Archive for Tax Controversy

Political Campaign Activity by Non-profit Organizations – Part 1

Our society is very much a political society.  Even though not everyone may vote for a number of reasons, citizens are aware of elections and often the issues that are matters of discussion.  Opinions are plentiful, some are not factually-based, but that does not deter the individual from expressing his or her opinions.  Political campaigns are pervasive – we see advertising on various media, our mailboxes are filled with flyers from competing candidates, our phone often rings with pitches from various candidates. With everyone seemingly getting in on the action, there may be a temptation for a church or non-profit organization to throw in their two cents worth.

At one level, it makes sense for an organization to take a stand in favor or opposition to a candidate.  For example, a church may be a strong supporter of the nation of Israel.  One Read More

Written by | Posted in IRS • Non-Profit Tax • Tax Controversy

FLASH ALERT! WOTC: IRS Notice 2015-13: Providing Transition Relief For Employers Submitting Late WOTC Applications

We Have Been Waiting For This!

The IRS has released IRS Notice 2015-13, which provides transition relief given the late retroactive renewal of the Work Opportunity Tax Credit program in December 2014. Notice 2015-13 waves the 28-day deadline for submitting IRS Form 8850 (the WOTC Pre-screen Notice) for qualifying employees hired in 2014.  The extended deadline for submitting the applications for affected employees is now April 30, 2015.

From the Notice:

 

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Written by | Posted in Affordable Healthcare Act • Africa • Audit • Corporate • Federal • International • IRS • North America • Partnership • State And Local Tax (SALT) • State Tax • Tax Controversy • Tax Deductions • Tax Policy

Church Wins Round In Court Over Property Tax Exemption

In a recent court case, a New York court ruled that two churches closed by a Catholic Diocese remained exempt from property taxes. In this situation, the diocese had announced plans to permanently close the churches and issued canonical “decrees of suppression.” This action has the effect of terminating the diocese. The property was transferred to other parishes. The local tax assessor informed the diocese that the churches were being placed on the tax rolls, removing the property tax exemption from the two churches.

The diocese asked the court to reinstate the tax-exempt status of both churches, citing the fact that the properties were being used on occasion for religious purposes including monthly religious services. In addition, the diocese stated that the churches were not used for any other purpose. The assessor countered that the properties were not Read More

Written by | Posted in Property Tax • Religion • Tax Controversy

Church Exemption From Filing Form 990 Challenged

Churches are exempt from having to file Form 990 with the IRS. This exemption has been in place since the early 1940’s when Form 990 was adopted, and non-profit organizations were required to file the form with the IRS. This was brought about by a concern that tax-exempt organizations were using their status to engage in unfair competition with for-profit businesses. Churches have held to be exempt, as to do so would violate the First Amendment to the Constitution.

The Freedom From Religion Foundation (FFRF) has filed suit in a federal district court in Wisconsin, alleging that it was required to file a “detailed application” (Form 1023) and pay a fee before obtaining tax exempt status, and has also been required to file “detailed, intrusive and expensive annual reports” (Form 990) in order to maintain that status. Read More

Written by | Posted in IRS • Religion • Tax Controversy • Tax Provision/Tax Reporting

Why The Ministerial Housing Allowance Might Not Survive

On September 7, as was discussed in “Appeals Court Upholds Clergy Housing Exemption,” the Seventh Circuit of appeals reversed a Federal District Court decision that ruled the minister’s housing allowance was unconstitutional. The suit had been brought by the Freedom From Religion Foundation. So the housing allowance survives, for now.

The Appeals Court ruling was actually based on the fact that the plaintiffs, Dan Barker and Laurie Anne Gaylor (co-presidents of FFRF) did not have standing to sue as they had not been denied the benefit of a housing allowance. In ruling that the plaintiffs did not have standing, the court did not actually address the issue of the constitutionality of the housing allowance. Read More

Written by | Posted in IRS • Religion • Tax Controversy • Tax Provision/Tax Reporting

Appeals Court Upholds Clergy Housing Exemption

The 7th U S Circuit Court of Appeals has dismissed a lawsuit by the Freedom From Religion Foundation (FFRF) that challenged the constitutionality of the clergy housing allowance. The suit was originally brought in the District Court for the Western District of Wisconsin where Judge Barbara Crabb ruled that the tax break for ministers was unconstitutional. Her basis for the ruling was that the law benefited religious people and no one else. The decision, which would potentially eliminate the most important tax break for ministers, was stayed pending appeal.

