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Yearly Archives: 2020

IRS To Begin Un-Announced Visits to Delinquent Taxpayers!

February 11, 2020

The IRS has announced, in Fact Sheet 2019-15, that it will begin visiting taxpayers who have ongoing tax compliance issues. The IRS will focus its efforts in areas where there have been a limited number of revenue officers available due to declining IRS resources.

According to the Fact Sheet, the IRS's primary goal for these visits is to make face-to-face contact with taxpayers who have a previously known tax issue that was not resolved through mail contact. The IRS emphasizes in the Fact Sheet that these visits will typically occur after numerous contacts by mail with the taxpayer about an existing tax issue. 
Taxpayers should be aware they have a tax issue before they receive a visit from a revenue officer (revenue officers are trained IRS civil enforcement employees who work to resolve compliance issues, such as missing returns or unpaid taxes).  

However, The First Face-To-Face Contact From A Revenue Officer Will Almost Always Be Unannounced!
During the visit, the revenue officer will interview the taxpayer to gather financial information and tell the taxpayer what he or she needs to do to become and remain compliant with the tax laws. 
If a taxpayer has an outstanding federal tax debt, the revenue officer will take the appropriate actions to collect any taxes owed during the visit. The revenue officer will request payment, but will provide a range of payment options, including payment by check made out to the U.S. Treasury.

A legitimate revenue officer is there to help taxpayers understand and meet their tax obligations, not to make threats or demand some unusual form of payment for a nonexistent liability. The officer will explain the liability to the taxpayer.

IRS Visits Shouldn't Be Confused As A ScamSee our post How to Confirm the Identity of a Field Revenue Officer When They Come Knocking at Your Door, where we discuss that when an IRS revenue officer visits a taxpayer, they will always provide two forms of official credentials, both include a serial number and photo of the IRS employee. Taxpayers have the right to see each of these credentials.

Have an IRS Tax Problem?
 
 
Prefer That the IRS Not Show up at
Your Home or Office?

 
 Contact the Tax Lawyers at 
Marini & Associates, P.A.   
for a FREE Tax Consultation contact us at:
www.TaxAid.com or www.OVDPLaw.com or
Toll Free at 888-8TaxAid (888) 882-9243


 

 

Read more at: Tax Times blog

How to Confirm the Identity of a Field Revenue Officer When They Come Knocking at Your Door

February 11, 2020

According to the Taxpayer Advocate Service (TAS), The Internal Revenue Service (IRS) has begun conducting face-to-face meetings with individual and business taxpayers as a part of a special compliance effort entitled Revenue Officer Compliance Sweep (ROCS).

This Is An Extremely High Priority Effort Where IRS Field Revenue Officers (RO’s) Will Be Working To Resolve Compliance Issues, Including Missing Tax Returns And Taxes Owed, With A Special Emphasis On Payroll Taxes.
 

The RO’s will visit areas where there is little to no IRS presence. They will interview taxpayers while gathering financial information to help them become compliant now and remain so in the future. The new effort began Wisconsin, Texas, and Arkansas and will eventually rollout nationwide.

To avoid confusion with IRS scam artists and other imposters, the IRS will announce general details about these efforts in specific locations as an important step to raise community awareness around IRS activity during a specified time.

Visits from IRS agents shouldn't be confused as a scam. Here’s what to look for:

  • Taxpayers may receive an appointment letter requesting certain information and providing an opportunity to call the IRS to set up an appointment prior to the visit.
  • The first face-to-face contact from a RO will most likely be unannounced. Taxpayers should be aware they have a tax issue before they receive a visit from a RO because the IRS would have previously sent correspondence attempting to resolve the issue.
  • When a RO visits a taxpayer, they will always provide two forms of official credentials, called a pocket commission and a HSPD-12 card. Both forms include a serial number and photo of the IRS employee. The HSPD-12 card is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. Taxpayers have the right to see each of these credentials and can verify information on the RO’s HSPD-12 card by calling a dedicated IRS telephone number, provided by the RO, for verifying the information and confirming his or her identity.
  • A legitimate RO is there to help taxpayers understand and meet their tax obligations, not to make threats or demand some unusual form of payment for a nonexistent liability. The RO will explain the liability to the taxpayer. Taxpayers may request the name and telephone number of the manager of the field revenue officer if they have any concerns.
  • If the taxpayer has an outstanding federal tax debt, the visiting officer will request payment and provide a range of payment options, including a check payable to the U.S. Treasury.

