News and miscellaneous legal topics – 2011
The Missouri House of Representatives approved a bill providing amnesty from assessment or payment of all penalties, additions to tax, and interest on delinquencies with respect to unpaid Missouri income taxes and sales and use taxes due on or before December 31, 2010.
A taxpayer must apply for amnesty, file a tax return for each tax period for which amnesty is requested, pay the unpaid taxes in full from January 1, 2012, to February 29, 2012, and agree to comply with state tax laws for the next eight years from the date of the amnesty agreement.
The amnesty would apply regardless of whether the taxes were previously assessed, except for penalties, additions to tax, and interest paid before January 1, 2012. The amnesty would not extend to any taxpayer who at the time of payment is a party to any criminal investigation or to any civil or criminal litigation pending in any U.S. or Missouri court for nonpayment, delinquency, or fraud relating to any tax imposed by the state.
If a taxpayer fails to comply with the state tax laws at any time during 8 years following the date of the agreement, all penalties, additions to tax, and interest that were waived under the agreement would become due and owing immediately.
A taxpayer's elects to participate in the amnesty program is an express and absolute relinquishment of all administrative and judicial rights of appeal. No tax payment received under the amnesty program would be eligible for refund or credit.
H.B. 2a, as passed by the Missouri House of Representatives, First Extraordinary Session, on September 9, 2011.
"So You Owe Taxes ? Now What ?" 9/17/11
I will join with Dr. Sandra Byrd, director of the Low Income Tax Clinic at MSU, MSU graduate students, and the Springfield Greene County Library auditorium at 7:00 P.M., Wednesday, September 28, 2011 to present a seminar on dealing with IRS collection.
New IRS video series "Owe Taxes ? Understanding IRS Collection Efforts" 9/14/11
- Know your rights
- Ready to file and owe money
- Filed but didn't pay
- Have not filed
- Want to pay but can't
- Ignored IRS bills
- Your business owe taxes ?
After attending the June 2, 2011 IRS Practitioner Liaison meeting, I toured the IRS Kansas City Campus (formerly "Service Center"), which is not generally accessible to the public.
IRS Tips on Keeping Good Records Now to Reduce Tax-Time Stress 7/26/11
In most cases, the IRS does not require you to keep records in any special manner. Generally, you should keep any and all documents that may have an impact on your federal tax return. It's a good idea to have a designated place for tax documents and receipts. More
IRS Multilingual Gateway lets you select the language of your choice
including Chinese, Korean, Russian, Spanish and Vietnamese. 8/27/11
Here are seven things the IRS wants you to know about deducting costs related to your job search 7/29/11
- To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.
- You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income, up to the amount of your tax benefit in the earlier year.
- You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.
- If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.
- You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
- You cannot deduct job search expenses if you are looking for a job for the first time.
- The amount of job search expenses that you can claim on your tax return is limited. You can claim the amount that is more than 2 percent of your adjusted gross income. You figure your deduction on Schedule A.
For more information about job search expenses, see IRS Publication 529, Miscellaneous Deductions. This publication is available on www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Two-Year Limit No Longer Applies to Many Innocent Spouse Requests IR-2011-80, July 25, 2011 7/26/11
The IRS will no longer apply the two-year limit to new equitable relief requests or requests currently being considered by the agency.
A taxpayer whose equitable relief request was previously denied solely due to the two-year limit may reapply using IRS Form 8857, Request for Innocent Spouse Relief, if the collection statute of limitations for the tax years involved has not expired.
Taxpayers with cases currently in suspense will be automatically afforded the new rule and should not reapply.
The IRS will not apply the two-year limit in any pending litigation involving equitable relief, and where litigation is final, the agency will suspend collection action under certain circumstances.
By law, the two-year election period for seeking innocent spouse relief under the other provisions of section 6015 of the Internal Revenue Code, continues to apply. The normal refund statute of limitations also continues to apply to tax years covered by any innocent spouse request.
A total of 74 Taxpayer Assistance Centers will be open in 34 states, Washington, D.C. and Puerto Rico from 9 a.m. to 2 p.m. local time. Taxpayers can find participating offices by visiting the Saturday Service Locations page on IRS.gov. This special event is particularly intended for people who want to make a "fresh start" by taking steps to have liens withdrawn. It also provides an opportunity to those who cannot visit an IRS walk-in office during regular weekday hours to speak with IRS personnel about their tax issues.
No Missouri offices are scheduled to be open. 7/15/11
Transferable Colorado state conservation easement income tax credits sold by individuals were capital assets and the holding period for the credits began when the taxpayers received them, not when they acquired the real property that was subject to the conservation easement. The state conservation easement tax credits qualified as capital assets because the credits were NOT included in one of the Code § 1221 excluded property categories. Also, the credits were not a substitute for ordinary income because the credits did not represent a right to income.
The credits were never part of the taxpayers' real property rights. The state granted the credits only after the easement donation was complete, so that the holding period for the credits began when the taxpayers received the credits from the state and not when they acquired the property.
McNeil v. Comm., U.S. Tax Court, CCH Dec. 58,631(M), T.C. Memo. 2011-109, T.C.M., (May 23, 2011)
IRS Chief CounseI Explains Tolling Of Statute Of Limitations When It Issues Third-Party Summons 6/25/11
IRS Chief Counsel has issued internal guidance that explains how to calculate the tolling (suspension) of the state of limitations under Code §§ 6501 and 6531, involving civil assessments or criminal prosecutions when the IRS issues a summons to a third-party who fails to comply with the summons. The suspension applies if the third-party does not fully comply with the summons within six months after it is served. The six-month period begins on the exact day the summons is served on the third-party. The end of the six months and the beginning of the suspension period start exactly six months after the summons is served. The suspension period is added onto the original Assessment Statute Expiration date (ASED) to calculate the new ASED (the last day on which the IRS could take a particular action against the taxpayer).
Generally, the IRS has three years to assess taxes in a civil proceeding or initiate criminal proceedings, although the limit can be longer (or indefinite) in more egregious circumstances.
The statutory period is suspended (and thus the limit is extended) for third-party summonses if:
- The person whose liability is involved intervenes in the judicial proceeding seeking to enforce the summons or initiates a proceeding to quash the summons ( Code § 7609(e)(1)); or
- The third-party does not adequately respond to the summons ( Code § 7609(e)(2)).
In Jones v. Comm., CA 4, 107 AFTR 2d ¶2011-930, the 4th Circuit Court of Appeals upheld the validity of Reg. § 1.6015-5(b)(1), applying 2-year deadline to Code § 6015(f) innocent spouse relief claims, and reversed and remanded the Tax Court decision to contrary, striking the regulation down and granting taxpayer's request for Code § 6015(f) relief that taxpayer filed outside 2-year deadline The 4th Ciruit found that Code § 6015(f) was sufficiently ambiguous to leave room for agency interpretation and that such interpretation, reflecting IRS determination that no deadline would create uncertainty and that instead 2-year timeline should apply, was reasonable. The Court rejected taxpayer's arguments that regulation was unnecessarily and inappropriately narrowed the relief that Congress had intended to provide in Code § 6015(f). However, taxpayer was entitled to be heard on her alternative argument that even if regulation were valid, she should still be given time extension under Reg. § 301.9100-3, and the case was remanded for consideration of that issue.
IRS optional standard mileage rates for the final six months of 2011 increased to 55¢ 6/25/11
The IRS normally updates the mileage rates once a year in the fall for the next calendar year, but the IRS made this special adjustment for the final months of 2011 in recognition of recent gasoline price increases. The rate will increase 4.5¢ from the 51¢ to 55.5¢ a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. Revenue Procedure 2010-51.
Third Circuit in Mannella reversed the Tax Court and held that the taxpayer's innocent spouse suit too late 5/30/11
The Third Circuit in Mannella, 107 AFTR 2d 2011-519, 2011-1 USTC ¶50159 (CA-3, 2011), reversed the Tax Court's decision and held that the taxpayer's innocent spouse suit under Section 6015(f), filed more than two years after she was notified that the IRS was initiating collection procedures against her, was untimely under Reg 1.6015-5(b)(1). The Third Circuit remanded the case to the Tax Court to allow the taxpayer to bring an equitable tolling claim.
