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Tax Controversy News

Is there a difference between "tax loss" in a criminal case and tax "due and owing" in a civil proceeding?

Dec 20, 2013

Yes. For individuals facing criminal tax investigations, the IRS and U.S. Department of Justice will calculate a “tax loss” for purposes of the U.S. Sentencing Guidelines. The “tax loss” may be more or less than the actual tax due for a particular period because the government may calculate “tax loss” as a percentage of unreported income, unless a more accurate…

What risks do real estate professionals encounter when selected for an IRS examination?

Brian J. Crepeau | Nov 22, 2013

For those real estate professionals who want to deduct their passive rental losses against ordinary income, in addition to substantiating rental income and expenses reported on their return, they will need to prove that they are “real estate professionals” who “materially participate” in their rental operations. While this appears simple, I assure you it is…

Does the IRS have a new rule regarding tips at bars and restaurants?

Giovanni V. Alberotanza | Sep 27, 2013

Yes. Effective January 1, 2014, the IRS will begin to reclassify certain automatic tips as service charges. For example, an 18% gratuity charged to parties of six or more will likely be classified as a service charge rather than a tip. This will have a significant impact on restaurants, bars, banquet halls, and other food service establishments.  Businesses are…

As a job-creating small business, what can you expect from the IRS?

Brian J. Crepeau | Aug 23, 2013

A love letter, that inquires if your business is underreporting cash.  This initiative is aimed at boosting federal receipts and ensuring compliance. The IRS sees underreporting of cash as a “wide spread problem” with small businesses. In 2008, new laws gave the IRS broader access to merchant credit/debit card transactions. The IRS compares the merchant…

Can same-sex spouses file joint federal income tax returns in light of the Supreme Court’s decision to strike down the Defense of Marriage Act (DOMA)?

Jul 26, 2013

Maybe. Typically, the IRS determines marital status by looking at state law in the person’s place of domicile – generally where their permanent residence or primary home is located. Therefore, same-sex spouses who reside in and were married in Maryland will likely be considered married for federal tax purposes. However, complications and uncertainty with filing status…

Is there a free, easy resource that explains federal tax issues and obligations for small business owners?

Jun 28, 2013

Yes. Federal tax reporting, filing and payment obligations can be overwhelming for the small business owner. The IRS offers a virtual workshop online that offers nine lessons ranging from “federal taxes and your new business,” to “federal taxes when hiring employees or contactors,” “how to manage payroll” and “hiring people who live in the United States…

Other than Right Wing Tea Party groups, who else is the IRS targeting for examination?

Brian J. Crepeau | May 24, 2013

The usual suspects, including the wealthy, the self-employed, those with offshore accounts, those with complex investment and business transactions, and those with anomalous returns. Still, few audits are random. The primary method for selection is the IRS’ “Discriminant Information Function” (DIF). The DIF scores tax returns and the higher the score the more likely an…

Can same-sex spouses file joint state income tax returns, and are they now subject to the same Maryland estate tax laws as opposite-sex spouses?

Apr 26, 2013

The Maryland General Assembly recently passed HB 380 and HB 1031/SB 658 that affect income and estate taxes for same-sex spouses. If the Governor signs HB 380, same-sex spouses may file joint or married filing separate Maryland income returns, and may deduct the cost of health insurance paid by one-spouse for the benefit of the other…

I am a Maryland resident who owns a business in New Jersey. I pay tax on my income to both states. Am I entitled to a credit?

Brandon N. Mourges | Feb 22, 2013

In Comptroller v. Wynne, the Court of Appeals recently held that Maryland’s denial of a credit towards the local income tax portion of Maryland’s income tax regime for taxes paid to other states by a Maryland resident is unconstitutional. For example, if a resident generated income in a state with a 9% income tax rate,…

The IRS recently initiated an employment tax audit of my business. My accounting department informed me that some of my workers may have been improperly classified as independent contractors. What can I do to limit my exposure?

Brandon N. Mourges | Jan 25, 2013

Consider the Classification Settlement Program (CSP), under which the Internal Revenue Service must offer your company a settlement that includes a significantly reduced liability if your company meets the established criteria, including the consistent issuance of Forms 1099 each year to the class or classes of workers at issue. If there was a reasonable basis for treating the workers at…

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Rosenberg Martin Greenberg

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Phone: 410-727-6600
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