etrent17/irs-articles huggingface dataset:
IR-2005-59, May 18, 2005
WASHINGTON –– The Internal Revenue Service and the Treasury Department today issued revisions to the new Treasury Department Circular 230 standards for written tax advice that were announced late last year.
Practitioners and professional organizations have expressed support for the effort to enhance public confidence in tax professionals. At the same time, they have asked for clarification in several areas to ensure that the standards for written tax advice apply in a manner consistent with their intent. The revisions announced today respond to those requests.
“The guidance issued today provides useful clarification to the major changes we announced earlier,” said IRS Commissioner Mark W. Everson. “These revisions respond to concerns raised by practitioners without weakening the underlying standards.”
Three of the five revisions issued today expand on the definition of “excluded advice” that is not subject to the detailed covered opinion standards of Circular 230. These revisions apply to:

Advice from in-house tax professionals to their employers;


Situations in which the advice is provided after the client files the relevant tax return; and


“Negative advice,” wherein an advisor tells a client a transaction will not provide the purported tax benefit.

Advice that is excluded from the covered opinion standards by these revisions will continue to be subject to the general requirements for other written advice.
The revised covered opinion standards also provide a definition of “the principal purpose” of tax avoidance that excludes transactions claiming tax benefits that are consistent with the statute and Congressional purpose. In addition, today’s revisions relax specific requirements for the format of disclosures that are required for certain written tax advice. These requirements maintain the expectation that the disclosures will put taxpayers on notice of any limitations on their ability to rely on written advice.
The written opinion standards and the changes announced today will apply to written advice rendered after June 20, 2005.
Links:




Regulations Governing Practice Before the Internal Revenue ServicePDF





Latest News From the Office of Professional Responsibility

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IR-2005-58, May 13, 2005
WASHINGTON — The Internal Revenue Service announced today that Janice J. Lambert has been appointed the Chief Financial Officer (CFO) of the Internal Revenue Service.
As CFO, Lambert will oversee an organization responsible for the custodial accounting of $2 trillion in taxpayer receipts and the IRS' $10 billion annual operating budget. In addition, the CFO serves as the principal advisor to the IRS Commissioner and Deputy Commissioners on financial and performance management, financial systems, strategic planning, and internal controls.
“Janice has an excellent grasp of government budgeting and performance-based metrics,” said IRS Commissioner Mark W. Everson. “In the last year, she has demonstrated a real ability to handle IRS business issues. Janice is a welcome addition to our leadership team.”
Lambert came to the IRS as Deputy CFO in June 2004 from the Department of Treasury, where she served as Director of Budget. In that capacity, she was responsible for overseeing the formulation and execution of Treasury’s $13 billion budget and providing leadership and guidance to Treasury’s 13 bureaus and organizations on the development and implementation of performance-based metrics and budgets.
Before coming to the IRS, Lambert led the implementation of Treasury's first-ever integrated budget that consolidated the bureaus' budget and annual performance plans and realigned the bureaus' budget activities to move closer to full costing of program performance.
Lambert previously served as the Chief of Budget and Administration for the Department of Justice’s Organized Crime and Drug Enforcement Task Force (OCDETF).  As Chief, she oversaw the strategic planning, budget management and reimbursement of OCDETF resources for nine federal law enforcement agencies.  She also managed the administration functions and resources of the OCDETF Executive Office.
After receiving a Bachelor of Science (BS) in Finance and Business Administration from the University of Southern California, Lambert received a Masters in Public Administration (MPA) in Public Policy from the George Washington University.
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IR-2005-57, May 6, 2005
WASHINGTON — The Internal Revenue Service has certified the model year 2006 Lexus RX 400h as being eligible for the clean-burning fuel deduction. This certification means that taxpayers who purchase one of these hybrid vehicles new during calendar year 2005 may claim a tax deduction of up to $2000 on Form 1040.
Under Working Families Relief Act of 2004 which was signed into law in October of 2004, the clean-burning fuel deduction is limited to up to $2,000 for certified vehicles first put into service in 2005 and $500 for vehicles placed in service in 2006. No deduction will be allowed after 2006.
Federal Law allows individuals to claim a deduction for the incremental cost of buying a motor vehicle that is propelled by a clean-burning fuel. By combining an electric motor with a gasoline-powered engine, these hybrid vehicles obtain greater fuel efficiency and produce fewer emissions than similar vehicles powered solely by conventional gasoline-powered engines.
This one-time deduction must be taken in the year the vehicle is originally used. The taxpayer must be the original owner.  Individuals do not have to itemize deductions on their tax return to claim this deduction. This benefit can be taken as an adjustment to income on the Form 1040.
The amount of the deduction for the Lexus RX 400h was set after the manufacturer, Toyota Motor Sales, U.S.A., Inc. documented for the IRS the incremental cost related to the vehicle’s electric motor and related equipment.
The list of hybrid vehicles that the IRS has previously certified for the clean-burning fuel deduction can be found at IRS.gov.
Links:

