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Thursday, August 21, 2014

28.09 Update available, activates Client Organizers and provides other changes

The 28.09 update is available for download now
From inside your TaxWise software, access the COMMUNICATIONS menu, "Get Program Updates"  or download from the Customer Support Site.

28.09 incorporates two changes made in an internal 28.08 build, meaning you will go from version 28.07 directly to version 28.09 when you update.

28.09 Release Notes
Corrections to Acceptance Summary Report: TaxWise has made corrections to the Acceptance Summary Report so that it now shows the correct Type in the report.

28.09 is the End of Season Release: Version 28.09 is the last version that TaxWise will release for the primary e-file season. This version will also become the End of Season CD. Check the Customer Support Site for updated Individual and Business States and updated modules or access the COMMUNICATIONS menu, "Get Module Updates" to check for updates. 

Client Organizers: The Client Organizers have been enabled for TaxWise 2013 to help collect information for your tax year 2014 clients.

28.08 Release Notes
Changes to Client Letter for State ACH Debit:  TaxWise has made changes so that ACH Debits for state returns are now correctly displayed in the Client Letter.

Various Changes for State Electronic Filing:  TaxWise has made several changes to correct issues with state electronic filing.

Wednesday, August 20, 2014

Get your FREE "Understanding the Affordable Care Act Premium Tax Credit Guide" here.

Get your FREE Understanding the Affordable Care Act Premium Tax Credit Guide here.
Don't let clients be surprised by ACA penalties. With our new and authoritative ACA resources, you will be ready to answer your clients' questions and ensure compliance.

Be sure to contact your Account Manager at 800-495-4626 for more information about the ACA resources available         

Monday, August 18, 2014

CCH Weekly Report from Washington, D.C.,(Aug. 18, 2014)

CCH Weekly Report from Washington, D.C.,(Aug. 18, 2014)

The usually quiet month of August in Congress has been busy with almost daily announcements by lawmakers on corporate inversions. Leading Democrats called for Congress to curb or eliminate corporate inversions and urged President Obama to take executive action. The senior Republican on the Senate Finance Committee (SFC) linked inversion legislation to the broader goal of tax reform. The Treasury Inspector General for Tax Administration (TIGTA) warned that some IRS contractors had access to taxpayer information without having completed background investigations. Meanwhile, the IRS issued final regulations on the retail method of accounting. The IRS also reported that taxpayers continue to fall victim to telephone scams.


SFC Chairman Ron Wyden, D-Ore., predicted that comprehensive inversion legislation will be introduced in September (TAXDAY, 2014/08/15, C.1). Wyden also welcomed a proposal by Sen. Charles E. Schumer, D-N.Y., to reform the earnings stripping rules. Schumer said his proposal could be part of SFC inversion legislation. Additionally, Wyden said he is in discussions with SFC ranking member Orrin G. Hatch, R-Utah, about inversions. Hatch said on August 14 that inversion legislation should be a stepping-stone to reform of the tax code (TAXDAY, 2014/08/18, C.1). A group of Senate Democrats also urged President Obama to take executive action to the maximum extent possible to deny federal contracts to inverted corporations (TAXDAY, 2014/08/14, C.2).

In other news from Congress, a bipartisan bill was introduced to exempt students employed by their college or university from the Patient Protection and Affordable Care Act’s (PPACA) (P.L. 111-148) employer mandate (TAXDAY, 2014/08/14, C.1).


IRS Contractors. Some IRS contractors without the appropriate background investigation had access to taxpayer information, TIGTA found (Ref. No.: 2014-10-037; TAXDAY, 2014/08/15, T.1). According to TIGTA, taxpayer information may be at risk because of a lack of background investigations in contracts for courier, printing and other services.

Exempt Organizations. TIGTA urged the Service to improve its oversight of payroll tax compliance by tax-exempt organizations (Ref. No.: 2014-10-012; TAXDAY, 2014/08/14, T.1). TIGTA discovered that 25 exempt organizations failed to remit payroll and other taxes, totaling more than $25 million.

Criminal Investigation. The IRS Office of Criminal Investigation (CI) has adequate controls in place to ensure compliance with federal laws prohibiting any person convicted of a domestic violence offense from possessing guns or ammunition, TIGTA reported (Ref. No.: 2014-IE-R008; TAXDAY, 2014/08/13, T.1).


Retail Method. The IRS released final regulations on the retail inventory method of accounting (T.D. 9688; TAXDAY, 2014/08/15, I.1). The Service also issued procedures for taxpayers to obtain automatic consent to change a method of accounting (Rev. Proc. 2014-48; TAXDAY, 2014/08/18, I.3).

MACRS. The Service also issued final regulations relating to dispositions of modified accelerated cost recovery (MACRS) property and accounting for property in MACRS general asset accounts (T.D. 9689; TAXDAY, 2014/08/15, I.2).

Telephone Scams. Approximately 90,000 taxpayers have complained to TIGTA about telephone scams from con artists impersonating IRS employees (IR-2014-81; TAXDAY, 2014/08/14, I.2). The Service reported that some 1,100 taxpayers suffered an estimated $5 million in losses.

Taxpayer Bill of Rights. Updated editions of Publication 1, Your Rights as a Taxpayer, are now available on the IRS website in English, Chinese, Korean, Russian, Spanish and Vietnamese (IR-2014-80; TAXDAY, 2014/08/13, I.3). The Service is highlighting the new Taxpayer Bill of Rights.

By George L. Yaksick, Jr., CCH News Staff

Friday, August 15, 2014

Save on your 2015 CCH Books; also New ACA Webinar dates added

CCH Summer Book Sale
Don't pay full price later. Pre-order your tax resources now and save 15% on U.S. Master Tax Guide®, 2015 and other new editions. They will be shipped to you as soon as they are published. Order your copies today.

Browse the online summer catalog
NEW ACA Webinar dates added
Are ready to answer your clients' Affordable Care Act questions and help them avoid penalties? It is critical to prepare now to help clients understand the penalties that could leave them upset when they find their tax refunds are being reduced by these penalties. With ACA Webinars from the experts at CCH, you will be prepared to advise your clients' on the myriad of compliance issues under this complex law. 

Two new webinars have been added to our upcoming schedule:

Affordable Care Act: Understanding and Avoiding the New Tax Penalties
Wednesday, Sept. 10 at 1 p.m. Eastern
Learn More 

Affordable Care Act: Understanding the Individual and Employer Mandates
Friday, Sept. 26 at 1 p.m. Eastern
Learn More

ExamMatrix EA Exam Review
Do what thousands of successful Enrolled Agents have done and prepare effectively and efficiently with this exam review course.Receive a $100 discount if you order before August 31st. Call your Account Manager for details.
Complimentary TaxWise Software Webinars
Do you need current training on your TaxWise software? We are offering a series of complimentary webinars during the summer. Click the link below to view available webinars, dates and times.Register Here
IRS Representation Certification
Get certified to represent your clients before the IRS. 
Learn more

Tuesday, August 12, 2014

Advent discontinue bank product support as of August 11, 2014

Advent Financial Services is discontinuing all refund settlement and card programs.  As a result, TaxWise will no longer accept e-files with an Advent bank application as of 5:00pm EST, Monday, August 11, 2014.

For the current tax season, please contact Customer Care to discuss offering bank products through Oct 15th with a different banking partner.
For the upcoming tax season, the following settlement solutions are available:

Please note that for those bank applications already in process:
·         August 22- Advent will no longer process inbound deposits for taxpayers
·         August 26- Advent will no longer process outbound payments or support the printing of checks. All unused checks and card stock will need to be destroyed in accordance with the Advent Operating Manual (pages 10 & 14)
·         September 5—Advent will cease operations

If you have further questions, please contact customer support at 866-641-9473.

We look forward to supporting you in this matter.


Monday, August 11, 2014

CCH Weekly Report from Washington, D.C.,(Aug. 11, 2014)

CCH Weekly Report from Washington, D.C.,(Aug. 11, 2014)

Corporate inversions continued to be a hot topic in Washington, even with Congress on its August recess. Several Democratic lawmakers urged President Obama to take independent action to stop the inversions. The president said the administration is trying to determine whether it has legal authority to stop companies from taking advantage of a tax loophole allowing them to change their citizenship and avoid paying U.S. taxes. The IRS, meanwhile, released final regulations that provide comprehensive guidance for the award program under Code Sec. 7623.

White House

Speaking at the U.S.-Africa Leaders’ Summit on August 6, President Obama said his administration is examining whether it has legal authority to stop U.S. multinational companies from using a tax loophole to change their citizenship to another country and avoid paying U.S. taxes (TAXDAY, 2014/08/08, W.1). Inversions are not fair to hardworking Americans who make up the lost revenue through higher taxes or reduced federal services, the president said. He declined to say whether he would issue an executive order, noting instead that, after the Treasury evaluation is completed, he would make a decision on what actions to take.


