Letter 6336 requests that taxpayers review their micro-captive insurance filing positions and notify the IRS in writing by the response due date stated in the letter, if they have discontinued taking deductions or other tax benefits from a micro-captive insurance transaction. The letter also encourages taxpayers to consult with an independent tax advisor in regard to prior year filing positions and consider filing amended returns to bring themselves back into compliance if warranted. The letter provides a hotline number for taxpayers to contact us.
The IRS understands that due to the current conditions, taxpayers may need additional time beyond the stated response due date to provide their written response. As such, the IRS automatically extended all letters with a May 4, 2020 response due date to June 4, 2020. Taxpayers who received a letter with response due date after May 4, 2020 and who need additional time should call the hotline number included in the letter. The IRS will continue to monitor the situation, including the impact of current operations.
Several recent U.S. Tax Court decisions have confirmed that certain micro-captive arrangements are not eligible for claimed federal tax benefits. If you have taken a deduction or other tax benefit on a prior year tax return related to micro-captive insurance, you can amend your return to remove these benefits.
If you face a high-stakes cryptocurrency tax issue, including potential past noncompliance and ongoing or contemplated transactions, please reach out
ReplyDeleteIn February 2020, the IRS announced that it would step up efforts to contact high-income taxpayers (defined as earning $100,000 or more per year), who in prior years have failed to file one or more tax returns. The IRS’s enforcement effort in 2020 was announced, in part, in reaction to a 2018 GAO study that showed a 40% decline in non-filer investigations since 2010. Indeed, by 2018, non-filer investigations declined to .8 million for individuals and .4 million for businesses. The decline in IRS non-filer investigations was a result of reduced IRS resources and funding.
ReplyDeleteAlmost a year later, and as a result of the IRS’s efforts, tax practitioners are seeing an increase in non-filer inquiries. High net worth non-filer taxpayers and businesses who had gone undetected for years are suddenly finding themselves owing significant tax, penalties and, in some cases, facing criminal prosecutions.
The donation of a permanent conservation easement on farm or ranch land can provide a significant tax benefit to the donor. The rules are complex and must be carefully complied with to obtain the tax benefits that are possible – qualified farmers and ranchers can deduct up to 100 percent of their income (i.e., the contribution base). For others, the limit is 50 percent of annual income.
ReplyDeleteBut, the IRS has a history of auditing returns claiming deductions for conservation easements, and winning in court on the issue.