Category Archives: criminal tax law

The global outbreak of the COVID-19 virus (the COVID-19 Emergency) has significantly limited the ability of many individuals to leave the United States. Regardless of whether they are infected with the COVID-19 virus, individuals may have become severely restricted in their movements, including by order of government authorities. Individuals who do not have the COVID-19 virus and attempt to leave the United States may also face canceled flights and disruptions in other forms of transportation, shelter-in-place orders, quarantines, and border closures, or they may feel unsafe traveling during the COVID-19 Emergency due to recommendations to implement social distancing and limit exposure to public spaces (collectively, COVID-19 Emergency Travel Disruptions). 

Nonresident alien individuals who perform services or other activities in the United States and foreign corporations who employ individuals or engage individuals as agents to perform services or other activities in the United States may be considered engaged in a U.S. trade or business (USTB). If the individuals performing those services or other activities are temporarily in the United States solely due to COVID-19 Emergency Travel Disruptions, this may cause the nonresident alien or foreign corporation to become engaged in a USTB when the nonresident alien or foreign corporation would not be so engaged were these individuals not present in the United States. Generally, a nonresident alien or foreign corporation that is engaged in a USTB is taxable on its business income connected to that USTB.

If a U.S. income tax treaty applies, however, the nonresident alien individual or foreign corporation generally will not be liable to tax on the income of its USTB (i.e., business profits) unless the business is conducted through a permanent establishment in the United States (PE) such as an office or other fixed base or a dependent agent.

Q1. Will a nonresident alien or foreign corporation, not otherwise engaged in a USTB, be treated as engaged in a USTB as a result of services or other activities conducted by one or more individuals temporarily present in the United States if, but for COVID-19 Emergency Travel Disruptions, those services or other activities would not have been conducted in the United States?

A1. A nonresident alien, foreign corporation, or a partnership in which either is a partner (Affected Person) may choose an uninterrupted period of up to 60 calendar days, beginning on or after February 1, 2020, and on or before April 1, 2020 (the COVID-19 Emergency Period), during which services or other activities conducted in the United States will not be taken into account in determining whether the nonresident alien or foreign corporation is engaged in a USTB, provided that such activities were performed by one or more individuals temporarily present in the United States and would not have been performed in the United States but for COVID-19 Emergency Travel Disruptions. For purposes of these FAQs, an "individual temporarily present in the United States" means an individual who is present in the United States on or after February 1, 2020, and on or before April 1, 2020, and is a nonresident alien, or a U.S. citizen or lawful permanent resident who had a tax home as defined in section 911(d)(3) outside the United States in 2019 and reasonably expects to have a tax home outside the United States in 2020. In addition, to determine the nonresident status of an alien, the relief provided in Rev. Proc. 2020-20 is applicable.

Q2. If a nonresident alien or foreign corporation is engaged in a USTB (taking into account the application of the treatment in Question 1) but otherwise does not carry on such USTB through a PE under an applicable income tax treaty, will the nonresident alien or foreign corporation be treated as conducting business through a PE due to services or other activities conducted by individuals temporarily present in the United States that would not have been conducted in the United States but for COVID-19 Emergency Travel Disruptions?

A2. During an Affected Person's COVID-19 Emergency Period, services or other activities performed by one or more individuals temporarily present in the United States will not be taken into account to determine whether the nonresident or foreign corporation has a PE, provided that the services or other activities of these individuals would not have occurred in the United States but for COVID-19 Emergency Travel Disruptions.

General Information

An Affected Person's income earned during the COVID-19 Emergency Period will not be subject to the 30% gross basis tax imposed under section 871(a) or section 881(a) solely because the Affected Person is not treated as having a USTB or PE under these FAQs.

In all events, the Affected Person should retain contemporaneous documentation to establish the period chosen as the COVID-19 Emergency Period and that the relevant business activities conducted by individuals temporarily present in the United States during the COVID-19 Emergency Period would not have been undertaken in the United States but for COVID-19 Emergency Travel Disruptions. The Affected Person should be prepared to provide that documentation upon request by the IRS.

