Source: http://www.carnahanlaw.com/news-and-miscellaneous-legal-topics-2007/
Timestamp: 2019-04-21 16:13:00+00:00

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and their localities from corporate and personal income taxes, violates the Commerce Clause. The Kentucky Court of Appeals 3-judge appellate panel vacated the trial court’s judgment in favor of the Department and held that Kentucky’s bond taxation system is facially unconstitutional under the Commerce Clause because it affords more favorable tax treatment to in-state bonds than to out-of-state bonds. The Kentucky Supreme Court turned down the Department’s request for review, and its petition to the U.S. Supreme Court followed. Kentucky Department of Revenue v. Davis, U.S. Supreme Court, Dkt. 06-666, petition for certiorari granted May 21, 2007.
will be introduced on May 23, and will consolidate the Hope Scholarship, the Lifetime Learning Credit and the deduction for tuition and fees with a goal of simplification.
applies the active trade or business requirement to the “separate affiliated group” (SAG) of the distributing and controlled corporations with members treated as one corporation, and a look-through rule is applied to determine whether the SAG conducts an active trade or business.
An employer’s proposed addition of a “catastrophic casualty losses” (not necessarily involving a personal or family medical emergency so as to be a qualified “medical emergency.”) to its medical leave-sharing plan would result in payments of donated benefits being includible in the donor employees’ gross income as “wages” subject to withholding taxes as assigned income. Assigned income treatment does not apply to bona-fide employer-sponsored (medical) leave-sharing plans or qualified major disaster leave-sharing programs. Under Rev. Rul. 90-29 amounts paid to an employee under a medical leave-sharing plan are includible in the recipient’s gross income under IRC § 61 and subject to withholding taxes. A donor employee is not subject to income or withholding taxes and may not claim an expense, loss deduction, or charitable contribution upon surrender to a medical leave-sharing plan. PLR 200720017.
The 2nd Circuit Court of Appeals held a single-member limited liability company (LLC) owner who failed to elect LLC be treated as a corporation under IRS check-the-box regulations may be held personally liable for the LLC’s unpaid payroll taxes. McNamee, CA-2 May 23, 2007.
which is part of a larger war spending bill, passed Congress on May 24 and was signed by President Bush May 25, 2007. Congress enacted the $4.8 billion in tax incentives to help businesses absorb the cost of a higher federal minimum wage. The new law increases the small business expensing dollar limitation to $125,000, and raises the investment limitation to $500,000 for tax years beginning in 2007 through 2010, both indexed for inflation. A package of S corp reforms address passive investment income, the reserve method of accounting by banks that are S corps, sales of an interest in a QSub, and the computing of taxable income of the S portion of an electing small business trust (ESBT). The new law expands the kiddie tax to apply to children who are under age 19 or who are full-time students under age 24 (14 in 2005, under 18 in 2006). The Work Opportunity Tax Credit (WOTC) is one of several tax incentives to encourage employers to hire challenged individuals, including physical disabilities, economically challenged, covering more veterans and some other targeted groups.
of florist sales for sales and use tax purposes from December 31, 2007, to December 31, 2009. This provision does not conform with the Streamlined Sales and Use Tax (SST) Agreement, although North Dakota is a full member state.
The Michigan Supreme Court held that a California corporation’s receipts for engineering and architectural services performed entirely outside Michigan for real estate improvement projects constructed in Michigan were taxable sales subject to the single business tax, Fluor Enterprises, Inc. v. Department of Treasury, Michigan Supreme Court, No. 129149, May 2, 2007.
should pay sales tax on its purchases and not charge sales tax to the owners of real property contracting for the improvement to their real property. Letter Ruling No. LR3685, Missouri Department of Revenue, March 12, 2007.
Missouri enacted a corporate income and personal income tax nonrefundable credit equal to one-half the value of the donation, up to $2,500 per taxpayer for donations to food pantries, and the existing credit for donations to residential treatment agencies is revised to include cash, publicly traded stocks and bonds, and real estate (previously, only monetary donations. H.B. 453, Laws 2007, effective August 28, 2007.
