Monthly Archives: March 2022

The Internal Revenue Service announced on February 15, 2022 that Form 14457, Voluntary Disclosure Practice Preclearance Request and Application, has been revised, including expanding a section on reporting virtual currency. 

Form 14457 permits taxpayers who may face criminal prosecution for willful violation of tax law to voluntarily disclose information to the IRS that they failed to previously disclose. 

Updates and additions to this form include:

• IRS Criminal Investigation now accepts photocopies, facsimiles and scans of taxpayer signatures. Taxpayers can send this form via eFax to 844-253-5613 to reduce mailing and processing times. Previously, Part II of this form had to be mailed.
• An expanded section for reporting virtual currency.
• A penalty structure for employment tax and estate and gift issues.
• A check-box for inability to pay in full.

The updates reflect input from practitioners and stakeholders and take into account trends in the type of financial asset that taxpayers hold.

“This is an important form and process for people who recognize it’s better to step forward and address their tax situations head-on, before facing IRS enforcement action,” said Doug O'Donnell, Deputy Commissioner Services and Enforcement. “The revised form includes a number of updates, and we encourage people to review the guidelines and consult a trusted tax professional.”

Thousands of taxpayers have used the Voluntary Disclosure Practice since its inception. It serves as a compliance option for taxpayers who have potential criminal exposure and wish to come into compliance with the tax laws. Those making such disclosure are still subject to civil examination and the payment of all applicable taxes, interest and penalties.

Taxpayers who did not commit any tax or tax-related crimes and wish to correct mistakes or file delinquent returns should consider other options available to comply with their tax and reporting obligations. The IRS encourages taxpayers to consult with professional tax or legal advisors in determining which option is the most appropriate.

A taxpayer’s voluntary disclosure must be timely, accurate and complete. The taxpayer must also cooperate with the IRS in determining the correct tax liability, and make full payment of the tax, interest and any applicable penalties.

Cooperation includes full payment of all tax, interest and penalties. A taxpayer who is unable to make full payment may request that the IRS consider other payment arrangements. If a taxpayer anticipates they cannot pay the total amount of tax, interest and penalties required, they must disclose this and submit a proposed payment arrangement and a completed, and executed, Collection Information Statement (Form 433-A). The burden is on the taxpayer to establish inability to pay, to the satisfaction of the IRS, based on full disclosure of all assets and income, domestic and foreign, under the taxpayer’s control.

Failed To File or Pay Your Taxes?

Read more at: Tax Times blog

According to the DoJ, from 2010 through 2019, James M. Robar, of Colorado Springs, Colorado, did not timely file tax returns with the IRS. Beginning in approximately February 2012 James Robar was employed by a U.S. Department of Defense contracting company, eventually serving as its managing director starting in 2015. 

In 2019, after receiving a $1 million bonus from his employer, Robar purchased two properties at a total cost of slightly more than $1 million, and he titled both properties solely in his spouse’s name. 

In Total, Robar Did Not Report Approximately $5.5 Million
In Compensation He Earned From 2012 Through 2019, Causing A Tax Loss To The Government Of More Than $1.5 Million.

Robar is the second defendant associated with the defense contracting company to plead guilty. Charles Squires pleaded guilty to tax evasion in February 2022.

Robar is scheduled to be sentenced at a later date and faces a maximum penalty of five (5) years in prison. He also faces a period of supervised release, restitution and monetary penalties. 

Failed To File or Pay Your Taxes?

Read more at: Tax Times blog

Even though the Internal Revenue Service issues most refunds in less than 21 days for taxpayers who filed electronically and chose direct deposit, some refunds may take longer.

Many different factors can affect the timing of a refund after the IRS receives a return. A  manual review may be necessary when a return has errors, is incomplete or is affected by identity theft or fraud.

Other returns can also take longer to process, including when a return needs a correction to the Child Tax Credit or Recovery Rebate Credit amount, includes a claim filed for an Earned Income Tax Credit or an Additional Child Tax Credit, or includes a Form 8379, Injured Spouse Allocation , which could take up to 14 weeks to process.

The fastest way to get a tax refund is by filing electronically and choosing direct deposit. Taxpayers who don’t have a bank account can find out more on how to open an account at an FDIC-Insured bank or the National Credit Union Locator Tool.

Some returns may require additional review and may take longer. Also, remember to take into consideration the time it takes for a financial institution to post the refund to an account or to receive it by mail.

