We received a question from Denise from Canada.
The question is: “I’ve heard a lot of words to describe people who were no longer U.S. citizens – “surrendered”, “relinquished”, “renounced” U.S. citizenship. What is the difference between these three terms?” Read More
As the IRS steers taxpayers toward self-help digital tools, it is necessary to bring the “statutory mailbox rule” into the 21st century. Currently, the statutory mailbox rule in IRC § 7502 does not apply to the electronic transmission of many time-sensitive documents and payments to the IRS. The rule provides that if the requirements set forth in the statute are met, a document or payment is deemed to be filed or paid on the date of the postmark stamped on the envelope.
If the postmark date is on or before the last day of the period prescribed for filing the document or making the payment, the document or payment is considered timely filed or paid even if it is received after the due date. Further, IRC § 7502(c) provides that registered or certified mail, or methods deemed substantially equivalent by the Secretary of Treasury, is prima facie evidence of delivery. Read More
WASHINGTON – The Internal Revenue Service today announced that interest rates increased for the calendar quarter beginning April 1, 2018. The rates will be:
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Read More
Foreign retirement accounts do not meet the FBAR filing exception for U.S. retirement accounts in 31 CFR 1010.350(g)(4). That exception specifically applies to plans under sections of the Internal Revenue Code, that is, domestic U.S. plans.
FBAR reporting of foreign retirement accounts will be determined by the facts of each situation. However, these general guidelines may be helpful in determining whether your foreign retirement account should be reported on the FBAR. Read More
For a unique group of foreign individuals (i.e., non-US citizens referred to in the tax world as “aliens”), living in the U.S. does not trigger “resident” status for tax purposes. These so-called “exempt” individuals include foreign students, foreign scholars, and alien employees of foreign governments and of international organizations in the United States. U.S. tax law considers this lucky bunch to be exempt from counting days of presence in the United States for the purposes of determining whether they are resident aliens of the United States. Read More
In an earlier blog I discussed my concern about how the IRS’s private debt collection (PDC) program affects taxpayers who are likely experiencing economic hardship. In this blog, I want to share my concern that the IRS is not making good business decisions as it implements the PDC initiative.
Since 2004, Internal Revenue Code (IRC) § 6306 has authorized the IRS to outsource tax debts to private collection agencies (PCAs).
Why is the United States imposing full U.S. taxation on the Canadian incomes of Canadian citizens living in Canada?
The Internal Revenue Code mandates that ALL “individuals”, EXCEPT “non-resident aliens”, are subject to full taxation, on their WORLDWIDE income, under the Internal Revenue Code. The word “individuals” includes U.S. citizens regardless of where they live and regardless of whether they are citizens and residents of other countries where they also pay tax. This means that, by its plain terms, the United States imposes full taxation on the citizens and residents of other nations, because they are also (according to U.S. definitions) U.S. citizens. The United States is the only country in the world that has a definition of “tax residency that mandates full taxation based ONLY on citizenship. Read More
To be eligible to deduct the excess costs of a gluten-free diet under Internal Revenue Code Section 213, you must have a documented reason to require the observance of a gluten-free diet, along with a physician’s prescription to follow a gluten-free diet. This should provide sufficient documentation of eligibility.
A frequent question that arises is whether legal expenses are deductible. The answer to that question can be both yes and no and can be complicated depending upon the nature of the legal expense.
The Internal Revenue Code (IRC), which is the body of tax laws written by the United States (U.S.) Congress and approved by the president in office at the time the law is created, tells us that except as otherwise expressly provided, such as itemized deductions, no deduction shall be allowed for personal, living, or family expenses. The IRC also says that, in the case of an individual, deductions are allowed for all of the ordinary and necessary expenses paid or incurred during the taxable year:
• For the production or collection of taxable income; Read More
Knowingly filing a false tax return and aiding another to do so are violations of the IRC, Section 7206. Briefly summarized, those violations encompass:
• Tax perjury — knowingly signing a false tax return that is false
• Willfully aiding another person to commit tax fraud
• Hiding assets with the intent to evade or defeat the assessment of taxes or in connection with a tax settlement or compromise offer
The law says that anyone convicted of the foregoing is guilty of a felony. An individual can face a fine of $250,000 ($500,000 in the case of a corporation or go to prison for not more Read More
Underpinning the vast power of the IRS to collect our tax money is the Internal Revenue Code (26 U.S.C), hereafter referred to as the IRC. Subtitle F, Chapter 75, Subchapter A, of the IRC lists the crimes and punishments for anyone convicted of violating our tax law.
The most common violations of the IRC are crimes of omission. The following is a brief discussion of Section 7203, Failure to File, Supply Information or Pay Tax.
Generally, there are four separate offenses described here:
1. Failure to pay the tax — The person is required by law to pay a tax at a time required by law and willfully failed to pay the tax. Willfulness simply means an intentional, voluntary violation of a known legal duty. Read More
Let’s do a quick review of the levels of authoritative research sources for the IRS. We are always being told that IRS pubs are not binding or authoritative in scope by the IRS so when we do research we need to dig deeper. The pubs are handy for helping the layman understand the process and they have some pretty good examples and formula computations. But you always need the underlying internal Revenue Code (IRC) for the pub. The IRC is the Holy Bible for the IRS. It gives them their cans and cant’s. It gives them their authority and also limits that authority. It is from whence all things income tax flows. If the IRC is the Bible then the Internal Revenue Manual (IRM) is the how-to manual.
The authority on this subject, and the person who I strive to emulate, is Peter J. Scalise. His article, Tax Research Techniques, used with his permission, is the basis for the rest of this post.
• Step 1: Establish the facts and circumstances (Joe Friday Style: Just the facts, Ma’am!)
• Step 2: Determine all tax issues (even if the IRS hasn’t brought them up yet)
• Step 3: Identify the specific authorities involved: (who are YOU dealing with?)
Statutory Authority – The Internal Revenue Code (IRC)
Administrative Authority Read More
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