California Tax Interest Rates Sky Rocket


For taxes administered by the California Department of Tax and Fee Administration, the interest rates between July 1, 2019 and December 31, 2019, are:





  • The debit rate for deficiencies or underpayments is 9%; and
  • The credit rate for refunds or overpayments is 2%.




  • The interest rate seems extremely high for even California tax authorities. The Federal interest rate on deficiencies and underpayment is currently 6%. California CDTFA is 3% more than the Federal interest rate.





    Contact Joseph P. Wilson at 949-397-2292 or wilson@wilsontaxlaw.com.  Mr. Wilson represents clients throughout California and the Globe, involving local, state, federal and international civil tax disputes and tax litigation and criminal tax defense. Mr. Wilson is the Managing Shareholder at Wilson Tax Law Group, APLC, former Member of the Executive Committee of the Taxation Section, California Lawyers’ Association, a former IRS Attorney, a former Assistant United States Attorney, and a former Tax Attorney, California Franchise Tax Board.

2019 California Property Tax Appeal Deadlines - Updated

The regular appeals filing periods for 2019 for California county property tax assessments have been certified. The regular appeals filing periods will begin on July 2 and end on either:





  • September 16; or
  • December 2.




The end date a county uses depends on whether the county assessor mails assessment notices by August 1 to all taxpayers with property on the secured roll. See Letter to County Assessors, No. 2019/015, California State Board of Equalization, May 31, 2019





Contact Joseph P. Wilson at 949-397-2292 or jwilson@wilsontaxlaw.com.  Mr. Wilson represents clients throughout California and the Globe, involving local, state, federal and international civil tax disputes and tax litigation and criminal tax defense. Mr. Wilson is the Managing Shareholder at Wilson Tax Law Group, APLC, former Member of the Executive Committee of the Taxation Section, California Lawyers’ Association, a former IRS Attorney, a former Assistant United States Attorney, and a former Tax Attorney, California Franchise Tax Board.

2018 IRS Assessed $29.3 Billion in Civil Tax Penalties

Failure to comply with filing, reporting, and payment requirements may result in civil penalties or, in some cases, criminal investigation, which may in turn lead to prosecution, fines, and imprisonment. IRS’s Collection function collects Federal taxes that have been reported or assessed but not paid and secures tax returns that have not been filed. IRS’s Criminal Investigation function conducts investigations of alleged criminal violations of the tax code and related financial statutes.





In Fiscal Year (FY) 2018, the IRS collected more than $55.5 billion in unpaid assessments on returns filed with additional tax due, netting more than $40.6 billion after credit transfers.





The IRS assessed close to $29.3 billion in civil penalties. Almost $12.0 billion was assessed in civil penalties on individual and estate and trust income tax returns.





In FY 2018, the IRS initiated 2,886 criminal investigations in three areas—legal source tax crimes, illegal source financial crimes, and narcotics-related financial crimes. The IRS completed 3,051 investigations in these areas.





Contact Joseph P. Wilson at 949-397-2292 or jwilson@wilsontaxlaw.com.  
Mr. Wilson represents clients throughout California and the Globe, involving local, state, federal and international civil tax disputes and tax litigation and criminal tax defense. Mr. Wilson is the Managing Shareholder at Wilson Tax Law Group, APLC, former Member of the Executive Committee of the Taxation Section, California Lawyers’ Association, a former IRS Attorney, a former Assistant United States Attorney, and a former Tax Attorney, California Franchise Tax Board. 

Senate Finance Committee Begins Investigation of Abusive Conservation Easement Appraisals

The Senate Finance Committee Chair and Ranking Member announced here that they have started The Senate Finance Committee Chair and Ranking Member announced here that they have started
an investigation into the potential abuse of syndicated conservation easement transactions, which may have allowed some taxpayers to profit from gaming the tax code and deprived the federal government of billions of dollars in revenue. For several years now, the IRS has been investigating these transactions.

