etrent17/irs-articles huggingface dataset:
IR-2004-123, Oct. 7, 2004
WASHINGTON — Internal Revenue Service and Virgin Islands Bureau of Internal Revenue (VI BIR) tax officials today announced the establishment of a new partnership to work together on common tax enforcement issues. The Virgin Islands joins 48 states, the District of Columbia and New York City on the list of tax agencies that have signed partnership agreements with the IRS.
The partnership is the latest effort designed to enable federal, territorial, state and local tax agencies to join together in ensuring all taxpayers pay the amount of tax they are legally obligated to pay. Like the other agencies, the VI BIR will be working with the IRS to combat abusive tax avoidance transactions by sharing information and leveraging resources.
“This is a logical extension of our existing relationship with states and cities,” said IRS Commissioner Mark W. Everson. “We are pleased to work with the Virgin Islands Bureau of Internal Revenue to help ensure compliance with the tax laws.”
The scope of the partnership is broader than previous agreements. Additional aspects include the sharing of resources and coordination on issues involving income tax benefits under the Virgin Islands Economic Development Program (EDP).
The IRS and the VI BIR will coordinate examination activities of those claiming EDP benefits.
“The Economic Development Program is good for the territory,” said Louis M. Willis, Director of the Bureau of Internal Revenue, U.S. Virgin Islands. “The Bureau needs all parties involved in the program to be legitimate and doing the right things. We look forward to working with the IRS on this and other tax administration issues.”
In addition to the U.S. Virgin Islands, the cities and states that have signed agreements with the IRS include: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York State, New York City, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia and Wisconsin. 
In 2004 the IRS has shared leads on approximately 35,000 taxpayers engaged in abusive tax avoidance with these states and cities. The upfront sharing of information helps each organization avoid duplication of efforts and leverages resources by eliminating audits on the same taxpayers by two or three agencies.
Related Item:  IR-2004-77 — IRS and State Partnership Moves Forward to Improve Compliance and Service
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IR-2004-122, Oct. 1, 2004
WASHINGTON — The Internal Revenue Service today unveiled a new tool to help tax professionals determine whether their clients are eligible for the Earned Income Tax Credit. The new application is available in English and Spanish.
The EITC Assistant is another in a series of steps being taken by the IRS to maximize taxpayer participation while minimizing EITC errors.
“This tool will help tax professionals and taxpayers navigate what can be quite complex qualification standards for the EITC,” said Mark W. Everson, IRS Commissioner. “This is part of our on-going effort to help those who qualify, but only those who qualify, claim this important benefit.”
Starting today, the EITC Assistant will help determine eligibility for the credit, help determine filing status of the taxpayers and help determine if the taxpayers’ children meet the definition of “qualifying children” for EITC purposes. Improvements to EITC Assistant will continue. Beginning next year, tax professionals and taxpayers will be able to use it to calculate the amount of the expected credit.
The EITC Assistant also is part of an on-going effort to enhance electronic communications with tax preparers and taxpayers.
During the 2005 filing season, EITC Assistant will be prominently displayed on IRS.gov. Currently, it can be reached through the main pages for Tax Professionals, Individuals or Español on IRS.gov
Related Items:
EITC Assistant
Earned Income Tax Credit (EITC) Can Lower Federal Tax Liabilities — Ask How!
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IR-2004-143, Nov. 30, 2004
WASHINGTON — The Internal Revenue Service today announced it will increase the minimum threshold for Federal Unemployment Tax Act (FUTA) deposits, a move that will reduce burden for more than 4 million small businesses.
Under the new rules effective Jan. 1, 2005, employers are required to make a quarterly deposit for unemployment taxes if the accumulated tax exceeds $500. The current threshold is $100.  
“The IRS is committed to reducing burden on taxpayers whenever we can,” said IRS Commissioner Mark W. Everson. “The new rules will help cut paperwork for millions of small businesses. The IRS Office of Taxpayer Burden Reduction is continually reviewing what other steps we might take that will save money and time for businesses.”
The maximum amount the IRS collects from employers per employee is $56 per year, if the employer timely made state unemployment tax payments. The current $100 threshold requires most employers with two or more employees to make at least one federal tax deposit per year. Raising the requirement to $500 will reduce burden for employers with eight employees or less by eliminating their requirement to make up to four FUTA tax deposits yearly.   
The $100 minimum deposit threshold was established in 1970.
Related links:

Comments by Members of Congress


Final regulations: Federal Unemployment Tax Deposits -- De Minimis Threshold (20KPDF)

