Source: http://www.carnahanlaw.com/news-and-miscellaneous-legal-topics-2011/
Timestamp: 2019-04-21 17:08:56+00:00

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The Missouri House of Representatives approved a bill providing amnesty from assessment or payment of all penalties, additions to tax, and interest on delinquencies with respect to unpaid Missouri income taxes and sales and use taxes due on or before December 31, 2010.
A taxpayer must apply for amnesty, file a tax return for each tax period for which amnesty is requested, pay the unpaid taxes in full from January 1, 2012, to February 29, 2012, and agree to comply with state tax laws for the next eight years from the date of the amnesty agreement.
The amnesty would apply regardless of whether the taxes were previously assessed, except for penalties, additions to tax, and interest paid before January 1, 2012. The amnesty would not extend to any taxpayer who at the time of payment is a party to any criminal investigation or to any civil or criminal litigation pending in any U.S. or Missouri court for nonpayment, delinquency, or fraud relating to any tax imposed by the state.
If a taxpayer fails to comply with the state tax laws at any time during 8 years following the date of the agreement, all penalties, additions to tax, and interest that were waived under the agreement would become due and owing immediately.
A taxpayer’s elects to participate in the amnesty program is an express and absolute relinquishment of all administrative and judicial rights of appeal. No tax payment received under the amnesty program would be eligible for refund or credit.
H.B. 2a, as passed by the Missouri House of Representatives, First Extraordinary Session, on September 9, 2011.
I will join with Dr. Sandra Byrd, director of the Low Income Tax Clinic at MSU, MSU graduate students, and the Springfield Greene County Library auditorium at 7:00 P.M., Wednesday, September 28, 2011 to present a seminar on dealing with IRS collection.
Your business owe taxes ?
After attending the June 2, 2011 IRS Practitioner Liaison meeting, I toured the IRS Kansas City Campus (formerly “Service Center”), which is not generally accessible to the public.
The change to the two-year limit is effective immediately, and details are in Notice 2011-70, posted today on IRS.gov.
A total of 74 Taxpayer Assistance Centers will be open in 34 states, Washington, D.C. and Puerto Rico from 9 a.m. to 2 p.m. local time. Taxpayers can find participating offices by visiting the Saturday Service Locations page on IRS.gov. This special event is particularly intended for people who want to make a “fresh start” by taking steps to have liens withdrawn. It also provides an opportunity to those who cannot visit an IRS walk-in office during regular weekday hours to speak with IRS personnel about their tax issues.
Transferable Colorado state conservation easement income tax credits sold by individuals were capital assets and the holding period for the credits began when the taxpayers received them, not when they acquired the real property that was subject to the conservation easement. The state conservation easement tax credits qualified as capital assets because the credits were NOT included in one of the Code § 1221 excluded property categories. Also, the credits were not a substitute for ordinary income because the credits did not represent a right to income.
The credits were never part of the taxpayers’ real property rights. The state granted the credits only after the easement donation was complete, so that the holding period for the credits began when the taxpayers received the credits from the state and not when they acquired the property.
IRS Chief Counsel has issued internal guidance that explains how to calculate the tolling (suspension) of the state of limitations under Code §§ 6501 and 6531, involving civil assessments or criminal prosecutions when the IRS issues a summons to a third-party who fails to comply with the summons. The suspension applies if the third-party does not fully comply with the summons within six months after it is served. The six-month period begins on the exact day the summons is served on the third-party. The end of the six months and the beginning of the suspension period start exactly six months after the summons is served. The suspension period is added onto the original Assessment Statute Expiration date (ASED) to calculate the new ASED (the last day on which the IRS could take a particular action against the taxpayer).
Generally, the IRS has three years to assess taxes in a civil proceeding or initiate criminal proceedings, although the limit can be longer (or indefinite) in more egregious circumstances.
The third-party does not adequately respond to the summons ( Code § 7609(e)(2)).
In Jones v. Comm., CA 4, 107 AFTR 2d ¶2011-930, the 4th Circuit Court of Appeals upheld the validity of Reg. § 1.6015-5(b)(1), applying 2-year deadline to Code § 6015(f) innocent spouse relief claims, and reversed and remanded the Tax Court decision to contrary, striking the regulation down and granting taxpayer’s request for Code § 6015(f) relief that taxpayer filed outside 2-year deadline The 4th Ciruit found that Code § 6015(f) was sufficiently ambiguous to leave room for agency interpretation and that such interpretation, reflecting IRS determination that no deadline would create uncertainty and that instead 2-year timeline should apply, was reasonable. The Court rejected taxpayer’s arguments that regulation was unnecessarily and inappropriately narrowed the relief that Congress had intended to provide in Code § 6015(f). However, taxpayer was entitled to be heard on her alternative argument that even if regulation were valid, she should still be given time extension under Reg. § 301.9100-3, and the case was remanded for consideration of that issue.
