Overview Over the past decade, the IRS has ramped up enforcement on foreign asset reporting. Failure to do so can lead United States taxpayers down a dark road of hefty civil penalties and even potential criminal exposure. Though we have already discussed at length the FBAR and Form 8938, this article will take a deeper dive into one of the most co...
“Tax Fraud” Defined and How the IRS Proves It In continuing with the Tax Crimes series, we began by examining introducing you to the criminal tax investigation process and how referrals to the Internal Revenue Service’s (“IRS”) Criminal Investigation Division (“CID”) begin. Now, we will dive into the IRS’s definition of fraud, the “badges” of fraud...
How the Criminal Tax Investigation Starts and When You Should Worry In case you did not know, you can go to jail for cheating on your taxes. Although the odds of being convicted of a tax crime are extremely low, the IRS does conduct a number of criminal investigations each year in an effort to directly influence the American public’s confidence and...
Civil Penalties and Interest Explained Have you ever forgotten to file your tax return on time? What about missing the payment deadline if you owed taxes? Did you wonder why the “taxes owed” amount was not the entire amount you had to pay the IRS? This article, along with subsequent articles, will explain why. Congress has enacted a number of civil...
Overview Have you ever wondered what needs to be declared on a U.S. tax return if you own foreign assets? Depending on the type of foreign asset, you may be required to file a Foreign Bank and Financial Accounts Report (for more on that, refer to the article: Reporting My Foreign Bank and Financial Accounts) or even Form 8938. Beginning in 2011, th...
What is the Trust Fund Recovery Penalty? Under Internal Revenue Code (“IRC” or the “Code”) § 6672, any person required to collect and pay over any tax imposed by the Code who fails to collect such tax or pay over such tax will be liable for a penalty equal to the total amount of the tax not collected or paid over. Several persons may be held jointl...
Overview In community property states, each spouse is generally attributed one half of the community income. Unless a joint return is filed, this results in each spouse being liable for tax on their attributed portion of the community income. This article will explore what happens when community property is not properly allocated between married in...
Navigating the Complexities of Cryptocurrency Taxation and Regulation in the US The rise of cryptocurrencies, led by the ever-popular Bitcoin, has caught the attention of investors worldwide. As virtual currencies continue to appreciate significantly, individuals and businesses are eager to capitalize on the potential financial gains. However, the ...
Overview Depending on the amount of taxes, penalties, and interest owed to the IRS, you may be considering an Offer in Compromise (“OIC”). However, to pay “pennies on the dollar,” the Internal Revenue Service (“IRS”) will not accept an OIC unless the amount offered is equal to or greater than your Reasonable Collection Potential (“RCP”). What is Re...
Understanding IRS Levies and Your Rights Tax levies are scary and are extremely debilitating for all taxpayers. Levies involve the actual seizure of property to satisfy a tax debt. Under Internal Revenue Code (“IRC”) 6331(a), the IRS has the right to seize and sell “all property and rights to property.” This means real or personal property and tang...
How to Avoid Unfair Tax Liability in Community Property States In Texas and eight other states, community property laws govern the interests of spouses in property and income acquired or earned during their marriage. In general, community property laws affect how a couple will figure their income on their federal income tax returns if they are marr...
How the IRS Determines if Your Side Business is a Hobby With the COVID-19 pandemic, many taxpayers had the luxury of working from home. Companies have since changed their in-office policies to allow employees the continued ability to work remotely. Some employers have even altered their policies entirely, allowing employees to permanently work remo...
Overview The purpose of the Streamlined Filing Compliance Procedures (“Streamlined Procedures”) is to bring U.S. taxpayers into offshore filing compliance. The Streamlined Procedures are available to taxpayers that did not willfully fail to report foreign financial assets and pay any tax due in respect of those assets. In particular, the Streamline...
How to Qualify for and Request IRS Penalty Relief So, you failed to file or failed to pay your taxes for the first time in your life and now the Internal Revenue Service is hitting you with a penalty. Guess what? With the First-Time Penalty Abatement waiver, this mishap may be forgiven. History of the First-Time Penalty Abatement Waiver Back in 200...
What Cryptocurrency Holders Need to Know About IRS Compliance Notices The IRS started sending out letters mid-July to taxpayers who have participated in virtual currency transactions. The letters consist of three different versions: Letter 6174, Letter 6174-A, and Letter 6173. Each letter's intention, according to the IRS, is to "strive to help tax...
The Risks of Failing to File Your Tax Return and How to Address It It's much more common than you might think. We have countless clients walk through our doors, asking what they should do when they haven't filed a tax return in several years (and in some cases, MANY years). Many are shocked to learn that their only concern isn't the amount that wil...
Why Public Perception of the IRS Varies and What It Means for Taxpayers Pretty interesting article from Jeff Simpson of taxprotoday.com outlining the various reasons different people either hate, fear, or just simply try to avoid the Internal Revenue Service. What may surprise some is that one particular study demonstrates that an individual's poli...
Key Situations Where CPAs Should Consult a Tax Attorney Now that tax season is over and many CPAs are "relaxing" by getting back to their regular 10-12 hour days (or hopefully taking some well-deserved vacation), I thought it was a great time to share an article published in the Journal of Accountancy entitled "10 situations when a CPA should call ...
How Unpaid Taxes Could Lead to Passport Revocation and Travel Restrictions The Woodlands, Texas - Last month, a few tax-related measures were slipped into H.R. 22, known as the "Fixing America's Surface Transportation Act." These provisions could add some significant teeth to the IRS' ability to collect past-due tax debts at a time when budget shor...
Understanding Dual-Role Worker Classification and IRS Implications For business owners, the decision on how to classify those who work for them is very important. It's been known for a while that worker classification matters are one of the key target areas for the IRS, and in an era of constant cutbacks and budget shortfalls, it's an area that wil...
