ERC: Is the IRS Trying to Ski Uphill?... [ read ]
One of my favorite things to do is snow ski. I've been doing it for a long time and try to go on a couple of ski trips every year. In fact, I just returned from a trip with a couple of friends including my colleague Alan Davis, who is not only a great estate planning attorney, he is also an excellent skier. But I digress. Uphill skiing was brought to mind when I saw on March 7th the IRS released its third warning in six months regarding fraud and abuse in the Employee Retention Credit (ERC) program.
BREAKING NEWS: Supreme Court Rejects the Government's Aggressive FBAR Argument; FBAR Nonwillful Penalties Apply Per Form.... [ read ]
When a taxpayer omits a foreign account from an FBAR form and that omission is nonwillful, federal law can still impose a steep monetary penalty. Originally that penalty was capped at $10,000, but the law requires that the maximum penalty be inflation-adjusted each year. Currently, the maximum nonwillful penalty is $15,611.
The IRS Gets Serious About ERC Abuse... [ read ]
In a prior blog post, I discussed how both the IRS Examination Division and the IRS Criminal Investigation Division were starting to focus on Employee Retention Credits (ERC) and ERC promoters. In a recent interview, an IRS CID official said that there have already been 10 or 11 ERC indictments.
Can BBA Partners Make Deposits Under IRC Section 6603?... [ read ]
If you owe the IRS money in 2023, the interest accruals are far more costly than they have been in recent history. That is because Congress requires the IRS to charge a mark-up on the federal short-term rate, which has skyrocketed. Congress also has mandated that interest be compounded daily. Under these rules, most taxpayers are currently facing a 7% interest rate that compounds daily. Given these staggering interest rates, more and more of my clients are considering making what is known as a "deposit" to the IRS. Deposits stop interest from accruing to the extent of the amount of the deposit.
IRS Proposes A New Acronym and a New Tip Reporting Program... [ read ]
The government loves a good acronym for a program, institution or act, like FATCA (Foreign Account Tax Compliance Act), TEFRA (Tax Equality and Fiscal Responsibility Act), NASA or IRS. There must be a branch of the government solely dedicated to creating acronyms and making sure the acronym is not offensive, like Seattle's South Lake Union Trolley which I understand was quickly changed to South Lake Union Streetcar.
What Do The National Taxpayer Advocate and David Letterman Have In Common?... [ read ]
When I was in college, Late Night With David Letterman, which was on NBC immediately after The Tonight Show With Johnny Carson, was must see TV. I know I am dating myself, but almost every weeknight my fraternity brothers and I would watch Late Night to see Dave, Paul Schafer, Larry "Bud" Melman, stupid pet tricks, stupid people tricks, the guy under the seats and other wacky bits. Of course, this was only after we had completed 2-3 hours of quality study time at the fraternity house. I know from recent experience that you can waste a whole weekend watching old Late Night clips on YouTube, including an audience favorite, the nightly Top 10 list. The Top 10 list was usually topical, but could be anything.
Proposed Revisions to Texas Comptroller Rule 3.591 (Apportionment) Seek to Incorporate the Texas Supreme Court's Holding in Sirius XM Radio, Inc.... [ read ]
In the Friday, January 20, 2023 edition of the Texas Register, the Texas Comptroller published yet an another set of proposed revisions to Texas Comptroller Rule 3.591, Franchise Tax Apportionment. See 48 Tex. Reg. 200 (Jan. 20, 2023).
Prevailing On Business vs. Hobby Determinations Is Now More Important Than Ever... [ read ]
Recently, Joel Crouch wrote an excellent blog about a taxpayer who prevailed over the IRS, which had argued that the taxpayer's ranching business was not really a business. While it is great that the taxpayer was victorious, had the Tax Court determined that the ranching operation was not a business, but a hobby, the taxpayer may have still been entitled to claim some deductions for its hobby expenses. This is, in part, because the years at issue in that case were 2015, 2016, and 2017. The legal landscape is much less friendly for recent years.
Tax Court Starts Off The Year Allowing the Deduction of Significant Losses from a Cattle Ranch... [ read ]
The U.S. Tax Court started off the year with a very nice win for taxpayers. In Wondries v. Commissioner, the court rejected the IRS's disallowance of loss deductions under IRC Section 183 and held that the taxpayers engaged in their cattle ranching activity for profit rather than as a hobby.
The IRS Compounding Interest Rate is 7%: Should You Make a Deposit or Advance Payment Now?... [ read ]
The IRS will charge interest on any amount of tax ultimately due. For taxpayers wanting to stop the accrual of interest before the liability is paid, some or all of the proposed deficiency can be deposited or paid to the IRS while the controversy continues.
