Substantiating business expenses is a common problem for many businesses going through an audit with either the Internal Revenue Service (IRS) or the Minnesota Department of Revenue (MDR). In a previous blog article, we addressed the first step of a four step process in an IRS or MDR substantiation audit: proving the payment of expenses. [...]
This is the first article in a series dedicated to using Section 530 of the Revenue Act of 1978 as protection for businesses that have been using independent contractors, in good faith, but are now facing an IRS or State of Minnesota audit of that practice. Section 530 may be 34 years old, but it [...]
I have been watching the tax cases dealing with building facade easements for insight into how the IRS and the courts are reacting to the significant deductions being taken by partners in real estate partnerships. These partnerships generally buy a building, develop it, and contribute a restrictive easement to an historic preservation nonprofit organization. (See [...]
Yes. For the IRS, the procedure is known as an Audit Reconsideration Request (AR). The IRS has the discretionary authority to abate an assessment of any tax if it is in excess of your’s liability. Reasons for an AR include: you did not appear for the audit; you moved and did not receive the correspondence [...]
Taxpayers and representatives often ask us: how long does the IRS have to make changes to an individual income tax return and assess additional taxes? Another way to phrase this question is: how long is the IRS’s “statute of limitations on assessment” for individual income taxes? In most cases, the answer is that the IRS [...]
Many individuals and businesses fail to file their income tax returns for multiple years for a variety of reasons, usually stemming from life and business pressures that made it almost impossible for them to file their returns. When they finally have the time and motivation to prepare and file the returns, they realize that they [...]
One of the most critical issues a taxpayer can face during an IRS audit is deciding what information to provide to the IRS. The IRS will typically request information either informally through an Information Document Request (IDR), or formally through an Administrative Summons (Summons). Deciding how to respond can depend on which type of request [...]
In 1970, Congress passed the Bank Secrecy Act. The purpose of that Act was to combat money laundering. It granted broad authority to the Internal Revenue Service to enforce the Act. This meant the implementation of the Report of Foreign Bank and Financial Accounts (FBAR). The FBAR was the IRS’s attempt to ensure the maintenance [...]
Substantiating business expenses is a common problem for many businesses going through an audit with either the Internal Revenue Service (IRS) or Minnesota Department of Revenue (MDR). The IRS and MDR have expectations of what they believe to be proper record keeping. Meeting these expectations can be difficult and the requirements can vary depending on [...]
On January 5, 2012, in Notice 2012-8, the IRS significantly modified the rules for spouses seeking Innocent Spouse Relief under Internal Revenue Code Section 6015(f), which is also known as “Equitable Relief.” Notice 2012-8 is effective immediately and supersedes the old rules in Revenue Procedure 2003-61. The IRS will evaluate all new and pending Section [...]