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The Tax Court in Brief: Tax Court Opinions And Decisions

The Tax Court in Brief: Tax Court Opinions And Decisions

The Week of January 11 – January 15, 2021

Kenneedy v. Comm’r, T.C. Memo. 2021-3 | January 12, 2021 | Copeland, E. | Dkt. No. 5687-17W

Short Summary:  Petitioner appealed, pursuant to § 7623(b)(4), three determinations of the Whistleblower Office (WBO) of the Internal Revenue Service (IRS) that declined to make awards to him.  Petitioner filed a single whistleblower claim, but the WBO split it into three distinct claims. Petitioner’s whistleblower claim alleged that three taxpayers and related subsidiaries owed $150,103,245 in unpaid excise taxes, penalties, and interest. The IRS processed the claims, and it took no action against two of the taxpayers, and no change resulted from the examination of the third taxpayer.  Petitioner challenged the WBO’s determinations. The Tax Court held that the WBO did not abuse its discretion in declining any awards to Petitioner.

Key Issue:  Whether the WBO abused its discretion in declining to award the Petitioner any amount under his whistleblower claims when it took no action against two taxpayers and issued no changes after the examination of the third taxpayer.

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Transfer Pricing And State Aid: The Unintended Consequences of Advance Pricing Agreements

Transfer Pricing And State Aid

An advance pricing agreement (APA) is a formal arrangement between a tax authority and a multinational enterprise (MNE) in which the parties jointly agree on the MNE’s transfer pricing methodology, estimated taxable income, and tax payments for a fixed period, thus reducing the likelihood of an income tax dispute. We argue that APAs, which were developed by governments to solve MNE-state problems in one realm (international taxation of related party transactions), have had unintended consequences for both parties due to the spillover impacts of APAs into other policy realms. We explore this argument in the European Union state aid cases where, in the context of competition policy, APAs can be viewed as hidden, discretionary policies that can be misused by lower-tier governments to attract or retain inward foreign direct investment by offering individual MNEs preferential tax treatment. Our paper contributes to this literature by analyzing the unintended consequences of APAs and recommending policy changes to reduce these negative spillovers.

Written By William Byrnes and Lorraine Eden, Texas A&M

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State And Local Tax Audit Process

State And Local Tax Audit Process

This article is the third part of a three-part series regarding the State and Local Tax consequences of doing business in multiple states.  This article will discuss a State Tax Audit. Part 1 discussed Nexus and Part 2 discussed Voluntary Disclosure.

Questions we get from companies regarding its multistate activities are:  “How will states find me?”  “How will states enforce these new economic standards for sales and use taxes and income, franchise or gross receipts taxes?”   The answer is “do you really want to find out!”  The cost of states finding you and then assessing tax, interest, and penalties versus being proactive and compliant with state tax laws, as discussed in Part 1 of this series, can be a lot of money, as tax, interest, and penalties multiply very quickly.

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Taxpayer First Act Report To Congress January 2021

IRS Report To Congress

Prologue

The Taxpayer First Act (TFA) was enacted on July 1st, 2019 with strong bipartisan support to reimagine and enhance the way we serve taxpayers, continue to enforce the tax laws in a fair and impartial manner, and train IRS employees to deliver a world-class customer experience. The Act consists of 45 provisions, including specific mandates to improve the taxpayer experience. There are three critical plans included in this report (Taxpayer Experience, Training, and Organizational Redesign). These plans lay out a vision to revolutionize tax administration in our country for the 253 million citizens who interact with the IRS annually, and ensure that the $3.6 trillion of federal revenue that the IRS collects annually will continue. This is an inspirational vision that builds on work that is already underway and provides an investment framework for evaluating IRS funding levels in future years. However, without the commitment of significant multi-year funding, the IRS cannot make the taxpayer improvements necessary to maintain trust and confidence in the federal government and its tax collection system.

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Looking For An Easy Way To File And Deliver 1099s And W-2s?

Looking For An Easy Way To File And Deliver 1099s And W-2s?

Small and medium sized businesses are moving to the cloud to easily file Forms 1099, W-2 and ACA. As an authorized IRS transmitter of these forms, the process is made much easier for you with efile4Biz. This quick and easy interface will have you filing forms in just minutes so you have more time to spend on other activities.

You work in the cloud to enter your data manually of via an excel template or use your accounting apps like Quickbook or Xero. If you are a tax preparer filing on behalf of multiple clients, they offer multiple options. You can use Excel Template, Xero API, Quickbooks Desktop Plugin, Quickbooks Online Plus and Quickbooks Online Accountant. Cost is $1.50 Per Form. eFile4Biz files with IRS, then prints, emails or sends through post email copy of Forms to recipients for you.

SAVE TIME AND MONEY: Go To eFile4Biz

Tax Treaties: United States And Greece

Tax Treaties: United States And Greece

Quick Summary. Greece (Ελλάδα, Hellada or Hellas)sits on the Mediterranean Sea in Southeastern Europe.   Officially the Hellenic Republic (Ελληνική Δημοκρατία, Elliniki Dimokratia), Greece’s government is a parliamentary republic.  Its structure is set forth in the Constitution of Greece, its fundamental charter, which was adopted by the Fifth Revisional Assembly in 1975 and last amended by the Greek Parliament in 2008.

