Tag Archive for Tax Blog

Cancellation of Debt, Foreclosures, And Bankruptcy – Part 3

How Do I Know if My Client Has CODI?

As with any information for your clients, the key is a thorough interview. Lending institutions are notorious for sending out reporting documents late or, in the case of the client moving, never.

The courts and the IRS have been very specific about what triggers a forgiveness of debt by a lender. They set forth examples and used them as precedence in the IRC and recent Bankruptcy Court cases. These are called “identifiable events” and are defined as follows:

In general. An identifiable event is– Read More

Written by | Posted in Individual

SCOTUS Decides to Hear CSX – But Why?

Each year, the Supreme Court punts on dozens of cases. Included in the dozens of cases which the court elects not to hear each year are sales tax cases. They are uninteresting to the majority of the population and just not the type of cases the justices want to hear. In fact, despite having a significant affect in most multi-state businesses, the Supreme Court has not heard a sales tax nexus case since Quill in 1992.

If there was ever a case to hear, it was Amazon and Orbitz versus New York. At issue was the two large online retailers versus the mighty state of New York. To the dismay of many State and Local Tax (“SALT”) critics, the Supreme Court decided to punt on this case at the end of 2013. Perhaps, it thought Congress was going to shock the world and actually do something. Or, perhaps, it just really didn’t care about sales tax nexus. Read More

Written by | Posted in State And Local Tax (SALT)

Form W-8BEN And What It’s Used For

Non-U.S. persons must pay U.S. tax on certain kinds of income they receive from U.S. sources. Typically, the income is taxed at a flat rate of 30%. The only way for this tax to be alleviated is if an income tax treaty exists between the U.S. and another country and that treaty authorizes a lower rate of tax.

You might be wondering how the United States collects this tax. For example, the non-U.S. person might decide not to pay it, thus thumbing his nose at the government. In that case, does the U.S. government dispatch secret service agents to all four corners of the globe to track down the tax evader, who may owe only a small amount of tax? Of course not. The U.S. knows all too well that it would be a waste of time and resources to take on the role of a bounty hunter. Read More

Written by | Posted in IRS

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 4 – 4.2.6)

Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis Of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution Of The Republic of South Africa

CHAPTER 4 – SECTION 195(1) OF THE CONSTITUTION AND PUBLIC ADMINISTRATION DUTIES WITH REFERENCE TO SECTIONS 74A AND 74B

4.2.6 Transparency must be fostered Read More

Written by | Posted in Africa • Audit

Cancellation of Debt, Foreclosures, And Bankruptcy – Part 2

What is Cancellation of Debt?

Cancellation of debt is the release from collection activity on a debt by a lender without consideration from the debtor. In other words, the person or institution you borrowed money from releases you from the responsibility to repay that debt. Normally, if you have the use of money, that you are now not obligated to repay, it must be treated as income. There are lots of exceptions and exclusions to that statement and we will review many of them.

As with most things in taxes, you must move through this subject in a specific order and not jump around. You must make certain determinations in a specific order to see how Read More

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Show Me The Money! Is The Source of OVDP Revenue Coming From Taxes Or Excessive Offshore Penalties?

On June 18, 2014, IRS Commissioner John Koskinen disclosed that the 2009, 2011, and ongoing 2012 offshore voluntary disclosure programs have resulted in more than 45,000 disclosures and the collection of about $6.5 billion in taxes, interest, and penalties. On its face, the OVDIs appear to be bringing into the government’s coiffures an average of approximately 9,000 taxpayers a year with approximately $1.3 billion in revenue.

