IRS Form 12257

The IRS may issue Form 12257 after an appeals hearing.  Form 12257 provides a summary of the determination made by the IRS Appeals Office.  Further, by executing the form, you may be waiving certain rights regarding the issue and matter at hand and thus it is important that you agree with the determination made by the appeals office, and understand what you are signing.  The video below has been prepared by John McGuire, a tax attorney in Denver, Colorado with The McGuire Law Firm to provide additional information regarding Form 12257.  You can speak with a tax attorney by contacting The McGuire Law Firm.

Denver Tax Attorney Denver Tax Lawyer

A Proper Perspective On Thanksgiving

Donec pede justo, fringilla vel, aliquet nec, vulputate eget, arcu. In enim justo, rhoncus ut, imperdiet a, venenatis vitae, justo. Nullam dictum felis eu pede mollis pretium. Integer tincidunt. Cras dapibus. Vivamus elementum semper nisi. Aenean vulputate eleifend tellus. Aenean leo ligula, porttitor eu, consequat vitae, eleifend ac, enim. Aliquam lorem ante, dapibus in, viverra quis, feugiat a, tellus.

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Aenean commodo ligula eget dolor. Aenean massa. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Donec quam felis, ultricies nec, pellentesque eu, pretium quis, sem. Nulla consequat massa quis enim.

 

Wedding Sermon

Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Aenean commodo ligula eget dolor. Aenean massa. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Donec quam felis, ultricies nec, pellentesque eu, pretium quis, sem. Nulla consequat massa quis enim.

Donec pede justo, fringilla vel, aliquet nec, vulputate eget, arcu. In enim justo, rhoncus ut, imperdiet a, venenatis vitae, justo. Nullam dictum felis eu pede mollis pretium. Integer tincidunt. Cras dapibus. Vivamus elementum semper nisi. Aenean vulputate eleifend tellus. Aenean leo ligula, porttitor eu, consequat vitae, eleifend ac, enim. Aliquam lorem ante, dapibus in, viverra quis, feugiat a, tellus.

Are Roth IRA Distributions Taxable?

Are distributions from my Roth IRA taxable?  Many people know and understand that when they take distributions from their traditional IRA or a 401(k) the distributions are taxable.  These distributions are taxable, and it makes sense because you contributed money to the traditional IRA or 401(k) without paying income tax on the contributions.  Thus, being taxed on the distributions would seem fair and equitable.  But what about a Roth IRA where you have already paid tax on the contributions you made to the Roth IRA?

Generally, you would not include in your gross income qualified distributions from a Roth IRA or distributions that are a return of your regular contributions to your Roth IRA.  Furthermore, distributions from a Roth IRA that you had rolled over tax free into another Roth IRA would generally not be included within your gross income, and thus not be subject to tax.

The above being stated, one must consider the basis of distributed property and know what distributions are considered qualified distributions.  When taking distributions from a Roth IRA, the basis of property being distributed is its fair market value as of the date of distribution.  This is the case regardless of whether or not the distribution from the Roth IRA is a qualified distribution. 

A qualified distribution from a Roth IRA could be any of the following: A distribution made after the five year period that begins the first taxable year a contribution was made to the Roth IRA and the distribution was made after you were 59.5 years old, made because you were disabled, made to a beneficiary or to your estate, or meets the requirements for “first home” exception. 

Are the distributions from a Roth IRA subject the 10% additional tax, such as early withdrawals from a 401(k)?  Distributions that are not qualified distributions may be subject to an additional 10% tax or penalty.  There are a number of exceptions that apply and thus could provide relief in regards to the 10% additional tax.  For example, if you used the distributions to pay certain medical expenses or for higher education expenses, you may not have to pay the additional 10%.  Further, when the IRS levies a Roth IRA, the additional 10% tax generally would not apply because the deemed distribution to the taxpayer was not necessarily a voluntary distribution to the taxpayer.

The above article was written by John McGuire, a tax attorney and business attorney at The McGuire Law Firm.  The McGuire Law Firm has offices in Denver, Colorado and Golden, Colorado.

