Archive for IRS

Cryptocurrency: A Story And Tax Consequences

Thinking about writing about Bitcoin, I remembered my maverick of an Economics teacher back in high school in Mumbai, India whose very thick south Indian accent meant we did not know what he was saying more than half the time. He started off the chapter on currency by having everyone in class remain standing till we came up with a definition for “Money”. Thankfully someone said “medium of exchange” real quick!

Although the underlying meaning of currency remains the same, the simple concept of a medium of exchange has undergone several upgrades particularly so with the cryptocurrency or digital payment systems known more commonly as Bitcoin.

Read more

TIGTA Says That Improvements Are Needed in the IRS’ Estate and Gift Tax Return Examination Process

Ronald Marini, Tax Advisor

The Internal Revenue Service (IRS) needs to make improvements in the classification, prioritization, and inventory assignment processes for the Estate and Gift Tax Return Examination Program, according to an audit report that the Treasury Inspector General for Tax Administration (TIGTA) issued today.

Read more

Assisting The IRS To Ensure Taxpayers Enter Installment Agreements They Can Afford

Nina Olson, Tax Advisor

Previously, I discussed my concerns about installment agreements (IAs) and the study TAS Research conducted on IAs. Today I will discuss the recommendations I have made to the IRS to ameliorate some of my concerns about IAs, both in the study and in the associated Most Serious Problem, both published in the National Taxpayer Advocate’s 2016 Annual Report to Congress. Per the TAS arrangement with the IRS, the IRS responds to recommendations I present in the Most Serious Problems in the Annual Report. I will also focus on the IRS responses to these recommendations. Read more

President Trump’s 2017 Disaster Tax Relief Bill

John Stancil, Tax Advisor

At long last, Congress and President Trump have given us a tax bill that provides some real relief for taxpayers impacted by this year’s hurricanes. The “Disaster Relief and Airport and Airport Extension Act of 2017” was signed by the President on September 29.

Although it deals with issues beyond hurricane relief, those issues are not the focus of this article and will not be discussed here. And there are some provisions relating to hurricane disaster losses that do not have widespread application and will not be discussed here.

There are four important segments to the hurricane relief granted by this act.

Read more

IRS Ransomware Scam – Keep Taxpayers Safe

The Internal Revenue Service (IRS) has issued an urgent warning about a new scheme targeting taxpayers. The scheme, which IRS Commissioner John Koskinen called “a new twist on an old scheme” involves a bogus email which impersonates the IRS and the Federal Bureau of Investigation (FBI) as part of a ransomware scam to take computer data hostage.

The scam email uses the emblems of both the IRS and the FBI. The email urges recipients to click on a link to download a questionnaire allegedly from the FBI. The email implies that the questionnaire is required as part of changes in the law focused on tax compliance. The regs referenced in the email are bogus, and the link doesn’t click through to a questionnaire. Instead, the link downloads ransomware. Read more

IRS Appeals Reverts Back to Face To Face Appeals Conferences

Ron Marini

Internal Revenue Manual (IRM), blandly entitled “Conference Practices,” provides that ALL conferences will be held by telephone except under certain specific enumerated circumstances.

The mission of the IRS Appeals Division is to “resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and the taxpayer and in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Service.”  Read more

IRS Audits – How Are Tax Returns Selected for Audit?

Ron Marini

In order to determine how to respond to an IRS Tax Audit, it is helpful to understand how tax returns are selected for examination. The IRS selects returns for examinations in several ways, some based upon objective criteria coded into a carefully protected computer program and others based upon old fashioned investigation work.

Selection for an IRS Audit does not always suggest there’s a problem. The IRS uses several different methods: Read more

Employers May Give Employees Tax-Free Disaster Relief

John Stancil

If they carefully follow the guidelines, employers may give cash payments to employees for disaster relief, tax-free. Under Sec. 139 of the Internal Revenue Code, qualified disaster relief payments to employees are tax free to the employee and deductible by the employer. This includes income as well as social security and Medicare taxes. Read more

Concerns About The IRS’s Commitment To Taxpayer Rights

About this time every year, my wonderful staff of attorney-advisors presents me with early drafts of the discussion of the ten most litigated issues in federal courts that are ultimately published in the National Taxpayer Advocate’s Annual Report to Congress. Editing these drafts is one of my favorite tasks, because I get to review in a concentrated fashion a significant swath of tax litigation. There are always one or two cases I have missed over the year that leap out at me during the editing process. Mescalero Apache Tribe v. Commissioner is one such case. Read more

Federal Payment Levy Program: Harming Veterans (Part II)

In my previous blog, I described the Federal Payment Levy Program (FPLP) and outlined my general concerns about the IRS’s implementation of the “Low Income Filter” (LIF) and lack of person-to-person assistance. In this blog post, I discuss my concerns about the IRS’s decision to extend the FPLP to military pensioners.  The IRS based its decision to include military retirement payments as an additional payment stream in the FPLP on figures contained in a 2015 Treasury Inspector General for Tax Administration (TIGTA) audit report (Most Federal Employee/Retiree Delinquency Initiative Cases Are Resolved with the Collection of Revenue; However, Some Program Improvements Can Be Made, Ref. No. 2015-30-051 – hereinafter, the “TIGTA report”). TIGTA reported that the IRS planned to expand the use of the FPLP to military retirement payments to increase revenue, but utilize the low-income filter (LIF) to exclude military retirees with incomes below the 250 percent of the federal poverty guidelines, similar to the way it treats taxpayers receiving Social Security or Railroad Retirement Board (RRB) benefit payments. The IRS, however, decided not to implement the LIF for military retirees. Read more

IRS Has A Heart For Hurricane Harvey Victims

Barry Fowler

With a major portion of Houston and surrounding areas under water and devastated, the Internal Revenue Service (IRS) has announced significant tax relief for victims of Hurricane Harvey.

Those in Texas who have been affected by the storm have until January 31, 2018, to file certain individual and business tax returns and make certain tax payments. This includes an additional filing extension for taxpayers with valid extensions through October 16, and businesses with extensions through September 15. Read more

IRS Taxes For U.S. Inpats – What You Need To Know

Hugo Lesser

Inpats, or inpatriates, are foreigners who have been transferred to work in the United States. So in a sense, inpats are also (from the perspective of their country of origin) expats.

As individuals working in the States, inpats normally become subject to the U.S. taxation system. This is probably the first time they’ll encounter the IRS, who from their side refer to inpats as Resident Aliens. Read more