To check the status of a refund, taxpayers should use the Where’s My Refund? tool on IRS.gov. Information for the most current tax year filed is generally available within 24 hours after the IRS acknowledges receipt of a taxpayer’s e-filed return. If they filed a paper return, taxpayers should allow four weeks before checking the status.

The IRS will contact taxpayers by mail when more information is needed to process a return. IRS phone and walk-in representatives can only research the status of a refund if it has been:

• 21 days or more since it was filed electronically (or since the IRS filing season start date – whichever is later),
• Six weeks or more since a return was mailed , or when
• Where's My Refund? tells the taxpayer to contact the IRS.

Before filing a return, taxpayers should make IRS.gov their first stop to find online tools to help get the information they need to file. The tools are easy-to-use and available anytime. Millions of people use them to help file and pay taxes, find information about their accounts, get answers to tax questions and get tips on filing a return.

Taxpayers should review the special instructions to validate an electronically filed 2021 tax return if their 2020 return has not been processed or they used the Non-Filers tool in 2021 to register for an advance Child Tax Credit payment or third Economic Impact Payment in 2021.

Have IRS Tax Problems?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

 

Read more at: Tax Times blog

In Rev Proc 2022-18, 2022-13 IRB 933, the IRS waived the residency and presence tests applicable for the 2021 Code Sec. 911 foreign earned income and foreign housing cost exclusions with respect to certain U.S. individuals in:

• Iraq, 
• Burma (Myanmar), 
• Chad, 
• Afghanistan, and 
• Ethiopia 

due to adverse conditions in those countries.

Code Sec. 911(a) and Code Sec. 911(c)(4) allow a "qualified individual" to exempt from taxation the individual's foreign earned income (up to the exclusion amount of $108,700 for 2021) and the housing cost amount.  

A qualified individual is an individual whose tax home is in a foreign country and who is either: (1) a U.S. citizen (or, in certain situations, U.S. resident alien) who satisfies the IRS that they have been a bona fide resident of one or more foreign countries for an uninterrupted period that includes an entire tax year (bona fide foreign residence test), or (2) a U.S. citizen or resident who, during a period of 12 consecutive months, is present in one or more foreign countries for at least 330 full days (foreign physical presence test). (Code Sec. 911(d)(1))

Under certain circumstances, the time requirements of the foreign residence test and the foreign presence test may be waived. If these requirements are waived, the taxpayer is treated as having met the foreign residence requirement for the period during which they were a bona fide resident of the foreign country, or the taxpayer will be treated as having met the foreign presence requirement for the period during which they were present in the foreign country.

Three conditions must be met for the waiver to apply: (1) the taxpayer must have been a bona fide resident of, or present in, a foreign country for a certain period; (2) before the taxpayer meets the time requirements for the foreign residence test or the foreign presence test, they must leave the foreign country during a period in which IRS determines, after consultation with the State Department, that individuals had to leave the foreign country because of war, civil unrest or similar adverse conditions in that country that prevented the normal conduct of business by those individuals; and (3) the taxpayer must establish to IRS's satisfaction that he could reasonably have been expected to meet the time requirements but for the war, civil unrest or similar adverse conditions. (Code Sec. 911(d)(4))

For 2021, the Treasury secretary, in consultation with the secretary of state, has determined that war, civil unrest, or similar adverse conditions precluded the normal conduct of business in the following countries beginning on the specified date:

Country	Date of Departure On or After
Iraq	January 19, 2021
Burma	March 30, 2021
Chad	April 17, 2021
Afghanistan	April 27, 202
Ethiopia	November 5, 2021

For example, for purposes of Code Sec. 911, an individual who left Iraq on or after January 19, 2021, will be treated as a qualified individual for the period during which that individual was present in, or was a bona fide resident of, Iraq if the individual establishes a reasonable expectation that he or she would have met the requirements of Code Sec. 911(d) but for those conditions.

To qualify for relief under section Code Sec. 911(d)(4), an individual must have established residency, or have been physically present, in the foreign country on or before the date that the Treasury secretary determines that individuals were required to leave the foreign country. Thus, for example, individuals who were first physically present or established residency in Iraq after January 19, 2021, are not eligible to qualify for the exception provided in Code Sec. 911(d)(4) for 2021.

Have IRS Tax Problems?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

Read more at: Tax Times blog