IRS Provides Hurricane Milton Relief; May 1, 2025 Deadline Now Applies To Individuals And Businesses In All Of Florida

In IR-2024-264 Dated Oct. 11, 2024 the Internal Revenue Service announced relief for individuals and businesses in 51 counties in Florida due to Hurricane Milton, 

Individuals and businesses in six counties that previously did not qualify for relief under either Hurricane Debby or Hurricane Helene will receive disaster tax relief beginning Oct. 5, 2024, and concluding on May 1, 2025. They are Broward, Indian River, Martin, Miami-Dade, Palm Beach and St. Lucie.

In addition, individuals and businesses in 20 counties previously receiving relief under Debby, but not Helene will receive disaster tax relief under Hurricane Milton, from Aug. 1, 2024, thru May 1, 2025. They are Baker, Brevard, Clay, DeSoto, Duval, Flagler, Glades, Hardee, Hendry, Highlands, Lake, Nassau, Okeechobee, Orange, Osceola, Polk, Putnam, Seminole, St. Johns and Volusia counties.

As a result, affected taxpayers in all of Florida now have until May 1, 2025, to file various federal individual and business tax returns and make tax payments, including 2024 individual and business returns normally due during March and April 2025 and 2023 individual and corporate returns with valid extensions and quarterly estimated tax payments.

Hurricane Milton-related tax relief postpones various tax filing and payment deadlines that occurred beginning on Oct. 5, 2024, and ending on May 1, 2025 (postponement period). 

As a result, affected individuals and businesses will have until May 1, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the May 1, 2025, deadline now applies to:

• Any individual or business that has a 2024 return normally due during March or April 2025.
• Any individual, C corporation or tax-exempt organization that has a valid extension to file their calendar-year 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the hurricane occurred.

• 2024 quarterly estimated tax payments normally due on Jan. 15, 2025, and 2025 estimated tax payments normally due on April 15, 2025.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2024, Jan. 31, 2025, and April 30, 2025.

In addition, for localities affected by Hurricane Milton, penalties for failing to make payroll and excise tax deposits due on or after Oct. 5, 2024, and before Oct. 21, 2024, will be abated, as long as the deposits are made by Oct. 21, 2024. Localities eligible for this relief are: Alachua, Baker, Bradford, Brevard, Broward, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Gilchrist, Glades, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lafayette, Lake, Lee, Levy, Madison, Manatee, Marion, Martin, Miami-Dade, Monroe, Nassau, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putman, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Taylor, Union and Volusia counties.

The IRS Automatically Provides Filing And Penalty Relief
To Any Taxpayer With An IRS Address Of Record
Located In The Disaster Area. These Taxpayers Do Not
Need To Contact The Agency To Get This Relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief efforts who are affiliated with a recognized government or philanthropic organization. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk requests from practitioners for disaster relief option, described on IRS.gov.

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Scotus Won't Hear FBAR Constitutional Challenge By "Pro Se" Taxpayer

According to Law360, The U.S. Supreme Court let stand on October Seventh 2024 a Seventh Circuit decision dismissing a man's challenge to the constitutionality of the Bank Secrecy Act's requirement to report his foreign bank accounts, effectively ending the man's claim that the filings were an invasion of privacy.

In an order, the high court denied the petition of George Gaio Mano, a U.S. citizen living in Japan, who had petitioned the court in July to overturn a requirement that he file a Report of Foreign Bank and Financial Accounts, or FBAR, for 2022.

While a federal district court had denied Mano's claims on the merits, the Seventh Circuit in May upheld the dismissal on additional grounds that the case had become moot. After filing his appeal, Mano chose to file an FBAR for 2022, the appellate court said in its ruling.

He didn't choose to file an FBAR, he said. Rather, he was "coerced" into making the report after the Seventh Circuit twice rejected his motion for a temporary injunction, he said.

Mano, who represented him self "Pro se," said that the "Petitioner's choice was either file FBAR or break the law."

Mano had argued that the reporting requirements stemming from the Bank Secrecy Act were disconnected from the law's purpose and served primarily "to intimidate and control U.S. citizens who have committed no crimes," according to his petition.

He claimed the government was wrongly allowed to create a "mass collection of private banking data" that violated several amendments to the Constitution, including the right to privacy.

