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2012 State Tax Form

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2012 State Tax Form

2012 state tax form Publication 556 - Main Content Table of Contents Examination of ReturnsIf Your Return Is Examined Interest Netting Abatement of Interest Due to Error or Delay by the IRS Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions Offer in Compromise Appeal RightsAppeal Within the IRS Appeals to the Courts Refund or Credit of Overpayments Before Final Determination Claims for RefundTime for Filing a Claim for Refund Limit on Amount of Refund Processing Claims for Refund Reduced Refund How To Get Tax Help Examination of Returns Your return may be examined for a variety of reasons, and the examination may take place in any one of several ways. 2012 state tax form After the examination, if any changes to your tax are proposed, you can either agree with those changes and pay any additional tax you may owe, or you can disagree with the changes and appeal the decision. 2012 state tax form Examination selection criteria. 2012 state tax form   Your return may be selected for examination on the basis of computer scoring. 2012 state tax form A computer program called the Discriminant Inventory Function System (DIF) assigns a numeric score to each individual and some corporate tax returns after they have been processed. 2012 state tax form If your return is selected because of a high score under the DIF system, the potential is high that an examination of your return will result in a change to your income tax liability. 2012 state tax form   Your return may also be selected for examination on the basis of information received from third-party documentation, such as Forms 1099 and W-2, that does not match the information reported on your return. 2012 state tax form Or, your return may be selected to address both the questionable treatment of an item and to study the behavior of similar taxpayers (a market segment) in handling a tax issue. 2012 state tax form   In addition, your return may be selected as a result of information received from other sources on potential noncompliance with the tax laws or inaccurate filing. 2012 state tax form This information can come from a number of sources, including newspapers, public records, and individuals. 2012 state tax form The information is evaluated for reliability and accuracy before it is used as the basis of an examination or investigation. 2012 state tax form Notice of IRS contact of third parties. 2012 state tax form    The IRS must give you reasonable notice before contacting other persons about your tax matters. 2012 state tax form You must be given reasonable notice in advance that, in examining or collecting your tax liability, the IRS may contact third parties such as your neighbors, banks, employers, or employees. 2012 state tax form The IRS must also give you notice of specific contacts by providing you with a record of persons contacted on both a periodic basis and upon your request. 2012 state tax form    This provision does not apply: To any pending criminal investigation, When providing notice would jeopardize collection of any tax liability, Where providing notice may result in reprisal against any person, or When you authorized the contact. 2012 state tax form Taxpayer Advocate Service. 2012 state tax form   The Taxpayer Advocate Service is an independent organization within the IRS whose goal is to help taxpayers resolve problems with the IRS. 2012 state tax form If you have an ongoing issue with the IRS that has not been resolved through normal processes, or your problems with the IRS are causing financial difficulty, contact the Taxpayer Advocate Service. 2012 state tax form    Before contacting the Taxpayer Advocate Service, you should first discuss any problem with a supervisor. 2012 state tax form Your local Taxpayer Advocate will assist you if you are unable to resolve the problem with the supervisor. 2012 state tax form   For more information, see Publication 1546. 2012 state tax form See How To Get Tax Help , near the end of this publication, for more information about contacting the Taxpayer Advocate Service. 2012 state tax form Comments from small business. 2012 state tax form    The Small Business and Agricultural Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards have been established to receive comments from small business about federal agency enforcement actions. 2012 state tax form The Ombudsman will annually evaluate the enforcement activities of each agency and rate their responsiveness to small business. 2012 state tax form If you wish to comment on the enforcement actions of the IRS, you can take any of the following steps. 2012 state tax form Fax your comments to 1-202-481-5719. 2012 state tax form Write to the following address: Office of the National Ombudsman U. 2012 state tax form S. 2012 state tax form Small Business Administration 409 3rd Street, SW Washington, DC 20416 Call 1-888-734-3247. 2012 state tax form Send an email to ombudsman@sba. 2012 state tax form gov. 2012 state tax form File a comment or complaint online at www. 2012 state tax form sba. 2012 state tax form gov/ombudsman. 2012 state tax form If Your Return Is Examined Some examinations are handled entirely by mail. 2012 state tax form Examinations not handled by mail can take place in your home, your place of business, an Internal Revenue office, or the office of your authorized representative. 2012 state tax form If the time, place, or method is not convenient for you, the examiner will try to work out something more suitable. 2012 state tax form However, the IRS makes the final determination of when, where, and how the examination will take place. 2012 state tax form Throughout the examination, you can act on your own behalf or have someone represent you or accompany you. 2012 state tax form If you filed a joint return, either you or your spouse, or both, can meet with the IRS. 2012 state tax form The person representing you can be any federally authorized practitioner, including an attorney, a certified public accountant, an enrolled agent (a person enrolled to practice before the IRS), an enrolled actuary, or the person who prepared the return and signed it as the preparer. 2012 state tax form If you want someone to represent you in your absence, you must furnish that person with proper written authorization. 2012 state tax form You can use Form 2848 or any other properly written authorization. 2012 state tax form If you want to consult with an attorney, a certified public accountant, an enrolled agent, or any other person permitted to represent a taxpayer during an interview for examining a tax return or collecting tax, you should make arrangements with that person to be available for the interview. 2012 state tax form In most cases, the IRS must suspend the interview and reschedule it. 2012 state tax form The IRS cannot suspend the interview if you are there because of an administrative summons. 2012 state tax form Third party authorization. 2012 state tax form   If you checked the box in the signature area of your income tax return (Form 1040, Form 1040A, or Form 1040EZ) to allow the IRS to discuss your return with another person (a third party designee), this authorization does not replace Form 2848. 2012 state tax form The box you checked on your return only authorizes the other person to receive information about the processing of your return and the status of your refund during the period your return is being processed. 2012 state tax form For more information, see the instructions for your return. 2012 state tax form Confidentiality privilege. 2012 state tax form   Generally, the same confidentiality protection that you have with an attorney also applies to certain communications that you have with federally authorized practitioners. 2012 state tax form   Confidential communications are those that: Advise you on tax matters within the scope of the practitioner's authority to practice before the IRS, Would be confidential between an attorney and you, and Relate to noncriminal tax matters before the IRS, or Relate to noncriminal tax proceedings brought in federal court by or against the United States. 2012 state tax form   In the case of communications in connection with the promotion of a person's participation in a tax shelter, the confidentiality privilege does not apply to written communications between a federally authorized practitioner and that person, any director, officer, employee, agent, or representative of that person, or any other person holding a capital or profits interest in that person. 2012 state tax form   A tax shelter is any entity, plan, or arrangement, a significant purpose of which is the avoidance or evasion of income tax. 2012 state tax form Recordings. 2012 state tax form    You can make an audio recording of the examination interview. 2012 state tax form Your request to record the interview should be made in writing. 2012 state tax form You must notify the examiner 10 days in advance and bring your own recording equipment. 2012 state tax form The IRS also can record an interview. 2012 state tax form If the IRS initiates the recording, you must be notified 10 days in advance and you can get a copy of the recording at your expense. 2012 state tax form Transfers to another area. 2012 state tax form    Generally, your return is examined in the area where you live. 2012 state tax form But if your return can be examined more quickly and conveniently in another area, such as where your books and records are located, you can ask to have the case transferred to that area. 2012 state tax form Repeat examinations. 2012 state tax form    The IRS tries to avoid repeat examinations of the same items, but sometimes this happens. 2012 state tax form If your tax return was examined for the same items in either of the 2 previous years and no change was proposed to your tax liability, please contact the IRS as soon as possible to see if the examination should be discontinued. 2012 state tax form The Examination An examination usually begins when you are notified that your return has been selected. 2012 state tax form The IRS will tell you which records you will need. 2012 state tax form The examination can proceed more easily if you gather your records before any interview. 2012 state tax form Any proposed changes to your return will be explained to you or your authorized representative. 2012 state tax form It is important that you understand the reasons for any proposed changes. 2012 state tax form You should not hesitate to ask about anything that is unclear to you. 2012 state tax form The IRS must follow the tax laws set forth by Congress in the Internal Revenue Code. 2012 state tax form The IRS also follows Treasury Regulations, other rules, and procedures that were written to administer the tax laws and court decisions. 2012 state tax form However, the IRS can lose cases that involve taxpayers with the same issue and still apply its interpretation of the law to your situation. 2012 state tax form Most taxpayers agree to changes proposed by examiners, and the examinations are closed at this level. 2012 state tax form If you do not agree, you can appeal any proposed change by following the procedures provided to you by the IRS. 2012 state tax form A more complete discussion of appeal rights is found later under Appeal Rights . 2012 state tax form If You Agree If you agree with the proposed changes, you can sign an agreement form and pay any additional tax you may owe. 2012 state tax form You must pay interest on any additional tax. 2012 state tax form If you pay when you sign the agreement, the interest is generally figured from the due date of your return (excluding any extension of time to file) to the date of your payment. 2012 state tax form If you do not pay the additional tax when you sign the agreement, you will receive a bill that includes interest. 2012 state tax form If you pay the amount due within 10 business days of the billing date, you will not have to pay more interest or penalties. 2012 state tax form This period is extended to 21 calendar days if the amount due is less than $100,000. 2012 state tax form If you are due a refund, you will receive it sooner if you sign the agreement form. 2012 state tax form You will be paid interest on the refund. 2012 state tax form If the IRS accepts your tax return as filed, you will receive a letter in a few weeks stating that the examiner proposed no changes to your return. 2012 state tax form You should keep this letter with your tax records. 2012 state tax form If You Do Not Agree If you do not agree with the proposed changes, the examiner will explain your appeal rights. 2012 state tax form If your examination takes place in an IRS office, you can request an immediate meeting with the examiner's supervisor to explain your position. 2012 state tax form If an agreement is reached, your case will be closed. 2012 state tax form If you cannot reach an agreement with the supervisor at this meeting, or if the examination took place outside of an IRS office, the examiner will write up your case explaining your position and the IRS's position. 2012 state tax form The examiner will forward your case for processing. 2012 state tax form Fast track mediation. 2012 state tax form   The IRS offers fast track mediation services to help taxpayers resolve many disputes resulting from: Examinations (audits), Offers in compromise, Trust fund recovery penalties, and Other collection actions. 2012 state tax form   Most cases that are not docketed in any court qualify for fast track mediation. 2012 state tax form Mediation can take place at a conference you request with a supervisor, or later. 2012 state tax form The process involves an Appeals Officer who has been trained in mediation. 2012 state tax form You may represent yourself at the mediation session, or someone else can act as your representative. 2012 state tax form For more information, see Publication 3605. 2012 state tax form 30-day letter and 90-day letter. 2012 state tax form   Within a few weeks after your closing conference with the examiner and/or supervisor, you will receive a package with: A letter (known as a 30-day letter) notifying you of your right to appeal the proposed changes within 30 days, A copy of the examination report explaining the examiner's proposed changes, An agreement or waiver form, and A copy of Publication 5. 2012 state tax form You generally have 30 days from the date of the 30-day letter to tell the IRS whether you will accept or appeal the proposed changes. 2012 state tax form The letter will explain what steps you should take, depending on which action you choose. 2012 state tax form Be sure to follow the instructions carefully. 2012 state tax form Appeal Rights are explained later. 2012 state tax form 90-day letter. 2012 state tax form   If you do not respond to the 30-day letter, or if you later do not reach an agreement with an Appeals Officer, the IRS will send you a 90-day letter, which is also known as a notice of deficiency. 2012 state tax form You will have 90 days (150 days if it is addressed to you outside the United States) from the date of this notice to file a petition with the Tax Court. 2012 state tax form Filing a petition with the Tax Court is discussed later under Appeals to the Courts and Tax Court . 2012 state tax form The notice will show the 90th (or 150th) day by which you must file your petition with the Tax Court. 2012 state tax form Suspension of interest and penalties. 2012 state tax form   Generally, the IRS has 3 years from the date you filed your return (or the date the return was due, if later) to assess any additional tax. 2012 state tax form However, if you file your return timely (including extensions), interest and certain penalties will be suspended if the IRS does not mail a notice to you, stating your liability and the basis for that liability, within a 36-month period beginning on the later of: The date on which you filed your tax return, or The due date (without extensions) of your tax return. 2012 state tax form If the IRS mails a notice after the 36-month period, interest and certain penalties applicable to the suspension period will be suspended. 2012 state tax form   The suspension period begins the day after the close of the 36-month period and ends 21 days after the IRS mails a notice to you stating your liability and the basis for that liability. 2012 state tax form Also, the suspension period applies separately to each notice stating your liability and the basis for that liability received by you. 2012 state tax form    The suspension does not apply to a: Failure-to-pay penalty, Fraudulent tax return, Penalty, interest, addition to tax, or additional amount with respect to any tax liability shown on your return or with respect to any gross misstatement, Penalty, interest, addition to tax, or additional amount with respect to any reportable transaction that is not adequately disclosed or any listed transaction, or Criminal penalty. 2012 state tax form Seeking relief from improperly assessed interest. 2012 state tax form   You can seek relief if interest is assessed for periods during which interest should have been suspended because the IRS did not mail a notice to you in a timely manner. 2012 state tax form   If you believe that interest was assessed with respect to a period during which interest should have been suspended, submit Form 843, writing “Section 6404(g) Notification” at the top of the form, with the IRS Service Center where you filed your return. 2012 state tax form The IRS will review the Form 843 and notify you whether interest will be abated. 2012 state tax form If the IRS does not abate interest, you can pay the disputed interest assessment and file a claim for refund. 2012 state tax form If your claim is denied or not acted upon within 6 months from the date you filed it, you can file suit for a refund in your United States District Court or in the United States Court of Federal Claims. 2012 state tax form   If you believe that an IRS officer or employee has made an unreasonable error or delay in performing a ministerial or managerial act (discussed later under Abatement of Interest Due to Error or Delay by the IRS ), file Form 843 with the IRS Service Center where you filed the tax return. 2012 state tax form If the IRS denies your claim, the Tax Court may be able to review that determination. 2012 state tax form See Tax Court can review failure to abate interest later under Abatement of Interest Due to Error or Delay by the IRS . 2012 state tax form If you later agree. 2012 state tax form    If you agree with the examiner's changes after receiving the examination report or the 30-day letter, sign and return either the examination report or the waiver form. 2012 state tax form Keep a copy for your records. 2012 state tax form You can pay any additional amount you owe without waiting for a bill. 2012 state tax form Include interest on the additional tax at the applicable rate. 2012 state tax form This interest rate is usually for the period from the due date of the return (excluding any extension of time to file) to the date of payment. 2012 state tax form The examiner can tell you the interest rate(s) or help you figure the amount. 2012 state tax form   You must pay interest on penalties and additions to tax for failing to file returns, for overstating valuations, for understating valuations on estate and gift tax returns, and for substantially understating tax liability. 2012 state tax form Interest is generally figured from the date (including extensions) the tax return is required to be filed to the date you pay the penalty and/or additions to tax. 2012 state tax form   If you pay the amount due within 10 business days after the date of notice and demand for immediate payment, you will not have to pay any additional penalties and interest. 2012 state tax form This period is extended to 21 calendar days if the amount due is less than $100,000. 2012 state tax form How To Stop Interest From Accruing If you think that you will owe additional tax at the end of the examination, you can stop the further accrual of interest by sending money to the IRS to cover all or part of the amount you think you will owe. 2012 state tax form Interest on part or all of any amount you owe will stop accruing on the date the IRS receives your money. 2012 state tax form You can send an amount either in the form of a deposit in the nature of a cash bond or as a payment of tax. 2012 state tax form Both a deposit and a payment stop any further accrual of interest. 2012 state tax form However, making a deposit or payment will stop the accrual of interest on only the amount you sent. 2012 state tax form Because of compounding rules, interest will continue to accrue on accrued interest, even though you have paid the underlying tax. 2012 state tax form To stop the accrual of interest on both tax and interest, you must make a deposit or payment for both the tax and interest that has accrued as of the date of deposit or payment. 2012 state tax form Payment or Deposit Deposits differ from payments in two ways: You can have all or part of your deposit returned to you without filing for a refund. 2012 state tax form However, if you request and receive your deposit and the IRS later assesses a deficiency for that period and type of tax, interest will be figured as if the funds were never on deposit. 2012 state tax form Also, your deposit will not be returned if one of the following situations applies: The IRS assesses a tax liability. 2012 state tax form The IRS determines that, by returning the deposit, it may not be able to collect a future deficiency. 2012 state tax form The IRS determines that the deposit should be applied against another tax liability. 2012 state tax form Deposits returned to you will include interest based on the Federal short-term rate determined under section 6621(b). 2012 state tax form The deposit returned will be treated as a tax payment to the extent of the disputed tax. 2012 state tax form A disputed tax means the amount of tax specified at the time of deposit as a reasonable estimate of the maximum amount of any tax owed by you, such as the deficiency proposed in the 30-day letter. 2012 state tax form Notice not mailed. 2012 state tax form    If you send money before the IRS mails you a notice of deficiency, you can ask the IRS to treat it as a deposit. 2012 state tax form You must make your request in writing. 2012 state tax form   If, after being notified of a proposed liability but before the IRS mails you a notice of deficiency, you send an amount large enough to cover the proposed liability, it will be considered a payment unless you request in writing that it be treated as a deposit. 2012 state tax form Keep copies of all correspondence you send to the IRS. 2012 state tax form   If the amount you send is at least as much as the proposed liability and you do not request that it be treated as a deposit, the IRS will not send you a notice of deficiency. 2012 state tax form If you do not receive a notice of deficiency, you cannot take your case to the Tax Court. 2012 state tax form See Tax Court , later under Appeal Rights . 2012 state tax form Notice mailed. 2012 state tax form    If, after the IRS mails the notice of deficiency, you send money without written instructions, it will be treated as a payment. 2012 state tax form You will still be able to petition the Tax Court. 2012 state tax form   If you send money after receiving a notice of deficiency and you have specified in writing that it is a “deposit in the nature of a cash bond,” the IRS will treat it as a deposit if you send it before either: The close of the 90-day or 150-day period for filing a petition with the Tax Court to appeal the deficiency, or The date the Tax Court decision is final, if you have filed a petition. 2012 state tax form Using a Deposit To Pay the Tax If you agree with the examiner's proposed changes after the examination, your deposit will be applied against any amount you may owe. 2012 state tax form The IRS will not mail you a notice of deficiency and you will not have the right to take your case to the Tax Court. 2012 state tax form If you do not agree to the full amount of the deficiency after the examination, the IRS will mail you a notice of deficiency. 2012 state tax form Your deposit will be applied against the proposed deficiency unless you write to the IRS before the end of the 90-day or 150-day period stating that you still want the money to be treated as a deposit. 2012 state tax form You will still have the right to take your case to the Tax Court. 2012 state tax form Installment Agreement Request You can request a monthly installment plan if you cannot pay the full amount you owe. 2012 state tax form To be valid, your request must be approved by the IRS. 2012 state tax form However, if you owe $10,000 or less in tax and you meet certain other criteria, the IRS must accept your request. 