Three Democratic senators urged President Obama to take action to stop corporate inversions. Sens. Richard Durbin, D-Ill., Elizabeth Warren, D-Mass., and Jack Reed, D-R.I., wrote the president on August 5, saying that the coming flood of corporate inversions justifies the president taking independent action (TAXDAY, 2014/08/06, C.1). Although corporate tax reform is touted as a solution by some, the senators noted that cutting U.S. corporate tax rates to 28 percent will not stop companies from moving to Ireland where the tax rate is 12.5 percent.

A bipartisan group of senators wrote to the leaders of the Senate Finance Committee on August 6 to recommend against passage of corporate tax reform legislation that includes provisions to preclude the use of cash accounting for certain businesses, including ranchers, farmers and professional service companies (TAXDAY, 2014/08/08, C.1). A letter signed by 46 senators to Committee Chairman Sen. Ron Wyden, D-Ore., and ranking member Orrin G. Hatch, R-Utah, objects to a tax reform plan authored by former chairman Sen. Max Baucus, D-Mont., that would require businesses and individuals that exceed $10 million in annual gross receipts to use accrual accounting.


FATCA. The United States has reached a new agreement with the Czech Republic to implement the provisions of the Foreign Account Tax Compliance Act (FATCA) (P.L. 111-147) (TAXDAY, 2014/08/08, T.1). FATCA requires foreign financial institutions to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

Inversions. The Treasury Department said it is weighing options to curb the growing number of corporate inversions, a tax-avoidance strategy that has the potential of eroding the U.S. corporate tax base (TAXDAY, 2014/08/07, T.1). According to a spokesperson for Treasury Secretary Jack Lew, the department is reviewing its options since Congress has failed to act on comprehensive tax reform for businesses.

The following reports were released by the Treasury Inspector General for Tax Administration (TIGTA):

A TIGTA report concluded that the IRS complied with the legal requirements of the IRS Restructuring and Reform Act of 1998 (RRA ‘98) (P.L. 105-206) when conducting seizures of taxpayers’ property (Ref. No.: 2014-30-053; TAXDAY, 2014/08/08, T.2). Although TIGTA found some violations by the IRS, it concluded that none of the violations adversely affected taxpayers.

In almost all instances, the IRS correctly provided accurate information to the Health Exchanges on family income and size for purposes of determining insurance eligibility and the maximum Advance Premium Tax Credit an individual could receive (Ref. No.: 2014-43-044; TAXDAY, 2014/08/06, T.1). TIGTA identified a less than 0.3 percent for which the IRS notified the exchange that it could not provide the requested tax information when, in fact, the individual’s name was available in IRS records.


Whistleblowers. Final regulations were issued that provide comprehensive guidance for the award program under Code Sec. 7623 (T.D. 9687; TAXDAY, 2014/08/08, I.1). The final guidance provides details on submitting information regarding underpayments of tax or violations of the tax code and on filing claims for awards, as well as the administrative proceedings applicable to claims for awards under Code Sec. 7623.

Return Preparers. The IRS’s Wage and Investment Division has released memos providing interim guidance on return preparer complaint issues and return preparer misconductW&I Division Memorandum: Interim Guidance on Contacts Regarding Specific Return Preparer Complaint Issues (WI-21-0814-04).

Exempt Organizations. Updated instructions for Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code were issued (TAXDAY, 2014/08/07, I.4). The revised instructions allow organization officials to use the organization’s address rather than supply their personal address on the form.

Energy Tax Credits. The IRS has clarified prior guidance regarding the application of the Physical Work Test and the ability to transfer a facility after construction has begun (Notice 2014-46; TAXDAY, 2014/08/11, I.3). This notice also modifies Notice 2013-29, I.R.B. 2013-20, 1085, and Notice 2013-60, I.R.B. 2013-44, 431, by modifying the application of the safe harbor for certain facilities with respect to which a taxpayer paid or incurred less than 5 percent, but at least 3 percent, of the total cost of the facility before January 1, 2014.

By Stephen K. Cooper and Brant Goldwyn, CCH News Staff

Wednesday, August 6, 2014

Support site maintenance Wednesday 9-10am EST

The support sites have some minor maintenance scheduled this morning, between 9 and 10am EST.
The maintenance will only take about five minutes, but if you are on the site at that time, you will see the maintenance page.