Rather than report his Japanese account for 2022, which Mano was required to do because his bank balance exceeded $10,000, he sued U.S. Treasury Secretary Janet Yellen, the Treasury Department and the Internal Revenue Service. The reporting requirement violated the Fourth Amendment because it was an unreasonable search and seizure, he claimed. It also violated the due process rights under the Fifth Amendment, Mano's right to privacy under the Ninth and Tenth amendments and the Fifth Amendment's privilege against self-incrimination, he argued.

A federal district court disagreed. Prior cases such as California Bankers Assn. v. Shultz  have held that the filing requirement is not an unreasonable search or seizure, it said. It also ruled Mano did not adequately develop his due process argument, and failed to allege any violation of the privilege against self-incrimination. It also concluded that the Ninth and Tenth amendments did not afford Mano a right to privacy.

On appeal, the Seventh Circuit ruled that the Bank Secrecy Act does not create a privately enforceable claim. The Constitution also does not have an automatic cause of action allowing private enforcement in courts, the appellate court said.

However, after bringing suit, Mano went ahead and reported his bank account, which left him with no cause of action, the court said. Any harm from having to file another report is speculative, it said, noting that Mano regularly withdraws enough money from the account to keep the balance under $10,000.

In August, the federal government waived its right to respond to Mano's petition.

Have an IRS Tax Problem?

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Treasury Issuess Final Regulations Identifying Syndicated Conservation Easement Transactions As Abusive Tax Transactions

The Department of the Treasury and the Internal Revenue Service on October 7, 2024 issued final regulations identifying certain syndicated conservation easement transactions as "Listed Transactions" – abusive tax transactions that must be reported to the IRS.

Syndicated conservation easements have been included in the IRS’ annual list of “Dirty Dozen” tax schemes for many years.

“These regulations send a clear signal on abusive syndicated conservation easement arrangements, which generate high fees for promoters and willing participants who gamed the tax system with grossly inflated appraisals,” said IRS Commissioner Danny Werfel.

“As The Senate Finance Committee Has Shown In Its Review, Abusive Syndicated Conservation Easement Transactions Are Operating Too Often As Nothing More Than Retail Tax Shelters That Let Taxpayers Buy Deductions At The End Of Any Given Year.”

In these transactions, investors typically acquire an interest in a partnership that owns land and then claim an inflated charitable contribution deduction based on a grossly overvalued appraisal. Going forward, participants and material advisors will need to report their participation in these transactions using Forms 8886 and 8918.

The IRS previously identified certain SCE transactions as listed transactions in Notice 2017-10. These final regulations, consistent with Notice 2017-10, identify certain SCE transactions as listed transactions. The issuance of these final regulations clarifies that participants and material advisors must report these transactions, including any transactions that were completed in taxable years that are still open.

This listed transaction regulation is part of a multifaceted IRS approach that is succeeding in protecting the integrity of the tax system. 

On a related front, the IRS has enjoyed significant success in the courts resulting in a number of syndicated partnerships having their grossly inflated easement valuations reduced for tax purposes to what the actual market value was at the time of the donation, with the partners claiming the inflated deduction often incurring substantial penalties.

Have an IRS Tax Problem?

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Tax Court Cuts $16.7M Deduction To $93,000 For Conservation Donation

According to Law360,  partnership that claimed a $16.7 million tax deduction for donating a conservation easement covering land in Georgia was trying to "fleece the public" with its claims that the land could be used for clay mining, a U.S. Tax Court judge said on October 8, 2024 in L Minerals LLC et al. v. Commissioner, docket number 17076-21, in the U.S. Tax Court slashing the deduction.

In a 69-page ruling, U.S. Tax Court Judge Patrick Urda cut the deduction for JL Minerals LLC to $93,000 and upheld penalties against the partnership for grossly overestimating the value of its contribution. JL Minerals "and its coterie of advisors took Congress's attempt to promote conservation and cynically used it as a cover to fleece the public fisc to the tune of nearly $17 million in baseless deductions," Judge Urda said.

While the partnership defended the value of its 2017 donation, and therefore its deduction amount, with an appraisal claiming the land could be used to mine kaolin, the judge said the "extensive record" in the case proved otherwise.

The record included testimony that multiple kaolin processors had looked at the roughly 65-acre tract, with its steep slopes and ravines, and decided it wasn't worth mining "or even keeping as part of a long-term reserve," Judge Urda said. 