The IRS normally updates the mileage rates once a year in the fall for the next calendar year, but the IRS made this special adjustment for the final months of 2011 in recognition of recent gasoline price increases. The rate will increase 4.5¢ from the 51¢ to 55.5¢ a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. Revenue Procedure 2010-51.
The Third Circuit in Mannella, 107 AFTR 2d 2011-519, 2011-1 USTC ¶50159 (CA-3, 2011), reversed the Tax Court’s decision and held that the taxpayer’s innocent spouse suit under Section 6015(f), filed more than two years after she was notified that the IRS was initiating collection procedures against her, was untimely under Reg §1.6015-5(b)(1). The Third Circuit remanded the case to the Tax Court to allow the taxpayer to bring an equitable tolling claim.
The Tax Court in Pullins, 136 TC No. 20, reiterated that Congress did not impose a two-year limitations period when it enacted Code Sec. 6015(f) and the IRS should not have imposed one by regulation.
In Mayo Foundation (2011-1 USTC ¶50,143), the Supreme Court held that the appropriate standard of deference to review challenged regulations is the standard in Chevron USA (467 U.S. 837, 1984). Under Chevron, regulations are generally entitled to significant deference. The Tax Court in Pullins found that when it decided Lantz, it had used the Chevron standard, and concluded there was no need to reconsider Lantz in light of Mayo.
A number of Lantz-type Code Sec. 6015(f) cases are scheduled for argument in the circuit courts of appeal: Coulter (Docket No. 10-680) in the Second Circuit on June 14; Jones (Docket No. 10-1985) in the Fourth Circuit on May 12; other cases pending include Buckner (Docket No. 10-2056) and Hall (Docket No. 10-2628) in the Sixth Circuit, and Payne (Docket No. 10-72855) in the Ninth Circuit.
Three senators wrote to Shulman on April 18, 2011 expressing concern that [t]]he two-year limitations period on claims for equitable innocent spouse relief prevents innocent spouses from receiving the relief they deserve,” In a separate letter, 50 members of the House said that Congress did not intend to impose a two-year limitations period under Code Sec. 6015(f).
Commissioner Douglas Shulman told lawmakers in an April 29, 2011 letter that the IRS is reviewing the two-year limitations period on claims for equitable innocent spouse relief.
The Senate previously passed the bill. If signed by the governor, the bill would provide small businesses (fewer than 50 employees) a $10,000 income tax deduction for each new full-time job created with an annual salary of at least the average annual county wage, or $20,000 if the business offers health insurance for new employees and pays at least 50% of the premiums of all full-time employees who opt into the plan. Generally, a full-time job means the employee works at least an average of 36 hours per week for a 16-week period. There is some relief where the employee’s hours did not meet the 36 hours per week requirement because of weather-related delays if (1) the taxpayer documents the cause of the delay and the date upon which it occurred and (2) the employee for whom the deduction is sought has worked an equivalent of 576 hours within a 20-week period. H.B. 45, as passed by the Missouri General Assembly on April 27, 2011.
The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 eliminated new information reporting requirements that were created by previous legislation.
The Patient Protection and Affordable Care Act of 2010 expanded information reporting to include payments to corporations, “amounts in consideration of property,” and “other gross proceeds” made in the course of a trade or business (including operation of a governmental entity), beginning in 2012. The new law repeals these requirements. You are not required to file Form 1099-MISC for these payments for any year.
Existing information reporting requirements remain in effect. Payments of $600 or more for nonemployee compensation made in the course of a trade or business are generally required to be reported on Form 1099-MISC. Certain payments to corporations are required to be reported. See the Instructions for Form 1099-MISC for more information.
The Small Business Jobs Act of 2010 provided that anyone receiving rental income from real estate would be treated as receiving income from a trade or business of renting property; therefore, information return requirements applicable to small businesses would be in effect. This provision also is repealed; you are not considered to be in a trade or business solely because you receive rental income. See IRS Publication 527 for more information on rental income and expenses.
The Comprehensive 1099 Tax Protection Act of 2010 (H.R.4) now goes to the White House for President Obama’s expected signature. H.R. 4 repeals a provision under the 2010 health care reform legislation requiring businesses to file a Form 1099 for all payments aggregating $600 or more in a calendar year to a single provider of goods, other than a tax-exempt payee, for payments made after December 31, 2011, the reporting of payments to corporations by businesses in exchange for either goods or services, and information reporting for rental property expense payments made after December 31, 2010. As a revenue offset, related to a premium assistance under the health care reform legislation, H.R. 4 waives the amount of any overpayment of the health care credit that is subject to recapture.
The IRS recently issued final regs. on TAOs that apply to TAOs issued on or after April 1, 2011 and make only minor changes to proposed regs. issued in 2009, which reflect updates made to TAOs by legislation enacted since 1998. A TAO will not be issued to IRS Criminal Investigation division (CI), if the action ordered in the TAO could reasonably be expected to impede a criminal investigation. IRS CI to determines if the TAO could reasonably be expected to impede an investigation.
The IRS recently released final regs. on the validity and priority of federal tax liens, which track proposed regs. issued in 2008 except for a refinement of the rules for refilling of a notice of federal tax lien (NFTL). Most NFTLs contain a certificate of release that automatically becomes effective on the date the required refiling period ends if the NFTL is not refiled, and at which time the lien is extinguished and the NFTL is ineffective. The required refiling period is the one-year period ending 30 days after the expiration of 10 years after the date of the assessment of the tax; and the one-year period ending with the expiration of 10 years after the close of the preceding required refiling period for such notice of lien. Under the final regs., neither failure to timely refile the NFTL, nor the release of the lien, shall alter or impair any right of the United States to property or its proceeds that is the subject of a levy or judicial proceeding commenced prior to the end of the refiling period or the release of the lien, except to the extent that a person acquires an interest in the property for adequate consideration after the commencement of the proceeding and does not have notice of, and is not bound by, the outcome of the proceeding.
Federal tax liens recorded before the judgment creditors secured their abstract of judgment or had perfected their lien took priority over a judgment creditor’s lien with respect to surplus proceeds derived from the nonjudicial foreclosure sale of delinquent taxpayers’ real property. Federal law governs the relative priority of federal tax liens and state-created liens, and the tax lien did not lose its priority because the government did not comply with state (California) law and does not depend on when the government filed a claim relative to a competing claimant. The federal tax liens were filed more than 30 days before the nonjudicial foreclosure sale, and there was no evidence that the IRS received notice of the sale as required by Code § 7425(c)(1), the liens survived the sale and attached to the surplus proceeds. Quality Loan Service Corp., Petitioner v. 24702 Pallas Way, Mission Viejo, CA 92691, All Claimants to Surplus Funds After Trustee’s Sale of Real Property Located at, Respondent, and Mark V. Franzen; Debra A. Franzen, Claimants-Appellants, and United States of America, Claimant-Appellee., U.S. Court of Appeals, Ninth Circuit, 2011-1 U.S.T.C. ¶50,299, (Mar. 24, 2011).
In Tucker v. Comm., Dkt. No. 3165-06L, TC Memo. 2011-67, 3/22/11, the Tax Court has found that the IRS can include dissipated assets in a taxpayer’s reasonable collection potential (RCP) when evaluating an offer-in-compromise (OIC), and money lost while day trading was considered dissipated. Not only was the investment itself highly speculative, but the taxpayer had no experience and compounded the risk by trading on margin. The Tax Court found that the IRS did not abuse its discretion when it rejected the taxpayer’s OIC because the taxpayer’s RCP exceeded his tax liability.
The IRS won the battle, and won the war, but did not receive any tax payments. The taxpayer’s offer would have paid over 90% of his tax liability. The offers rejection demonstrates the IRS’s tough approach to handling OICs.
The first $1,500 on purchases of new Energy Star-qualified appliances in Missouri during the holiday period, are exempt from sales tax. Qualifying appliances that have the Energy Star label on them are clothes washers, refrigerators, freezers, dishwashers, water heaters, furnaces, air conditioners, and heat pumps. If an appliance costs more than $1,500, the regular sales tax rate is in effect for any of the purchase price above $1,500.
Appliances not eligible for the exemption include clothes dryers, trash compactors, conventional ovens, ranges, and stoves, lighting fixtures, office equipment, and home electronics.
Several local governmental entities have also opted to participate in the holiday.
All IRS forms, schedules and related instructions are available on IRS.gov. The draft Form 941 with a new line 5e, § 3121(q) Notice and Demand, Tax due on unreported tips, is now on IRS.gov. This month’s IMRS Hot Issues answers questions about Form 941 versus Form 944 filing requirements and more.
