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Tag Archive for IRC

Renouncing/Relinquishing Your U.S. Citizenship And Taxes

Citizenship, Expatriate taxes

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

A Digital “Mailbox Rule” Is Required As The IRS Steers Taxpayers Toward Self-Help Digital Tools

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

Interest Rates Increase For The Second Quarter Of 2018

WASHINGTON – The Internal Revenue Service today announced that interest rates increased for the calendar quarter beginning April 1, 2018.  The rates will be:

  • five (5) percent for overpayments [four (4) percent in the case of a corporation];
  • two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000;
  • five (5) percent for underpayments; and
  • seven (7) percent for large corporate underpayments.

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

FBAR Reporting Requirement Or Exception – 4 Types Of Foreign Retirement Accounts

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

Tax Alert (USA) – US Tax Cuts & Jobs Act

On November 2, 2017, the US Congress House Ways and Means Committee unveiled the tax reform plan called the Tax Cuts & Jobs Act.  The bill aims to simplify the Internal Revenue Code and introduce tax savings for the average American family.  Although it is unlikely that the legislation will make it through Congress unscathed, it does provide a more detailed blueprint of the tax reforms that the citizens would like to enact.  Below are highlights of the proposed changes. Read more

Tax Reform Impacts The Research Tax Credit, Domestic Production Activities Deduction & Orphan Drug Credit

Lower Corporate Tax Rate
The law cuts the corporate tax rate from 35% to 21%. In effect, this cut increases the Research Credit’s net benefit by more than 21%, from its previous amount of 65% to the law’s 79%.

The 21% increase in the credit’s net value is due to IRC Section 280C(c). Read more

Taxing Capital Gains Of Nonresident Aliens Residing In The US- The 183- Day Rule

Ephraim Moss, Tax Connections

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 studentsforeign 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

Private Debt Collection: Recent Debts (Part 3 of 3)

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).

Read more

Why Is The U.S. Imposing Full Taxation On Canadians?

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

Gluten-Free Federal Tax Deduction

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.

Read more

Are Legal Expenses Tax Deductible?

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

Crimes Under The IRC — Part 2 of 2 – Crimes of Commission: Tax Perjury, Aiding Another and Hiding Assets

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

Penalties are stiff

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

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