Weekly Report from Washington, D.C.

The Senate Budget Committee held a field hearing during the August recess to learn more about the government’s efforts to curb stolen identity refund fraud. The IRS issued guidance on the domestic production activities deduction, penalties for failing to disclose reportable transactions, and more. Two taxpayers brought suit against the IRS for the breach of its Get Transcript app.

Congress

Identity Theft. At a field hearing of the Senate Budget Committee, lawmakers heard about efforts to curb identity theft and stolen identity refund fraud (TAXDAY, 2015/08/27, C.1). Treasury Inspector General for Tax Administration (TIGTA) J. Russell George TIGTA’s role and the impact of tax-fraud related identity theft.

BEPS. Senate Finance Committee Chairman Orrin G. Hatch, R-Utah, and House Ways and Means Committee Chairman Paul Ryan, R-Wis, have outlined concerns regarding the country-by-country (CbC) reporting requirements that are being considered by the Treasury Department (TAXDAY, 2015/08/28, C.1). The lawmakers called on Secretary Jack Lew to respond to their previous request for information on the Base Erosion and Profit Shifting (BEPS) project (TAXDAY, 2015/06/10, C.2) that is being developed by the Organisation for Economic Co-operation and Development (OECD).

Treasury

PPACA. The Treasury Inspector General for Tax Administration (TIGTA) reviewed the IRS’s Affordable Care Act Information Sharing and Reporting Project, (TAXDAY, 2015/08/26, T.1). TIGTA found that the project was deployed by the IRS on time but lapses occurred in risk and requirements management.

IRS

Domestic Production Activities Deduction. The IRS released temporary and proposed regulations on the Code Sec. 199 domestic production activities deduction (T.D. 9731; NPRM REG-136459-09; TAXDAY, 2015/08/27, I.1). The temporary regulations relate to the calculation of W-2 wages. The proposed regulations provide guidance on a number of activities, including films, oil production, as well as clarifying key terms.

Data Breach. Two individual taxpayers have filed a lawsuit against the IRS stemming from the breach of the IRS’s Get Transcript app earlier this year (TAXDAY, 2015/08/25, I.2). The IRS has acknowledged 610,000 attempts to gain access to the Get Transcript information, with about 330,000 of those attempts successfully getting through verification measures.

Reportable Transactions. The IRS issued proposed regulations on the Code Sec. 6707A penalty to reflect changes to the penalty under the Small Business Jobs Act of 2010 (SBJA) (P.L. 111-240) (NPRM REG-103033-11 ; TAXDAY, 2015/08/28, I.1). The SBJA made the penalty proportional to the tax saved; converted the flat rate amounts to maximum; and added a minimum amount.

U.S. Territories. Proposed guidance addresses whether an individual is a bona fide resident of a U.S. territory (NPRM REG-109813-11; TAXDAY, 2015/08/27, I.2). Additional days of constructive presence would be allowed for business or personal travel outside of the U.S, territory.

Filing Season Statistics. The IRS released the Statistics of Income (SOI) Bulletin for Summer 2015 and highlighted some recent filing season statistics (IR-2015-104 , IR-2015-105; TAXDAY, 2015/08/27, I.4; TAXDAY, 2015/08/27, I.5) . The IRS reported that U.S. taxpayers filed almost 147.4-million individual income tax returns for tax year (TY) 2013, reflecting an increase of 1.7 percent from 2012.

Self-Employed Individuals. The IRS has issued a fact sheet covering the basic information about business taxes needed by anyone who is self-employed (FS-2015-22; TAXDAY, 2015/08/27, I.3). The fact sheet provides an overview of subjects such as obtaining an Employer Identification Number (EIN), filing tax returns; business expenses, business use of a home; self-employment taxes; estimated tax payments; recordkeeping; and making electronic tax payments through IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS).

Pension Plans. The IRS released guidance under the Cooperative and Small Employer Charity Pension Flexibility Act (P.L. 113-97) (Notice 2015-58; TAXDAY, 2015/08/31, I.1). The law specifies minimum funding requirements and related rules that apply with respect to certain defined benefit pension plans maintained by groups of cooperatives and related entities and groups of charities.

By George L. Yaksick, Jr., Wolters Kluwer News Staff

 

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