May 2018 - HBL CPAs

May
24
2018

Interests in Foreign Accounts

U.S. citizens with interests in foreign accounts must generally file a Report of Foreign Bank and Financial Accounts (FBAR), or face penalties. One taxpayer failed to file an FBAR or to pay the IRS-imposed penalty of $1.2 million. The IRS filed suit. Both a U.S. District Court and the U.S. 9th Circuit Court of Appeals rejected her claims that the penalty violated the 8th Amendment of the Constitution (Excessive Fines Clause) and violated treaty provisions.

May
21
2018

Tax-Exempt Status Denied

Tax-exempt status was denied. A nonprofit corporation was set up to “deliver quality management consulting services to medical providers and advance government programs through patient safety initiatives.” It was denied tax-exempt status by the IRS and the U.S. Tax Court. The entity wanted to provide low-income housing, “uplifting services for the elderly and veterans” and internal auditing services. The court ruled that it wasn’t eligible for tax-exempt status because it wouldn’t serve the public interest and would solely benefit its founder.

May
17
2018

Employment Tax Topics

IRS YouTube videos explain certain employment tax topics. In a series of short videos, the IRS covers payroll-related topics that may be of interest to small business owners. Topics include how to voluntarily correct the classification of employees and when and how to report employment taxes withheld from employee paychecks to the IRS. A third video discusses how the IRS tax calendar can help employers keep track of important tax deadlines. Access the IRS YouTube channel here: https://bit.ly/2HQ12Jy

May
15
2018

Private School’s Volunteer Treasurer Requires a Trial

The issue of a penalty for a private school’s volunteer treasurer requires a trial. A U.S. District Court denied summary judgment to the IRS on its imposition of a trust fund recovery penalty. Why? The man’s conduct could make him eligible for a “reasonable cause” exception for being penalized, but a trial is necessary to make that determination. An exception requires that a “responsible person’s” failure to cause withheld payroll taxes to be paid over to the IRS isn’t willful if the person reasonably believed the taxes were being paid.

May
10
2018

U.S. Citizens Working Abroad

The IRS has corrected a previous notice that lists housing cost exclusions for U.S. citizens working abroad. Those citizens having a tax home in a foreign country and who meet specific requirements may be able to exclude certain housing costs from their gross income. The excludable amount is the excess of the year’s housing expense over a base amount of $16,624 in 2018 (previously reported as $16,656 in Notice 2018-33). That limit is adjusted for higher cost areas,

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