Montana bill S.B. 554 proposing to enact a 4% sales and use tax conforming to the requirements of the SST Agreement died in the Senate Taxation Committee on April 27, 2007.
Arkansas bill H.B. 1827, delaying SST Agreement conformity until July 1, 2009 died May 1, 2007 in the House Revenue and Taxation Committee. Previously enacted legislation brings full conformity with the SST Agreement, effective January 1, 2008.
The 7th Circuit Finds Collection Period Was Extended By Oral Offer For Installment Payments.
It was sufficient that the IRS presented an affidavit that computer records indicated such an offer. An installment agreement (which also stops the limitations period from running) must be in writing to be an effective “approved” agreement, negotiations do not need to be in writing to stop the running of the statute of limitations while negotiations, whether successful or not, are in progress. Seagrave, CA-7, May 3, 2007, 2007-1 USTC ¶50,479.
The IRS released proposed regulations clarifying how to determine the dependency exemption between divorced/separated parents as a result of amendments to the Working Families Tax Relief Act of 2004 and the Gulf Opportunity Zone Act of 2005. A noncustodial parent may deduct an exemption amount for a qualifying child, if the custodial parent releases the claim to exemption. A custodial parent is the parent with whom the child resides for the greater number of nights during the calendar year. If a child is temporarily absent from a parent’s home, the child is viewed as residing with the parent with whom the child usually resides on that night(s). If a child resides with each parent for an equal amount of time during the year, the parent with the higher adjusted gross income for that year is treated as the custodial parent. A custodial parent may release an exemption claim for a child by signing a written declaration that he or she will not claim the child as a dependent. The noncustodial parent must attach the declaration to his or her return to claim the dependency exemption. The proposed regulations provide that a custodial parent who released an exemption claim may revoke the release for future tax years by giving written notice of the revocation to the noncustodial parent. Published in the Federal Register on May 2, 2007.
IRS proposed regulations explain the application of the active trade or business requirement to a tax-free spin off of a subsidiary corporation to the shareholders of the parent corporation. The regulations also explain § 355(b)(3), published in the Federal Register on May 8, 2007.
The husband purchased the property prior to marriage and was the only record owner having never added his wife’s name as an owner. The property was refinanced and the couple executed a deed of trust indicating that the wife had an interest in the property, The applicable notification provision requires notice to be given to any person who holds a publicly recorded deed of trust. The corporation failed to comply with the mandatory notice requirements and, therefore, lost all interest in the property. Glasgow Enterprises, Inc. v. Brooks, Missouri Court of Appeals, Eastern District, No. ED88327, April 17, 2007.
Construction services that transformed a warehouse building to a different use by installing new walls, flooring, and ceilings, did not qualify as “original construction” for Kansas sales tax purposes and were, therefore, taxable, so the general contractor was required to charge sales tax on its labor services when it billed the owner for work that was done and was required to pay sales tax to its subcontractors. Private Letter Ruling No. P-2007-003, Kansas Department of Revenue, April 5, 2007.
Governor Kathleen Sebelius has signed a bill that enables Kansas to maintain its status as a member of the SST Agreement. H.B. 2171, Laws 2007, effective July 1, 2007.
The Nevada Senate has passed and sent to the Assembly legislation that is intended to bring the state into full conformity with the SST Agreement. S.B. 502, as passed by the Nevada Senate on April 24, 2007.
Washington filed a petition to be a member of the SST Governing Board April 19, 2007.
for taxpayers who underreported or not yet permitted for tax will be offered from June 15 to August 15, 2007, information available on the comptroller’s Web site.
The Tax Court issued a decision upholding the rule that qualified higher education expenses paid in a year other than the year an early IRA distribution occurred do not reduce the amount of the early IRA distribution subject to the 10% additional tax. Duronio, Dkt. No. 13719-04, TC Memo. 2007-90, April 17, 2007.
