Monday December 10, 2018
Protect Your Identity During the Holidays
During December, the shopping season moves into high gear. Identity thieves are also "shopping for your data" during this busy holiday time.
IRS Commissioner Chuck Rettig urged everyone to be careful during the holidays. He stated, "With tax season quickly approaching, people should be extra careful during the holidays to protect their sensitive tax and financial data. Taking a few simple steps can protect this valuable information and help prevent someone from stealing a tax refund. Taxpayers guarding their information also helps strengthen protections against identity thieves taken by the IRS, the states and the tax industry."
In IR-2018-238, the Service offered seven tips to protect your personal information.
Recover Your Records after a Disaster
The year 2018 brought hurricanes, fires, floods and other natural disasters to many American homes. Unfortunately, victims of these types of natural disasters often lose financial and tax records. They also need to substantiate their losses to claim insurance payouts or deduct casualty amounts on tax returns.
In IR-2018-18, the Service explained how to recover your records and document losses.
IRS Pub. 547, Casualties, Disasters and Thefts and Pub. 584, Casualty Disaster and Theft Loss Workbook will be of great help if you are a disaster victim.
Administrator Not Liable for Decedent's Income Tax
In United States v. Timothy O'Brien et al.; No. 8:17-cv-01007 (3 Dec 2018), a U.S. District Court for the District of Maryland held a special administrator was not liable for unpaid income taxes.
Decedent Louis C. Pate passed away on December 5, 2012. On November 7, 2013, the Orphan's Court for Prince George's County, Maryland, removed Willee Mae Pate Roary as personal representative and appointed Timothy P. O'Brien as special administrator.
The insolvent estate was closed on May 17, 2016 with no successor personal representative having been appointed. The IRS sought to collect $229,974 in unpaid income taxes from Special Administrator O'Brien. The income taxes were from tax years 2007 through 2009.
Maryland law permits a court appointment for a special administrator to protect the estates. The Maryland code states, "When necessary to protect property before the appointment and qualification of a personal representative or before the appointment of a successor personal representative following a vacancy in the position of personal representative, the Court shall enter an order appointing a special administrator."
The special administrator does not have all of the powers of a personal representative. The personal representative may "prosecute, defend or submit to arbitration actions, claims, or proceedings in any appropriate jurisdiction for the protection or benefit of the estate, including the commencement of a personal action which the decedent might have commenced or prosecuted."
While the special administrator has "all powers necessary to collect, manage and preserve property," he has no "inherent power" to sue. Therefore, O'Brien did not have the right to pursue collection of the taxes from the estate beneficiaries. The IRS claim against Special Administrator O'Brien was dismissed.
Applicable Federal Rate of 3.6% for December -- Rev. Rul. 2018-30; 2018-49 IRB 1 (16 November 2018)
The IRS has announced the Applicable Federal Rate (AFR) for December of 2018. The AFR under Section 7520 for the month of December is 3.6%. The rates for November of 3.6% or October of 3.4% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2018, pooled income funds in existence less than three tax years must use a 1.4% deemed rate of return.
Published December 7, 2018
|U.S. Treasury Circular 230 requires that this firm advise you that any tax advice provided was not intended or written to be used, and cannot be used by you, for the purpose of avoiding penalties that the IRS could impose upon you.|
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