IRS OFFERS RELIEF FOR PARTNERSHIPS AND ENTITIES

NSTPInternal Revenue Service (IRS)

The IRS has issued revised guidance extending relief for certain partnerships, real estate mortgage investment conduits (REMICs), and other entities that did not file the required returns by the new due date for tax years beginning in 2016. The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (Surface Transportation Act) changed the date by which a partnership, REMIC, or other entity must file its annual return.  For calendar year filers, the due date for filing the annual return or request for an extension changed from April 15 (April 18 in 2017) to March 15. Many entities filed their returns or their extension request for tax year 2016 by the April deadline, and if not for the Surface Transportation Act, these returns and requests for extension of time to file would have been on time. Notice 2017-47 provided relief from the penalty for failure to timely file for partnerships and REMICs that filed by the date that would have been timely prior to amendment by the Surface Transportation Act. Notice 2017-71 amplifies, clarifies, and supersedes Notice 2017-47 by providing that additional acts, such as the making of various elections, of partnerships, REMICs, and certain other entities made by the date … Read More

IRS ISSUES 2018 STANDARD MILEAGE RATES

NSTPInternal Revenue Service (IRS)

The optional standard mileage rates for business use of a vehicle will increase slightly in 2018, after decreasing in the two previous years, the IRS announced Thursday (Notice 2018-3). For business use of a car, van, pickup truck, or panel truck, the rate for 2018 will be 54.5 cents per mile, up from 53.5 cents per mile in 2017. Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile. Driving for medical or moving purposes may be deducted at 18 cents per mile, which is one cent higher than for 2017. (The medical and moving expense deductions may be affected by the pending tax reform legislation.) The rate for service to a charitable organization is unchanged, set by statute at 14 cents per mile (Sec. 170(i)). The portion of the business standard mileage rate that is treated as depreciation will be 25 cents per mile for 2018, unchanged from 2017. To compute the allowance under a fixed and variable rate (FAVR) plan, the maximum standard automobile cost is $27,300 for 2018 (down from $27,900 for 2017) for automobiles (not including trucks and vans) and $31,000 for trucks and vans (a decrease of $300 … Read More

USE IT OR LOSE IT: DEADLINE FOR STARTUPS TO CLAIM R&D CREDIT LOOMS

NSTPDeadline

Startup businesses have one last chance to claim a valuable credit, experts say – but they need to act fast. Before 2016, businesses could only take the Research & Development Credit against their income tax liability. But a provision in the Protecting Americans from Tax Hikes Act, or PATH Act, of 2015, allows eligible small businesses to apply part or all of their research credit against their payroll tax liability, instead of their income tax liability. The option is meant to benefit startups that have little or no income tax liability. The new option was available for the first time for 2016 returns, but under a special rule for tax-year 2016, a small business that failed to choose this option can still make the election by filing an amended return by Dec. 31, 2017. “This is a tremendous opportunity for startups, but the deadline is approaching rapidly,” said Michael Silvio, tax director at Hall & Co. CPAs. “Under the rules, small-business startups may claim up to $250,000 in credits per year against the payroll tax liability instead of the income tax liability. Eligible firms can earmark the credits against payroll for the first quarter after the filing. Businesses that did … Read More

CONSUMER ALERT: IRS WARNS TAXPAYERS, TAX PROS OF NEW EMAIL SCAM TARGETING HOTMAIL USERS

NSTPInternal Revenue Service (IRS), Online Scams, Taxpayer

The Internal Revenue Service has issued a warning to taxpayers and tax professionals of a new email scam targeting Hotmail users that is being used to steal personal and financial information. The phishing email subject line reads: “Internal Revenue Service Email No. XXXX | We’re processing your request soon | TXXXXXX-XXXXXXXX”. The email leads taxpayers to sign in to a fake Microsoft page and then asks for personal and financial information. The IRS has received over 900 complaints about this new phishing scheme that seems to exclusively target Hotmail users. The suspect websites associated with this scam have been shut down, but taxpayers should be on the lookout for similar schemes. Individuals who receive unsolicited emails claiming to be from the IRS should forward it to phishing@irs.gov and then delete it. It is important to keep in mind the IRS generally does not initiate contact with taxpayers by email to request personal or financial information. For more information, visit the “Tax Scams and Consumer Alerts” page on IRS.gov. The IRS reminds tax professionals to be aware of phishing emails, free offers and other common tricks by scammers. Tax professionals who have data breaches should contact the IRS immediately through their Stakeholder Liaison. See Data Theft … Read More

2017 HURRICANE RELIEF: IRS PROVIDES SAFE HARBOR METHODS FOR DETERMINING NONBUSINESS CASUALTY LOSSES – REV PROC 2018-08

NSTPNatural Diaster

In Revenue Procedure 2018-08, IRS has provided safe harbor methods that individual taxpayers may use in determining the amount of their casualty and theft losses for their personal-use residential real property and personal belongings. For a safe harbor under which individuals may use one or more cost indexes to determine the amount of loss to their homes as a result of Hurricane and Tropical Storm Harvey, Hurricane Irma and Hurricane Maria. New safe harbors for determining the amount of losses: IRS has become aware that taxpayers often have difficulty determining the amount of their losses under the methods provided in Reg. § 1.165-7(a)(2), which has resulted in time-consuming and expensive litigation. In order to provide certainty to both taxpayers and IRS, the Revenue Procedure provides safe harbor methods that individuals may use under Reg. § 1.165-7(a)(2) to measure the decrease in the FMV of their personal-use residential real property following a casualty and to determine the pre-casualty or theft FMV of personal belongings. Qualifying to use the safe harbors: An individual who has suffered a casualty loss to the individual’s personal-use residential real property may use one of the first three safe harbor methods described in “Personal-use residential real property safe harbor … Read More

2017 HURRICANE RELIEF: IRS PROVIDES SAFE HARBOR FOR DETERMINING CASUALTY LOSS TO A HOME – REV PROC 2018-9

NSTPNatural Diaster

In Revenue Procedure 2018-9, IRS has provided a safe harbor method under which individuals may use one or more cost indexes to determine the amount of loss to their homes as a result of Hurricane and Tropical Storm Harvey, Hurricane Irma and Hurricane Maria (2017 Hurricanes). An individual with a U.S. income tax filing requirement who suffered a casualty loss to the individual’s personal-use residential real property located in the “2017 Disaster Area” as a result of the 2017 Hurricanes may use the safe harbor method provided in Rev Proc 2018-9 (the “Cost Indexes Safe Harbor Method”) in determining the amount of the individual’s casualty loss under Code Sec. 165. The term “2017 Disaster Area” means the entire states of Texas, Louisiana, Florida, Georgia, and South Carolina, the Commonwealth of Puerto Rico, and the territory of the U.S. Virgin Islands. Rev Proc 2018-9 applies to bona fide residents of Puerto Rico and the U.S. Virgin Islands only where these individuals otherwise have a U.S. income tax filing requirement. For purpose of Rev Proc 2018-9, personal-use residential real property is real property, including improvements (such as buildings and ornamental trees and shrubbery), that is owned by the individual who suffered a … Read More