Tax Headlines

1827

S Corporation Had Reasonable Cause for Failure to Timely File Annual Tax Return (Ensyc Technologies, TCS)

An S corporation was not liable for the penalty for failure to timely file its annual tax return. The failure of the S corporation to timely file its return was due to reasonable cause because the entity exercised ordinary business care and prudence in its efforts to timely file its Form 1120S for the tax year at issue. The entity’s accountant had sent the return to the president of the company in time for him to file the return by its deadline. The president retained a copy of the 1120S bearing his signature, and he believed he had sent the original to the IRS. However, it was determined that the president never mailed the Form 1120S that his accountant had prepared for him.

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VEBA’s Investment Income Properly Included in Calculation of Excess in Qualified Asset Account (Northrop Corp. Employee Insurance Benefit Plans Master Trust, CA-FC)

The Court of Federal Claims properly held that a tax-exempt voluntary employees’ beneficiary association (VEBA) could not avoid the Code Sec. 512(a)(3)(E)(i) limitation on exempt function income by paying welfare benefits with investment income. Under Reg. §1.512(a)-5T the VEBA’s unrelated business taxable income (UBTI) was the lesser of the VEBA’s investment income or the investment income that exceeded the qualified asset account limit, regardless of whether the income was spent on member benefits during the year. Thus, the VEBA’s income was exempt from tax only to the extent that it did not exceed the amount necessary to satisfy incurred but unpaid member claims.

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Rhode Island ~ Multiple Taxes: Budget Bill Sent to Governor

The Rhode Island Senate, on June 11, 2012, passed a $8.1 billion state budget bill, already approved by the House of Representatives, that would establish a tax amnesty program, impose a sales and use tax on pet care and certain transportation services, increase the cigarette tax, amend various cigarette tax provisions, impose a hospital licensing fee, and amend the definition of “beverage” for purposes of the beverage container tax.

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Minnesota ~ Sales and Use Tax: Accommodations Intermediary Services Discussed

A Minnesota Department of Revenue notice explains sales and use tax requirements for accommodations intermediaries. An accommodations intermediary that facilitates the sale of lodging located in Minnesota is required to register as a retailer and collect, report, and remit sales tax, regardless of the location of the intermediary or the location of the customer that pays for the room. Accommodations intermediaries include vacation rental home operators, travel consolidators, tour operators and any other person that facilitates the sale of lodging and charges the customer a room charge.

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Finance Panel Considers Revisions to Energy Tax Incentives

Senate Finance Committee Chairman Max Baucus, D-Mont., told a panel of oil and other energy experts on June 12 that some energy tax incentives need to be dropped when Congress undertakes a comprehensive overhaul of the tax code. And, those that are inefficient, redundant or favor certain technologies and industries are most likely to go.

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