Tuesday, May 16, 2017

QTIP Trusts

A Qualified Terminable Interest Property (QTIP) Trust is a trust that enables the grantor to look after his or her current spouse and ensure that the assets from the trust are then passed on to beneficiaries of the grantor’s choice, such as children from a grantor’s previous marriage. In addition to providing the living spouse with a source of funds, a QTIP Trust also limits death and gift tax burdens on the surviving spouse. QTIP Trusts also prevent assets from transferring to a surviving spouse’s new spouse, should they choose to remarry.

Tuesday, December 27, 2016

End of Year Donations and Write Offs

Here at year end many people are preparing to make charitable donations. As long as the checks are in the mail by December 31st, 2016, you will be able to write off the donation on your 2016 tax return. If you are making your donation using a bank-issued credit card, you can claim the write-off in the year you charged the expense, even if you pay the bill in the next year. Retailer-issued credit cards must claim the write-off in the year the bill is paid.

Tuesday, September 20, 2016

Nevada Commerce Tax

In June of 2015, the State of Nevada passed a law establishing a Commerce Tax. The tax is a gross receipts tax. Every person or entity doing business in the State of Nevada must file a return, even if no tax is due. The taxable year runs from July 1st to June 30th of the following year. The initial year for the Commerce Tax was July 1, 2015 through June 30, 2016. The initial return was due on August 15, 2016, with one six month filing extension available (February 15, 2017). Subsequent returns are due on August 15th of each successive year (six month filing extensions available to February 15th).

In addition to corporations, partnerships, limited liability companies, business trusts and joint ventures; ‘doing business in Nevada’ includes sole proprietorships (file a schedule C with the federal individual income tax return) and anyone with rental property located within the state of Nevada. The law does exempt certain businesses from the tax such as credit unions, certain governmental units and non – profit entities that qualify as tax exempt organizations pursuant to the Internal Revenue Code Section 501 (c).

Businesses whose gross receipts are less than four million dollars ($4,000,000) for the taxable year will pay no tax. Businesses whose gross receipts, after limited allowable deductions, exceed four million dollars for the taxable year will pay a tax that varies based on their type of business. Complete information and forms are available online at http//tax.nv.gov

Tuesday, August 16, 2016

IRS Scams - Part 2!

Each year, the Internal Revenue Service releases a list of the worst tax scams. These scams peak at tax season, but they happen all year round. Here’s a roundup of some of the fraudsters’ favorites.
Identity theft, phone scams and “phishing” are listed as the top three forms of scams. Identity theft, of course, is when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund. Phone scams are those scary, send us money right now or go to jail calls. Phishing is usually done by email. The sender is seeking personal and financial information.

Fake charities also abound. They often use names similar to trusted organizations; some even go as far as setting up fake websites. They are out to take your hard earned cash and prey upon your generosity. To check if a charity is legitimate, you can check https://www.irs.gov/charities-non-profits/search-for-charities.

Taxpayers can be guilty of tax scamming as well. They have been known to falsely claim deductions, under report income, use multilayer companies to try and conceal who owns income. The earned income tax credit has been abused, as taxpayers actually claim higher income and/or dependents they are not entitled to claim, to get a larger refund.

The IRS is on the lookout for fraud constantly. Beware, be smart, and if you have any questions, give us a call at (702) 893-9500.

Thursday, June 30, 2016

IRS Impersonation Scams

You’re sitting at home relaxing. The phone rings. The person on the other end claims to represent the IRS and demands immediate payment on back taxes you allegedly owe. They threaten you with being arrested, deportation, court action or many other unsavory consequences. These calls are scams! Do not be intimidated by these callers pretending to be from the IRS. They are attempting to steal your money and your personal financial information.

The IRS will never call to demand immediate payment. They will never ask you to pay by a specific method, such as prepaid debit cards or Western Union. They do not ask you to pay by credit or debit card over the phone. The IRS will not threaten to call the police and have you arrested for not paying. If you receive one of these bogus calls, report it to the IRS. It will help the IRS to stop these scams. Record or write down the caller’s name, badge number, call back number and caller ID if available. You can report the incident by emailing the IRS at phishing@irs.gov, or by contacting the Treasury Inspector General for Tax Administrations (TIGTA) through their website at www.treasury.gov/tigta/contact_report_scam.shtml

Wednesday, August 21, 2013

Trust Fund Criminal Penalties

When it comes to employee tax withholdings, business owners can be sentenced to jail if they aren’t careful. In July, Richard Whatley of Salt Lake City was sentenced to a maximum 51 months on federal prison for willful failure to account for payroll taxes. On top of that, he must pay $540,000.00 in restitution. This is a reduction from the original $2.3 million in employee tax withholdings that he failed to forward to the IRS.

Mr. Whatley is the former owner of three employee leasing companies. He signed the payroll checks for all of the leased employees, and over the course of five years (2001-2006), he failed to properly forward taxes that were held on the employees’ behalf to the IRS. He reached a plea agreement with prosecutors in January, pleading guilty in exchange for a sentence of 41 to 51 months in prison and reduced restitution. Judge David Nuffer sentenced him to the maximum 51 months from that agreement.

The IRS requires that business owners, officers, and directors be held responsible for unpaid taxes that were withheld (or supposed to be withheld) for the IRS, but not forwarded to them. These are trust fund taxes. The officers and directors are held responsible if they have the ability to control which debts are paid. These trust fund taxes include payroll taxes, sales tax, and certain employment taxes. On the civil side, the IRS can transfer any trust fund tax liability to any person that they feel is responsible for the unpaid debt.

Owners and officers aren’t just vulnerable to civil (monetary) liability. Like Mr. Whatley, they can be put in jail. To pursue criminal imprisonment, the IRS needs to show a willful failure to pay. In some cases, it has determined that “willful” only requires custody or responsibility of the funds. Charges of tax evasion or willful failure to account for the trust funds are felonies.

The lesson here is clear. Businesses can struggle and fail. They can even find shelter and a fresh start through bankruptcy, except for trust fund taxes. A business, its owners, and any employee with significant responsibilities cannot avoid liability for trust fund taxes. It may become a personal liability, and even a criminal one. Tax evasion and other criminal charges are a real danger any time trust fund taxes are not paid.

Monday, May 6, 2013


A recent Notice of Deficiency from the IRS has received national attention, both for its timing and its recipient. The Notice was directed to Sumner Redstone, the 89-year-old majority shareholder of CBS and Viacom, for failure to file a gift tax return pertaining to a gift made in 1972. The amount of the taxes and penalties total $1.1 million. This does not include interest, which many have calculated going back to only 1996, is at least $1.4 million.

Generally, a statute of limitations applies to deficiencies this old, but because no return was ever filed, the time period did not begin running. On that basis, the Notice was issued, and Redstone is challenging the assessment in Tax Court. He argues that the 1972 payment was in fact not a gift, but was for the settlement of a legal dispute within the family’s movie theater business.

The case is titled Redstone v. Commissioner, T.C., No. 008097-13.