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Tax Articles

IRS Accuracy Related Penalties

The IRS may impose a twenty percent accuracy-related penalty if it determines that there is a substantial understatement of income tax according to IRC 6662. You may avoid all or part of the penalty by showing that: (1) you acted in good faith, (2) the understatement was based on substantial authority, or (3) there was a reasonable basis for…


How to Report a Foreclosure to the IRS

A foreclosure on rental property technically involves the sale of the property back to the lender. Form 1099-A Acquisition or Abandonment of Secured Property reports that the lender has repossessed or foreclosed on the property. Box 2 is the amount of the outstanding mortgage debt, and box 4 is the fair market value of the property. If the value of the…


IRS Form 8952 – Voluntary Worker Classification Settlement Program

I received an interesting call today from a small business employer who was reported to the IRS by a disgruntled past worker who claimed that he was paid as an independent contractor (and received IRS Form 1099) when in actuality he believed himself to be an employee (that should have received IRS Form W-2) for…


Who Should I Hire To Do My Taxes?

We all know there are good and bad people everywhere, both inside the IRS and in the tax practitioner community alike.  Routinely readers of this blog report specific and egregious allegations of tax practitioner misconduct in violation of United States Treasury Department Circular 230. It really is tragic but these are the pitfalls of an…


IRS Request for Miscellaneous Determination – IRS Form 8940

The IRS has released Form 8940, Request for Miscellaneous Determination that tax-exempt organizations will use to request certain determinations about their tax-exempt status.  In addition to foundation status issues, organizations will use this new form to obtain advance approval of certain activities and exemption from IRS Form 990 filing requirements.  Organizations applying for recognition of exemption and at the same…


IRS Collection Limitations

There are several options available through the IRS to resolve delinquent tax obligations and/or request relief.  One of the many reasons you need to be careful when engaging the IRS in these regards is because many of the programs including offer in compromise, collection due process appeal, and innocent spouse request extend the amount of…