Tax Blog/Blawg

On March 29, 2011, the IRS published Notice 2011-28 which provides interim guidance on informational reporting to employees of the cost of their employer-sponsored group health plan coverage. This informational reporting is required under § 6051(a)(14) of the Internal Revenue Code. This provision was enacted as part of the Affordable Care Act to provide useful and comparable consumer information to employees on the cost of their health care coverage. This reporting to employees is for their information only, to inform them of the cost of their health care coverage, and does not ...

The Government has been aggressively seeking injunctive relief against employers ordering them to timely file the corporation's tax returns and to withhold and pay over federal income taxes and employment taxes.  Most recently, the Government has increased its enforcement efforts in the temporary staffing arena.  On March 17, 2001 in US v. LCL Administration, Inc. the U.S. District Court for the Eastern District of California granted  the Government's request for a preliminary injunction against LCL, a temporary staffing company, and its officers, ordering them to timely ...

For better or worse, many a tax dispute has been won or lost on procedure, often on the question of whether a document - be it a tax return, refund claim, or petition - was timely filed.  The centrality of this issue helps explain the renown of the otherwise unremarkable "mailbox rule" (a.k.a. the "timely-mailing-is-timely-filing rule").

The attached article, published in the International Tax Review, examines a recent case, Dietsche v. Commissioner, in which the Tax Court ruled that a petition mailed from New Zealand and postmarked the day after its due date was not timely filed ...

For interested readers, we have a number of speaking engagements approaching in the next couple of months.

• Tomorrow (March 23), I will be speaking with Ed Froelich (Morrison & Foerster) and Kristin Hickman (University of Minnesota) on a Strafford webinar about the impact of the Supreme Court's decision in Mayo Foundation.  We will be discussing not only the reasoning behind the decision and its implications for non-regulatory guidance but also specific considerations for taxpayers to deal with heightened deference to Treasury's interpretations of the Internal Revenue Code.

• On ...

Nowadays, newspapers and tax journals often contain articles about international tax issues, particularly the duty of U.S. persons to file an annual Form TD F 90-22.1 ("FBAR") to report their interests in foreign financial accounts.  As general knowledge of the FBAR increases, the chances of taxpayers avoiding penalties on grounds that they did not act "willfully" decrease. Nevertheless, one recent case fought before both the Tax Court and a federal district court, in United States v. Williams, 09-cv-437 (E.D. Va. 2010), offers support for the notion that where there's no will ...

Following on the heels of the IRS announcement that a problem was identified in the way the first quarter HIRE credit (line 12e) was applied when computing the Failure to Deposit (FTD) penalty on second quarter Forms 941, IRS announced the audit criteria for HIRE Act examinations. John Tuzynski, Chief of Employment Tax Operations, IRS Small Business/Self Employed Division, said an IRS enforcement initiative is under way for employers that claimed tax credits under the HIRE Act.    He indicated that the exams focus on verifying Forms W-11, payroll amounts claimed by employers and ...

Much confusion has existed over the past few years about filing Form TD F 90-22.1 ("FBAR") to report foreign accounts to the IRS.  To remedy this, the IRS issued pronouncements in 2009 and 2010 granting certain FBAR filing exemptions and penalty waivers.  Many of these benefits had retroactive effect.  A recent criminal case, United States v. Simon, calls into question the validity of the IRS pronouncements.  By holding that the U.S. Department of Justice may pursue criminal prosecutions in situations where the IRS publicly indicated that it would not even assert civil penalties, this ...

TaxBlawg’s Guest Commentator, David L. Bernard, is the former Vice President of Taxes for Kimberly-Clark Corporation, a past president of the Tax Executives Institute, and a periodic contributor to TaxBlawg.

Transfer pricing among affiliated companies is the classic “double-edged sword”. When carefully designed, transfer pricing practices can cut a company’s effective tax rate (“ETR”) with little risk of interference from tax authorities. When done poorly, transfer pricing can devolve into a mess of  ETR-killing practices.  As quickly as one edge can save a company money, the other edge can cut short a tax professional’s career.

Representative Donna Edwards introduced a bill [H.R. 631] titled “Working for Adequate Gains for Employment in Services Act” (WAGES Act), that would increase the minimum federal cash wage rate for tipped employees from $2.13 per hour to $3.75 per hour.  Since 1966, the Fair Labor Standards Act (FLSA) has allowed employers to use a combination of a cash wage and tips to meet their minimum wage obligations under federal law for “tipped employees.”  Employers may currently pay tipped employees as little as $2.13 per hour and still be in compliance with the FLSA if they credit tips ...

According to the Department of Homeland Security, the federal government has started its crackdown on businesses suspected of hiring illegal immigrants.  Federal agents are expected to visit companies to verify employees' identity and eligibility for employment in the United States.  Documentation, such as Forms I-9 will be reviewed.

ICE is not expected to name the companies listed in its audit plans but may identify the specific sectors that will be targeted.

Companies should manage these audits carefully because there is a significant potential for the findings to result in ...