Category Archives: Taxes + IRS
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Charitable Conservation Easements Found A Friend In The 11th Circuit
Many Tax Court cases have been decided based upon an obscure Treasury Regulation, upholding the IRS’ 100% disallowance of charitable conservation easement deductions. The 11th Circuit struck down the Regulation, holding that it is “arbitrary and capricious”. A rare win for taxpayers. The Bloomberg article attached below was written by our own attorney, Nancy O. Kuhn. A Rare Victory For Taxpayers ... Read More
TAGGED: irs, tax, Treasury Regulation, 11th Circuit, taxpayers
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Estate Tax Considerations for 2022: How Clients Can Plan in an Uncertain Time
The Internal Revenue Service ("IRS") has released annual inflation adjustments for 2022. These include increased gift, estate, and generation-skipping transfer (“GST”) tax exemptions (the “unified credit”), annual gift tax exclusions, and retirement account limits. The changes are as follows: The unified credit will increase to $12.06 million for an individual (from $11.7 million in 2021). This means that a married ... Read More
TAGGED: news, Tax Law, legislation, estate planning, trust and estates, taxes & IRS
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Client Alert: CIC Services, LLC v. Internal Revenue Service – A Rare Victory for the Taxpayer
On May 17, 2021, a unanimous Supreme Court issued its opinion in the long-awaited case interpreting the Anti-Injunction Act as applied to the Internal Revenue Service. CIC Services, LLC v. Internal Revenue Service was a rare loss for the government. The Supreme Court held that CIC Services has jurisdiction to question the IRS’ ability to demand burdensome record-keeping information from ... Read More
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Client Alert: Exempt Organizations Engaged in Illegal Activities – Will They Be Held Accountable?
In the aftermath of the January 6, 2021 insurrection, the focus has shifted to the entities that may have financed the insurrection. Thousands of individuals travelled to Washington, D.C. for the rally and insurrection, and news reports have alleged that charitable organizations may have assisted in funding the participants’ expenses. On January 13, 2021, members of the Ways and Means ... Read More
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Client Alert: Few Tax Exempt Organizations Examined By the IRS
The Treasury Inspector General for Tax Administration (“TIGTA”) recently issued a report about its review of the Internal Revenue Service’s (“IRS”) examination of tax-exempt organizations.[1] (“TIGTA Report”) The TIGTA Report analyzed examinations conducted by the IRS during fiscal year 2019. TIGTA found that there are many obstacles to overcome in order for IRS’ examiners to detect noncompliance by ... Read More
TAGGED: irs, tax exempt organizations, nonprofits, TIGTA, Form 990
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Client Alert: Employers Liable for Deferred Payroll Taxes
The Internal Revenue Service has issued guidance for employers who, in response to the President’s Executive Memorandum dated August 8, 2020, choose to defer payroll taxes for employees from September 1, 2020, through December 31, 2020. In Notice 2020-65, issued August 28, 2020, the IRS specified that the deferred payroll taxes are due to the IRS prior to ... Read More
TAGGED: irs, Tax Law, Payroll Taxes, Notice 2020-65
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Client Alert: Payment Protection Program Grants May Result in Unexpected Taxable Income
The Paycheck Protection Program (“PPP”) enacted through the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) is the government relief program that provided loans to small businesses to cover payroll, rent or mortgage payments and utilities. The loan may be forgiven under certain prescribed circumstances. The issue for recipients now is how to account for the funds. There ... Read More
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SCOTUS Opinion: No Pre-emption for States to Use Federal Immigration Information to Enforce State Identity Theft Law
Under federal law, employers must verify, through an I-9 form, that they have “verified” that each new employee “is not an unauthorized alien.” In Kansas v. Garcia, three persons who were living in the United States illegally used the same false Social Security number on their I-9 forms, as well as their tax withholding forms, and were prosecuted under ... Read More
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SCOTUS Opinion: Court Strikes Down The “Bob Richards Rule”
The IRS allows affiliated corporations to file a group tax return. When the IRS issues a tax return to the group as a whole, federal law does not describe how to allocate the funds. The Ninth Circuit created a rule for that when it decided In re Bob Richards Chrysler-Plymouth Corp., 473 F.2d 262 (1973). The "Bob Richards Rule" mandated ... Read More
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End of the Calendar Year: A Good Time to Confirm Compliance Issues for Businesses
Corporations, limited liability companies (LLCs), and other business entities are certainly aware of the need to make certain end of year decisions for income tax purposes, but it also is a good time to perform a business audit for possible state, local, and personal property tax return deadlines. It is also advisable for businesses to review other corporate compliance issues, such ... Read More
