IRS | TaxConnections

14 Oct 2020

IRS Provides Guidance On Base Erosion And Anti-Abuse Tax

The Internal Revenue Service issued final regulations PDF providing additional guidance on the base erosion and anti-abuse tax (BEAT).

To limit profit-shifting, the Tax Cuts and Jobs Act (TCJA) added a new tax, the BEAT. The BEAT focuses on large U.S. corporations that make deductible payments to related foreign parties.

The final regulations provide detailed guidance regarding how to compute certain BEAT calculations for groups of related taxpayers. The final regulations also contain rules permitting taxpayers to waive deductions for purposes of the BEAT, and additional guidance regarding partnerships and anti-abuse rules.

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.

IR-2020-200

Written by IRS | Posted in IRS Notice

25 Sep 2020

IRS Finalizes Regulations For 100 Percent Bonus Depreciation

The Treasury Department and the Internal Revenue Service today released the last set of final regulations PDF implementing the 100% additional first year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed in service by the business.

The 100% additional first year depreciation deduction was created in 2017 by the Tax Cuts and Jobs Act and generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.

The deduction applies to qualifying property (including used property) acquired and placed in service after September 27, 2017. The final regulations provide clarifying guidance on the requirements that must be met for property to qualify for the deduction, including used property.

Written by IRS | Posted in Bonus Depreciation • IRS • IRS Notice

24 Sep 2020

IRS Reminds Taxpayers Of The Home Office Deduction Rules

During Small Business Week, September 22-24, the Internal Revenue Service wants individuals to consider taking the home office deduction if they qualify. The benefit may allow taxpayers working from home to deduct certain expenses on their tax return.

The home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy. However, the Tax Cuts and Jobs Act suspended the business use of home deduction from 2018 through 2025 for employees. Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home.

Qualifying For A Deduction

Written by IRS | Posted in Home Office Deduction • IRS Notice

12 Aug 2020

Penalties For Not Turning Trust Fund Taxes Over To The IRS

When you pay your employees, you are not paying them all of the money they earned. Instead, you are responsible for withholding part of their income for taxes. These can include income taxes and FICA (Social Security and Medicare).

Your employees trust that this money – referred to as trust fund taxes – goes to the treasury to pay their portion of taxes, and not to the company’s accounts.

But what happens if your business doesn’t submit this money to the treasury? Keeping this money can result in penalties from the IRS.

Learn what these penalties are and how you and your attorney can work the federal agency’s Special Agents to try to get the assessments reduced.

Key Insights We Will Discuss:
Possible penalties for not turning trust fund taxes over to the IRS.
Who are IRS Special Agents?
How a tax attorney can help you negotiate with Special Agents.
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Written by Venar Ayar | Posted in Trust Fund Taxes

07 Aug 2020

Here’s What Taxpayers Need To Know About The Home Office Deduction

The home office deduction allows qualifying taxpayers to deduct certain home expenses on their tax return. With more people working from home than ever before, some taxpayers may be wondering if they can claim a home office deduction when they file their 2020 tax return next year.

Here are some things to help taxpayers understand the home office deduction and whether they can claim it:

• Employees are not eligible to claim the home office deduction.
• The home office deduction Form 8829 is available to both homeowners and renters.
• There are certain expenses taxpayers can deduct. They include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.
• Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.
• The term “home” for purposes of this deduction:
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Written by IRS | Posted in Internal Revenue Service

24 Jul 2020

Know The IRS Collection Statue Expiration Date

Keith Jones:The IRS Collection Statue Expiration Date

IRS Collection Statue Expiration Date (CSED)
“It is a basic concept of law that once a statute of limitation has passed, no action barred by the statute may take place.”

–Procedurally Taxing

The IRS collections statute expiration date (CSED) is the date after which the IRS can no longer collect a tax debt.

When things are simple, the CSED is easily calculated as 10 years from the date of assessment.

This means that no matter how little the IRS has been able to collect on a tax debt assessed in April of 2007, they must cease collection on that debt in April of 2017.

