Tax Relief Blog

IRS Tax Penalty – How to abate and avoid penalties

April 7, 2008 | Mike Habib, EA

Avoiding IRS Tax Penalties and the Tax Gap

IRS — The Internal Revenue Code imposes many different kinds of penalties, ranging from civil fines to imprisonment for criminal tax evasion.

If you do not file your return and pay your tax by the due date, you may have to pay a penalty. You may also have to pay a penalty if you substantially understate your tax, understate a reportable transaction, file an erroneous claim for refund or credit, or file a frivolous tax submission. If you provide fraudulent information on your return, you may have to pay a civil fraud penalty.

Intellectual property contribution tax problem resolution

April 7, 2008 | Mike Habib, EA

Final regs detail donee’s filing requirements for qualified intellectual property contributions
T.D. 9392, 04/04/2008; Reg. § 1.6050L-2

Mike Habib, EA

MyIRSTaxRelief.com
IRS has issued final regs explaining the information return requirements for donees receiving net income from qualified intellectual property contributions made after June 3, 2004.

Estate and Gift Tax Problem Resolution

April 4, 2008 | Mike Habib, EA

Estate and Gift Tax Relief – Joint Committee Staff examines options for reforming transfer taxes

Mike Habib, EA
MyIRSTaxRelief.com

The Staff of the Joint Committee on Taxation has released JCX-23-08, Taxation Of Wealth Transfers Within A Family: A Discussion Of Selected Areas For Possible Reform. This document, which was prepared in conjunction with an Apr. 3, 2008 hearing conducted by the Senate Finance Committee, explains the estate and gift tax system’s current state of flux and explores ways to reform it. The full-text document can be viewed at http://www.house.gov/jct/x-23-08.pdf.

Observation: Estate planning has become unduly difficult in the face of uncertainty posed by the current regime, which calls for a one-year repeal of estate tax followed by a return to harsher rules. While it is a fairly good bet that estate tax won’t be permanently repealed, it seems certain that some types of changes will be implemented even before 2010. For example, there is a pretty good chance that a fully unified system will be restored with a higher exemption level.

Background. As noted in JCX-23-08, the Federal estate and gift tax rules are in a state of flux. Under the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”), the estate tax and the gift tax are partially unified: a single tax rate schedule applies under the estate tax and the gift tax, but after 2003 the exemption amounts differ. The highest rate of estate and gift tax has decreased in steps from 55% in 2001 to 45% in 2007 through 2009. The estate tax exemption amount is increasing in several steps from $1 million in 2002 to $3.5 million in 2009. The gift tax exemption amount has remained at $1 million. The credit against Federal estate tax liability for State estate and inheritance taxes was phased down from 2002 through 2004 and replaced by a deduction starting in 2005.

Medical FICA Tax Problem Resolution

April 4, 2008 | Mike Habib, EA

District court holds that stipends paid to medical residents were exempt from FICA

Regents of the University of Minnesota v. U.S. (DC MN 4/1/2008) 101 AFTR 2d ¶ 2008-647

Mike Habib, EA
myIRSTaxRelief.com

Estimated tax payments – IRS Problem Resolution

April 2, 2008 | Mike Habib, EA

New, changed and expired provisions affect 2008 individual estimated tax

Mike Habib, EA
MyIRSTaxRelief.com

Apr. 15, 2008 is the due date for affected calendar year taxpayers to make their first installment of 2008 estimated tax. There aren’t any drastic changes in the estimated tax rules themselves for 2008. However, there are a number of new, changed and expiring provisions that will affect some individuals’ estimated tax computations for 2008. This article provides a brief overview of the estimated tax rules for individuals and looks at the changes that may impact 2008 estimated taxes.

Who needs to pay estimated tax. Individuals who have income that is not subject to withholding (for example, earnings from self-employment, interest, dividends, rents, alimony, etc.) must pay estimated tax or face a penalty. In addition, taxpayers who do not elect voluntary withholding on unemployment compensation and the taxable part of social security payments also may have to pay estimated tax on those items or face a penalty. (Code Sec. 6654)

When and how much to pay. For 2008 estimated tax, in general, a taxpayer must pay 25% of a “required annual payment” by Apr. 15, 2008, June 16, 2008, Sept. 15, 2008 and Jan. 15, 2009 to avoid an underpayment penalty. (Code Sec. 6654(c))

Insurance Agent Tax Resolution

April 1, 2008 | Mike Habib, EA

Retired insurance agents’ renewal commissions didn’t qualify for FICA special timing rule

Mike Habib, EA
myIRSTaxRelief.com

Chief Counsel Advice 200813042

Trucker Tax Relief – Trucker Tax Resolution Service

April 1, 2008 | Mike Habib, EA

Truckers Tax Relief – Are you a truck driver with tax problems?

Trucking Tax & Accounting: Back Taxes – Unfiled delinquent tax returns – IRS & State audits – Messy books / accounting

If you’re a truck driver and owe the IRS, you’re better off resolving your tax debt now. As you know, tax problems do not go away by themselves! Stop your IRS wage garnishment today, stop your IRS bank levy today, and release your IRS tax lien today.

Federal tax liens – failure to pay the estate taxes

March 31, 2008 | Mike Habib, EA

Homes sold by estate beneficiary remained subject to federal estate tax liens

First American Title Insurance Co., et al. v. U.S. (CA9 3/27/2008) 101 AFTR 2d ¶ 2008-622

Mike Habib, EA

Non-profit exempt organization tax problems

March 28, 2008 | Mike Habib, EA

IRS Regs clarify Code Sec. 501(c)(3) exempt status and impact of excise taxes

Mike Habib, EA

MyIRSTaxRelief.com

Dependent deductions tax problem

March 25, 2008 | Mike Habib, EA

Tax breaks for qualifying relatives are limited – what you should know
Internal Legal Memorandum 200812024

Mike Habib, EA
myIRSTaxRelief.com

An Internal Legal Memorandum (ILM) explains that various tax breaks are not allowed for qualifying relatives. Specifically, the ILM concludes that, apart from a dependency exemption, a taxpayer’s qualifying relative may not qualify him for the earned income credit, head of household filing status, or the child tax credit, but in limited circumstances may qualify the taxpayer for the child and dependent care credit.

Background. A taxpayer is entitled to a deduction equal to the exemption amount for each person who qualifies as his “dependent.” (Code Sec. 151(c))