2012 state tax form Before you request an installment agreement, you should consider other less costly alternatives, such as a bank loan. 2012 state tax form You will continue to be charged interest and penalties on the amount you owe until it is paid in full. 2012 state tax form Unless your income is below a certain level, the fee for an approved installment agreement has increased to $105 ($52 if you make your payments by electronic funds withdrawal). 2012 state tax form If your income is below a certain level, you may qualify to pay a reduced fee of $43. 2012 state tax form For more information about installment agreements, see Form 9465, Installment Agreement Request. 2012 state tax form Interest Netting If you owe interest to the IRS on an underpayment for the same period the IRS owes you interest on an overpayment, the IRS will figure interest on the underpayment and overpayment at the same interest rate (up to the amount of the overpayment). 2012 state tax form As a result, the net rate is zero for that period. 2012 state tax form Abatement of Interest Due to Error or Delay by the IRS The IRS may abate (reduce) the amount of interest you owe if the interest is due to an unreasonable error or delay by an IRS officer or employee in performing a ministerial or managerial act (discussed later). 2012 state tax form Only the amount of interest on income, estate, gift, generation-skipping, and certain excise taxes can be reduced. 2012 state tax form The amount of interest will not be reduced if you or anyone related to you contributed significantly to the error or delay. 2012 state tax form Also, the interest will be reduced only if the error or delay happened after the IRS contacted you in writing about the deficiency or payment on which the interest is based. 2012 state tax form An audit notification letter is such a contact. 2012 state tax form The IRS cannot reduce the amount of interest due to a general administrative decision, such as a decision on how to organize the processing of tax returns. 2012 state tax form Ministerial act. 2012 state tax form    This is a procedural or mechanical act, not involving the exercise of judgment or discretion, during the processing of a case after all prerequisites (for example, conferences and review by supervisors) have taken place. 2012 state tax form A decision concerning the proper application of federal tax law (or other federal or state law) is not a ministerial act. 2012 state tax form Example 1. 2012 state tax form You move from one state to another before the IRS selects your tax return for examination. 2012 state tax form A letter stating that your return has been selected is sent to your old address and then forwarded to your new address. 2012 state tax form When you get the letter, you respond with a request that the examination be transferred to the area office closest to your new address. 2012 state tax form The examination group manager approves your request. 2012 state tax form After your request has been approved, the transfer is a ministerial act. 2012 state tax form The IRS can reduce the interest because of any unreasonable delay in transferring the case. 2012 state tax form Example 2. 2012 state tax form An examination of your return reveals tax due for which a notice of deficiency (90-day letter) will be issued. 2012 state tax form After you and the IRS discuss the issues, the notice is prepared and reviewed. 2012 state tax form After the review process, issuing the notice of deficiency is a ministerial act. 2012 state tax form If there is an unreasonable delay in sending the notice of deficiency to you, the IRS can reduce the interest resulting from the delay. 2012 state tax form Managerial act. 2012 state tax form    This is an administrative act during the processing of a case that involves the loss of records or the exercise of judgment or discretion concerning the management of personnel. 2012 state tax form A decision concerning the proper application of federal tax law (or other federal or state law) is not a managerial act. 2012 state tax form Example. 2012 state tax form A revenue agent is examining your tax return. 2012 state tax form During the middle of the examination, the agent is sent to an extended training course. 2012 state tax form The agent's supervisor decides not to reassign your case, so the work is unreasonably delayed until the agent returns. 2012 state tax form Interest from the unreasonable delay can be abated since both the decision to send the agent to the training class and not to reassign the case are managerial acts. 2012 state tax form How to request abatement of interest. 2012 state tax form    You request an abatement (reduction) of interest on Form 843. 2012 state tax form You should file the claim with the IRS Service Center where you filed the tax return that was affected by the error or delay. 2012 state tax form   If you have already paid the interest and you would like a credit or refund of interest paid, you must file Form 843 within 3 years from the date you filed your original return or 2 years from the date you paid the interest, whichever is later. 2012 state tax form If you have not paid any of the interest, these time limitations for filing Form 843 do not apply. 2012 state tax form   Generally, you should file a separate Form 843 for each tax period and each type of tax. 2012 state tax form However, complete only one Form 843 if the interest is from an IRS error or delay that affected your tax for more than one tax period or for more than one type of tax (for example, where 2 or more tax years were being examined). 2012 state tax form   If your request for abatement of interest is denied, you can appeal the decision to the IRS Appeals Office. 2012 state tax form Tax Court can review failure to abate interest. 2012 state tax form    The Tax Court can review the IRS's refusal to abate (reduce) interest if all of the following requirements are met: You filed a request for abatement of interest (Form 843) with the IRS after July 30,1996. 2012 state tax form The IRS has mailed you a notice of final determination or a notice of disallowance. 2012 state tax form You file a petition with the Tax Court within 180 days of the mailing of the notice of final determination or the notice of disallowance. 2012 state tax form   The following requirements must also be met: For individual and estate taxpayers — your net worth must not exceed $2 million as of the filing date of your petition for review. 2012 state tax form For this purpose, individuals filing a joint return shall be treated as separate individuals. 2012 state tax form For charities and certain cooperatives — you must not have more than 500 employees as of the filing date of your petition for review. 2012 state tax form For all other taxpayers — your net worth must not exceed $7 million, and you must not have more than 500 employees as of the filing date of your petition for review. 2012 state tax form Abatement of Interest for Individuals Affected by Presidentially Declared Disasters or Military or Terrorist Actions If you are (or were) affected by a Presidentially declared disaster occurring after 1996 or a terrorist or military action occurring after September 10, 2001, the IRS may abate (reduce) the amount of interest you owe on certain taxes. 2012 state tax form The IRS may abate interest for the period of any additional time to file or pay that the IRS provides on account of the disaster or the terrorist or military action. 2012 state tax form The IRS will issue a notice or news release indicating who are affected taxpayers and stating the period of relief. 2012 state tax form If you are eligible for relief from interest, but were charged interest for the period of relief, the IRS may retroactively abate your interest. 2012 state tax form To the extent possible, the IRS can take the following actions: Make appropriate adjustments to your account. 2012 state tax form Notify you when the adjustments are made. 2012 state tax form Refund any interest paid by you where appropriate. 2012 state tax form For more information on disaster area losses, see Disaster Area Losses in Publication 547. 2012 state tax form For more information on other tax relief for victims of terrorist attacks, see Publication 3920. 2012 state tax form Offer in Compromise In certain circumstances, the IRS will allow you to pay less than the full amount you owe. 2012 state tax form If you think you may qualify, you should submit your offer by filing Form 656, Offer in Compromise. 2012 state tax form The IRS may accept your offer for any of the following reasons: There is doubt about the amount you owe (or whether you owe it). 2012 state tax form There is doubt as to whether you can pay the amount you owe based on your financial situation. 2012 state tax form An economic hardship would result if you had to pay the full amount owed. 2012 state tax form Your case presents compelling reasons that the IRS determines are a sufficient basis for compromise. 2012 state tax form If your offer is rejected, you have 30 days to ask the Appeals Office of the IRS to reconsider your offer. 2012 state tax form The IRS offers fast track mediation services to help taxpayers resolve many issues including a dispute regarding an offer in compromise. 2012 state tax form For more information, see Publication 3605. 2012 state tax form Generally, if you submit an offer in compromise, the IRS will delay certain collection activities. 2012 state tax form The IRS usually will not levy (take) your property to settle your tax bill during the following periods: While the IRS is evaluating your offer in compromise. 2012 state tax form The 30 days immediately after the offer is rejected. 2012 state tax form While your timely-filed appeal is being considered by Appeals. 2012 state tax form Also, if the IRS rejects your original offer and you submit a revised offer within 30 days of the rejection, the IRS generally will not levy your property while it considers your revised offer. 2012 state tax form For more information about submitting an offer in compromise, see Form 656. 2012 state tax form Appeal Rights Because people sometimes disagree on tax matters, the IRS has an appeals system. 2012 state tax form Most differences can be settled within this system without expensive and time-consuming court trials. 2012 state tax form However, your reasons for disagreeing must come within the scope of the tax laws. 2012 state tax form For example, you cannot appeal your case based only on moral, religious, political, constitutional, conscientious, or similar grounds. 2012 state tax form In most instances, you may be eligible to take your case to court if you do not reach an agreement at your appeals conference, or if you do not want to appeal your case to the IRS Office of Appeals. 2012 state tax form See Appeals to the Courts , later, for more information. 2012 state tax form Appeal Within the IRS You can appeal an IRS tax decision to a local Appeals Office, which is separate from and independent of the IRS office taking the action you disagree with. 2012 state tax form The Appeals Office is the only level of appeal within the IRS. 2012 state tax form Conferences with Appeals Office personnel are held in an informal manner by correspondence, by telephone, or at a personal conference. 2012 state tax form If you want an appeals conference, follow the instructions in the letter you received. 2012 state tax form Your request will be sent to the Appeals Office to arrange a conference at a convenient time and place. 2012 state tax form You or your representative should be prepared to discuss all disputed issues at the conference. 2012 state tax form Most differences are settled at this level. 2012 state tax form If agreement is not reached at your appeals conference, you may be eligible to take your case to court. 2012 state tax form See Appeals to the Courts , later. 2012 state tax form Protests and Small Case Requests When you request an Appeals conference, you may also need to file either a formal written protest or a small case request with the office named in the letter you received. 2012 state tax form Also, see the special appeal request procedures in Publication 1660. 2012 state tax form Written protest. 2012 state tax form   You need to file a written protest in the following cases: All employee plan and exempt organization cases without regard to the dollar amount at issue. 2012 state tax form All partnership and S corporation cases without regard to the dollar amount at issue. 