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
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TOPICS / TAX
IRS practice & procedure
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
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
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