On Thursday, two weeks after the end of the government shutdown, the IRS reopened its registration system for renewing preparer tax identification numbers (PTINs) for the 2014 filing season. When the IRS reopened on Oct. 17, it announced that while the PTIN registration system was available for new PTIN registrations,
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Tax
IRS releases inflation adjustments for 2014
On Thursday, the IRS issued the annual inflation adjustments for 2014 for more than 40 tax provisions and the tax tables for 2014 (Rev. Proc. 2013-35). Among the inflation-adjusted amounts that have increased are the personal exemption, which increased from $3,900 in 2013 to $3,950 for 2014, and the standard
Social Security wage base rises to $117,000 for 2014
On Wednesday, the Social Security Administration (SSA) announced that the wage base above which taxes for old age, survivors, and disability insurance (OASDI) are not due will increase from $113,700 to $117,000 in 2014. The new rate means employees will pay a maximum of $7,254 of OASDI in 2014, with
Guidance issued for FFIs with FATCA agreements
On Tuesday, the IRS issued its latest guidance in preparation for the implementation of the Foreign Account Tax Compliance Act (FATCA) reporting and withholding requirements (Notice 2013-69). The guidance applies to foreign financial institutions (FFIs) entering into an FFI agreement with the IRS under Sec. 1471 or to FFIs or
Ineffective income and withholding verification hinder IRS in detecting fraudulent returns
On Monday, the Treasury Inspector General for Tax Administration (TIGTA) released the results of its review of the IRS’s fraudulent tax return detection system, the Electronic Fraud Detection System (EFDS), concluding that inadequate income and withholding verification resulted in the IRS’s missing many fraudulent returns (TIGTA, Income and Withholding Verification
Filing season will be delayed, IRS says
The IRS announced on Tuesday a delay of one or two weeks in the start of the 2014 filing season as a result of the 16-day government shutdown to allow adequate time for the IRS to prepare and test systems. The return filing start date was originally going to be
Internet Tax Freedom Act preempts Illinois click-through nexus law
On Friday, the Supreme Court of Illinois held that Illinois’s click-through nexus law is expressly preempted by the federal Internet Tax Freedom Act (ITFA), P.L. 105-277, which prohibits states from imposing discriminatory taxes on electronic commerce (Performance Marketing Ass’n v. Hamer, No. 114496 (Ill. 10/18/13)). The Illinois law (35 Ill.
IRS and Tax Court reopen after government shutdown; PTIN renewals delayed
After President Barack Obama signed the bill reopening the federal government and raising the debt limit, the IRS posted a notice on its website Thursday morning notifying workers to report to work no later than four hours after “the start of their tour of duty that begins at 6 a.m.
Government shutdown, debt ceiling deal includes one tax provision
Wednesday’s deal to fund the federal government through Jan. 15 and to extend the federal government’s borrowing authority through Feb. 7 in the end contained only one tax provision, making a minor change to 2010’s health care legislation. The agreement, H.R. 2775, was passed by the Senate in a 81–18
Federal courts to stay open through Oct. 17
The federal judiciary announced on Thursday that federal courts will remain open through Thursday, Oct. 17, unless the government shutdown is resolved and court funding is restored before then. When the federal government first shut down on Oct. 1, the federal judiciary estimated that between fees and federal appropriations that
IRS not issuing liens or levies, enforcement actions limited, during shutdown
The IRS updated its website to notify taxpayers that, during the current government shutdown, the IRS is not sending out liens or levies either generated automatically or sent by personnel. Taxpayers may still receive notices of liens or levies with October mailing dates, the IRS says, but these notices were
Orthodontist sues to reinstate employer mandate in health care law
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
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
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