However, the last six months paint a very different picture. That period is marked by anemic growth. Indeed, there were only 2,000 additional disclosures and $500 million in additional revenue. That may lead one to speculate that the OVDI, at least for high net Read More

Written by | Posted in FBAR • IRS • OVDP

The Department of Treasury Issued Final Treasury Regulations Governing Research and Experimental Expenditures

Introduction

On Monday, July 21 of 2014, the Department of Treasury and Internal Revenue Service (hereinafter the “Service”) issued Final Treasury Regulations under T.D. 9680 to amend the definition of research and experimental expenditures pursuant to I.R.C. § 174. These Final Treasury Regulations finalized and replaced the previously issued Proposed Treasury Regulations that were published on September 6, 2013. As a reminder, Treasury Regulations provide the official interpretations of the Internal Revenue Code by the Department of Treasury and have the force and effect of law. The most common forms of Treasury Regulations include: Read More

Written by | Posted in R&D Credit Services • Treasury Regulations

Tax Professionals Escalate Client Acquisition With New Technology

Over the years in executive search, I had the pleasure to meet extraordinarily talented tax professionals all over the world in corporations, public accounting firms, law firms, independent tax services firms, academia and government. During this time, I learned how highly educated tax professionals are and continue to be throughout their tax careers. What I also discovered is that many of the very finest tax technicians enjoyed looking through the tax code to “ figure out the tax problem and solve it like a puzzle”. These great tax technicians are masters at solving tax problems yet many are shy about promoting themselves. Four years ago, I decided to develop a platform that would bring tax professionals out from behind the scenes and make them visible to the people who are searching for them. In order to ensure the most success for tax professionals, we decided Read More

Written by | Posted in TaxConnections

Growing Marijuana Taxes In Colorado A Hit

RECEIPTIf you are late to the party, Colorado has fully legalized marijuana and in the first five months of legal retail sales, Colorado has sold a staggering $90 million worth of marijuana. We thought you may find it interesting to discover there are plenty of taxes attached to these sales. We recently received this receipt to our offices outlining all the taxes on the purchase of marijuana in Colorado. The Colorado Department of Revenue announced that the state earned $35 million in taxes, licensing and other fees from July 1, 2013 to June 30, 2014. The state collected nearly $5 million in taxes this June, an increase from the previous month. Governor John Hickenlooper expects sales to reach $1 Billion in the first fiscal year of legal marijuana. He also expects around $114 Million in taxes during this year. Colorado is proof that marijuana sales can benefit the state and generate revenue. We would greatly appreciate your comments regarding the taxes associated with this purchase.

Written by | Posted in Marijuana Taxes • Sales/Use Tax

Overstayed Your Welcome? “Substantial Presence” In The USA

Under US tax laws, any individual with a “substantial presence” in the United States runs the risk of being classified as a US person for tax purposes.  Those who are physically present in the United States for a long enough time may find themselves owing taxes on their worldwide income to the IRS even if they are neither a US citizen nor a green card holder, and even if they earn no income from US sources.

The Substantial Presence Test

The criteria often cited for meeting the substantial presence test is residing in the US for more than 182 days in a given calendar year.  This is very misleading, as the actual calculation used by the IRS is more complicated and looks at US residency over a Read More

Written by | Posted in Expatriate • FBAR • Income Tax • Individual • International

Cancellation of Debt, Foreclosures, And Bankruptcy – Part 1

This is the beginning of a 15 part series on Cancellation of Debt.

With the plunge in the economy over the last several years we, as tax professionals, have seen an increasing number of our clients coming in with cancellation of debt, foreclosures and bankruptcies. From canceled credit cards, repossessed cars, defaulted payday loans, and bad business loans, to our clients losing their homes, we have seen it all. What most clients don’t realize is that along with these issues come tax consequences. It is our job, as tax professionals, to help reduce or eliminate those consequences to the greatest extent possible.

We will discuss and review the following procedures: Read More

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Make Non-Cash Charitable Contributions – But Do It Right

Non-cash charitable contributions can be of great benefit at tax time. However, both donors and the recipients frequently overlook required IRS rules which could would to the taxpayer’s detriment. In addition, the taxpayer frequently may often understate the deductible amount of the contribution.

In order to deduct a contribution of $500 or more, the donor must list the property being donated, the date of the donation, as well as the name and tax ID number of the organization. This should be recorded on Form 8283. It has been my experience that many organizations do not make the tax ID number readily available to the donor. It should be placed on the receipt for the donation to make it easier for the donor to properly claim the contribution. When the number is not available, an Internet search may often yield Read More

Written by | Posted in Income Tax • Individual
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