In the Netflix series, Breaking Bad, character Jesse Pinkman exclaimed, “Yeah, Science!!” as his meth-lab mentor, Walter White, displayed how chemistry can be used to hone their joint venture. While the activity in which they were engaged may have been “scientific,” I doubt that activity would qualify as “scientific” as that term is used in section 501(c)(3), Title 26 of the Internal Revenue Code.
Under section 501(a) of the Code, an organization described in subsection 501(c) shall be exempt from federal income taxation. Organizations qualified under section 501(c)(3) include organizations organized and operated exclusively for, among other listed things, religious, charitable, educational, and scientific purposes.
The Treasury Regulations (26 C.F.R. § 1.501(c)(3)-1(d)(5)) provides a lengthy definition and explanation of the term “scientific” as used and intended in section 501(c)(3). In a nutshell, a scientific organization must be organized and operated in the public interest. Research, for example, must be for the public interest and not the type ordinarily carried on as an incident to commercial or industrial operations. Research may qualify under section 501(c)(3) if: (a) the results are made available to the public on a nondiscriminatory basis; (b) the research is performed for the United States, or any of its agencies or instrumentalities, or for a State or political subdivision thereof; or (c) the research is directed toward benefiting the public.
The Department of the Treasury and the Internal Revenue Service today issued a final regulation addressing the treatment of income earned by certain foreign corporations that is subject to a high rate of foreign tax.
The final regulations allow taxpayers to exclude certain high-taxed income of a controlled foreign corporation from their Global Intangible Low Taxed Income (GILTI) computation on an elective basis.
Treasury and the IRS today also issued a proposed regulation regarding the high-tax exception with the GILTI high-tax exclusion. Treasury and the IRS welcome public comments.
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule under Section 311 of the USA PATRIOT Act that severs Bank of Dandong, a Chinese bank that acts as a conduit for illicit North Korean financial activity, from the U.S. financial system. FinCEN also issued today an advisory to further alert financial institutions to schemes commonly used by North Korea to evade U.S. and United Nations (UN) sanctions, launder funds, and finance the North Korean regime’s weapons programs.
As part of the Obama administration’s announcement of a crackdown on inversions the U.S. Treasury issued final and temporary proposed regulations that would dramatically change the taxation of corporate debt issued to related corporations having nothing to do with inversions or foreign acquisitions.
On October 3rd of 2016, the Internal Revenue Service (hereinafter “the Service”) issued Final Treasury Regulations setting forth guidance on research and development efforts in connection to Internal Use Software (hereinafter “IUS”) for purposes of claiming the Research & Development Tax Credit (hereinafter “RTC”) under I.R.C. § 41.
On July 12, the U.S. Treasury released its 2016 Model Tax Treaty. I suspect that people will interpret this in terms of how it affects their individual tax situations. This gives a huge clue with respect to information exchange and how the U.S. views “double taxation,” citizenship-based taxation, and related issues.
In general, the QI agreement allows foreign persons to enter into an agreement with the Internal Revenue Service (IRS) to simplify their obligations as a withholding agent under FATCA chapters 3 and 4 and as a payer under chapter 61 and section 3406 for amounts paid to their account holders.
On November 24th of 2015, the Internal Revenue Service (hereinafter the “Service”) streamlined the compliance for the Tangible Property Regulations (hereinafter “TPR”) for small businesses by increasing the safe harbor threshold for deducting certain capital items from $ 500 to $ 2,500 under IRS Notice 2015-82. The scope affects businesses that do not maintain an Applicable Financial Statement (hereinafter “AFS”) such as an audited financial statement. It applies to amounts spent to acquire, produce or improve tangible property that would normally qualify as a capital item.
The new $2,500 threshold applies to any such item that is substantiated by an invoice. As a result, small businesses will be able to immediately deduct expenditures that would otherwise need to be spread over a period of years through annual depreciation deductions. The new $2,500 threshold takes effect starting with tax year 2016. Read More
I had a grEAt conversation with my friend Bob Kerr Friday. We talked about the Department of the Treasury expanding the relief it announced previously on February 24, which will mitigate any harm to tax filers in regards to filing Form 1095A under the Affordable Care Act.
Basically, if you enrolled in Marketplace coverage, received an incorrect Form 1095-A, and filed your return based on that form, you do not need to file an amended tax return.
Additional points Bob brought up include:
• The IRS will not pursue the collection of any additional taxes from you based on updated information in the corrected forms. This relief applies to tax filers who enrolled through the Read More
On Wednesday, March 18th the Republican leaders of Congress’s two main tax committees, the House Ways and Means Committee Chairman Paul Ryan, R-Wis., (hereinafter “Ryan”) and the Senate Finance Committee Chairman Orin Hatch, R-Utah, (hereinafter “Hatch”) wrote a letter to the Treasury Secretary Jacob Lew (hereinafter “Lew”) urging him to avoid pursuing an executive action by President Barack Obama (hereinafter “Obama”) on major tax reform in 2015.
The letter comes in direct response to a statement by the White House Press Secretary Josh Earnest (hereinafter “Earnest”) earlier this month suggesting that Obama might be open to using his executive authority to overhaul the tax code and close select tax loopholes for large corporations. The White House spokesman was probed by a reporter Read More
The IRS is an agency of the Treasury Department and is charged with the administration of the tax laws. It is the largest government agency in the world. Headed by the Commissioner of Internal Revenue, its structure is as follows:
(1) There are four civil compliance divisions responsible for serving specific groups of taxpayers with similar needs. They are:
a. Wage and Investment Division: This division services 88 million individual taxpayers who have only wage and investment income, almost all of which is reported to the IRS by third-party payors.
b. Small Business Self-employed Division: This division is responsible for taxpayers who Read More
On Friday, January 16th of 2015, The Treasury Department and Internal Revenue Service (hereinafter the “Service”) released for publication in the Federal Register a notice of proposed rulemaking (REG-153656 -03) concerning the application of the credit for increasing research activities pursuant to I.R.C. § 41 for computer software that is developed by or for the taxpayer, for the taxpayer’s internal use.
These Proposed Treasury Regulations have been long-awaited as the Service previously issued Final Treasury Regulations (T.D. 9104) governing many aspects of the Research Tax Credit (hereinafter “RTC”) back in 2003, but deferred addressing the guidelines dealing with Read More