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
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TOPICS / TAX
IRS practice & procedure
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).
IRS reviews whistleblower operations
The IRS is reviewing the operations of its Whistleblower Office to improve the timeliness and quality of its decisions on whistleblower claims, Deputy Commissioner for Services and Enforcement Steven T. Miller said in an internal IRS memo dated June 20. The review will yield a set of “expectations” for timely
Ban on political activities: An election-year warning for charities
As the 2012 elections draw near, the IRS is once again increasing its oversight of the ban on political campaign activities by Sec. 501(c)(3) charitable organizations. An IRS work plan (Exempt Organizations 2011 Annual Report & 2012 Work Plan, available at tinyurl.com/bos7pb4) states that, in enforcing the ban this year,
IRS compliance and enforcement trends
The IRS and state and local taxing authorities are developing compliance goals and strategies that are affecting CPAs and will continue to do so in new ways in the coming decade. Jim Buttonow and Brian Howell described them in a presentation at the AICPA Practitioners Symposium and TECH+ Conference in
No exclusion for former spouse from assignment of disability income
The Tax Court recently clarified that disability retirement benefits assigned to a former spouse under a divorce agreement are ineligible for exclusion from income, even though the benefits would qualify for exclusion as compensation for personal injury had the other ex-spouse received them. The former spouse’s argument that she was
Federal law preempts Alabama statute denying tax deduction for illegal alien employees
The Eleventh Circuit Court of Appeals held that the section of Alabama House Bill 56 that disallowed an employer a state tax deduction for wages and compensation paid to an alien unauthorized to work in the United States was preempted by federal immigration law (United States v. Alabama, No. 11-14532
IRS Chief Counsel’s office issues advice on identity theft returns
In Program Manager Technical Advice 2012-13, the IRS Office of Chief Counsel explained in a memorandum to Small Business/Self-Employed Division attorneys what the IRS can do when a return is filed by an identity thief in order to generate a fraudulent refund and the IRS has issued a statutory notice
IRS announces the end of tiered issues
Effective Aug. 17, 2012, the IRS will no longer use the tiered management process to set examination priorities and address important issues in the Large Business & International division (LB&I). Instead, it will examine the former Tier I, II, and III issues and assess risk in the same manner as
Corporation cannot deduct California business privilege tax in year paid
Wells Fargo, an accrual-basis taxpayer, could not deduct the California business privilege tax it paid in one year (year 1) for the privilege of doing business the next year (year 2), even though California law had, since 1972, treated the tax as being incurred in year 1, a federal district
Removal of two-year limit on innocent spouse claims does not revive taxpayer’s case
The U.S. District Court for the District of Massachusetts dismissed a taxpayer’s claim that she was entitled to innocent spouse relief under Notice 2011-70, which announced the removal of the two-year limitation period for claims for equitable innocent spouse relief under Sec. 6015(f) (Haag, No. 11-CV-11591-PBS (D. Mass. 8/13/12)). The
Fraud convicts cannot argue in Tax Court that payments did not result from fraud
Taxpayers who had been convicted of fraud were precluded from later arguing that payments they received were not the result of fraud, the Tax Court held in two related cases (Atkinson, T.C. Memo. 2012-226, and Boultbee, T.C. Memo. 2012-227). The court invoked the doctrine of collateral estoppel to prevent the
Installment interest from settlement with state is tax-exempt
The Third Circuit Court of Appeals, reversing the Tax Court, held that a state that paid taxpayers installment interest on amounts owed pursuant to an eminent domain settlement did so under its borrowing authority, and the interest therefore was tax-exempt. According to the court, the interest was paid due to
Taxpayers residing outside U.S. questioned at U.S. border regarding back taxes
Taxpayers traveling to the United States with unpaid U.S. tax assessments can be detained at the border, questioned, and flagged for follow-up enforcement. If a taxpayer has an unpaid tax liability and is subject to a resulting Notice of Federal Tax Lien, the IRS may submit identifying taxpayer information to
Accounting firm’s payments to owners flunk independent-investor test
The Seventh Circuit held that an accounting and consulting firm organized as a C corporation could not deduct payments to related entities because they were dividends, not compensation for services rendered by the company’s owners. The firm was founded in 1979 by three accountants. During the tax years at issue—2001,
Charitable deduction erased by statement’s omission
The Tax Court upheld a disallowance of more than $22,000 of a couple’s charitable contribution deduction solely for the lack of a contemporaneous statement from their church, the donee, that the couple received no goods or services in return. The taxpayers, David and Veronda Durden, made the contributions by check,
Tax compliance for acquisitions: Prepare before purchasing
Fears of a “double-dip” recession in 2012 may have subsided, but the overall economic forecast remains uncertain. Therefore, companies are looking beyond organic, internal growth to external growth sources to bolster company performance. A recent study by The Boston Consulting Group (BCG) touted the power of acquisitions for growth during
Regulations finalize rules on entertainment use of business aircraft
On Tuesday, the IRS issued final regulations relating to the disallowance under Sec. 274 of deductions for the use of business aircraft for entertainment (T.D. 9597). The final regulations adopt, with some modifications, proposed regulations issued in 2007 (REG-147171-05), which in turn followed principles first expressed in Notice 2005-45. In
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From The Tax Adviser
March 31, 2026
Current developments in taxation of individuals: Part 1
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Current Developments in Taxation of Individuals: Part 1
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