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

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. …
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The Collection of State Sales Tax in Today’s  eCommerce World

The Collection of State Sales Tax in Today’s eCommerce World

Sales Tax
By Anthony Diosdi Introduction For years, retailers conducting business through eCommerce were advised that states could not require them to collect and remit sales tax on online sales unless they were ‘doing business’ in a taxing state based on the tax laws of that state. This concept was referred to as a “nexus” based on a seller’s physical presence within a state.  Therefore, a seller who is determined to have a physical presence within a state would be obligated to withhold and remit sales tax to the taxing state. Examples of physical presence included but were not limited to having employees working in a taxing state, placing sales agents in a taxing state, moving business property into a taxing state, or renting property in a taxing state.Many online merchants avoided…
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Crossing The Line – Felony Tax Crimes

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

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…
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Your Chance of an IRS Audit is Way Down. But That’s Not Good News if You Have to  File an IRS Form 3520 and/or IRS Form 3520-A

Your Chance of an IRS Audit is Way Down. But That’s Not Good News if You Have to File an IRS Form 3520 and/or IRS Form 3520-A

Tax Law
By Anthony Diosdi The Internal Revenue Service (“IRS”) has been asked to do more with less by Congress. As a result far fewer American’s are having their tax returns audited by the IRS. For reasons that will be discussed in this article, that may not be a good thing. This is particularly true if you have an obligation to file IRS Form 3520 and/or IRS Form 3520-A. The International Penalties Associated with Not Timely Filing an IRS Form 3520 and IRS Form 3520-ARecently, U.S. persons with business interests outside of the United States have become subject to an expanding universe of reporting requirements. U.S. persons are required to disclose foreign assets and transactions not only on FinCen 114 (“FBAR”) but in many cases foreign assets and transactions must be disclosed…
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Calculating Foreign Tax Credits Before and After the 2017 Tax Cut and Jobs Act

Calculating Foreign Tax Credits Before and After the 2017 Tax Cut and Jobs Act

Tax Law
By Anthony Diosdi The 2017 Tax Cut and Jobs Act significantly changed the way we plan cross-border transactions. Prior to the 2017 Tax Cut and Jobs Act, foreign tax credits were calculated using tax pools. After the enactment of the Tax Cuts and Jobs Act, the pools have been repealed and replaced with a single year indirect credit for the foreign income taxes “attributable to” the item of income under Internal Revenue Code Section 960(a).History of Foreign Tax Credits As a result of the United States taxing U.S. persons on their worldwide income, in 1918, Congress enacted the foreign tax credit system. Foreign tax credits were developed to prevent double taxation of foreign source income. A foreign tax credit is intended to allow a U.S. taxpayer to reduce the U.S.…
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Are Taxpayers Who Fail to File a FBAR Today at Greater Risk of  Being Assessed the Willful ($100,000) FBAR Penalty?

Are Taxpayers Who Fail to File a FBAR Today at Greater Risk of Being Assessed the Willful ($100,000) FBAR Penalty?

Tax Law
By: Lynn K. Ching Do you have an interest in a foreign financial account which you have not disclosed on a ‘Report of Foreign Bank and Financial Accounts’ (FBAR)? If so, heads up!! The IRS continues to prioritize prosecution of taxpayers with undisclosed offshore foreign accounts. As has been wide publicized by the IRS, U.S. persons who have a financial 1 interest in, or signatory authority over foreign financial accounts - with a combined total exceeding $10,000.00 at any time during the year, are required to file an FBAR. The penalty for failure to do so is up to $10,000 for each non-willful violation, and a civil penalty of up to 50% of the balance of each foreign account or $100,000.00, whichever is greater, for a willful violation. Courts have…
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The IRS Whistleblower Program and the Potential for Additional Recovery Under the False Claims Act

The IRS Whistleblower Program and the Potential for Additional Recovery Under the False Claims Act

Tax Law
By Anthony Diosdi Let’s suppose that John has been a tax attorney at a law firm owned by Bob for the last 25 years. Bob has enjoyed a reputation for being a very successful tax attorney in Miami, Florida for many years. Everything was going nicely until John noticed that Bob was cheating on his own tax returns to fund his lavish lifestyle. To make matters worse, in order to increase business, Bob demanded that John file frivolous refund claims on behalf of the firm’s clients with the Internal Revenue Service (“IRS”).  It turns out that Bob had been filing fraudulent refund claims on behalf of clients for years. John declined to take any part in the filing of frivolous refund claims with the IRS. This resulted in his discharge…
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Should Your LLC be Taxed as a Disregarded Entity or a Corporation?

Should Your LLC be Taxed as a Disregarded Entity or a Corporation?

Tax Law
By Anthony Diosdi Probably one of the most frequent questions any tax professional receives from his or her clients is how should my limited liability company (“LLC”) be taxed. As usual in any area of tax planning, there is no one-size-fits-all approach. Each individual’s circumstances must be carefully considered in determining how an LLC should be taxed.An LLC is an entity formed under state law. Once an LLC is formed under state law, a determination must be made for federal (and in some cases for state tax purposes) how the LLC will be taxed. The Income Tax Regulations typically treat an LLC that has a single owner as a “tax nothing.” This means that a single-owner LLC is disregarded for tax purposes and treated as an extension of its owner.…
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