IRS Sends $122,783 Check by Mistake
House Cleaner Sensed it was an Error and Returned Check; IRS won’t Comment

SOURCE: CBS
A Denver-area house cleaner could hardly believe her eyes when she opened up the mail. She was expecting to pay the Internal Revenue Service, but instead she received a refund check for more than $100,000.
Laura Schultz [...]

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IRS Urgent Letters and Notices That YOU MUST ATTEND TO
Mike Habib, EA
IRS Audit & Examination Letters
Letter 525 – General 30 Day Letter
This letter accompanies a report giving you a computation of the proposed adjustments to your tax return. It informs you of the courses of action to take if you do not agree with the [...]

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Make any personal calls on that company cell phone? That’s a “fringe benefit” of your job, according to a 20-year-old law, and the IRS is looking to collect.
The Wall Street Journal reports that the IRS wants to step up enforcement of the 1989 law, which holds that employees who make personal calls on [...]

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How individuals are affected by tax changes in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

The American Recovery and Reinvestment Act of 2009 (commonly referred to as the Recovery Act), which was signed into law on Feb. 17, 2009, makes a number of beneficial [...]

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Newly revised 2008 Form 5405, First-Time Homebuyer Credit, reflects Recovery Act IR 2009-14
Mike Habib, EA Tax Relief & Tax Problem Resolution
In a news release issued on Feb. 25, 2009, IRS has announced that it has posted a revised version of the 2008 Form 5405, First-Time Homebuyer Credit, to reflect recent improvements to the [...]

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The American Recovery and Reinvestment Act of 2009 (commonly referred to as the Recovery Act), which was signed into law on Feb. 17, 2009, makes a number of beneficial changes for business. Here’s a review of the more widely applicable provisions that could have an impact on you and your enterprise.
Mike Habib, EA Tax [...]

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President’s FY 2010 budget will propose many major tax changes for businesses and individuals

“A New Era of Responsibility: Renewing America’s Promise,” the Administration’s preview of its FY 2010 budget, is available at http://www.omb.gov
Mike Habib, EA Tax Relief & Tax Problem Resolution

On Feb. 26, 2009, the Obama Administration released a document titled “A New Era of [...]

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Energy tax incentives in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

The recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 economic stimulus act) includes a package of tax incentives to encourage investments in renewable energy projects or more-efficient technologies. I’m writing to [...]

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Business tax changes in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

I’m writing to give you an overview of the key tax changes affecting business in the recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 economic stimulus act). Please call our [...]

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Expanded college credit in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

The recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 economic stimulus act) includes a measure aimed at making college more affordable for low and moderate-income students. The new provision temporarily enlarges [...]

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Enhanced first-time homebuyer credit in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

In hopes of spurring the housing industry, the recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 economic stimulus act) includes an enhanced tax credit for first-time homebuyers. Here are the [...]

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“Making Work Pay” tax credit in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution

The recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 economic stimulus act) contains a wide-ranging tax package that includes tax relief for low and moderate-income wage earners, individuals and families [...]

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Tax changes affecting individuals and families in the American Recovery and Reinvestment Act of 2009
Mike Habib, EA Tax Relief & Tax Problem Resolution
The recently enacted “American Recovery and Reinvestment Act of 2009” (the 2009 economic stimulus act) contains a wide-ranging tax package that includes tax relief for low and moderate-income wage earners, individuals and [...]

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While the new law tax changes in the Emergency Economic Stabilization Act of 2008 were the most significant developments in the final quarter of 2008, many other tax developments may affect you, your family, and your livelihood. These other key developments in the final quarter of 2008 are summarized below. Please call us for [...]

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How businesses are affected by tax changes in the Emergency Economic Stabilization Act of 2008
As I’m sure you’re aware, on Oct. 3, 2008, the President signed into law the Emergency Economic Stabilization Act of 2008 (P.L. 110-343). Although virtually all of the press coverage of this law has concentrated on its hotly debated $700 [...]

