COLVIN + HALLETT BLOG

Buying Real Property From A Foreign Seller or Closing the Deal? Know the FIRPTA Rules So You Aren’t Liable for Failing to Withhold

Buying Real Property From A Foreign Seller or Closing the Deal? Know the FIRPTA Rules So You Aren’t Liable for Failing to Withhold

FIRPTA, or the Foreign Investment in Real Property Tax Act, is part of the United States’ continued efforts to tax all income/gain connected to the United States. Real estate agents, escrow agents, and buyers should be aware of FIRPTA because it mandates income tax withholding and paying over to the IRS 15% of the sales price on the purchase of a U.S. real property interest from a foreign person under certain circumstances. 26 U.S.C. § 1445. In other words, buyers may not be able to pay all of the purchase price to the seller—some may have to be paid to the IRS. This can include situations where a foreign person (or entity) sells, exchanges, liquidates, redeems, gifts, or transfers in any other way a real property interest. The obligation is imposed on a buyer as well as a buyer’s agent and/or settlement/escrow officer.

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Amazon Seller Using Amazon Fulfillment Center?  You May Be Receiving A Washington Department of Revenue Questionnaire Soon

Amazon Seller Using Amazon Fulfillment Center? You May Be Receiving A Washington Department of Revenue Questionnaire Soon

In the last few weeks we have received calls from several companies that have received Washington Business Activity Questionnaires regarding their affiliation with Amazon fulfillment centers. We believe the Washington State Department of Revenue (DOR) may have opened a project targeting out of state vendors who may unknowingly have Washington contacts through fulfillment centers located in Washington.

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Self-Employed? Don’t Miss Out on Your Future Social Security Benefits by Filing Your Tax Returns Too Late

Self-Employed? Don’t Miss Out on Your Future Social Security Benefits by Filing Your Tax Returns Too Late

Taxpayers who don’t file their returns on time may think that the late filing/payment penalties and interest are the worst part about filing tax returns well after the deadline. But self-employed taxpayers should be aware of another harm that could haunt them in the future: losing out on Social Security retirement benefits.

By way of quick background, to be eligible for Social Security retirement benefits, a person must have wages or net self-employment earnings for 40 quarters (i.e., earn 40 “credits”).

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Need a PTIN or need to renew? Act quickly or you might be paying up again soon

Need a PTIN or need to renew? Act quickly or you might be paying up again soon

On July 10, 2017, the U.S. District Court for the District of Columbia issued a permanent injunction prohibiting the IRS from charging a fee for the issuance and renewal of preparer tax identification numbers (PTINs), after concluding that the IRS lacked statutory authority to charge such user fees. Steele, et al. v. United States of America, No. 14-cv-1523 (D. D.C. June 1, June 10, 2017). The Court also ordered the IRS to refund all PTIN user and renewal fees paid since the inception of the PTIN program. In response to the Court’s order, the IRS suspended its collection of PTIN user fees and issued a statement indicating it is working with the Department of Justice to determine how to proceed regarding the Court’s order to refund past PTIN fees paid.

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McNeill: Tax Court Gives Partners New Avenue to Challenge Penalties

McNeill: Tax Court Gives Partners New Avenue to Challenge Penalties

In McNeill v. Commissioner, 148 T.C. No. 23 (June 19, 2017), the Tax Court held that taxpayer challenges to penalties imposed in the wake of a TEFRA partnership audit or litigation can be challenged in collection due process (CDP) proceedings. It was always clear that if a taxpayer had personal defenses to a penalty asserted at the partnership level, the taxpayer could pay the penalty (and any associated interest), file a claim for refund, and have his personal defenses considered by the IRS and the courts.

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What You Need to Know About the IRS’s Campaign to Identify Foreign Non-Filers Through a W-8ECI Matching Program

What You Need to Know About the IRS’s Campaign to Identify Foreign Non-Filers Through a W-8ECI Matching Program

On May 23, 2017, IRS Officials announced in an industry webcast that the IRS began a campaign to identify foreign companies that should be filing Form 1120-F, but have not.  The officials also warned that the IRS intends to follow up on every potential non-compliant company it identifies and refer some for further audit.  Apparently initial letters have just been sent to companies or will be coming “very, very soon.”  

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New IRS Campaign Brings Increased Scrutiny to Related Party Transactions

New IRS Campaign Brings Increased Scrutiny to Related Party Transactions

In January, the IRS announced a rollout of its compliance campaigns targeting certain issues on which the IRS Large Business & International (LB&I) will focus its examinations. It is part of LB&I’s shift to issue-focused examinations in light of a diminished IRS budget. Since the announcement, LB&I has been conducting a series of webinars on its 13 new campaigns. On June 6, LB&I executives provided information on its Related-Party Transactions (RPT) campaign, which is one of the 13 campaigns.

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To Lie Is “Human Nature,” To Exclude Is Divine

To Lie Is “Human Nature,” To Exclude Is Divine

The IRS proposed estate tax deficiencies of hundreds of millions of dollars against the Estate of Michael Jackson, accusing the Estate of undervaluing the assets held by the King of Pop at his death. Much of the case has been settled, but the parties still dispute the value of the Gloved One’s image and likeness, with the IRS contending it was worth $161 million and the estate contending the value was far less.  A trial on this issue (along with the value of certain music catalogues) was held in February of 2017.

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