Tag Archive for TaxConnections’

Are There Advantages To Owning A Second Home?

Whatever the location, size, or value of a second home, certain tax advantages are built in. However, your opportunity to benefit from them depends on how you use the property.

Personal Use

Both property taxes and mortgage interest are as deductible for a second home as they are for your primary residence — and are subject to the same limitations. If you file a joint return, you cannot deduct interest on more than $1 million of acquisition debt ($500,000 for married persons filing separately) on one or two homes. Read More

Written by | Posted in Capital Gains • Deductibles • Deductions • Property Tax

Taxpayer Advocate Service Survey Confirms Need To Maintain And Enhance A Robust Omni-Channel Taxpayer Service Strategy

In my most recent Annual Report to Congress, I published a study in support of the Service Priorities Project (SPP), a joint effort between Taxpayer Advocate Service (TAS) and IRS Wage & Investment (W&I). The goal of the SPP is to produce a matrix to help the IRS identify where to allocate its taxpayer service resources. To assist the IRS in determining service priorities, the matrix presents data on taxpayer needs and preferences as well as more traditional IRS “efficiency” concerns. While W&I initially worked with TAS in the development of the SPP, ultimately I felt that the additions to the Taxpayer Experience Survey did not address the missing data needed to complete the SPP matrix. I directed TAS Research to develop a study and fill in the gaps of the SPP. The result, A Further Exploration of Taxpayers’ Varying Abilities and Attitudes Toward IRS Options for Fulfilling Common Taxpayer Needs, revealed several areas that I’d like to highlight today. Read More

Written by | Posted in IRS • National Taxpayer Advocate • Service Priorities Project

Top Predictions You Need To Know: Wayfair V. South Dakota Onlines Sales Tax Case

As we wait for a decision in the Wayfair v. South DakotaSupreme Court Case regarding online sales tax, we thought it would be fun to take a look at possible outcomes depending on how the Court rules.

Our Opinion On The Online Sales Tax Case

Back in March we shared our predictions on how the online sales tax case’s outcome would affect businesses.

What if the Supreme Court rules against South Dakota? We’re back where we started with Quill remaining the physical presence standard and states passing various legislation that’s either unconstitutional (and likely not upheld) or that requires onerous reporting. Read More

Written by | Posted in Online Sales Tax

Virtual Currency And Taxes – The View Of The United States Internal Revenue Service

Internal Revenue Service Notice 2014-21

Section   1. Purpose

This notice describes how existing general tax principles apply to transactions using virtual currency. The notice provides this guidance in the form of answers to frequently asked questions.

Section   2. Background

The Internal Revenue Service (IRS) is aware that “virtual currency” may be used to pay for goods or services, or held for investment. Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value. In some environments, it operates like “real” currency — i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance — but it does not have legal tender status in any jurisdiction. Read More

Written by | Posted in IRS • Virtual Currency

The Latest In Online Sales Tax: Wayfair Vs. South Dakota Oral Arguments

Last week the U.S. Supreme Court heard oral arguments in the Wayfair v. South Dakota online sales tax case. While the court’s decision regarding the matter isn’t expected until June, the Justices’ questions in the matter reveal that it’s far from already settled, and they’re divided on whether or not Quill should be overruled.

South Dakota’s Arguments Regarding Quill

South Dakota’s Attorney General Marty Jackley began his statement, Read More

Written by | Posted in Online Sales Tax

Navigating The Shoals Of IRS Penalty Abatement – Types Of Defense (Part II)

Now that you may have missed the income tax filing and payment deadline perhaps it is a good time to understand how to cope with penalization as it can get woefully expensive – not to mention mind numbing – if you go about it have baked.

There are a handful of defenses you can attempt to assert when it comes to navigating the shoals of IRS penalty abatement, chose with care and proper counsel.

The key IMHO is to comport yourself with law abiding dignity whilst deliberately navigating through these general options, including: Read More

Written by | Posted in TaxConnections

What Is Wrong With IRS User Fees?

The IRS has been increasing user fees to fund its operations. It recently increased or proposed to increase a wide range of fees including the fees for installment agreements (IAs), offers-in-compromise (OICs), pre-filing agreements (PFAs), private letter rulings (PLRs), and special enrollment examinations (SEE). I raised concerns about these increases in my 2015 and 2017 Annual Reports to Congress.

