2016 Federal Tax Update - … Federal Individual Tax Update - Highlight Reel • 2016 Extender Bill? Not yet • 5 new legislative acts in 2015 - Including Path Act

2016 Federal Tax Update

Bradley Burnett, J.D., LL.M. (Taxation)

Bradley Burnett Tax Seminars, Ltd.

www.BradleyBurnettTaxSeminars.com

http://www.BradleyBurnettTaxSeminars.com

2017 Federal Individual Tax Update

- Highlight Reel

• 2016 Extender Bill? Not yet

• 5 new legislative acts in 2015

- Including Path Act (Extender Bill)

• Treas. regs, court cases and IRS rulings, notices and announcements galore

• Indexing for inflation – Some effective 2016,

more effective 2017, for substantive law

provisions, and aggressive new indexing for penalties

01/30/17© 2017 Bradley Burnett Tax

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2016 Extender Legislation?

• 30 provisions set to expire at end of 2016

• Most notably:

- Mortgage insurance premium deduction

- Home debt forgiveness exclusion

- Accelerated depreciation race horses / race tracks

- Credits for non-wind & non-solar property §§45, 48

- Technical corrections to existing law


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Possible 2017 Legislation

• Mobile Workforce State Income Tax

Simplification Act – Would bar states from taxing

earnings of nonresident employees who stay less

than 30 days (has not yet passed)

• Retirement Enhancement Savings Act – Expands

ability of small employers to band together with

multi-employer plans and makes other retirement

related changes (has not yet passed)


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2015 PATH Act - Individual Tax Provisions

• Tuition Deduction (Extended through 12/31/16)

• American Opportunity Tax Credit (Made permanent) (Beginning for 2016, EIN of educational institution must be reported)

• Deduction for sales tax (in lieu of income tax) (Made permanent)

• Deduction for mortgage insurance premium as mortgage interest (Extended through 12/31/16)

• $250 teacher deduction for supplies (Made permanent) (For 2016 and later, indexed for inflation (2017 remains at $250) and expanded to include professional development expenses)


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Polling Question #1

• Which of the following college tax breaks is

extended beyond 2016 by the PATH Act?

A. Tuition deduction

B. American Opportunity Tax Credit (AOTC)

C. Both A. and B. above

D. Neither A. or B. above


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2015 PATH Act - Individual Tax Provisions

• IRA transfers to charity for 70 ½ or older (Made permanent) (Make sure receipts are properly worded)

• Expanded contributions of real property for qualified conservation charitable deduction (Made permanent)

• Exclusion for personal residence cancellation of debt income (Extended through 12/31/16)

• $500 credit for nonbusiness energy property (Extended through 12/31/16) (Energy Star requirements updated)

• Enhanced child tax credit (Made permanent)

• Enhanced earned income tax credit (Made permanent)


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2015 Highway Funding Bill

• HSA (Health Savings Account) eligibility not affected by receipt of armed service (or VA) benefits

- If an individual purchases so-called “high deductible insurance”, such individual (or his (her) employer) may contribute to a tax deductible and tax deferred HSA account

• Health insurance employer mandate penalty exemption for recipients of Tricare (or VA) health care benefits

- Recipients of Tricare (or VA) health care benefits NOT counted in testing for 50 (full time) employee threshold


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Identity Theft and Tax Fraud

• Expect refunds to be dramatically slowed by IRS and states

• 2016 W-2s & 2016 1099-MISCs m/ be filed by employer w/ government by 01/31/17

• Protect your computer against being hacked (IRS Pub 4557 (Rev. 10-2015) – Safeguarding Taxpayer Data (A Guide for Your Business)

- Provides basics to be followed to protect taxpayer data

- Following such basics arguably is defense against Circular 230 violation


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Form 1040 Due Dates

• Form 1040 due dates do not change

- Due on 04/18/17 (04/15/17 lands on Saturday,

04/17/17 lands on a legal holiday)

- Remains 06/15/17 if out of country on “April 15”

- Extended due date is 10/16/17 (10/15/17 lands

on a Sunday)

01/30/17

© 2017 Bradley Burnett Tax Seminars, Ltd.

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FBAR (FinCen 114) Due Dates

FBAR

Current

Law

New Law Net Change Effective Date

FBAR

Return

(FinCen

114)

June 30 April 15 2 ½ months

less

Tax years

beginning after

2015

FBAR

Extension

None Up to 6

months

Up to 6

months

more

Tax years

beginning after

2015


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FBAR (FinCen 114) Due Dates

• 2016 FBAR is due on 04/15/17

- 04/15/17 lands on a Saturday

- Government has clarified the following Tuesday (04/18/17) is the due date for the 2016 FBAR

- Automatic six month extension until 10/15/17

- (10/15/17 lands on a Sunday) (government has not yet clarified whether extended FBAR is due on Monday 10/16/17)


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Income Tax Return Due DatesIncome Tax Return Due Dates

Entity Type Current Law New Law Net Change Effective Date

S Corp 15th day of 3rd

month

15th day of 3rd

month

No change No change

Partnership 15th day of 4th

month

15th day of 3rd

month

Accelerated 1

month

Returns for tax

years beginning

after 12/31/15

C Corp (non

06/30 year end)

15th day of 3rd

month

15th day of 4th

month

Delayed 1 month Returns for tax

years beginning

after 12/31/15

C Corp (non

06/30 year end)

15th day of 3rd

month

15th day of 3rd

month*

(* 15th day of 4th

month after

2025)

No change

(except for *) (*

15th day of 4th

month after

2025)

* No change,

until returns for

tax years

beginning after

12/31/25


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Tax Return Extension Due Dates

Income Tax Return Extension Due Dates

Tax Return Type Current Law New Law Net Change Effective Date

S Corp 6 months 6 months No change No change

Partnership 5 months 6 months 1 month more Returns for tax

years beginning

after 12/31/15

C Corp (non

06/30 year end)

6 months 5 months 1 month less Returns for tax

years beginning

after 12/31/15

C Corp (non

06/30 year end)

6 months 6 months*

(* 5 months after

2025)

No change * (*

until tax years

beginning after

2025, then 1

month less)

* No change,

until returns for

tax years

beginning after

12/31/25


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Tax Return Extension Due Dates

Income Tax Return Extension Due Dates

Tax Return Type Current Law New Law Net Change Effective Date

1041 5 months 5 ½ months ½ month more Returns for tax

years beginning

after 12/31/15

5500 2 ½ months 3 ½ months 1 month more Returns for tax

years beginning

after 12/31/15

990 3 months 6 months 3 months more Returns for tax

years beginning

after 12/31/15


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Late Filing Minimum Penalty Increase

• §6051 Increase in Floor of Late Filing Minimum Penalty from $205 to $210 (or, if Less, the Amount of Tax Due) for Certain Returns More Than 60 Days Late (for returns required to be filed after 12/31/16)

- For certain returns filed more than 60 days late, minimum penalty has increased (from $205 to) $210 or the amount of tax owed, whichever is smaller

- E.g., A 2016 Form 1040 is filed with IRS more than 60 days late with $112 income tax due. The late filing penalty will be $112. Total owed IRS = $224 (i.e., $112 + 112), plus late payment penalty (if any) and interest


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Late Filing Minimum Penalty Increase

• §6051 Increase in floor of late filing minimum

penalty from $205 to $210 (or, if less, amount of

tax due) for > 60 days late (for 2016 returns and

later) (i.e., returns originally due after 2016):

1. Form 990-T

2. Forms 1040, 1040A, 1040NR, 1040NR-EZ

3. Form 1041

4. Form 1120, 1120-H, 1120S


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3 Categories of Rich

• Super Rich $415,050 / $466,950 (2016)

- Highest brackets (39.6% OI and 20% LTCG)

• Medium Rich $259,400 / $311,300 (2016)

- Phase-out personal exemptions and itemized

deductions

• Poor Rich $200,000 / $250,000 (2016)

- 3.8% NII tax


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Capital Gains and Qualifying Dividends

