CCH Weekly Report from Washington, D.C.

The Treasury Inspector General for Tax Administration (TIGTA) issued the following reports finding that:

The Business Master File Case Creation Nonfiler Identification Process (BMF CCNIP) for targeting business nonfilers has increased the number of returns secured, but possibly only as a result of an increase in the total closed inventory (TAXDAY, 2012/03/02, T.1). TIGTA made four recommendations for the Enterprise Collection Strategy, Small Business/ Self-Employed Division (ECS), including that ECS determine the causes of increases or decreases in closure types and make selection code adjustments.

The IRS, despite disallowing $1.6 billion in erroneous claims for first-time homebuyer credits, could have identified even more erroneous claims (TAXDAY, 2012/03/01, T.1). TIGTA recommended that the IRS update examination results throughout the year and ensure that homebuyer credit claims are run against IRS automated examination filters and that the highest risk cases are selected for post-refund examinations.

The IRS Disaster Assistance Program guidelines were incomplete and inaccurate and did not reflect the processes and procedures used by employees to assess disasters and grant tax relief to affected individuals and businesses (TAXDAY, 2012/02/29, T.1). Additionally, the Program Office was not documenting the assessment of the severity and scope of damage for each federally declared disaster when determining the length and type of tax relief to be granted and the IRS did not always timely release disaster relief indicators from individual tax accounts.

IRS

Net Investment Income Guidance. The IRS will soon issue guidance under Code Sec. 1411 in connection with the 3.8-percent Unearned Income Medicare Contribution Tax, an IRS official told practitioners on February 29 at a program sponsored by the D.C. Bar’s Taxation Section (TAXDAY, 2012/03/01, I.4).

Public Inspection/Code Sec. 6110. The IRS released final regulations pertaining to the release for public inspection of certain documents relating to tax-exempt organizations (T.D. 9581; TAXDAY, 2012/02/29, I.1). The U.S. Court of Appeals had previously held in Tax Analysts, CA-DC, 2003-2 USTC ¶50,730, that the IRS had improperly withheld from public inspection letter rulings on tax-exempt status after relying on certain regulations under Code Secs. 6104 and 6110. The final regulations eliminate the portions of the regulations that the court found to be in violation of Code Sec. 6110.

Correspondence Audits. Panelists at a recent IRS Oversight Board public meeting suggested improvements to the IRS’s correspondence audit process, which they stated is too burdensome for many taxpayers (TAXDAY, 2012/02/29, I.5). Speakers suggested narrowing the scope of audit selection, streamlining IRS-taxpayer communication, relaying telephone questions to appropriately trained IRS personnel, or even eliminating the need for telephone services through expanded use of e-services.

March Per Diem Rates for Foreign Travel. The U.S. State Department has released a listing of maximum travel per diem allowances for travel in foreign areas, effective as of March 1, 2012 (TAXDAY, 2012/02/27, I.1).

IRS Tax Tips. The IRS released tax tips on the following topics:

Boosting your refund (TAXDAY 2012/03/02, I.2);

Free Tax Help for Military Personnel and Their Families (TAXDAY, 2012/03/01, I.5);

Mortgage Debt Forgiveness (TAXDAY, 2012/02/29, I.6);

Four Ways to Find Free Tax Help (TAXDAY, 2012/02/28, I.1);

Education Tax Credits For Higher Education (TAXDAY, 2012/02/27, I.2).

By Jeff Carlson, Stephen K. Cooper and Jennifer J. Rodibaugh, CCH News Staff

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

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