May 2012

May 31, 2012

First Circuit Strikes Down Defense of Marriage Act but Stays Tax Remedies

The First Circuit Court of Appeals declared part of the federal Defense of Marriage Act unconstitutional, upholding a Massachusetts federal district court decision.

May 30, 2012

Guidance Issued on New $2,500 Health FSA Limit

The IRS guidance on implementation by employers of the $2,500 annual limit on employee salary reduction contributions to health flexible spending arrangements.

May 29, 2012

Prop. Regs. Clarify Meaning of “Substantial Risk of Forfeiture” Under Sec. 83

The IRS issued proposed regulations that would clarify when a substantial risk of forfeiture exists on the transfer of stock to an employee that is treated as compensation under Sec. 83.

May 25, 2012

IRS Issues Guidance, Requests Comments on Smart Cards and Debit Cards Used for Transit Fares

The IRS asked for comments on issues regarding the use of smart cards and debit or credit cards to pay transit fares.

May 23, 2012

IRS to Close Offices as Part of Administration’s Cost-Cutting Efforts

The IRS announced that 43 smaller offices will be closed and space in many larger facilities will be reduced

May 22, 2012

Offer in Compromise Rules Made More Flexible in Expansion of Fresh Start Program

The IRS announced that it is making the terms under which it will accept offers in compromise more flexible.

May 21, 2012

Final Regs. Issued on Health Insurance Premium Tax Credits

The IRS issued final regulations governing the Sec. 36B health insurance premium tax credit enacted by 2010’s health care legislation.

May 18, 2012

Accounting Firm Payments to Owners Flunk Independent Investor Test

The Seventh Circuit held that an accounting and consulting firm organized as a C corporation could not deduct payments to related entities because they were dividends, not compensation for services rendered by the firm’s owners.

May 14, 2012

Farm Debtors Must Pay Capital Gain Tax in Full, the Supreme Court Holds

The U.S. Supreme Court ruled that farmers who sold farm assets during a bankruptcy reorganization under Chapter 12 of the Bankruptcy Code were liable for the full amount of the capital gains tax that resulted from the sale

May 11, 2012

Obligations Arising From Certain Upfront Payments Made by CFCs Are Not U.S. Property

The IRS issued temporary regulations relating to the treatment of upfront payments made pursuant to certain notional principal contracts for federal income tax purposes.

May 10, 2012

Illinois “Click-Through Nexus” Law Held Unconstitutional

The Circuit Court for Cook County in Illinois issued an eagerly awaited order explaining its bench decision on April 25, which declared Illinois’s “click-through nexus” law unconstitutional.

May 8, 2012

TIGTA and Congress Focus on Identity Theft and Tax Fraud

The House Ways and Means Oversight and Social Security Subcommittees held a hearing on tax fraud involving identity theft and TIGTA released a report saying the IRS does not handle identity theft issues well.

May 4, 2012

Final Regs. Explain Allocation of Deduction for Prepaid Mortgage Insurance Premiums

The IRS issued final regulations governing the allocation of prepaid mortgage insurance premiums for periods after Dec. 31, 2010.

May 3, 2012

Terms in OIC Agreement Take Meaning From Code, Court Holds

The Second Circuit held that the terms “refund” and “overpayment” in an OIC agreement are specialized tax terms that take their meaning from the Code and are not given their “plain English” meanings, despite the colloquial tone of the agreement.

May 2, 2012

Basis Reporting Rules for Debt Instruments and Options Postponed for One Year

The IRS postponed the basis and gain reporting rules under Secs. 6045(g), 6045(h), 6045A, and 6045B for debt instruments and options, so they will apply to those acquired on or after Jan. 1, 2014.