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Tag Archive for IRS Notice

IRS Willing To Consider Requests For Relief From Double Taxation Related To Repatriation

IRS On Repatriation and Double Taxation

The IRS announced that the agency has become aware of limited circumstances in which it may be appropriate to provide relief from double taxation resulting from application of the repatriation tax under section 965, as amended by the Tax Cuts and Jobs Act (TCJA).

The IRS has determined that in unique circumstances, such as where a corporation paid an unusual dividend for business reasons, not because of the enactment of TCJA, it may be appropriate to provide relief from double taxation. When the same earnings and profits of foreign corporations are taxed both as dividends and under section 965, double taxation could result.

The IRS is open to considering relief from such double taxation where there is no significant reduction in the resulting tax by application of foreign tax credits, such that the taxpayer would be required to pay more tax than it would have if the dividend had not been paid.

Taxpayers who have fact patterns that may fit these limited circumstances may raise them with the IRS by contacting the Office of Associate Chief Counsel (International) at 202-317-3800.

 

Important Things To Know About IRS Tax Refunds

IRS

As tax filing season approaches, the Internal Revenue Service cautions taxpayers not to rely on receiving their refund by a certain date, especially when making major purchases or paying bills. Some tax returns may require additional review and those refunds may take longer.

Many Factors Affect Refund Timing

Just as each tax return is unique and individual, so is each taxpayer’s refund. Here are a few things taxpayers should keep in mind if they are waiting on their refund but hear or see on social media that other taxpayers have already received theirs.

Different factors can affect the timing of a refund. The IRS, along with its partners in the tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud.

Even though the IRS issues most refunds in less than 21 days, it’s possible a particular taxpayer’s refund may take longer. Some tax returns require additional review and take longer to process than others. It may be necessary when a return has errors, is incomplete or is affected by identity theft or fraud. The IRS will contact taxpayers by mail when more information is needed to process a return.

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Treasury, IRS Issue Final Regulations On The Foreign Tax Credit

IRS - Treasury, IRS Issue Final Regulations On The Foreign Tax Credit

The Internal Revenue Service issued final regulations on the Foreign Tax Credit, a long-standing tax benefit that generally allows individuals and businesses to claim a credit for income taxes paid or accrued to foreign governments.

The Tax Cuts and Jobs Act (TCJA) made major changes to the tax law, including revamping the U.S. international tax system. Specifically, several Foreign Tax Credit provisions were changed, including repeal of section 902, which allowed deemed-paid credits in connection with dividend distributions based on foreign subsidiaries’ cumulative pools of earnings and foreign taxes. TCJA also added two separate limitation categories for foreign branch income and amounts includible under the Global Intangible Low-Taxed Income (GILTI) provisions.

Additionally, the TCJA changed how taxable income is calculated for purposes of the Foreign Tax Credit limitation by disregarding certain expenses and repealing the use of the fair market value method for allocating interest expense.

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IRS Selects Nine New Members For The Electronic Tax Administration Advisory Committee

IRS Notice

The Internal Revenue Service has selected nine new members for the Electronic Tax Administration Advisory Committee (ETAAC).

Established in 1998, the ETAAC is a public forum for the discussion of issues in electronic tax administration. Its aim is to prevent identity theft and refund fraud in support of paperless filing of tax and information returns. ETAAC members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and the nation’s tax industry to fight identity theft and refund fraud.

Committee members include state tax officials, consumer advocates, cybersecurity and information security specialists, tax preparers, tax software developers and representatives of the payroll and financial communities.

The following individuals have been appointed to serve three-year terms on the committee beginning in September 2019:

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IRS Interest Rates On Overpayment And Underpayment

IRS Notice

The Internal Revenue Service announced that interest rates will remain the same for the calendar quarter beginning October 1, 2019, as they were in the prior quarter.

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.

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How To Spot Signs Of Tax Client Data Theft

IRS _ How To Spot Client Data Theft

The Internal Revenue Service and its Security Summit partners  urged tax professionals to learn the tell-tale signs that their office may have experienced a data theft that resulted in fraudulent tax returns being filed in their clients’ names.

The IRS, state tax agencies and the private-sector tax industry, working together as the Security Summit, warned practitioners that global criminal syndicates remain active, and they are well financed, high skilled and tax savvy in their attempts to gain sensitive tax data.

The reminder came as the IRS and the Summit partners encouraged tax professionals to take time this summer to review their data security protection. To help the tax community, the Summit partners offered a new “Taxes-Security-Together” Checklist as a starting point.

“Learning the signs of identity theft is critical for anyone handling taxpayer data,” said IRS Commissioner Chuck Rettig. “It can be as subtle as an unusually slow computer system or as obvious as multiple clients unexpectedly receiving the same IRS notice. Paying attention to these details is critical, and fast action alerting the IRS and calling in a security expert can help protect taxpayers and your business.”

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New Rules And Limitations For Depreciation And Expensing Under The Tax Cuts And Jobs Act

IRS Rules And Limitations For Expensing
Businesses Can Expense More Under The New Law

A taxpayer may elect to expense the cost of any section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. For taxable years beginning after 2018, these amounts of $1 million and $2.5 million will be adjusted for inflation.

The new law also expands the definition of section 179 property to allow the taxpayer to elect to include the following improvements made to nonresidential real property after the date when the property was first placed in service:

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LB&I Announces Large Corporate Compliance Program

IRS Announcement On Large Business

The Internal Revenue Service announced a key advancement in how it identifies its biggest and most complex large corporations.
On May 15, the IRS’s Large Business and International Division (LB&I) began a new application of data analytics for determining the population of its largest and most complex corporate taxpayers. This new Large Corporate Compliance (LCC) program replaces the Coordinated Industry Case (CIC) program and covers compliance oversight for LB&I’s largest corporate taxpayers. LCC is one of LB&I’s portfolio of compliance programs.

LCC employs automatic application of the large case pointing criteria to determine the LCC population. For example, pointing criteria include such items as gross assets and gross receipts. In the past, this was done on a manual, localized basis. Automated pointing allows a more objective determination of the taxpayers that should be part of the population.

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Understanding Your IRS Notice Or Letter

IRS Notices

Your IRS notice or letter will explain the reason for the contact and give you instructions on how to handle the issue.

If you agree with the information, there is no need to contact us.

Enter your notice or letter number above to get more information on IRS notices and letters, along with answers to many notice-related questions. If your notice or letter doesn’t return a result using the Notices & Letters Search on this page, contact us at the toll-free number 800-829-1040.

Why Was I Notified By The IRS?

The IRS sends notices and letters for the following reasons:

  • You have a balance due.
  • You are due a larger or smaller refund.
  • We have a question about your tax return.
  • We need to verify your identity.
  • We need additional information.
  • We changed your return.
  • We need to notify you of delays in processing your return.

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Get Ready For Taxes: Tax Reform Changes Likely To Reduce Number Of Taxpayers Who Itemize

IRS - Itemized Deductions

The Internal Revenue Service advised taxpayers that the doubling of the standard deduction due to tax law changes is likely to reduce the number of taxpayers who normally itemize.

This is the sixth in a series of reminders to help taxpayers Get Ready for the upcoming tax filing season. The IRS has recently updated  its Get Ready page with steps to take now for the 2019 tax filing season.

In previous years, about one out of three taxpayers itemized. The IRS expects that number to be less for tax year 2018. The Tax Cuts and Jobs Act (TCJA) passed in December 2017, significantly affects deductions in several ways, impacting those taxpayers who normally itemize.

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How To Turn IRS Notices Into A Marketing Opportunity

Well, last week Nina Olson, who’s the National Taxpayer Advocate at IRS, came out and stated that the real audit rate in the United States is 6.2%, not 7/10 of 1%. Just to put that in perspective, 7/10 of 1% equates to just over a million audits, and 6.2% equates to nearly 7 million audits. So who’s right? Who’s wrong?

How do you turn that into a marketing opportunity? Here is what the IRS is doing. Their headcount has been decimated over the last 3 or 4 years. It’s down by 23%. So more and more, the IRS is relying on technology, and their computers are generating automatic notices. 70% of the time they’re incorrect. Read more

Get Ready To File Taxes

With the tax filing season right around the corner, the IRS encourages taxpayers to visit IRS.gov for tax tools and resources. Taxpayers can resolve nearly every tax issue on the IRS website.

IRS.gov provides many self-service tools and features, including these six: Read more