2012 state tax form All other cases, unless you qualify for the small case request procedure, or other special appeal procedures such as requesting Appeals consideration of liens, levies, seizures, or installment agreements. 2012 state tax form   If you must submit a written protest, see the instructions in Publication 5 about the information you need to provide. 2012 state tax form The IRS urges you to provide as much information as you can, as it will help speed up your appeal. 2012 state tax form That will save you both time and money. 2012 state tax form    Be sure to send the protest within the time limit specified in the letter you received. 2012 state tax form Small case request. 2012 state tax form   If the total amount for any tax period is not more than $25,000, you may make a small case request instead of filing a formal written protest. 2012 state tax form In figuring the total amount, include a proposed increase or decrease in tax (including penalties), or claimed refund. 2012 state tax form If you are making an offer in compromise, include total unpaid tax, penalty, and interest due. 2012 state tax form For a small case request, follow the instructions in our letter to you by sending a letter: Requesting Appeals consideration, Indicating the changes you do not agree with, and Indicating the reasons why you do not agree. 2012 state tax form Representation You can represent yourself at your appeals conference, or you can be represented by any federally authorized practitioner, including an attorney, a certified public accountant, an enrolled actuary, or an enrolled agent. 2012 state tax form If your representative attends a conference without you, he or she can receive or inspect confidential information only if you have filed a power of attorney or a tax information authorization. 2012 state tax form You can use a Form 2848 or any other properly written power of attorney or authorization. 2012 state tax form You can also bring witnesses to support your position. 2012 state tax form Confidentiality privilege. 2012 state tax form   Generally, the same confidentiality protection that you have with an attorney also applies to certain communications that you have with federally authorized practitioners. 2012 state tax form See Confidentiality privilege under If Your Return Is Examined , earlier. 2012 state tax form Appeals to the Courts If you and the IRS still disagree after the appeals conference, you may be entitled to take your case to the United States Tax Court, the United States Court of Federal Claims, or a United States District Court. 2012 state tax form These courts are independent of the IRS. 2012 state tax form If you elect to bypass the IRS's appeals system, you may be able to take your case to one of the courts listed above. 2012 state tax form However, a case petitioned to the United States Tax Court will normally be considered for settlement by an Appeals Officer before the Tax Court hears the case. 2012 state tax form If you unreasonably fail to pursue the IRS's appeals system, or if your case is intended primarily to cause a delay, or your position is frivolous or groundless, the Tax Court may impose a penalty of up to $25,000. 2012 state tax form See Appeal Within the IRS, earlier. 2012 state tax form Prohibition on requests to taxpayers to give up rights to bring civil action. 2012 state tax form   The Government cannot ask you to waive your right to sue the United States or a Government officer or employee for any action taken in connection with the tax laws. 2012 state tax form However, your right to sue can be waived if: You knowingly and voluntarily waive that right, The request to waive that right is made in writing to your attorney or other federally authorized practitioner, or The request is made in person and your attorney or other representative is present. 2012 state tax form Burden of proof. 2012 state tax form   For court proceedings resulting from examinations started after July 22, 1998, the IRS generally has the burden of proof for any factual issue if you have met the following requirements: You introduced credible evidence relating to the issue. 2012 state tax form You complied with all substantiation requirements of the Internal Revenue Code. 2012 state tax form You maintained all records required by the Internal Revenue Code. 2012 state tax form You cooperated with all reasonable requests by the IRS for information regarding the preparation and related tax treatment of any item reported on your tax return. 2012 state tax form You had a net worth of $7 million or less and not more than 500 employees at the time your tax liability is contested in any court proceeding if your tax return is for a corporation, partnership, or trust. 2012 state tax form    The burden of proof does not change on an issue when another provision of the tax laws requires a specific burden of proof with respect to that issue. 2012 state tax form Use of statistical information. 2012 state tax form   In the case of an individual, the IRS has the burden of proof in court proceedings based on any IRS reconstruction of income solely through the use of statistical information on unrelated taxpayers. 2012 state tax form Penalties. 2012 state tax form   The IRS has the burden of initially producing evidence in court proceedings with respect to the liability of any individual taxpayer for any penalty, addition to tax, or additional amount imposed by the tax laws. 2012 state tax form Recovering litigation or administrative costs. 2012 state tax form   These are the expenses that you pay to defend your position to the IRS or the courts. 2012 state tax form You may be able to recover reasonable litigation or administrative costs if all of the following conditions apply: You are the prevailing party. 2012 state tax form You exhaust all administrative remedies within the IRS. 2012 state tax form Your net worth is below a certain limit (see Net worth requirements , later). 2012 state tax form You do not unreasonably delay the proceeding. 2012 state tax form You apply for administrative costs within 90 days of the date on which the final decision of the IRS Office of Appeals as to the determination of the tax, interest, or penalty was mailed to you. 2012 state tax form You apply for litigation costs within the time frames provided by Tax Court Rule 231, found at http://www. 2012 state tax form ustaxcourt. 2012 state tax form gov  www. 2012 state tax form ustaxcourt. 2012 state tax form gov . 2012 state tax form   Prevailing party, reasonable litigation costs, and reasonable administrative costs are explained later. 2012 state tax form Note. 2012 state tax form If the IRS denies your award of administrative costs, and you want to appeal, you must petition the Tax Court within 90 days of the date on which the IRS mails the denial notice. 2012 state tax form Prevailing party. 2012 state tax form   Generally, you are the prevailing party if: You substantially prevail with respect to the amount in controversy or on the most significant tax issue or set of issues in question, and You meet the net worth requirements, discussed later. 2012 state tax form   You will not be treated as the prevailing party if the United States establishes that its position was substantially justified. 2012 state tax form The position of the United States is presumed not to be substantially justified if the IRS: Did not follow its applicable published guidance (such as regulations, revenue rulings, notices, announcements, private letter rulings, technical advice memoranda, and determination letters issued to the taxpayer) in the proceeding (This presumption can be overcome by evidence. 2012 state tax form ), or Has lost in courts of appeal for other circuits on substantially similar issues. 2012 state tax form   The court will generally decide who is the prevailing party. 2012 state tax form Reasonable litigation costs. 2012 state tax form   These include the following costs: Reasonable court costs. 2012 state tax form The reasonable costs of studies, analyses, engineering reports, tests, or projects found by the court to be necessary for the preparation of your case. 2012 state tax form The reasonable costs of expert witnesses. 2012 state tax form Attorney fees that generally may not exceed $125 maximum hourly rate as set by statute and indexed for inflation. 2012 state tax form See Attorney fees , later. 2012 state tax form Reasonable administrative costs. 2012 state tax form   These include the following costs: Any administrative fees or similar charges imposed by the IRS. 2012 state tax form The reasonable costs of studies, analyses, engineering reports, tests, or projects. 2012 state tax form The reasonable costs of expert witnesses. 2012 state tax form Attorney fees that generally may not exceed $125 per hour. 2012 state tax form See Attorney fees , later. 2012 state tax form Timing of costs. 2012 state tax form    Administrative costs can be awarded for costs incurred after the earliest of: The date the first letter of proposed deficiency is sent that allows you an opportunity to request administrative review in the IRS Office of Appeals, The date you receive notice of the IRS Office of Appeals' decision, or The date of the notice of deficiency. 2012 state tax form Net worth requirements. 2012 state tax form   An individual taxpayer may be able to recover litigation or administrative costs if the following requirements are met: For individuals — your net worth does not exceed $2 million as of the filing date of your petition for review. 2012 state tax form For this purpose, individuals filing a joint return are treated as separate individuals. 2012 state tax form For estates — your net worth does not exceed $2 million as of the date of the decedent's death. 2012 state tax form For charities and certain cooperatives — you do not have more than 500 employees as of the filing date of your petition for review. 2012 state tax form For all other taxpayers — as of the filing date of your petition for review, your net worth does not exceed $7 million, and you must not have more than 500 employees. 2012 state tax form Qualified offer rule. 2012 state tax form    You can also receive reasonable costs and fees and be treated as a prevailing party in a civil action or proceeding if: You make a qualified offer to the IRS to settle your case, The IRS does not accept that offer, and The tax liability (not including interest, unless interest is at issue) later determined by the court is equal to or less than the amount of your qualified offer. 2012 state tax form You must also meet the remaining requirements, including the exhaustion of administrative remedies and the net worth requirement, discussed earlier, to get the benefit of the qualified offer rule. 2012 state tax form Qualified offer. 2012 state tax form    This is a written offer made by you during the qualified offer period. 2012 state tax form It must specify both the offered amount of your liability (not including interest) and that it is a qualified offer. 2012 state tax form   To be a qualified offer, it must remain open from the date it is made until the earliest of: The date it is rejected, The date the trial begins, or 90 days from the date it is made. 2012 state tax form Qualified offer period. 2012 state tax form    This period begins on the day the IRS mails you the first letter of proposed deficiency that allows you to request review by the IRS Office of Appeals. 2012 state tax form It ends 30 days before your case is first set for trial. 2012 state tax form Attorney fees. 2012 state tax form   Attorney fees generally may not exceed $125 maximum hourly rate as set by statute and indexed for inflation. 2012 state tax form However, this amount can be higher in certain limited circumstances depending on the level of difficulty of the issues in the case and the local availability of tax expertise. 2012 state tax form See IRS. 2012 state tax form gov for more information. 2012 state tax form    Attorney fees include the fees paid by a taxpayer for the services of anyone who is authorized to practice before the Tax Court or before the IRS. 2012 state tax form In addition, attorney fees can be awarded in civil actions for unauthorized inspection or disclosure of a taxpayer's return or return information. 2012 state tax form   Fees can be awarded in excess of the actual amount charged if: You are represented for no fee, or for a nominal fee, as a pro bono service, and The award is paid to your representative or to your representative's employer. 