Tax Court dismisses case brought by Whistleblower

A person who provides information about unpaid federal tax to the IRS Whistleblower Office (WBO) may qualify for a cash award. The information must be specific, credible and lead to the collection of tax. One tipster claimed that over 200 fast-food restaurants connected to a franchisor were “skimming cash off sales and not reporting the […]

How big is the tax gap?

The “tax gap” is the difference between the amount of tax owed for a tax year and the amount that’s actually paid on time and voluntarily. How big is it? The Treasury Inspector General for Tax Administration (TIGTA) conducted an audit “to assess the IRS’s process for developing the tax gap estimates.” TIGTA found issues […]

Update on the new Form 1099-K requirements

Can the IRS handle the influx of returns that the new Form 1099-K reporting requirements are expected to generate? Two Republican House Ways and Means Committee members have asked the Government Accountability Office to examine just that. Under the American Rescue Plan Act, third-party settlement organizations, such as PayPal, must file Forms 1099-K with the […]

Myths about filing tax returns

The IRS is on a mission to separate fact from fiction. Specifically, it wants to debunk common myths about filing tax returns, finding refund information and adjusting withholding. First a few facts about this year’s filing season: nine out of 10 refunds were issued within 21 days; as of March 31, the IRS had issued […]

New IRS ruling limits deduction and research and experimental expenses

According to a new IRS ruling, after July 31, 2023, businesses may no longer file refund claims or amended returns to deduct research or experimental expenses they failed to deduct in a prior year. The IRS’s reasoning is that Revenue Ruling 58-74 didn’t explain whether taxpayers consistently treated the costs of research and experimental expenses […]

Tennessee storm tax relief

The IRS has provided tax relief to victims of storms in Tennessee that began on March 31, 2023. Taxpayers in the disaster area now have until July 31, 2023, to file various tax returns and to make tax payments. Taxpayers who reside or have a business in the following counties qualify for this tax relief: […]

Estimated Tax Payments Due soon

If you make estimated tax payments, be aware that April 18 isn’t just the 2022 tax filing deadline. It’s also the deadline for the first estimated tax payment for 2023. Estimated tax payments are generally made by self-employed people, retirees, investors, businesses and others that don’t have taxes withheld from their income. The payments are […]

Filing day approaching

With tax day approaching, the IRS is reminding individuals that they have until April 18, 2023, to make 2022 contributions to a traditional or Roth IRA. Another reminder: Taxpayers in plans including 401(k)s and 403(b)s whose salary deferrals exceed the 2022 limit ($20,500 for taxpayers under age 50) must remove the excess deferral amount, plus […]

IRS penalties subject of proposed regulations

With a goal of making IRS penalties easier for taxpayers to understand, the IRS has issued proposed regs that examine how tax penalties are applied. According to the tax agency, the IRS seeks a process that it can administer with nationwide uniformity. Generally, the IRS can’t assess a penalty against a taxpayer unless the assessment […]

Is it a deductible legal expense?

Business owners can generally deduct business legal expenses on their tax returns. The taxpayer bears the burden of showing that the legal fees arose from business, rather than personal issues. In one case, a physician specializing in gene therapy and his wife (a surgeon) had multiple legal issues and deducted legal expenses of $360,295 for […]