From: "paralegals" <paralegals@prodigy.net>
Sent: Thursday, April 19, 2001 8:59 PM
Subject: Tax info
Copyright 2001, Tax Analysts
2001 HIG 76-1, (HIG), Tax Analysts Highlights for THURSDAY, APRIL 19,
2001
News, Commentary, and Analysis
HOUSE BILL INTENDS TO RAISE AWARENESS OF INDIVIDUALS' FEDERAL TAX
PAYMENTS
Rep. Ron Paul, R-Texas, introduced a bill earlier this month that would
require individuals to pay federal income taxes through monthly
installments
to the IRS by abolishing the tax withholding on employment paychecks.
2001
TNT 76-3
---------------------------------------------How taxpayers inform IRS of a change of address
Rev Proc 2001-18, 2001-8 IRB; TD 8939; Reg. § 301.6212-2
IRS has issued final regs that define the term “last known address” in
connection with the mailing of notices of deficiency and other notices,
statements, and documents sent to a taxpayer's last known address. In
addition, IRS has issued a new revenue procedure that explains how
taxpayers
inform IRS of a change of address.
Background. IRS uses the taxpayer's address of record for the various
notices that are required to be sent to a taxpayer's “last known
address”
under the Code, as discussed below, and for refunds of overpayments of
tax.
Rev Proc 2001-18 explains how a taxpayer informs IRS of a change of
address.
It amplifies and supersedes Rev Proc 90-18, 1990-1 CB 491. After
properly
being informed of an address change, IRS will update the taxpayer's
address
of record to the new address.
Notices covered by the procedure.Rev Proc 2001-18 applies to notices
that
are required to be sent to a taxpayer's “last known address” under the
following Code sections:
... Code Sec. 982(c)(1) (formal document request for the production of
foreign-based documentation);
... Code Sec. 6110(f)(3)(B) (notification of disclosure proceedings);
... Code Sec. 6110(f)(4)(B) (notification of disclosure proceedings);
... Code Sec. 6212(b) (notice of deficiency);
... Code Sec. 6245(b)(1) (notice of partnership adjustment for electing
large partnerships);
... Code Sec. 6303(a) (notice and demand for tax);
... Code Sec. 6320(a)(2)(C) (notice and opportunity for hearing upon
filing
of notice of lien);
... Code Sec. 6325(f)(2)(A) (notice of revocation of certificate of
release
or nonattachment of a lien);
... Code Sec. 6330(a)(2)(C) (notice and opportunity for hearing before
levy);
... Code Sec. 6331(d)(2)(C) (notice of intention to levy);
... Code Sec. 6332(b)(1) (copy of notice of levy with respect to a life
insurance or endowment contract);
... Code Sec. 6335(a) and Code Sec. 6335(b) (notices of seizure and
sale);
... Code Sec. 6901(g) (notice of liability in transferee cases);
... Code Sec. 7603(b)(1) (summons by mail to third-party record
keeper); and
... Code Sec. 7609(a)(2) (notice of third-party summons).
IRS generally will use the address on the most recently filed and
properly
processed return as the address of record for these notices. However,
it may
update the taxpayer's address of record by using the United States
Postal
Service's (USPS) National Change of Address database (NCOA database) in
accordance with Reg. § 301.6212-2. A taxpayer who wants to change the
address of record must give clear and concise notification as provided
in
Rev Proc 2001-18.
How to change address. The revenue procedure details several ways in
which
an address can be changed:
... If a taxpayer files a return with new address information, the
proper
processing of the return will update the taxpayer's address of record.
... If a taxpayer no longer wishes the address of record to be the one
shown
on the most recently filed return, for instance, because he moved after
the
return was filed, clear and concise written notification of a change of
address should be sent to the IRS Center serving the taxpayer's old
address
or to the Customer Service Division in the local area office. Form 8822
may
be used for this purpose.
... If, after a joint return is filed, either taxpayer establishes a
separate residence, each should send clear and concise written
notification
of a current address to IRS.
... Because IRS maintains address records for transfer tax returns
separate
from those for individual income tax returns, an individual's
notification
of a change of address should identify whether any gift, estate, or
generation-skipping transfer tax returns are affected.
... Upon being contacted by an IRS employee about the filing of a
return or
an account adjustment, the taxpayer may provide clear and concise
written
notification or oral notification of a change of address to the IRS
employee.
... A taxpayer should notify the USPS facility serving the taxpayer's
old
address of the taxpayer's new address so that mail from IRS can be
forwarded
to the new address. Under Reg. § 301.6212-2, IRS may also update a
taxpayer's address of record based on a new address that the taxpayer
provides the USPS that is retained in USPS's NCOA database. IRS
nonetheless
advises taxpayers to notify it directly of a change of address to
ensure a
timely and accurate update of IRS's address of record for the taxpayer.
Definitions and other matters.Rev Proc 2001-18 lists the returns that
are
covered by it and makes it clear that an application for extension of
time
to file a return is not considered a return. Thus, for example, IRS
will not
use a new address listed on Form 4868, Application for Automatic
Extension
of Time to File U.S. Individual Income Tax Return, to update the
taxpayer's
address of record. Rev Proc 2001-18 explains when a return is
considered
properly processed and what constitutes a clear and concise
notification. It
also lists notice requirements and returns that are not covered by it.
References: For last known address, see FTC 2d/FIN ¶ T-2817 ; United
States
Tax Reporter ¶ 62,124.03 ; TaxDesk ¶ 83,107 ; TG ¶ 70259 .
----------------------------------------------Sham trusts – economic substance – proof – business deductions –
accuracy-related negligence and substantial understatement penalties.
Tax Court properly determined that trusts created by married
taxpayers/sole
trustees/beneficiaries to avoid taxes were shams to be disregarded for
for
tax purposes: trusts, which didn't conduct business or report taxable
income, lacked economic substance where taxpayers assigned their income
and
other assets to trusts, while retaining assets' use and enjoyment, and
attempted to have trusts pay and deduct their personal expenses. Also,
meritless, conclusory challenges to denial of certain deductions and
imposition of accuracy-related penalties were deemed waived. (Muhich v.
Comm., CA 7, 87 AFTR 2d 2001-667 )
----------------------------------------------------------
---------------------------------------------------------------------------
---Code Sec. 1441
Withholding of tax on nonresident aliens.
IRS has established experimental program to enhance voluntary
compliance
among public and private colleges and universities making payments of
grants, scholarships, wages, and other income to aliens. Program, known
as
as VCAP (Voluntary Compliance on Alien Withholding Program), is
effective on
2/26/2001 and will be available for submissions made on or before
2/28/2002.
(Rev Proc 2001-20, 2001-9 IRB , United States Tax Reporter ¶ 86,094 )
-----------------------------------------------------------------------------Withholding on nonresident aliens.
Payors must use revised Form W-9, Request for Taxpayer Identification
Number
and Certification, to solicit U.S. status certifications of payees
after
6/30/2001; use is optional until 7/1/2001. However, foreign person
can't use
Form W-9 to furnish TIN to payor after 12/31/2000, but must use Form W8,
Certificate of Foreign Status, instead. (Ann. 2001-15, 2001-8 IRB ,
United
States Tax Reporter ¶ 86,096 )
-----------------------------------------------------------------------------Code Sec. 6103
Actions against IRS employees – constitutional violations – malicious
harassment – unauthorized collection; unauthorized disclosure of return
information – limitations period – immunity.
Magistrate judge's recommendations to dismiss and/or grant IRS
employees
summary judgment in taxpayer's action alleging malicious harassment
during
tax collection activities in violation of his 5th Amendment rights were
adopted: taxpayer didn't state Bivens claim, or 5th Amendment claim
based on
Magistrate's reasoning. (Hassell v. U.S., et al., DC TX, 87 AFTR 2d
2001-638 )