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

Category Archives: Procedure

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Congress Passes Partnership Audit Reform – Obama Expected to Sign

Posted in General, Legislative, Partnership/LLC, Passthrough Entity, Procedure

This morning the Senate passed H.R. 1314 (The Bipartisan Budget Act of 2015), which will completely change the way partnerships (and LLCs taxed as partnerships) are audited.  The House passed the legislation on Wednesday and it is reported that President Obama will sign the legislation as soon as it reaches his desk.  As discussed in… Continue Reading

Partnership Tax Filing Deadlines Speed Up Under Pending Highway Bill

Posted in Joint Venture, Partnership/LLC, Procedure

The Senate today voted 91-4  to extend the highway trust fund authorization through October 29th from its current expiration date of July 31st, 2015 and it is now headed to the President for signature.   The bill – H.R. 3236 – contains numerous revenue raising provisions (intended to raise approximately $8 billion in revenue to offset… Continue Reading

IRS Eliminates Requirement to File Copy of Section 83(b) Election with Tax Return

Posted in Compensation, Partnership/LLC, Procedure

In an effort to improve e-filing, the IRS has proposed to eliminate the need to file a copy of a Section 83(b) election with the service provider’s annual tax return. Taxpayers receiving non-vested stock or partnership interest often file a Section 83(b) election within 30 days of receipt to treat the equity as vested for… Continue Reading

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 Guidance on Economic Substance Doctrine

Posted in Economic Substance, Procedure

Notice 2014-58 adds some clarity to when the IRS will assert the strict-liability economic substance penalties and how they will determine the “transaction” that is disregarded under the Section 7701(o) economic substance doctrine.  The new guidance amplifies Notice 2010-62 and also formalizes some of the unofficial guidance in the 2011 IRS LB&I field directive. IRS… Continue Reading

Final Regulations Address Reportable Transaction Tax Advisor Penalties

Posted in Procedure, Tax Shelters

Today the IRS finalized regulations that penalize tax advisors who do not properly notify the IRS on Form 8918 with respect to so-called “listed” or “reportable” transactions.  These rules, applicable to so-called “material advisors”, are a back door way for the IRS to track transactions that have a higher probability of being tax shelters.  However,… Continue Reading

New FBAR Amnesty Program Changes Help Some, Hurt Some

Posted in International, Procedure

The IRS has significantly expanded the streamlined amnesty programs for persons who did not timely comply with Foreign Bank Account Reporting (FBAR) rules.  Although these changes broaden the base of taxpayers qualifying for the 0% or new 5% penalty, certain taxpayers will see their penalty go up to 50% where it becomes public that the… Continue Reading

New Final Regulations on Written Tax Advice: The End of Circular 230 Disclaimers

Posted in General, Procedure

On Monday, June 9th the IRS issued final regulations (T.D. 9668) that eliminate the requirement to include Circular 230 disclaimers in documents and transmissions and provide other welcome changes to practice standards under Circular 230.  Click here for the new complete Circular 230. Since 2004, practitioners have been grappling with the strict (and complicated) “covered… Continue Reading

IRS Updates FATCA Q&A

Posted in FATCA, General, International, Procedure

On April 18 and again on May 1, the IRS issued newly updated Frequently-Asked-Questions for FATCA compliance following their recent comprehensive regulations on the topic.  The FATCA rules create a series of documentation rules and a potential 30% withholding tax on payments to non-U.S. financial entities.  The Q&A guidance includes answers to common questions relating… Continue Reading

IRS Shakes Up Exempt Organization Division – Impacts Tax-Exempt Rulings

Posted in Procedure, Tax Exempt

This week the IRS announced a realignment of its Exempt Organizations (EO) division.  This realignment will affect primarily the legal and technical side of EO.  This realignment will cause major disruption in the short term, and taxpayers should allow additional time for private letter ruling requests or for exemption applications assigned to EO Technical.  In… Continue Reading

New FATCA Regulations Incorporate Taxpayer Comments and Clean Up Existing Rules

Posted in FATCA, International, Procedure

Today the IRS announced two new sets of regulations on the FATCA rules.  In general, FATCA creates 30% withholding on certain distributions to certain Foreign Financial Institutions (FFIs) unless those FFIs comply with onerous rules to disclose certain investor information to the U.S. government. The new regulations are T.D. 9657 and T.D. 9658. The new… Continue Reading

