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Lynn Nichols delivers the federal tax update for the week. To find all of the FICPA CPE events on tax related topics around the state including your local FICPA chapter please click here. The podcast this week covers the following topics:
- Guidance on Wage Recharacterization and Business Connection Requirement
(Rev. Rul. 2012-25; 2012-37 IRB 337; 9/10/2012)
The IRS has clarified that an arrangement that recharacterizes taxable wages as nontaxable reimbursements or allowances does not satisfy the business connection requirement of the accountable plan rules under section 62(c) and applicable regulations.
- Company Is Entitled to Refund of FICA Taxes on Severance Payments
(United States v. Quality Stores Inc. et al.; CA 6; No. 10-1563; 9/7/2012)
The Sixth Circuit, affirming a district court and bankruptcy court, held that a debtor company was entitled to a refund of FICA taxes it paid on severance payments to terminated employees, finding that the payments were supplemental unemployment compensation benefits that were not taxable wages under FICA.
- Disproportionate Allocations and Distributions Did Not Terminate S Corp Election
(LTR 201236003; 4/11/2012; rel. 9/7/2012)
The IRS ruled that a company's S corporation election was not terminated by disproportionate and corrective distributions made to shareholders because the distributions didn't create a second class of stock.
- Partnership Limitations Case Remanded to Tax Court
(Wilmington Partners LP v. Commissioner; CA 2; No. 10-4183; 9/10/2012)
The Second Circuit remanded for further consideration by the Tax Court the question of whether the IRS may assess taxes against a partnership based on adjustments to partnership items from a tax year beyond the three-year limitations period.
- Partners Not Properly Identified to IRS, Assessment Period Remained Open
(Gaughf Properties LP et al v. Commissioner; 139 T.C. No. 7; 9/10/2012)
The Tax Court held that the period for assessing tax attributable to a partnership remained open because information identifying the partners did not meet the requirements of the applicable regs and that the IRS was not precluded from asserting that the statutory period remained open.
- Couple's Selection of Delivery Service Results in Untimely Petition
(Marcius J. Scaggs et ux. v. Commissioner; T.C. Memo. 2012-258; 9/10/2012)
The Tax Court dismissed on jurisdictional grounds a couple's petition for redetermination of deficiencies and accuracy-related penalties, finding that the petition was untimely because the form of delivery service they used did not qualify as a type of designated private delivery service equal to U.S. Postal Service as described in IRS guidance.
- IRS Pays Birkenfeld $104 Million Whistleblower Award
(Tax Notes Today; 9/12/2012; Article by Jeremiah Coder)
Lawyers for Bradley Birkenfeld announced September 11 that the IRS has paid the former UBS banker an award of $104 million for helping the Service collect more than $5 billion in unpaid taxes from banks and individuals.
LAST UPDATED 9/17/2012