The tax assessment and collection process in most foreign countries is markedly different than the process in the U.S. These differences can present a number of challenges for U.S. citizens who reside in foreign countries. In Sotiropoulos v. Commissioner, T.C. Memo. 2017-75, the court considered one of these challenges, namely, how does one determine whether… Continue reading U.S. Foreign Tax Credit Not Impacted by Repayment of Foreign Tax Refund
Category: Tax Procedure
Reckless Conduct Sufficient for FBAR Civil Tax Penalty
It is not clear as to what level of conduct justifies the imposition of the $100,000+ foreign bank account reporting (“FBAR”) civil tax penalty. In Bedrosian v. United States, No. 15-5853 (E.D. Pa. 2017), the court considered whether reckless conduct is sufficient given the facts presented in the case. The FBAR Civil Tax Penalty The… Continue reading Reckless Conduct Sufficient for FBAR Civil Tax Penalty
Court Says Employer Entitled to Worker’s IRS Records
When the IRS determines that independent contractors are taxed as employees, it is up to the employer to show that the IRS determination is incorrect. One way to do this is to show that the workers paid tax even though the employer did not withhold the tax. In Mescalero Apache Tribe v. Commissioner, 148 T.C.… Continue reading Court Says Employer Entitled to Worker’s IRS Records
Computing the Reportable Transaction Penalty
The Section 6707A reportable transaction penalty can be difficult to work with given the more limited avenues for contesting the penalty. The court addressed this in Bitter v. Commissioner, T.C. Memo. 2017-46, in the context of a Section 412(i) plan. Tax advisors have been waiting for an answer to the very question of how to… Continue reading Computing the Reportable Transaction Penalty
Do Criminal Convictions Deter Employment Tax Crimes?
Failing to pay taxes to the government is a crime. This includes failing to pay employment taxes withheld by employers from employee wages. The Treasury Inspector General for Tax Administration (“TIGTA”) just released a report suggesting that the government has failed to enforce employment tax crimes. The report argues that the IRS’s lax enforcement results… Continue reading Do Criminal Convictions Deter Employment Tax Crimes?
Offer in Compromise Extends IRS Collection Time
When you owe the IRS back taxes, sometimes it is best to wait for the IRS’s collection statute to expire. This wait-and-see approach involves waiting to see if the IRS attempts to collect the tax debt. Sometimes the IRS doesn’t even bother to take any action to collect unpaid taxes. To succeed, it is important… Continue reading Offer in Compromise Extends IRS Collection Time
Check Signing Activity Not Sufficient for Trust Fund Penalty
The IRS will often assert trust fund recovery penalties against anyone who signs checks written on the business checking account. The court addressed this in Shaffran v. Commissioner, T.C. Memo. 2017-35, concluding that some check signing activity alone is not sufficient to impose a trust fund recovery penalty. The case provides some insight as to… Continue reading Check Signing Activity Not Sufficient for Trust Fund Penalty
Relying on Tax Attorney for Filing Deadline is Reasonable Cause
It is clear that one cannot rely on a tax attorney to file a tax return for purposes of removing penalties if the return is not filed. But can you rely on an attorney if the attorney provides advice as to the wrong date for filing? The court addresses this in Estate of Hake v.… Continue reading Relying on Tax Attorney for Filing Deadline is Reasonable Cause
Planning for Tax Refunds in Bankruptcy
The In re Porter, No. 16-11831-BFK (E.D. Va. 2017) case serves as a timely reminder that taxpayers who have unpaid tax debts and who are expecting sizable tax refunds may benefit from timing the filing of their bankruptcy cases. Facts & Procedural History The taxpayer filed her 2014 tax return on April 4, 2016. The… Continue reading Planning for Tax Refunds in Bankruptcy
How to Challenge an Invalid IRS Notice of Deficiency
The IRS is required to send taxpayers a notice of deficiency before it can assess additional tax. The notice itself has to put the taxpayer on notice that the IRS made a determination that there was a tax deficiency (i.e., an amount owed), the tax year, and the amount. A notice that does not include… Continue reading How to Challenge an Invalid IRS Notice of Deficiency