Tax Law Articles

Note these tax deadlines

February 15 – Deadline for providing 2011 Forms 1099-B and 1099-S to recipients.
February 28 – Payers must file 2011 information returns (such as 1099s) with the IRS. (Electronic filers have until April 2 to file.)
February 29 – Employers must send 2011 W-2 copies to the Social Security Administration. (Electronic filers have until April 2 to file.)
March 1 – Farmers and fishermen who did not make 2011 estimated tax payments must file 2011 tax returns and pay taxes in full.
March 15 – 2011 calendar-year corporation income tax returns are due.

Resolve to put your tax and financial house in order this year

The only way to achieve financial security is to monitor your tax and financial affairs throughout the year. And what better way to kick off the new year than to tidy up your financial and tax house. Here are some tips to get you started.

Take control of your credit cards. Over-reliance on credit cards hurts you in several ways. With interest rates typically in double digits, it’s the most expensive way to borrow money. Think of those monthly interest payments as draining off dollars that you could be investing in a home or saving for your retirement. And too much debt can hurt your credit score and make other borrowing more difficult. It takes time and discipline to reduce credit card debt, but it’s well worth the effort. [Read more...]

Use adjusted tax numbers for your 2012 tax planning

Each year the IRS adjusts certain tax numbers for inflation and tax law changes. Here are some of the adjusted numbers you’ll need for your 2012 tax planning.

Standard mileage rate for business driving remains at 55.5¢ a mile. Rate for medical and moving mileage decreases to 23¢ a mile. Rate for charitable driving remains at 14¢ a mile.
Section 179 maximum first-year expensing deduction decreases to $139,000, with a phase-out threshold of $560,000.
Transportation fringe benefit limit decreases to $125 for vehicle/transit passes and increases to $240 for qualified parking. [Read more...]

Watch out for scams when selling your business

You’ve spent years developing your business, building its value, enhancing its reputation. Now you’re ready to move on. You place a “Business for Sale” advertisement in the Internet classifieds, and the next day an eager – overly eager – buyer approaches you with a deal that seems too good to be true. The buyer offers full price and wants to structure the deal as a stock sale. A stock sale means the buyer will get the entire business, including all its assets (cash, checking accounts, receivables, inventory, and so on) at closing. The buyer doesn’t ask tough questions about the firm and seems in a hurry to close the sale. He or she offers a 10% down payment and says the full balance will be paid off within a year. [Read more...]

IRS expands innocent spouse relief

If you file a joint income tax return with your spouse, you are considered “jointly and severally” liable for the payment of all taxes owed. The IRS can come after either you or your spouse for the entire amount of tax due, plus any penalties and interest due.

The law has “innocent spouse” rules that may limit an individual’s responsibility for unpaid taxes resulting from filing a joint return. If the “innocent spouse” can establish that he or she did not know, or have reason to know, that there was an understatement of tax when signing the joint return, relief can be requested. [Read more...]

Last-minute 2011 deal reached on payroll tax cut

On December 23, 2011, Congress finally approved a two-month extension of the payroll tax cut for American workers. The agreement was reached after weeks of partisan bickering. Though both Democrats and Republicans wanted a one-year extension of the tax cut, they could not agree on how to pay for a year-long extension and settled on a paid-for two-month extension.

The new law extends the 4.2% social security tax on wages through February 29, 2012. Without this extension, the tax rate would have gone to 6.2% on the first $110,100 of wages earned in 2012. [Read more...]

It’s tax time again

It’s time to file various tax returns once again. If any of the following tax deadlines will apply to you, circle the dates on your 2012 calendar.

January 17 – Due date for the fourth quarterly installment of 2011 estimated taxes for individuals unless you file your tax return and pay any taxes due by January 31.
January 31 – Employers must furnish 2011 W-2 statements to employees. Payers must furnish payees with Form 1099s for various payments made. The deadline for providing Form 1099-B and consolidated statements to customers is February 15. [Read more...]

Face the alternative minimum tax (AMT) head-on

The alternative minimum tax (AMT) – often called a “stealth tax” – snares unsuspecting or uninformed taxpayers each year. With a better understanding of the rules, you may be able to avoid or reduce adverse tax consequences.

