Tax Professionals & Data Safeguards. It is part of Circular 230 and in a Tax Tip, the IRS restates that data security measures should be reviewed before year end and provides a data security check list with basic steps they to be taken for their and their client’s which include: Using a firewall, backup software/services (multiple backups onsite and secure offsite), encrypting data on computers and backups, creating a data security plan and learning about/recognizing data theft and phishing scams. IRS Tax Tip 2021-184 (12/13/2021)
IRC §170 & Expanded Relief Under CARES Act. Provision extended through end of 2021 allowing joint filers to deduct up to $600 in cash donations and individuals $300. Further, taxpayers are not required to itemize deductions on their returns to take advantage of this tax provision. (IR 2021-247)
U.S. v. Morales, Jr., CA 3, 128 AFTR 2d ¶2021-5434) confirms why IRS transcripts are Important, Mercurial and Helpful. The IRS was granted summary judgment dismissing Taxpayer’s claims that returns were filed much earlier via IRS transcripts and not complete via later transcripts; thereby allowing for assessments being reduced to judgment.
Personal & Business Income Tax Returns Admissible when Charged with Filing False Client Returns. In U.S. v. Umoren, DC NV, 128 AFTR 2d ¶2021-5437, while personal/business income tax returns were not considered inextricably intertwined with crimes charged, their probative value as to knowledge of illegality would not be substantially outweighed by an undue prejudice while detained or thereafter.
IRS Refuses to Accept 8th Circuit Decision in Mayo Clinic, 127 AFTR 2d 2021-2013 (997 F.3d 789). IRS was found to have exceeded its statutory authority under Reg. § 1.170A-9(c)(1) where it promulgated the primary-function requirement and merely-incidental test. The IRS argued that Mayo’s primary function was health care, and its health-care activities were not ‘merely incidental to its educational activities.’ The Eighth Circuit reversed and remanded the case to the district court after concluding that the reg was, in part, valid. In(CA8 2021) 127 AFTR 2d ¶2021-700 (Action on Decision), the IRS says it will not acquiesce to the Eighth Circuit’s holding.
Chief Counsel Advice 202148006 Discusses Imputed Underpayment Calculations Under BBA audit procedures. The Bipartisan Budget Act of 2015 (BBA) replaces TEFRA partnership audit procedures and created a centralized partnership audit regime that, unless an exception applies: any adjustment to a partnership-related item (PRI) must be determined at the partnership level, any tax from a PRI adjustment is assessed and collected at the partnership level, and any related penalty must be determined at the partnership level. (Code Sec. 6221(a))
The Congressional Budget Office reported on Dec. 8 that the federal budget deficit reached an estimated $358 billion for the first two months of fiscal year 2022.