New sanctions aimed at noncompliant tax-exempt groups

Article Abstract:

The Taxpayer Bill of Rights 2 (TBOR-2) introduces intermediate penalties for noncompliant tax-exempt groups. In the past, sanctions against violating tax-exempt organizations took an all-or-nothing position, either revoke their status as tax-exempt entities or simply let them off the hook. With the enactment of TBOR-2, however, publicly supported Sec. 501(c)(3) charities and Sec. 501(c)(4) social welfare organizations can be punished without having the organization drop its exempt status. It imposes excise taxes on the individual who benefitted as well as the entity managers who allowed the misuse of exempt organization assets, but does not necessitate the tax exemption to be revoked. The new legislation also extends the rules prohibiting private inurement to Sec. 501(c)(3) and Sec. 501(c)(4) entities. Lastly, it improves reporting and disclosure rules to make the annual Form 990 more information and accessible to the public.

Public Finance Activities, Tax Deductions & Exemptions, Tax Evasion & Penalties, Tax deductions, Tax exemption, Tax exemptions, Tax penalties

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Limitations period shorter because taxpayer made adequate disclosure

Article Abstract:

The Tax Court found in the 'Williamson' case that the taxpayer sufficiently revealed that particular items and their values that should be included in an estate could not be ascertained as of the date of filing of the estate tax return. The court thus decided that the general three-year limitations period for tax assessment applied. In the case, a dispute regarding the identification and transfer of community property disabled the estate to determine, inventory or marshal the estate assets and compelled it to apply for an extension of time to file its estate tax return. The request included a statement justifying the extension and was granted. When the estate timely filed its return, it included a copy of the extension request with a disclosure statement explaining that it was not able to identify and value all the assets of the estate.

Cases, Tax accounting, Estate tax, Estate taxes

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Taxpayer Bill of Rights requires more IRS disclosure and expands civil remedies

Article Abstract:

The Taxpayer Bill of Rights in the Technical and Miscellaneous Revenue Act of 1988 is not as strong as it was initially intended to be and the average taxpayer is still at the discretion of the IRS. The Bill covers audits and interviews including taxpayer representatives; notices, advice and regulations; installment agreements; collection practices and liens; and taxpayer proceedings.

United States. Internal Revenue Service. Taxpayer Advocate Service

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