COLVIN + HALLETT BLOG
IRS Provides Penalty Relief for Failure to Include “Negative Basis” Info on 2018 Partnership Returns
For 2018 partnership tax returns due in 2019, partnerships must report negative “tax basis” capital accounts on the Schedules K-1 for their partners. Perhaps recognizing that it may be difficult for some partnerships to timely comply with these new requirements, the IRS issued Notice 2019-20 on March 7, 2019, providing penalty relief under certain circumstances, discussed below.
New Tax Court Opinion Highlights Tax Risks for Entities Functioning as Service Providers to Marijuana Businesses
On Thursday, December 20, 2018, the Tax Court released its opinion in Alternative Health Care Advocates et al v. Comm’r, 151 T.C. No. 13 (2018), a case involving the disallowance of deductions related to trafficking of marijuana mandated by Section 280E of the Internal Revenue Code. The Alternative Health Care Advocates opinion broke new ground by extending the scope of the deduction disallowance beyond the legal owner/seller of marijuana to an affiliated entity that participated in the marijuana sales.
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.
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.
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.
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.
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.
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”).
On May 10, 2017, Attorney General Sessions issued a Memorandum titled Department Charging and Sentencing Policy. Prosecutors were instructed to “charge and pursue the most serious, readily provable offense” and “disclose to the sentencing court all facts that impact the sentencing guidelines or mandatory minimum sentences.”
Colvin + Hallett Law would like to thank our peers in the legal community for selecting our own John Colvin as the Best Lawyers© 2018 Lawyer of the Year: Seattle Litigation and Controversy – Tax, and for inclusion in the 24th Edition of The Best Lawyers in America© for his work in:
Criminal Defense: White-Collar
Litigation and Controversy: Tax
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