Tax News

CCH (cch.taxgroup.com) reports:

  As part of his latest budget compromise proposal, California Governor Arnold Schwarzenegger is proposing a three-year temporary one cent sales and use tax rate increase (excluding diesel, gasoline and jet fuel); a two-year suspension of the corporation franchise and income tax net operating loss (NOL) deduction, which would be followed by a phased-in conformity to the federal NOL carryback and carryover periods; and enactment of a modified tax amnesty, a runaway Hollywood production tax credit, and provisions that better align accrual of revenues and accrual of spending.

  If enacted as proposed, the one cent sales tax rate increase would be followed by a permanent 11/4 -cent reduction beginning in the fourth year. Conformity to the federal NOL deduction would be phased-in over three years starting in 2010 and would allow taxpayers to claim a two-year NOL carryback and a 20-year NOL carryover. Currently, California does not allow NOL carrybacks and limits the carryover period to 10 years. The Governor's press release does not provide any further details regarding his tax amnesty proposal, the alignment of revenue and expense accruals, or the runaway Hollywood production tax credit.

  A fact sheet outlining the Governor's proposed budget compromise is available on the Governor's Web site at:
http://gov.ca.gov/index.php?/fact-sheet/10443/.

Fact Sheet , Governor Schwarzenegger's Office, August 20, 2008.
 

CCH (cch.taxgroup.com) reports:

  The IRS violated a discharge injunction with respect to a debtor whose tax liability was not discharged in bankruptcy. The liability was not discharged because a period of three years, not including periods of equitable tolling, had not run between the date of filing of the debtor's income tax return and the date of filing of the bankruptcy petition.

  Although the IRS believed its collection activity was done in good faith, it nevertheless knowingly and willfully violated the discharge injunction and, therefore, was subject to damages arising from the violation. While the IRS acted within its discretion to establish a policy of adding an additional six months to the three-year look-back period, the law changed, and any action subsequently taken by the IRS to collect the discharged debt, although in good faith and in conformance with the IRS policy, was contrary to the law. Consequently, the IRS was liable for damages arising from the violation.

  Because the IRS affirmatively pleaded sovereign immunity and because the government had not waived sovereign immunity, the debtor could not be awarded punitive damages. The debtor was, however, entitled to monetary damages for any losses proximately caused by the violation of the discharge injunction. Finally, because the debtor only alleged a violation that had occurred in the past, and not a continuing violation, coercive sanctions against the IRS were not required.

In re S.L. Distad, BC-DC Utah, 2008-2 USTC ¶50,500

Other References:

 
Code Sec. 6503

  CCH Reference - 2008FED ¶39,032.15

 
Code Sec. 6871

  CCH Reference - 2008FED ¶40,630.15

  CCH Reference - 2008FED ¶40,630.175

  CCH Reference - 2008FED ¶40,630.38

  Tax Research Consultant

  CCH Reference - TRC IRS: 57,054.15
CCH Reference -
TRC IRS: 30,200
CCH Reference -
TRC IRS: 45,118
CCH Reference -
TRC IRS: 57,158
 

CCH (cch.taxgroup.com) reports:

  A federal district court properly denied an individual and a corporation's (taxpayers) request for disclosure of an IRS officer's time records under the Freedom of Information Act (FOIA). The officer's time records were similar to "personnel and medical" files and were exempt from disclosure. Contrary to the taxpayers' argument, the officer's privacy interest outweighed any public interest and disclosure would not have contributed significantly to the public's understanding of IRS operations. Further, because the records were created in connection with the conditions of the officer's employment, and not her investigation of the taxpayers, the records could not be released under the Privacy Act without her consent. Moreover, the district the court did not abuse its discretion when it denied the taxpayers' request to conduct an in camera review of the remaining withheld documents because the IRS's declarations and the Vaughn index set out in detail which documents were withheld and the reasons for withholding them and the taxpayers failed to show that the IRS acted in bad faith.

  Unpublished opinion affirming a DC N.J. decision, 2008-2 USTC ¶50,498.

L.S. Berger, CA-3, 2008-2 USTC ¶50,499

Other References:

 
Code Sec. 6103

  CCH Reference - 2008FED ¶36,894.804

  CCH Reference - 2008FED ¶36,894.8044

  CCH Reference - 2008FED ¶36,894.8046

  CCH Reference - 2008FED ¶36,894.809

  CCH Reference - 2008FED ¶36,894.825

 
Code Sec. 7852

  CCH Reference - 2008FED ¶43,840.60

  Tax Research Consultant

  CCH Reference - TRC IRS: 9,500
CCH Reference - TRC IRS: 9,502.15
 

Tax Analysts report: