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News and miscellaneous legal topics – 2018

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Various legal items emphasizing Missouri and federal taxes, archived from the RSS ("rich site summary") feed xlm logo

Installment agreement does not prevent enforcement of IRS lien new 8/13/18

While the government is precluded from using an administrative levy while an installment agreement is pending, the government is not precluded from seeking judicial enforcement of their tax lien. The existence of an installment agreement did not preclude the government from enforcing its tax lien against the individual under the statutory law. State Auto Property and Casualty Insurance Company, DC Miss.,  2017-2 USTC ¶50,435.

The US Supreme Court ruled in South Dakota v. Wayfair that "Physical Presence" is no longer required for sales tax nexus new 6/22/18

On June 21, 2018 the U.S. Supreme Court ruled five to four in South Dakota v. Wayfair, Inc. vacated and remanded the lower court decision, holding that physical presence is no longer required for states to assert a seller’s obligation to collect that state’s sales tax. Previously, under National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753, and Quill Corp. v. North Dakota, 504 U. S. 298, the Supreme court had held that a state may not require a business with no physical presence in the State to collect that State’s sales tax.

What taxpayers should know about tax return copies and transcripts new 6/13/18

Transcripts

To get a transcript, taxpayers can:

Transcripts are free and available for the current tax year and the past three years. A transcript usually displays most line items from the tax return. This includes marital status, the type of return filed, adjusted gross income and taxable income. It also includes items from any related forms and schedules filed. It doesn’t reflect any changes the taxpayer or the IRS may have made to the original return. Taxpayers needing a transcript should remember to plan ahead. Delivery times for online and phone orders typically take five to 10 days from the time the IRS receives the request. Taxpayers should allow 30 days to receive a transcript ordered by mail, and 75 days for copies of your tax return.

Copies of tax returns

Taxpayers who need an actual copy of a tax return can get one for the current tax year and as far back as six years. The fee per copy is $50. A taxpayer will complete and mail Form 4506 to request a copy of a tax return. They should mail the request to the appropriate IRS office listed on the form. Taxpayers who live in a federally declared disaster area can get a free copy of their tax return. More disaster relief information is available on IRS.gov.

How to Locate the Bills and Amendments a Member of Congress has Sponsored or Cosponsored in Congress.gov new 3/20/18

There are a few ways to do this on Congress.gov.

IRS 5071C Letter regarding suspicious tax return new 3/14/18

In some cases, as part of IRS efforts to determine who filed a suspicious tax return, the IRS sends Letter 5071C to ask taxpayers to use an online identity verification process. Taxpayers always have the option of calling the telephone number in the letter. Below is the text on IRS.gov for Understanding Your 5071C Letter:

"We received a federal income tax return with your name and taxpayer identification number but we must verify your identity to process it accurately. The contact information below is only for taxpayers who received Letter 5071C.

What you need to do

If you didn’t file

If you did file

We’ll ask you a series of questions about your identity and tax return history. If we are unable to verify your identity over the phone or online, we may ask you to schedule an appointment at your local IRS office to verify your identity in person.

The toll-free number is for identity verification only. No other tax-related information, including refund status, is available."

New IRS withholding calculator new 3/2/18

The Internal Revenue Service today released an updated Withholding Calculator on IRS.gov and a new version of Form W-4 to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act in December.

Instructions for Requesting Copy of Fraudulent Returns new 2/28/18

If you are the person whose name and SSN was used to file a fraudulent tax return, a Form 4506-F must be completed and must contain the following information:

Your Form 4506-F be accompanied by a copy of your government-issued identification (for example, a driver’s license or passport).

Required information and documentation for a request by a person authorized to obtain the identity theft victim’s tax information

If you are authorized to obtain the identity theft victim’s tax information, the Form 4506-F must contain the following information:

Your Form 4506-F must be accompanied by a copy of your government-issued identification (for example, a driver’s license or passport). You must also include documents demonstrating your authority to receive the requested tax return information (for example, Form 2848, Form 8821, or a court order) unless: You are requesting return information of your minor child as a parent or legal guardian, or Your authority to obtain return information for the requested tax year(s) is on file with the IRS and you are providing your CAF number.

IRS Creates Special IRS.gov Page for Tax Reform new 2/28/18

To help the tax community track information related to the Tax Cuts and Jobs Act (TCJA), the IRS has created a special page on IRS.gov to highlight provisions of the new law. The frequently updated page will include a "one-stop" listing of new legal guidance, news releases, Frequently Asked Questions, and other information related to TCJA. Tax professionals should bookmark the page and check it regularly for the latest information as the IRS works to implement changes.

U.S. Supreme Court Sets Oral Argument Date for South Dakota v. Wayfair new 2/26/18

On April 17, 2018, the U.S. Supreme Court will hear oral arguments in South Dakota v. Wayfair, involving a South Dakota law that requires an out-of-state seller to collect sales tax from South Dakota customers if thresholds are met.

IRS Resources for Tax Law Changes new 2/11/18

Major tax changes approved by Congress in the Tax Cuts and Jobs Act (TCJA) became law on December 22, 2017. The IRS is working on implementing this major tax legislation that will affect both individuals and businesses. The IRS will provide information and guidance to taxpayers, businesses and the tax community as it becomes available. Check this page for updates and resources.

U.S. Supreme Court to Review E-Commerce Use Tax Nexus Standard new 2/9/18

The U.S. Supreme Court has agreed to revisit the physical presence nexus standard that states must abide with before imposing use tax collection responsibilities on remote sellers. The Court first adopted that benchmark some 50 years ago in National Bellas Hess, Inc. v. Illinois Dept. of Revenue, 386 U.S. 753 (1967), and reaffirmed just over 25 years ago in Quill Corp. v. North Dakota, 504 U.S. 298 (1992).

National Bellas Hess and Quill held that under the U.S. Constitution Commerce Clause a state cannot require a remote seller that does not have a physical presence in a state to collect and remit that state’s use tax on sales to in-state customers. Instead, the customer is obligated to self-accrue and remit the use tax to the state, but there is a high rate of non-compliance.

South Dakota enacted a 2016 law that disregarded the physical presence standard in favor of an economic nexus standard, requiring remote sellers with: (1) at least $100,000 sales per year to; or (2) 200 or more separate transactions with,South Dakota purchasers, register with, and collect and remit. South Dakota's use tax. The law was intended to and succeeded in generating a court challenge with South Dakota v. Wayfair, Inc., Docket No. 17-494, cert. granted (Jan. 12, 2018). Other states have enacted similar laws with differing thresholds, or onerous reporting requirements that effectively compel remote sellers to collect and remit the use tax as a cheaper alternative than complying with the reporting scheme.

The Court’s anticipated decision in Wayfair, which is expected by June 2018, has the potential to fundamentally alter the state tax landscape for remote sellers and their customers, equalize tax burdens for traditional brick-and-mortar businesses, and significantly boost state tax collections.

If the Court’s opinion in Wayfair recedes from the physical presence standard, a fundamental question not squarely before the Court is whether the Court's decision will apply retroactively. The Court will likely be concerned with retroactivity, having discussed retroactivity in Quill (where retroactivity also was not an issue) as “thorny questions … better resolved by Congress than by this Court.” The South Dakota legislature imposed its economic nexus standard only prospectively from a Court decision or Congressional action overturning the physical presence standard. Unless the Court or Congress determines otherwise, other states that have not similarly adopted prospective-only economic nexus standards would not be inhibited from applying the changed standard retroactively.

For added complexity, Congress may yet step in and take charge of setting nexus rules, either before the Court’s decision or after. Congress has the authority under the Commerce Clause to set the use tax nexus rules for interstate commerce, regardless of how the Court decides Wayfair. Bills have been pending in Congress sporadically before Quill and annually since Quill for Congress to make these nexus rules. In Quill, the Court invited Congress to act, acknowledging that as the federal legislative branch Congress was better qualified to make nexus rules. But Congress (so far) has not acted. Bills are currently pending in Congress that would achieve opposite results, some of which would affirm the physical presence rule, while other bills would allow states to impose use tax collection responsibilities on remote sellers.

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