However, when you’re working with the IRS, things are rarely as simple as you’d like. There are a handful of events that can result in extending the CSED date (sometimes called “tolling events”).
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Written by Keith Jones, CPA TheCPATaxProblemSolver | Posted in Collection Statue Expiration Date • IRS

23 Jul 2020

IRS Reminds Businesses Filing Cash Transactions

IRS reminds businesses filing cash transaction reports about e-file option; batch filing now available

The Internal Revenue Service reminds businesses required to file reports of large cash transactions that e-filing is a fast, easy and secure option for filing their reports. Now, businesses can batch file their reports, which is especially helpful to those required to file many forms.

Although businesses have the option of filing Form 8300, Report of Cash Payments Over $10,000, on paper, many have already found the free and secure e-filing system is a more convenient and cost-effective way to meet the reporting deadline. The form is due 15 days after a transaction and there’s no charge for the e-file option.

Although many cash transactions are legitimate, information reported on this form can help stop those who evade taxes, profit from the drug trade, engage in terrorist financing and conduct other criminal activities. The government can often trace money from these illegal activities through the payments reported on Form 8300 and other cash reporting forms.
Businesses that file Form 8300 electronically get free, automatic acknowledgment of receipt when they file. In addition, electronic filing is more accurate, reducing the need for follow-up correspondence with the IRS.
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Written by IRS | Posted in Cash Transactions • IRS

22 Jul 2020

Working Virtually: Protect Tax Data At Home And At Work

With cyberthieves active during COVID-19, the Internal Revenue Service and the Security Summit partners today urged tax professionals to review critical security steps to ensure they are fully protecting client data whether working in the office or a remote location.

Many tax professionals have expanded telework options this year as firms, like other businesses, work to keep personnel safe, practice recommended safety guidelines and use technology to virtually serve their clients.

During this period, the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) have urged organizations to maintain a heightened state of alert as cybercriminals seek to exploit Covid-19 concerns.

To assist tax professionals with the security basics, the IRS, state tax agencies and nation’s tax industry are launching a five-part series called Working Virtually: Protecting Tax Data at Home and at Work. The special series is designed to help practitioners assess their home and office data security. The first recommendation today covers the “Security Six” – basic steps that should be taken for every work location. The series will continue each Tuesday through August 18.

“The Security Summit partners urge tax professionals to take time this summer to give their data safeguards a thorough review and ensure that these protections are in place whether they work from home or the office,” said IRS Commissioner Chuck Rettig.
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Written by IRS | Posted in Security Six • Working Virtually

17 Jul 2020

IRS Unveils ‘Dirty Dozen’ List Of Tax Scams For 2020

IRS unveils ‘Dirty Dozen’ list of tax scams for 2020; Americans urged to be vigilant to these threats during the pandemic and its aftermath

The Internal Revenue Service announced its annual “Dirty Dozen” list of tax scams with a special emphasis on aggressive and evolving schemes related to coronavirus tax relief, including Economic Impact Payments.

This year, the Dirty Dozen focuses on scams that target taxpayers. The criminals behind these bogus schemes view everyone as potentially easy prey. The IRS urges everyone to be on guard all the time and look out for others in their lives.

“Tax scams tend to rise during tax season or during times of crisis, and scam artists are using pandemic to try stealing money and information from honest taxpayers,” said IRS Commissioner Chuck Rettig. “The IRS provides the Dirty Dozen list to help raise awareness about common scams that fraudsters use to target people. We urge people to watch out for these scams. The IRS is doing its part to protect Americans. We will relentlessly pursue criminals trying to steal your money or sensitive personal financial information.”

Taxpayers are encouraged to review the list in a special section on IRS.gov and be on the lookout for these scams throughout the year. Taxpayers should also remember that they are legally responsible for what is on their tax return even if it is prepared by someone else. Consumers can help protect themselves by choosing a reputable tax preparer.

The IRS urges taxpayers to refrain from engaging potential scammers online or on the phone. The IRS plans to unveil a similar list of enforcement and compliance priorities this year as well.
An upcoming series of press releases will emphasize the illegal schemes and techniques businesses and individuals use to avoid paying their lawful tax liability. Topics will include such scams as abusive micro captives and fraudulent conservation easements.

