Welcome to TaxBlawg, a blog resource from Chamberlain Hrdlicka for news and analysis of current legal issues facing tax practitioners. Although blawg.com identifies nearly 1,400 active “blawgs,” including 20+ blawgs related to taxation and estate planning, the needs of tax professionals have received surprisingly little attention.
Tax practitioners have previously lacked a dedicated resource to call their own. For those intrepid souls, we offer TaxBlawg, a forum of tax talk for tax pros.
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IRS's Small Business/Self-Employed (SB/SE) Division has issued an internal memorandum which provides that the trust fund recovery penalty may be imposed against third-party payroll service providers as well as the employer. IRC section 6672 imposes the TFRP on any person who: 1) is responsible for collecting, accounting for, and paying over payroll taxes; and, 2) willfully fails to perform the function. This is also known as the 100% penalty because it is equal to the amount of the tax that was no collected and paid.
This appears to represent a major policy change by the IRS, which ...
A Year of Change (2010-2011): Through Heightened Employment Tax and Comptroller Audits, the Government Seeks to Increase Revenue
This presentation will focus on understanding employment tax, franchise tax and sales and use tax audit risks, mechanisms to mitigate exposure strategies to develop robust audit techniques and a working knowledge of recent changes.
Speakers:
Paul H. Masters (Comptroller Audits)
and
Heather M. Pesikoff (Employment Tax)
Register here now.
See below for more details.
In February 2010, the IRS began a study to estimate the tax gap for underreported employment taxes and determine compliance rates for business taxpayers, the first study of its kind since 1984. The National Research Project intended to be a comprehensive review of 6,000 taxpayers over a three year period. The goal was data collection to find ways to reduce noncompliance and chip away at the current $345 billion tax gap of which underreported employment taxes account for $54 billion, almost one-fifth of the total of underreported liability.
On July 7, 2011, the Treasury ...
On May 5, 2011, the Treasury Inspector General for Tax Administration (TIGTA) issued a report that is not going to please anybody. It concluded that IRS employees are provided with ample information about their tax responsibilities to enable them to comply, but some do not, and the agency needs to do more to address the problem.
This is not the first report on the subject, following up on an Employee Tax Compliance program (ETC) initiated in calendar year 1995 “to insure that employees are held to a high standard of compliance.” In a December 2009 IRS Report, more than 97,000 Federal ...
Beginning July 1 2011, the 0.2% federal unemployment tax (FUTA) surtax is no longer in effect. Thus, the FUTA tax rate, before consideration of state unemployment tax credits, is now 6.0%.
Under Code Sec. 3301(1), the 0.2% FUTA surtax expired on June 30, 2011. The surtax was part of the 6.2% gross unemployment tax rate that employers paid on the first $7,000 of wages paid annually to each employee (6% permanent tax rate, 0.2% temporary surtax). The surtax has been in effect in every year since 1976, when it was enacted by Congress on a temporary basis. Since legislation has not been ...
As Tax Blawg readers know, after the Supreme Court’s Mayo decision adopted the deferential Chevron standard for determining the validity of Treasury regulations (instead of the less deferential National Muffler standard that taxpayers preferred), taxpayers and practitioners have speculated that seeking to invalidate a regulation may be a fool’s errand. Since Mayo, many of the U.S. Circuit Court of Appeals (but not all) have shown a proclivity towards deference. Extrapolating from these precedents, on the heels of the Mayo decision, it appears that the pendulum has swung ...
The Third Circuit yesterday issued a harshly worded rebuke to the taxpayer in Merck v. United States, No. 10-2775 (Jun. 20, 2011), affirming the District Court’s decision that the taxpayer’s swap-and-assign transaction was really a disguised loan that gave rise to Subpart F income. (See TaxProfBlog for a link to the opinion.)
Described briefly, the transactions at issue involved a U.S. company that entered into interest rate swap contracts with a foreign bank. The company then assigned its right to receive payments under the swaps to foreign subsidiaries in exchange for ...
TaxBlawg’s Guest Commentator, David L. Bernard, is the former Vice President of Taxes for Kimberly-Clark Corporation, a past president of the Tax Executives Institute, and a periodic contributor to TaxBlawg.
My last blog post suggested that the best defense against transfer pricing assessments is the adoption of a globally consistent transfer pricing policy supported by appropriate documentation. Near the conclusion of that post, I noted that the Competent Authority (CA) process and Advance Pricing Agreements (“APAs”) were tools that could be employed if your company faced transfer pricing adjustments.
Although the goal of your transfer pricing policy and related documentation is to manage risk and avoid tax assessments, the nature of the beast is such that there is no precise price one can pinpoint in transfer pricing matters that can completely eliminate the risk of a tax authority’s challenge. Rather, there is usually a range of potential prices that may be appropriate. A tax authority may be inclined to pick a price at the end of the range most favorable to its country from a revenue perspective, leaving the Chief Tax Officer (CTO) to consider a menu of potential remedies, including administrative appeals, litigation, APAs, or perhaps a request for CA assistance.
In the last two weeks, various news sources have reported on a previously low-profile IRS initiative to use state land-transfer records to identify potential omissions in reporting gifts of real estate. (Via TaxProf here and the WSJ here.) According to the reports, the IRS is using information received from at least 16 states to identify transfers of real estate the value of which exceeded the $13,000 threshold for filing a gift tax return. As a result, the IRS is pursuing taxpayers who made such transfers but failed to file returns.
Although this particular example of the IRS building an enforcement case through the use of non-tax sources targets individuals, corporate tax professionals should not rest too easily. Most corporate taxpayers might not be engaged in such outright noncompliance as failing to file returns. Nevertheless, the volume of non-tax information that is available in the public domain - especially for large, public companies - poses potentially analogous risks to corporate taxpayers for the positions taken on their tax returns. Beyond the traditional sources of non-tax information, such as SEC filings and court documents, news articles and press releases proliferate over the Internet. Likewise, companies may face a new potential source of trouble in the proliferation of social networking sites. From LinkedIn resumes to Facebook profiles, information that reflects upon a company grows by the day.
In IRS examinations, many practitioners encounter situations where the Internal Revenue Service seems to conjure up a set of facts that is divorced from reality. On the collection side, strange as it may sound, the IRS sometimes does this too, by treating the taxpayer as if he has assets he really doesn't.
When a taxpayer is unable to pay his tax in full, he is entitled to request a “collection alternative” from the IRS, usually an Installment Agreement but sometimes an Offer in Compromise. This process involves submitting a variety of financial statements to the IRS – most often ...