2012 state tax form Jurisdiction for determination of employment status. 2012 state tax form    The Tax Court can review IRS employment status determinations (for example, whether individuals hired by you are in fact your employees or independent contractors) and the amount of employment tax under such determinations. 2012 state tax form Tax Court review can take place only if, in connection with an audit of any person, there is a controversy involving a determination by the IRS that either: One or more individuals performing services for that person are employees of that person, or That person is not entitled to relief under Section 530(a) of the Revenue Act of 1978 (discussed later). 2012 state tax form   The following rules also apply to a Tax Court review of employment status: A Tax Court petition to review these determinations can be filed only by the person for whom the services are performed, If you receive a Notice of Determination by certified or registered mail, you must file a petition for Tax Court review within 90 days of the date of mailing that notice (150 days if the notice is addressed to you outside the United States), If during the Tax Court proceeding, you begin to treat as an employee an individual whose employment status is at issue, the Tax Court will not consider that change in its decision, Assessment and collection of tax is suspended while the Tax Court review is taking place, Payment of the asserted employment tax deficiency is not required to petition the U. 2012 state tax form S. 2012 state tax form Tax Court for a determination of employment status. 2012 state tax form There can be a de novo review by the Tax Court (a review which does not consider IRS administrative findings), and At your request and with the Tax Court's agreement, small tax case procedures (discussed later) are available to simplify the case resolution process when the amount at issue (including additions to tax and penalties) is $50,000 or less for each tax period involved. 2012 state tax form   For further information, see Publication 3953, Questions and Answers About Tax Court Proceedings for Determination of Employment Status Under IRC Section 7436. 2012 state tax form Section 530(a) of the Revenue Act of 1978. 2012 state tax form   This section relieves an employer of certain employment tax responsibilities for individuals not treated as employees. 2012 state tax form It also provides relief to taxpayers under audit or involved in administrative or judicial proceedings. 2012 state tax form Tax Court review of request for relief from joint and several liability on a joint return. 2012 state tax form    As discussed later, at Relief from joint and several liability on a joint return under Claims for Refund, you can request relief from liability for tax you owe, plus related penalties and interest, that you believe should be paid by your spouse (or former spouse). 2012 state tax form You also can petition (ask) the Tax Court to review your request for innocent spouse relief or separation of liability if either: The IRS sends you a determination notice denying, in whole or in part, your request, or You do not receive a determination notice from the IRS within 6 months from the date you file Form 8857. 2012 state tax form   If you receive a determination notice, you must petition the Tax Court to review your request during the 90-day period that begins on the date the IRS mails the notice. 2012 state tax form See Publication 971 for more information. 2012 state tax form Note. 2012 state tax form Your spouse or former spouse may file a written protest and request an Appeals conference to protest your claim of innocent spouse relief or separation of liability. 2012 state tax form See Rev. 2012 state tax form Proc. 2012 state tax form 2003-19, which is on page 371 of the Internal Revenue Bulletin 2003-5 at  www. 2012 state tax form irs. 2012 state tax form gov/pub/irs-irbs/irb03-05. 2012 state tax form pdf. 2012 state tax form Tax Court You can take your case to the United States Tax Court if you disagree with the IRS over: Income tax, Estate tax, Gift tax, Employment tax involving IRS employment status determinations, or Certain excise taxes of private foundations, public charities, qualified pension and other retirement plans, or real estate investment trusts. 2012 state tax form For information on Tax Court review of a determination of employment status, see Jurisdiction for determination of employment status, earlier. 2012 state tax form For information on Tax Court review of an IRS refusal to abate interest, see Tax Court can review failure to abate interest, earlier under Examination of Returns. 2012 state tax form For information on Tax Court review of Appeals determinations with respect to lien notices and proposed levies, see Publication 1660. 2012 state tax form You cannot take your case to the Tax Court before the IRS sends you a notice of deficiency. 2012 state tax form You can only appeal your case if you file a petition within 90 days from the date the notice is mailed to you (150 days if it is addressed to you outside the United States). 2012 state tax form The notice will show the 90th (or 150th) day by which you must file your petition with the Tax Court. 2012 state tax form Withdrawal of notice of deficiency. 2012 state tax form If you consent, the IRS can withdraw a notice of deficiency. 2012 state tax form A notice of deficiency may be rescinded if the notice was issued as a result of an administrative error; the taxpayer submits information establishing the actual tax due is less than the amount shown in the notice; the taxpayer specifically requests a conference with the appropriate Appeals office for the purpose of entering into settlement negotiations. 2012 state tax form However, the notice may be rescinded only if the appropriate Appeals office first decides that the case is susceptible to agreement. 2012 state tax form See Revenue Procedure 98-54 for a more detailed explanation of the requirements. 2012 state tax form Once withdrawn, the limits on credits, refunds, and assessments concerning the notice are void, and you and the IRS have the rights and obligations that you had before the notice was issued. 2012 state tax form The suspension of any time limitation while the notice of deficiency was issued will not change when the notice is withdrawn. 2012 state tax form After the notice is withdrawn, you cannot file a petition with the Tax Court based on the notice. 2012 state tax form Also, the IRS can later issue a notice of deficiency in a greater or lesser amount than the amount in the withdrawn deficiency. 2012 state tax form Generally, the Tax Court hears cases before any tax has been assessed and paid; however, you can pay the tax after the notice of deficiency has been issued and still petition the Tax Court for review. 2012 state tax form If you do not file your petition on time, the proposed tax will be assessed, a bill will be sent, and you will not be able to take your case to the Tax Court. 2012 state tax form Under the law, you must pay the tax within 21 days (10 business days if the amount is $100,000 or more). 2012 state tax form Collection can proceed even if you think that the amount is excessive. 2012 state tax form Publication 594 explains IRS collection procedures. 2012 state tax form If you filed your petition on time, the court will schedule your case for trial at a location convenient to you. 2012 state tax form You can represent yourself before the Tax Court or you can be represented by anyone admitted to practice before that court. 2012 state tax form Small tax case procedure. 2012 state tax form   If the amount in your case is $50,000 or less for any 1 tax year or period, you can request that your case be handled under the small tax case procedure. 2012 state tax form If the Tax Court approves, you can present your case to the Tax Court for a decision that is final and that you cannot appeal. 2012 state tax form You can get more information regarding the small tax case procedure and other Tax Court matters from the United States Tax Court, 400 Second Street, N. 2012 state tax form W. 2012 state tax form , Washington, DC 20217. 2012 state tax form More information can be found on the Tax Court's website at www. 2012 state tax form ustaxcourt. 2012 state tax form gov. 2012 state tax form Motion to request redetermination of interest. 2012 state tax form   In certain cases, you can file a motion asking the Tax Court to redetermine the amount of interest on either an underpayment or an overpayment. 2012 state tax form You can do this only in a situation that meets all of the following requirements: The IRS has assessed a deficiency that was determined by the Tax Court. 2012 state tax form The assessment included interest. 2012 state tax form You have paid the entire amount of the deficiency plus the interest claimed by the IRS. 2012 state tax form The Tax Court has found that you made an overpayment. 2012 state tax form You must file the motion within one year after the decision of the Tax Court becomes final. 2012 state tax form District Court and Court of Federal Claims Generally, the District Courts and the Court of Federal Claims hear tax cases only after you have paid the entire tax and penalties, and filed a claim for a credit or refund. 2012 state tax form The taxpayer may litigate certain types of employment tax cases in either the United States District Court or the United States Court of Federal Claims. 2012 state tax form Before taxpayers can initiate suit in either of these courts with respect to certain employment taxes, they will have to pay, at a minimum, the employment tax assessment attributable to one employee for any one quarter and file a claim for refund of the tax. 2012 state tax form Once the claim for refund is denied or 6 months elapse without any action by the IRS, the taxpayer may initiate suit. 2012 state tax form As explained later under Claims for Refund, you can file a claim with the IRS for a credit or refund if you think that the tax you paid is incorrect or excessive. 2012 state tax form If your claim is totally or partially disallowed by the IRS, you should receive a notice of claim disallowance. 2012 state tax form If the IRS does not act on your claim within 6 months from the date you filed it, you can then file suit for a refund. 2012 state tax form You generally must file suit for a credit or refund no later than 2 years after the IRS informs you that your claim has been rejected. 2012 state tax form However, you can file suit if it has been 6 months since you filed your claim and the IRS has not yet delivered a decision. 2012 state tax form You can file suit for a credit or refund in your United States District Court or in the United States Court of Federal Claims. 2012 state tax form However, you cannot appeal to the United States Court of Federal Claims if your claim is for credit or refund of a penalty that relates to promoting an abusive tax shelter or to aiding and abetting the understatement of tax liability on someone else's return. 2012 state tax form For information about procedures for filing suit in either court, contact the Clerk of your District Court or of the United States Court of Federal Claims. 2012 state tax form Refund or Credit of Overpayments Before Final Determination Any court with proper jurisdiction, including the Tax Court, can order the IRS to refund any part of a tax deficiency that the IRS collects from you during a period when the IRS is not permitted to assess that deficiency, or to levy or engage in any court proceeding to collect that deficiency. 2012 state tax form In addition, the court can order a refund of any part of an overpayment determined by the Tax Court that is not at issue on appeal to a higher court. 2012 state tax form The court can order these refunds before its decision on the case is final. 2012 state tax form Taxpayers should thoroughly review IRS settlement offers before signing a Tax Court Decision document to ensure that all adjustments are correct, including the inclusion of any tax credits that the taxpayer is allowed to claim. 2012 state tax form Note. 2012 state tax form The court may no longer order a refund of an overpayment after the case is final. 2012 state tax form Generally, the IRS is not permitted to take action on a tax deficiency during: The 90-day (or 150-day if outside the United States) period that you have to petition a notice of deficiency to the Tax Court, or The period that the case is under appeal if a bond is provided. 