Here are this year’s ‘Dirty Dozen’ scams:
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Written by IRS | Posted in IRS Notice • Tax Scam

14 Jul 2020

J5 Reflects On Two-Years Pursuing Global Tax Cheats

Leaders from five international tax organizations are marking the two-year anniversary of the formation of the Joint Chiefs of Global Tax Enforcement (J5) this week.
The J5 includes the Australian Taxation Office (ATO, the Canadian Revenue Agency (CRA), the Dutch Fiscal Information and Investigation Service (FIOD), Her Majesty’s Revenue and Customs (HMRC) from the UK and the Internal Revenue Service Criminal Investigation Division (IRS-CI) from the US.

Taking advantage of each country’s strengths, the J5’s initial focus was on enablers of tax crime, virtual currency and platforms that enable each country to share information in a more efficient manner. Within the framework of each country’s laws, J5 countries shared information and were able to open new cases, more completely develop existing cases, and find efficiencies to reduce the time it takes to work cases. Operational results have always been the goal of the organization and they have started to materialize.

“While operational results matter, I’ve been most excited at the other benefits that this group’s existence has provided,” said Don Fort, Chief, IRS Criminal Investigation. “In speaking with law enforcement partners domestically and abroad as well as stakeholders in various public and private tax organizations, there is real support for this organization and tangible results we have all seen due to the cooperation and global leadership of the J5.”
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Written by IRS | Posted in Global Tax Cheats • IRS Notice

18 Jun 2020

IRS Outlines Changes To Health Care Spending Available Under CARES Act

The Internal Revenue Service has advised that new rules under the CARES Act provide flexibility for health care spending that may be helpful in the current environment where more people may need at-home services due to measures to fight the coronavirus.

Telehealth And High Deductible Health Plans

Under the CARES Act, a high deductible health plan (HDHP) temporarily can cover telehealth and other remote care services without a deductible, or with a deductible below the minimum annual deductible otherwise required by law. Telehealth and other remote care services also are temporarily included as categories of coverage that are disregarded for the purpose of determining whether an individual who has other health plan coverage in addition to an HDHP is an eligible individual who may make tax-favored contributions to his or her HSA. Thus, an otherwise eligible individual with coverage under an HDHP may still contribute to an HSA despite receiving coverage for telehealth and other remote care services before satisfying the HDHP deductible, or despite receiving coverage for these services outside the HDHP. The temporary rules under the CARES Act, as extended by IRS Notice 2020-29, apply to services provided on or after Jan. 1, 2020, with respect to plan years beginning on or before Dec. 31, 2021.

Expansion Of Qualified Medical Expenses

The CARES Act also modifies the rules that apply to various tax-advantaged accounts (HSAs, Archer MSAs, Health FSAs, and HRAs) so that additional items are “qualified medical expenses” that may be reimbursed from those accounts. Specifically, the cost of menstrual care products is now reimbursable. These products are defined as tampons, pads, liners, cups, sponges or other similar products. In addition, over-the-counter products and medications are now reimbursable without a prescription. The new rules apply to amounts paid after Dec. 31, 2019. Taxpayers should save receipts of their purchases for their records and so that they are able to submit claims for reimbursements.
More information

The IRS will provide any further updates as soon as they are available on its webpage at IRS.gov/coronavirus

IR-2020-122

Written by IRS | Posted in CARES ACT • IRS

16 Jun 2020

IRS’ People First Initiative Provides Compliance Relief

The Internal Revenue Service unveiled the People First Initiative on March 25, 2020. It is an unprecedented effort to temporarily scale back many collection and enforcement activities by the IRS during the COVID-19 global pandemic.

The purpose of the People First Initiative is to immediately ease the burden on people facing tax issues as much as possible, to enable them to better focus on the well-being of themselves and others during this unprecedented situation for the nation. It is not permanent, but it will stay in effect until it is deemed to no longer be needed.

In consultation with its partners, the IRS will continue to review the People First Initiative and modify or expand it as needed during this situation.

Main Elements of People First Initiative
The initiative modifies numerous IRS compliance programs, providing taxpayer relief for the following programs:
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Written by IRS | Posted in IRS