Welcome to the bimonthly publication IRS Insights, produced by Deloitte's Tax Controversy Services Group to keep our clients abreast of current issues related to the Internal Revenue Service. In this month's issue:
· IRS Announces Abusive Transaction Settlement Initiative – The IRS, in Announcement 2005-80, has launched a settlement initiative under which taxpayers will have a limited opportunity to resolve the tax treatment of certain transactions with the IRS. The IRS has identified 21 listed and nonlisted transactions that it deems abusive as eligible for this initiative.
· Appeals Court Affirms Penalties in Long-Term Capital Holdings Case – In Long Term Capital Holdings v. U.S., 2nd Circuit; 04-5687-cv (September 27, 2005), the Court of Appeals for the Second Circuit affirmed the district court’s imposition of a 40 percent gross valuation misstatement penalty, and, in the alternative, a 20 percent penalty for substantial understatement of tax.
· Period to Calculate Deficiency Interest Begins in Year Following a Credit Elect – In FleetBoston Financial Corporation v. U.S., No. 02-879T (Fed. Cl. October 19, 2005), the Court of Federal Claims held that a corporation's deficiency interest, on the amounts the corporation originally reported as overpayments to be applied to it estimated tax liabilities for the following years, began running from the due dates for the following years’ returns.
· Tax Controversy Update: IRS Extends Section 1441 Voluntary Compliance Program – In Rev. Proc. 2005-71, the IRS announced that it has extended the sunset date of the Section 1441 Voluntary Compliance Program to March 31, 2006.
· Recent Guidance
See attached file for details.
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IRS Announces Abusive Transaction Settlement Initiative
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