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Boston Tax Law Blog

Partial foreign account disclosure tied to willfulness

The willful failure to file FBARs (Report of Foreign Bank and Financial Account) increases the associated civil penalties. The exact definition of willful was at the heart of a recent Tax Court case.

Is the standard for willfulness a “voluntary, intentional violation of a known legal duty?” This is what the taxpayer urged. The court did not resolve the issue, but was of the opinion that the trend could be toward treating reckless actions as enough to satisfy the willful violation requirement.

Do bitcoin users need to file an FBAR?

Bitcoins are one example of a new form of currency referred to as cryptocurrency, digital currency or virtual currency. It is a type of currency purchased and exchanged online. Users may wonder whether or not their actions with these types of digital assets are in compliance with United States tax laws. Unfortunately, the Internal Revenue Service (IRS) has yet to provide any definitive guidelines. The federal agency was recently chastised by Congress for a lack of clarity and called to put together “additional guidance on the tax consequences and basic tax reporting requirements” for those who use cryptocurrency.

One specific question that the IRS will likely answer once it provides this additional guidance is whether or not bitcoin users should file an FBAR.

Misclassification of workers and the tax consequences

Why it is important to ensure that each worker is properly classified? The distinction between independent contractor and employee determines the amount of taxes that must be withheld from a worker’s pay.

A recent U.S. tax court case provided some potential help for employers who get this determination wrong. At issue in the tax court litigation was whether past employees improperly classified as independent contractors had paid their tax bills.

A look at the IRS criminal investigation process

The IRS Criminal Investigation Division (IRS-CI) reviews criminal fraud allegations in light of the Internal Revenue Code, Bank Secrecy Act as well as money laundering statutes. If referred for prosecution a case then transfers to the Department of Justice.

 Once a criminal investigation is initiated what are the options? How does the IRS determine which cases to send for criminal prosecution

IRS enforcement continues downward trajectory

Each year, the IRS releases a data book with statistics from the prior calendar year. Culling through the tables yields interesting information.

Total collections have increased from almost $92 billion in 1960 to $3.3 trillion in 2016. The Service also processed 244 million tax returns and issued approximately $426 million in taxpayer refunds last year.

Filing status disallowance leads to a tax deficiency

The rules that determine proper filing status need to be reviewed closely or you could receive a letter assessing an unexpected tax liability. Married filing joint (MFJ) verses married filing separately (MFS) status was the subject of a recent tax court case.

These two options for married people often lead to significantly different tax obligations. MFS provides a benefit when you want to separate your tax liabilities, however, and may avoid needing to request innocent spouse relief down the road. In this post, we will discuss the rules and why the tax court sided with the IRS in the recent case.

Considering an OIC for tax debt: How much should you offer?

You may have already heard that it is sometimes possible to settle your tax debt for less than the full amount that you owe.

What you heard is correct, through a procedure called offer in compromise (OIC). But as with so many things in life, the devil is in the details.

Supreme Court may hear retroactive taxation case

If an Illinois company doing business in Washington State has its way, the Supreme Court may be forced to decide at what point retroactive taxation provisions becomes unenforceable. The case at issue involves an Illinois company, Dot Foods, and its business transactions in Washington.

There could be landmark, precedent-setting value to this case, because similar taxation issues have been seen in states around the country.

Could you benefit from a home office deduction?

It was recently National Small Business Week. The IRS thus highlighted some tax topics relevant to small business owners.

Are you just starting out in business with operations currently run out of your garage or a recently finished basement? Maybe you have been in business for years, but use part of your home as a financial planning office or hair salon. The home office deduction is often overlooked, but can provide value.

Tax issues for bars and restaurants: avoiding a recipe for trouble

As a bar or restaurant owner, you know that taxes are a big concern. In terms of maintaining a healthy business, staying in compliance with all the requirements may rank right up there with pleasing your customers as a key to success.

In this post, we will use a Q & A format to address some of the frequent questions that arise.

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