Clients who are appealing a state tax audit to the Department of Revenue’s appeals division sometimes ask me whether they should pay the items in the audit report that they do not dispute. They reason that this will save interest and it may improve their position before the appeals division. Unless I am asked to… CONTINUE
What is Washington State’s Enhanced Voluntary Disclosure Program?
There has been talk recently about the Department of Revenue (DOR) “Enhancements” to its Voluntary Disclosure Program (hereafter referred to as “Program”). That talk suggests that something new is available to businesses wishing to avail themselves of the benefits of voluntary disclosure. In appropriate circumstances voluntary disclosure may well be beneficial, but the fact… CONTINUE
IRS 1099-K Increases Risk of Washington State Sales Tax Audit
In 2008 Congress enacted legislation requiring institutions processing credit cards for businesses that take cards in exchange for goods or services to give such businesses a IRS 1099-K form annually, and to furnish the IRS with a copy of the form. Section 6050W (which was added to the Internal Revenue Code by the Housing… CONTINUE
Budget Cuts Strap IRS – But No Free Ride for Certain Filing Missteps
It is common knowledge among tax practitioners and the informed public that the IRS is strapped for funds, and that this has made it very difficult to reach IRS personnel, reduced audits and slowed collection activities. But we have heard clients and others say that because of this they are taking little care in what… CONTINUE
Sometimes an IRS Mistake is a Good Thing
It is easy to get discouraged by income tax bills, but it is a bad idea to get discouraged about a tax bill while there are still opportunities to contest the bill. If a client is willing and has a reasonable basis for challenging the validity of the bill we usually encourage him or… CONTINUE
Rev. Proc. 2013-34 Good News for Innocent Spouse Claims
Back on January 5, 2012, the IRS issued Notice 2012-8, which was a proposed Revenue Procedure that would expand and liberalize the IRS procedures for evaluating Innocent Spouse claims. On September 16 ,2013, after a period of taking comments on the proposed new procedures, the IRS issued them in final form as Rev. Proc. 2013-34. Rev. Proc. 2013-34 is effective… CONTINUE
New Year’s Eve Court of Appeals Decision Roils Washington’s Nexus Waters
Washington law provides that for this State to assert B & O tax jurisdiction over an out of state business that makes wholesales into this State two things must occur: (1) the seller must have nexus with this State, and (2) the goods must be received by the buyer in this state. WAC 458-20-193(7). That there… CONTINUE
Confusion and Expense for Small Businesses Dealing with Washington Cities’ B & O Taxes
The Association of Washington Cities states that as of October 2007 approximately 188 cities required a local business license (including the 40 with a city B & O tax). The city B & O taxes, like the Washington Sate B & O taxes are levied at a percentage rate on the gross receipts of the… CONTINUE
City of Seattle’s Year-End Repeal of a Confusing Piece of Legislation
In an article I posted on Nov. 13, 2013 (“The Continuing Debate over Defining Taxable Income”) I discussed the 2011 case of Getty Images (Seattle), Inc. v. City of Seattle, where a Washington Court of Appeals agreed with the City of Seattle that amounts received by Getty were taxable income and not non taxable loans. The… CONTINUE
The Continuing Debate Over Defining Taxable Income – Getty Images (Seattle), Inc. v. City of Seattle and Klein Honda v. State of Washington
In 1960, the US Supreme Court ruled that when Mr. Berman gave his friend, Mr. Duberstein, a Cadillac to thank him for some business referrals, Mr. Duberstein (who thought he had received a gift and did not report it as income) had to include the car in income as taxable compensation. The Supreme Court said… CONTINUE