Multiple companies had drilled and tested the property, with only one deciding to mine it, and that company later shut down its mine without a lease for future mining, the judge said.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
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or Toll Free at 888 8TAXAID (888-882-9243)

 

TIGTA - IRS Could Collect Over a Billion Dollars in Taxes From Unreported Wagering Income

The Treasury Inspector General for Tax Administration (TIGTA) released Report Number:  2024-300-064 on September 30, 2024 Titled The IRS Could Collect Over a Billion Dollars in  Taxes From Unreported Wagering Income where they discussed that the IRS has not enforced income tax return filing requirements for recipients of millions of Forms W-2G, Certain Gambling Winnings, reporting billions of dollars in gambling winnings.  

TIGTA reviewed all Forms W-2G issued to individual taxpayers during  Tax Years (TY) 2018 through 2020 (as of March 2023) and found 148,908 individuals who were issued Forms W-2G with a total amount of more than $15,000 per individual in gambling winnings and did not file a tax return.  

These Nonfilers Were Associated With Approximately
$13.2 Billion In Total Gambling Winnings.

Further TIGTA analysis determined that 139,045 of these nonfilers were included in the IRS’s nonfiler case creation process inventory.  

In response to our audit work, the IRS analyzed 17,436 TY 2018 high-income nonfilers with total positive income greater than or equal to $100,000 and calculated that it could potentially increase tax revenue by approximately $1.4 billion through addressing the 139,045 individual nonfilers with gambling winnings.  

In addition, hundreds of Forms W-2G do not include a Taxpayer Identification Number (TIN) required to trace the income to the recipient.  

Finally, the IRS has few processes in place to identify potential excise tax noncompliance by entities accepting wagers, particularly in emerging areas such as online sports wagering. 

TIGTA recommended that the Commissioner, Small Business/ Self-Employed Division:  

1. Begin appropriate enforcement actions for nonfilers with gambling winnings from TYs 2018 through 2020; 
2. Review nonfilers with gambling winnings for TYs 2018 through 2020 who were not identified by the IRS’s nonfiler system; 
3. Analyze Forms W-2G with missing TINs to determine what forms of wagering and/or gambling institutions may be noncompliant; 
4. Expand the wager codes to specifically include sports betting; and 
5. Conduct an environment scan of the current and potential future conditions of the sports betting and online gambling industries.   

The IRS agreed with three recommendations and plans to begin enforcement action, if appropriate, and scan the conditions of the sports betting and online gambling industries.  

However, the IRS disagreed with analyzing Forms W-2G with missing TINs to determine what forms of wagering and/or gambling institutions may be noncompliant.  Lastly, the IRS partially agreed to explore the potential productivity and feasibility of expanding the wager codes. 

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Gambling Income?

 

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Only 90 Days Left To File BOI Report

Only 90 days remain to ensure your business complies with the Corporate Transparency Act (CTA). 

As we stated in our post Prepare Now For New Beneficial Ownership Reporting Requirements, where we discussed Starting January 1, 2024, many business entities will be required to report information to the U.S. government about who ultimately owns or controls them, including the business’ owners and officers. This new beneficial ownership information (BOI) reporting requirement is part of the Corporate Transparency Act (CTA), which aims to help law enforcement combat financial crime and protect the U.S. financial system from bad actors.

When is the deadline to comply?

A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial beneficial ownership information report. A reporting company created or registered on or after January 1, 2024 and before January 1, 2025 will have 90 days to file.

What are the penalties for non-compliance?

Penalties for non-compliance can be significant, resulting in criminal or civil fines and/or imprisonment. Not filing reports timely can result in a $500 per day penalty, up to $10,000, and imprisonment of up to two years.

Where can I learn more?

For more information, visit the beneficial ownership information (BOI) and Frequently Asked Questions.on the U.S. Department of the Treasury’s Financial Crimes Enforcement Network's (FinCEN) webpage. 

Disclaimer: The information contained herein is for informational purposes and should not be relied upon or construed as tax or legal advise, generally, nor regarding any specific issue or factual circumstance.

Need Help Filing Your BOI Report?

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Marini & Associates, P.A. 

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or Toll Free at 888 8TAXAID (888-882-9243)