The IRS on June 24 released 20 new updated frequently asked questions (FAQs) on its offshore income voluntary disclosure program (VDP) and foreign bank and financial accounting reports (FBAR). The IRS also provided to the AICPA FBAR Task Force the street address for FBAR submissions by private delivery services: IRS
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Tax
ETAAC Recommends Congress Mandate More E-Filing
Do-it-yourself e-filing by individual taxpayers increased 19% from 2008 to 2009, the Electronic Tax Administration Advisory Committee (ETAAC) said in its 2009 Annual Report submitted to Congress on Wednesday. However, e-filed returns by tax preparers were down 1%. Overall, the committee estimates that for major form types, 59% of returns
TIGTA: 1040 Tweaks Needed, Drabness to Stay
A few relatively minor changes to Form 1040 could yield improvements in preventing common taxpayer errors, the Treasury Inspector General for Tax Administration (TIGTA) said in an audit. Analyzing the approximately 7 million math error notices the IRS sends annually, TIGTA homed in on some of the most frequent taxpayer
Deducting Losses for Defrauded Investors
The financial collapse of high-profile investment institutions has generated billions of dollars of losses. A recent report notes that federal and state prosecutors “are preparing for a surge of prosecutions of financial fraud.”1 A question may arise as to whether these losses for tax purposes are to be treated as
New Car Buyers in States With No Sales Tax Can Still Take Sales Tax Deduction
On June 10, the IRS announced that new car buyers in states with no sales tax are entitled to take the new car sales tax deduction under IRC § 164(b)(6) (IR-2009-60). The American Recovery and Reinvestment Act of 2009 introduced a deduction for taxpayers who buy new cars, light trucks,
FBAR Voluntary Disclosure Questions Answered
The IRS has answered 51 “frequently asked questions” (FAQs) about its voluntary disclosure and settlement option for previously unreported offshore financial accounts and entities and income from them. The six-month window for making disclosures under the program ends Sept. 23. Although IRS Commissioner Doug Shulman said the program can allow taxpayers
IRS Offshore Voluntary Compliance Program Questions
The information below includes questions that IRS Criminal Investigation special agents have asked some taxpayers participating in the IRS Offshore Voluntary Compliance program. Practitioners might want to document the facts as fully as possible in a detailed summary when submitting under the program. Those considering the Offshore Voluntary Compliance program
IRS Proposes New Cell-Phone Fringe Benefit Substantiation Rules
Employer-provided cell phones have gone from an exclusive perk to common equipment in the 20 years since Congress made them subject to strict substantiation requirements for business use. Monday, the IRS proposed simplifying those rules. Generally, employees must include in income the fair market value of fringe benefits provided by
IRS Changes FBAR Reporting Requirements for June 30, 2009
June 30 is the deadline for filing the current year Report of Foreign Bank and Financial Accounts, Treasury Form TD F 90-22.1 (FBAR). “United States persons” having a financial interest in or signature authority or other authority over any financial account in a foreign country have an FBAR filing requirement
Ninth Circuit Rules on Tax Court Jurisdiction in Partnership Cases
The Ninth Circuit has held in a group of consolidated cases that the Tax Court has jurisdiction to decide in partner-level proceedings whether a partnership’s transactions were tax-motivated (Keller, No. 06-75466 (9th Cir. 6/3/09)). The case concerns the outstanding tax liabilities of 16 partners who invested in cattle partnerships that
Supreme Court Grants Cert. in Bilski Case
On Monday, the U.S. Supreme Court granted a writ of certiorari in the case of Bilski v. Doll, Sup. Ct. Dkt. No. 08-964. The Court has agreed to review the Federal Circuit’s earlier decision in the case and address the question of when business methods are eligible for patent protection.
Clean Energy Gets a Tax Jolt
From fitting a home with energy-efficient windows to harnessing the power of waves and tides, activities that conserve energy or produce it from clean and renewable sources enjoy new or expanded tax credits in the American Recovery and Reinvestment Act of 2009 (ARRA). The next generation of electric vehicles gets
A Broker Is What a Broker Does
The Tax Court held that a woman’s work as an independent contractor for a real estate agency enabled her and her husband to deduct losses because they were incurred from a real property trade or business rather than a passive activity. According to the court, the taxpayers’ real estate activities
In Search of a Standard
Editor’s note: This is a sidebar to “Executive Compensation: What’s Reasonable?“ A seminal case employing the independent investor test for reasonable compensation is the 1983 decision by the Ninth Circuit Court of Appeals in Elliotts Inc. v. Commissioner (716 F.2d 1241). In it, the Ninth Circuit (Alaska, Arizona, California,
Other Routes to Transparency
I would like to submit my name as being less than enamored with the new Form 990 that the IRS has visited upon hapless not-for-profits. I noticed that your article “The Redesigned Form 990” (March 09, page 72) featured the use of the buzzword “transparency.” It seems that any reporting
Timely Prosecution
A return filing date is not the only benchmark for measuring the six-year time limit within which the government must begin a prosecution for tax evasion under IRC § 7201. Criminal defendant Leonard Widman found that out when the U.S. District Court for the District of Connecticut denied his motion
Executive Compensation: What’s Reasonable?
When a corporate client seeks words of wisdom regarding tax planning, most CPAs go through the litany of suggestions related to acceleration of deductions and deferral of income. Yet one of the biggest and potentially most dangerous tax issues facing corporations is the compensation paid to the top executives and
IRS Sets Procedures for Tax Return Preparer Penalties
The IRS has issued internal memoranda setting forth procedures for consideration of tax return preparer penalties in taxpayer examinations. A memorandum by the Large and Mid-Size Business Division (LMSB) describes procedures for tax return preparer penalty cases, and two audit technique guideline memos by the Small Business/Self-Employed Division (SB/SE) explain
State Taxation of Telecommuters
Walk into any office today—not just late on a Friday afternoon—and you might wonder where all the workers are. Most likely, they’re telecommuting, from home or anyplace they can plug in or catch a wireless signal and log on—and for a lot of good reasons. Employers don’t have to provide
Wacky Tax Deductions
Bankrate.com surveyed accountants nationwide for its fourth annual survey of their clients’ craziest attempts to reduce their taxes. Here are some stories to share at your next party or around the office: An Arizona client sought a home office deduction for the toilet paper he bought for his house.
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