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Monday September 23, 2019

Washington News

Washington Hotline

IRS Program to Increase Employee Smartphone Security

One important function of the Treasury Inspector General for Tax Administration (TIGTA) is to review IRS security practices. The IRS is tasked with protecting personal tax information for over 140 million American taxpayers. TIGTA regularly reviews IRS policies to encourage higher levels of security for these tax records.

One of the negotiated agreements between the IRS and its 80,000 employees is that they are permitted to use their personal iPhones. This is called the "bring your own device (BYOD)" plan.

The TIGTA report noted this policy increases the productivity of IRS employees and reduces costs. IRS employees who desire to use this program must register their smartphones with the Service. There is a separate server for these phones. The IRS has implemented procedures for independent review of the activity logs on these BYOD servers.

The TIGTA report made several recommendations to increase security. The IRS employees should have malware and anti-virus protection on their phones. If a phone is lost or stolen, there should be a procedure for deleting data from that phone. The IRS employees should not use a screenshot to record any tax information.

The IRS indicated it will implement the TIGTA-recommended security upgrades.

Editor's Note: The TIGTA report did not discover any data breach incidents, but it urged the IRS to take steps to reduce security risks. The IRS Security Summit regularly studies security for both the IRS systems and taxpayers. Because most taxpayers and tax preparers use electronic filing and all IRS records are on computer servers, it is important to be on guard against fraudsters and hackers. The Security Summit and TIGTA reviews have been successful in reducing the number of security-related incidents each year.

Senate Finance Committee Subpoenas Conservation Easement Documents

On September 16, Senate Finance Committee chair Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) issued subpoenas to six individuals. The subpoenas requested information about syndicated conservation easement partnerships.

Grassley and Wyden explained that "Conservation easements are a legitimate tax tool to promote land conservation, but some of them in recent years may have allowed some taxpayers to profit from gaming the law – depriving the government of billions in revenue."

The joint statement by Grassley and Wyden continued, "As we have both said all along, conservation easements have very legitimate purposes. We need to protect those purposes and protect the American taxpayer. If a handful of folks can game the system for profit, then we are all left holding the bag. We expect fulsome cooperation with our investigation, and it is unfortunate we have had to resort to compulsory process. Ultimately, when Congress makes an inquiry, it needs to be answered."

The Senate Finance Committee initiated a review of syndicated conservation easements in March of 2019. Document requests were issued after IRS data showed the syndicated conservation easement partnerships claimed $20 billion in charitable deductions from 2010 to 2016. The Senate leaders suggested these deductions were the result of "extravagantly high appraisals."

Andrew Bowman, President of the Land Trust Alliance, supports the Senate Finance Committee review of syndicated conservation easements. He stated, "If the promoters of these deals truly believe they are appropriate, they should have no problem providing information to Congress to substantiate their activities. What are they trying to hide?"

Bowman also supports the Charitable Conservation Easement Program Integrity Act of 2019. This bill limits conservation easement tax deductions to 2.5 times a partner's adjusted basis.

Robert Ramsay is Executive Director of the Partnership for Conservation. He defended the use of syndicated conservation easement partnerships. Ramsay stated, "Conservation easement donations and the associated tax benefit are a crucial tool in the toolbox for private land conservation. We also encourage the Committee to focus on the conservation values that partnerships have permanently protected."

Executor Held Personally Liable for $1.2 Million Tax

In United States v. James Widtfeldt, No. 8:18-cv-00453 (16 Sep 2019), Executor James Widtfeldt was held personally liable for over $1.2 million in estate and gift taxes.

Prior to her death on February 8, 2006, Gusteva Widtfeldt gifted "River Place" and "O'Neill" rental houses in 2004 to James Widtfeldt. James also received additional properties from her estate. The estate did not file an IRS Form 709 Gift Tax Return for the 2004 gifts or an IRS Form 706 Estate Tax Return after Gusteva passed away.

The IRS audited the estate and assessed gift tax, estate tax, penalties and interest. After litigation in Tax Court, the Eighth Circuit affirmed the IRS assessment. Widtfeldt v. Commr., 449 F. App'x 561 (8th Cir. 2012).