Monday, August 4, 2014

CCH Weekly Report from Washington, D.C.,(Aug. 4, 2014)

There was a flurry of activity on Capitol Hill as lawmakers rushed to complete work on several bills before leaving for the summer recess. The House Ways and Means Committee approved legislation that would allow families and individuals to participate in tax-free savings programs in order to pay the health care, transportation, housing and educational costs for disabled individuals. The Senate Homeland Security and Governmental Affairs Committee approved a measure that would require federal agencies to report the fine or penalty to be paid by a company in a settlement and whether the fine is tax-deductible. In addition, the Senate approved legislation that provides a short-term patch to continue funding the Highway Trust Fund. The bill now moves to the president’s desk for his signature. Meanwhile, the IRS released temporary and proposed regulations that modify the effective date provision of recently published regulations that affect corporations whose stock has been acquired by the Department of Treasury, as well as final regulations on the penalties to be imposed on material advisors who fail to file a true and complete return.

White House

President Obama on July 30 again urged lawmakers to act on curbing corporate inversions, calling it an accounting trick that harms the nation’s economy (TAXDAY, 2014/07/31, W.1). The president made his case for immediate legislative action during a speech on the economy in Kansas City, Mo. Obama said that, for the last two years, he has put forward plans to cut corporate taxes and close loopholes, and to make the federal tax code more reliable and to make it clearer.


House. The post of IRS commissioner should be replaced by a bipartisan panel, according to a witness testifying before the House Oversight and Government Reform Committee on July 30 (TAXDAY, 2014/07/31, C.2). The hearing was called so members could hear ideas from a panel of tax and legal experts on how to reform the IRS in the wake of ongoing federal investigations into the Service’s inappropriate handling to applications for 501(c)(4) tax-exempt status.

Bipartisan legislation that would allow families and individuals to participate in tax-free savings programs in order to pay the health care, transportation, housing and educational costs for disabled individuals was approved by the House Ways and Means Committee on July 31 (TAXDAY, 2014/08/01, C.1). The Achieving a Better Life Experience (ABLE) Bill of 2013 (HR 647) passed the committee by a voice vote. Chairman Dave Camp, R-Mich., and ranking member Sander M. Levin, D-Mich., agreed they would find an offset for the bill’s $2-billion cost before it reaches the House floor for a vote.

Senate. The Joint Committee on Taxation (JCT) on July 25 released a report (JCX-93-14) detailing the most recent legislation applicable to excise taxes on tobacco in advance of the Senate Finance Committee’s July 29 hearing entitled "Tobacco: Taxes Owed, Avoided, and Evaded" (TAXDAY, 2014/07/29, C.1). The definitions of tobacco products in the tax code determine the tax rate that will apply, as well as the licensing and recordkeeping requirements that may apply to a manufacturer or importer of the products. Other definitions determine the time the tax liability arises or the timing of its payment.

The Senate Finance Committee on July 29 examined the problem of lost excise taxes on tobacco products and looked for solutions to recover the lost revenue (TAXDAY, 2014/07/30, C.3). Over $3 billion in revenue has been lost by the federal government as tobacco manufacturers have outmaneuvered government regulation of their products in order to avoid increased taxes due to 2009 legislation seeking revenue for the Children’s Health Insurance Program (CHIP).

Democrats from both chambers of Congress on July 29 introduced the No Federal Contracts for Corporate Deserters Bill, which would bar federal contracts from going to businesses that incorporate overseas (TAXDAY, 2014/07/30, C.2). The measure would also apply to companies that are majority-owned by shareholders of the old U.S. corporation, and do not have substantial business opportunities in the foreign country in which they are incorporating. The legislation applies to all inversions that were not finalized by May 8, 2014. That effective date is consistent with the effective date of the Stop Corporate Inversions Bill of 2014 (HR 4679).

The Senate on July 30 failed to advance the Bring Jobs Home Bill (Sen 2569), which would end tax breaks for companies that move jobs overseas and create new incentives to return jobs to the U.S. The motion to allow a final vote was not agreed to by a vote of 54 to 42; a 60-vote threshold had to be met to advance the bill. The legislation would keep the current business expense deduction in place for companies that bring jobs and business activity back home but businesses would no longer be able to get a tax benefit for shipping jobs overseas.

The Senate Homeland Security and Governmental Affairs Committee on July 30 approved, by voice vote, the Truth in Settlements Bill of 2014 (Sen 1898), which would require federal agencies to report the fine or penalty to be paid by a company in a settlement and whether the amount to be paid is tax-deductible (TAXDAY, 2014/08/01, C.2). The bill is intended to create greater transparency in legal settlements, especially write-offs, and would require companies to report subsequent tax changes to the Securities and Exchange Commission.