2012 state tax form Claims for Refund If you believe you have overpaid your tax, you have a limited amount of time in which to file a claim for a credit or refund. 2012 state tax form You can claim a credit or refund by filing Form 1040X. 2012 state tax form See Time for Filing a Claim for Refund , later. 2012 state tax form File your claim by mailing it to the IRS Service Center where you filed your original return. 2012 state tax form File a separate form for each year or period involved. 2012 state tax form Include an explanation of each item of income, deduction, or credit on which you are basing your claim. 2012 state tax form Corporations should file Form 1120X, Amended U. 2012 state tax form S. 2012 state tax form Corporation Income Tax Return, or other form appropriate to the type of credit or refund claimed. 2012 state tax form See Publication 3920 for information on filing claims for tax forgiveness for individuals affected by terrorist attacks. 2012 state tax form Requesting a copy of your tax return. 2012 state tax form   You can obtain a copy of the actual return and all attachments you filed with the IRS for an earlier year. 2012 state tax form This includes a copy of the Form W-2 or Form 1099 filed with your return. 2012 state tax form Use Form 4506 to make your request. 2012 state tax form You will be charged a fee, which you must pay when you submit Form 4506. 2012 state tax form Requesting a copy of your tax account information. 2012 state tax form   Use Form 4506-T, Request for Transcript of Tax Return, to request free copies of your tax return transcript, tax account transcript, record of account, verification of nonfiling, or Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript. 2012 state tax form The tax return transcript contains most of the line items of a tax return. 2012 state tax form A tax account transcript contains information on the financial status of the account, such as payments, penalty assessments, and adjustments. 2012 state tax form A record of account is a combination of line item information and later adjustments to the account. 2012 state tax form Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript contains data from these information returns. 2012 state tax form Penalty for erroneous claim for refund. 2012 state tax form   If you claim an excessive amount of tax refund or credit relating to income tax (other than a claim relating to the earned income credit), you may be liable for a penalty of 20% of the amount that is determined to be excessive. 2012 state tax form An excessive amount is the amount of the claim for refund or credit that is more than the amount of claim allowable for the tax year. 2012 state tax form The penalty may be waived if you can show that you had a reasonable basis for making the claim. 2012 state tax form Time for Filing a Claim for Refund Generally, you must file a claim for a credit or refund within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. 2012 state tax form If you do not file a claim within this period, you may no longer be entitled to a credit or a refund. 2012 state tax form If the due date to file a return or a claim for a credit or refund is a Saturday, Sunday, or legal holiday, it is filed on time if it is filed on the next business day. 2012 state tax form Returns you filed before the due date are considered filed on the due date. 2012 state tax form This is true even when the due date is a Saturday, Sunday, or legal holiday. 2012 state tax form Disaster area claims for refund. 2012 state tax form   If you live in a Presidentially declared disaster area or are affected by terroristic or military action, the deadline to file a claim for a refund may be postponed. 2012 state tax form This section discusses the special rules that apply to Presidentially declared disaster area refunds. 2012 state tax form    A Presidentially declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Disaster Relief and Emergency Assistance Act. 2012 state tax form Postponed refund deadlines. 2012 state tax form   The IRS may postpone for up to 1 year the deadlines for filing a claim for refund. 2012 state tax form The postponement can be used by taxpayers who are affected by a Presidentially declared disaster. 2012 state tax form The IRS may also postpone deadlines for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. 2012 state tax form For more information, see Publication 547. 2012 state tax form   If any deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin. 2012 state tax form A list of the areas eligible for assistance under the Disaster Relief and Emergency Assistance Act is available at the Federal Emergency Management Agency (FEMA) website at www. 2012 state tax form fema. 2012 state tax form gov and at the IRS website at www. 2012 state tax form irs. 2012 state tax form gov. 2012 state tax form Nonfilers can get refund of overpayments paid within 3-year period. 2012 state tax form   The Tax Court can consider taxes paid during the 3-year period preceding the date of a notice of deficiency for determining any refund due to a nonfiler. 2012 state tax form This means that if you do not file your return, and you receive a notice of deficiency in the third year after the due date (with extensions) of your return and file suit with the Tax Court to contest the notice of deficiency, you may be able to receive a refund of excessive amounts paid within the 3-year period preceding the date of the notice of deficiency. 2012 state tax form The IRS may postpone for up to 1 year certain tax deadlines, including the time for filing claims for refund, for taxpayers who are affected by a terrorist attack occurring after September 10, 2001. 2012 state tax form For more information, see Publication 3920. 2012 state tax form Claim for refund by estates electing the installment method of payment. 2012 state tax form   In certain cases where an estate has elected to make tax payments through the installment method, the executor can file a suit for refund with a U. 2012 state tax form S. 2012 state tax form District Court or the U. 2012 state tax form S. 2012 state tax form Court of Federal Claims before all the installment payments have been made. 2012 state tax form However, all the following must be true before a suit can be filed: The estate consists largely of an interest in a closely-held business. 2012 state tax form All installment payments due on or before the date the suit is filed have been made. 2012 state tax form No accelerated installment payments have been made. 2012 state tax form No Tax Court case is pending with respect to any estate tax liability. 2012 state tax form If a notice of deficiency was issued to the estate regarding its liability for estate tax, the time for petitioning the Tax Court has passed. 2012 state tax form No proceeding is pending for a declaratory judgment by the Tax Court on whether the estate is eligible to pay tax in installments. 2012 state tax form The executor has not included any previously litigated issues in the current suit for refund. 2012 state tax form The executor does not discontinue making installment payments timely, while the court considers the suit for refund. 2012 state tax form    If in its final decision on the suit for refund the court redetermines the estate's tax liability, the IRS must refund any part of the estate tax amount that is disallowed. 2012 state tax form This includes any part of the disallowed amount previously collected by the IRS. 2012 state tax form Protective claim for refund. 2012 state tax form   If your right to a refund is contingent on future events and may not be determinable until after the time period for filing a claim for refund expires, you can file a protective claim for refund. 2012 state tax form A protective claim can be either a formal claim or an amended return for credit or refund. 2012 state tax form Protective claims are often based on current litigation or expected changes in the tax law, other legislation, or regulations. 2012 state tax form A protective claim preserves your right to claim a refund when the contingency is resolved. 2012 state tax form A protective claim does not have to state a particular dollar amount or demand an immediate refund. 2012 state tax form However, to be valid, a protective claim must: Be in writing and be signed, Include your name, address, social security number or individual taxpayer identification number, and other contact information, Identify and describe the contingencies affecting the claim, Clearly alert the IRS to the essential nature of the claim, and Identify the specific year(s) for which a refund is sought. 2012 state tax form   Generally, the IRS will delay action on the protective claim until the contingency is resolved. 2012 state tax form Once the contingency is resolved, the IRS may obtain additional information necessary to process the claim and then either allow or disallow the claim. 2012 state tax form   Mail your protective claim for refund to the address listed in the instructions for Form 1040X, under Where To File. 2012 state tax form Exceptions The limits on your claim for refund can be affected by the type of item that forms the basis of your claim. 2012 state tax form Special refunds. 2012 state tax form   If you file a claim for refund based on one of the items listed below, the limits discussed earlier under Time for Filing a Claim for Refund may not apply. 2012 state tax form These special items are: A bad debt, A worthless security, A payment or accrual of foreign tax, A net operating loss carryback, and A carryback of certain tax credits. 2012 state tax form   The limits discussed earlier also may not apply if you have signed an agreement to extend the period of assessment of tax. 2012 state tax form For information on special rules on filing claims for an individual affected by a terrorist attack, see Publication 3920. 2012 state tax form Periods of financial disability. 2012 state tax form   If you are an individual (not a corporation or other taxpaying entity), the period of limitations on credits and refunds can be suspended during periods when you cannot manage your financial affairs because of physical or mental impairment that is medically determinable and either: Has lasted or can be expected to last continuously for at least 12 months, or Can be expected to result in death. 2012 state tax form    The period for filing a claim for refund will not be suspended for any time that someone else, such as your spouse or guardian, was authorized to act for you in financial matters. 2012 state tax form   To claim financial disability, you generally must submit the following statements with your claim for credit or refund: A written statement signed by a physician, qualified to make the determination, that sets forth: The name and a description of your physical or mental impairment, The physician's medical opinion that your physical or mental impairment prevented you from managing your financial affairs, The physician's medical opinion that your physical or mental impairment was or can be expected to result in death, or that it has lasted (or can be expected to last) for a continuous period of not less than 12 months, and To the best of the physician's knowledge, the specific time period during which you were prevented by such physical or mental impairment from managing your financial affairs, and A written statement by the person signing the claim for credit or refund that no person, including your spouse, was authorized to act on your behalf in financial matters during the period described in paragraph (1)(d) of the physician's statement. 2012 state tax form Alternatively, if a person was authorized to act on your behalf in financial matters during any part of the period described in that paragraph, the beginning and ending dates of the period of time the person was so authorized. 2012 state tax form    The period of limitations will not be suspended on any claim for refund that (without regard to this provision) was barred as of July 22, 1998. 2012 state tax form Limit on Amount of Refund If you file your claim within 3 years after filing your return, the credit or refund cannot be more than the part of the tax paid wi
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Lottery Results

In the United States, 43 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands have lotteries. Lotteries are a form of gambling run by the state including instant-win scratch-off games, Lotto and daily games.

