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Monthly Archives: November 2019

In-Person IRS Tax Compliance Visits Coming to Your Neighborhood Soon!

According to accountingTODAY, the Internal Revenue Service is expanding its efforts to ensure businesses and individuals are paying their taxes, particularly payroll taxes, with in-person visits planned by revenue officers to more parts of the country, starting recently in Wisconsin and later this month Texas and Arkansas.
The goal of the visits is to help resolve tax compliance issues by meeting face-to-face with taxpayers who have ongoing tax issues, such as payroll tax compliance for employers. The IRS plans to focus its efforts in areas where there have been a limited number of revenue officers available due to declining IRS resources. Thanks to recent budget increases, the IRS has been expanding its staff and has been on a hiring spree, allowing it to expand its enforcement efforts.
The IRS has been identifying areas of the country where it either no longer has an office near taxpayers or where it has no presence at all. The new program will supplement the IRS’s Private Debt Collection program, in which it works with contracted collection agencies who telephone individual taxpayers who owe longstanding tax debts..
“These new visits that we're doing outside involve teams of revenue officers traveling to locations where we have reduced resources or no resources to visit higher-risk cases involving larger balances due and cases that have needed visits from a revenue officer for some time, in some cases years,”
 said Guillot.
One of the main focuses will be unremitted payroll taxes. “In many cases business owners have been withholding large amounts of employment taxes from their employees and not [sending] them over to the Treasury,” said Guillot.
“It’s an extremely high priority. Our efforts are to try to get them into compliance when we meet with them face to face. We have data that proves this is an effective way of getting them to be compliant, which is the kind of success we want, because if the business becomes compliant, they continue to provide jobs for our citizens, and that's good for everybody.”
He noted that there will be additional compliance events like this throughout the year. The IRS plans to send around a dozen revenue officers to an area and they will be splitting up to visit multiple taxpayers to resolve high-priority cases. 
Have an IRS Tax Problem?
Contact the Tax Lawyers at
Marini & Associates, P.A. 
 for a FREE Tax Consultation Contact us at: or
or Toll Free at 888-8TaxAid (888 882-9243). 

Read more at: Tax Times blog

IRS Announces Increases Enforcement on Syndicated Conservation Easements

The Internal Revenue Service announced in IR 2019-182, 11/12/2019 a significant increase in enforcement actions for syndicated conservation easement transactions, a priority compliance area for the agency. Coordinated examinations are being conducted across the IRS in the Small Business and Self-Employed Division, Large Business and International Division and Tax Exempt and Government Entities Division. Separately, investigations have been initiated by the IRS' Criminal Investigation division. These audits and investigations cover billions of dollars of potentially inflated deductions as well as hundreds of partnerships and thousands of investors.


"We will not stop in our pursuit of everyone involved in the creation, marketing, promotion and wrongful acquisition
of artificial, highly inflated deductions
based on these aggressive transactions.

Every available enforcement option will be considered, including civil penalties and, where appropriate, criminal investigations that could lead to a criminal prosecution," said IRS Commissioner Chuck Rettig.

"Our innovation labs are continually developing new, more extensive enforcement tools that employ advanced techniques. If you engaged in any questionable syndicated conservation easement transaction, you should immediately consult an independent, competent tax advisor to consider your best available options. It is always worthwhile to take advantage of various methods of getting back into compliance by correcting your tax returns before you hear from the IRS.

Our Continued Use Of Ever-Changing Technologies

Would Suggest That Waiting Is Not A Viable Option
For Most Taxpayers." 

In December 2016, the IRS issued Notice 2017-10 (PDF), which designated certain syndicated conservation easements as listed transactions. Specifically, the Notice listed transactions where investors in pass-through entities receive promotional material offering the possibility of a charitable contribution deduction worth at least two and half times their investment. In many transactions, the deduction taken is significantly higher than 250 percent of the investment. Syndicated conservation easements are included on the IRS's 2019 "Dirty Dozen" list of tax scams to avoid.

