Much has been written (true and untrue) about how the average taxpayer will be affected by the expected increase in IRS funding from the Inflation Reduction Act of 2022 (IRA 22).  While the total funding has been decreased and priorities have shifted a bit, the Commissioner has made clear that increasing the IRS’s efforts at ensuring employment tax compliance remains of utmost importance.  For those operating businesses with employees, there is no better time than now to review their employment …

IRS to Use Additional Funding To Increase Employment Tax Compliance Read More »

On July 24, 2023, IRS Commissioner Danny Werfel announced the IRS would cease its decades-long practice of unannounced visits to taxpayer’s homes and places of business when attempting to collect unpaid taxes. In addition to concerns over the safety of IRS employees (noting a steep increase in threats to agency employees), the Commissioner shared concern over an increase in scammers impersonating IRS employees to extort money from unsuspecting taxpayers. Moving forward, when a case is assigned, the Revenue Officer’s first …

IRS Ending Unannounced Visits from Revenue Officers Read More »

As the April 18, 2023, filing deadline approached, many taxpayers were caught off guard to learn their refunds were significantly less than in the past few years, or that they even owed additional taxes.  In large measure, this resulted from many of the pandemic-related credits expiring. For those who found themselves owing an amount they could not pay, the question arises “what do we do now?” To be sure, the IRS is one of the most (if not the most) …

Thank So You Filed Your Tax Return With A Balance Due— Now What? Read More »

Each year, the IRS warns Taxpayers in its “Dirty Dozen” list of tax scams to be on the lookout.   This year, the list includes two warnings about which we have had similar concerns. This year’s first addition to the “Dirty Dozen” list was Employee Retention Credit (“ERC”) promoters using aggressive marketing to assist taxpayers in applying for the credits.  Originally enacted as part of the CARES Act, the ERC allows significant credits against employment taxes for those businesses effected by …

IRS Includes ERC Promoters and “Offer Mills” in 2023 “Dirty Dozen” List Read More »

On February 28, 2023, the United State Supreme Court issued its opinion in a highly watched case concerning the maximum penalty that may be imposed for a “non-willful” violation of the Report of Foreign Bank and Financial Account (FBAR) requirements.  Under the Bank Secrecy Act, all U.S. persons with accounts at foreign institutions with an aggregate balance above $10,000 at any point during the year must annually report certain information about the accounts on an FBAR.  The statute imposes a …

Supreme Court Issues Important FBAR Penalty Decision Read More »

Over the last several years, few issues have been higher on the IRS’s priority list than what have been termed “Syndicated Conservation Easements.”  These tax strategies generally involve taxpayers purchasing in interest in a partnership that either owns or purchases real property over which it grants a “conservation easement” restricting some level of development on the real property.  The partnership then allocates a portion of the total charitable deduction to the partners to claim on their tax return that far …

Significant Syndicated Conservation Easement Ruling Read More »

In August 2022, President Biden authorized $80 billion in funding to the Internal Revenue Service over the next ten years. The funding is based on estimates in a U.S. Department of Treasury report from May 2021, outlining the President’s proposed initiatives to increase tax compliance and the funding required to implement them.  It includes modernizing current technology, increasing data analytics use, and hiring agents to enforce civil and criminal tax laws.  It’s estimated 87,000 new employees will be hired across …

IRS Hiring New Employees with Portion of $80 Billion Funding Read More »

Federal law requires employers who pay wages to employees to withhold and remit employment taxes to the IRS.  In addition, employers must timely file IRS Forms 941 (or Forms 943 or 944, if applicable) to report their employment taxes.  Employers who fail to comply with either requirement can face significant civil penalties for non-compliance.  Business owners, and employees hired by the employer to file and pay its employment taxes, may also be at risk for having to pay the employees’ portion of …

Unpaid Payroll Taxes and Potential Criminal Prosecution Read More »

Under the Tax Cuts and Jobs Act of 2017, Congress limited individuals’ deduction for state and local taxes to $10,000. Since, many states have experimented to reduce this limitation’s burden on their residents. Colorado’s attempt to lessen the impact on small business owners—the “SALT Parity Act”—was signed into law on June 23, 2021. Beginning January 1, 2022, “flow-through entities” (i.e., businesses taxed as partnerships or S-Corporations) may elect to be taxed at the entity level. By doing so, the entity’s …

Colorado’s State Tax Deduction Work-Around Read More »

The Trust Fund Recovery Penalty (“TFRP”) relates to employment taxes (IRS Form 941) due by an employer to the IRS for wages paid to its employees.  It is the employees’ portion of income tax, Social Security, and Medicare, withheld by the employer from employees’ wages.  Although referred to as a penalty, it is a tax. When an employer does not make required federal tax deposits for employment taxes, it incurs a tax liability comprised of the Trust Fund and non-Trust …

What is the Trust Fund Recovery Penalty? Read More »