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Sacramento Tax Law Blog

IRS Issues Final Regulations on Substantiation for Charitable Contributions

If you regularly claim deductions for donations, you may need to update your tax record keeping practices --- the Internal Revenue Service (IRS) issued final regulations this summer concerning the correct way to substantiate any charitable contributions you wish to deduct. Under Section 170(f)(8), for contributions of $250 or more, the recipient organization should provide you a receipt at the time of the contribution that shows:

Legislators Seek to Limit Impact of Wayfair Decision through New House Bill

On September 13, 2018, a bill was introduced in the U.S. House of Representatives "to prohibit States from retroactively imposing a sales tax collection duty on a remote seller," among other purposes. H.R. 6824, also called the Online Sales Simplicity and Small Business Relief Act of 2018, seeks to limit the impact of the recent Wayfair decision, which eliminated the need for a business to be physically present in a state in order to have economic nexus in that state.

IRS Collection Due Process Program Remains Imperfect

The Treasury Inspector General for Tax Administration (TIGTA) recently reviewed the Internal Revenue Serivce's (IRS's) program on Collection Due Process requests, and found it to have similar room for improvement as compared to TIGTA's last review. For instance, the program could be more accurate in classifying requests and providing the correct type of hearing to taxpayers. The IRS also needs to improve how it handles taxpayer requests initially sent to the wrong location, as well as how it calculates statute expiration dates. For more information on the results of this review, click here.

TIGTA Report Finds IRS Private Debt Collection Policies May Be Harmful to Taxpayers

The Treasury Inspector General of Tax Administration (TIGTA) recently conducted an audit of the Internal Revenue Service (IRS)'s latest private debt collection program and found much room for improvement. As of May 31, 2018, the private debt collection program had netted $1.3 million, but the private agencies have collected only 1 percent of the $4.1 billion assigned to the program. For reference, the industry average for 2016 was 9.9 percent.

State and Local Tax Deductions Available to Businesses

The Internal Revenue Service (IRS) announced this week that business payments to charities that result in state or local tax credits will be deductible expenses in most cases.  This is unlike the manner in which the IRS has said it will treat payments that individuals make to charities (details here).  For more information on SALT deductions available to businesses, click here.

Californian Pleads Guilty to Willful Failure to Report Foreign Accounts to IRS

A Californian pleaded guilty this week before the U.S. District Court, Central District of California, to willfully failing to disclose over $1 million held in offshore bank accounts. He and the bank also took other steps to hide and secretly access his funds. The man now faces up to five years in prison, supervised release, restitution, and other monetary penalties.

IRS and Treasury Propose Regulations On State and Local Tax Deductions

The Tax Cuts and Jobs Act of 2017 limits the annual federal tax deduction for state and local taxes to $10,000. In response to this limit, some states with higher tax rates (including California) considered programs that would allow taxpayers to characterize tax payments as charitable donations instead.

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.

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