Safeharbor issued for nonaccrual-experience method of accounting

Revenue Procedure 2011-46 provides a book safe harbor method of accounting for taxpayers using the nonaccrual-experience (NAE) method of accounting under § 448(d)(5) of the Internal Revenue Code and § 1.448-2 of the Income Tax Regulations. In general, under the NAE book safe harbor method, taxpayers within the scope of the revenue procedure may compute its uncollectable amount by multiplying the portion of the year-end allowance for doubtful accounts on the taxpayer’s applicable financial statement that is attributable to current year NAE-eligible accounts receivable by 95 percent. Rev. Proc. 2011-46 also provides procedures for obtaining automatic consent to change to the NAE book safe harbor method and to make certain changes within the NAE book safe harbor method.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The tax attorneys at the Beliveau Law Group provides legal services for federal and state tax law as well as tax returns. The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

IRS Announces New Voluntary Worker Classification Settlement Program; Past Payroll Tax Relief Provided to Employers Who Reclassify Their Workers as Employees

The Internal Revenue Service launched a new program that will enable many employers to resolve past worker classification issues and achieve certainty under the tax law at a low cost by voluntarily reclassifying their workers.

This new program will allow employers the opportunity to get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit. [Read more…]

Proposed regulations would set user fees for fingerprinting & return preparer competency exam

Preamble to Prop Reg 09/22/2011, Prop Reg § 300.0, Prop Reg § 300.12, Prop Reg § 300.13, Prop Reg § 300.14
IRS has issued proposed regs that would establish a $27 fee for taking the registered tax return preparer examination and a $33 fingerprinting fee in order to participate in the preparer tax identification number (PTIN), acceptance agent, and authorized e-file provider programs (collectively, the programs). These regs will be effective upon publication of a Treasury decision adopting them as final in the Federal Register.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The tax attorneys at the Beliveau Law Group provides legal services for federal and state tax law as well as tax returns. The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Florida addresses the question what happens if there is no residuary clause in the Will

Ann Aldrich drafted her own will on an “E-Z Legal Form.”  In Article III, entitled “Bequests,” just after the form’s pre-printed language “direct[ing] that after payment of all my just debts, my property be bequeathed in the manner following,” she hand wrote instructions directing that all of the following “possessions listed” go to her sister, Mary Jane Eaton.  If Mary Jane were to predecease her, the possessions were to be distributed to her brother, James Aldrich.  Ann listed all her assets she owned individually on the will.  The will contained no other distributive clauses.  [Read more…]

IRS Issues Guidance Regarding Obtaining and Renewing PTINs and Continuing Education Requirements for Registered Tax Return Preparers

Notice 2011-80 provides guidance to individuals who have or will obtain a preparer tax identification number (PTIN), including a provisional PTIN, or who become registered tax return preparers.  [Read more…]

Draft of Form 940 Employer’s Annual Federal Unemployment (FUTA) Tax Return has been issued

The IRS has issued a draft version of 2011 Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return. The draft version of the form takes into account the elimination of the 0.2% federal unemployment tax (FUTA) surtax, effective beginning with wages paid on July 1, 2011. [Read more…]

Responsible person penalty upheld against majority owner and financier of company

The Court of Federal Claims in Jenkins v. US, (Ct Fed Cl 09/15/2011) 108 AFTR 2d ¶2011-5277 has held that the majority owner, CEO, and principal financier of a publishing corporation was responsible for its nonpayment of payroll tax, and willfully failed to pay over the funds to the government. Although he didn’t exercise day-to-day control over the entity, he clearly had the capacity to do so. He also drew on company funds in an attempt to recoup cash he advanced to the entity, knowing full well that payroll taxes were unpaid at that time. [Read more…]

Medicaid Advocacy Needed

The National Academy of Elder Law Attorneys (NAELA) has been in touch with staff from the minority side of the House Oversight, Subcommittee on Health Care, DC, the Census and National Archives. The majority recently announced they will hold a hearing entitled, “Examining Abuses of Medicaid Eligibility Rules” at 10:00am on Wednesday, September 21 in room 2247 Rayburn House Office Building. You should be able to watch the hearing on Subcommitte on Health Care website.  An elder law attorney, a Medicaid administrator, and Stephen Moses will be testifying for the Republican side. The director of Illinois Family Services will be the sole Democratic witness.

