On July 14, 2015, the Georgia Department of Revenue (“DOR”) released tax return filing guidance guidance for same-sex couples in response to the U.S. Supreme Court’s decision in Obergefell v. Hodges, 576 U.S. ___ (2015) which required states to license and recognize same-sex marriage. The Georgia DOR now will recognize same-sex marriage in the same way it recognizes marriages of opposite-sex couples. The Georgia DOR will recognize all marriages where the marriage license was issued in Georgia and all marriages lawfully licensed and performed out of state.
The guidance is important for Georgia same-sex couples that were married in a state legally recognizing marriage before 2015. Before the July 14 guidance, those couples were required to file Georgia individual income tax returns as if they were single – despite being required to adopt a federal filing status as married (either jointly or separately). Married same-sex Georgia couples who have not yet filed their 2014 Georgia income tax return may now file under the same rules that apply to legally married opposite-sex couples. If a legally married same-sex couple has already filed their 2014 return, they are permitted to file an amended return under the same rules that applied to legally married opposite-sex couples in 2014.
Georgia same-sex couples that were legally married in another state prior to 2014 are permitted to file amended Georgia income tax returns under the rules that applied for the tax years in question to lawfully married opposite-sex couples. Under O.C.G.A. § 48-2-35(c)(1)(A) a claim for refund be filed within three years of the later of the date of payment of the tax to the Georgia DOR or the due date (including any extensions granted) for filing the original return for that period.
Read the Georgia DOR guidance here.
The IRS recently released a procedural update to the Internal Revenue Manual for the Streamlined Filing Compliance Initiative. The IRS added section 22.214.171.124 to the Internal Revenue Manual including two subsections detailing Streamlined Filing Compliance for U.S. Taxpayers Residing Outside the United States (IRM 126.96.36.199.1) and Streamlined Filing Compliance for U.S. Taxpayers Residing in the United States (IRM 188.8.131.52.2). The new subsections detail eligibility requirements for taxpayers entering into the Streamlined Filing Compliance Initiative to avoid failure-to-file and failure-to-pay penalties when filing amended tax returns.
IRM 184.108.40.206.1(5) and IRM 220.127.116.11.2(4) give detailed instructions for U.S. taxpayers seeking relief for failure to elect deferral of income from certain retirement and savings plans where deferral is permitted by an applicable treaty.
IRM 18.104.22.168.2.1 gives detailed instructions for IRS Accounts Management to process the Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures that is required for domestic streamlined filers. IRM 22.214.171.124.2.1(9)(6) also instructs the Accounts Manager to refer any case with five or more foreign information returns (Forms 3520, 3520-A, 5471, 5472, 8938, 926, or 8621) to LB&I OVDP Compliance. The five information return threshold is a combination of all years filed. For example, submissions containing three Forms 5471 for 2011 and three Forms 5471 for 2012 would be referred since the total number of forms submitted is six.
Read the full IRM Procedural Update here: IRM Procedural Update WI-21-0814-1244
The great fiction writer Elmore Leonard passed away yesterday at the age of 87 years old. Mr. Leonard published over 40 novels and numerous short stories in a writing career that spanned five decades. He started as a writer of westerns and became one of the most loved crime novelists of his time. His mastery of dialogue won him praise from reviewers and fellow authors. Martin Amis, Kinky Friedman and Joe Queenan all reviewed Leonard novels for the New York Times.
He was a darling of Tinseltown too. Several of his stories were adapted into film more than once, including “The Big Bounce” and “The 3:10 to Yuma.” There was no trouble finding Hollywood A-Listers to star in his films either. Paul Newman, Gene Hackman, John Travolta, Jennifer Lopez, George Clooney, Russell Crowe, Danny DeVito, and Vince Vaughn are only a handful of the stars who have played characters created by Leonard.
So what’s the tax hook to this homage? There has to be one right? There is.
Leonard’s novel Pagan Babies features “Father” Terry Dunn, who is living in Rwanda to dodge an indictment for Federal tax fraud. As the story moves along we find out that Terry may not be the man of the cloth that he holds himself out to be, and when he returns to his hometown of Detroit he runs in to a few other problems to go along with his tax situation. You’ll have to read the book to find out how it all plays out. Pagan Babies may not be the finest work of Leonard’s career – it did offer popular exposure to the devastating violence that plagued Rwanda for many years – but it gave us an excuse to pay public homage to one of our favorite writers.
Read Elmore Leonard’s 10 Rules of Writing here.
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 decision has not been made.
