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.
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IRS Practice & Procedure
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.
Treasury Introduces Prepaid Debit Cards for Tax Refunds
The Treasury Department announced a pilot program of prepaid debit cards to allow taxpayers without bank accounts to receive their tax refunds more quickly.
IRS Oversight Board Releases Latest Taxpayer Attitude Survey Results
The IRS Oversight Board has released the results of its 2010 Taxpayer Attitude Survey showing that taxpayers feel that income tax cheating is unacceptable and are generally satisfied with their personal interaction with the IRS.
PTINs a Pain for Some CPAs
As the start of tax filing season looms, some CPA preparers are reporting difficulties meeting the new IRS requirement to register and obtain or renew a PTIN.
Refund Options for the 2011 Filing Season
Over time, the options for receiving refunds have expanded to include direct deposit, refund anticipation loans, and splitting refunds among multiple accounts.
IRS Faulted for Failure to Send Notice to Last Known Address
The Fifth Circuit held that for purposes of the starting date of the limitation period for filing a Tax Court petition, a notice of determination that is returned to the IRS as undeliverable is null and void if the IRS did not exercise reasonable diligence to determine the taxpayer’s correct address.
Check-the-Box Relief for Certain Foreign Entities Electing Flowthrough Treatment
The IRS provided relief to certain foreign eligible entities that made erroneous entity classification elections (check-the-box elections) based on a mistaken understanding of the number of owners as of the effective date of the election.
PTIN Application Process for Preparers Without a Social Security Number
The IRS provided a process for individuals without a Social Security number to obtain a preparer tax identification number (PTIN).
Is There Still Time to Correct IRS Interest Mistakes?
If the IRS does not refund the correct interest, what is the statute of limitation for a claim for additional interest? What is statute of limitation for a claim for refund for interest netting and how long the IRS has to assess the correct amount of deficiency interest? The answers to these questions may surprise even experienced tax professionals.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
