Monthly Archives: November 2020

A federal district court in Goldring, (DC LA 9/28/2020) 126 AFTR 2d ¶2020-6254, has held that the IRS properly assessed interest on a taxpayer’s underpayment. The couple elected to apply an overpayment to future years, so that overpayment wasn’t available to apply to the underpayment for the year at issue. 

The IRS is authorized to credit any overpayment of tax against any outstanding tax liability owed by the taxpayer making the overpayment and refund any balance of the overpayment to that taxpayer. (Code Sec. 6402(a); Reg. §301.6402-1)

However, a taxpayer’s election to apply an overpayment to a subsequent year is irrevocable and binds both the taxpayer and the IRS. (Code Sec. 6513(d))

Once The Taxpayer Makes The Election To Apply An Overpayment To A Subsequent Year, IRS Cannot Offset
The Overpayment Against Any Additional Tax For The Year
Of The Overpayment. (Rev Rul 77-339, 1977-2 CB 475; Rev Rul 55-448, 1955-2 CB 595)

On her 2010 return, taxpayer Goldring reported a lawsuit settlement as capital gain, overpaid her tax liability and elected to carry the overpayment forward to future tax years. The IRS disputed Goldring’s characterization of part of the lawsuit settlement ("disputed amount") as capital gain.  

In 2020, a federal district court determined that the disputed amount was interest and, therefore, was taxable as ordinary income. (Goldring, (DC LA 4/13/2020) 125 AFTR 2d 2020-1701)

After the district court determined that the disputed amount was ordinary income, the IRS assessed Goldring with additional tax for 2010 and accrued interest from the due date of her 2010 return. 

Goldring argued that she shouldn't owe interest because she had enough of an overpayment in 2010 to cover the additional tax; therefore, interest did not accrue on her underpayment from the due date of her 2010 return.

The district court determined that the IRS properly assessed interest on Goldring’s 2010 underpayment.

Contrary to Goldring’s argument, the IRS could not use her 2010 overpayment to offset the additional tax assessed for 2010 because Goldring elected to carry over to a subsequent year that overpayment, and the IRS was bound by her election. Since the IRS had no funds it could use to offset the additional tax for 2010, interest began to accrue on the underpayment on the due date of Goldring’s 2010 return.

Read more at: Tax Times blog

The IRS recently changed its' procedure for handling delinquent information returns. The 2012 OVDP FAQ# 18 originally provided automatic penalty relief, but was only available to taxpayers who were fully tax compliant. 

Then the IRS modified the Delinquent International Information Return Submission Procedures and clarified how taxpayers may file delinquent international information returns in cases where there was reasonable cause for the delinquency. Taxpayers who had unreported income or unpaid tax were not precluded from filing delinquent international information returns. However, unlike the procedures described in OVDP FAQ#18, penalties may have been imposed under the Delinquent International Information Return Submission Procedures if the Service does not accept the explanation of reasonable cause. 

Now the IRS has recently changed their website on Delinquent International Information Return Submission Procedures (DIIRSP) which now provides:

Taxpayers who have identified the need to file delinquent international information returns who are not under a civil examination or a criminal investigation by the IRS and have not already been contacted by the IRS about the delinquent information returns should file the delinquent information returns through normal filing procedures.

Penalties may be assessed in accordance with existing procedures.

• All delinquent international information returns other than Forms 3520 and 3520-A should be attached to an amended return and filed according to the applicable instructions for the amended return.
• All delinquent Forms 3520 and 3520-A should be filed according to the applicable instructions for those forms.
• Taxpayers may attach a reasonable cause statement to each delinquent information return filed for which reasonable cause is being asserted. 
• During processing of the delinquent information return, penalties may be assessed without considering the attached reasonable cause statement. 
• It may be necessary for taxpayers to respond to specific correspondence and submit or resubmit reasonable cause information.

Information returns filed with amended returns will not be automatically subject to audit but may be selected for audit through the existing audit selection processes that are in place for any tax or information returns.

These procedures now clearly provide for normal filing of late delinquent returns, with a reasonable cause statement, which may be considered after the filing and after the automatic assessment of penalties. 

This Procedure Is No Different Than Filing Any Late Return
and is Evidence that the DIIRSP Has Been Eliminated.

What Does This Mean For Streamlined Offshore And Domestic Procedures?

We previously posted Comm'r Warns Taxpayers - Streamlined Offshore Procedures Won't Last Forever! where we discussed that while there is still a trickle of non-willful taxpayers cleaning up under the Streamlined Offshore Procedures, the IRS has made it clear that this the Streamlined Offshore Procedures won't last forever and this may be non-willful taxpayer's last chance to report previously undisclosed foreign accounts under this program. 

These IRS' ending the OVDP program, the Delinquent Information Return Program  and the proposed ending of the Streamlined Offshore Procedures, reflect an ongoing efforts by the U.S. government to make offshore tax compliance a priority.

Read more at: Tax Times blog

The IRS’s Small Business/Self-Employed division wants to fill more than 150 collection representative vacancies throughout the country. The pay scale ranges from GS-5 to GS-8.

Small businesses are encouraged to share the external announcements with interested friends, family or clients that might be interested in applying.

Collection representatives provide a full range of administrative and technical assistance for taxpayers and their representatives. 

The job announcements list the responsibilities and closing dates:

• External announcement 21PHI-SBX0008-0962-05 
• External announcement 21PHI-SBX0036-0962-05 (seasonal)

Have an IRS Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888) 882-9243

Read more at: Tax Times blog

IRS has updated its "IRS Operations During COVID-19: Mission critical" website with updates on how it is functioning during Covid 19 including information about changes to procedures in its Appeals Office and information about its resumed issuance of balance due notices.

The IRS has had to curtail some operations due to COVID-19, but its mission-critical functions, including accepting tax returns and sending refunds, continue. It has set up a website (the "IRS Operations During COVID-19: Mission critical") detailing what functions are and are not currently operating.

Appeals Office changes.  

The IRS removed language from the website that said that in-person Appeals conferences had been suspended “until at least August 31, 2020.” 

The updated website still states that IRS is offering telephone and videoconference Appeals conferences. But it changes IRS’s position on Appeals conferences for cases that haven’t been docketed in the Tax Court. 

Appeals Will No Longer Suspend Cases Due To A Taxpayer's Request For An In-Person Conference. 

“In the interests of providing a timely Appeals conference, Appeals will now begin contacting taxpayers and scheduling a conference, either over the telephone or through WebEx.”  

The website reflects IRS's previously posted information that it resumed sending the 500 series balance due notices to taxpayers in October.

Have an IRS Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

Read more at: Tax Times blog