Tax News

CCH (cch.taxgroup.com) reports:

  Rhode Island Gov. Donald L. Carcieri has signed the budget bill which (1) decouples the calculation of the corporate and personal income taxes from the federal provision deferring the recognition of income from the discharge of business indebtedness (CODI), (2) eliminates the lower tax rates for capital gains, (3) requires e-filing for personal income withholding tax in certain circumstances, (4) expands the failure to pay penalty, (5) makes the qualifications for the Jobs Development Act more stringent, and (6) increases certain insurance company fees. Sales and use tax provisions (TAXDAY, 20090702-S.25) and motor fuel and estate tax provisions (TAXDAY, 20090702-S.24) are reported separately.

CCH (cch.taxgroup.com) reports:

  The budget bill signed by Rhode Island Gov. Donald Carcieri establishes a presumption of nexus for sales and use tax nexus purposes, requires electronic sales and use tax payments for some taxpayers, and amends hospital licensing fees.

CCH (cch.taxgroup.com) reports:

  The Indiana budget bill makes numerous changes to corporate and personal income tax, franchise and capital stock tax, and insurance companies gross premiums tax laws as summarized below.

CCH (cch.taxgroup.com) reports:

  The IRS properly credited five checks toward the outstanding tax liability of a law firm and not the individual tax liability of an attorney and his wife. For the tax year at issue, the taxpayer/husband was improperly characterized as an independent contractor rather than an employee of his law firm and the IRS determined that the couple failed to report income and improperly claimed deduction. The taxpayers requested a collection due process (CDP) hearing after the IRS sent a notice of intent to levy. Although one of the disputed checks was not presented to the Appeals Officer, the Tax Court could consider it because the Tax Court did not follow the record rule, and therefore, could consider evidence not produced at the CDP hearing as long as it was relevant. Since the IRS did not make an evidentiary objection to the check at trial, any objection for relevance was waived. Because the taxpayers received a notice of deficiency, their underlying tax liability could not be challenged in the CDP hearing. Questions about whether a particular check could be credited to a taxpayer's account for a particular tax year, however, were not challenges to the taxpayer's underlying tax liability. The Appeal's officer's determination to the contrary was a harmless error of law and not an abuse of discretion because the IRS did correctly credit the checks against liabilities other than the taxpayers' unpaid individual tax liability for the tax year at issue. The taxpayers payments were voluntary and so their designations controlled. Designations on the checks, such as the employer identification number of the law firm that was liable for the employment taxes with respect to the taxpayer, supported a conclusion that the payments were meant to pay the law firm's tax debt, not the taxpayers' individual tax debt. Although one check arguably could have been for the payment of trust fund recovery penalty against the taxpayer as a responsible person for his law firm, the liability was for a tax year outside of the CDP hearing and the Tax Court lacked jursidiction over those taxes

  The taxpayers failed to present evidence that the employment taxes were overpaid prior to the year at issue and that the overpayment should be credited toward their individual deficiency. The taxpayers presented no evidence of their income from earlier years nor stated how the amounts should be credited or how the credits reduced the deficiency. Finally, the Appeals officer did not abuse her discretion in refusing to send the Social Security Administration information about the taxpayer's additional income. The issue was not related to an unpaid tax or levy and so was an issue that could not be raised at a CDP hearing.

Y.R. Kovacevich, Dec. 57,879(M)

Other References:

 
Code Sec. 6330

  CCH Reference - 2009FED ¶38,184.12

  Tax Research Consultant

  CCH Reference - TRC IRS: 51,056.25

CCH (cch.taxgroup.com) reports:

  The IRS Office of Chief Counsel issued guidance to its attorneys with respect to the scope and standard of review in cases involving requests for relief from joint and several liability under Code Sec. 6015(f). In Porter I (Dec. 57,439), and Porter II (Dec. 57,792), the Tax Court ruled that it would make its own de novo determination regarding whether a requesting spouse is entitled to relief, and that it would not be limited to evidence in the administrative record. The IRS disagrees with these holdings, and the guidance instructs government attorneys to continue to argue that the scope of the Tax Court's review is limited to issues and evidence presented before IRS Appeals or Examination. Government attorneys are to raise scope and standard of review arguments whenever appropriate, noting the IRS's disagreement with the Porter opinions.

  In addition, the guidance urges the expeditious identification of all cases in which a taxpayer raises relief from joint and several liability for the first time in a petition to the Tax Court following receipt of a notice of deficiency, or when the taxpayer files a petition after six months from filing a claim for relief with the IRS but before a determination on the claim is issued. The Cincinnati Centralized Innocent Spouse Operations (CCISO) should be requested to make a determination with respect to these cases. If CCISO determines the petitioner is not entitled to relief, a status report should be filed with the Tax Court setting forth the IRS's determination and attaching CCISO's written analysis as an exhibit.

Chief Counsel Notice CC-2009-021

Tax Analysts report: