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 taxpayers understand their tax and filing obligations and how to correct ...

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 will be due and payable to the IRS after the accountants prepare and file these returns. A much bigger concern in some cases is the potential criminal liability that attaches when taxpayers purposefully don't file a tax return. Under I.R.C. section 7203, willfully failing to file a tax return is a...

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 will continue to have their attention. As recently as the summer of 2014, the IRS announced that it was stepping up its audits of S Corporations, largely due to what has been perceived as abuses in this area. Combined with a joint information-sharing initiative between the IRS and the U.S....

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 political party affiliation seems to coorelate pretty well with their overall opinion of the agency. Click here to take a look.  As a practicioner that has dealt with the agency and its employees for years now, there's no doubt the massive budget cuts and personnel reductions over the last few years have certainly had an impact on the IRS' handling of its administrative functions, including in the tax audit and appeals arena where we deal...

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 "timeout"" that essentially lays out a list of instances when CPAs might be in situation where calling in legal counsel is in their (and more importantly their client's) best interest. It's a well-written but somewhat long article, and it was published on April 13th, so I feel pretty confident that most CPAs didn't even notice it then because they were pretty busy to put it lightly. Here's a link to the article:http://www.journalofaccountancy.com/issues/2015/apr/when-tax-accountants-should-call-legal-counsel.html

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 2001, the IRS introduced the First-Time Penalty Abatement waiver (“FTA”) to assist taxpayers dealing with federal tax issues. The purpose of FTA is to ensure compliance for typically responsible taxpayers by providing a one-time waiver; however, FTA can only abate three types of penalties: Failure to Pay (IRC §...

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 remotely. With all the extra time no longer spent in traffic or at the water cooler, some people have seized the opportunity to chase their dreams and take on new hobbies or open a side business. It is important to understand the tax consequences of these side businesses. According to Internal Revenue Code (“IRC”) § 162, ordinary and necessary...

  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 married, yet file separate returns. While there are benefits to filing a single tax return – married filing jointly – sometimes it can be to the couple’s advantage to file separate returns. Ultimately, however, filing of separate returns can result in one spouse having to disproportionately pay taxes. Under Internal Revenue Code (“IRC”) §...

      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 tangible or intangible property, including items such as a personal vehicle and residence, as well as wages, investment assets, receivables, and bank accounts.   When the IRS first levies a taxpayer, the agency will follow a set process: The tax must first be assessed;The taxpayer will be...

 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 shortfalls have limited the agency's ability to do so efficiently. They i...

Two of the most common payment options for delinquent tax debts are installment agreements and offers in compromise. Let’s discuss theses options below, along with the key considerations for choosing which route might be best in a taxpayer’s particular case. If you owe the IRS, and are considering how to pay off the debt, contact The Wilson Firm. We have both the experience and expertise to make the right decision. IRS Installment Agreement: An installment agreement allows taxpayers the opportunity to pay their debts in smaller, more manageable amounts. Installment agreements typically consist of equal monthly payments. The number of monthly...

A wise man once said, “Fool me once, shame on you; fool me twice, shame on me.” Whoever this so-called wise man was, he had never encountered the IRS. If he had, the corrected quote would be something like this: “Fool the IRS once, go straight to jail.” When it comes to trying to defraud the Internal Revenue Service, just don’t. At worse you end up in prison, at best, you end up looking over your shoulder for the rest of your life. As we get closer to the April 18, 2023 filing deadline, and the economy gets worse, it can...

  The Collection Statute Expiration Date, often referred to as the “CSED”, is the maximum time period the IRS will look back to collect unpaid taxes. Similar to a statute of limitation, where anything beyond that date is off-limits, the CSED is 10 years from the date the tax was originally assessed. For example, if you filed a tax return for the 2018 tax year on or before April 15, 2019 and owed tax with that return, those taxes were deemed to have been assessed on April 15, 2020. The CSED date on any unpaid amounts would be April 15, 2029....

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 shortfalls have limited the agency's ability to do so efficiently. They include the addition of a new section to the Internal Revenue Code, I.R.C. § 7345, which authorizes the Treasury Secretary to certify that a taxpayer has a "seriously delinquent tax debt." A "seriously delinquent tax debt" is defined as a federal tax liability which been assessed and is greater than...

  When filing a joint tax return, married taxpayers are often privy to certain tax benefits. Generally, married taxpayers take advantage of a higher standard deduction and a lower tax rate when filing their taxes together. However, as a result of a joint filing, both taxpayers are equally responsible for the possible liability that comes with joint filing status. But what if one spouse wasn’t exactly honest about their income when filing the tax return, and the other spouse didn’t know? By requesting Innocent Spouse Relief, a spouse can be relieved of the responsibility for paying tax, interest, and penalties if...

Written by Jack Naranjo. Are you engaged to someone with significant IRS debt? Learn how community property laws in Texas might affect your earnings and property, and explore options to protect your financial interests. When Your Fiancé/Fiancée Owes Money to the IRS. Assume that A is engaged to marry B. They live in Texas. B owes the IRS over $100,000. A has income from her personal earnings and income-producing property (e.g., rental property).Should A be concerned that the IRS could come after her income to satisfy B’s federal income tax liability? Should B be concerned that, if B tries to apply...

Over the past decade, the IRS has intensified scrutiny on foreign asset reporting, with non-compliance leading to severe tax penalty implications, including hefty fines and criminal charges for U.S. taxpayers. Though we have already discussed at length the FBAR and Form 8938, this article will take a deeper dive into one of the most common international information reporting forms - Form 3520. Who is Required to Report? U.S. taxpayers are obliged under tax law to report global income. "United States Persons" who must report include:U.S. citizens or residentsDomestic partnerships and corporationsU.S. estates (excluding foreign ones)Trusts under U.S. jurisdictionOthers not classified as...

An Introduction to Form 5471 - Information Return of U.S. Persons With Respect to Certain Foreign Corporations   Purpose of Form Form 5471 is used to satisfy the reporting requirements of Internal Revenue Code (“IRC”) §§ 6038 (information reporting with respect to certain foreign corporations and partnerships) and 6046 (returns as to organization or reorganization of foreign corporations and as to acquisitions of their stock). Likewise, Form 5471 is used to report amounts related to IRC § 965 (treatment of deferred foreign income upon transition to participation exemption system of taxation). Certain U.S. persons who are officers, directors, or shareholders in...

  Introduction Dogecoin, Shiba, Bitcoin, Ethereum. If none of those sound familiar, then you might have been living under a rock the past few years. From online forums to mainstream news networks, crypto has been a hot topic. We have seen people lose fortunes to crypto, while others got rich seemingly overnight. Because crypto is such a new technology, the final verdict on some of the more complex tax issues related to it are up in the air. While the future holds many uncertainties on how crypto tax issues will be litigated, income that comes from crypto is taxable income like...

  Under the Bank Secrecy Act, formerly known as the Currency and Foreign Transactions Report Act of 1970, Congress enacted the requirement that certain foreign bank and financial accounts must be reported by United States taxpayers by filing a Report of Foreign Bank and Financial Accounts (“FBAR”).   What is an FBAR? An FBAR is a Foreign Bank Account and Financial Asset Report, which is filed on FinCEN Form 114. Congress’s rationale for requiring the reporting of foreign bank accounts and financial assets is simple – to prevent tax evasion. Although the IRS retains civil FBAR enforcement authority, FinCEN Form 114...