Listed below are the details for some of the efforts that the IRS emphasized in its press release:

1. New Flexibility for Offers in Compromise

IRS employees will be permitted to consider a taxpayer's current income and potential for future income when negotiating an offer in compromise. Normally, the standard practice is to judge an offer amount on a taxpayer's earnings in prior years. The IRS may also require that a taxpayer entering into such an offer in compromise agree to pay more if the taxpayer's financial situation improves significantly.

2. Hundreds of Saturday Open Houses to Resolve Taxpayer Issues

The IRS will hold special Saturday open houses to give struggling taxpayers more opportunity to work directly with IRS employees to resolve issues. The offices will be open on March 27 and three additional Saturdays in the spring and early summer.

3. Special Outreach Efforts to Unemployed

Efforts [to reach unemployed persons struggling to meat their tax liability include opportunities for these taxpayers to make payment arrangements and resolve both federal and state tax issues in one place.

4. Special Section of IRS.gov Created

Taxpayers who are unemployed or struggling financially can find information on a new page on the IRS Web site, IRS.gov.

Below are some related videos from the IRS YouTube Page:

Owe Taxes But Can't Pay? --- English
Unemployment Compensation --- English | Spanish
Job Search Expense --- English | Spanish | ASL

 

Posted by Joshua Hock, Associate Editor, Wealth Strategies Journal

Notice 2010-26 designates the Chile earthquake occurring in February 2010 as a qualified disaster for purposes of § 139 of the Internal Revenue Code in the affected areas of Chile.  The designation enables employer-sponsored private foundations to assist certain victims in areas affected by the Chile earthquake and enables recipients to exclude qualified disaster relief payments from gross income.     
 
Notice 2010-26 will be published in Internal Revenue Bulletin 2010-14 on April 5, 2010.

 

Posted by Joshua Hock, Associate Editor, Wealth Strategies Journal

Tax Tip 2010-47 lists six points about the higher standard deduction for real estate taxes:

1. The additional deduction amount is equal to the amount of real estate taxes paid, or $500 for single filers or $1,000 for joint filers, whichever is less.

2. The taxes must be imposed on you.

3. You must have paid the taxes during your tax year.

4. The taxes must be levied for general public welfare on the assessed value of the real property and charged uniformly on all property under the jurisdiction of the taxing authority. Many states and counties also impose local benefit taxes for improvements to property, such as assessments for streets, sidewalks and sewer lines. These taxes usually cannot be deducted.

5. Real estate taxes paid on foreign or business property do not qualify for the increased standard deduction.

6. You must file a Form 1040 or 1040A and attach Schedule L, Standard Deduction for Certain Filers, to claim the increased deduction. When claiming the higher standard deduction for real estate taxes, be sure to check the box on line 40b of Form 1040 or line 24b of Form 1040A.

For more information, see Form 1040 instructions or 1040A Instructions and Schedule L instructions. The forms and instructions can be downloaded at IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Posted by Joshua Hock, Associate Editor, Wealth Strategies Journal

This article contains research on the number of new LLCs, corporations, and LPs formed in the United States between 2004-2007. It also contains research on how LLCs were taxed for tax years 2002-2006. The research clearly indicates that LLCs are by far and away the predominant choice of business structure for newly-formed entities. This article is in a relatively final form (only pagination should change,) and it will appear in volume XV of the Fordham Journal of Corporate & Financial Law in the coming months.

Taxpayer choice pervades the federal income tax system. This choice can be made either implicitly, whereby the taxpayer arranges his economic and/or legal affairs so as to qualify for his desired tax treatment, or explicitly, whereby the taxpayer merely tells the Internal Revenue Service how he wishes to be treated for tax purposes, without having to take any specific non-tax actions or structure his financial or legal dealings in any particular way. Scholars often focus on implicit taxpayer choice and seek to hinder that type of tax planning. However, explicit taxpayer choice garners little scholarly attention. This hole in the literature is surprising given that explicit taxpayer choices, in the form of tax elections, generally reflect pure tax-planning opportunities that are affirmatively granted to taxpayers by Congress and the Treasury Department and given that tax elections continue to be added to the Internal Revenue Code.

To help fill this gap, this Article provides a framework for understanding how explicit tax elections are and should be used in the federal income tax system. Specifically, by drawing on a wide variety of tax elections, this Article discusses problems that may be caused by the use of explicit tax elections, identifies and assesses four major functions served by explicit tax elections, and derives a few generally applicable recommendations about how to design explicit tax elections so as to maximize their efficacy and minimize criticisms of their use. Despite the many compelling criticisms of the availability of explicitly provided taxpayer choices, this Article argues that carefully conceived explicit elections can be valuable tools in the design and administration of the tax system. Moreover, by isolating and analyzing situations where Congress and the Treasury affirmatively turn over to the taxpayers the right to determine their own tax consequences, this study of explicit elections can provide insight into the broader balance of power between taxpayers and the government. And, at the very least, this Article brings scholarly attention to the under-studied role of explicit elections in the tax system.