Tax Court Again Invalidates Two-Year Limitations Regulations For Requesting Equitable Innocent Spouse Relief 5/12/11
The Tax Court in Pullins, 136 TC No. 20, reiterated that Congress did not impose a two-year limitations period when it enacted Code Sec. 6015(f) and the IRS should not have imposed one by regulation.
In Mayo Foundation (2011-1 USTC ¶50,143), the Supreme Court held that the appropriate standard of deference to review challenged regulations is the standard in Chevron USA (467 U.S. 837, 1984). Under Chevron, regulations are generally entitled to significant deference. The Tax Court in Pullins found that when it decided Lantz, it had used the Chevron standard, and concluded there was no need to reconsider Lantz in light of Mayo.
A number of Lantz-type Code Sec. 6015(f) cases are scheduled for argument in the circuit courts of appeal: Coulter (Docket No. 10-680) in the Second Circuit on June 14; Jones (Docket No. 10-1985) in the Fourth Circuit on May 12; other cases pending include Buckner (Docket No. 10-2056) and Hall (Docket No. 10-2628) in the Sixth Circuit, and Payne (Docket No. 10-72855) in the Ninth Circuit.
Three senators wrote to Shulman on April 18, 2011 expressing concern that [t]]he two-year limitations period on claims for equitable innocent spouse relief prevents innocent spouses from receiving the relief they deserve," In a separate letter, 50 members of the House said that Congress did not intend to impose a two-year limitations period under Code Sec. 6015(f).
Commissioner Douglas Shulman told lawmakers in an April 29, 2011 letter that the IRS is reviewing the two-year limitations period on claims for equitable innocent spouse relief.
The Senate previously passed the bill. If signed by the governor, the bill would provide small businesses (fewer than 50 employees) a $10,000 income tax deduction for each new full-time job created with an annual salary of at least the average annual county wage, or $20,000 if the business offers health insurance for new employees and pays at least 50% of the premiums of all full-time employees who opt into the plan. Generally, a full-time job means the employee works at least an average of 36 hours per week for a 16-week period. There is some relief where the employee's hours did not meet the 36 hours per week requirement because of weather-related delays if (1) the taxpayer documents the cause of the delay and the date upon which it occurred and (2) the employee for whom the deduction is sought has worked an equivalent of 576 hours within a 20-week period. H.B. 45, as passed by the Missouri General Assembly on April 27, 2011.
The Missouri General Assembly ended its 2011 regular session without passing this bill. 5/25/11
The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 eliminated new information reporting requirements that were created by previous legislation.
The Patient Protection and Affordable Care Act of 2010 expanded information reporting to include payments to corporations, "amounts in consideration of property," and "other gross proceeds" made in the course of a trade or business (including operation of a governmental entity), beginning in 2012. The new law repeals these requirements. You are not required to file Form 1099-MISC for these payments for any year.
Existing information reporting requirements remain in effect. Payments of $600 or more for nonemployee compensation made in the course of a trade or business are generally required to be reported on Form 1099-MISC. Certain payments to corporations are required to be reported. See the Instructions for Form 1099-MISC for more information.
The Small Business Jobs Act of 2010 provided that anyone receiving rental income from real estate would be treated as receiving income from a trade or business of renting property; therefore, information return requirements applicable to small businesses would be in effect. This provision also is repealed; you are not considered to be in a trade or business solely because you receive rental income. See IRS Publication 527 for more information on rental income and expenses.
