etrent17/irs-articles huggingface dataset:
IR-2003-86, July 7, 2003
WASHINGTON — In an annual report to Congress, National Taxpayer Advocate Nina E. Olson outlined her objectives for the Office of the Taxpayer Advocate for the coming fiscal year.
The Taxpayer Advocate Service (TAS) has a dual mission to assist taxpayers in resolving problems with the IRS and to make administrative and legislative recommendations to mitigate those problems. "The Office of the Taxpayer Advocate will continue to partner with the IRS to resolve taxpayer problems, and ensure taxpayer rights and concerns are considered and protected during IRS program implementation," said Olson.
In the annual Fiscal Year Objectives report, which is required by law, Olson reviews the accomplishments of her office during the current fiscal year and describes its focus and goals for the coming fiscal year.
In fiscal year 2003 the Office of the Taxpayer Advocate worked with the IRS on several initiatives, including Earned Income Tax Credit certification, Offers-in-Compromise, Individual Taxpayer Identification Numbers, the Federal Payment Levy program, Collection Due Process hearings, and the implementation of the National Research Project. The report describes how TAS will continue to focus on these programs for the next fiscal year.
The report identifies several new projects for fiscal year 2004 involving small business issues, electronic filing, and financial literacy. The Office of the Taxpayer Advocate is also sponsoring or participating in several research studies involving abusive tax schemes, the impact of representation on the outcome of EITC audits, and the reasons for lack of taxpayer response in EITC examinations.
“A true partnership between TAS and the rest of the IRS in the planning and implementation of programs, reduces the risk of delivering programs that meet taxpayer resistance or that must be substantially reworked after implementation,” Olson said.
In conjunction with her Annual Report, the National Taxpayer Advocate is also issuing a study that she commissioned on the role of ombudsmen in federal agencies.  Advocates and ombudsmen play an important role in an increasing number of federal agencies and departments.  The study details how these offices interact with various agencies and the importance of independence in achieving their mission.  This report, Agencies Within Agencies: A Survey of Federal Agency External Ombudsmen, will be available by calling 1-800-829-3676 and requesting Publication Number 4213.

Related Items:


The National Taxpayer Advocate’s Report to Congress: Fiscal Year 2004 Objectives  ( 989KPDF )


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WASHINGTON — The Internal Revenue Service announced today the selection of Beverly Ortega Babers as the new Chief Human Capital Officer.  In this new position, Babers will report to John Dalrymple, Deputy Commissioner for Operations Support. Federal law requires executive departments and agencies to name or appoint a senior official to be the agency's Chief Human Capital Officer. 
“Beverly brings a wealth of experience and breadth of knowledge in not only human resources but tax litigation and tax administration to this critical position on my senior leadership team,” said IRS Commissioner Mark W. Everson.  “Moreover, she will bring a fresh perspective and focus to the many challenges facing our workforce.”
Currently, Babers is the Director, Technical Services, in the IRS Appeal Division, overseeing tax policy and procedure, technical guidance and processing services functions within Appeals.
Babers joined the IRS in 1999 as an Assistant to the Commissioner, providing advice on tax policy and tax administration matters.
Before coming to the IRS, Babers was Chief of Staff and Counsel to the Assistant Attorney General of the Tax Division of the Department of Justice, where she made recommendations for appellate and litigation strategy and oversaw administrative functions.
Previous to her government service, Babers was an associate with the law office of Jones, Day, Reavis & Pogue in Washington, DC.
Babers is a 1989 graduate of the Boalt Hall School of Law, University of California at Berkeley.
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IR-2003-84, July 2, 2003
WASHINGTON — The Internal Revenue Service today announced a closing agreement with Ernst & Young, LLP, resolving issues relating to an examination of Ernst & Young’s compliance with the registration and list maintenance requirements regarding the firm’s marketing of tax shelters. The agreement requires Ernst & Young to make a non-deductible payment of $15 million.
In addition to the payment, Ernst & Young has agreed to work with the IRS to ensure ongoing compliance with the registration and list maintenance provisions of the Internal Revenue Code and regulations.  To this end, Ernst & Young will implement a Quality and Integrity Program to ensure the highest standards of practice and ongoing compliance with the law and regulations. The IRS may, upon its request, review documents prepared as part of this program.
“We are pleased that Ernst & Young has cooperated fully with the IRS in resolving these matters,” said IRS Commissioner Mark W. Everson. “In particular, the ability of the IRS to review the firm’s compliance on an ongoing basis will help to reduce the likelihood of future violations of the registration and list maintenance requirements. This represents a real breakthrough and is a good working model for agreements with practitioners.”
“This agreement constitutes a significant development in our continuing efforts to identify potentially abusive tax transactions,” said Everson.
The examination is one of over 90 investigations the IRS has opened of professional service firms.
The closing agreement included a disclosure authorization that allowed the IRS to issue this release. Section 6103 of the Internal Revenue Code strictly limits the IRS in disclosing taxpayer information.
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IR-2003-105, Aug. 28, 2003
Washington — Corporations making estimated tax payments may postpone part of their Sept. 15, 2003, payment due to a provision in the new tax law enacted in May. This law allows 25 percent of the September estimated installment to be made by Oct. 1, 2003.
For example, if a corporation owes an estimated tax payment of $4,000 due Sept. 15, 2003, then the corporation could opt to pay $3,000 (75 percent) by Sept. 15, 2003, and the remaining $1,000 (25 percent) by Oct. 1, 2003.
Generally, corporations use one of two options when making their estimated tax payments: the Electronic Federal Tax Payment System (EFTPS) or by submitting Form 8109, Federal Tax Deposit Coupon, to their financial institution. Neither process is affected by the October 1 payment date.
For more information, you may call the IRS at 1-800-829-4933.
Related Item:

