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Why We Should Repeal The Flora Rule Or Find Another Way To Give Taxpayers Who Cannot Pay The Same Access To Judicial Review As Those Who Can (Part 2 of 3)

Nina Olson- Judicial Review Part 2

In the previous blog post, I discussed how the Flora rule harms low income taxpayers who were not part of the tax system when it was established and sometimes eliminates judicial review for those subject to “assessable penalties,” most of which also did not exist at the time. This week, I discuss the policy justification for the Flora rule, why it has faded, and why the theoretical ability to petition other courts does not provide real access to judicial review for some taxpayers.

The Justification For The Flora Rule Has Faded

As we discussed last week, in 1958 in Flora I and again in 1960 in Flora II, the U.S. Supreme Court held that taxpayers must have “fully paid” an assessment before filing suit in U.S. district court or the U.S. Court of Federal Claims. In Flora I the Court said a policy basis for the full payment rule was to protect the “public purse” and cited dicta in earlier decisions, such as Cheatham, which was decided in 1875. This dictum said the rule was needed to protect the very “existence of government” from a “hostile judiciary.” Although the Flora decisions did not repeat the “existence of government” rationale, it relied heavily on Cheatham. Cheatham is cited seven times in Flora I and 20 times in Flora II.

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Real Estate Investments For Retirement

Kazim Qasim - Real Estate Investments For Retirement

Two of the biggest concerns of those who are investing for retirement are not running out of money and maintaining regular cash flow. It can be difficult to switch from a bi-weekly paycheck to carefully timed withdrawals from a retirement account.  Market fluctuations cause balances to rise and fall, leaving an investor with less in their account than they’d planned.

These are the reasons that some investors consider real estate investments for retirement. A multi-family property yields regular, monthly income similar to a paycheck. Home values typically don’t fluctuate wildly and over time show appreciation. But what are the deeper implications of real estate investing for retirement?

Pros of Real Estate Investing for Retirement

Five thousand dollars in rent, deposited into your bank account every month, can easily take a salary’s place. One of the biggest pluses to real estate investing for retirement is passive income. Tenants pay monthly rents and you can use that income to fund your retirement.

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What You Need To Know About State Tax Issues Before M&A Negotiations

Monika Miles - M&A

Is your company facing a merger or acquisition? Is state tax part of the negotiations? It needs to be! Whether you’re the company buying or selling, state tax issues often arise during the process – even more so now that so many states have enacted economic nexus laws. How should you plan ahead? It begins with due diligence!

Discovering State Tax Issues During Due Diligence

It’s not uncommon for state tax issues to be uncovered during the due diligence phase of an M&A deal as both companies look at ramifications of additional states coming into play.

Often, when a major buyer is looking into a target company, its CPA firm has already addressed it, whereas the seller company (which is usually smaller) generally hasn’t dealt with the ramifications of selling their products across state lines because they often have little or no representation. We work with many companies on the selling side of M&A deals, and help dispute or reduce the estimates the acquiring company’s CPA firm provides.

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Is The IRS Pursuing A Criminal Charge Against You?

Venar Ayar - IRS Criminal Charges

The percentage of criminal charges filed against taxpayers in the United States in 2019 is generally lower than it has been in the previous years. The chances of undergoing a criminal investigation by the IRS are therefore minimal. However, you might still find yourself part of that small percentage with no idea how to address their tax issues and avoid a prison sentence. Tax issues are very complex and mistakes are bound to happen.

How Does The IRS Recognize Tax Fraud?

The IRS has become more understanding and lenient when it comes to errors in calculations and other honest mistakes, for instance, miscalculating the amount of Earned Income Tax Credit. This is a painful mistake with its consequences but it is not likely to trigger a criminal investigation.  Purposely concealing records such as a bank account from an auditor, on the other hand, is a sure way to call for probe into your situation. What scenarios then, may lead to a criminal investigation by the IRS?

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Offshore Voluntary Disclosure Program (OVDP) Update

Manasa Nadig - OVPD

It has been exactly a year to the day Part I of this post went up. The Internal Revenue Service decided to put an end to the Offshore Voluntary Disclosure Program (OVDP) on September 28th, 2018. That was just a precursor of the tumultuous changes to come at the Internal Revenue Service.

In November of 2018, the IRS released a Memorandum with updated procedures regarding voluntary disclosure both domestic and foreign submitted to them after September 28th, 2019. Notwithstanding the closure date, the IRS has the discretion to apply the new procedures to domestic voluntary disclosures received on or before September 28th, 2018.

Procedures Under The New OVDP

1.   All taxpayers, whether offshore or domestic need to submit a preclearance request on Form 14457 for screening to Criminal Investigation {CI} to determine eligibility. This can be requested via Fax or Mail to the IRS Criminal Investigation unit in Philadelphia.

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Taxpayers Should Include Tax Plans In Their Wedding Plans

Wedding And Taxes

Couples getting married this year know there are a lot of details in planning a wedding. Along with the cake and gift registry, their first tax return as a married couple should be on their checklist. The IRS has tips and tools to help newlyweds consider how marriage may affect their taxes.

Here are five simple steps that can make filing their first tax return as newlyweds less stressful.

Step 1: Taxpayers should check their withholding at the beginning of each year, or when their personal circumstances change — like after getting married. Using the IRS Withholding Calculator is a good way for taxpayers to check their withholding. Taxpayers who need to change their withholding should complete and submit a new Form W-4, Employee’s Withholding Allowance Certificate, to their employer.