Overview: The AMT is a separate tax system that runs parallel to the regular income tax system. This complex calculation includes additions for “tax preference items” and reductions for personal exemptions and certain tax deductions. There are five basic steps to computing the AMT.

Determine your taxable income for regular income tax purposes.
Make the technical AMT adjustments required by law. [Read more...]

Tax tips for year-end charitable giving

As the year draws to a close, you may decide to donate cash or property to one or more worthy causes. Besides the satisfaction of helping others, there’s another reward for your benevolence: a tax deduction on your 2011 return. But keep the following points in mind:

For starters, you may only deduct contributions made to a legitimate tax-exempt charitable organization. Note that a qualified charity cannot be established to benefit a specific individual or family.
Generally, your deduction is limited to 50% of adjusted gross income (AGI) for the year (30% of AGI for contributions to certain charities and private foundations). Any excess may be carried over for up to five years. The deduction for gifts of property have other AGI limits. [Read more...]

New worker classification program offered by the IRS

Companies that have had worker classification issues are being offered a settlement program by the IRS. The program, labeled the “Voluntary Worker Classification Settlement Program,” will let employers who previously misclassified employees as independent contractors make a minimal payment to settle the tax dispute. The program will give eligible employers substantial relief from federal payroll taxes they may have owed for past periods. Employers must agree to pay just over 1% of wages paid to reclassified workers for the past year and to treat these workers as employees going forward.

New law signed by President Obama on November 21, 2011

On November 21, 2011, President Obama signed the Three Percent Withholding Repeal and Job Creation Act into law. This new law repeals three percent withholding on certain payments to government contractors. The law, H.R. 674, was amended to include the Vow to Hire Heroes Act which provides tax credits to employers who hire unemployed veterans.

The law creates the “Returning Heroes Tax Credit” and the “Wounded Warriors Tax Credit.” Employers may qualify for a credit of up to $5,600 for hiring a veteran who has been looking for employment for more than six months. A credit of up to $2,400 applies for veterans who have been unemployed for more than four weeks but less than six months. [Read more...]

IRS could reallocate interest and penalties under class action settlement to wages

In a highly redacted Legal Memorandum, IRS has concluded that it isn’t bound by the settlement allocation of payments under a class action lawsuit and could instead convert portions of the settlement allocated to penalty and interest payments into wages subject to employment taxes. Legal Advice Issued by Field Attorneys 20114704F

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 issues safe harber method of accounting for nonaccrual-experience method of accounting.

Rev. Proc. 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. This revenue procedure also provides the procedures by which a taxpayer may obtain automatic consent (1) to change to the NAE book safe harbor method, and (2) to make certain changes within the NAE book safe harbor method.

Eligible taxpayers may calculate their uncollectible amount by multiplying the portion of the year-end allowance for doubtful accounts on the taxpayer’s applicable financial statement (AFS) attributable to current year NAE-eligible accounts receivable by 95%. The revenue procedure also provides the mechanisms by which a taxpayer may obtain automatic consent to change to, or make certain changes within, the NAE book safe harbor method.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

Scams against the elderly: Know the danger signs

News of yet another investment scam is alarming enough, but when the victim is elderly, the crime seems especially offensive. Senior citizens are a favorite target of con artists for a variety of reasons. Here are some popular schemes to look out for.

Scams take many forms, but those involving gold and precious metals are especially problematic right now. Buying gold is trendy, and it can appeal to a senior’s desire for tangible security. Naturally, scammers will take advantage of this appeal. If someone you know is elderly and considering a gold-related investment, make sure they do their homework and work with a reputable company. Anyone pitching gold as a safety net against doomsday scenarios or hyperinflation should be carefully vetted. [Read more...]

Are you prepared for these common business problems?

When the economy is uncertain, you must be extra-careful to avoid the types of disasters that could ultimately lead to your company’s demise. Fortunately, some advance planning may prevent or alleviate severe problems. Here are seven common scenarios facing owners and managers of small to mid-sized businesses.

A natural disaster damages the premises. Of course, you can’t control the weather or other unforeseen circumstances. But damage to a business building caused by a natural disaster could temporarily shut down the operation. It can even ultimately put you out of business. Make sure that you have adequate insurance and that valuable business data is stored at a secure site. [Read more...]

