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.
The Mixed Bag of Proposed §199A Regulations... [ read ]
The IRS issued the eagerly awaited §199A proposed regulations on August 8, which will please some, but also leave others disappointed.
Are E-Filed Tax Returns Subject to the Same Late Filing Rules as Paper Tax Returns?... [ read ]
On July 11th, the 5th Circuit Court of Appeals heard arguments in Haynes v. United States regarding the application of a late filing penalty to an electronically filed tax return that was filed late due to a computer software malfunction. The question before the 5th Circuit is whether the U.S. Supreme Court decision in U.S. v. Boyle is still valid law in the age of electronic filing of tax returns.
The IRS Adds Repatriation, Virtual Currency, and S Corporations Compliance to its New Enforcement Campaigns... [ read ]
The IRS Large Business and International division – which serves corporations, subchapter S corporations, and partnerships with assets greater than $10 million – has announced a new series of targeted audits, referred to as "campaigns." As previously reported, the IRS is focusing its examinations on specific issues in an effort to channel the development and determination of tax issues into the hands of those agents that have the most knowledge and training in that particular subject matter. Among the tax issues that are the subject of these new audit campaigns are S Corporation distributions, Virtual Currency, and the Section 965 Transition Tax.
Can a Taxpayer Avoid a Civil Fraud Penalty by Filing an Amended Tax Return?... [ read ]
In a prior blog post, we discussed amending a tax return to avoid the accuracy-related penalties. This blog post will discuss whether the same strategy can be used to avoid the civil fraud penalty under IRC Section 6663.
The Tax Court Hands the IRS Another Win in its Campaign Against Small Captive Insurance Arrangements... [ read ]
The IRS prevailed in another challenge against a small captive insurance arrangement in the case of Reserve Mechanical Corp. v. Comm'r, decided by the Tax Court on June 18, 2018. This is the second case decided in the IRS' favor involving a small captive, the first being Avrahami v. Commissioner decided last year. As the IRS seeks to build on these judicial victories, taxpayers would be well advised to look closely at their captive insurance programs to make sure they are not at risk for suffering the same fate as these taxpayers.