They appear to involve promoters selling interests in tracts of land to taxpayers looking for large tax deductions. In such an arrangement, the taxpayers then get inflated appraisals of those tracts of land and grant conservation easements on that land. The resulting inflated charitable deductions are then split among the taxpayers."


The SFC sent letters to 14 "individuals who appear to be associated with these investor groups that might have unfairly profited from conservation easements."  The names are listed on the press release.

If you have a tax issue, contact Wilson Tax Law 949-397-2292.

IRS Auditor in LA Arrested on Federal Bribery Charge

On 5/9/19, Treasury Police (TIGTA) arrested an IRS auditor, Felecia Taylor, at the IRS office in Long Beach for allegedly soliciting and accepting a $5,000 bribe to reduce the tax liability of a taxpayer who was under audit.


Taylor made an initial court appearance in United States District Court in Santa Ana and is facing a maximum sentence of 15 years. Although more realistically she is looking at between 3-5 years.


According to the press release and the affidavit in support of the criminal complaint, Taylor, who has been employed at the IRS since 1990, works as a tax compliance officer in Long Beach, where she plans and conducts examinations of individual and business taxpayers.


On May 1, a taxpayer contacted law enforcement, and stated that, at a meeting two days earlier, Taylor was “inviting a bribe” in exchange for lowering the amount owed to the IRS to $10,000, according to court documents. The taxpayer was supposed to pay the bribe to Taylor on May 7 at her Long Beach office, court papers state.


The taxpayer met with law enforcement on Tuesday, was equipped with recording devices, and was given $5,000 in cash to give to Taylor, the affidavit states. According to a recording of that meeting, Taylor provided adjusted tax records to show a reduction of the taxpayer’s liability to $10,616 as agreed and, in response, the taxpayer handed Taylor an envelope containing $5,000 in cash.


Taylor allegedly took the envelope in one hand, mouthed the word, “Five?” and placed five fingers in the air to non-verbally confirm the amount of cash the taxpayer had just given her. When the taxpayer replied, “Yes, what we agreed on, yep it’s all there,” Taylor placed the envelope on her desk and stated, “We are all done,” the affidavit states.


The case is being prosecuted by Assistant United States Attorney Jennifer Waier of the Santa Ana Branch Office. She is extremely competent and well-versed handling bribery cases involving IRS. Although the allegations sound very bad, Taylor is presumed innocent unless and until proven guilty beyond a reasonable doubt.


https://wilsontaxlaw.com

New IRS Guidance on How to Defer Capital Gains from Stock Sales Though Investment in a Qualified Opportunity Fund

The IRS recently issued proposed regulations to address gains that may be deferred when taxpayers invest in a qualified opportunity fund (QOF). This is a great opportunity for clients to defer capital gains from sale of stocks and to spur investment in designated opportunity zones.





Click to open document in a browser the proposed regulation.





The proposed regulations also withdraw and replace placeholder provisions in an earlier set of proposed regulations. These concern:





  1. The definition of "substantially all"
  2. Transactions that can trigger includible gain
  3. The timing and amount of deferred gain that is included
  4. The treatment of leased property used in the qualified opportunity zone (QOZ) business
  5. The use of QOZ business property in the QOZ
  6. The sourcing of income to the QOZ business
  7. The reasonable period for a QOF to reinvest proceeds from the sale of qualifying assets

In
addition, within a few months the IRS expects to address administrative rules
for a QOP that fails maintain the required 90 percent investment standard, as
we well information reporting requirements.





Finally,
the IRS expects to revise Form 8996, Qualified Opportunity Fund, for 2019 tax
years and subsequent years. These revisions may require additional information,
including the employer identification number (EIN) for the QOF business, and
the amounts invested by QOFs and QOF businesses in particular QOZs.





Substantially All” for QOZ Business





The 2018
regs provided that a trade or business satisfies the "substantially
all" test for a QOZ business if at least 70 percent of its tangible
property is qualified opportunity zone business property. The new proposed regs
generally extend this 70-percent threshold to the "substantially all"
tests for use. However, in the holding period context, the "substantially
all" threshold is 90 percent.