The Electronic Federal Tax Payment System (EFTPS)

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IR-2003-104, Aug. 27, 2003
WASHINGTON — The U.S. and Austrian Competent Authorities have entered into a competent authority agreement. This agreement provides that the U.S.-Austria Income Tax Treaty signed on October 25, 1956, does not prohibit Austria from taxing deferred payments for services earned by U.S. citizens while working and residing in the United States, when such compensation was paid after these employees became residents of Austria. The agreement also confirms, however, that Austria shall deduct from its tax the amount of U.S. taxes imposed on the deferred payments for services, as required by the treaty. The 1956 income tax treaty is applicable for assessment periods up to and including 1998.
Inquiries concerning this agreement may be directed to Mr. Lynn Bartlett of the IRS at (202) 435-5021.
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IR-2003-103, Aug. 22, 2003
WASHINGTON — The U.S. and Swiss competent authorities concluded an agreement on August 20, 2003 regarding the Limitation on Benefits Article of the income tax treaty and accompanying Revised Memorandum of Understanding between the United States and the Swiss Confederation. The agreement provides guidance regarding application of the “derivative benefits” provisions of Article 22(3) of the treaty and paragraph 7 of the Revised MOU, under which a Swiss company may be entitled to treaty benefits based, in part, on the residence of its ultimate beneficial owners.
The agreement provides that certain categories of U.S. residents will be taken into account for purposes of the derivative benefits ownership tests of Article 22(3) and paragraph 7. The qualifying categories of U.S. residents are: individuals who are residents of the United States (as determined under Article 4 of the Treaty); the United States; political subdivisions of the United States; instrumentalities of the United States or a political subdivision thereof; and companies incorporated in the United States whose principal class of shares is primarily and regularly traded on a recognized stock exchange.
To view the text of the U.S.-Swiss Competent Authority Agreement, go to www.irs.gov and click on “Business” in the “Contents” area, then choose “International Business.”
Related Item:
U.S.-Swiss Competent Authority AgreementDOC  (Word 32K)
IR-2003-102, Aug. 20, 2003
WASHINGTON — The IRS is now publishing the Digital Dispatch on a weekly basis instead of biweekly. By sending the e-mail dispatch out each week, the IRS can better help tax professionals stay current with important new developments. 
The Digital Dispatch is a newsletter for tax professionals e-mailed to 100,000 subscribers, free of charge. It provides subscribers with important upcoming tax dates and events, summaries of and links to IRS news releases, alerts, and all of the week’s technical guidance – announcements, notices, revenue procedures and revenue rulings.
Anyone with e-mail and access to the internet can subscribe by visiting IRS.gov.
The IRS provides numerous electronic subscription options besides the Digital Dispatch:

e-News For Tax Professionals is an electronic mail service designed to provide localized, targeted  and immediate information for tax professionals in each state.


