As the Founder and CEO of www.taxconnections.com, I want to welcome About.com Freelance Writer/Editor William Perez. William Perez is interested in interviewing members of TaxConnections on a wide variety of subject matters on tax. William joined TaxConnections and is eager to speak with and interview our members for media articles on tax topics. We encourage all of our members to reach out to William and send him a message at https://www.taxconnections.com/profile/William-Perez/12261048 with interesting stories on a wide range of subject matters.
We are fortunate in the TaxConnections community as we have tax experts from all over the world joining an interactive experience only available through membership in TaxConnections Worldwide Directory of Tax Professionals. Our members are leading the Read More
Earlier this week, I spoke to an IRS Revenue Agent who shed some light on how the decision regarding transitional treatment is made for those taxpayers seeking to transition to the Streamlined Procedures from OVDP. Under the current procedures, the agent and his or her supervisor make the decision regarding transitional treatment, with involvement as necessary by the technical adviser. Practically speaking, the technical adviser does nothing more than “rubber stamp” the decision made by the examiner and the examiner’s manager.
While the process might seem straight-forward, it is not always seamless. That is where Streamlined Transition FAQ 8 comes into play. It provides some role for a central committee in those cases designated for central committee review. Unfortunately, no Read More
Many tax practitioners have become disenchanted with the IRS’s treatment of those who are transitioning from OVDP to the Streamlined Procedures. What is the source of this disenchantment? Very simply, the IRS is denying the nonwillful certification in a disproportionately high number of cases.
To make matters worse, the process of denial is somewhat of an enigma. In OVDP cases, the IRS has more than just the certification. It also has the Offshore Voluntary Disclosure Letter and the accompanying documents that make up the final submission. According to many tax practitioners, if the certification causes the IRS to doubt the taxpayer’s claim that he was nonwillful, then its default position is to deny transitional relief. Read More
Often, a small business or start-up will utilize an S corporation election for their business. An S corporation is a corporation formed under a particular State’s incorporation laws (or an organization that has elected to be treated as a corporation for US income tax purposes). The corporation must be eligible to elect S corporation status and its shareholders must consent in writing on Form 2553 to have the corporation elect S corporation status. The Form 2553 must be filed with the Internal Revenue Service (IRS) on or before the 15th day of the 3rd month of the corporation’s tax year in order for the election to be effective as of the beginning of that tax year. If the corporation is on a calendar tax year, the Form 2553 must be filed on or before March 15th in order for the election to be effective for that tax year. Read More
Australia’s 2012 “significant investor” residence visa scheme has attracted some 1,000 applicants who have committed to invest AUD4 billion in businesses or other complying investments. To date, the vast majority of applicants have been from Chinese nationals.
The scheme might have been expected to attract some interest from Russian entrepreneurs and investors. However, Australia’s personal tax rates may be a distraction (an effective maximum marginal rate of 49% currently applies to income in excess of AUD180,000 pa). Furthermore, the current geopolitical situation around Ukraine and the flight MH17 atrocity may now deter potential applicants who might be regarded as associates of the Russian leadership. Read More
Each year the IRS mails millions of notices. Here’s what you should do if you receive a notice from the IRS:
1. Don’t ignore it. You can respond to most IRS notices quickly and easily. And it’s important that you reply promptly.
2. IRS notices usually deal with a specific issue about your tax return or tax account. For example, it may say the IRS has corrected an error on your tax return. Or it may ask you for more information.
3. Read it carefully and follow the instructions about what you need to do. Read More
By Michael DeBlis and Virginia La Torre Jeker
Scenario Number 2: Failure to File A Tax Return in Tax Years Four Through Six
Adam is a U.S. citizen with an undisclosed offshore account. He moved to Switzerland in 2008 after taking a job with a Swiss consulting company and has lived there ever since. That same year Adam opened up a checking account at Grosser Schweizer Bank, a Swiss Bank.
Adam’s tax woes go back to 2008, when he relocated to Switzerland. He did not file any U.S. tax returns in 2008, 2009, and 2010. However, he has been fully compliant, at least as far as filing U.S. income tax returns go, since 2011. He has never filed an FBAR. Read More
The Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) proposed rules on July 30 requiring US financial institutions to collect “Customer Due Diligence” information. The FinCEN proposed rules are aimed at non-US persons who have not been tax compliant in their home countries and who are using their US financial accounts to hide income from their home governments. The full Treasury announcement can be accessed here and the proposed rules can be accessed here.
The information required under the proposed rules mandates the identification of the true beneficial owners of US financial accounts. One of the main goals for obtaining this information will be so that the USA can comply with the US government’s obligations to any countries with which it has a “reciprocal” Intergovernmental Agreement (IGA) under Read More
The IRS has authority to assert FBAR civil penalties. Contrary to popular belief, an FBAR violation doesn’t automatically mean that a penalty will be asserted. Examiners are expected to exercise discretion, taking into account the facts and circumstances of each case, in determining whether penalties should be asserted. For example, the examiner may determine that the facts do not justify asserting a penalty. In that case, the examiner will issue an FBAR warning letter, Letter 3800.
According to IRM 184.108.40.206, the sole purpose of the FBAR penalty is to promote compliance with the FBAR reporting and recordkeeping requirements. In exercising their discretion, examiners should consider whether issuing a warning letter and securing delinquent FBARs, rather than asserting a penalty, will achieve the desired result of Read More
As I have been helping my Mom transition into life as a widow many interesting facts have begun to resonate. Particularly intriguing for me today under Regs. §1.2-2(b)(4) parent(s) can be claimed as a dependent if you meet the usual support, citizenship, gross income, and joint return tests.
Interestingly enough if you are single you can file as head of household if you claim your parent or pay more than half the cost of keeping them in a rest home or home for the elderly. Fortunately my mom is nowhere ready for that sort of treatment we hope. However in my most recent research efforts I’ve been intrigued by two separate and distinct opportunities worth consideration: Read More
Hiding Receipts By Cash Is A Tax Issue
For many years, small restaurants, bars, pizza parlors, ice cream stands, and other food establishments have used all cash systems to hide their income and not pay sales tax and income tax on the full receipts. In New Jersey, the Division of Taxation has created a very aggressive system where they make up excessively high mark ons from food and liquor purchases, and absolutely slaughter businesses that don’t keep good records.
The way this tack works by the New Jersey division of taxation is they subpoena the records from the major food suppliers and liquor distributors. The tax authorities then compared the expenses listed on the tax return to what these third-party sellers reported. Read More
In a post on 1/17/14 titled “Marijuana And The Tax Law“, I noted the significant tax dollars that Colorado was to generate from legalizing recreational use of marijuana. I also noted that for tax practitioners who assist these businesses (as well as those selling in other states for medicinal use), there are tax law issues (such as IRC Section 280E) and ethical considerations given that growing, cultivating, distributing and using marijuana is still a federal crime. CPAs and attorneys need to consider the rules of conduct applicable in their state.
I have a 4-page article on this topic in the Tax Talk feature of the Federal Bar’s July 2014 The Federal Lawyer. It is entitled, “Ethical Considerations When Your Potential Tax Client is a Marijuana Business.” I explain the issues CPAs and attorneys face in helping these Read More