The IRS presumes that an activity is carried on for profit if it makes a profit during at least 3 of the last 5 tax years, including the current year, and at least 2 of the last 7 years for activities consisting primarily of breeding, showing, training or racing horses. Losses from a not for profit activity may not be used to offset other income. The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations, but does not apply to corporations other than S corporations.
along with the annual inclusion amounts for vehicles first leased in 2007, Rev. Proc. 2007-30. This year’s guidance no longer provides tables for electric automobiles placed in service between December 31, 2001 and January 1, 2007 which are provided in Code Sec. 280F(a)(1)(C). Thus,. Three separate deductions are covered by the 2007 dollar caps.
$1,775 for each tax year thereafter (2006 – unchanged).
$1,875 for each tax year thereafter.
Taxpayer did not elect to treat the LLCs as corporations for federal tax purposes, which resulted in the IRS treating them as sole proprietorships/disregarded entities, and the taxpayer was personally liable for the unpaid employment taxes. Subsequently, the IRS moved to enforce liens against his property to collect the taxes. Littriello, CA-6, April 13, 2007.
in which return-preparation web sites fool taxpayers into thinking they are filing tax information with a member of the Free File Alliance. The taxpayer’s information is used to file a return, but the bank account numbers are changed so that refunds are deposited elsewhere. IR-2007-87.
The IRS properly revoked the exempt status of a Texas corporation that operated a school that was not operated exclusively for exempt purposes, but was instead operated in furtherance of the private interests of its founder/executive director. Rameses School of San Antonio, Texas, TC Memo. 2007-85, CCH Dec. 56,894(M), April 10, 2007.
According to the Center on Budget and Policy Priorities newsletter, April 5, 2007, reported by CCH, 6 governors (Iowa, Massachusetts, Michigan, New York, North Carolina and Pennsylvania) have recommended adoption of combined reporting, requiring parents and subsidiaries to add their profits together, and 4 states (Vermont, Texas, New york and West Virginia) have joined the 16 that have used combined reporting for decades.
Arkansas is currently an associate member state of the SST Governing Board. Legislation enacted earlier in 2007 will bring Arkansas into full conformity with the SST Agreement, effective January 1, 2008.
Regulation § 12 CSR 10-400.200, Missouri Department of Revenue, concerning the Missouri corporate income and personal income tax credit for special needs child adoption expenses is amended, effective May 30, 2007, to reflect changes made by S.B. 1229, Laws 2006, revising the tax credit application deadline and making the unclaimed portion of the resident adoption tax credit allocation available for children-in-crisis tax credits. Regulation § 12 CSR 10-400.210 is adopted, explaining the application process and allocation of funds for the Missouri corporate income and personal income tax credit enacted by S.B. 1229, Laws 2006, for verified contributions to qualified child crisis care agencies. In order to claim the tax credit, a taxpayer must submit, with the taxpayer’s tax return, a contribution verification certification provided by the qualified agency receiving the contribution.
Letter Ruling No. LR3628, Missouri Department of Revenue, February 8, 2007 held a Missouri company’s low-income housing tax credits claimed on the company’s 2003 and 2004 tax returns, but not utilized due to a large 2005 net operating loss carried back to 2003 and 2004, were transferable to another taxpayer for use for Missouri corporate income or personal income tax purposes. The net operating loss deduction eliminated any 2003 or 2004 tax liability against which the tax credits could be applied and freed up the tax credits to be transferred or carried forward.
Proposed legislation directs the Massachusetts Department of Revenue to prepare a feasibility study and draft legislation to bring Massachusetts into compliance with the Streamlined Sales and Use Tax Agreement by December 1, 2009. S.B. 1757, as introduced January 10, 2007.
Legislation introduced in Connecticut requires the Connecticut Commissioner of Revenue Services to take the steps necessary to bring the state into compliance with the Streamlined Sales and Use Tax (SST) Agreement so that the state could apply for membership by October 1, 2007, but does not contain statutory changes to come into actual conformity with the Agreement. Another SST bill, Senate. S.B. 1452, was introduced in the Connecticut Senate on March 21, 2007 for conformity.