• 0%, 15%, 20% long term capital gain rates

- 0% rate if in 15% OI bracket (up to $36,900 single, $73,800 MFJ)

- 20% rate if in 39.6% OI bracket (> $415,050 single, >$466,950 MFJ)

• Plus 3.8%, AMT, effective tax rate increases for phase-out of PEP (personal exemption) and PEASE (itemized deductions) = 30% rate

• Gift appreciated stock to low income family


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Presidential Candidates – Tax Proposals

Hillary Clinton Bernie Sanders Donald Trump

Capital Gains Rates Top rate 39.6% (20% 6 yr) Top rate 39.6% 0%, 15% and 20%

Extra Tax: Buffet Rule Over $1 mill pays 30% None

Extra Tax: Fair Share

Surcharge

Over $5 mill pays addtl 4% None

Extra Tax: Wall Street None Transaction tax on stocks,

bonds and derivatives

None

Ordinary Income Rates Up to 39.6% (+ surtaxes) Up to 52% Up to 25%

NII (Net Invst Income) Tax No change Increase to 10% No change

Broaden base (strip

deductions)

Axe some deductions, limit

some deducts to 28%

Limit some deductions to

28%, eliminate AMT

Axe some deductions,

steepen PEP & Pease

Social Security Taxes No change Blow cap off wage base,

add 3 new payroll taxes*

No change

Estate and Gift Taxes $3.5 mill exemption, no

indexing, top rate 45%, gift tax

exemption $1 mill

$3.5 mill exemption, top

rate 65%, eliminate

discounting, hurt GRATs

Eliminate estate tax

Affordable Care Act Expand Premium Tax Credit *Add 2 new payroll taxes Eliminate ACA 01/30/1720

Tax Reform

“The difference between death and taxes is death

doesn’t get worse every time Congress meets.”

Will Rogers


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Post-Election Tax Proposals

Democrat Republican Donald Trump

Corporate Tax Rate Possibly agree to

cut if repatriation tax

proceeds go to U.S.

infrastructure

improvements

20% 15%

Corp Repatriation Tax Rate ? 8.75% for cash; 3.75% for other 10%

Proceeds of repatriation tax Fund U.S.

infrastructure

improvements

Offset broader corporate tax

rate cuts

?

U.S. infrastructure

improvements

Funded by Corp

repatriation tax

? $1 trillion infrastructure

renewal plan w/ $137 billion

tax credits for private

investment in projects

Future of international Corp

tax

? Territorial system (tax only U.S.

economic activity (no tax on

overseas income)

End deferral (companies m/

pay tax annually on all

overseas earnings)


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Democrat Republican Donald Trump

Pass-Through Tax Rate ? 25% after assigning some

portion as compensation

15% for “small business”.

“Large business” taxed as C

Corp

AMT ? Repeal, except for 90% limit

on NOLs

Repeal

Business Incentives ? Repeal all, except R&D credit Repeal all, except R&D credit

Depreciation ? Full expensing Expensing only for

manufacturing only if company

forgoes interest deductions*

Interest deduction ? Limited to interest income,

except for financing and

leasing industries

* See depreciation immediately

above

Affordable Care Act Keep ACA Axe ACA + ACA taxes Axe ACA + ACA taxes


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Democrats Republicans Donald Trump

Ordinary Income Rates Status quo (7 rates up

to 39.6%)

12%, 25% and 33% 12%, 25% and 33%

Capital Gains Rates ? Half excluded (thus,

rates of 6%, 12.5% and

16.5%) (Interest income

treated same)

Status quo (0%, 15% and 20%)

NII (Net Investment Income)

Tax

Status quo (3.8% tax) Repeal Repeal

Carried interest (portion of

investment returns paid to

fund managers)

? ? (Status quo is capital

gains rate)

Ordinary income

Standard Deduction Status quo (joint

$12,300, single

$6,300)

$24,000 joint, $18,000

single parents, $12,000

other singles

$30,000 joint, $15,000 single

Itemized Deductions ? Keep only mortgage and

charitable deductions

Keep only mortgage & charitable.

