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
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TOPICS / TAX
IRS practice & procedure
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
Supreme Court: Filing a false tax return can lead to deportation
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.
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
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