IRS Makes It Easier to Fix Auto-Revoked Tax-Exempt Status Retroactively

Posted in Procedure, Tax Exempt

Finally Rev. Proc. 2014-11 has made it easier to reinstate tax-exempt status retroactively after many non-filers find their exempt status automatically revoked under a 2006 tax law.  The revocation happens automatically after three consecutive years of not filing annual returns (Forms 990, 990-EZ or 990-PF) or information notices (Form 990-N).  The new procedure simplifies and… Continue Reading

Baucus Proposes Reforms to Administration of Tax Code

Posted in Legislative, Procedure, Tax reform

In the second part of the new Senate Finance Committee tax reform proposals, Sen. Baucus introduced proposals to combat tax fraud and make filing simpler and more efficient.  An overview is below.  For details see the detailed summary and proposed legislative text.   Tax Filing Reforms Improve the information return filing process by (1) not… Continue Reading

IRS Revamps and Expands Late Election Relief For S corporations

Posted in General, Passthrough Entity, Procedure, S corporation

The IRS published Rev. Proc. 2013-30, which is a consolidation and extension of a series of prior procedures to assist taxpayers with late elections relating to S corporations.   The revenue procedure provides the exclusive simplified methods for taxpayers to request relief for late S corporation elections, Electing Small Business Trust (ESBT) elections, Qualified Subchapter S… Continue Reading

Renewable Energy Production Tax Credit – IRS Guidance On When Construction Begins

Posted in Energy, Green, Procedure

Under 2012 legislation, a “qualified facility” is eligible to receive either a renewable electricity production tax credit or energy investment tax credit, if construction of such facility begins before January 1, 2014.  In new Notice 2013-29 the IRS provides guidelines and a safe harbor to determine when construction has begun on such a facility.  For… 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

Supreme Court Rules Against IRS in Statute of Limitation Case

Posted in General, Litigation/Controversy, Procedure, Statute of Limitations

In a much-anticipated decision, the U.S. Supreme Court voted 5-4 against the IRS and held that the three-year and not six-year statute of limitations applied to a so-called Son of BOSS tax shelter in U.S. vs. Home Concrete & Supply LLC.   This is the culmination of a series of split appeals court decisions on… Continue Reading

New Proposed FATCA Regulations Try to Ease Compliance Burden

Posted in FATCA, General, International, Procedure

New proposed regulations under the Foreign Account Tax Compliance Act (FATCA) implement FATCA’s obligations in stages to minimize burdens on foreign financial institutions (FFIs), and to allow time for resolving local law limitations to which some FFIs may be subject.  The IRS press release notes that the 388-page proposed regulations will: Permit FFIs in many… Continue Reading

New Regulations On Foreign Financial Account Reporting

Posted in International, Procedure

The IRS issued temporary regulations under the recently enacted section 6038D, Reporting of Specified Foreign Financial Assets.  Previously the IRS issued interim guidance in Notice 2011-55 and has also published draft Form 8938 instructions.  The statute and regulations are effective for tax years beginning after March 18, 2010.  In general, section 6038D requires individual taxpayers… Continue Reading

Final Regulations Address Reportable Transaction Penalties

Posted in Procedure, Tax Shelters

The IRS finalized regulations (T.D. 9550) on Section 6707A penalties for failure to disclose “Listed” and “Reportable” transactions.  These penalties were created in 2004 and later modified in 2010 to make the penalty amount proportionate to the decrease in tax shown on the return as a result of the transaction.  The new regulations conform the regulations to… Continue Reading

Final Regulations on Automatic Return Extensions

Posted in Partnership/LLC, Procedure, Real Estate

The IRS finalized temporary regulations, which had reduced the automatic tax return extension period for certain pass-through entities from six months to five months. Specifically, the final regulations provide for a five-month automatic extension of time to file certain returns for partnerships, trusts, and estates other than certain bankruptcy estates. The regulations also contain an… Continue Reading

Final Circular 230 Regulations Create Registered Tax Return Preparer Category

Posted in Procedure

The IRS issued final rules regulating practice in front of the IRS.  The regulations create a new “registered tax return preparer” designation, generally applying to individuals who: are not an attorney or certified public accountant and prepare, or assist in preparing, all or substantially all of a tax return or claim for refund for compensation…. Continue Reading