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IR-2004-140, November 24, 2004
WASHINGTON — The Internal Revenue Service announced today the appointment of Henry V. Singleton as Director of its Retailers, Food, Pharmaceuticals and Healthcare Industry section, headquartered in Illinois. The section reports to the IRS’s Large and Mid-Size Business division.
“Henry has played a key leadership role in helping us achieve some of our most significant accomplishments,” said Deborah M. Nolan, Commissioner, Large and Mid-Size Business division. “He brings a tremendous amount of experience to his new role.”
The Retailers, Food, Pharmaceuticals and Healthcare Industry section is one of five special industry segments within the Large and Mid-Size Business division whose members have similar financial reporting and growth patterns. This section includes businesses dealing in food and beverages, retailing, pharmaceuticals, agricultural commodities, farms and healthcare. It provides pre-filing and issue resolution services to approximately 300 large and 18,000 mid-size taxpayers with assets greater than $10 million.
Singleton has been acting in the position of industry director since July 2004. He began his IRS career in 1987 as a revenue agent and held various management positions, including territory manager of the Financial Services Industry section in New York, before his selection into IRS’s executive development program. After completing the program in 2003, he was appointed Director of Field Operations for the Retailers, Food, Pharmaceuticals and Healthcare industry section in New Jersey.
Prior to joining the IRS, Singleton held managerial and technical positions in the insurance, healthcare and oil industries.  
A Certified Public Accountant, Singleton completed his graduate work at LaSalle University in Philadelphia and his undergraduate work at Hampton University in Virginia.
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IR-2004-139, Nov. 17, 2004
WASHINGTON — The Internal Revenue Service today released the optional standard mileage rates to use for 2005 in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes.
Beginning Jan. 1, 2005, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

40.5 cents a mile for all business miles driven, up from 37.5 cents a mile in 2004;


15 cents a mile when computing deductible medical or moving expenses, up from 14 cents a mile in 2004; and


14 cents a mile when giving services to a charitable organization.

The 3-cent increase in the business mileage rate was the largest one-year rise ever. The primary reasons were higher prices for vehicles and fuel during the year ending in September. The charitable standard mileage rate is set by law.
The standard mileage rates for business, medical and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile. An independent contractor, Runzheimer International, conducted the study for the IRS.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, for any vehicle used for hire, or for more than four vehicles used simultaneously. Revenue Procedure 2004-64 contains additional information on these standard mileage rates.
Related Item: Revenue Procedure 2004-64PDF
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IR-2004-138, Nov. 16, 2004
WASHINGTON — The Treasury Department and the Internal Revenue Service today issued interim guidance reflecting changes to the requirements for disclosure of reportable transactions by taxpayers and material advisors made by the newly enacted American Jobs Creation Act of 2004.
The American Jobs Creation Act provides rules that require material advisors to file returns disclosing reportable transactions and to maintain investor lists. The Act also imposes new monetary penalties on material advisors who fail to comply with these obligations. Notice 2004-80 provides interim guidance to material advisors who are required to comply with the new reporting and list maintenance requirements and invites comments from the public regarding rules and standards implementing these new requirements.
In addition, the Treasury Department and the Internal Revenue Service today issued four revenue procedures that eliminate the reporting requirements for certain transactions for both taxpayers and material advisors. These revenue procedures, which reduce taxpayer burden by providing that certain transactions are not reportable transactions under the disclosure regulations, apply to transactions with contractual protection (Revenue Procedure 2004-65), loss transactions (Revenue Procedure 2004-66), transactions that give rise to significant book-tax differences (Revenue Procedure 2004-67), and transactions involving brief asset holding periods (Revenue Procedure 2004-68).
"The new Jobs Act strengthens our hand in the fight against abusive shelters," said IRS Commissioner Mark W. Everson. "Under the new law, attorneys, accountants and other tax advisers who fail to comply with these disclosure requirements will face significant monetary penalties. At the same time, we will continue to balance taxpayer burden against the benefits to the IRS of additional disclosure requirements."
"We are committed to making sure that the disclosure of potentially abusive transactions by taxpayers and material advisors yields meaningful information without imposing undue burdens," said Acting Assistant Secretary for Tax Policy Greg Jenner. "As part of this commitment, we will continue to adjust the disclosure rules as appropriate when we determine that specific transactions do not warrant disclosure or warrant reduced disclosure."
Two of the revenue procedures update prior guidance relating to loss transactions and transactions that give rise to a significant book-tax difference by identifying additional transactions for which disclosure is not required.
Related Items:

Notice 2004-80 (26KPDF)


Revenue Procedure 2004-65 (10KPDF)


Revenue Procedure 2004-66 (20KPDF)


Revenue Procedure 2004-67 (19KPDF)


Revenue Procedure 2004-68 (12KPDF)

