IRS Seeks to Bar Transfer Pricing Argument in Western Digital
E-Filing and the Late-File Penalty
For many years, the Boyle rule established that the failure of a third-party accountant to file a tax return by its due date does not establish a taxpayer’s “reasonable cause” for the forgiveness of late-file penalties. But is the Boyle rule consistent with the realities of e-filing? For now, yes. In a 2020 Tax Court case, Padda, the court rejected a taxpayer’s claim that his accountant’s failure to electronically submit his tax returns on time…
Deductibility of Paycheck Protection Program (PPP) Expenses
Concerning the non-deductibility of expenses related to the Paycheck Protection Program (PPP), the IRS released updated guidance this month (November 2020). Under the new IRS guidance, a calendar year borrower who received a PPP loan in 2020, which loan has not been forgiven by the end of 2020, may not deduct expenses incurred with PPP loan proceeds if (i) the expenses are qualifying expenses under the PPP rules (i.e., qualifying payroll costs, mortgage interest, utility…
Chances of Audit Increasing
Following historically low examination rates in 2020, the IRS plans to ramp up tax audits of small businesses by about 50% next year (2021). The increase in audits will apply to both partnerships and pass-throughs, said the IRS. The audit net will be wide – from local mom-and-pop retail stores to technology startups to those business with historically low audit rates. To man these efforts, the IRS is hiring more than 50 specialized auditors to…
Importance of Innocent Spouse “Timing”
A 2020 District Court case in Texas tells us that the “timing” of filing an Innocent Spouse Request for relief is supremely important. In the Landers case, the taxpayer filed her Innocent Spouse Claim after an IRS bank levy had been sent to her banking institution. In effect, she filed her Innocent Spouse Claim during the 21-day period that the bank was holding her funds after receipt of the levy. She was attempting to stop…
No Harm, No Foul When Instruction Error Favorable to Defendant
A Video Explaining Ethics and the Development of the Covenant of Good Faith
Sensing a Trend? Maine Tax Assessor Argues Sales Tax “Sale Price” of iPhones More Than What They Sold For
After losing at trial, the Maine State Tax Assessor is now arguing to the state’s Supreme Judicial Court that sales tax applies to carrier subsidies received by Apple on its sales of iPhones bundled with service contracts. During the years in issue, Apple sold iPhones to its customers at a reduced price when the customers also purchased a long-term service contract from a wireless telecommunications carrier. Pursuant to agreements Apple had with these carriers, the…
Key Steps the Pharma and Bioscience Sectors Must Take Ahead of Federal Scrutiny of COVID-19 Relief Funding
November 23, 2020 – Alerts
By Ernest E. Badway
An unprecedented explosion of government investigation and enforcement is at hand as federal regulators focus their efforts on ferreting out any fraud or abuse of the $1 trillion in COVID-19 relief funding programs through loans, grants and tax credits.
For pharma and bioscience companies, it is imperative to take steps now to limit the risks and consequences of such investigations. Regulatory threats to these companies may be forestalled…
The IRS, Forgiven PPP Loans, and Business Deductions: Once Was a Mistake, Twice Is an Inexcusable Decision
It has been more than eight months since the enactment of the CARES Act,[i] yet here we are, with the end of 2020 in sight, and we are still debating whether taxpayers should be allowed to claim a deduction for business expenses that were properly paid using the proceeds of a loan under the Paycheck Protection Program.[ii] Why is that?
Two reasons: (1) The IRS; and (2) The Congress. The IRS has inexplicably…