1. Timely Filing Rules Valid Again!
   
   The Internal Revenue Service issued regulations denying foreign corporations and nonresident aliens the right to deduct certain expenses on a US income tax return unless the tax return was filed by a deadline. The US Tax Court originally declared these regulations invalid. Now the US Court of Appeals has overridden the Tax Court and consequently the timely filing requirement is now back in place. (Swallows Holding Ltd, CA-3, 2008-1).
   
   
2. Canada /US Social Security Totalization Agreement
   
   The US Tax Court has determined that when a US citizen and resident works as a consultant in Canada, such that he is considered to be an employee for Canadian rules and self-employed for US rules, the individual will, pursuant to the tiebreaker rule in the Totalization Agreement, be subject to self employment tax in the United States, (R.L. Rusten TC Summary Opinion 2008-16).
   
   
3. Penalties for Tax Preparers
   
   Legislation has been introduced to change the basis for levying penalties against a tax return preparer that prepares a tax return with an "unreasonable position”. The legislation defines an “unreasonable position" as a position for which there is not "substantial authority". There is a "reasonable cause" exception also if the position was appropriately disclosed and there was “a reasonable basis" for the position. The legislation would be retroactive to May 25, 2007. (H.R. 4318).