The IRS introduced on Tuesday a streamlined application process for small organizations that want tax-exempt status under Sec. 501(c)(3) (Rev. Proc. 2014-40). Final and temporary regulations were also issued on July 1 to allow the IRS to adopt this streamlined application process (T.D. 9674). To apply for tax-exempt status under Sec.
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Tax
ITINs will expire after five years under new IRS policy
The IRS announced a new policy concerning individual taxpayer identification numbers (ITINs) on Tuesday: ITINs that are not being used will expire after five years (IR-2014-76). The policy will go into effect in 2016. The IRS reports that only a quarter of the 21 million ITINs issued since 1996 are
Employment tax responsibilities of designated payer agents
New rules clarify tax responsibilities when an employer designates an agent to pay its employees. The IRS issued final regulations on the liability for employment taxes when an employer designates an agent under a “service agreement” to pay its employees and to satisfy its employment tax obligations instead of following
District court invalidates husband’s transfer of property to spouse
Applying a five-part test, a district court upholds IRS liens against property nominally owned by the taxpayer’s wife. The District Court for the Northern District of Illinois invalidated a husband’s quitclaim deed that purportedly transferred ownership of the marital residence to his spouse. The husband, Jack L. Stone, had unpaid
Country-by-country reporting by multinationals
The Organisation for Economic Co-operation and Development (OECD) has recently been advocating for increased tax transparency and for international cooperation to prevent tax avoidance. One element of this international cooperation that the OECD would like to see implemented is country-by-country income and tax reporting by multinational corporations. Country-by-country reporting would
Spouses must qualify as first-time homebuyers under same provision
An appellate decision overturns the Tax Court on the statute’s plain language. Reversing the Tax Court, the Eleventh Circuit held that married taxpayers filing jointly did not qualify for the first-time homebuyer credit when one of them was a longtime homeowner. The unambiguous language of Secs. 36(c)(1) and 36(c)(6) requires
Stock forfeitable upon employees’ termination “for cause” not substantially vested
An employment agreement’s requirements constitute an “earnout” provision that could create a substantial risk of forfeiture under Sec. 83. In consolidated cases, the Tax Court denied the IRS summary judgment, concluding that the phrase “termination for cause” in the taxpayers’ restricted stock and employment agreements did not have the same
Guidance issued on application of Windsor to retirement plans
Qualified plans must recognize same-sex marriages after the Windsor decision and must be amended, if need be, to make them conform to the results of that decision. Under guidance issued by the IRS, administrators of qualified retirement plans must recognize the same-sex spouses of legally married participants as of June
Rollover of gains on certain property dispositions
A little-known provision of the Code is Sec. 1044, which allows certain taxpayers to defer recognition of gain on the sale of publicly traded securities that is reinvested into specialized small business investment companies (SSBICs). When taxpayers later dispose of interests in SSBICs, important tax implications can arise from the
Trust can be a real estate professional
Trustees performing services on a trust’s behalf qualify the trust for the exception for real estate professionals to the passive activity loss disallowance. The Tax Court held that a trust’s rental losses could be currently deducted since the trust qualified as a real estate professional. According to the court, the
Complete rules for the IRS’s voluntary return preparer certification program are released
On Monday, the IRS published guidance introducing its new, voluntary Annual Filing Season Program, which permits tax preparers who are not CPAs, attorneys, or enrolled agents to complete tax education requirements and receive a certificate, called a Record of Completion (Rev. Proc. 2104-42). (For prior coverage, see “IRS Reveals Details
Regulations provide guidance for small-employer premium tax credit
The IRS issued final regulations on the Sec. 45R credit for small employers that offer health insurance coverage for employees (T.D. 9672). The regulations provide guidance on how to determine full-time-equivalent employees (FTEs) and average annual wages, how to calculate the credit, and what is a “qualifying arrangement” for purposes
IRS reveals details of voluntary preparer certification program
On Thursday, the IRS announced that it will soon introduce a voluntary program for tax return preparers called the Annual Filing Season Program (IR-2014-75). This program will permit return preparers to obtain a record of completion when they voluntarily complete 18 hours of continuing education, including a six-hour refresher course
Final rules involve disregarded entities, indoor tanning tax, and FICA and FUTA exemptions
The IRS issued T.D. 9670 on Wednesday, which finalizes rules on the disparate topics of disregarded entities that collect the excise tax on indoor tanning and how certain exceptions from Federal Insurance Contributions Act (FICA) and Federal Unemployment Tax Act (FUTA) taxes work when a disregarded entity is involved. Indoor
AICPA reiterates its strong concerns about IRS voluntary certification program
The AICPA on Tuesday sent a 14-page letter to the IRS, expressing its strong concerns that a proposed IRS voluntary certification program for unenrolled tax return preparers “would cause significant legal problems that may ultimately frustrate the IRS’s goals, confuse the public, and lead to litigation.” The IRS is expected
New rules allow one-month orientation period before 90-day health plan waiting period begins
The IRS, the Labor Department, and the Department of Health and Human Services jointly issued final regulations (REG-122706-12) governing the maximum length of time an employee orientation period can last consistent with the 90-day waiting period under the Patient Protection and Affordable Care Act, P.L. 111-148, which prohibits employers from
New streamlined procedures and changes to the Offshore Voluntary Disclosure Program are announced
Just in time for the Foreign Account Tax Compliance Act (FATCA), which goes into effect July 1, the IRS announced changes to its streamlined filing compliance procedures and its Offshore Voluntary Disclosure Program (OVDP) designed to make it easier for taxpayers to comply with their obligations to report offshore assets and
Supreme Court issues decision on IRS summons enforcement
On Thursday, the U.S. Supreme Court vacated and remanded a decision of the Eleventh Circuit, in which the appeals court held “that a bare allegation of improper purpose [in issuing a summons] … entitle[s] a taxpayer to examine IRS officials” (Clarke, No. 13-301 (U.S. 6/19/14), slip op. at 1). Instead,
Supreme Court holds inherited IRAs are not retirement funds
In a unanimous opinion written by Justice Sonia Sotomayor, the U.S. Supreme Court on Thursday held that funds from an inherited IRA were not retirement funds that were exempt from the debtor’s bankruptcy estate (Clark v. Rameker, No. 13-299 (U.S. 6/12/14), aff’g 714 F.3d 559 (7th Cir. 2013)). The Supreme
New rules for providing written tax advice are finalized
The IRS issued final regulations under Circular 230, Regulations Governing Practice Before the Internal Revenue Service (31 C.F.R. Part 10), on the rules for practitioners to provide written tax advice and certain other related provisions (T.D. 9668), adopting the proposed regulations (REG-138367-06) issued in September 2012 with some modifications. The
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