TIGTA. The Treasury Inspector for Tax Administration (TIGTA) issued reports finding:

There were three additional instances of confirmed purchase card misuse during the reporting period that resulted in the IRS taking action (Ref. No.: 2014-10-048; TAXDAY, 2014/08/01, T.2). TIGTA reviewed the IRS’s current credit card guidance and determined that the IRS policies and controls have been established to mitigate the risk of fraud and inappropriate government travel and purchase charge card practices.

The IRS did not evaluate the potential impact of reducing or eliminating services at its Taxpayer Assistance Centers (TACs) prior to making changes at these locations (Ref. No.: 2014-40-038; TAXDAY, 2014/07/30, T.1). Since many low-income, elderly and limited-English-speaking taxpayers rely on the TACs for assistance in meeting their basic tax obligations, the IRS should have established the impact of the service cuts at the TACs prior to implementing them.

Social Security Insolvency. Social Security’s retirement and disability programs will run into financial problems in 19 years, Treasury Secretary Jack Lew said on July 28 in conjunction with the release of the 2014 OASDI Trustees Report (TAXDAY, 2014/07/29, T.1). Lew explained that, because the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) has decreased short-term Medicare, the trustees estimate that the Medicare program will have sufficient resources to cover benefits until 2030, which is four years longer than 2013’s estimate.

Inversions. Lew has again called on Congress to pass anti-inversion tax legislation as soon as possible (TAXDAY, 2014/07/29, T.2). Writing in the Washington Post on July 27, Lew said the practice has accelerated in recent months, with a significant number of big corporations nearing completion of such deals and reports of many more in the works.


National Tax Forum. Enrolled agents, certified public accountants, certified financial planners and other tax professionals are invited to attend the next IRS Nationwide Tax Forum, which will be held from August 19 through August 21, 2014, in National Harbor, Maryland (IR-2014-79; TAXDAY, 2014/08/01, I.1). IRS Deputy Commissioner for Services and Enforcement John M. Dalrymple will give the keynote speech at the forum.

Segregation Rules. The IRS has issued temporary and proposed regulations that modify the effective date provision of recently published regulations that affect corporations whose stock has been acquired by the Department of Treasury under the Emergency Economic Stabilization Act of 2008 (EESA) (T.D. 9685; NPRM REG-105067-14; TAXDAY, 2014/07/31, I.1). The new regulation modify the effective date of T.D. 9638, I.R.B. 2013-46, 487, to exclude from the changes to the segregation rules in that regulation the sale by Treasury to public shareholders of an instrument issued pursuant to an EESA program.

Material Advisor Penalty. The IRS has finalized regulations on the penalties to be imposed on material advisors who fail to file a true and complete return (T.D. 9686; TAXDAY, 2014/07/31, I.2). The final regulations make several substantive changes to the proposals in NPRM REG-160872-04, I.R.B. 2009-4, 358.

Foreign Housing Credit. The IRS has updated its list in Rev. Proc. 2014-25, I.R.B. 2014-15, 927, of foreign countries for which the foreign presence or residency requirements of Code Sec. 911(d)(1) are waived for tax year 2013 (Ann. 2014-28; TAXDAY, 2014/07/31, I.3). South Sudan has been added to the list, applicable to an individual whose date of departure was on or after December 17, 2013.

Covered Asset Regulations. In Notice 2014-44, I.R.B. 2014-32 (TAXDAY, 2014/07/22, I.1), the Treasury and IRS described regulations that would be issued with respect to the application of Code Sec. 901(m) to dispositions of assets following a covered asset acquisition (Notice 2014-45; TAXDAY, 2014/07/30, I.1). The regulations address concerns over the application of the statutory disposition rule in Code Sec. 901(m)(3)(B)(ii).

Pre-Approved 403(b) Plan Program. IRS officials discussed details of the new 403(b) pre-approved plan program during a July 28 IRS phone forum (TAXDAY, 2014/07/29, I.1).

Expired-PTIN Warning Letters. The IRS announced in an email that, during the week of July 28, the IRS Return Preparer Office would mail letters to approximately 5,000 return preparers who are preparing tax returns without valid preparer tax identification numbers (PTIN) (TAXDAY, 2014/07/28, I.3). Letters were sent to preparers who are using unrenewed legacy PTINs obtained prior to September 2010, those who are using Social Security numbers instead of PTINs and those who are using expired PTINs.


