The IRS Office of Professional Responsibility has apparently “thrown in the towel” regarding the 2014 holding of the United States District Court for the District of Columbia in the case of Ridgely v. Lew, et al, USDC DC, No. 1:12-cv-00565, 2014 TNT 138-11 that the OPR does not have the authority to regulate tax return preparation under Circular 230.
In Fact Sheet FS-2015-19 the IRS provides information about online information provided by the agency about Circular 230. But at the end of the second paragraph of the fact sheet the agency concedes that “[t]ax return preparation is not “practice” as currently defined by case law.”Read More
The question of who is able to sign a Form 2848, Power of Attorney and Declaration of Representative is sometimes not a simple one to answer. Chief Counsel Advice 201522005 looks at a fact pattern involving a LLC taxed as a partnership and a member manager that is an indirect subsidiary included in the consolidated return of a parent corporation—and you may find the IRS’s conclusion surprising.Read More
In Revenue Procedure 2015-32 the IRS replaced the temporary pilot relief program for 1-Participant plans that was created by Revenue Procedure 2014-32 with a permanent program for relief. The revised program applies to applications submitted on or after June 3, 2015.
One participant programs, because they are not covered by Title I of ERISA, are not eligible to participate in the Department of Labor’s Delinquent Filer Voluntary Compliance (DFVC) program that provides an option for relief from penalties for those plans.
In Notice 2002-23 the IRS had provided that plans that obtained DFVC relief from the Department of Labor would automatically be exempted from penalties imposed by the IRC. Thus, one participant plans (which generally should have filed Form 5500-EZ) had no method to automatically obtain relief from IRC penalties of the sorts that plans under the jurisdiction of the Department of Labor could obtain.Read More
The United District Court for the Western District of Wisconsin found that the taxpayer and his S Corporation had participated in a listed transaction requiring disclosure for four years in the case of Vee’s Marketing, Inc. v. United States, Docket No. 3:13-cv-00481.
Generally a taxpayer must file a Form 8886 for each year the taxpayer participates in a transaction that is the same or substantially similar to one the IRS has identified as a listed transaction. A failure to file the report will trigger a penalty, regardless of whether the taxpayer actually is found to have a deficiency arising from the transaction, in the amount of 75% of the tax savings claimed on the return based on the transaction.Read More
Small businesses may find that their federal payroll tax filing form changes from year to year from Form 941 (filed quarterly) to Form 944 (filed annually). While the Form 944 was meant to be a simplifying concession to small businesses, often business owners may not understand the notice they receive regarding which form should be filed or, just as possible, the notice may end up being lost in the mail.
So that begs the question—what impact does filing the wrong form have on the statute of limitations for the IRS to assess taxes? IRS Field Service Advice 20152101F provides some answers to that question.Read More
The IRS on May 26, 2015 announced in a statement published on the agency’s web page that criminals had obtained access to information about 100,000 taxpayers via unauthorized use of the IRS’s “Get Transcript” application. The information accessed included Social Security information, date of birth and street address.
The IRS has shut down the “Get Transcript” application pending a determination by the IRS about what modifications to the program should be made in order to strengthen security for the program.Read More
A taxpayer’s attempt to designate her corporation’s adequate protection payments made in the corporation’s bankruptcy case failed in the case of Riggs v. Commissioner, TC Memo 2015-98.
The taxpayer in this case had been the sole owner and president of a corporation that had run up significant payroll tax liabilities with the IRS. The corporation ended up in bankruptcy and, although she attempted to start up a new corporation, the IRS found that corporation was a successor in interest to the tax liabilities, pulling it into the bankruptcy case that had been filed on behalf of the first corporation. As well, the IRS found that Ms. Riggs, as President and sole shareholder of the corporation, was a responsible party who had willfully allowed trust fund taxes to go unpaid, finding her liable for the trust fund penalty under IRC §6672.Read More
The IRS provided deadlines for filing 2015 income tax returns in Revenue Ruling 2015-13, taking into account the fact that the IRS no longer requires income tax returns to be filed with the Service Center in Andover, Massachusetts.
