The IRS has expanded the use of correspondence examinations of individual income tax returns. This item reviews the procedures by which returns are selected for review, how taxpayers should respond to correspondence, and IRS problems with timely response to taxpayer or practitioner letters.
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IRS Practice & Procedure
Offshore Voluntary Disclosure Initiative
The IRS announced another special voluntary disclosure initiative designed to bring U.S. persons hiding assets offshore back into the U.S. tax system. This item discusses some of the issues related to the IRS effort to bring U.S. persons into compliance.
Form 5471 Penalties
This item discusses the importance of timely filing federal income tax returns that include Form 5471, regardless of whether the return shows a balance due, because of the extensive penalties for failure to comply with the reporting requirements.
Court-Ordered Restitution Subject of Informal Guidance
In a piece of informal guidance, the IRS Office of Chief Counsel has provided an outline of its understanding of the IRS’s new authority to assess and collect court-ordered restitution for failure to pay tax.
Second Offshore Voluntary Disclosure Program Started
The IRS has announced that it is starting a new program designed to bring money held in foreign accounts back into the U.S. tax system and to help taxpayers with income from offshore accounts comply with federal tax law.
Taxpayer Assistance Order Regulations Issued
The IRS issued final regulations governing National Taxpayer Advocate taxpayer assistance orders when a taxpayer is suffering hardship because of the way the IRS is administering the tax laws.
IRS Issues Final Regs and Guidance on Mandatory E-Filing Requirements
The IRS issued final regulations and several pieces of guidance relating to the requirement that return preparers e-file tax returns, starting this year.
Free File Program Expanded to Include Returns Filed from Overseas
The IRS announced that taxpayers who live in foreign countries can now use the Free File program to prepare and e-file their federal tax returns.
First-Time Homebuyer Credit Recapture Causing IRS Processing Problems
The IRS announced that it is having problems processing tax returns that involve repayment of the Sec. 36 first-time homebuyer credit for 2008 home purchases.
IRS Proposes Extending Period for Receiving Authorization to Disclose Return Information
The IRS issued a proposed regulation that would extend from 60 days to 120 days the permitted period for submission of taxpayer authorizations allowing disclosure of returns and return information to third-party designees.
IRS Issues Final Regs on Disclosing Return Information to Whistleblowers
On March 14, the IRS released final regulations regarding disclosure of return information by the Treasury Department in connection with written contracts among the IRS, whistleblowers and, if applicable, their legal representatives (T.D. 9516).
Senate Passes Bill Addressing Tax Strategy Patents
The Senate voted 95–5 on March 8 to pass the America Invents Act. Included in the bill is a provision intended to stop the granting of patents for tax strategies.
House Passes 1099 Repeal
On March 3, the House passed a bill to repeal the expanded Form 1099 information reporting requirements mandated by last year’s health care legislation and the new 1099 reporting requirements imposed on taxpayers who receive rental income.
IRS Oversight Board Says 80% E-File Goal Will Not Be Met
The IRS Oversight Board released its Electronic Filing 2010 Annual Report to Congress and concluded that the goal that 80% of all major tax return types be electronically filed will likely not be met by 2012.
Supplemental Claims: Acceptable Amendment or New Claim?
Whan a taxpayer amends a previously filed refund claim at a time outside the refund statute of limitation period, certain factors dictate whether this supplemental claim is deemed to be an amendment to an existing claim or a new claim.
CPA Supervised Nonsigning Preparers and Non-1040 Preparers Exempted from Return Preparer Rules
The IRS has released guidance on the implementation of new regulations governing tax return preparers and provided an exception to its return preparer regulation plan for nonsigning preparers supervised by a CPA, attorney, enrolled agent, or other Circular 230 practitioner.
Updated Guidance on Adequate Position Disclosure
The IRS has released updated guidance identifying when a taxpayer’s disclosure of an item or position in an income tax return is adequate for purposes of reducing the understatement of tax penalty and the tax return preparer penalty for understatement due to unreasonable positions.
Tax-Exempt Bond Voluntary Closing Agreement Program Announced
The IRS announced a program to provide certain issuers that purchase and hold their own tax-exempt bonds relief from debt extinguishment.
IRS Announces Changes to Lien Process
The IRS has announced a set of new policies designed to help taxpayers pay their back taxes and avoid liens.
IRS Provides Transitional Relief for Some Stock Basis Reporting Requirements
The IRS provided transitional relief from the information reporting requirements that apply to issuers of stock regarding organizational actions that affect stock basis.
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.
