Tag Archive for Tax Blog

10 IRS Facts On Filing An Amended Return (+ 3)

Have you ever filed your tax return only to later realize that it was not complete? You forgot to include some income, you left off a deduction, you did something incorrect on the return. Sometimes you may want to file now, then file later when that last document comes in. After all, you’re waiting for that fat refund. It’s a situation many of us have found ourselves in. The solution is to file an Amended Return, Form 1040X. The IRS lists “Ten Facts on Filing an Amended Tax Return.” They are listed here:

1. Use Form 1040X, Amended U.S. Individual Income Tax Return, to file an amended tax return. An amended return cannot be e-filed. You must file it on paper.

2. You should consider filing an amended tax return if there is a change in your filing Read More

Written by | Posted in Individual • IRS

Tips For Surviving The Dreaded Eggshell Audit – Tip #6

Tip #6: Keep in Touch With the Revenue Agent

Staying in touch with the revenue agent is critical. The practitioner can learn a lot, even if the agent does not come out and say that he suspects fraud or is in the process of making a referral to CI.

The careful and experienced practitioner should be able to sense when the audit has turned criminal. In this regard, one of the classic warning signs that a referral to CI is looming is that the civil audit has turned quiet.

Civil audits are conducted on a time line, which may vary from case to case. However, if the audit is not progressing, the practitioner needs to know why. Often, it is because an Read More

Written by | Posted in Audit • Tax Tips

Actors And Entertainers In Canada – Tax Issues For Non-Residents

As a general rule, non-resident actors or entertainers who derive income from performing in Canada will be subject to Canadian tax on such income. Typically, such persons are self-employed independent contractors, rather than employees. Therefore, they will be subject to tax in Canada on the basis that they are carrying on a business in Canada [1].

Even if they are resident in a country with which Canada has a tax treaty, they will generally still be subject to Canadian tax on income from such activities in Canada. Typically, Canada’s tax treaties contains a special provision that allows Canada to tax the income of actors and entertainers (as well as athletes), even if there is no “permanent establishment” or “fixed base” in Canada [2]. This will be the case even if the actor or entertainer forms a corporation through which to provide his or her services {3]. Read More

Written by | Posted in Income Tax • Individual • International

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 4 – 4.2.2)

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

4.2.2 What are the democratic values and principles referred to in s 195(1)? Read More

Written by | Posted in Africa • Audit

Did You Recently Graduate From A Tax Program? Are You Searching For A Tax Job? Learn How To Strategically Improve Your Tax Opportunities

Prior to building TaxConnections, I was an internationally recognized tax headhunter to multinational corporations, law firms and public accounting firms. TaxConnections was built to generate connections for tax graduates by giving them a niche tax platform to be seen and heard. All tax graduates must have an online public relations strategy. TaxConnections provides a platform to be more visible to the people searching for tax expertise online. Whether you are a new tax graduate or an experienced tax professional, you must make it easy for people to find you online. Your visibility will determine your success.

Last year there was quite a media storm about colleges and universities churning out students who had no access to jobs after graduation. While reading these media stories, Read More

Written by | Posted in TaxConnections

Newsweek Delves Into FATCA And The Growing Trend In Expatriation

I was recently interviewed by Newsweek for a story covering FATCA and its effects on US citizens abroad, as well as the perceived impact it has had in causing many individuals to give up their US citizenship. The questions asked by the reporter, Barbara Stcherbatcheff, were quite illuminating; my responses even more so. Many of my statements did not make it into the ultimate Newsweek article, but I believe readers will find the entire interview most revealing. Read on, and learn the true FACTS behind FATCA.

1. NEWSWEEK: The compliance cost of FATCA to financial institutions alone has been roughly estimated at US$8 billion a year, approximately ten times the amount of estimated US tax revenue estimated to be raised ($792 million.) Unusually, FATCA was not subject to a cost/benefit analysis by the Committee on Ways and Means. So why do you believe that Read More

Written by | Posted in FATCA

It’s Not The End of The World! Statutory Notice of Deficiency: Part 2

Client Receives “The Letter”

Best case scenario; we see the client as soon as that first CP2000 letter arrives at their door. Unfortunately, many times we don’t see a client until they have actually received the SNOD. This puts us at the disadvantage as some of the taxpayers time lines have already been blown by this point.

A quick review of the basics of any representation contact:

1. Engagement letters for specific situations (i.e consultation only, representation, etc)
2. Review of all IRS correspondence, taxpayer’s return and documentation, time lines in play and IRS transcripts. Read More

Written by | Posted in Audit • Income Tax • Individual • Tax Tips

Tips For Surviving The Dreaded Eggshell Audit – Tip #5

Tip #5: Conduct a Shadow Investigation

Representatives should “audit” the auditor. In other words, track his investigation to determine what – and how much – he knows at all times. It goes without saying that the representative should interview any witnesses with whom the government has already spoken.

This task has been made easier under 1998 legislation. The IRS must now notify the taxpayer before contacting third parties and keep records of any third party contacted, at least during the civil phase of an investigation. I.R.C. § 7602(c).

Moreover, section 7609, as amended in 1998, now requires the IRS to notify taxpayers of Read More

Written by | Posted in Audit • Tax Tips

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 4 – 4.2.1)

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 THE DUTIES OF SARS EMANATING FROM SECTION 195(1) OF THE CONSTITUTION Read More

Written by | Posted in Africa • Audit

Starbucks College Plan And Taxes

I’m intrigued by the recent announcement by Starbucks that they would provide tuition reimbursement for employees (working at least 20 hours per week) who are working on their undergraduate degree. There are a few rules, but it still seems to be a decent deal for the employees. The courses must be taken online at Arizona State University. Freshman and sophomores get partial reimbursement and juniors and senior get full reimbursement. Apparently this is to encourage the students to complete their degree. And, of course, they need to be admitted to ASU.

The FAQs on the Starbucks website states that the student must also secure financing:

“You will receive an automatic, upfront scholarship to cover part of your tuition costs. You Read More

Written by | Posted in Corporate • Individual

It’s Not The End of The World! Statutory Notice of Deficiency: Part 1

Your client calls you in a panic because they have just received a letter from the IRS and it says they owe money and talks about having to go to Tax Court! For most of us this is an everyday occurrence, however, for the client, it can be panic inducing. At the other extreme is the client who just ignores the letters until the certified letter comes talking about liens and levies, but that’s another blog post entirely.

The IRS even has a Tax Tip titled: Eight Tips for Taxpayers Who Receive an IRS Notice. Tip #1 is Don’t panic! Of course, none of the other tips include the advice to consult a tax professional, but that’s what we’re here for.

Once your client receives a Statutory Notice of Deficiency (SNOD) the clock is running and Read More

Written by | Posted in Audit • Income Tax • Individual • Tax Tips

Cash Method For Small Businesses

On July 10, 2014, the House Small Business Committee’s Subcommittee on Economic Growth, Tax and Capital Access, held a hearing – Cash Accounting: A Simpler Method for Small Firms? Congressman Tom Rice opened the hearing noting that he is a former tax attorney and CPA. The purpose of the hearing seems to be how use of the cash method for some businesses (such as small ones) can simplify tax compliance. He did not mention Congressman Camp’s proposal to deny use of the cash method for businesses with over $10 million of gross receipts (unless they are a sole proprietor or farming business) (see Camp’s summary of the Tax Reform Act of 2014, page 87-88).

What did the subcommittee learn from the witnesses?

• The cash method is simpler than accrual. It could be even simpler if reporting was Read More

Written by | Posted in Small Business
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