IRS Issues Not-So-Soft Letters to 20,000 Taxpayers Disallowing ERC Claims... [ read ]
On Wednesday, the IRS announced the mailing of more than 20,000 letters to taxpayers notifying them of disallowed ERC claims. According to the announcement, the IRS is disallowing claims to entities that did not exist or did not have paid employees during the period of eligibility. This will be the first round of presumptively several rounds of letters, as the IRS continues to aggressively pursue ERC claims.On Wednesday, the IRS announced the mailing of more than 20,000 letters to taxpayers notifying them of disallowed ERC claims. According to the announcement, the IRS is disallowing claims to entities that did not exist or did not have paid employees during the period of eligibility. This will be the first round of presumptively several rounds of letters, as the IRS continues to aggressively pursue ERC claims.
Tax Court Decides What is Adequate Disclosure for Gift Tax... [ read ]
Anyone who makes a taxable gift (more than $17,000 in 2023, $18,000 in 2024) in a taxable year must file a Form 709, United States Gift Tax Return, reporting the gift to the IRS. Generally, the IRS then has three years to assess any tax due. However, if no Form 709 is filed or the gift is not adequately disclosed on the Form 709, the IRS has an indefinite time to assess any tax due.
Soroban v. Commissioner: Some Limited Partners May Be Subject to Self-Employment Tax... [ read ]
The Tax Court recently called into question whether a partner designated as a limited partner is truly a limited partner. In Soroban Capital Partners, LP v. Commissioner, the court analyzed whether a partner was truly a limited partner in the context of Section 1402(a)(13) of the Tax Code.
Court Finds Civil Fraud Penalty Not Applicable To Easement Donation Where Taxpayer Disclosed Cost Basis... [ read ]
On October 26th, the Tax Court issued an interesting opinion in Mill Road 36 Henry LLC v. Commissioner, T.C. Memo 2023-129, upholding the IRS disallowance of a $8.9 million deduction for an easement donation but also holding that a partnership's filing of an information return disclosing the wide disparity between its cost basis and claimed value of the easement donation meant there was no intent to mislead the IRS, and thus the civil fraud penalty did not apply.
Court Holds that Late-Filing Penalty is Applicable to E-Filed Tax Return... [ read ]
I've previously written blog posts regarding the IRC Section 6651 failure-to-file penalty and its application to electronically filed tax returns. On October 24th, the 11th Circuit Court of Appeals issued a decision in Lee v. United States which is the first appellate-level holding that reliance on an agent, in this case a CPA, is not reasonable cause for failure to file a timely e-filed tax return.
The Form 8300 Hazards for Businesses and Practitioners... [ read ]
The IRS has recently increased their focus and examinations of businesses who deal in cash (or cash equivalents such as cashier's checks and money orders). These examinations have led to significant fines and penalties for these unsuspecting businesses. If the IRS discovers that a business is not properly reporting cash transactions on IRS Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, the associated fines and penalties can easily amount to hundreds of thousands of dollars.
More Money, More Audits: IRS Proposes Three-Fold Increase to High-Wealth Audit Group... [ read ]
More money for the IRS means more audits for those with more money. It's just that simple. Last week, Eric Cirelli of the IRS Large Business and International (LB&I) Division gave an update on the division's priorities at the UCLA Tax Controversy Institute. A seemingly-core priority is the expansion of the IRS' global high wealth group.
Too Much of a Good Thing: IRS Expects Eight (8) Billion Filings under New Digital Asset Reporting... [ read ]
The IRS is testing the limits of the law of diminishing returns with the new digital asset reporting regime, announcing that it expects to receive eight (8) billion filings per year. Yes, billion with a "B". As background, the Infrastructure Investment Act of 2021 enacted new information reporting requirements that apply to digital asset transactions. Originally set to take effect in 2024, the IRS recently issued proposed regulations that brought both interpretative guidance as well as a delayed effective date.
Problems Money Can Solve? IRS Continues to Direct IRA Funding Towards Enforcement... [ read ]
Is non-compliance a problem money can solve? The IRS seems to think so, rolling out last week yet another set of enforcement initiatives based on Inflation Reduction Act funding. Like other recent initiatives that target wealth taxpayers and complex partnerships, these latest IRS initiatives target large corporations.
IRS Provides Procedures for ERC Claim Withdrawal: Should Employers Use Them?... [ read ]
We have written numerous times about the employee retention credit (ERC): sometimes about the IRS' focus on unscrupulous refund claims, more recently about how the IRS has stopped processing new ERC claims, and steps employers may want to consider taking. Now the IRS has yet another update regarding ERC issues, most likely motivated by an IRS desire to clear its massive backlog of ERC claims waiting to be administratively processed.