Jump to Navigation
Over 30 Years of Experience handling tax controversies & tax disputes

Boston Tax Law Blog

Forest Whitaker tax case: withholding is key

Academy Award-winning actor and director Forest Whitaker is famous for his impassioned portrayal of such varied characters as ruthless dictators and obedient soldiers. He now has another – much more dubious – claim to fame: a high-profile tax collection saga recently decided by the Ninth Circuit Court of Appeals.

Whitaker’s years-long tax problems began in 2014, with the filing of his 2013 income tax return. That year, the actor and his wife reported, on their joint tax return, an income of almost $1.5 million, with a corresponding tax liability of about $427,000. However, withholdings and estimated tax payments for the year totaled only $15,000.

The tax implications of flipping houses

Flipping houses may be an attractive way to make money. Taking a distressed house, making repairs and putting it back on the market seems easy enough, especially when you have a penchant for craftsmanship or a good relationship with a contractor. Nevertheless, as much money as you think you will make flipping houses, always remember that Uncle Sam will want his cut.

This post will highlight the tax implications of flipping a house.

Can cancelled debt become taxable income?

When a lender decides to cancel a debt (most likely because it is deemed uncollectable) it usually is a benefit to the consumer despite the negative effect on his or her credit rating. Nevertheless, the cancellation of a debt could have important tax implications.

Essentially, the remaining debt may be considered taxable income, which could affect the amount you may owe the federal government come tax time. But like every rule, there are exceptions. This post will highlight a few debts that may be viewed as income. 

Will the "Millionaire Tax" reach voters?

It's called the Fair Share Amendment, and it was certified to go before voters in November. But the constitutional amendment which would impose a 4% surtax on incomes over $1 million has to pass the Massachusetts Supreme Court first.

The issue at hand isn't whether it's a good idea, but rather whether it meets the high standards necessary to be added to the state constitution. A ruling is expected in the coming weeks.

Uncle Sam may want some of your gambling winnings

Who knew that when the Atlanta Falcons led the New England Patriots 28-3 midway through the third quarter in Super Bowl LI that the Patriots would prevail? Ask any Patriots fan and they believed. Indeed, they probably put their faith in their team with their wallets before the game by placing bets.

Yes, gambling is part of the fabric of America’s culture. And with Super Bowl LII coming on Sunday, betting will once again be center stage.  With more than 100 million was bet on last year’s big game in Las Vegas casinos, it is estimated that more money will wagered this year. Nevertheless, it is likely that Uncle Sam will come calling if you win big this year. In fact, there are requirements for reporting and withholding from winning bets

How to avoid payroll scams this tax season

For many businesses, January is the start of a new fiscal year. It definitely begins with promise and optimism especially if the previous year ended strong. But there are also substantial responsibilities when it comes to preparing a federal income tax return. Indeed, there is a duty to ensure that you provide accurate information to the federal government, but as more electronic information is passed between businesses, it is increasingly important to guard against scams.

In fact, the Internal Revenue Service (IRS) has warned of a new scam involving false requests for w-2 information. Essentially, the scam begins with a falsified request from a purported high level employee requesting information about employee w-2 forms from the company’s human resources department. The email will ask for an earnings summary for “a quick review” or to “double check information.”

More companies tapped to prevent tax fraud

During tax season you are likely focused on properly chronicling your income, expenses and applicable exemptions. You are probably not worried about the possibility of your tax information being stolen en route to the IRS.

However, scores of tax returns are hacked each year and the information used to create fraudulent returns (and illegal refunds). According to the Federal Trade Commission, tax fraud was the top form of identity theft last year. Also, the IRS reported that is stopped 1.4 million returns based on identity theft. It also prevented $8.7 billion in fraudulent returns from being paid out. But since identity theft based tax fraud is such a crime with little risk of being caught and a high rate of return taking a chunk out of a $20 billion business is significant.

Rules on passport restrictions for back taxes moving forward

It has been more than two years since legislation passed giving the IRS an additional collection tool. The tax agency will soon begin working in conjunction with the State Department to revoke, limit or deny passports of individuals with “seriously delinquent tax debt.”

This month the IRS will start notifying the State Department of these taxpayers who owe the IRS more than $51,000. This amount includes back taxes, penalties and interest with a lien or levy.

Speculation abounds as to how the Supreme Court will rule

In a prior post, we highlighted the question of how broad the term “obstruction of justice” could be construed in the context of bringing criminal charges for continuing failures to file federal tax returns. We noted that the owner of a freight service company was indicted on nine counts of tax related offenses, including a violation of Section 7212(a) of the Tax Code, which calls for criminal sanctions upon anyone who “corruptly…obstructs or impedes or endeavors to obstruct or impede the due administration of the Internal Revenue Code.”

According to comments in a recent accountingtoday.com report, the section is affectionately termed a “one-man conspiracy statute.” Of course, anyone versed in the basics of criminal law will understand that a conspiracy takes two or more persons, but with the Tax Code, apparently that is not the case. As such, it has been a potent weapon for prosecutors to bring charges in cases such as the one involving the freight service company owner. 

Why you should still be aware of 'The Wealth Squad'

With tax reform signed into law, many business owners are optimistic about what 2018 will bring. A substantially lower tax rate could mean substantial savings come April 2019. Of course, businesspeople want to pay only as much as they legally owe in taxes; and if they can avoid paying additional taxes, they will.

In the meantime, if you had a wildly successful 2017, should you be concerned about the IRS? If you’re feeling secure and confident, consider this; according to a Bloomberg.com report, uber-successful may draw inquiries from Uncle Sam. The report highlighted that 25 percent of people who had incomes of $10 million and above were audited in 2013. Considering that the IRS collected more than $6 billion in underreported income, it is conceivable that the number of audits for this group could increase next year, even in spite of new tax laws. 

Have a Question? Ask an Attorney:

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Visit Our
Tax Law Website
Contact Information

Levins Tax Law, LLC
1671 Worcester Road, Suite 304
Framingham, MA 01701

Framingham Law Office Map

Levins Tax Law, LLC
38 Newbury Street, 6th Floor
Boston, MA 02116

Boston Law Office Map
By Appointment Only

Phone: 508-435-0118
Toll-Free: 888-333-9501
Fax: 888-333-0291