2014 Tax Identity Theft AllStars

Ever more present in the news is the rise of tax-related identity theft.  Although the IRS is committed to enforcement against refund fraud and identity theft, it remains overwhelmed by the growing trend.

No Disability Here; Court Scrutinizes Physician Over Note to IRS

On January 29th, in a 27 page opinion, the U.S. Court of Federal Claims denied a estate’s claim that a deceased taxpayer suffered from a disability, and should benefit from the §6511(h) extension of time to file a claim for refund for those unable to manage their financial affairs due to disability.

Blazing a New Trail: The Brass Tacks About a Potential Grass Tax

State legislators have followed the general public opinion and have begun to legalize the sales and use of marijuana. Federal lawmakers now must contemplate whether they should follow suit. As with most commodities generating revenues, the issue of taxation must be addressed. A recent study by the Congressional Research Service explores the potential issues surrounding a federal marijuana excise tax.

When Your Return Preparer Betrays You

Identity theft has been pervasive.  In an earlier blog ( Identify Theft Pervasive, Overwhelms IRS (Dec. 1, 2014)) I discussed that while the IRS has increased its activity in the fight against...

Identify Theft Pervasive, Overwhelms IRS

By now you may have heard one or more of the horror stories: the taxpayer files a return and eagerly awaits the expected refund, until he receives a letter from the IRS informing him that a...

Even Tax Lawyers Have a Stake in College Sports

With the arrival of the college football bowl season and college basketball regular season, there are few times of the year when sports fans across the nation pay closer attention to the...

Close of Minimum Value Loophole May Launch Additional Duty for Some Employers

An employer that sponsors a self-insured group health plan for its full-time employees asks, "Don't I escape 'pay or play' as long as the plan that I offer to my full-time employees is affordable and provides minimum value under the MV Calculator, even though it does not cover in-patient hospitalization services?" The IRS is taking action to ensure that the answer is "no,"

SSA Releases 2015 Social Security Changes

On October 22, 2014, the Social Security Administration released a Fact Sheet of the 2015 Social Security changes.  The most important changes include the following: 1.   The social security...

Calendar and Timelines Help Employers Keep Track of Affordable Care Act Obligations

The Affordable Care Act presents an ongoing challenge both for regulators formulating guidance and for employers and their professional advisers trying to keep up with that guidance and related deadlines and transition relief. The compliance calendar and timelines in the Health Care Reform Adviser on Bloomberg BNA’s Tax and Accounting Center help you keep track of what needs to be done.

What is a Willful Attempt to Evade Tax?

Among the many “gray areas” of taxation is what constitutes a willful attempt to evade or defeat tax.  The answer may lie in what circuit court has jurisdiction over the question.   In Vaughn...

The Final Tangible Property Regulations

The "Final" Final Tangible Property Regulations The final regulations issued as T.D. 9689 on August 18, 2014 represent the last major component of the IRS's long-running effort to provide...

REITs and Real Property

Whether a particular item is real property is of critical importance to REITs, because a REIT must derive a certain amount of income from real property and hold a certain amount for investment....

Affordable Care Act Sheds Annual Deductible Limits for Employer-Sponsored Health Plans

The Affordable Care Act requires annual cost-sharing limits on coverage as part of the essential health benefits package required for plan years beginning in or after 2014. As enacted, it provided for annual limits on total cost-sharing and for annual limits on deductibles for insured employer-sponsored plans offered in the small group market. Section 213 of the Protecting Access to Medicare Act of 2014 (Pub. L. No. 113-93) eliminated

Guidance on Changes in Method of Accounting for Depreciable Property Appears to Only Affect Unfiled 2013 Returns

Rev. Proc. 2014-7 supersedes and expands the scope of Rev. Proc. 2012-20 to provide taxpayers the option of changing their methods of accounting to comply with either the temporary or proposed regulations generally for taxable years beginning in 2012 or 2013. However, practically speaking, only taxpayers who have not yet filed (including extensions) their 2013 returns appear to be able to benefit from the automatic consent procedures provided in Rev. Proc. 2014-17.

IRS Guidance on Changes in Method of Accounting for Depreciable Tangible Property


On February 28, 2014, the IRS issued Rev. Proc. 2014-17 detailing long anticipated guidance regarding certain changes in method of accounting for depreciable tangible property under the final, temporary, and proposed tangible property regulations. Rev. Proc. 2014-17 updates Rev. Proc. 2011-14 and supersedes prior guidance provided in Rev. Proc. 2012-20.


Who Gets the Partnership Allocations?

Are undistributed partnership allocations attributable to a transferred nonvested partnership capital interest allocated to the holder of the nonvested partnership interest or to the partners in...

Small Employers Shop the SHOP Exchange

Starting in 2014, small employers may chose to make health-care coverage available to their employees through the Small Business Health Options Program (SHOP). The SHOP Exchange, also known as a SHOP Marketplace, allows the employer to select qualified health plans in the small group market from which employees may get coverage. The employer chooses

Deadline for Furnishing Notice of Health Coverage Options Approaches for Employers

An employer must furnish current employees with written notice of their health coverage options by October 1, 2013, if the employer is covered by the Fair Labor Standards Act (FLSA). The Affordable Care Act added this requirement which tells employees about health insurance Exchanges, also called Health Insurance Marketplaces, and employer-sponsored health plan options. An employer must furnish current employees with written notice of their health coverage options by October 1, 2013, if the employer is covered by the Fair Labor Standards Act (FLSA). The Affordable Care Act added this requirement which tells employees about health insurance Exchanges, also called Health Insurance Marketplaces, and employer-sponsored health plan options

Buy-Sell Agreement?

Breaking up is hard to do, but a little planning can go a long way.  For example, in Kumar v. Commissioner , T.C. Memo 2013-184, the Tax Court ruled that a minority shareholder of an S corporation...

De-Risking on the Horizon for Many Pension Plans

About 40% of senior financial executives, responding to a survey by Prudential Financial Inc, indicated that they will “seriously consider” transferring their company’s defined benefit plan risk...

Bloomberg BNA Launches Premier State Tax Library

Bloomberg BNA launches its new Premier State Tax Library in response to the increased importance of state and local tax planning. This library includes the following new products and tools:   ...

The Tax Court Weighs In on LILOs and SILOs

On August 5, in John Hancock Life Ins. Co. v. Commissioner , 141 T.C. No. 1 (8/5/13), the Tax Court ruled for the first time on the income tax consequences of lease-in-lease-out (LILO)...

The Importance of Updating Records with the IRS

Changes of residence, changes of headquarters, changes in corporate structure, corporate/partnership   dissolution, bankruptcy, liquidation, and other occurrences that affect simple things like...

Whose Judgment Is This Anyway?

What happens when the court makes a mistake in issuing its decision?   What recourse is available to the parties concerned?   Does the court vacate its decision and reissue a correct decision, or...

Timelines Help Employers Track Changes to Affordable Care Act Deadlines That Are Not Extended

Employers need to be aware of their health care-related obligations. Is your monitoring system for implementation of the Affordable Care Act’s rules up to date? Does it accurately and timely display deadlines under the Act and extensions and transition relief that the Department of Treasury and IRS, the Department of Labor, and the Centers for Medicare & Medicaid Services have granted? Does it reflect the 2014 transition relief provided for the employer mandate also known as “pay or play”?

Self-Insured Plan Compliance Calendar: First Deadline for Patient-Centered Outcomes Research Trust Fund Fee Approaches

The deadline is July 31, 2013, for sponsors of self-insured group health plans to pay Patient-Centered Outcomes Research (PCOR) Trust Fund fees to the IRS. The fee applies to accident and health coverage, retiree coverage, and COBRA coverage. It does not apply to excepted benefits or to programs that do not provide significant benefits in the nature of medical care or treatment.

Pension Plan Sponsors Weigh Third Party Annuities

According to a survey conducted by benefits consulting firm Mercer and CFO Magazine, sponsors of defined benefit pension plans are increasingly interested in purchasing annuities to transfer   plan...

Enhancements to Bloomberg BNA Tax & Accounting Center

On June 17, 2013, Bloomberg BNA launched several enhancements on the Tax and Accounting Center, including new products and as well as improvements on existing products. We are very excited about...

Bitcoin 1001: Property or What?

Oh to be young.  On June 12, Bloomberg TV's Street Smart reported that a newly wed couple has proposed transacting in bitcoin exclusively, i.e., no U.S. dollars, for the first 90 days of their...

No Shifting COD: Even a Bankrupt Casino Makes Money

Casinos make money in the long run.  A casino may not be making money at any given moment, such as when a visitor wins a large jackpot, and a casino may not even want "money" in every situation....

Beware of Prohibited Transactions in Self-Directed IRA Investment Opportunities

A taxpayer who has a self-directed IRA and who guarantees a loan entered into by a company the shares of which are owned by the IRA runs afoul of the tax Code's prohibited transaction rules, causing the account to fail to qualify as an IRA, according to the Tax Court in Peek v. Comr., 140 T.C. No. 12 (2013).


EIN Inconsistency

In CCA 201315026, the IRS considered taxpayer’s request for assistance in determining whether there is a continuation of a partnership where the Original Partnership merges with an existing...

What Self-Funded Group Health Plans Should Know About Transitional Reinsurance

If you have a self-insured group health plan, you should care about the Affordable Care Act’s Transitional Reinsurance Program because you will help to fund it. Your plan will submit “contributions” for plan years beginning in the 3-year period starting January 1, 2014, to the Department of Health and Human Services.

Workforce Reduction Supplemental Benefits Can Affect Pension Benefits

A supplemental benefit paid to a pension plan participant was an accrued benefit and subject to the terms of a qualified domestic relations order (QDRO), according to the U.S. Court of Appeals for the Third Circuit. Gruber v. PPL Retirement Plan , No. 12-2123 (3d Cir. 4/9/13).

How Much Do You Know About Changes to the Qualified Retirement Plan Rules in Puerto Rico?

Bloomberg BNA is presenting a webinar on May 23, from 1:00-2:30 p.m., ET, focusing on the new regulations on retirement income issued on January 9, 2013, by the Puerto Rico Department of the Treasury under the Puerto Rico Internal Revenue Code of 2011. Carlos Gonzalez, author of the Bloomberg BNA Tax & Accounting Portfolio No. 324, International Pension Planning - Puerto Rico , and Eugene Holmes, Senior Counsel, Proskauer Rose LLP, Washington, D.C.,  will take your questions on the Puerto Rico income taxation of benefits and payments from retirement plans covering Puerto Rico recipients and related administrative issues.

Controversies Over De-Risking Defined Benefit Plans: For the Courts or the Agencies?

Practitioners are suggesting that Verizon Communications' decision to pay Prudential Insurance Company of America an $8 billion premium to take over monthly pension payments to 41,000 retirees was a "game changer" in the increasing de-risking strategies for defined benefit plans being pursued by employers, and may have altered the landscape of pension de-risking that relies on annuity forms of distribution.

How Can We Pay for Lower Corporate Tax Rates?

Bloomberg BNA's inaugural Tax Policy & Practice Summit, held in Washington, DC, the week after the November election, featured lively panel discussions, presentations, and Q&A on the fiscal...

Are DB Plan Sponsors Violating ERISA by Using Pension Assets to Purchase Group Annuities?

A trend appears to be developing in which defined benefit plan sponsors are using pension plan assets to purchase group annuity contracts from insurers who then assume the obligation to make future annuity payments to the company's retirees. Employers view these transfers as "de-risking" their pension plans while improving the company's longer-term financial profile. Recently, retiree participants of the Verizon Communications, Inc. defined benefit plan filed a putative class action in a federal district court claiming that the company's plan to transfer $7.5 billion in pension assets to Prudential Insurance Co. to purchase annuities violates Verizon's fiduciary duties under ERISA and interferes with the retirees' protected rights.

