Yearly Archives: 2016

Revenue Procedure 2016-49 provides procedures to disregard and treat as null and void for transfer tax purposes a qualified terminable interest property (QTIP) election in situations where the QTIP election was not necessary to reduce the estate tax liability to zero. 

This guidance provides that such procedures are unavailable where QTIP elections are made in estates in which the executor elected portability of the deceased spousal unused exclusion (DSUE) amount under § 2010(c)(5)(A).  This guidance modifies and supersedes Rev. Proc. 2001-38, 2001-1 C.B. 1335. 

Advantageous 2017 Application Filing Deadline Extended: Complete and accurate certification applications filed before October 1, 2016 will have an effective date of certification of January 1, 2017, even if the date of the CPEO’s notice of certification is after January 1, 2017. The prior guidance had a September 1, 2016 deadline for this special transition rule.

CPA Working Capital Statements Can Be Provided in a Note: Treasury and IRS anticipate revising the requirements of the temporary regulations and Revenue Procedure 2016-33 to allow the audited financial statements covered by the CPA opinion to include a note to the financial statements that states that the financial statements reflect positive working capital. The note must still provide in detail a calculation of the working capital. In the case of a CPEO applicant that is a member of a controlled group of which other members are CPEO applicants or CPEOs, the note to the financial statements of the combined or consolidated annual audited financial statements for the controlled group must state that the individual financial statements of each CPEO applicant or CPEO that is a member of the controlled group reflect positive working capital (as defined by GAAP).

CPA Statements Re: Accrual Accounting Eliminated: Because GAAP requires the use of an accrual method of accounting and the required CPA opinion must state that a CPEO applicant’s or CPEO’s audited annual financial statements are presented fairly in accordance with GAAP, the separate requirement for a CPA opinion stating that such financial statements “reflect that the CPEO . . . computes its taxable income using an accrual method of accounting” is unnecessary. Treasury and IRS anticipate revising the Revenue Procedure 2016-33 to eliminate the requirement of a CPA statement re: accrual accounting.

Working Capital Transition Rule for Years Ending Before September 30, 2016: For fiscal years ending before September 30, 2016, a special transition rule is provided allowing the CPEO applicant to submit a separate statement, signed under penalties of perjury by a responsible individual of the CPEO applicant, that the financial statements reflect positive working capital for the fiscal year. That responsible individual statement could be provided in lieu of the CPA opinion or Note to the Financial Statement, described above. However, the statement by the responsible individual must also provide in detail a calculation of the CPEO applicant’s working capital. In the case of a CPEO applicant that is a member of a controlled group of which other members are also CPEO applicants or CPEOs, the CPEO applicant must submit its own separate statement by a responsible individual re: positive working capital, again setting forth in detail a calculation of the individual CPEO applicant’s working capital.

CPA Declaration Re: Authorization to Represent the CPEO Eliminated: The requirements in the proposed regulation and Revenue Procedure 2016-33 that the CPA file a written declaration with the IRS that he or she is authorized to represent the CPEO applicant or CPEO before the IRS will be eliminated.

Disregarded Entities May Apply for Certification: Treasury and the IRS anticipate that the final regulations under section 7705 will not prohibit a business entity that is disregarded as separate from its owner from becoming a CPEO. In addition, Treasury and the IRS anticipate revising the definition of Responsible Individual, to also include: (1) in the case of a disregarded entity owned by a corporation or partnership, the Responsible Individuals of that corporation or partnership (as defined by the regulations); and (2) in the case of a disregarded entity owned by an individual, the individual owner. Treasury and the IRS also anticipate providing in the final regulations that CPEO applicants and CPEOs that, but for their status as disregarded entities would separately be members of a controlled group, are treated as members of a controlled group.

Sole Proprietorships Can Apply for Certification: Treasury and IRS anticipate that the final regulations will expressly allow sole proprietorships to apply for certification as a CPEO.

Taxpayers Can Rely on Notice 2016-49: Treasury/IRS expressly confirm that the statements in Notice 2016-49 that the final regulations and future updated revenue procedures, when issued, will address the issues identified in Notice 2016-49 in the manner indicated in that Notice (as described above). Pending the issuance of final regulations and the updated revenue procedure, taxpayers may rely on the guidance contained in this notice. 

Revenue Procedure 2016-49 will be published in IRB 2016-42 on October 17, 2016.

 

Have a US Estate Tax Problem?

 

 

Estate Tax Problems Require

an Experienced Estate Tax Attorney

Contact the Tax Lawyers at

Marini & Associates, P.A.

 for a FREE Tax Consultation Contact US at

www.TaxAid.us or www.TaxLaw.ms

or Toll Free at 888-8TaxAid (888 882-9243).