In 2019, Greece implemented several amendments to its Income Tax Code, including a corporate income tax rate reduction, reduced dividend withholding tax rates, and a participation exemption for certain capital gains.  The amendments also reduced bracketed rates for individuals and certain exemptions for non-residents from income, inheritance, and gift taxes.
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250 Motivational Quotes To Inspire You In 2021

250 Inspirational Quotes For 2021

We have compiled a complimentary eBook of more than 250 Motivational Quotes from famous people for you to read each day. View them for yourself or distribute them daily to your team members. Great thoughts create great results.

“Be kind whenever possible.It is always possible.” ~ Dalai Lama

“Victory belongs to the most persevering.” ~ Albert Einstein, Theoretical Physicist

“Believe you can and you are halfway there.” ~ Theodore Roosevelt, 26th U.S. President

“Strength does not come from physical capacity. It comes from indomitable will.” ~ Mahatma Gandhi

“An investment in knowledge pays the best interest.” ~ Benjamin Franklin, Inventor, Author, Politician

REQUEST 250 MOTIVATIONAL QUOTES AND INSPIRATIONS eBOOK

State And Local Tax: Entity Formation For Certain Texas Activity

State And Local Tax: Entity Formation For Certain Texas Activity

My colleague, Matthew Roberts, recently posted an article regarding choice-of-entity, “Starting a Business in Texas:  Choice of Entity.”   The article provided a summary of the tax and non-tax implications of each potential entity type.

We will discuss “passive entities” under Texas law.  Please note the definition of a passive entity under Texas law is not the same as the definition under the Internal Revenue Code.   Depending on the business being conducted in Texas, a certain type of entity may be more beneficial to reduce or eliminate your  Texas Margin Tax (the “Margin Tax”).

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Businesses Have Feb. 1 Deadline To Provide Forms 1099-MISC And 1099-NEC To Recipients

Forms 1099-MISC and 1099-NEC

The Internal Revenue Service reminds businesses and other payors that the revised Form 1099-MISC, Miscellaneous Income PDF, and the new Form 1099-NEC, Nonemployee Compensation PDF, must be furnished to most recipients by February 1, 2021.

Redesigned Form 1099-MISC

The IRS revised Form 1099-MISC for the 2020 tax year to accommodate the creation of a new Form 1099-NEC. The redesigned 1099-MISC has different box numbers for reporting certain income. Businesses must send Form 1099-MISC to recipients by February 1, 2021, and file it with the IRS by March 1 (March 31 if filing electronically).

If businesses are using Forms 1099-MISC to report amounts in box 8, Substitute Payments in Lieu of Dividends or Interest, or box 10, Gross Proceeds Paid to An Attorney, there is an exception to the normal due date. Those forms are due to recipients by February 16, 2021.

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National Taxpayer Advocate Annual Report To Congress

National Taxpayer Advocate Annual Report To Congress
National Taxpayer Advocate delivers Annual Report to Congress; focuses on taxpayer impact of COVID-19 and IRS funding needs

National Taxpayer Advocate Erin M. Collins released her 2020 Annual Report to Congress, focusing on the unprecedented challenges taxpayers faced in filing their tax returns and receiving refunds and stimulus payments during a year consumed by the COVID-19 pandemic. The report also finds that a roughly 20% inflation-adjusted reduction in the IRS’s budget since fiscal year (FY) 2010 has left the agency with antiquated technology and inadequate staffing levels to meet taxpayers’ needs.

As part of the report, Collins released the fourth edition of the National Taxpayer Advocate’s “Purple Book,” a compilation of 66 legislative recommendations designed to strengthen taxpayer rights and improve tax administration.

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Learn How TaxConnections Members Are Increasing Revenue For Tax Colleagues In Small, Medium, Large Tax Practices

TaxConnections Referral Network

Over the years, we have observed tax professionals helping tax professionals in other firms. We encourage our members to partner and network with each other to add new services to their practices. TaxConnections network effect is of great value to small and medium sized practices who want to add specialty expertise to their practices.

The purpose of this post is to lead you to experts who will work with you when you refer new business to them. You maintain 100% control over your clients! We encourage all tax professionals who want to add specialty expertise to their practices to reach out to these TaxConnections Members:

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On-Line Retailers And Remote Sellers: Sales And Use Taxes

On-Line Retailers And Remote Sellers: Sales And Use Taxes

The Supreme Court of the United States’ decision in Wayfair, in June 2018, changed the landscape for sales and use taxes nexus for on-line retailers and remote sellers.  Due to budgetary deficits the states are facing due to the downturn in the economy and the Covid-19 Pandemic, states will increase audit activity to raise money.  Companies must be prepared and be proactive in order to avoid or reduce any state tax assessments.

The Wayfair decision lowered the bar in which a company has nexus with a state.   Prior to Wayfair, a company needed a physical presence in the state to be required to collect and remit sales and use taxes.  After Wayfair, states now require an economic presence, generally based on a threshold of sales into the state to create nexus with the state.  Please note, even if a company does not meet the economic thresholds for sales or transactions, as the case may be, but has a physical presence in the state, then the company has nexus with the state because of the physical presence and must register for sales and use taxes in such state.

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