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Archive for IRS

Federal Payment Levy Program: Harming Veterans

Over the years, I and my staff have written and advocated extensively about our concerns with the IRS’s implementation of the Federal Payment Levy Program (FPLP). My concerns are amplified by a recent IRS change in policy regarding adding military retirement payments as a payment stream to FPLP. In this blog post, I will provide relevant background on the issue. In the second part of the blog, I will discuss the data points upon which the IRS relies in justifying FPLP levies on military retirement payments, why those figures are inaccurate and misleading, and why I believe military retirement payments should be run through the Low Income Filter (LIF) to mitigate the risk of economic harm to these retirees. Read more

Correctible Error Authority Creates More Problems Than It Resolves Part 2

In my last blog, I discussed my concerns about the IRS’s current use of math and clerical error authority under IRC §§ 6213 (b) and (g). This week, I’ll take a closer look at the proposal to expand math error authority to “correctible errors,” and explain why I think Congress should not grant such expansion in two of the three instances. Although the Treasury Department recently scored this proposal as raising a significant amount of revenue, the concerns I raise in these two blog postings should make folks think deeply about whether we should raise revenue at the expense of taxpayer rights. Read more

Correctible Error Authority Raises Taxpayer Rights Concerns

People occasionally ask me which areas of tax administration worry me the most. There is certainly no shortage of candidates, but if I had to narrow it down, the IRS’s math and clerical error authority under IRC § 6213(b) and (g) would be right up there at the top of the list, along with the IRS correspondence examination program. In fact, I expressed my concerns about the IRS’s administration of its math error authority since my first Annual Report to Congress in 2001, when I was fresh from representing low income taxpayers as Executive Director of a Low Income Taxpayer Clinic. I’ve gone on to write, conduct research studies, and make legislative recommendations about math error authority in my Reports to Congress, as well as congressional testimony in 2011 and 2015. My past concerns take on new meaning, what with the current Administration’s budget proposal echoing the former Obama Administration’s call for the IRS to be granted “correctible error” authority. Read more

Americans Abroad And IRS ‘Amnesty’ Offers In OVDP

In an earlier post, I explained why the Canada Revenue Agency assisted the IRS in collecting a penalty on a Canadian resident. The bottom line was that he was presumably NOT a Canadian citizen and therefore did NOT have the benefits of the tax treaty. This post is to explain where the penalty came from in the first place.

It has been widely reported that a U.S. citizen residing in Toronto, Canada since 1971, paid a $133,000 U.S. dollar penalty for failing to file IRS forms disclosing that he was running a business through a Canadian corporation. How did this fly get caught in the spider’s web? Read more

Fiscal Year 2018 Per Diem Rates

The IRS permits taxpayers to use general predefined rates to substantiate business expenses under Internal Revenue Code Sec. 274(d) for lodging, meals, and incidental expenses incurred while traveling away from home for business purposes.

The General Services Administration (GSA) released the federal domestic per diem rates for periods effective from 10/1/17 through 9/30/18 (aka fiscal year 2018). Read more

IRS Cautions Against Over-reliance On Its Website

National Taxpayer Advocate Nina Olson discussed the potential pitfalls of treating information on the IRS’s website, such as its FAQs pages, as authoritative. The Taxpayer Advocate is an independent office within the IRS tasked with helping people resolve tax issues with the IRS and recommending changes that will prevent future problems.

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New Passport Program: How Lack Of Notice Harms Taxpayers

In my first blog on passport issues, I discussed the importance of providing notice to taxpayers prior to certifying their seriously delinquent tax debts to the Department of State (DOS). Once the IRS makes the certification, the DOS must deny the person’s passport application and it may revoke their passport, except in certain emergency and humanitarian situations. Under the IRS’s current policy, the only direct notice prior to the certification is through language buried in the middle of the CDP notice, which was not included at all for taxpayers who received their CDP notices prior to January 2017. This policy impairs due process rights and the taxpayer’s right to be informed and right to challenge the IRS’s position and be heard. Read more

Significance Of Stepped Up Basis In Estate Planning IRC 1014

According to Internal Revenue Code Section 1014 the basis of property acquired from a decedent is the fair market value of the property at the date of the decedent’s death.

This is often referred to as stepped up basis and it is profoundly significant for U.S. taxpayers dealing with the myriad of issues surrounding estate planning or tax preferential transfer of assets. Read more

An End Of Summer Troubling Tax Tidbit

Summer is swiftly coming to an end.

It’s time to think about getting the kids back to school. And what a relief, there’s been little to no thought about taxes. Sure, we think about the sales tax breaks we get buying back to school items and clothing this time of year, but that’s actually enjoyable. Read more

New Passport Program: Why Notice to Taxpayers Matters

Previously, I analyzed the IRS collection performance, looking at the effects of different drivers of collection such as notices, installment agreements, liens, levies, and refund offsets. Today, I’d like to pick this topic back up, but focus on a collection issue associated with new legislation. In late 2015, Congress passed the Fixing America’s Surface Transportation Act (FAST Act), which aimed to boost tax collection through two avenues: Read more

IRS Releases More Details On Passport Revocation Rule

Previously, we discussed a newly-enacted Code Section 7345 of the Internal Revenue Code, which authorizes the denial, revocation, or limiting of a delinquent taxpayer’s U.S. passport. We noted then that the statutory language contained in the new law offers few details about how exactly the penalty will be administered and to what extent exceptions would apply.

After more than a year-long delay, the IRS finally provided a number of important additional details relating to the passport revocation rule on its website. Read more

New International Criminal Units Driven By Data Mining

In 2012, we discussed the use of data-mining technology and how the Internal Revenue Service has adopted it to find taxpayers with undisclosed offshore bank accounts. U.S. taxpayers who are still considering whether to disclose their accounts need to understand that IRS’s data-mining software increases their risk of being detected. They should act accordingly and seek legal advice immediately.” We also discussed that the phasing in over the coming year of the Foreign Account Tax Compliance Act (FATCA) will only increase the breadth and depth of the data available to IRS and E-Trak. Read more

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