IRS falls behind on amended returns - Michael Cohn, Accounting Today:
The mid-year report to Congress, released Wednesday by National Taxpayer Advocate Erin Collins, found the IRS reduced its backlog of unprocessed paper-filed original tax returns from 13.3 million at the end of the 2022 filing season to 2.6 million at the close of the 2023 filing season, an 80% reduction that marked a return to pre-pandemic levels.
However, the report also found the IRS is still behind in processing amended tax returns and taxpayer correspondence. Employees in the IRS's Accounts Management function usually perform two roles: answering phone calls and processing taxpayer correspondence, amended returns and other cases.
Better IRS Service Came At A Cost, Taxpayer Advocate Says- David van den Berg, Law360 Tax Authority ($):
The Internal Revenue Service met a target set by the U.S. Department of the Treasury to achieve at least an 85% level of service, or LOS, in answering phone calls in the 2023 filing season, Collins said in her fiscal 2024 Objectives Report to Congress. The 2023 filing season was generally a marked improvement for taxpayers, she said, noting the IRS also issued refunds quickly. Furthermore, the agency's backlog of paper returns dropped from 13.3 million at the end of the 2022 filing season to 2.6 million at the end of the 2023 filing season, a return to pre-pandemic levels, Collins said.
"Overall, the difference between the 2022 filing season and the 2023 filing season was like night and day," Collins said.
Taxpayer Advocate Highlights IRS Progress, Key Changes for 2024 - Jonathan Curry, Tax Notes ($):
The IRS deserves praise for a remarkable turnaround in 2023, but the highly touted level of phone service it maintained this filing season isn’t all it’s cracked up to be, according to the national taxpayer advocate.
After several years of doom and gloom coming out of the filing season, National Taxpayer Advocate Erin Collins finally has something positive to report: “This year, for the first time, the clouds are beginning to part, and I can see some blue sky.”
The full 62 page report can be found here. What will the next report say if IRS funding really is "slashed" (see next article)?
House GOP Budget Proposes 9 Percent Slash to IRS Funding- Doug Sword, Tax Notes ($):
The spending bill is scheduled to be marked up by the House Appropriations Financial Services and General Government Subcommittee June 22.
The proposed cut to the tax agency’s budget amounts to 9 percent from the $12.3 billion it received for fiscal 2023. It includes a slightly gentler-than-expected $1.23 billion (or 23 percent) cut to the agency’s enforcement budget, which has been the target of Republicans since the Inflation Reduction Act (IRA, P.L. 117-169) set aside nearly $80 billion over 10 years for the IRS in a special spending category. More than half of the special funding was targeted for enforcement, the IRS division hit hardest by employment losses in the last decade.
US-Chile Tax Treaty Clears Hurdle In Senate - Dylan Moroses, Law360 Tax Authority ($). "The U.S. Senate agreed Wednesday to limit debate on a bilateral tax treaty between the U.S. and Chile, setting up a likely final vote on the agreement this week."
Calif. Man Owes Nearly $500K In FBAR Penalties, US Says - David Hansen, Law360 Tax Authority ($):
A California man faces nearly $500,000 in penalties and interest for failing to report his financial accounts in a bank in the Bahamas, the U.S. government told a federal court.
[NAME REDACTED] maintained a personal account and a certificate of deposit account at First Caribbean Bank from 2006 to 2013 without disclosing either's existence to the Internal Revenue Service, the government said in a complaint filed Tuesday, saying his oversight was willful and deliberate.
Improper Signature Invalidates Tax Return - Caitlin Mullaney, Tax Notes ($):
In a June 21 memorandum opinion in Parducci v. Commissioner, Judge Ronald L. Buch found that [NAME REDACTED]’s 2013 federal income tax return wasn’t a valid return because it wasn’t signed by him and didn’t include any documentation showing that he authorized an agent to sign on his behalf.
[NAME REDACTED]’s 2013 return was filed with two signatures — one purporting to be his own signature and one from [NAME REDACTED], a CPA who signed as the preparer. Buch noted that it is unclear how [NAME REDACTED]’s alleged signature came to be on the return.
Court Urged To Dismiss Suit Over IRS Microcaptive Reporting - Theresa Schliep, Law360 Tax Authority ($):
A Utah federal court should toss an insurance company's suit challenging IRS guidance requiring the disclosure of microcaptive insurance arrangements to the agency, the U.S. government said, arguing that the case can't proceed because it would restrain tax collection.
In a motion filed Tuesday, the government said the court should dismiss the suit from Standard Insurances Co. and various related entities over Internal Revenue Service Notice 2016-66 . The businesses sought to invalidate the notice requiring the reporting of microcaptive insurance arrangements and to destroy documents that the IRS obtained from the plaintiffs pursuant to the notice.
Analyst Cannot Deduct MBA Expenses, Tax Court Says - Anna Scott Farrell, Law360 Tax Authority ($). "An analyst at Mattel is not entitled to business deductions for education expenses she incurred while previously working for another company, the U.S. Tax Court ruled, saying she performed significantly different tasks for the toy company as a result of her education."
Man Can't Fight Liability At Collection Hearing, Tax Court Says - Anna Scott Farrell, Law360 Tax Authority ($). "A taxpayer is not allowed to challenge his underlying tax liability at a collection hearing because the IRS already issued a notice of deficiency, the U.S. Tax Court said in a bench opinion released Wednesday."
China Extends Tax Breaks for New Energy Vehicles Until 2027 - Linda Lew, Bloomberg ($):
The move, announced at a briefing in Beijing on Wednesday, is the latest in a series of steps to lift sales and production in the world’s biggest EV market.
“Even though China has accomplished certain achievements in the new energy vehicle industry, the sector still has problems, including insufficient supply of critical technology and uneven development in the wider market,” said Xin Guobin, an official from the Ministry of Industry and Information Technology. “These need to be responded to.”
Understanding R&D Tax Breaks and Reform Options - Thomas Brosy, TaxVox:
Business groups are pushing for the more generous R&D deduction to be reinstated, arguing that the existing law will lower investment in R&D and make the United States less competitive. Although restoring the pre-2022 R&D tax break was included in the American Jobs and Families Act that passed the House Ways & Means Committee last week, the fate of that bill is unclear. However, the preferential treatment of R&D has a long history of bipartisan support, and extending the pre-2022 R&D tax break was part of the Build Back Better Act of 2021.
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