December, 2020 | TaxConnections

31 Dec 2020

James And Simona Quezada v. Internal Revenue Service – The Fifth Circuit And The Discharge Of Taxes In Bankruptcy

The dischargeability of and the ability to collect taxes by the IRS in a consumer bankruptcy case often turn on the issue of whether and when the taxpayer filed the relevant returns, thereby determining when the statute of limitations on assessment began to run. In this case, the IRS assessed the taxpayer, James Quezada, in 2014 for tax deficiencies arising for tax years 2005-2008. Quezada filed for bankruptcy in 2016. The IRS filed a claim for the alleged 2005-2008 tax deficiency. Over the taxpayer’s objection, the Bankruptcy Court held that the limitations period never began to run because Quezada never filed “the return,” and the District Court affirmed. As a result, the taxes were deemed not dischargeable, and the IRS’s claim was upheld.

Written by Gregory Mitchell | Posted in Discharge of Taxes In Bankruptcy

31 Dec 2020

Frequently Asked Questions On Sales And Use Taxes Economic Nexus And Wayfair

PART 1: HOW DOES WAYFAIR IMPACT MY BUSINESS AS A REMOTE SELLER

Q: How many states have passed economic nexus sales and use tax law?

A: All states that impose sales and use taxes except for Florida and Missouri have passed economic nexus laws for sales and use tax purposes. Please note that Alaska, Delaware, Montana, New Hampshire and Oregon do not impose a state sales and use tax.

Q: Which sales are used to determine economic nexus threshold?

A: It will depend on the state. Some states use gross sales, other use retail sales (sale for resale sales are not included) and others use taxable sales (exempt sales are not included).

Q: When determining nexus threshold, do I review Customer Bill to Location or Customer Ship to Location?

Written by George Rendziperis, J.D. | Posted in Sales And Use Taxes Economic Nexus

31 Dec 2020

Tax Treaties: United States And France

Quick Summary. Located in Western Europe, France borders Belgium, Luxembourg, Germany, Switzerland, Monaco, Italy, Andorra and Spain. France has a unitary semi-presidential republic and is comprised of 18 integral regions with a capital at Paris.

The Constitution of the Fifth Republic, approved in 1958, provides for a bicameral legislature comprised of the National Assembly (Assemblée nationale) and a Senate. The executive branch is lead by a president, who is head of state, and an appointed prime minster.

France is characterized by a civil legal system based primarily upon written, codified statutes.

Effective 2019, France provides for a tax on certain digital services.

Also effective in 2019, France has moved towards a withholding tax regime based on a pay-as-you-earn (PAYE) system. The Finance Act Bill for 2019 also moves the taxation of non-residents towards the taxation of residents by eliminating certain withholding provision and implementing the PAYE system.

France is a member of the European Union (EU), the G7, G20, Organisation for Economic Co-operation and Development (OECD), and the World Trade Organization (WTO).

Treaty.

Written by Jason Freeman | Posted in Tax Treaties: United States And France

31 Dec 2020

IRS “Dirty Dozen” List Of Tax Scams For 2020

The Internal Revenue Service announced its annual “Dirty Dozen” list of tax scams with a special emphasis on aggressive and evolving schemes related to coronavirus tax relief, including Economic Impact Payments.

This year, the Dirty Dozen focuses on scams that target taxpayers. The criminals behind these bogus schemes view everyone as potentially easy prey. The IRS urges everyone to be on guard all the time and look out for others in their lives.

Written by TaxConnections Admin | Posted in IRS Tax Scams

30 Dec 2020

Treasury And IRS Begin Delivering Second Round Of Economic Impact Payments To Millions Of Americans

Today, the Internal Revenue Service and the Treasury Department will begin delivering a second round of Economic Impact Payments as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 to millions of Americans who received the first round of payments earlier this year.

The initial direct deposit payments may begin arriving as early as tonight for some and will continue into next week. Paper checks will begin to be mailed tomorrow, Wednesday, December 30.

The IRS emphasizes that there is no action required by eligible individuals to receive this second payment. Some Americans may see the direct deposit payments as pending or as provisional payments in their accounts before the official payment date of January 4, 2021. The IRS reminds taxpayers that the payments are automatic, and they should not contact their financial institutions or the IRS with payment timing questions.

Written by IRS | Posted in Economic Impact Payments • Second Round

30 Dec 2020

Consolidated Appropriations Act, 2021 – An Important Question To Ask

A Tax Advisor sent me a message yesterday stating he was providing me with the full text the House Of Representatives published on the Consolidated Appropriations Act, 2021. As I looked at this monstrous bill of 5593 Pages, I was struck by the fact the government has only provided a truncated version of the bill that ended on Page 3126. I asked him, ” Where are the other 2467 Pages of the bill that are missing from this government publication?

This House of Representative Bill 133 was negotiated during the holidays when the majority of Congress and “the people” have not had the opportunity to read it yet.