Make time for a year-end tax review

Time is running out for moves you can make to reduce your 2011 tax bill. Some actions to consider right now:

Be sure to max out your 401(k) plan at work. This year you can sock away $16,500 ($22,000 if you’re 50 or older).
Establish a pension plan for your small business. You may qualify for a tax credit of up to $500 in each of the plan’s first three years.
Plan year-end purchases of new or used business equipment to take full advantage of the expensing limit of $500,000 for 2011. Purchases of new equipment (not used) can qualify for first-year 100% bonus depreciation.
Get your investment records in order so you can make wise year-end sell decisions, either to rebalance your portfolio at the lowest tax cost or to offset gains and losses.
Track down reinvested dividends for any stock sold in 2011. They’ll add to your cost basis and reduce taxable gain or increase deductible loss on the sale.

If you’d like to discuss tax-cutting options that fit your particular situation, please contact us soon for a year-end planning review.

Contact us soon for a year-end tax review

An important part of our service to you is to help identify actions you can take before year-end to minimize your 2011 income tax bill. Accelerating or delaying income and deductions, contributing to retirement plans, and taking investment losses are just a few of the strategies you might want to consider. There are also tax credits that require careful planning or they may be lost. If you’d like to discuss tax-cutting options that fit your particular situation, please contact us soon for a year-end planning review.

Charitable contributions: More than just cash might be deductible

Many taxpayers give much more than just cash to their favorite charity. Many also provide their time, travel, meals, and other “out of pocket” expenses in order to assist the charity in doing good work. And while you can’t take a charitable deduction for your time, you are allowed to deduct other expenses incurred in support of a charity, such as vet bills for your local humane society, or wood and nails for a “habitat” charity.

Let’s examine your house of worship. It’s possible for members to deduct evangelism travel expenses, even if the charity (a church in this example) never initiated, controlled, supervised, or assisted with the trips. The church fostered missionary work in general. Before the trip, the church provided the taxpayers with letters of commendation serving as introductions to other interfaith groups during the trip. And after the trip, the charity publicized the member’s efforts to the other congregations. This allowed the taxpayers to deduct mileage at the prescribed IRS rate, air fare, lodging, and meals while on their missionary trip. [Read more...]

Consider four tax-smart ways to save for college

The cost of sending a child to college is daunting. According to the latest figures from the independent College Board, the total average cost for the 2010/2011 academic year – including tuition and fees, room and board, books and supplies, transportation and other sundries – for in-state students at four-year public colleges was $20,339. For out-of-state students, the average cost jumped to $32,329. The cost at four-year private colleges averaged $40,476. And costs are expected to keep rising.

Nevertheless, you can lighten the financial burden of putting your children through school by taking advantage of certain tax-favored vehicles. These techniques are generally available to grandparents as well as parents. Here are four prime examples. [Read more...]

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

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

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...]

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

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.

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

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

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.

[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

Ninth Circuit upholds formula producing larger gifts for charity after valuation challenge

Anne Y. Petter (“Taxpayer” or “Anne”) transferred membership units in a family-owned LLC partly as a gift and partly by sale to two trusts and coupled the transfers with simultaneous gifts of LLC units to two charitable foundations. The transfer documents include both a dollar formula clause —which assigns to the trusts a number of LLC units worth a specified dollar amount and assigns the remainder of the units to the foundations—and a reallocation clause—which obligates the trusts to transfer additional units to the foundations if the value of the units the trusts initially receive is finally determined for federal gift tax purposes to exceed the specified dollar amount. Based on an initial appraisal of the LLC units, each foundation received a particular number of units. But after an Internal Revenue Service (“IRS”) audit determined that the units had been undervalued, the foundations discovered they would receive additional units. Everyone agrees that the Taxpayer is entitled to a charitable deduction equal to the value of the units the foundations initially received. But is the Taxpayer also entitled to a charitable deduction equal to the value of the additional units the foundations will receive? The Tax Court answered that she was. The Appeals Court agreed.

