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Boston Tax Law Blog

How you can avoid being called a 'Scrooge' during the holidays

While many individuals and businesses look to charitable giving as an end-of-year tax planning strategy, not everyone (or every business) is in a charitable mood. Indeed, it is easy to be viewed as a “Scrooge” if you don’t get into charitable giving, but there may be genuine reasons for not donating this year.

This post will highlight four ways to decline charitable donation requests without being chastised.

Just how expansive can 'obstruction of justice' be?

If you have paid any attention to national political news over the last few months, the term “obstruction of justice” has been mentioned a number of times. To the uninitiated, federal law is broadly defined to punish conduct that affects the “due administration of justice.” This largely means that conduct that would adversely affect a pending judicial proceeding or law enforcement investigation may be considered a crime punishable under federal law.

But when it comes to obstructing justice with regard to tax administration, what type of conduct may be punished? Moreover, does a person have to be under investigation or subject to an IRS audit before obstruction occurs?

Should you use an accountant or a tax attorney for your business?

Running a business is more than just monitoring and ordering inventory, managing employees and finding ways to stay competitive in the marketplace. It also takes knowledge of accounting principles and a sound grasp of the U.S. Tax Code.

Indeed, one does not need to be both an accountant and a tax attorney, but when it comes to delegating duties regarding taxation and withholding, which is better to use? This is a paradox that small companies with limited resources may deal with. To that end, this post will provide some insight.

Could you be audited for working with independent contractors?

The "gig economy" works in large part by employing independent contractors instead of employees in order to keep costs down. That has led to some headaches -- whether or not a worker is an employee or a contractor is a legal determination under the Fair Labor Standards Act. It's not strictly the choice of the employer.

In order to ensure you're using independent contractors rather than hiring employees, you'll need to comply with the federal legal standards for an independent contractor relationship. In general, that means that your contractor cannot be hired to do the same work in the same way that an employee would. The test is essentially how much control over the work the employer exercises, along with how integral the work is to the employer's business.

Willful vs. non-willful compliance with FBAR/FATCA

FBAR and FATCA violations are either willful or non-willful in nature. The penalties for inadvertent or non-willful violations are understandably lesser than those for willful non-compliance. The IRS punishes those who non-willfully violate FBAR filing mandates with penalties of up to $10,000 per non-complying tax year.

Non-willful violations could potentially include such things as:

  • Negligence (i.e., you thought the deadline, after the 6-month automatic extension, was October 16, but it was actually October 15; or you reported a foreign account to your tax preparer, but he/she didn't include it on your return and you failed to notice)
  • Mistake (a return or foreign account disclosure was sent with insufficient postage, and came back to you, thus making it late; an account was inherited during the year, but probate court records didn't transfer the account fully until after the filing deadline)
  • Good faith misinterpretation of the law (you thought that only people with accounts of cumulative value of $20,000 at any point during the calendar year or more had to be reported, but the cutoff is actually an aggregate value of $10,000)

3 lessons from business owners from recent tax evasion case

Taxes are one of the many things on a long list of obligations a business owner must address. Although entrepreneurs balance many obligations, a failure to properly deal with Uncle Sam can result in serious ramifications.

A business owner out of Nevada provides an example.

Huge data leak reveals offshore accounts in use by celebs, execs

In what seems to a recurring theme, a mass data release - this one known as the "Paradise Papers" - has disclosed the identities of high-profile users of offshore accounts. It is vitally important to note prior to discussing the content of the Paradise Papers that there is nothing inherently wrong with having offshore or foreign accounts. The IRS even recognizes the validity of these accounts, which is why it established protocols for reporting income from them via the FATCA and FBAR.

The Paradise Papers revealed numerous high-profile offshore account holders, including:

  • Businesses like Amazon, Facebook and Nike
  • U2 front man Bono
  • Queen Elizabeth
  • Commerce Secretary Wilbur Ross

Are you following the official IRS tax guidance?

Many of us have, if we’re curious about a particular tax-related issue, consulted the IRS website (www.irs.gov), especially now as the tax year is winding down. We assume that since the content on the site is put out and endorsed by a government agency, it is valid, factual and reliable.

While information on the site may indeed be factually accurate, it is, surprisingly, not the “official” source of IRS guidance. Earlier this year, the service released a memo advising individual and business taxpayers alike to not rely on any information on the site unless it has also been incorporated into either the Tax Code or the Internal Revenue Bulletin. 

Consider these moves now to minimize tax in the New Year

The final stretch to the end of the year is upon us. There are important decisions to make between now and December 31, about such issues as insurance coverage and health savings accounts for 2018, for example. It’s also the time to handle last-minute tax issues that could save you big bucks.

Do you have any underperforming stocks?

Charting its own course, Mass proposes millionaires tax

As national tax reform has focused on cuts and simplification of the tax brackets, Massachusetts has been discussing the “Fair Share Amendment.” The measure would create an additional 4 percent state tax on income over $1 million.

Why is the state legislature discussing tax increases? How does an increased focus on collections also tie in?

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