The Ways and Means Committee voted to send a bill that would repeal the expanded Form 1099 reporting requirements to the full House of Representatives on February 17, and the Senate approved its own version of 1099 repeal.
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IRS Practice & Procedure
President Proposes 3-Year AMT Patch, Partial Relief on 1099s, Crackdown on Misclassification
President Barack Obama released his proposed budget for fiscal 2012, containing several tax proposals.
IRS Starts Accepting Delayed Returns
The IRS on February 15 announced that it has started accepting returns that it could not accept before because it was updating forms and reprogramming its systems.
IRS Announces Second Offshore Voluntary Disclosure Program
The IRS 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 to comply with federal tax law.
IRS Guidance on Court-Ordered Restitution
The IRS Office of Chief Counsel provided an outline of its understanding of the IRS’ new authority to assess and collect court-ordered restitution for failure to pay tax.
IRS Revises Withholding Rules for Nonresident Alien Employees
The IRS announced the 2011 procedures for withholding on wages of nonresident alien employees who work in the United States
False Tax Returns, Mail Fraud, and Money Laundering
The Third Circuit Court of Appeals may have opened the door to a new approach that could result in significantly increased criminal penalties for taxpayers who file false returns. Taxpayers who mail or e-file their tax returns and knowingly understate their taxable income thereon may be exposing themselves to the same money laundering charges levied against drug dealers and financiers of international terrorism.
AICPA National Tax Conference Hosts Senior IRS Executives
The AICPA hosted a number of senior IRS executives at the institute’s National Tax Conference on October 26, 2010. This item gives an overview of the policies or programs that these speakers discussed, which will have a significant impact on the practices of CPA members and their clients.
Disagreements Between Taxpayers and the IRS over Substantiating the R&D Credit
The incentive effect of the R&D credit has been severely dampened by the fact that defending the credit during an IRS audit can be a long and frustrating process for taxpayers. But there are several vague and subjective terms in the body of the R&D tax credit law that are interpreted very differently by taxpayers, the courts, and the IRS.
Tax Law Changes Delay Start of Filing Season for Some Taxpayers
The IRS has warned taxpayers that it will not be accepting certain 2010 individual tax returns until mid- or late February, due to tax law changes enacted by Congress late in 2010. Taxpayers affected include all those who itemize deductions on Schedule A, as well as those who take certain recently extended deductions.
New Procedures Permitting Prepayment Review of International Information Reporting Penalties
The authors review the recently published new Internal Revenue Manual (IRM) Section 8.11.5, which permits taxpayers that have been assessed certain international information reporting penalties to elect prepayment review of those penalties by IRS Appeals.
New IRS Audit Technique Guide for Examination of Repair and Maintenance Costs
The author reviews the IRS’s new audit technique guide for examination of repair and maintenance costs. To be prepared for a potential IRS examination, taxpayers should ensure that the proper determination has been made with respect to unit of property and what is considered a repair and maintenance cost and should have the proper documentation to support the determination.
New 1099 Rules: President’s Speech Offers Hope for Some Relief; Exceptions for Rental Income Reporting Remain Vague
For small businesses that were dreading the thought of having to produce a Form 1099 for every payee to which they paid at least $600, President Barack Obama offered the prospect of relief in his State of the Union speech January 25 when he said, “We can start right now by correcting a flaw in the [health care] legislation that has placed an unnecessary bookkeeping burden on small businesses.”
Bill Introduced to Address Tax Strategy Patents
On January 25, Senators Max Baucus, D-Mont., and Chuck Grassley, R-Iowa, introduced legislation intended to stop the granting of patents for tax strategies.
IRS Targets 1040 Schedules, Procedures in Preparer Compliance Visits
In its current round of office visits involving tax preparer compliance, the IRS is targeting practitioners who prepare a high percentage of returns with certain Form 1040 schedules and is checking preparers’ procedures and recordkeeping.
IRS Gives Relief to Return Preparers with Pending PTIN Applications
Because some return preparers are having trouble with the IRS’ new online PTIN application, the IRS on January 24 announced that it is providing relief for preparers who make a good-faith effort to comply with the new PTIN requirement.
Lack of Economic Substance Guidance May Chill Legitimate Planning, Organizations Warn
The AICPA and the American Bar Association (ABA) Tax Section jointly issued a comprehensive set of recommendations to the IRS to encourage the Service to quickly establish guidance for applying the economic substance doctrine.
IRS Announces Date to Start Processing Delayed Returns
The IRS announced that it plans to be able to start processing tax returns delayed by the late enactment of the 2010 Tax Relief Act on February 14.
IRS Will Not Meet 80% E-File Goal, Oversight Board Says
The IRS Oversight Board released its Electronic Filing 2010 Annual Report to Congress on January 19, including the news that its goal that 80% of all major tax return types be electronically filed will likely not be met by 2012.
2011 Tax Filing Season Gets Under Way with Many Changes
The IRS started accepting e-filed and Free File returns on January 14, marking the official start of the 2011 tax filing season. However, many taxpayers will not be able to file until some time in February while the IRS updates forms and reprograms its systems to account for legislative changes made late in 2010.
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.