Estate of Anne Y. Petter v Comm, (CA 9 8/4/2011) 108 AFTR 2d ¶ 2011-5149

Beliveau Law Group: Massachusetts | Florida | New Hampshire

IRS changes position on two year rule for equitable innocent spouse relief

Notice 2011-70 expands the period within which individuals may request equitable relief from joint and several liability under section 6015(f) of the Internal Revenue Code. Specifically, this notice provides that the Internal Revenue Service will consider requests for equitable relief under section 6015(f) if the period of limitation on collection of taxes provided by section 6502 remains open for the tax years at issue. If the relief sought involves a refund of tax, then the period of limitation on credits or refunds provided in section 6511 will govern whether the IRS will consider the request for relief for purposes of determining whether a credit or refund may be available. This notice also provides certain transitional rules to implement this change.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

How do you calculate a participant’s required minimum distribution from a defined contribution plan?

In its Employee Plan News, June 22, 2011, IRS discusses how to calculate a participant’s required minimum distribution (RMD) from a defined contribution plan.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

Agreements with creditors didn’t shield president from trust fund recovery penalty

The Court of Appeals for the Fourth Circuit, affirming the district court, has held in Newbill v. U.S. that the president, treasurer, and majority shareholder of a construction company was liable for the trust fund recovery penalty under Code Sec. 6672. He was a responsible person, and agreements that gave creditors joint control over the company’s accounts didn’t shield him from the penalty.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

Private foundation’s receipt of note from founder’s corporation won’t be self-dealing

In PLR 201129049, IRS has privately ruled that a private foundation’s holding of a promissory note and its receipt of promissory note payments from its founder’s corporation after the period of estate administration terminations won’t be treated as acts of self-dealing subject to the Code Sec. 4941(a) excise tax. IRS concluded that the transactions will meet all of the requirements of the “estate administration exception” in Reg. § 53.4941(d)-1(b)(3).

Beliveau Law Group: Massachusetts | Florida | New Hampshire

IRS rules no abatement of first-tier excise tax penalty on private foundation’s undistributed income

In a Technical Advice Memorandum (TAM) 201129050, IRS has determined that the first-tier excise taxes due under Code Sec. 4942 on a trust’s undistributed income for the years at issue shouldn’t be abated under Code Sec. 4962 because the trust failed to establish that it acted with reasonable cause and not with willful neglect.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

No special use recapture on transfer of farmland to limited liability company or lease of farmland

In four identical private rulings, IRS has concluded that neither trusts’ transfers of farmland to limited liability companies (LLCs) in exchange for interests in the LLCs, nor the LLCs’ lease of the farmland to a partnership, will trigger recapture of special use valuation.

PLR 201129016, PLR 201129018, PLR 201129019, PLR 201129020

Beliveau Law Group: Massachusetts | Florida | New Hampshire

Noncompete covenant connected with any stock acquisition is Sec. 197 intangible

The First Court of Appeals in Recovery Group, Inc., (CA 1 7/26/2011) 108 AFTR 2d ¶ 2011-5114, confirmed the Tax Court when it determined that a covenant not to compete, entered into in connection with the acquisition of a portion of the stock of a corporation that is engaged in a trade or business, is considered a “section 197 intangible,” within the meaning of I.R.C. § 197(d)(1)(E), regardless of whether the portion of stock acquired constitutes at least a “substantial portion” of such corporation’s total stock.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

Tax Court approves valuation of homes and paintings

The Tax Court in Estate of Mitchell, TC Memo 2011-94, rejected IRS’s deficiency determinations and found that an estate properly determined the fair market value of the decedent’s real property and two paintings he had owned.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

Chief Counsel Notice formally reverses litigation position on two-year window for equitable innocent spouse relief

A new Chief Counsel Notice (CCN), cc-2011-017 “Change in Litigating Position on the Two-Year Deadline to Request Section 6015(f) Equitable Relief”, formally reverses IRS’s litigation stance on the issue of whether an individual may request equitable relief under Code Sec. 6015(f) more than two years after IRS first acted to collect the liability from the individual. The CCN explains why IRS reversed course, and how litigators should apply IRS’s new position, namely that it will consider a request for equitable relief if it was filed with IRS during the Code Sec. 6502 period of limitation on collection or, for any credit or refund of tax, within the Code Sec. 6511 period of limitation. [Read more...]

