The United States government takes tax evasion very seriously. Two separate agencies, the Internal Revenue Service (IRS) and the Department of Justice’s (DOJ) Tax Division work to hold those who attempt to avoid their tax obligations accountable.
These agencies recognize that the financial market is evolving. They realize investors are looking to cryptocurrency to diversify their portfolios.
The United States government hit New Yorkers and other residents of high tax states hard with the new tax law. The Tax Cuts and Jobs Act (TCJA) included a provision that put a limit on the state and local tax deduction. This limit meant residents of high tax states could only deduct up to $10,000 of their state taxes from their federal returns.
New York lawmakers fought back. In addition to joining a lawsuit against the federal government to fight the legality of the cap, they also put together a work around that allowed residents to get additional credits and help better ensure their federal returns reflected savings for the SALT payments.
Filing taxes for the 2018 tax year was a bit more difficult than previous years. The main reason: this year was the first year the Tax Cuts and Jobs Act (TCJA) was essentially in full effect.
This year, taxpayers had to navigate the new tax law and many found themselves facing an unwelcomed surprise. Instead of a tax refund, taxpayers throughout the country found themselves facing an unexpected tax bill. As a result, some taxpayers filed their tax returns but were unable to pay the bill.
The Tax Cuts and Jobs Act (TCJA) has led to many changes in tax law. We are just starting to experience the full impact of these changes, as many of the new provisions went into effect for the recent tax filing for the 2018 tax year. One specific impact tax experts predict to continue to grow in coming months is an uptick in state tax audits due to a cap on the state and local taxes (SALT) deduction.
The TCJA now limits the SALT deduction to $5,000 for those filing returns as single individuals and $10,000 for married couples. This limitation has a significant impact on states with high tax rates — namely New York and California.
In 2015 Congress passed a law that required the Internal Revenue Service (IRS) to use private collection agencies (PDCs) to collect outstanding tax bills. The Government Accountability Office (GAO) conducted a review of the IRS’ PDC program and has found some concerning problems.
The Internal Revenue Service (IRS) or the New York Department of Taxation and Finance may send business owners a letter requesting additional information to support tax returns. When this happens, an organized set of records can help to better ensure the process goes smoothly.
Tax Day has passed, but some taxpayers may have missed an important form. In certain situations, the government requires taxpayers to file additional paperwork. One example: foreign accounts. The Internal Revenue Service (IRS) recently published an announcement reminding taxpayers that fall into this category to report foreign bank accounts and other financial interests.
The Tax Cuts and Jobs Act (TCJA) limited the SALT deduction to $10,000. This change limited taxpayers in the amount of taxes they could deduct for payments to cover property, income and sales tax obligations at the state level.
New York officials recently released information on the arrest of eight individuals charged with tax crimes. The charges include filing fraudulent tax returns and failing to pay personal income taxes. The accused face financial penalties as well as potential prison time ranging from a sentence of one to 15 years.
Why the large range? The biggest reason often depends on intent.
New York state legislature just agreed to increase the tax bill for high value properties in the state. The law, known as the “progressive mansion tax,” requires property owners that purchase a property with a value at or above $1 million to pay a larger tax bill.
How much is the tax? The tax has two components. The first is a fee on the purchase of the property. The exact fee will depend on how much the homeowner paid for the property, hence the “progressive” nature of the tax. Any property valued between $1 and $2 million dollars will pay a 1 percent tax. If the home was $2 to $3 million, the tax goes up to a 1.25 percent of the home’s value. The law can charge the homeowner up to 4.15 percent of the home’s value.
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