*UPDATED* IRS HAS NOW ALSO EXTENDED DUE DATE AND PAYMENT DATE FOR GIFT AND GST TAX RETURNS, AS WELL AS ESTATE TAX RETURNS, AND ASSOCIATED TAX DUE, TO JULY 15, 2020.... [ read ]
As mentioned in a previous blog post, IRS Notice 2020-18 provides an automatic extension of time to file income tax returns and pay federal income taxes until July 15, 2020 for Affected Taxpayers-defined as any person, including any individual, trust, estate, partnership, corporation, or other entity under IRC 7701(a)(1), with a federal income tax return or payment otherwise due on April 15, 2020.
IRS Called Out for Not Pursuing High Income Taxpayers... [ read ]
On May 29, 2020, the Treasury Inspector General for Tax Administration (TIGTA) issued a report entitled, "High-Income Nonfilers Owing Billions of Dollars Are Not Being Worked by the Internal Revenue Service". The report found that 879,415 high-income tastaxpayers failed to file tax returns from 2014-2016 resulting in approximately $45.7 billion in unpaid taxes. On June 4, 2020, the Senate Finance Committee Chairman, Chuck Grassley, sent a letter to IRS Commissioner, Charles Rettig, requesting information on how many tax dollars went uncollected and why there was so little effort to address the issue.
A District Court Pushes Back on Government's Willful FBAR Penalty... [ read ]
After a string of government victories in willful FBAR penalty cases, there may be some light at the end of the tunnel for taxpayers challenging an assertion of a willful FBAR penalty. In United States v. Sandra J. de Forrest , the U.S. District Court for the District of Nevada denied the government's motion for partial summary judgment regarding a willful FBAR penalty, finding there were genuine disputed material facts regarding the taxpayer's knowledge of the obligation to file an FBAR.
U.S. Tax Court Announces Trial Sessions will be Conducted Remotely... [ read ]
On May 29th, the U.S. Tax Court announced it will be conducting remote trial sessions until further notice, joining many other courts around the country.
Debt Relief: Breaking Down the Tax Aspects of Covid-19's Economic Impact - Part II... [ read ]
As discussed in Part I of this series, the cancellation of indebtedness, whether in whole or in part, generally results in COD Income to a taxpayer which must be included in gross income. Section 108 of the Internal Revenue Code (the "Code"), though, provides a handful of exceptions to this general rule of income inclusion. However, due to Covid-19, Congress has expanded exceptions to the general COD Income rule beyond those in section 108. Furthermore, it is possible, based on measures passed during prior economic crises, that Congress will pass additional exceptions to the general COD Income rule and that situations will arise in which COD Income exceptions may be expanded beyond their typical scope.
Texas Comptroller Prevails in a Texas Franchise Tax Sourcing Case involving Satellite-Radio Programming — But Taxpayers Could Also Benefit in Other Contexts... [ read ]
In a case with potentially broad implications, the Third Court of Appeals recently agreed with the Texas Comptroller that revenues received by a taxpayer from subscription-based satellite-radio programming could be sourced to the location of the subscribers for Texas franchise tax purposes rather than to where the programming actually occurred.
Update on IRS Voluntary Disclosures... [ read ]
In a previous blog post, we discussed how and when to make a voluntary disclosure to the IRS using the revised voluntary disclosure guidelines announced by the IRS in November 2018. In April 2020, the IRS quietly updated Form 14457, Voluntary Disclosure Practice Preclearance Request and Application and its instructions. The changes to the form and instructions answer some of the outstanding questions but also raise new questions. For example, while the instructions clearly state that a disclosure will not guarantee immunity from prosecution, they also state multiple times that the practice provides a way to "avoid potential criminal prosecution."
The Texas Supreme Court Holds that the Sale of Military Aircraft to the U.S. Government for Foreign Buyers Could not be Sourced to Texas for Franchise Tax Purposes... [ read ]
In a recent decision involving the apportionment factor for Texas franchise tax purposes, the Texas Supreme Court held that the sale of certain military aircraft to the U.S. Government for ultimate delivery to foreign buyers could not be sourced to Texas, even though legal title and possession transferred in Texas, where the U.S. Government's involvement was statutorily required under federal law. In so holding, the Court disclaimed deciding whether tangible personal property must be sold to a buyer located in Texas or simply delivered to a point in Texas before the sale can be sourced to Texas. See Lockheed Martin Corp. v. Hegar, 2020 WL 2089741 (Tex. 2020). As discussed below, the decision is potentially significant both with respect to what it holds and also what it expressly disclaims to hold.
Debt Relief: Breaking Down the Tax Aspects of Covid-19's Economic Impact – Part I.... [ read ]
This is the first in a series of blogs which will address various tax aspects of loan modification, debt relief, restructuring, bankruptcy, and other topics that will likely be at the forefront of the legal landscape in the near future as a result of Covid-19. The posts in this series, while not exhaustive of all topics, will provide guidance on important practice points and raise several issues taxpayers and practitioners should be aware of. The first topic in the series, cancellation of indebtedness, illustrates the often-unexpected tax consequences accompanying relief from indebtedness.
EXPENSES PAID WITH FORGIVEN PAYMENT PROTECTION PLAN (PPP) LOAN PROCEEDS ARE NOT DEDUCTIBLE... [ read ]
The CARES ACT added the Paycheck Protection Plan program, which provides for a loan on favorable terms to qualifying small businesses to pay permitted expenses. These expenses are limited to payroll costs, mortgage interest, rent and utilities --all as defined in the statute and in SBA Guidance and FAQs.
