On Monday, the IRS released final regulations regarding disclosure of return information by the Treasury Department in connection with written contracts among the IRS, whistleblowers and, if applicable, their legal representatives (TD 9516). The new IRS Whistleblower Office may determine during the course of an investigation that it needs the
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TOPICS / TAX
IRS practice & procedure
Senate Passes Bill Addressing Tax Strategy Patents
The Senate voted 95–5 Tuesday to pass the America Invents Act (S 23), which was formerly called the Patent Reform Act. Included in the bill is a provision intended to stop the granting of patents for tax strategies. That provision, in section 14 of the bill, would deem any “strategy
Pass-Throughs Dominate Tax Reform Conversation
While lawmakers and the Obama administration both support simplifying an Internal Revenue Code described by one witness as “grotesque in its complexity,” lines in the sand are quickly being drawn on how it should be done. These lines were evident in a March 3 House Ways and Means Select Revenues
CPA-Supervised Nonsigning Preparers Exempted From Exam, Continuing Education
The IRS issued guidance on new regulations governing tax return preparers (Notice 2011-6), and provided an exception to its return preparer regulation plan for nonsigning preparers supervised by a CPA, attorney, enrolled agent or other Circular 230 practitioner. The notice also provides an exception for individuals who prepare returns that
Educated Spouse Denied Relief
The Tax Court upheld the IRS position that an educated spouse was unreasonable in believing her ex-husband would pay a tax deficiency, and denied her innocent spouse relief. Elizabeth B. Kelly, who had received a degree in social science, married Sean Kelly in 1981. Sean Kelly worked at Portfolio Analytics,
When Is a Supplemental Claim a New Claim?
For taxpayers, timeliness is crucial for certain acts, such as filing a refund claim with the IRS within the statute of limitation period. A refund claim must set forth in detail each ground upon which a credit or a refund is claimed and include facts sufficient to apprise the IRS
Tax-Exempt Bond Voluntary Closing Agreement Program Announced
On Monday, the IRS announced a program to provide certain issuers that purchase and hold their own tax-exempt bonds relief from debt extinguishment (Announcement 2011-19). In 2008, during the financial crisis, the IRS issued two notices providing relief from liquidity constraints in the tax-exempt bond market. The notices allowed state
IRS Lists Countries With Adverse Conditions for IRC § 911 Purposes in 2010
The IRS has waived the eligibility requirements under IRC § 911(d)(1) for certain taxpayers who did not meet the requirements because of adverse conditions in the foreign country in which they lived (Revenue Procedure 2011-20). The affected countries for 2010 are Haiti and Côte d’Ivoire (also known as Ivory Coast).
FinCEN Amends BSA Regs on FBAR Filings
The Financial Crimes Enforcement Network (FinCEN) on Thursday issued a final rule that amends the regulations under the Bank Secrecy Act (BSA) regarding Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), to clarify when an account is foreign and therefore reportable as a foreign financial account
IRS Announces Changes to Lien Process
The IRS has announced a set of new policies designed to help taxpayers pay their back taxes and avoid liens (IR-2011-20). The changes to the IRS’ lien filing practices include: Increasing the dollar threshold above which liens are generally filed. Making lien withdrawals easier after the taxes have been paid.
House Committee Sends 1099 Repeal to the Floor; Senate Passes Its Own Version of Repeal
The House Ways and Means Committee approved a bill Thursday that would repeal the expanded Form 1099 reporting requirements, voting 21–15 to send the measure to the full House of Representatives. Late on Thursday, the Senate passed the FAA Air Transportation Modernization and Safety Improvement Act (S 223) by a
Overstatement of Basis Is Not Omission From Gross Income, Appeals Court Rules
For the second time in a week, a federal circuit court of appeals has handed the IRS a defeat on the issue of whether an overstatement of basis amounts to an omission from gross income for purposes of invoking the longer, six-year limitation period for assessing tax under IRC §
Another Circuit Says Overstatement of Basis Is Not an Omission From Gross Income
The ongoing controversy over whether a taxpayer’s overstatement of basis triggers a six-year statute of limitation period continues as the Fourth Circuit has held that the extended period does not apply (Home Concrete & Supply, LLC, No. 09-2353 (4th Cir. 2/7/11)). The taxpayers had artificially overstated the bases in their
IRS Announces Second Offshore Voluntary Disclosure Program
On Tuesday, the IRS announced that it is starting a new program designed to bring money held in foreign accounts back into the U.S. tax system and to help taxpayers with income from offshore accounts to comply with federal tax law. Under the program, taxpayers that disclose previously undisclosed foreign
IRS Guidance on Court-Ordered Restitution
In a piece of informal guidance, the IRS Office of Chief Counsel provided an outline of its understanding of the IRS’ new authority to assess and collect court-ordered restitution for failure to pay tax (CCA 201105037). The Firearms Excise Tax Improvement Act (PL 111-237), enacted in August 2010, amended IRC
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NEW FORM 1099 REQUIREMENT FOR RENTAL INCOME Taxpayers receiving income from renting real estate should be aware of their new information-reporting responsibilities under IRC § 6041(h)(1), as amended by the Small Business Jobs Act of 2010 (PL 111-240). The law requires them to report payments they make totaling $600 or
Some Forbearance Payments Deductible, Some Not
The Tax Court held that a corporation could deduct forbearance payments made to its shareholders in return for their promise not to exercise their stock redemption rights under the first two of several agreements. However, the court also held that payments under a subsequent agreement had to be capitalized, since
New 1099 Rules: President’s Speech Offers Hope for Some Relief; Exceptions for Rental Income Reporting Remain Vague
For small businesses that were dreading the thought of having to produce a Form 1099 for every payee to which they paid at least $600, President Barack Obama offered the prospect of relief in his State of the Union speech Jan. 25 when he said, “We can start right now
Audit Guide Covers Capitalization Rules
Practitioners have been making use of a resource arising from the IRS’ ongoing audit initiative concerning capitalization rules. The IRS issued Capitalization v. Repairs Audit Technique Guide (LB&I-4-0910-023) as a framework for examining agents to follow when determining whether a business’s expenses should be capitalized or an immediate deduction allowed,
Bill Introduced to Address Tax Strategy Patents
On Tuesday, Sens. Max Baucus, D-Mont., and Chuck Grassley, R-Iowa, introduced legislation intended to stop the granting of patents for tax strategies. The Equal Access to Tax Planning Act of 2011 (S 139) would provide that “any strategy for reducing, avoiding, or deferring tax liability” is deemed to be “prior
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