CCH Weekly Report from Washington, D.C.

An IRS official speaking at a panel discussion on the impact of the recent Third Circuit Court of Appeals case Historic Boardwalk Hall, LLC (2012-2 ustc ¶50,538 ) noted that the Service would not challenge legitimate tax credit partnerships. In addition, the Service has announced timelines for withholding agents and foreign financial institutions (FFIs) to complete due diligence requirements, as well as additional guidance on gross proceeds withholding and the status of certain instruments under the Foreign Account Tax Compliance Act (FATCA). Tax return preparers are being reminded to renew their Preparer Tax Identification Numbers (PTINs) for 2013.

Treasury

The Treasury Inspector General for Tax Administration issued the following reports:

Some IRS employees are closing delinquent taxpayer accounts without following proper procedures and without managerial approval (Reference Number: 2012-40-108 ; TAXDAY, 2012/10/25, T.1 ). An analysis of a judgmental sample of 17 cases and a statistically valid sample of 136 taxpayer accounts closed as currently not collectible were not worked according to procedures.

Revenue officers (ROs) in the Collection Field Function did not always follow required procedures when assessing taxes on businesses that have not filed tax returns (Reference Number: 2012-30-110 ; TAXDAY, 2012/10/24, T.1 ). The ROs did not follow the required procedures in 21 percent of the sample cases chosen by TIGTA.

The IRS needs more controls to identify taxpayers who claim erroneous refundable credits (Reference Number: 2012-40-105 ; TAXDAY, 2012/10/23, T.1 ). TIGTA discovered that, when the IRS freezes a questionable Earned Income Tax Credit (EITC) but releases a related Additional Child Tax Credit (ACTC), the ACTC will not be allowed 67 percent of the time.

Tax Credit Partnerships. Curtis Wilson, IRS associate chief counsel (Passthrough & Special Industries), Washington, D.C., reported that the IRS would not challenge legitimate tax credit partnerships (TAXDAY, 2012/10/25, T.2 ). Wilson was speaking at a panel discussion on the impact of the recent Third Circuit Court of Appeals case Historic Boardwalk Hall, LLC (2012-2 ustc ¶50,538 ; TAXDAY, 2012/08/30, J.2 ).

IRS

FATCA Due Diligence. The IRS has announced timelines for withholding agents and foreign financial institutions (FFIs) to complete due diligence requirements, as well as additional guidance on gross proceeds withholding and the status of certain instruments under the Foreign Account Tax Compliance Act (FATCA), as enacted in the Hiring Incentives to Restore Employment (HIRE) Act of 2010 (P.L. 111-147 ) (Announcement 2012-42 ; TAXDAY, 2012/10/25, I.1 ). Meanwhile the U.S. is pursuing intergovernmental agreements with foreign governments that will contain time frames for FFIs to complete due diligence to identify U.S. accounts.

West Virginia Disaster. The IRS has updated its September 20, 2012, notice (TAXDAY, 2012/09/24, I.5 ) granting relief to victims of severe storms and straight-line winds that began on June 29, 2012, in parts of West Virginia (WVA-2012-28 ; TAXDAY, 2012/10/26, I.1 ). New counties where relief is available are Boone, Cabell, Clay, Greenbrier, Jackson, Lincoln, Mason, McDowell, Mercer, Mingo, Monroe, Pocahontas, Roane, Tyler, Webster and Wood.

IP PINs. The IRS anticipates issuing identity protection personal identification numbers (IP PINs) to approximately 500,000 individuals for the 2013 filing season, Christopher J. Lee, senior attorney, National Taxpayer Advocate Service, said on October 25 (TAXDAY, 2012/10/26, I.5 ). Letters will go out in December 2012 instructing taxpayers to use their IP PIN to file their 2012 returns in 2013.

IRPAC Report/Public Meeting. The Information Reporting Program Advisory Committee (IRPAC) released its 2012 report in conjunction with its October 24, 2012, public meeting in Washington, D.C. (IR-2012-80 ; TAXDAY, 2012/10/25, I.2 ). The 2012 report includes recommendations for the IRS relating to cost basis proposed regulations, implementation of Code Sec. 4980H under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148 ), merchant card and third-party payments, and FATCA.

COD Income. Two practitioners and an IRS attorney discussed cancellation of debt (COD) income issues at an American Bar Association Taxation Section program on COD and debt workout issues (TAXDAY, 2012/10/25, I.3 ). The participants included Beverly Katz, IRS special counsel (Passthroughs & Special Industries); David Friedline, Ernst & Young LLP, New York, who moderated the program; and Fred Witt, Deloitte Tax LLP, Phoenix.

Louisiana Disaster Relief. The IRS has updated its September 5, 2012, notice (TAXDAY, 2012/09/06, I.2 ) granting relief to victims of Hurricane Isaac to include the parishes of Allen, Morehouse and St. Martin and on October 22, 2012, to include the parishes of Pointe Coupee and West Baton Rouge (LA/MS-2012-15 ; TAXDAY, 2012/10/24, I.1 ).

RTRP Exam/No Extension. The IRS is not planning to extend the December 31, 2013, deadline for unenrolled preparers to take and successfully pass the registered tax return preparer (RTRP) examination, a spokesperson for the Service told CCH on October 23 (TAXDAY, 2012/10/24, I.2 ).

PTIN Renewal Deadline. The IRS is reminding tax return preparers to renew their Preparer Tax Identification Numbers (PTINs) for 2013 (IR-2012-79 ; TAXDAY, 2012/10/23, I.1 ). Many preparers are also required to take a competency test; an appointment scheduling the exam can be made through the PTIN system at http://www.irs.gov .

Amended Return Advice. Taxpayers filing an amended return generally do not increase their chance of being audited, an IRS manager said on October 19 (TAXDAY, 2012/10/22, I.2 ). Russell Renwick, IRS group manager (exempt organizations), Baltimore, said it depends on what item is being amended but, that, in his experience, an amended return does not automatically trigger an audit.

By Jennifer 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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