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Tax Law Roundup current law developments in U.S. taxation

Category Archives: Compliance

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New Trade Act Hikes Penalties for Information Return Failures

Posted in Compliance, Corporate, Procedure

The newly-enacted Trade Preference Extension Act boosts the penalties for failing to provide accurate information returns to the IRS and payees – such as Forms W-2, 1098, and 1099, as well as Forms 1095-B and 1094-B.  The penalty under Section 6721 (reports to the IRS) and Section 6722 (reports to payees) has more than doubled,… Continue Reading

New Option for Late FBARs – Just File It!

Posted in Compliance, FBAR, International

An often overlooked filing obligation is the annual June 30 requirement to file the FBAR form for taxpayers with foreign bank accounts aggregating over $10,000. Late FBARs are a consistent problem and the IRS has a long history of complicated solutions. The latest (and greatest) is the “just file it!” approach, as long as the… Continue Reading

BE-10 Filings For Foreign Subsidiaries: the Countdown is On

Posted in Compliance, International

The countdown is on: every five years, the U.S. Department of Commerce’s (DoC) Bureau of Economic Analysis (BEA) conducts a survey of U.S. corporate entities with foreign affiliates. The DoC conducts these surveys to produce statistics about U.S. direct investment abroad and ultimately to help formulate international financial and monetary policy. The deadline for this… Continue Reading

IRS Releases FATCA Model Agreement for Foreign Financial Institutions

Posted in Compliance, General, International, Securities

The IRS continues its string of guidance on the Foreign Account Tax Compliance Act (FATCA) by issuing Notice 2013-69, which (1) includes a model participating FFI agreement and (2)  provides guidance to Foreign Financial Institutions (FFIs) and branches of FFIs treated as reporting financial institutions under an applicable Model 2 intergovernmental agreement (IGA) (reporting Model 2… Continue Reading

IRS Provides Details on Section 179 Expensing for Qualified Real Property

Posted in Compliance, General, Real Estate, REITs

As part of the January 2013 tax legislation, Congress expanded the definition of property qualifying for favorable Section 179 expensing to include qualified real property placed in service in any taxable year beginning in 2010, 2011, 2012, or 2013.  In general, qualified real property is depreciable real property purchased to be used in the taxpayer’s… Continue Reading

New IRS On-Line FATCA Registration System

Posted in Compliance, FATCA, International

The latest Foreign Account Tax Compliance Act (FATCA) guidance is the on-line registration system.  The IRS also published a 4-page overview and 75 pages of instructions for the new registration system.  Prior Tax Law Roundup articles describe FATCA and the related deadlines. FATCA Online Registration System Overview  The IRS describes the system as follows: Under… Continue Reading

Treasury Delays FATCA Implementation by Six Months

Posted in Compliance, Funds, International

The Treasury issued a Notice to give taxpayers six more months to comply with the complex FATCA requirements needed to avoid 30% withholding on certain payments to a Foreign Financial Institution (FFI) and certain Non-Financial Foreign Entities (NFFE).  The recently finalized FATCA regulations have phased-in implementation from January 1, 2014 through 2017.  Under the new… Continue Reading

IRS Issues Final FATCA Foreign Account Regulations

Posted in Compliance, FATCA, International

The IRS published extensive 544-page final regulations on Foreign Account Tax Compliance Act (FATCA), finalizing the 2012 proposed regulations.  The final regulations address detailed taxpayer comments on the need to reduce FATCA administrative burdens and address technical implementation.  The regulations are effective January 28, 2013.  For an overview of the final regulations see the IRS… Continue Reading

IRS Explains Requirements for Adequate Disclosure to Avoid Penalties

Posted in Compliance, Procedure

In Rev. Proc. 2012-51, the IRS issued its annual update to its prior guidance on what constitutes adequate disclosure on a tax return to avoid certain accuracy and tax-preparer penalties.  According to the IRS, the changes from the prior year are editorial only and not substantive.  The guidance provides detailed rules as to when disclosure… Continue Reading

