President Barack Obama’s recently released FY 2014 proposed budget contains a number of estate, gift, and generation-skipping transfer (GST) tax proposals. The most far-reaching would permanently return the estate, gift, and GST tax regimes to the 2009 rules, starting in 2018. This would mean a 45% top tax rate and
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Significant decline in IRS staff leads to fewer audits
The Transactional Records Access Clearinghouse (TRAC), reports that the IRS plans to expend 18% fewer staff hours auditing large businesses with assets of more than $10 million in fiscal year 2013 (which ends Sept. 30) than it did in FY 2011. These lower numbers do not take into account the
President proposes many tax changes in 2014 budget
President Barack Obama released his proposed FY 2014 budget on Wednesday. In it, he aims to raise approximately $580 billion in revenue through new taxes, limits on deductions, and other tax proposals. The revenue-raising portion of the proposed budget generally mirrors the president’s proposals made during the fiscal cliff negotiations
Incorrect expert advice about estate return filing deadline does not excuse penalty
An executor of an estate who relied on his accountant’s mistaken advice that he had obtained a one-year extension of the filing due date for Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, was nonetheless liable for a large late-filing penalty (Knappe, No. 10-56904 (9th Cir. 4/4/13)). Knappe’s
Survey shows how Americans plan to use tax refunds this year
Americans have some decidedly unsexy plans for their tax refunds this year. Forget about impulse buys or impromptu holidays. These days, taxpayers expect to use the money for the basics: savings, day-to-day expenses, and paying down debt. A new survey conducted for the AICPA by Harris Interactive found that 46%
IRS announces pre-approval program for Sec. 403(b) plans
The IRS has released a revenue procedure establishing a program for the pre-approval of Sec. 403(b) plans. Under the program, beginning June 28, 2013, it will accept applications for opinion and advisory letters as to whether the form of “prototype plans” and “volume submitter plans” meet the requirements of Sec.
Appeals court reverses $2.6 million penalty against tax shelter promoter
The Fourth Circuit Court of Appeals reversed and remanded a district court decision because the lower court permitted the jury to hear evidence of a taxpayer’s failure to file his personal income tax returns and to pay his taxes as evidence of his bad acts in determining whether he should
IRS’s identity theft liaison pilot program with law enforcement expands to 50 states
The IRS announced the expansion of its Law Enforcement Assistance Program on identity theft to 50 states and the District of Columbia (IR-2013-34). The expansion was effective Friday. Under the program, state and local law enforcement officials with evidence of identity theft involving fraudulently filed tax returns obtain permission from
Individual health care mandate rules proposed
The IRS released proposed rules for the Sec. 5000A shared-responsibility payment—the penalty or tax imposed on individual taxpayers who do not obtain minimum essential health care coverage beginning in 2014 (the controversial “individual mandate”) (REG-148500-12). Separately, the IRS also issued final regulations defining affordable coverage for purposes of the premium
Proposed regs. would govern employment tax liability of third-party agents
The IRS released proposed regulations (REG-102966-10) under Sec. 3504 (acts to be performed by agents) that would govern the liability for employment taxes when an employer designates an agent under a “service agreement” to pay its employees and to satisfy all employment tax obligations. Such agents include payroll service providers,
Release of dependency exemption trumps child support
In two recent cases, the Tax Court ruled on the validity of a dependency exemption release to a noncustodial parent. Taken together, the cases illustrate how a properly executed and filed Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, is the key to releasing
Simplified home office deduction safe harbor now available
In Rev. Proc. 2013-13, issued in January, the IRS gave taxpayers an optional safe-harbor method to calculate a deduction for expenses of a business use of a residence under Sec. 280A, effective for tax years beginning in 2013. Individual taxpayers who elect this method can determine the deduction by multiplying
Confidential and privileged communications
As tax advisers, accountants should understand when communications and work product are privileged and when they are not. The IRS is granted significant power to pursue information in examining a tax return or collecting a tax liability, and the courts have interpreted this summons power as broad authority to obtain
FATCA final regulations cover all the bases
The IRS issued final regulations providing rules on information reporting by foreign financial institutions (FFIs) and withholding on certain payments to FFIs and other foreign entities (T.D. 9610). Under the Foreign Account Tax Compliance Act of 2009 (FATCA), enacted as part of the Hiring Incentives to Restore Employment Act of
Making a “backdoor” Roth IRA contribution
Sec. 408(d)(1) ordinarily requires a pro rata allocation between taxable and nontaxable amounts (using the Sec. 72 annuity rules) when reporting distributions received from an individual retirement plan (an individual retirement account or annuity (IRA)). The practical effect is that a taxpayer must recover any nontaxable amount (basis) ratably as
Tax considerations when dividing property in divorce
The emotional aspects of a divorce often interfere with planning for the efficient distribution of the marital estate. The shock and ill feelings may create a barrier between spouses that prevents even discussing issues. Tax practitioners need to know how to explain to a divorcing client the tax realities, to
Golf course easement donation lands out of bounds
The Tax Court disallowed a taxpayer’s deduction for a conservation easement because the taxpayer’s donated golf course was not a qualified real property interest. The court found that the golf course was not subject to a use restriction in perpetuity since the easement agreement permitted the taxpayer, with the approval
IRS extends suspension of examinations of tangible property capitalization issues
On Wednesday, the IRS posted an updated Large Business & Industry (LB&I) Directive for field examinations on the repair vs. capitalization issue that extends the suspension of examinations (LB&I-04-0313-001). The effective date of the tangible property temporary regulations (T.D. 9564) (in amendments published Dec. 17, 2012) has been extended to
Appeals court denies IRS request for stay in return preparer regulation case
The IRS lost another round in its court battle to regulate tax return preparers when the U.S. Court of Appeals for the District of Columbia Circuit denied its motion to stay an injunction halting its return preparer regulation program, pending appeal of a lower court’s decision (Loving, No. 1:12-cv-00385-JEB (D.C.
Identity theft, phishing top IRS’s “Dirty Dozen” tax scams
The IRS issued its “Dirty Dozen” list of tax scams Tuesday, highlighting fraudulent schemes commonly committed by and upon taxpayers. The annual warning, released to coincide with tax filing season, emphasizes the most egregious schemes involving filing false returns or return items, but it also advises yearlong vigilance against practices
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FROM THIS MONTH'S ISSUE
Flip out with the latest Tech Q&A
The September Technology Q&A column shows how to create dynamic to-do lists with Excel's checkboxes and also how to set up multifactor authentication texts that don't rely on phones. Flip through both items and view a video walkthrough in our digital format.
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