PLR Update: IRS Issues its "No Ruling" List for 2020 as well as Extends a Surprising Invitation for PLR Requests in a Hot Button Area... [ read ]
In a previous blog post, I outlined the IRS private letter ruling process, including the mechanics of making a request and tips for presenting your ruling request to the IRS. In this blog post, I touch on the IRS' "no ruling" lists issued this month as well as discuss a strange invitation by the IRS for taxpayers to use the private letter ruling process to seek guidance on …. wait for it….. cryptocurrency taxation.
Another Arrow in the Taxpayer's Quiver against Trust Fund Penalties: Supervisory Approval... [ read ]
We all know that the IRS is quick to pull the trigger on penalties, especially trust fund penalties, which the IRS rightfully views as Uncle Sam's money. But the Tax Court's January 21st decision in Chadwick vs. Commissioner makes clear that even trust fund penalties must be approved by a supervisor when proposed; otherwise, the penalties are invalid.
Update on IRS Civil Enforcement Priorities... [ read ]
Last week, I participated in a conference call with IRS officials from Examination and Collection who were discussing the IRS' 2020 enforcement priorities. Here are the take-aways from the call.
Surprise, Surprise, An Estate Has Reasonable Cause For Filing A Tax Return Late... [ read ]
In prior blog posts we have discussed the uphill battle an estate faces when it requests abatement of a late filing penalty when the Form 706, United States Estate Tax Return, is not timely filed. Although there are cases where an estate has prevailed on a reasonable cause/reliance defense, they are few and far between. In the typical case, the court cites United States v. Boyle in holding that a taxpayer can rely on a tax professional for tax advice, but not regarding the "ministerial act" of filing a tax return on time.
IRS Coming After Tax-Delinquent Wealthy People in 2020... [ read ]
At recent tax programs, IRS officials referenced a new program called "Hi-Def" which will be targeting wealthy people who have not filed tax returns. The program is intended to address the perception that the IRS does not pursue delinquent wealthy people.
Fifteen Things You Should Know About Selling Your Business... [ read ]
1. Company Records. When you first begin contemplating a sale, you need to make sure the business's records are in order and up to date. You want your business's records in good shape to produce to a potential buyer at the due diligence stage. Keep a minute book with annual minutes or annual unanimous written consents as well as consents (or minutes of special meetings) approving major transactions, such as loans, etc. Retain copies of all of the business's fully executed contracts (loan documents, customer agreements, vendor agreements). This way, there is no question whether the company is obligated under a contract for which you have only kept a partially executed copy.
Inflation-Adjusted 2020 Unified Estate and Gift Tax Exclusion Amounts... [ read ]
It just keeps getting better for wealthy individuals! The Internal Revenue Service recently announced the inflation-adjusted estate and gift tax exclusion amount for 2020.
CRYPTOCURRENCY AND COMPENSATION: US TAX AND SECURITIES LAW RAMIFICATIONS... [ read ]
As discussed in a prior blog post by my colleague, Anthony Daddino, the IRS began sending "educational" letters (i.e., warning letters) to taxpayers regarding their potential failure to report or pay tax on cryptocurrency transactions. The identity of the recipients of such educational letters allegedly arose from the information obtained by the IRS from the "John Doe" summons served on Coinbase, Inc., a cryptocurrency exchange that primarily dealt in Bitcoin transactions during the time period covered by the summons. The primary focus of the letters was to "educate" taxpayers who purportedly engaged in sales or exchanges of virtual currency; however, such letters also identified an additional source of taxable income and reporting requirements that could arise from cryptocurrency payments made to employees or independent contractors for their services (i.e., compensation).
IRS Form 8275: To Disclose or Not Disclose -- That Is The Question... [ read ]
At least once in their career most tax return preparers have faced the dilemma of whether and how to make a disclosure with a tax return. A disclosure is an extra explanation beyond the usual income and expenses shown on a tax return. Not surprisingly, most taxpayers do not want to disclose anything more than necessary to the IRS. There may be privacy concerns or they just don't want the IRS to know anything more than necessary about them or their business. They also may be concerned that a disclosure is a red flag and will increase the chances of an IRS audit. All of these are legitimate concerns, but a disclosure can protect the taxpayer -- and maybe more importantly the tax return preparer -- from penalties.
New IRS Ruling Shows the Dangers of Standard LLC Agreement Provisions When an S Election is Made... [ read ]
Most LLC agreements provide that distributions will be made to members in accordance with their positive capital accounts. In fact it is virtually boilerplate. So what happens when an LLC makes a Subchapter S election with this provision in its LLC agreement? You guessed it -- a second stock of class, and the need for IRS relief in resurrecting the S election, as a new IRS private letter ruling reveals.