The IRS Continues Assessing Employer Shared Responsibility Payments... [ read ]
The IRS continues issuing Letter 226-J notices proposing assessments that are commonly referred to as "employer penalties" under the Affordable Care Act. The letters state that the IRS has made a preliminary calculation of the employer's Employer Shared Responsibility Payment ("ESRP") obligation. Letter 226-J is typically accompanied by Form 14764, ESRP Response; Form 14765, Employee Premium Tax Credit Listing; and states the amount of the proposed ESRP. Employers who disagree with the proposed ESRP must complete and return Form 14764 within thirty days and identify any errors in the letter on Form 14765. In addition, the IRS frequently issues a Letter 227-K or Letter 227-L to provide employers additional information about the proposed ESRP.
IRS Criminal Investigation Releases Its 2018 Annual Report... [ read ]
On November 14, IRS Criminal Investigation released its 2018 Annual Report. The report comes on the heels of IRS-CI Deputy Chief Eric Hylton's statement at the ABA Section of Taxation meeting in early October that CI plans to hire 250 new special agents over the next 18 months.
The ‘Silver Tsunami' and the Golden Age of Wealth Transfer... [ read ]
Studies estimate that over the next fifteen years, society's aging population will transfer an unprecedented $25 trillion in wealth accumulation to the next generation. The recent spike of the lifetime estate and gift tax exemption amount inflates the opportunities for successful wealth transfer.
Tax Court Sends Another Sobering Reminder to Taxpayers: Carefully Review Your Tax Return Before Filing... [ read ]
The Tax Court made itself loud and clear again in its recent decision Yapp v. Commissioner: carefully review your return before filing even if a professional is used to prepare the return. A failure to do so can have drastic consequences down the road.
How to Respond to an IRS Backup Withholding Notice... [ read ]
The Internal Revenue Code provides that if a business files an information return that has a missing or incorrect Taxpayer Identification Number (TIN), the business will be notified by the IRS and may be required to withhold a specified percentage (24% for payments made after 12/31/17) of certain reportable payments made to the payee with the missing or incorrect TIN. Businesses that ignore the IRS notices and fail to comply may be responsible for uncollected taxes and face penalties for filing incorrect information returns.
Information Reporting Penalty and the Reasonable Cause Defense... [ read ]
Forms W-2 are subject to information reporting penalties under Sections 6721 and 6722 of the Internal Revenue Code. Section 6721 imposes a penalty for any failure to file an information return timely, for any failure to include all required information, or for the inclusion of incorrect information. Section 6722 imposes a penalty in the case of any failure to furnish a payee statement on or before the required date, any failure to include the required information, or the inclusion of incorrect information.
IRS Collection and Retirement Accounts... [ read ]
Pursuant to IRC Section 72(t)(1), if a taxpayer receives a distribution from a qualified retirement account, the taxpayer not only faces potential taxes on the distribution amount itself, but also an additional tax equal to 10% of the amount of the distribution that is includible in gross income. There are a number of exceptions to the 10% rule, most notably distributions made after the taxpayer has reached the age of 59 ½.
Does Failure to Oversee A Trusted Employee Equal Willful Conduct for the Trust Fund Recovery Penalty?... [ read ]
In prior blog posts, we discussed the McClendon case where a doctor made a loan to his business to make payroll, and in doing so, inadvertently exposed himself to liability for the trust fund recovery penalty. The 5th Circuit recently returned the case to the U.S. District Court for further consideration, including the Government's argument that the doctor's failure to oversee the trusted employee to whom he delegated the duty of filing payroll tax returns and paying the employment taxes satisfies the willfulness element of IRC Section 6672.
The Continuing Saga of Dr. McClendon and The Trust Fund Recovery Penalty... [ read ]
In a prior blog post, we discussed the case of Dr. Robert McClendon and the IRS' assessment of the Trust Fund Recovery Penalty against him due to his attempt to do the right thing. In 2016, a U.S. District Court granted the IRS' motion for summary judgement regarding the trust fund recovery penalty, because Dr. McClendon, after learning that his medical practice owed the IRS payroll taxes, loaned the business $100,000 to make its payroll to employees.
The Time is Now: Only One Month Left for Streamlined Installment Agreements (Limited Financial Information Required to Qualify!)... [ read ]
Taxpayers should be aware that the IRS's test program for streamlined installment agreements is set to expire at the end of September 2018—just one month away.