The SST Governing Board met in Charlotte, North Carolina on March 16-17, 2007 to debate several topics but took few final actions. The next meeting is scheduled for June in Detroit.
Recently introduced Montana legislation would enact a 4% sales and use tax that would conform to the SST Agreement requirements, applicable to goods and services sold or used after March 30, 2009.
Rhode Island has repealed multiple points of use (MPU) provisions and enacted other technical changes to conform with the SST Agreement, effective January 1, 2007, .
to qualified residential treatment agencies, pregnancy resource centers, and centers for victims of domestic violence. Reg. § § 13 CSR 35-100.010, 35-100.020, and 40-79-010, Missouri Department of Social Services, effective March 30, 2007.
A Mississippi sales and use tax statute has been amended to incorporate provisions, definitions, and sourcing rules regarding telecommunications services to conform.
North Dakota sales and use tax provisions are amended to keep North Dakota laws in compliance. S.B. 2380 and S.B. 2381, Laws 2007.
Oregon legislation would enact a sales and use tax intended to conform with the requirements of the Streamlined Sales and Use Tax (SST) Agreement. The tax would only come into effect if voters approve a proposed constitutional amendment. This bill is similar to H.B. 3187.
where out-of-state retailers not registered to collect California tax that sells the product to the California consumer and have suppliers ship products directly to the retailers’ California customers, finding that sales tax is due on those transactions and the drop shipper must report and pay tax measured by the retail selling price of the property paid by the California consumer to the true retailer. Tax Information Bulletin, California State Board of Equalization, March 2007.
Lanco, Inc. v. Director, Division of Taxation, U.S. Supreme Court, petition for certiorari filed March 9, 2007; MBNA America Bank, N.A. v. Tax Commissioner of the State of West Virginia, U.S. Supreme Court, Dkt. 06-1228, petition for certiorari filed March 8, 2007. In MBNA America Bank, N.A., 640 S.E.2d 226 (2006), the West Virginia Supreme Court of Appeals held the state could impose corporate net income and business franchise taxes on a bank’s gross receipts from West Virginia customers, even though the bank had no physical presence in the state. In Lanco, Inc., 908 A.2d 176 (2006), the New Jersey Supreme Court held that New Jersey may apply its corporation business tax to income from the licensing of intangibles in the state, notwithstanding the taxpayer’s lack of a physical presence in New Jersey.
By law, the interest rates that apply to corporate tax overpayments are lower than those that apply to other taxpayers. The interest factors in the Form 8913 instructions apply to non-corporate taxpayers with an April 17 filing deadline, including individuals, estates, trusts and partnerships that are basing their refund request on the actual amount of tax paid. IRS News Release IR-2007-56, March 12, 2007.
All fundraising solicitations by (or on behalf of) the tax-exempt political organization contain a clear request (in a conspicuous and easily recognizable format) for the contributor’s address and, if the contributor is an individual, the contributor’s occupation and employer (consistent with the instructions for Form 8872) and include a statement that the political organization is subject to Federal taxes and penalties if it fails to disclose this information to the Service. A fundraising solicitation includes any solicitation of contributions or gifts in written (including electronically such as via the internet or by facsimile or email) or printed form, by television or radio, or by telephone.
For each contribution for which the contributor has not provided the required information, such as the contributor’s address, occupation and employer, the tax-exempt political organization makes a written (including electronically such as via the internet or by facsimile or email) request, or an oral request memorialized in writing, to the contributor for the required information within 30 days of receipt of the contribution. The information request may thank the contributor for the contribution, but must not include material on any other subject or an additional solicitation. Each information request must include a statement that the tax-exempt political organization is subject to Federal taxes and penalties if it fails to disclose this information to the Service. In addition, each information request that is not oral or electronic must include a pre-addressed return envelope or postcard. Each oral or electronic information request must include the mailing or Internet address to which the required information should be submitted instead of a pre-addressed return envelope or postcard.
