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What is the difference between tax fraud and tax negligence, and why does it matter? P.3

We’ve been looking in recent posts at the difference between tax fraud and negligence, and emphasizing the importance of taxpayers working with an experienced attorney when the IRS decides to investigate reporting discrepancies.

It is important for the taxpayer that a tax investigation is as accurate as possible, since the penalties he or she faces, if any, depend on the investigator’s conclusions and subsequent agency actions based on them. Working with an experienced attorney during the audit process can help ensure these matters are effectively addressed and that the taxpayer’s interests and rights are protected throughout the process. This is particularly important if an audit is likely to result in penalties or referral for criminal prosecution. 

What is the difference between tax fraud and tax negligence, and why does it matter? P.2

In our previous post, we began looking at the difference between tax fraud and tax negligence. As we noted, the difference is between being mistaken or careless, or perhaps reckless, and intentionally attempting to deceive the IRS in tax reporting.

The IRS’ Internal Revenue Manual lays out some of the things tax examiners and auditors consider for when distinguishing negligence and fraud in an investigation. While the signs may be very clear one way or the other in some cases, distinguishing whether discrepancies are due to negligence or fraud is not always an easy matter for IRS agents. 

What is the difference between tax fraud and tax negligence, and why does it matter?

For readers who do their own taxes, chances are most have made a mistake at some point that required correction. For some, the correction may have been made automatically by the IRS, while others may have gotten a call to clear things up.

Those who have made significant mistakes may have been subjected to a full audit in which the IRS scrutinized all the taxpayer’s accounts and financial information to ensure everything was reported correctly. Anybody who has been through an IRS audit knows it can be nerve-wracking. 

Work with experienced legal counsel during IRS investigation

Last week, the Internal Revenue Service released its annual Criminal Investigation report for 2016, detailing the number and type of investigations, recommended prosecutions and federal sentences obtained against those accused of tax crimes. While the total number may seem large to those unfamiliar with the annual report, they actually show that there was a general decrease in cases.

Much of the reason for the decrease in criminal tax cases is that the IRS has been experiencing budget cuts for the last six years. The IRS has dealt with this by cutting staff, including special agents, reallocating its resources and focusing on high priority cases. 

Complex domicile issues in tax cases make for interesting competing narratives, P.2

Last time, we began discussing a recent tax case involving the issue of domicile. As we noted, the CEO of Match Group was successful in arguing that he had temporarily created a domicile in Texas, even though he still had ties to New York and eventually returned there.

According to commentators, Blatt’s decision to relocate his dog to Texas was probably the factual key to the decision. Whether or not that is true, it does go to show to trickiness, and potential arbitrariness, of domicile determinations and the potential impact it can have on tax liability. 

Complex domicile issues in tax cases make for interesting competing narratives, P.1

Income tax disputes can sometimes involve complex technical questions. These issues can involve not only the amount and type of income due, but also the status of the taxpayer, as in the case of Greg Blatt, CEO of Match Group—the company that owns and operates several online dating sites, including

Blatt was successful in a New York income tax dispute this month in which he had been sued for over $400,000 in city and state income taxes, interest and penalties from the tax years 2009 and 2010. Blatt had previously lived in New York, but had moved to Texas to take on the CEO role for Match Group, which is headquartered in Dallas, only later to return to New York. 

Looking at President Trump’s proposed tax changes for businesses , P.2

In our last post, we began looking at some of the changes expected to occur with tax reform in the Trump presidency. As we noted, reduction of corporate income tax rate, ending taxing of overseas income returned to the United States, and implementing a border adjustment tax are all reportedly part of Trump’s plan, and these policies will impact many U.S. businesses.

Another change expected to come for businesses is full expensing of business investments. Under this reform, should it pass, businesses would be able to deduct the value of investments in new business the year the investments are made instead of over a longer period of time. The effect of the change is that it will reduce the cost of capital investments.

3 reasons to make a succession plan for your family business now

Whether you are close to retirement, want to change careers or are facing an illness , you should develop and implement a succession plan for your family business. Leaving your position requires more than just a last-minute transfer of ownership to a descendant or buyer. For the best outcome for you and your business, you need to begin the succession process years before these events occur. The longer you wait, the more likely you are to miss out on the following benefits of having a succession plan in place.

Looking at President Trump’s proposed tax changes for businesses

Many readers have, no doubt, been following the talk of the changes coming down the pipeline with respect to the federal tax system. The proposed changes are on multiple fronts, including individual income taxation, estate taxation and corporate taxation.

According to commentators talking about the proposed changes, President Trump started with a promise to reduce the corporate tax rate to 15 percent. Through discussion and debate, Trump’s team came to include within its proposed tax reform a number of other changes to the federal tax system. First of all, House Republicans have proposed moving the corporate income tax rate from 35 percent to 20 percent, which doesn’t quite hit Trump’s goal but gets closer. 

Be cautious of DIY approach to filing taxes, consider working with tax attorney, P.3

We’ve been discussing in our last couple posts the risks of DIY tax filing and the relative benefits of working with tax professionals to file tax returns. As we pointed out last time, both CPAs and tax attorneys have special competencies in handling tax filing. Information shared with a tax attorney is typically privileged, though there are ways privilege can be waived.

Correcting inaccuracies in tax filings is a particularly important area to work with an experienced attorney, because of the potential risks involved. While it isn’t necessarily that difficult to file an amended complaint to report omitted income or correct improper deductions, it can result in more problems if the amended complaint is inaccurate due to a failure to thoroughly examine the extent of the inaccuracies. 

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Located in Atlanta, The Peck Group, LC, represents clients nationwide. Regionally, we are committed to serving clients in Fulton County and throughout the state of Georgia.