Revenue Procedure 11-20 provides information to any individual who failed to meet the eligibility requirements of § 911(d)(1) of the Code because adverse conditions in a foreign country precluded the individual from meeting those requirements for taxable year 2010.
Notice 11-14 provides guidance on the federal tax consequences of payments made to or on behalf of financially distressed homeowners under programs established pursuant to the Treasury Department’s Housing Finance Agency Innovative Fund for the Hardest-Hit Housing Markets and the Department of Housing and Urban Development’s Emergency Homeowners Loan Program. This notice also provides guidance on the information reporting requirements for these payments.
The Missouri House of Representatives approved H.B. 76 on March 3, 2011, that would phase out the state corporate franchise tax over a five-year period, beginning in 2012.
for 2016 and thereafter, no annual franchise tax would be imposed.
Also, the annual corporate franchise tax liability of a corporation for 2011 through 2015 would be limited to the amount of the corporation’s tax liability for 2010. If a corporation did not have a corporate franchise tax liability in 2010 because the corporation was not doing business within the state or did not exist, the corporation’s annual franchise tax liability would be limited to the amount of the corporation’s franchise tax liability for its first full taxable year of existence.
For tax returns filed on or after January 1, 2012, the bill would also allow any financial institution that is a limited liability company or a limited liability partnership to claim the banking institution tax credit against its annual franchise tax liability.
The Missouri Senate approved S.B. 19 that would similarly phase out the corporate franchise tax and cap corporate franchise tax liabilities.
The Missouri House of Representatives passed H.B. 116 on March 3, 2011, which would provide an amnesty from the assessment or payment of all penalties, additions to tax, and interest with respect to unpaid state income taxes and sales and use taxes due prior to December 31, 2010, that are reported and paid in full from August 1, 2011, through October 31, 2011. The amnesty would apply regardless of whether the taxes were previously assessed.
nor to any taxpayer who at the time of payment is a party to any criminal investigation or to any civil or criminal litigation pending in any U.S. or Missouri court for nonpayment, delinquency, or fraud relating to any tax imposed by the state.
agree to comply with the state tax laws for the eight years following the date of the amnesty agreement.
If a taxpayer fails to comply with the state tax laws at any time during the eight years following the date of the agreement, all penalties, additions to tax, and interest that were waived under the agreement would become due and owing immediately.
Furthermore, taxpayer’s election to participate in the amnesty program as evidenced by full payment of the tax due would constitute an express and absolute relinquishment of all administrative and judicial rights of appeal.
No tax payment received under the amnesty program would be eligible for refund or credit.
provide for offsets from Missouri tax refunds for non-tax amounts due to the federal government and vice versa.
These IRS Taxpayer Assistance Centers are your source for personal tax help when you believe your tax issue cannot be handled online or by phone.
Audits – two applications graphically display changes in the number of field and correspondence audits, both individual and corporate, for fiscal years 1992 through 2010.
Graphical Highlights – national enforcement trends for corporate and individual audits along with information about levies, liens and seizure activities.
Criminal Enforcement – the latest figures from the Department of Justice on the criminal enforcement of cases referred by the IRS, presented with detailed maps, ranking tables, and individual district tables for the United States and each of 90 federal judicial districts.
U.S. Code – an updated list of the most frequently cited lead charges that eventually led to formal charges or convictions.
TRACFED – expanded information and exclusive data analysis tools are available on TRAC’s newly expanded subscription site.
Proceeds of refinanced debt used for other purposes ? for example, to pay off credit card debt ? do not qualify for the exclusion.
Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions ? such as insolvency ? may be applicable. IRS Form 982 provides more details about these provisions.
Note: Taxpayers can use the Online Payment Agreement application on IRS.gov to set-up with Direct Debit Installment Agreements.
The IRS announced that nearly 100 IRS offices will be open on Saturday, February 26, and Saturday, March 26, to help taxpayers. The location of participating offices is listed on IRS.gov. IRS offices will be open from 9 a.m. to 2 p.m. local time. See IR-2011-19 for more.
Do you want to become a § 501(c)3 organization but are having trouble getting started?
Have you begun the § 501(c)3 application process, but run into roadblocks?
The lien attached when the property was jointly held and was not extinguished when the wife received the property in dissolution of marriage. Jones, DC Calif., 2011-1 USTC Par. 50,167.

References: § 1221
 § 7609
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 § 1
 § 6015
 § 6015
 § 6015
 § 6015
 § 301
 §1
 § 7425
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 § 3121
 § 911
 § 501
 § 501