Daily Tax Update - June 10, 2014: IRS Adopts 'Taxpayer Bill of Rights'

IRS ADOPTS “TAXPAYER BILL OF RIGHTS: The IRS announced the adoption of a "Taxpayer Bill of Rights" that will become a “cornerstone document” to help provide taxpayers with a better understanding of their rights.

National Taxpayer Advocate Nina Olson said, “Congress has passed multiple pieces of legislation with the title of ‘Taxpayer Bill of Rights.’” Olson added, “However, taxpayer surveys conducted by my office have found that most taxpayers do not believe they have rights before the IRS and even fewer can name their rights. I believe the list of core taxpayer rights the IRS is announcing today will help taxpayers better understand their rights in dealing with the tax system.”

The provisions are:

1. “The Right to Be Informed

2. The Right to Quality Service

3. The Right to Pay No More than the Correct Amount of Tax

4. The Right to Challenge the IRS’s Position and Be Heard

5. The Right to Appeal an IRS Decision in an Independent Forum

6. The Right to Finality

7. The Right to Privacy

8. The Right to Confidentiality

9. The Right to Retain Representation

10. The Right to a Fair and Just Tax System.”

Notice 2014-39 answers two questions for recipients of Section 1603 Awards.  First, this notice provides that the Section 1603 Payment resulting from sequestration during the affected time period does not affect the amount of the Section 1603 Award or the basis of the specified energy property taken into account for purposes of determining the Section 1603 Award.  Consequently, taxpayers may not partition the basis of property for which they receive a Section 1603 Award and claim a tax credit under section 45 or 48 of the Code on any part of the basis of the same property.  Second, this notice provides that under section 48(d)(3)(B), taxpayers must reduce the basis of the specified energy property by 50 percent of the amount of the actual Section 1603 Payment.

Revenue Ruling 2014-18 provides that a nonstatutory stock option or a stock appreciation right (each, a stock right) granted by a nonqualified entity for purposes of section 457A is treated as exempt from section 457A, provided that the stock right is exempt from section 409A, and further provided that the stock appreciation right at all times by its terms must be settled, and is settled, in service recipient stock for purposes of section 409A.  Notice 2009-8 amplified.