Monday, August 31, 2020

Settlements Begin In Syndicated Conservation Easement Transaction Initiative

The IRS issued IR-2020-196 announcing that, as part of a continuing effort to combat abusive transactions, on August 31, 2020 the completion of the first settlement under its initiative to resolve certain docketed cases involving syndicated conservation easement transactions.

On June 25, 2020, the IRS Office of Chief Counsel announced that it would offer to settle certain cases involving abusive syndicated conservation easement transactions. Since then, Chief Counsel has sent letters to dozens of partnerships involved in these transactions whose cases are pending before the U.S. Tax Court.

“We Are Seeing Movement On These Settlements,”
Said IRS Chief Counsel Mike Desmond. 
“Given The Potential For Significant Penalties, We Anticipate More Taxpayers Will Take Similar Actions And Ultimately Accept These Offers, And We Encourage Them To Do So.”

The IRS will continue to actively identify, audit and litigate these abusive transactions as part of its vigorous effort to combat abuse in this area. These transactions undermine the public's trust in tax incentives for private land conservation and in tax compliance in general. Ending these abusive schemes remains a top priority for the IRS. The IRS continues to strongly recommend that participants seek the advice of competent, independent advisors in considering the potential resolution of their matter.

This week, the first settlement under the terms of the initiative was finalized. Coal Property Holdings, LLC and its partners agreed to a disallowance of the entire $155 million charitable contribution deduction claimed for an easement placed on a 3,700- acre tract of land in Tennessee. On October 28, 2019, the Tax Court issued its Opinion (153 T.C. 126) granting the government’s motion for partial summary judgment holding that the "judicial extinguishment" provisions of the easement deed did not satisfy the requirements of section 1.170A-14(g)(6), Income Tax Regs.

Under the terms of the settlement, the investor partners were permitted to deduct their cost of investing in the conservation easement transactions and paid a 10 percent penalty, whereas the promoter partner was denied any deduction and paid a 40% penalty. The taxpayers also fully paid all tax, penalties, and interest in conjunction with the settlement. The settlement will be reflected in a stipulated decision document entered by the Tax Court and in a separately entered closing agreement. A public statement acknowledging the settlement was part of the agreement between the IRS and the taxpayer.

IRS Commissioner Chuck Rettig thanked the trial team for their exceptional dedication and work on the case: “The IRS is pleased that the partnership in the Coal Property transaction has agreed to this settlement, and we encourage other participants in qualifying easement cases to accept the terms of the Chief Counsel’s initiative,” Rettig said.

Coal Property was represented by Christopher S. Rizek and Scott D. Michel of the Washington, D.C. law firm Caplin & Drysdale. “In light of the significance of the Court’s ruling on the perpetuity issue, our client decided to take advantage of an assured penalty reduction in the IRS initiative and settle this matter under the IRS’s terms, and it is pleased that this case is resolved,” Rizek said.

Are you at risk of tax penalties associated with an investment in a syndicated conservation easement? You may have been misled by a promoter of this type of investment who promised exceptionally high returns in the form of sizeable tax deductions. If you’re an investor who was sold a conservation easement product through investment in a partnership or LLC, our syndicated conservation easement lawyer can help you recover losses associated with this scheme. The IRS has a large team of attorneys dedicated to punishing these fraudulent tax shelters and is aggressively pursuing all those involved, including unsuspecting investors. 

Have IRS Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

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

Possible Tax Changes From a Joe Biden Presidency?

Joe Biden has a double-digit lead in some polls and a number of Senate seats may turn blue as well, giving the Democrats a majority in Congress. If all that was to come to fruition, there would be major tax law changes.

Income Tax Changes 

Biden prefers that increasing taxes on America’s richest workers. He’d do this by re-raising the top marginal income-tax bracket from 37% to 39.6%. If you recall, the TCJA lowered the top marginal bracket from 39.6% to 37% in 2018. For the 2020 tax year, this top marginal rate is applicable to earned income above $518,400 for single lers and over $622,050 for married couples ling jointly. 

Biden is also in favor of increasing the capital gains tax on filers with incomes above $1 million. Presently, short-term capital gains are taxed at the ordinary income tax rate, whereas long-term gains are taxed at 0%, 15%, or 20%, depending on a ler’s income. The 20% rate is applicable to single and married couples ling jointly with earned income above $441,450 and $496,600,respectively, in the 2020 tax year. Biden’s proposal calls for filers with over $1 million in income to pay ordinary tax rates on all their gains, regardless of holding period, at a rate of 39.6%.  So if you have appreciated stocks that you are likely to be selling in the next several years, sell them now. If you do, postpone capital losses until January so you can use them against gains occurring in higher-tax years. 