IRS Reminds Taxpayers that the Aug. 31 Deadline Is Fast Approaching for the Second Special Voluntary Disclosure Initiative of Offshore Accounts

IRS has warned U.S. taxpayers hiding income in undisclosed offshore accounts that they are running out of time to take advantage of the soon-to-expire 2011 Offshore Voluntary Disclosure Initiative (OVDI), which will expire on Aug. 31, 2011.

The IRS reminded taxpayers that the 2011 Offshore Voluntary Disclosure Initiative (OVDI) will expire on Aug. 31, 2011. Taxpayers who come forward voluntarily get a better deal than those who wait for the IRS to find their undisclosed accounts and income. New foreign account reporting requirements are being phased in over the next few years, making it ever tougher to hide income offshore. As importantly, the IRS continues its focus on banks and bankers worldwide that assist U.S. taxpayers with hiding assets overseas.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

IRS revises Notice 2011-53

IRS has revised Notice 2011-53 which provides the phased implementation of the Foreign Account Tax Compliance Act (FATCA) rules that expand the information reporting requirements imposed on foreign financial institutions (FFIs) and impose withholding, documentation, and reporting requirements with respect to certain payments made to specified foreign entities. The revised Notice provides that a withholding agent’s Code Sec. 1472(a) withholding obligations for payment to a non-financial foreign entity with respect to amounts described in Code Sec. 1473(1)(A)(i) (U.S.-source FDAP payments), will begin on Jan. 1, 2014.

The 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.

IRS reissues guidance on processing tax payment extension requests based on undue hardship

IRS’s Small Business/Self-Employed (SB/SE) Division has reissued interim guidance for directors on the procedures for processing Form 1127, Applications for Extension of Time for Payment of Tax Due to Undue Hardship.

Reissuance of Procedures for Processing Form 1127 Applications for Extension of Time for Payment of Tax Due to Undue Hardship

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

IRS has issued an Attorneys Audit Technique Guide for auditors reviewing attorney returns

IRS recently released a comprehensive Attorneys Audit Technique Guide (ATG) for auditors to use in reviewing returns of attorneys. It pinpoints the problem areas that IRS agents are instructed to probe for, explains in detail how attorney audits should be conducted, and lists the types of documents that should be requested and examined.

Attorneys Audit Technique Guide

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

In PLR 201128017, certain contracts issued by life insurance company to investment account owners are annuity contracts

In PLR 201128017,IRS has privately ruled that contracts offered by a life insurance company to certain investment account owners that obligate the company to pay a benefit if a customer’s account falls below a specified value, are annuity contracts under Code Sec. 72. Accordingly, any such benefits paid to the customers will be considered “amounts received as an annuity,” and the fees paid by the customers for the contracts will be factored into their investment in the contracts for Code Sec. 72(b) purposes.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

Tax Court reaffirms that it has jurisdiction to hear whistleblower claims denied by the IRS

In Kasper, the tax court reaffirmed its decision in Cooper v. Commissioner, 135 T.C. 70 (2010), each Whistleblower Office letter that denies a whistleblower claim is a determination within the meaning of sec. 7623(b)(4), I.R.C. The Tax Court has jurisdiction to review the matter, because it is a final administrative decision.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

Warrants issued to shareholder not treated as “exercised” for Sec. 382 purposes

In PLR 1126002 IRS has privately ruled that warrants issued from a parent corporation to a shareholder as part of an exchange for the shareholder’s stock in the parent won’t be treated as exercised on the date of the exchange under Code Sec. 382(l)(3)(A)(iv) and Reg. § 1.382-4(d)(2). The shareholder also won’t be treated as owning any stock in the parent for purposes of Reg. § 1.382-3(j)(3)’s cash issuance exception immediately before the parent’s subsequent issuance and sale of common stock to independent investors in order to raise capital.

Source: Federal Tax Updates on Checkpoint Newsstand tab 7/13/2011

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

IRS issues proposed regulations regarding Ex Parte Communications Between Appeals and Other Internal Revenue Service Employees

Notice 2011-62 provides a proposed revenue procedure that will update Rev. Proc. 2000-43, 2000-2 C.B. 404, which provides guidance regarding ex parte communications between Appeals and other Internal Revenue Service functions.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

Tax Law Articles

PRACTICE AREAS

ARTICLES

Subscribe to our Newsletter

Connect with us

Florida Offices

Massachusetts Offices

New Hampshire Offices

Contact us