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Uncertain Tax Position Reporting For Corporations

Since Tax Year 2010, Schedule UTP has been used by certain corporations to report uncertain tax positions. Corporations filing Forms 1120, 1120-F, 1120-L, or 1120-PC must file Schedule UTP if total assets equal or exceed the applicable asset threshold for the tax year and the corporation reserved for a tax position in audited financial statements.

For tax years beginning in 2014 and later, the asset threshold for reporting uncertain tax positions on Schedule UTP (Form 1120) decreased to $10 million. Corporations meeting all other Schedule UTP filing requirements must file a Schedule UTP if total assets equal or exceed $10 million. This asset threshold decrease for tax year 2014 is the final phase of the five-year Schedule UTP filing requirement phase-in. The asset threshold for tax years 2010 and 2011 was $100 million, and it decreased to $50 million for tax years 2012 and 2013.

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Large Business And International Transfer Pricing Audit Roadmap

The Transfer Pricing Operations (TPO) of the Large Business and International (LB&I) division of IRS has released the Transfer Pricing Audit Roadmap to the public.  The Transfer Pricing Audit Roadmap (Roadmap) is a practical, user-friendly toolkit organized around a notional 24 month audit time-line.

The Roadmap provides recommended audit procedures and links to useful reference material. It is not intended as a template. Every transfer pricing case is unique and requires ongoing exercise of judgment and discretion.  With the release of the Roadmap, TPO is providing the public with insight into what to expect during a transfer pricing examination.  This transparency is intended to help improve communications and efficiency, for the benefit of both the IRS and taxpayers.

The Roadmap is a “living document”. TPO will continue to review the Roadmap and make changes over time as new techniques arise or additional reference materials become available.  Users are encouraged to contact the TPO to provide any input, feedback and suggestions for improvement.

As Reported By The IRS:

https://www.irs.gov/pub/irs-utl/FinalTrfPrcRoadMap.pdf  

 

 

Sentencing Guidelines For A Taxpayer Charged with FBAR Violations

Do You Have Foreign Income?

In case you have foreign income or assets, you might be under an obligation to file a Report of Foreign Bank and Financial Accounts (FBAR) disclosing your assets and income to the IRS. The FBAR filing requirements specifically apply to US taxpayers with financial interest in, or signature authority over a financial account or foreign bank with a value of at least $10,000 at any point.

These FBAR requirements extend to U.S. residents, U.S. citizens and various kinds of business entities, such as limited liability companies (LLCs), corporations and partnerships. Keep in mind that FBAR violations, which usually involve failure to maintain relevant financial records or failure to file an FBAR, could result in severe penalties, especially if these violations are “willful.”

Failure To File

Since 2017, any failure to file can lead to harsh sentencing; this depends on how much you or your business has in foreign financial institutions or offshore accounts. A failure to disclose and furnish the information is usually an intentional act to deceive the IRS. You have to file the FBAR paperwork, as long as your accounts have over $10,000.

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What Taxpayers Should Know About Tax Return Copies And Transcripts

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The IRS recommends that taxpayers keep a copy of tax returns for at least three years. Doing so can help taxpayers prepare future tax returns or even assist with amending a prior year’s return. If a taxpayer is unable to locate copies of previous year tax returns, they should check with their software provider or tax preparer first. Tax returns are available from IRS for a fee.

Even though taxpayers may have a copy of their tax return, some taxpayers need a transcript. These are often necessary for a mortgage or college financial aid application.

Here is some information about copies of tax returns and transcripts that can help taxpayers know when and how to get them:

Transcripts
To get a transcript, taxpayers can:

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Missed The Tax Deadline And Owe Tax? File By June 14th To Avoid Higher Late Filing Penalty

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Taxpayers who owe tax and file their federal income tax return more than 60 days after the deadline will usually face a higher late-filing penalty. For that reason, the Internal Revenue Service urges affected taxpayers to avoid the penalty increase by filing their return by Thursday, June 14.

Ordinarily, the late-filing penalty, also known as the failure-to-file penalty, is assessed when a taxpayer fails to file a tax return or request an extension by the due date. This penalty, which only applies if there is unpaid tax, is usually 5 percent for each month or part of a month that a tax return is late.

If a tax return is filed more than 60 days after the April due date — or more than 60 days after the October due date if an extension was obtained — the minimum penalty is either $210 or 100 percent of the unpaid tax, whichever is less. This means that if the tax due is $210 or less, the penalty is equal to the tax amount due. If the tax due is more than $210, the penalty is at least $210.

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No More Hide N’ Seek For Taxpayers’ Overseas Assets

IRS Is Ending Its Offshore Voluntary Disclosure Program

The IRS is ending the Offshore Voluntary Disclosure Program (OVDP) this September 28th. This program has given U.S. taxpayers an opportunity to come forward with ‘previously undisclosed foreign income, accounts or assets with the promise and certainty that they will not face criminal prosecution.

Since the program’s inception in 2009, over 56,000 US taxpayers have paid over $11.1 billion in back taxes, interest, and penalties through the OVDP, but the number of participants has steadily declined over the past few years – from 18,000 in 2011 down to only 600 in 2017.

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How Can You Remove An IRS Tax Lien?

What is a Tax Lien?

The Internal Revenue Service frequently files tax liens (federal) against taxpayers with unpaid tax obligations. Federal tax liens are documents that are filed with county governments (often where the relevant taxpayer lives or conducts business) informing the public that the taxpayer owes money to the IRS.

Liens are attached to a taxpayer’s property (both personal property and business property). This means that the IRS will have first dibs on the proceeds of your property such as your home or car. The tax lien can also impair your crediting rating.

However, the good news is that you can remove the IRS lien by following these strategies.

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How To Avoid Tax Evasion Penalties In Michigan

Tax evasion penalties in Michigan are no laughing matter. It’s easier than you might expect to get yourself into trouble with the Internal Revenue Service (IRS). The main thing is not to be negligent, because legally speaking, it’s no excuse. Stay on top of your taxes.

Don’t procrastinate and don’t avoid opening the mail for fear of what you might find. If you live in Michigan and find yourself in tax trouble, call Ayar Law today at (248) 262-3400 for a free and confidential consultation.

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Effect Of Sequestration On The Alternative Minimum Tax Credit For Corporations

Pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, refund payments issued to, and credit elect and refund offset transactions for, corporations claiming refundable prior year minimum tax liability, are subject to sequestration.

This means that refund payments and credit elect and refund offset transactions processed on or after Oct. 1, 2017, and on or before Sept. 30, 2018, will be reduced by the fiscal year 2018 6.6 percent sequestration rate, irrespective of when the IRS received the original or amended tax return.

The sequestration reduction rate will be applied unless and until a law is enacted that cancels or otherwise affects the sequester, at which time the sequestration reduction rate is subject to change.

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Plug-In Electric Drive Vehicle Credit (IRC 30D)

Internal Revenue Code Section 30D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles including passenger vehicles and light trucks.

For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5-kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5-kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.

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IRS Announces Six Large Business And International Compliance Campaigns

The IRS Large Business and International division (LB&I) has announced the approval of six additional compliance campaigns. LB&I announced on January 31, 2017, the rollout of its first 13 campaigns, followed by an additional 11 on November 3, 2017, and five more on March 13 of this year.

LB&I is reviewing legislation enacted on December 22, 2017, to determine which existing campaigns, if any, could be impacted as a result of a change in the controlling statutory framework. Information regarding any identified impact will be communicated after that analysis has been completed.

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Canada: IRS Is Going After Taxpayers Abroad

IRS says it now plans to invest time and resources catching non-compliant Canadians and taxpayers abroad elsewhere with regards to forms commonly applicable to that specific group of taxpayers – ones unfortunately also commonly missed. It will focus on:

  • Form 3520/3520-A annual return to report transactions with foreign trusts and receipt of certain foreign gifts (a gift of more than $100,000 from a non-resident alien individual)
  • Forms 1042/1042-S Withholding – such as on payment from renters of USA property
  • Nonresident Alien Tax Treaty Exemptions – Improperly claim treaty benefits and exempt U.S. source income from taxation
  • Nonresident Alien – Proper deduction of eligible expenses including Sch A itemized
  • NRA Tax Credits – Erroneous claims of dependent (e.g., kids, spouse) tax credits or education credits only available to U.S. persons

Have questions? Contact Daniel Gray.

 

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