On Thursday, the IRS issued proposed regulations under Sec. 6708 governing the penalty for failure of material advisers to provide lists of advisees (i.e., investors) in reportable transactions (as required by Sec. 6112), which applies if the advisers do not supply the lists to the IRS within 20 business days
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TOPICS / TAX
IRS practice & procedure
The basic framework of cross-border taxation
U.S. citizens are taxable on their worldwide income, with a credit or deduction for taxes paid on foreign income. The United States makes no distinction between earnings from business or investment activities within the United States and those outside its borders. Tax laws governing cross-border transactions are both arcane and
Mandatory language for consents to disclose, use taxpayer information modified
In Rev. Proc. 2013-14, the IRS provided guidance to tax return preparers about the format and content of taxpayer consents to disclose and consents to use tax return information and modified the mandatory language required on each taxpayer consent. The guidance applies to individuals filing a return in the Form
Home Concrete decision offers limited guidance
In its Home Concrete decision last year, the Supreme Court limited the ability of Treasury, through regulations, to define the meaning of “omits from gross income” differently than the Court had previously construed. But due to plurality and concurring decisions with different analyses, only limited inferences can be made as to how
File now or file later
The U.S. District Court for the District of Massachusetts held that an estate was liable for a late filing penalty since its reliance on an accountant’s advice to file a late estate tax return rather than a timely estimated return was not reasonable cause for filing the return after the
Voluntary Classification Settlement Program expanded
The IRS significantly modified its Voluntary Classification Settlement Program (VCSP). In Announcement 2012-46, in effect until June 30, 2013, the IRS is temporarily permitting employers who have not filed Forms 1099 for their workers to participate in the program by paying a larger amount of past-due tax than under the
Proving fraud proves difficult for IRS
The Tax Court determined that the IRS was time-barred from assessing tax against the owner of several bankrupt entities for all but the last of several years at issue. Aside from the one year for which the taxpayer consented to extend the limitation period, the assessments were all outside the
IRS appeals decision striking down tax return preparer registration program
The IRS on Wednesday filed a Notice of Appeal to the United States Court of Appeals for the District of Columbia Circuit of the Jan. 18 district court decision that struck down the IRS’s registered tax return preparer program and enjoined it from enforcing the regulations (Loving, No. 1:12-cv-00385-JEB (D.D.C)
U.S. and Switzerland sign FATCA agreement
The Treasury Department announced on Thursday that the United States and Switzerland have signed a bilateral agreement to implement provisions of the Foreign Account Tax Compliance Act (FATCA). FATCA was enacted by Congress in 2010 as part of the Hiring Incentives to Restore Employment Act of 2010, P.L. 111-147. It
IRS issues annual whistleblower report to Congress
On Wednesday, the IRS issued its annual report on the whistleblower program, reporting the program’s results for the 2012 fiscal year (FY) and legislative and administrative recommendations for improving the program. Under Sec. 7623(b), which was amended in 2006, the IRS is required to pay awards of specified percentages of
IRS postpones effective date of new procedures for consents to disclose
Rev. Proc. 2013-19, issued Wednesday, delays the date that taxpayer consents to disclose and consents to use tax return information must contain the mandatory language recently issued in Rev. Proc. 2013-14. The original effective date of Jan. 14, 2013, has been moved back to Jan. 1, 2014. Taxpayer consents to
Grouping passive activities
One technique for converting otherwise passive activities to nonpassive is grouping them and treating them collectively as a single activity, thereby combining the participation hours and improving a taxpayer’s ability to achieve the necessary hours for material participation. Regs. Sec. 1.469-4 provides general rules and limitations for grouping activities and
Changes to rules on failure to file gain recognition agreements proposed
The IRS has issued proposed regulations to update the rules that apply to U.S. taxpayers that fail to file gain recognition agreements (GRAs) when they transfer certain property to foreign corporations in nonrecognition transactions (REG-140649-11). The proposed rules would change the standards under which transferors are required to recognize gain
IRS files motion to suspend injunction in return preparer regulation case
The IRS on Wednesday filed a motion in federal court to suspend an injunction that forbids it from continuing with its registered tax return preparer program, pending appeal of the case (Motion to Suspend Injunction Pending Appeal, D.D.C. 1/23/13). The IRS also indicated that it intends to file a Notice of
Updated forms, procedures issued for plan sponsors in IRS’s Voluntary Correction Program
On Thursday, the IRS announced that it was issuing updated procedures and forms for sponsors of retirement plans that intended to qualify under Secs. 401(a), 403(a), 403(b), 408(k), or 408(p), but that have not met these requirements for a period of time. The procedures govern the Employee Plans Compliance Resolution
Sec. 6038D reporting of specified foreign financial assets postponed for one year
The IRS on Wednesday announced that it is postponing for at least one year the requirement that domestic entities report interests in specified foreign financial assets. In Notice 2013-10, the IRS says that when it issues final regulations, they will apply no earlier than to tax years beginning after Dec.
Federal court strikes down IRS tax return preparer registration program
The United States District Court for the District of Columbia on Friday struck down the IRS’s registered tax return preparer program and enjoined it from enforcing the regulations (Loving, No. 12-385 (D.D.C. 1/18/13)). Background The IRS in 2011 began regulating all tax return preparers who prepare and file tax returns
FATCA final regulations cover all the bases
On Thursday, the IRS issued final regulations providing rules on information reporting by foreign financial institutions (FFIs) and withholding on certain payments to FFIs and other foreign entities (T.D. 9610). Under the Foreign Account Tax Compliance Act of 2009 (FATCA), enacted as part of the Hiring Incentives to Restore Employment
FATCA: A new era of financial transparency
Since 2008, the U.S. government has been aggressively moving against U.S. taxpayers who have undeclared foreign accounts. Through a variety of mechanisms, the government has obtained information about U.S. account holders and their assets from jurisdictions previously thought nearly impenetrable. These recent developments portend the eventual erosion of traditional concepts of
Improving the audit selection process
The Treasury Inspector General for Tax Administration (TIGTA) recently released two reports for its study of the IRS Small Business/Self-Employed (SB/SE) Division’s audits of partnerships and S corporations. The findings in both reports are similar: Although the SB/SE audits recommended substantial adjustments, roughly 33% of all the audits in fiscal
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