The Centers for Medicare & Medicaid Services (CMS) contract planning and oversight practices for the development of and its related systems were ineffective given the challenges and risks, the Government Accounting Office (GAO) concluded in a report released on July 31 (TAXDAY, 2014/08/01, M.1). CMS officials told the GAO that the task of developing a first-of-its-kind federal marketplace was a complex effort with compressed time frames. The report found that the CMS issued task orders to develop the federally facilitated marketplace (FFM) and federal data services hub (data hub) systems when key technical requirements were unknown, including the number and composition of states to be supported and, importantly, the number of potential enrollees.

By Jeff Carlson, Stephen K. Cooper and Jennifer Cordaro, CCH News Staff

Thursday, July 31, 2014

IRS extended maintenance this weekend

IRS Issued the Quick Alert below

CCH SFS will stop sending efiles and receiving acks at 5pm Friday August 1st, and resume Monday morning August 4th.  During this time period, you may continue sending efiles to us, which we will hold until Monday morning.

Subject:  Extended Maintenance Window for the Modernized e-File (MeF) Production Environment
The MeF Sunday maintenance build window is being extended on Sunday, August 3, 2014. The system will be unavailable from 1:00 a.m. until 10:00 a.m., Eastern. The build will deploy critical system updates. This extended window impacts the MeF Production Environment.
Thank you in advance for refraining from accessing the MeF Production System during this period.

Monday, July 28, 2014

CCH Weekly Report from Washington, D.C.,(Jul. 28, 2014)

CCH Weekly Report from Washington, D.C.,(Jul. 28, 2014)

The House passed the Child Tax Credit Improvement Bill of 2014 (HR 4935) and the Student and Family Tax Simplification Bill (HR 3393) during the week of July 21. The Senate, meanwhile, agreed to move forward with legislation that would end a tax break that currently allows a deduction for moving expenses for companies relocating overseas. The IRS released guidance on the premium tax credit and the branded prescription drug fee.


House. House lawmakers on July 25 voted to approve the Child Tax Credit Improvement Bill of 2014 (HR 4935), introduced by Ways and Means Committee member Lynn Jenkins, R-Kan. (TAXDAY, 2014/07/28, C.1). The bill would eliminate the marriage penalty in the child tax credit by increasing the income phase-out threshold for couples filing joint tax returns from $110,000 to $150,000 ($75,000 for individuals and married taxpayers filing separately) and index for inflation (to the nearest multiple of $50) the phase-out threshold for the $1,000 credit beginning in calendar year 2015.

The House voted on July 24 to approve legislation to merge federal tax benefits for higher education, the Student and Family Tax Simplification Bill (HR 3393), authored by Rep. Diane Black, R-Tenn. (TAXDAY, 2014/07/25, C.1). The Joint Committee on Taxation (JCT) has estimated the measure would increase the federal budget deficit by about $96.5 billion over the 2014-2024 period. Approved by the House Ways and Means Committee on June 25 (TAXDAY, 2014/06/26, C.1), the legislation would combine the Hope Credit, the American Opportunity Tax Credit (AOTC), the Lifetime Learning Credit and the tuition deduction into one tax incentive.

In a major speech on July 24 to address the growing incidence of poverty in the U.S., House Budget Committee Chairman Paul Ryan, R-Wis., called for an increase in the Earned Income Tax Credit (EITC) program to help low-income Americans (TAXDAY, 2014/07/25, C.4). Ryan proposed doubling the maximum credit for childless workers to $1,005 and lowering the minimum eligibility age from 25 to 21. He proposed paying for the expansion by eliminating corporate welfare, such as subsidies to energy companies.

A preliminary Government Accountability Office (GAO) study found that health insurance subsidies under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) were successfully awarded to 11 out of 12 fake applicants (TAXDAY, 2014/07/24, C.1). Testifying before the House Ways and Means Oversight Subcommittee on July 23, Seto Bagdoyan, acting director of the GAO’s Forensic Audits and Investigative Service, said the study points to larger problems with the PPACA’s eligibility controls, but the results cannot be fully extrapolated to the overall applicant or enrollment populations within the larger federal health insurance program.

The IRS will not delay premium subsidies under the PPACA, following split decisions by two circuit courts of appeal regarding the legality of tax subsidies under Code Sec. 36B (TAXDAY, 2014/07/23, J.4). IRS Commissioner John Koskinen’s remarks about the rulings were made during a House Oversight and Government Reform hearing on July 23 (TAXDAY, 2014/07/25, C.2).

