Category: Federal Tax Controversies
Unseen Tax Consequences for Fraud Victims
Thieves and fraudsters have always been taxed on their ill-gotten gains. Now, their victims may also be taxed on the losses suffered at the hands of the scammers. As reported by the Majority Staff of the Senate Special Committee on Aging, fraud victims must pay income taxes on funds that…
Tax Court reminder – IRS levies on IRA accounts are taxable
The United States Tax Court recently issued a Memorandum opinion reminding taxpayers that when the Internal Revenue Service (IRS) seizes an Individual Retirement Account (IRA), the seized IRA needs to be included as taxable income. Lonnie Wayne Hubbard v. Commissioner of Internal Revenue (T.C. Memo. 2024-16). In 2017, disgraced…
New Priority Guidance Plan Announced For Limited Partner Exception to SECA
NEW PRIORITY GUIDANCE PLAN ANNOUNCED FOR LIMITED PARTNER EXCEPTION TO SECA For a number of years there has been an ongoing challenge by the IRS of taxpayers claiming limited partner status and exemption from the Self-Employment Contributions Act (SECA) tax. The activity in this area has greatly increased in…
IRS Offers Penalty Relief for Certain Taxpayers Filing Tax Returns for the 2019 and 2020 Years
The Internal Revenue Code (Code) imposes various penalties on taxpayers for failure to comply with certain return-filing and taxpaying obligations, including the following: Section 6651(a)(1) of the Code generally imposes an addition to tax for a failure to file (on or before the date prescribed) a tax return that is…
Payment of tax generated by partnership audits at the partnership level – adjusting partnership items
In the 2015 Bi-Partisan Budget Act (“2015 Act”), Congress enacted new centralized audit procedures for entities taxed as partnerships for Federal Income Tax purposes. Because these rules are fairly complex, both for taxpayers and the IRS, they did not become effective until tax years beginning in 2018. The default rule…
Failure to Carefully Review Tax Return Results in Costly Mistake for Taxpayers
Whether you prepare your tax return yourself with tax preparation software or rely on an accountant to prepare your return, it is important to remember to meticulously review your returns before filing. The cost of such failure to review could potentially lead to substantial penalties, including a twenty (20%) percent…
New Partnership Level Audit Rules
On November 2, 2015, the President signed into law the Bipartisan Budget Act of 2015 (the “Act”). The Act had numerous provisions, none of which relate to tax except almost the very last provision which now provides new rules for auditing partnerships. Under the Act, absent elections discussed below, all…
New Code Section 7345 Could Jeopardize Passports for Taxpayers with Significant Tax Debts
On December 4, 2015, President Obama signed into law the “Fixing America’s Surface Transportation Act” (officially labeled the “FAST Act”) – P.L. 114-94. The bill’s primary takeaway is a 5-year, $305 billion plan to modify and modernize American transportation systems. However, hidden within the bill is a new Internal Revenue Code section…
IRS To Focus Criminal Investigations On Employment Tax Cases
Rebecca Sparkman, the Director of the IRS Criminal Investigation Division, said that criminal investigations will devote additional resources to employment tax cases. Employment tax cases are ones where the responsible person withholds income and employment taxes from its employees but does not remit the withheld funds to the United States Treasury. …
IRS Voluntary Classification Settlement
The Internal Revenue Service has announced a new Internal Revenue Service Voluntary Classification Settlement program that provides partial relief from federal employment taxes for eligible taxpayers that agree to prospectively treat workers as employees. The Voluntary Classification Settlement Program (VCSP) allows eligible taxpayers to voluntarily reclassify their workers for federal…