When interacting with taxpayers, RO’s have the responsibility to educate the taxpayer about the Taxpayer Bill of Rights (TBOR), identify economic hardships if there is an outstanding federal tax debt and payment creates a hardship, and advise and seriously consider collection alternatives.

Taxpayers should be aware that RO’s may also consider other means of resolving the tax debt including:

  • Setting up an installment agreement to allow the taxpayer to pay the bill over time;
  • Recommending relief from penalties (when available) imposed when the tax bill is overdue (e.g., if there is reasonable cause) or recommending adjustment or abatement if the tax debt is in doubt;
  • Evaluating whether the taxpayer is a good candidate for an offer in compromise, where the IRS would accept less than the full amount of the tax liability; or
  • Suspending collection due to currently not collectible accounts, which could include In Business Trust Fund taxpayers.
Have an IRS Tax Problem?
 
 Contact the Tax Lawyers at 

Marini & Associates, P.A.   
for a FREE Tax Consultation contact us at:
www.TaxAid.com or www.OVDPLaw.com or
Toll Free at 888-8TaxAid (888) 882-9243

     

    Read more at: Tax Times blog

    TC Determines that Taxpayer With 1 Million Deficiency Not Subject to Accuracy Related Penalty

    February 5, 2020

    The Tax Court, in Hommel, TC Memo 2020-4, has determined that an individual who had a $1 million tax deficiency was not liable for an accuracy-related penalty because the IRS failed to prove it complied with the required procedures for imposing such a penalty. 

    A penalty is imposed for filing an inaccurate return based on substantial understatement of tax due (Code Sec. 6662(b)(2) or based on negligence or disregard of the rules. (Code Sec. 6662(b)(1)) An understatement is substantial if it exceeds the greater of $5,000 or 10% of the tax required to be shown on the return. (Code Sec. 6662(d)(1)(A))  
    Under Code Sec. 6751(b)(1) an accuracy-related penalty can't be assessed unless the initial determination of the assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination or such higher level official as the Secretary may designate. 
    The Tax Court has held that Code Sec. 6751(b)(1) requires written supervisory approval of the "initial determination" of a penalty no later than the earlier of when:
    1. the penalty determination is communicated to the taxpayer in the form of a notice of deficiency (NOD), or
    2. another form of formal communication is sent to the taxpayer that both:
              (a) advises the taxpayer that penalties were determined, and
              (b) gives the taxpayer the opportunity to appeal that determination. (Clay, (2019) 152 TC 223) 
    In Palmolive, (2019) 152 TC 75, the taxpayer argued that the IRS hadn’t proved exactly how or when the revenue agents made their initial determinations to assess penalties. The penalty-approval form in Palmolive did not bear the name of the revenue agent who made the initial determination, or any name at all, but the parties stipulated to the identity of the IRS employees involved in making the initial penalty determination.
    The taxpayer, Jason Hommel, ran a business selling bullion and minting and selling coins. For 2009 the IRS determined that Jason had a $1 million tax deficiency because he understated his income from the business by almost $6 million. Based on this deficiency, the IRS sought to impose an accuracy-related penalty based on substantial understatement of income. However, the IRS failed to introduce any evidence at trial that the penalty had been approved by an IRS supervisor before the deficiency notice was sent to the taxpayer. 
    After the trial, the IRS sought to reopen the record to introduce evidence of supervisory approval of the accuracy-related penalty. The IRS wanted to submit declarations averring that Agent Strayer conducted Jason’s 2009 audit and initially determined to impose the accuracy-related penalty.
    However, the penalty-approval form did not include Agent Strayer’s name, but the name of Agent Cunningham. The penalty-approval form also did not contain an origination date. The IRS claimed that the error in the penalty-approval form was a clerical error that occurred because the case was first assigned to Agent Cunningham and then reassigned to Agent Strayer. 
    Jason objected to the IRS’s attempt to reopen the record, arguing that he would be prejudiced by the IRS's late introduction of the declarations related to the penalty determination. 
    The Tax Court determined that Agent Cunningham's name on the penalty-approval form called into question whether Agent Strayer was, in fact, the individual who made the penalty determination and whether his report was even the initial determination of the penalty. Unlike the taxpayer in Palmolive, Jason did not stipulate that Agent Strayer made the initial penalty determination. Therefore, the only thing linking Agent Strayer to an immediate supervisor was his declaration swearing he indeed made the initial determination and got the written approval from his supervisor.
    According to the Tax Court, the problem for the IRS was that the penalty-approval form didn't speak for itself, and the declarations that the IRS sought to have admitted regarding the penalty-approval form were hearsay. 
    The Tax Court agreed with Jason’s argument that he would be prejudiced by the admission into evidence of the IRS’s declarations regarding Agent Strayer without any opportunity for cross-examination. Therefore, the Court refused to reopen the record and found that Jason was not liable for the accuracy-related penalty.
    Need To Contest and IRS Penalty?
     
