Newsletters

IRS and State Partnership to Fight Tax Avoidance

In the fall of 2003, the Internal Revenue Service and state tax officials formed a new nationwide partnership to share information on both abusive tax avoidance schemes and the individuals involved in them. The states and the IRS have always shared various types of information, but this partnership gives federal, state, and city agencies the opportunity to share leads and coordinate case management to effectively extend the resources of all involved parties.

Treasury Offset Program and Injured Spouse Relief

If you owe any past-due child support, Federal agency non-tax debts, or state income tax obligations, you might not be getting the federal income tax refund that you expected. Congress has authorized the Department of Treasury's Financial Management Service (FMS), which issues the refund checks, to set up the Treasury Offset Program, which can reduce your refund or any overpayment that you wanted to apply to next year's tax liability.

Early Distributions from Traditional and Roth IRAs

You have been diligently putting money away in your Individual Retirement Account (IRA), but something has come up and you would really like to be able to get your hands on some of that money. However, you have heard that there are big penalties and taxes to be paid if you make a withdrawal before retirement. Should you take your money out of the retirement account, or should you borrow it from the bank?

Partnership Anti-abuse Provisions

The Internal Revenue Service has the authority to disregard the partnership form of an entity if the operations of the business are found to be inconsistent with the intent of the partnership tax statutes and the partnership form is being used for tax-avoidance purposes. According to Treasury Regulations, the intent of the partnership laws is to allow taxpayers to conduct a joint business activity through a flexible economic arrangement without incurring an entity-level tax.

Cemetery Companies

An organization that operates solely for the purpose of disposing of human bodies by burial or cremation may be entitled to tax-exempt status under Internal Revenue Code Section 501(c)(13). A cemetery company is not permitted to engage in any business not necessarily incident to that purpose, such as operating a mortuary. However, an organization that sells monuments, markers, vaults, and flowers solely for use in the cemetery will not lose its tax-exempt status.