The IRS claimed that Widtfeldt received multiple estate properties and was personally liable for over $1.2 million in tax and penalties. If transfer tax is not paid, a lien attaches to recipients for gift tax under Sec. 6324(b) or for estate tax under Sec. 6324(a)(2).

Executor Widtfeldt contended he owned all of the property in 1994 and the IRS claim was not valid. The IRS responded that "claim preclusion" does not permit Widtfeldt to relitigate the events of the case.

The Eighth Circuit noted that the ownership claim by Widtfeldt had been presented to the Tax Court. Because the Tax Court rejected that position and claim preclusion does not permit relitigation of issues, Widtfeldt was personally liable. The U.S. District Court ordered the sale of River Place and Rock Falls Place to cover Widtfeldt's tax liabilities.

Applicable Federal Rate of 1.8% for October -- Rev. Rul. 2019-23; 2019-41 IRB 1 (17 September 2018)

The IRS has announced the Applicable Federal Rate (AFR) for October of 2019. The AFR under Section 7520 for the month of October is 1.8%. The rates for September of 2.2% or August of 2.2% 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 2019, pooled income funds in existence less than three tax years must use a 2.2% deemed rate of return.

Published September 20, 2019
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Shelby Harder, 2018
Dr. Irving Auld and Dorothy
Roher Auld Scholarship

"Many students take for granted what a university has to offer. However, I am thankful every single day for the opportunity to attend this prestigious school. At Lawrence, you have the ability to engage in Socratic debates about the world we live in at dinner, play recreational or NCAA sports, and talk one on one with brilliant professors. At Lawrence, you don't just 'learn' a subject, you are immersed in it. You dive into the liberal arts and these professors show you the beauty in it all, and how everything is tied together. I am a Biochemistry major with a soft spot for rocket science, philosophy, and evolution. Lawrence is my dream school, and it would have never been possible without the Dr. Irving Auld and Dorothy Roher Auld Scholarship. I am forever grateful for their generosity."

Juliana E. Olsen-Valdez, 2018
Carroll Family Scholarship

"Lawrence University is a great place for students looking to embrace their multi-interested approach to learning. As a Geology major, I have spent many long hours in laboratories. But, I have also had the opportunity to organize and lead students on outdoor backpacking trips, help build a stronger community for International students, participate in dialogues on campus initiatives, attend dozens of musical events, and study abroad in a field-based geology program, all while taking classes in a variety of academic spheres on campus. Lawrence, as an institution and student body, creates a collective of learners, listeners, and leaders who are continuously evolving their understanding of the world around them. I am fortunate to have the support of the Carroll Family Scholarship, so that I can say I am a part of this exceptional community too!"

Weiqi "Vicky" Liang, 2019
Marian H. Cuff Endowed Scholarship

"Lawrence is a special institution with nice people around the campus. I better myself by trying out different things and using new ways to think critically. Even though I am a Philosophy major, I have successfully taken classes in Anthropology, Biology, Economics, and Government. In addition, I still find many great extracurricular opportunities to explore, such as singing with Viking Chorale, even though I am not a music major. While having the great experience of volunteering at the elderly center last year, I became an elder advocacy coordinator at the Volunteer Community Service Center. At Lawrence, I've learned to handle difficult academic problems while looking forward to exploring possible opportunities. I am very grateful to be awarded the Marian H. Cuff Endowed Scholarship for every year I have been here, and appreciate that the scholarship has provided this wonderful Lawrence experience to me."

Anthony Cardella, 2018
Ansorge Family Scholarship

"I am so excited that I am able to attend Lawrence University. I know that I will make great progress studying piano with Dr. Michael Mizrahi. Since being at Lawrence I've already made a lot of progress and I really love it here. I am so grateful for the Ansorge Family Scholarship that made it possible for me to come to Lawrence because without it, I might not have been able to afford the cost of attending a school that is a great fit for me and a place where I will learn so much and go so far."