"Abusive syndicated conservation easement transactions undermine the public's trust in private land conservation and defraud the government of revenue," Rettig said. "Putting an end to these abusive schemes is a high priority for the IRS."
Taxpayers may avoid the imposition of penalties relating to improper contribution deductions if they fully remove the improper contribution and related tax benefits from their returns by timely filing a qualified amended return or timely administrative adjustment request.
The IRS's comprehensive compliance efforts are focused on the abusive syndicated conservation easement transactions described in Notice 2017-10, recognizing that there are many legitimate conservation easement transactions.

The IRS is fully committed to putting an end to abusive syndicated conservation easement transactions, and holding accountable the individuals and entities who promoted, assisted with or participated in these schemes. The IRS is committing significant examination and investigative resources to vigorously audit the entities and individuals involved in this scheme, including those who failed to properly disclose their participation as required. Additionally, the IRS is also litigating cases where necessary, with more than 80 currently docketed cases in the Tax Court.
In addition to grossly overstating the value of the easement that is purportedly donated to charity, these transactions often fail to comply with the basic requirements for claiming a charitable deduction for a donated easement. The IRS has prevailed in many cases involving these basic requirements and has now established a body of law that the IRS believes supports disallowance of the deduction in a significant number of pending conservation easement cases. Where it hasn't done so already, the IRS will soon be moving the Tax Court to invalidate the claimed deductions in all cases where the transactions fail to comply with the basic requirements, leaving only the final penalty amount to be determined.

In addition to auditing participants, the IRS is pursuing investigations of promoters, appraisers, tax return preparers and others. Further, the IRS is evaluating numerous referrals of practitioners to the IRS Office of Professional Responsibility. The IRS will develop and assert all appropriate penalties, including penalties for participants (40 percent accuracy-related penalty), appraisers (penalty for substantial and gross valuation misstatements attributable to incorrect appraisals), promoters, material advisors, and accommodating entities (penalty for promoting abusive tax shelters and penalty for aiding and abetting understatement of tax liability), as well as return preparers (penalty for understatement of taxpayer's liability by a tax return preparer).

In December 2018, the Department of Justice filed a complaint seeking to stop several individuals and an entity from organizing, promoting or selling allegedly abusive syndicated conservation easement transactions. The IRS continues to work with the Department of Justice in this area and reminds taxpayers that continued disclosure of syndicated conservation easement transactions is required under Notice 2017-10.


If You Engaged In Any Questionable Syndicated Conservation Easement Transaction, You Should Immediately Consult An Independent, Competent Tax Advisor


To Consider Your Best Available Options.

Contact the Tax Lawyers at
Marini & Associates, P.A. 
 for a FREE Tax Consultation Contact us at: or
or Toll Free at 888-8TaxAid (888 882-9243). 


Read more at: Tax Times blog

IRS CI Identifies Dozens of Cryptocurrency Tax Evaders at J5!

The IRS’s criminal division identified “dozens” of potential cryptocurrency tax evaders or cybercriminals after a meeting this week with tax authorities from four other countries.

Leaders of tax enforcement authorities from the U.S., Australia, Canada, the Netherlands and the United Kingdom, known as the J5, met this week to discuss ways to deal with tax crimes and tax evasion, particularly involving cryptocurrency and shared data, tools and tax enforcement strategies to find new leads in a quest to mitigate cross-border money-laundering and cybercrime.

“All of the participants from the J5 countries rolled up their sleeves and worked together using real data to identify real criminals. One thing was really clear this week and that’s the J5 countries are committed to identifying and holding accountable tax cheats and other criminals who attempt to use the dark web and cryptocurrency as an underground economy.”

All of this occurred while the IRS is preparing for a new wave of cryptocurrency audits. The agency sent letters to more than 10,000 people earlier this year, warning that they might be subject to penalties for skirting taxes on their virtual investments.

The IRS And Its Partners Are Using Data From Previous Enforcement Activities To Find New Criminals, Korner Said.
Using The Data From The Five Countries Gives Them A Broader View Of How Accounts, Money And People Are Connected.

