Tax News

CCH (cch.taxgroup.com) reports:

  Overriding a veto by Gov. Jim Gibbons, the Nevada Legislature has enacted legislation that temporarily revises the rate of the modified business tax, the rate of the local school support tax, and the state business license fee. Additionally, the governmental services tax due for used vehicles has been increased.

CCH (cch.taxgroup.com) reports:

  Certain Massachusetts corporate excise taxpayers that experience an increase in a combined group's net deferred tax liability as a result of the enactment of combined reporting requirements for unitary businesses are entitled to a FAS 109 deduction in order to alleviate the potential financial statement impact resulting from the move from separate to combined reporting. On or before July 1, 2009, the principal reporting corporation must file electronically with the Massachusetts Department of Revenue to state the amount of the FAS 109 deduction to be claimed in future years.

  For these purposes "net deferred tax liability "means the net increase, if any, in deferred tax liabilities minus the net increase, if any, in deferred tax assets of the combined group, as computed in accordance with generally accepted accounting principles (GAAP), that would otherwise result from the imposition of the combined reporting requirements provided for in the Act. The "Act" refers to An Act Relative to Tax Fairness and Business Competitiveness, signed into law on July 3, 2008. St. 2008, c. 173.

CCH (cch.taxgroup.com) reports:

  Maine Gov. John Baldacci has signed a budget bill that contains a number of personal income and corporation income tax provisions, including amendments that update the state's Internal Revenue Code (IRC) conformity date, decouple from certain recently enacted federal provisions, establish a "throwout" rule, temporarily eliminate federal net operating loss (NOL) carryforwards, potentially freeze the personal income tax brackets, and reduce the earned income credit.

CCH (cch.taxgroup.com) reports:

  As summer starts, the IRS issued guidance implementing provisions of recent tax legislation. The guidance addresses the work opportunity tax credit (WOTC) and employer-owned life insurance (EOLI). Tax revenue from individual incomes taxes fell 44 percent in April 2009 compared to April 2008, reflecting the economic downturn. In other news, the U.S. and Luxembourg signed a protocol to their tax treaty to better facilitate the exchange of information and Helen Elizabeth Garrett, President Obama's nominee for Assistant Secretary of Treasury for Tax Policy, announced she did not want the post.

IRS

  Work Opportunity Tax Credit. New guidance from the IRS describes enhances to the work opportunity tax credit made by the American Recovery and Reinvestment Act of 2009 (2009 Recovery Act) (P.L. 111-5) (IR-2009-55, Notice 2009-28; TAXDAY, 2009/05/29, I.3). Under the 2009 Recovery Act, more veterans and young people may qualify as targeted groups for the credit.

  Employer-Owned Life Insurance. The IRS released guidance in question and answer format about the treatment of employer-owned life insurance (EOLI) contracts under the Pension Protection Act of 2006 (PPA) (P.L. 109-280) (Notice 2009-48; TAXDAY, 2009/05/27, I.4). The PPA generally limits the amount of death benefits that can be excluded from the gross income of a policyholder to the sum of the premiums and other amounts paid by the policyholder for the contract with some exceptions if, among other things, notice and consent procedures are followed.

  The EOLI notice and consent requirements under the PPA must be satisfied before the policy is issued, Rebecca Baxter, attorney, Insurance Branch, IRS Office of Chief Counsel, said on May 28 in Washington, D.C. (TAXDAY, 2009/05/29, I.4). "A policy is issued on the later of the date of application for coverage, the effective date of coverage or the formal issuance of the contract," Baxter explained.

  Insurance Contracts. A proposed safe harbor would address the application of life insurance rules to policies that mature after the insured individual attains the age of 100 (Notice 2007-47; TAXDAY, 2009/05/27, I.3). Speaking in Washington, D.C. on May 28, Donald J. Drees, Jr., senior technician reviewer, Insurance Branch, IRS Office of Chief Counsel, requested comments on the proposed safe harbor.

  Corporations. The IRS issued final regulations to determine which corporations are included in a controlled group of corporations (T.D. 9451;
TAXDAY, 2009/05/27, I.2). The guidance generally follows temporary and proposed regulations issued in 2006 (T.D. 9304, I.R.B. 2007-6, 423, NPRM REG-161919-05, I.R.B. 2007-6, 463) and amended in 2007 (T.D. 9369, I.R.B. 2008-6, 394, NPRM REG-104713-07, I.R.B. 2008-6, 409).

  Tax Collection. Revenue from individual income taxes declined significantly in April 2009 compared to April 2008, according to Treasury Department statistics (TAXDAY, 2009/05/28, T.2). The Treasury Department collected $136.7 billion in individual income taxes in April 2009 compared to $244 billion in individual income taxes in April 2008.

  New Markets Tax Credit. Treasury Secretary Timothy F. Geithner announced on May 27 that 32 organizations will share $1.5 billion in New Markets Tax Credit allocations (TAXDAY, 2009/05/28, T.1). Taxpayers receive a credit against federal income taxes for making qualified equity investments in investment vehicles known as community development entities (CDEs).

