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Penalties for willful tax violations can be steep

The IRS does make a distinction between tax errors that were willful and not willful in nature. Generally speaking, taxpayers in Georgia and elsewhere will escape harsh punishment for errors deemed to be not willful. In some cases, it may be possible to avoid penalties altogether for an honest mistake. However, if the government believes that a person engaged in willful tax evasion, the penalties can be steep. For example, failing to report an offshore account could result in a fine of $100,000.

IRS issues extension for closed defined-benefit plans

Sponsors of closed defined benefits plans in Georgia may be interested to learn that a fifth extension was granted for temporary nondiscrimination relief for these plans. Under federal benefits law, employers that offer benefits must offer equal benefits to all employees. However, a number of companies shifted from offering traditional defined benefits or pension plans to offering defined contribution plans, including 401(k)s. The defined benefits plans continue in place, but are "closed," because they only include employees who worked at the company as of the date of the plan's closure. Since 2014, the IRS has issued temporary relief for these plans, allowing them to continue so long as they remain "closed" to only those employees enrolled at a certain date.

IRS: Failing to cash checks doesn't change tax liabilities

For many people in Georgia, qualified retirement plans like 401(k)s and IRAs are important not only because they enable retirement savings but also because they support tax benefits over the years. Many receive distributions from their plans, whether loans from a program or payments after retirement, through electronic methods like direct deposit. In these cases, people do not need to worry about depositing the check or potentially losing or forgetting it. However, the IRS has ruled on the tax issues that arise when people receive paper checks and fail to cash them. To the extent that people continue to rely on paper checks, uncashed checks can present a significant tax question, especially when the amounts involved are substantial.

2018 penalties waived for some paying taxes late

Taxpayers in Georgia may be relieved to learn that they could be exempt from a certain penalty imposed on filers. Each year, people must generally pay at least 90% of their total tax burden prior to filing their returns. If they do not, they will receive an additional fee as an underpayment penalty from the IRS. However, for 2018 returns, those who paid at least 80% of their burden prior to filing will automatically have the penalty waived. The IRS noted that a special penalty waiver was available in the spring, but many eligible taxpayers failed to claim it in time.

The difference between a tax opinion and tax ruling

Taxpayers in Georgia and around the country may find that they need guidance from the IRS to answer a question about their return. The IRS may be willing to issue a private letter ruling, and generally speaking, any guidance provided by the ruling is binding. Alternatively, the government may offer to issue a tax opinion, which is generally not binding. However, it may be faster to get a tax opinion as opposed to the private letter ruling.

Cryptocurrency investors and IRS warning letters

In Georgia and across the U.S., the Internal Revenue Service is currently mailing official letters to thousands of people who invest in cryptocurrencies. The letters issue official warnings for taxpayers with complex tax issues. The IRS plans to mail letters to approximately 10,000 United States taxpayers. A person who may have failed to pay their taxes on cryptocurrency sales may receive form letter 6173, 6174 or 6174-A.

Personal injury compensation could be taxable income

Those who are hurt in Georgia or any other state who receive a settlement could be taxed on those proceeds. In fact, an individual could pay taxes on money that is eventually paid to his or her attorney. However, not everyone will have to give a portion of their injury settlement to the government. For instance, if the award is related to a physical injury, a plaintiff will generally get to keep all of it.

The TFA and the appeals process

Taxpayers in Georgia should be aware that the Taxpayer First Act changes the way the Internal Revenue Service conducts certain operations and procedures. This includes changes to how appeals are handled.

American citizens living abroad may receive a tax refund

American citizens who live overseas are still generally responsible for filing a federal tax return with the IRS. While many former Georgia residents who now live overseas can claim a credit for foreign income taxes paid, this has not been true for individuals residing in France. However, new guidance now allows taxpayers to claim a credit for Contribution Sociale Généralisée and Contribution pour le Remboursement de la Dette Sociale payments.

IRS warns of phone scams during tax season

As Georgia taxpayers are preparing and filing their 2018 tax returns, the Internal Revenue Service is warning people about criminals who pose as IRS representatives in phone scams. In a news release, the IRS said that these phone scams continue to be a major threat and can cost victims a lot of money.

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