[Read more…]

Tax Treatment of Employer-Provided Cell Phones

Notice 2011-72 provides that, when an employer provides an employee with a cell phone primarily for noncompensatory business reasons, the IRS will treat the employee’s use of the cell phone for reasons related to the employer’s trade or business as a working condition fringe benefit, the value of which is excludable from the employee’s income and, solely for purposes of determining whether the working condition fringe benefit provision in section 132(d) applies, the substantiation requirements that the employee would have to meet in order for a deduction under §162 to be allowable are deemed to be satisfied. In addition, the IRS will treat the value of any personal use of a cell phone provided by the employer primarily for noncompensatory business purposes as excludable from the employee’s income as a de minimis fringe benefit. The rules of this notice apply to any use of an employer-provided cell phone occurring after December 31, 2009.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The tax attorneys at the Beliveau Law Group provides legal services for federal and state tax law as well as tax returns. The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Ninth Circuit Court of Appeals affirms district court that personal goodwill was a corporate asset

In Larry E. Howard v. U.S., (CA 9 8/29/2011) 108 AFTR 2d ¶ 2011-5226, the Court of Appeals for the Ninth Circuit has affirmed a district court’s conclusion that the amount received by a dentist on the sale of his wholly owned dental-practice professional service corporation that was allocated to his personal goodwill was in fact a corporate asset. As a result, the amount was recharacterized as a dividend to him from his corporation.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The tax attorneys at the Beliveau Law Group provide legal services for federal and state tax law, as well as with tax returns. Our tax attorneys are located in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Domestic per diem rates issued for year beginning in October (FY 2012)

The General Services Administration (GSA) has posted the federal domestic per diem rate table for fiscal year 2012 on its website. The rates are in effect from Oct. 1, 2011 through Sept. 30, 2012.

Per diem rate information (including a FY 2012 downloadable rate file) can be accessed on the GSA website at http://www.gsa.gov/portal/category/21287.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at the Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Employer information report (EEO-1) due September 30th

The deadline for filing the Employer Information Report (also known as the EEO-1 Report) with the Equal Employment Opportunity Commission (EEOC) is September 30th. The report must be filed by: (1) employers with federal government contracts of $50,000 or more who have 50 or more employees; and (2) employers who do not have a federal government contract but have 100 or more employees. The report requires employers to provide a count of their employees by job category, ethnicity, race, and gender. Employment numbers may be obtained from any pay period in July through September of 2011.

Ninth Circuit finds Fifth Amendment inapplicable to offshore banking records

The Ninth Circuit held in M.H. v. United States of America No. 11-55712 (8/19/2011) that the Fifth Amendment privilege against self-incrimination may not be used by a taxpayer under grand jury investigation for the use of his undisclosed Swiss bank accounts.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at the Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Trust modification prevents drafting error from resulting in costly transfer tax

In PLR 201132017, the IRS ruled in this case, the documentation submitted by Surviving Spouse strongly indicates that Decedent and Surviving Spouse did not intend to have any control over the assets held in the By-Pass Trust, and that the provision in Section 4.01 of Trust to charge Surviving Spouse’s debts, expenses and death taxes from the By-Pass Trust was the result of a scrivener’s error.  In reforming the By-Pass Trust, Court found that the modification of Trust was an equitable reformation of Trust under common law and
State Statute.

[Read more…]

Final regs clarify prima facie evidence of delivery rule

TD-9543  Reg. § 301.7502-1, contains regulations amending a Treasury Regulation to provide guidance as to the only ways to establish prima facie evidence of delivery of documents that have a filing deadline prescribed by the internal revenue laws, absent direct proof of actual delivery. The regulations provide that the proper use of registered orcertified mail, or a service of a private delivery service (PDS) designated under criteria established by the IRS, will constitute prima facie evidence of delivery. The regulations are necessary to provide greater certainty on this issue and to provide specific guidance. The regulations affect taxpayers who mail Federal tax documents to the Internal Revenue Service or the United States Tax Court.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at the Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

First Court of Appeals holds that estate tax payers are not entitled to a second filing extension; also refund claim was untimely filed

The Appeals Court has held in Dickdow v US pursuant to 26 U.S.C. § 6511(a), a taxpayer seeking such a refund must file his refund claim within three years of filing the tax return or within two years from the time the tax was paid, whichever is later. Furthermore, for taxpayers who claim a refund within three years of  filing the return, § 6511(b)(2)(A) substantively limits the amount of any such refund to the portion of the tax paid within the three years immediately preceding the refund claim, plus the period of any extension of time for filing the return. [Read more…]

IRS extends deadline for second offshore voluntary disclosure offer

In light of Hurricane Irene, IRS extended the due date for 2011 OVDI requests until Sept. 9, 2011. Taxpayers who have not yet submitted their request or any documents must, by the extended Sept. 9 due date, (i) submit certain identifying and other information requested in the Offshore Voluntary Disclosures Letter to the Criminal Investigation (CI) office, and (ii) send a request for a 90-day extension to submit the complete voluntary disclosure package.

Paine vs. Sullivan decides issue of testamentary capacity – What went wrong?

John Sullivan was born in May 1912.  He married his wife, Odette, in 1956.  John and Odette did not have any natural born children of their own but adopted Odette’s sister’s children, Annabelle and Valerie.    In 1995, Annabelle left the home after a falling-out and never reconciled with John or Odette.  In 1995, John and Odette executed new wills disinheriting Annabelle.  Valerie was to inherit the entire estate should there not be a surviving spouse.  Valerie remained in John and Odette’s home until in 2000 when Valerie and Odette had a falling-out.  Odette banished Valerie from the home.  John would continue to sneak phone calls to Valerie.

[Read more…]

IRS issues final regs for suspending interest and penalties under Sec. 6404(g)

IRS has issued final regs on the rules for suspending interest, penalties, additions to tax, or other additional amounts under Code Sec. 6404(g). The final regs, which generally adopt proposed regs with certain modifications, affect individual taxpayers who timely file income tax returns but are not given timely notice by IRS of their additional tax liability.

TD-9545

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at the Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

State of New Hampshire Real Estate Transfer Tax Declaration of Consideration

Changes were recently adopted by the State of New Hampshire relating New Hampshire RSA 78-B:10. The changes relate to the filing of a Declaration of Consideration form with the New Hampshire Department of Revenue and the actual declaration of buyer and seller. A copy of the enacted legislation can be found at http://www.gencourt.state.nh.us/legislation/2011/SB0042.html.

Beginning August 13, 2011 buyers and sellers will need to sign separate Declaration of Consideration forms.

[Read more…]

What ‘counts’ in divorce? See if you can guess

It’s often unclear whether certain of a couple’s assets or certain types of income “count” in divorce proceedings. Take a look at the following questions, and see if you can guess what the courts decided. (Remember that the actual outcome could vary from state to state and in slightly different situations.)

  • A woman won $2.7 million in a medical malpractice lawsuit. Ten years later she got divorced. Can her husband share in the money?

No, said an Iowa court. The couple had placed the money in an investment account and had lived off the proceeds for a time. The court said that since the husband had lived off the proceeds for a while, it was only fair to allow the wife to keep whatever amount was left, “so that she is adequately compensated for her physical injuries, pain and suffering, and future medical expenses.” [Read more…]

Termination of parental rights includes grandparents’ rights

When someone’s parental rights are terminated, this also terminates the rights of the person’s relatives – including the child’s grandparents, an Illinois appeals court recently ruled. In this case both natural parents’ rights were terminated, and the child’s foster parents petitioned for adoption. The natural father’s parents objected. But the court said they had no legal right to contest the adoption, since once the father’s parental rights were terminated, all of their rights were terminated as well.

