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Manhattan Tax Law Blog

Former MTV star “The Situation” headed to jail for tax crime

Even fame will not protect individuals when the government moves forward with prosecution for tax crimes. The Internal Revenue Service (IRS) recently accused Michael “The Situation” Sorrentino of tax evasion.

Ultimately, the former reality star, of “Jersey Shore” fame, took a plea deal in the case.

How will tax reform impact small businesses?

Tax reform is not a common occurrence. Tax reform that results in a complete overhaul that impacts almost every taxpayer in the country is even more unlikely. Yet that is the current climate. Individuals, corporations, businesses … every taxpayer in the country will likely experience an impact from the Tax Cuts and Jobs Act (TCJA).

This piece will focus specifically on some of those impacts to small business owners.

Business credit for FMLA leave: The basics

Employers are wise to take note of recent changes to tax implications of paid family and medical leave. The Internal Revenue Service (IRS) recently published a notice stating changes to the tax code have led to the creation of business credit for the provision of this type of leave.

How does an employer know if they qualify for the credit? For the purposes of this portion of the code, the IRS has defined family and medical leave to be the same as the definition present under title I of the Family and Medical Leave Act of 1993 (FMLA).

Do you owe Uncle Sam if you inherit property? 2 considerations.

The loss of a loved one is often a difficult and emotional time. The last thing anyone wants to think about when going through this time in life is tax obligations. Unfortunately, in some cases, these are considerations that must be taken into account.

Take property for an example. Those who inherit the family home from a loved one may have questions about how the Internal Revenue Service (IRS) would view a sale. Although the exact answer depends on the details of each individual situation, the following basic rules often apply:

How did tax reform change the business deduction for meals?

The Tax Cuts and Jobs Act (TCJA) led to major tax reform. One specific example: the TCJA led to the elimination of the previously allowed business deduction for meals and entertainment.

Change leads to confusion: What business deductions will the IRS allow?

IRS limits tax workarounds: New York towns are fighting back

Many towns across the state have high property tax rates. Limits to the state and local tax (SALT) deductions incorporated in the Tax Cuts and Jobs Act of 2017 may hit these residents and communities hard in 2019.

One example is the village of Haverstraw – on average, residents pay property taxes of about $63.66 for every $1,000 of their home value. An average property tax bill can easily surpass the set $10,000 SALT deduction cap. A proposed solution for this involved a charitable contribution workaround that is now being denied as an option.

States pass new online sales tax laws, will they survive?

Taxation of online transactions is notoriously difficult. What does it take for a state to claim enough interaction to require a tax obligation? This question has led to many legal battles, the most recent of which made it to the highest court in the country.

The case, South Dakota v. Wayfair, Inc., essentially involved an attempt by a state to tax a business that did not meet the then accepted requirements for taxation. At the time, the government required states to establish a business satisfied a physical presence nexus to require a tax obligation. This basically meant the business must have a headquarters or physical store located in the state. South Dakota passed a law that bypassed this requirement. Instead of requiring a physical presence, the new law required a certain amount of transactions or business conducted within the state to result in required application of a state sales tax. Wayfair challenged the law, pointing to previous precedent to thwart South Dakota’s attempted tax bill.

The power of the IRS: Did you know about this potential penalty?

It is no surprise that the Internal Revenue Service (IRS) will impose penalties if you do not pay your tax bill. The agency is clear about its ability to fine taxpayers' various penalties and fees and, in some cases, potential for imprisonment for failure to meet our tax obligations.

But taxpayers are wise to take note: these are not the only penalties the IRS can apply. Another penalty you may not be aware of is the agency's ability to take away your passport.

IRS to collaborate with state authorities to address tax evasion

The Internal Revenue Service (IRS) continues its efforts to crackdown on tax evasion. The latest focus involves increased communication with state agencies.

Is this new? No. The IRS already collaborates with state and local agencies to help better ensure taxpayers are in full compliance with applicable tax laws. This effort focuses on how the IRS could better use a specific program: the State Audit Report Program.

You've been summoned by the IRS, now what?

In general, unless you are expecting a refund check, a letter from the IRS is an anxiety-inducing experience. Occasionally, the IRS sends out an Information Document Request ( IDR), asking for information. While you do not have a legal obligation to comply, if you fail to respond or comply with the request, the IRS can escalate the case to a formal summons.

What is a summons?

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