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Boston Tax Law Blog

FATCA challenge dismissed by federal appeals court

A group of several Americans living abroad – who call themselves “Republicans Overseas” – have vowed to continue their fight against the Foreign Account Tax Compliance Act (FATCA) in spite of a recent dismissal of their claims by the Sixth Circuit Court of Appeals.

The plaintiffs, originally joined in their suit by Senator Rand Paul (R-KY), initially filed suit to stop enforcement of FATCA as concerning their overseas accounts. Their suit argued, among other things, on allegations that compliance with the “draconian” FATCA infringes upon their privacy rights.

Why is seeking tax guidance during divorce important?

Certain IRS rules sound rather simple. Here is one: Alimony is deductible and the deduction does not have to be itemized. It is a so-called above-the-line deduction. 

As simple as it sounds, the IRS pays close attention and frequently audits this deduction. It matches up a deduction against income, which can be an easy recipe for mismatches especially if you ex-spouse fails to report alimony as income.

When can the streamlined program cause more damage?

Anyone with assets diversified in foreign accounts with balances that total $10,000 or more at any time in a given year needs to file a disclosure (FinCEN Form 114 of previously referred to as a FBAR). Fail to file this disclosure and the penalties are draconian.

Since 2008, the Department of Justice in coordination with IRS Criminal Investigations has brought charges of tax evasion and willful failure to report foreign account charges against more than 160 individuals. The Offshore Voluntary Disclosure Programs (OVDP) have brought in more than $10 billion in tax, penalties and interest as more than 55,000 have used the programs to come into compliance. Word has gotten out as the number of FBARs filed each year has increased to more than one million in 2015.

Data entry error behind Mass DOR tax notices

Getting mail from the IRS or Massachusetts Department of Revenue (DOR) is usually not a good thing. It can be tough to open the letter.

When the notice lists a tax deficiency, where do you start to resolve the issue? For a number of Massachusetts residents it turned out a data entry error in TaxAct software was to blame for the tax deficiency notices. Because their tax payments were applied to the wrong years, the DOR notices were a mistake.

Tax bill used to taunt famous fighter

The Internal Revenue Service (IRS) does not hold back punches. The federal agency is currently attempting to gather late tax payments from one of the world’s best fighters. Floyd Mayweather Jr. reportedly owes the federal agency $7.2 million in taxes from 2010 as well as $22.2 million from 2015.

Part of the high tax bill comes from a tax that is placed upon the fighter’s winnings. These winnings are taxed and it appears the famous fighter has yet to make good on some of these bills. 

“Zapper” software and tax fraud penalties

In neighboring Connecticut, a Chinese restaurant owner accused of using “zapper” software faces serious tax fraud penalties. Massachusetts also assesses a sales tax on meals.

How does the software avoid state sales tax? Zappers are a type of “phantom-ware” that skews point-of-sale records to understate the amount of tax to collect.

Down to the wire: Mass won’t yet collect online sales tax

As online sales continue to grow - estimates are 15 percent a year - many states worry that millions of dollars in sales tax are being lost. Massachusetts is one of them.

In April, Massachusetts Department of Revenue (DOR) Directive 17-1 issued a rule to collect online sales taxes that was set to go into effect on July 1, 2017. In the last days of June, however, the agency decided to revoke the Directive 17-1 and go back to the drawing board.

Digital currency investigation narrowed

Could the value of bitcoin continue to increase? One teenage bitcoin millionaire predicts we’ve not see the top for the cybercurrency.

On a bumpy ride lately, the value of a bitcoin has ranged from between $2,365 and $2,200 in just the last week. The teen reportedly has 403 bitcoins after starting investing back in 2011 with some money his grandmother gifted him.

Offseason victory: Bruins prevail over IRS in meal deduction faceoff

The Red Sox are in first place, but the Bruins also scored a victory this week, even though it's their offseason.

The Bruins' win was not on the ice, but in U.S. Tax Court over the IRS, in a case involving the deductibility of team meal expenses.

Private tax collection agency accused of questionable practices

Congress passed legislation in 2015 that allowed the IRS to outsource some of its collection work. Concerns had been voiced by the Inspector General for Tax Administration and the National Taxpayer Advocate, but private collection firms started working with the IRS earlier this year.

Already some accusations are surfacing against one of these outside collection firms. According to reporting by the New York Times, Pioneer Credit Recovery has advised people to take money out of retirement accounts, request an employer loans or increase credit card debt to pay off overdue tax balances. Four U.S. Senators have sent a letter demanding changes in company practices.

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