At this time of year, many charities see an upsurge in donations, and the federal tax deduction for charitable contributions is a significant incentive. The Tax Court recently highlighted how an apparently slight oversight in documentation can upend the interdependent relationship between donee and donor. General Substantiation Requirements The substantiation
Advertisement
TOPICS / TAX
IRS practice & procedure
Covered opinion rules would be eased
The IRS released proposed regulations that would eliminate the complex rules in Circular 230, Section 10.35, governing covered opinions (REG-138367-06). To replace them, the proposed regulations would expand the requirements for written advice under Circular 230, Section 10.37. The IRS notes in the preamble to the proposed regulations that “[y]ears
New ITIN procedures issued for 2013 filing season
As the IRS promised when it issued the strict new individual taxpayer identification number (ITIN) procedures earlier this year, it has issued slightly easier procedures, effective Jan. 1, 2013, for the 2013 filing season (FS-2012-11). While some requirements have been eased slightly, others have been made more stringent. The IRS
Rev. proc. updates guidance on adequate disclosure of return positions
The IRS released its annual update identifying when a taxpayer’s disclosure of an item or position in an income tax return is adequate for purposes of reducing the understatement of tax penalty and the tax return preparer penalty for understatement due to unreasonable positions (Rev. Proc. 2012-51). Rev. Proc. 2012-51
One-time abatement of $5,000 frivolous filing penalty announced
Taxpayers who have filed all required tax returns and paid all outstanding tax liabilities, including penalties (except for the Sec. 6702 penalty) and related interest, may qualify for a one-time reduction to $500 of any unpaid penalties that the IRS has assessed (Rev. Proc. 2012-43). Under Sec. 6702, a $5,000
TIGTA: IRS unable to detect ITIN fraud; AICPA urges changes
IRS management created an atmosphere that discourages tax examiners from identifying potentially fraudulent applications for individual taxpayer identification numbers (ITINs), the Treasury Inspector General for Tax Administration reported in August (TIGTA Rep’t No. 2012-42-081). ITINs allow individuals who are not eligible for Social Security numbers to obtain an identification number for
TIGTA: Appeals errors persist
The IRS Office of Appeals continues to make errors in classifying hearings and determining the statute of limitation on collections, the Treasury Inspector General for Tax Administration reported (TIGTA Rep’t No. 2012-10-077). The audit and report, required annually by statute, indicates that, based on statistical samples studied, the potential number
IRS delays Oct. 31 deadlines for taxpayers and preparers affected by Hurricane Sandy
On Wednesday, the IRS announced it is granting taxpayers and tax preparers affected by Hurricane Sandy until Nov. 7 to file returns and accompanying payments normally due on Oct. 31 (IR-2012-82).The relief applies to taxpayers and tax preparers in an area affected by Hurricane Sandy or otherwise affected by the
FATCA prop. regs. amended to extend various deadlines
The IRS is delaying various FATCA-related deadlines because it has received feedback that complying with the original deadlines and other requirements is proving to be impractical for some taxpayers (Announcement 2012-42). The announced changes modify the 388-page proposed regulations issued in February related to the Foreign Account Tax Compliance Act
TIGTA: IRS pays millions in unnecessary interest on NOL carrybacks
The Treasury Inspector General for Tax Administration (TIGTA) issued a report Monday in which it found that IRS delays in processing net operating loss (NOL) carrybacks result in the IRS’s paying millions of dollars in interest unnecessarily (TIGTA Rep’t No. 2012-40-111). According to TIGTA, the IRS pays these millions in
Whistleblower’s claim is not entitled to Tax Court review
In a case of first impression, the Tax Court held that it could not order the IRS to reopen an individual’s whistleblower claim under Sec. 7623(b), and the court dismissed his petition (Cohen, 139 T.C. No. 12 (2012)). Sec. 7623(b) authorizes an award to a whistleblower if the IRS proceeds
No deduction for bringing down the house
The Tax Court disallowed the taxpayers’ charitable contribution deduction for the value of a donated house that would later be destroyed in a training exercise by a county fire department. The court held that a deduction should not be allowed since the taxpayers did not transfer an undivided portion of an
IRS’s “Fresh Start” program expands payment options
Clients should always be encouraged to file their returns on time and pay as much of the balance due as possible, but those that cannot pay in full are not out of options. Changes the IRS has made as part of its “Fresh Start” initiative over the past two years
Responding to a 90-day letter
Under Sec. 6212(a) the IRS can issue a statutory notice of deficiency, also known as a 90-day letter, when it determines a deficiency in an income or estate and gift tax liability. A 90-day letter is a formal legal notice, sent by certified or registered mail. Taxpayers have a statutory
TIGTA recommends identity theft safeguards
The Treasury Inspector General for Tax Administration (TIGTA) reported that the IRS had failed to detect 1.5 million tax returns with potential identity-theft-related fraudulent tax refunds exceeding $5.2 billion for the 2011 filing season (TIGTA Rep’t No. 2012-42-080). The IRS itself reported that it detected 938,664 returns with fraudulent tax
TIGTA shines light on large tax delinquencies of federal government agencies
The Treasury Inspector General for Tax Administration (TIGTA) found that 70 federal agencies had unpaid employment taxes totaling $14 million, and 18 federal agencies were delinquent in filing 39 employment tax returns, as of Dec. 31, 2011, in a report issued Thursday (TIGTA Rep’t No. 2012-30-094). Although federal agencies are
PTIN information release concerns aired
The AICPA has expressed concerns to the IRS about the Service’s public release of information of CPAs and other federal tax return preparers the IRS collects as part of its preparer tax identification number (PTIN) registration requirement. Some of the PTIN information is subject to public release under the federal
U.S. attorneys are authorized to fight stolen identity refund fraud
In an effort to better combat crimes involving stolen identities and tax refund fraud, the Justice Department is changing the procedures it uses to handle such cases. Under Tax Division Directive No. 144, released on Wednesday, U.S. attorneys’ offices will no longer need prior authorization from the Justice Department’s Tax
Use of wrong delivery service results in dismissal of Tax Court petition
Taxpayers who chose the wrong type of FedEx delivery service did not get the benefit of the timely mailing/timely filing rule and as a result had their petition dismissed by the Tax Court (Scaggs, T.C. Memo. 2012-258). The taxpayers had filed a petition in Tax Court challenging an IRS notice
Statutory definition of notional principal contract extended further through 2013
The IRS announced that, in response to comments that the proposed effective date of regulations issued under Sec. 871(m) would not give taxpayers sufficient time to build and test the systems required to implement the rules, it was further extending the effective date until 2014 (Correction to T.D. 9572, 8/31/12).
Features
FROM THIS MONTH'S ISSUE
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.
From The Tax Adviser
August 30, 2025
2025 tax software survey
July 31, 2025