Cap at $200,000 married, $100,000

single

Estate and Gift Taxes Status quo Repeal Repeal


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Social Security Wage Base

• $118,500 for 2015

• $118,500 for 2016 (same as 2015)

• $127,200 for 2017


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Foreign Earned Income Exclusion / Housing

• $100,800 in 2015

• $101,300 in 2016

• $102,100 in 2017

• Housing Exclusion – Ranges $16,128

(2015), $16,208 (2016), $16,336 (2017)


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Foreign Earned Income Exclusion

• No §911 exclusion on delinquent return if IRS contacts taxpayer and raises issue first (Nancy McDonald, 2015-169 (08/25/15))

• §911 Income Earned by Bona Fide Resident in Foreign Country (23% of Total) Excluded – It’s Not Always an “All or Nothing” Gig (Wendell Wilson and Angelica M. Wilson, pro sese, v. Comm., TCS 2016-19 (04/25/16))

- 23% of mariner’s income earned in foreign ports

- 77% in international water (not a foreign country)


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Foreign Bank and Financial Accounts

• FinCen Form 114 (FBAR) must be filed

• Filed electronically

• For 2015 FBAR, due by June 30, 2016 (no extensions)

• For 2016 FBAR, due by April 18, 2017 (6 month extension possible)

- Same applies to later years

• If “signature authority” only, 2016 FBAR need not be filed until April 15, 2018


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FBAR Must Be Filed By

• Persons with either: Ownership of or

signature authority over foreign bank

account

- Authority over = ability to withdraw

- Account(s) must exceed $10,000 U.S.

on any one day

• Use conversion rate as of last day of year


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Foreign Bank Account

• Account physically located in England (though the bank is a U.S. bank) is a foreign account

• Account physically located in Chicago, IL (though the bank is a Canadian bank) is NOT a foreign account

• Key: At what location (branch) is the account is set up? If “signature card” outside of U.S. soil, it is a foreign account

• Online gaming account is a foreign bank account if titled off of U.S. soil (Jon Hom, DC CA (06/04/14)) (but, in Jon Hom, 9th Cir. (07/26/16) appeal, only clearing account (like a Paypal account) is reportable bank account, not accounts merely holding gambling money)


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FBAR Reports “Financial Accounts”

Financial accounts =

1. Bank (e.g., savings and checking) accounts, time deposits

2. Securities accounts (e.g., brokerage accts)

3. Commodities future or options accounts

4. Insurance policy with cash value

5. Mutual funds or similar pooled funds

6. Online poker accounts

7. Any other accounts maintained in a foreign financial institution (or person providing services of fin institution)


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Polling Question #2

• Q: Are any foreign financial assets,

beyond merely bank accounts, reportable

on a FinCen 114 (FBAR)?


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Lookout, Lookout !!

• Do not overlook:

- Employee ability to sign on foreign business account -Foreign retirement savings accounts - Inherited foreign accounts - Accounts owned by recent immigrants to U.S.

- Investment account broker got client into

- If in doubt, fill it out. If in doubt, send it out. On time!!


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Federal Standard Mileage Rates

2015 2016 2017

Medical / Moving 23¢ 19¢ 17¢

Charitable 14¢ 14¢ 14¢

Business 57.5¢ 54¢ 53.5¢


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2017 Estate and Gift Tax Exclusion

Amounts

• Estate and Gift Tax Basic exclusion amount §2010 (Rev. Proc. 2016-55)

- Basic exclusion amount for determining unified credit against estate tax = $5,490,000 (2017) $5,450,000 (2016)

• Annual gift tax exemption §2503 (Rev. Proc. 2016-55)

- $14,000 (2017 remains same as 2016) of gifts to any person (other than gifts of future interests in property) are not included in the total amount of taxable gifts made during that year


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Individual Retirement Accounts

• Annual Contribution Limits to IRAs for 2016 and

2017 (IR 2016-141)

- Traditional IRA and Roth IRA Contribution Limits

$5,500 (for 2016 and 2017)

- Traditional or Roth IRA Contribution Limit for age

50 or over $6,500 (for 2016 and 2017)


