COLVIN + HALLETT BLOG

Celebrity Tax Woes Bookend October 2018: Mike “the Situation” Sorrentino and Wesley Snipes Take a Hit

Celebrity Tax Woes Bookend October 2018: Mike “the Situation” Sorrentino and Wesley Snipes Take a Hit

The month of October began and ended with two celebrity names receiving unfavorable news in their tax controversy matters. On October 5th, Michael “the Situation” Sorrentino, of “Jersey Shore” acclaim, and his brother received prison sentences in Newark, New Jersey federal court. To round the month out, on November 1st, Wesley Snipes lost his Tax Court battle in which he alleged the IRS abused its discretion in not accepting his offer-in-compromise.

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Owe the IRS? Your Passport May Be At Risk if You Don’t Work Out a Payment Plan or OIC with the IRS

Owe the IRS? Your Passport May Be At Risk if You Don’t Work Out a Payment Plan or OIC with the IRS

Having a “seriously delinquent tax deficiency” as determined under IRC §7345 can enable the IRS to certify an individual’s tax debt to the State Department, which allows the State Department to revoke, deny, or limit an individual’s passport. A taxpayer has “seriously delinquent tax debt” when he or she owes more than $51,000 including late fees and penalties (which is indexed to inflation) and when a levy has been issued or a lien has been filed by the IRS. IRC §7345(b). The right to a Collection Due Process hearing also must have lapsed or have been exhausted in order to be subject to certification.

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IRS Will End Offshore Voluntary Disclosure Program in September

IRS Will End Offshore Voluntary Disclosure Program in September

The Internal Revenue Service announced yesterday that it will end the Offshore Voluntary Disclosure Program (“OVDP”) on September 28, 2018 and wind it down over the coming months. IR-2018-52. The IRS established the OVDP voluntary compliance program in 2009, with its current incarnation set up in 2014, to allow taxpayers who willfully failed to report foreign bank accounts/assets to come forward voluntarily without fear of criminal liability, and to limit their civil penalties on specified terms.

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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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