TaxConnections Blog Post
What Should Taxpayers Do When the IRS Queries Their Tax Affairs? –

FIRSTLY, IT IS recommended that any request for information or documentation be reduced to writing as this will help set the parameters of the audit going forward.

The taxpayer should also check which tax years are involved and which taxes.

Where the IRS requests information beyond a typical three-year period, a defense may lie under the appropriate tax provision that a statutory limitation period may apply where a taxpayer may successfully argue that it does not have to provide any information or documentation, as the period for raising any additional assessments may have prescribed in that the original tax assessment has become final and conclusive. Obviously, the taxpayer Read More

You might think it’s too late to make a difference for your 2013 taxes as there is less then a week left of the year. You would be wrong. Here are six ways you can still lower that tax bill before the end of the year:

1. Increase your charitable deductions by making that donation of cash or goods now instead of when you do spring cleaning. Make sure you get a receipt and have a detailed list of items you are giving. If you are giving more then $250 in a monetary donation make sure you get a letter from the charity showing the date, dollar amount, and a statement showing what, if anything, you received in return for the donation.

2. Pay your January payments of your health insurance premiums, mortgage payments, real Read More

With my family snugly content amidst a long holiday season I felt compelled to pen some thoughts regarding the ubiquitous United States Tax Code and all its myriad of seemingly scary changes looming around the proverbial corner. This post lists ten tax matters to be aware of in the new year that have come up in conversations with clients. It also offers four recommendations to minimize tax obligations that I’ve found myself repeatedly trumpeting whenever asked. And finishes with some quick reference tax facts.

Be Aware:

1. For 2013 the self-employment tax has reverted back to its normal 15.3% rate, and the limit for the Social Security portion of the tax has increased to $113,700. Read More

“The foundation of life insurance is the recognition of the value of a human life & the possibility of indemnification for the loss of that value.” In translation, it means someone pays a premium to an insurance company for someone else to receive a a sum of money on his/her death. The contract can also include a terminal or critical illness. Some life insurance contracts are only for a specified term.

Many people know that having life insurance is important, however are not so sure about the proceeds that are distributed and the tax consequences of such distribution. This post seeks to clear up some of those common myths.

The question, “Are life insurance proceeds taxable?”, elicits the favorite answer of Read More

On November 9, 2012, (former) IRS Commissioner Douglas Shulman stepped down as his five year term ended (even though he had not served a full term). We then had acting Commissioner Miller who resigned on May 21, 2013 due to the Section 501(c)(4) controversy. We got a new acting Commissioner – Daniel I. Werfel on May 22, 2013. Because the term “acting” can only be used for 210 days after the official position holder leaves, his title was Principal Deputy Commissioner and Deputy Commissioner for Services and Enforcement.

On August 1, 2013, President Obama nominated John Koskinen. President Obama stated:

“John is an expert at turning around institutions in need of reform. With decades of Read More

The Internal Revenue Service has just issued Revenue Procedure 2014-10 which provides guidance to foreign financial institutions (FFIs) entering into an FFI agreement with the IRS for FATCA (Foreign Account Tax Compliance Act) purposes. The final version of the FFI agreement is set forth in meticulous detail in the Revenue Procedure. The final FFI agreement contained in the Revenue Procedure contains a number of changes to provisions of the draft FFI agreement set out in an earlier IRS Notice (Notice 2013-69 2013-46 I.R.B. 503), on October 29, 2013.

Who Should Sign the FFI Agreement?

FFIs signing the FFI agreement will be treated as “participating FFIs”. Generally, these are Read More

TaxConnections Blog Post
What Does It Mean When a Taxpayer Receives an IRS Query? –

GENERALLY, WHEN A taxpayer receives an Internal Revenue Service query, IRS intends auditing the taxpayer’s tax affairs. Such a query generally takes the form of a written notification to the taxpayer in terms of which the taxpayer is requested to provide the IRS with certain information and documentation relating to either a specific transaction or to specific tax years.

The query may include an investigation of all the relevant taxes applicable to the taxpayer, such as income tax, value-added tax, sales tax, PAYE, and payroll taxes.

 

Read More

It all started with the announcement of the FATCA (Foreign Account Tax Compliance Act) going into effect, then the new streamlined compliance procedures were announced in 2012 to go into effect on September 1st, 2012.

They were implemented in recognition that some U.S. taxpayers living abroad had failed to timely file U.S. federal income tax returns or FBARs, Form TD F 90-22.1. These delinquent taxpayers may have recently become aware of their filing obligations and now seek to come into compliance with the law.

The new procedures are for non-residents including but not limited to dual citizens who have not filed U.S. income tax and other related information returns. Read More

Year-end tax planning could be especially productive this year because timely action could nail down a host of tax breaks that won’t be around next year unless Congress acts to extend them, which, at the present time, looks doubtful. These include, for individuals: the option to deduct state and local sales and use taxes instead of state and local income taxes; the above-the-line deduction for qualified higher education expenses; and tax-free distributions by those age 70-1/2 or older from IRAs for charitable purposes.

Some areas to draw your attention are listed below:

NEW HIGH INCOME SURCHARGES

High-income-earners have other factors to keep in mind when mapping out year-end plans. Read More