NEWS from NSA

  • Monday, May 11, 2015 12:49 PM | NCSA Website Manager (Administrator)
    The IRS and Treasury struggled to defend the $500 de minimis safe harbor deduction limit during a presentation at the ABA Tax Section meeting in Washington on Friday.
     
    "We are sympathetic. We understand the amount is arbitrary," Ken Beck, taxation specialist in the Treasury's Office of Tax Policy, said. "The question is, what is the appropriate amount?"
     
    What is readily apparent is that $500 is not the appropriate amount.
     
    NSA and about 100 other commenters sent letters to the Internal Revenue Service seeking to raise the $500 safe harbor for deducting, rather than capitalizing and depreciating, tangible property expenses. Beck acknowledged that "no one" requested that the threshold be lowered or remain the same. Rather, Beck estimated most commenters wanted a threshold of about $2,500 to ease the administrative burden on small taxpayers.
     
    Andrew Keyso, IRS associate chief counsel (income tax and accounting) appeared on the same panel as Beck at the ABA meeting, also acknowledge the IRS was surprised when even the AICPA asked the IRS to expand the definition of the applicable financial statement (AFS), such as a Securities and Exchange Commission filing or an audited shareholder statement, so that more taxpayers could use the higher $5,000 limit currently in place. However, Keyso stated it would be easier, and therefore more likely, for the IRS to change the safe harbor limit than update the AFS definition in the regulations. "We're still looking into whether we want to do this," Keyso said.
     
    Most meeting participants, including NSA Executive Vice President John Ams, were left with the distinct impression the $500 limit would be raised to at least $2,500, if not more, at some point this year.
     
    Beck also said clarifications to Revenue Procedure 2015-13, which consolidates and updates the procedures for making automatic and non-automatic accounting method changes, would be coming "shortly, but not imminently." 


  • Monday, May 11, 2015 12:48 PM | NCSA Website Manager (Administrator)
    The Senate Finance Committee has approved a measure to expand the Section 529 college savings program to include computer-related expenses. 
     
    S. 335, approved April 29 by a voice vote after the markup, now awaits a vote by the full Senate.
    The House passed a similar version Feb. 25 on a 401-20 vote. Though the president criticized provisions in the bill, saying the program largely favored the wealthy, he didn't issue a veto threat.
     
    The bill would expand the tax-preferred college savings program to qualify expenses related to any computer technology, Internet access or related service for use by college students as an acceptable withdrawal from the account. Computer-related costs had been included in the program in tax years 2009 and 2010, but that provision expired. The measure would also modify the tax code to allow students who have taken money from a 529 savings account, but then withdrawn from classes, to re-deposit the money into the account within 60 days of receiving their refund without paying a penalty.


  • Monday, May 11, 2015 12:48 PM | NCSA Website Manager (Administrator)

    NSA members may now register for this year's five IRS Nationwide Tax Forums. More than 40 separate seminars and workshops are being offered this year, and participants may earn up to 18 continuing professional education credits at each Forum. Dates and location for this year's Forums are as follows: 
     

    Location

    Forum Dates

    Pre-Registration Deadline for $230 Rate

    National Harbor, MD
    (near Washington, DC)

    July  7 - 9

    June 23

    Denver, CO

    July 28 - 30

    July 14

    San Diego, CA

    August 11 - 13

    July 28

    Atlanta, GA

    August 25 - 27

    August 11

    Orlando, FL

    September 1 - 3

    August 18


    The cost of enrollment for those who pre-register is $230 per person, a savings of $130 off the late or on-site registration price of $360. Pre-registration ends two weeks prior to the start of each forum. HOWEVER – NSA members can save an additional $10 by using NSA's special registration code when they register. More information is available on the NSA website here.


  • Monday, May 11, 2015 12:47 PM | NCSA Website Manager (Administrator)
    Withholding agents for foreign taxpayers who fail to deposit the correct amount will soon see new regulations regarding limits on claims or refunds.
     
