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Sacramento Tax Law Blog

California Drafts Plans for Sales Tax Regulations in Wake of Wayfair Decision

Back in June, the U.S. Supreme Court issued a decision in South Dakota v. Wayfair, Inc. that reversed Quill's requirement for physical presence to establish sales tax nexus for out-of-state businesses. Individual states are now hurrying to decide upon economic or transactional thresholds to govern who should be collecting and paying over sales tax concerning primarily e-commerce sales.

Tax Agencies Offering Relief to Californians Affected by Wildfires

Federal and California state tax agencies have offered relief to certain taxpayers affected by the 2018 wildfires in Northern California. The Internal Revenue Service will postpone specific deadlines, waive penalties, and provide other relief as detailed here. The California Franchise Tax Board's list of qualified disasters and instructions for claiming relief can be found at this link. The California Department of Tax and Fee Administration (formerly the BOE) is also offering relief for businesses impacted by the fires, including extensions to file returns and relief from certain penalties or interest. Details on the specific CDTFA programs offering relief, and instructions for requesting relief, are available here.

Swiss Banks Pay Big Penalties for Failure to Disclose U.S. Accounts

The Department of Justice recently imposed another $5.3 million penalty on Bank Lombard Odier & Co., Ltd., a Swiss bank that has already paid over $99 million for offering offshore banking services to U.S. taxpayers without disclosing their transactions. Since Bank Lombard signed its first non-prosecution agreement in 2015, it has acquired 88 additional accounts, again without disclosing them as required.

Prison Time for Bay Area CPA and Client Who Tried to Evade Taxes

A taxpayer recently found out the hard way that if something sounds too good to be true, get a second opinion. His San Francisco-based CPA helped him prepare and file tax returns that failed to report over $18 million in income between December 2007 and September 2013, which resulted in $4.7 million of unpaid tax liabilities. In this case, both the taxpayer and his CPA were indicted; the taxpayer entered into a plea agreement and the tax preparer took his chances --- he lost.

Swiss Bank Resolves to Pay $5 Million Penalty for Role in Asset Concealment

NPB Neue Privat Bank, a Swiss private bank based in Zurich, and the U.S. Department of Justice Tax Division signed a non-prosecution agreement on July 18, 2018, by which NPB will pay a $5 million penalty for aiding U.S. taxpayers in opening accounts to conceal assets and income from the U.S. government. Between August 2008 and December 2015, NPB managed approximately $400 million annually in both declared and undeclared assets. The bank failed to disclose the identities of American clients to the Internal Revenue Service after entering into a Qualified Intermediary Agreement in 2001 whereby it was to report U.S. securities transactions to the IRS on Forms 1099 and obtain Forms W-9 from new and existing U.S. clients to help verify their tax compliance.

Pass Through Entities Become Focus of New IRS Compliance Campaign

The Internal Revenue Service (IRS) recently launched a new compliance campaign focused on S corporations and shareholder distributions. The three areas of concern include failure to report gain upon the distribution of appreciated property, failure to correctly determine the taxability of a dividend, and the failure to report non-dividend distributions in excess of their stock basis subject to taxation. The IRS will be conducting issue-based examinations and reaching out to stakeholders on this topic. For more information, click here.

IRS Announces New Virtual Currency Compliance Campaign

The Internal Revenue Service (IRS) is going to be taking a closer look at virtual currency transactions in a new compliance campaign focusing on education and guidance efforts about reporting requirements for convertible transactions involving digital currency such as Bitcoin. "Taxpayers with unreported virtual currency transactions are urged to correct their returns as soon as practical," the IRS said in its press release. For more information, click here.

U.S. Supreme Court Declines FATCA Case - What This Means to Individuals with Offshore Accounts

What do a U.S. Senator, the owner of an Albanian brokerage firm, an attorney who is a dual citizen of America and Israel, and a group of current and former U.S. citizen now living in Canada, Switzerland, and the Czech Republic all have in common? They have been denied review by the U.S. Supreme Court in their jointly failed attempt to enjoin the enforcement of the Foreign Account Tax Compliance Act (FATCA), certain intergovernmental agreements (IGAs), and the foreign bank account reporting (FBAR) penalty.

Plans Underway for New Federal Form 1040

The Internal Revenue Service (IRS) announced plans to consolidate the federal Forms 1040, 1040A and 1040EZ into a single Form 1040 for the 2019 filing season. The shorter form would be supplemented with schedules for more complex tax filing situations. Tax professionals can view the proposed new Form 1040 in draft form here and submit any comments to [email protected].

FTB Releases 2018 Filing Season Update

The California Franchise Tax Board (FTB) recently released an update about the 2018 tax filing season. As of May 31, 2018, the FTB had processed over 17 million personal income tax (PIT) and business entity (BE) returns. Ninety-one percent of personal returns and 85 percent of business returns were e-filed. The FTB issued 10.9 million personal refunds totaling $10 billion and 76,000 business refunds totaling $363 million, averaging $917 and $4,776, respectively. Over 1.3 million California Earned Income Tax Credits were claimed, and $292 million in credits/refunds were allowed.

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