Federal Tax Update - April 1, 2013

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Lynn Nichols delivers the podcast this week on the latest federal tax changes.  The FICPA 2013 CPE Catalog is now available online…see www.ficpa.org/catalog for all of your CPE needs.

The podcast covers the following:

(‘Doc’ numbers are citations to the listed item in Tax Analysts’ Tax Notes Today. See more at www.taxanalysts.com)

  1. How to Dispute Employment Tax Assessment
    (ECC 201312039; 1/17/2013; rel. 3/22/2013)
    In e-mailed advice, the IRS advised that a taxpayer who disagrees with an employment tax assessment should pay the income tax withholding and FICA tax on Form 941 and file a claim for refund on Form 941-X; if the IRS doesn't act on the claim in six months or issues a notice of claim disallowance, the taxpayer can file a refund suit. [Doc 2013-6902]

  2. State Law Determines Who Can Bind Partnership
    (ECC 201312043; 2/6/2013; rel. 3/22/2013)
    In e-mailed advice, the IRS noted that state law determines who has signature authority for a partnership and that the identity of any tax matters partner is irrelevant because the tax matters partner statute does not give the tax matters partner authority to bind the entity. [Doc 2013-6906]

  3. Questionnaire Sent to Groups That Declare Themselves to Be Tax Exempt
    (Questions and answers about Self-Declarers Questionnaire; 3/22/2013)
    The IRS has provided self-declared tax-exempt organizations with a list of questions and answers for completing a voluntary questionnaire, which seeks information from organizations that have not applied to the IRS for recognition of exemption but are claiming tax exemption and have filed Form 990 for the 2010 or 2011 tax years. [Doc 2013-6983]

  4. Tax Court Determines Reasonable Compensation for Corporate Officers and   Employees, Then Determines Reasonable Rental for Warehouse and Office
    (K & K Veterinary Supply Inc. v. Comm.; T.C. Memo. 2013-84; 3/25/2013)
    The Tax Court, accepting the conclusions of the IRS's experts, determined the amount of reasonable compensation for the sole shareholder of a veterinary supply corporation and his family members and the amount of rent deductions the corporation was entitled to claim; the court held that the doctrine of equitable recoupment does not apply. The Corporation lost part of its deduction for salaries and rent, but was not permitted to reclassify the lost deductible amounts as dividends.  [Doc 2013-7118]

  5. Transfer of Patents Was a Sale Subject to Amortization
    (FAA 20131201F; 1/31/2013; rel. 3/22/2013)
    In partially redacted field attorney advice, the IRS determined that a corporation was entitled to a deduction for the amortization of patents acquired from its principal shareholder but not for the monthly payments made by the corporation to the shareholder. [Doc 2013-7170]

  6. Payments for Compensatory Damages Are Ordinary Business Expenses
    (FAA 20130501F; 12/7/2012; rel. 2/1/2013)
    In heavily redacted field attorney advice, the IRS concluded that a taxpayer's cash payment to settle potential liability for environmental contamination was an ordinary and necessary business expense under section 162, in part because the payment was compensatory and not prohibited under the public policy doctrine of section 162(f).  [Doc 2013-7166]

  7. Hawkins Elaborates on Conflicts of Interest
    (Tax Analysts’ Tax Notes Today; 3/29/2013; Article by Jeremiah Coder)
    Tax practitioners should pay close attention to the potential presence of conflicts of interest but need not recuse themselves in every situation in which there's a conflict, IRS Office of Professional Responsibility Director Karen Hawkins said March 28.  [Doc 2013-7491]

  8. Appeals Court Refuses to Lift Injunction on Return Preparer Regulations
    (Tax Analysts’ Tax Notes Today; 3/29/2013; Article by Eric Kroh)
    The D.C. Circuit on March 27 denied the IRS's motion to lift a district court's injunction against enforcing the regulations governing its tax return preparer registration program. [Doc 2013-7439]

  9. 2012 Employee Plans Issue Focus Paper on Plan Terminations
    In a March 2012 issue focus paper, the IRS updated previously issued issue focus papers with explanations of some qualification requirements from the 2011 Cumulative List that terminating plans may have to adopt. [Doc 2013-7240]