IRS DENIES PRE-EXISTING SILO BENEFITS: The Internal Revenue Service has designated "sale-in/lease-out" or "Silo" arrangements as abusive tax avoidance transactions.Silo arrangements are designed to exploit the tax law by shifting tax benefits from a tax-indifferent party that cannot use them to a taxpayer that can. Taxpayers entering into Silo arrangements cannot claim tax benefits as the purported owners of property subject to the lease, because they do not acquire tax ownership of the property.
In the American Jobs Creation Act of 2004, Congress enacted limitations on the deductibility of losses from future Silo transactions. In Notice 2005-13, the IRS says that it will challenge the purported tax benefits claimed by taxpayers entering into earlier Silo transactions. It further states that it will consider Silos to be "listed transactions," requiring those who enter into them to disclose their participation. In addition, promoters of listed transactions must keep lists of investors and, in certain cases, register those transactions with the IRS.
"I appreciate the Treasury Department's effort to shut down these abusive deals," said Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee. "The department has done a very good job of going after bogus leasing shelters since the Finance Committee exposed them. Today's action complements our new law going after these deals. It reaches back to the deals that otherwise might have gotten away."
HONDA VEHICLES CERTIFIED FOR CLEAN-FUEL VEHICLE DEDUCTION: The Internal Revenue Service has certified the 2005 Honda Insight, Honda Civic Hybrid and Honda Accord Hybrid as eligible for the clean-fuel vehicle deduction. Taxpayers who purchase one of these hybrid vehicles new may claim a tax deduction of up to $2,000 on Form 1040.
Under the recently signed Working Families Relief Act of 2004, the clean-burning fuel deduction is up to $2,000 for certified vehicles first put into service in 2004 and 2005. The deduction will be limited to $500 for vehicles placed in service in 2006, and no deduction will be allowed after 2006.
The Tax Code allows individuals to claim a deduction for the incremental cost of buying a motor vehicle that is propelled by a clean-burning fuel. By combining an electric motor with a gasoline-powered engine, these hybrid vehicles obtain greater fuel efficiency and produce fewer emissions than similar vehicles powered solely by conventional gasoline-powered engines.
This one-time deduction must be taken in the year the vehicle is originally used. Individuals do not have to itemize deductions on their tax return to claim this deduction. The benefit can be taken as an adjustment to income on the Form 1040.
IRS HAS $2 BILLION FOR 2001 NON-FILERS: Unclaimed refunds totaling more than $2 billion are awaiting about 1.7 million people who failed to file an income tax return for 2001, according to the Internal Revenue Service. However, in order to collect the money, a return must be filed with the IRS no later than April 15, 2005.
The IRS estimates that half of those who could claim refunds would receive more than $484. In some cases, individuals had taxes withheld from their wages or made payments against their taxes out of self-employed earnings, but had too little income to require filing a tax return. Some taxpayers may also be eligible for the refundable Earned Income Tax Credit.
In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity to claim a refund. If no return is filed to claim the refund within three years, the money becomes the property of the U.S. Treasury.
There is no penalty assessed by the IRS for filing a late return qualifying for a refund.
VIRCHOW KRAUSE TAPS SHAPLAND AS INTERNATIONAL DIRECTOR: Super-regional CPA and consulting firm Virchow, Krause & Co. has named Richard Shapland as director of international tax services, effective immediately.
Shapland, who will be based in Chicago, comes aboard after serving as managing director of international taxes for Big Four firm Ernst & Young. At VK, Shapland will be responsible for all international and cross-border tax issues.
International tax services is part of VK's International Services Group, a global services umbrella that provides revenue enhancement programs, marketing and business development, global project management, management consulting, compliance support, and strategic-sourcing programs.
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