Rockville Tax Law Blog

New IRS program suspends installment agreements, other rules

In the wake of the COVID-19 pandemic, the Internal Revenue Service has created a program designed to assist people who may be having challenges with filing their taxes during this uncertain time. The program, called the IRS People First Initiative, will include a variety of actions, and an exact timeline for when these actions will be implemented is expected in the coming weeks. 

Do IRS diminished resources mean reduced enforcement?

You may have heard recently that a lack of staff resources has led to reduced tax compliance. From 2010 to 2017 there has been a significant decrease in IRS personnel used for audit examinations from 13,138 to 8,205, representing a 38 percent decrease in just seven years. 

However, the IRS is still paying attention.  While it may be true on the human resources side, it is certainly not the case that it has led to fewer audits. In fact, as people-power has gone down at the IRS, technology has increased.

Are you eligible to take a foreign tax credit?

The IRS just recently announced the final regulations that can aid taxpayers in determining their eligibility and calculations for foreign tax credits. The changes have come in response to the Tax Cuts and Jobs Act as well as the need to develop regulations for foreign tax credit issues that have arisen, such as the apportionment of R&D costs and foreign tax redeterminations determined under Section 905 of the tax code.

 

Filing and paying company withholding taxes

The government requires that all employers file and pay their taxes in a timely manner. This includes making federal tax deposits and filing an annual 940 or 940EZ, filing quarterly 941 forms, filing annual 945 forms, and filing annual W-2 wage and tax statements for each employee. 

Failing to stay on top of payroll taxes can get your company into hot water

Understanding payroll tax withholding is crucial for business, not only to ensure the employees are making appropriate contributions, but also to prevent problems with the IRS. As an employer, your company's payroll tax withholding is a legal obligation and it is your responsibility to ensure the withheld taxable portions are paid in a timely manner. The amount of taxes to be withheld will be based on your employee's W4 forms submitted to the federal, state and, in some places, city taxing authorities.

Recent Tax Law Updates: October 2019

IRS Updates on Treatment of Virtual Currency

While continuing to treat virtual currency as a capital asset, in Notice 2014-21, 2014-16 IRB 938, the IRS speaks to its equivalent value in real currency and its treatment. On October 9, 2019, the IRS issued Rev Rul 2019-24, 2019-44 IRB, Among other items, the IRS noted that:

Recent Tax Law Updates: September 2019

Repeated Bankruptcies Extend Length Of Non-Dischargability. A bankruptcy court in Oklahoma found that the three-year look-back period during which tax debts are not dischargeable extended for the times a taxpayer filed previous bankruptcies. (Nachimson, (Bktcy Ct OK 8/23/2019) 124 AFTR 2d ¶2019-5171)

IRC 6320: Prior Opportunity To Dispute Liabilities Prevents Ability To Raise Later In CDPH. Tax Court was found to have properly upheld IRS's administrative determination to proceed with a lien filing where the IRS Settlement Officer met all Code Sec. 6330(c) requirements and the taxpayer had been given a deficiency notice - and actually litigated those liabilities in an earlier case. (Hom v. Comm., CA 9, 124 AFTR 2d ¶2019-5181)

Recent Tax Law Updates: August 2019

IRS Enforces Stock-Based Compensation Rule. The Large Business and International Division formally withdrew its Cost-Sharing Arrangement Stock-Based Compensation Directive dated January 12, 2018 and provided new instructions for examiners on transfer pricing issue selection related to SBC in CSAs.

Draft 2019 Form 706 & Instructions Now Available to be used for decedents who passed after December 31, 2018. Please note that Schedule R-1, Generation-Skipping Transfer Tax is now a separate form.

Reminder: Maryland Sales Tax Holiday Is Sunday, August 11 - Saturday, August 17

Maryland's sales tax holiday for back-to-school items this year is from Sunday, August 11 through Saturday, August 17. Any single qualifying article of clothing or footwear priced $100 or less will be exempt from Maryland sales tax, regardless of how many items are purchased at the same time. The first $40 of any backpack or bookbag purchase is also tax-free. 

Recent Tax Law Updates: July 2019

New IRS Commissioner Promises Increased Enforcement

There is a new sheriff in town, and at the American Institute of CPAs June 10 conference in Las Vegas, Commissioner Charles Rettig announced that there will be a much greater emphasis on enforcement. He also made it a point to remind everyone that the IRS Criminal Investigation Division is alive and well. (United States Tax Reporter ¶ 76,054)

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