    In Notice 2015-10, the IRS said the regulations "will provide that an otherwise allowable claim for refund or credit made by a claimant that is the beneficial owner of a withheld payment is only available to the extent that the relevant withholding agent deposited the amount withheld. 

    The regulations will also provide for a pro rata allocation of the amount available to the claimant for refund or credit when a withholding agent has partially satisfied its deposit requirements, according to the notice, which also sought comments on the pro rata allocation procedural rules. The IRS is considering exceptions to the general rules to minimize the potential for fraud or intentional under-depositing of withholding taxes.
     
    The IRS said that it is concerned with cases in which individuals subject to withholdings under tax code Section 1441 through Section 1443, which in part deal with withholding tax on nonresident aliens and foreign corporations, are making or will make the refund claims for refunds as required by Section 6302.
     
    The IRS said it acted because of a concern that "if a refund or credit is issued for an amount that has not been deposited, the IRS may not be able to recover that amount because the claimant, and in some cases the relevant withholding agent, may be outside the United States."
     
    Notice 2015-10 will be published in Internal Revenue Bulletin 2015-20 on May 18.  A copy is available here


  • Monday, May 11, 2015 12:46 PM | NCSA Website Manager (Administrator)
    Preparer penalties for willful or reckless understatement of a tax liability may be assessed where a return was signed but never filed, or if it was filed but the IRS disallowed the refund claimed, the IRS Office of Chief Counsel said in a chief counsel advice memorandum, CCA 201519029, released on May 8.
     
    Tax code Section 6694(b)'s penalty may be assessed where a return preparer signed a return and his or her conduct was willful or reckless, the office said, and there is no requirement that the IRS allow the amounts claimed on the return before it is assessed, according to the CCA.
     
    The CCA considered various scenarios where a return preparer created amended returns understating liability due to willful or reckless conduct; some weren't filed with the IRS, and the Service denied the refunds claimed for those that were filed.
     
    "The language of I.R.C. §6694(b) does not require that a return be filed for the penalty to apply, only that a return is prepared," the CCA said. "And Treas. Reg. §1.6694-1(a)(2) provides that a return is prepared when it is signed."  If a preparer fails to sign a return, it is deemed prepared on the date it is filed under the Treasury Regulations, the CCA said.
     
    However, those penalties don't apply where a practitioner merely files a claim for refund after the period of limitations has expired, the Internal Revenue Service office said in CCA 201519029 released May 8.  An "understatement of liability" doesn't include claims barred by the limitations period, it said.
     
    A copy of CCA 201519029 is available here.


  • Monday, May 11, 2015 12:45 PM | NCSA Website Manager (Administrator)
    The IRS handed out $5.6 billion in erroneous education credits according to the Treasury Inspector General for Tax Administration, a situation that led Sen. Orrin Hatch, chairman of the Senate Finance Committee, to question if the agency is qualified to administer the credits.
     
    The list of education tax credits the Internal Revenue Service dispensed in error in fiscal year 2012 was extensive, according to a Treasury Inspector General for Tax Administration report released May 5.
     
    According to TIGTA, approximately 2 million taxpayers received more than $3.2 billion in education credits for students with no Form 1098-T, Tuition Statement. In addition, more than 1.6 million taxpayers got about $2.5 billion in education credits for students attending ineligible institutions and more than $650 million was paid to some 419,000 taxpayers for students who were used to claim the American Opportunity Tax Credit for more than four tax years.
     
    TIGTA concluded the IRS needs to do a lot more to improve in this area, and still does not have the appropriate processes in place to properly administer the credits.
     
    The IRS said it has taken action, such as making changes to a key form in 2012 that reduced the number of claims by $4.5 billion in one year. It also said it needs to access other government databases so that it can validate student eligibility, and disallow credits more easily. That could be accomplished through legislation, its statement said.
     
    Text of TIGTA's report, "Billions of Dollars in Potentially Erroneous Education Credits Continue to Be Claimed for Ineligible Students and Institutions" (No. 2015-40-027), is located here.