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IRS seeks to return $266 million in undeliverable refunds and economic stimulus payments to taxpayers [IR 2008-123]:

More than 383,000 regular refund and economic stimulus checks have been returned by the U.S. Postal Service as undeliverable, IRS said on Oct. 23. This figure included 279,000 economic stimulus checks totaling $163 million and 104,000 [...]

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IRS OKs use of one property to engineer a reverse and forward like-kind swap Chief Counsel Advice 200836024

In Chief Counsel Advice (CCA), IRS has given its blessing to the use of one property to engineer both a completed reverse like kind exchange and an attempted forward like kind exchange. The forward exchange was necessary [...]

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Victims of Hurricane Gustav in Louisiana qualify for tax relief
IR 2008-100
http://www.irs.gov/newsroom/article/0,,id=186409,00.html

An IRS news release says victims of Hurricane Gustav in the 34 parishes of Louisiana designated as presidential disaster areas have until Jan. 5, 2009, to make tax payments and file returns that would otherwise be due between Sept. 1, 2008, and Jan. [...]

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Employer not required to obtain worker status determination before withholding taxes

Nino v. Ford Motor Company, DC MI, 102 AFTR 2d ¶2008-5215, Dkt. No. 07-13545, 8/8/08

A federal district court has dismissed an employee’s pro se (“for self”; non-attorney) complaint that he should not have had withholding deducted until his employer obtained a worker status determination [...]

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Ability to pay tax liability not relevant to determination of willfulness under Code Sec. 7202

U.S. v. Easterday (2008, CA9) 102 AFTR 2d ¶ 2008-5218
By a vote of two to one, a Ninth Circuit panel decision has upheld a district court’s ruling that a defendant’s ability to pay wasn’t relevant to the determination of whether [...]

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IRS explains how to claim credit for qualified fuel cell and qualified microturbine property

A new Notice carries interim guidance on the terms and conditions that must be met by taxpayers that want to claim the Code Sec. 48 credit for fuel cells and microturbines.
Background. A taxpayer may be eligible to claim (on [...]

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To disclose or not to disclose, that is the question.
Hiding Income Offshore is not the way to go.
Mike Habib, EA
For years, offshore accounts have been a hot topic in popular culture and for the IRS; most recently Liechtenstein has been mentioned, however the IRS is interested in accounts anywhere in the world that generate income [...]

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If It Seems Too Good to Be True, It Probably Is
Tax Return Preparer Fraud
Mike Habib, EA
Dishonest tax return preparers can cause many problems for taxpayers who fall victim to their schemes. These scam artists make their money in a number of ways including skimming a portion of their clients’ refunds, charging a percentage of [...]

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Tiered discount allowed in real estate FLP gift tax case

In Astleford, a memorandum decision, the Tax Court permitted a taxpayer to apply a tiered discount in the context of a family limited partnership owning interests in real estate.
Facts. On 8/1/96, Mrs. Astleford formed the Astleford Family Limited Partnership (“AFLP”) to facilitate the [...]

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Deduction for cost of goods sold limited to negotiated discount price

IRS concluded in this ILM that the step transaction doctrine applied to the repayment to companies of the difference between the full list price of merchandise and the negotiated discount price, and therefore the companies’ deduction for cost of goods sold (COGS) was [...]

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Beneficial owners can deduct home mortgage interest and taxes

The Tax Court held that taxpayers were entitled to deduct mortgage interest and real estate taxes they paid on property owned by their son, because they were the beneficial owners of the property.
The taxpayers resided at the property for all of 2003. During that [...]

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USA & Malta sign new income tax treaty
[U.S. Treasury Press Release, 8/8/08]:
The U.S. Treasury Department has announced that a new income tax treaty between the United States and Malta was signed on Aug. 8, 2008 . The treaty will have withholding tax ramifications for U.S. citizens working in Malta and citizens of [...]

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IRS targets U.S. source income paid to foreign persons IRM 4.10.21, U.S. Withholding Agent Examinations – Form 1042
Mike Habib, EA

IRS has issued a new Internal Revenue Manual (IRM) section, IRM 4.10.21, U.S. Withholding Agent Examinations – Form 1042, on reporting and withholding requirements for U.S. source income that’s paid to foreign persons.
Background. [...]

