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
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TOPICS / TAX
IRS practice & procedure
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
IRS PTIN Application System to Go Down for Maintenance
The IRS announced on its website that it will not be accepting new applications for preparer tax identification numbers (PTINs) from 5 p.m. EST Friday, Dec. 23, until approximately 6 a.m. EST on Monday, Jan. 9. The IRS PTIN system will be available for renewals during that time. The IRS
Final Regs on EITC Due Diligence Issued
The IRS issued final regulations (T.D. 9570) Monday governing the due-diligence requirements imposed on tax return preparers who prepare tax returns on which taxpayers claim the earned income tax credit (EITC). Former rules required preparers to complete Form 8867, Paid Preparer’s Earned Income Credit Checklist, or to otherwise record the
Foreign Financial Asset Reporting Form Finalized
The IRS on Saturday released the final version of Form 8938, Statement of Specified Foreign Financial Assets, and released its instructions on Monday. Affected taxpayers must use the form to report certain financial assets to the IRS. Last week, the IRS released temporary and proposed regulations on the new reporting
Regulations Issued for Specified Foreign Financial Assets 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
Tax Issues and the 2010 S Corporation Shareholder Decedent
Editor’s note: This article originally appeared on thetaxadviser.com. A tax practitioner working with the estate of an S corporation shareholder who died in 2010 must contend with numerous issues. This article points out some of the issues and discusses some of the choices that a practitioner can consider. The
IRS Holds First Hearing on Real-Time Tax System
The IRS held a public hearing on Thursday to gather feedback on how to implement a system in which the IRS would match information on tax returns with data from third-party information returns during the processing of the return. Under the proposed “real-time tax system,” if the IRS found discrepancies
IRS Issues Guidance on Fingerprinting, Other Registered Tax Return Preparer Details
The IRS provided more details on Sept. 21 of its still-developing requirements for all paid tax return preparers to be registered and undergo a background check, to include fingerprinting. The IRS said CPAs are exempt from fingerprinting at this time. It also said it will not require individuals to be
Tenth Circuit Remands Employee-Spouse Case to Tax Court
The Tenth Circuit Court of Appeals vacated the Tax Court’s decision that denied a farmer’s business deduction for reimbursements made to his wife under an employee medical expense and health insurance reimbursement plan. The appellate court held that the Tax Court should have applied the common-law agency doctrine to determine
Ninth Circuit Affirms Tax Court’s Jurisdiction to Redetermine Partnership Deficiency
In a Son-of-BOSS appeal, the Ninth Circuit Court of Appeals rejected a taxpayer’s two procedural arguments and upheld the Tax Court’s jurisdiction to redetermine the tax shelter participant’s deficiency. The petitioner, Michael Napoliello, entered into two pairs of offsetting long and short foreign currency option contracts held by an LLC
Offers in Compromise and Dissipated Assets
Under IRC Sec. 7122(a), taxpayers may request an offer in compromise (OIC) with the IRS to settle outstanding tax liabilities for less than the full amount owed. To qualify, taxpayers must prove that their outstanding tax liabilities exceed the amount of income and assets available to satisfy those liabilities during
IRS Clarifies Corporate Governance Questions for Tax-Exempt Organizations
The IRS believes that strong corporate governance leads to increased compliance for tax-exempt organizations. In 2008, the IRS released a redesigned Form 990, Return of Organization Exempt From Income Tax, which requires more comprehensive and in-depth information regarding the organization’s governance, structure, policies and disclosure practices. These changes were formalized
Adjunct Professor Ruled an Employee
The Tax Court held that an adjunct university professor was a common-law employee and not a statutory employee or independent contractor, since he exercised only limited control over his course curriculum and materials and the university considered him its employee. William Schramm was an adjunct professor at Nova Southeastern University
IRS Launches New Round of Preparer Office Visits
The IRS has sent letters to tax return preparers whom the IRS has identified as at high risk of not complying with their responsibilities as return preparers. The IRS will follow up with office visits to some of these preparers who appear to have serious compliance issues. The IRS has
IRS Announces Competency Testing for Registered Tax Return Preparers
As part of its ongoing initiative to regulate previously unenrolled tax return preparers, the IRS announced on Tuesday that competency testing for registered tax return preparers will start next week (IR-2011-111). The IRS announced that the fee for taking the competency test will be $116 ($27 of which is the
Shulman Announces Delay in Fingerprinting Requirement
The IRS will delay and reconsider its fingerprinting requirement for tax return preparers, IRS Commissioner Doug Shulman told the AICPA National Tax Conference on Tuesday. “We have decided to hold off fingerprinting while we consider issues that have been raised and have further discussions with interested parties,” Shulman said during
Employer Duties Regarding IRS Levies
When a taxpayer fails to satisfy his or her tax liabilities, the IRS has an array of administrative tools that it can call upon to obtain the taxpayer’s compliance. One method is levying the taxpayer’s wages at the source under Internal Revenue Code provisions that require employers to help the
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From The Tax Adviser
March 31, 2026
Current developments in taxation of individuals: Part 1
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