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Tax Blog/Blawg

Tax Talk Blog for Tax Pros

Welcome to TaxBlawg, a blog resource from Chamberlain Hrdlicka for news and analysis of current legal issues facing tax practitioners. Although blawg.com identifies nearly 1,400 active “blawgs,” including 20+ blawgs related to taxation and estate planning, the needs of tax professionals have received surprisingly little attention.

Tax practitioners have previously lacked a dedicated resource to call their own. For those intrepid souls, we offer TaxBlawg, a forum of tax talk for tax pros.

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Posts from July 2011.

In Chief Counsel Advice 201120021, the Service concluded that an enterprise's tool reimbursement plan failed the accountable plan business connection requirement because it impermissibly recharacterized wages and reimbursed employees for tool expenses incurred before the start of employment.  The IRS reiterated its view that for an expense to satisfy the business connection requirement of the accountable plan rules, it is not sufficient for an employee to incur a deductible business expense but the expense must also arise in connection with the employment.  Thus, since the ...

The IRS allows employers that determine that they are not in compliance with various employment and income tax laws to step forward and be accountable by entering into an agreement with  the IRS.  Generally, the agreements are structured so that the taxpayer is better off than if the IRS had identified the issue on exam.   While this assists the IRS in improving compliance without using scarce resources to uncover noncompliance, a recent  report by the Treasury Inspector General for Tax Administration ( TIGTA  ) found that the program lacked controls resulting in ...
Categories: Employment Tax

Last, year the IRS requested public comment on the continuing need for the high-low method for substantiating under IRC section 274(d), lodging, meal and incidental expenses incurred in traveling away from home. The IRS received no comments.

On July 19, 2011, IRS Announcement 2011-42 indicated that the IRS intends to discontinue authorizing the high-low substantiation method.  The IRS will publish a revenue procedure providing the general rules and procedures for substantiating lodging, meals, and incidental expenses incurred in traveling away from home (omitting the ...

Categories: Employment Tax

IRS's Small Business/Self-Employed (SB/SE) Division has issued an internal memorandum which provides that the trust fund recovery penalty may be imposed against third-party payroll service providers as well as the employer. IRC section 6672 imposes the TFRP on any person who: 1) is responsible for collecting, accounting for, and paying over payroll taxes; and, 2) willfully fails to perform the function.  This is also known as the 100% penalty because it is equal to the amount of the tax that was no collected and paid.

This appears to represent a major policy change by the IRS, which ...

Categories: Employment Tax

A Year of Change (2010-2011): Through Heightened Employment Tax and Comptroller Audits, the Government Seeks to Increase Revenue

This presentation will focus on understanding employment tax, franchise tax and sales and use tax audit risks, mechanisms to mitigate exposure strategies to develop robust audit techniques and a working knowledge of recent changes.


Paul H. Masters (Comptroller Audits)


Heather M. Pesikoff (Employment Tax)

Register here now.

See below for more details.

In February 2010, the IRS began a study to estimate the tax gap for underreported employment taxes and determine compliance rates for business taxpayers, the first study of its kind since 1984.  The National Research Project intended to be a comprehensive review of 6,000 taxpayers over a three year period.  The goal was data collection to find ways to reduce noncompliance and chip away at the current $345 billion tax gap of which underreported employment taxes account for $54 billion, almost one-fifth of the total of underreported liability. 

On July 7, 2011, the Treasury ...

Categories: Employment Tax

On May 5, 2011, the Treasury Inspector General for Tax Administration (TIGTA) issued a report that is not going to please anybody.  It concluded that IRS employees are provided with ample information about their tax responsibilities to enable them to comply, but some do not, and the agency needs to do more to address the problem.

This is not the first report on the subject, following up on an Employee Tax Compliance program (ETC) initiated in calendar year 1995 “to insure that employees are held to a high standard of compliance.”  In a December 2009 IRS Report, more than 97,000 Federal ...

Beginning July 1 2011, the 0.2% federal unemployment tax (FUTA) surtax is no longer in effect. Thus, the FUTA tax rate, before consideration of state unemployment tax credits, is now 6.0%.

Under Code Sec. 3301(1), the 0.2% FUTA surtax expired on June 30, 2011. The surtax was part of the 6.2% gross unemployment tax rate that employers paid on the first $7,000 of wages paid annually to each employee (6% permanent tax rate, 0.2% temporary surtax). The surtax has been in effect in every year since 1976, when it was enacted by Congress on a temporary basis. Since legislation has not been ...

Categories: Employment Tax