If the contributor has not responded to the information request by the due date of the Form 8872 and in the tax-exempt political organization’s records, including contributor records, fundraising records or previously filed Forms 8872, the tax-exempt political organization has information about the contributor that is requested by the Form 8872, the organization must report such information on the Form 8872.
If any missing or corrected contributor information is received after the contribution has been disclosed on Form 8872, the tax-exempt political organization files an amended Form 8872 including the additional information within 30 days of receipt of the information, unless the information is received less than 30 days and more than 2 business days before an election, in which case the tax-exempt political organization files an amended Form 8872 including the additional information no later than 2 business days before the election.
The tax-exempt political organization discloses all the required information on Forms 8872 with respect to at least 85 percent of the total dollar amount of contributions it received during the calendar year.
The political organization keeps contemporaneous records sufficient to substantiate that it has complied with subparagraphs (1) through (5).
because it performed substantially all of its activities in the “field of accounting” rather than specifically “public accounting”, so the QPSC flat tax rate applied rather than the graduated corporate tax rates. Rainbow Tax Service Inc., 128 T.C. No. 5.
holding that it is not excessively demanding for taxpayers to review their returns for apparent erroneous information, and that it is their duty to do so. Allen, 128 TC No. 4.
Form 656-A, renamed Income Certification for Offer in Compromise Application Fee and Payment.
The Idaho House of Representatives failed to pass legislation that would authorize the state’s entry into the Streamlined Sales and Use Tax (SST) Agreement. The bill would not have made the substantive changes to Idaho law necessary to become a full member but would have given Idaho advisor state status, and directed the Idaho Tax Commission to prepare and recommend legislation to achieve conformity with the SST Agreement to the next legislative session.
Missouri S.B. 576 was been introduced on February 22, 2007 in the Senate to conform the state’s laws to the Streamlined Sales and Use Tax (SST) Agreement, effective August 28, 2007. Similar conformity legislation died in 4 previous sessions of the Legislature.
Arkansas Governor Mike Beebe signed legislation intended to bring the state into full conformity with the Streamlined Sales and Use Tax (SST) Agreement, effective January 1, 2008.
A voluntary disclosure cannot be anonymous, must be truthful, timely and complete, and the taxpayer must cooperate with the IRS to determine correct tax liability and make good faith arrangements to pay in full tax, interest and penalties. It is advisable to file 6 years of returns. To be timely, the taxpayer must file a return with the IRS before the IRS notifies the taxpayer that it intends to initiate an investigation, and before it has initiated an investigation, has received information from an informant or other 3rd party about the taxpayer’s noncompliance, or has acquired information about the taxpayer’s noncompliance from a criminal enforcement action. A taxpayer who contacts the IRS about a voluntary disclosure may be directed to the Criminal Investigation function for an evaluation of the disclosure. Late returns should be highly accurate since they have significant audit potential. Counsel may seek a waiver of penalties before disclosing the taxpayer’s identity and identification number.
The Federal Circuit Court of Appeals has ruled that the 3-year period of limitations in Code Sec. 6229(a) for assessing tax on any person that is attributable to a partnership item is a minimum period for making the assessment and is not itself a separate statute of limitations that may foreclose assessment by the IRS, so the IRS did not have to assess tax against the partners within 3 years after the partnership filed its tax return. AD Global Fund, LLC, CA-Fed., March 2, 2007.
The final regulations generally follow the temporary regulations in force since 2004, and simplify the rules (but are still complex) for property nearing the end of a recovery period or involving a previous election out. The final regulations do not settle the issue of how to handle depreciation in deferred exchanges, and do not address whether a middleman such as an exchange accommodation titleholder is entitled to depreciation, but make clear the IRS does not consider it appropriate for a taxpayer to take depreciation on relinquished MACRS property during the period between the disposition of the property and the acquisition and ownership of the replacement property. The final regulations also do not tackle the allocation of basis among multiple properties involved in like-kind exchanges or involuntary conversion. The final regulations operate to determine depreciation of such basis only once basis property is determined or allocated under section 1031 or 1033. T.D. 9314.
allowing the IRS to enter into full or partial payment installments agreements of any unpaid tax, applicable on the date final regulations are published in the Federal Register.
