Steps to reduce tax and penalties on nonfilers

Article Abstract:

The IRS has embarked on a new program intended to draw nonfilers back into the tax system. Introduced in Oct 1992, the nonfiler program will rely heavily on the Service's information matching system, which is capable of checking income information records against taxpayer accounts, in identifying taxpayers who fail to file tax returns. Approximately 2,000 agents are expected to implement the program. The IRS has announced that those who decide to return to the tax-system on their own volition will not face criminal prosecution. Despite this statement, the nonfiler program should not be mistaken as a tax amnesty because nonfilers will still be held liable for tax, interest and civil penalties. 'High flyer' taxpayers who have willfully and flagrantly avoided their tax obligations may be criminally prosecuted.

United States. Internal Revenue Service, Taxpayer compliance

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Utility of Crummey trusts expanded by new decision

Article Abstract:

A transfer to a Crummey trust is a useful technique in estate planning because it qualifies for the annual gift exclusion under Section 2503 (b), based on the 1968 decision of the Ninth CIrcuit. Crummey trusts were made even more flexible when the Tax Court recently allowed a shorter period for the withdrawal of rights and widened the class of qualified beneficiaries. For proper planning of Crummey trusts, practitioners need to be knowledgeable of various rulings, especially those that pertain to the requirements in setting up trusts, and to the lapse of withdrawal powers.

Estate planning, Trusts and trustees, Trustees, Trusts (Law), Crummey trusts

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Partial innocent spouse relief is possible

Article Abstract:

The Tax Court has granted innocent spouse relief under Section 6013(e) in two related tax evasion cases. The husbands, in both cases, did not discuss their business with their wives but filed false joint tax returns for which they were later convicted. The court specified that innocent spouse relief could be granted only on part of a disputed return. The implications of the court's rulings on the interpretation of Section 6013(e) are also analyzed.

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