A $104-million IRS whistleblower award has been paid to former Swiss Bank UBS AG employee Brad Birkenfeld. The award is purported to be the largest paid under the IRS whistleblower program. Information provided by Birkenfeld aided the IRS in uncovering tax fraud in offshore accounts, which has resulted in collection of $5 billion so far. The IRS Award Report stated, in part, "While the IRS was aware of tax compliance issues related to secret bank accounts in Switzerland and elsewhere, the information provided by the whistleblower formed the basis for unprecedented actions."

As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses and other taxpayers for the month of October 2012.

The Tax Code provides that the IRS generally may not select an individual, partnership, or corporate tax return for audit after a period of three years has expired, dating from the tax return's filing date or due date, whichever is later. For example, if a taxpayer filed his 2011 Form 1040 on February 10, 2012, and the due date for the filing of returns that year was April 17, 2012, then the statute of limitations period ends on April 17, 2015, and not February 10, 2015. On the other hand, if the taxpayer filed his tax return late, on November 10, 2012, and had not obtained an extension of time to file, the statute of limitations period would run from November 10, 2012.

Whether or not the IRS will allow a deduction for year-end bonuses for services performed during that year depends not only on the timing of the payment, but also the events surrounding the payment. If your business is planning to provide year-end bonuses to employees, you may find the following tax tips useful in your planning.

Taxpayers recovering from the current economic downturn will get at least some relief in 2013 by way of the mandatory upward inflation-adjustments called for under the tax code, according to CCH, a Wolters Kluwer business. CCH has released estimated income ranges for each 2013 tax bracket as well as a growing number of other inflation-sensitive tax figures, such as the personal exemption and the standard deduction.

In 2013, a new and unique tax will take effect--a 3.8 percent "unearned income Medicare contribution" tax as part of the structure in place to pay for health care reform. The tax will be imposed on the "net investment income" (NII) of individuals, estates, and trusts that exceeds specified thresholds. The tax will generally fall on passive income, but will also apply generally to capital gains from the disposition of property.

Lawmakers have departed Washington to campaign before the November 6 elections and left undone is a long list of unfinished tax business. In many ways, the last quarter of 2012 is similar to 2010, when Congress and the White House waited until the eleventh hour to extend expiring tax cuts. Like 2010, a host of individual and business tax incentives are scheduled to expire. Unlike 2010, lawmakers are confronted with massive across-the-board spending cuts scheduled to take effect in 2013.

The IRS announced in a recent memo (LB&I-4-0812-010) that its Large Business & International (LB&I) Division is terminating the Tiered Issue Process previously used to set exam (audit) priorities and manage exams. The new exam process will be more decentralized and is intended to provide more authority to examination agents and teams to craft taxpayer-specific approaches to issues.

The Tax Court has held that a taxpayer's sale of an office building to his adult children, and his payment of rent for use of offices in the building, were bona fide transactions that had economic substance. The court rejected the IRS's argument that the transaction was tax-motivated and that the rental payments were not deductible. The court's opinion demonstrates that transactions between family members, such as a sale of real estate, can be respected for tax purposes if the facts demonstrate that the transaction was bona fide and had a business purpose.

The IRS has issued proposed reliance regulations to clarify the exception to the 50 percent meal and entertainment expenses deduction limit under Code Sec 274(n) where amounts are paid or incurred under reimbursement or other expense allowance arrangements. While the IRS generally takes a strict approach under these new regulations, they do provide a helpful road-map both to businesses and to contractors, as well as employees, for setting up and following through on reimbursement arrangements. As "proposed reliance regulations," taxpayers are allowed to use them immediately to their advantage.