Federal Tax Posts

A taxpayer who tried to challenge the constitutionality of the Tax Cuts and Jobs Act (TCJA) lost in court. He alleged that the TCJA violated the 14th Amendment because it creates “gross inequality” in taxation. A U.S. District Court concluded that the taxpayer didn’t have standing to challenge the unfairness of the TCJA, so the court didn’t have jurisdiction to hear the case. The court [...]

Millions of dollars in retirement savings become unclaimed property each year, according to a new Government Accountability Office (GAO) report (https://bit.ly/2V6uotr). It says that federal action is needed to clarify the tax treatment of unclaimed 401(k) plans and individual retirement accounts transferred to states. According to the GAO, the IRS and Labor Dept. have issued guidance on making such transfers to states. But the IRS [...]

If you call the IRS, be prepared to identify yourself. Tax-related identity theft is on the rise. That’s why the IRS says its call center professionals take great care to ensure they discuss personal information only with taxpayers (or authorized representatives). Before calling the IRS, have this information ready: your Social Security number or individual taxpayer identification number; filing status; your prior year tax return; [...]

A White House press release announced that President Trump has signed an executive order (EO) aimed at strengthening retirement security. The goal of the EO is to help ensure that American workers are financially prepared to retire. This includes, among other things, expanding access to multiple employer retirement plan options and improving the effectiveness and cost of required communications. The EO also calls for examining [...]

The IRS’s determination that a taxpayer had unreported wage and IRA distribution income was upheld. For two years, he’d filed a tax return on time that reported zero income and zero liability. However, he’d received wages from his job as an engineer and also distributions from an IRA. The taxpayer didn’t dispute that he’d received payments, but rather made frivolous arguments that the payments weren’t [...]

The House Ways and Means Committee has provided additional details on what to expect in its “Tax Reform 2.0” proposed legislation. In addition to making permanent individual and small business tax cuts, the proposals would create a savings tool called a Universal Savings Account; allow the money in Section 529 education accounts to pay for home school costs and student debt; and allow taxpayers to [...]

IRS: The proposed regulations targeting SALT limitation workarounds don’t affect the deductibility of business payments. The IRS has clarified that businesses that make business-related payments to charities or government entities for which the taxpayers receive state or local tax (SALT) credits can continue to deduct the payments as business expenses. The deductibility of these payments isn’t affected by the proposed regs that target state-implemented “workarounds” [...]

U.S. House Republicans plan to vote soon on “Tax Cuts 2.0.” They plan to introduce a bill sometime next week, according to House Speaker Paul Ryan. The proposed legislation reportedly would make permanent the $1.1 trillion in temporary cuts for individuals and small businesses that are set to expire in 2025. It’s also expected to include provisions involving retirement and education savings and new business [...]

The IRS is reminding taxpayers that an important deadline is approaching. Taxpayers have until 9/28/18 to apply for the Offshore Voluntary Disclosure Program, a form of tax amnesty. Taxpayers with unreported foreign accounts can avoid criminal charges and pay reduced civil penalties by voluntarily disclosing the accounts to the IRS. After the 9/28/18 deadline, the IRS will maintain a pathway so that taxpayers who may [...]

Taxpayers often must provide IRS tax forms to lenders, colleges and other third parties for nontax purposes. To better protect taxpayer data, the IRS has announced a new format for online individual tax transcripts that will redact personally identifiable information from the Form 1040 series. The changes will begin on Sept. 23. Financial entries will remain visible, which will give taxpayers and third parties the [...]

Damages that a taxpayer receives in a settlement for physical injury or illness can generally be excluded from taxable income. In a new case, a settlement payment was received by a taxpayer for employment discrimination, so the U.S. Tax Court ruled it must be included in income. The court rejected the taxpayer’s argument that the employment discrimination led to a later physical injury. In addition, [...]

In Notice 2018-68, the IRS has provided guidance with respect to executive compensation changes made by the Tax Cuts and Jobs Act. The changes include how the tax code limits the deduction for remuneration paid to certain executives by publicly held corporations, for tax years beginning after 12/31/17. Specifically, the Notice discusses the amended definition of covered employees and the operation of a grandfather rule. [...]

The IRS issued proposed reliance regulations that explain how taxpayers can elect to aggregate their trades or businesses for purposes of limitations on the qualified business income (QBI) deduction (also called the pass-through or Section 199A deduction). The IRS explained that, if certain requirements are met, individuals who engage in more than one trade or business may (but aren’t required to) aggregate them, treating them [...]

Individuals who provide the IRS with information leading to collection of unpaid taxes may receive an IRS whistleblower award. A former securities trader provided information about his previous employer and applied for an award. The IRS denied it. He then asked the U.S. Tax Court to allow him to proceed with the claim anonymously, citing possible future economic harm. The court denied his request. To [...]