The Tax Court holds that the IRS must fully consider an offer in compromise to promote effective tax administration. The Tax Court held that the IRS failed to adequately consider on public policy or equity grounds an offer in compromise (OIC) that a married couple had made, and it remanded
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TOPICS / TAX
IRS practice & procedure
Practitioners suspended or disbarred from practice before the IRS can prepare tax returns
The IRS has decided that, as a result of the recent decision preventing it from regulating unenrolled tax return preparers, disbarment or suspension from practice before the IRS cannot include a ban on tax return preparation or blocking an individual’s preparer tax identification number (PTIN). Therefore, the Service announced that
Tax owed on full sale price where taxpayer won’t provide cost basis information
The Eleventh Circuit Court of Appeals upheld a deficiency notice of more than $5 million against a taxpayer who reported adjusted gross income of $22,921 and taxable income of $13,221 on his late-filed 2006 return (Hoang, No. 13-14398 (11th Cir. 5/2/14), aff’g T.C. Memo. 2013-127). Diep Hoang’s 2006 tax return
IRS announces two-year FATCA enforcement transition period
Foreign financial institutions that make a good-faith effort to comply with the requirements of the Foreign Account Tax Compliance Act (FATCA) will benefit from lighter enforcement during 2014 and 2015, the IRS announced on Friday (Notice 2014-33). The IRS is treating those years as a “transition period” for the implementation
New rules for innocent spouse equitable relief
A new, more comprehensive revenue procedure may spell equitable relief for many more taxpayers.
Final FATCA rules are issued
The IRS released regulations needed to implement the Foreign Account Tax Compliance Act (FATCA). FATCA, enacted as part of the Hiring Incentives to Restore Employment Act of 2010, P.L. 111-147, requires U.S. withholding agents to withhold tax on certain payments to foreign financial institutions (FFIs) that do not agree to
Tenth Circuit throws out IRS summonses
In a decision that creates a split from five other circuit courts, the Tenth Circuit Court of Appeals quashed IRS summonses that were issued after the 23-day period required under Sec. 7609(a)(1) (Jewell, Nos. 13-6069, 13-7038 (10th Cir. 4/28/14)). When the IRS issued four summonses to banks seeking records about nursing
Taxpayers must reveal tax shelter opinion letters despite attorney-client privilege
By attempting to establish good-faith and state-of-mind defenses, taxpayers put their legal knowledge and understanding into contention, and therefore they waived attorney-client privilege, the Tax Court held on Wednesday (Ad Investment 2000 Fund LLC, 142 T.C. No. 13 (2014)). As a result, the court will order the taxpayers to produce
Critical lessons from the Peco Foods case
The Tax Court’s Peco Foods ruling imparts several critical tax lessons for all taxpayers in an acquisition mode, regardless of whether they plan to pursue a cost-segregation study.
IRS clarifies: Electronic signatures permitted for Form 8879
Correcting an oversight, the IRS on Thursday updated the online version of Publication 1345, Handbook for Authorized IRS e-File Providers of Individual Income Tax Returns (rev. 3/20/14), to clarify that electronic signatures are permitted for Form 8879, IRS e-File Signature Authorization, as well as Form 8878, IRS e-file Signature Authorization
IRS expands use of electronic signatures
With the updated version of IRS Publication 1345, Handbook for Authorized IRS e-File Providers of Individual Income Tax Returns (rev. 3/11/14), the IRS provides new methods for taxpayers to electronically sign Form 8878, IRS e-file Signature Authorization for Form 4868 and Form 2350, the e-file signature authorization form. Taxpayers can
Take steps to meet the EITC due-diligence requirements
The IRS is scrutinizing returns that claim the earned income tax credit (EITC) and paying attention to return preparers who it suspects are filing inaccurate EITC claims. New due-diligence rules require practitioners to document more information and report it to the IRS with every return filed.
Supreme Court resolves circuit split on gross-valuation-misstatement penalty
The U.S. Supreme Court held that the 40% penalty for a gross valuation misstatement applied when the partnerships at issue had been determined to be shams that lacked economic substance, and, as a result, the partners’ outside basis in the partnerships was zero (Woods, No. 12-562 (U.S. 12/3/13), rev’g 471
Report reveals breadth of criminal tax activities
From shady tax preparation businesses to identity theft gangs to corrupt IRS agents, the IRS Criminal Investigation division’s annual report reviewing its accomplishments in 2013 reveals the wide range of criminal tax activities it investigated in the past year. And, the report points out, despite a continued significant decline in
Final FATCA rules are issued
On Thursday, the IRS released a large package of regulations needed to implement the Foreign Account Tax Compliance Act (FATCA). FATCA, enacted as part of the Hiring Incentives to Restore Employment Act of 2010, P.L. 111-147, requires U.S. withholding agents to withhold tax on certain payments to foreign financial institutions
New IDR procedures postponed until March 3
The IRS announced in an email to practitioners that it is pushing back the effective date for its new information document request (IDR) procedures to March 3 (e-News for Tax Professionals 2014-6 (Feb. 7, 2014)). The new procedures had been scheduled to start Jan. 2. The new IDR procedures were
Penalty calculation properly based on erroneous credits, Tax Court holds
The Tax Court held that the amount of tax shown on a return was reduced by refundable credits, but not below zero, for purposes of calculating the Sec. 6662(a) accuracy-related penalty. The court reached that conclusion even though the taxpayers were not entitled to the credits they had claimed. The
Simplified method offered for requesting extended time to make portability election
The IRS on Monday offered certain executors a simplified way to request an extension of time to make the “portability” election to transfer a deceased spouse’s unused estate tax exclusion to the surviving spouse (Rev. Proc. 2014-18). Executors of estates of spouses who died in 2011, 2012, or 2013 and
Supreme Court resolves circuit split on 40% gross valuation misstatement penalty
On Tuesday, the U.S. Supreme Court held that the 40% penalty for a gross valuation misstatement applied when the partnerships at issue had been determined to be shams that lacked economic substance, and, as a result, the partners’ outside basis in the partnerships was zero (Woods, No. 12-562 (U.S. 12/3/13),
IRS bound to honor designation of voluntary payment by one taxpayer of another’s liability
In a reviewed opinion, the Tax Court held that the IRS must follow a corporation’s designation of voluntary payments toward the income tax liabilities of its owners/employees. However, because the payments did not represent taxes withheld at the source, the IRS was allowed to levy on the assets of the
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Flip out with the latest Tech Q&A
The September Technology Q&A column shows how to create dynamic to-do lists with Excel's checkboxes and also how to set up multifactor authentication texts that don't rely on phones. Flip through both items and view a video walkthrough in our digital format.
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