Daily Tax Update - April 08, 2005

Today, the IRS released Revenue Procedure 2005-26, which provides guidance relating to section 6501(c) (10), which provides for an extended period of limitations to assess any tax with respect to a listed transaction that a taxpayer failed to disclose as required under section 6011. The revenue procedure sets forth procedures that taxpayers and material advisors may follow to disclose previously undisclosed listed transactions for purposes of section 6501 (c)(10) and guidance on the date which the period of limitations will expire if these procedures are not followed. The revenue procedure, which is effective April 8, 2005, applies to violations for tax years in which the assessment period did not expire before October 22, 2004.

  • The revenue procedure can be accessed here.  

With the April 15th deadline for filing Federal tax returns approaching, the IRS reminded taxpayers today that automatic four-month extensions are available by telephone or by computer, as well as through the paper Form 4868. The IRS expects to receive almost 9 million extension requests, which must be made by the normal filing deadline.

  • According to the IRS, "An extension of time to file does not give more time to pay any taxes owed. A person may choose to pay any projected balance due when requesting an extension, and the payment may be made electronically. Even without a payment, one can still get the extension. Whether requesting an extension electronically or on paper, the taxpayer must estimate the total tax liability based on the information available. If the IRS later finds this estimate to be unreasonable, the extension will be null and void. The taxpayer will still get credit for any payments made with the extension request."
  • The IRS also reminds taxpayers that interest charges apply to any tax not paid by the regular deadline. The IRS further states, "The current rate is 6 percent a year, compounded daily, and is subject to change each calendar quarter. Taxpayers who request an extension may also be liable for a late payment penalty of 0.5 percent per month if the total tax paid by the regular deadline is less than 90 percent of the actual 2004 tax."
  • Form 4868 can be accessed here.     

As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving.  Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them.  Read  more information on Steptoe's tax practice