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IR-2004-137, Nov. 15, 2004

WASHINGTON — The Internal Revenue Service is looking for 87,485 taxpayers whose income tax refund checks could not be delivered. Checks totaling more than $73 million can be reissued as soon as taxpayers correct or update their addresses with the IRS.
"If we owe you money, we'd like to get it to you," said IRS Commissioner Mark W. Everson. "All you have to do is tell us where you are. Our Web site makes it easy for taxpayers to track their undelivered refund checks."
"Where's My Refund?" on IRS.gov provides information about refunds and is available from the IRS home page. To use it, taxpayers enter information that includes their Social Security number, filing status (such as single or married filing jointly) and the refund amount shown on their 2003 tax return. When the information is submitted online, taxpayers see Web pages that show the status of their refund and, in some cases, instructions to resolve potential account issues.
“Where’s My Refund?” was developed through the IRS Business Systems Modernization program and delivered in the summer of 2002. Taxpayers used the online tool nearly 24 million times to track their refunds in 2004.
The number of undeliverable checks decreased this year by 5,325, but the average refund, $836, increased compared with last year’s average of $722.
Taxpayers can avoid undelivered refund checks by having their refunds directly deposited into a personal checking or savings account. Direct deposit also guards against theft or lost refund checks. The option is available for both paper and electronically filed returns. More than 49 million taxpayers chose to direct deposit almost $120 billion in refunds this year. The number of direct deposit refunds was up 10.8 percent from last year.
Refund checks go astray for reasons that can vary with each taxpayer. Often, it’s because a life change causes an address change. If taxpayers move or change their address and fail to notify the IRS or the U.S. Postal Service, a check sent to their last known address is returned to the IRS.

Taxpayers who have moved since filing their last tax return can ensure the IRS has their correct address by filing Form 8822, Change of Address, with the IRS. Download the form or request it by calling 1-800-TAX-FORM (1-800-829-3676).
Those without access to the Internet, who think they may be missing a refund, should first check their records or contact their tax preparer before calling the IRS toll-free assistance line at 1-800-829-1040 to update their address.
Related Links:

Where’s My Refund?


Form 8822, Change of Address (44KPDF)

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IR-2004-136, Nov. 10, 2004
WASHINGTON — The Internal Revenue Service and Puerto Rico Department of the Treasury, the Hacienda, today announced a new partnership to fight abusive tax avoidance transactions.
The partnership is the latest development in an effort unveiled in September 2003 to enable federal, state and commonwealth tax agencies to join together in ensuring all taxpayers fulfill their obligations under the tax code. Puerto Rico joins 48 states, the District of Columbia, New York City and the Virgin Islands on the list of tax agencies that have signed partnership agreements with the IRS. Like these tax agencies, the Hacienda will be working with the IRS to combat abusive tax avoidance transactions by sharing information and resources.
“This is a logical extension of our existing relationship with 48 states, several cities and the Virgin Islands,” said IRS Commissioner Mark W. Everson. “We are pleased to work with the Hacienda to help ensure compliance with the tax laws.”
In 2004 the IRS has shared leads with partner agencies on more than 35,000 taxpayers engaged in abusive tax avoidance transactions. Upfront information sharing helps the organizations avoid duplication of efforts and maximizes resources by eliminating the need for multiple audits of the same taxpayers.
The scope of the partnership also includes information-sharing and coordination on issues related to self-employment.  Self-employed residents of Puerto Rico pay income tax to the PR Hacienda and also have a requirement to file a Form 1040-PR, Self-Employment Tax Return – Puerto Rico, or a Form 1040-SS, U.S. Self-Employment Tax Return, with the IRS. 
”In the Department of the Treasury we are pleased to join efforts with the IRS,” PR Assistant Secretary for Internal Revenue Rebeca Vargas said. “Together we will accomplish our goals.”
In addition to the Commonwealth of Puerto Rico, others that have signed agreements with the IRS include: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York State, New York City, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, U.S. Virgin Islands, Virginia, Washington, West Virginia and Wisconsin.
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IR-2004-135  Nov. 8, 2004
WASHINGTON — The Internal Revenue Service today announced the selection of three new members for the Electronic Tax Administration Advisory Committee (ETAAC).  The new members will replace three members whose terms ended in September 2004.
“IRS is pleased with the continued support of the ETAAC group,” said Bert DuMars, Director, IRS Electronic Tax Administration. “ETAAC supports the goal of electronic tax administration by encouraging taxpayers to transact and communicate electronically with the IRS.”
ETAAC will have 14 members that serve as a public forum for discussion of electronic tax administration issues.  The ETAAC members convey the public’s perceptions of the IRS electronic tax administration activities, offer constructive observations about current or proposed polices, programs, and procedures, and suggest improvements.
The new members are:

Nora Daly, of Redwood Shores, Calif.  Daly is the Senior Legislative Analyst with Oracle Corporation.  As the senior legislative analyst, Daly is responsible for tracking legislative and regulatory changes that affect employers’ payroll compliance requirements.


James Gottfried, of Cleveland, Ohio.  Gottfried is a Partner with Ernst & Young. As partner, Gottfried is responsible for all strategic and operational aspects of Ernst &Young’s Americas Tax Compliance business units.


Linda Lueck, of Onalaska, Wis.   Lueck is the owner of Lueck Accounting Services. Lueck has successfully operated her tax and accounting business for 16 years and files 95% of returns electronically.  She also serves as an accounting instructor at Western Wisconsin Technical College.

“The ETAAC group provides essential input into the development and implementation of the IRS’ strategy for electronic tax administration,” said DuMars.  Each June, the ETAAC submits an annual report to Congress reporting on the progress of the IRS’ electronic tax initiatives. ETAAC was created in 1998 by the IRS Electronic Tax Administration as required by the IRS Restructuring and Reform Act of 1998 (RRA 98).
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IR-2004-134, Nov. 8, 2004
WASHINGTON — The Internal Revenue Service reminds taxpayers who were on qualified extended duty in the U.S. Uniformed Services or the Foreign Service that the period to file an amended return to recoup capital gains taxes paid as the result of the sale of a personal residence ends on Nov. 10, 2004, for homes sold before 2001.
The Military Family Relief Tax Act of 2003 allows persons on qualified extended duty in the U.S. Uniformed Services or the Foreign Service to suspend the five-year test period that applies to the sale of a personal residence for up to 10 years of such duty time. A taxpayer is on qualified extended duty when at a duty station that is at least 50 miles from the residence sold, or when residing under orders in government housing, for more than 90 days or for an indefinite period.
Generally, taxpayers may exclude up to $250,000 of gain on a home sale ($500,000 on a joint return), provided they have owned and used the home as a principal residence for two of the five years before the sale. A reduced maximum exclusion may apply to those who satisfy part of the two-year rule. Military personnel often retain ownership of a home while away on duty but eventually sell it without returning to live in it, perhaps failing the use test completely.
This change applies to home sales after May 6, 1997. A taxpayer may use this provision for only one property at a time and may exclude gain on only one home sale in any two-year period. Although an amended return must usually be filed within three years of the original return’s due date, the law gives qualifying taxpayers who sold a home before 2001 until Nov. 10, 2004, to file an amended return claiming the exclusion. Military personnel and individuals in support of the U.S. Armed Forces serving in a combat zone are entitled to additional time to amend their returns.
Related Items:

IRS Helps Military Personnel Get New Law's Tax Breaks 


Tax Information form the U.S. Armed Forces

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IR-2004-133, Nov. 1, 2004
 
WASHINGTON — The Internal Revenue Service today released a revised application form for charitable organizations seeking tax-exempt status. The new form will streamline the application process for the organizations and will help the IRS spot potentially abusive charities.
The revised Form 1023, Application for Exemption Under Section 501(c)(3) of the Internal Revenue Code, is available online. Printed copies of the form and instructions will be available at the end of November by calling the IRS toll-free at (800) 829-3676. The additional information required upfront will mean fewer contacts between the IRS and the organizations.
“We have identified the use and abuse of charities as one of our four service-wide enforcement priorities,” said IRS Commissioner Mark W. Everson. “This new form will give us valuable information about those who might abuse the tax-exempt system and erode public confidence in charities. At the same time, this change will help smooth the application process and minimize burden on new groups.”
The new form is the result of extensive collaboration with the tax-exempt community and takes into account recommendations the IRS received during a lengthy period of public comment. The revision also uses information the IRS gathered from customer satisfaction surveys.
“Applicants want a process that is easier, faster and more streamlined. They want a process that minimizes contacts with the IRS. The new Form 1023 will reduce the burden on applicants and will increase information to the IRS,” said Martha Sullivan, Director of the IRS’ Exempt Organizations Division.
The new Form 1023 also was designed to provide the IRS with information it needs to ensure compliance with the tax laws. The new form will alert the IRS to potential problems early in the application process and will help identify potentially abusive situations involving tax-exempt organizations.
“Unfortunately, there are those who try to create and use tax-exempt organizations for abusive purposes,” Sullivan said. “Revising Form 1023 has given us a unique opportunity to design a form to gather the information we need and to stop those who would undermine the public’s confidence in charities.”
Users of the new Form 1023 will find it longer but much easier to use than the current version. The new Form 1023 Package consolidates all forms necessary to apply for exemption, is organized in a logical, sequential way and includes a handy checklist to help reduce common errors.
Related Links:

Form 1023, Application for Exemption Under Section 501(c)(3) of the Internal Revenue Code (853KPDF)
Instructions for Form 1023 (183PDF)