Tax Attorney Denver Tax Lawyer Denver

Introduction to the BSA

What is the Bank Secrecy Act?  The Financial Recordkeeping and Reporting of Currency and Foreign Financial Transactions Act of 1970, is generally referred to the Bank Secrecy Act (BSA).  The act can be found at 31 U.S.C. 5311.  The purpose of the act is relatively simple, that being to require financial institutions in the United States to maintain a certain level of records and recordkeeping, and require the filing of certain reports regarding currency transactions relationships with certain customers of the financial institution.

Generally a bank or financial institution complies with the BSA through the filing of Currency Transaction Reports, also referred to as CTRs and Suspicious Activity Reports, also referred to as SARs.  In addition to certain record keeping requirements, the Bank Secrecy Act also requires, in general, a financial institutions records be sufficient enough to allow for the reconstruction of a customer’s account if such reconstruction is necessary.  Therefore, an audit trail or paper trail can be constructed if needed, which as reported by certain federal agencies, has been very useful information and vital in criminal investigations as well as other tax and regulatory investigations and cases. 

There are two parts to the BSA those being: 1: Financial Recordkeeping and 2: Reports of currency and Foreign Transactions.  Financial Recordkeeping authorizes the Secretary of The Treasury to issue regulations that will require the maintenance of certain records by insured financial institutions.  Thus, think about the FDIC notices when you walk in your bank.  These types of financial institutions that are insured are required to maintain a certain level of records.  Reports of Currency and Foreign Transactions allows the Department of Treasury to regulate and thus require the reporting of certain transactions.  You may have heard that banks are required to report transactions in excess of $10,000 and in many cases this is correct and what Part 2 of the BSA in terms of currency transaction reporting is associated with. 

The purpose of the BSA is thus to require maintenance of records and reporting of transactions that enable and aid investigations and examinations of a wide variety of criminal activity from tax evasion to money laundering that may associated with illegal drug trafficking and/or terrorism.  The idea is that if certain records are maintained, and certain transactions reported, these records can be used to investigate and examine certain individuals and track certain criminal activity.  This makes a lot of sense.  The paper trail left by money can often lead to the individuals responsible for crime.  The majority of criminal activities can create and lead to large sums of money, and generally require a certain amount of money.  Thus, finding the source of this money can assist law enforcement. 

Other acts and regulations have expanded and thus strengthened the scope of the Bank Secrecy Act.  For example, please see the Money Laundering Control Act of 1986, the Annuzio-Wylie Anti-Money Laundering Act of 1992 or the Money Laundering and Financial Crimes Strategy Act of 1998.

This article has been drafted by John McGuire, a tax attorney in Denver, Colorado at The McGuire Law Firm.  Mr. McGuire’s practice focuses on taxation matters with individuals and businesses, and tax representation before the Internal Revenue Service and other taxing authorities.  Mr. McGuire also works with businesses regarding their transactional matters.

Bank Secrecy Act

Denver Sales Tax Questions and Issues

Many businesses in Denver are required to collect and pay sales tax, but many business owners have questions regarding sales tax matters.  The article below has been prepared to provide additional information regarding sales tax matters in Denver County.

First and foremost, when is sales tax imposed in Denver?  In Denver, sales tax will be imposed on the purchase price for retail sales, leases and rentals of certain tangible personal property.  Further, some services can be taxable that are purchased or performed in Denver or if delivered, used or stored in the county.  Thus, it begs the next question, what services are taxable?  The following services could be taxable, but please note, the list below is not all inclusive of the services that could be taxable.

  • Software charges
  • Entertainment Services
  • Informational Services
  • Fees such an entrance fees or a cover charge or mandatory tips/gratuity

What if a business is not located in Denver but receives business from Denver?  Does a business outside of Denver need to collect and pay the Denver Sales Tax?  If a business is licensed outside of Denver, the business may be required to collect and remit the Denver Retailer’s Use Tax on sales in Denver that would be taxable Denver retail sales.  These applicable activities could include performing an activity in Denver in connection with the sale or lease of tangible personal property. 