Milwaukee-Downer Scholarships and Professorships

Some of the many recipients of Milwaukee-Downer scholarships gather for a photo with Carolyn King Stephens M-D'62 and Marlene Crupi-Widen M-D'55 in January 2014 at the annual scholarship luncheon.

Rosamund Victoria Bille Adler Scholarship
Dr. Charles E. Albright Scholarship
Helen Daniels Bader Scholarship
James G. and Ethel M. Barber Scholarship
Catharine Beecher Endowed Fund for Downer Women
Bessie A. Bell Scholarship
Berk Scholarship
Frederick C. Best Scholarship
Beta Study Club Scholarship
Lynde Bradley Scholarship
Lucia R. Briggs-Alumnae Scholarship
Edith Lange Brooks Scholarship
Anne Barman Caldwell Scholarship
Alice Miller Chester Scholarship
City of Milwaukee Student Funds Scholarship
Milwaukee-Downer Class of 1940 Fund
Milwaukee-Downer Class of 1942 Fund
College Endowment Association Scholarship
Janet Cope Crawford Scholarship
Jessie Mabbott Daniels Scholarship
F. T. Day Scholarship
Rufus Dodge Scholarship
Julia P. Ely and Hannah R. Vedder Memorial Scholarship
General Endowed Scholarship - M-D College
Dr. Alfred W. and Mrs. Ada F. Gray Scholarship
Berenice E. Hess Scholarship Endowment
Lucille Ray Hibbard Scholarship
Belle Austin Jacobs Scholarship
Helen McDermott Jurack and Ronald J. Mason Scholarship
Marjorie S. Logan Scholarship
Nellie Maxwell Scholarship
S. Annabelle & Paul McGuire Scholarship
Memorial Scholarship Fund - Milwaukee-Downer
Milwaukee-Downer Class of 1953 Scholarship
Milwaukee-Downer Class of 1955 Scholarship
Milwaukee-Downer Class of 1956 Scholarship
Milwaukee-Downer Class of 1957 Scholarship
Milwaukee-Downer Class of 1958 and 1959 50th Reunion Scholarship
Milwaukee-Downer Club Scholarship
Milwaukee-Downer/Lawrence College Consolidation 50th Anniversary Scholarship
Francis Evelyn Kelley Morgan Memorial Scholarship
O'Neill-Anderson Family Scholarship Endowment
Elizabeth A. Olson Scholarship
Gilbert Haven Peirce, Sr. and Emma Elizabeth Manor Peirce Milwaukee-Downer Scholarship
Aleida J. Pieters Scholarship
Matilda Siefert Puelicher Scholarship
Elizabeth Ann Richardson Scholarship
William M. Ross Memorial Scholarship
Elizabeth Rossberg Scholarship
Charles Frederic Sammond Scholarship
Mildred L. Schroeder Scholarship
Sivyer Educational Fund for Women
Marion Merrill Smith Scholarship
Dr. Elizabeth A. Steffen Scholarship
W. Mead and Elizabeth McKone Stillman Scholarship
Strzelczyk Family Scholarship
Clare Scherf Sweetman Scholarship
Raymond H. and Jane K. Taylor Scholarship
Jerline E. Walfoort Memorial Scholarship
Barbara E. Wehr Fund
Harmony Weissbach Scholarship
Martha and Frances Wheelock Scholarship
James G. and Ethel M. Barber Professorship of Theatre and Drama
T. A. Chapman Professorship in Music
Alice G. Chapman Professorship in Physics
Alice G. Chapman Librarianship
Milwaukee-Downer College and College Endowment Association Professorship

Angela Small Fry Intia, 2019
Maurine Campbell Scholarship

"Thanks to the Maurine Campbell scholarship, I have been able to attend the amazing school that is Lawrence University. With the help from this scholarship, I have been able to pursue my dream career in chemistry working with the outstanding and extremely helpful faculty here. Even outside of chemistry I take the time for exploration into my interests and want to give back through my work as a resident life advisor, stock room assistant, and student supervisor at Bon Appetit. Everything I have learned here, academically or not has forever molded the person I am today."

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