IRS Targets Cash
Reporting RequirementsThe IRS has targeted businesses and non-bank financial services, such as check-cashing and currency-exchanging businesses, for a nationwide educational blitz regarding the reporting of cash transactions over $10,000.
Businesses, as well as court clerks that receive more than $10,000 in cash in a single transaction or in a series of transactions within a 12 month period, must report those funds within 15 days of receipt on Form 8300. The term "cash" includes cashier's and traveler's checks, bank drafts and money orders, but not personal checks. Failure to comply with the reporting requirements can be punished by a $500,000 fine and 10 years imprisonment.
If You Paid Someone Else's
Taxes, You are Entitled to Sue for a RefundThe Supreme Court ruled that a third party who paid the tax liability of another taxpayer had standing to sue the IRS for a refund on the taxes paid. The IRS unsuccessfully argued that only the taxpayer had standing to sue for a refund. In the case of Williams (decided on 4/25/95), the husband incurred a tax liability that resulted in a lien on the family's residence. The wife received the house in a divorce and paid the tax lien, under protest, in order to sell the house and avoid a threatened lawsuit from the purchaser. She then sued the IRS for a refund. The Court stated that the wife had standing to sue for a refund since she had paid the tax, although the tax liability was her husband's. The Court noted that under the IRS's position, people in similar situations would be left without a remedy. This case is important to those who must pay another's tax obligation because of a tax lien on property.
IRS Levy is Subject to
Taxpayer's " Take-Home " Pay, Not Gross PayAn employer is permitted to compute the amount of income subject to an IRS levy, with reference to the taxpayer's take-home pay, according to a recent letter ruling by the IRS (PLR 9511043). Court-ordered child support payments, deductions for life insurance premiums, assignments of wages, and other, employment-related deductions may now be subtracted from the amount subject to the IRS levy. This is a benefit to taxpayers who are subject to wage levies for unpaid taxes and they should make sure that all court-ordered obligations are paid directly from their paychecks, which will lower the amount of "take home" pay and, therefore, reduce the effect of a tax levy.
Conversion from
Partnership to LLC Made EasyThe IRS, in Revenue Ruling 95-37, 1995-17 IRB 10, has concluded that the consequences of a partnership converting to a limited liability company is the same as a partnership-to-partnership conversion. This ruling makes clear that: (i) it does not matter how the conversion occurs under local law; (ii) the tax years for the partners do not close; (iii) The LLC continues to us the partnership's f federal tax identification number; and (iv) the LLC does not have to be formed in the same state as the partnership. Therefore, a Nevada general or limited partnership may convert to a California LLC without federal tax consequences. The Ruling applies the principles contained in Revenue Ruling 84-52, 1984-1 CB 157, regarding the various methods by which a partnership may convert to an LLC.
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**NOTE: The information contained at this site is for educational purposes only and is not intended for any particular person or circumstance. A competent tax professional should always be consulted before utilizing any of the information contained at this site.**