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IR-2004-132, Nov. 1, 2004
WASHINGTON — The Internal Revenue Service is seeking applications for vacancies on the Advisory Committee on Tax Exempt and Government Entities (ACT). The committee provides a venue for public input into critical tax administration areas.
Vacancies exist in the following customer segments:
Employee Plans — two vacancies,
Exempt Organizations — two vacancies,
Federal, State and Local Governments — one vacancy, and
Tax Exempt Bonds — one vacancy.
There are currently no vacancies in Indian tribal governments.
The ACT is an organized public forum for the IRS and representatives who deal with employee plans, exempt organizations, tax-exempt bonds, and federal, state, local and Indian tribal governments. The ACT allows IRS to receive regular input on administrative policy and procedures of the Tax Exempt and Government Entities Division.
Members are appointed by the secretary of the Treasury and serve two-year terms, beginning in May 2005. Applications can be made by letter or by completing an application form, available on the IRS Web site. In either case, applications should reflect the proposed member's qualifications. A notice published in the Federal Register, Nov. 1, 2004, contains more details about the ACT and the application process.
Applications should be sent to Steven Pyrek; TE/GE Communications and Liaison Director; Internal Revenue Service; 1111 Constitution Ave. NW — SE:T:CL Penn Bldg; Washington, D.C. 20224, or by fax 202-283-9956 (not a toll-free number).
Related Link: ACT Reports
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IR-2004-156, Dec. 22, 2004
WASHINGTON – Large and Mid-Size Business division taxpayers seeking to resolve certain tax issues prior to filing their tax returns may now do so for multiple years under the IRS Pre-Filing Agreement (PFA) Program. The IRS issued revised PFA program guidelines today that provide taxpayers and the IRS increased flexibility to enter into PFAs to resolve issues for the current taxable year and up to four future taxable years.
The PFA program is designed to permit a taxpayer to resolve the treatment of an issue before the filing of a return. The PFA program reduces taxpayer burden and makes more effective use of IRS resources by eliminating tax controversy before the tax return is filed and providing certainty that agreed upon tax positions will not be challenged during the post-filing examination process.
“We have expanded the PFA program based on suggestions we received from taxpayers regarding how the IRS could improve the program,” said Large and Mid-Size Business Commissioner Deborah M. Nolan. “The changes reflect our focus on reducing taxpayer burden and, where possible, resolving issues during the pre-filing process.”
Large and Mid-Size Business division serves business taxpayers with assets greater than $10 million.
Other issue resolution procedures, such as the Accelerated Issue Resolution (AIR) Program or Early Referral to Appeals, remain available to taxpayers who are not eligible for the PFA program or who are unable to reach an agreement through the PFA program.
The revisions to the IRS Pre-Filing Agreement Program are detailed in Revenue Procedure 2005-12. This guidance, as well as information about other issue resolution programs, can be viewed at IRS.gov.  
Related Item:  Revenue Procedure 2005-12 (PDF 160KPDF)
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IR-2004-155, Dec. 22, 2004
WASHINGTON – The Internal Revenue Service has issued letters to approximately 1,700 businesses and retirement plan sponsors alerting them to new income and excise taxes applicable to S corporation employee stock ownership plans (ESOPs) and warning of the consequences of participating in abusive schemes involving ESOPs and S corporations. The letters are being mailed to S corporation ESOPs reporting 10 or fewer participants.
The letters follow recently issued temporary regulations on ESOPs and S corporations, which provide guidance concerning the application of Internal Revenue Code section 409(p).
Congress intended that S corporations, like C corporations, be able to encourage employee ownership through an ESOP. Section 409(p) was enacted to address concerns about ownership structures involving S corporations and ESOPs that concentrate the benefits of the ESOP in a small number of persons. For example, 409(p) imposes income and excise taxes in situations involving abusive arrangements in which an S corporation is used to pass corporate income to a tax-exempt ESOP where the only participants in the ESOP are the owner/employees of the business. 
For S corporation ESOPs in existence on March 14, 2001, section 409(p) is effective for plan years beginning after Dec. 31, 2004. This delayed effective date has allowed existing S corporations that maintain ESOPs time to restructure the stock ownership in order to avoid the tax effects of section 409(p).
In addition, the IRS letters call attention to other abuses connected with S corporation ESOPs. “The IRS has determined that many existing arrangements designed to take advantage of the benefits of S corporation ESOP rules would not only involve taxation under section 409(p) but would also violate qualification requirements of the tax law, such as the coverage rules under Code section 410(b),” said Carol Gold, director of the IRS Employee Plans division. “When an ESOP is not qualified under such circumstances, the subchapter S corporation may be taxable as a C corporation and any highly compensated ESOP participant may be taxable on the value of his or her account balance.”
The sponsor of an S corporation ESOP that may be involved in an arrangement described above should immediately consult a tax advisor. If the tax advisor determines that the arrangement is abusive, an amended return should immediately be filed for all open years affected by the arrangement. This issue may not be resolved under the Employee Plans Compliance Resolution System (EPCRS). Employee Plans anticipates initiating a compliance program to review a large number of S corporation ESOPs with small numbers of participants.
Additional information regarding section 409(p) and the temporary regulations, as well as other issues pertaining to ESOPs adopted by S corporations may be found on our Internet site.  You can access the information at /ep by clicking on “S Corporation ESOP Guidance.”
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IR-2004-154, Dec. 21, 2004
WASHINGTON — The Internal Revenue Service and the Treasury Department today announced the Industry Issue Resolution (IIR) Program will address payroll industry concerns pertaining to signature requirements on employment tax returns.
The National Payroll Reporting Consortium presented the IIR submission to the IRS requesting that the agency update existing procedures to recognize electronic filing and other changes. The industry group also requested certain updates to forms, instructions, publications and sections of the Internal Revenue Manual.
The signature issue involves Revenue Ruling 82-29, which relieves authorized Reporting Agents from having to manually sign employment tax returns they file on behalf of their clients. These returns include Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return; Form 941, Employer’s Quarterly Federal Tax Return; and Form 943, Employer’s Annual Tax Return for Agriculture Employees.
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. At any time, business associations and taxpayers may submit tax issues that they believe could be resolved though the IIR program.
IIR project selections are based on criteria set forth in Revenue Procedure 2003-36. For each issue selected, a multi-functional team gathers and analyzes the relevant facts and recommends guidance. The revenue procedure also contains IIR submission procedures.
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IR-2004-153, Dec. 17, 2004
WASHINGTON — The Internal Revenue Service has made available on its Web site Publication 600, Optional State Sales Tax Tables, which taxpayers may use for their 2004 returns. The IRS also will send Pub. 600 to all taxpayers who get a Form 1040 tax package.
The tax law authorizing this optional deduction for state and local sales tax instead of state and local income tax was enacted too late in the year to include the tables in the tax instruction books.
The American Jobs Creation Act of 2004 authorized the sales tax deduction as an option for those who itemize deductions, letting them choose between deductions for state and local income or sales taxes. Taxpayers will indicate by a checkbox on line 5 of Schedule A which type of tax they’re claiming. The law provides this choice for Tax Years 2004 and 2005 only.
“Taxpayers should check these tables to see if they’re entitled to a larger sales tax deduction than a state income tax deduction,” said IRS Commissioner Mark W. Everson.
The tables give taxpayers a sales tax deduction amount as an alternative to saving their receipts throughout the year and tabulating the amount actually paid. Taxpayers use their income level and number of exemptions to find the sales tax amount for their state. The table instructions explain how to add an amount for local sales taxes if appropriate.
Taxpayers also may add to the table amount any sales taxes paid on:

A motor vehicle, but only up to the amount of tax paid at the general sales tax rate; and


An aircraft, boat, home (including mobile or prefabricated), or home building materials, if the tax rate is the same as the general sales tax rate.

While this deduction will mainly benefit taxpayers with a state or local sales tax but no income tax – in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming – it may give a larger deduction to any taxpayer who paid more in sales taxes than income taxes. For example, a person may have bought a new car, boosting the sales tax total, or claimed tax credits, lowering the state income tax paid.
Taxpayers may download Pub. 600 from this site. A printed version will be available for mailing in a few weeks by calling (toll-free) 1-800-TAX-FORM (1-800-829-3676).
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IR-2004-150, Dec. 16, 2004
WASHINGTON — The Treasury Department and IRS issued proposed and temporary regulations today under Section 409(p). That section of the tax law generally prohibits accruals or allocations under an employee stock ownership plan (ESOP) that holds stock of an S corporation where the ownership interest in the ESOP or in rights to acquire the corporation are so concentrated among 10 percent owners that they hold 50 percent or more of the interests in the corporation.
The regulations replace proposed and temporary regulations that were issued in 2003 and address a wide variety of issues under section 409(p), including the key definitions of a prohibited accrual or allocation, a disqualified person and a non-allocation year.
“These regulations support our efforts to shut down abusive schemes, in this case those skirting pension laws," IRS Commissioner Mark W. Everson said.
“These regulations respond to the comments we received from the public on the 2003 regulations, including comments recommending changes to ensure that ESOPs holding S corporation stock are not used inappropriately as tax shelter devices,” said Greg Jenner, Treasury Acting Assistant Secretary for Tax Policy.
The regulations generally go into effect for plan years beginning on or after Jan. 1, 2005, subject to several special effective date rules. A public hearing on the regulations is scheduled for April 20, 2005.
The regulations – TD 9164 and REG-129709-03 – are available at the Federal Register.
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IR-2004-149, Dec. 15, 2004
WASHINGTON — The Internal Revenue Service has announced the selection of 12 new members for the Internal Revenue Service Advisory Council (IRSAC). The appointees will join 10 returning members who are in the second year of a three-year term.
The 12 new members appointed to serve on the council are:

Deborah Cutler-Ortiz, director of family income, Children’s Defense Fund, Washington, D.C.


Karla R. Hyatt, tax attorney, Waller Lansden Dortch & Davis, PLLC, Nashville, Tenn.


Angel Ingram, senior tax analyst, Eli Lilly & Company, Indianapolis, Ind.


Joni Johnson-Powe, managing director, J.P. Powe & Associates, LLC, Greenwood Village, Colo.


