Taxpayers in certain areas affected by Hurricane Irene have until Oct. 31 to file certain returns and make payments normally due before then, the IRS announced Thursday (IR-2011-87). The areas eligible for relief include parts of North Carolina, New Jersey, New York and Puerto Rico; the IRS expects to provide
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TOPICS / TAX
IRS practice & procedure
Golfer Bogies Endorsement Income
Professional golfer Retief Goosen split a decision with the IRS in the Tax Court that partly redetermined the character and source of his income from product endorsements. Goosen is a native of South Africa and a nondomiciliary United Kingdom resident. He was well-known abroad before he won the 2001 U.S.
Third Circuit Upholds $473 Million Subpart F Deficiency
The Third Circuit Court of Appeals affirmed a deficiency of nearly $473 million against pharmaceutical company Merck & Co. Inc. as successor to Schering-Plough, saying an interest rate swap Schering-Plough engaged in with two foreign subsidiaries was a disguised loan from the subsidiaries. Subpart F of the IRC (sections 951
FATCA Reporting Suspended for Some; Pre-2010 FBAR Filing Extended
The IRS suspended FATCA (Foreign Account Tax Compliance Act) information reporting requirements for certain individuals with foreign assets and shareholders of passive foreign investment companies (PFICs) under IRC §§ 6038D and 1298(f) (Notice 2011-55). The requirement will be suspended until the IRS releases Form 8938, Statement of Specified Foreign Financial
IRS Clarifies Sept. 9 Extension for Offshore Reporting
The IRS on Monday clarified its postponement of deadlines under the 2011 Offshore Voluntary Disclosure Initiative (OVDI). On Friday, in response to Hurricane Irene, the IRS moved the OVDI deadline to Sept. 9 (from Aug. 31), but did not address the Aug. 31 due date for information filings that are
Hurricane Postpones IRS’s Offshore Voluntary Disclosure Deadline
As Hurricane Irene was about to make landfall in North Carolina on Friday evening and head up the East Coast, the IRS announced it had postponed the deadline for its 2011 Offshore Voluntary Disclosure Initiative (OVDI). The new due date for requests is Sept. 9, 2011. Before the extension, taxpayers
TIGTA: IRS Does Not Timely Resolve Math Error Disputes
The Treasury Inspector General for Tax Administration (TIGTA) released a report in which it recommended that the IRS develop processes to ensure that math error disputes with taxpayers are resolved more quickly and accurately. Between Jan. 1 and July 23, 2010, TIGTA reviewed 260 taxpayer responses to IRS math error
Final Regulations Govern Establishing Evidence of Delivery to the IRS
The IRS issued final regulations providing guidance on how taxpayers can prove the timely delivery of physical documents to the IRS or the Tax Court, absent direct proof of delivery (TD 9543). The regulations provide that proper use of registered or certified U.S. mail or a private delivery service, under
Client Tax Fraud and the CPA
Your client just called and left the following message: “I answered the door at my home today, and an agent who said he was from the IRS Criminal Investigation Division wanted to ask me some questions. What should I do?” While you may never get a call from a client
Managing an IRS Correspondence Audit
The IRS has expanded its use of correspondence examinations in lieu of field examinations of individual income tax returns. While this trend has allowed the Service to collect additional revenue more efficiently, it has also caused difficulties for some taxpayers and CPAs representing them. The IRS has had problems in
Fourth Circuit Joins Others Upholding Two-Year Innocent Spouse Limit; Tax Court Again Rejects It
The Fourth Circuit Court of Appeals joined the Third and Seventh circuits in validating Treasury regulations limiting to two years the period in which taxpayers may apply for innocent spouse equitable relief under IRC § 6015(f). The decision overruled the Tax Court, which has consistently reached an opposite conclusion, including
Practitioners, Policymakers Welcome IRS Change on Innocent Spouse Relief
Tax practitioners, legislators and taxpayer advocates said the IRS’ announcement that it would no longer require taxpayer requests for innocent spouse equitable relief under IRC § 6015(f) to be made within two years of the beginning of collection activity was a long overdue change. “It’s not surprising at all; the
FinCEN Creates FBAR E-Filing System
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) on Monday said it has developed an electronic filing system for Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). The reports can now be filed via FinCEN’s BSA E-Filing System. A United States person who has a financial
Comments Sought on IRS Continuing Education Provider Standards and Process
The IRS on Monday invited public comments on its process for approving continuing education providers and on the standards that should apply to such providers (Notice 2011-61). Under final Circular 230 regulations issued in May, registered tax return preparers will be required to meet continuing education requirements by completing courses
Phased Implementation of FATCA Requirements Announced
On Thursday, the IRS announced plans to phase in the requirements of the Foreign Account Tax Compliance Act (FATCA) (Notice 2011-53). The IRS has received numerous comments about the difficulty of implementing aspects of the FATCA requirements. The notice’s phased implementation is designed to give both foreign financial institutions and
Final Regulations Issued on Determining Amount of Tax Paid for Foreign Tax Credit Purposes
Final regulations issued on Wednesday provide guidance on determining the amount of taxes paid for purposes of determining the foreign tax credit (TD 9535). The regulations are designed to curb certain transactions that, the IRS says, “produce inappropriate foreign tax credit results.” The final regulations adopt proposed regulations issued in
100,000 Preparers Did Not Comply With PTIN Rules
The IRS announced on Tuesday that it has identified approximately 100,000 tax return preparers who did not comply with the new rules for preparer tax identification numbers (PTINs), and it is sending them letters informing them of the problem (IR-2011-74). All tax return preparers (including CPAs, attorneys and enrolled agents)
Section 179 Expensing for Noncorporate Lessors
While 100% bonus depreciation may be the “flavor of the month” when it comes to accelerated depreciation, it is limited to original-use property and is currently scheduled to sunset for most property at the end of 2011. IRC § 179 expensing therefore remains a prime option for small businesses, especially
State Income Tax Credit Is a Capital Asset
The Tax Court held that a taxpayer’s sale of a state income tax credit resulted in a capital gain, not ordinary income, since the payments received from the sale were not a substitute for ordinary income. Capital assets consist of all assets except those listed in eight categories in IRC
Loan Loss Held Not Personal
The Tax Court ruled that a taxpayer’s loan to a business associate was made in connection with the taxpayer’s trade or business, and therefore, the forgiveness of that loan was a bad-debt loss under IRC § 166(a). The IRS had argued that the loan was personal and therefore subject to
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