Boston Tax Law Blog

Tax Court sustains rejection of high-profile offer in compromise

On behalf of Levins Tax Law, LLC posted in Tax Evasion on Tuesday, November 13, 2018.

The IRS scored much more than a glancing blow to former action movie powerhouse actor Wesley Snipes this week, with the Tax Court sustaining the Service’s rejection of a lowball offer in compromise settlement. Snipes owes more than $23.5 million in back taxes to the government, dating back to between 1999 and 2006, a period during which he made approximately $40 million but paid no taxes (he also didn’t file tax returns during that time).

Snipes was convicted of three misdemeanor counts of failing to file tax returns back in 2008, and eventually served three years in federal prison between 2010 and 2013. After his release, the IRS once again assessed past due taxes, this time totaling roughly $23.5 million after accounting for original tax amounts, penalties and interest. Snipes, in seeing that massive tax bill, proffered an offer in compromise of less than $843,000, which represents only four percent of the assessed taxes due.

Tips to lower your 2018 taxes

On behalf of Levins Tax Law, LLC posted in Internal Revenue Service on Monday, November 5, 2018.

The 2017 Tax Cuts and Jobs Act dramatically changed the way Americans handle taxes. In addition to doubling the standard deduction and lowering the deductability of state and local taxes (SALT) funds, other changes exist as well, all of which might affect you come tax time.

These helpful tips might allow you to lower your 2018 tax bill, but you need to act fast in order to take advantage of them.

How are election workers treated for tax purposes?

On behalf of Levins Tax Law, LLC posted in Internal Revenue Service on Wednesday, October 31, 2018.

With the midterm elections right around the corner, there is an uptick in the number of election workers on the books for local, state and federal-level elections. Many of these workers are volunteers, but some of them receive payment for their time.

If workers earn compensation, then their income might be subject to withholding and inclusion as income for tax purposes. This post will provide more insight into how election workers fare under federal tax regulations.

How will MA DOR respond to the mandatory repatriation tax?

On behalf of Levins Tax Law, LLC on Monday, October 29, 2018.

State tax obligations may change in response to the passage of the Tax Cuts and Jobs Act (TCJA). State tax law generally responds to changes in the federal tax code in one of four ways: it will change state tax laws through rolling conformity, annual conformity, fixed conformity or selective conformity.

Pass-through businesses and deductions

On behalf of Levins Tax Law, LLC posted in Internal Revenue Service on Wednesday, October 24, 2018.

If you are a small business owner, the Tax Cuts and Jobs Act likely created some tax-related questions for you. You may be wondering, for example, how to determine your business income deductions under Section 199A.

What is the qualified business income deduction?

Business deductions set to change because of the TCJA

On behalf of Levins Tax Law, LLC posted in Internal Revenue Service on Wednesday, October 17, 2018.

Are you a business owner? Have you grown accustomed to expensing – and deducting – business meals, entertainment, recreation and similar costs? If so, then you should definitely read this post.

The IRS recently issued guidance regarding the types of allowable deductions for business-related entertainment and meal expenditures. The changes are the result of amendments to existing IRS regulations brought about by the passage of the Tax Cuts and Jobs Act back in 2017.

IRS finalizes rules regarding charitable contributions

On behalf of Levins Tax Law, LLC posted in Internal Revenue Service on Friday, October 12, 2018.

Recently the IRS issued final rules regarding the reporting and record-keeping requirements for deductible non-cash charitable contributions. There are different categories of mandatory documentation required for various amounts of contributions. Regardless of the value of the contribution, though, proof of its value is necessary, whether in the form of a hand-written note, a receipt or a qualified appraisal.

Following these documentation requirements can help you avoid having the IRS come asking questions, and they might even prevent you from being audited.

Neglecting FATCA reporting risks noncompliance for banks

On behalf of Levins Tax Law, LLC posted in Internal Revenue Service on Monday, October 8, 2018.

Foreign financial institutions (FFIs) without an adequate reporting strategy could risk noncompliance with IRS regulations regarding offshore accounts. Non-domestic accounts subject to the Foreign Account Tax Compliance Act (FATCA) must be reported by financial institutions as well as by the account holders themselves under the tax code. Not adequately informing the IRS – either directly or indirectly – about the presence of foreign assets held by U.S. taxpayers could lead to steep penalties, both for the account holder and the FFI itself. In particular, the FFI could face a punitive withholding tax that may far outweigh the cost of any single foreign account.

Evolution is key

Tax burden on retirees could shift this fiscal year

On behalf of Levins Tax Law, LLC posted in Internal Revenue Service on Wednesday, September 26, 2018.

Thanks to the Tax Cuts and Jobs Act of 2017, many of us saw our income tax requirements and need for withholding shift. The IRS is now warning a particular demographic of the need to carefully review withholdings in light of upcoming changes brought about by the TCJA: retirees.

In particular, retired persons who draw social security and are higher-income overall may need to adjust withholding in order to avoid paying taxes for fiscal year 2018. In addition, retirees who receive income from pensions, annuities and tax-deferred retirement accounts may also be in for a shock when filing their 2018 taxes.

Don’t forget to report 1099-C debt cancellation income

On behalf of Levins Tax Law, LLC posted in Internal Revenue Service on Friday, September 21, 2018.

A recent tax court decision reveals just how important it is to not ignore income on Form 1099-C come tax time. The case, TCM 2018-140, involves a taxpayer who received debt discharge to the tune of over $360,000 back in 2010. Lacking any other income for the year, the taxpayer chose to not file a tax return. In 2018, he incurred failure-to-file and failure-to-pay penalties due to his lack of tax reporting.

The tax court tried to throw the taxpayer a proverbial bone by allowing him time to prove that the debt discharge dealt with his primary residence and/or that he was insolvent at the time, but the taxpayer failed to meet the burden of proof for either claim. Had he proven that debt forgiveness income as reported on Form 1009-C was indeed tied to his primary residence, that would have offset the income and made him eligible for tax forgiveness as well.