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…
Tax Articles
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…
ERSOP Plans as a Financing Alternative for Start-ups
Starting a new business can be an exciting and challenging endeavor, but financing the venture can often prove to be a significant obstacle. Traditional lenders typically require a business to be operational for at least a year before they will consider providing small business loans. Meanwhile, venture capitalists often reject the majority of start-up proposals…
Key Tax Considerations for Administering Estates
Administering estates from a tax perspective can be a complex and challenging task, particularly for non-tax attorneys who may not have extensive experience in this area. Estate administration is all about managing finances, including making key elections and timing distributions, income, and expenses. Failure to make the right choices could result in significant tax liabilities…