Clean-Fuel Vehicle Deduction Available for Certain Models

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IR-2005-56, May 2, 2005
WASHINGTON — The Internal Revenue Service will host the tax practitioner community at six Nationwide Tax Forums this summer. The first of the three-day forums begins June 28.
The Nationwide Tax Forums feature a variety of basic and advanced seminars that provide the tax professional community with the latest information on IRS policies and programs.
Among the topics on the 2005 agenda are like-kind exchanges, estate and trust planning, identity theft, retirement plans for small businesses, alternative minimum tax and recent tax law changes. The seminars are conducted by IRS experts and tax industry leaders from the American Bar Association, the American Institute of Certified Public Accountants, the National Association of Enrolled Agents, the National Association of Tax Professionals, the National Society of Accountants and the National Society of Tax Professionals.
Tax professionals are invited to bring unresolved cases or questions to IRS representatives for on-site resolution. In addition, IRS staff will be on hand to help attendees complete the IRS e-file application, register for e-Services products and provide information about electronic payments and other electronic business tools.
The forums also benefit practitioners by giving them the opportunity to meet and exchange ideas with other practitioners –– and sample the latest offerings from tax industry vendors.
The locations and dates for the 2005 tax forums are:

San Francisco, June 28-30


Houston, July 12-14


Atlanta, July 26-28


New York City, Aug. 9-11


Las Vegas, Aug. 23-25


Chicago, Aug. 30-Sept. 1

Enrolled agents can earn up to 21 continuing professional education credits by participating in a forum. Other professionals should consult their prospective licensing organization for information on qualifying credits.
The fees for the 2005 forums are $119 per person per city for pre-registration and $259 for late or on-site registration. Pre-registration for a forum ends two weeks prior to the start of the forum. Reduced fees are available for members of IRS partner associations mentioned above. Members should contact their associations directly for details.
Related Items:
Tax Professionals
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IR-2005-55, May 2, 2005
WASHINGTON — The Internal Revenue Service is requesting membership nominations for the Information Reporting Program Advisory Committee (IRPAC). The deadline for submitting applications is June 30, 2005.
Established in 1991, IRPAC provides recommendations to IRS leadership on a wide range of information reporting and administration issues. The committee presents a report to the Commissioner of the IRS each year at a public meeting.
In order to effectively advise the Commissioner and IRS executives, members are drawn from diverse backgrounds. Members include representatives of the taxpaying public, the tax professional community, small and large businesses, colleges and universities, state tax administrations and the payroll community.
IRPAC is comprised of up to 23 members, who are appointed to three-year terms by the Commissioner. Each year, approximately one-third of the membership terms expire. Nominations are currently being accepted for up to seven appointments that begin in January 2006.
Interested parties may nominate themselves and/or one other qualified person for membership. All nominees must complete an application and federal tax background check waiver form. In addition, FBI and––if applicable––practitioner background checks are required of all nominees.
More information, including application packages, is available on the Tax Professional’s Page on IRS.gov, the IRS Web site. Questions about the nomination process can be sent to the following e-mail address: *public_liaison@irs.gov.
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IR-2005-69, June 27, 2005
WASHINGTON — The Internal Revenue Service has certified the model year 2006 Toyota Highlander Hybrid as being eligible for the clean-burning fuel deduction. This certification means that taxpayers who purchase one of these hybrid vehicles new during calendar year 2005 may claim a tax deduction of up to $2000 on Form 1040.
Under Working Families Relief Act of 2004 which was signed into law in October of 2004, the clean-burning fuel deduction is limited to up to $2,000 for certified vehicles first put into service in 2005 and $500 for vehicles placed in service in 2006. No deduction will be allowed after 2006.
Federal Law allows individuals to claim a deduction for the incremental cost of buying a motor vehicle that is propelled by a clean-burning fuel. By combining an electric motor with a gasoline-powered engine, these hybrid vehicles obtain greater fuel efficiency and produce fewer emissions than similar vehicles powered solely by conventional gasoline-powered engines.
This one-time deduction must be taken in the year the vehicle is originally used. The taxpayer must be the original owner.  Individuals do not have to itemize deductions on their tax return to claim this deduction. This benefit can be taken as an adjustment to income on the Form 1040.
The amount of the deduction for the Toyota Highlander Hybrid was set after the manufacturer, Toyota Motor Sales, U.S.A., Inc. documented for the IRS the incremental cost related to the vehicle’s electric motor and related equipment.
The list of hybrid vehicles that the IRS has previously certified for the clean-burning fuel deduction can be found at IRS.gov.
Links:

Clean-Fuel Vehicle Deduction Available for Certain Models

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IR-2005-68, June 23, 2005
WASHINGTON — The Internal Revenue Service today reminded truckers and other owners of heavy highway vehicles that the installment option for paying the federal highway use tax will no longer be available.
This change was included in the American Jobs Creation Act of 2004 and applies to filers of Form 2290, Heavy Highway Vehicle Use Tax Return.
Beginning with the Form 2290 for the tax year that begins on July 1, 2005 and ends on June 30, 2006, the balance due shown on the form must be paid in full by the due date of the return. In most cases, the deadline for filing the return and paying any tax due is August 31, 2005. Payment can be made by check, money order or electronically through the Electronic Federal Tax Payment System (EFTPS).
In previous years, taxpayers who timely filed Form 2290 could choose to pay the tax in up to four equal installments. Ordinarily, these installment payments were due on the last day of August, December, March and June. About 148,000 taxpayers chose this option last year, the IRS said.
In general, the highway use tax applies to trucks, truck tractors and buses with a gross taxable weight of 55,000 pounds or more. Ordinarily, vans, pick-ups and panel trucks are not taxable because they fall below the 55,000-pound threshold.
For trucks and other taxable vehicles in use during July, the Form 2290 and payment are due on August 31. The tax is based on weight and normally ranges from $100 to $550 per vehicle. A variety of special rules, discussed in the instructions for Form 2290, apply to vehicles with minimal road use, logging or agricultural vehicles, vehicles transferred during the year and those first used on the road after July.
State governments are required to receive proof of payment of the federal highway use tax as a condition of vehicle registration. Schedule 1 of the Form 2290 is stamped and returned to filers for this purpose. This process remains unchanged.
The Jobs Act also eliminated reduced tax rates for vehicles registered in Canada and Mexico. For vehicles with a base registration in either country, the tax rate was 25% below the regular rate.
In addition, the Jobs Act made electronic filing mandatory for taxpayers who file highway use tax returns for 25 or more vehicles. The availability of electronic filing for Forms 2290 is pending. Taxpayers should continue to file paper returns. The IRS will notify taxpayers when the electronic filing program is available.
The electronic payment option continues to be available, and the IRS urges taxpayers to enroll in EFTPS and pay their tax obligations this way.
The new Form 2290 and its instructions are now available on irs.gov, the tax agency’s Web site. The form and instructions will be mailed automatically to taxpayers who filed last year.
The form and instructions are available in Spanish and, for the first time this year, in French.
Links:Form 2290 (English)PDFForm 2290 (Spanish)PDFInstructions for Form 2290 (English)PDFInstructions for Form 2290 (Spanish)PDFElectronic Federal Tax Payment System
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IR-2005-67, June 20, 2005

WASHINGTON — Richard J. Morgante and Pamela G. Watson have been named to the top two posts in the Wage and Investment (W&I) Division, the IRS unit that serves most individual taxpayers, the Internal Revenue Service announced today.
Morgante, currently the division’s deputy commissioner, will move up to W&I commissioner, and Watson, now the division’s compliance director, will succeed him as W&I’s second highest executive. Both appointments will take effect in early July.
Morgante began his IRS career in 1975 as a Taxpayer Service Representative in Syracuse, N.Y. He has held executive positions on the local level in Los Angeles and New Orleans, and on the national level, where he has served as director for economic analysis, budget director, director of management and finance in the Small Business/Self Employed Division and deputy commissioner of the Tax Exempt and Government Entities Division before becoming deputy commissioner of W&I in June 2004.
“Rich is a strong leader familiar with many parts of the IRS,” said IRS Commissioner Mark W. Everson. “He is well prepared to take over W&I, a cornerstone of our operations and the face of the IRS to the vast majority of taxpayers.”
Morgante succeeds Henry Lamar who is retiring after 34 years with the IRS, the last two as W&I commissioner.  “Henry’s leadership helped us deliver a very successful tax-filing season this year, and I want to personally thank him for his many years of dedicated service to America’s taxpayers,” Everson said.
A native of Buffalo, N.Y., Morgante holds a degree in philosophy and theology from St. John Vianney Seminary in East Aurora, N.Y., a certificate in public administration from the University of Southern California and a certificate in financial management from George Washington University.
Watson began her IRS career in 1978 in Jackson, Miss. where she held various collection-related technical and managerial positions. Starting in 1985, she held a series of increasingly responsible positions in Atlanta and Washington in which she managed various collection, taxpayer service and return processing functions. In 2001, she joined the W&I executive team, first serving as senior advisor to the W&I commissioner and then as director of filing and payment compliance, before becoming compliance director in August 2004.

“Rich and Pam make a strong team, and their leadership and experience will help us effectively serve taxpayers and enforce the law,” Everson said.
Based in Atlanta, W&I has processing and customer service responsibility for virtually all taxpayers, processing approximately 175 million paper and electronic returns for individuals and businesses last year, answering 67.3 million automated and assistor calls and serving over 7 million customers face-to-face.
 
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IR-2005-66, June 15, 2005
WASHINGTON — On June 3, 2005, the Competent Authorities of the United States and Canada entered into a Memorandum of Understanding (MOU) to establish principles and guidelines to improve the performance and efficiency of the mutual agreement procedure (MAP) process in accordance with the terms set forth in the United States-Canada Income Tax Convention (1980), as amended from time to time.
The fundamental purpose of the mutual agreement procedure is to endeavor to resolve double taxation or taxation contrary to a convention. Upon making a MAP request, the taxpayer places responsibility for a principled and timely resolution of the issue in the hands of the respective Competent Authorities and the manner in which the resolution of double taxation is accomplished is at the discretion of the Competent Authorities. It is for this reason the two Competent Authorities have reached the understandings outlined in the MOU.
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IR-2005-65, June 3, 2005
WASHINGTON — The Internal Revenue Service today announced there will be no change in the interest rates for the calendar quarter beginning July 1, 2005. The interest rates are as follows:
• Six (6) percent for overpayments (five (5) percent in the case of a corporation);
• Six (6) percent for underpayments;
•  Eight (8) percent for large corporate underpayments; and
•  Three and one-half (3.5) percent for the portion of a corporate overpayment exceeding $10,000.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during April 2005.
Rev. Rul. 2005-35, announcing the new rates of interest, will appear in Internal Revenue Bulletin No. 2005-24, dated June 13, 2005.
Link: Rev. Ruling 2005-35PDF
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IR-2005-77, July 29, 2005
WASHINGTON — IRS Commissioner Mark W. Everson today lauded the Congress for its progress thus far in securing additional funding in accordance with the IRS 2006 budget request, and he suspended plans to close some of its Taxpayer Assistance Centers.
“I appreciate the actions the Congress has taken thus far in securing more resources for the IRS, and particularly that the Senate Appropriations Committee has fully funded the President’s request,” Everson said.
The Senate committee has provided the full $10.68 billion the President requested, and the House has passed a bill at $10.56 billion. The Internal Revenue Service’s 2005 funding is $10.24 billion.
In May, the IRS announced its intent to close 68 of its 400 Taxpayer Assistance Centers later this year. But both the House bill as passed and the Senate Appropriations markup have included provisions in the Fiscal Year 2006 IRS budget that would stop the IRS from moving ahead with the closures, pending further study.
In recent years, the IRS has made significant improvements in service to taxpayers, including phone services and internet technology.
“The President’s budget gave us additional funding for enforcement, which helps reduce the deficit, but requires us to do some modest belt-tightening in other areas, as other federal agencies have been asked to do.  We want to create efficiencies where they’d have the least impact on service.  Nonetheless, I appreciate the concerns raised by Congress about our walk-in centers, and have put these closures on hold,” Everson said.
Although the provisions pertaining to the Taxpayer Assistance Centers have yet to become law, Everson decided to immediately suspend the proposed closures until any related actions required by the Fiscal Year 2006 IRS appropriation have been completed.
Links:  IR-2005-63
IR-2005-75, July 20, 2005
 
WASHINGTON — Taxpayers and tax professionals who filed for an extension can use e-file to file their 2004 tax returns, the Internal Revenue Service announced today.
The IRS expects some 10 million taxpayers to file after the April 15 deadline. Among them are those who received an automatic four-month filing extension to Aug. 15 and those granted an additional two-month extension to Oct. 17 because of certain hardships.
“Extension filers should take a few minutes and look into the benefits of IRS e-file,“ said IRS Commissioner Mark W. Everson. “IRS e-file is the preferred method for taxpayers who want their taxes done fast. It’s accurate, secure and easy to use.”
E-file is also the best option for taxpayers who need to file, but did not get an extension. E-file speeds the return to the IRS, reducing penalty and interest amounts for those who owe taxes.
In addition to e-file, several private companies participating in the Free File program will provide free return preparation and e-filing services to eligible taxpayers through mid-October. Almost all taxpayers qualify for Free File, which is available on IRS.gov.
Aug. 15 is also the last time that TeleFile can be used to file tax forms of any kind. The IRS is discontinuing the TeleFile system — using a telephone to file basic tax returns and extensions — because of declining use and the growth of other electronic filing alternatives, such as Free File.
Of the more than 126 million tax returns filed through early July, more than 67 million were filed electronically — 11 percent more than last year. Of those, more than 5 million came through Free File, a 46 percent increase from last year.
This year marks the first time that more than half of all taxpayers filed electronically, with paper filers now in the minority. More than 53 percent have filed electronically so far this year.
Links:

Free File


E-file

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IR-2005-74, July 15, 2005
 
WASHINGTON — The Internal Revenue Service will not impose the excise tax penalty on the misuse of dyed diesel fuel in parts of Florida because of shortages of clear diesel fuel caused by Hurricane Dennis.
This relief applies to dyed diesel fuel sold or used from July 8 through July 18, 2005 in Florida counties west of the Apalachicola River.
This penalty relief is available to any person that sells or uses dyed fuel for highway use. In the case of the operator of the vehicle in which the dyed fuel is used, the relief is available only if the operator or the person selling the fuel pays the tax of 24.4 cents per gallon. The tax return and the payment will be due on Oct. 31, 2005, and the IRS will not impose penalties for failure to make semimonthly deposits of the tax. IRS Publication 510, Excise Taxes for 2005, has information on the proper method for reporting and paying the tax.
Ordinarily, dyed diesel fuel is not taxed, because it is sold for uses exempt from excise tax, such as to farmers for farming purposes and to local governments for buses.
Links:


Announcement 2005-51PDF


Publication 510, Excise Taxes for 2005PDF, online version


Publication 510, Excise Taxes for 2005 (277KB, 47 pagesPDF)


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IR-2005-73, July 12, 2005
WASHINGTON—The Internal Revenue Service has issued new rules allowing corporate officers or duly authorized agents to sign employment tax forms by facsimile, including alternative signature methods such as computer software programs or mechanical devices.
The rules, outlined in Revenue Procedure 2005-39, will reduce burden on business taxpayers by simplifying employment tax filing and lowering the number of returns rejected by the IRS because of signature issues.
“The IRS is committed to reducing burden on taxpayers whenever we can,” said IRS Commissioner Mark W. Everson. “Providing companies with new ways to sign official documents will help reduce administrative burden and free up resources for other purposes.”
Rev. Proc. 2005-39 applies to the following forms:
• Any form in the 940 series, including Form 940, Employer’s Annual Federal Unemployment Tax Return (FUTA); Form 941, Employer’s Quarterly Federal Tax Return; Form 943, Employers Annual Federal Tax Return for Agricultural Employees; and Form 945, Annual Return of Withholding Federal Income Tax;
• Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons;
• Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips;
• Form CT-1, Employer’s Annual Railroad Retirement Tax Return; and
• Any variant of these forms, such as Form 941c, Statement to Correct Information; Form 941-SS, Employer’s Quarterly Federal Tax Return.
The IRS issued the revenue procedure in response to an Industry Issue Resolution submission presented to the IRS last year by the National Payroll Consortium.
“The Industry Issue Resolution process quickly and effectively resolved issues that were fairly clear and straightforward, but that otherwise may have taken years to get through the regulatory review process,” said Pete Isberg, president of the consortium. The National Payroll Consortium “appreciates the responsiveness of the IRS in addressing these issues, and we applaud the IRS for developing the Industry Issue Resolution process. It has proven to be a very effective model for resolving complex issues.”
Related item:
• Internal Revenue Bulletin No. 2005-28PDF
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The information in this release has been updated. Please see News Release IR-2005-112, issued Sept. 28.
IR-2005-84, Aug. 30, 2005
WASHINGTON — The Internal Revenue Service today announced special relief for taxpayers in the Presidential Disaster Areas struck by Hurricane Katrina.
These taxpayers generally will have until Oct. 31, 2005, to file tax returns and submit tax payments. The IRS will abate interest and any late filing or late payment penalties that would otherwise apply. This relief includes the Sept. 15 due date for estimated taxes and for calendar-year corporate returns with automatic extensions.
“People affected by Hurricane Katrina have more than enough concerns –– taxes shouldn’t be among them,” said IRS Commissioner Mark W. Everson. “We hope the relief we are providing will help taxpayers in their financial recovery from this devastating storm.”
The disaster areas designated for individual relief include:
• 31 Louisiana parishes: Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Orleans, Pointe Coupee, Plaquemines, St. Bernard, St. Charles, St. Helena, St. James, St. John, St. Mary, St. Martin, St. Tammany, Tangipahoa, Terrebonne, Vermilion, Washington, West Baton Rouge and West Feliciana;
• 15 Mississippi counties: Amite, Forrest, George, Greene, Hancock, Harrison, Jackson, Lamar, Marion, Pearl River, Perry, Pike, Stone, Walthall, and Wilkinson; and
• Three Alabama counties: Baldwin, Mobile and Washington.
Among the tax relief details are the following:
• The Federal Tax Deposit (FTD) Penalty Waiver Period for employment and excise tax deposits is Aug. 29-Sept. 23, 2005.
• The Extension Period for returns and other tax payments is Aug. 29 – Oct. 31, 2005.
• The Disaster Designation for this area is “Hurricane Katrina” — taxpayers mark certain relief-related forms with this designation in red. 
Link:
Relief Details
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IR-2005-82, Aug. 16, 2005
WASHINGTON — With back-to-school sales in full swing, the Internal Revenue Service reminds teachers and other educators to save their receipts for purchases of books and classroom supplies. These out-of-pocket expenses may lower their 2005 taxes.
The deduction is available to eligible educators in public or private elementary or secondary schools. To be eligible, a person must work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide.
Educators may subtract up to $250 of qualified expenses when figuring their adjusted gross income (AGI) for 2005. This deduction is available whether or not the taxpayer itemizes deductions on Schedule A.
The IRS suggests that educators keep records of qualifying expenses in a folder or envelope with a label such as, “Educator Expense Deduction,” noting the date, amount and purpose of each purchase. This will help prevent a missed deduction at tax time.
Under current law, this deduction is scheduled to expire at the end of 2005. In tax year 2003, the most recent year for which figures are available, educator expense deductions totaling almost $814 million were claimed on nearly 3.3 million individual income tax returns.
For more information, see Topic 458 or call the IRS Tele-Tax system toll-free at 1-800-829-4477 and listen to Topic 458.
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IR-2005-81, Aug. 8, 2005
WASHINGTON — The Internal Revenue Service and the Treasury Department today announced the Industry Issue Resolution (IIR) Program will address concerns relating to “member of a family receiving assistance” requirements for the Work Opportunity and Welfare to Work Tax Credits and the definition of home construction contracts.
Revenue Ruling 2003-112 provides guidance on when an individual meets the “member of a family receiving assistance” requirements. The National Employment Opportunities Network submitted a request for guidance to resolve the issues arising from the States’ interpretation of the requirements prior to the issuance of the revenue ruling.
The Construction Financial Management Association and Associate Builders and Contractors Inc. submitted a request to clarify the definition of home construction contracts, as outlined in IRC 460(e)(6)(A), primarily relating to income derived from residential real estate development that qualifies for the completed contract method of accounting.
"The IIR program provides clarity and consistency to complex tax issues, while reducing burden for taxpayers," said Large and Midsize Business Commissioner Deborah M. Nolan. "These are issues that can be resolved for groups of affected taxpayers so that they do not become contested issues during tax examinations."
Since its inception in 2000, the IIR program has resulted in resolution of many different tax issues cumulatively affecting thousands of taxpayers in many different lines of business. For each issue selected, a multi-functional team gathers and analyzes the relevant facts and recommends guidance.
At any time, business associations and taxpayers may submit tax issues that they believe could be resolved through the IIR program. IIR project selection criteria and submission procedures are outlined in Revenue Procedure 2003-36, which is available on the IRS Web site at IRS.gov. The IRS reviews submissions at least semi-annually with the next review to be completed by August 31, 2005.
Attached is detailed information regarding the issues the IRS considered during its latest review of IIR submissions.
Links:

IIR Submissions ( 81KPDF)

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IR-2005-80, Aug. 8, 2005
WASHINGTON — The Internal Revenue Service and Department of the Treasury released today the 2005-2006 Priority Guidance Plan, listing the tax issues that will be the subject of formal legal guidance during the next year.
The Priority Guidance Plan, a 27-page document, plays an important role in assisting taxpayers to navigate the tax system. The guidance plan is developed in consideration of suggestions from internal and external stakeholders, including taxpayers, tax practitioners and industry groups. This input enables the IRS and the Department of Treasury to focus legal resources on providing guidance on a broad range of issues that are important to taxpayers and tax administration.
The 2005-2006 Priority Guidance Plan contains 254 projects dealing with tax topics that affect individuals, corporations, charities, international transactions and employee benefit plans. The guidance items touch on a wide range of issues, including:
• Additional legal requirements prompted by the stronger standards for reporting tax shelters under the new American Jobs Creation Act.
• Guidance on the tax treatment of distributions from Roth retirement plans.
• Guidance on the impact of providing a 2 ½ month grace period for flexible spending accounts on health savings accounts (HSAs).
• Regulations under section 529 regarding qualified tuition programs for higher education.
• How should charities report car donations they receive.
• Legal requirements to withhold on the winner’s prizes at poker tournaments.
"Guidance provides a real service to taxpayers by clarifying how the IRS interprets the law," said IRS Commissioner Mark W. Everson. "The results of the new plan, published over the next 12 months, will help taxpayers comply with the law."
This year’s plan also reflects the IRS Strategic Plan, which highlights the agency’s commitment to providing excellent service to taxpayers and enforcing America’s tax laws in a balanced manner.
A key component of service entails assisting taxpayers in understanding how the IRS will apply the law.  The Priority Guidance Plan serves a critical role in eliminating ambiguity and guesswork on how the IRS will treat certain issues.
This year’s plan reflects changes making it more useful for tax practitioners. The plan has been redesigned to include more specific descriptions of guidance projects for the year ahead.Links:

Joint Statement from IRS, Treasury on Priority Guidance Plan ( 70KPDF)


Priority Guidance Plan 2005-2006 ( 289KPDF)


IR-2005-81, Industry Issue Resolution Program to Address Two New Issues

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IR-2005-79, Aug. 8, 2005
WASHINGTON — Taxpayers who requested the automatic four-month extension to file their 2004 tax return face an Aug. 15 deadline.  People who are unable to meet this approaching deadline may seek an additional two-month extension.
Taxpayers with special circumstances or hardships should file Form 2688, Application for Additional Extension of Time to File, before Aug. 15. This extension request is not automatic. If the IRS approves the Form 2688 request, taxpayers will have until Oct. 17 to file their return.
Taxpayers should read Form 2688 instructions carefully to ensure they provide an explanation for their extension request. The extension applies only to the deadline for filing the tax return, not time for paying taxes owed.
Taxpayers can file Form 2688 electronically with the IRS. The form can be sent to IRS e-file either through tax professionals or through personal computers. Taxpayers also may mail it to the IRS center where their tax return must be filed.
IRS e-file and the Free File program, the partnership between the IRS and a consortium of tax software providers, will be available through Oct. 17. Free File provides free software and e-filing for qualified taxpayers.
Also, Telefile for taxpayers who use Form 1040EZ will cease operations after Aug.15.
Related Items:

IRS e-file


Free File

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IR-2005-78, Aug. 5, 2005
WASHINGTON — The Internal Revenue Service today was recognized for its community-based partnerships that link low-income taxpayers with organizations that prepare tax returns for free, ensure they properly receive tax credits and assist them with ways to build a financial savings.
The IRS’ Stakeholder Partnership, Education and Communications organization received the Connect America Partner of the Year Award. The honor is presented each year at the National Conference on Community Volunteering and National Service. The IRS is the first federal agency to receive the award.
“I’m pleased that the IRS has been recognized with this prestigious award. It’s an honor for us to receive the same recognition as past winners such as the Salvation Army, the March of Dimes Birth Defects Foundation and Mothers Against Drunk Drivers,” said IRS Commissioner Mark W. Everson.
Since its creation in 2000, IRS’ SPEC operation has worked to develop a community-based partnership model that links Earned Income Tax Credit, outreach and free tax preparation with asset-building strategies for low-income families.
IRS’ SPEC outreach programs are geared toward low-income, elderly, disabled and limited English proficient individuals and families. SPEC develops free tax preparation services for these groups under the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. VITA and TCE operate 14,000 tax preparation sites nationwide.
“The work of SPEC has been particularly helpful in growing our volunteer organizations. In the past five years, we have doubled the number of volunteer-prepared tax returns to more than 2 million. That’s good service for taxpayers and good for the American public. We are committed to doing more,” Everson said.
This year, SPEC worked with 290 local coalitions that helped the IRS inform working families of the Earned Income Tax Credit. In addition to helping low-income families receive tax credits, these local partners also work to help the families by providing information and access to asset building opportunities.
Connect America, a program of the Points of Light Foundation, is a network of diverse national organizations (businesses, nonprofits, and government agencies) working together to leverage volunteering and other resources to increase individual and collective impact on communities.
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IR-2005-111, Sept. 28, 2005
WASHINGTON — The Partnership for Public Service has awarded Internal Revenue Service Associate Chief Information Officer Terence Lutes with a Service to America Medal for his contributions to electronic tax administration and the IRS e-file program.
Lutes, who previously served as head of the Office of Electronic Tax Administration, has overseen the development of the e-file program, which has enabled millions of taxpayers to forego paper returns and file their taxes online.
“Electronic filing has fundamentally changed the way Americans pay taxes,” said IRS Commissioner Mark W. Everson. “Terry has done an exceptional job leading this effort, which makes filing tax returns more reliable and speeds refunds on their way to taxpayers.”
When Lutes became involved with the e-file program in 1996, some 15 million individual returns were filed electronically. Since then, e-file has grown dramatically. During the 2005 tax season, for the first time, more than half of all individual tax returns, approximately 68 million, were filed electronically.
E-file cuts in half the amount of time it takes to receive a refund from the IRS and, by automatically checking returns for common errors, e-file results in more accurate submissions. E-file has also sharply reduced the cost of tax return processing for the IRS –– by as much as 90 percent compared with the cost of processing a paper return.
While Lutes was in charge, the Office of Electronic Tax Administration won numerous awards for innovation in electronic product development, marketing campaigns and the IRS.gov website. Lutes was selected on five occasions as one of the 100 most influential individuals in the field of accounting by Accounting Today Magazine.
In his current position as associate CIO, Lutes continues to oversee e-file. In addition, he manages application development and has operational responsibility for IRS information technology systems. He also manages e-government strategy for the IRS. Lutes oversees 6,500 employees, 1,500 contractors and an annual budget of approximately $1.5 billion.
The Partnership for Public Service, a nonpartisan, nonprofit organization, will present Lutes and eight other distinguished civil servants with Service to America medals at a ceremony today in Washington, D.C.
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IR-2005-107, Sept. 19, 2005
WASHINGTON—On Aug. 26, 2005, the Competent Authorities of the United States and Mexico entered into a mutual agreement (“the Agreement”) regarding the eligibility of entities that are treated as fiscally transparent under the laws of either Contracting State to benefits under the Convention Between the United States of America and the Government of the United Mexican States for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, along with a Protocol, signed on Sept. 18, 1992, and as amended by the Additional Protocol signed on Sept. 8, 1994, and the Second Additional Protocol signed on Nov. 26, 2002. The Agreement specifies the cases where fiscally transparent entities are entitled to treaty benefits and clarifies the procedure for claiming treaty benefits from Mexico.
Link:
• Competent Authority Mutual AgreementPDF
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IR-2005-106, Sept. 16, 2005
WASHINGTON — The Internal Revenue Service announced today that it is deferring the planned effective date of Schedule M-3 reporting for life, property and casualty insurance companies that file Forms 1120L and 1120PC. Schedule M-3, filed in conjunction with income tax returns by certain large and mid-size corporations to reconcile net income, will be required for 1120L and 1120PC filings for tax years ending on or after Dec. 31, 2006. Previously, the IRS planned to require Schedule M-3 for these filings for tax years ending on or after Dec. 31, 2005.
Schedule M-3, “Net Income (Loss) Reconciliation for Corporations with Total Assets of $10 Million or More,” is used by corporations that file Form 1120 to reconcile their financial accounting income to their taxable income. Corporations filing Form 1120 started using Schedule M-3 for tax periods ending on or after Dec. 31, 2004. The IRS had planned to implement the use of Schedules M-3 for other types of entities this year and next.
“Postponing M-3 implementation relieves burden on these affected corporate taxpayers that are currently faced with a number of other challenges and requirements,” said Deborah M. Nolan, Commissioner of the IRS’s Large and Mid-size Business Division. “Taxpayers will then have ample time to provide input and comment, and prepare their accounting systems for the requirements of Schedule M-3 that will be implemented next year.”
The IRS and the U.S. Department of the Treasury expect to release drafts of the Schedule M-3 for Form 1120L and 1120PC soon.
Later this year, the IRS will also release drafts of Schedule M-3 for taxpayers that file Form 1120S and partnerships that file Form 1065, for public comment and input. Schedule M-3 for these taxpayers will go into effect, as planned, for tax periods ending on or after Dec. 31, 2006.
Links:
Schedule M-3 for Large and Mid-Size Corporations — More information about Schedule M-3.
Subscribe to the Schedule M-3 E-mail Service
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IR-2005-104, Sept. 15, 2005
WASHINGTON – The Internal Revenue Service, in response to the continued shortages of diesel fuel caused by Hurricane Katrina, will extend the penalty relief when dyed diesel fuel is sold for use or used on the highway. The penalty relief will apply throughout the United States.
In IR-2005-89, released September 2, 2005, the IRS announced that it would not impose the dyed fuel penalty when dyed diesel fuel is sold for use or used on the highway and that this relief would remain in effect through September 15, 2005. Today’s announcement extends that penalty relief through October 5, 2005. Any dyed diesel fuel held by retailers or users on October 5, 2005, can be used on the highway after that date.
This relief is available to any person that sells or uses dyed diesel fuel for highway use.  In the case of fuel that is dyed at the terminal to meet IRS standards, the relief is available to the operator of the vehicle in which the fuel is used only if the operator or the person selling the fuel pays the tax of 24.4 cents per gallon.
To the extent permitted by EPA rules, dyed high sulfur fuel received by retailers, including fuel received after October 5, 2005, may be sold for highway use if the dye is added only at the refinery but not if dye is added at the terminal to meet IRS standards.  IRS will waive penalties for highway use of high sulfur fuel that is dyed only at the refinery.  Retailers may rely on the representations of their suppliers that fuel received after October 5, 2005, has not been dyed at the terminal.
Position holders are reminded that they are required to pay tax on any high sulfur diesel fuel that has not been dyed at the terminal to meet IRS standards.  Terminal operators should not dye, or add additional dye, to any fuel on which tax is paid.
Ordinarily, dyed diesel fuel is not taxed, because it is sold for uses exempt from excise tax, such as to farmers for farming purposes and to local governments for buses.   
The IRS is also extending the penalty relief on the recently enacted tax penalty on a failure to meeting the requirements of EPA highway diesel fuel sulfur content regulations if EPA has waived those requirements.  This relief will remain in effect until the date the EPA waiver or any extension of that waiver expires.
Links:

IR-2005-89, IRS Waives Diesel Fuel Penalty Due to Hurricane Katrina


More Information on Hurricane Katrina-related Issues
The information in this release has been updated. Please see News Release IR-2005-112, issued Sept. 28.
IR-2005-103, Sept. 14, 2005
WASHINGTON — Hurricane Katrina relief workers have until Jan. 3, 2006 to file any returns and pay any taxes due, according to the Internal Revenue Service.
In general, this means that relief workers are entitled to the same extensions that apply to individuals and businesses located in the disaster area. Eligible relief workers should notify the IRS that they are affected by Katrina when they file returns or respond to notices or contacts from the tax agency.
Eligible relief workers are those assisting in the disaster area. This includes people affiliated with recognized government or philanthropic organizations and others.
Relief workers can get the extensions by marking the top of appropriate forms with “Hurricane Katrina” written in red ink. They can also alert the IRS by calling the toll-free disaster hotline at 1-866-562-5227.
The IRS will abate interest and any late filing, late payment or failure to deposit penalties that would otherwise apply. This relief includes the Sept. 15 due date for estimated taxes and for calendar-year corporate returns with automatic extensions; the Oct. 17 deadline for individuals who received a second extension for filing their individual income tax returns; and the Oct. 31 deadline for filing quarterly federal employment and excise tax returns.
In the aftermath of Hurricane Katrina, the IRS assures individuals, businesses and tax practitioners that it is working aggressively to monitor the situation and resolve other potential tax administration issues as they are identified.
Links:

More Information About Hurricane Katrina


IR-2005-96, Katrina Victims Will Have Until Jan. 3 to File and Pay Taxes