The TAS YouTube channel is available at www.youtube.com/TASNTA 4/15/11
- Automated Underreporter Program - IRS Audits
- Appeals from IRS Audits
- Correspondence Examinations - IRS Audits
- Examination Overview - IRS Audits
- Federal Payment Levy Program
- Installment Agreements
- The Power of the Notice of Federal Tax Lien
- Do I Have to Pay Taxes on IRS Cancellation of Debt Income
- Overview of IRS Cancellation of Debt Income
- Using Form 982 to Exclude IRS Cancellation of Debt Income
- Tax Relief for Foreclosed Homeowners - IRS Cancellation of Debt Income
- Liens - IRS Collection Alternatives
- Pro Bono Work, Low Income Taxpayer Clinics LITC
The Comprehensive 1099 Tax Protection Act of 2010 (H.R.4) now goes to the White House for President Obama's expected signature. H.R. 4 repeals a provision under the 2010 health care reform legislation requiring businesses to file a Form 1099 for all payments aggregating $600 or more in a calendar year to a single provider of goods, other than a tax-exempt payee, for payments made after December 31, 2011, the reporting of payments to corporations by businesses in exchange for either goods or services, and information reporting for rental property expense payments made after December 31, 2010. As a revenue offset, related to a premium assistance under the health care reform legislation, H.R. 4 waives the amount of any overpayment of the health care credit that is subject to recapture.
The IRS recently issued final regs. on TAOs that apply to TAOs issued on or after April 1, 2011 and make only minor changes to proposed regs. issued in 2009, which reflect updates made to TAOs by legislation enacted since 1998. A TAO will not be issued to IRS Criminal Investigation division (CI), if the action ordered in the TAO could reasonably be expected to impede a criminal investigation. IRS CI to determines if the TAO could reasonably be expected to impede an investigation.
Under Code § 7811, the National Taxpayer Advocate (NTA) may issue a TAO when a taxpayer is suffering or is about to suffer a significant hardship as a result of the manner in which the internal revenue laws are being administered. A serious privation is more than mere economic or personal inconvenience, and includes:
- An immediate threat of adverse action;
- A delay of more than 30 days in resolving taxpayer account problems;
- Incurring by the taxpayer of significant costs (including fees for professional representation) if relief is not granted;
- Irreparable injury to, or a long-term adverse impact on, the taxpayer if relief is not granted.
The IRS recently released final regs. on the validity and priority of federal tax liens, which track proposed regs. issued in 2008 except for a refinement of the rules for refilling of a notice of federal tax lien (NFTL). Most NFTLs contain a certificate of release that automatically becomes effective on the date the required refiling period ends if the NFTL is not refiled, and at which time the lien is extinguished and the NFTL is ineffective. The required refiling period is the one-year period ending 30 days after the expiration of 10 years after the date of the assessment of the tax; and the one-year period ending with the expiration of 10 years after the close of the preceding required refiling period for such notice of lien. Under the final regs., neither failure to timely refile the NFTL, nor the release of the lien, shall alter or impair any right of the United States to property or its proceeds that is the subject of a levy or judicial proceeding commenced prior to the end of the refiling period or the release of the lien, except to the extent that a person acquires an interest in the property for adequate consideration after the commencement of the proceeding and does not have notice of, and is not bound by, the outcome of the proceeding.
Federal tax liens took priority over a judgment creditor's lien with respect to surplus proceeds 4/7/11
Federal tax liens recorded before the judgment creditors secured their abstract of judgment or had perfected their lien took priority over a judgment creditor's lien with respect to surplus proceeds derived from the nonjudicial foreclosure sale of delinquent taxpayers' real property. Federal law governs the relative priority of federal tax liens and state-created liens, and the tax lien did not lose its priority because the government did not comply with state (California) law and does not depend on when the government filed a claim relative to a competing claimant. The federal tax liens were filed more than 30 days before the nonjudicial foreclosure sale, and there was no evidence that the IRS received notice of the sale as required by Code § 7425(c)(1), the liens survived the sale and attached to the surplus proceeds. Quality Loan Service Corp., Petitioner v. 24702 Pallas Way, Mission Viejo, CA 92691, All Claimants to Surplus Funds After Trustee's Sale of Real Property Located at, Respondent, and Mark V. Franzen; Debra A. Franzen, Claimants-Appellants, and United States of America, Claimant-Appellee., U.S. Court of Appeals, Ninth Circuit, 2011-1 U.S.T.C. ¶50,299, (Mar. 24, 2011).
