Court denies deductions

A taxpayer ran his businesses through several entities. The U.S. Tax Court ruled he wasn’t entitled to deduct consulting fees and commission expenses that one of his LLCs paid to his corporation. The taxpayer claimed the expenses were for camera rentals and were “ordinary and necessary” for his business. However, he didn’t provide sufficient, credible evidence to prove it. He also didn’t explain how he calculated expenses or whether the company charged third parties the same amount for similar services. (TC Memo 2017-38)

Collection Agencies to begin work for IRS

Are you overdue paying your tax bill? You may be contacted by a private collection agency. (The IRS is starting to use private firms as a result of a 2015 law requiring it.) The IRS has posted a sample letter on its website that it will send to taxpayers to notify them that their overdue accounts have been assigned to a private collection agency. The letter informs taxpayers that the collection agency will work with the taxpayer on payment options and offer a payment plan if he or she can’t pay the balance in full. Here’s the sample letter: http://bit.ly/2m86EXN

IRS rules IRAs weren’t “inherited.”

When an IRA owner dies, how the IRA rollover to the new owner is categorized may lead to tax issues, and the need for required minimum distributions (RMDs). In a private letter ruling (PLR), the IRS let a taxpayer roll over her deceased spouse’s Roth IRAs and regular IRA from a trust into her own Roth IRAs and regular IRAs, thus avoiding RMDs on the Roth IRAs, and making her the owner of the regular IRA for RMD computations. Though she was the trust’s sole beneficiary, the IRS found the IRAs weren’t inherited. (PLR 201707001)

Employer Deadline Extended

Certain small employers may provide eligible workers with a qualified small employer health reimbursement arrangement (QSEHRA), subject to rules that differ from the rules of most group health plans. Eligible employers were instructed to furnish a written notice of policy details to eligible employees at least 90 days before the start of the year the QSEHRA is provided for. Until the IRS issues further guidance, the requirement to provide notices is lifted for plans that begin in 2017. No penalties will be assessed. (IRS Notice 2017-20)