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Tax Credit: Place Your Children In Day Camp While You Are Working This Summer

Charles Woodson- Tax Credit For Day Camp

Summer has just arrived, and there is a tax break that working parents should know about. Many working parents must arrange for care of their children under 13 years of age (or any age if disabled) during the school vacation period. A popular solution — with a tax benefit — is a day camp program. The cost of day camp can count as an expense toward the child and dependent care credit. But be careful; expenses for overnight camps do not qualify. Also, not eligible are expenses paid for summer school and tutoring programs.

For an expense to qualify for the credit, it must be an “employment-related” expense; i.e., it must enable you and your spouse, if married, to work, and it must be for the care of your child, stepchild, foster child, brother, sister or step-sibling (or a descendant of any of these) who is under 13, lives in your home for more than half the year and does not provide more than half of his or her own support for the year. Married couples must file jointly, and both spouses must work (or one spouse must be a full-time student or disabled) to claim the credit.

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Take A Look: Internal Revenue Service Data Book

IRS Data Report

The Internal Revenue Service (IRS) Data Book is published annually by the IRS and contains statistical tables and organizational information on a fiscal year basis. The report provides data on collecting the revenue, issuing refunds, enforcing the law, assisting the taxpayer, and the budget and workforce.

You can view selected summary graphs, key statistics, and descriptions of the tables and the IRS functions they cover. To download data tables on IRS and taxpayer statistics, visit the relevant section page listed on the left-side navigation column.

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Over 8500 Tax Incentive Zones Throughout The U.S. Allow Employers To Claim Percentage Of Credits For Wages

Blake Christian - Tax Credits And Incentives
Hiring Tax Credits

An abundance of Federal and California hiring tax credits can offset your tax liability on a dollar-for-dollar basis.

Is your business potentially missing out on significant tax refunds which can offer you enhanced cash flow and a competitive advantage? Numerous federal and state tax hiring tax credits and incentives can offset your tax liability on a dollar-for-dollar basis. Any missed credits for past years can be secured via amended returns for at least the past three years, and to the extent the credits cannot be used in the prior or current year, liberal carryover rules generally apply. Federal and California hiring tax credits are abundant and should never be overlooked by those who have the potential to take advantage of them.

The significance of hiring tax credits is especially true for businesses when hiring employees. There are over 8,500 tax incentive zones throughout the country which generally allow employers to claim credits for a percentage of wages paid to employees meeting certain criteria at the time of hire. Which hiring tax credit and other incentive programs you qualify for.

Hiring Tax Credits Available to You

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DAF – Donor Advised Funds Provide Tax Benefits

Charles Woodson 2

If you would like to make a substantial tax-deductible charitable donation this year, but have the ability to spread the actual distribution of funds to specific charities over a number of years, a donor-advised fund (DAF) may fill that need. There are any number of reasons individuals choose DAFs, including making a substantial charitable donation in an exceptionally high-income year, to overcome the standard deduction, or as part of their estate plan. Here are some details about DAFs that will help you decide if you can gain any benefit from a DAF.

What is a DAF? – A DAF is a separate fund (account) set up within a public charity (sponsoring organization) to which a donor contributes cash or non-liquid assets. The donor then advises the sponsoring organization on how to invest and ultimately distribute the funds from the account as charitable gifts over the course of many years.

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Why We Should Repeal The Flora Rule Or Find Another Way To Give Taxpayers Who Cannot Pay The Same Access To Judicial Review As Those Who Can (Part 1 of 3)

Nina Olson Flora Rule

Taxpayers have the right to appeal a decision of the IRS in an independent forum. Consistent with this right, in the 2018 Annual Report to Congress (ARC) I recommended legislation to provide all taxpayers with a realistic opportunity for judicial review of IRS determinations.

The so-called “Flora rule”—named after a Supreme Court case decided in 1960—limits access to judicial review by those who cannot “fully pay” what the IRS says they owe. In this blog, I explain how the rule is obsolete and harms low income taxpayers who were not part of the tax system in 1960. I also explain how the rule sometimes eliminates judicial review for those subject to “assessable penalties,” most of which did not exist in 1960.

What is the Flora rule?

In general, 28 U.S.C. § 1346(a)(1) authorizes a taxpayer to file suit in a U.S. district court or the U.S. Court of Federal Claims to recover “any … tax,” “any penalty,” or “any sum.”  The statute places no explicit limits on how much the taxpayer must have paid before filing suit. In 1958 in Flora I and again in 1960 in Flora II, however, the U.S. Supreme Court held that taxpayers must have “fully paid” an assessment (called the “Flora” or “full payment” rule) before doing so.
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A Tax Calendar: The Smartest First Step In Organizing All Corporate, Partnership And Individual Tax Filings Worldwide

Tax Calendar 2

As many CFOs call me to conduct private, high level searches for their tax organizations’, I am sharing a secret with them. Every CFO and VP Tax is going through an update of tax and accounting software or they are thinking about it. Recently, I had the pleasure of reviewing a Tax Calendar that is a masterpiece of software development for any corporation or tax services firm tracking every imaginable tax filing date nationally and internationally. After thinking about what this software developer created and then speaking to numerous CFOs and VPs Tax about all the challenges in updating of their technology, I realized how smart it would be to use this Tax Calendar to organize everything first.

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