Publications

Publications

Publications

IRS Provides Temporary Relief for Taxpayers in Audits and Collections – Certain Activities Continue TEST

By: Steven Walker

On March 25, 2020, the Internal Revenue Service issued a news release announcing the People First Initiative.  See IR-2020-59 (03-25-2020).  The new initiative is aimed at helping taxpayers by providing relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions.  The temporary relief lasts through July 15, 2020, when the IRS presumably will resume normal operations.  Significantly, the People First Initiate provides: The IRS will generally not start new field, office, and correspondence examinations, and General collection activities are suspended, but certain actions will continue. Highlights of the provisions are outlined below: Suspended Collection Activities...
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District Court Lowers Penalties for Form 3520 Nonfiling to Zero TEST

By: Steven Walker

A recent taxpayer-friendly court decision from New York is worth reviewing for practitioners who handle late-filed Forms 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, for offshore trusts. The federal district court struck down the IRS's imposition of a 35% civil penalty for failing to timely file a Form 3520 — an information return used to report, among other things, transactions with foreign trusts — and limited the penalty to a much smaller amount, 5%. Moreover, the court ruled that the penalty must be computed based upon the year-end value of the trust's...
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Do You Own a Foreign Corporation? IRS Presses Form 5471 Penalties TEST

By: Steven Walker

The San Francisco Bay Area is a focal point for international business. It is common for individuals to start a business, and later expand operations overseas to Europe or Asia.  There is no prohibition in expanding overseas, but U.S. persons (a defined term that means U.S. citizens and residents of the United States) are required to report their foreign business activities on "information returns" filed with the Internal Revenue Service.  While there may be no tax due, the returns report information that is used to satisfy the reporting requirements of sections 6038 and 6046, and the related regulations.  A trap...
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Are You an Owner or Beneficiary of a Foreign Trust or Receive a Foreign Gift or Bequest? TEST

By: Steven Walker

The Government is pressing taxpayers with large civil penalties for late-filed Forms 3520.  The IRS may assert the penalty in the context of a foreign trust or if you are a U.S. person who received foreign gifts of money or other property.  This is an evolving and complex area of the law, and there is a recent, taxpayer-friendly case from New York that is worth reading. The Wilson Case In Wilson v. United States, 2019 US Dist. LEXIS 199902 (ED NY. Nov. 18, 2019), the United States District Court for the Eastern District of New York ruled that the IRS...
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Key Moves in Difficult Times -Options for Taxpayers Facing Economic Uncertainty TEST

By: Steven Walker

We are in tough economic times.  A record number of Americans have filed for unemployment benefits, and business owners are forecasting a significant drop in profits, as they seek to cut costs and penny-pinch to make it through the year.  The near-term outlook is tight, as we work together to help fight and pull out of a health crisis. Despite the difficult times, taxpayers should remain calm, stay focused, and take advantage of the procedural relief offered by the IRS and the Franchise Tax Board to keep your head above the water and eventually get back on your feet.  One...
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Relief for Taxpayers Affected by Coronavirus Disease 2019 (COVID-19) Pandemic TEST

By: Steven Walker

The recent COVID-19 pandemic has already had a significant effect on our personal and professional lives.  Between states and localities implementing “shelter-in-place” orders, commercial activity grinding to a near halt, and the stock market seeing massive losses, the United States has taken a severe economic hit as well.  Many taxpayers may be wondering how the COVID-19 virus will affect tax obligations given the rampant financial hardship and uncertainty in the United States. Here is what to know. IRS Extends Filing Deadline and Federal Tax Payments The IRS announced on March 21, 2020, that the federal income tax filing due date...
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Congress Passes New Law, Allows Early Distribution from IRAs for COVID-19 TEST

By: Steven Walker

A new law allows individuals under the age of 60 to withdraw up to $100,000 from their IRAs without facing an early distribution penalty. As Congress begins to implement the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act in the coming days, there are important aspects of the law Americans should know about aside from $1,200 direct payments.  Individuals in dire financial circumstances due to the COVID-19 pandemic may be looking to their retirement accounts for relief. The CARES Act allows taxpayers to distribute up to $100,000 from their IRA prior to their 60th birthday without paying the 10% early...
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Avoiding Civil Penalties for Failing to File or Pay TEST

By: Steven Walker

The IRS can assess a penalty for the failure to timely file a tax return on or before the due date, and a penalty for failing to timely pay the balance shown on a return.  See § IRC 6651(a)(1) and (2).  The amount of the penalties can be substantial, and if unchecked, they can total up to 25 percent of the tax due on the return.  It is important to remember that an extension to file doesn’t extend the time to pay, and so the prudent course of action is to always timely file to avoid the failure to file...
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Best Practices for Making Tax Payments – Don’t Send in a Check TEST

By: Steven Walker

Both the IRS and the FTB offer the ability to make electronic payments online.  Therefore, the days of manually writing a check and mailing it to the taxing agency via certified mail make little sense, given that secure options exist for electronic payments.  Manual checks can be lost in the mail, stolen, or incorrectly posted to the wrong tax period. For the IRS, individual taxpayers can make an electronic payment online through Direct Pay with a bank account.  See the following link:  https://www.irs.gov/payments/direct-pay.  An individual taxpayer may use this service to pay Form 1040 taxes, estimated taxes, or other associated...
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