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Bramwell’s Lunch Beat: Some Filers Affected by Tax Form Error Get Deadline Reprieve

Apr 6th 2015
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Firm accused of auditor independence violations
The Public Company Accounting Oversight Board (PCAOB) has disciplined a majority shareholder of L.L. Bradford & Co. and two former partners in the Las Vegas accounting firm for violating auditor independence requirements, wrote Matthew Heller of CFO. Shareholder Hazel-Leilani De Los Reyes Bradford and former partner Dustin M. Lewis were fined $25,000 and $10,000, respectively, and were barred from associating with a PCAOB-registered accounting firm for at least two years. Another former partner, Eric S. Bullinger, was barred from any such association for one year. De Los Reyes Bradford was responsible for quality control at the firm, but “failed to design and implement a process to track and monitor audit partner assignments and rotation,” the PCAOB stated.

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IRS deadline extended for Obamacare customers sent the wrong tax form
Obamacare customers who received the wrong tax form from the federal government this spring will not face penalties if they miss the April 15 deadline, officials announced on Friday, wrote Sarah Ferris of The Hill. Anyone who has not yet been sent corrected tax forms and are “unable to file an accurate tax return” now have until Oct. 15 to file – as long as they request an extension. The government did not say how many people will be given extra time, though officials said in late March that 80,000 people were still waiting on their corrected tax forms. A total of 800,000 people had mailed the wrong forms. “If a taxpayer receives their Form 1095-A before April 15 and is able to file using the form before the deadline, they should do so,” according to a statement from the US Treasury Department released late Friday. The information used to calculate subsidies was wrong on about 20 percent of 1095-A tax forms.

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April is the cruelest month – for prosecuting tax fraud
If it feels like you're seeing an inordinate number of stories about criminal tax prosecutions lately, expect to read even more soon. IRS prosecutions spike in April, possibly as a not-so-gentle reminder during filing season that there can be a big price to pay for tax evasion and tax fraud, wrote Suzanne Woolley of Bloomberg. Susan Long, director of the Transactional Records Access Clearinghouse (TRAC) at Syracuse University, says the pattern isn't coincidence. It's also not because the IRS just found juicy cases to refer to prosecutors from the current tax season – the lead time is way longer than that. “Back in 1973, we got IRS manuals, and they actually talked about coordinating [prosecutions] during tax season to make people think about their responsibility under the tax law,” Long says. The IRS did not respond to a request for comment.

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Airbnb income may be tax-free – but there’s a catch
Laura Saunders of the Wall Street Journal wrote that rental services, such as Airbnb, are making it easier for people to take advantage of a tax code provision that allows them to rent out their homes for fewer than 15 days a year and pocket the income tax-free. But this boon also is putting some so-called hosts on a collision course with the IRS, tax experts say. The problem: Some firms are required to send 1099 forms to both the taxpayer and the IRS indicating how much income the taxpayer earned from renting through them. Yet there isn’t an easy way for a host who rented for fewer than 15 days to tell the IRS such income was tax-free. As a result of these conflicting rules, some taxpayers who act as hosts may get computer-generated letters from the IRS in a year or so asking about tax on their hosting income – even though no tax is due on it, says CPA Jonathan Horn. The hosts will then need to prove that the income was tax-free.

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Ex-UBS banker Schumacher pleads guilty in US tax probe
Former UBS AG executive Hansruedi Schumacher pleaded guilty to conspiracy to defraud the United States as part of the government’s prosecution of financial industry officials who help Americans dodge taxes, wrote Susannah Nesmith and David Voreacos of Bloomberg. Schumacher, 56, entered his plea on Thursday in federal court in West Palm Beach, Florida. Schumacher, who also worked at Neue Zuercher Bank (NZB) and once ran the cross-border business for UBS, was indicted in August 2009 on a charge of helping US citizens evade taxes on UBS and NZB accounts. After being declared a fugitive in December 2009, he surrendered to US authorities last year and testified against his former UBS boss, Raoul Weil, in a trial in October 2014. Jurors acquitted Weil of charges he directed bankers to help thousands of UBS clients cheat the IRS.

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IRS technical guidance roundup (week of March 30)
The IRS issued the following technical guidance last week:

Notice 2015-29 provides guidance on how the special rule for expatriate health plans for the 2014 and 2015 fee years under the Expatriate Health Coverage Clarification Act of 2014 applies to the health insurance provider fee under ACA § 9010. Under the notice, a covered entity will receive a reduction in its 2015 fee liability for expatriate health plans, as defined by the US Department of Health and Human Services’ Medical Loss Ratio final rule, that are attributable to the 2014 and 2015 fee years.

Revenue Procedure 2015-26 provides instructions for all communications relating to the identification of the agent to act on behalf of the consolidated group. In general, the corporation that is the common parent of a consolidated group for a consolidated return year is the sole agent with regard to the group’s income tax liability.

Revenue Procedure 2015-28 contains modifications to Revenue Procedure 2013-12, 2013-4 I.R.B. 313. The modifications reflected in this revenue procedure include new safe harbor EPCRS correction methods relating to automatic contribution features (including automatic enrollment and automatic escalation of elective deferrals) in plans described in § 401(k) and § 403(b), and special safe harbor correction methods established for plans (including those with automatic contribution features) that have failures that are of limited duration involving elective deferrals.

Announcement 2015-11 provides the annual report on Advance Pricing Agreements. It will be published in Internal Revenue Bulletin 2015-15 on April 13, 2015.

Recent AccountingWEB Articles That You Can’t Afford to Miss:

Charitable Deductions: If You Don’t Prove ’Em, You’ll Lose ’Em
When it comes to claiming charitable deductions on a 2014 federal income tax return, good recordkeeping is essential.

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Medical-Care Deductions for Meals and Lodgings: What Your Clients Should Know
The IRS offers relief to those staying out of town to receive outpatient treatment at a hospital or similar facility.

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Does New House Bill Sound the Death Knell for Estate Tax?
House GOP tax writers want to put the kibosh on the “death tax.” But the bill stands little chance of becoming law.

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Companies Starting to See a Need for State-by-State Tax Provisioning
Corporations are starting to move from a blended-rate method to a state-by-state approach. But it hasn’t been easy.

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