While many large employers welcomed the IRS’s recent delay of the so-called employer mandate, requiring them to provide health coverage for their employees, an orthodontics practice in Florida filed suit on Tuesday to force the federal government to reinstate the original effective date of the Sec. 4980H shared-responsibility penalty that
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Tax
Tax Court holds assumption of estate tax liability may reduce value of gift
Holding that there was a genuine issue of material fact, the Tax Court on Monday denied an IRS motion for summary judgment in an estate and gift tax case where the 89-year-old taxpayer, Jean Steinberg, made gifts to her daughters while requiring them to pay any tax liability that would
Tax Court closed during government shutdown; IRS announces no refunds
With the federal government shutting down at midnight on Sept. 30, the Tax Court announced that it is closing during the shutdown. Unlike the other federal courts, which will remain open for at least 10 days, the Tax Court stopped accepting petitions, motions, and other papers, and electronic filings at
How the government shutdown affects taxpayers and tax practitioners
The failure of Congress to agree on a continuing spending resolution on Monday led to the first federal government shutdown since 1995–1996. The shutdown involves a large number of federal government functions, including many affecting taxpayers and tax practitioners. As this item was posted, it was not clear how long
Self-directed IRAs: A tax compliance black hole
The appeal of investing retirement funds outside of the typical securities market has driven a surge in the use of self-directed IRA (SDIRA) investment structures. These structures come in various forms, but they all start when an IRA account holder forms an SDIRA with a custodian (e.g., a bank or
New directive clarifies information document requests
In a March 2012 speech to the Tax Executives Institute (TEI) midyear meeting, Steven Miller, then the IRS deputy commissioner for Services and Enforcement, which includes the Large Business & International (LB&I) Division, described steps he believed would facilitate more efficiency in large case examinations. First, in his view, was
Business or hobby? The nine factors
The IRS may question taxpayers regarding whether an activity is a business or a hobby. If the activity is not engaged in for profit, it is subject to the hobby loss rules in Sec. 183, and its deductible expenses are limited to the amount of income it generates, further subject
Final regs. clarify who is subject to 50% limit on meal and entertainment expenses
The IRS issued final regulations clarifying which party is subject to the 50% limit on deductible meal and entertainment expenses under Sec. 274(n) (T.D. 9625). The final rules adopt proposed regulations (REG-101812-07) issued in July 2012 without substantive change. As the IRS emphasized in the preamble to the earlier proposed
D.C. Circuit rejects per-bet approach for nonresident alien
The D.C. Circuit reversed a Tax Court decision by allowing a nonresident alien to use the same approach (per-session) to compute his gambling gains as used by U.S. citizens. The court found no reason nonresident aliens should have to use a different approach and remanded the case to the Tax
TIGTA: Identity theft protection needs improvements
In an audit, the Treasury Inspector General for Tax Administration (TIGTA) found that the IRS has greatly improved its identity theft protection program since the 2012 filing season but that additional changes should be made (The Taxpayer Protection Program Improves Identity Theft Detection; However, Case Processing Controls Need to Be
New method for determining who gets Sec. 199 deduction under contract manufacturing arrangements
The IRS issued new guidance to examiners in its Large Business & International (LB&I) Division regarding how to determine which taxpayer is entitled to claim the Sec. 199 domestic production activities deduction in a contract manufacturing arrangement (LB&I-04-0713-006). The directive replaces earlier guidance (LB&I-4-0112-001) issued last year, which had used
Transfer pricing and its effect on financial reporting
This article examines the relationship between transfer pricing and an entity’s tax and financial reporting. Due to increased IRS audit procedures, transfer pricing has become one of the riskiest areas for multinational corporations from both a compliance and tax planning perspective. Amazon, AOL, Adobe, Hewlett-Packard, Microsoft, and other multinationals have
Rules for deferral of income from gift card sales clarified
The IRS issued guidance clarifying that taxpayers that sell gift cards can defer recognizing income from the sale of gift cards redeemable by an unrelated third party until the year after the payment is received (Rev. Proc. 2013-29, clarifying and modifying Rev. Proc. 2011-18). With the rapid growth in the
Write it down: The importance of documenting oral advice
CPAs routinely provide oral advice to clients. While professional standards generally do not require such advice to be documented, the experience of the AICPA Professional Liability Insurance Program demonstrates that undocumented advice weakens the defense to a professional liability claim. This real-life scenario provides an example: A CPA providing bank
IRS updates special per diem rates for 2013–2014 travel expenses
On Wednesday, the IRS issued its annual update of special per diem rates for use in substantiating certain business expenses taxpayers incur when traveling away from home in 2013 and 2014 (Notice 2013-65).The notice provides the transportation industry meal and incidental expenses rates, the rate for the incidental-expenses-only deduction, and
Streamlined procedures for post-Windsor FICA refunds are released
In Notice 2013-61, the IRS announced the procedures employers should follow for filing refund claims for overpaid Federal Insurance Contributions Act (FICA) and income taxes paid on employer-provided benefits for same-sex spouses that, because of the Supreme Court’s Windsor decision, are now tax free. The notice provides two streamlined administrative
New York state proposes to regulate tax return preparers
Stepping into the void left when a federal court threw out the IRS’s registered tax return preparer program (see article here), the New York State Department of Taxation and Finance has proposed amendments to its Personal Income Tax Regulations and Procedural Regulations to regulate tax return preparers (N.Y. Comp. Codes
New procedures for equitable innocent spouse relief are released
On Monday, the IRS issued Rev. Proc. 2013-34, providing the rules under which taxpayers can obtain equitable innocent spouse relief from joint liability under Sec. 66(c) or 6015(f). Married couples who file joint returns are jointly liable for their federal income tax liability, while married couples who live in community
Repair regulations are finally issued
On Friday, the IRS issued long-awaited final (T.D. 9636) and proposed regulations regarding the treatment of expenditures incurred in acquiring, producing, or improving tangible assets, including rules on determining whether costs related to tangible property are deductible repairs or capital improvements. The IRS noted that it had received many comments
Preventive health services with no deductible qualify as high-deductible health plans
In its latest guidance on health care rules, the IRS issued a notice on Monday clarifying that preventive health services that are provided without a deductible under a health insurance plan will not disqualify a high-deductible health plan (HDHP) (Notice 2013-57). Under Sec. 223, individuals who participate in a health
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