Federal Tax Headlines


Tax Court Could Review Interest Abatement Issues, but Not Collection Actions: More Information Needed on Innocent Spouse Issues (Gray, TC)

The Tax Court, addressing an IRS motion to dismiss an individual’s petition for lack of jurisdiction, held that it lacked jurisdiction to review an IRS determination as to collection actions, but had jurisdiction to hear an interest abatement issue, and needed more information to determine if it had jurisdiction to hear an innocent spouse issue. The taxpayer was subject to collection actions by the IRS, and was denied relief by the IRS on the three issues addressed at her Collection Due Process (CDP) hearing under Code Sec. 6330.

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Tax Court’s Refusal to Consider Individual’s Refund Claim Erroneous (Wright, CA-2)

The Tax Court’s failure to consider an individual’s argument that he did not receive refund for a tax year at issue was erroneous and, therefore, the case was remanded. The Tax Court was required to determine whether the individual was entitled to and received the refund or whether the refund was used to offset his prior year tax liabilities and, accordingly, credit the individual’s liability, abate the interest and order the IRS to issue the refund.

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IRS Chief Counsel Calls for Certainty for Tax Extenders

IRS Chief Counsel William J. Wilkins called the fate of the tax extenders critical for tax administration after 2012. Many popular but temporary tax incentives expired at the end of 2011 and it is unclear if they will be renewed. Wilkins, who spoke at the Tax Executives Institute, Inc. (TEI) 62nd Mid-Year Conference in Washington, D.C., on March 27, also said it is premature to predict when the Service may finalize guidance on capitalization of costs relating to tangible property.

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Filing, Payment Deadlines Extended for Storm, Flooding, Mudslide and Landslide Victims in West Virginia (WVA-2012-2)

The IRS has extended return-filing and payment deadlines for victims of severe storms, flooding, mudslides and landslides that started on March 15, 2012, in parts of West Virginia, resulting in Logan County being declared a federal disaster area. Certain deadlines falling on or after March 15, 2012, and on or before May 31, 2012, have been postponed to May 31, 2012.

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Tax Court Lacked Jurisdiction to Review FPAA Issued to Interim Partnership (Rawls Trading, LP, TC)

Tax Court jurisdiction did not exist over an interim partnership proceeding involving an individual who pursued a tax shelter strategy with a tiered partnership structure, in which two lower level (“source”) partnerships engaged in activities designed to fabricate capital losses through overstatement of bases in partnership interests. These overstated bases flowed through to the higher level (“interim”) partnership, which owned the source partnerships, and then, through other pass-through entities, to the taxpayer.

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CCH Weekly Report from Washington, D.C.

House Republicans released the GOP budget for fiscal year 2013, which calls for reforming the tax code and eliminating special interest loopholes, while simultaneously lowering tax rates and extending the Bush-era tax cuts. Legislation was also introduced to grant small businesses a 20-percent tax cut and eliminate subsidies for big oil companies. In addition, a Senate Finance subcommittee held a hearing on tax fraud through identity theft. The IRS, meanwhile, announced it will enter into voluntary closing agreements (VCAs) with issuers of qualified student loan bonds that were unable to establish which bond issues the student loans were properly allocable to as purpose investments and that, as a result, could not establish that the bond issues involved were not issues of arbitrage bonds.

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