See You on Tuesday: IRS Furloughs Impact Certain Filing Deadlines & Services

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UPDATE 7/17/2013: The IRS has announced that it is canceling the furlough day scheduled for Monday, July 22, 2013 mentioned below. According to the press release “the IRS will be open for taxpayers that day as scheduled.” Presumably all functions and services will be available. The press release indicates that the IRS also may cancel the scheduled August 30, 2013 furlough day but a firm decision has not been made.

The IRS will be closed tomorrow. It is the first of five previously announced furlough days for the IRS brought on by federal budget cuts. While there may be some at the IRS who just want to get away, the long weekend may impact taxpayers facing certain deadlines. The IRS has issued the following guidance which applies to all five scheduled furlough days.

Filing Deadlines Unaffected

  • The furlough days are not considered federal holidays, so the shutdown will have no impact on any tax-filing deadlines.
  • The only tax payment deadlines coinciding with any of the furlough days relate to employment and excise tax deposits made by business taxpayers. These deposits must be made through the Treasury Department’s Electronic Federal Tax Payment System (EFTPS), which will operate as usual.
  • However, the IRS will be unable to accept or acknowledge receipt of electronically-filed returns on any day the agency is shut down.

Deadlines to Produce Documents Extended

  • Where the last day for responding to an IRS request falls on a furlough day, the taxpayer will have until the next business day.  
    • For example, if the last day to respond is tomorrow, the taxpayer will have until Tuesday, May 28 to comply (Monday is Memorial Day).
  • This next business day extension applies to:
    • administrative summonses,
    • documents requests for an examination, review or compliance check, and
    • document requests related to a collection matter.

Deadline Extensions Do Not Apply to the Courts

  • Petitions with the U.S. Tax Court are Still Due if you received a
    • Statutory Notice of Deficiency,
    • Final Partnership Administrative Adjustments,
    • Final Determination following a Collection Due Process Hearing, or
    • Other notice with a deadline for seeking Tax Court review (e.g., innocent spouse relief, interest abatement).
  • Refund Claim Complaints in U.S. District Court are Still Due
    • However, check to see if the local court is on furlough and has issued guidance.

The Internet Might Be Open and We Might Take Your Call

  • Some, but not all, online and automated phone tools will continue to function on furlough days.
  • The following online and phone tools will be available
    • Withholding Calculator,
    • Order A Transcript,
    • EITC Assistant,
    • Interactive Tax Assistant,
    • PTIN system for tax professionals,
    • Tele-Tax, and the
    • Online Look-up Tool for repaying the first-time homebuyer credit.
  • The following services will not be available:
    • Where’s My Refund?
    • Online Payment Agreement.

(SNL) IRS Scandal (Weekend) Update

We have stood by while the IRS has taken shots from both the right and the left in recent days. The 501(c)(4) targeting situation will certainly yield changes for the IRS – how broad and how meaningful are yet to be seen. We may have more to say when we see what really comes of it all.

In the meantime, folks are lining up to take a bit of stuffing out of the IRS. This one is too good to let pass. Amy Poehler is a family favorite and we recommended her Thursday night gig if you haven’t checked it out before. Here she is with Seth Myers in a return to Weekend Update.

Supreme Court Allows Foreign Tax Credits for U.K. Windfall Tax

us-supreme-courtThe U.S. Supreme Court has resolved a split in the circuits on the U.S. tax treatment of U.K. windfall tax payments made by U.S. utilities. In a unanimous opinion authored by Justice Thomas, the Court held that the windfall tax qualified as a “creditable tax” for U.S. foreign tax credit purposes. The result is that the appellant here, PPL, and Entergy, who had the companion case, will be able to take a credit against their U.S. income taxes for the amounts paid to the United Kingdom.

The central issue was whether the U.K. tax was a tax on income, the general standard for creditable foreign taxes. The ultimate decision was a bit more nuanced and scholars surely will continue to debate the issue including the algebra (don’t see that often in the tax world) and the potential distinction between the regulatory phrase “in the U.S. sense” and Justice Thomas’ phrase “if enacted in the U.S.”

Practitioners, being the practical folks that they are, will look to expand the decision for the benefit of other clients that may have paid taxes similar to the windfall tax but not received the benefit of foreign tax credits against their U.S. income.

This is what happens when the Supreme Court issues a tax opinion. There will be more to come, as the estate tax case that may decide the fate of DOMA has been heard and likely will be decided this year and another tax case (on overpayment penalties) is being briefed for the Supremes right now. Expect a decision in the latter case, U.S. v. Woods, sometime in 2014.

Read the PPL opinion here:
PPL Corp. v. Commissioner, Docket No. 12-43 (U.S.S.C. May 20, 2013)