Internal Revenue Service | TaxConnections

31 Aug 2021

How To Find Out If You Owe An IRS Tax Penalty

Taxpayers who don’t meet their tax obligations may owe a penalty.

The IRS charges a penalty for various reasons, including if you don’t:

File your tax return on time
Pay any tax you owe on time and in the right way
Prepare an accurate return
Provide accurate information returns

We may charge interest on a penalty if you don’t pay it in full. We charge some penalties every month until you pay the full amount you owe.

Understand the different types of penalties, what you need to do if you get a penalty and how to avoid getting one.

Written by TaxConnections Admin | Posted in Internal Revenue Service • Tax Penalties • TaxConnections

07 May 2020

IRS Retools Settlement Days Program To Allows Unrepresented Taxpayers To Settle Their Cases Virtually

The Internal Revenue Service Office of Chief Counsel today announced the Settlement Days program will continue remotely enabling unrepresented taxpayers to work towards resolving their pending United States Tax Court case despite “stay-at-home” orders in many jurisdictions. The first two events are for docketed cases with place of trial in Detroit or Atlanta. Future events may be scheduled in other cities throughout the United States.

Virtual Settlement Days is a coordinated effort to resolve Tax Court cases by giving taxpayers not represented by counsel the opportunity to receive free tax advice and possible representation from Low Income Taxpayer Clinics (LITCs) or other pro bono organizations. Taxpayers can discuss their Tax Court case and federal tax issues with members of the IRS Office of Chief Counsel, Appeals and Collections.

The program is geared to help unrepresented taxpayers receive free assistance in discussing a potential fair settlement of their tax disputes in an informal setting without the need for further litigation or a trial in Tax Court. The vast majority of taxpayers participating in previous Settlement Days programs have resolved their cases; most of those who ended up with a liability have been able to enter into an installment payment arrangement.

The Tax Court canceled scheduled trial sessions in a series of Orders issued on March 11, 13 and 23, 2020. The Tax Court Orders state that it is expected that parties will continue to work together to exchange information and address pending issues. The Settlement Days events accomplish the Tax Court’s goals by allowing the parties to work towards settling case on a remote basis.
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Written by IRS | Posted in Internal Revenue Service • Settlement Program

23 Jan 2020

National Taxpayer Advocate Reports Most Serious Problems At The Internal Revenue Service

Most Serious Problems At IRS

Section 7803 (c)(2)(B)(ii) of the Internal Revenue Code, as amended by the Taxpayer First Act (TFA), requires the National Taxpayer Advocate to submit this report each year and to include in it, among other things, a description of the ten most serious problems encountered by taxpayers as well as administrative and legislative recommendations to mitigate those problems. Previously, the report was required to contain a description of at least 20 of the most serious problems facing taxpayers. This year’s report, per the TFA, includes the 10 Most Serious Problems. These issues can affect taxpayers’ basic rights and the ways they pay taxes or receive refunds, even if they’re not involved in a dispute with the IRS.

As your voice at the IRS, the National Taxpayer Advocate uses the Annual Report to elevate these problems and recommend solutions to Congress and the highest levels of the IRS.

Written by National Taxpayer Advocate | Posted in National Taxpayer Advocate

19 Dec 2019

Foreign Account Tax Compliance Act (FATCA) Intergovernmental Agreements

FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. FFIs are encouraged to either directly register with the IRS to comply with the FATCA regulations (and FFI agreement, if applicable) or comply with the FATCA Intergovernmental Agreements (IGA) treated as in effect in their jurisdictions.

For access to the FATCA regulations and administrative guidance related to FATCA and to learn about taxpayer obligations please visit the Internal Revenue Service FATCA Page.

In order to see the list of countries who have “in force” agreements with the United States IRS, you can view the list here.

Written by IRS | Posted in FATCA Intergovernmental Agreements • IRS

01 Nov 2019

Foreign Trusts: IRS Continues To Issue Bogus Form 3520-A Penalty Notices – My Letter To The IRS

When I was a kid we lived across the street from the Wolfermans. The Wolfermans got a dog. One day I was in my yard, and their dog was barking. Mr. Wolferman came out, clapped his hands and called the dog. The dog joyfully bounded to Mr. Wolferman. Mr. Wolferman then proceeded to spank the dog, apparently for barking. I remember thinking what a fool Mr. Wolferman was for doing that – the dog would never come to him again when called.

