Tax News & Views Take It Or Leave It Roundup

June 26, 2020

Partner Buy-In Rule Could Spoil Some IRS Easement Settlements - Kristen Parillo, Tax Notes ($):

The IRS’s June 25 announcement that it will be offering a time-limited settlement initiative took some by surprise, given IRS Small Business/Self-Employed Division Commissioner Eric Hylton’s comments at a June 18 event that the agency isn’t considering a resolution program for syndicated conservation easements similar to the microcaptive insurance settlement offer.

But rejection of the offer by a single partner might keep all partners out of the deal, according to the article.

Link to announcement (IR-2020-130): 

IRS Victory In Easement Case Prompts An Offer Not To Be Refused - Peter Reilly, Forbes. "The IRS is following up a major Tax Court win against sketchy conservation shelters with a purportedly 'take it or leave it' offer."


IRS calling workers back to offices, even as COVID-19 surges - Kay Bell, Don't Mess With taxes. "IRS agents in Austin, Texas, were among the first group to go back to work on June 1. So far, at least three workers at that Central Texas campus have tested positive for COVID-19. And although the IRS is not among the federal agencies hardest hit by COVID-19, around 100 IRS workers overall reportedly have contracted the virus, with a handful hospitalized."

Because of shutdowns, the IRS is months behind in dealing with paper filings and notices. This doesn't give confidence that they will catch up anytime soon.


Employee Retention Credit Deadlines Looming - Emily Foster, Tax Notes ($). "Employers eligible for the credit in the first and second quarters can apply for the credit via their second-quarter filing of Form 941, due July 31, and can amend that form later in the year..."

IRS Proposes Regulations on Disallowance of Employer’s Deduction for Commuting Benefits - Thomsen Reuters Tax & Accounting. "he proposed regulations still concentrate on the disallowance of employer deductions for parking expenses, but they also address transportation in commuter highway vehicles (vanpooling) and transit benefits, and explain how certain exceptions allow some qualified transportation fringes to be deductible."


GAO Report Reveals Need to Simplify Next Round of Rebates - Taylor LaJoie, Tax Policy Blog. "The Government Accountability Office (GAO) recently released a report revealing that almost a half-million taxpayers missed their total rebate payment due to complications over disbursing funds to non-filers with eligible dependents."


Treasury Not Extending COVID-19 Residency, PE Relief - Andrew Velarde, Tax Notes ($):

“All that relief is premised on a certain state of the world, with certain kinds of travel disruptions. We see that travel disruptions are beginning to get better, although of course they still exist,” James Wang, attorney-adviser, Treasury Office of International Tax Counsel, said, adding that Treasury is still monitoring the situation. 

Taxpayers who are in the U.S. for more than a certain amount of time may find themselves with unexpected tax obligations. 

Related: International Tax For Employers.

Foreign Accounts and FBAR Penalties - Jason B. Freeman, Freeman Law Blog. "The case serves as yet another cautionary tale to those U.S. persons with an interest in foreign accounts. Failing to report an interest in such accounts—such as failing to file a required FBAR—could result in penalty exposure."


Taxpayer Fends Off Nominee Lien Challenge at Summary Judgment Stage - Keith Fogg, Procedurally Taxing. "It’s not often a leading case in a tax issue is named Porta-John."

Related: Why did the IRS file a tax lien against me?


IDR Releases New State Tax Guidance: 199A(g) Deduction - Iowa Department of Revenue:

In other words, for Iowa tax purposes in tax year 2019 an Iowa cooperative is allowed a deduction for 100% of the IRC section 199A(g) deduction properly claimed on its 2019 federal 1120-C, line 22, and is also required to reduce its IRC section 1382 adjustment by 100% of the IRC section 199A(g) deduction allocated to patrons as reported on its 2019 federal 1120-C, Schedule H, line 4...

Governor Walz Announces Businesses Can Now Apply for $62 Million in COVID-19 Relief Funding - "Eligible businesses with 50 or fewer employees may apply for grants of up to $10,000. The money will be evenly distributed between businesses in Greater Minnesota and the Twin Cities metro, with at least $10 million to go to minority-owned businesses, $2.5 million to veteran-owned businesses, and $2.5 million to women-owned businesses."

Another Federal Tax Deadline Extension Would Harm States, Experts Say - Lauren Loricchio, Tax Notes ($). "But in a June 25 blog post, tax experts at MultiState Associates said that although 'the federal government was right to delay the 2020 tax filing season,' another extension would cause material harm.'"


Improving the Tax Treatment of Residential Buildings Will Stretch Affordable Housing Assistance Dollars Further - Scott A. Hodge, Tax Policy Blog. "After spending potentially millions of dollars to build a residential building or complex, the tax code requires developers to depreciate, or write off, the cost of that investment over 27.5 years. By contrast other businesses can fully write off their investments in equipment, like computers or delivery vans, in the year they were made."


Stroke of the pencil causes tax trouble for Florida man. Tax preparers routinely caution clients to review their returns before filing. That's sound advice, but it can backfire.

A majority shareholder of a "multibillion-dollar plastics manufacturing holding company" was indicted last week on charges involving an alleged $61 million income tax evasion. According to a Department of Justice press release, the alleged violation arose when the taxpayer was too energetic in reviewing a corporate tax return:

In 2016, 2017, and 2018, Defendant's tax preparer provided draft AAST corporate tax forms for Defendant's review. Defendant then returned the corporate tax forms with handwritten notes that indicated AAST had tens of millions of dollars of cost of goods sold. Defendant did not provide any support to his tax preparer for these claims.

Defendant's tax preparer used the information that Defendant provided to report AAST's cost of goods sold on AAST's corporate tax returns in the amounts of approximately $26 million, $51 million, and $87 million for 2016, 2017, and 2018, respectively.

You can use FIFO inventories to determine cost of sales. You can use LIFO inventories. You just can't use imaginary inventories.

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