Increase in the Corporate Tax Rate

The present corporate tax rate is 21%. Under the Biden tax plan, the corporate tax rate would be increased to 28%, which is still well below where it was during the Obama presidency. 

Estate Tax Changes

2020 may be the last year to benefit from current estate tax exemptions.  Biden’s tax platform appears to favor an increase in the so-called “wealth tax”, which can be achieved by a reduction in the estate tax exemption, as a smaller exemption leads to more estate tax. 

The estate tax exemption’s current level is $11.58 million per individual. This means that an individual can give away USD $11.58 million ($23.16 million for married couples) to others during their lifetime or at death without being subject to gift or estate taxes. Without congressional action, these amounts are set to continue to increase with inflation through 2025, after which they will decrease back to about $5 million per individual. With congressional action, it’s likely that this “sunset” will come sooner, and that the exemption could be set even lower, under a Democratic administration or Congress. 

While Biden has not committed to supporting all recommendations, the Biden-Sanders Unity Task Force has recommended returning the estate tax regime to the “historical norm.” This could mean restoring the exemption threshold to the 2009 level of $3.5 and it could also return to  an estate tax rate increase back to the 45% rate in effect in 2009.

Estate Tax Planning Opportunities for Business Owners

This is a good time for clients with $11 million or more as individuals or over $23 million as a couple to consider gifting today by using their high exemption. If you do not use the current increased exemption you may lose it. Proactive gifting today using the current higher exemption by transferring the incremental amount out of your estate is a great way to transfer millions of dollars on an estate tax advantaged basis. 

We recommend against procrastinating until the makeup of the Congress and White House is determined in November. There is no actual deadline to get started, but any gifts you want to make this year will need to be completed by December 31st. Gift planning is best done very carefully, and it can take time to organize things properly with an experienced tax attorney.

See also our post Covid 19 Gives Rise to Estate & Family Planning Opportunities for estate planning opportunities caused by Covid 19.

Do You Need to Update Your Estate Plan? 

 Contact the Tax Lawyers at 
Marini & Associates, P.A.
for a FREE Tax Consultation
or Toll Free at 888-8TaxAid (888 882-9243) 


IRS Posts Lists of Foreign Trust Reporting Requirements and Tax Consequences

On its website, the IRS has provided foreign trusts, and U.S. owners of such trusts, with a summary of their existing information reporting requirements. 

The IRS notes that failure to satisfy these information reporting requirements can result in significant penalties.  

A U.S. owner of a foreign trust is required to file Form 3520 when the U.S. owner:

  • Creates a foreign trust, transfers money or property to a foreign trust, or makes a loan to a foreign trust; 

  • Receives distributions from a foreign trust;

  • Receives the uncompensated use of property belonging to a foreign trust; 

  • Receives a loan from a foreign trust; or 

  • Is treated as a “trust owner” under the grantor trust rules (Code Sec. 671 - Code Sec. 679).

Generally, Form 3520 is due by the 15th day of the fourth month following the end of the U.S. person’s tax year (April 15 for calendar year taxpayers). This due date can be extended. If the U.S. person requests an extension to file their income tax return, the U.S. person should be sure to check Form 3520, Box 1k, and enter the form number of their income tax return to avoid a late filing penalty for Form 3520.

A foreign trust with a U.S. owner is required to file Form 3520-A. However, a U.S. owner of a foreign trust should ensure that the foreign trust timely files a complete and accurate Form 3520-A and furnishes the required annual statement to the foreign trust’s U.S. owner to avoid penalties for the foreign trust’s failure to timely file a Form 3520-A.

If a foreign trust fails to file a Form 3520-A, the U.S. owner must complete and attach a substitute Form 3520-A to the U.S. owner’s Form 3520 by the due date of the U.S. owner’s Form 3520 (April 15 for calendar year taxpayers) in order to avoid being subject to a penalty for the foreign trust’s failure to file a Form 3520-A.  

Generally, Form 3520-A is due by the 15th day of the 3rd month (March 15 for calendar year taxpayers) after the end of the trust’s tax year. Taxpayers can get an automatic 6-month extension to file Form 3520-A by filing Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information and Other Returns. Form 7004, like Form 3520-A, must be filed under the foreign trust’s EIN. 

Also, each year a U.S. person who is the beneficiary of a foreign grantor trust should receive, from the foreign trust, a Foreign Grantor Trust Beneficiary Statement (Form 3520-A, page 5). A U.S. person who is the beneficiary of a foreign nongrantor trust should receive a Foreign Nongrantor Trust Beneficiary Statement, which will include information about the taxability of the distributions the beneficiary received.

