IRS issues instructions related to § 199A qualified income business deduction. . .
On September 24, 2019, the Internal Revenue Service issued instructions related to certain interests in rental real estate for purposes of the § 199A qualified income business deduction.
Revenue Procedure 2019-38 contains a safe harbor allowing certain interests in rental real estate, including interests in mixed-use property, to be treated as a trade or business for purposes of the qualified business income deduction under § 199A of the Internal Revenue Code.
If an interest in rental real estate satisfies the safe harbor requirements, it will be treated as a single trade or business for purposes of the § 199A deduction. If an interest fails to meet all the relevant requirements, it may still be treated as a trade or business for purposes of the § 199A deduction if it still independently meets the definition of a trade or business in the § 199A regulations.
This safe harbor is available for taxpayers seeking to claim the § 199A deduction with respect to a “rental real estate enterprise” – defined strictly for safe harbor purposes as an interest in real property held to generate rental or lease income. It may consist of an interest in a single property or interests in multiple properties.
To learn more about the requirements that must be met by taxpayers or relevant passthrough entities (RPEs) to qualify for this safe harbor, call THE TAX EXPERTS at the Thorgood Law Firm at 212-490-0704. www.thorgoodlaw.com. The consultation is FREE!
IRS releases new tax gap estimates showing consistent compliance rates with past years.
On September 26, 2019, the Internal Revenue Service released tax gap estimates for tax years 2011, 2012 and 2013. These past estimates indicate the nation’s tax compliance rate has not substantially changed from prior years.
The gross tax gap is the difference between true tax liability for a given period and the amount of tax that is timely paid.
The average gross tax gap from tax years 2011, 2012 and 2013 was estimated at $441 billion per year. After late payments and enforcement efforts were added to the equation, the net tax gap was estimated at $381 billion. These tax gap estimates indicate that approximately 83.6%, of taxes are paid voluntarily and timely.
The new tax gap estimate is essentially unchanged from the revised Tax Year 2008-2010 estimate of 83.8%. After enforcement efforts are factored, the estimated proportion of taxes eventually paid is 85.8% for the period from 2008 through 2013. These are close to the estimates for TY 2001 and TY 2006, which were 83.7% and 82.3%, respectively.
The voluntary compliance rate of our tax system is crucial to our nation’s fiscal condition. An increase of only one-percentage-point in voluntary compliance represents almost $30 billion in additional tax revenue.
The IRS aggressively pursues taxpayers who owe delinquent taxes. The IRS currently collects more than $3 trillion annually in taxes, penalties, interest and user fees. Any taxpayer that owes delinquent taxes and needs to prepare and file overdue tax returns may call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com for experienced guidance and assistance. Call 212-490-0704.
