The House is expected to take up a series of bills that address IRS oversight and repeal the estate tax when lawmakers return from a two-week recess on April 13. The IRS, meanwhile, issued guidance during the week of March 23 addressing the Employee Plans Compliance Resolution System (EPCRS), rollovers of airline payment amounts and the Standard Industry Fare Level (SIFL) mileage rates.
Congress
House Ways and Means Committee Chairman Paul Ryan, R-Wis., said on March 26 that he would be open to approaching an overhaul of the tax code in phases as long as it leads to comprehensive tax reform (TAXDAY, 2015/03/27, C.1). “We’re willing to do it in pieces then move to a big across-the-board bill, which I think is cleaner and better,” said Ryan. “I’m happy to do tax reform in two phases if that’s necessary, so long as the first phase doesn’t preclude but actually precipitates the second phase, which is to finish the job of lowering the rates across the board.” What would be included in the first phase, however, is hard to define. Corporate inversions and international business taxes are a real issue and the clock is ticking, Ryan acknowledged.
The House Ways and Means Committee on March 25 approved seven bills dealing with oversight of the IRS and repeal of the estate tax TAXDAY, 2015/03/26, C.1. Democrats on the committee were in agreement on the IRS measures but balked at repealing the estate tax. The bills are expected to come up for a vote in the House after Congress returns from a two-week recess on April 13.
Senate Finance Committee ranking member Ron Wyden, D-Ore., has asked the IRS to issue guidance clarifying that electrical vehicle (EV) charging provided by employers is a de minimis fringe benefit under Code Sec. 132(e) meaning it should not be included as an employee’s income because it is so small as to make accounting for it unreasonable or administratively impractical (TAXDAY, 2015/03/25, C.2). In a March 23 letter to IRS Commissioner John Koskinen, Wyden said the “ambiguity of the tax treatment has left employers not knowing how to treat the benefit for tax purposes.” Wyden pointed out that adding the necessary equipment for payment and tracking can nearly triple the cost of an EV charging station, in addition to service fees in excess of $200 per month.
IRS
EPCRS. The IRS has issued a revenue procedure designed to improve and update Employee Plans Compliance Resolution System (EPCRS)—the comprehensive system of correction programs for sponsors of retirement plans under Code Secs. 401(a), 403(a), 403(b), 408(k), or 408(p) —by making limited modifications and clarifications to Rev. Proc. 2013-12, I.R.B. 2013-4, 313, (Rev. Proc. 2015-27; TAXDAY, 2015/03/30, I.4).
LITC Grants. The IRS has announced the recipients of the Low-Income Taxpayer Clinic (LITC) matching grants for the 2015 grant year (IR-2015-61; TAXDAY, 2014/03/27, I.3). The IRS has awarded nearly $10.25 million in matching grants to 132 organizations for the current grant year.
Rollovers of Airline Payment Amounts. The IRS has issued guidance for how taxpayers must report rollovers of airline payment amounts under recently enacted P.L. 113-243, which amended certain provisions of the FAA Modernization and Reform Act of 2012 (Announcement 2015-13; TAXDAY, 2015/03/30, I.2). The guidance provides, among other things, that qualified airline employees who received airline payment amounts should include the full amount on Form 1040 for the year of receipt and back it out on Line 21..
IRS Tax Tips. The IRS has reminded taxpayers that it releases daily tax tips during filing season that are available on IRS.gov (IR-2015-59; TAXDAY, 2015/03/27, I.1). The easy-to-read tips cover a wide range of tax topics intended to help taxpayers during the 2015 tax filing season such as information on money-saving tax credits and deductions that can be easy to overlook.
SIFL Rates. The IRS has released the applicable terminal charge and the SIFL mileage rates for determining the value of noncommercial flights on employer-provided aircraft in effect for the first half of 2015 for purposes of the taxation of fringe benefits (Rev. Rul. 2015-6; TAXDAY, 2015/03/27, I.2). For flights taken during the period from January 1, 2015, through June 30, 2015, the terminal charge is $45.52, and the SIFL rates are: $.2490 per mile for the first 500 miles, $.1898 per mile 501 through 1,500 miles, and $.1825 per mile over 1,500 miles.
