Tag Archive for Tax Blog

IRS Announces New Policy For Individual Taxpayer Identification Numbers / ITINs

What is an ITIN and What is it Used For?

An ITIN is a nine-digit tax processing number issued by the IRS for federal tax reporting only. The ITIN is not intended to serve any other purpose. The ITIN does not authorize one to work in the US and it cannot be used as an identification number or for any purpose outside the US tax system.

Who Needs an ITIN?

The IRS issues ITINs to individuals who are required to have a US taxpayer identification number but who are not eligible to obtain a Social Security Number (SSN). If an individual is eligible to obtain a SSN, he should NOT be applying for an ITIN. ITINs are issued to Read More

Written by | Posted in Individual • IRS

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 3 – 3.7)

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 3 – LIMITATIONS TO INVOKING SECTIONS 74A AND 74B OF THE INCOME TAX ACT

3.7 MULTI-STAGED DECISION-MAKING187 Read More

Written by | Posted in Africa • Audit

Tips For Surviving The Dreaded Eggshell Audit – Tip #3

Tip # 3: Interview All Potential Witnesses As Soon As Possible

The careful practitioner will want to interview all potential witnesses as soon as possible. The reason is to learn the lay of the land. But, more subtly, there can be an important benefit to nailing down each witness’s testimony before the civil agent has had an opportunity to influence the witness’s memory by leading questions and other mind-shaping techniques.

The witness may be much more amenable to a taxpayer-favorable recollection before being put upon – maybe even intimidated – by an IRS agent, particularly a Special Agent. However, obtaining witness interviews in a potential criminal case is rife with danger for Read More

Written by | Posted in Audit • Tax Tips

Meet Two Tax Professionals Who Are Making History – Marketing Tax Expertise and Tax Education Online

These are new times that require new ways of marketing tax services! We want you to meet two tax professionals who are leading the way, historically, in marketing tax expertise and education online. We are introducing Stuart Sobel and Shamen Dugger as the two individuals who made history by being the first two tax experts to market their tax education videos at www.taxconnections.com to consumers and tax professionals. This is the beginning of the pay per view tax expertise online, on-demand.

The consumer comes to TaxConnections to find a tax professional and connect with them. What they soon discover is that tax questions they have are now being answered by tax education videos available at TaxConnections Tax Video Library. TaxConnections provides consumers free access to our tax professional members who subscribe to the site for Read More

Written by | Posted in Tax Education • TaxConnections

Canada-US Cross Border Tax Issues In Connection With Employee Stock Options

Canada and the US both tax employees who receive benefits from options they are granted to acquire shares in their employer or a related entity. This article will focus on the Canadian tax implication of employee stock options (“ESO”), and how these rules apply in certain Canada-US cross-border situations.

As a general rule, stock options benefits are taxed under section 7 of the Income Tax Act (“the Act”). No taxation results at the time that the ESO is granted-rather taxation results at the time the ESO is exercised. The amount taxable will be equal to the excess of the fair market of the stock at that time over the exercise price.

In cases where the ESO was not “in the money” at the time of grant (i.e. exercise price no Read More

Written by | Posted in Corporate • International

The Smart Attorneys Best Friend: A Tax Professional – Part 3

Child Custody

The biggest family court related issues Attorneys deal with are cases dealing with child custody and dependent exemptions. Effective 1 Jan 2009, new rules kicked in regarding the necessary documentation for claiming the dependent exemption for a child of divorced or separated parents. Before this date a copy of the judicial decree was sufficient, however, due to the varying nature and ambiguous wording of the different jurisdictions, this was determined to be inadequate. (IRC Cod. Sec. 152)

The Form 8332 (Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent) , or a facsimile with all the same information, is now required to be Read More

Written by | Posted in Tax Tips

New Rules On ITINs: What Does This Means For You?

For a quick refresher on what ITINs are: Individual Taxpayer Identification Numbers aka ITINs are tax processing numbers issued by the Internal Revenue Service. It is a nine digit number that always begins with the number 9 and has a range of 70-88 in the fourth digit, example 9XX-7X-XXXX. The IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA).

ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code. Read More

Written by | Posted in Individual • IRS

Compensation And Benefits For An S Corporation Shareholder/Employee

A major issue for most S corporations is the matter of shareholder compensation and benefits. One of the advantages of an S corporation is the ability to avoid self-employment taxes on the earnings of the corporation. However, payroll taxes cannot be totally avoided as the IRS requires that an employee/shareholder be paid a “reasonable” salary. A related issue is benefits made available to the shareholder/employee. There are restrictions on benefits that shareholders can receive. These shareholders often do not realize (or choose to ignore) that the corporation cannot be treated like a gift bag in which you reach in and give themselves personal benefits.

A shareholder/employee is required by law to receive a “reasonable” salary from the corporation. The IRS does not define reasonable but takes into consideration several Read More

Written by | Posted in Corporate • Individual

Why Does U.S. Congress And IRS Want A Canadian Cop?

“Imagine my surprise when I found out the United States considers me a criminal,” says a Canadian police officer who has been enforcing Canadian laws and protecting Canadians for more than three decades.

The American government considers that Canadian cop a criminal because he hasn’t filed tax returns with Internal Revenue Service (IRS) on his entirely Canadian earned and taxed income. He also hasn’t submitted Foreign Bank Account Reports (FBARs) to U.S. Financial Crimes Enforcement Network (FinCEN) on joint bank accounts held at his local Canadian bank with his Canadian wife.

He had no idea until recently that he was required to do so simply because he was born Read More

Written by | Posted in FATCA • FBAR • International • North America • OVDP

Non-Profits Get Smart With Access To Online, On Demand Education On Non-Profits

For the very first time, members of non-profits can easily access pay per view video education that can literally save their organization! Stuart Sobel, the only man known as the “Guru of Giving”, knows the IRS rules and regulations for tax exempt organizations inside and out. After working for the IRS for thirty years he became an expert on the subject matter. Although Stu has used his tax exempt expertise to primarily teach the tax professionals, TaxConnections is now making these private educational opportunities available to Board Members and Members of non-profit organizations. Times are about to get better for the non-profits with access to these online and on-demand videos!

With more than 500,000 non-profits losing their tax exempt status in the past few years due to lack of compliance with IRS Guidelines, access to this extraordinary valuable on Read More

Written by | Posted in IRS • Non-Profit Tax • Tax Education • TaxConnections

Tips for Surviving The Dreaded Eggshell Audit – Tips #1 And 2

Tip # 1: Establish Your Priorities And Communicate Them To Your Client

In an eggshell audit, your goals should be the following:

• Primary Goal: To prevent a criminal referral.

• Secondary Goal: To reduce potential adjustments and tax liability.

Tip # 2: Don’t Make Your Client’s Problems Your Own

The practitioner needs to be very careful not to make the client’s problems his problems – i.e., by doing something in the course of the audit that is itself criminal or otherwise Read More

Written by | Posted in Audit • Tax Tips

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 3 – 3.6.2)

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 3 – LIMITATIONS TO INVOKING SECTIONS 74A AND 74B OF THE INCOME TAX ACT

3.6.2 Limitation to the Legitimate Expectation Doctrine Read More

Written by | Posted in Africa • Audit
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