Daily Tax Update - April 8, 2010


IRS REMINDS TAXPAYERS UNABLE TO MEET DEADLINE TO FILE EXTENSION: The IRS reminded taxpayers who can’t meet the April 15 filing deadline to file Form 4868, Application for Automatic Extension of Time To File US Individual Income Tax Return. The extension gives taxpayers an additional six months, until October 15, to file a tax return. According to the IRS, “An extension of time to file is not an extension of time to pay. You need to estimate your tax liability and pay any balance due when you request the extension. Several payment options are available, including electronic funds withdrawal, credit card and check. If you are unable to pay the total balance due, you should pay as much as possible and then contact the IRS about an installment plan. Even if you cannot pay the balance due, it is important to either file a return or request an extension to avoid the failure-to-file penalty.”

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Notice 2010-33 updates the list of frivolous taxpayer arguments for purposes of section 6702 penalties.

Announcement 2010-22, On March 18, 2010 the Hiring Incentives to Restore Employment (HIRE) Act of 2010, Pub. L. 111-147 (H.R. 2847) was enacted including FATCA which makes a number of changes to the tax law affecting foreign account tax compliance. Announcement 2010-22 informs the public that Treasury and the IRS will provide guidance on the implementation of FATCA. Further, Treasury and the IRS are soliciting comments from the public to consider while drafting guidance projects.

Notice 2010-34 provides guidance about reporting obligations for certain shareholders of passive foreign investment companies who are subject to the annual filing requirement set forth in new section 1298(f).

TD 9481 contains final regulations relating to travel expenses of state legislators while away from home. The regulations affect eligible state legislators who make the election under section 162(h) of the Internal Revenue Code (Code). The regulations clarify the amount of travel expenses that a state legislator may deduct under section 162(h). 

Notice 2010-36 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2). In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007. 

Notice 2010-31 announces the 2009 section 45K credit for fuel produced from a nonconventional source. For 2009, the section 45K credit is only available for fuel produced from coke or coke gas (other than from petroleum based products) and is not subject to phase-out.

Notice 2010-32 provides interim guidance with regard to the application of the 2-percent floor under section 67 to certain investment advisory fees. Specifically, this notice provides that, for taxable years beginning before January 1, 2010, non-grantor trusts and estates will not be required to “unbundled” a fiduciary fee into portions consisting of costs that are fully deductible and costs that are subject to the 2-percent floor.

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.

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