News & Articles

IRS Extends the Tax Filing and Paying Deadline for Individuals

Posted on Fri, Mar 19, 2021

The IRS has announced that the federal income tax filing deadline for individuals for the 2020 tax year is extended from April 15, 2021, until Monday, May 17, 2021.

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Tags: Individual Taxes, IRS, Tax Deadline

IRS Announces Changes for Personal Use of Employer-Provided Vehicles

Posted on Tue, May 14, 2019

The free use of a company car is one of the best perks an employee may receive as part of a compensation package. But the benefit to the employee isn't completely "free" under current tax law. Essentially, personal use of a company car is treated as a taxable noncash fringe benefit, subject to income tax obligations.

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Tags: Vehicle, IRS, Tax Cuts and Jobs Act (TCJA)

Understanding IRS Audit Guidance

Posted on Wed, Apr 24, 2019

IRS examiners usually do their homework before meeting with taxpayers and their professional representatives. This includes reviewing any relevant Audit Techniques Guides (ATGs) that typically focus on a specific industry or audit-prone business transaction.

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Tags: Audit, IRS Audit, IRS

Delinquent Taxpayers May Experience Passport Issues

Posted on Wed, Mar 27, 2019

Let's say a person is planning to take a plane trip out of the country. And further suppose that individual owes the federal government a fair amount of back taxes. The person may not be able get a passport if he or she owes the government a significant amount of back taxes. The IRS is now reminding taxpayers that legislation passed in 2015 allows the tax agency to revoke passports or deny new ones to major debtors.

Taxpayers Free to Go Overseas

The IRS says it won't certify a taxpayer as owing a seriously delinquent tax debt or will reverse the certification for an individual who: 

  • Is in bankruptcy;
  • Has been identified by the IRS as a victim of tax-related identity theft;
  • Has an account the IRS has determined is currently not collectible due to hardship;
  • Is located within a federal disaster area;
  • Has a request pending with the IRS for an installment agreement;
  • Has a pending offer in compromise with the IRS; or
  • Has an IRS accepted adjustment that will satisfy the debt in full.

Background of the Law

Under the Fixing America's Surface Transportation Act of 2015, a highway spending measure, the IRS was granted the authority to notify the State Department about taxpayers who have "seriously delinquent tax debts." The State Department is then tasked with denying the individual their passport application or renewal. It took awhile to put the wheels in motion, but the IRS began enforcing this provision of the law last year.

For these purposes, a seriously delinquent tax debt is defined as $50,000 or more, indexed for inflation. The threshold for 2019 is $52,000. This includes back taxes, penalties and interest for which the IRS has filed a tax lien or issued a levy.

How It Works

If a taxpayer is certified as owing a seriously delinquent tax debt, he or she receives a Notice CP508C from the IRS. This notice explains the steps that must be taken to resolve the debt. For instance, IRS representatives may help a taxpayer set up a payment plan or explain other payment alternatives. People who owe back taxes shouldn't delay — especially if they're planning a trip abroad.

Once the tax obligations are met, the IRS will reverse the taxpayer's certification within 30 days. Matters may be expedited under certain circumstances.

Before denying a passport renewal or new passport application, the State Department will hold a taxpayer's application for 90 days to allow him or her to resolve any erroneous certification issues, make full payment of the tax debt or enter into a satisfactory payment arrangement with the IRS.

In an IRS announcement, the agency presents several ways that an individual can avoid having the State Department notified of a seriously delinquent tax debt, including the following:

  • Pay the tax debt in full;
  • Pay the tax debt in a timely manner under an approved installment agreement;
  • Pay the tax debt in a timely manner under an accepted offer in compromise (OIC);
  • Pay the tax debt in a timely manner under the terms of a settlement agreement with the Department of Justice (DOJ);
  • Have requested or have a pending collection due process appeal with a levy; or
  • Have collection suspended because you've made an innocent spouse election or requested innocent spouse relief.

The IRS also has provided details on two key relief programs available to taxpayers who could have their passports revoked or denied.

1. Payment agreements. A taxpayer can formally request to use a payment plan by filing Form 9465. This form can be sent with a tax return bill or notice or a taxpayer can arrange a monthly payment agreement online.

2. Offers in compromise. With an OIC, a taxpayer settles up with the IRS for an amount that's less than the actual tax liability. The IRS will examine the individual's income and assets to determine his or her ability to pay. An individual can use an online pre-qualifier to see if he or she is likely to qualify for an OIC.

Other special rules apply to taxpayers who are currently serving in a combat zone.

Moral of the story: As you can see, there are several available options for avoiding a worst-case scenario. With assistance from a tax advisor, a person who owes back taxes should be able to find a happy tax landing.

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Tags: Filing Taxes, IRS, Tax Cuts and Jobs Act (TCJA)

Tax Issues to Consider When Small Business Owners Get Divorced

Posted on Thu, Mar 14, 2019

For many small business owners, their ownership interest is one of their biggest personal assets. What will happen to your ownership interest if you get divorced? In many cases, your marital estate will include all (or part) of your business interest.

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Tags: IRS, Divorce, Small Business

IRS Issues Final QBI Deduction Regulations

Posted on Wed, Feb 13, 2019

The IRS has issued final regulations on determining allowable deductions based on qualified business income (QBI) from pass-through entities. This break is available only through 2025, unless it's extended by future legislation.

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Tags: IRS, Qualified Business Income (QBI), Pass-Through Entities

How Much Does the IRS Let Delinquent Taxpayers Live On Each Month?

Posted on Wed, Oct 10, 2018

The IRS uses "Collection Financial Standards" to help determine a taxpayer's ability to pay a delinquent tax liability. Allowable living expenses include those that meet the test of being necessary to provide for a taxpayer's (and his or her family's) health and welfare, as well as his or her ability to produce income.

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Tags: Healthcare, IRS, Taxes

QBI Deduction Provides Tax Break to Pass-Through Entity Owners

Posted on Fri, Aug 24, 2018

The IRS recently issued proposed reliance regulations to help clarify the new qualified business income (QBI) deduction that was introduced as part of the Tax Cuts and Jobs Act. This guidance is complex and hundreds of pages long. As part of the proposed regs, the IRS explained that, if certain requirements are met, individuals, estates and trusts (all referred to as "individuals" by the proposed regs) that own interests in more than one qualifying trade or business can (but aren't required to) aggregate them, by treating them as a single trade or business.

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Tags: IRS, Business Owner, Tax Cuts and Jobs Act (TCJA), Qualified Business Income (QBI)

Ensure You Qualify for Charitable Donation Deductions

Posted on Thu, Jul 12, 2018

Giving to charity can provide you with a warm feeling as well as a nice tax break. But you've got to itemize deductions on your tax return. And, like most tax breaks, charitable deductions come with a number of rules you must follow to actually claim the write-off. Here are the details.

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Tags: Charitable Giving, IRS, Charitable Donations

Handle with Care: The Nanny Tax Rules

Posted on Wed, Nov 22, 2017

When you hire a nanny, housekeeper or other domestic worker, pay close attention to the tax rules.

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Tags: Social Security, IRS, Independent Contractor, Taxes