In Tucker v. Comm., Dkt. No. 3165-06L, TC Memo. 2011-67, 3/22/11, the Tax Court has found that the IRS can include dissipated assets in a taxpayer's reasonable collection potential (RCP) when evaluating an offer-in-compromise (OIC), and money lost while day trading was considered dissipated. Not only was the investment itself highly speculative, but the taxpayer had no experience and compounded the risk by trading on margin. The Tax Court found that the IRS did not abuse its discretion when it rejected the taxpayer's OIC because the taxpayer's RCP exceeded his tax liability.
The IRS won the battle, and won the war, but did not receive any tax payments. The taxpayer's offer would have paid over 90% of his tax liability. The offers rejection demonstrates the IRS's tough approach to handling OICs.
Missouri "Show-Me Green" Sales and Use Tax Holiday 4/1/11
The first $1,500 on purchases of new Energy Star-qualified appliances in Missouri during the holiday period, are exempt from sales tax. Qualifying appliances that have the Energy Star label on them are clothes washers, refrigerators, freezers, dishwashers, water heaters, furnaces, air conditioners, and heat pumps. If an appliance costs more than $1,500, the regular sales tax rate is in effect for any of the purchase price above $1,500.
Appliances not eligible for the exemption include clothes dryers, trash compactors, conventional ovens, ranges, and stoves, lighting fixtures, office equipment, and home electronics.
Several local governmental entities have also opted to participate in the holiday.
The news release can be found on the department's web site at http://dor.mo.gov/news/2011/031711.
Businesses will no longer get Form 941, Employer's Quarterly Federal Tax Return and other business forms?in the mail 3/31/11
All IRS forms, schedules and related instructions are available on IRS.gov. The draft Form 941 with a new line 5e, § 3121(q) Notice and Demand, Tax due on unreported tips, is now on IRS.gov. This month's IMRS Hot Issues answers questions about Form 941 versus Form 944 filing requirements and more.
IRS posts tax tips for 2011 3/31/11
Tips include information about health insurance benefits for the self-employed, mortgage debt forgiveness, bartering, the adoption credit, energy credits, rental income, alternative minimum tax, capital gains and losses, scams, and more.
Find answers through the Interactive Tax Assistant on IRS.gov 3/31/11
Select a topic, and answer a series of questions to get the latest information on most tax issues.
Information about IRS 2011 (second) Offshore Voluntary Disclosure Initiative (OVDI) 3/31/11
for those taxpayers with undisclosed offshore accounts is available in eight languages. IR 11-14
IRS Debunks Frivolous Tax Arguments 3/31/11
Employing any of these arguments could result in a $5,000 penalty. IR 11-25
Free tax preparation sites will be open nationwide 3/31/11
providing vital tax preparation services for low- to moderate-income and elderly taxpayers. IR 11-13
Failure to meet IRC § 911(d)(1) eligibility requirements because adverse conditions in a foreign country 3/31/11
Revenue Procedure 11-20 provides information to any individual who failed to meet the eligibility requirements of § 911(d)(1) of the Code because adverse conditions in a foreign country precluded the individual from meeting those requirements for taxable year 2010.
Federal tax consequences of payments made to or on behalf of financially distressed homeowners 3/31/11
Notice 11-14 provides guidance on the federal tax consequences of payments made to or on behalf of financially distressed homeowners under programs established pursuant to the Treasury Department's Housing Finance Agency Innovative Fund for the Hardest-Hit Housing Markets and the Department of Housing and Urban Development's Emergency Homeowners Loan Program. This notice also provides guidance on the information reporting requirements for these payments.
IRS releases a YouTube video about accessible tax forms for blind or visually impaired taxpayers 3/31/11
The Missouri House of Representatives approved H.B. 76 on March 3, 2011, that would phase out the state corporate franchise tax over a five-year period, beginning in 2012.
- Currently, the rate is 1/37 of 1% of the corporation's outstanding shares and surplus and the and the threshold amount is $10MM (the $10MM threshold amount is retained by the bill)
- for 2012, the rate would be 1/37 of 1%;
- for 2013, the rate would be 1/50 of 1%;
- for 2014, the rate would be 1/75 of 1%;
- for 2015, the rate would be 1/150 of 1%; and
- for 2016 and thereafter, no annual franchise tax would be imposed.