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Tax provisions directly affecting farmers in the Heartland, Habitat, Harvest, and Horticulture Act of 2008 The recently enacted “Heartland, Habitat, Harvest, and Horticulture Act of 2008” (the 2008 Farm Act) contains a package of tax changes including specialized tax breaks for the farming industry (along with a crackdown on farm losses) and new and modified [...]

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Overview of the tax changes in the Heartland, Habitat, Harvest, and Horticulture Act of 2008
The recently enacted “Heartland, Habitat, Harvest, and Horticulture Act of 2008” (the 2008 Farm Act) contains a package of tax changes including specialized tax breaks for the farming industry (along with a crackdown on farm losses) and new and modified credits [...]

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Overview of tax changes in the Heroes Earnings Assistance and Relief Tax Act of 2008
The recently enacted “Heroes Earnings Assistance and Relief Tax Act of 2008” (the 2008 Heroes Act) provides targeted tax relief for military members and their families, fully offset with tightened expatriation rules, a new rule requiring U.S. companies working under federal [...]

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The IRS OKs deferral of income from intellectual property payments
Mike Habib, EA
myIRSTaxRelief.com
The IRS has privately ruled that a taxpayer could defer reporting income from intellectual property payments until the tax year following the tax year of receipt of the payments under a revenue procedure governing advance payments.
Background. Under the accrual basis method of accounting, [...]

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Grantor’s power to substitute trust property didn’t trigger inclusion in estate – Rev Rul 2008-22, 2008-16 IRB 796 Mike Habib, EAmyIRSTaxRelief.com
A new revenue ruling concludes that the corpus of an irrevocable trust that a grantor created during life is not includible in his gross estate under Code Sec. 2036 or Code Sec. 2038 [...]

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No refund suit is allowed in the absence of a timely claim filed with IRS
U.S. v. Clintwood Elkorn Mining Co., (S Ct 4/15/2008) 101 AFTR 2d ¶ 2008–696 Mike Habib, EAmyIRSTaxRelief.com
The Supreme Court, reversing the Court of Appeals for the Federal Circuit, has held that the plain language of Code Sec. 7422(a) [...]

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IRS acquiesces to TLC Leasing – explains meals deduction limit in employee leasing setting Rev Rul 2008-23, 2008-18 IRB
TRUCKER TAX RELIEF & TRUCKER TAX PROBLEM RESOLUTION
Mike Habib, EA
myIRSTaxRelief.com
IRS has acquiesced to the Eighth Circuit’s holding in Transport Labor/Contract Leasing (TLC Leasing) that a company leasing truck drivers to client companies wasn’t subject to [...]

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IRS Begins Focus on Foreign Athletes
and Entertainers

The IRS recently launched an Issue Management Team focused
on improving U.S. income reporting and tax payment complianceby foreign athletes and entertainers who work in the United States.The initial focus is on those engaged in tennis, golf and music. Theseindividuals and those associated with arranging their appearances inthe U.S. [...]

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Failure to follow IRS procedure prevented use of longer NOL carryback
Tualatin Valley Builders Supply, Inc. v. U.S. 101 AFTR 2d ¶ 2008–688
Mike Habib, EA
myIRSTaxRelief.com
The Ninth Circuit, affirming a district court, has held that a taxpayer could not use the special 5-year carryback period that applied for net operating losses arising [...]

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IRS wrongfully revoked DLC’s tax-exempt status
Democratic Leadership Council, Inc. v. U.S., 101 AFTR 2d ¶ 2008-661
Mike Habib, EA
myIRSTaxRelief.com
A district court has held that IRS violated its own regs when it retroactively revoked the tax exempt status of the Democratic Leadership Council (DLC) as a Code Sec. 501(c)(4) social welfare organization.
Facts. In ‘85, several prominent [...]

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The most important IRS Tax Development in Q1 2008
Mike Habib, EA
myIRSTaxRelief.com
While the Economic Stimulus Act of 2008 was the most significant development in the first quarter of 2008, many other tax developments may affect you, your family, and your livelihood. The new law changes and other key developments are summarized below. Please [...]