Written by TaxConnections Admin | Posted in 2021 • TaxConnections

30 Dec 2020

State and Local Tax Nexus

This article is the first of a three-part series regarding the State and Local Tax consequences of doing business in multiple states. Part 1 will discuss Nexus, Part 2 will discuss Voluntary Disclosures, and Part 3 will discuss the Audit Process.

What is Nexus? In order for a state to impose an income, franchise, or gross receipts tax on a taxpayer or require a taxpayer to collect and remit sales and use taxes, the taxpayer must have nexus with the state. Nexus is some type of connection with the state. Such connection could be a physical presence in the state, an economic presence in the state (i.e., taking advantage of the market in the state (such as an intangible asset)) or some type of factor presence in the state (certain dollar amount of sales into a state).

Are there different nexus standards for Income, Franchise and Gross Receipts taxes and Sales and Use taxes? Yes.

Written by George Rendziperis, J.D. | Posted in State And Local Tax Nexus • Texas

29 Dec 2020

Move Over 1099-MISC: The New Form 1099-NEC Is Here!

Move Over 1099-MISC: The New 1099-NEC Is Here!

As you likely know by now, there has been a major change that will impact your customers’ filings for the 2020 tax year and beyond. The IRS has recently released the1099-NEC, a new form replacing Form 1099-MISC box 7 for reporting nonemployee compensation.

Breaking Down the 1099-NEC

The new 1099-NEC is based on an old form that has been out of use since 1982. The IRS revived the form to address some time-management and administrative issues that arose under the Protecting Americans from the Tax Hikes Act of 2015 (PATH Act). The new Form 1099-NEC effectively separates certain data from box 7 of the 1099-MISC, in addition to staggering the filing due dates.

Written by TaxConnections Admin | Posted in Form 1099-NEC

29 Dec 2020

Tax Treaties: United States And Iceland

Quick Summary. Iceland is an independent parliamentary republic governed by a president and parliament. Its national parliament, the Althingi, is the oldest national assembly in the world–giving Iceland claim to the world’s oldest assembly democracy.

Resident corporation are taxed on worldwide income. Corporate income tax rates vary depending on whether the entity is a limited liability company, limited partnership company, or other legal entity.

Recent amendments to the Icelandic Income Tax Act no. 90/2003 provide for thin capitalization rules.

Resident individuals are taxed on worldwide income, while non-resident individuals are taxed on certain Icelandic-sourced income.

Treaty.

Written by Jason Freeman | Posted in Tax Treaties: United States And Iceland

29 Dec 2020

Theft Loss Deduction – The “Discovery Year”

A recent Tax Court case has highlighted the importance for individual taxpayers in determining the “discovery year” for the purpose of taking a theft loss deduction. In Giambrone v. Commissioner, the Tax Court held that the taxpayers were not entitled to a theft loss deduction because they did not claim the deduction in the year they discovered the illegal scheme giving rise to the deduction. See Giambrone v. Commissioner, TC Memo 2020-145 (10/19/2020).

Pursuant to I.R.C. § 165(c), an individual taxpayer can deduct an uncompensated loss—even one not connected with a trade or business or a transaction entered into for profit—if such loss arises from a theft. Generally, a theft loss is treated as sustained during the tax year in which the taxpayer discovers such loss. See I.R.C. § 165(e).

Written by Ryan Dean | Posted in Freeman Law • Texas • Theft Loss Tax Deduction

29 Dec 2020

IRS Issues Standard Mileage Rates For 2021

The Internal Revenue Service today issued the 2021 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on January 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

56 cents per mile driven for business use, down 1.5 cents from the rate for 2020,
16 cents per mile driven for medical, or moving purposes for qualified active duty members of the Armed Forces, down 1 cent from the rate for 2020, and
14 cents per mile driven in service of charitable organizations, the rate is set by statute and remains unchanged from 2020. Read More

Written by IRS | Posted in IRS Mileage Allowance

25 Dec 2020

Tax Treaties: United States And Russia

Quick Summary. Geographically the largest country in the world and spanning across Eastern Europe and Northern Asia, Russia is a semi-presidential republic with a civil law system. Russia’s Tax Code imposes three levels of taxation: federal, regional, and local.

Russia’s constitution was adopted in 1993 and provide for eighty five federal subjects, including oblasts, krays, republics, autonomous okrugs and oblasts, and federal cities of Moscow and Saint Petersburg.

Russia has a bicameral Federal Assembly or Federalnoye Sobraniye comprises of the Federation Council or Sovet Federatsii. Its judicial system is comprised of the Supreme Court of the Russian Federation; Constitutional Court, and subordinate courts including the Higher Arbitration Court; regional (kray) and provincial (oblast) courts; Moscow and St. Petersburg city courts; autonomous province and district courts.

Written by Jason Freeman | Posted in Tax Treaties: United States And Russia