Also, the annual corporate franchise tax liability of a corporation for 2011 through 2015 would be limited to the amount of the corporation's tax liability for 2010. If a corporation did not have a corporate franchise tax liability in 2010 because the corporation was not doing business within the state or did not exist, the corporation's annual franchise tax liability would be limited to the amount of the corporation's franchise tax liability for its first full taxable year of existence.
For tax returns filed on or after January 1, 2012, the bill would also allow any financial institution that is a limited liability company or a limited liability partnership to claim the banking institution tax credit against its annual franchise tax liability.
The Missouri Senate approved S.B. 19 that would similarly phase out the corporate franchise tax and cap corporate franchise tax liabilities.
The Missouri House of Representatives passed H.B. 116 on March 3, 2011, which would provide an amnesty from the assessment or payment of all penalties, additions to tax, and interest with respect to unpaid state income taxes and sales and use taxes due prior to December 31, 2010, that are reported and paid in full from August 1, 2011, through October 31, 2011. The amnesty would apply regardless of whether the taxes were previously assessed.
The amnesty would not apply to:
- penalties, additions to tax, and interest paid before August 1, 2011;
- nor to any taxpayer who at the time of payment is a party to any criminal investigation or to any civil or criminal litigation pending in any U.S. or Missouri court for nonpayment, delinquency, or fraud relating to any tax imposed by the state.
Amnesty would be granted only to taxpayers who:
- submit a written application within the prescribed period;
- file a tax return for each taxable period for which amnesty is requested;
- pay the entire balance due within 60 days of approval of their application by the Department of Revenue, and
- agree to comply with the state tax laws for the eight years following the date of the amnesty agreement.
- If a taxpayer fails to comply with the state tax laws at any time during the eight years following the date of the agreement, all penalties, additions to tax, and interest that were waived under the agreement would become due and owing immediately.
Furthermore, taxpayer's election to participate in the amnesty program as evidenced by full payment of the tax due would constitute an express and absolute relinquishment of all administrative and judicial rights of appeal.
No tax payment received under the amnesty program would be eligible for refund or credit.
Other provisions in the bill would:
- allow the Director of the Department of Revenue to retain 1% of the amount of any local sales or use tax collected for the cost of collection;
- require, as a prerequisite to the issuance or renewal of any city or county occupation license or any state license for conducting any business, the possession of a statement from the Department of Revenue that no income, franchise, sales and use, motor fuel, or cigarette tax, or lead-acid battery or new tire fees are due; and
- provide for offsets from Missouri tax refunds for non-tax amounts due to the federal government and vice versa.
The IRS has more than 400 offices nationwide where taxpayers can walk in and get face-to-face assistance. 3/18/11
These IRS Taxpayer Assistance Centers are your source for personal tax help when you believe your tax issue cannot be handled online or by phone.
The Transactional Records Access Clearinghouse (TRAC) today posted updates to much of its data on the Internal Revenue Service 3/16/11
- Audits - two applications graphically display changes in the number of field and correspondence audits, both individual and corporate, for fiscal years 1992 through 2010.
- Graphical Highlights - national enforcement trends for corporate and individual audits along with information about levies, liens and seizure activities.
- Criminal Enforcement - the latest figures from the Department of Justice on the criminal enforcement of cases referred by the IRS, presented with detailed maps, ranking tables, and individual district tables for the United States and each of 90 federal judicial districts.
- U.S. Code - an updated list of the most frequently cited lead charges that eventually led to formal charges or convictions.
- TRACFED - expanded information and exclusive data analysis tools are available on TRAC's newly expanded subscription site.
If your mortgage debt is partly or entirely forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income. Here are 10 facts the IRS wants you to know about Mortgage Debt Forgiveness.
- Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.
- The limit is $1 million for a married person filing a separate return.
- You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
- To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.
- Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
- Proceeds of refinanced debt used for other purposes ? for example, to pay off credit card debt ? do not qualify for the exclusion.
- If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.
- Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions ? such as insolvency ? may be applicable. IRS Form 982 provides more details about these provisions.
- If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
- Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.