Four Fridays and a Monday. Those are the days that the IRS will be closed under the budget cuts imposed by sequestration. Rather than rolling employee furloughs, the IRS has decided to take a few three-day weekends and close shop entirely for five days in 2013. Acting Commissioner Steven Miller make the announcement on Friday.
In addition to regular federal holidays, the IRS will be closed on the following days in 2013: May 24, June 14, July 5, July 22 and Aug. 30. IRS employees will not be paid for these days and IRS offices will not open.
On Wednesday, the Internal Revenue Service announced a three-month tax filing and payment extension to Boston area taxpayers and others affected by Monday’s Boston Marathon explosions.
This relief applies to all individual taxpayers who live in Suffolk County, Mass., including the city of Boston. It also includes victims, their families, first responders, others impacted by this tragedy who live outside Suffolk County and taxpayers whose tax preparers were adversely affected.
The IRS will issue a notice giving eligible taxpayers until July 15, 2013, to file their 2012 returns and pay any taxes normally due April 15. No filing and payment penalties will be due as long as returns are filed and payments are made by July 15, 2013. By law, interest, currently at the annual rate of 3 percent compounded daily, will still apply to any payments made after the April deadline.
The IRS will automatically provide this extension to anyone living in Suffolk County, Mass. No further action is necessary for Suffolk County, Mass., taxpayers to obtain this relief.
Eligible taxpayers living outside Suffolk County, Mass. must call (866) 562-5227 starting Tuesday, April 23, and identify themselves to the IRS before filing a return or making a payment. Eligible taxpayers who receive penalty notices from the IRS can also call (866) 562-5227 to request penalties abatement. Eligible taxpayers who need more time to file their returns may receive an additional extension to Oct. 15, 2013, by filing Form 4868 by July 15, 2013. Visit irs.gov for more information.
Our hearts and prayers go out the victims and families.
The IRS thinks that they can.
The IRS maintains that its agents can read taxpayers’ emails, texts, and other private electronic communications without a warrant according to a story by Brendan Sasso in The Hill. According to the story, the IRS has maintained that taxpayers “do not have a reasonable expectation of privacy in such communications.”
The report is based on documents acquired in a Freedom of Information Act request filed by the American Civil Liberties Union.
Read the story here:
IRS: We can read emails without warrant
Hat tip: Beau Howard
Today, the United States Supreme Court will hear arguments about the Constitutional rights of homosexual couples courtesy of the Internal Revenue Code.
The Court may rule on a variety of grounds in United States v. Windsor including standing (was the couple’s marriage recognized under New York law) and the proper Constitutional standard (does Intermediate Scrutiny apply to homosexuals) but the case started with a tax return.
Edie Windsor and Thea Spyer were New York residents and a couple for over 40 years. In 2007, they were married in Canada where same-sex marriage was legal. Upon Thea’s death, Edie filed a federal estate tax return, Form 706. Thea’s estate paid $363,053 in federal estate taxes because she was not eligible for the unlimited marital deduction under IRC §2056(a) – a benefit routinely applied to married couples of different sexes. Edie filed a claim for refund of the estate taxes paid. When that claim for refund was denied she filed suit in federal district court.
The refund denial was reversed by the U.S. District Court for the Southern District of New York and the Second Circuit Court of Appeals. Read opinions published in those cases here and here.
Whether not the Supreme Court issues a sweeping or narrow opinion on the rights of homosexuals, there is little question that the tax code touches everyone. After all, that’s where this case started.
I want to be a tax accountant.
Tax Season is in full swing, so it seems appropriate to bring out this little gem again. Credit to Thompson Reuters for the production.
The taxpayers in Historic Boardwalk Hall are seeking review in the United States Supreme Court. As reported here last summer, the Third Circuit Court of Appeals reversed the Tax Court and denied the public/private partnership between the New Jersey Sports and Exposition Authority (“NJSEA”) and Pitney Bowes the benefit of historic rehabilitation tax credits because the two parties were not bona fide partners.
The petition faces an uphill battle to gain a hearing at the Supreme Court. There is no split in the Circuit Courts of Appeal on this issue and the high court seems reluctant to tackle tax matters without that prompt. The petition rightly argues that this is the first case “where the Internal Revenue Service has made a broad based challenge to the allocation of Congressionally-sanctioned federal historic rehabilitation tax credits by a partnership to a partner.” The public policy implications of the Third Circuit’s decision are broad and the impact has already been felt in the historic rehabilitation context and beyond. Many parties will be watching to see what happens with this petition.
Read the petition for writ of certiorari here:
Historic Boardwalk Hall Petition for Writ of Certiorari
The U.S. Senate has confirmed Bingham’s Ron Buch and Georgetown’s Albert Lauber to serve as the two newest members of the United States Tax Court.