     Contact the Tax Lawyers at 
    Marini & Associates, P.A.   
    for a FREE Tax Consultation contact us at:
    www.TaxAid.com or www.OVDPLaw.com or
    Toll Free at 888-8TaxAid (888) 882-9243
    

    Read more at: Tax Times blog

    IRS States No New Guidance On Repatriation Tax

    February 3, 2020

    According to Law360, the Internal Revenue Service isn't planning to issue additional guidance on the 2017 tax overhaul's deemed repatriation despite a recent announcement that the agency was considering relief for some companies in this area, a top official said January 31, 2020.

    The agency learned of "few sympathetic cases" in which companies were excessively taxed under the Tax Cuts and Jobs Act's transition levy on overseas income, said Peter Blessing, the IRS associate chief counsel, international, at the American Bar Association

    ’s Section of Taxation midyear meeting in Boca Raton, Florida.

    The agency is considering double-taxation relief for companies that saw their earnings taxed first as dividends in the previous system, and again by the TCJA's 15.5% or 8% one-time deemed repatriation tax.

     
    "It's Not Expected To Cover A Lot Of Cases.
    We're Not Going To Get More Guidance On It,"
    Blessing Said On A Panel.
    "We Try Not To Be Transparent And Not Have Private Law."
    To ensure that companies didn't try to game the transition tax, the TCJA measured income on two dates, Nov. 2, 2017, when the legislation was introduced in the U.S. House of Representatives, and Dec. 22, 2017, when President Donald Trump signed the bill into law. The tax is imposed on whichever amount was higher.

    But some companies may have had their foreign subsidiaries issue dividends for "business reasons," the IRS said, creating an unfair imposition of both taxes in a Jan. 17 news release announcing the relief. 

    James S. Wang, attorney-adviser with Treasury's Office of Tax Policy, said last week that the IRS would consider relief on a case-by-case basis. 

    The IRS statement was meant to encourage companies in similar situations to approach the agency for consideration, Blessing said Friday.

    "It wasn't meant to be any kind of broad-based program at all," he said.

    IRS officials have said that companies would need to prove that they were indeed double-taxed, after taking into account foreign tax credits, before receiving the relief. Companies would also need to show that the transactions were entered into for legitimate business reasons and not to obtain a tax benefit.

     
    Have an International Tax Problem?
     
     Contact the Tax Lawyers at 

    Marini & Associates, P.A.   
    for a FREE Tax Consultation contact us at:
    www.TaxAid.com or www.OVDPLaw.com or
    Toll Free at 888-8TaxAid (888) 882-9243

     

    Read more at: Tax Times blog

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