Nonresident aliens and foreign corporations (including those that are partners in partnerships) may make protective filings of their annual U.S. tax returns, even if they believe they are not required to file for the 2020 taxable year because they were not engaged in a USTB, to avail themselves of the benefits and protections that arise from such filings (such as those relating to deductions, statutes of limitations, and claiming tax treaty-based relief).

The IRS will continue to monitor the evolving effects of the COVID-19 Emergency on nonresident alien individuals and foreign corporations and may update these FAQs as appropriate.

Have an International Tax 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

Read more at: Tax Times blog

On June 2020 we posted IRS Reopening Offices In 8 States & Puerto Rico By June 29!, where we discussed that the Internal Revenue Service plans to reopen operations in eight states and Puerto Rico in June that had been shuttered because of the COVID-19 pandemic, IRS Commissioner Chuck Rettig told employees in an internal email.

So far, employees with non-portable work returned to offices in Kentucky, Texas, and Utah on June 1, 2020. Additional IRS offices and centers are opening in the coming weeks, including: 

• Georgia and Tennessee beginning June 15
• Missouri and Michigan beginning June 15
• Indiana and Ohio beginning June 29
• California, Puerto Rico, Oregon beginning June 29

These re-openings include key processing centers, notice print facilities, and call center operations.The IRS also announced some changes to operations. According to Forbes, here's a look at some of what's open or opening soon:

Telephone Lines. Automated phone lines are available now. But if you want to talk to a real person, including the EIP phone line for those who received an EIP letter (Notice 1444), you should expect to wait. If you're looking for an update for your regular tax refund, you can call the automated number at 1-800-829-1954. And before you dial: this line has no information about the status of your stimulus checks (Economic Impact Payments).

Practitioner Priority Service (PPS). My colleagues have been rejoicing about the reopening of the Practitioner Priority Service (PPS) line, but I've yet to talk to a representative. That may be because the PPS line is open but has limited staffing.

Centralized Authorization File (CAF). The IRS says that it's processing some Centralized Authorization File (CAF) requests on a limited basis. However, anecdotally, I've not spoken with any tax professionals who have managed to get through (my request failed again today). According to the IRS, only the CAF unit at Ogden is operational at this time, which would explain my issues: Ogden services mostly west coast taxpayers.

Web services. IRS.gov remains open. That means:

• Practitioners with e-Services accounts and client authorization can access the Transcript Delivery System (TDS) to obtain taxpayer transcripts. 
• Taxpayers can also access "Where's My Refund?" and "Get Transcript Online."
• Taxpayers can check the status of their Economic Impact Payment at Get My Payment, their refund status at Where's My Refund? or obtain a tax transcript at Get Transcript Online. 
• Taxpayers also can make tax payments through Direct Pay.
• Taxpayers who previously have been issued an Identity Protection PIN but lost it must use the Get an IP PIN tool to retrieve their numbers. 

Taxpayer Protection Program: If you received correspondence (Letters 5071C, 5447C, or 5747C) from the IRS asking if you filed a suspicious tax return, you can use the online Identity Verification Service to validate your identity. If you received a Letter 4883C, follow its instructions. While online services are available, phone assistance is limited.

Office of Chief Counsel. The Office of Chief Counsel continues to work to resolve cases in litigation, including those recently canceled by the U.S. Tax Court. Although Counsel is not meeting with taxpayers or their representatives in face-to-face meetings or taking depositions, attorneys are available to discuss their cases by telephone.

Independent Office of Appeals. Appeals employees are continuing to work their cases. Appeals is not currently holding in-person conferences with taxpayers, but conferences may be held over the telephone or by videoconference.

Taxpayer Advocate Service (TAS) Local Numbers. TAS is open, in theory, to receive phone calls at the local phone numbers (visit taxpayeradvocate.irs.gov to find yours). I have personally not had any success reaching anyone (I have been able to leave voice mail messages).

Tax-exempt Sector Determinations, Rulings, and Closing Agreements. The IRS continues to process applications for recognition of tax exemption for exempt organizations and continues to work rulings and determinations for employees plans and closing agreements for municipal issuers (this does not include paper applications for tax exemption and paper filed information returns submitted after March 26, 2020) 

What's Not Open:

Services by mail. The "Get Transcript by Mail" is not operational since the offices that print and mail the transcripts are closed.

