IRS Offshore Compliance Options for Foreign Asset Reporting Many tax practitioners and taxpayers have noticed increased enforcement in the international tax space. It’s always better to correct failures in filing foreign information returns or FBARs before receiving a letter from the IRS. In certain situations, taxpayers who are living in the Unite...
What Is a Trust Fund Recovery Penalty and How the IRS Enforces It A Trust Fund Recovery Penalty (TFRP) is one of the most serious payroll tax enforcement actions the IRS can impose. When employment taxes are not properly remitted, the IRS may assess personal liability against individuals deemed responsible for collecting and paying those taxes. Unl...
What Is the Section 121 Principal Residence Gain Exclusion? When a taxpayer sells a principal residence, the Internal Revenue Code allows eligible homeowners to exclude a portion of the gain from taxable income under Section 121. Individuals may exclude up to $250,000 of gain, while married couples filing jointly may exclude up to $500,000 if they ...
Introduction Many business owners find the appeals process for Texas Comptroller sales tax audits daunting. The best way to resolve contested issues in an audit is directly with the auditor. However, when you are unable come to an agreement with the auditor, there are various channels available to taxpayers to pursue a more favorable result. The pu...
How Texas Sales Tax Audits Create Additional Tax and Penalty Exposure Businesses operating in Texas must comply with sales and use tax requirements enforced by the Texas Comptroller. When discrepancies are identified during an audit, the state may assess additional tax, interest, and penalties based on its review of the company’s records. Sales tax...
What is the TFRP? The Trust Fund Recovery Penalty (TFRP) allows the IRS to hold certain individuals personally liable for the unpaid employment taxes of a business. Under Section 6672 of the Internal Revenue Code, any person who is required to collect and pay over any tax and fails to do so may be liable for a penalty equal to the amount of tax tha...
Fraud Penalties in Sales Tax Audits and How They Are Challenged Sales tax audits conducted by state taxing authorities can result in additional tax assessments, interest, and penalties when discrepancies are identified. In certain cases, the taxing authority may assert fraud penalties, which significantly increase the total liability. Fraud penalti...
How an Offer in Compromise Can Reduce IRS Tax Debt An Offer in Compromise, or OIC, is an IRS program that allows qualifying taxpayers to settle their tax debt for less than the full amount owed. This option is available when paying the full liability would create financial hardship or when the taxpayer’s financial situation limits their ability to ...
What Is a Trust Fund Recovery Penalty and Who Can Be Held Liable A Trust Fund Recovery Penalty, or TFRP, may be assessed by the IRS when employment taxes withheld from employees are not properly remitted to the government. These taxes are considered trust fund taxes because they are collected from employees and held by the employer for payment to t...
An assessment is the IRS’s formal recording of a tax liability on a taxpayer’s account. Once a liability has been assessed, the IRS is authorized to begin collection efforts, such as sending bills, filing liens, and issuing levies. Tax and penalty assessments can arise in a number of ways. Perhaps a taxpayer never filed a return, so the IRS filed a...
How Texas Sales Tax Audits Lead to Penalties and Assessments State tax authorities regularly conduct sales tax audits to verify that businesses are properly collecting, reporting, and remitting sales tax. When discrepancies are identified, the taxing authority may assess additional tax, interest, and penalties. Penalties imposed during a sales tax ...
How IRS Tax Assessments Arise From Withholding Errors Taxpayers receive credit for federal income taxes withheld from wages as reported on Form W-2. When the IRS cannot verify withholding or believes it was not properly reported, it may issue a notice proposing additional tax based on its internal records. In some cases, discrepancies between emplo...
What is reasonable cause? The IRS imposes penalties for various infractions, including late filing, late payment, and accuracy-related penalties. Generally, taxpayers must demonstrate that their error or omission was due to reasonable cause for the IRS to grant a penalty abatement. Part 20 of the Internal Revenue Manual (IRM) provides a definition ...
Overview of the Voluntary Disclosure Program The IRS Voluntary Disclosure Program (“VDP”) provides taxpayers who have willfully failed to report income, assets, or other tax-related information an avenue to resolve their noncompliance with the IRS. In order to be eligible, taxpayers must have willfully violated the tax law and must make a disclosur...