The 2012 State Tax Form

2012 state tax form 8. 2012 state tax form   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. 2012 state tax form Reporting tax withheld. 2012 state tax form Nominees. 2012 state tax form Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. 2012 state tax form Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. 2012 state tax form Alternative minimum tax treatment. 2012 state tax form How To Report Dividend IncomeInvestment interest deducted. 2012 state tax form Reminder Foreign-source income. 2012 state tax form  If you are a U. 2012 state tax form S. 2012 state tax form citizen with dividend income from sources outside the United States (foreign-source income), you must report that income on your tax return unless it is exempt by U. 2012 state tax form S. 2012 state tax form law. 2012 state tax form This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. 2012 state tax form Introduction This chapter discusses the tax treatment of: Ordinary dividends, Capital gain distributions, Nondividend distributions, and Other distributions you may receive from a corporation or a mutual fund. 2012 state tax form This chapter also explains how to report dividend income on your tax return. 2012 state tax form Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. 2012 state tax form You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. 2012 state tax form However, some amounts you receive that are called dividends are actually interest income. 2012 state tax form (See Dividends that are actually interest under Taxable Interest in chapter 7. 2012 state tax form ) Most distributions are paid in cash (or check). 2012 state tax form However, distributions can consist of more stock, stock rights, other property, or services. 2012 state tax form Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends General Information This section discusses general rules for dividend income. 2012 state tax form Tax on unearned income of certain children. 2012 state tax form   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. 2012 state tax form If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. 2012 state tax form If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. 2012 state tax form    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. 2012 state tax form Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. 2012 state tax form   For more information about the tax on unearned income of children and the parents' election, see chapter 31. 2012 state tax form Beneficiary of an estate or trust. 2012 state tax form    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. 2012 state tax form You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. 2012 state tax form , from the fiduciary. 2012 state tax form Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. 2012 state tax form Social security number (SSN) or individual taxpayer identification number (ITIN). 2012 state tax form    You must give your SSN or ITIN to any person required by federal tax law to make a return, statement, or other document that relates to you. 2012 state tax form This includes payers of dividends. 2012 state tax form If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. 2012 state tax form For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. 2012 state tax form Backup withholding. 2012 state tax form   Your dividend income is generally not subject to regular withholding. 2012 state tax form However, it may be subject to backup withholding to ensure that income tax is collected on the income. 2012 state tax form Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. 2012 state tax form   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. 2012 state tax form For more information, see Backup Withholding in chapter 4. 2012 state tax form Stock certificate in two or more names. 2012 state tax form   If two or more persons hold stock as joint tenants, tenants by the entirety, or tenants in common, each person's share of any dividends from the stock is determined by local law. 2012 state tax form Form 1099-DIV. 2012 state tax form   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. 2012 state tax form Keep this form with your records. 2012 state tax form You do not have to attach it to your tax return. 2012 state tax form Dividends not reported on Form 1099-DIV. 2012 state tax form   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. 2012 state tax form For example, you may receive distributive shares of dividends from partnerships or S corporations. 2012 state tax form These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. 2012 state tax form , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. 2012 state tax form Reporting tax withheld. 2012 state tax form   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. 2012 state tax form Nominees. 2012 state tax form   If someone receives distributions as a nominee for you, that person should give you a Form 1099-DIV, which will show distributions received on your behalf. 2012 state tax form Form 1099-MISC. 2012 state tax form   Certain substitute payments in lieu of dividends or tax-exempt interest received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. 2012 state tax form See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. 2012 state tax form Incorrect amount shown on a Form 1099. 2012 state tax form   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. 2012 state tax form The new Form 1099 you receive will be marked “Corrected. 2012 state tax form ” Dividends on stock sold. 2012 state tax form   If stock is sold, exchanged, or otherwise disposed of after a dividend is declared but before it is paid, the owner of record (usually the payee shown on the dividend check) must include the dividend in income. 2012 state tax form Dividends received in January. 2012 state tax form   If a mutual fund (or other regulated investment company) or real estate investment trust (REIT) declares a dividend (including any exempt-interest dividend or capital gain distribution) in October, November, or December, payable to shareholders of record on a date in one of those months but actually pays the dividend during January of the next calendar year, you are considered to have received the dividend on December 31. 2012 state tax form You report the dividend in the year it was declared. 2012 state tax form Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. 2012 state tax form They are paid out of earnings and profits and are ordinary income to you. 2012 state tax form This means they are not capital gains. 2012 state tax form You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. 2012 state tax form Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. 2012 state tax form Qualified Dividends Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. 2012 state tax form They should be shown in box 1b of the Form 1099-DIV you receive. 2012 state tax form The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. 2012 state tax form 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. 2012 state tax form 6%. 2012 state tax form 20% on any amount that otherwise would be taxed at a 39. 2012 state tax form 6% rate. 2012 state tax form To qualify for the maximum rate, all of the following requirements must be met. 2012 state tax form The dividends must have been paid by a U. 2012 state tax form S. 2012 state tax form corporation or a qualified foreign corporation. 2012 state tax form (See Qualified foreign corporation , later. 2012 state tax form ) The dividends are not of the type listed later under Dividends that are not qualified dividends . 2012 state tax form You meet the holding period (discussed next). 2012 state tax form Holding period. 2012 state tax form   You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. 2012 state tax form The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. 2012 state tax form Instead, the seller will get the dividend. 2012 state tax form   When counting the number of days you held the stock, include the day you disposed of the stock, but not the day you acquired it. 2012 state tax form See the examples later. 2012 state tax form Exception for preferred stock. 2012 state tax form   In the case of preferred stock, you must have held the stock more than 90 days during the 181-day period that begins 90 days before the ex-dividend date if the dividends are due to periods totaling more than 366 days. 2012 state tax form If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. 2012 state tax form Example 1. 2012 state tax form You bought 5,000 shares of XYZ Corp. 2012 state tax form common stock on July 9, 2013. 2012 state tax form XYZ Corp. 2012 state tax form paid a cash dividend of 10 cents per share. 2012 state tax form The ex-dividend date was July 16, 2013. 2012 state tax form Your Form 1099-DIV from XYZ Corp. 2012 state tax form shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). 2012 state tax form However, you sold the 5,000 shares on August 12, 2013. 2012 state tax form You held your shares of XYZ Corp. 2012 state tax form for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). 2012 state tax form The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. 2012 state tax form You have no qualified dividends from XYZ Corp. 2012 state tax form because you held the XYZ stock for less than 61 days. 2012 state tax form Example 2. 2012 state tax form Assume the same facts as in Example 1 except that you bought the stock on July 15, 2013 (the day before the ex-dividend date), and you sold the stock on September 16, 2013. 2012 state tax form You held the stock for 63 days (from July 16, 2013, through September 16, 2013). 2012 state tax form The $500 of qualified dividends shown in box 1b of your Form 1099-DIV are all qualified dividends because you held the stock for 61 days of the 121-day period (from July 16, 2013, through September 14, 2013). 2012 state tax form Example 3. 2012 state tax form You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. 2012 state tax form ABC Mutual Fund paid a cash dividend of 10 cents a share. 2012 state tax form The ex-dividend date was July 16, 2013. 2012 state tax form The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. 2012 state tax form Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. 2012 state tax form However, you sold the 10,000 shares on August 12, 2013. 2012 state tax form You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. 2012 state tax form Holding period reduced where risk of loss is diminished. 2012 state tax form   When determining whether you met the minimum holding period discussed earlier, you cannot count any day during which you meet any of the following conditions. 2012 state tax form You had an option to sell, were under a contractual obligation to sell, or had made (and not closed) a short sale of substantially identical stock or securities. 2012 state tax form You were grantor (writer) of an option to buy substantially identical stock or securities. 2012 state tax form Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. 2012 state tax form   For information about how to apply condition (3), see Regulations section 1. 2012 state tax form 246-5. 2012 state tax form Qualified foreign corporation. 2012 state tax form   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. 2012 state tax form The corporation is incorporated in a U. 2012 state tax form S. 2012 state tax form possession. 2012 state tax form The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. 2012 state tax form For a list of those treaties, see Table 8-1. 2012 state tax form The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. 2012 state tax form See Readily tradable stock , later. 2012 state tax form Exception. 2012 state tax form   A corporation is not a qualified foreign corporation if it is a passive foreign investment company during its tax year in which the dividends are paid or during its previous tax year. 2012 state tax form Readily tradable stock. 2012 state tax form   Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. 2012 state tax form For a list of the exchanges that meet these requirements, see www. 2012 state tax form sec. 2012 state tax form gov/divisions/marketreg/mrexchanges. 2012 state tax form shtml. 2012 state tax form Dividends that are not qualified dividends. 2012 state tax form   The following dividends are not qualified dividends. 2012 state tax form They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. 2012 state tax form Capital gain distributions. 2012 state tax form Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. 2012 state tax form S. 2012 state tax form building and loan associations, U. 2012 state tax form S. 2012 state tax form savings and loan associations, federal savings and loan associations, and similar financial institutions. 2012 state tax form (Report these amounts as interest income. 2012 state tax form ) Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year. 2012 state tax form Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation. 2012 state tax form Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. 2012 state tax form Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. 2012 state tax form Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. 2012 state tax form Table 8-1. 2012 state tax form Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. 2012 state tax form Australia Indonesia Romania Austria Ireland Russian Bangladesh Israel Federation Barbados Italy Slovak Belgium Jamaica Republic Bulgaria Japan Slovenia Canada Kazakhstan South Africa China Korea Spain Cyprus Latvia Sri Lanka Czech Lithuania Sweden Republic Luxembourg Switzerland Denmark Malta Thailand Egypt Mexico Trinidad and Estonia Morocco Tobago Finland Netherlands Tunisia France New Zealand Turkey Germany Norway Ukraine Greece Pakistan United Hungary Philippines Kingdom Iceland Poland Venezuela India Portugal     Dividends Used to Buy More Stock The corporation in which you own stock may have a dividend reinvestment plan. 2012 state tax form This plan lets you choose to use your dividends to buy (through an agent) more shares of stock in the corporation instead of receiving the dividends in cash. 2012 state tax form Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. 2012 state tax form If you use your dividends to buy more stock at a price equal to its fair market value, you still must report the dividends as income. 2012 state tax form If you are a member of a dividend reinvestment plan that lets you buy more stock at a price less than its fair market value, you must report as dividend income the fair market value of the additional stock on the dividend payment date. 2012 state tax form You also must report as dividend income any service charge subtracted from your cash dividends before the dividends are used to buy the additional stock. 2012 state tax form But you may be able to deduct the service charge. 2012 state tax form See chapter 28 for more information about deducting expenses of producing income. 