IRS Newswire e-mails news releases to subscribers from the National Media Relations Office.


IRS Tax Tips provides daily e-mails of tax information to subscribers during the tax filing season (Jan 1 – April 15) and periodically during the rest of the year. 


Employee Plan News is a newsletter about current developments and upcoming events within the retirement plan arena that is e-mailed to subscribers, quarterly.


Tax Stats Dispatch Mailing List provides subscribers with the announcements about the most recent tax statistics.


SB/SE Mailing List provides  information to subscribers about IRS outreach products and programs for small businesses and self-employed taxpayers.


FSLG Newsletter is e-mailed periodically to subscribers to provide information about current developments and upcoming events of interest to government entities.


“Quick Alerts” e-file Messaging System keeps subscribers in touch with first hand knowledge of processing delays, the moment they happen.

Related Item:

e-News Subscriptions

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IR-2003-101, Aug. 18, 2003
WASHINGTON — The Internal Revenue Service announced today the appointment of Maya A. Bernstein as the agency’s Privacy Advocate. The Privacy Advocate develops policies to protect taxpayer and IRS employee privacy and ensures that they are integrated into all IRS practices and modernization efforts. The Privacy Advocate also ensures that taxpayers and employees are aware of their privacy rights.
  
“We are fortunate indeed to have someone with Maya’s level of expertise directing the IRS’s privacy office,” said David R. Williams, Chief of the Communications and Liaison division, of which the Office of the Privacy Advocate is part. “As technology enables the IRS to modernize, privacy becomes an ever more important issue.”   
Bernstein, an attorney, has special expertise in information policy and electronic commerce, including data protection, privacy compliance and electronic signature law. She comes to the IRS from the private sector, where most recently she was a consultant in information policy and administrative law. Before that, she was an associate at a law firm. 
Previously, she was a Senior Policy Analyst at the Office of Management and Budget.  During her nine-year tenure, Bernstein was responsible for reviewing a wide variety of agency regulations, ensuring compliance by federal agencies with the Administrative Procedure Act, Regulatory Flexibility Act, Paperwork Reduction Act and the policy of the President. She was also OMB’s lead analyst on privacy policy and, in that capacity, routinely advised attorneys throughout the government on implementation of the Privacy Act of 1974.
She has taught courses and lectured on privacy.
Bernstein earned a Juris Doctor, cum laude, from the Washington College of Law, American University, pursued graduate study in the program on Science, Technology and Society at the Massachusetts Institute of Technology, and earned a Bachelor of Arts from the University of Michigan with honors. She is admitted to the bars of California and the District of Columbia.
Related Items
IRS Privacy Policy
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IR-2003-100, Aug. 15, 2003
WASHINGTON — The Internal Revenue Service announced tax relief for those hit by the power blackout in the Northeastern United States. The IRS will consider as timely any tax returns or payments due from today through next Friday, Aug. 22, if they are completed by Aug. 22, 2003. However, the law does not allow the agency to abate interest on any overdue taxes during this period.
While the IRS cannot extend the time for making employment and excise tax deposits, it will waive penalties on such deposits due during this period for affected taxpayers due to reasonable cause if the deposits are made by Aug. 22, 2003.
“We recognize that individuals and businesses will need time to recover after the power is restored, which is why we are granting this additional time,” said IRS Commissioner Mark W. Everson.
For the purposes of this tax relief, affected taxpayers include individuals and businesses located in the blackout area, and those whose tax records, including records needed for tax deposits, are located in the area of the power blackout.
To qualify for this relief, affected taxpayers should put “NORTHEAST BLACKOUT” in red ink at the top of the return relying on this relief. Individuals or businesses located in the blackout area – or taxpayers outside the area that were directly affected by the power blackout – should contact the IRS if they receive penalties for filing returns or paying taxes late.
The IRS will monitor this ongoing situation to determine if any additional relief is warranted.
The IRS toll-free number for general tax questions is 1-800-829-1040.
Related Item:

Labor Dept. release granting additional time for filing Form 5500 (76KPDF)

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Update Sept. 28, 2011 — For current information, see Offer in Compromise Program.
IR-2003-99, August 15, 2003
WASHINGTON — Beginning November 1, 2003, the Internal Revenue Service will charge a $150 application fee for the processing of offers in compromise. The IRS expects that this fee will help offset the cost of providing this service, as well as reduce frivolous claims.
The law authorizes federal agencies to charge fees to defray the costs of providing certain services. Guidelines encourage such fees for benefits beyond those provided to the general public. The IRS anticipates the fee also will reduce the number of offers that are filed inappropriately — for example, solely to delay collection — enabling the agency to redirect resources to the processing of acceptable offers.
“The application fee will provide funding to recover some of the costs associated with the offer in compromise program and reduce the number of inappropriate filings,” said Dale Hart, Commissioner, Small Business/Self-Employed Division.
An offer in compromise (OIC) is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax liability. Under certain circumstances, the IRS has the authority to settle federal tax liabilities by accepting less than full payment. To submit an OIC, a taxpayer must use the May 2001 version of the Form 656 “Offer in Compromise” package.
All taxpayers who file an OIC will have to pay the application fee with their submission unless the offer is based solely on doubt as to liability, or the taxpayer’s total monthly income falls at or below income levels based on the Department of Health and Human Services poverty guidelines. Taxpayers who claim the poverty guideline exception must certify their eligibility using Form 656-A, “Offer in Compromise Application Fee Instructions and Certification.”
Form 656-A, which will not be accepted by the IRS before November 1, will be available soon on IRS.gov.
Related Items:

Offer in Compromise Fee Regulations (see update at top)


What is an Offer in Compromise (see update at top)

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IR-2003-98, Aug. 8, 2003
WASHINGTON — With the final set of advance child tax credit checks being mailed today, the IRS reminds taxpayers they can use IRS.gov to get information about the amount or status of their checks. People who filed after April 15 — for example, those with extensions — will get any advance payment they are entitled to receive after the IRS processes their 2002 return.
About 7.9 million checks totaling $4.8 billion are being sent today, marking the third and final week of the initial mail out of 24 million checks totaling about $14 billion. The checks represent an advance of this year's increase in the child tax credit and generally go to parents who claimed the credit on their 2002 returns.
Taxpayers eligible for the credit who filed their tax return after April 15 or who have yet to file their 2002 tax returns because of an extension, will have their advance child tax credits sent to them after their return is processed. Aug. 15 is the filing deadline for those who filed for an automatic extension.
"The only thing a taxpayer needs to do is cash the check," said Mark W. Everson, IRS Commissioner. "If you qualify, we’ll send you a notice. There's no need to call, no need to apply, no need to fill out another form. The IRS will do all the work."
To find out the amount and mailing date of their check, taxpayers are turning to the “Where’s My Advance Child Tax Credit?” feature on IRS.gov. In less than a month, taxpayers have used this online tool more than 9 million times to check the status of their Advance Child Tax Credit. It provides taxpayers with useful basic information, such mailing dates and a  mounts.
It also explains any adjustments to payments for child support, taxes owed or other federal debts. For those who do not qualify, it provides a description of likely reasons.
Related Item:


Where's My Advance Child Tax Credit?


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WASHINGTON — The Internal Revenue Service today announced there will be a change in the interest rates for the calendar quarter beginning October 1, 2003.  The interest rates are as follows:  

four (4) percent for overpayments [three (3) percent in the case of a corporation];


four (4) percent for underpayments;