 

 

Robert S. Blumenfeld  - 

 Estate Tax Counsel

Mr. Blumenfeld concentrates his practice in the areas of International Tax and Estate Planning, Probate Law, and Representation of Resident and Non-Resident Aliens before the IRS.

Prior to joining Marini & Associates, P.A., he spent 32 years as the Senior Attorney with the Internal Revenue Service (IRS), Office of Deputy Commissioner, International.

While with the IRS, he examined approximately 2,000 Estate Tax Returns and litigated various international and tax issues associated with these returns.As a result of his experience, he has extensive knowledge of the issues associated with and the preparation of U.S. Estate Tax Returns for Resident and Non-Resident Aliens, Gift Tax Returns, Form 706QDT and Qualified Domestic Trusts.

 

 

 

Sources:

IRS

NAPEO

The Internal Revenue Service announced today that it plans to begin private collection of certain overdue federal tax debts next spring and has selected four contractors to implement the new program.

The new program, authorized under a federal law enacted by Cong
ress last December, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables. As a condition of receiving a contract, these agencies must respect taxpayer rights including, among other things, abiding by the consumer protection provisions of the Fair Debt Collection Practices Act.

The IRS has selected the following contractors to carry out this program:

1. CBE Group 1309 Technology Pkwy Cedar Falls, IA 50613
2. Conserve 200 CrossKeys Office park Fairport, NY 14450
3. Performant 333 N Canyons Pkwy Livermore, CA 94551
4. Pioneer 325 Daniel Zenker Dr Horseheads, NY 14845

These private collection agencies will work on accounts where taxpayers owe money, but the IRS is no longer actively working their accounts. Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts or lack of resources preventing the IRS from working the cases.

The IRS will give each taxpayer and their representative written notice that their account is being transferred to a private collection agency. The agency will then send a second, separate letter to the taxpayer and their representative confirming this transfer.

Private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes. Employees of these collection agencies must follow the provisions of the Fair Debt Collection Practices Act and must be courteous and respect taxpayer rights.

The IRS will do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, particularly in light of continual phone scams where callers impersonate IRS agents and request immediate payment.

Private collection agencies will not ask for payment on a prepaid debit card. Taxpayers will be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency. 

For more information visit the Private Debt Collection page on IRS.gov.

 
        Clinton Tax Plan

• Her proposals would increase revenue by $1.1 trillion over the next decade.
• Nearly all of the tax increases would fall on the top 1 percent; the bottom 95 percent of taxpayers would see little or no change in their taxes.
• Marginal tax rates would increase, reducing incentives to work, save, and invest, and the tax code would become more complex.
• The analysis does not address a forthcoming proposal to cut taxes for low- and middle-income families.

Trump Tax Plan    

• His proposal would cut taxes at all income levels, although the largest benefits, in dollar and percentage terms, would go to the highest-income households. 
• The plan would reduce federal revenues by $9.5 trillion over its first decade before accounting for added interest costs or considering macroeconomic feedback effects.
• The plan would improve incentives to work, save, and invest.
• However, unless it is accompanied by very large spending cuts, it could increase the national debt by nearly 80 percent of gross domestic product by 2036, offsetting some or all of the incentive effects of the tax cuts.

1. Implementing a multi-millionaire “Fair Share Surcharge.” Hillary will call for imposing a 4 percent “Fair Share Surcharge” on the 2 out of every 10,000 taxpayers making more than $5 million per year – who are the most likely to benefit from tax planning. This surcharge is a direct way to ensure that effective rates rise for taxpayers who are avoiding paying their fair share, and that the richest Americans pay an effective rate higher than middle-class families.
2. Shutting down the “private tax system” for the most fortunate, starting by immediately closing egregious loopholes. Hillary will call for strengthening the Buffett Rule by broadening the base of income subject to the rule. This means immediately closing egregious loopholes, like the Bermuda reinsurance loophole and the “Romney loophole” that let the most fortunate avoid paying their fair share. That also means closing the “step up in basis” loophole, which lets the highest-income Americans escape paying their fair share on assets passed to heirs.
3. Restoring fair taxation on multi-million dollar estates. Hillary is proposing to restore the Estate Tax to 2009 parameters, which would ensure some of the largest, multi-million dollar estates are not exempt from paying their fair share. And she would go beyond that for estates valued in the tens or hundreds of millions of dollars. She will also close complex loopholes, including methods that people can now use to make their estates appear to be worth less than they really are. The Estate Tax is a tax on the very largest estates that would only affect 4 out of every 1,000 estates after Clinton’s reforms. 
4. Ensuring millionaires can no longer pay a lower rate than their secretary. Hillary will reiterate her call for the “Buffett Rule,” which ensures that those making more than $1 million per year pay at least an effective tax rate of 30 percent.