IRS Webinar/Identity Theft. The IRS has improved its strategies for preventing and detecting tax-related identity theft and for providing assistance to identity theft victims, said officials from the IRS stakeholder liaison office during a March 26 IRS webcast (TAXDAY, 2015/03/27, I.5). Specific examples of procedural improvements include the new IRS policy to delay releasing tax refunds until after it has verified third-party income information, new screening filters to detect false returns, and the new limitation on the number of direct deposits of tax refunds that can be made into one account.
IRS Webinar/Retirement Plans. Many types of retirement plans can make loans to plan participants, but some cannot, IRS officials explained during a March 26 IRS webinar on retirement plan loans to participants (TAXDAY, 2015/03/27, I.6). Plans prohibited from making participant loans include individual retirement accounts (both traditional and Roth) and IRA-based plans such as SEPs, SARSEPs and SIMPLE IRAs, Anita Bower, Office of Communications and Liaison, IRS Tax-Exempt/Government Entities Division, stated.
2014 IRS Data Book. The IRS released the 2014 Data Book, a snapshot of Service activities for fiscal year 2014. The report describes activities conducted by the IRS from October 1, 2013, to September 30, 2014, and includes information concerning returns filed, taxes collected, enforcement, taxpayer assistance and IRS budget and workforce (IR-2015-58; TAXDAY, 2015/03/25, I.1).
IRS Fact Sheet/Right to Representation. The IRS has released a fact sheet providing information on a taxpayer’s right to retain representation (FS-2015-17; TAXDAY, 2015/03/25, I.2). This is one of several taxpayer rights that are discussed in IRS Publication 1, Your Rights as a Taxpayer. Taxpayers have the right to retain an authorized representative to represent them in their dealings with the IRS.
Eligibility Waiver/Libya and Yemen. The IRS has announced a waiver for any individual who failed to meet the eligibility requirements of Code Sec. 911(d)(1) because adverse conditions in a foreign country precluded the individual from meeting the requirements for the 2014 tax year (Rev. Proc. 2015-25; TAXDAY, 2015/03/25, I.3). Qualified individuals may exempt from taxation their foreign earned income and housing cost amounts.
Per Diem Travel Rates. The U.S. State Department has released a listing of maximum travel per diem allowances for travel in foreign areas (TAXDAY, 2015/03/25, I.4). The rates apply to all government employees and contractors, and are effective as of April 1, 2015.
Field Attorney Advice/Debentures and Straddles. The IRS Chief Counsel has released a Field Attorney Advice memorandum that addressed whether an issuer of aggregate original principal amount exchangeable senior debentures created a straddle by issuing the debentures and holding the corresponding reference shares (TAXDAY, 2015/03/24, I.1). Also addressed is whether the issuer may deduct interest attributable to the debentures.
Chief Counsel Notice/Tax Court E-Transcripts. IRS Chief Counsel has issued a notice supplementing its procedures for ordering transcripts from the Tax Court (TAXDAY, 2015/03/24, I.3). The new notice advises that in most circumstances, Counsel attorneys should only receive requested transcripts in electronic, rather than paper, format. The notice also outlines how IRS attorneys should use the dedicated “Tax Court Transcripts for PA” email box for transcript related issues.
Online Tax Help Tools. More taxpayers are using the information and tools on IRS.gov , to help them in preparing their returns. Tools include “Where’s My Refund,” which enables taxpayers to track the status of their refunds, the IRS “Get Transcript” application, the tool allowing requests for electronic filing PINs and more (IR-2015-57; TAXDAY, 2015/03/23, I.1).
Miscellaneous
The American Institute of Certified Public Accountants (AICPA) recommended that the IRS and the Treasury Department provide relief for surviving spouses who would like to elect portability of their deceased spouse’s unused estate tax exemption (TAXDAY, 2015/03/25, M.1). In a letter to the Service dated March 19, the AICPA requested the IRS provide a short Form 706-EZ to make the portability election. The AICPA also requested that the IRS provide permanent relief (15 months) to estates not otherwise required to file Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, and allow the surviving spouse to file for portability, if the executor chooses not to file the form because the estate is not otherwise required to do so. Rev. Proc. 2014-18, I.R.B. 2014-7, 513, provides an automatic extension until the end of 2014 for certain estates that did not otherwise have a filing requirement to elect portability of the deceased spousal unused exclusion (DSUE) amount for the benefit of the surviving spouse.
By Jeff Carlson and Jennifer Cordaro, Wolters Kluwer News Staff