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Final regs detail donee’s filing requirements for qualified intellectual property contributions
T.D. 9392, 04/04/2008; Reg. § 1.6050L-2
Mike Habib, EA
MyIRSTaxRelief.com
IRS has issued final regs explaining the information return requirements for donees receiving net income from qualified intellectual property contributions made after June 3, 2004.
Background. A taxpayer’s deduction for the donation of “qualified intellectual property” – patents, [...]

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Estate and Gift Tax Relief – Joint Committee Staff examines options for reforming transfer taxes Mike Habib, EAMyIRSTaxRelief.com
The Staff of the Joint Committee on Taxation has released JCX-23-08, Taxation Of Wealth Transfers Within A Family: A Discussion Of Selected Areas For Possible Reform. This document, which was prepared in conjunction with an Apr. 3, 2008 [...]

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New, changed and expired provisions affect 2008 individual estimated tax Mike Habib, EAMyIRSTaxRelief.com
Apr. 15, 2008 is the due date for affected calendar year taxpayers to make their first installment of 2008 estimated tax. There aren’t any drastic changes in the estimated tax rules themselves for 2008. However, there are a number of new, changed [...]

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Retired insurance agents’ renewal commissions didn’t qualify for FICA special timing rule
Mike Habib, EAmyIRSTaxRelief.com
Chief Counsel Advice 200813042
In a Chief Counsel Advice (CCA), IRS has ruled that because renewal commissions paid to its retired employees were subject to a substantial risk of forfeiture as of the insurance agents’ retirement dates, an insurance company couldn’t take those [...]

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Truckers Tax Relief – Are you a truck driver with tax problems?
If you’re a truck driver and owe the IRS, you’re better off resolving your tax debt now. As you know, tax problems do not go away by themselves! Stop your IRS wage garnishment today, stop your IRS bank levy today, and release your [...]

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IRS Regs clarify Code Sec. 501(c)(3) exempt status and impact of excise taxes
Mike Habib, EA
MyIRSTaxRelief.com
T.D. 9390, 03/27/2008; Reg. § 1.503(c)(3)-1, Reg. § 53.4958-2IRS has issued final regs clarifying the substantive requirements for tax exemption under Code Sec. 501(c)(3) and the relationship between those requirements and the imposition of Code Sec. 4958 excise taxes. The final [...]

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IRS issues proposed regs reflecting PPA changes and guidance for notice of retroactively effective plan amendments
Mike Habib, EA
myIRS.TaxRelief.com
Prop Reg § 1.411(d)-3(a)(1); Prop Reg § 54.4980F-1, Q&A 8(d); Prop Reg § 54.4980F-1, Q&A 9(f); Prop Reg § 54.4980F-1, Q&A 9(g); Prop Reg § 54.4980F-1, Q&A 11(a)(7); Prop Reg § 54.4980F-1, Q&A 18(a)(4); Prop Reg § 54.4980F-1, [...]

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How falling interest rates and the declining stock market affect tax and estate planning
Mike Habib, EA
myIRSTaxRelief.com
Interest rates have dropped significantly in recent months and may drop even more given the state of the economy. Sagging rates can have a significant impact on many tax and estate planning strategies. Lower interest rates affect the income, [...]

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“Makeup” required minimum distributions salvage lifetime payouts to nonspouse IRA beneficiaryMike Habib, EAmyIRSTaxRelief.comA private letter ruling allows the nonspouse beneficiary of an IRA to salvage lifetime payouts even though she failed an essential rule requiring distributions to begin by the end of the year following the year of the IRA owner’s death. She made up [...]

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If you owe the IRS, you’re better off resolving your tax debt now. As you know, tax problems do not go away by themselves! Stop IRS wage garnishment today, stop IRS bank levy today, and release IRS tax lien today.
As you can see from the statement below by Mr. Douglas H. Shulman, [...]

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What are your chances for being audited? IRS’s 2007 data book provides some clues
Mike Habib, EA
myIRSTaxRelief.comIRS has issued its annual data book, which provides statistical data on its fiscal year (FY) 2007 activities. As this article explains, the data book provides valuable information about how many tax returns IRS examines (audits), and what categories of [...]

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