Senate. Two global banks and more than a dozen hedge funds misused a complex financial structure to claim billions of dollars in unjustified tax savings and to avoid leverage limits that protect the financial system from risky debt, the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations (PSI) has found (TAXDAY, 2014/07/23, C.2). In a 93-page report released on July 21 and in a hearing on July 22, PSI Chairman Carl Levin, D-Mich., described how banks and hedge funds used these dubious, structured financial products to lower their taxes and ultimately cost the Treasury billions of dollars in lost revenue.

A Treasury official on July 22 called for immediate legislative action to curb corporate inversions (TAXDAY, 2014/07/23, C.1). Testifying at a Senate Finance Committee hearing on corporate inversions and tax reform, Robert B. Stack, Treasury deputy assistant secretary for International Tax Affairs, emphasized what he termed a serious need for the U.S. to directly address the potential loss of federal revenues from corporate inversion transactions. Both parties agree that Congress must address corporate inversions, but they are worlds apart on how to tackle the immediate problem.

The Senate on July 23 agreed, by a vote of 93 to 7, to move forward with the Bring Jobs Home Bill (Sen 2569), which would end a tax break that currently allows a deduction for moving expenses for companies relocating overseas (TAXDAY, 2014/07/24, C.3). It would also provide a 20-percent tax credit to help companies with the cost of bringing jobs back to the U.S. The future of the bill is unclear, however, as Senate Republican and Democratic leaders wrangle over the amendment process.

Sen. Roy Blunt, R-Mo., on July 24 introduced an anti-carbon tax amendment to Sen 2569, which would create a point of order against carbon tax-related legislation brought to the Senate floor. The measure would require three-fifths of the Senate to approve any federal tax or fee imposed on carbon emissions from any product or entity that is a direct or indirect source of the emissions.

Sen. Mark R. Warner, D-Va., has asked the Obama administration to either delay or minimize the Code Secs. 4980H, 6055 and 6056 reporting requirements for employers under the PPACA (TAXDAY, 2014/07/25, C.3). In a letter dated July 23 to Treasury Secretary Jack Lew, Warner said he has concerns over the ability of employers to comply with the PPACA reporting requirements in time for their general start date on January 1, 2015.


The Treasury Inspector General for Tax Administration (TIGTA) issued reports finding:

IRS procedures provide employees with adequate guidance for handling joint filer collection activity information requests under Code Sec. 6103(e)(8) (Ref. No.: 2014-30-046; TAXDAY, 2014/07/24, T.1). However, it could not be determined whether the IRS was in complete compliance with Code Sec. 6103(e)(8) requirements when responding to written collection activity information requests from joint filers.

The IRS did not have adequate controls to verify eligibility for the work opportunity tax credit (WOTC) (Ref. No: 2014-40-041; TAXDAY, 2014/07/23, T.2). TIGTA identified 759 WOTC claims on tax returns processed in 2012 for which the IRS had information when the tax returns were processed that could have been used to identify these claims as questionable.


Per Diem Rates. The U.S. State Department has released a listing of maximum travel per diem allowances for travel in foreign areas (TAXDAY, 2014/07/25, I.1). The rates apply to all government employees and contractors, and are effective as of August 1, 2014.

Premium Tax Credit. The IRS has issued temporary and proposed regulations—effective for tax years beginning after December 31, 2013, and expiring July 24, 2017—affecting individuals who enroll in qualified health plans through Affordable Insurance Exchanges and claim the premium tax credit, and Exchanges that make qualified health plans available to individuals (T.D. 9683, NPRM REG-104579-13; TAXDAY, 2014/07/25, I.4). The temporary and proposed regulations address circumstances in which a married taxpayer may claim a premium tax credit on a separate return, how taxpayers who legally separate or divorce allocate the benchmark plan premium, and other issues.

Applicable Percentage Table. The applicable percentage table used to calculate an individual’s premium tax credit for tax years beginning after December 31, 2014, as well as the required contribution percentage in Code Sec. 36B(c)(2)(C)(i)(II) has been updated (Rev. Proc. 2014-37; TAXDAY, 2014/07/25, I.6). In addition, the guidance cross-references the required contribution percentage under Code Sec. 5000A(e)(1)(A).

Self-Employed Individuals. The IRS has issued guidance for taxpayers to compute the deduction under Code Sec. 162(l) for health insurance costs for self-employed individuals and for the premium tax credit allowed under Code Sec. 36B (Rev. Proc. 2014-41; TAXDAY, 2014/07/25, I.7). This guidance is intended to provide taxpayers with calculation methods that resolve the circular relationship between the Code Sec. 162(l) deduction and the Code Sec. 36B tax credit.

