Yearly Archives: 2024

In Jenner v. Commissioner, 163 T.C. No. 7 (2024), the United States Tax Court ruled on the applicability of Collection Due Process (CDP) requirements to Foreign Bank Account Reporting (FBAR) penalties. The case, decided on October 22, 2024, involved Stephen C. Jenner and Judy A. Jenner as petitioners against the Commissioner of Internal Revenue.

The Jenners were assessed FBAR penalties for allegedly failing to timely file foreign bank account reports from 2005 to 2009.

The Treasury's Bureau of the Fiscal Service informed the Jenners that funds would be withheld from their monthly Social Security benefits to satisfy these debts. 

The Jenners requested a CDP hearing, which was denied by the IRS.

The Tax Court held that FBAR penalties are not subject to the requirements of I.R.C. §§6320 and 6330. The court ruled that it lacked jurisdiction in this case.

The Tax Court's decision was based on several key factors:

• Nature of FBAR Penalties: The court determined that FBAR penalties are not taxes imposed by the Internal Revenue Code.
• Scope of CDP Requirements: Sections 6320 and 6330 of the Internal Revenue Code, which govern CDP rights, apply specifically to unpaid taxes.
• Jurisdiction: Since FBAR penalties are not taxes, the Tax Court concluded it did not have jurisdiction over the case.
• Collection Mechanism: The court noted that the collection mechanism for FBAR penalties is not lien or levy, which are the methods typically subject to CDP procedures. 
• Query can the IRS execute a levy on their Social Security Income without first going the District Court to obtain an FBAR judgment? 

This ruling clarifies the distinction between tax penalties and FBAR penalties in terms of procedural rights. It emphasizes that FBAR penalties, while administered by the IRS, are not subject to the same collection due process protections as tax liabilities under the Internal Revenue Code. 

The decision limits the avenues for contesting FBAR penalty collections and underscores the separate legal framework governing these penalties compared to regular tax assessments.

Read more at: Tax Times blog

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction in favor of the plaintiffs in the case of Texas Top Cop Shop, Inc. et al. vs. Garland. 

In so ruling, “[t]he Court has determined that the CTA and Reporting Rule are likely unconstitutional for purposes of a preliminary injunction. 

It has not made an affirmative finding that the CTA and Reporting Rule are contrary to law or that they amount to a violation of the Constitution.” 

The Court Went Further And Ruled That This Is A
Nationwide Injunction, Applying Against Enforcement Of
The CTA And Its Impending January 1, 2025 Filing Deadline.

The Court stated: “…the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of the APA. Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”

The CTA required that an estimated 32.6 million existing business entities disclose their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network before 2025. The government argued that the law’s function, to crack down on anonymous shell companies and deter money laundering, terrorism financing, and other illicit economic activity, falls within Congress’s regulatory duties.

But the CTA still fails to pass muster, even if anonymous corporate operations can be regulated by Congress, because the Constitution’s Commerce Clause can’t be leveraged to compel the disclosure of information for law enforcement purposes, the court’s opinion said.

We note this is a preliminary injunction, and we urge reporting companies to pay attention for additional updates and proceedings in this and other cases which could modify or change this order.

Need Help Filing Your BOI Report?

     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

On October 3, 2024 we posted Only 90 Days Left To File BOI Report, where we discussed that Starting January 1, 2024, many business entities will be required to report information to the U.S. government about who ultimately owns or controls them, including the business’ owners and officers. This new beneficial ownership information (BOI) reporting requirement is part of the Corporate Transparency Act (CTA), which aims to help law enforcement combat financial crime and protect the U.S. financial system from bad actors. If your U.S. entity was in existence before January 1, 2024, you must file your Beneficial Owners Report by January 1, 2025, which is less than 30 days away. Failing to meet this federal requirement could result in steep penalties: Civil fines of up to $500 per day. Criminal penalties could include up to two years of imprisonment. The government isn’t taking non-compliance lightly, and neither should you. The Clock Is Ticking! This isn’t just a formality; it’s the law. The process can take time, especially if you're new to the reporting requirements or have complex ownership structures.  Disclaimer: The information contained herein is for informational purposes and should not be relied upon or construed as tax or legal advise, generally, nor regarding any specific issue or factual circumstance. Need Help Filing Your BOI Report?      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

 On November 22, 2023 we posted IRS Delays Again $600 Venmo Payment Reporting Requirement Until 2025, now in Notice 2024-85 The IRS provides that calendar years 2024 and 2025 will be regarded as the final transition period for purposes of IRS enforcement and administration of the minimum reporting threshold for Form 1099-K, Payment Card and Third Party Network Transactions.  

Under Notice 2024-85, a third party settlement organization (TPSO) will be required to report payments in settlement of third party network transactions with respect to a participating payee when the amount of total payments for those transactions is more than: 

• $5,000 during calendar year 2024; 
• more than $2,500 during calendar year 2025; and 
• more than $600 during calendar year 2026 and after.  

Reporting requirements do not apply to personal transactions such as birthday or holiday gifts, sharing the cost of a car ride or meal, or paying a family member or another for a household bill. These payments are not taxable and should not be reported on Form 1099-K.

However, the casual sale of goods and services, including selling used personal items like clothing, furniture and other household items for a loss, could generate a Form 1099-K for many people, even if the seller has no tax liability from those sales.

This complexity in distinguishing between these types of transactions factored into the IRS decision to delay the reporting requirements an additional year and to plan for a threshold of $5,000 for 2024 in order to phase in implementation. 

Expanded information reporting, which will occur as the result of the change in thresholds for Form 1099-K, is important because it increases tax compliance and can reduce burden on taxpayers seeking to follow the law. The IRS believes that expansion must be managed carefully to help ensure that Forms 1099-K are issued only to taxpayers who should receive them. In addition, it's important that taxpayers understand what to do as a result of this reporting, and that tax professionals and software providers have the information they need to assist taxpayers.

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