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IRS audit levels are at historic lows. A Report by the Treasury Inspector General for Tax Administration suggests that the IRS should reprioritize its audit and collection efforts. More specifically, it should change the manner in which its models select audits and predict collectability. The Report found that the IRS has failed to collect more than $2.4 Billion from wealthy individuals who owe the federal government back taxes. The Report also found that IRS Examiners…
If you are in IRS Collections, dealing directly with a Revenue Officer, delivering your tax return directly to that Revenue Officer, upon his or her request, is not an “actual” tax return filing. Not “actually” filing a tax return has many important implications. Namely, you need to “actually” file a tax return to start the 10-year statute of limitations on collections and to have a “filed” tax return for the dischargability rules in Bankruptcy. See…
The taxation of cryptocurrency is no longer just a young person’s problem. That changed the day the Internal Revenue Service (IRS) made cryptocurrency a focal point of enforcement and added a crypto disclosure question on IRS Form 1040. Unsuspecting parents with dependent children should be on guard. The IRS is looking for noncompliance and the crypto question creates a possible perjurious trap. Noncompliance may be sleeping in the basements of many unwary parents. Nearly 40…
For a further exploration of penalty defenses, including 6751(b), please see our firm video: Here are the facts of another taxpayer win under IRC 6751(b): A married couple’s civil fraud penalty was not timely approved by an IRS Revenue Agent’s (RA’s) supervisor as required under Code Sec. 6751(b)(1). The taxpayer’s joint return was examined by the IRS following which the RA had sent them a summons requiring their attendance at an in-person closing conference. The…
Currently before the Supreme Court is the question of whether certain tax provisions of the Affordable Care Act are constitutional. If they are not constitutional, it could result in refunds being due to taxpayers who paid additional Medicare taxes and those high earners who paid the Net Investment Income Tax. Because the statute of limitations is running up on tax year 2017, affected taxpayers should consider filing a “protective claim” for refund. A protective claim…
The IRS recently clarified that crypto investors who only “purchased” digital assets using fiat but did not sell or transact those assets during 2020, do not need to report their purchases on page 1 of their 1040s. The IRS cryptocurrency FAQs were updated on the IRS website, stating: “If your only transactions involving virtual currency during 2020 were purchases of virtual currency with real currency, you are not required to answer yes to the Form…
It is without question that 2020 was a bang-bang year for crypto investors. Many generated a substantial amount of short-term capital gains. And with the IRS making clear that cryptocurrencies are “property” for tax purposes, not true currency, this put the spotlight on the taxability of crypto transfers or liquidations. Commonly, the question arises about how to reduce large capital gains tax on crypto transactions. There are a variety of strategies to reduce taxability, including…
I thought this blog post would be helpful because it involves a little-known IRS penalty section, IRC 6676. IRC 6676 imposes a 20% penalty to the extent that a claim for refund or credit with respect to income tax is made for an “excessive amount.” An “excessive amount” is defined as the difference between the amount of the claim for credit or refund sought and the amount that is actually allowable. To defend an IRS…
The IRS Statutory Notice of Deficiency is perhaps the most important Tax Notice a taxpayer can receive. It prescribes strict timelines to challenge proposed IRS actions and is a taxpayer’s ticket to Tax Court. If a taxpayer misses the prescribed 90-day deadline to file a Tax Court petition, then he or she gives up significant and substantive rights to challenge the proposed IRS action. It is a hard deadline. However, changes of taxpayer addresses can…
A recent case from the 11th circuit, U.S. v. Henco Holding Corp., is an important case in regard to the tax enforcement of transferee liability. The two biggest takeaways from the case are: one, a reminder that a state statute of limitations is not binding on the IRS, with the Court noting that it has long been held that the federal government does not become subject to a state statute of limitations when it…