What sales tax is charged if delivering items outside of Denver County?  You should generally charge the applicable tax for the location you are delivering the item.  You should also check to see if any type of license is required for the location, or any other fee required.

What food is taxed and what food is exempt from sales tax?  When you purchase food in Denver County that is prepared such as in a restaurant, or when food is ready to eat, sales tax will apply to the purchase.  Food that is purchased for domestic consumption in your home can be exempt from sales tax. 

Does sales tax apply to the sale of alcoholic beverages such as beer and wine?  Yes, sales tax always applies to the sale of alcoholic beverages.

What is a home rule city?  A home rule city, which is what Denver is, elects to collect and administer their own sales tax, as opposed from another taxing authority such as the state department of revenue.

John McGuire, a local tax attorney in Denver and Golden Colorado prepared the above article.  You can contact John by contacting The McGuire Law Firm.  A free consultation with a tax attorney is provided to all potential clients.

FinCEN Examining Virtual Currency Businesses

FinCEN (Financial Crimes Enforcement Network) has recently been investigating and examining businesses involved with virtual currencies such as Bitcoin.  In fact, on May 5, 2015, FinCEN announced the first civil enforcement action stemming from a virtual currency provider.  FinCEN and the United States Attorney General Office for the Northern District of California assessed a $700,000 civil penalty against Ripple Labs, LLC and a subsidiary for violation of the Bank Secrecy Act (BSA).  The applicable businesses apparently did not comply with requirements regarding an anti-money laundering policy as required under the Bank Secrecy Act.  Furthermore, penalties were assessed for failing to report suspicious activities (Suspicious Activity Reporting) in regards to certain transactions. 

FinCEN’s position is that virtual currency businesses and virtual currency providers as well as exchangers must comply with the Bank Secrecy Act.  FinCEN Director Jennifer Calvery stated, “Virtual currency exchangers must bring products to market that comply with our anti-money laundering laws.  Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.” 

Compliance with the BSA helps safe guard financial institutions and thus the American people from illegal motives, which is why certain institutions must have anti money laundering policies and other compliance and reporting requirements.  The failure of an institution or business to comply with the BSA can lead to civil penalties and possible criminal charges.  When civil penalties are assessed, the Internal Revenue Service has been delegated the authority and responsibility to collect the amounts that have been assessed.  In regards to the benefits of the applicable regulations, it is believed that certain reporting requirements have helped prevent and detect criminal activity related to illegal drug trafficking, terrorism and other illegal activities. 

If you are involved with or are considering involvement with a virtual currency business, it is recommended you become aware of the record keeping, reporting and other compliance measures required by the Bank Secrecy Act and other acts implemented for similar purposes. Such compliance issues may include an Anti-Money Laundering Policy (AML), Suspicious Activity Reporting (SAR), Know Your Customer and other programs and procedures.

 

IRS Tax Lien and Jointly Held Property

The filing of a federal tax lien by the Internal Revenue Service creates many issues and questions when property is held jointly.  Related issues can arise when the Internal Revenue Service files a tax lien against a party, and the party holds an interest in property but the other owners of the property have no such tax lien. The issues can be further compounded by state law matters such as community property and joint tenancy, tenancy in common and tenancy by the entirety.  Joint tenancy will be discussed below.

A joint tenancy is created when two or more people become the owners of property and the ownership is equal and undivided, and when the interest of each tenant is created through the same conveyance at the same time and the interests are equal.  You may have seen a right of survivorship stated within a joint tenancy or the JTWROS, which means joint tenancy with right of survivorship.  Generally, a joint tenancy will have a right of survivorship and under this right of survivorship, when one tenant passes away, the surviving joint tenant or joint tenants will automatically own a greater portion of the property.  For example, if A & B own Blackacre Properties as joint tenants with right of survivorship.  If A passes away, B is now the sole owner of Blackacre Properties.  It is important to note that certain states have removed the survivorship issues from joint tenancy, and thus check the applicable laws within the applicable state. 