The regulations provide rules for the submission, processing, acceptance, and rejection of such agreements by the IRS, the termination or modification of existing agreements, and the appeal of rejections, modifications, and terminations to the IRS Office of Appeals (Appeals).
The majority of these provisions are unchanged from prior regulations and reflect longstanding IRS administrative practice.
The IRS may enter into an installment agreement that ends on the expiration of the period of limitations on collection in section 6502 and § 301.6502-1, or at some prior date. A partial payment installment agreement that ends prior to the expiration of the collection period of limitations would allow the IRS to collect the balance of the tax liability against any property belonging to the taxpayer or to request the Department of Justice to institute a judicial action to reduce the liability to judgment or take other actions to enforce the federal tax lien.
The proposed regulations do not limit IRS authority to enter into partial payment installment agreements that run to the end of the collection period.
If, following the rejection of a proposed installment agreement, the IRS determines that the taxpayer made a good faith revision of the proposal and submitted the revision within 30 days of the date of rejection, the provisions of the regulations apply to that revised proposal.
IRS acceptance of an installment agreement does not reduce the amount of taxes, interest, or penalties owed. (However, penalties may continue to accrue at a reduced rate pursuant to § 6651(h)).
§ 843 of the AJCA amended § 6159(c) to exclude partial payment installment agreements from the scope of installment agreements that must be accepted by the IRS.
(E) The taxpayer agrees to comply with the provisions of the Internal Revenue Code for the period the installment agreement is in effect.
The proposed regulations provide that installment agreements guaranteed under § 6159(c) must provide for the full payment of the liabilities. Section 843 of the AJCA added new § 6159(d), requiring the IRS to review partial payment installment agreements every 2 years. (Former subsections (d) and (e) were re-designated (e) and (f).) The primary purpose of the review is to determine whether the financial condition of the taxpayer has significantly changed so as to warrant an increase in the value of the payments being made.
A proposed installment agreement becomes pending when it is accepted for processing.
(1) In general. No levy may be made to collect a tax liability that is the subject of an installment agreement during the period that a proposed installment agreement is pending with the IRS, for 30 days immediately following the rejection of a proposed installment agreement, during the period that an installment agreement is in effect, and for 30 days immediately following the termination of an installment agreement. If, prior to the expiration of the 30-day period following the rejection or termination of an installment agreement, the taxpayer appeals the rejection or termination decision, no levy may be made while the rejection or termination is being considered by Appeals. This section will not prohibit levy to collect the liability of any person other than the person or persons named in the installment agreement.
(2) Exceptions. If taxpayer files a written notice with the IRS that waives the restriction on levy imposed by this section, the IRS determines that the proposed installment agreement was submitted solely to delay collection, or the IRS determines that collection of the tax to which the installment agreement or proposed installment agreement relates is in jeopardy.
(C) Taking action to collect from any person who is not named in the installment agreement or proposed installment agreement but who is liable for the tax to which the installment agreement relates.
The statute of limitations under § 6502 for collection of any liability shall be suspended during the period that a proposed installment agreement relating to that liability is pending with the IRS, for 30 days immediately following the rejection of a proposed installment agreement, and for 30 days immediately following the termination of an installment agreement. If, within the 30 days following the rejection or termination of an installment agreement, the taxpayer files an appeal with Appeals, the statute of limitations for collection shall be suspended while the rejection or termination is being considered by Appeals. The statute of limitations for collection shall continue to run if an exception under paragraph (f)(2) of this section applies and levy is not prohibited with respect to the taxpayer.
The Commissioner shall review taxpayer’s financial condition in the case of a partial payment installment agreement at least once every 2 years. The purpose of this review is to determine whether the taxpayer’s financial condition has significantly changed so as to warrant an increase in the value of the payments being made or termination of the agreement.