Most other mail processes. The IRS is receiving and storing mail, but they're not really opening and processing mail. Officially they say, "our mail processing functions have been scaled back to comply with social distancing recommendations." Mail correspondences could take a while to process, or in some cases, correspondence sent to IRS offices may be returned to the taxpayer if that office is closed and no one is available to accept them.  

Most phone lines. As noted earlier, some specific phone lines have resumed service, but most have not.

U.S. Residency Certification: The Philadelphia Accounts Management Campus is closed, so the U.S. Residency Certification Program's processing is temporarily suspended. 

Taxpayer Advocate Service (TAS) Toll-Free Number and Walk-in Services. The centralized toll-free number is unavailable until further notice. Additionally, there are no walk-in services.

Paper Tax Returns: All taxpayers should file electronically through their tax preparer, tax software provider, or IRS Free File if possible. The IRS is not currently able to process individual paper tax returns. If you have already filed via paper, do not file a second tax return or write to the IRS to inquire about the status of your return or your stimulus check. 

Ordering Forms: The IRS's National Distribution Center cannot take any orders for forms or publications to be mailed during this time. Most forms and publications are available for download electronically at IRS.gov/forms.

Have a Tax 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 
orToll Free at 888-8TaxAid

Read more at: Tax Times blog

On its Active Campaigns website, IRS LB&I has added a new compliance campaign that will examine TCJA issues. This new campaign will examine TCJA issues on a select pool of returns and then share what is learned by these examinations throughout the IRS. 

Issues could include computation of:

IRC §965 Transition Tax,

IRC §250 50% Deduction for Corporate Taxpayer's,
IRC §960 80% Deamed Paid Foreign Tax Credit and
 the IRC §962  election by an Individual to be tax
as a Corporation.

In January 2017, the IRS announced a new audit strategy for its Large Business and International Division (LB&I) known as “compliance campaigns.” With the new compliance campaigns, LB&I essentially shifted to examinations based on compliance issues that LB&I determined presented greater levels of compliance risk, thereby improving return selection. The IRS initially selected 13 compliance issues when it rolled out this strategy. (See IRS Has 13 New Compliance Campaigns for LB&I Taxpayers.)

Since the initial 13 campaign announcement, LB&I has added additional campaigns, see LB&I Has Announced the Approval of 5 Additional Compliance Campaigns (09/14/2018) and LB&I Announces Large Corporate Compliance Program (05/16/2019).

IRS LB&I has added a new The Tax Cuts and Jobs Act (TCJA) campaign on its website

Practice Area: Enterprise Activities
Lead Executive: Nikole Flax
Point of Contact: Monique Gabel

The Tax Cuts and Jobs Act (TCJA) was signed into law on December 22, 2017. Taxpayers have filed returns for 2017 and 2018 and are in the process of preparing and filing 2019 returns.

In 2020, the majority of returns that will be under review by LB&I will be returns reflecting changes brought about by TCJA; and in light of that, LB&I has initiated the TCJA Campaign to closely monitor issues on a select pool of returns and share information learned throughout LB&I and the IRS.

LB&I is also considering the impact of the Coronavirus Aid, Relief and Economic Security (CARES) Act on these returns as well as any others examined. The goal of this campaign is to identify transactions, restructuring and technical issues and better understand taxpayer behavior under the new law.

The treatment streams for this campaign may include examinations, soft letters, outreach, new and improved practice units and development of future issue-based campaigns.

Have an International Tax 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

In e-News for Tax Professionals, the IRS has reminded taxpayers that July 1 marks the closing of several business payment P.O. Boxes (also known as Lockbox addresses), in the Cincinnati and Hartford areas. Payments will be returned to sender. No forwarding service will be offered.

IRS first made this announcement in January 2020. See IRS will be closing some P.O. boxes in July; won't forward checks.

IRS instructs taxpayers and tax professionals that, to help ensure timely receipt, they should check IRS's Where to File website before mailing tax payments.

 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