Reliance on Professional Advice Defense to IRS Penalties... [ read ]
When the IRS proposes changes to a taxpayer's return that result in an underpayment of tax, it will always consider penalties under Internal Revenue Code Section 6662 - Imposition of Accuracy-Related Penalty on Underpayments. The most common penalties proposed by the IRS are negligence and substantial understatement of income tax, both of which are 20% of the tax due.
IRS Caps Off its 2024 Dirty Dozen List with an "Everything Else" Approach... [ read ]
In grand finale style, the IRS released its last entry to its 2024 Dirty Dozen List with a catch-all listing of transactions and invitation to taxpayers to be a whistleblower.
IRS Proposes Adding Certain CRATs to the Naughty List... [ read ]
After a period of relative inactivity, over the last 18 months the IRS has increased the number of potential listed transactions including syndicated conservation easements, micro-captives, Malta pension plans and monetized installment plans. Most of these were already on the IRS Dirty Dozen list, but, so far, none of the proposed regulations regarding making these listed transactions have been finalized.
Hobby Loss and Ranches – An Overview of Section 183... [ read ]
If a taxpayer undertakes an activity with the objective of making a profit, the expenses related to the activity are generally deductible and any excess losses related to the activity can be utilized in future tax years (subject to applicable net operating loss limitations). If the activity is deemed to be subject to the "hobby loss rules" of Internal Revenue Code Section 183, however, the expenses and losses related to the activity are generally disallowed. Much to the chagrin of taxpayers in farm and ranching businesses, the IRS often comes in after the fact in an examination and makes a determination that the farm and ranching activity is not engaged in for profit and, thus, subject to the punitive hobby loss limitations. A well thought out and thorough challenge to an IRS examination is imperative.
The ERC Voluntary Disclosure Window has Closed: Will It Reopen?... [ read ]
Last Friday, March 22, the IRS ERC Voluntary Disclosure program ended. So technically, there can be no more ERC Voluntary Disclosures. Interestingly the IRS announced that the program could potentially open at a later date.
The Clock is Ticking: IRS Identifies Seven (7) ERC Warning Signs in Advance of March 22nd deadline for IRS' Voluntary Disclosure Program... [ read ]
For those procrastinating, or just discerning, taxpayers that are still considering the IRS' disclosure program for employee retention credit (ERC) claims, the IRS released today seven potential red flags to help taxpayers make a decision before the program closes on March 22, 2024.
Deadline for ERC Voluntary Disclosure is Around the Corner... [ read ]
Blog readers are well aware of the IRS continuing enforcement efforts regarding the Employer Retention Credit (ERC). One tool in that enforcement effort is the ERC voluntary disclosure program for employers who received questionable ERC refunds. Introduced on December 22, 2024, the deadline for applying, March 22, 2024, is fast approaching. Any employer who has concerns about an ERC refund should consult with a competent tax advisor as soon as possible about whether they should be considering a voluntary disclosure.
IRS Launches New Effort at High Income Non-Filers: Impacted Taxpayers Should Seek Representation... [ read ]
On February 29, 2024, the IRS announced a new effort to target high-income individuals. This time the IRS announced that they have opened 125,000 cases focusing on millionaires who have failed to file income tax returns. The IRS believes that, based on third-party information received, there may be more than $100 billion of unreported financial activity and conservatively hundreds of millions of dollars of unpaid tax.
The Most Important Elements of a Successful IRS Voluntary Disclosure? Timing and Luck.... [ read ]
As in comedy, the most important element in an IRS voluntary disclosure is generally timing. However, a couple of U.S. Tax Court memorandum opinions in Whistleblower 14376-16W v. Commissioner, T.C. Memo 2017-181 and T.C. Memo 2024-22, point out that timing and luck are the most important elements of a voluntary disclosure
Another Shot Across the ERC Bow by the IRS... [ read ]
One of my ERC friends sent me the IRS letter below that was received by one of his ERC clients about their ERC filing. The letter, Notice CP271, says there has been aggressive advertising involving ERC and the employer should confirm they are entitled to the ERC amount they claimed.
