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 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...
Why Tax Issues Matter in Divorce Tax issues are frequently overlooked in divorce litigation. Parties often focus on custody disputes and dividing assets, but the tax consequences of those decisions can dramatically alter the true economic outcome of the divorce. This article discusses three very important tax issues that arise in a divorce case and...
Understanding What “Tax-Free” Really Means in Business Sales Now, I know what you are thinking nothing is “tax-free.” Yes, that is correct. Generally, tax-free in tax planning is a tax deferral. Also, the tax deferral discussed in this article applies to capital gains. It does not apply to ordinary income items from the sale of the business, includ...
Overview of Disclosure Requirements This is the second part of a two-part article. In Part 1, we briefly covered several international disclosure forms that must be submitted by certain U.S. taxpayers (including nonresident aliens that meet the “substantial presence test”) in connection with international accounts or transactions, including: FBAR/F...
Overview of Disclosure Requirements This two-part article summarizes FinCen and IRS reporting requirements of U.S. citizens,resident aliens, certain non-resident aliens (e.g., who meet the “substantial presencetest”), domestic entities, domestic trusts and domestic estates that have an interest inforeign financial accounts, brokerage accounts, reti...
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...
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...
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 r...
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...
“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...
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...
Overview The purpose of the Streamlined Foreign Offshore Procedures (“SFOP”) is to bring foreign or non-U.S. resident taxpayers into compliance for reporting foreign financial assets. In other words, SFOP provides taxpayers, who comply with the eligibility criteria outlined below, with amnesty from penalties such as failure-to-file and failure-to-p...
Overview The Texas Voluntary Disclosure Program (VDP), administered by the Texas Comptroller of Public Accounts, allows businesses and individuals to report and pay previously unpaid or underpaid taxes voluntarily. This program incentivizes compliance by offering significant benefits, such as penalty waivers and, in most cases, interest waivers, fo...
Everything to Know about Texas Sales and Use Tax Audits Facing a Texas sales and use tax audit can be daunting, but understanding the process can help your business prepare and navigate it with confidence. At The Wilson Firm, we specialize in guiding businesses through tax audits to ensure compliance and minimize risks. The Texas Comptroller of Pub...
Everything to Know About Tax Permits in Texas If you're launching a new business in Texas or expanding your existing operations, understanding how to apply for a Texas sales tax permit is a critical step toward ensuring legal compliance and seamless business operations. A sales tax permit is not just a regulatory requirement; it’s a cornerstone of ...
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 ...
The Risks of Fraudulent Employee Retention Credit Claims 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 ...
Everything to Know About Service Sales Tax in Texas Navigating Texas sales tax on services is vital for businesses to stay compliant and avoid penalties. The Wilson Firm specializes in guiding clients through Texas tax regulations. Texas collects approximately $47 billion in sales tax annually, with services accounting for about 20% of taxable reve...
Everything to Know About the VDP If you've ever worried about unreported income, offshore accounts, or other tax issues that might lead to serious consequences, the Voluntary Disclosure Program (VDP) could be a lifeline. As a federal tax program administered by the Internal Revenue Service (IRS), the VDP allows taxpayers to come forward voluntarily...