On Feb. 9, 2018, Congress enacted the Bipartisan Budget Act of 2018 (P.L. 115-123), which addresses concerns about the IRS’s largest fee revenue generator – the IA fee increases. The law prevents the IRS from increasing the IA fee again without legislation. It also requires the IRS to waive or refund the fee for taxpayers with income below 250 percent of the federal poverty level who authorize the IRS to directly debit the IA payments (DDIA) from a bank account or who cannot set up a DDIA (e.g., because they do not have a bank account). This legislation suggests that Congress shares some of my concerns. This blog summarizes our concerns. Read More

Written by | Posted in IRS • Taxpayer Advocate • Taxpayer Rights • User Fees

The IRS Can Do A Better Job Providing Military Taxpayers With Accurate And Up-To-Date Information About Tax Issues They Are Facing

As we near the end of the 2018 filing season, it is worth reflecting on the challenges taxpayers face in complying with complex tax law provisions. In my 2017 Annual Report to Congress, I identified IRS customer service and information provided to military taxpayers as one of the Most Serious Problems facing taxpayers. In this blog, I will discuss the needs and preferences of military taxpayers and recap some of my recommendations on how the IRS can substantially improve its service to this taxpayer population. Read More

Written by | Posted in IRS • Military

5 Common Tax Mistakes All Small Businesses Should Avoid

Tax season is the collective groan heard around the world. We get it. No one enjoys filing their taxes, even when they turn preparation over to a skilled professional. If you’re doing your taxes right, managing your small business taxes should be a year-round process.

Keeping up to date in real-time makes the effort come tax season exponentially easier. But if you’re not staying on top of things, you could make these five common tax mistakes for small businesses. Read More

Written by | Posted in IRS • Tax Mistakes • TaxConnections

Part III. General Descriptions Of APAs Executed In 2017

Part III. General Descriptions Of APAs Executed In 2017

This Announcement is issued pursuant to § 521(b) of Pub. L. 106-170, the Ticket to Work and Work Incentives Improvement Act of 1999, which requires the Secretary of the Treasury to report annually to the public concerning advance pricing agreements (APAs) and the Advance Pricing and Mutual Agreement Program (APMA Program), formerly known as the Advance Pricing Agreement Program (APA Program). The first report covered calendar years 1991 through 1999. Subsequent reports covered each calendar year 2000 through 2016 separately. This nineteenth report describes the experience, structure, and activities of the APMA Program during calendar year 2017. It does not provide guidance regarding the application of the arm’s length standard. Read More

Written by | Posted in Advance Pricing And Mutual Agreement Program • IRS • TaxConnections

ALERT: Advance Pricing Arrangement And Mutual Agreement Program (Part II)

This Announcement is issued pursuant to § 521(b) of Pub. L. 106-170, the Ticket to Work and Work Incentives Improvement Act of 1999, which requires the Secretary of the Treasury to report annually to the public concerning advance pricing agreements (APAs) and the Advance Pricing and Mutual Agreement Program (APMA Program), formerly known as the Advance Pricing Agreement Program (APA Program). The first report covered calendar years 1991 through 1999. Subsequent reports covered each calendar year 2000 through 2016 separately. This nineteenth report describes the experience, structure, and activities of the APMA Program during calendar year 2017. It does not provide guidance regarding the application of the arm’s length standard. Read More

Written by | Posted in Advance Pricing And Mutual Agreement Program • IRS • TaxConnections

A Discussion Of Belated Alternatives To The Offshore Voluntary Disclosure Program And Recommendations For Further Improvements (Part 3 of 3)

In the first blog in this series we discussed how those who participate in amnesties also tend to be people who made inadvertent errors, that is, “benign” actors, rather than bad actors. We discussed how it can make sense to offer some form of amnesty before implementing a sudden increase in penalties or enforcement. Otherwise, the increase is more likely to be viewed as unfair and erode trust for the government. Moreover, a decline in trust can erode voluntary compliance.

In the second blog, we cited data showing that, consistent with the research on amnesties, IRS’s first amnesty alternative – the Offshore Voluntary Compliance Initiative (OVCI) – generally attracted people who failed to report offshore accounts but had paid their taxes or had under-reported small amounts. Read More

Written by | Posted in IRS • OVDP
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