Value of husband’s business interest is reduced at divorce

After 27 years of marriage, a Colorado couple got divorced. The husband’s main asset was a share of an oil and gas company that was worth $2.5 million. However, for purposes of dividing the couple’s property, the divorce judge reduced the value of the husband’s share by one-third, to about $1.6 million.

The judge explained that this was a “marketability discount.” The idea of a marketability discount is that, while the husband’s interest might have been “worth” $2.5 million if you simply divided the value of the business by his percentage interest, it wouldn’t be “worth” $2.5 million if he tried to sell his interest to a third party. That’s because a third party probably wouldn’t want to pay full value for a minority stake in a business, given that he or she would be a minority owner and would have no control over the operations. [Read more…]

Social Security benefits used to calculate child support

Social Security benefits received by a father count when figuring out his child support obligation, the Mississippi Supreme Court recently ruled. The father’s only source of income was Supplemental Security Income benefits. After a paternity case, he was ordered to pay 14 percent of his income for child support.

The father objected, pointing to a federal law that says Social Security benefits can’t be withheld for child support payments. The court agreed that it couldn’t order the Social Security Administration to withhold his payments. But it could still order him to turn part of the money over to the mother after he received it, the court decided.

‘Skype visitation’ ordered when mother moves out-of-state

A mother can relocate with her children from New York to Florida if she pays for visitation via the “Skype” service that will provide a real-time broadcast between her children and their father over the Internet, a New York court recently decided.

The mother wanted to move from Long Island to Florida with the couple’s two children, ages nine and six. She planned to move in with her parents because the New York home was in the late stages of foreclosure and she was unemployed. The father was a recovering alcoholic who lived in employer-provided housing and couldn’t afford trips to Florida.

He objected to the move, especially because he had recently completed rehab and was trying to become a permanent presence in the children’s lives. [Read more…]

Ex-wife remarries; husband stops paying her health insurance

A divorced husband could stop paying for his ex-wife’s health insurance when she got engaged and moved in with her fiancé, the Iowa Supreme Court recently ruled. The couple’s divorce decree required the husband to pay up to $300 per month for the wife’s health insurance. He obliged, but wanted to stop paying when the wife no longer needed the coverage.

The question was whether the insurance coverage was part of the wife’s support – which could be modified by a court if her needs changed – or part of the couple’s property settlement, which couldn’t be changed. The court said that in this particular case, the insurance payments were part of the wife’s support, and so they could be cancelled later by a judge.

Prenups: No longer just for the rich and famous

Prenuptial agreements used to be only for celebrities, but in the last few years they have become dramatically more common in the U.S., and now it’s quite ordinary for middle-class couples to ask for them.

There’s no one single reason for the change. Rather, a number of factors are working together to make prenups more acceptable – including:

  • The recession. Many people have seen the value of their homes, pensions and investments shrink dramatically, and they are concerned about protecting what they have left. In addition, a lot of people want to shield themselves from debts brought to a marriage by the other spouse. [Read more…]

Worker in company car covered by workers’ comp

Workers who are using a company-owned vehicle might be considered “at work” – and thus covered by workers’ comp if they have an accidenteven if the employer believes that they’re done for the day. The Texas Supreme Court recently ruled that a sales rep was entitled to workers’ comp for injuries she suffered in a car accident after her last meeting of the day with clients.

She was headed home, although she had planned to drop off some marketing materials at an employer-provided storage unit on the way. The employer argued that the sales rep was going home and was no longer “at work” at the time of the accident. But the court disagreed, and said the rep was covered because she was in a company car on a job-related errand when the accident occurred.

Federal job discrimination claims set new record

Nearly 100,000 job discrimination claims were filed with the U.S. Equal Employment Opportunity Commission in fiscal 2010, an all-time record. Claims were up 7% over the previous year during the period, which ended in September 2010. They were up 21% over fiscal 2007.

