New Circular 230 Brings Big Changes; Some Reassurance From IRS Issued |
Treasury Circular 230 gives critical guidance to how tax practitioners go about their work and recent changes in that document mean some big changes in how tax professionals will issue tax advice going forward. Much of what is in the changes to Circular 230 is a response to abusive transactions over the past few years, but some tax practitioners say the rules may go too far and will add unnecessary expense to providing tax advice. Other professionals worry about the chilling effect of referrals under Circular 230, an issue Cono Namorato, director of the Office of Professional Responsibility, took on in a recent talk to the ABA Taxation Session. CCH’s Federal Tax Weekly newsletter reports that Mr. Namorato emphasized that referrals under circular 230 do not represent a presumption of wrongdoing and he further assured practitioners that threats of referrals by revenue agents to gain leverage in negotiations would not be tolerated.
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State and local taxes have typically been an autonomous function in many large companies because of their highly specialized nature, particularly sales and use taxes, and because of their lesser significance in terms of dollars when compared to federal income taxes. But Sarbanes-Oxley may make the state and local tax function much more closely related to the rest of the accounting function at many large companies and tax professionals working in these areas must start to develop documentation and procedures to ensure they meet the standards set under Sec. 404 of SOX and also Auditing Standard No. 2 of the Public Company Accounting Oversight Board. Informal systems will not meet these strict new standards to show the presence of and effectiveness of internal control procedures. In a recent issue of CCH’s Journal of State Taxation, accounting professors Raquel Alexander, Kimberly G. Key and Rebecca Sawyer take on the issue of internal control and offer suggestions on how state and local tax departments can stand up to the new levels of audit scrutiny.
- Click here to get a full copy of this article from the Journal of State Taxation.
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While the American Jobs Creation Act of 2004 did much to create tax planning opportunities, the bill also includes many provisions intended to shut down what Congress and the IRS saw as abuses of the Code. One area of concern was the distribution of losses in partnerships. Certain provisions of the AJCA seek to eliminate these perceived abuses and will affect the tax calculations tax professionals will use in the future on partnership transactions involving losses. CPA James Kehl takes a close look at the following changes:
- Built-in loss rules of Sec. 704(c)
- Substantial built-in loss rules of Sec. 734
- Loss disallowance rules
In his article in the Journal of Passthrough Entities, Mr. Kehl walks you through examples and sample calculations that will allow tax practitioners to familiarize themselves with the new rules and how they will be applied.
- For a free copy Mr. Kehl’s article from the Journal of Passthrough Entities, click here
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What Congress and the IRS see as abuse of disregarded entities under the Check-the-Box rules for international businesses could result in changes to tax code provisions that have successfully allowed many taxpayers to avoid time-consuming and unnecessary complexities in achieving the entity classification they want. In a recent issue of CCH’s Journal of Taxation of Global Transactions, attorney William H. Morris, tax counsel-international for General Electric Company, looks at the practical application of the check-the-box rules and notes some of the potential changes being discussed and how they will affect future tax planning. Classification of foreign entities gets a good review in this article that includes both basic review and a look at some more advanced concepts in dealing with foreign entities.
- Click here to get a full copy of this article from the Journal of Taxation of Global Transactions.
- To order the Journal Taxation of Global Transactions, click here..
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As Congress has passed sweeping reforms of the nation’s bankruptcy laws, the U.S. Supreme Court has ruled that assets held by married debtors in individual retirement accounts were exempt from their bankruptcy estate. This is a significant ruling a rare one from the court in this area, so estate planners need to take note of the case of R. Rousey v. J. Jacoway and what it’s future impact will be on estate plans and bankruptcy. In CCH’s Estate Planning Review, the details of the case are explained as well as how the case and the new bankruptcy laws match up with each other. Also part of the picture are individual state bankruptcy laws and how they affect IRAs as well as some specific limitations that could remove protection from assets that go over certain threshold amounts.
- Click here to get a full copy of this article from the Estate Planning Review.
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