Posted by Patrick Siegfried, Associate Editor, Wealth Strategies Journal.

This paper proposes that policymakers encourage "automatic annuitization" so that it becomes an integral part of defined contribution retirement plan design in the U.S. A large body of research in economics indicates that life annuities are the most cost-effective way to provide guaranteed income that will last for as long as an individual lives and that, as a result, annuities ought to play a central role in the portfolio of most retirees. Unfortunately, for a variety of historical, regulatory and behavioral reasons, most participants in defined contribution plans (such as 401(k) and 403(b) plans) do not currently have access to guaranteed income options through their employer's plan. An emerging body of evidence suggests that making life annuities the "default" payout option from defined contribution retirement plans may be an effective way to increase annuitization rates and therefore an effective way to boost retirement income security of future retirees. The paper discusses a general outline for how such an automatic annuitization program could be implemented so as to increase participant choice, encourage annuitization for the majority of households for whom annuities would enhance retirement security, and limit the administrative burden on plan sponsors.

Posted by Patrick Siegfried, Associate Editor, Wealth Strategies Journal.

Revenue Procedure 2010-19 provides guidance for individuals who emigrate from Canada and wish to make an election for U.S. federal income tax purposes under paragraph 7 of Article XIII (Gains) of the Convention between the United States of America and Canada with Respect to Taxes on Income and on Capital, signed on September 26, 1980, as amended by Protocols signed on June 14, 1983, March 28, 1984, March 17, 1995, July 29, 1997, and September 21, 2007 (the "Treaty") with respect to property that is subject to Canadian departure tax under Canada's deemed alienation rules (the terms "alienation" and "disposition" are used interchangeably throughout this revenue procedure).  This guidance is limited to the circumstances described in the revenue procedure and therefore does not address other situations in which the election under paragraph 7 of Article XIII may be available.   

Revenue Procedure 2010-19 will be in IRB 2010-13, dated March 29, 2010.

 

Posted by Joshua Hock, Associate Editor, Wealth Strategies Journal  

1. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 12 or younger when the care was provided. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.

2. The care must have been provided so you - and your spouse if you are married filing jointly - could work or look for work.

3. You - and your spouse if you are married filing jointly - must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or they were physically or mentally unable to care for themselves.

4. The payments for care cannot be paid to your spouse, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year even if he or she is not your dependent. You must identify the care provider(s) on your tax return.

5. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.

6. The qualifying person must have lived with you for more than half of 2009. However, see Publication 503, Child and Dependent Care Expenses, regarding exceptions for the birth or death of a qualifying person, or a child of divorced or separated parents.

7. The credit can be up to 35 percent of your qualifying expenses, depending upon your adjusted gross income.

8. For 2009, you may use up to $3,000 of expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

9. The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you deduct or exclude from your income.

10. If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. If you are a household employer, you may have to withhold and pay social security and Medicare tax and pay federal unemployment tax. For information, see Publication 926, Household Employer's Tax Guide.

Beginning with 2009 tax returns, Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers, has been eliminated. Form 1040A filers will now use Form 2441, Child and Dependent Care Expenses (Form 2441 instructions). For more information on the Child and Dependent Care Credit, see Publication 503, Child and Dependent Care Expenses. You may download these free forms and publications from IRS.gov or order them by calling 800-TAX-FORM (800-829-3676).

Posted by Joshua Hock, Associate Editor, Wealth Strategies Journal

Revenue Procedure 2010-14 provides a safe harbor method of reporting gain or loss for certain taxpayers who initiate deferred like-kind exchanges under § 1031 of the Internal Revenue Code but fail to complete the exchange because a qualified intermediary (QI) defaults on its obligation to acquire and transfer replacement property to the taxpayer.   If a taxpayer meets the requirements of the revenue procedure, the Internal Revenue Service will not treat the taxpayer as being in actual or constructive receipt of exchange proceeds if the taxpayer does not complete an exchange because of a default of a QI that becomes subject to a bankruptcy or receivership proceeding.   A taxpayer reports gain under the revenue procedure on the disposition of relinquished property as the taxpayer receives payments.

Revenue Procedure 2010-14 will be in IRB 2010-12, dated March 22, 2010.

 

Posted by Joshua Hock, Associate Editor, Wealth Strategies Journal

Notice 2010-24 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code.  It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2).  In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.

Notice 2010-24 will appear in IRB 2010-12 dated March 22, 2010.

Posted by Joshua Hock, Associate Editor, Wealth Strategies Journal