IRS Update Chapter 5 pp' 177210

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IRS UpdateChapter 5 pp. 177-210
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IRS key message p. 177

• Perceived erosion in compliance
• Renewed emphasis on enforcement
• Commissioner Everson People should pay what they
  owe

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Voluntary compliance p. 178

• Taxpayers complete returns, determining correct
  tax
• Filing and paying are duties, not options
• Civil and criminal penalties for noncompliance

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Meaning of income p. 180

• Compensation for labor
• Foreign-source income
• Federal Reserve Notes

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Definitions p. 182

• U.S. citizens
• United States
• Persons
• Federal employees

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Constitutional claims p. 184

• 5th Amendment
• Due process
• Self-incrimination
• 13th Amendment (servitude)
• 16th Amendment
• Ratification
• Non-apportioned direct tax

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Legal bases p. 187

• IRS is government agency
• Paperwork Reduction Act

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Contacting IRS p. 188

• e-mail
• irs.tax.shelter.hotline_at_irs.gov
• telephone [phone]
• More information www.irs.gov

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Home-based business p. 189

• Business use of home cannot transform
  nondeductible personal living expenses into
  deductible expenses
• Economic substance is not created by taxpayers
  beliefs

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Disabled access credit p. 190

• Must be eligible small business
• Expenditures must be incurred to comply with ADA
• Investment promotions often are scams

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Abusive trusts p. 192

• Hide asset/income ownership
• Layered deductions of bogus expenses
• Foreign and domestic packages

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Trust taxation p. 193

• Separate legal entity
• No income tax advantage
• Compressed tax brackets for Form 1041
• Grantor trust income taxed to grantor

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Foreign trusts p. 194

• Often taxed as grantor trusts
• Filing requirements
• Form 1040NR if business income
• Form 3520 when created/funded
• Form 3520-A annually
• Form TD F 90-22.1 annually if assets gt 10,000

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Trust tax principles p. 196

• Substance over form
• Grantors may be owners
• Completed transfers are gifts
• Personal expenses are not deductible

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Schedule K-1 p. 200

• Follow K-1 line instructions
• Avoid netting or combining
• Attach Form 8582 worksheets
• Form 8082 reports non-receipt
• Identify amended K-1s
• 2-D bar codes for paper filing

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Toll-free numbers p. 202

• PPS (accounts)
• e-file
• Business (EIN)
• Refunds
• Employer plans

• [phone]
• [phone]
• [phone]
• [phone]
• [phone]

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Burden reduction p. 203

• Significant issues impacting large number of
  taxpayers
• Uncertain tax treatment
• Repetitive examinations
• Understanding of industry practices
• e-mail IRR_at_irs.gov

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On-line EIN p. 204

• Complete Form SS-4 on-line
• Number received immediately
• Keep client signature in your file
• See instructions for LLCs
• Foreign addresses excluded

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E-services for all p. 206

• Registration
• PTIN
• TIN matching
• e-file provider application

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Incentive products p. 207

• Disclosure authorization
• Electronic account resolution
• Transcript delivery system
• 100 accepted returns required

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Taxpayer Advocate p. 208

• Resolve taxpayer problems when normal channels
  fail
• Systemic advocacy
• Phone [phone]

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Questions?