The U.S. Supreme Court issued a decision Tuesday holding that a conviction under Sec. 7206 for willfully filing a false tax return (or for aiding and abetting filing a false tax return) is an aggravated felony that can result in deportation. Kawashima v. Holder, S. Ct. Dkt. No. 10-577 (U.S.
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TOPICS / TAX
IRS practice & procedure
FinCEN once again extends FBAR filing deadline for certain financial professionals
The Financial Crimes Enforcement Network (FinCEN) announced a further extension of the deadline for filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), to June 30, 2013, for a small group of financial professionals (FinCEN Notice 2012-1). In 2011, FinCEN announced that three small groups of
IRS proposes PTIN regs. for supervised, nonsigning and non-1040 preparers
The IRS issued proposed regulations on Tuesday regarding the availability of preparer tax identification numbers (PTINs) for supervised nonsigning preparers and for preparers of forms other than Form 1040. They also address what tax forms are considered returns for purposes of the PTIN rules (REG-124791-11). The proposed regulations do not
TIGTA: Revise Form 1099-R to improve taxpayer compliance
In a report released on Tuesday, the Treasury Inspector General for Tax Administration (TIGTA) recommended the IRS change its Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., to improve taxpayer compliance with reporting and paying tax on this type of income (TIGTA, Opportunities Exist
Couples who filed joint returns must now file separate powers of attorney
Starting March 1, the IRS will no longer accept old versions of Form 2848, Power of Attorney and Declaration of Representative, and will accept only the version released in October 2011. The new version of the form requires a husband and wife who filed a joint tax return to each
Interest-netting relief allowed to consolidated group member
The Court of Federal Claims ruled that a member of a consolidated group is “the same taxpayer” for purposes of interest-netting relief both before and after becoming a member of the consolidated group. The IRS assessed a tax deficiency of $9,953,525 against Magma Power Co. with respect to its tax
Disallowed deduction equals change in accounting method
The Fifth Circuit Court of Appeals upheld a Tax Court decision that a change in accounting method occurred when the IRS disallowed an accrual-basis taxpayer’s deduction for inventory purchased on account from a related-party cash-basis taxpayer. Therefore, the taxpayer was required to include amounts erroneously deducted in closed tax years
First-time homebuyer credit allowed for equitable owner
The Tax Court held that a taxpayer could claim a first-time homebuyer credit for a house he didn’t occupy or hold legal title to during the tax year. The taxpayer bore the benefits and burdens of ownership under state law, making him its equitable owner, and his intention to live
Tax Court rules on homebuyer credit when former residence is being sold
The Tax Court held that a married couple’s old house, which they continued to use while trying to sell it, qualified as a principal residence, and therefore they did not meet the timing requirement to qualify for an $8,000 first-time homebuyer credit when they purchased a new house (Foster, 138
Streamlined installment agreement program modified
The IRS Small Business/Self-Employed Division modified the maximum unpaid balance of assessment taxpayers must meet to qualify for its streamlined installment agreement program and extended the time for payment (SBSE 05-0112-013). The aggregate unpaid balance of assessment threshold has doubled, from $25,000 to $50,000. The timeframe for full payment has
IRS: Tax preparers who want to prepare 2011 returns must renew PTINs
The IRS is sending information letters to tax return preparers who have not yet renewed their preparer tax identification numbers (PTINs) for the 2012 filing season. (The IRS system was, at this writing, not able to issue new PTINs.) The IRS started sending the letters last week and will continue
Annual update on adequate disclosure of return positions issued
The IRS released updated guidance 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. 2012-15). The IRS regularly releases
Taxpayer advocate cites underfunding as cause of IRS’ most serious problems
The national taxpayer advocate, Nina Olson, in her annual report to Congress for 2011, cited the IRS’ lack of adequate funding, expanding workload and overreliance on automation as the most serious problems facing taxpayers. She said that, as a result, the IRS cannot adequately meet the needs of taxpayers, cannot
IRS announces third offshore voluntary disclosure program
In a press release trumpeting the successful collection of more than $4.4 billion in its 2009 and 2011 voluntary disclosure programs, the IRS announced it is starting its third program designed to help people hiding offshore accounts get current with their taxes in the U.S. (IR-2012-5). The new program, unlike
More-generous rules proposed for equitable innocent spouse relief
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
IRS audits of small business software files
Tax practitioners have always been cautious with the records they provide to the IRS in an audit to control the depth of an IRS inquiry. But IRS agents are starting to request client backup files from small business accounting software such as QuickBooks and Peachtree, and many practitioners are concerned
Tax relief and health care acts shape 2011 returns
As CPAs gear up for tax season, they’ll find the Form 1040 series for 2011 looking much the same as that of the previous year, but only because of Congress’ 11th-hour compromise late in 2010 to keep it so. Nonetheless, a number of new features affecting individuals and businesses, such
Qui tam award held taxable
The Eleventh Circuit Court of Appeals affirmed a Tax Court determination that a qui tam whistleblower award to a taxpayer under the federal False Claims Act (FCA) was taxable. Under the FCA, a person may bring a civil action, in which the U.S. government may intervene, against a party that
New law, proposed regs heighten EITC preparer due diligence
The Sec. 6695(g) penalty for failure by preparers to exercise due diligence with respect to the earned income tax credit (EITC) increased from $100 to $500 effective for returns required to be filed after Dec. 31, 2011. The measure was enacted in late October as part of the U.S.-Korea Free
Regulations Issued on Repair Expenditures
On Friday, the IRS issued long-awaited temporary and identical proposed regulations (T.D. 9564; REG-168745-03) regarding the treatment of expenditures incurred in selling, acquiring, producing, or improving tangible assets, including rules on determining whether costs related to tangible property are deductible repairs or capital improvements. The temporary regulations affect all taxpayers
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