Tag Archive for Tax compliance

When Is a Tip not a Tip?

John Stancil

When is a tip not a tip? According to the IRS, “when it is a service charge.” Under rules effective January 1, 2014, the IRS has redefined the terms “tip” and “service charge” for tax purposes. Under these rules, restaurants that charge an automatic percent charge for large parties may no longer treat these amounts as tips. Read more

Tax Compliance Alert: The IRS Issues Transition Period Guidance for Recently Revised Form 3115

Peter Scalise


The Internal Revenue Service (hereinafter the “Service”) issued on March 24 of 2016 their Announcement 2016-14 addressing the transition period implementation dates in connection with the recently revised Form 3115 entitled “Application for Change in Accounting Method which was most recently revised and released to the public in December of 2015. This presents a paradigm shift as while most tax forms and publications are updated annually, this was the first update to Form 3115 since December of 2009. Read more

TaxConnections Executive Search Division – Exclusive Retained Services

Senior Director, Tax (Southern California)

The Senior Director, Tax will be responsible for directing and managing all tax compliance and tax reporting with international, federal, state and local authorities including quarterly and annual tax provision. The Senior Director, Tax will also be responsible for the following:

• Direct and manage the preparation and review of the worldwide income tax provision including the preparation of the ASC 740 calculations, current and deferred analysis, technical review of tax accounting positions (FIN48, 123R, FAS141R purchase accounting, valuation allowance analysis APB 23 Assertion), tax account reconciliations and return-to-provision reconciliation. Read more

Tax Compliance Alert: IRS Prepares For Impact of Obamacare On 2015 Tax Season


On Wednesday, September 10th the Internal Revenue Service (hereinafter the “Service”) Commissioner John Koskinen (hereinafter “Commissioner Koskinen”) informed a congressional subcommittee about the Service’s progress on the Affordable Care Act and the impact that tax subsidies will have on the upcoming 2015 tax season. In a hearing before the House Ways and Means Health Subcommittee, Commissioner Koskinen discussed how the Service would be processing the premium tax credit, which helps subsidize the cost of health insurance coverage for eligible taxpayers.

Commissioner Koskinen duly noted that eligible taxpayers can choose to have their Read more

Standards For Prosecuting Tax Crimes And What They Mean For The Public

The government is not required to prosecute persons whom it believes has violated the law. Certainly, in the tax context, only a small percentage of people who are known or reasonably suspected to have committed a tax crime are investigated and prosecuted. Judgment calls abound – from the first discovery of information through prosecution.

Given the limited resources that can be applied to tax prosecutions, the government must be highly selective. The ability to “pick and choose” which cases it prosecutes is the reason why it has such a high conviction rate. The message from Uncle Sam to taxpayers is this: “Sure, we don’t prosecute all tax cheats, but if we get you in our prosecution cross-hairs, you are dead.” Read more

IRS Finally Gets It Right – This Is The Penalty-Free Path Forward American Late Filers Have Been Waiting For

Big Data and an ever aggressive approach by the IRS toward ferreting out Americans living abroad who are not current with their US tax filing has, so far, not yielded the results that the US government hoped for. With a tax system that is based largely upon voluntary compliance, the United States wields a big stick, and yet they realize that in reality a carrot may yield a much better result. The big stick in this circumstance is FATCA, the Foreign Account Tax Compliance Act, which so far has signed on 77 thousand banks worldwide and 70 countries to report to the US where Americans reside and what accounts they hold. The carrot, on the other hand is the New Streamlined Procedure …

Come See The Softer Side Of Having Your Own Streamlined Procedure!

Read more

Is There Benefit To Responding To Your Swiss Bank’s Request For Confirmation Of Tax Compliance?

On Tuesday, June 17, 2014 we originally posted “Did You Receive a Swiss Bank Letter Asking You to Confirm That You Are Compliant with US Tax Law?” where we discussed that numerous clients of our firm have requested advice on how to respond to letters from their Swiss Bankers asking them to confirm that they are US tax compliance.

We advise taxpayers not to be fooled into thinking that answering these letters or providing this information will somehow benefit you the client! Your account will be turned over to the U.S. Treasury Department, as an account associated with a US beneficiary, whether you respond to this banks request or not!