A couple of weeks ago I described the traumatic experience of a client who had received a $10,000 penalty notice from the IRS for a completely invalid purpose. As the owner of a foreign trust, my client had done all she could have done to comply with the filing requirements of a foreign trust owner. She was compliant, yet was slapped with a $10,000 penalty. See Foreign Trusts: IRS Penalty Notices For Late Forms 3520-A Traumatize Many Innocent Taxpayers!

Since then, I have learned firsthand of dozens of similar notices, and I suspect there have been thousands issued for the same invalid purpose. Then, this week, another client contacted me about receiving the exact notice under the exact circumstances.

Below is the letter I wrote to the IRS on behalf of the client who received the latest notice. The recipients of these notices represent foreign trust owners who are doing their best to obey the law (the Wolfermans’ dog) only to be punished by a formidable but misguided tax collection agency (Mr. Wolferman). Would one blame the dog for wandering off to find someone kinder and wiser to pledge allegiance to (as in expatriation)?

Written by Gary Carter | Posted in Foreign Asset Reporting • Foreign Trusts • Form 3520/3520-A • IRS International Compliance • IRS Penalty

02 Oct 2019

IRS Grants Relief For U.S. Persons Who Own Stock In Certain Foreign Corporations

The Department of the Treasury and the Internal Revenue Service issued Revenue Procedure 2019-40 and proposed regulations that provides relief to certain U.S. persons that own stock in certain foreign corporations.

The Revenue Procedure limits the inquiries required by U.S. persons to determine whether certain foreign corporations are controlled foreign corporations (“CFCs”). The Revenue Procedure also allows certain unrelated minority U.S. shareholders to rely on specified financial statement information to calculate their subpart F and GILTI inclusions and satisfy reporting requirements with respect to certain CFCs if more detailed tax information is not available. It also provides penalty relief to taxpayers in the specified circumstances.

Written by IRS | Posted in Stock In Foreign Corporations

26 Sep 2019

Does Your Home Sale Qualify For The Exclusion of Gain?

The tax code recognizes the importance of home ownership by allowing you to exclude gain when you sell your main home. To qualify for the maximum exclusion of gain ($250,000 or $500,000 if married filing jointly) you must meet the Eligibility Test , explained later. To qualify for a partial exclusion of gain, meaning an exclusion of gain less than the full amount, you must meet one of the situations listed in Does Your Home Qualify for a Partial Exclusion of Gain? , later.

Before considering the Eligibility Test or whether your home qualifies for a partial exclusion, you should consider some preliminary items.

Transfer of your home to a spouse or an ex-spouse.

Generally, if you transferred your home (or share of a jointly owned home) to a spouse or ex-spouse as part of a divorce settlement, you are considered to have no gain or loss. You have nothing to report from the transfer and this entire publication doesn’t apply to you. However, there is one exception to this rule. If your spouse or ex-spouse is a nonresident alien, then you likely will have a gain or loss from the transfer and the tests in this publication apply.

Written by IRS | Posted in Exclusion Of Gain • Internal Revenue Service Strategic Plan FY 2018-2022 • Sale Of Home

19 Sep 2019

Learn Workers Classification Rules For Federal Tax Purposes

Significant tax consequences result from the classification of a worker as an employee or independent contractor. These consequences relate to withholding and employment tax
requirements, as well as the ability to exclude certain types of compensation from income or take tax deductions for certain expenses. Some consequences favor employee status, while others
favor independent contractor status. For example, an employee may exclude from gross income employer-provided benefits such as pension, health, and group-term life insurance benefits. On
the other hand, an independent contractor can establish his or her own pension plan and deduct contributions to the plan. An independent contractor also has greater ability to deduct work related expenses.

Under present law, the determination of whether a worker is an employee or an independent contractor is generally made under a facts and circumstances test that seeks to determine whether the worker is subject to the control of the service recipient, not only as to the nature of the work performed, but the circumstances under which it is performed. Under a special safe harbor rule (sec. 530 of the Revenue Act of 1978), a service recipient may treat a worker as an independent contractor for employment tax purposes even though the worker is in fact an employee if the service recipient has a reasonable basis for treating the worker as an independent contractor and certain other requirements are met. In some cases, the treatment of a worker as an employee or independent contractor is specified by statute.