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Transfers from IRAs to Charities

• IRA transfers to charity for 70 ½ or older (Made permanent) (Make sure receipts are properly worded)

• Must be trustee transfer – Rollovers don’t cut it –Do not retrieve check from trustee and hand deliver it to charity

• Substantiation – Separate receipt (contemporaneous acknowledgement) needed for:

1. Deductible donations; and

2. Transfers from charity


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Consequences of IRA Prohibited Transaction

• Plan ceases to be a plan as of 1st day of year in which prohibited transaction takes place

• Excise tax triggered

• Excise tax return (Form 5330) due

• 6 year statute of limitations (for assessment) for not disclosing prohibited transaction on 1040 (Thiessen, 146 TC 7 (03/29/16))

- In Thiessen, IRA borrowed money from bank (not “in an of itself” a prohibited transaction)

- Problem: IRA owner guaranteed loan to IRA by bank (guarantee is a prohibited transaction)


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Qualified Retirement Plans

• Compensation Limit for 2016 (2017)

- For 2016, the maximum compensation used for

figuring contributions and benefits is $265,000

($270,000 for 2017)

• Defined contribution limit for 2016 (2017)

- For 2016, the limit on contributions, other than

catch-up contributions, for a participant in a

defined contribution plan is $53,000 ($54,000 for

2017)


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• Elective Deferral Limit for 2016 (2017)

- For 2016, the limit on elective deferrals, other

than catchup contributions, is $18,000

(unchanged for 2017)

- These limits apply for participants in SARSEPs,

401(k) plans (excluding SIMPLE plans), 403(b)

plans and 457(b) plans


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• Catch-up contribution limit for 2016 (2017)

- A plan can permit participants who are age 50 or over at the end of the calendar year to make catch up contributions in addition to elective deferrals and SIMPLE plan salary reduction contributions

- Catch up contribution limitation for a defined contribution plan other than a SIMPLE plan is $6,000 for 2016 (unchanged for 2017)

- Catch up contribution limitation for SIMPLE plans is $3,000 for 2016 (unchanged for 2017)


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PATH Act - Business Tax Provisions

• §179 Expense Election (Rev. Proc. 2016-55)

- Extended to 2015 and beyond and made permanent

- Maximum §179 expense $500,000 for 2016 ($510,000 for 2017)

- Start of phase out $2,000,000 for 2016($2,030,000 for 2017)


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• §179 and 15-year life for real estate (Made permanent)

• §179 for Real Estate - $250,000 in 2015, increases to $500,000 (inflation adjusted) for 2016 and beyond

• HVAC units qualify as §179 property (2016 and beyond)

• Real estate sourced §179 recapture is ordinary income


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• 15 Year Life for Real Estate Applies to:

- Qualified leasehold improvements;

- Qualified restaurant buildings; and

- Qualified retail improvements

• Effect of Extender Bill: 15 year life (2015

and later) (permanent) did not revert to 39-

year life. Bonus depreciation still available

on first half unless elect out.


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§168(k) Bonus Depreciation

2012-17 2018 2019

2020 & beyond

50% 40% 30%

0%


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Cost Recovery of Real Estate – 3 Baskets

• Three general baskets of cost recovery for

real estate:

1. 27.5 year (residential real estate)

2. 15 year (improvements (after 3 years) to

qualified restaurant, retail or leasehold

property)

3. 39 year (commercial property) (leftover

basket)


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PATH Act – Expansion of Bonus Property

• Bonus depreciation

- PATH Act added (effective 2016 and later) ability to take bonus depreciation on 39-year qualified improvement property

1. Need not be leasehold improvement

2. Need not be property more than 3 years old

3. Must be property previously placed in service

4. Must be non-residential, non-exterior, non-structural non-expansion, non-elevator and non-escalator


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2016 Depreciation Limits for Luxury Auto

• Lesser of $3,160 or 20% of basis *

* Plus $8,000 bonus depreciation ($6,400 in 2018,

$4,800 in 2019, $0 thereafter)

