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Boston Tax Law Blog

Tax penalties: Massachusetts amnesty program might help

When you do not have the money to pay your tax bill before the filing deadline, you may not file a return. Requesting an extension usually does not avoid the failure to pay penalty.

Federal and state tax penalties add up quickly. On top of the back taxes and interest, the amount you owe may easily skyrocket. But a new two-month Massachusetts amnesty program might provide some relief when it comes to state penalties.

Rule could expand the reach of IRS tax levies

One tool that the Internal Revenue Service uses to collect back taxes is the tax levy. A levy allows the IRS to take property to satisfy an outstanding tax debt.

A proposed rule could expand the ability of the IRS to collect back taxes from federal employees. The IRS estimate is that approximately 300,000 federal employees owe a total of $3.3 billion in unpaid taxes. This goes to show that anyone can struggle to pay an unexpected tax bill.

The rule would allow the Federal Retirement Thrift Investment Board to freeze an investor's Thrift Savings Plan when it receives a tax levy notice. The FRTIB would also be able to take funds from the retirement account to pay the back taxes. What other property can the IRS levy?

Timelines on correspondence audits: IRS often misses the mark

This is a follow-up to a post we did last winter on correspondence audits.

The term “tax audit” is often associated with face-to-face audits. As we noted in our March 5 post, however, correspondence audits – also known on “corr-exams,” are a commonly used procedure in which taxpayers respond to IRS inquiries by mail.

In this post, we will take note of a recent government report that found concerns with how the IRS manages the flow of documents it receives through these audits.

FATCA finally goes into effect

On July 1, 2014, the Foreign Account Tax Compliance Act went into effect. The measure was passed in 2010 as part of the Hiring Incentives to Restore Employment Act. FATCA has been billed as a way to curb the use of unreported foreign accounts to avoid U.S. tax liabilities. 

Leading up to implementation of the Act, the Treasury reached information-sharing agreements with many countries. In addition, almost 77,000 banks have registered with the Internal Revenue Service and agreed to share information on their U.S. account holders.

What does implementation of the Act mean for those who have a foreign bank or investment account?

Offshore account update: FBAR filing criteria

This is a follow-up to a post we did in March on offshore account disclosure.

As we noted in our March 14 post, disclosure requirements for foreign accounts are becoming more complicated.

It isn’t only that the Report of Foreign Bank and Financial Accounts (FBAR) is still required to be filed – usually by June 30 each year – for offshore accounts of $10,000 or more. A new law, the Foreign Account Tax Compliance Act (FATCA) has added to the compliance burden not only for taxpayers, but for banks and other financial institutions.

In this post, we will take note of two points. One is that there is a different form for the FBAR this year. The other is that the FBAR filing requirement applies not only to U.S. taxpayers, but also to those with “signature authority” over an offshore account that meets the $10,000 threshold.

No blood from a stone: currently not collectible status

There's an old saying that "you can't get blood from a stone."

Many lawyers get introduced to it in law school. It's a phrase that may have roots in ancient Bible stories, such as Cain and Abel, though its exact origins remain obscure.

In modern parlance, when lawyers use it, the impossibility of getting blood from a stone refers to not being able to collect a debt from someone who doesn't have the money to pay it.

In this post, we will take note of a variation on this theme in the field of tax law. It is called "currently not collectible" status. As with many terms in tax law, there is an abbreviation associated with it: CNC.

Reimbursing employees for health insurance: tax issue unresolved

Last month we devoted a two-part post to the issue of worker classification and payroll taxes.

As we discussed, the question of whether a particular worker is an employee or an independent contractor has significant tax consequences. As we noted in our May 15 post, the IRS has been aggressively auditing employers in recent years, trying to detect misclassification.

In this post, we will take note of another tax-related issue that affects both employers and workers: options for providing or purchasing health insurance for employees.

Tax penalty abatement, part 2: how do you request one?

Let's resume the discussion of tax penalty abatement that we began a few weeks ago.

As we pointed out in our April 29 post, the term "abatement" is not without ambiguity. When applied to tax penalties, it could refer to paying less - or it could refer to getting out from under the penalty entirely.

In this part of the post, we will explain some of the ways in which taxpayers can push back against tax penalties that the IRS tries to impose.

Finding the line between tax evasion and tax avoidance

Large businesses play a major in the American economy. Not only do they meet the demands of consumers, but they also provide employment to thousands of people throughout the country. In order to be successful, companies employ a variety of strategies to minimize losses. Part of this is determining how state and federal corporate taxes fit into all of this.

As a result of tax-related business strategies, companies might come under fire for not paying "enough" taxes. Amidst these charged -- and often controversial -- conversations, the terms tax avoidance and tax evasion may thrown around. To many, the two phrases may sound remarkably similar, but the difference is absolutely critical.

Employment taxes, part 2: the issue of worker classification

Last week we began discussing the rather complicated topic of employment taxes.

As we noted, the term “employment taxes” is often used interchangeably with another term, payroll taxes.

But the complexity concerning these taxes does not really come from the use of these synonyms. It comes from the fact that employment taxes refer to several different tax responsibilities that employers have.

These responsibilities do not only encompass federal income tax withholding, Social Security taxes and Medicare taxes. They also include federal unemployment taxes.

In this part of the post, let’s delve in more detail into Social Security and Medicare taxes.

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