  • Monday, May 11, 2015 12:45 PM | NCSA Website Manager (Administrator)
    The Modernized e-File Production and Assurance Testing Systems (ATS) will be unavailable on Saturday, May 16 and on Saturday, June 6. The IRS will be conducting system maintenance on these two Saturdays from 7:00 a.m. until 3:00 p.m. Eastern Time.  Please refrain from accessing the MeF Production and ATS Systems at these times. 


  • Monday, May 11, 2015 12:44 PM | NCSA Website Manager (Administrator)

    An e-mail confirmation process to notify employers of account activity by third-party payroll processors, such as scheduling or canceling payments, is to start this month, according to Thomas Mathews, director of headquarters collection of the Internal Revenue Service's Small Business/Self Employed Division. "The e-mail service gives employers another tool to monitor actions to make sure the third-party payer is doing what it is supposed to do," Mathews said. 

    The email notification system, as well as an address notification program implemented in January 2014 so that employers could approve and confirm changes made by payroll processors, is part of the agency's efforts to increase employer safeguards related to payroll service providers. 

    The Treasury Inspector General had earlier noted that 40 percent of small businesses rely on outside payroll processors, and it questioned whether the IRS had adequate controls to safeguard employers when third parties do not comply with payment and filing rules. "While third-party payer arrangements usually work as intended, there have been instances in which third-party payers receive funds from employers for payment of payroll taxes, but they have not remitted those taxes to the IRS," according to TIGTA. "This causes significant problems for employers because the funds have been paid out but the taxes are still due." 


  • Friday, April 24, 2015 12:27 PM | NCSA Website Manager (Administrator)

    IRS Publication 5215, Affordable Care Act: Responsibilities for Health Coverage Providers, is now available on the IRS website.
     
    Publication 5215 was posted April 15 and is aimed at helping health coverage providers understand the reporting requirements of minimum essential coverage to the IRS and covered individuals.
     
    The publication addresses, in more or less summary fashion, how to report coverage on Form 1095-B, Health Coverage, types of minimum essential coverage under the ACA and who is considered a provider of minimum essential coverage.


    A copy of Pub 5215 is available here.


  • Friday, April 24, 2015 12:26 PM | NCSA Website Manager (Administrator)
    The answer, it seems, depends upon when you ask and who the audience is. If you ask during an election campaign and the candidate is a tea party conservative, deficits matter a lot. When that candidate is elected, then the answer becomes, not so much.
     
    In any event, it is confusing when Republicans in Congress who came to power pledging tight-fisted budgeting are in the midst of a tax-cut and spending binge that would boost federal deficits by a half-trillion dollars.
     
    For example:
     
    The House voted April 16 to repeal the estate tax, paid by only 0.2 percent of U.S. estates, and to permanently extend tax deductions for state and local sales taxes—without offsetting the cost of either measure. Those moves would combine to expand the deficit by $311 billion over 10 years. The House passed a bill to revive section 179 expensing for small businesses without offsetting the cost, which is estimated at $79 billion over ten years.
     
    Congressional efforts to extend other tax breaks without offsets to the tune of hundreds of billions of dollars. Republicans also have proposed increasing military spending beyond the caps agreed to in 2011, through a separate budget line called overseas contingency operations.
     
    The deficits be damned binge even has some Republicans confused. "How are you going to balance the budget when you are spending all of this money?" said Rep. Walter B. Jones (R-N.C.). "We were the party that advocated less government and less spending. We aren't keeping our promise." Sen. Mike Lee (R-Utah), in an opinion column in the Deseret News, complained that the new spending "comes right after the Senate just passed a 10-year balanced budget that specifically doesn't account for these additional costs." He added, "That's how a feel-good, bipartisan compromise comes in—with a $141 billion price tag."
     
    Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement that adding more debt atop a record-high level of $18 trillion is worrisome. "This failure to pay for this legislation is completely at odds with rhetoric about fiscal responsibility and balanced budgets," she said. "It is impossible to take a budget resolution seriously if lawmakers pass a balanced budget and then bust that budget plan before it is even finalized."
     
    Those who previously complained that we were all stuck with a do-nothing Congress now have a Congress that is geared for action. Whether it is the type of action that we wanted is another matter. 


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