Category Archives: criminal tax law

Before TCJA, individual taxpayers generally could deduct all state and local taxes (SALT) as itemized deductions. TCJA limited the individual SALT deduction to $10,000 for taxable years 2018 through 2025. Some states have been looking for a workaround to enable their resident taxpayers to avoid the $10,000 deduction limit. 

• IRS Has Approved a SALT Workaround for Pass-Through Entity (Notice 2020-75; IR-2020-252)
   
• Before TCJA, individual taxpayers normally could deduct all state and local taxes (SALT) as itemized deductions
   
• TCJA limited the individual SALT deduction to $10,000 for taxable years 2018 through 2025
   
• Some states have been looking for a workaround to enable their resident taxpayers to avoid the $10,000 deduction limit

• The IRS has approved the availability and functionality of this workaround in Notice 2020-75

Watch for legislation in your own state authorizing a PTE election for state taxes to be paid on behalf of the owner by the entity.

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for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243) 

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According to Procedurally Taxing, an Innocent Spouse Request does not stop a Levy during the 21-day period after the Levy, when the bank was holding the funds in the joint account after receipt of the levy. 

The case of Landers v. United States, 3:20-cv-00455-G (N.D. Tex. 2020) raises the issue of the timing of the injunction against collection vis a vis the completion of a bank levy.  

This case appears to break ground not previously broken, as Ms. Landers seeks to undo the levy because she filed her innocent spouse request during the 21-day period the bank was holding the funds in the joint account after receipt of the levy.  

The court decides that the language stopping collection resulting from the filing of an innocent spouse request does not stop the bank levy during the 21-day period.  

The opinion goes through an analysis of the Anti-Injunction Act to get there.

Have IRS Tax Problems?

 Contact the Tax Lawyers at
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The Internal Revenue Service Advisory Council (IRSAC) conveys the public's perception of IRS's activities and plays a significant role as external evaluator regarding the reorganization and its implementation. The Council advises the IRS regarding tax administration policy, programs, and initiatives, and they sees a danger in chronic underfunding of the agency.

IRSAC made the point in its annual report, which also highlighted the importance of the Taxpayer First Act and opportunities to expand the e-filing and online application process.

The 2020 Public Report includes recommendations on 26 issues, which cover a broad range of topics, including:

• Funding of the IRS
• The Taxpayer First Act
• Expansion of e-File
• Proposal for an early exam program for Large Business
• Telephone response times for the Practitioner Priority Service
• Resources for Native American taxpayers and federally recognized tribes
• Taxpayer Digital Communications

Inadequate IRS funding is a fundamental risk to tax administration. “A tax system rooted in voluntary compliance requires appropriate levels of customer service and enforcement, both of which depend upon adequate and consistent funding,” the report said. “Congressional appropriations provide the vast share of operating funds for the IRS to administer the nation’s tax system, and collect over $3.1 trillion in net revenue.”

In Fiscal Year 2019, More Than 80 Percent of Federal Government Spending Was Funded By
Federal Taxes Collected By The IRS.

Yet “Overall Funding For The IRS Has Decreased Roughly 20 % On An Inflation-Adjusted Basis Since FY2010,”
Added Charles Read, CEO Of GetPayroll In Lewisville, Texas.

“The result of these budget reductions since FY 2010 is a 22 percent decline in the number of employees at the agency and a 30 percent decline in the number of employees working in enforcement roles.”

Among IRSAC’s recommendations are advocacy for funding at a level no lower than the FY2010 benchmark adjusted for inflation, or $14.3 billion, or at minimum a level that will provide for a net increase in staffing on a sustained yearly basis; and advocating for consistent or multi-year funding for long-term initiatives, including the customer service strategy, training strategy and business modernization plan.

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According to AccountingTODAY, during a House Ways and Means Oversight Subcommittee hearing, Rep. Judy Chu, D-California, submitted the AICPA letter for the congressional record and asked Rettig to respond to how its backlog of millions of pieces of mail from the pandemic is still affecting taxpayers who are being sent penalty notices and the tax professionals who are trying to help them without an easy way to get through to the IRS.

“The IRS closed its facilities to protect its workforce for several weeks this spring and I recognize that it created a huge backlog of mail that the IRS is still working through,” she said. “But I’m disturbed that the IRS is continuing levy and lien notices while processing that backlog of mail. Taxpayers and businesses who have in fact filed on time are being penalized because the IRS still has not processed their filings.”

She noted that the AICPA letter from Nov. 5 included some “commonsense options that the IRS can implement to alleviate the financial difficulties for these tens of thousands of taxpayers.”

She asked him why the IRS wasn’t setting up a dedicated way to address these concerns. “Commissioner Rettig, my understanding is that the IRS has not established an expedited phone service for tax professionals to dispute the lien and levy notices that are being sent to taxpayers despite the backlog,” she said. “Do you have a current estimate of how large the mail backlog is could you also provide a rationale for not setting up such a process to date and whether we can have such a process?”

Rettig Responded That The IRS Has “An Aggregate Of About 3 Million Pieces Backlogged, Of Which About A Million Are Tax Returns, Which Is Not Unusual For Us.”

As for the AICPA letter, he pointed out that he worked for 36 years on the outside as a tax attorney before joining the IRS. “I’m in touch with thousands of practitioners on the outside, AICPA as well as others, and what they were asking for was for us to go beyond the first-time abate and beyond reasonable cause for individuals with a comment saying first-time abate for a failure to file, failure to pay, failure to estimate penalty, you get an automatic abatement and one of their comments was, well if somebody already has one of those they don’t get a second one but then they default to reasonable cause,” he said. 

“We have procedures in place. The individuals in the Internal Revenue Service were not merely career employees who looked at this, but more than 10 people who came onboard from private practice with similar experience to mine looked at this as well and were not willing to provide an open forum for people, professionals particularly, who might not be addressing their responsibilities during this. So we took a hard look at that and AICPA is aware, as are other practitioners.”

Have IRS Tax Problems?

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