A report issued by the Treasury Inspector General for Tax Administration (TIGTA) says the IRS does not always follow legal requirements when issuing liens and lien notices. The report also concludes that, as a result, action is needed to protect taxpayer rights during the lien process. A federal tax lien
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Tax
IRS Provides Relief for Small Tax-Exempt Nonfilers
The IRS announced that is providing relief for small tax-exempt organizations that are supposed to automatically lose their tax-exempt status because they failed to file Forms 990-EZ or 990-N for the years 2007, 2008 and 2009. Under a special one-time program, the IRS is giving those organizations until Oct. 15
Appeals Court Overturns Taxpayer Win in Tax Shelter Case
The U.S. Court of Appeals for the Tenth Circuit has held that a taxpayer’s investment in a “Son of BOSS” tax shelter lacked economic substance and therefore did not generate deductible losses (Sala, No. 08-1333 (10th Cir. 7/23/10)). This holding reverses a rare taxpayer win on the issue of Son
IRS Proposes PTIN Fees
The IRS proposed (REG-139343-08) Thursday to begin charging all authorized tax preparers a $50 user fee to obtain or renew annually a preparer tax identification number (PTIN). The fee would be on top of a “reasonable fee” charged by a third-party vendor that will administer the application and renewal process.
Regulations Issued on Preventive Services
As part of ongoing guidance on this spring’s health reform legislation, the IRS, Department of Labor, and Department of Health and Human Services have issued interim final and proposed regulations implementing the preventive health services rules in the acts (TD 9493; REG-120391-10). The Patient Protection and Affordable Care Act (PL
IRS Launches Gulf Oil Spill Hotline, Plans Special Assistance Day
The IRS announced that it has set up a special toll-free telephone line for taxpayers affected by the oil spill in the Gulf of Mexico. The phone number is 866-562-5227, and it will operate on weekdays from 7 a.m. to 10 p.m.local time, the IRS said. The phone line is
Closing Date Deadline for Homebuyer Credit Extended to Sept. 30
President Barack Obama signed the Homebuyer Assistance and Improvement Act of 2010 (HR 5623) on July 2. The bill extends the closing date deadline to qualify for the first-time homebuyer credit under IRC § 36 from June 30, 2010, to Sept. 30, 2010. To offset the cost of the extension,
Regular IRA to Roth IRA Conversion: Evaluating the Income Recognition Options
Editor’s note: Also read “Deferral and Spreading of Roth Conversion Income Not Always Best,” in the July 2010 issue of the Journal of Accountancy. Click here to download “Regular IRA to Roth IRA Conversion: Evaluating the Income Recognition Options,” an illustrative spreadsheet that allows planners to choose between two possible
EIN Retention When Converting a Corporation to an LLC
Most companies that convert a corporation to an LLC want the LLC to retain the historic employer identification number (EIN) of the corporation and may assume that the EIN carries over automatically to the LLC. In fact, the IRS will reassign the historic EIN of a corporation to a successor
Line Items
UNCERTAIN TAX POSITIONS DRAFT SCHEDULE RELEASED The IRS released a draft of new Schedule UTP, Uncertain Tax Position Statement, (tinyurl.com/27jmhm7) and instructions (tinyurl.com/25uorpf) as part of its initiative to require certain business taxpayers to report uncertain tax positions on their returns (Announcement 2010-30). (For previous JofA coverage of the initiative,
Royalty Payments Held Deductible
The U.S. Court of Appeals for the Second Circuit held that a company’s royalty payments for the right to use certain trademarks could be currently deducted, reversing a Tax Court decision. Since the royalty payments were calculated using a percentage of sales, the Second Circuit held, the royalty cost was
Turning Business Losses Into Tax Refunds
Businesses with a need for a cash infusion may be able to obtain one quickly as a result of a tax refund from recently expanded net operating loss (NOL) carryback allowances. These provisions address the fact that, although a net loss may appear in only one tax year, it represents
Charitable Planning: CRTs, CLTs and the Increasing Payment CLAT
One of the main reasons people give to charity is for their ego or image—they want to be seen in the community as philanthropic. Another main reason some donate is for the tax breaks. Others give to charity for truly altruistic reasons. Yet others leave money to charity because they
Closing Up Shop: How to Successfully Shut Down a Private Foundation
The precipitous drop in wealth in the United States during the 2008–2009 financial meltdown accelerated a trend of many private foundations’ considering closing their doors. Foundations gave 8.4% less in grants in 2009 from the year before, as the value of their assets fell by 17.2%. Between 2007 and 2008,
Valuing Art for Tax Purposes
Even people who don’t collect art probably own a painting or sculpture or two. At some point, one of two things is likely to happen: One, the artwork will be given away, perhaps as a noncash charitable contribution for which the owner will claim an itemized deduction, or as a
Mapping the Scope of Personal Service Corporations
The Tax Court held that a land surveying company was a personal service corporation subject to a 35% flat income tax rate because it was engaged in engineering, despite the fact that it performed no work requiring an engineering license under state law. Section 448 requires most C corporations to
Deferral and Spreading of Roth Conversion Income Not Always Best
This year has been touted as the Year of the Roth IRA Conversion (“2010: The Year of the Roth Conversion?” JofA, Jan. 2010, page 28). Advice abounds on when to carry out a conversion and how to pay for it. Often, though, a thorough analysis of the alternatives requires planners
High Court Denies Business-Method Patent
The U.S. Supreme Court ruled Monday that a method of hedging against fluctuations in the price of energy or other commodities was an unpatentable abstract idea. The court, however, rejected the idea that a business method could never be patentable. The case, Bilski v. Kappos (08-964), has been widely followed
President Signs Bill Providing Temporary Funding Relief for Pension Plans
President Barack Obama signed HR 3962, the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, on Friday. The bill includes the so-called “doc fix,” increasing Medicare reimbursement to physicians by 2.2% through the end of November, in place of a scheduled 21% cut. The
Health Care Regulations Issued
The IRS and Treasury Department issued proposed regulations (TD 9491, REG-120399-10) Tuesday implementing rules for health care insurance coverage and group health plans under the Patient Protection and Affordable Care Act (PL 111-148) and the Health Care and Education Reconciliation Act (PL 111-152). The text of the proposed regulations is
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