Proposed Amendments of Regulations (REG-100841-97), published in the Federal Register on March 5, 2007.
The Oregon Department of Revenue has amended a regulation to provide that an isolated sale of real property in Oregon may satisfy the nexus requirements of the U.S. Constitution Due Process Clause for corporate income tax purposes. OAR 150-318.020(2), Oregon Department of Revenue, effective January 1, 2007.
The broker was doing business in and employing capital within Pennsylvania because it engaged in the transportation of property in and through the state. In addition, the broker was using and employing property in the state to accomplish its corporate purposes through its trucking lease agreements, which provided it with quiet and peaceful use and possession of the leased equipment. Cruise International Corp. v. Pennsylvania, Pennsylvania Commonwealth Court, No. 667 F.R. 2004, January 18, 2007.
an accuracy-related penalty under Code Sec. 6662 is applicable to any portion of the deficiency.
Each case is factually unique, specific facts and circumstances must be determined on a case by case basis, and the law in this area is still developing.
Return preparer fraud generally involves the preparation and filing of false income tax returns by preparers who claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. This includes inflated requests for the special one-time refund of the long-distance telephone tax. Preparers may also manipulate income figures to obtain tax credits, such as the Earned Income Tax Credit, fraudulently. FS-2007-12, January 2007.
which was originally promulgated in 1978. The amended Rule has a phased-in effective date: as of July 1, 2007, franchisors may follow the amended Rule, or they may continue their current practice of complying with the original Rule or individual state franchise disclosure laws that require an Uniform Franchise Offering Circular (“UFOC”); but by July 1, 2008, they will be required to follow the amended Rule only. A primary goal in amending the Rule was to harmonize the federal Rule with state franchise disclosure laws, to adapt to changes in the marketing of franchises and new technologies, and reducing compliance costs where possible. News release; Federal Register Notice Containing the Final Rule Language and the Statement of Basis and Purpose.
The State Median Family Income figures will be revised to reflect Consumer Price Index data to be published by the Bureau of Labor Statistics. The Schedules of Actual Administrative Expenses of Administering a Chapter 13 Plan will be updated at the same time. Bankruptcy cases filed on or after February 1, 2007 must use the adjusted figures. The Internal Revenue Service has not yet established a planned release date for the 2007 National and Local Expense Standards.
Online Personal Tax Return Inquiry system at http://www.dor.mo.gov | “Where’s My Tax Return?” on the right side of the page.
Beginning in 2006, state and local governments are required to report interest paid on tax-exempt state and local bonds on Form 1099-INT, Interest Income. This amount must be shown on your tax return and is for information only.
A Missouri property tax sale was set aside because the amounts paid (less than 10% of the discounted value of the land)for the parcels of property were grossly inadequate. Although no set percentage of value constitutes grossly inadequate consideration, Missouri cases suggest that consideration that is less than 10% of the value of the land in a forced tax sale is constructive fraud or amounts to confiscation. In the Matter of Manager of the Division of Finance of Jackson County, Missouri v. LA-SHA Consulting, Inc., Missouri Court of Appeals, Western District, Nos. WD66385, WD66386, and WD66387, December 26, 2006.
by virtue of having 2 employees working from their homes in Texas (telecommuters), and was responsible for collecting Texas sales tax on web sites it created and hosted for Texas customers from when the employees began operating from their home offices in Texas. Letter No. 200611818L, Texas Comptroller of Public Accounts, November 16, 2006.
with New York to require the company to register for sales tax purposes and to collect the sales or use tax on any sales of taxable service contracts it makes in New York. The service providers, whether acting as independent contractors, agents, or in another representative capacity, are considered to be acting on behalf of the company in New York. TSB-A-06(29)S, New York Commissioner of Taxation and Finance, November 30, 2006.
