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Tax

Court of Federal Claims Upholds Additional SUI Credit

In an unreported decision, the U.S. Court of Federal Claims held that plaintiffs in 10 consolidated tax refund cases were entitled to an additional state unemployment insurance (SUI) credit against their FUTA tax liabilities for years 1991–1996. Although the case selected as the lead was that of Cencast Services LP,

Alimony Determined

The doctrine of collateral estoppel did not bar the IRS from assessing a deficiency for an underpayment it had conceded in a Tax Court stipulated decision concerning the same issue in the immediate prior tax year, the Tax Court held. The underpayment stemmed from what the IRS ultimately claimed, and

Line Items

FINAL REGS CLARIFY INSTALLMENT TAX PAYMENTS The IRS issued final regulations governing the payment of tax liabilities in installments (TD 9473). The regulations reflect changes to the Tax Code made by acts going as far back as 1996. IRC § 6159 allows taxpayers who cannot pay their tax liabilities in

Managing S Corporation At-Risk Loss Limitations

Today’s economic climate may be dealing your clients a loss. It’s bad enough, especially for small business owners, to have to wonder when they might return to profitability. Beyond that, tax recognition of their losses is limited. One of those limitations is that a taxpayer’s loss deductions are limited to

Improve Tax Tracking With Automated Workflow

“Why should we change the way we track tax work through the office? Isn’t the manual system better?” I have heard these types of questions many times over the years, and it never surprises me because accountants, like many of us, don’t like change. Firms that use a manual system

Equitable Relief Partially Granted

The Tax Court held that a taxpayer was entitled to equitable relief under IRC § 6015(f) for her husband’s half of the additional 2002 and 2003 federal income tax liabilities reported on court-ordered amended joint tax returns, since she had no reason to believe her ex-husband would not pay his

Vendor Allowances for Defective Merchandise Reduce Inventory Cost

In a recent chief counsel advice, the IRS held that certain allowances resellers receive from vendors for defective merchandise should be treated as reducing the cost of inventory under Treas. Reg. § 1.471-3(b). The IRS is closely scrutinizing the various types of vendor allowances to determine if they constitute gross

Final Regs Expand ISO, ESPP Reporting Requirements

IRC § 6039 requires corporations to furnish a written statement containing certain information to an employee who exercises incentive stock options (ISOs) or who receives stock under an employee stock purchase plan (ESPP). In 2006, Congress expanded these reporting obligations by requiring that corporations also furnish information to the IRS.

Obama Outlines Proposed Tax Credits, Other Changes

President Barack Obama, in a State of the Union address Wednesday that focused heavily on job creation, proposed several business and individual tax credits. Obama called for a new tax credit for small businesses that hire workers or raise wages as well as the elimination of all capital gains tax

IRS Updates Rules on Adequate Disclosure

The IRS has updated its guidance on the rules governing when disclosure of an item or position on a tax return constitutes “adequate disclosure” for purposes of reducing an understatement of income tax or avoiding certain tax return preparer penalties (Revenue Procedure 2010-15). The guidance applies only to the substantial

In the Twilight of the EGTRRA

When the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, PL 107-16) was enacted in 2001, almost no one seriously thought that one of its most important provisions would ever be given its full effect—the repeal of the federal estate and generation-skipping transfer (GST) taxes in 2010. However,

IRS Plans to Require Disclosure of Uncertain Tax Positions

The IRS announced Tuesday that it is considering making changes to how business taxpayers report uncertain tax positions (Announcement 2010-9). Specifically, the IRS said it is developing a schedule that certain businesses would be required to use to disclose uncertain tax positions on their returns annually. The IRS plans to

Swiss Court Halts Release of Some UBS Account Holder Data

A Swiss court has held that the Swiss bank UBS does not have to hand over to the IRS confidential data on 26 accounts under a settlement agreement between the United States and Switzerland negotiated in August 2009. Under the agreement, UBS is supposed to turn over for investigation information

Senate Passes Haiti Assistance Income Tax Relief

The Senate on Thursday passed by unanimous consent the Haiti Assistance Income Tax Relief Act (S. 2936). The Senate bill was identical to H.R. 4462, passed by the House on Wednesday. The legislation now goes to President Barack Obama for his signature; he is expected to sign it this week.

House Unanimously Passes Haiti Donation Bill

The House of Representatives on Wednesday unanimously passed a bill that would allow taxpayers to accelerate deductions for charitable contributions made for relief of victims of the earthquake in Haiti (HR 4462). Under the bill, taxpayers could deduct donations made in 2010 on their 2009 returns. Donations covered by the

IRS Updates Method Thresholds for Vehicle Fringe Benefits

The IRS has updated for 2010 (Revenue Procedure 2010-10) the maximum allowable fair market value (FMV) of an employer-provided vehicle for which the cents-per-mile and fleet-average rules may be used in determining the value of an employee’s personal use of the vehicle. For passenger automobiles, the new maximum FMV is

Tax Season Starts; IRS Releases Homebuyer Credit Form

The IRS started accepting e-filed tax returns on Jan. 15, marking the official start of tax season. The IRS’ popular Free File program also started accepting returns on Friday. However, as usual, W-2 and 1099 forms are generally not due to taxpayers before Feb. 1, so many taxpayers will not

Taxpayer Advocate Urges Better IRS Service

A report examining problems taxpayers encounter with the IRS found that the Service’s collection practices may harm long-term taxpayer compliance and are not supported by reliable data. The IRS also faces challenges in providing core services such as meeting the demand for telephone assistance, National Taxpayer Advocate Nina Olson said

IRS Proposes New Requirements for Return Preparers

The IRS on Monday announced plans to require mandatory registration of all paid, signing tax return preparers as well as competency testing and CPE requirements for preparers other than CPAs, attorneys or enrolled agents. The plan also calls for extending Circular 230’s ethics rules to all return preparers. Following a

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