So how does an IRS tax lien impact property held in joint tenancy?  Typically, if only one of the joint tenants owes taxes and thus the tax lien has been filed against only one of the joint tenants, the lien attaches to the taxpayer’s interest and thus the entire property, which can be sold pursuant to collection action such as a judicial sale under Section 7403 of the Internal Revenue Code.  However, the non-liable joint tenants, those tenants who have not had the tax lien filed against them, are required to receive compensation from the sale of the property. What if the joint tenant were to pass away?  Under most states, if the person whom the tax lien has been filed passes away before the other joint tenants, the tax lien will cease to attach to the property held in joint tenancy.  What if such individual is the last to die?  If the individual with the tax lien survives all other joint tenants, the tax lien would attach to the entire property.  Of course, there are exceptions to this rule and you must check the applicable state law.

If you have questions related to the impact of a federal tax lien on your individual or business property, you can speak with a tax attorney and business attorney by contacting The McGuire Law Firm.  The McGuire Law Firm provides a free consultation with an attorney to discuss your tax and business matters. 

IRS Tax Lien and Jointly Held Property

 

What is FBAR Form 114?

Form 114 is the form used to report financial interests or signatory authority over foreign financial interests as required under the Report of Foreign Bank and Financial Accounts.  The form is filed yearly, and electronically with the Financial Crimes Enforcement Network (FinCen).  It is important to note that Form 114 is filed separately from your 1040 individual income tax return.  Moreover, certain penalties apply for not filing the Form when you would be required to do so.  The video below has been prepared by a tax attorney to provide additional information regarding Form 114.

Speak with a tax attorney in Denver, Colorado or Golden, Colorado at The McGuire Law Firm regarding your tax questions and issues.

What Is IRS Form 709?

Who files Form 709, and why is Form 709 required to be filed?  Form 709 is used to report transfers that are subject to federal gift tax and types of Generation Skipping Transfer Taxes (GST Taxes), as well as calculate the tax due, if in fact any tax would be due under the facts and circumstances of the transfer.  Form 709 also allocates the Generation Skipping Transfer Tax exemption to property transferred during the transferor’s lifetime.

Gift and Generation Skipping Transfer Tax is computed and filed with the Internal Revenue Service on a calendar year basis.  All reportable gifts can be stated on one Form 709, and you do not file more than one Form 709 in a calendar year.

So now that we know what Form 709 is, and what information is stated on Form 709, who must file the form?  Citizens and residents of the United States must file gift tax returns under the following circumstances:

  1. You gave gifts to someone totaling more than the annual exclusion. In 2014, the annual exclusion was $14,000, thus if you gave gifts to one person in 2014 in excess of $14,000, you likely must file a gift tax return.
  2. If you gave a gift of a future interest, even if the gift was less than $14,000 (the annual gift tax exclusion) you must file Form 709. Why?  This is because a gift of a future interest does not qualify for the annual exclusion, because it is not a present interest.  Generally, a gift must be a present interest, meaning the beneficiary has the current right to own and control the gift for the annual exclusion to apply.
  3. It is important to note that spouses do not file a joint Form 709.  Each spouse is responsible for filing their own Form 709 with the Internal Revenue Service.  If spouses gift split, they must file Form 709.
  4. If a gift is community property, it is considered to be given by each spouse, and each spouse must file the Form 709.  Further, if a gift is made that was held as joint tenants or tenants in the entirety, each spouse will file Form 709.
  5. Only individuals will file a gift tax returns.  Gifts from trust or a business such as a partnership or corporation, the individual beneficiaries, or business owners may be liable for the gift tax issues.  It is important to note that it is the donor, the person giving the gift that pays for the gift tax. However, if the donor does not pay the gift tax, the recipient of the gift can be liable.

Based off of the above, who does not need to file Form 709?  If you made no gifts to your spouse, you gifted no more than $14,000 to a single individual and all gifts you made were of present interests, you do not need to file a gift tax return. 

If you have tax related questions, you can speak with a Denver tax attorney by contacting The McGuire Law Firm.  A free consultation with a tax attorney is provided to all potential clients.

 Denver Tax Attorney Denver Tax Lawyer