In Notice 2019-45[1] the IRS expanded the list of preventive care items that can be paid for under a high deductible health plan (HDHP) for taxpayers with health savings accounts.

Under IRC §223, for a taxpayer to be eligible to contribute to a health savings account, the taxpayer must be covered by a qualified HDHP program and have no disqualifying coverage.  Aside from payments for certain preventive care, an HDHP cannot provide reimbursement to the taxpayer until the taxpayer has paid for care equal to the deductible.

“Friends, Romans, countrymen, lend me your ears; I come to bury Caesar, not to praise him.” (William Shakespeare, Julius Caesar, spoken by Mark Anthony)

The IRS has now moved to update yet again the Form 1040, adding the Form 1040-SR that was mandated in the Bipartisan Budget Act of 2018 and updating the regular Form 1040, at least partially abandoning the much maligned postcard 1040 that was introduced for 2018 tax returns.

The taxpayer in the case of Burack v. Commissioner, TC Memo 2019-83[1], had withdrawn over $500,000 from her IRA.  She used the funds to pay for her new home in Philadelphia as she was awaiting the funds from the sale of her former residence.  She planned to return the funds to an IRA with 60 days of the original receipt, completing a tax free rollover.[2]

Beginning with the 2020 Forms W-2, employers will be allowed to issue Forms W-2 to employees with truncated social security numbers, though the copies sent to the social security administration will continue to have the employee’s complete social security number on them.  The IRS has issued final regulations on the issue, adopting with little change the proposed regulations previously issued on this topic.[1]

The IRS has issued final regulations that bar partnerships from treating partners working for a disregarded entity owned by the partnership as employees.[1]  The final regulations replace identical temporary regulations that were issued in May of 2016.[2]

Some partnerships had argued that since single member LLCs are treated as separate entities, and therefore “like” C corporations, for payroll tax purposes, partners of a partnership holding 100% of the interests in the LLC could be employees of the disregarded entity.  By doing so, the partners could qualify for various tax benefits, such as tax favored benefits available to employees but not self-employed persons.

The IRS has sent an email to tax professionals discussing what to do if the professional becomes aware of a data breach.[1]

The email begins by reminding tax professionals that the IRS had sent out an email in March (which I suspect many overlooked due to coming in the middle of a generally very trying filing season) about the need to develop a data security plan.  But the email continues that even with such a plan in place, a data breach can still occur.

The taxpayer in the case of Brown v. Commissioner, TC Memo 2019-69[1] ran into a number of issues, but a key one was failing to meet the requirements to exclude certain payments received as a minister from the taxpayers’ income as a housing allowance.

Taxpayers who try to reconstruct records when faced with an IRS exam often make obvious mistakes.  But in the case of Burden, et al v. Commissioner, TC Summary Opinion 2019-11[1] the taxpayers may have set a new standard for creating records that clearly did not reflect reality.

The key issues in this case revolved around the taxpayers’ attempt to deduct $41,950 for unreimbursed employee business expenses for both spouses.  Of those expenses $20,334 represented vehicle expenses computed at the standard mileage rate, $10,897 represented travel expenses and $2,904 represented meals and entertainment expenses.

An individual who paid half of an amount previously included in income by her ex-spouse on a joint return was allowed a claim of right deduction under IRC §1341 for her payment in the case of Mihelick v. Commissioner, Case No. 17-14975, CA 11.[1]