Wednesday, February 4, 2015

Applicable Federal Rates for February

The Section 7520 rate for February 2015 is 2.0%, while the Applicable Federal Rates (AFRs) are as follows (Rev. Rul. 2015-3, 2015-6 IRB):

Short-term (≤ 3 years)
Mid-term (> 3 years but ≤ 9 years)
Long-term (> 9 years)

Identity Theft Victims May Opt into IRS Program

In an effort to help victims of identity theft, the IRS has issued approximately 1.5 million six-digit Identity Protection PINs (IP PINs) for taxpayers to use in filing their federal tax return. The IP PIN is a unique number that is assigned annually to victims of identity theft with resolved cases. The IP PIN is intended to help these individuals avoid delays in filing returns and receiving refunds. The IRS is continuing the program, which was piloted last year in Florida, Georgia, and the District of Columbia. In addition, the IRS is offering the program to approximately 1.7 million taxpayers for whom the IRS suspects identity theft on their accounts. For more information on combating identity theft, see (search for identity theft ). News Release IR-2015-07.

President's Budget Proposal for 2016 (Green Book)

On 2/2/15, President Obama released his federal budget proposals for fiscal year 2016. On that same day, the Treasury Dept. released the "General Explanations of the Administration's Fiscal Year 2016 Revenue Proposals," commonly known as the "Green Book." The nearly $4 trillion budget proposal is intended to strengthen the middle class and help working families by providing them with more generous tax breaks, such as a new tax credit to two-earner families, an increased child and dependent care tax credit, an expanded earned income tax credit, and an improved tax credit to improve college affordability. Additionally, the proposal includes provisions intended to scale back certain tax breaks for the wealthy, close certain corporate tax loopholes while broadening the tax base, lower the corporate tax rate, target companies that shift income and assets overseas to avoid taxes, and provide the IRS with the authority to regulate all paid tax return preparers. The Green Book can be viewed at

Child Support Payments Have Priority over Alimony

According to the terms of his divorce, an ex-husband was required to provide child support payments of $8,307 and alimony payments of $8,205 ($16,512 total) for the year in question. However, he only paid a $9,688 for both child support and alimony that year, claiming the entire amount as alimony. According to IRC Sec. 71(c)(3), if the payment is less than the full amount of required child support and alimony, the partial payment is treated first as nondeductible child support, and any excess is alimony. Thus, the Tax Court disallowed all but $1,381 of the ex-husband's alimony deduction, which was the excess amount over his required child support payment. Joseph L. Becker, TC Summ. Op. 2015-2 (Tax Ct.).