Monthly Archives: March 2023

According to ProcedurallyTaxing, Chief Counsel’s office issued Program Manger Technical Assistance (PMTA) 2023-001 to address the issue of a $1 claim filed in order to try to protect the statute of limitations for filing claims.  The advice concludes that the $1 or any nominal claim will not protect the taxpayer but it also distinguishes nominal claims from protective claims. 

It then goes on to state that "A late-filed claim will not be treated as an amendment or “supplement” to an original claim if it would require the investigation of new matters that would not have been disclosed by the investigation of the original claim."

Essentially, the PMTA takes the position that putting down a nominal amount does not create the type of informal claim a taxpayer can later fix.  

For more regarding exceptions to this rule go to ProcedurallyTaxing.

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In Notice 2023-27 the Treasury Department and the IRS announced that they intend to issue guidance related to the treatment of certain NFTs as section 408(m) collectibles. 

This treatment is also relevant for other purposes of the Code, including the long-term capital gains tax rate under section 1(h). The notice also describes how the IRS intends to determine whether an NFT constitutes a section 408(m) collectible, pending the issuance of that guidance, and requests comments generally on the treatment of NFTs as a section 408(m) collectible, as well as comments on specific questions listed in the notice.

A Nonfungible Token (NFT) Is A Unique Digital
Identifier That Is Recorded Using Distributed Ledger
Technology And May Be Used To Certify Authenticity
And Ownership Of An Associated Right Or Asset.

Distributed ledger technology, such as blockchain technology, uses independent digital systems to record, share and synchronize transactions, the details of which are recorded simultaneously on multiple nodes in a network. A token is an entry of data encoded on a distributed ledger. A distributed ledger can be used to identify ownership of both NFTs and fungible tokens, such as cryptocurrency, as described in Rev. Rul. 2019-24.

Section 408(m)(2) of the tax code provides for a specific list of items that constitute collectibles for certain purposes. Acquisition of a collectible by an individual retirement account (IRA) or individually-directed account of a qualified plan is treated as a distribution from the account equal to the cost to the account of the collectible. Generally, collectibles also do not have as advantageous capital-gains tax treatment as other capital assets.

Until additional guidance is issued, the IRS intends to determine when an NFT is treated as a collectible by using a “look-through analysis.” Under the look-through analysis, an NFT is treated as a collectible if the NFT’s associated right or asset falls under the definition of collectible in the tax code. For example, a gem is a collectible under section 408(m); therefore, an NFT that certifies ownership of a gem is a collectible.

In Notice 2023-27, the Treasury Department and the IRS are requesting comments on any aspect of NFTs that might affect the treatment of an NFT as a collectible as well as certain comments specifically set out in the notice.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

for a FREE Tax HELP 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

On February 20, 2023, we posted SCOTUS Ruled That Non-willful Failure To File A FBAR Report Warrants a $10,000 Penalty Per Form Not Per Account!, where we discussed that the U.S. Supreme Court ruled on February 28, 2023, in Alexandru Bittner v. U.S., case number 21-1195, that the Bank Secrecy Act's $10,000 maximum penalty for the nonwillful failure to report foreign bank accounts applies on a per-form basis and not per account. 

Now According to Law360, in U.S. v. Katholos, case number 1:17-cv-00531, in the U.S. District Court for the Western District of New York, a woman given a $4.5 million penalty for willfully failing to report a foreign bank account told a New York federal court that a recent ruling by the U.S. Supreme Court should reduce that amount.

In Bittner v. U.S., the court found the $10,000 maximum penalty for nonwillful failure to report foreign bank accounts applies annually and not per account, should apply to Marika Katholos, according to her attorneys. The decision should mean Katholos' penalty is capped at $100,000 instead of 50% of the balance in the account, the lawyers told the U.S. District Court for the Western District of New York.

The U.S. Department of Justice, however, said that Bittner is irrelevant to Katholos' case. Bittner applies to nonwillful violations, whereas the U.S. said Katholos deliberately failed to identify her accounts. The Bittner case also involved multiple bank accounts, whereas there is only a single account at issue in Katholos' case, the government added. 

Katholos' attorneys argued the majority in Bittner noted that many tax professionals were unaware of the reporting requirement until the government began aggressive enforcement around 2008 or 2009. That may have included the tax professionals advising Katholos, who took their misguided advice. The attorneys sought permission for an expert witness to testify in a proceeding to reconsider whether she made an honest mistake.

The court requested letters March 1 from each party explaining how the Bittner decision could affect the case.

Marini& Associates, P.A. 

 

 

for a FREE Tax Consultation at: 

www.TaxAid.com or www.OVDPLaw.com 
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According to Law360, the Financial Crimes Enforcement Network issued its first guidance on reporting beneficial ownership information on Friday, March 24, 2023. This FAQ is a milestone under the Corporate Transparency Act's crackdown on the abuse of shell companies.

The guidance, which applies beginning Jan. 1, 2024 includes a 14-page document with answers to frequently asked questions, a summary of key filing dates, another summary of key questions and two videos aimed at informing more than 30 million businesses about the CTA's requirements. The law, passed in 2021, requires businesses to file reports on beneficial ownership in an effort to crack down on tax evasion, money laundering, sanctions evasion and illicit finance.

"We are committed to making this transparency process as simple as possible, particularly for small businesses who may have never heard of or interacted with FinCEN before," Himamauli Das, acting director of FinCEN, said in a statement Friday.

Erica Hanichak, government affairs director at the Financial Accountability and Corporate Transparency Coalition, or FACT Coalition, told Law360 on Friday that reporting templates that should have been relatively innocuous actually threaten to derail the CTA's entire agenda by giving reporting companies an unanticipated escape hatch. Companies would have the option to say they were "unable to obtain" or "unable to identify" either beneficial owners or company applicants, according to a draft intake form.

Hanichak said the guidance released Friday was a good first step to let businesses know about their reporting obligations, but she said she hopes the agency will offer more in-depth guidance in the future covering topics like how entities with multiple layers that certain U.S. states facilitate will be affected. 

Have A Beneficial Ownership Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP 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