Attempt to Avoid Fees on Transferring IRA Creates Late Rollover, IRS Grants Relief

A taxpayer who received advice from an adviser at a financial institution to which he planned to transfer her IRA was given relief by the IRS in PLR 201508021.  That by itself is not unusual, but the nature of the “deficiency” in the advice was a bit unusual, as the situation was one where the IRS could have concluded that this was actually a taxpayer error, something the IRS has generally not been willing to forgive.

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Estate Did Not Permanently Set Aside Funds for Charitable Purpose When It Knew of Possibility of Prolonged Litigation

The Tax Court had to decide when a part of the gross income of an estate is considered “permanently set aside” for a charitable purpose as defined in IRC §642(c)(2) in the case of Estate of Belmont v. Commissioner, 144 TC No. 6.  In such a situation an estate would be allowed a charitable contribution deduction for the year in which this occurred.

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Methods for Obtaining Electronic Consent for Employer to Request Refunds of FICA Published in Proposed Form

In Notice 2015-15 the IRS attempts to address what constitutes employee’s consent to support a claim for refund of FICA taxes by an employer.  Specifically the notice contains a proposed revenue procedure that would provide for requirements for employers who obtain electronic consent from their employees. 

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Simplified Accounting Method Change Procedures Issued by IRS for Small Taxpayers to Comply with Repair/Tangible Property Regulations

Facing mounting pressure from various parties to grant relief, the IRS has provided an optional “simplified” method of complying with the new repair/tangible property capitalization regulations in Revenue Procedure 2015-20.  In addition to issuing the ruling, the IRS also issued a press release (IR-2015-29) describing the relief.

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Funds Deposited to Taxpayer's Account Were Held in Trust for Her Boss, Amounts Generally Not Taxable to Her

The credibility of a taxpayer when testifying can often make or break a case at the Tax Court.  That is especially true when the taxpayer is claiming certain defenses—such as the claim that funds the taxpayer deposited into her bank account were not truly her income, but that of her employer.

In the case of Na v. Commissioner, TC Memo 2015-21 the taxpayer’s testimony was found to be credible.

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IRS to Disallow All Pending Claims for Payroll Tax Refunds on Severance Pay, Implementing Supreme Court Decision in Quality Stores

The U.S. Supreme Court resolved a split among lower courts regarding whether severance payments under a severance plan are subject to FICA, overruling the holding of the Sixth Circuit Court of Appeals in the case of United States v. Quality Stores, 113 AFTR 2d 2014-1326 reversing CA6, 110 AFTR 2d 2012-5827.  The IRS, nearly eleven months later, officially announced [Announcement 2015-8] that based on that decision the agency was going to deny all pending claims for refund.

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Preparer's Use of Forms 1099C as "Collection Technique" Discussed by Office of Professional Responsibility

The IRS Office of Professional Responsibility has issued Alerts from the Office Professional Responsibility Issue 2015-02 that discusses the implications of a preparing using Form 1099C as a “collection tool” to encourage clients to pay the balances due to the professional.

The alert specifically avoids giving a direct answer on whether the proposed conduct violates federal law and/or provisions of Circular 230, but certainly raises areas of concern.

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Social Security Beneficiaries May Obtain Copy of Form 1099SSA Online

Clients are known to misplace tax related documents which can complicate the process of getting their tax returns completed.  However, over time more and more organizations have established processes to let taxpayers download additional copies of tax documents online.

Now the Social Security Administration has joined that group. In a News Release the Social Security Administration announced that social security beneficiaries will be able to obtain a copy of their Form 1099-SSA from the agency’s website.

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IRS Announces Depreciation and Lease Inclusion Amounts on Vehicles for 2015

In Revenue Procedure 2015-19 the IRS released the limits on depreciation for vehicles subject to the limitations of §280F(d)(7)(B)(i) for items placed in service in 2015, as well as the revised limits for 2014 for autos qualifying for bonus depreciation under IRC §168(k).  The latter revisions were needed since Congress finally extended the bonus depreciation rules through the end of 2014 in the Tax Increase Prevention Act of 2014, signed into law on December 19, 2014.

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LLC Issusance of Preferred Interests to IRA and Issuance of Other Classes of Interest Terminated S Election, IRS Grants Retroactive Relief in PLR

When a LLC “checks the box” by filing a Form 2553 to elect to be treated as a corporation and simultaneously elect S status, it must live by all the S corporation restrictions.  That includes the restriction on only having one class of “stock” issued by the entity during the time it wishes to remain an S corporation.

In reality, there is no such federal tax entity as an “LLC”—the structure was originally designed when the first statute was adopted by Wyoming decades ago to be an entity for which there was no federal tax treatment specifically mandated.  To this day the IRC does not have provisions outlining the tax treatment of “LLCs” but rather, under the check the box regulations found at Reg. §301.7701‑2 the entity is treated for federal tax purposes as one of the entities that the IRC knows about.

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Building Placed in Service When Substantially Complete and Available for Use Even Though Not Open

The concept of “placed in service” for purposes of beginning to deduct depreciation is often a tricky one to deal with in real life, and the date of placing an item in service may not be as simple as some might believe.  Certainly, in the case of Stine, LLC v. United States, 115 AFTR 2d ¶ 2015-381, DC LA, the IRS’s view of a “bright line” test based on a when a building was open for business was rejected by the Court.

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TIGTA Warns of Phone Scams Related to IRS

In press release TIGTA 2015-01 J. Russell George, Treasury Inspector General for Taxpayer Administration (TIGTA) warned of the threat of phone scams where the individual claims to represent the Internal Revenue Service in order to defraud individuals.

Phone scams have become the new favorite tool for those running scams since some individuals may mistakenly believe they are safe from scams and financial risks if they avoid online interactions.  The criminal generally uses information obtained about the mark from various sources to convince them that they represent the IRS and, often, that unless the mark does something immediately (like give a credit card number, buy a prepaid debit card to send to the government, etc.) some dire result will occur.

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Relief from Late Payment and Underpayment of Estimated Tax Penalties Offered for Repayment of Advance Premium Credit for 2014

The IRS announced relief for certain taxpayers who end up having to repay amounts related to advance payment of the premium tax credit in Notice 2015-9.  The IRS announced that the relief will apply to liabilities under IRC §6651(a)(2) for late payment of a balance due for taxpayers unable to pay the balance due and under IRC §6654(a) for underpayment of estimated taxes.  The relief will only apply to 2014 taxes.

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