six (6) percent for large corporate underpayments; and


one and one-half (1.5) 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 July 2003.
Rev. Rul. 2003-104, announcing the new rates of interest, will appear in Internal Revenue Bulletin No. 2003-39, dated September 29, 2003.
Related Item:  Revenue Ruling 2003-104PDF
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IR-2003-109, Sept. 15, 2003
WASHINGTON — The Internal Revenue Service today reminded approximately 750,000 small and mid-size businesses using “off-the-shelf” retirement plan documents that they must update their plans by Sept. 30, 2003, to maintain the tax benefits. Businesses that act after the deadline must pay a compliance fee to avoid loss of tax benefits.
The Sept. 30 deadline applies to small businesses that obtain certain IRS approved “off-the-shelf” plan documents from plan sponsors, such as banks, brokers, insurance companies, lawyers or consultants. The plans are the so-called Master & Prototype (M&P) plans and Volume Submitter plans. Even though such plans are approved and sponsors have updated them, businesses must still formally adopt the updated plans by Sept. 30. To do so, businesses should contact their plan sponsor.
Some M&P and Volume Submitter plans must also file determination letter requests in order to keep their plans in compliance with the law. In Revenue Procedure 2003-72, the IRS extended the deadline for filing a determination letter request to Jan. 31, 2004, for employers who adopt their plan amendments by the Sept. 30, 2003, deadline.
Employers who fail to amend their plans by Sept. 30, 2003, must apply for a determination letter to avoid plan disqualification, and, under the Revenue Procedure 2003-72, they will also have until Jan. 31, 2004, to apply. But they must pay a $250 compliance fee with their application.
Paul Shultz, director of IRS’s Employee Plans Rulings & Agreements, said, “We’ve heard from the benefits community about the pressure that the fast-approaching deadline will cause on employers, especially small business owners. We’re trying to encourage employers to act now and contact their plan sponsors.”
Both businesses and their employees enjoy tax benefits from retirement plans that are in compliance with the law. Failure – even inadvertent failure – to act by the deadline could cost a retirement plan tax-favored status.
Employers or plan sponsors in need of more information should visit the Retirement Plans Web page, or call customer account services toll-free at 1-877-829-5500.
Related Items:

Retirement Plans


Employee Plans News, Special Edition, August 2003 -- Includes a discussion of Revenue Procedure 2003-72 (64KPDF)


Revenue Procedure 2003-72 (77KPDF)

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IR-2003-108, Sept. 3, 2003
WASHINGTON — Today, the Treasury Department and the IRS announced over-the-counter drugs can be paid for with pre-tax dollars through health care flexible spending accounts. Treasury and IRS issued guidance clarifying that reimbursements for nonprescription drugs by an employer health plan are excluded from income. Thus, reimbursements by health flexible spending arrangements (FSAs) and other employer health plans for the cost of over-the-counter drugs available without prescription are not subject to tax if properly substantiated by the employee. 
"Flexible Spending Accounts are an important tool in helping people meet their health care costs," stated Treasury Secretary John Snow. "Since many prescription drugs have moved to the over-the-counter market, this action today makes paying for them a little bit easier to swallow."
“Flexible Spending Accounts were established under the tax code to provide incentives for better health care,” said IRS Commissioner Mark W. Everson. “This action is a sensible expansion and simplification of the program consistent with existing law.”
Drugs are increasingly becoming available over-the-counter without prescription. Many health plans no longer cover the cost of these drugs as over-the-counter. While an over-the-counter drug is less expensive than the prescription drug, the cost to many consumers increases because the price paid by the consumer for the over-the-counter drug is greater than the co-payment by the consumer when the drug was covered by insurance. This is especially an issue for individuals who remedy chronic health problems by regularly taking an over-the-counter medicine.
Revenue Ruling 2003-102 explains that the statutory exclusion for reimbursements of employee health expenses is broader than the itemized deduction for medical expenses (which does not apply to nonprescription drugs). Thus, the guidance clarifies that employer reimbursements of employee health expenses that are nonprescription drugs, including reimbursements through health FSAs and Health Reimbursement Arrangements (HRAs), are excluded from income like other employer reimbursements of employee health expenses. This will result in savings to consumers with access to employer plans who may purchase nonprescription drugs. 
However, for purposes of the itemized medical expenses deduction, the cost of such over-the-counter drugs continues to be non-deductible.  In addition, the cost of dietary supplements that are merely beneficial to the employee's health are not excluded from income.
Rev. Rul. 2003-102 will be published in Internal Revenue Bulletin 2003-38, dated Sept. 22, 2003.
Related Item: Rev. Rul. 2003-102 (46KPDF)
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IR-2003-107, Sept. 3, 2003
WASHINGTON — The Internal Revenue Service today announced the selection of five new members for the Electronic Tax Administration Advisory Committee (ETAAC). The new members will serve concurrently with, and then replace, five current members whose terms end in 2003.
ETAAC serves as a public forum for discussion of electronic tax administration issues. The group supports the goal of increasing electronic interaction between taxpayers and the IRS.
Currently, the group is comprised of 14 members, including the five outgoing members. The addition of the five new members will ensure continuity when the terms of the current members end. The new members are:

David H. Boucher of Goshen, New York. Boucher is the president of Decision Modeling, Inc. Boucher created the interest analysis software InterestNet, a product used in the federal interest computations.     
	 


Grace Dietrich of Sarasota, Florida. Dietrich is Senior Vice President – Technology with Jackson Hewitt. As the chief information officer for Jackson Hewitt, Dietrich has direct responsibility for electronic filing and bank product processing. 
	 


Mary Jane Egr, of Lincoln, Nebraska. Egr is the state tax commissioner for Nebraska and is responsible for all electronic tax administration in the state of Nebraska. During her tenure, Nebraska has initiated many federal and state electronic options for filing and paying taxes. 
	 


Larry L. Gray of Rolla, Missouri. Gray is the owner of Alfermann, Gray & Co., CPA (AG Investments). Gray is a member of professional organizations such as the National Association of Tax Preparers and the American Institute of Certified Public Accountants, and uses electronic filing and paying in his practice.
	 


Leonard B. Holt of Rome, Georgia. Holt is Vice President, Operations, for Universal Tax Systems, Inc. Holt has successfully used, developed and marketed electronic tax products for a number of companies over the course of his career.

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IR-2003-106, Sept. 2, 2003
WASHINGTON — As the new school year begins, 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 2003 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.
Taxpayers may subtract up to $250 of qualified expenses when figuring their adjusted gross income (AGI) for 2003. 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 Expenses Deduction,” noting the date, amount and purpose of each purchase. This will help prevent a missed deduction at tax time.
This is scheduled to be the last year for this deduction. Last year’s Job Creation and Worker Assistance Act put it in place for 2002 and 2003 only.
For more information, call the IRS Tele-Tax system toll-free at 1-800-829-4477 and select Topic 458, or read it online.
Related Item: Tax Topic 458 — Educator Expense Deduction
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IR-2003-126, Oct. 28, 2003
(Updated 11/3/03 to add Riverside County.)
(Updated 12/5/03 to add incident ending date)
(Updated  2/6/04 to expand disaster description and extend incident ending date)
WASHINGTON — The Internal Revenue Service today announced special tax relief for Southern California residents in the Presidential Disaster Area that was struck by wildfires, flooding, mudflow and debris flow beginning Oct. 21, 2003, and ending Mar. 31, 2004.
The disaster area counties are: Los Angeles, Riverside, San Bernardino, San Diego and Ventura.

The FTD Penalty Waiver Period for employment and excise tax deposits is Oct. 21 - Nov. 7, 2003.


The Extension Period for returns and other tax payments is Oct. 21 through Dec. 29, 2003.


The Disaster Designation for this area is “CA Wildfires” – taxpayers mark certain relief-related forms with this designation.