Have an International Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

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

Friday, August 28, 2020

IRS Approves Temporary Use of E-Signatures For Certain Forms - Great News From The IRS For International Practitioners Form 8832 & 8802.

The Internal Revenue Service today announced in IR-2020-194 that it will temporarily allow the use of digital signatures on certain forms that cannot be filed electronically.

The change will help to reduce in-person contact and lessen the risk to taxpayers and tax professionals during the COVID-19 pandemic, allowing both groups to work remotely to timely file forms.

“We take the health and safety of the nation’s taxpayers, the tax professional community and our employees very seriously,” said IRS Commissioner Chuck Rettig. 

“Expanding The Use Of Digital Signatures Is An Important Step During COVID-19 To Help Tax Professionals."

"We understand the importance of digital signatures to the tax community, and we will continue to review our processes to determine where long-term actions can help reduce burden for the tax community, while appropriately balancing that with critical security and protection against identity theft and fraud.”

The Form 1040, U.S. Individual Income Tax Return, already uses an electronic signature when it is filed electronically, either by using a taxpayer self-selected PIN, if self-prepared, or a tax-preparer selected PIN, if using a tax professional. More than 90% of Form 1040s are filed electronically. 

The IRS Recommends All Taxpayers Consider E-Filing Forms This Year, Whenever Possible, Because Of COVID-19.

The below list of forms is available at and through tax professional’s software products. These forms cannot be e-filed and generally are printed and mailed. The IRS will not specify which digital signature product tax professionals must use. There are several commercial products available.

The following forms can be submitted with digital signatures if mailed by or on Dec. 31, 2020: 

• Form 3115, Application for Change in Accounting Method;

• Form 8832, Entity Classification Election;

• Form 8802, Application for U.S. Residency Certification; 

• Form 1066, U.S. Income Tax Return for Real Estate Mortgage Investment Conduit; 

• Form 1120-RIC, U.S. Income Tax Return For Regulated Investment Companies;

• Form 1120-C, U.S. Income Tax Return for Cooperative Associations; 

• Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts;

• Form 1120-L, U.S. Life Insurance Company Income Tax Return; 

• Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return; and 

• Form 8453 series, Form 8878 series, and Form 8879 series regarding IRS e-file Signature Authorization Forms.

The IRS will closely monitor this temporary option for e-signatures and determine if additional steps are needed.

Have IRS Tax Problems?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

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

Wednesday, August 26, 2020

IRS Has Updated Its Taxpayer And Third Party Authentication Procedures

In Memo wi-21-0720-0774, the IRS has updated its taxpayer and third party authentication procedures. 

The IRS may disclose returns and return information to third parties a taxpayer has authorized to receive that information. (IRC § 6103). Generally, the IRS may disclose return information to third parties if the taxpayer's consent to such disclosure is in writing and is signed and dated by the taxpayer. (Reg. § 301.6103(c)-1(b)(1)).

Taxpayers may use Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization to consent to the IRS's disclosure of their return information to a third party. (Form 2848, Instructions) 

The IRS issues a nine-digit number (CAF number) to third parties seeking to access a taxpayer's return information using Form 2848 or Form 8821. Once issued, a third party uses their CAF number as an identifier on all their future CAF authorizations. 

The IRS has updated its taxpayer and third party authentication procedures in two ways: 

  1. In certain circumstances, when a taxpayer calls the IRS seeking return information, IRS employees will ask taxpayers to provide additional authentication of their identity. These circumstances include when a taxpayer does not have any open account issues or notices, and the taxpayer calls the IRS: 
    • to request verbal account information (other than refund status); 
    • to request transcript or tax account information to be sent to an address that is not the taxpayer’s address of record; or 
    • about an Identity Protection Personal Identification Number (IP PIN) that is lost, misplaced, or was not received by the taxpayer. 
  2. Before releasing any return information to a third party who calls the IRS seeking a taxpayer's return information using a Form 2848 or Form 8821, IRS employees will need to authenticate the identity of the third party.
    • To authenticate the third party’s identity, the IRS employee will ask for the third party's Centralized Authorization File (CAF) number, Social Security number (SSN), date of birth and the address listed on the third party's tax return. The third party must correctly answer all the IRS employee's authentication questions to obtain the taxpayer's return information. 
An IP PIN is a 6-digit number assigned to eligible taxpayers to help prevent the misuse of their Social Security number on fraudulent federal income tax returns. (IP PIN FAQs)

The guidance also supplies a limited exception to the third party authentication procedures when the taxpayer calls the IRS and the third party is either part of the phone conversation, or is present in the room with the taxpayer, and the CAF authorization is already on file with the IRS. In this case, an IRS employee can discuss the taxpayer's return information with the third party without performing the above third party authentication procedures. 

