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Sacramento Tax Law Blog

Federal Tax Treatment of Reimbursements to Southern Californians Affected by Gas Leak

The Internal Revenue Service (IRS) recently announced that Southern Californians affected by the natural gas leak in the Aliso Canyon storage field that was discovered on October 23, 2015, will not be required to include payments or reimbursements made to them by the Southern California Gas Company for temporary relocation in their income calculations for tax purposes. For more information, consult IRS Announcement 2016-25 (here).

National Taxpayer Advocate Releases Mid-Year Report to Congress

National Taxpayer Advocate Nina E. Olson gave her mid-year report to Congress on July 7, 2016, reviewing the 2016 filing season and identifying priority issues she hopes the Internal Revenue Service (IRS) will address.

Tax Court Re-Affirms Subpoena Notification Requirement, To IRS' Dismay

On July 8, 2016, Judge Mark V. Holmes issued an order in US Tax Court case Ernest S. Ryder & Associates, Inc., APLC, et al., v. Commissioner requiring the Internal Revenue Service (IRS) to notify the taxpayer of any and all subpoenas, with their responses and responsive documents, issued by the IRS to third parties. In this case, there were 77 such subpoenas issued and not yet disclosed, due to the absence of any direct requirement to do so within the Tax Court rules.

Security Summit Successes and Steps Forward

The Security Summit, a partnership between the IRS, state tax agencies, and private-sector tax industry executives, met on June 28, 2016 to review its first-year successes and strategize for 2017. The Summit focused on improving authentication procedures, information sharing, cybersecurity, and public outreach to help keep taxpayers' data and money safe.

FTB Creates Exemption to No Cash Policy

The California Franchise Tax Board (FTB) implemented a "no cash" policy in its field offices effective September 1, 2015. However, recognizing that this could create a hardship for some taxpayers, the FTB has established an exemption policy effective July 1, 2016. Taxpayers may sign a No Cash Policy Exemption Request form and submit it to the FTB with an explanation for their inability to pay using an alternative method. If accepted, exempt taxpayers will need to make an appointment at an FTB field office to pay in cash.

Proposed Bill May Change How California Taxes Microbusinesses

On February 19, 2016, California Assembly Member Lopez introduced Assembly Bill No. 2625 to amend certain sections of the Revenue and Taxation code related to the annual minimum franchise tax and microbusinesses. Specifically, it would reduce the annual tax for qualifying new microbusinesses according to a sliding scale, up to $600 annual tax for businesses with gross receipts less returns and allowances of more than $100,000 but less than $150,000.

IRS Relaunches Online Transcript Tool with More Rigorous Security Checks

The Internal Revenue Service (IRS) has returned its Get Transcript Online tool back into service after disabling it in Spring 2015 due to security issues. With a "more rigorous e-authentication process" in place, all users can access copies of their tax transcripts and other tax-related information through the IRS' website once more. For taxpayers who find the new, two-step authentication process difficult, the IRS continues to offer more traditional ways to request and receive such data.  

IRS Filing Deadline for Employers and Health Coverage Providers

Self-insured employers, applicable large employers, and health coverage providers must electronically file their Forms 1094-B and 1095-B by June 30, 2016. Paper returns were due May 31, 2016.

UBS Provides Foreign Records to IRS

The US Department of Justice recently determined that the Singapore affiliate of UBS (UBS AG) "has complied with an Internal Revenue Service (IRS) summons for bank records" related to a taxpayer whose liabilities are at issue. The international financial institution refused to produce the records when first served the summons. After a petition was filed to enforce the summons formally, UBS and the IRS resolved the matter amicably and the petition was voluntarily dismissed.

Treasury Inspector General for Tax Administration Estimates Over $34 Million in Inappropriate Tax Refunds and Abatements

The Treasury Inspector General for Tax Administration (TIGTA) issued a final report on May 17, 2016, after auditing the Internal Revenue Service's handling of amended individual tax returns. It found that examinations of such returns "did not always ensure that claims were properly evaluated" and did not always prevent the issuance of inappropriate tax refunds and abatements. Lack of substantiation was the main cause for this issue.

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