Tax Headlines


Motion to Dismiss Petitions to Review Collection Action Granted Despite Pending Bankruptcy Proceeding (Settles, TC)

An individual’s motions to dismiss his petitions to review a collection action while a bankruptcy proceeding was still pending were granted because dismissing the petitions did not violate the automatic stay under 11 USC Sec. 362(a)(8), which only stays the commencement or continuation of an action. Granting the motions was proper because his tax liabilities had already been adjudicated in bankruptcy court (TAXDAY, 2011/06/24, J.2) and, therefore, the goal of judicial economy was been satisfied.

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Student Loan Bill Tagging S Corps for Revenue Falls in Senate

A Senate bill that would hold certain S corporations liable for payroll taxes failed on May 8 to garner the needed 60 votes to prevent a filibuster, falling by a vote of 52 to 45. The Stop the Student Loan Interest Rate Hike Bill of 2012 (Sen 2343) won the support of all Senate Democrats, but Republicans rejected the legislation because it calls for a new tax in order to offset the $5.9-billion price tag.

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Idaho ~ Corporate, Personal Income Taxes: Rules Governing Deductions, Sourcing Rules, Apportionment, Credits, and More Discussed

The Idaho Legislature has adopted a concurrent resolution that, with one exception concerning a proposed rule addressing the sourcing rules of guaranteed partnership payments and distributions (TAXDAY 2012/02/29, S.6), adopts the Idaho personal income and corporate income tax regulations proposed by the Idaho State Tax Commission in October 2011. The rules amended cover a variety of topics, including the applicable date of regulatory amendments, deductions, sourcing rules for nonresidents, corporate income tax apportionment, and credits (including the Hire One Act credit).

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Individual Denied Credit from Overpayment Allocated by IRS to Satisfy Penalty; Jurisdiction Lacking to Determine Penalty Overpayment (Weber, TC)

An individual whose tax overpayment was used to satisfy a penalty was not entitled to credit that overpayment against his tax liability for a later year. The taxpayer was subject to a trust fund recovery penalty (TFRP) under Code Sec. 6672, to which his income tax overpayment was applied, thus eliminating his credit against future taxes.

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Treasury Security Rate Set for Computing Current Plan Liability for May 2012 (Notice 2012-36)

For pension plan years beginning in May 2012, the IRS has released the corporate bond weighted average interest rate, the permissible range of interest rates used to calculate current plan liability and to determine the required contribution under Code Sec. 412(l) for plan years through 2012, and the current corporate bond yield curve and related segment rates for the purpose of establishing a plan’s funding target under Code Sec. 430(h)(2).

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Georgia ~ Personal Income Tax: Nonresident Withholding, Fiduciary Estimated Tax Provisions Amended

Georgia has enacted legislation that amends the personal income tax withholding provision on nonresident distributions by requiring any partnership, S corporation, or limited liability company (LLC) that owns property or does business in Georgia to withhold a nonresident member’s share of taxable income sourced to Georgia, whether distributed or not. The amount of tax withheld for each nonresident member is determined by multiplying the nonresident member’s share of the taxable income sourced to Georgia by a rate of 4%. Such taxes are due on or before the due date for filing the income tax return for the partnership, S corporation, or LLC, without regard to any extension of time for filing.

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