New Laws Archives

Tax Court Holds Against IRS on First-Time Homebuyer Credit Issue

On November 5, 2012, the Tax Court ruled on case involving the first-time homebuyer credit overruling the Internal Revenue Service (IRS) that had consistently held that both spouses had to qualify individually for the credit. The Court noted Congress enacted the long-time homebuyer provision to expand qualification for the credit and disagreed with the IRS that the plain language of the statute required that both spouses had to meet the same criteria.

Tax Court Lacks Jurisdiction to Review IRS's Refusal to Pursue Whistleblower's Claim

In a case of first impression, the United States Tax Court held that it lacked jurisdiction under Internal Revenue Code (IRC) Section 7623(b) to review the IRS's refusal to pursue a whistleblower's claim. Cohen v. Commissioner, 139 T.C. No. 12 (Oct. 9, 2012)

Good News for Taxpayers Living Abroad with Unfiled Tax Returns or FBAR Reports

Beginning September 1st, some taxpayers living abroad who have not filed tax returns will get help from the IRS, if little or no back taxes are due. This is a great relief to taxpayers who have lived overseas and have failed to file timely tax returns or Reports of Foreign Bank and Financial Accounts (FBARs). In many cases, the taxpayer is unaware of the FBAR requirement and the associated penalties which are disproportionate to the potential harm to the government for the taxpayer's failure to file particularly if little or no additional tax is due.

Treasury Department Releases Model Intergovernmental Agreement To Guide Foreign Financial Institutions compliance with FATCA

On July 26, 2012, the United States Department of Treasury published two versions of model intergovernmental agreements, a reciprocal and non-reciprocal. These agreements establish a framework for financial institutions to report certain financial account information to their respective tax authorities. The information will then be shared under existing bilateral treaties tax information exchange agreements or tax treaties. The reciprocal version of the model intergovernmental agreement is available only to partner countries, jurisdictions with which the U.S. has an income tax treaty or tax information exchange agreement in effect. This version not only provides a means for foreign banks to report on the assets held in their institutions by U.S. citizens, it also allows the IRS to share taxpayer information with a foreign government about its citizens' assets held in the U.S. Congress must approve the use of the reciprocal agreement.

IRS Reports $5 Billion Collected From Offshore Disclosures

The Internal Revenue Service's (IRS) third iteration of the Offshore Voluntary Disclosure Program continues to march through 2012 and indefinitely into the future. The IRS is reporting that at this point approximately 34,500 taxpayers have come forward and revealed their overseas or foreign accounts. As a result of these voluntary disclosures, the IRS has captured in excess of $5 billion in revenue, which includes previously unpaid taxes as well as penalties and interest on those past due tax liabilities.

Supreme Court rules against the IRS

In United States v. Home Concrete & Supply, LLC, the US Supreme Court affirmed the decision of the Fourth Circuit, holding that Section 6501(e)(1)(A) of the Internal Revenue Code, which extends the limitations period for the government to assess a deficiency against a taxpayer, does not apply when a taxpayer overstates the basis in property that he has sold, thereby understating the gain received from the sale. Justice Scalia filed a concurring opinion. Justice Kennedy filed a dissenting opinion, which was joined by Justices Ginsburg, Sotomayor, and Kagan.

A Reminder to File IRS Form 8938, Statement of Specified Foreign Financial Assets

Most taxpayers with a reporting requirement for their interests in specified foreign financial assets must file their first IRS Form 8938 with their 2011 income tax return. The Foreign Account Tax Compliance Act (FATCA), enacted in 2010, requires certain U.S. taxpayers to report specified assets on Form 8938, if the aggregate value of the relevant assets exceed certain thresholds.

New IRS tax preparer requirements based on California law

The IRS is using California law as a model for new education requirements for tax preparers. The new requirements will go into effect in 2012, their purpose being to prevent tax fraud and protect taxpayers from bad decisions on the part of preparers.

The IRS Announces Increases to Tax Benefits in 2012

Thanks to inflation, the IRS will increase certain tax benefits that will affect most taxpayers including the estates of decedents dying in 2012.Under the law, most tax provisions are adjusted annually for inflation. The net result of the changes taking effect in 2012 will be higher values for the standard deduction as well as personal and dependent exemption amounts. Tax-bracket thresholds will increase, allowing more taxpayers to be taxed in lower brackets, and the maximum earned income tax credit for low- and moderate- income workers and working families will also rise.For the full story, click here:,,id=104345,00.htmlIf you have any questions, call us at (916) 488-8501.

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