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Canceled Debt Can Create Taxable Income It’s not well known, but typically, if you are contractually bound to pay a debt, and that debt is cancelled, forgiven, or discharged or otherwise goes away you just received “income.”   The issue you need to understand is that this so-called dischargeof debt “income” taxable or not?   Under …

Court held that sales taxes collected by a retailer never become the property of the retailer and instead are funds held in trust for the state. In (Calabrese v. New Jersey Department of Taxation, No. 12-524 (3d Cir. cert. denied 1/7/13)), the Third Circuit said public policy concerns weighed against debtor Michael Calabrese Jr. primarily because sales taxes collected by a retailer never …

IRS Will Not Waive Penalties When Taxpayer Did Not Realize Law Was Uncertain Taxpayer claimed a deduction for a charitable contribution for contributing property, and made no effort to verify the validity of their sizable deduction.   However, the state of the law on the issue was uncertain. The IRS disallowed the deduction and then assessed …

Beware: Single-Member, Single-Purpose LLC Is Nominee of Taxpayer for Purposes of Federal Tax Lien A single member, single purpose LLC is a common so-called “asset protection” strategy.  Put the asset, usually income producing real estate, into a limited liability company (LLC) and it will be protected from indirect creditors (that is debt not directly related …

IRS Issues Updated Interest Rates for Under and Overpayments The IRS announced that interest rates for the calendar quarter beginning January 1, 2013, will be: 3% for overpayments (2% in the case of a corporation);  3% for underpayments; and 5% for large corporate underpayments.  The overpayment rate for the portion of a corporate overpayment exceeding …

(Source: FBI) – Preet Bharara, the United States Attorney for the Southern District of New York, announced that former New York State Senator NICHOLAS A. SPANO was sentenced today in White Plains federal court to a year and a day in prison for obstructing the ability of the Internal Revenue Service to assess and collect U.S. …

 New Agreement to Strengthen Cooperation in Combating Tax Evasion,  Reduce Administrative Burden on Financial Institutions WASHINGTON –  On June 21, 2012 the U.S. Department of the Treasury issued separate joint statements with Switzerland and Japan expressing mutual intent to pursue a framework for intergovernmental cooperation to facilitate the implementation of the Foreign Account Tax Compliance Act …

A local stockbroker, insurance agent and financial advisor, Kevin P. Mahoney, was convicted Wednesday in U.S. District Court in Boston on charges of more than $50 million in tax fraud, including making more than $2.2 million in fake payments to the Internal Revenue Service. According to the Justice Department Mr. Mahoney was convicted of attempting to …

Innocent spouse relief is a provision of the tax code designed to help a taxpayer, who filed a joint return, but who did not know, and did not have reason to know that his or her spouse understated or underpaid an income tax liability. See Publication 971, Innocent Spouse Relief. Historically innocent spouse relief has …

The IRS want you to know that if you need to resolve a tax problem, have tax law questions or you’re just more comfortable talking with someone face-to-face, visit your local IRS Taxpayer Assistance Center (“TAC”) where you can spread out your records and talk with an IRS representative across the counter.  No appointment is …