Identity theft and telephone scams top this year’s list of the “Dirty Dozen” fraudulent tax schemes released by the IRS.
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TOPICS
IRS Practice & Procedure
D.C. Circuit Affirms Decision Striking Down Tax Return Preparer Regs.
The IRS’s attempt to regulate unenrolled tax return preparers was dealt another blow when the D.C. Circuit Court of Appeals held that the agency exceeded its statutory authority when it issued regulations imposing various requirements on tax return preparers.
New IDR Procedures Postponed Until March 3
The IRS announced in an email to practitioners that it is pushing back the effective date for its new information document request (IDR) procedures.
Final Regs. Permit Agents to Withhold FUTA for Home Care Service Recipients
The IRS issued final regulations permitting an agent authorized by the IRS under Sec. 3504 to perform certain acts normally required of employers to withhold FUTA taxes owed by home care service recipients.
An Overview of AICPA and IRS Rules of Practice
This column refreshes practitioners on the AICPA and IRS rules of practice, provides a list of resources for questions and answers, and details the relationship and similarities between the AICPA and IRS ethics standards related to tax practice.
Taxpayer Did Not Have Fraudulent Intent
The Tax Court held that a taxpayer who used an “agent-principal” scheme to avoid paying taxes on income from his business was not liable for a civil fraud penalty because the IRS had failed to prove that the taxpayer had fraudulent intent.
Valuation-Misstatement Penalty Applies to Tax Shelter Transactions
The Supreme Court held in that the Sec. 6662(b)(3) penalty for tax underpayments attributable to valuation misstatements applies to an underpayment resulting from a basis-inflating transaction that is disregarded for a lack of economic substance.
New IDR Policy Means Stricter Deadlines, More Discussions
A directive issued by IRS LB&I Division contains guidelines for issuing an information document request (IDR) and, separately, rules for enforcing the IDR.
District Court Considers Taxpayer’s Privilege and Work Product Doctrine Claims in IRS Summons Action
A recent case provides insight into how other courts may define materials prepared “in anticipation of litigation” and apply the work product doctrine, attorney-client privilege, and tax practitioner privilege to disputes between taxpayers and the IRS.
Final Version of Net Investment Income Tax Form Released
Just in time for the start of tax season, the IRS has released the final version of Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, which will be used by individuals and trusts and estates to compute the new 3.8% tax.
2014 Inflation Adjustments Released
The IRS issued the annual inflation adjustments for 2014 for more than 40 tax provisions and the tax tables for 2014.
Large Tax Preparation Franchise Company Closed by Court Order
A federal district court in Ohio has issued a permanent injunction ordering ITS Financial LLC, the parent company of Instant Tax Service tax franchiser, to cease operations. The order, which was issued as a result of a two-week trial in June, also bars Fesum Ogbazion, the sole owner and CEO of ITS Financial, from operating or being involved with any business relating to tax-return preparation.
IRS Announces FY 2014 Sequester Reduction Rate for Qualified Refundable Credit Bonds
Refundable credit payments processed on or after Oct. 1, 2013, and on or before Sept. 30, 2014, will be reduced by a sequestration rate of 7.2% for issuers of various bonds that elected to receive a direct credit subsidy under Sec. 6431.
IRS: “Don’t Know What You Got (Till It’s Gone)”
Continued funding of the IRS is essential to the success of the nation’s voluntary tax system.
Implementation Guidance for Appeals Judicial Approach and Culture Project
The goal of the IRS Appeals Judicial Approach and Culture Project is to promote a quasi-judicial approach in how the Appeals office handles its cases. It is part of an effort to improve internal and external customer perceptions of a fair, impartial, and independent Appeals office.
TIGTA Report Studies Assessment and Enforcement of Sec. 6694 Paid Preparer Penalties
TIGTA studied how effective the IRS is in using the requirements and penalty regime that apply to tax preparers. The TIGTA study attempted to determine whether controls are in place to ensure that the IRS effectively enforces and applies penalties to paid preparers as required by Sec. 6694.
Isley and IRS Appeals Cannot Work It On Out
The Tax Court held that IRS Appeals could not unilaterally accept an offer in compromise proposed by Ronald Isley, vocalist and founding member of the Isley Brothers, because the OIC covered liabilities related to a case that had been referred to the Department of Justice for prosecution.
Fast-Track Settlement Program Expanded to Small Businesses
Formerly available only to large and midsize businesses and in a geographically limited pilot program for smaller entities, the IRS’s Fast Track Settlement program is now available to smaller businesses nationwide.
Late S Corp. Return Not an Income Disclosure Despite Reference in Stockholder’s Form 1040
When information disclosing income that should have been included in the taxpayer’s return is provided to the IRS after the return is filed, that information is not considered to be disclosed on the return.
Change in “Responsible Party” Must Be Reported to the IRS
The IRS in May 2013 issued final regulations requiring any person assigned an employer identification number to provide updated responsible-party information to the IRS.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