If there is no Form 2848 or Form 8821 on file with the IRS, the taxpayer can verify the identity of the third party, but the disclosure authority is limited to the duration of the call or meeting, and the taxpayer must remain part of the conversation throughout. If the taxpayer leaves the conversation, the employee must end the call or meeting.

Have IRS Tax Problems?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

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

Last round of ITINs Will Expire In 2020 - Early Renewal To Prevent Refund Delays

The IRS issued IR-2020-181 on August 17, 2020 advising that more than 1 million Individual Taxpayer Identification Numbers are set to expire at the end of 2020 as the Internal Revenue Service completes the expiration of ITINs assigned prior to 2013. The IRS continues to urge affected taxpayers to submit their renewal applications early to avoid refund delays next year.

Under the Protecting Americans from Tax Hikes (PATH) Act, ITINs that have not been used on a federal tax return at least once in the last three consecutive years and those issued before 2013 will expire. This year ITINs with middle digits 88 will expire Dec. 31, 2020. Additionally, ITINs with middle digits 90, 91, 92, 94, 95, 96, 97, 98 or 99, that were assigned before 2013 and have not already been renewed, will also expire at the end of the year.


ITINs are used by people who have tax filing or payment obligations under U.S. law but who are not eligible for a Social Security number. ITIN holders who have questions should visit the ITIN information page on and take a few minutes to understand the guidelines.


The IRS continues a nationwide education effort to share information with ITIN holders. To help taxpayers, the IRS offers a variety of informational materials, including flyers and fact sheets, available in up to seven languages, including English, Spanish, Chinese, Russian, Vietnamese, Korean and Haitian/Creole on


Who should renew an ITIN

  • Taxpayers whose ITIN is expiring and who expect to have a filing requirement in 2021 must submit a renewal application. Others do not need to take any action. ITINs with the middle digits 88 (For example: 9NN-88-NNNN) or 90, 91, 92, 94, 95, 96, 97, 98 or 99 (that meet the criteria above) need to be renewed even if the taxpayer has used it in the last three years. The IRS will begin sending the CP-48 Notice, You must renew your Individual Taxpayer Identification Number (ITIN) to file your U.S. tax return, to affected taxpayers in late summer. The notice explains that taxpayers will need to take action to renew the ITIN if it will be included on a U.S. tax return filed in 2021. Taxpayers who receive the notice after acting to renew their ITIN do not need to take further action unless another family member is affected.
  • As a reminder, ITINs with middle digits 83 through 87 expired last year. Middle digits 73 through 77, 81 and 82 expired in 2018. Middle digits 70, 71, 72, and 80 expired in 2017, and 78 and 79 expired in 2016. Taxpayers with these ITIN numbers who expect to have a filing requirement in 2021 can renew at any time.


Family option remains available

Taxpayers with an expiring ITIN have the option to renew ITINs for their entire family at the same time. Those who have received a renewal letter from the IRS can choose to renew the family’s ITINs together, even if family members have an ITIN with middle digits that have not been identified for expiration. Family members include the tax filer, spouse and any dependents claimed on the tax return.


How to renew an ITIN

To renew an ITIN, a taxpayer must complete a Form W-7 and submit all required documentation. Taxpayers submitting a Form W-7 to renew their ITIN are not required to attach a federal tax return. However, taxpayers must still note a reason for needing an ITIN on the Form W-7. See the Form W-7 instructions for detailed information.


Spouses and dependents residing outside of the U.S. only need to renew their ITIN if filing an individual tax return, or if they qualify for an allowable tax benefit (e.g., a dependent parent who qualifies the primary taxpayer to claim head of household filing status.) In these instances, a federal return must be attached to the Form W-7 renewal application.


There are three ways to submit the Form W-7 application package. Taxpayers can:

  • Mail the form, along with original identification documents or copies certified by the agency that issued them, to the IRS address listed on the Form W-7 instructions. The IRS will review the identification documents and return them within 60 days.
  • Work with Certified Acceptance Agents (CAAs) authorized by the IRS to help taxpayers apply for an ITIN. CAAs can authenticate all identification documents for primary and secondary taxpayers, verify that an ITIN application is correct before submitting it to the IRS for processing and authenticate the passports and birth certificates for dependents. This saves taxpayers from mailing original documents to the IRS.
  • In advance, call and make an appointment at a designated IRS Taxpayer Assistance Center to have each applicant’s identity authenticated in person instead of mailing original identification documents to the IRS. Each family member applying for an ITIN or renewal must be present at the appointment and must have a completed Form W-7 and required identification documents. See the TAC ITIN authentication page for more details.


