The IRS on Friday issued two related proposed regulation projects on health care coverage reporting requirements under the Patient Protection and Affordable Care Act, P.L. 111-148. One set of proposed regulations gives guidance to providers of minimum essential health coverage that are subject to the information-reporting requirements of Sec. 6055
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TOPICS / TAX
IRS practice & procedure
No constructive dividend from services rendered at cost
The Tax Court held that the sole owner of a construction corporation did not receive a constructive dividend in the amount of forgone profit when the corporation built a lakefront home for him and his wife at cost. The shareholder fully reimbursed the corporation for its costs, including overhead, and
IRS acquiesces to broader Tax Court review of innocent spouse cases
In a favorable development for taxpayers seeking innocent spouse equitable relief, the IRS announced that it will acquiesce to a Ninth Circuit holding (Wilson, 705 F.3d 980 (9th Cir. 2013), aff’g T.C. Memo. 2010-134) that allowed the Tax Court to consider newly developed information during trial. The IRS had argued
State tax tribunals: A growing trend
The recent growth of the independent tax tribunal as a means to resolve state tax issues prior to trial is a significant development in the area of adjudicating state tax appeal controversies. The use of an impartial, independent forum outside the dominion and control of the state tax authority is
IRS proposes increased user fees for installment agreements, offers in compromise
On Thursday, the IRS issued proposed regulations to raise user fees for installment agreements from $105 to $120 and for offers in compromise from $150 to $186. The new fees are scheduled to take effect Jan. 1, 2014 (REG-144990-12). The user fees have not been raised since 2007 for installment
Final rules issued on individual health care mandate
The IRS released final regulations Tuesday on the Sec. 5000A shared-responsibility payment—the penalty or tax imposed on individual taxpayers who do not obtain minimum essential health care coverage beginning in 2014 (known as the “individual mandate”) (T.D. 9632). The final rules adopt the proposed regulations issued in January with a
Proposed rules reset limitation for pursuing equitable innocent spouse relief
On Monday, the IRS issued proposed regulations under Secs. 6015(f) and 66(c) changing the deadline for taxpayers to request innocent spouse relief from joint liability (REG-132251-11). The proposed rules generally adopt new time limitation rules announced in Notice 2011-70, and, as a result, the regulations are effective the date the
CPAs and the trust fund recovery penalty
CPAs and other accounting professionals should take note of a recent federal district court decision imposing joint and several liability against outside accountants for failure to pay a distressed client’s employment withholding taxes. In Erwin, No. 1:06CV59 (M.D.N.C. 2/5/13), a federal district court rendered judgment pursuant to Sec. 6672 against
Loan guarantee terminates IRA
The Tax Court held that two taxpayers’ personal guarantees of a loan to a company whose stock was owned by their individual retirement accounts (IRAs) were indirect extensions of credit to the IRAs, a prohibited transaction. Thus, the IRAs ceased to qualify as IRAs at the beginning of the tax
The rules on providing client records
Suppose a CPA who prepared a client’s tax returns receives a request from the client that the CPA transfer all of the client’s tax records to a new firm. The client includes the appropriate Sec. 7216 consent to disclose authorization to transfer the records. What are the CPA’s responsibilities and
Identity theft protection process at IRS needs improvements, TIGTA says
Identity theft was the number one type of consumer complaint in 2011, according to the Federal Trade Commission, and some practitioners have asked if tax-related identity theft has become an epidemic. In light of the growing problem, the Treasury Inspector General for Tax Administration (TIGTA) recently audited the IRS’s Taxpayer
IRS provides details about postponed employer health care penalty and information reporting
On Tuesday, the IRS made official the postponement of the large-employer health care penalty and certain information reporting rules that had been informally announced July 2 on a Treasury Department blog. Notice 2013-45 postpones the information reporting rules under Secs. 6055 and 6056 and the Sec. 4980H shared responsibility penalty
IRS finds widespread noncompliance by colleges and universities
The IRS published its final report concerning its Colleges and Universities Compliance Project, finding compliance issues related to unrelated business taxable income (UBTI) and compensation practices. The IRS conducted the study to find out why colleges and universities had so much unrelated business activity but owed so little tax and
Basis reporting for debt instruments and options is phased in
In final regulations (T.D. 9616), the IRS is phasing in basis reporting requirements under Sec. 6045(g) for debt instruments and options. The IRS took the action in response to comments about the complexity of complying with these rules and to give brokers ample time to develop and implement reporting systems.
Voluntary Classification Settlement Program
Determining proper classification of workers, either as independent contractors or employees, can be a subjective challenge for employers. The determination of whether a worker is an employee or an independent contractor is based on the facts and circumstances surrounding the individual’s work for the employer. Generally, the more the employer
Requesting a first-time abatement penalty waiver
The IRS’s first-time abatement (FTA) penalty waiver, although introduced 12 years ago, remains little known and often unrequested by qualifying taxpayers. It allows a first-time noncompliant taxpayer to request abatement of certain penalties for a single tax period. Individual taxpayers may request an FTA of a failure-to-file or failure-to-pay penalty.
GAO: Foreign account “quiet disclosures” may be much higher than detected
More than 10,000 taxpayers showed signs of having avoided offshore penalties by making “quiet disclosures” of foreign bank accounts for tax years 2003 through 2008, the U.S. Government Accountability Office (GAO) reported, a period for which the IRS has detected several hundred quiet disclosures. Filing data also suggest many more
CPA’s nonfiling ruled inadmissible for abusive shelter promotion penalty
Evidence of a CPA’s failure to file and pay his own taxes was not properly admissible in determining his penalty for promoting an abusive tax shelter, the Fourth Circuit held. The appellate court thus vacated a $2.6 million penalty and liability verdict against CPA Robert Nagy and reversed and remanded
Automated substitutes for return drop by half
After increasing eightfold from fiscal 2002 to 2011, the number of returns generated by the IRS’s Automated Substitute for Return (ASFR) program fell by half in fiscal 2012, and tax assessments under the program decreased by 54% (see related graphic, “Automated Substitutes for Return Decline”). The ASFR program uses information
Taxpayer can contest trust fund penalty where son tossed Letter 1153 into basement
A taxpayer successfully challenged the IRS’s filing of a notice of federal tax lien against him for a trust fund recovery penalty on the basis that he did not have an opportunity to contest the liability on which the assessment underlying the lien was based. The taxpayer argued he had
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Tax season quick guide
Get ready for tax season with the JofA’s annual filing season quick guide, an easy-to-use compilation of dollar thresholds, tax tables, standard amounts, credits, and deductions. Download and print for quick reference this tax season.
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