Branded Prescription Drug Fee. Final, temporary and proposed regulations were issued that provide guidance on the annual fee imposed on manufacturers and importers of branded prescription drugs under section 9008 of the PPACA (T.D. 9684; NPRM REG-123286-14; Notice 2014-42; TAXDAY, 2014/07/25, I.5). The new regulations address, among other things, the definition of a "manufacturer or importer," the role of the "adjustment amount" in determining whether an entity is a "covered entity,", the definition of a "controlled group" and the role of its "designated entity."

Monthly National Average Premium. The IRS has issued guidance providing the 2014 monthly national average premium for qualified health plans that have a bronze level of coverage for taxpayers to use in determining their maximum individual shared responsibility payment under Code Sec. 5000A(c)(1)(B) (Rev. Proc. 2014-41; TAXDAY, 2014/07/25, I.8). An explanation of the methodology used to determine the monthly national average premium amount is also provided.

Form 1023-EZ. Organizations seeking tax-exempt status as a Code Sec. 501(c)(3) charity can provide less information to the IRS if they use Form 1023-EZ, IRS officials said on July 24 at an IRS webinar on how to apply for tax-exempt status (TAXDAY, 2014/07/25, I.9). The IRS is hopeful that this simplified form will reduce its backlog in processing applications for charitable status, Joseph Kovacs, tax law specialist, IRS Exempt Organizations (EO) Rulings and Agreements Office, said.

Wash Sale Rules. Guidance has been issued on the circumstances in which the IRS will not treat a redemption of shares in a money market fund (MMF) as part of a wash sale (Rev. Proc. 2014-45, TDNR JL-2579, NPRM REG-107012-14; TAXDAY, 2014/07/24, I.1). The guidance applies to a redemption of one or more shares in a registered investment company if the investment company is regulated as an MMF and, at the time of the redemption, the investment company is a floating net asset value MMF (floating-NAV MMF).

PPACA Employer Reporting. Draft forms for reporting under the PPACA’s employer shared-responsibility provisions will be available soon, Ligeia Donis, senior technical reviewer, IRS, said during a webcast sponsored by the American Bar Association (ABA) on July 23 (TAXDAY, 2014/07/24, I.2).

Start-up and Organizational Expenses. The IRS has finalized regulations providing for the treatment of start-up expenditures and organizational expenses following a technical termination of a partnership (T.D. 9681; TAXDAY, 2014/07/23, I.1). The final regulations adopt proposed regulations (NPRM REG-126285-12, I.R.B. 2013-52, 853; TAXDAY, 2013/12/09, I.1) issued on December 9, 2013, with a minor clarification.

S Corps and Basis in Indebtedness. Final regulations were adopted relating to an S corporation shareholder’s basis in the corporation’s indebtedness (T.D. 9682; TAXDAY, 2014/07/23, I.2). The regulations provide that basis of indebtedness of the S corporation to the shareholder means the shareholder’s adjusted basis in any bona fide indebtedness of the S corporation that runs directly to the shareholder.

Covered Assets. The Treasury and IRS will issue regulations under Code Sec. 901(m), applicable to the disposition of assets following covered asset acquisitions (CAAs) and CAAs involving the acquisition of interests in a partnership that has elected an optional adjustment to the basis of partnership property under Code Sec. 754 (Notice 2014-44; TAXDAY, 2014/07/22, I.1). The regulations will generally apply to dispositions occurring on or after July 21, 2014.


The Organisation for Economic Co-operation and Development (OECD) on July 21 released the full version of a new global standard for the exchange of information between jurisdictions (TAXDAY, 2014/07/22, M.1). The Standard for Automatic Exchange of Financial Account Information in Tax Matters calls on governments to obtain detailed account information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis.

On the eve of a July 22 Senate Finance Committee hearing on tax reform, the RATE Coalition asked the Committee Chairman Ron Wyden, D-Ore., and ranking member Orrin G. Hatch, R-Utah, to take into account what they believe is the underlying cause of the recent rash of corporate inversions: a statutory corporate rate that is too high, and a U.S. tax code that is too complex (TAXDAY, 2014/07/22, M.2). RATE urged Wyden and Hatch to ask the witnesses whether they agree that the United States’ combined corporate tax rate of 39.1 percent is detrimental to job creation and the ability of U.S. businesses, both small and large, to invest and grow.

By Jeff Carlson, Stephen K. Cooper and Jennifer Cordaro, CCH News Staff