There were several reasons for the increase. One is that the struggling economy led to more employees being laid off. Another is that the agency had a bigger budget, and spent money to educate employees and make it easier for them to file claims. The total amount the agency collected from employers in lawsuits it filed itself during the period was $404 million, also an all-time record.

Worker with ‘occasional flare-ups’ had a protected disability

An employee who suffered sporadic muscle flare-ups can sue his employer for disability discrimination where the business failed to accommodate his occasional problem, a federal appeals court recently ruled. The worker, a parts manager at an AutoZone store, had a condition that caused intermittent tightening in his back muscles. When the condition flared up, he couldn’t perform simple tasks.

The company fired him after keeping him on involuntary medical leave for more than a year. The worker sued under the Americans with Disabilities Act. In response, AutoZone argued that he wasn’t “disabled” because his condition only occasionally limited him in his abilities. But the court disagreed, and said a “predictable yet intermittent pattern” of muscle problems could amount to a disability under the federal law.

Discrimination based on bankruptcy is illegal

With so many people having filed for bankruptcy in the current economy, it’s important to know that it’s illegal for an employer to discriminate against a worker because he or she went bankrupt. Most everyone is aware that it’s illegal to discriminate on the basis of race or sex, but few people realize that “bankruptcy discrimination” also violates federal law.

However, the law isn’t as extensive as the laws against race and sex discrimination. For instance, a federal appeals court in Philadelphia recently decided that while it’s illegal to fire someone for going bankrupt, it’s okay to refuse to hire someone because of a prior bankruptcy filing.

The court said this was true because the discrimination rules in the federal bankruptcy laws are different from the ones in the federal civil rights laws. This ruling only covers a small part of the country, though. It’s definitely wise to speak with an attorney about any concerns over bankruptcy issues.

Business liable for firing someone based on a ‘rumor’

You might remember the “telephone game” in school, where the teacher would tell a student a secret. The student would pass the secret on to a classmate and it would circulate through the class. At the end, the last student would relate the secret and the class would learn how much the story had changed as it was passed along.

Businesses can experience a real-life telephone game in the form of rumors about people who work there. But employers who take action against employees based on unverified rumors risk being held responsible in court.

For example, a jury in Minnesota recently ordered the Marriott Hotel to pay damages to Jeff Moen, a bellhop who had been fired based on a rumor that he had brought a gun to a meeting with management and union representatives.

The bellhop had worked at the hotel for 22 years. Though he had been the subject of a couple of minor complaints early in his career, he had a glowing record in the five years before he was fired. [Read more…]

U.S. cracks down on verification of new employees

The federal government is stepping up its enforcement efforts against employers who fail to verify new employees’ eligibility to work in the U.S. In some cases, it’s levying serious fines against employers who don’t do proper verifications – even if the employer never hired an illegal worker as a result.

For example, clothing company Abercrombie & Fitch was fined more than $1 million by the government for failing to verify employees’ eligibility to work at its stores in Michigan. And in that case, there was no evidence that Abercrombie actually employed any illegal workers.

U.S. Immigration and Customs Enforcement simply found deficiencies in Abercrombie’s electronic I-9 verification system when it conducted an inspection. This was enough for a serious fine. [Read more…]

Social media sites are creating issues in the workplace

The rise of social media – including blogs, Facebook and Twitter – has opened up a whole world of communication to people. But it’s also opened up a lot of potential confusion and headaches in the workplace. That’s because, with a few strokes on a keyboard, an employee can now do things – such as insult the boss or make an inappropriate sexual comment to a co-worker – that used to happen mainly at the office holiday bash or an after-work gathering at the corner pub.

And as bad as such behavior may have been in the traditional context, it’s even more damaging on the Internet, where it’s documented for the whole world to see, and where the evidence can never be completely deleted. Social media also allow employees to widely distribute sensitive information or trade secrets, and post incriminating data and photographs.

Misuse of social media can easily result in economic harm to a company or a lawsuit for sexual harassment or a hostile work environment. As a result, many employers are creating social media policies to go along with their general Internet and e-mail policies, to try to head off problems and make it easier to deal with them if they occur. [Read more…]