By Mary Lundstedt
On May 23, 2018, the IRS issued Notice 2018-54, making it abundantly clear that when it comes to state efforts to circumvent the recently enacted state and local tax (SALT) deductions cap, "taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes."
By Eli Noff, Partner & Mary Lundstedt, Esq.
On May 16, 2018, in United States v. Colliot, the District Court for the Western District of Texas held that the Internal Revenue Service (IRS) is precluded from assessing a willful Report of Foreign Bank and Financial Accounts (FBAR) penalty exceeding the $100,000 limit provided in Federal Regulation (Reg.) §1010.820. The decision is a victory for taxpayers—forcing the government to either appeal the decision or promulgate new regulations.
By Mary Lundstedt , Esq.
In November of 2017, Coinbase, Inc. ("Coinbase"), a company that facilitates digital currency transactions, was ordered to comply with an IRS summons demanding specific Coinbase client identifying information and transaction data for Coinbase accounts "with at least the equivalent of $20,000 in any one transactions type" in any year during the period of 2013-2015. Approximately 14,000 Coinbase clients will be affected. The federal district court ruled that the summons, as narrowed in its decision, "serves the IRS's legitimate purpose of investigating Coinbase account holders who may not have paid federal taxes on their virtual currency profits."
By Mary Lundstedt, Esq.
On April 5, 2018, the Chief Counsel's Office provided advice in Notice CC-2018-005 to Chief Counsel attorneys who handle I.R.C. §7345 passport actions. The Chief Counsel's Office detailed both the certification and reversal processes for "seriously delinquent taxpayers," as well as the procedures for the judicial review of certifications. Lastly, the Notice indicates that since this is a new area of litigation, with questions still unanswered, these cases are ultimately to be coordinated with Procedure & Administration, Branches 3 and 4.
By Mary Lundstedt, Esq.
On May 10, 2018, the United States Attorney for the District of Maryland announced that new Baltimore Police Commissioner Daryl De Sousa has been charged with three misdemeanor counts of willful failure to file a U.S. individual income tax return. Specifically, the charges allege that Commissioner De Sousa failed to file returns for tax years 2013, 2014 and 2015-each failure a violation of Internal Revenue Code (IRC) §7203.
On May 5th Glen E. Frost wrote a letter, on behalf of the American Citizens Abroad, to IRS Commissioner John Koskinen in regards to private collection firms based in the United States collecting debts of U.S. taxpayers with foreign addresses.
In 2015 the Fixing America’s Surface Transportation Act ("FAST Act") was established to provide long-term funding for surface transportation infrastructure planning and investment. Included in this new law was a section allowing the State Department to refuse to issue or renew a passport for a seriously delinquent taxpayer.
Jessica Frase Marine, Esq.
When a taxpayer receives a notice from the IRS proposing an additional assessment of tax, the taxpayer can often work administratively with the IRS to resolve the dispute. However, many times, the taxpayer and IRS are not able to come to an agreement. In those instances, there are four different forums which can be utilized to litigate a Federal civil tax case: the United States Tax Court, United States District Courts, the United States Court of Federal Claims, and United States Bankruptcy Courts.
Over the past few years, the IRS has increased its attention on offshore bank accounts, earmarking much of its limited budget, staff, and resources towards initiatives such as the Offshore Voluntary Disclosure Program (OVDP) and Swiss Bank Program, and pushing strict compliance of foreign bank and financial account reporting through enforcement measures such as the Foreign Account Tax Compliance Act (FATCA). It appears that the IRS was definitely on to something, as the debut of the Panama Papers makes clear.
IRS budget cuts may not appear entirely bad. With a reduced budget comes a reduction in the manpower and resources necessary for the IRS to conduct audits. Less audits means less need for taxpayers to concern themselves with the possibility of retaining records for years or, to some, the need to be entirely truthful on their tax returns.