  Tax Treaties. The U.S. and Luxembourg signed a protocol to their 1996 tax treaty (TDNR TG-143; TAXDAY, 2009/05/27, T.1). The protocol will permit U.S. tax officials to obtain information from Luxembourg on all types of federal taxes, in both civil and criminal matters, for tax years beginning in or after 2009.

  Tax Policy Nominee. Helen Elizabeth Garrett, nominated by President Obama to serve as Assistant Secretary of Treasury for Tax Policy, withdrew herself from consideration on May 29 (TAXDAY, 2009/06/01, W.1). Garrett said she needed to reassess her decision to accept the nomination due to family reasons.

  By George L. Yaksick, Jr., CCH News Staff
 

CCH (cch.taxgroup.com) reports:

  The IRS has extended return-filing and payment deadlines for victims of the severe storms, flooding, tornadoes and straight-line winds in Volusia County in Florida that was declared a federal disaster area on May 17, 2009. Persons who qualify for assistance have until July 16, 2009, to file returns, pay taxes and perform other time-sensitive acts otherwise due between May 17, 2009 and July 16, 2009. Affected taxpayers include those residing or having businesses in the disaster area, as well as persons living outside the covered disaster areas whose books, records, or tax professionals' offices are located in the covered disaster areas and all relief workers affiliated with recognized government or philanthropic organizations that assisted in the relief efforts. Taxpayers who reside or have businesses located outside of the covered disaster areas must request relief by calling the IRS disaster hotline (1-866-562-5227).

  The filing extension does not apply to information returns in the Form W-2, 1098, 1099 series, to Forms 1042-S or 8027, or to employment or excise tax deposits. However, penalties for failure to timely file information returns can be waived, for reasonable cause, under existing procedures. In addition, the IRS will abate penalties and interest for failure to make timely employment and excise tax deposits due between May 17, 2009, and June 1, 2009, so long as the deposits were made by June 1, 2009.

  The IRS also reminded taxpayers that, effective for 2009: (1) taxpayers do not have to itemize to take advantage of deductions for uninsured disaster losses; (2) the 10-percent adjusted gross income limit for losses no longer applies; and (3) taxpayers must reduce the loss from each casualty event by $500. Taxpayers have the option of claiming disaster-related casualty losses on either their 2008 or 2009 federal returns. However, because of recent law changes, while claiming the losses on 2008 returns may result in faster refunds, waiting until 2009 to make the claim may be more beneficial depending on the taxpayer's circumstances. Taxpayers claiming disaster-related casualty losses on their 2008 returns should mark the top of their tax returns "Florida/Severe Storms, Flooding, Tornadoes, and Straight-line Winds" to expedite refunds.

Florida Storm, Flood, Tornado and Straight-Line Wind Victims Disaster Relief Notice, FL 2009-38, 2009FED ¶46,389

Other References:

 
Code Sec. 7508A

  CCH Reference - 2009FED ¶42,687C.22

  Tax Research Consultant

  CCH Reference - FILEIND: 15,204.25
CCH Reference - FILEBUS: 15,110
 

CCH (cch.taxgroup.com) reports:

  The IRS has announced that it does not acquiesce in a decision by the Tenth Circuit Court of appeals in L.A. Cox , CA-10,
2008-1 USTC ¶50,165, relating to the ability of an IRS Appeals officer to conduct a Collection Due Process (CDP) with individuals with whom the officer had a prior involvement. The Tenth Circuit disqualified the officer from conducting the CDP hearing regarding a married couple's tax liabilities for two tax years because the officer had considered those liabilities during a CDP hearing for a prior year, ruling that the officer's consideration of those liabilities was "prior involvement" prohibited under Code Sec. 6330(b)(3). The Tenth Circuit also stated, in a footnote, that the holding, by implication, would invalidate Reg. §301.6330-1(d)(2), which expressly excludes prior CDP hearing from the definition of "prior involvement."

  The IRS determined that the Tenth Circuit erred by failing to give proper deference to the Service's construction of the term "involvement" in the regulations. The conclusion that "involvement" has a plain meaning is incorrect because the term is not defined in the statute or legislative history and is inherently ambiguous.

  According to the IRS, an Appeals officer is not legally precluded by the "no prior involvement" language from conducting a taxpayer's CDP hearing for a given tax year because he considered the taxpayer's compliance history when evaluating eligibility for collection alternatives during a prior CDP hearing. There is no disqualifying involvement when the same officer holds consecutive CDP hearings for the same taxpayer who has accrued new unpaid tax liabilities. Instead, "prior involvement" refers to an Appeals officer having considered the tax year at issue in a prior non -CDP context, such as when the Appeals officer worked on collection of the tax as a revenue officer.

  An Action on Decision dated May 11, 2009 (TAXDAY, 2009/03/11, I.8), recommended nonacquiescence.

Nonacquiescence Announcement, 2009FED ¶46,385

Other References:

 
Code Sec. 6330

  CCH Reference - 2009FED ¶38,184.16

  CCH Reference - 2009FED ¶38,184.28

 
Code Sec. 7521

  CCH Reference - 2009FED ¶42,791.30

  Tax Research Consultant

  CCH Reference - TRC IRS: 51,056.15
 

Tax Analysts report: