The Bloomberg BNA Federal Tax Blog is a forum for practitioners and Bloomberg BNA editors to share ideas, raise issues, and network with colleagues about federal tax topics. The ideas presented here are those of individuals and Bloomberg BNA bears no responsibility for the appropriateness or accuracy of the communications between group members.
May 23, 2013
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
May 20, 2013
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).
April 29, 2013
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...
April 18, 2013
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.
Although the European Union could not gain the support needed to
implement the Tobin tax on financial transactions, 11 EU countries are
expected to implement the tax on their own this year. See...
April 12, 2013
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).
April 4, 2013
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.
March 19, 2013
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.
March 11, 2013
In late March, the Supreme Court will hear arguments in a pair of same-sex marriage cases that could have widespread federal tax impacts. One case tests the constitutionality of the Defense of...
February 28, 2013
Bloomberg BNA is presenting a workshop on March 6 focusing on compliance by small employers with the Patient Protection and Affordable Care Act. Alden Bianchi of Mintz Levin Cohn Ferris Glovsky and...
February 20, 2013
In Section 407(a)(3)(E) of the American Taxpayer Relief Act of 2012 (2012 ATRA), Congress enacted a new rule applicable to hydropower facilities that produce incremental hydropower production (i.e.,...
February 14, 2013
Bloomberg BNA is presenting a workshop on February 21 focusing on compliance by large employers with the Patient Protection and Affordable Care Act. Alden Bianchi of Mintz Levin Cohn Ferrris...
February 5, 2013
The Pension Protection Act of 2006 (PPA) added special funding rules for significantly underfunded multiemployer pension plans. According to a study conducted by the DOL, IRS and PBGC, about 68% of...
January 30, 2013
The House Ways and Means Committee believes that a leading cause of the 2008 financial crisis was the complicated set of rules on taxation of financial instruments and products. On January 24,...
January 7, 2013
In a surprising turn of events, Rev. Proc. 2013-6, the IRS’s most-recently updated procedure for issuing determination letters on the qualified status of various retirement plans, was revised to...
December 20, 2012
Taxpayers facing liability under the
new §1411 net investment income tax (NIIT) that takes effect for
tax years after 2012 have been asking whether a prior year capital
loss carryover may be...
November 30, 2012
Employer pension plans are rapidly disappearing, making retirement savings critical. The risk is that people will outlive their savings. Those nearing retirement, as well as the federal government...
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...
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.
November 26, 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...
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...
November 16, 2012
While the nation’s attention has been focused on the so-called “fiscal cliff” and its impact on taxpayers – and with good reason – less visible has been the practical impact on tax practitioners who...
November 13, 2012
An issue that comes up frequently with employers is whether severance payments to employees are subject to FICA taxation (OASDI and HI taxation). Recent Circuit cases have muddied the waters by...
November 2, 2012
GM and Ford, sponsors of two of the largest pension plans in the country, are offering lump sum settlements to retirees who are already collecting monthly pension benefits. The IRS approved each...
October 5, 2012
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...
October 4, 2012
As of August 31, 2012, the IRS no longer provides letter-forwarding services on behalf of plan sponsors or administrators of qualified retirement plans to locate missing participants who may be...
October 3, 2012
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...
September 27, 2012
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...
September 24, 2012
The Treasury Department has proposed changes to the Circular 230 rules that will significantly simplify and streamline the existing rules for written tax advice by removing current Circ. 230 §10.35...
September 20, 2012
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.
September 4, 2012
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
income from a December 2003 rollout of the arrangements.
August 24, 2012
Tax policy issues related to partnerships and pass-through entities are both political and economic as the predominant form of investment and business entity is now the limited liability...
August 16, 2012
Although many employers have been struggling to keep their defined benefit pension plans adequately funded, other companies find that they now have a surplus of assets held in trust for retirement...
August 10, 2012
The latest in pension funding relief, the Moving Ahead for Progress in the 21st Century Act (MAP-21), addresses the problems facing pension plans in several ways. The legislation tinkered with the...
July 31, 2012
We are pleased to announce that the RATE Coalition will be
presenting a panel discussion at the inaugural Bloomberg BNA Tax Policy & Practice
Summit on November 13-14, 2012, in Washington, DC....
July 23, 2012
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...
July 17, 2012
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?
July 2, 2012
With regard to the well-settled “abuse of discretion” standard the Tax Court utilizes in CDP cases, a secondary question arises, namely, the standard the court should use with respect to the...
June 1, 2012
The IRS has issued proposed regulations that would make it more
difficult to defer taxation on restricted property that is subject to
conditions unrelated to the performance of future services.
May 29, 2012
The IRS recently announced more changes to its offer-in-compromise (OIC)
program as part of its “fresh start” initiative designed to help
financially distressed taxpayers in IR-2012-53 (5/21/12).
May 23, 2012
Many questions remain unanswered for low-income employees who wonder whether they may enroll in a qualified health plan and claim the health insurance premium tax credit beginning in 2014 or...
May 21, 2012
In PLR 201220004, an accrual method subchapter S corporation filed for Chapter 11 protection and planned to issue a combination of cash, new debt, and stock to its creditors pursuant to its (as...
May 15, 2012
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.
May 11, 2012
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.
April 27, 2012
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.
April 16, 2012
The IRS has posted to its website updates to the National Collection
Financial Standards used to evaluate a taxpayer’s ability to pay and
other financial circumstances primarily in connection with installment
agreements and offers in compromise. The revised standards are effective
April 2, 2012.
The IRS’s recently updated version of Form 2848, Power of Attorney and
Declaration of Representative (Rev. March 2012), presents several traps
for taxpayers and practitioners alike.
March 23, 2012
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.
March 15, 2012
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
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
March 8, 2012
The IRS announced in IR-2012-31 (3/7/12) an expansion of its “Fresh Start” initiative to help struggling taxpayers by providing penalty relief to the unemployed and to make installment agreements available to more taxpayers.
March 2, 2012
Bloomberg BNA Tax & Accounting has just released on iBooks its new go-anywhere desk reference Tax Essentials: Individuals. This ebook provides an annual overview of federal tax questions affecting individuals and small business.
The Huffington Post picked up a survey jointly conducted by
Bloomberg BNA and the American University Kogod Tax Center that reveals
the degree to which businesses of all sizes share common goals for tax
February 24, 2012
Congress has periodically altered the amount of certain required estimated tax payment installments for corporations with assets of at least $1 billion (determined as of the end of the preceding tax year).
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.
February 21, 2012
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.
February 14, 2012
December 21, 2011
October 20, 2011
October 14, 2011
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
September 23, 2011
The IRS’s Voluntary Classification Settlement Program (VCSP) presents a golden opportunity for employers to resolve past worker classification issues at an exceptionally low cost before an audit occurs. Under the VCSP, an employer would pay 10% of the amount of employment taxes calculated under the
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
August 26, 2011
Although group health plans that are not grandfathered under the
Patient Protection and Affordable Care Act typically must provide
coverage with no cost sharing for recommended preventive care services,
there are situations in which a plan may impose a deductible, copay or
July 29, 2011
A recent change in the IRS’s policy regarding so-called “innocent spouse relief” under §6015(f) on equitable grounds may present a new opportunity for taxpayers to seek relief. Under Notice 2011-70, 2011-32 I.R.B. , effective July 25, 2011, the IRS no longer will require that a spouse submit
July 22, 2011
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
July 18, 2011
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.
June 29, 2011
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.
June 8, 2011
Just in time for Mother's Day, the IRS issued PLR 201118025, denying a waiver of the 60 day time limit to roll over an IRA distribution where a group of siblings pooled their money to buy their elderly mother a
May 19, 2011
As many of you know, a Tax Court Summary Opinion is written by a
Special Trial Judge appointed by the Chief Judge of the Tax Court.
Typically, these Summary Opinions are small cases that deal with a
taxpayer merely proving his/her entitlement to deductions, or
contesting income assigned to him/her. And, these opin
An amendment to a pending Senate bill to extend expiring tax
cuts (H.R. 4213) would allow Roth conversions in §401(k), §403(b)
and eligible governmental §457 deferred compensation plans that
have Roth accounts. (Another amendment to the extenders bill would
allow Roth accounts within §457 plans, which are not
May 18, 2011
To encourage private investment in the renovation of historic
structures, income tax credits have been made available at both the
state and federal levels. Partnerships have been the preferred
vehicle for taking advantage of these credits.
In PLR 201112004, the IRS, citing Rev. Rul. 2003-48, 2003-19
I.R.B. 863, ruled that a conversion of a stock insurance holding
company into a mutual insurance holding company qualified as an E
reorganization. Although Rev. Rul. 2003-48 involved a
demutualization, it was cited in the PLR which involved a
The Obama administration has taken the position that §3 of the
Defense of Marriage Act (DOMA), 1 USC §7, is unconstitutional as
applied to legally married same-sex couples, so the Department of
Justice is scaling back its defense of the law. Executive agencies
will continue complying with the law, however, the U.S.
In Union Security Insurance Company v.
Blakeley , 2011 FED App. 0052P (6th Cir. 2011), the Sixth
Circuit addressed the proper role of federal common law in
determining a beneficiary under a domestic partner clause. The
court decided that, in order to determine the proper beneficiary,
Misclassifying employees could get much more expensive in a
hurry. The DOL's strategic plan for 2011 through 2016 prioritizes
investigations into employers' misclassification of employees as
independent contractors. The agency is partnering with the IRS to
take a closer look at companies that may try to cut
What Self-Funded Group Health Plans Should Know About Transitional Reinsurance
Beware of Prohibited Transactions in Self-Directed IRA Investment Opportunities
Workforce Reduction Supplemental Benefits Can Affect Pension Benefits
Is the Obama Administration's Opposition to a Financial Transactions Tax Weakening?