Some Q & A highlights from NSA's Orlando Tax Forum speakers: Bob Cross and Tina Lee!
Question: How do I handle the issue of consents when the taxpayer does not read or speak English and can not even read their native language?
Answer: In order for a consent to be valid it must have been signed by the taxpayer KNOWINGLY AND WILLINGLY! If you are not fluent enough in a language the taxpayer understands to be professionally convinced that the taxpayer fully understands the document and is signing both knowingly and willingly you must either withdraw from the engagement or proceed as though the consent form was not signed. While hiring an interpreter is an option, I just don't see how you can be professionally confident that all the required elements are present.
Question: How do you terminate a form 8821 information disclosure authorization if you don't have a copy of the original form?
Answer: You send a letter of revocation to the applicable IRS Service Center. The letter must adequately identify the taxpayer, the information authorized to be disclosed (including the tax years) and the person or entity that was authorized to receive the disclosed information.
Question: Is there a quick rule of thumb that I can use to determine if an S Corporation Stockholder is reporting reasonable compensation?
Answer: No. If we have learned anything from the extensive litigation on this issue, it is that every situation is unique. The courts have identified multiple factors over the years but still make allowances for circumstances that are unique to each case. The court record of J D Associates provides a very informative guideline. JD & Associates, Ltd. DC-ND, Dkt. No. 3:04-cv 59, Findings of Fact & Conclusions of Law ( 2006)
Question: If an office building is owned by a C Corporation and rented/leased to an S Corporation, do we still have a self-rental issue?
Answer: The attribution rules determine the answer. If both entities are controlled by the same individual ownership, then self-rental remains as an issue.