FUTA Credit Reductions in 2012

Employers in some states could pay more in unemployment taxes in 2012 due to the states' failure to repay federal loans. Employers in affected states would have to pay additional taxes by January...

Year-End 401(k) Plan Disclosures: Upcoming Deadlines

Having distributed the first set of fee disclosure documents this summer and initial quarterly statements of plan fees and expenses this fall, it's time for 401(k) plan administrators to turn their...

California Employers Face Pension Plan Mandate

Two bills passed by the California legislature and signed by the governor set the stage for the first state-sponsored retirement program for employees of private employers. If the program moves...

Bloomberg BNA Tax Policy & Practice Summit

Bloomberg BNA Tax Policy Summit: Post-Election Answers to "What Now" "Taxmaggeden," new reporting requirements under "Obamacare," and competing tax reform initiatives are just some of the...

Error in Earned Income Credit Amounts

While working on the Bloomberg BNA 2013 Projected Tax Rates , we were analyzing the Earned Income Credit and noticed something interesting. Section 32(b)(3)(B)(i), added by the American Recovery...

Reminder: Year-End Deadline Nears to Amend Certain §409A Agreements


The last day of 2012 ends the two-year transition period for employers to revise employment agreements that require executives separated from service to sign a release of claims document before receiving post-termination pay and avoid further compliance problems under §409A.

Tax Court Rejects Contract Rights Purchase Argument in Split-Dollar Rollout Case


InNeff v. Comr. , T.C. Memo 2012-244, a case involving split-dollar life insurance arrangements entered into before the effective date of the 2003 final split-dollar regulations, the Tax Court held that two employees covered under life insurance policies realized income from a December 2003 rollout of the arrangements.   

Inaugural Bloomberg BNA Tax Policy & Practice Summit

Bloomberg BNA will host its inaugural Tax Policy & Practice Summit on November 13-14, 2012, in Washington, DC.  One week after the November election, the Summit will focus on the impact of the...

Do the QDIA Safe Harbor Rules Give Plan Fiduciaries Too Much Control?

Do the quirky facts in Bidwell v. University Medical Center, Inc. justify the Sixth Circuit's decision that a plan administrator was not liable for $101,900 in losses to two §403(b) plan participants after it transferred the participants' investments from a stable value fund to a qualified default investment alternative (QDIA) without first receiving investment directions from the participants?

Pursue Reasonable Cause Defense Outside Automated Decision Software, Gorman Says

The Internal Revenue Service can assesses numerous penalties against employers in connection with payroll taxes — including for late filing, making late payments, and failing to pay electronically — so it is important for practitioners to understand the ways available to them for winning reduction or abatement of penalties for their clients.

Tax Court Dismissal of Petition Seeking Review of CDP Action

In a case of first impression, the Tax Court held that dismissal of a taxpayer’s petition seeking review of IRS collection actions under §6330(d) does not violate the bankruptcy automatic stay under 11 U.S.C. §362(a)(8).

Supreme Court Resolves §6501 Limitations Issue but Deference Accorded to Treasury Regulations Remains Somewhat Murky

The U.S. Supreme Court's 5-4 decision in U.S. v. Home Concrete & Supply LLC, v. Comr. , No. 11-139 (S. Ct. 4/25/12) seems clear enough - an overstatement of an asset's basis resulting in an understatement of gain on its sale is not an "omission from gross income" of 25% or more for purposes of §6501(e)(1)(A) such that the normal three-year statute of limitations on assessment is extended to six years.

Is the Recession Causing Small Retirement Plans to Skimp on Compliance Efforts?

Have difficult economic times caused small retirement plans to cut back on compliance with the tax laws? According to the March 20 issue of the IRS electronic newsletter, Employee Plans News , 1 in 4 smaller retirement plans reviewed starting in 2007 under the IRS's LESE ("Learn, Educate, Self-Correct, and Enforce") project had engaged in at least one prohibited transaction.

A Broken Record: Recent and Contemporary Arguments Concerning Tax Reform

Much of the debate in presidential primaries has centered on the perceived need for tax reform. Such reform would require substantial changes to the current version of the Internal Revenue Code, which, when enacted in 1986, was considered to represent “one of the most comprehensive revisions of the Federal income tax system since its inception.”

Deadline Looms for 2011 Small Business Health Care Tax Credit

March 15th is tax day for many corporations. As you prepare to file 2011 income tax returns, keep in mind that small businesses may be eligible for a tax credit to offset the cost of providing health insurance to their employees.

Disappearing Debt

A recent article in the Tax Management Real Estate Journal, “Is It the End or Just the Beginning: Planning with The Final Partnership Debt-for-Equity Regulations,” 28 Real Estate Journal 39 (2/1/2012), discusses the final regulations under §108(e)(8) and §721, and illustrates electing liquidation value to minimize income from discharge of indebtedness.

The Payroll Tax Cut: Is it Here to Stay?

Congress recently extended the payroll tax cut, so the rate for employees will continue to be 4.2%, down from the usual 6.2%. Unless Congress decides to extend the lower rate again, the 4.2% rate expires December 31, 2012.

IRS Now Allows K-1s to be Provided Electronically

2012 02 14 The IRS issued guidance in Rev. Proc. 2012 17 that now allows partnerships to provide Schedule K 1, Partner’s Share of Current Year Income, Deductions, Credits, and Other Items to recipients electronically.

What’s Next on the Road to Health Care Reform for Group Health Plans?

The health care reforms introduced in 2010 take effect in stages. The IRS, DOL and HHS delayed the enforcement of some market reforms that took effect for group health plans in plan years beginning on or after September 23, 2010. Others require regular review to ensure continued adherence. In addition, it is not yet clear whether compliance with notification provisions intended to take effect in 2012 will be postponed.

What Will DOL's Re-Proposed Fiduciary Rule Look Like?

2011-09-23 In a News Release issued September 19, 2011, the Labor Department announced that it intends to re-propose its rule defining who is a fiduciary under ERISA in early 2012. The DOL issued a proposed rule last October that would have, among other things, expanded the definition to include those individ

DOL Extends Deadline for Complying with Fee Disclosure Rules

Investment managers and other retirement plan service providers have been given a few more months to prepare new fee disclosures to plan fiduciaries. New DOL rules (DOL Regs. Sec. 2550.408b-2(c)) try to unmask “hidden fees” by requiring retirement plan service providers and investment vehicles to disclose indirect and direct compensation received from the plan. After receiving requests from the financial services industry for more time to compile fee information, the DOL proposed extending the original effective date of July 16, 2011, to January 1, 2012. Comments on this proposal asked for yet more time to comply, and the DOL was persuaded to extend the effective date to April 1, 2012.

Get a Waiver to Prolong Your Mini-Med Plan's Survival

A "mini-med" plan, a lower-cost plan that pays out a low dollar amount for health benefits, is available through a group health plan only until 2014 and only with a temporary annual limit waiver from the Department of Health and Human Services. Without a waiver, a mini-med plan and its sponsoring employer violate the Patient Protection and Affordable Care Act, the tax Code and ERISA.

IRS Reminds Taxpayers to Report Foreign Accounts by June 30 Deadline

In Information Release 2011-70 (6/24/11), the IRS reminded those who have bank or other financial accounts in a foreign country, or who have signature authority over such an account, that they may be required to report the account to the Treasury Department by June 30. Filing  is required for qualified pension plans and IRAs. Participants and beneficiaries in retirement plans under Code §§401(a), 403(a) or 403(b) and owners and beneficiaries of traditional IRAs, IRA annuities, SEP IRAs, SIMPLE IRAs, and deemed IRAs under §408 and Roth IRAs under §408A  are not required to file an FBAR for a foreign financial account held by or on behalf of the retirement plan or IRA.

Indemnity Is “Property” Under §351, IRS Rules

Generally, I.R.C. §351 provides nonrecognition treatment when the transferor exchanges “property” for stock of a corporation that is controlled by the transferor immediately after the exchange.