For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit IRS.gov. A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. Taxpayers may obtain a copy of this publication and Form 982 either by downloading them from IRS.gov or by calling 800-TAX-FORM (800-829-3676).
IRS Announces New Effort to Help Struggling Taxpayers Get a Fresh Start 2/26/11
The IRS announced a series of new steps to help struggling taxpayers get a fresh start with their tax liabilities. The goal is to help individuals and small businesses meet their tax obligations, without adding unnecessary burden to taxpayers. See IR-2011-20 for more. Some actions include:
- Significantly increase the dollar thresholds when liens are generally filed
- Liens will now be withdrawn once full payment of taxes is made if the taxpayer requests, and will streamline internal procedures to allow collection personnel to withdraw the liens
- For taxpayers with unpaid assessments of $25,000 or less, the IRS will allow lien withdrawals under several scenarios:
- taxpayer entering into a Direct Debit Installment Agreement
- taxpayer on a regular Installment Agreement converts to a Direct Debit Installment Agreement
- The IRS will also withdraw liens on existing Direct Debit Installment agreements upon taxpayer request
- Liens will be withdrawn after a probationary period demonstrating that direct debit payments will be honored
- More small businesses (filing either as an individual or as a business) can use streamlined Installment Agreements due to raising the dollar limit to participate
- $25,000 or less in unpaid tax (Currently, $10,000)
- Businesses can pay liability down to less than $25,000 if greater to participate
- 24 months to pay
- must enroll in a Direct Debit Installment Agreement to participate
- IRS is also expanding a new streamlined Offer in Compromise (OIC) program
- annual incomes up to $100,000 to participate
- tax liability of less than $50,000 (doubling the current limit of $25,000 or less)
Note: Taxpayers can use the Online Payment Agreement application on IRS.gov to set-up with Direct Debit Installment Agreements.
IRS Holds Saturday Open Houses on February 26 and March 26 to Help Taxpayers 2/26/11
The IRS announced that nearly 100 IRS offices will be open on Saturday, February 26, and Saturday, March 26, to help taxpayers. The location of participating offices is listed on IRS.gov. IRS offices will be open from 9 a.m. to 2 p.m. local time. See IR-2011-19 for more.
- 30 W. Pershing Road
Kansas City, MO 64108
- 2937 S. Claremont Avenue
Springfield, MO 65804
- 1222 Spruce Street
Saint Louis, MO 63103
Do you want to become a § 501(c)3 organization but are having trouble getting started?
Have you begun the § 501(c)3 application process, but run into roadblocks?
Learn specifics on obtaining § 501(c)3 tax exempt status including:
- Organizational Preparedness for § 501(c)3
- General application requirements
- Required documents for application
- Resource list
- Application timeline
- State and local nonprofit tax regulations
- Ensuring continued compliance
When: Wednesday, February 23, 2011 Time: 9:30am - 12:00pm
Where: Bruce R. Watkins Cultural Heritage Center, 3700 Blue Parkway, Kansas City, MO
RSVP to Dana P. Clark by 4:00pm Wednesday, February 16, 2011
CES II is funded through Health & Human Services Compassion Capital Fund grant # 90 EJ0083
Concepts for Effective Services II, 20 W. 9th Street, Suite 600, Kansas City, MO 64105-1704
Free IRS Webinar - PART II of Starting Off Right: What New NON-501(c)(3) Organizations Need to Know 2/11/11
Date: February 24, 2011
Presented by Tax Exempt and Government Entities Division and Exempt Organizations for:
- Newly formed 501(c)(4) through 501(c)(8) Organizations
- Newly formed 501(c)(10) Organizations
- Tax professionals
- Doing what you said you would ? meeting your organization's "operational test"
- Five ways to avoid jeopardizing your tax-exempt status
- Annual filing requirements for exempt organizations
- Tools you can use for tax compliance as your organization grows
Government was entitled to foreclose its tax lien on nonliable spouse's property for taxes assessed against her ex-husband 2/9/11
The lien attached when the property was jointly held and was not extinguished when the wife received the property in dissolution of marriage. Jones, DC Calif., 2011-1 USTC ?50,167.