Joan C. LeValley, owner, JCL & Company, Park Ridge, Ill.


Robert E. Panoff, attorney and owner, Robert E. Panoff, P.A., Miami, Fla.


Cathy B. Peinhardt, accountant and tax preparer, Coast Business Services, Gearhart, Ore.


Patti M. Richards, member manager, attorney and CPA, The Richards Law Firm, LLC, Atlanta, Ga.


Margaret A. Roark, president, M&D Consulting, Inc., Fairfax Station, Va.


Michael H. Salama, director, tax audits and controversies, The Walt Disney Company, Burbank, Calif.


Mitchell S. Trager, senior tax counsel, Georgia-Pacific Corporation, Atlanta, Ga.


Robert A. Weinberger, vice president, government relations, H&R Block, Washington, D.C.

IRSAC was established in 1953 to focus on broad policy matters. The council’s primary purpose is to provide an organized public forum for IRS officials and representatives of the public to discuss relevant and emerging tax issues. Council members offer recommendations, observations and operational improvements regarding IRS’ polices, programs and procedures that have a substantive impact on federal tax administration.
Related Link: IRSAC Fact Sheet
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IR-2004-148, Dec. 15, 2004
WASHINGTON — The Internal Revenue Service announced the selection of nine new members for the Information Reporting Program Advisory Committee (IRPAC). The appointees will join eight returning members who are in the second year of a three-year term.
The nine new members appointed to serve on the committee are:

Marianne Couch, executive director, National Association of Form 1099 Filers, Inc., Ann Arbor, Mich.


Charles F. Egender, owner, Charles F. Egender, CPA, P.A., Bel Air, Md.


Barry C. Faison, chief financial officer, Virginia Retirement System, Richmond, Va.


Robert J. Foley, director, product tax, State Street Bank & Trust Company, Boston, Mass.


Paul Heller, financial director, J.P. Morgan Chase, New York, N.Y.


Virgil A. Julian, owner, Julian & Company, CPA, P.C., Independence, Mo.


Katherine Kinnicutt, manager, IRA/qualified plan technical operations and compliance, Raymond James & Associates, St. Petersburg, Fla.


Regina D. Tarpley, franchisee and general manager, T&M Tax Service, dba Jackson Hewitt Tax Service, Blue Ridge, Ga.


Janice M. Wegesin, president, JMW Consulting, Inc., Palatine, Ill.

IRPAC was established in 1991 to focus on information reporting issues. The committee’s purpose is to provide an organized public forum for discussion of relevant tax administration issues between IRS officials and representatives of the public. Committee members provide recommendations and suggestions on a broad range of issues intended to improve the information reporting program and achieve equitable treatment of all taxpayers.
Related Link — IRPAC Fact Sheet
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IR-2004-147, Dec. 13, 2004
WASHINGTON — The Internal Revenue Service has certified the model year 2005 Ford Escape Hybrid as being eligible for the clean-burning fuel deduction. The certification means taxpayers who purchase this vehicle new may claim a tax deduction of $2,000 on Form 1040.
Federal tax 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.
Under the recently signed Working Families Tax Relief Act of 2004, the clean-burning fuel deduction is up to $2,000 for certified vehicles first put into service in 2004 and 2005. The deduction will be limited to $500 for vehicles placed in service in 2006 and no deduction will be allowed after that year.
The one-time deduction must be taken in the year the vehicle is originally used. The taxpayer must be the original owner. Individuals take this benefit as an adjustment to income on Form 1040. They do not have to itemize deductions on their tax returns to claim it.
The amount of the deduction for the 2005 Escape Hybrid was set after the manufacturer, Ford Motor Company, documented for the IRS the incremental cost related to the vehicle’s electric motor and related equipment.
The IRS has previously certified Toyota and Honda hybrid vehicles. The Toyota Prius was certified for model years 2001, 2002, 2003, 2004 and 2005. The Honda Insight was certified for model years 2000, 2001, 2002, 2003 and 2004 and the Honda Civic Hybrid for model years 2003 and 2004.Related Item:  Clean-Fuel Vehicle Deduction Available for Certain Models
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IR-2004-146, Dec. 10, 2004
WASHINGTON — The Competent Authorities of Switzerland and the United States have reached a mutual agreement on the qualification of certain Swiss and U.S. pensions for treaty benefits under paragraph 3 of Article 10 (Dividends) of the U.S.-Switzerland income tax treaty. The agreement also specifies the procedures for claiming treaty benefits in each country and the methods each country uses to grant treaty benefits.
The agreement constitutes a Mutual Agreement in accordance with the Convention Between the United States of America and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income signed at Washington, D.C., on October 2, 1996.
Related Item — Agreement (79K)PDF
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IR-2004-144, Dec. 2, 2004
WASHINGTON — The Internal Revenue Service today announced there will be no change in the interest rates for the calendar quarter beginning Jan. 1, 2005. The interest rates are as follows:

5 percent for overpayments [4 percent in the case of a corporation];


5 percent for underpayments;


7 percent for large corporate underpayments; and


2.5 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 October 2004.
Related Item: Revenue Ruling 2004-111 (40KPDF)
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IR-2003-11, Jan. 27, 2003
WASHINGTON – The Internal Revenue Service announced today the selection of Nancy J. Jardini as Deputy Chief of Criminal Investigation (CI), the agency’s law enforcement arm. 
Jardini, the first woman in CI's 84-year history to serve in a leadership role as the Deputy Chief, directs the nationwide policies and programs that guide a staff of approximately 4,500 employees, including more than 2,900 special agents. CI special agents investigate and assist in the prosecution of criminal tax, money laundering and narcotics-related financial crime cases. 
“Nancy has an impressive background that will benefit both Criminal Investigation and American taxpayers,” said Acting IRS Commissioner Bob Wenzel. “Her extensive experience as Associate Chief Counsel for Criminal Tax in IRS will serve well in her new position of Deputy Chief, Criminal Investigation."
“I am proud to join an organization with a long history of distinguished service," said Jardini. "CI special agents are well-respected law enforcement officers who are renowned for their financial investigative expertise. And I look forward to continuing CI's mission to investigate potential criminal violations in a manner that fosters confidence in the tax system and compliance with the law. Our top priority is to investigate violations of tax law. But our special agents’ financial expertise also is a critical key in the nation's fight against terrorism and drug trafficking, and we continue to participate in those efforts.”
Prior to joining Criminal Investigation, Jardini was the Associate Chief Counsel/Division Counsel for Criminal Tax within IRS. She directed a nationwide staff of attorneys deployed in 35 locations nationwide and in the national headquarters in Washington. Those criminal tax specialists worked closely with the special agents and managers of Criminal Investigation during all stages of their investigations relating to criminal violations of the Internal Revenue laws and other statutes for which the IRS has enforcement responsibility.
Jardini, who has been a criminal law practitioner for over fifteen years, came to the IRS in July 2000, from the Criminal Division of the Justice Department. In addition to her experience as both a federal prosecutor and as a defense attorney, she has written and lectured extensively on a variety of topics related to criminal law and procedure.
Jardini earned a bachelor's degree in history and Spanish from Chatham College in 1985 and a juris doctor degree from Villanova University in 1988. She is a native of Pittsburgh, Pa.
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IR-2003-9, Jan. 23, 2003
WASHINGTON – The Internal Revenue Service has launched a new and expanded e-subscription service through IRS.gov for taxpayers, tax professionals, small business owners and the news media.
Subscribers to the e-service lists will get timely, specialized information sent via e-mail on topics such as state practitioner meetings, news releases, filing season tax tips and other programs.
Among the new features:
E-News for Tax Professionals
E-News for Tax Professionals is a reorganized and improved version of the Local News Net. The new electronic newsletter for tax practitioners and others provides consolidated and localized information that’s available for the first time on a state-by-state basis.
Previously, the old service was available only on a district-by-district basis, reflecting the old IRS organizational structure. In some instances, this format forced practitioners to subscribe to multiple listings to cover one state, and it meant professionals received information not pertinent to their area.
Current subscribers do not need to take any action. Subscribers to the old Local News Net have been converted over to the new e-News for Tax Professionals system.
IRS Digital Dispatch
IRS Digital Dispatch also has been expanded. The Digital Dispatch provides national tax news and recent information added to IRS.gov.  These are regularly issued every other week and when special events warrant a special edition.
IRS Newswire
For the first time, IRS news releases and fact sheets will be available to anyone as soon as the IRS publicly issues them. Previously, only the news media received instant delivery of news releases via e-mail. Now, through the IRS Newswire, anyone who wants to receive copies can sign up for electronic delivery.
In addition, the IRS has started real-time posting of news releases on The Newsroom section of IRS.gov. Under the old system, news releases were generally not available on the Web until the following day.
IRS Tax Tips
The IRS Tax Tips series is also available for direct e-mail subscriptions for the first time. Tax Tips are practical hints and reminders that are issued once a day during the filing season and periodically during the rest of the year. They cover topics such as free tax help, child tax credits, educator expenses, car donations and other topics. The Tax Tips series was originally designed for news media, Web sites and newsletters, but the e-mail service was eventually expanded to include others.
Current subscribers to Tax Tips do not need to resubscribe. The new system will automatically convert current subscribers to the subscription list available via the Web.
The IRS also offers several other subscription services, including:
the SB/SE Mailing List, which provides information about IRS small business and self-employed outreach products and programs; 
	 
Employee Plans News, a quarterly publication, with periodic special editions, containing retirement plan information from the Employee Plans office; and 
	 
the FSLG Newsletter, a periodic publication of the Federal, State and Local Governments office about items of interest to government entities.
 
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