Under prior IRS rules, a rollover on day 61 was incorrect and had to be self-corrected or an expensive time consuming private letter ruling process had to be followed by the taxpayer to obtain relief from the IRS. In either case, the taxpayer was looking at extreme financial and negative emotional consequences.

Rev Proc 2016-47: Self-Certification Of Late Rollover Contribution With IRS Model Letter

Under the new Rev Proc 2016-47, instead of being required to request a private letter ruling to receive a hardship waiver for a late 60-day IRA rollover , individuals will be able to “self-certify” to their financial institution that the rollover they’re making complies with the rollover requirements, even if it doesn’t otherwise meet the 60-day rollover period. Notably, though, if the taxpayer has already requested relief from the IRS for a rollover and been denied, these new self-certification provisions cannot be used to obtain relief.

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Recently, new developments have occurred regarding deductibility of legal expenses for a job related lawsuit, deductibility of interest on student loans paid by parents for a child, use of an internet tax stamp, a defective IRS deficiency notice, and an extension for an IRA rollover due to a bank’s error. Each of these will be discussed.

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Contributions Interpreted To Mean One Per Taxpayer Per Tax Year in US Tax Court Case – Bobrow v. Commissioner –

In Bobrow v. Comm’r, T.C. Memo. 2014-21, the Tax Court relied on IRC 408(d)(3)(B) regarding the limits and frequency of nontaxable rollover contributions elected by the taxpayer noting that the one-year limitation addressed in this section of the United States Tax Code applies to all IRAs maintained by the individual taxpayer.

So there you have it, as a result going forward I am now advising United States Taxpayers to engage only one IRA rollover per tax year and to be the absolute safest one rollover every 366 days.

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