Written by IRS | Posted in Workers Classification Rules

06 Sep 2019

U.S. Citizenship And Immigration Services To Close All But Seven Of Its Overseas Offices

The U.S. Citizenship and Immigration Services has announced that it plans to close all but seven of its 23 overseas offices, including those in London, Frankfurt, Rome and Bangkok.

This represents a change from its earlier plan, announced in March, that it would close all 23 of the outposts.

In a statement, the USCIS said the “organizational changes” would “allow more effective allocation of USCIS resources to support, in part, backlog reduction efforts.”

It said the offices it plans to keep open would be those in Beijing and Guangzhou, China; Nairobi, Kenya; New Delhi, India; Guatemala City, Guatamala; Mexico City, Mexico; and San Salvador, El Salvador.

“The first planned closures are the field offices in Monterrey, Mexico, and Seoul, South Korea, at the end of September,” the USCIS statement said.

Written by Helen Burggraf | Posted in FATCA • Internal Revenue Service

05 Sep 2019

A Reprieve From Revocation Of Passport When You Owe Taxes!

I have been fortunate the past couple of years to have been able to travel. I find that as I check off places on my bucket list, I keep adding on to it! I have been bitten by the travel bug! We recently went to Munich, Germany and climbed 14 stories to the top of The Kirche of St. Peter. The climb through the narrow stairway was somewhat crowded and tight at times but it was absolutely worth it! The views at the top were breath-taking.

Of course when you travel, you need your passport. What happens when you owe taxes to the Government, can they revoke your passport? If you remember, back in 2015, there was a Law passed called the FAST Act. The Act was mostly about transportation but they got in a clause that if you owed more than $50,000 in taxes, the Government could revoke your existing passport or deny you a new passport.

Under Section 32101 of the FAST Act, if the IRS certifies a taxpayer as having a ‘seriously delinquent tax debt”, which is: (1) Owing $52,000 or more in taxes and (2) Meeting certain other requirements under IRC §7345(b), the State Department must deny the taxpayer’s original or renewal passport application and may revoke or limit an existing passport.

Written by Manasa Nadig | Posted in Internal Revenue Service • Revocation Of Passport

16 Jul 2019

IRS Formally Announces It Will No Longer Challenge Foreign Tax Credits On Two French Social Services Contributions

The U.S. Internal Revenue Service said on Wednesday that it “will not challenge” the claiming of foreign tax credits against certain controversial payments that potentially thousands of American expatriates resident in France have been paying for years, and noted that taxpayers who wish to file a claim for refund of U.S. tax with respect to a foreign tax credit have 10 years after the “due date for filing the return” in question in which to do so.

The IRS statment, which was only two paragraphs long, came less than two weeks after the tax authority admitted in a U.S. Tax Court that it had wrongly collected millions of dollars of tax from France-resident American citizens in connection with their payment of the French “Contribution Sociale Generalisee” (CSG) and “Contribution au Remboursement de la Dette Sociate” (CRDS) taxes.

As reported, that statement was seen as capping a years-long legal saga, and was expected to potentially launch millions of dollars worth of tax refund claims by U.S. expats who have lived in, and been filing tax returns from, France.

Written by Helen Burggraf | Posted in IRS • TaxConnections

27 Jun 2019

List Of Designated Qualified Opportunity Zones Under Internal Revenue Code § 1400Z-2

This IRS notice lists the population census tracts the Secretary of the Treasury (Secretary) designates as qualified opportunity zones (Zones).

BACKGROUND

Section 13823 of “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for the fiscal year 2018,” P.L. 115-97, which was enacted December 22, 2017, amended the Internal Revenue Code (Code) by adding §§ 1400Z-1 and 1400Z-2.

Section 1400Z–1(b)(1)(A) of the Code allows the Chief Executive Officer (CEO) of each State to nominate a limited number of population census tracts to be designated as Zones for purposes of §§ 1400Z-1 and 1400Z-2. Revenue Procedure 2018-16, 2018-9 I.R.B. 383, provided guidance to State CEOs on the procedure for making these nominations. Section 1400Z-1(b)(1)(B) of the Code provides that after the Secretary receives notice of the nominations, the Secretary may certify the nominations and designate the nominated tracts as Zones.

Written by IRS | Posted in Designated Opportunity Zones