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Boston Tax Law Blog

Understanding the tax implications of vacation home renting

With the expanding popularity of short-term rental programs like “HomeToGo,” “AirBNB” and “HomeAway,” increasing numbers of homeowners are offering to let strangers use their houses, apartments and condos. These involve allowing someone to use the home for a set time for a fee, similar to staying in a hotel.

Short-term rentals are very profitable for property owners, especially those centered around holidays, festivals, state fairs or sporting events. Some people just prefer an apartment or home instead of an impersonal hotel. The reasons for this vary from person to person, but they include ease of access to cooking facilities, privacy, amenities, and close proximity to their desired location.

Did you receive a CP2000 from the IRS?

In the wake of tax season, taxpayers can receive a variety of notices from the Internal Revenue Service. How you respond when you get such a notice can be very important. One of the most common types of notices is IRS Notice CP2000. Today we will go over some CP2000 basics.

Tax preparer exonerated after jury trial

The old adage “just because you are charged with a crime does not mean you are guilty” is more than just a cliché used by criminal defense attorneys to procure business. Many times there is a real life application.

When it comes to tax preparers charged with federal crimes, the implications can be life changing. This is why the story of a preparer exonerated of criminal charges is a poignant reminder of the importance of a skilled tax attorney.

Three ways an attorney can help with tax audits

For many small businesses, getting their state and federal tax returns filed before the filing deadline is a feat in itself. But for an unfortunate chosen few, the task with taxes is not over just yet. These businesses, when they are chosen for an audit, may have to experience a new gauntlet that could threaten the future of their enterprise.

However, an experienced tax attorney can make the process easier if your business is selected for an audit. This post will identify three reasons why.

How to avoid Massachusetts restaurant sales tax issues

The Suffolk County District Attorney’s Office recently accused the owner of an East Boston diner of failing to report sales. In a lengthy complaint, the state argues the diner failed to properly report $850,000 in sales between 2012 and 2015. Failure to report the income, allegedly resulted in unpaid taxes of roughly $60,000. The owner framed the issue as a misunderstanding.

In Massachusetts, restaurants are required to collect a sales tax of 6.25 percent on meals. Accusations of pocketing money collected for the meals tax, but not paying it to the state are serious. Failure to collect the tax at all is equally serious.

Moving expense deduction to be suspended next year

If you are poised to move because of a new job, or transfer within the same company, you may be curious about what expenses may be tax deductible in the next tax year. After all, moving expenses have been a long-standing deduction that employees and small business owners have traditionally taken advantage of.

However, the moving expenses deduction will be suspended until 2025 as a result of the latest tax reform act. Specifically, the Tax Cuts and Jobs Act (TCJA) that was signed into law last December will not allow this deduction beginning with the 2018 tax year. The new law also suspends the inclusion of employer reimbursed moving expenses into a person’s income.

Student loan discharges may come with strings attached

For those considering bankruptcy because of the weight of student loan debts, they likely have unfortunately learned that discharging such debt is notoriously difficult. Essentially, bankruptcy debtors seeking to eliminate student loan debts must follow a rigid standard and show that their financial situation is going to persist and that they have made a good faith effort in paying them. However, courts have held this bar so high that few debtors actually qualify.

Nevertheless, the story of a disabled man who had $150,000 in student loans discharged brings some considerable concern to those who are looking to bankruptcy to eliminate these debts. After being allowed to wipe away the debt, the man was presented with a 1099-C, which is an IRS form indicating that forgiven debt is considered income under the U.S. Tax Code. After all of his deductions were considered, the man still was liable for $59,000 in tax debt.

Common tax fraud defenses to be asserted

In prior posts, we highlighted the difference between an honest mistake that results in the incorrect amount of taxes paid, and outright fraud where a taxpayer affirmatively tries to avoid paying taxes. Indeed, it is easy to point out the difference between fraud and mistakes in the abstract, but what defenses are actually available when the IRS thinks that you cheated on your taxes?

This post will briefly describe two important defenses.  

What should happen if you are selected for an audit

As we have noted in prior posts, small business owners must be vigilant in keeping good records not just for tax season, but throughout the year. Not only is this a practice that is vital to business success, but mistakes and inaccuracies can lead to audits.

Indeed, next year’s tax season may see fewer audits because of budget cuts, but scores of small businesses will still be subject to tax inquiries. In the event your company is selected for an audit, this post will give you some helpful information as you prepare.

How to protect yourself if you can't pay your tax bill right away

The theme of TurboTax commercials reminds us that the fear of the unknown can really control our lives and force us to procrastinate on completing our tax returns. We may fear that we may make mistakes that will lead to unfathomable penalties. We may also fear the power of the federal government to collect on back taxes.

So if you are barely making ends meet (especially if you are a self-employed business person) and you concerned about how deal with tax debt you can’t readily afford to pay off, it is undoubtedly very stressful.

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