IRS Examination Issues

Transcription

1 IRS Examination Issues Presented by Manuel E. Pravia, CPA Director, Tax & Accounting Services Morrison, Brown, Argiz & Farra LLC December 16, 2011

2 About the Presenter Manuel E. Pravia, CPA, is a Director in the Tax & Accounting Services department of Morrison, Brown, Argiz & Farra, LLC. His experience over the past 20 years spans various industries, such as insurance and financial institutions, as well as international tax (including corporate, foreign nationals, and expatriates). He also focuses on corporate tax accounting issues (now ASC 740), an area that he dealt with extensively during his ten years of experience at several prominent South Florida companies. Manny regularly presents at continuing professional education seminars and has been an instructor for Becker CPA Review. He is also an adjunct professor in the FIU School of Accounting. Morrison, Brown, Argiz & Farra, LLC is one of the nation's Top 40 certified public accounting and advisory firms and the largest Florida-based accounting firm in the state. Ranked for the last 15 years as one of the top 25 performing firms in the country on INSIDE Public Accounting's "Best of the Best" list, MBAF provides value-added assurance, domestic and international tax services and management advisory services such as litigation support, business consulting and technology solutions to entrepreneurs, privately-held businesses, wealthy individuals, family groups, private and public corporations, exempt organizations and legal practitioners across a broad range of industries. More than 400 highly-qualified partners and employees serve domestic and international clients in more than 45 states and 44 countries from offices in Miami, New York, Baltimore, Boca Raton, Boulder, Fort Lauderdale, Orlando, Valhalla (NY) and Ahmedabad (India). For more information about the Firm, visit 1

3 Disclaimer This document is a general discussion. The outcome of any specific matter depends upon the specific facts and circumstances. The information presented is not a substitute for professional advice. The views expressed do not necessarily represent MBAF s views or policies. Pursuant to Internal Revenue Service Circular 230, you are hereby informed that any tax advice set forth herein with respect to U.S. federal tax issues was not intended or written to be used, and cannot be used, by you or any taxpayer, for the purpose of avoiding any penalties that may be imposed on you or any other person under the Internal Revenue Code. 2

4 Current environment Budget deficits: need to either increase revenue or decrease spending Increase in foreign investment in the U.S. U.S. persons could be escaping tax on worldwide income Marked increase over the past months Recent losses filing carryback claims Compliance is main focus 3

5 Individuals Unreported income Matching to information reporting On the side endeavors Fringe benefits Expenses Schedule A Business Schedule C Schedule E 4

6 Small businesses Income tax Unreported income Expense substantiation (business v. personal) Payroll tax Employee v. contractor Reasonable compensation to S-corp shdrs Information reporting 1099s

7 Large Business & International Tier I issues: highest compliance risk Multiple industries, large numbers of taxpayers, significant dollar risk, substantial compliance risk, or are high visibility U.S. withholding agents onon-residents U.S. source income: only opportunity to tax Tier II issues: industry-specific 6

8 International Non-resident aliens One and only opportunity to tax Withholding on FDAP Real estate transactions (FIRPTA) Citizens/tax residents FBAR Foreign investments ocfc, PFIC, disclosure (form 8938) 7

9 Documentation Contemporaneous Completeness Machine sensible records Quickbooks/other acctg package files IRS FAQs at 8

10 What to expect and how to handle Types Desk/correspondence audit On-site Process Communication Closing the examination and beyond No two audits are the same Examiners background Target industries 9