The IRS announced an increase in the tangible property expensing threshold for taxpayers without applicable financial statements (AFS). While on their Thanksgiving recess, lawmakers continued to react to new measures announced by the Treasury Department and the IRS on corporate inversions. The Treasury Inspector General for Tax Administration (TIGTA) reviewed payment card reporting and other IRS functions.
Corporate Inversions. Release of additional measures addressing corporate inversions by the Treasury and the IRS (Notice 2015-79; TAXDAY, 2015/11/20, I.4 ) continued to draw responses from lawmakers (TAXDAY, 2015/11/24, C.1). Senate Finance Committee ranking member Ron Wyden, D-Ore., said that the “Treasury has made it clear that its efforts to halt the inversions and stop the further erosion of the tax base can only go so far.”
BEPS. The House Ways and Means Committee will review the Base Erosion and Profit Sharing (BEPS) project developed by the Organisation for Economic and Co-operation Development (OECD) at hearings on December 1, 2015 (TAXDAY, 2015/11/25, C.1). The Senate Finance Committee has also scheduled a hearing on the same topic on the same day.
Payment Card Reporting. TIGTA found that improvements are needed by the IRS in the implementation of payment card reporting requirements (Ref. No. 2015-40-089; TAXDAY, 2015/11/25, T.1). It also discussed how the IRS uses Forms 1099 K, Payment Card and Third Party Network Transactions, to reduce the tax gap (the difference between what taxpayers owe and what they actually pay).
Wage Information. TIGTA reported that the IRS did not always assess penalties against employers that failed to respond to the Service’s requests to resolve discrepancies related to the wage information the employers reported to the Social Security Administration (SSA) and the IRS. “Discrepancies in the wages credited to an individual’s Social Security account may affect the amount of Social Security benefits available to the employee upon retirement,” ” said Treasury Inspector General for Tax Administration J. Russell George in a statement (Ref. No. 2015-40-090; TAXDAY, 2015/11/24, T.1).
Fraud Detection. The IRS Return Review Program, being developed to replace the Electronic Fraud Detection System (EFDS), does not set a termination date or establishes a retirement plan for the old system, the Treasury Inspector General for Tax Administration (TIGTA) has reported (Ref. No. 2015-20-093; TAXDAY, 2015/11/30, T.1). TIGTA found that the expense of running both systems could cost taxpayers approximately $18 million per year.
De Minimis Expensing Threshold. The IRS has increased from $500 to $2,500 the maximum threshold for expensing certain capital items under the de minimis safe harbor provided in Reg. §1.263(a)-1(f) (IR-2015-133; Notice 2015-82; TAXDAY, 2015/11/25, I.2). The threshold for taxpayers with an AFS remains set at a maximum of $5,000 per invoice (or per item as substantiated by the invoice). “We received many thoughtful comments from taxpayers, their representatives and the professional tax community,” said IRS Commissioner John Koskinen in a statement. “This important step simplifies taxes for small businesses, easing the recordkeeping and paperwork burden on small business owners and their tax preparers.”
FATCA. The IRS has upgraded the Foreign Account Tax Compliance Act (FATCA) (P.L. 111-147) online registration system (IR-2015-131; TAXDAY, 2015/11/24, I.1). After the upgrade, sponsoring entities may obtain a Global Intermediary Identification Number (GIIN) for sponsored entities and users can update their information, download registration tables and change their financial institution type and access an updated jurisdiction list.
Phishing Scam. The IRS issued a warning to tax preparers that an email circulating asking them to update their e-services information was not generated by e-Services. The links provided in the email to access e-Services appear to be a phishing scam to capture usernames and passwords (TAXDAY, 2015/11/25, I.3).
IRS Senior Management. The IRS has selected Rosemary Sereti as the deputy commissioner in the Large Business and International Division. Effective next quarter, the division will have one deputy commissioner instead of two, as is the division’s current management structure, the Service reported (TAXDAY, 2015/11/25, I.1).
Tips. The IRS has provided tips to help taxpayers protect their computers from scammers, hackers and identity thieves. (IR-2015-132; TAXDAY, 2015/11/24, I.2). The IRS also provided tips on making year-end contributions to charitable organizations (IR-2015-134; TAXDAY, 2015/11/30, I.1).
By George L. Yaksick, Jr., Wolters Kluwer News Staff