Washington DC Tax Law Blog

What is an offer in compromise? Can it help with my tax bill?

An offer in compromise is, essentially, an offer to pay off a tax bill for a lower amount than is due. In exchange for receiving some payment, the Internal Revenue Service (IRS) forgives the remaining debt.

Why would the IRS accept an offer in compromise? Before accepting an offer, the agency would conduct an investigation. This investigation looks into whether or not the taxpayer could potentially pay more than he or she has offered, known as the taxpayer’s “reasonable collection potential.”

IRS Offers Penalty Relief to Ease Reform Transition

In order to make this first filing season under the recent tax reform somewhat less painful, the IRS offered a modicum of relief to taxpayers on January 16, 2019. The IRS announced that, for taxpayers who had withholdings and/or made estimated tax payments equal in amount to at least 85% of the tax reported on their 2018 tax return, it will waive underpayment penalties (IRC §6654 penalties).

Tax Season Opening Announced; Refunds to be Issued Despite Shutdown

Due to the partial government shutdown, the IRS is only operating with about 12.5 percent of its staff. However, on January 7, 2019, the IRS announced that tax filing season will begin on January 28, 2019. More surprisingly, despite a long history of contrary government shutdown policies, the White House concurrently assured taxpayers that refunds will be issued. The IRS confirmed this and issued IR-2019-01, stating that "[w]e are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown."

IRS Issues Time-Sensitive Notices During Shutdown--But You Can't Respond

The partial government shutdown continues to complicate matters for taxpayers. Although the IRS recently announced that it will process tax refunds despite the ongoing shutdown, communication with the IRS is a one-way street.

Taxpayers are still receiving notices from the IRS, such as time-sensitive notices of intent to file a lien or issue a levy-but taxpayers are unable to respond to these. The IRS isn't answering the phones, and there's no way for taxpayers to ensure that a mailed response reaches the correct IRS employee.

Avoid these common tax penalties in 2019

The United States tax code is a complex beast. A failure to abide by the rules outlined in the code can result in serious consequences. Depending on the details of the allegations, the consequences for a failure to follow this code can range from relatively minor financial penalties to serious prison sentences.

Some of the most common errors that can result in a penalty include:

Think the IRS can only look-back 3 years? 2 times you are wrong.

If there are questions about your tax returns, the Internal Revenue Service (IRS) can generally look back three years — but there are some exceptions that allow the agency to look back even longer. Two of the most common reasons for an extended look-back period: omission of income and a failure to file returns.

Omission of income and federal tax audits

Do I need to report cryptocurrency on my taxes?

Cryptocurrency, a type of digital asset, is a fairly new form of currency. Governmental agencies continue to determine the best we can handle this asset. Although rules and regulations are not currently complete, it is important to note that in some situations tax obligations are present.

Does the Internal Revenue Service tax cryptocurrency?

Tips to avoid an IRS audit in 2018

The Internal Revenue Service (IRS) audited an estimated 1.1 million tax returns in 2017. Those who are concerned about an audit likely have the following questions:

How will I know if I am getting audited? The IRS generally notifies taxpayers of an impending audit through a mailing.

Think non-citizens do not need an FBAR? Think again.

The United States government requires the Reports of Foreign Financial and Bank Accounts (FBAR) forms for United States citizens with ownership or signatory authority over certain foreign assets. However, there are also certain situations when a non-citizen may need to file an FBAR. Three examples include:

Can the IRS use social media to support allegations of tax fraud?

The Internal Revenue Service (IRS) uses many tools in its fight against tax fraud, including information available on social media platforms.

How does the IRS use information available on social media? The agency can use information posted on the public domain as evidence to support allegations of tax crimes

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