Avoid common errors now and prevent delays next year

Federal tax returns that are submitted in 2021 with an expired ITIN will be processed. However, certain tax credits and any exemptions will be disallowed. Taxpayers will receive a notice in the mail advising them of the change to their tax return and their need to renew their ITIN. Once the ITIN is renewed, applicable credits and exemptions will be restored, and any refunds will be issued.


Additionally, several common errors can slow down some ITIN renewal applications. These mistakes generally center on:

  • mailing identification documentation without a Form W-7,
  • missing information on the Form W-7, or
  • insufficient supporting documentation, such as U.S. residency documentation or official documentation to support name changes.


The IRS urges any applicant to check over their form carefully before sending it to the IRS. As a reminder, the IRS no longer accepts passports that do not have a date of entry into the U.S. as a stand-alone identification document for dependents other than U.S. military personnel overseas. The dependent’s passport must have a date of entry stamp, otherwise the following additional documents to prove U.S. residency are required:

  • U.S. medical records for dependents under age 6,
  • U.S. school records for dependents under age 18, and
  • U.S. school records (if a student), rental statements, bank statements or utility bills listing the applicant’s name and U.S. address, if over age 18.


To expand ITIN services, the IRS encourages individuals to apply for the Acceptance Agent Program

To increase the availability of ITIN services nationwide, particularly in communities with high ITIN usage, the IRS continues to actively recruit Certifying Acceptance Agents and accepting applications year-round. Interested individuals are encouraged to review all CAA program changes and requirements and submit an application to become a CAA.

Have IRS Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

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

CC's Memo Determines that Daily Fantasy Sports Operators is Liable For Excise Taxes On Wagering

In Legal Advice issued by the Chief Counsel's office in 2020-009 ("Memo"), the IRS has determined that an organization operating daily fantasy sports (DFS) games is liable for the excise tax on wagers and the occupation excise tax on wagering businesses and is required to register as a wagering business with the IRS. 

IRC §4401(a) generally imposes a tax on "wagers." A wager is (A) any wager with respect to a sports event or a contest placed with a person engaged in the business of accepting such wagers, (B) any wager placed in a “wagering pool” with respect to a sports event or a contest, if such pool is conducted for profit, and (C) any wager placed in a lottery conducted for profit. The tax on wagers is imposed on the person engaged in the business of accepting wagers ("wagering business"). (IRC §4401(C)).

Each person engaged in the wagering business must pay a $500 annual “occupation tax.” Generally, every person required to pay the tax on wagers is required to register with the IRS. 

Generally, traditional fantasy sports are games where participants assemble simulated, “fantasy” teams with rosters of actual players from the real teams in a sports league (such as the National Football League (NFL) or the National Basketball Association (NBA)). The participants accumulate points based on the actual game performances of the selected players. Scoring is based on the selected players’ performance statistics or measures that are converted into points. Each participant then receives a “total fantasy score” that is determined by compiling the individual fantasy scores of each player in the participant’s roster or lineup. The participants compete against one another based on their total fantasy score. (Humphrey v. Viacom, Inc., (DC NJ 2007) 2007 WL 1797648)

A version of fantasy sports, daily fantasy sports (DFS), takes place on a DFS operator’s website and is accessed via computer or mobile software applications. DFS operators’ offerings cover several actual professional sports leagues, as well as college sports, and some e-sports. 

DFS has many key differences from traditional fantasy sports games. For example, unlike traditional fantasy sports games, DFS contests are not tied to a specific sporting event, but typically occur daily, and the participants tend to be a much larger group of strangers.

Also, rather than drafting players as they do in traditional fantasy sports games, each DFS participant is given an equal amount of fictitious money known as a “salary cap.” The DFS operator sets each player’s “salary” or “price” commensurate with the player’s perceived value, not unlike how bookmakers set wagering odds in traditional sports gambling. A participant may select the same players for their fantasy team as other participants so long as those selections do not exceed that participant’s salary cap.

Another important distinction between traditional fantasy sports and DFS is the treatment of the entry fee associated with each. Although participants in both types of fantasy sports typically pay a fee to participate, the pool of money generated by entry fees is generally given entirely to the winner or winners of the traditional fantasy league. In contrast, in DFS a portion of the fees collected is not paid out to the winner or winners but is retained by the DFS operator. 

The office of Chief Counsel has determined that a DFS operator is liable for (1) the excise tax on wagers; and (2) the wagering occupation excise tax and, therefore, is required to register as a wagering business with the IRS. 

Have IRS Gambling Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

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