The issue arises due to the fact that April 15 in 2016 will fall on the third Friday in April. This sets in motion a series of issues, since the District of Columbia will recognize Emancipation Day (normally a formal holiday in the District celebrated on April 16) on April 15 since the 16th falls on a Saturday.Read More
In emailed advice (Chief Counsel Email 201520010) the IRS concluded that the agency had the authority to abate interest and penalties in a situation where the penalties and interest had been paid and an amended return was filed after the date on which the statute of limitations for claiming a refund of taxes on the year in question had expired.Read More
Update - see our discussion of Ninth Circuit's reversal of a similar case in July of 2015, two months after the Tax Court issued this opinion
A taxpayer that makes a “qualifying offer ” in a tax dispute may receive an award of litigation costs if a judgment in the case subject to litigation ends up being less than the amount of qualifying offer. The case of Angle v. Commissioner, TC Memo 2015-92, looks at this issue in a tax matter that ended up with multiple proceedings (four cases, including this one).Read More
Does filing a tax return that reflects a tax liability of $0.00 represent the filing of “a return for a preceding taxable year showing a liability for tax”—or, to put it simply, is $0 a liability for tax? That was the issue that the U.S. District Court for the Central District of California addressed in the case of Cal Pure Pistachios, Inc. v. United States, 115 AFTR 2d ¶2015-643.
The issue was whether the taxpayer, a C corporation, could escape a penalty for underpayment of estimated taxes using the “prior year’s tax” exception under IRC §6655(d).Read More
The IRS has updated the list of private delivery services that are eligible for the “timely mailing” protection found in IRC §7502 in Notice 2015-38.
IRC §7502 governs the methods taxpayers can use to be treated as timely filing documents with the IRS when they do not arrive at the related service center on or before the last date for filing the document. Generally the rule provides that the postmark date on a document mailed to the IRS will be considered the date of delivery of the document to the IRS or date of payment for payments. [IRC §7502(a)]Read More
The question of what qualifies for the “reasonable cause” exception to the gross valuation misstatement penalty under IRC §6662(h)(1) was the issue before the First Circuit in the case of Kaufman v. Commissioner, Docket No. 14-1863, CA1, affirming TC Memo 2014-52. This was the second time the Kaufmans had appealed an adverse Tax Court decision on this issue to the First Circuit, but the result wasn’t as favorable this time.
The Tax Court, on remand, determined that the value of the facade easement was zero and, given that, went on to decide that the taxpayers were subject to the penalty due to a gross valuation misstatement given the proper value was zero. Finally, and the issue we are interested in at this point, the court found that the taxpayers did not qualify for the relief granted to taxpayers from the penalty under the reasonable cause relief provision for this penalty found at IRC §6664(c).Read More
The IRS appears to have recognized that corporations who have tax issues with the IRS may also have problems with state taxing agencies. The IRS also noticed that, in California, the Franchise Tax Board has the right to suspend a corporation's powers, rights and privileges for failure to pay California state taxes.
One of the lost privileges is the privilege to file suit, an issue we have previously discussed in our post last month on Medical Weight Control case. The fact that the taxpayer had its corporate status retroactively restored was ruled, by the Tax Court, did not serve to retroactively grant a right to file suit in Tax Court.Read More
Subtle differences in facts can be very important when attempting to apply the opinion in a prior court decision to a client’s current situation. This is rather clearly illustrated by looking at the result in the case of Speer v. Commissioner, 144 TC No. 4 and contrasting his result with the result in a case he was relying upon, Givens v. Commissioner, 90 TC 1145.Read More
A person who is unable to manage their financial affairs due to a disability has the statute of limitations for claiming refunds suspended generally under §6511(h). However, in Chief Counsel Advice 201515019 the IRS National Office concluded that the suspension is limited in one very important way—it does not suspend the special extended period for filing a net operating loss claim under IRC §6511(d)(2).Read More
n 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. Now the California Board of Equalization has issued a separate warning in News Release 27-15-G to taxpayers that a similar scam is taking place for California state taxes.Read More