This is solely for the bank’s benefit, so that they can categorize your account as a “Tax Read more

7 Habitual Mistakes Companies Make – Chapter 4 (6)

TaxConnections Blog Post
Transparency –

“An old-fashioned handshake is a good way to do business—unless the IRS demands a copy”  —  Source: Cullen Hightower

“The condition of being obvious or evident.” — Source: Oxford Dictionary

IN THIS DAY and age it is important that businesses take a more open-minded approach when it comes to tax compliance. The process of transparency is not confined to the completion of a tax return and the disclosure made to the IRS. It begins with transparency between the role players involved in a transaction, the key decision makers in the business, and the people responsible for understanding the tax implications and compiling the return. Read more

7 Habitual Mistakes Companies Make – Chapter 4 (2)

TaxConnections Blog Post

CHAPTERS 1, 2, and 3 have brought the tax risk management process to a point where a Tax Risk Management strategy is in existence, with a participating tax team and a positive attitude toward proactive tax risk management.

This entire process for small businesses is taken care of through the tax-Radar program and the completion of the Tax Risk Matrix with the small businesses accounting firm.

This chapter deals with Tax Risk Management Step 4. Read more

7 Habitual Mistakes Companies Make – Chapter 4 (1)

TaxConnections Blog Post

Chapter 4

Insular? Be come More Transparent

Executive Summary

THE FOLLOWING POINTS are an extract from a survey* conducted over a period of two years and demonstrates the fact that the function of tax compliance within businesses is very insular and lacks the requisite interaction with other key persons in the business.

• No documented tax strategy – 78% Read more

Self-Directed IRAs: A Tax Compliance “Black Hole” – Part II

Taxconnections Picture - Money Down the DrainPart II is a continuation from yesterday’s October 14, 2013 post.  See Part I HERE.

Nontraditional investments favored by many self-directed IRAs can lead to unexpected taxation of unaware IRA account holders.

Example 2: IRA-Owned LLC Invests in Real Estate Partnership

Setup. Mark, a retired airline pilot with $1.5 million in his 401(k) account, was afraid of another stock market meltdown and viewed real estate investments as a safer alternative and a diversification technique for his retirement savings. After learning about SDIRAs from a friend, he did some preliminary research online. Mark quickly found numerous IRA custodians and companies that promoted “checkbook control IRAs” (i.e., the SDIRA/LLC concept discussed above) and decided that the lower annual custodian fees and overall control made the SDIRA/LLC the best option for him.

Mark executed a partial rollover of his 401(k) account into his new SDIRA. Subsequently, the SDIRA invested all but $300 into a newly formed LLC, thus creating an SDIRA/LLC structure (it is typical to leave the smallest amount of cash in the IRA as possible). From there, the IRA custodian had very little involvement because all of the investments were made at the LLC level, with Mark facilitating transactions as the LLC’s sole manager.

Investment. Mark’s goal for his SDIRA/LLC was to invest in residential rental real estate, either directly out of the LLC or through a “project LLC” (i.e., a partnership) with other investors. Mark found a real estate investment group that frequently Read more

Self-Directed IRAs: A Tax Compliance “Black Hole”

Taxconnections Picture - Money Down the DrainNontraditional investments favored by many self-directed IRAs can lead to unexpected taxation of unaware IRA account holders.

The appeal of investing retirement funds outside of the typical securities market has driven a surge in the use of self-directed IRA (SDIRA) investment structures. These structures come in various forms, but they all start when an IRA account holder forms an SDIRA with a custodian (e.g., a bank or trust company) that is amenable to holding “nontraditional” types of investments. In other words, the feature that makes an IRA “self-directed” is not its general legal framework, but rather the fact that the SDIRA’s custodian permits a wide array of investments and maximum control by the account holder.

Investments within SDIRAs frequently include real estate, closely held business entities, and private loans and can include any other investment that is not specifically prohibited by federal law—anything other than life insurance and collectibles can be held in an SDIRA. The SDIRA itself can be structured as a self-employed plan (SEP), a savings incentive match plan for employees (SIMPLE), or a traditional or Roth IRA, and is normally funded by a transfer from an account holder’s other IRA or a rollover from a qualified retirement account (e.g., a 401(k)). However, one common theme is that the IRA account holder wants to diversify away from 100% stock market-based investments and/or believes that better investment returns exist outside the securities market. Read more