A married couple who filed tax returns listing all income and tax due as “zero” were denied refunds in a decision by the U.S. Court of Appeals for the Federal Circuit (Waltner, No. 10-CV-225 (Fed. Cir. 4/19/12)). The court dismissed the couple’s tax refund suit for lack of jurisdiction, holding
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TOPICS / TAX
IRS practice & procedure
IRS creates priority phone service for correspondence audits
The IRS on April 2 launched a new toll-free phone service for tax professionals to use when responding to correspondence examination telephone calls or letters. The IRS calls the new service the Practitioner Priority Service (PPS). Practitioners can call a toll-free number (866-860-4259) and select the correspondence examination option (option
Colorado’s “Amazon” law requiring out-of-state retailers to report sales held to be unconstitutional
The U.S. District Court for the District of Colorado has held that the Colorado law requiring out-of state retailers to report information about customers’ purchases to each customer and to the Colorado Department of Revenue (DOR) violated the Commerce Clause of the United States Constitution (Direct Marketing Ass’n v. Huber,
Medical Center’s FICA refund claim dismissed as untimely
The First Circuit Court of Appeals dismissed a suit for refund of Federal Insurance Contributions Act (FICA) taxes Maine Medical Center mistakenly paid for its medical residents in the 2001 tax year, upholding a lower court determination that Maine Medical’s discovery requests were not warranted and that the information it
IRS launches third offshore voluntary disclosure program
With more than $4.4 billion collected in its 2009 and 2011 voluntary disclosure initiatives, the IRS in January announced its third program designed to encourage taxpayers with undisclosed offshore accounts to disclose them and fulfill related tax obligations (IR-2012-5). The new program, unlike the previous initiatives, has no deadline to
Innocent spouse is entitled to refund
The Tax Court recently found that a taxpayer who petitioned for relief under Sec. 6015(f) was not precluded from receiving a refund of money levied from a joint bank account. The court ruled that relevant Massachusetts law gave the innocent spouse a 50% ownership interest in the account. Thus, under
Homebuyer credit denied where former home still in use
A house that a married couple continued to use while trying to sell it was their principal residence during that period; therefore, they did not meet the timing requirement to qualify for an $8,000 first-time homebuyer credit when they purchased a new house, the Tax Court held. Francis and Maureen
More-generous innocent spouse rules proposed
In response to court decisions and the IRS’ claim that its experience applying equitable relief has given it new insight, the IRS issued a proposed revenue procedure changing the way it will treat requests for equitable innocent spouse relief under Secs. 66(c) and 6015(f) (Notice 2012-8). The three most significant
Uncertain tax position documents not protected
The U.S. Court of Federal Claims held that a taxpayer had to produce documents requested by the IRS containing information about its tax reserve for uncertain tax positions reported in its financial statements and other information concerning tax advice. According to the court, since the taxpayer had relied on the
Proposed regs. would require taxpayers that received EINs to update information
On Wednesday, the IRS issued proposed regulations that would require taxpayers that obtain employer identification numbers (EINs) to update their information with the IRS (REG-135491-10). The IRS issues EINs (which take the form 00-0000000) to employers, sole proprietors, corporations, partnerships, nonprofit associations, trusts, estates, government agencies, certain individuals, and other
FBAR and Foreign Financial Reporting Resources
TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), must be filed by U.S. persons having a financial interest in or signature authority or other authority over any financial account in a foreign country if the aggregate value of these accounts exceeds $10,000 at any time during the
Tax Court disallows cost segregation of apartment building components
In a case exploring the extent of allowable cost segregation in depreciable rental real estate, the Tax Court held that all but a small handful of items identified by the building’s owner had to be depreciated over the life of the building (AmeriSouth XXXII, Ltd., T.C. Memo. 2012-67). AmeriSouth, a
IRS expands “Fresh Start” initiative, provides penalty relief for unemployed
The IRS announced an expanded “Fresh Start” initiative Wednesday to help struggling taxpayers with a number of measures for relief (IR-2012-31). One of the most noteworthy of these measures is the abatement for the 2011 tax year of the failure-to-pay penalty (0.5% per month of the tax due up to
Tax Court says limitation on deductible mortgage interest applies to unmarried co-owners
On Monday, the Tax Court held that unmarried co-owners were together subject to the $1.1 million limit on personal residence indebtedness under Sec. 163(h)(3) (Sophy, 138 T.C. No. 8 (3/5/12)). The taxpayers had argued that, for unmarried taxpayers, each owner should be subject to a separate limit, even though married
Whistleblower allowed anonymity in Tax Court
While denying a tax whistleblower’s appeal of an IRS award rejection, the Tax Court agreed to grant the whistleblower anonymity in court proceedings and to redact identifying information from the case record. The court said the requested relief was reasonably necessary to protect the petitioner’s privacy interests as a confidential
Guidance issued, form finalized for foreign asset reporting
The IRS issued temporary and proposed regulations (T.D. 9567; REG-130302-10) on the requirement that certain foreign financial assets be reported to the IRS for tax years beginning after March 18, 2010. Sec. 6038D requires individuals to report interests in “specified foreign financial assets” (SFFAs) when filing their federal income tax
Temporary regs change TIPS bond premium method
The IRS and Treasury issued proposed and temporary regulations (REG-130777-11; T.D. 9561) requiring the use of the coupon interest method to amortize a premium in excess of a de minimis amount related to Treasury inflation-protected securities (TIPS). The regulations apply to TIPS issued on or after April 8, 2011. TIPS
Correspondence audits need some work, tax community tells IRS
The IRS’ use of correspondence audits to resolve issues with tax returns has mushroomed over the past decade—but taxpayer satisfaction with the program is fairly low. According to the Treasury Inspector General for Tax Administration (TIGTA), only 48% of those surveyed by the IRS said they were either somewhat or
FinCEN postpones mandatory FBAR e-filing
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced that it is postponing until July 1, 2013, its requirement that Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), be filed electronically. FinCEN notes that the delay in the e-filing requirement does not relieve anyone of the
Eighth Circuit affirms S corporation shareholder’s compensation was not reasonable
The Eighth Circuit affirmed the District Court for the Southern District of Iowa’s decision that an S corporation shareholder’s $24,000 salary was not reasonable compensation and that the $91,044 salary determined by the government’s expert witness was (David E. Watson, P.C., No. 11-1589 (8th Cir. 2/21/12)). At issue is a
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