This is the one-stop shop for all the updates you need to know for this year’s tax filing season. Find resources from the Journal of Accountancy, plus tax return checklists and tax savings tips from the AICPA, categorized by tax topic. INDIVIDUAL TAX Free File Program Expanded to Include Returns Filed
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TOPICS / TAX
Individual income taxation
First-Time Homebuyer Credit Recapture Causing IRS Processing Problems
On Wednesday, the IRS announced that it is having problems processing tax returns that involve repayment of the IRC § 36 first-time homebuyer credit for 2008 home purchases. The IRS stated that it has assigned additional staff and resources to the issue to resolve it promptly. One group of affected
IRS Proposes Permanently Extending Period for Receiving Authorization to Disclose Return Information
The IRS on Thursday issued a proposed regulation that would permanently extend from 60 days to 120 days the permitted period for submission of taxpayer authorizations allowing disclosure of returns and return information to third-party designees (REG-153338-09). IRC § 6103(c) authorizes the IRS to disclose a taxpayer’s returns or return
2011 Automobile Depreciation Limits Released
The IRS on Tuesday issued the 2011 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under IRC § 280F (Revenue Procedure 2011-21). This year, the IRS has provided the limitation amounts for vehicles placed in service in 2011 for which bonus depreciation under IRC §
Line Items
DEFYING COURTS, IRS FINALIZES BASIS OVERSTATEMENT RULES The IRS released final regulations defining an omission from gross income for purposes of the extended six-year limitations period for assessment of tax (TD 9511). The regulations finalize without change temporary regulations (TD 9466) that the Tax Court held to be invalid last
When Is a Supplemental Claim a New Claim?
For taxpayers, timeliness is crucial for certain acts, such as filing a refund claim with the IRS within the statute of limitation period. A refund claim must set forth in detail each ground upon which a credit or a refund is claimed and include facts sufficient to apprise the IRS
IRS Lists Countries With Adverse Conditions for IRC § 911 Purposes in 2010
The IRS has waived the eligibility requirements under IRC § 911(d)(1) for certain taxpayers who did not meet the requirements because of adverse conditions in the foreign country in which they lived (Revenue Procedure 2011-20). The affected countries for 2010 are Haiti and Côte d’Ivoire (also known as Ivory Coast).
House Committee Sends 1099 Repeal to the Floor; Senate Passes Its Own Version of Repeal
The House Ways and Means Committee approved a bill Thursday that would repeal the expanded Form 1099 reporting requirements, voting 21–15 to send the measure to the full House of Representatives. Late on Thursday, the Senate passed the FAA Air Transportation Modernization and Safety Improvement Act (S 223) by a
IRS Starts Accepting Delayed Returns
The IRS on Tuesday announced that it has started accepting returns that it could not accept before because it was updating forms and reprogramming its systems (IR-2011-16). In December, the IRS informed taxpayers that because of the Dec. 17 enactment date of the Tax Relief, Unemployment Insurance Reauthorization, and Job
President Proposes 3-Year AMT Patch, Partial Relief on 1099s, Crackdown on Misclassification
President Barack Obama released his proposed budget for fiscal 2012 that would make several tax credits permanent, including the research and experimentation credit, and provide three more years of AMT relief, but would repeal or limit several other tax breaks. The budget would also set aside $240 million for initiatives
Overstatement of Basis Is Not Omission From Gross Income, Appeals Court Rules
For the second time in a week, a federal circuit court of appeals has handed the IRS a defeat on the issue of whether an overstatement of basis amounts to an omission from gross income for purposes of invoking the longer, six-year limitation period for assessing tax under IRC §
IRS Will Allow Costs of Breast Pumps as Deductible Medical Expenses
In a reversal of long-standing policy, the IRS announced it will treat expenses for breast pumps and supplies that assist in lactation as deductible medical expenses (Announcement 2011-14). The IRS also said that amounts that taxpayers are reimbursed for these expenses under a flexible spending arrangement, Archer medical savings account,
Another Circuit Says Overstatement of Basis Is Not an Omission From Gross Income
The ongoing controversy over whether a taxpayer’s overstatement of basis triggers a six-year statute of limitation period continues as the Fourth Circuit has held that the extended period does not apply (Home Concrete & Supply, LLC, No. 09-2353 (4th Cir. 2/7/11)). The taxpayers had artificially overstated the bases in their
IRS Announces Second Offshore Voluntary Disclosure Program
On Tuesday, the IRS announced that it is starting a new program designed to bring money held in foreign accounts back into the U.S. tax system and to help taxpayers with income from offshore accounts to comply with federal tax law. Under the program, taxpayers that disclose previously undisclosed foreign
Final Regs Issued on Treating Musical Works as Capital Assets
The IRS issued final regulations on Friday governing how to elect to treat the sale or exchange of a musical work or copyright in a musical work as a sale or exchange of a capital asset (TD 9514). The IRC § 1221(a)(3) definition of capital asset excludes certain property held
Foreign Housing Expense Limitations for 2011 Released
The IRS has provided the inflation-adjusted limitations on foreign housing expenses for 2011 (Notice 2011-8). Under IRC § 911(a), a qualified individual can elect to exclude from gross income his or her foreign earned income and housing costs. Section 911(c)(1) provides a formula for determining the excludible amount of the
IRS Revises Withholding Rules for Nonresident Alien Employees
On Wednesday, the IRS announced the 2011 procedures for withholding on wages of nonresident alien employees who work in the United States (Notice 2011-12). The new procedures apply to wages paid on or after Jan. 1, 2011. In 2010, special withholding procedures were instituted for nonresident aliens because they were
Individual Insurance Mandate Held Unconstitutional Again
A second federal district court has held that the individual insurance mandate in the health care reform legislation is unconstitutional (Florida v. Department of Health and Human Services, No. 3:10-cv-91-RV/EMT (N.D. Fla. 1/31/11)). And, in this case, the court has refused to sever the mandate from the rest of the
Fifth Circuit: IRS Lacked Diligence in Notifying Taxpayer
The Fifth Circuit reversed and remanded a Tax Court decision in a case the Tax Court had dismissed for lack of jurisdiction due to the taxpayer’s late filing of her petition contesting the IRS’ denial of innocent spouse relief. The appellate court held that the original notice of determination sent
How the IRS Examines Repair and Maintenance Costs
Taxpayers are generally allowed to deduct the cost of making incidental repairs to their property used in carrying on any trade or business under IRC § 162 and Treas. Reg. § 1.162-4. However, to be deductible currently, a repair cost must not be subject to capitalization under IRC § 263(a).
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