Original Use of Purchased Tangible Property





The
proposed regulations generally provide that the "original use" of
tangible property acquired by purchase by any person commences on the date when
that person or a prior person:





  1. first places the property in service in the qualified opportunity zone for purposes of depreciation or amortization; or
  2. first uses the property in the qualified opportunity zone in a manner that would allow depreciation or amortization if that person were the property’s owner.

Used
tangible property will satisfy the original use requirement with respect to a
QOZ so long as the property has not been previously used (that is, has not
previously been used within that QOZ in a manner that would have allowed it to
depreciated or amortized) by any taxpayer





In
addition, a building or other structure that has been vacant for at least five
years before being purchased by a QOF or QOZ business satisfies the original
use requirement. Improvements made by a lessee to leased property satisfy the
original use requirement and are considered purchased property for the amount
of the unadjusted cost basis of the improvements.





Land
can be treated as QOZ business property only if it is used in a trade or
business of a QOF or QOZ business. The holding of land for investment does not
give rise to a trade or business, and the land cannot be QOZ business property.
Anti-abuse rules determine whether unimproved land can be qualifying property.
However, other purchased real property generally must be substantially
improved, as determined on an asset-by-asset basis.





Leased Tangible Property in QOZ





Leased
tangible property may be QOZ property if:





  1. the lease is entered into after 2017, and
  2. substantially all of the property’s use is in a QOZ during substantially all of the lease period.

However,
the first-use requirement does not apply to leased tangible property. The
leased property can generally also be acquired from a related person, though
several conditions apply. The proposed regs also provide methods for valuing
the leased property.





QOZ Businesses





The
proposed regs:





  1. provide that in determining whether a substantial portion of intangible property of a QOZ is used in the active conduct of a trade or business, a substantial portion is at least 40 percent;
  2. address real property that straddles a QOZ;
  3. provide three safe harbors and a facts-and-circumstances test for determining whether a corporation or partnership derives at least 50 percent of its gross income from the active conduct of a qualified business;
  4. defined "trade or business" by reference to Code Sec. 162, except that the ownership and operation (including leasing) of real property used in a trade or business can also be the active conduct of a trade or business; and
  5. provide a safe harbor for working capital.

Other QOZ, QOF and QOZ Business Rules





The
proposed regs also address:





  1. Section 1231 gains
  2. relief with resect to the 90 percent asset test, including relief for newly contributed assets and QOF reinvestments
  3. the amount of an investment for purposes of the deferral election
  4. inclusion events, the timing on basis adjustments, includible amounts, and special rules for partnerships and S corporations
  5. gifts and bequests
  6. exceptions for disregarded transfers and some non-recognition transactions
  7. distributions and contributions
  8. consolidated return provisions
  9. holding periods and tacking rules
  10. anti-abuse rules
  11. special rules for Indian tribes and tribally leased property.
The Orange County Tax Attorneys at Wilson Tax Law Group have experience in qualified opportunity fund (QOF) and qualified opportunity zone (QOZ) businesses.   If you would like to schedule a consultation to discuss or have questions, you can reach the Wilson Tax Law Group at 949-397-2292 (Newport Beach Office) or 714-463-4430 (Yorba Linda Office).

Feeling Stressed its Tax Day - No Worries - File a Return Extension

Anyone can request an automatic tax-filing extension. If fact some people get extra time without asking. The IRS estimates that more than 14.6 million taxpayers will get an automatic extension this filing season, either by filing a form or making an electronic tax payment. But some taxpayers, such as disaster victims, those serving in a combat zone and Americans living abroad, get more time, even if they don’t ask for it. Just remember the extension filing only applies to the return due not - not the payment date. The tax payment date cannot be extended and it remains April 15th. To request more details on each of these special tax-relief provisions concerning automatic extensions or the payment due date contact Wilson Tax Law Group, APLC or call us at 949-397-2292.