Tax Law Archives | Page 47 of 56

18Mar 2020 by Anthony Diosdi

The IRS Has Deferred 2020 Income Tax Payments by 90 Days. What Happens in 90 Days?

Tax Law

By Anthony Diosdi Treasury Secretary Steven Mnuchin recently announced that the Internal Revenue Service (“IRS”) is deferring income tax payments for the 2019 tax year by 90 days. Steven Mnuchin says that taxpayers will not be assessed interest and penalties on the late payments. According to Mnuchin, individuals can defer up to $1 million in federal taxes. Businesses can defer up to $10 million in federal taxes. The deferral is only available for tax payments. It does not permit the deferral of payroll taxes or estate and gift taxes. The announcement also does not impact estimated tax payment requirements. As of now, the income and corporate tax filing deadlines still have not pushed back. Although the announcement this is a step in the right direction. It does not go nearly…

18Mar 2020 by Anthony Diosdi

Demystifying the Form 5471 Part 7. Schedule P

Tax Law

By Anthony Diosdi Schedule P is used to report the Previously Taxed Earnings and Profits (“PTEP”) of the U.S. shareholder of a controlled foreign corporation (“CFC”) in the CFC’s functional currency (Part I) and in U.S. dollars (Part II). This schedule is also used to report the PTEP of the U.S. shareholder of a specified foreign corporation (“SFC”) that is only treated as a CFC for limited purposes under Internal Revenue Code Section 965(e)(2). This is the seventh of a series of articles designed to provide a basic overview of the Internal Revenue Service (“IRS”) Form 5471. This article is designed to supplement the IRS’ instructions to Schedule P of IRS Form 5471. This article will go column by column and line by line through the attachment to Form 5471.Who…

12Mar 2020 by Anthony Diosdi

Does the United States Tax Court have Jurisdiction to Review Penalties Assessed by the IRS for Not Timely filing Form 3520 or 3520-A?

Tax Law

By Anthony Diosdi IntroductionMost tax penalties and other civil sanctions for noncompliance with internal revenue laws are located in Chapter 68 of the Internal Revenue Code. Chapter 68 authorizes the assessment of civil sanctions for fraud, negligence, and delinquency penalties. These civil sanctions are subject to the deficiency process. This means that a taxpayer is afforded the opportunity of judicial review by the United States Tax Court before these penalties can be assessed and collected by the IRS. On the other hand, the authority to assess most international penalties is embedded in Chapter 61 of the Internal Revenue Code. Notwithstanding these differences in geography, all international penalties are “assessable penalties,” meaning that they may be assessed and collected without the IRS having to resort to providing an individual an opportunity…

11Mar 2020 by Anthony Diosdi

Advanced Strategies Available to Mitigate the Tax Consequences of GILTI Inclusions

Tax Law

By Anthony Diosdi Introduction to the Global Intangible Low-Tax RegimeThe 2017 Tax Cuts and Jobs Act dramatically changed the way outbound international transactions are taxed. The Tax Cuts and Jobs Act retained the existing Subpart F tax regime, but it also created a new class of taxable income known as global intangible low-taxed income (”GILTI”). Internal Revenue Code Section 951 authorizes GILTI. GILTI was intended to impose a current year tax on income earned from intangible property that was subject to no or a low tax rate offshore. GILTI is defined as the residual of a controlled foreign corporations (CFC’s) income (excluding Subpart F income or income that is effectively connected with a U.S. trade or business, and certain other classes of income) above a 10 percent return on the…

05Mar 2020 by Anthony Diosdi

What Happens When the IRS Makes an Error?

Tax Law

The Internal Revenue Service (IRS) has the major undertaking of collecting taxes from millions of people and enforcing complex tax laws. It should be no surprise that IRS officials sometimes make errors, though these can be costly for taxpayers. If you believe the IRS is taking unwarranted action, you should speak with a tax lawyer at SF Tax Counsel as soon as possible. Most people realize there has been a mistake when they receive a Notice of Delinquency. The IRS might assess your taxes inaccurately, wrongfully charge penalties, or even try to place a lien on your property or seize funds from your bank account. However, you only have 90 days to challenge the Notice of Delinquency, and you can do so by having an attorney file a petition in…