2012 state tax form In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. 2012 state tax form If you choose to do this, you must report as dividend income the difference between the cash you invest and the fair market value of the stock you buy. 2012 state tax form When figuring this amount, use the fair market value of the stock on the dividend payment date. 2012 state tax form Money Market Funds Report amounts you receive from money market funds as dividend income. 2012 state tax form Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. 2012 state tax form Capital Gain Distributions Capital gain distributions (also called capital gain dividends) are paid to you or credited to your account by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs). 2012 state tax form They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. 2012 state tax form Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. 2012 state tax form Undistributed capital gains of mutual funds and REITs. 2012 state tax form    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. 2012 state tax form You must treat your share of these gains as distributions, even though you did not actually receive them. 2012 state tax form However, they are not included on Form 1099-DIV. 2012 state tax form Instead, they are reported to you in box 1a of Form 2439. 2012 state tax form   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. 2012 state tax form   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. 2012 state tax form You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. 2012 state tax form Attach Copy B of Form 2439 to your return, and keep Copy C for your records. 2012 state tax form Basis adjustment. 2012 state tax form   Increase your basis in your mutual fund, or your interest in a REIT, by the difference between the gain you report and the credit you claim for the tax paid. 2012 state tax form Additional information. 2012 state tax form   For more information on the treatment of distributions from mutual funds, see Publication 550. 2012 state tax form Nondividend Distributions A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. 2012 state tax form You should receive a Form 1099-DIV or other statement showing the nondividend distribution. 2012 state tax form On Form 1099-DIV, a nondividend distribution will be shown in box 3. 2012 state tax form If you do not receive such a statement, you report the distribution as an ordinary dividend. 2012 state tax form Basis adjustment. 2012 state tax form   A nondividend distribution reduces the basis of your stock. 2012 state tax form It is not taxed until your basis in the stock is fully recovered. 2012 state tax form This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. 2012 state tax form If you buy stock in a corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first. 2012 state tax form   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. 2012 state tax form Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. 2012 state tax form See Holding Period in chapter 14. 2012 state tax form Example. 2012 state tax form You bought stock in 2000 for $100. 2012 state tax form In 2003, you received a nondividend distribution of $80. 2012 state tax form You did not include this amount in your income, but you reduced the basis of your stock to $20. 2012 state tax form You received a nondividend distribution of $30 in 2013. 2012 state tax form The first $20 of this amount reduced your basis to zero. 2012 state tax form You report the other $10 as a long-term capital gain for 2013. 2012 state tax form You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. 2012 state tax form Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. 2012 state tax form These distributions are, at least in part, one form of a return of capital. 2012 state tax form They may be paid in one or more installments. 2012 state tax form You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. 2012 state tax form For more information on liquidating distributions, see chapter 1 of Publication 550. 2012 state tax form Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. 2012 state tax form Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. 2012 state tax form Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. 2012 state tax form Taxable stock dividends and stock rights. 2012 state tax form   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. 2012 state tax form You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. 2012 state tax form The distribution gives cash or other property to some shareholders and an increase in the percentage interest in the corporation's assets or earnings and profits to other shareholders. 2012 state tax form The distribution is in convertible preferred stock and has the same result as in (2). 2012 state tax form The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. 2012 state tax form The distribution is on preferred stock. 2012 state tax form (The distribution, however, is not taxable if it is an increase in the conversion ratio of convertible preferred stock made solely to take into account a stock dividend, stock split, or similar event that would otherwise result in reducing the conversion right. 2012 state tax form )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. 2012 state tax form If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. 2012 state tax form Preferred stock redeemable at a premium. 2012 state tax form   If you hold preferred stock having a redemption price higher than its issue price, the difference (the redemption premium) generally is taxable as a constructive distribution of additional stock on the preferred stock. 2012 state tax form For more information, see chapter 1 of Publication 550. 2012 state tax form Basis. 2012 state tax form   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. 2012 state tax form If you receive stock or stock rights that are not taxable to you, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550 for information on how to figure their basis. 2012 state tax form Fractional shares. 2012 state tax form    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. 2012 state tax form However, with the approval of the shareholders, the corporation may set up a plan in which fractional shares are not issued but instead are sold, and the cash proceeds are given to the shareholders. 2012 state tax form Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. 2012 state tax form Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. 2012 state tax form Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate. 2012 state tax form    Report these transactions on Form 8949 with the correct box checked. 2012 state tax form   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. 2012 state tax form Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). 2012 state tax form Example. 2012 state tax form You own one share of common stock that you bought on January 3, 2004, for $100. 2012 state tax form The corporation declared a common stock dividend of 5% on June 29, 2013. 2012 state tax form The fair market value of the stock at the time the stock dividend was declared was $200. 2012 state tax form You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. 2012 state tax form You figure your gain or loss as follows: Fair market value of old stock $200. 2012 state tax form 00 Fair market value of stock dividend (cash received) +10. 2012 state tax form 00 Fair market value of old stock and stock dividend $210. 2012 state tax form 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. 2012 state tax form 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. 2012 state tax form 76 Total $100. 2012 state tax form 00 Cash received $10. 2012 state tax form 00 Basis (cost) of stock dividend − 4. 2012 state tax form 76 Gain $5. 2012 state tax form 24 Because you had held the share of stock for more than 1 year at the time the stock dividend was declared, your gain on the stock dividend is a long-term capital gain. 2012 state tax form Scrip dividends. 2012 state tax form   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. 2012 state tax form The certificate is generally nontaxable when you receive it. 2012 state tax form If you choose to have the corporation sell the certificate for you and give you the proceeds, your gain or loss is the difference between the proceeds and the portion of your basis in the corporation's stock allocated to the certificate. 2012 state tax form   However, if you receive a scrip certificate that you can choose to redeem for cash instead of stock, the certificate is taxable when you receive it. 2012 state tax form You must include its fair market value in income on the date you receive it. 2012 state tax form Other Distributions You may receive any of the following distributions during the year. 2012 state tax form Exempt-interest dividends. 2012 state tax form   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. 2012 state tax form Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. 2012 state tax form Information reporting requirement. 2012 state tax form   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. 2012 state tax form This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. 2012 state tax form Alternative minimum tax treatment. 2012 state tax form   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. 2012 state tax form See Alternative Minimum Tax (AMT) in chapter 30 for more information. 2012 state tax form Dividends on insurance policies. 2012 state tax form    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. 2012 state tax form However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. 2012 state tax form    If dividends on an insurance contract (other than a modified endowment contract) are distributed to you, they are a partial return of the premiums you paid. 2012 state tax form Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. 2012 state tax form Report any taxable distributions on insurance policies on Form 1040, line 21. 2012 state tax form Dividends on veterans' insurance. 2012 state tax form   Dividends you receive on veterans' insurance policies are not taxable. 2012 state tax form In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. 2012 state tax form Patronage dividends. 2012 state tax form   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. 2012 state tax form   Do not include in your income patronage dividends you receive on: Property bought for your personal use, or Capital assets or depreciable property bought for use in your business. 2012 state tax form But you must reduce the basis (cost) of the items bought. 2012 state tax form If the dividend is more than the adjusted basis of the assets, you must report the excess as income. 2012 state tax form   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. 2012 state tax form Alaska Permanent Fund dividends. 2012 state tax form    Do not report these amounts as dividends. 2012 state tax form Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. 2012 state tax form How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. 2012 state tax form Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. 2012 state tax form Report qualified dividends on line 9b of Form 1040 or Form 1040A. 2012 state tax form If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. 2012 state tax form See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. 2012 state tax form If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. 2012 state tax form You cannot use Form 1040EZ if you receive any dividend income. 2012 state tax form Form 1099-DIV. 2012 state tax form   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. 2012 state tax form Even if you do not receive Form 1099-DIV, you must report all your dividend income. 2012 state tax form   See Form 1099-DIV for more information on how to report dividend income. 2012 state tax form Form 1040A or 1040. 2012 state tax form    You must complete Schedule B (Form 1040A or 1040), Part II, and attach it to your Form 1040A or 1040, if: Your ordinary dividends (Form 1099-DIV, box 1a) are more than $1,500, or You received, as a nominee, dividends that actually belong to someone else. 2012 state tax form If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. 2012 state tax form   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. 2012 state tax form If your securities are held by a brokerage firm (in “street name”), list the name of the brokerage firm shown on Form 1099-DIV as the payer. 2012 state tax form If your stock is held by a nominee who is the owner of record, and the nominee credited or paid you dividends on the stock, show the name of the nominee and the dividends you received or for which you were credited. 2012 state tax form   Enter on line 6 the total of the amounts listed on line 5. 2012 state tax form Also enter this total on line 9a of Form 1040A or 1040. 2012 state tax form Qualified dividends. 2012 state tax form   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. 2012 state tax form The amount in box 1b is already included in box 1a. 2012 state tax form Do not add the amount in box 1b to, or substract it from, the amount in box 1a. 2012 state tax form   Do not include any of the following on line 9b. 2012 state tax form Qualified dividends you received as a nominee. 2012 state tax form See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. 2012 state tax form Dividends on stock for which you did not meet the holding period. 2012 state tax form See Holding period , earlier under Qualified Dividends. 2012 state tax form Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. 2012 state tax form Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. 2012 state tax form Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. 2012 state tax form   If you have qualified dividends, you must figure your tax by completing the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 or 1040A instructions or the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions, whichever applies. 2012 state tax form Enter qualified dividends on line 2 of the worksheet. 2012 state tax form Investment interest deducted. 2012 state tax form   If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. 2012 state tax form Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. 2012 state tax form This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. 2012 state tax form For more information about the limit on investment interest, see Investment expenses in chapter 23. 2012 state tax form Expenses related to dividend income. 2012 state tax form   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). 2012 state tax form See chapter 28 for general information about deducting expenses of producing income. 2012 state tax form More information. 2012 state tax form    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. 2012 state tax form Prev  Up  Next   Home   More Online Publications