Final Repair Regs Expected in 2013 with 2014 Effective Date

Posted in Compliance, Deductions, General

The IRS has announced a 2013 publication date and January 1, 2014 effective date for the final regulations relating to when to capitalize or expense payments relating to tangible property (the so-called “Repair Regs”).  The IRS Notice contains details as to when taxpayers will be permitted to apply either the final regulations or the temporary regulations… Continue Reading

IRS Issues New FBAR Guidance – Updated FAQs and New Streamlined Procedures for Low-Risk Cases

Posted in Compliance, General, International

The IRS published the anticipated update to the Frequently Asked Questions relating to the Offshore Voluntary Compliance Initiative (OVDI) relating to reporting of foreign financial accounts (commonly referred to as the “FBAR” reporting).  The guidance also includes favorable rules for (1) U.S. citizens living abroad and dual citizens with low compliance risks (generally less than… Continue Reading

IRS Issues Guidance on Capitalization vs. Repair Expense Including Automatic Accounting Method Changes

Posted in Compliance, Deductions

The IRS released two revenue procedures that describe how taxpayers can obtain automatic consent to change their accounting methods to comply with the recent temporary tangible property capitalization vs. repair regulations.  Revenue Procedure 2012-19 details repair and maintenance, materials and supplies, and related method changes resulting from the temporary regulations.  Revenue Procedure 2012-20 addresses depreciation,… Continue Reading

Final Regulations On The Redesigned Form 990 For Exempt Organizations

Posted in Compliance, Tax Exempt

The IRS finalized regulations (T.D. 9549) implementing the redesigned Form 990, Return of Organization Exempt from Income Tax.  The final regulations largely adopt the temporary and proposed regulations with some modifications.  The final regulations make permanent new threshold amounts for reporting compensation, require that compensation be reported on a calendar-year basis and change rules requiring information reporting… Continue Reading

FBAR Voluntary Disclosure – IRS Provides Short-term Extension to September 9

Posted in Compliance, General, International, Litigation/Controversy

NOTE (Aug. 29, 2011): The IRS clarified that the Sept. 9, 2011, extension also applies to taxpayers filing delinquent FBARs pursuant to IRS Q&A 17 and 18 for the simplified program applicable to taxpayers who did not owe tax but failed to file the appropriate tax forms. _________________________________________________________ Due to Hurricane Irene, the IRS extended… Continue Reading

IRS Reminds Taxpayers of Aug. 31 Deadline for FBAR Voluntary Disclosure

Posted in Compliance, General, International, Litigation/Controversy

The IRS issued a press release reminding taxpayers that they have until August 31 to join the 2011 Offshore Voluntary Disclosure Initiative.  According to the press release, the 2011 initiative offers benefits to encourage taxpayers to come forward rather than risk detection by the IRS, observing that taxpayers hiding assets offshore who do not come… Continue Reading

IRS Guidance on Carryover Basis Election for 2010 Decedent Estates

Posted in Compliance, Estate and Gift

The IRS issued important procedural guidance on how estates for decedents dying in 2010 may elect out of the estate tax, thereby giving up the favorable income tax basis step up at death.  Form 8939, the basis allocation form required to be filed by executors opting out of the estate tax, is due Nov. 15,… Continue Reading

IRS Revises FAQs on Schedule UTP – Reporting Uncertain Tax Positions

Posted in Compliance

The IRS updated their Schedule UTP Frequently Asked Questions, answering many common questions corporate taxpayers had in preparing their returns.  The FAQs address questions such as (1) when interest and penalties must be included in a ranking of the tax position; (2) the definition of a reserve; (4) whether to file Schedule UTP if the… Continue Reading

New Phased Implementation of Certain FATCA Requirements

Posted in Compliance, International

The looming 2013 effective date of new Foreign Account Tax Compliance Act (FATCA) reporting for Foreign Financial Institutions (FFIs) has some new relief.  In Notice 2011-53, the Treasury announced new phased-in implementation because “Chapter 4” of FATCA creates the need for significant modifications to the information management systems of FFIs, withholding agents, and the IRS. … Continue Reading