The law allows ministers of the gospel to exclude income tax on amounts designated by the church as housing allowance. Self-employment taxes are payable on these amounts. In addition, ministers may “double dip,” as they are allowed to deduct mortgage interest Read More

Written by | Posted in Clergy • IRS • Religion • Tax Controversy • Tax Provision/Tax Reporting

Minister’s Housing Allowance Subject of Court Battles

The housing allowance is a significant tax benefit for a minister. It can result in thousands of dollars in tax savings annually. The law currently allows a minister to occupy a church-owned parsonage without paying income tax on the value of the accommodations. Alternatively, the church may designate an amount to be paid to the minister as housing allowance. This amount, when used for housing costs, is not subject to income tax. Both a parsonage and a housing allowance are subject to self-employment taxes.

Only One Home Subject to Housing Allowance

Several court cases have recently been brought, seeking to limit or abolish this tax benefit for ministers.

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Written by | Posted in Clergy • IRS • Religion • Tax Controversy • Tax Provision/Tax Reporting

Florida Motor Fuel Tax Audits On The Rise

Over the past few years the Florida Department of Revenue (“FDOR”) has launched several new campaigns. About 2 years ago, the DOR gained the ability to access the data tracking all tobacco and alcohol items sold to retailers. Armed with third party data, the FDOR did several thousands of audits on those that sold tobacco or alcohol items. With the downturn in the economy, times are tough for the State of Florida and they are launching a similar campaign against auto dealers using DMV records. It was also brought to our attention that the DOR is launching a new campaign by training its auditors for motor fuel tax audits as well.

Has the FDOR reached out to your company or your client’s company about a pending Florida Motor Audit? If you or your client already received the Florida Form DR-840 – Notice Read More

Written by | Posted in Audit • Tax Controversy

Australian Tax Office BEPS “Progress Report”

In a speech last week ATO’s Mark Konza, Deputy Commissioner – International, gave an insight into the ATO’s activities in responding to a number of the OECD’s post Cairns G20 Minister’s Conference BEPS Action Plan items.

Deputy Commissioner Konza put particular emphasis on the ATO’s strategy in connection with “Action Item 1: address the tax challenges of the digital economy”. Commenting on the ATO’s work on this aspect he said-

“The broader digital economy is also being addressed through our four-year dedicated compliance program to address International Structuring and Profit Shifting (ISAPS). Tax and law professionals from external firms have been recruited into the ATO to help Read More

Written by | Posted in Australia/Oceania • Income Tax • International • OECD • Tax Controversy • Tax Policy • Tax Risk Management • Transfer Pricing

Australian Tax Office’s Scammer Video

The Australian Taxation Office has a webpage dedicated to tax related scams. Their latest video advising taxpayer’s how to protect themselves against scam attempts can be seen below.

This is the Transcript of the ATO Video that can be seen below:

Your personal information, like your identity — is unique. You use it to verify who you are and to access things like bank accounts, loans and tax returns.

Protecting your personal information is important. But do you know what to protect?

Personal information includes your name, address, date of birth, credit card details, myGov details, tax file number and driver’s licence details. Read More

Written by | Posted in Australia/Oceania • Income Tax • Individual • Tax Controversy • Tax Education • Tax Fraud/Evasion/Crimes • Tax Tips

What To Expect At A Tax Appeals Conference

Tax Appeals conferences are typically rather informal. There is generally no stenographer present to record the issues of fact and tax law discussed, unless specifically requested by the taxpayer via specific procedures. When you or others provide testimony during the tax appeals conference, it is not under oath; however, matters of fact must be stated on a signed affidavit under penalty of perjury (1). If you have evidence to support your position, you must disclose it prior to the appeals conference through your signed affidavit. You cannot simply wait until the appeals conference to present your evidence to the appeals officer for the first time. If you attempt to do so, the Appeals officer can decide to return the entire case back to the local office for verification of the evidence.

When you reach the Appeals conference, the Appeals officer may ask you to provide Read More

Written by | Posted in Federal • Income Tax • Individual • Tax Controversy

Tax Compliance Alert: IRS Prepares For Impact of Obamacare On 2015 Tax Season

Introduction

On Wednesday, September 10th the Internal Revenue Service (hereinafter the “Service”) Commissioner John Koskinen (hereinafter “Commissioner Koskinen”) informed a congressional subcommittee about the Service’s progress on the Affordable Care Act and the impact that tax subsidies will have on the upcoming 2015 tax season. In a hearing before the House Ways and Means Health Subcommittee, Commissioner Koskinen discussed how the Service would be processing the premium tax credit, which helps subsidize the cost of health insurance coverage for eligible taxpayers.

Commissioner Koskinen duly noted that eligible taxpayers can choose to have their Read More

Written by | Posted in Affordable Healthcare Act • IRS • Tax Controversy
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