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Sunday, September 15, 2019

More on Passport Revocation

I previously wrote about passport revocation or denial to those with significant unpaid federal tax liabilities – see, for example, the post here. Last month, an IRS News Release provided various details about the program.

Highlights include:

  • The current threshold of delinquent tax debt is $52,000 (or more)
  • When the IRS certifies a taxpayer as delinquent to the Dept. of State, the taxpayer will receive a Notice CP508C, which provides information on resolving the debt.
  • For taxpayers with current travel plans, the IRS has an expedited reversal mechanism to help get the certification reversed faster once the debt is addressed.
  • Ways to resolve the debt include payment in full, timely paying under an approved installment agreement, timely paying under an accepted offer in compromise, timely paying under a settlement agreement with the Dept. of Justice, having a pending collection due process appeal with levy, and having collection suspended based on innocent spouse relief.
  • Other exceptions from delinquent certification not directly related to paying the debt include taxpayers in bankruptcy, taxpayers that are identity theft victims, accounts that are not collectible due to hardship, taxpayers in a disaster area, pending requests for an installment agreement or offer in compromise, and an IRS accepted adjustment to satisfy the debt in full, taxpayers in a combat zone,

The Acting national Taxpayer Advocate has also shared information in a blog that taxpayers who are working with the Taxpayer Advocate Service may also avoid certification.

IR News Release 2019-141

Monday, September 02, 2019

CLAT Can Determine Charitable Lead Period by Formula

An estate tax charitable deduction under Code §2055(a) is permitted when a qualified charity first holds an interest in a trust followed by a noncharitable beneficiary, based on actuarial computations, if the lead interest is in the form of a guaranteed annuity (CLAT) or unitrust payment (CLUT). Both Code §2055(e)(2)(B) and Treas. Regs. §20.2055-2(e)(2)(vi) require that for a CLAT, the lead interest must have a specified term of years.

What happens if there is no express term of years for the lead interest, and instead the trust provides for the term to be computed by a formula included in the trust instrument? Is this sufficient?

PLR 201933007 addressed this issue, and held that a formula is sufficient if, as to a testamentary CLAT, the term of years is determinable at the date of death funding based on the formula provided.

PLR 201933007