• Bonus depreciation only available if vehicle is new

• If not 100% business use, above amounts are reduced


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W-2 and 1099-MISC Due Dates

• Change to Due Date of Forms W-2s and 1099-MISC for 2016 Year (Filed in 2017) – All Forms Due by January 31 No Matter What

- Effective for forms filed on or after January 1, 2017, Forms W–2 and Forms 1099-MISC for non-employee compensation must be filed by January 31

- Must be filed by January 31 EVEN IF FILED ELECTRONICALLY

- Bye bye to February 28 and March 31


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2015 Trade Package Legislation

• Delinquent information reporting penalties dramatically increase (effective for info returns filed after 2015)

• Applies to Forms 1099, W-2, 1095 (Health Care Reporting), etc.

• Example of penalty: $530 (twice) for intentional disregard of requirement to file each Form 1099 ($530 x 2 = $1,000 for each delinquent 1099)

• If in doubt, fill it out. If in doubt, send it out. ON TIME !!


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Increased Delinquent Info Return Penalty

§6721 Penalty Before 2016 After 2015

Fixed w/in 30 days $30 $50

Fixed > 30 days, but < Aug 1 $60 $100

Fixed Aug 1 or later $100 $250

Intentional disregard $250 $530

• Penalty may be applied twice (doubled) if return not supplied both to payee and government


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Bipartisan Budget Act of 2015

• Huge change to how IRS audits partnerships (any entity filing Form 1065, including LLCs taxed as partnerships)

• Effective 2018, new rules replace current TEFRA rules

• These new rules allow IRS to audit partnerships at the entity level and assess and collect taxes against the partnership, UNLESS partnership elects out of new regime

• Impacts the formation and operations of partnerships, disposition of partnership interests and admission of new partners

• Huge planning issue requiring relatively prompt attention for both new and existing partnerships


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Centralized Partnership Audits

• Annual Election Out Of New Rules (§6221)- Pshps w/ 100 or fewer partners* can opt out, if all

partners are:

- Individuals - C Corps - Foreign Corps -Estates

- S Corps (each shareholder counts as a partner*)

- Pshps cannot elect out if have partner which is:

- Partnership - Trust - SMLLC (not sure yet until final regs)

- Grantor trusts (not sure yet until final regs)


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• If do not elect out of new rules, two

choices:

1. Accept IRS’ partnership level imputed

underpayment (§6225)

- Avoid this like the plague

2. Elect to push up (push out) the

adjustment to partners (§6226)

- Do this


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• Imputed underpayment rule:

- IRS nets all at partnership level, applies

highest tax rate 39.6%

- Partnership has burden of proving lower

rate more appropriate

- No adjustments to partner’s outside basis

- Result = Double tax. NASTY!!


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• Push Up (Push Out) Election

- Elected within 45 days of notice of final partnership adjustment

- Partnership issues adjusted Form K- 1” for the “adjustment year” to each partner of the partnership for the reviewed year

- Partner gets basis step up for income (avoids double tax)

- Partner, not partnership, liable for tax if elected

- Partner pays tax, penalty and interest (at 2% higher than normal IRS interest rate)


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• Huge change to how IRS audits partnerships (and LLCs)

• Effective 2018, new rules replace current TEFRA rules

• These new rules allow IRS to audit partnerships at the entity level and assess and collect taxes against the partnership, UNLESS partnership elects out of new regime

• Impacts the formation and operations of partnerships, disposition of partnership interests and admission of new partners

• Huge planning issue requiring relatively prompt attention for both new and existing partnerships (and LLCs taxed as partnerships)


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Polling Question #3

• Q: Is it advisable for a partnership (or LLC

taxed as a partnership) to take a siesta and

ignore the new Centralized Partnership

Audit Rules which are coming like a freight

train and effective in 2018?


