Washington DC Tax Law Blog

Government sends man to prison for 21 months for tax fraud

Our legal system expects a lot out of small business owners. This system expects these entrepreneurs to follow the rules of their chosen business structure while also making sure they meet all required tax obligations. This is on top of balancing their business plan and making sure they are successful within their market. A failure to balance all these factors can lead to a collapse of the business and can come with steep penalties. If the government can support allegations of tax fraud, these penalties can come with prison time.

A recent case out of the East Coast provides an example.

Florida Attorney General Issues Tips to Help Floridians Avoid Tax Identity Theft Scams

On February 3, 2020, Florida Attorney General Ashely Moody issued a video consumer alert warning taxpayers to "Watch Out for Tax Identity Theft Scams" and providing tips for Floridians to help them avoid becoming victims of scammers.1

Five nations join tax evasion operation

A new tax enforcement organization is set to ramp up the nation’s ability to keep an eye out for tax evasion. The Joint Chiefs of Global Tax Enforcement, or J5, may sound like something out of the Marvel Universe. In reality, it is a collaborative effort of five major intelligence communities working together to bring down those accused of tax evasion.

In addition to tax enforcement officers from the United States, the J5 includes representatives from the United Kingdom, Canada, Australia and the Netherlands.

Have You Received a 1099-K for Cryptocurrency Transactions?

Cryptocurrency exchanges, such as Coinbase and Uphold, have begun issuing Forms 1099-Ks, Payment Card and Third Party Network Transactions, to customers. If you receive a 1099-K from a cryptocurrency exchange, then you can be assured that the IRS is fully aware of your reportable cryptocurrency transactions. This is because cryptocurrency exchanges are required to send 1099-Ks to: (1) customers during any tax year who had payments exceeding $20,000 and engaged in more than 200 transactions in the exchange, and (2) the IRS. Omitting 1099-K information from your tax return will automatically flag your return for underreporting and subject you to IRS penalties.

Updated IRS FAQs Require Appraisals for Charitable Donations of Virtual Currencies

In December of 2019, the Internal Revenue Service (IRS) added two new "Frequently Asked Questions" (FAQs) on its webpage regarding the responsibilities and reporting obligations for charitable organizations that received donations in the form of virtual currencies.1 One of these FAQs imposes an appraisal requirement for large donations of virtual currencies-increasing already existing concerns that such a requirement will discourage charitable giving.

IRS Issues Guidance for Reporting Required Minimum Distributions in 2020

Within the newly enacted Further Consolidated Appropriations Act, 2020 (FCAA) is another act-the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), which significantly changes retirement plan funding and distribution.[1] This new law increases the age at which account holders are required to take distributions from their individual retirement accounts (IRAs) from 70½ to 72 years old.[2]

 On January 24, 2020, the IRS issued guidance in Notice 2020-6 to financial institutions regarding reporting required minimum distributions (RMDs) for 2020 in light of the amendment to Internal Revenue Code (IRC) §401(a)(9) made by the SECURE Act.[3] In the Notice, the IRS clarified that:

Getting ready to file your taxes? Avoid these audit triggers.

Tax season is upon us. The Internal Revenue Service (IRS) began accepting tax returns on Monday, January 27. Those putting the finishing touches on their returns may wonder what the IRS looks for when reviewing returns -- what exactly triggers an audit?

Governor Announces More Than $1 Billion Tax Relief Aimed to Keep Retirees in Maryland

On January 16, 2020, the Maryland Governor's Office issued a news release reporting that Maryland Governor Larry Hogan announced the proposed Retirement Tax Reduction Act of 2020 (Act).[1]The Act would provide significant tax relief for Maryland retirees in order to make it more affordable for them to remain in Maryland. The news release quotes Governor Hogan as saying:

Non-Filers: IRS Will Not Prepare Your Return with QBI Deduction

When a taxpayer fails to file a tax return, the Internal Revenue Service (IRS) has the authority under Internal Revenue Code (IRC) §6020 to prepare a "substitute for return" (SFR) on the taxpayer's behalf. Generally, SFRs are detrimental to the taxpayer's overall tax situation. SFRs do not start the clock running for the three-year period for assessment, and the IRS is still permitted to proceed with collection activity. Moreover, the IRS is not going to assume that a taxpayer is entitled to a deduction for which it lacks evidence.

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