Remarks by the Commissioner of Internal Revenue

The IRS has announcement a new schedule to be attached to a corporate tax return listing uncertain tax positions.  See the remarks of the Commissioner here.

Pro Se Nurse Wins Against the IRS

A nurse represented herself and won her case against the IRS.  The Tax Court in Singleton-Clarke v. Commissioner, T.C. Summary Opinion 2009-182 found that the nurse's advanced degree did not qualify her for a new trade or business, and held that she could deduct her education expenses for 2005.

Top Ten Common mistakes for 1040X

• Schedule A missing when change to itemized deductions. Correspondence is then necessary.

• No original signature (copy). Correspondence is then necessary.

• Schedule C not included when amending schedule C or it does not indicate which Taxpayer it is for when the return is Married Filing Jointly (MFJ). Correspondence is then necessary.

• Schedule EIC is not attached when EIC is amended. Correspondence is then necessary.

• TP does not indicate exemptions name and SSN/ITIN number in exemption section when adding or removing and exemption. Correspondence is then necessary.

• Taxpayer requests direct deposit of their amended refund or adds direct deposit information for their original refund, since direct deposit information cannot be added on an amended return, we must correspond.

• Form 5405 not attached when claiming the First-Time Homebuyer Credit.

• Signature is other then the taxpayer and no supporting documentation is attached or indicated. (i.e. Form 2848, Durable POA, parent for minor, etc)

• Missing schedules and/or forms for Line 7 credits. Correspondence is then necessary.

Other common mistakes:

• Taxpayer files Head of Household (HOH) with no exemptions and does not indicate Qualifying dependents (QND) name and/or SSN.

• Taxpayer removes an exemption but not Recovery Rebate Credit (RRC). This requires additional correspondence.

• TP does not indicate if a child is eligible for Child Tax Credit (CTC) but takes the credit or the reverse.

IRS Telephone Directory for Practitioners

See this link for an IRS telephone directory for practitioners that list numbers for all states.

First Wednesday Tax Forum

The next First Wednesday Tax Forum will actually be held on the second Wednesday, January 13, 2010. Special Agents Todd Norwood and Elisa Rodriguez of IRS Criminal Investigation will be speaking on Refund Fraud and Fraud Detection. This will be an interesting and informative presentation. As tax season arrives, learn what you need to know to protect yourself and your clients.

Requisite Knowledge and Experience: None is needed

Advance Preparation: None is needed.

This is an update presentation.

The presentation is lecture style.

The First Wednesday Tax Forum will meet from 7:30-9:10 AM at the University of Phoenix, Dallas/Ft. Worth Campus. The University of Phoenix Campus is located in Churchill Tower, 12400 Coit Road, Dallas, Texas. Park in the parking garage behind the building. Come to the front of the building on the first floor. Registration is $15 per course. CPAs and enrolled agents receive 2 hours of CPE credit. If you plan to attend, please send an e-mail to dawn@tjtaxlaw.com. Make checks payable to Townsend & Jones, L.L.P., and mail to 8100 Lomo Alto, Suite 238, Dallas, Texas 75225. Phone 214-696-2661.

National Taxpayer Advocate's 2009 Annual Report to Congress

Nina Olson, the National Taxpayer Advocate, has released her Annual Report. The report can be found here.

*New* The return preparer review final report is now available.

The IRS has released it final report on return preparers and the report can be found here.  The report contains recommendations for oversight of return preparers.

How to Audit Proof A Tax Return

An article has appeared in Forbes on "Ten Ways to Audit Proof Your Tax Return". The articles advises one way is not to file electronically.

Taxpayer Cannot Rely on Google to Prove Reasonable Cause

Good-faith reliance on advice from an independent, competent professional as to the tax treatment of an item may meet the reasonable cause requirement for abatement of penalties. The Tax Court in Woodard v. Commissioner did not accept Mr. Woodard's argument that his research on the Internet using the Google search engine provided him with reasonable cause for the position he took when filing his 2004 tax return.

Tax Court Rules Cancellation of Debt Not Income

In the recent case of McCormick v Commissioner, the Tax Court held for the IRS to determine the amount of cancellation of indebtedness income properly attributed to the taxpayers, the Tax Court must determine the amount of the CitiFinancial and Chase debt that was definite and liquidated.


In this case, the Tax Court found that the IRS could not rely on the Forms 1099-C submitted by CitiFinancial and Chase as evidence of the amount of debt that was definite and liquidated. Section 6201(d) provides that in any court proceeding, if a taxpayer asserts a reasonable dispute with respect to any item of income reported on an information return and has fully cooperated, the IRS shall have the burden of producing reasonable and probative information concerning the deficiency in addition to the information return. In this case the taxpyaers asserted reasonable disputes with respect to the amounts reported by CitiFinancial and Chase. The IRSfailed to produce reasonable and probative information independent of the third-party information returns. Thus, the Tax Court held for the taxpayers.