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PAL Material Participation

With Less Than Stellar Time Records

1. 500 hours (Stephan Tolin (TCM 2014-65))

2. Do substantially all the work (Michel Moreno (DC LA 05/19/14))

3. >100 hours and no one else does more (Larry Kline TCM 2015-144))

4. SPA (significant participation activity = at least 100 hours in each, combined exceeds 500 hours) (Jose Lamas (TCM 2015-59))

5. Real estate professional (> ½ of time, 750 hours) with less than perfect records (Joseph D. and Darcy C. Moon v. Comm., TCS 2016-23 (05/23/16))


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Passive Activity Loss - Proving

Material Participation

• Cell phone (billing statement) call records

• Emails

• Travel itineraries and receipts

• Credit card charges

• Affidavits from customers

• Other documentary evidence


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Polling Question #4

• Q: Is the following statement true or false?

Cell phone call records (billing statements

and usage logs) could never in a hundred

years help prove material participation for

passive activity loss purposes


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PAL Real Estate Professional - Case of

Century

• Ohio Woman Granted PAL Real Estate Professional Relief (Beth M. Hailstock, TCM 2016-146 (08/08/16))

– Though no §469(c)(7) election and no aggregation election made

– Pathetic and missing financial records did not even trip her up

– No time records kept

– On strength of her “no outside employment” and credible testimony, court awards “Facts and Circumstances” material participation

– Does arguing this case make us penalty free when we sign a tax return with a less than perfect underlying fact pattern?


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FAST ACT (To Pay for Highways)

• Passport will be revoked (or not issued) if taxpayer: -Owes to IRS $50,000 or more in tax, penalty, interest, etc.; and - Not under installment agreement

• IRS to hire many new, aggressive outside (and inside) tax debt collectors

• Moral of the story: Get an IRS installment agreement and keep it


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User Fee Increase for Installment

Agreements

• User fee increases to $120 for an installment agreement

• Reduced to $52 for a direct debit installment agreement (an agreement whereby the taxpayer authorizes IRS to request monthly electronic transfer of funds from taxpayer's bank account to IRS)

• $43 notwithstanding the method of payment if low-income taxpayer

Preamble to Prop Reg (08/19/2016); Prop Reg§300.1, Prop Reg §300.2; IR 2016-108


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Innocent Spouse Relief

• §6015(f) Innocent Spouse Equitable Relief Awarded to Louisiana Widower to Abate Late Filing and Late Payment Penalties – His Late Wife Failed to Mail Return to IRS Three Years Before and He Didn’t Know It (Joseph Patrick Boyle, pro se, v. Comm., TCM 2016-87 (05/02/16))

- He gets off hook for penalties on his own tax!!

- Tax Court overturns two IRS principles re: equitable relief in Rev. Proc. 2013-34


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Private Delivery Services

• IRS Notice 2016-30 updates list of approved Private Delivery Services which satisfy “date of mailing = date of filing” rule

• FedEx and UPS stay, DHL added

• FedEx Ground and UPS Ground conspicuously absent from list

• Better get electronic receipt to prove date of “mailing”

• By comparison, U.S. Certified Mail still works (extremely well) to satisfy “date of mailing = date of filing” rule

• §§6213(a), 7502 Utilizing UPS Ground (vs. an Approved Faster UPS Service) Costs Michigan Man $41,000 in Taxes –No Tax Court Jurisdiction Where Petition, Though UPS’d on 90th Day, Received After 90th Day – Saving $12.30 Cost Him $41,000 – Ouch (Eric Lamart Sanders, pro se, v. Comm., TCS 2014-47 (05/12/14))


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Bradley Burnett Tax Seminars, Ltd.

• Live seminars and webinars available

- Tax Update Seminars

- Specialty topics available: Tax Reform, Corporation and Partnership Tax Planning Update, FBAR/Form 8938, IRAs, Self Directed IRAs

- In-house customized programs available

• E-Books coming soon!!

• Visit our website: www.BradleyBurnettTaxSeminars.com

• Email: [email protected]


Seminars, Ltd.

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http://www.BradleyBurnettTaxSeminars.com

mailto:[email protected]

Documents

2016 Federal Tax Update - … Federal Individual Tax Update - Highlight Reel • 2016 Extender Bill? Not yet • 5 new legislative acts in 2015 - Including Path Act