The IRS released guidance last month telling virtual currency investors and their tax advisers how the agency expects them to report income from their holdings. The guidance is the first since 2014 and comes as tax auditors are increasingly focusing on examining individuals with cryptocurrency investments.
“Being able to come together and share expertise, which hasn’t been done before, we can develop new platforms that we can each take back to our respective countries, importing the data that we each have to be able to data map, utilizing these new tools and develop new leads that we previously would not have known about prior to this challenge,” said Brooke Tetzlaff, a supervisory special agent at the IRS Criminal Investigation division and a U.S. participant in the Challenge.
Have a Virtual Currency Tax Problem?
Value Your Freedom?
Contact the Tax Lawyers at
Marini & Associates, P.A. 
 for a FREE Tax Consultation Contact us at: or
or Toll Free at 888-8TaxAid (888 882-9243). 


Read more at: Tax Times blog

Form W-8's Being Audited By the IRS for Reliability – It is About Time

The IRS’s Large Business and International (LB&I) division has released a process unit on using a withholding agent’s electronic systems to evaluate the reliability of the information provided by foreign payees on Forms W-8.  
A withholding agent is a U.S. or foreign person that has control, receipt, custody, disposal, or payment of any item of income of a foreign person that is subject to withholding. (Code Sec. 1473(4)).  Generally, a payment is subject to withholding if it is U.S. source income that is fixed or determinable annual or periodic (FDAP) income. FDAP income is all income included in gross income, including interest (and original issue discount), dividends, rents, royalties, and compensation.
When a withholding agent determines that a payment is withholdable, the withholding agent  must obtain a Form W-8 from the payee to determine whether the payee is a foreign person subject to withholding. Generally, a withholding agent making a withholdable payment must withhold at the 30% rate unless the withholding agent can reliably associate the payment with a Form W-8 or a withholding exemption.

 A withholding agent can reliably associate a payment with a Form W-8 if the withholding agent: 1. holds a valid Form W-8 that contains the required information, 2. can reliably determine how much of the payment relates to that Form W-8, and 3. can rely on the Form W-8, unless the withholding agent has actual knowledge or reason to know that the information on the Form W-8 is unreliable or incorrect.  

As part of an audit of a withholding agent, an examiner selects payments made by a withholding agent to foreign payees for evaluation against the withholding agent’s filed Forms 1042-S. The examiner performs this evaluation by reviewing foreign payees’ Forms W-8, Certificate of Foreign Status, on file with the withholding agent.
Many withholding agents collect and store Forms W-8 in electronic format. Therefore, an examiner must determine whether the withholding agent has systems and procedures for creating, collecting, and storing Forms W-8 that are reliable.

The Process Unit Outlines The Steps An Examiner Should Follow To Obtain Electronic Data Needed To Determine The Reliability Of Information Provided On Forms W-8.


According to the process unit, before the examination begins, an examiner should obtain and review any of the withholding agent’s data and records that are maintained by the IRS. This review should include any Forms 1042-S submitted by the withholding agent. An examiner should use Forms 1042-S to identify foreign persons receiving large amounts of U.S. source income with small amounts of withholding tax or any administrative inconsistencies, such as reporting and residence address mismatches.  
If the withholding agent uses a system for payees to electronically furnish Form W-8, the examiner should ask the withholding agent whether the system properly authenticates and verifies users and, if yes, how that authentication and verification is accomplished. The should also explain how incorrect and/or incomplete Forms W-8 are handled. 

The process unit also discusses how an examiner should review Forms W-8 the withholding agent received from a third party on behalf of a payee. In a case where the withholding agent has an agreement to use a shared electronic system for furnishing and authenticating Forms W-8, the process unit notes that all Forms W-8 and authenticating documents collected by the shared electronic system should be readily available to the withholding agent and consequently should be available for inspection by an examiner. 

After Each Step In The Audit Process,

An Examiner Should Determine If The Withholding Agent
Is Performing All Tasks Necessary
To Ensure Collection of Reliable Forms W-8.

An examiner should select and analyze a test sample of Forms W-8 to determine whether the information they contain is reliable. If the examiner is satisfied that the information collected resulted in properly prepared Forms W-8, then no further investigation is necessary. However, if material errors appear in the sample, further investigation will be required. 

Have an IRS Audit Problem?


Contact the Tax Lawyers of
Marini & Associates, P.A. 
For a FREE Tax Consultation contact us at:
Toll Free at 888-8TaxAid ( 888 882-9243) 


Read more at: Tax Times blog