Rev. Proc. 2007-16 sets out procedures to obtain automatic consent to change their method of accounting for property disposed of during the year of the change and for which the taxpayer claimed less than the depreciation allowable in the year of change or any prior year for tax years ending on or after December 26, 2006. The procedures are not available if the taxpayer deducted the cost of the property as an expense. Taxpayers can request the change in accounting method on an original return or on an amended return for the year of change by filing Form 3115. In the latter case, the taxpayer should adjust its taxable income to reflect the proposed change. There are transition rules for Forms 3115 filed before December 26, 2006. Taxpayers wanting to change their method of accounting for depreciation or amortization should follow Rev. Proc. 2002-9 to request automatic IRS consent. Rev. Proc. 2002-9 must be followed if the taxpayer used the impermissible method for at least two years preceding the year of the change (of accounting method).
a correction to require depreciation instead of a deduction for costs that had been consistently treated as an expense in the year of purchase is a change in method.
claiming additional first year bonus depreciation (a taxpayer must file a ruling request to revoke an election not to claim additional 30% 1st-year bonus depreciation for property placed in service in the period September 11, 2001 to December 31, 2001).
change to claim bonus depreciation.
if the change results from a posting or mathematical error or a change in the underlying facts.
if the taxpayer (including if initiated by the IRS) makes an adjustment to the useful life of a depreciable or amortizable asset for which depreciation is determined under § 167, unless the code or other guidance prescribes a specific useful life (exception does not apply under § § 168 or 1400I, L, or N.
a change in the placed-in-service date unless the code or IRS guidance provide that the change is a change of accounting method.
Higher IRS user fees for installment agreements were made permanent. T.D. 9306, IR-2006-196.
amplifying, clarifying, and modifying Notice 2006-50, 2006-25 I.R.B. 1141, that provided that the tax imposed by § 4251 (relating to communications excise tax) does not apply to amounts paid for long distance service and bundled service (collectively, nontaxable service) and also provides that taxpayers may request a credit or refund of tax on nontaxable service that was billed to the taxpayer after February 28, 2003, and before August 1, 2006, only on their 2006 federal income tax returns.
Did not file any other claim or request for credit or refund with the IRS for the federal communications excise tax for a period after February 28, 2003.
The appropriate standard amount is based on the number of exemptions taxpayers are entitled on their 2006 Form 1040 Series federal income tax return (other than the 2006 Form 1040 EZ), but not including taxpayer’s dependent who has filed or plans to file) a separate request for credit or refund of federal communications excise tax – the credit for: 1 exemption is $30; 2 exemptions is $40; 3 exemptions is $50; and 4 or more exemptions is $60.
Tax is imposed on the amounts paid for the local-only service, and the IRS is only refunding the long-distance portion of the federal telephone excise tax for tax billed after February 1, 2003 and before August 1, 2006.
The definition of bundled service is clarified to read as follows: Bundled (land line and wireless (cellular)) service is local and long distance service provided under a plan that does not separately state the charge for the local telephone service. Bundled service includes plans that provide both local and long distance service for either a flat monthly fee or a charge that varies with the elapsed transmission time for which the service is used. Prepaid cellular telephones will be treated as nontaxable service unless the terms of the prepaid telephone service expressly state it is for local-only service.
Individuals who do not have to file a federal income tax return and who meet the conditions may file Form 1040EZ-T to request the refund, and if requesting a refund of actual amounts completing and attaching Form 8913 .
Telecommunications providers have no obligation to supply their customers with those customers’ telecommunications bills.
multiply the FETP amount by the taxpayer’s monthly total telephone expenses for each month of the 41 month period from March 2003 through July 2006. The product of this calculation is the taxpayer’s credit or refund amount.
Will be processed normally to the extent they relate to the tax paid on nontaxable service that was billed before March 1, 2003. Notice 2007-11, 2006 WL 3803129.

References: v. 
 § 61
 v. 
 § 355
 v. 
 § 12
 § 12
 § 13
 v. 
 v. 
 § 301
 § 6651

§ 843
 § 6159
 § 6159
 § 6159
 § 6502
 v. 
 v. 
 § 167
 § 168
 § 4251