Money Matters: Amended returns don't qualify for timely mailing rule

By James W. Rahmlow
The Daily Record Newswire

In a recent Chief Counsel Advice the IRS determined that amended returns do not qualify for the timely-mailing-is-timely-filing rule.

Under Code Sec. 7502, certain returns that are filed by the due date of the return, including extensions, are considered timely filed if postmarked by the due date, even if not received until after the due date.

In the situation at hand, chief counsel concluded that Code Sec. 7502 only applies to returns “required to be filed.” Since the amended return was not required to be filed and was actually received by the IRS three days after the expiration of the statute, even though the postmark for mailing was timely, the IRS concluded that the amended return was not timely filed and disallowed the return.

Filing deadline is a little later
The IRS has now indicated that taxpayers will this year have until April 18 to file their federal personal income tax returns. Since Friday, April 15 is a federal holiday in the District of Columbia in honor of Emancipation Day, an extension is automatically granted until the next business day, which is Monday, April 18. New York state has indicated that it will follow the federal revised deadline.

100 percent bonus depreciation allowed for part of 2010
Legislation passed in late December 2010 provides an increase in the bonus depreciation rate from 50 percent to 100 percent for assets placed in service in 2011. In addition, assets placed in service after Sept. 8, 2010 also qualify for the 100 percent bonus depreciation as a result of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

This can be a real benefit to taxpayers, especially when it is coupled with the Code Sec. 179 deduction, which allows an immediate expensing deduction of $500,000 per year, both in 2010 and in 2011. It should be noted that the bonus depreciation provision goes back to 50 percent for assets placed in service after Dec. 31, 2011.
Q1 2011 interest rates on over and underpayments

In a recent Revenue Ruling, the IRS announced  their interest rates on over and underpayments for the calendar quarter Jan. 1 through March 31. In general, the rates decreased by 1 percent compared to the previous calendar quarter.

The rates are as follows:
• 2 percent for corporate overpayments
• 0.5 percent for corporate overpayments exceeding $10,000
• 3 percent for corporate underpayments
• 5 percent for large corporate underpayments
• 3 percent for non-corporate overpayments
• 3 percent for non-corporate underpayments

IRS issues January applicable federal rates
In Rev. Rul. 2011-2, the IRS released for January 2011, it’s short-term, mid-term and long-term applicable interest rates as well as the Adjusted AFRs. Here is a summary of those rates.
Applicable Federal Rates (AFR)
Short-term   0.43 percent
Mid-term    1.93 percent
Long-term   3.81 percent
Adjusted AFRs
Short-term 0.69 percent        
Mid-term 1.77 percent
Long-term  4.03 percent
Rev. Rul. 2011-2 was reissued subsequent to the original issue date to add a table for the deemed rate of transfers to new pooled income funds during the year of 2011.

From the U.S. Supreme Court: Medical residents’ payments subject to FICA
In an issue that has been around for many years, the U.S. Supreme Court has unanimously upheld IRS regulations which require hospitals to pay Social Security (FICA) taxes on the payments to their medical residents if the residents work at least forty hours per week. In the court’s finding, they referenced the Chevron standard concluding, among other things, that the IRS regulations must be upheld since they are a “reasonable interpretation” of the Internal Revenue Code.

IRA qualified charitable distribution
As part of recently passed 2010 legislation, a qualified distribution from an IRA to a charity, when done properly, will qualify for charitable distribution treatment both for 2010 and for 2011. Further, for 2010, if the qualified charitable distribution is made by Jan. 31, 2011, it also can qualify as a 2010 required minimum distribution for the IRA holder.

Electronic filing of Form 990 for small not-for-profits
Coming off of the success of filing Form 990-N, Electronic Notification e-Postcard for tax exempt organizations, the IRS has indicated that they are increasing the size of organizations that can use the simplified form. The previous threshold of $25,000 of gross receipts was increased to $50,000 for tax years beginning on or after Jan. 1, 2010. The threshold is an average of gross receipts for organizations that have been in existence for three or more years.

James W. Rahmlow, CPA, is a partner with Mengel, Metzger, Barr & Co. He can be contacted at


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