03Mar 2020 by Anthony Diosdi

A District Court Determines that a Sole Beneficiary of a Foreign Trust is Subject to Only a 5 Percent Penalty for the Untimely Filing of IRS Form 3520 and Not the Usual 35 Percent Penalty

Tax Law

By Anthony Diosdi In a claim for refund action, the estate of Joseph Wilson (“Wilson”) sought the return of penalties assessed under Section 6048(b). See Wilson and Est. of Joseph A. Wilson v. United States, Dkt. No. 2:19-cv-05037 (E.D.N.Y. Nov. 18, 2019). Wilson established an overseas trust in 2003. Wilson named himself the grantor of the trust and was its sole owner and beneficiary. The singular purpose of the trust was to “place assets beyond the reach of his then wife, who he had reason to believe was preparing to file a divorce against him.” (Which she ultimately did do). Wilson funded the trust worth approximately $9 million in U.S. Treasury bills, accruing annual interest approximately 5 percent.From the 2003 through 2007 calendar years, Wison filed “various income tax and…

03Mar 2020 by Anthony Diosdi

The IRS “Swings for the Fences” and Asserts a $120 Million FBAR Penalty

Tax Law

By Anthony Diosdi In United States v. Francis Burga and Francis Burga as Administrator of the Estate of Mergelus Burga, No. 19-cv-03246 (N.D. Cal. 2019), and the related case, United States v. Francis Burga, No. 18-cv-01633 (N.D. Cal. 2019), the United States Department of Justice is attempting to collect unprecedented civil FBAR penalties in the amount of approximately $120 million. The Internal Revenue Service (“IRS”) assessed nearly $120 million in FBAR penalties and interestagainst taxpayers who allegedly used Liechtenstein foundations and other foreign entities to move unreported income from the United States to offshore tax havens. The Department of Justice (“DOJ”) also alleges that the taxpayers held at least 294 bank accounts in Liechtenstein, the British Virgin Islands, Switzerland, Singapore, Japan, Panama, China, and Vietnam that were not disclosed to…

03Mar 2020 by Lynn Ching

With the Coronavirus on Everyone’s Mind- Now is a Good Time to Consider Medical Expense Tax Deduction Planning

Tax Law

By Anthony Diosdi The coronavirus has affected daily life around the world. The World Health Organization says the risk of coronavirus spread is “very high at a global level.” This dangerous contagion will not only put at risk every American’s physical health and well being, coronavirus threatens our financial security with potential costly medical bills. At this point there may be little we can do to avoid our exposure to the coronavirus. However, anyone that incurs medical expenses as a result of this freighening virus or any other illness, may be able to lessen the financial blow of this disease and deduct at least some of their medical expenses. More importantly, taxpayers may control the timing of a medical deduction and shift the deduction from one year to the next. …

05Feb 2020 by Anthony Diosdi

Crossing The Line – Felony Tax Crimes

Tax Law

By Lynn K. Ching So when does failing to file a tax return or not accurately reporting income and expenses on a return, cross the line - from the civil to the criminal arena? Why is it that one person gets assessed an accuracy related penalty for not correctly reporting his income and expenses, while another goes to jail for doing - seemingly - the same thing? Following is a brief discussion of crossing THAT ‘line’. Failure to File + More = Tax Evasion - 26 USC § 7201 While failure to file a tax return is generally a misdemeanor, failure to file a return + 2 “more” (discussed below) is a felony. Under 26 USC § 7201, the willful attempt to evade or defeat the assessment of taxes or…

31Jan 2020 by Anthony Diosdi

Former Miami Dolphins Linebacker Zach Thomas Will Go Up Against His Toughest Opponent to Date- The IRS in Refund Litigation

Tax Law

By Anthony Diosdi In the future, a jury of selectors will vote on whether former Miami Dolphins linebacker Zach Thomas should be in the Hall of Fame. Down the road, in a Fort Lauderdale federal court room, a jury might vote whether Thomas should get over $18,000 plus interest back from the Internal Revenue Service (“IRS”).Zach and wife Maritzabel Thomas, as a married couple who filed taxes jointly, filed a lawsuit in Fort Lauderdale federal district court on January 3, 2020 for a refund of an accuracy related penalty in the amount of $18,602 plus interest for the 2007 tax year.The story starts with Gary Stern, a Chicago tax lawyer who got an 18 month prison sentence after pleading guilty to committing tax fraud in a case involving energy credit…