Washington DC Tax Law Blog

COVID-19 & taxes: How does the IRS respond to emergencies?

President Donald Trump recently declared a national emergency as a result of the new coronavirus. State officials throughout the country have declared states of emergency and local counties and cities are doing the same.

These actions have triggered an array of federal, state and local assistance programs, but have they impacted taxes?

Administration Announces Unprecedented Tax-Payment Deadline Delay for Majority of Americans

On March 17, 2020, as part of a relief effort in response to the economic effects of the coronavirus pandemic, Treasury Secretary Steven Mnuchin announced the government's unprecedented move to delay the April 15th tax-payment deadline for certain individuals and businesses-penalty and interest free. Although full details of the maneuver have not been released yet, it is widely expected that individuals who owe no more than $1 million and businesses that owe no more than $10 million will have an extra 90 days to pay their 2019 income tax liabilities.

Comptroller Announces June 1st Extension of Business Tax Filing Deadlines

On March 11, 2020, in an effort to assist businesses affected by COVID-19's economic impact, Maryland Comptroller Peter Franchot announced the June 1st extension of business-related tax filing deadlines. Specifically, the announcement provided that:

Mistakes on taxes: Avoid these common errors

Tax season is upon us. The tax filing deadline is just over four weeks away and many taxpayers are gathering their tax forms and starting to fill out their returns. Whether looking at a big refund or a tax bill, taxpayers can help to better ensure a smooth process by avoiding these common errors:

Three tips to prepare for a tax audit

Tax audits are not uncommon. The Internal Revenue Service (IRS) conducted one million audits in 2017 alone. The agency generally conducts these tax audits either through mailings or with an agent showing up at your home or place of business. The agency conducted the vast majority of the one million audits from 2017, approximately 75%, through the use of mailing correspondences. The agency conducted the remaining audits on site with the use of field agents.

2019 IRS Wage and Income Transcripts Expected in May

Every year during tax season, many tax professionals and taxpayers eagerly await the release of IRS Wage and Income Transcripts in order to assist in return preparation. Wage and Income Transcripts provide valuable data, which the IRS compiles from information returns it receives, such as Forms W-2, 1099, 1098 and Form 5498, IRA Contribution Information.

Currently, tax professionals are expecting the timing of the 2019 Wage and Income Transcripts' release to follow suit with the release dates in 2018 and 2019. This means that 2019 Wage and Income Transcripts are expected to be released sometime in May of 2020. However, remember that the IRS is careful to emphasize that "current tax year information may not be complete until July." [1]

Fudging the numbers: What happens when you lie on your taxes?

From generous estimations to outright lies — what happens when you lie on your taxes? The lure of a lower tax bill or higher tax refund may tempt taxpayers to fudge the numbers on their tax return. However, such maneuvers can come with serious consequences.

IRS announces increased focus on high-income earners

The Internal Revenue Service (IRS) recently announced plans to increase visits to a certain group of taxpayers. The agency’s focus includes those who meet the following criteria: 1) earnings of over $100,000 annually, and 2) failure to file income tax returns.

High-Income Non-Filers Will Be Subject To Increased IRS Visits

On February 19, 2020, the IRS issued a news release announcing that "it will step up efforts to visit high-income taxpayers who in prior years have failed to timely file one or more of their tax returns."1 Specifically, IRS revenue officers (trained civil enforcement officers) across the nation will be increasing their in-person visits with high-income taxpayers who have not filed tax returns in 2018 or earlier years. While the IRS claims that the primary goals of these visits are to inform high-income taxpayers of their reporting and paying obligations and to bring them into compliance, the IRS emphasizes that:

Man Sentenced to Prison for Failing to Remit Payroll Taxes to IRS

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 Delaware provides an example resulting in both steep monetary penalties and prison time.

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