TAGGED: washington dc, maryland, nonprofits, Corporations, limited liability companies, business entities, District of Columbia, duty of loyalty, duty of care, LLC, Corporate Filing Requirements, Virginia, biennial reports, Annual Reports, property tax return (Form FP-31), l Business Tangible Personal Property Returns, Arlington County, Fairfax County, Fairfax County Department of Tax Administration, Corporate Formalities, Boards, Meetings, Elections, and Recordkeeping, Corporate Requirements, Corporate Bylaws, Fiduciary Duties, Breaches of Fiduciary Duties, Payroll Taxes
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Commercial Recordation/Transfer Tax Increase and Mandatory Use of New FP7
The Washington, D.C. Office of Tax and Revenue has issued an official notice of the increase on transfer and recordation tax on commercial properties where the consideration (real or imputed) is more than $2 million. The increase is effective on October 1, 2019 and is scheduled to expire on September 30, 2023. A ... Read More
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SCOTUS Opinion: Under Due Process Clause, State Cannot Tax Foreign Trust Solely Because A Beneficiary Resides In the State
A family trust was created in New York state, with the trustee also located in New York, to distribute assets to the children of the trust creator under the trustee’s sole discretion. One of those children moved to North Carolina. The trustee then divided the trust into three separate trusts, one for each child, retaining full power and discretion over ... Read More
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Conservation Easements: Saving Our Green Spaces or Illegal Tax Shelters?
A property owner who donates an easement of his or her property to a charitable organization for conservation or historical purposes is permitted to take a charitable deduction for the value of that donated property easement. The statutory requirements are set forth in Internal Revenue Code §170(h). There are many conservation easements that are fulfilling the intent of the legislation ... Read More
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Tax Filing Deadlines – A Good Time to Confirm Other Compliance Issues for Businesses
Corporations, limited liability companies (LLCs), and other business entities are certainly aware of tax filing deadlines in the month of April, but tax season is also a good time to perform a business audit for other important dates, including applicable state and local requirements and personal property return deadlines. It is also advisable to review other corporate compliance issues, such as ... Read More
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Department of Labor Proposes New Overtime Rules
Employers will recall during the Obama administration that the salary threshold for determining overtime eligibility under the Fair Labor Standards Act was changed from $23,660 per year to $47,476.00 per year. Many employers modified their own employment policies to meet the new standard despite the federal regulations never being implemented due to a successful court challenge. The Trump administration has ... Read More
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Revocable Trusts and Real Property in Washington, D.C.
When thinking about transferring a Washington, D.C. real property into a revocable trust, there are several considerations to take into account. Beginning Steps: To ensure the transfer occurs properly, a deed has to be recorded. A transfer is usually exempt from transfer and recordation taxes, provided that the trust is revocable and that the grantor remains the beneficiary. Deductions: In most circumstances, the property ... Read More
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Tax Planning for Nonresident Aliens Who Own US Property
Individuals who are not citizens or residents of the United States, known as nonresident aliens (NRA), need to be aware of the U.S. estate and gift taxes that will be applicable to their U.S. fixed assets, for example, U.S. real estate. If an NRA owns fixed assets located in the ... Read More
TAGGED: real estate, irs, nonresident aliens, property, qdot, taxes, trust & estates
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Tax Treaty Interpretation: Nonjusticiable Political Question?
The U.S. Court of Appeals for the District of Columbia reversed and remanded the lower court’s decision in a case involving the interpretation of the US-Switzerland tax treaty. In Starr International Company, Inc. v. United States, No. 1:14-cv-01593 (D.C. Cir. Dec. 7, 2019), Starr sought a tax refund for a portion of the 30 percent withholding taxes automatically ... Read More
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D.C. Tax Rate Changes Effective October 1, 2018
The District of Columbia’s Office of Tax and Revenue has issued a notification of changes in various tax rates that will become effective on Monday, October 1, 2018. The real property tax for Class 2 properties will increase to $1.65 per $100 of value for properties worth less than $5,000,000; $1.77 from $5 million to $10 million; and $1.89 for ... Read More
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Forgiven Debt – Taxable to the Borrower?
Generally, if a borrower is required to pay a sum certain at a specific time, the obligation is considered “debt” under the Internal Revenue Code. If the lender forgives a portion, it has “cancelled” the debt and the borrower must declare and take into income the dollar amount cancelled. A lender may unilaterally decide that a debt is not collectable ... Read More
TAGGED: bankruptcy, irs, taxes, 2016 taxes, 2017 taxes, chapter 11, chapter 7, debt, Federal taxes, tax