Paying taxes is an essential part of being a responsible citizen. The IRS has specific rules and procedures for taxpayers to follow when submitting their tax payments. However, many taxpayers may not be aware that there is a difference between making a payment and a deposit when paying the IRS. The two are not the…
Tax Articles
Missing Form 1099 May Establish Reasonable Cause
In general, if you do not receive a Form 1099 to report income to you and you omit it from your tax return, you may still be liable for penalties if the IRS later notices the issue and makes an adjustment. This is because taxpayers have a responsibility to report all their income, regardless of…
IRA Beneficiary Designation Planning Opportunities
Designating a beneficiary for an IRA may not be a top priority for most IRA owners, and even those who do give it some thought may not have planned it correctly due to the complex rules surrounding IRA beneficiary designations. However, as investments held in IRAs grow tax-free, it’s important to structure affairs so that…
IRS Looks at Improving Informants Rewards Program
The IRS using paid informants to identify noncompliant taxpayers may seem controversial, but it has not generated much controversy as the program has been poorly administered. In this article, we will discuss the IRS Informants Rewards Program, its eligibility requirements, and the recent changes to the program. About the IRS Whistleblower Program The IRS Whistleblower…
New Offer in Compromise Legislation
As discussed in a previous post, Congress has been toying with making changes to the IRS offer-in-compromise program. These changes were eventually included in the “Tax Increase Prevention and Reconciliation Act,” which President Bush signed into law on May 17, 2006. The new rules apply to offers in compromise filed 60 days after the date…
Prisoner Entitled to Convenient CDP Hearing
There are quite a few rights taxpayers have, that are disregarded by the IRS, and there is no remedy when it happens. As noted in Butti v. Commissioner, T.C. Memo. 2008-82, the IRS collection due process hearing can be one of those circumstances. The case involves a collection due process hearing, which is a legal…
Tax on Social Security Paid to Disabled Soldiers
Soldiers and military personnel have long been recognized for their service and sacrifices to their country, and as a result, society has generally agreed that they should be given certain privileges. These privileges often include access to free or reduced-cost education, health benefits, and retirement benefits, among others. For example, the GI Bill provides education…
Can the IRS Re-Assess Tax to Fix Its Own Error?
When a taxpayer makes an error on their tax return or fails to make timely payments to the IRS, it can result in additional tax, penalties, and even interest owed. This can be the case even if the taxpayer is just one day late or if the applicable tax laws are unclear or highly complex.…
Tax Withholding on Settlement Awards
There are quite a few court cases that address whether a lawsuit settlement award is taxable. Section 104 excludes some damage payments for income tax purposes. But what about withholding taxes? Assuming that the payment or award is taxable, can the award escape withholding tax? One might think that this turns on whether the award…
Estate Plans in Uncertain Times
As 2006 approaches, I can’t help but pause to think about our estate and gift tax regime. The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 changed the rules of the game. Following the enactment of EGTRRA, estate planners and tax attorneys went to work defining and clarifying how estate plans should be…