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Glen E. Frost

Attorney at Law *
Certified Public Accountant **
Certified Financial Planner®
Master of Laws in Taxation
Every Tax Problem has a Solution

10480 Little Patuxent Pkwy, Ste. 400
Columbia, MD 21044
Phone:  (410) 497-5947
Fax:      (888) 235-8405

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02/07/18

Permalink 04:30:14 pm, by admin Email , 342 words   English (US) latin1
Categories: News

Seriously Delinquent Tax Debt? Don’t Lose Your Passport!

In 2015, the Fixing America’s Surface Transportation Act, Pub. L. No. 114-94 (FAST Act), enacted IRC §7345. This section requires the IRS to interact with the State Department so that taxpayers with “seriously delinquent tax debts” are certified by the IRS as such, and subsequently have their passports revoked or denied by the State Department.

On January 16 of 2018, the IRS issued Notice 2018-01, 2018-3 I.R.B. 299, which provides guidance for the implementation of IRC §7345. The Notice states that implementation will begin this January of 2018.

A “seriously deficient tax debt” is defined as an unpaid, legally enforceable, and assessed federal tax liability exceeding $50,000, and for which: (1) a notice of federal tax lien has been filed under IRC §6323 and the right to an IRC §6320 hearing has been exhausted or lapsed, or (2) a levy has been issued. The $50,000 limit is adjusted for inflation each calendar year beginning after 2016.

The Notice provides that when a certified taxpayer applies for a passport, the State Department, generally, will allow the applicant 90 days to resolve their tax delinquency. Resolution make take the form of one of the following:

1. Making full payment 2. Entering into an installment agreement under IRC §6159 3. IRS acceptance of an offer in compromise under IRC §7122 4. Making timely payments under the terms of a settlement agreement with the Department of Justice 5. Requesting or having a pending collection due process appeal with a levy 6. Having collections suspended under an innocent spouse election 7. Requesting innocent spouse relief

If a taxpayer needs their passport to travel within those 90 days, the taxpayer must contact the IRS and resolve the matter within 45 days from the date of application. Notably, there is no “grace period” identified in Notice 2018-1; thus, taxpayers may find themselves subject to these procedures immediately. While the intent behind these procedures is to improve voluntary compliance, many practitioners have due process concerns since affected taxpayers are not entitled to judicial review until the decision has been made. Please visit Irs.gov for more information.

If you have delinquent tax debt and concerns with travel restrictions, contact Frost & Associates, LLC today at 410-497-5947.

01/17/18

Permalink 09:43:42 pm, by admin Email , 321 words   English (US) latin1
Categories: News

Tax Cuts and Jobs Act Definitively Eliminates Lucrative Tax Break for Virtual Currency Users

Effective for virtual currency exchanges completed after December 31, 2017, virtual currency users, such as Bitcoin users, can no longer attempt to claim that an exchange of one type of virtual currency for another is a “like-kind” exchange. Presently, virtual currency owners are subject to tax when exchanges are made for dollars, or other goods; however, many owners have diversified their holdings by swapping one virtual currency for another and deferred the tax, relying on §1031 of the Internal Revenue Code (IRC). Going forward, all virtual currency transactions will trigger an immediately taxable event.

This soon-to-be-gone tax break stems from IRC §1031. Currently, this section provides that no gain or loss is recognized at the time of sale, to the extent that the business or investment property sold is exchanged for similar (“like-kind”) business or investment property. Although, the law has not been particularly clear as to whether or not virtual currency technically qualifies for like-kind exchanges, with the 2014 IRS determination that virtual currency is “intangible property,” and thus subject to capital gain, many owners have relied on like-kind exchange deferral.

Pursuant to the Tax Cuts and Jobs Act, enacted December 22, 2017, this loop-hole will be definitively closed. The Act limits, in no uncertain terms, like-kind exchange treatment to real property—and virtual currency is clearly not recognized as such. Virtual currency, like securities, will be prohibited from like-kind exchange treatment.

While virtual currency owners won’t appreciate the Act’s impact on their gains, at least the more defined regulation of virtual currency may promote wider acceptance of it in the mainstream.

If you have questions regarding virtual currency transactions and their tax implications, please contact Frost & Associates, LLC at 410-497-5947.

1. The new law will not apply to an exchange if: (a) the property disposed of by the taxpayer in the exchange is disposed of on or before December 31, 2017, or (b) the property received by the taxpayer in the exchange is received on or before December 31, 2017.

11/14/17

Permalink 01:21:32 pm, by admin Email , 298 words   English (US) latin1
Categories: News

IRS Criminal Investigation Division Assembles New International Tax Enforcement Unit

With international tax compliance on the IRS’s radar, it was revealed publicly to reporters on August 2, 2017, that the IRS Criminal Investigation Division (IRS-CI) is assembling a new, dedicated international tax enforcement unit. The new initiative is expected to be fully operational by October 1. U.S. persons’ worldwide income and foreign financial assets are targeted.

According to the new IRS-CI Chief Don Fort, “we’re going to be standing up a group of elite special agents in our Washington, D.C., field office that are going to be dedicated to working and developing significant international tax cases. What we’re essentially doing is consolidating some of our foremost experts in these international tax cases who are really the nationwide experts in this field and put them under the umbrella of one focused operational group.” Before serving as chief, Fort was IRS-CI deputy chief and has spent the past 26 years of his career as an IRS criminal investigation agent.

Besides the base in the Washington, D.C., field office, members of the team will be strategically located throughout the country. The Department of Justice’s Tax Division will also be supporting the IRS in this endeavor.

The unit will involve a very heavy data analytics component in order to identify noncompliant taxpayers. Fort clarified that “the goal of the unit is to really use all of the data that we have available to us to help identify and develop areas of noncompliance.”

Specifically, the unit will utilize the mass of data recently collected by the IRS from sources such as Foreign Bank Account Reports (FBARs), foreign financial institutions’ data gathered as required under the Foreign Account Tax Compliance Act (FATCA), the Panama Papers, and amnesty programs like the Offshore Voluntary Disclosure Program (OVDP).

Contact Frost & Associates today if you have questions regarding international tax issues.

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* Licensed to practice in Maryland, Florida, and the District of Columbia. May represent taxpayers nationwide in IRS disputes.
** Licensed in Maryland

10480 Little Patuxent Pkwy, Ste. 400
Columbia, MD 21044
(410) 497-5947
© 2018 Glen E. Frost