Tax News

CCH (cch.taxgroup.com) reports:

A purchaser of computer software was liable for Texas sales and use tax on charges for installation, implementation, and maintenance services that were associated with the software and provided by the seller of the software.
Tax was applicable to certain software services only when the services were performed by the vendor of the software. The fact that the taxpayer could have hired a third party to perform the services at issue did not alter the taxability of those services.

CCH (cch.taxgroup.com) reports:

In response to the flood damage in southeastern Minnesota (DR-1717) in August and the property damaged by the Ham Lake fire of 2007, Governor Tim Pawlenty has signed a measure (H.F. 1a) during a special session that provides property tax relief to affected residential and commercial property owners. A county board of equalization in a qualifying county may grant a property tax abatement of up to 50% of the taxes, including taxes imposed on commercial-industrial property and seasonal residential recreational property, that are due on eligible property for taxes payable in 2007. The abatement does not apply to special assessments. The owner of the property is not required to apply for the abatement, and the county must grant any abatements by November 30, 2007.
"Eligible property" means a parcel of taxable property located in a qualified county containing a structure that has been determined by the assessor to have lost over 50% of its estimated market value due to flood or fire damage. For agricultural property, the abatement is limited to (1) the taxes on the parcel attributable to the value of the house, garage, and surrounding one acre, if the house has lost over 50% of its estimated market value and (2) the tax attributable to the value of any farm buildings and structures that have lost over 50% of their estimated market value.

CCH (cch.taxgroup.com) reports:

The Kentucky Court of Appeals determined that the federal Telecommunications Act of 1996 did not prevent the imposition of Kentucky utility gross receipts license tax by local school districts on gross receipts of direct broadcast satellite and wireless cable (DBS) service providers.
DBS service providers claimed that they were exempt from paying the utility tax because Sec. 602 of the Act prohibits taxes and fees by local taxing jurisdictions on direct-to-home satellite service. The court determined that the Sec. 602 "savings clause," which allows the taxation of a direct-to-home satellite service provider by a state, applied to the imposition of tax by local school districts because the tax was authorized for state purposes. Further, the court noted that the reason for prohibiting local jurisdictions from taxing DBS providers revolves around the burden of calculating and paying multiple tax bills with various due dates in any given state. In this case, the taxing scheme was not overly burdensome to DBS service providers because school districts were required to provide necessary information to service providers, providers could increase their rates to cover the cost of the tax, and providers were required to pay only one assessment each quarter.
The dissent disagreed that characterization of the tax as a state tax resolved the issue. Instead, the dissent determined that local school districts were local taxing jurisdictions prohibited from imposing the tax.
Treesh v. DirecTV, Kentucky Court of Appeals, No. 2006-CA-001983-MR, September 7, 2007, ¶202-804
Other References:
Explanations at ¶80-002

CCH (cch.taxgroup.com) reports:

A facilities technician was not entitled to carry back losses that resulted from trading securities on his own account. Since he conducted his trades as an individual, rather than as a securities dealer, his trading activities produced capital gains and losses; therefore, his losses could be carried forward, but not back. He also could not treat the losses as ordinary losses by making an untimely election to use the mark-to-market accounting method, absent evidence that he should be granted relief from the timely-election rules. Finally, he was subject to penalties for failing to file timely returns and make timely tax payments, absent evidence that his failures were due to reasonable cause and not willful neglect.
M. Kirch, TC Memo. 2007-276, Dec. 57,100(M)
Other References:
Code Sec. 475
CCH Reference - 2007FED ¶22,268.20
Code Sec. 1212
CCH Reference - 2007FED ¶30,402.50
Code Sec. 6651
CCH Reference - 2007FED ¶37,475.23
Tax Research Consultant
CCH Reference - TRC SALES: 15,208.10
CCH Reference - TRC SALES: 45,360.15
CCH Reference - TRC PENALTY: 3,050

CCH (cch.taxgroup.com) reports:

An individual was entitled to challenge his underlying tax liability in a Collection Due Process (CDP) appeal, but the IRS Appeals officer's refusal to allow him to do so was harmless error because his arguments concerning the liability were groundless. Although the taxpayer appealed the underlying tax liability, which arose, in part, from a self-assessed liability and, in part, from an IRS math error notice pursuant to Code Sec. 6213(b)(1), before such appeal was considered the IRS issued a levy notice for the same liability.
The Appeals office, in a letter signed by an Appeals team manager, thereafter summarily denied the tax liability appeals request. At a subsequent CDP hearing on the levy notice, the taxpayer was prevented from challenging the tax liability. The notice of determination upholding the levy action was signed by the same Appeals team manager who denied the prior appeals request. The taxpayer was entitled to challenge the liability at the CDP hearing both because the self-assessed portion of the liability had not been considered in the prior appeal and because, at the time the taxpayer became entitled to a CDP hearing, he had no prior opportunity to challenge the liability.
The failure to allow the taxpayer to challenge the liability was, however, harmless error because his only arguments with respect to the liability were frivolous. For the same reason, the involvement of the Appeals team manager in both the tax appeal and the CDP hearing, even if contrary to Code Sec. 6330(b)(3), was also harmless error, and the IRS was, therefore, entitled to proceed with the levy.
R.L. Perkins, 129 TC No. 7, Dec. 57,099
Other References:
Code Sec. 6213
CCH Reference - 2007FED ¶37,549.5255
Code Sec. 6330
CCH Reference - 2007FED ¶38,184.12
Tax Research Consultant
CCH Reference - TRC IRS: 27,206.15
CCH Reference - TRC IRS: 51,056.15

Tax Analysts report: