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Sacramento Tax Law Blog

Video: Benefit from our experience in offshore voluntary disclosures

Individuals and businesses often take advantage of the benefits offshore banking provides. You may have opened an account to ensure that you get to keep more of your hard-earned money with a favorable tax rate. You may have used a trust or foundation to protect your assets.

Under federal tax laws, you are required to report certain accounts to the IRS. Whether you misunderstood the reporting requirements or chose to ignore them, the IRS will find out about your offshore account.

IRS Proposed Regulation Defines "Husband" and "Wife"

The IRS now recognizes same-sex marriage for income tax purposes as well as estate, gift, generation-skipping and employment tax, following the recent Supreme Court holding that state bans on same-sex marriage are unconstitutional, Obergefell v. Hodges, 576 US ___ (2015). The terms "husband" and "wife" will now be defined as an individual lawfully married to another individual. The term "husband and wife" will mean two individuals lawfully married to each other. The new definitions will not apply to domestic partnerships, civil unions or other regulations in which the couple deliberately choose to remain unmarried. If a couple marries in a forien jurisdiciton, so long as the marriage is recognized in at least one U.S. state, possession or territory, then the marriage will be recognized for federal tax purposes as well.

IRPAC Issues Annual Report - Recommendations Include Improving the Penalty Abatement Process

The IRS' federal advisory committee, known as the Information Reporting Program Advisory Committee (IRPAC), has issued its 2015 report identifying several areas in need of improvement including a revision of certain forms, improvements to the IRS use of FAQs and improvements in the penalty abatement process for first time abatement requests and reasonable cause abatement requests. IRPAC noted that despite evidence that requests were submitted showing events beyond the taxpayer's control which resulted in taxpayer errors, the denial of penalty relief is commonly denied initially causing the taxpayer to spend additional time and money appealing the determination. Click here to read the complete IRPAC public report.

IRS Thwarts Identity Theft through W-2 Authenticity Verification

The IRS continues to battle identity theft of taxpayers and is proactive for 2016 filing with its authenticity verification test when taxpayers e-file their income tax returns. The IRS is working with specific Payroll Service Providers to use a verification code on a test population of W-2s. For more information, click here.

Video: A California tax law firm with the experience you need

The tax code is highly complex. Yet, any number of mistakes and missteps may result in interest and penalties that can outweigh the cost of your initial tax liability. Under some circumstances, you could face criminal charges and jail time.

With consequences such as these, you never want to leave your tax matter in the hands of an inexperienced attorney. At the Law Office of Williams & Associates, P.C., our attorneys have a level of experience that is unmatched.

Watch the video below to learn more about our lawyers and their qualifications.

You may get relief from the IRS, but the FTB says no when it comes to mortgage debt relief.

California law remains out of conformity with the federal statutory exclusion for certain discharges of qualified principal residence indebtedness for discharges of indebtedness occurring on or after January 1, 2014.

However, as explained in detail in FTB's February 2014 Tax News article, California law conforms and incorporates by reference the general rules of the federal tax law governing the forgiveness of nonrecourse and recourse indebtedness. California will follow federal law as it relates to the determination of whether cancellation of debt income ("CODI") exists as a result of the sale of a principal residence. See also,

California UBER Update

The Law Office of Williams & Associates, PC has been informed that the California Employment Development Department has recently won at least two administrative decisions against Uber in appeals of Obstructed Claims for Unemployment Insurance Benefits, before the California Unemployment Insurance Appeals Board. In plain English, this means that the state of California determined that Uber drivers are misclassified as independent contractors, that Uber should have paid state employment taxes and withholding on the payments rendered to those drivers.

The IRS Urges Taxpayers to Strongly Consider Offshore Compliance

Now that the United States and numerous foreign jurisdictions have begun the automatic third-party financial account reporting exchange, it is less likely that offshore financial accounts will go unnoticed by the IRS.  The IRS reminds taxpayers to take advantage of the Offshore Voluntary Disclosure Program (OVDP) or streamlined procedures to come into compliance regarding offshore accounts.  Since OVDP began in 2009, there have been more than 54,000 disclosures from which the IRS has collected over $8 billion.  In the past year, 20,000 taxpayers have participated in the streamlined proceedures designed for taxpayers whose non-compliance was not willful.  Thanks to information obtained from investigations and settlements with foreign financial institutions, the IRS has conducted thousands of offshore-related civil audits resulting in tens of milions of dollars.  The total assessed in criminal fines and restitutions is now in the billions.  To read the complete bulletin, see IR 2015-116.

IRS Begins Reciprocal Information Sharing with Foreign Governments - the Risks of Hiding Money Offshore is Increasing

The IRS met its deadline to begin the reciprocal automatic exchange of tax information with some foreign jurisdiction tax administrators as agreed under the intergovernmental agreements (IGAs) as part of the Foreign Account Tax Compliance Act (FATCA). As of September 30, 2015, the IRS can now reciprocate and provide information to the other jurisdictions who have shared information regarding financial accounts held by U.S. taxpayers with the IRS. The information now available provides the United States and partner jurisdictions an improved means of verifying the tax compliance of taxpayers using offshore banking and investment facilities, and improves detection of those who may attempt to evade reporting the existence of offshore accounts and the income attributable to those accounts.

Prosecution of Criminal Employment Tax Crimes is on the Rise

According to IRS data, in fiscal year 2014, 120 employment tax cases were opened for tax evasion investigation. Of those, 92 were recommended for prosecution and 82 received federal sentences. These numbers are set to increase, not only in federal cases, but in California cases as well. Caroline Ciraolo, Acting Assistant Attorney General for the Department of Justice Tax Division, has indicated that increasing criminal enforcement for employment tax crimes is a priority of the DOJ Tax Division. The maximum sentence for the willful failure to meet payroll filing and payment obligations is 5 years with penalties as high as $200,000.

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