Relief Provisions
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Update Jan. 6, 2014 — Use Form 656 BookletPDF, Offer in Compromise, to find the correct form to use.IR-2003-124, Oct. 23, 2003
WASHINGTON — Starting Nov. 1, 2003, the Internal Revenue Service will begin charging, with some exceptions, a $150 application fee to process offers in compromise. An offer in compromise (OIC) allows taxpayers to settle their tax liabilities for less than the full amount.
The fee will help offset the cost of providing this service, as well as reduce the number of offers that are filed inappropriately, for example, only to delay collection.
Taxpayers will be exempt from the fee if their monthly income falls at or below levels based on the Department of Health and Human Services poverty guidelines or if they file offers based solely on doubt as to liability. The poverty guideline exception applies only to individuals. Taxpayers who claim the poverty guideline exception must certify their eligibility using Form 656-A, “Offer in Compromise Application Fee Instructions and Certification.”
To submit an OIC, taxpayers must use the May 2001 version of Form 656, "Offer in Compromise." Those requesting an OIC must have filed all required federal tax returns and not be a debtor in a bankruptcy case. If in business, they must also have filed and paid any required employment tax returns on time for the two quarters prior to filing the OIC and be current with deposits for the quarter in which the offer in compromise was submitted.
Those who file an OIC postmarked on or after Nov. 1, 2003, and do not meet one of the exceptions, must submit the application fee using a check or money order made payable to the United States Treasury. Cash payments will not be accepted.
Related Item: IR 2003-99 — News Release announcing OIC application fee
(You may complete and print a fill-in form online,
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IR-2003-119, Oct. 9, 2003
WASHINGTON — The Internal Revenue Service today announced new facsimile guidelines that will make it easier for taxpayers and tax professional to correspond with the agency. The new guidelines will expand the list of documents and information the IRS will accept via fax.
The expanded guidelines stem from recommendations from tax professional organizations. The changes are aimed at reducing the burden on taxpayers and practitioners and shortening the time it takes to resolve tax inquiries and cases. The new guidelines became effective Oct. 1, 2003.  
These guidelines will save time and effort. The changes will mean taxpayers can resolve issues before the IRS more quickly. The IRS also thanks the National Society of Accountants and other tax professional groups who brought this issue forward. The agency is committed to considering any good idea that will ease the burden on taxpayers.
The new fax guidelines apply only to taxpayers and their representatives who are engaged in an on-going contact with the IRS, such as an examination or resolving questions about tax returns that are being processed. The fax can only take place after a discussion with the IRS employee who is requesting the information.
 
These general guidelines are applicable to all divisions and cover operations related to income tax, employment tax, excise tax, estate tax, gift tax, and generation skipping tax, as well as tax exempt and employee plans determinations. While the IRS has previously accepted forms via fax in limited situations (such as 1120-S elections and Powers-of-Attorney) the new guidelines permit an expanded number of forms and other types of documentation to be submitted by fax in the course of many return related inquiries.
Related Item: FAX Guidelines
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IR-2003-117,  Oct. 8, 2003
WASHINGTON — The Internal Revenue Service announced today the appointment of Carl T. Froehlich to head Agency-Wide Shared Services. AWSS develops procedures and implements policy for the IRS’s internal real estate and facilities management, EEO and Diversity, personnel, procurement and customer support activities. 
“Carl brings a wide range of expertise to lead an important part of the IRS,” said IRS Commissioner Mark W. Everson. “AWSS provides the internal support needed to help the IRS fulfill its tax administration mission.”
Froehlich comes to the IRS from the Department of the Treasury, where he was the Director of the Office of Performance Budgeting. Previously, he had been the Director of Strategic Planning and Evaluation, which later merged with the Budget Office to create the Office of Performance Budgeting.
While at Treasury, Froehlich led the department’s effort toward performance budget formulation. He led initiatives to formally link program financial execution, program performance and program budget development. He also was responsible for developing and implementing the department’s strategic plan.
Prior to joining Treasury in 2002, Froehlich was technical director of a consulting firm doing business with the Department of the Navy. Froehlich has also held the position of vice president of an information technology firm.
In June 2000, Froehlich completed 24 years of Navy service. His last active duty position was as Director, Department of the Navy Business Reform, on the staff of the Chief of Naval Operation.
Froehlich received his Master’s of Science in Nuclear Engineering and Bachelor’s of Science in Electrical Engineering degrees from the Georgia Institute of Technology.
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IR-2003-115, Oct. 6, 2003
WASHINGTON — John C. Klotsche, a former chairman with leading international law firm Baker & McKenzie, will join the Internal Revenue Service to help coordinate the agency’s efforts to combat abusive tax shelters and improve enforcement processes.
He will serve as Senior Advisor to IRS Commissioner Mark W. Everson and will also work with Mark E. Matthews, the Deputy Commissioner for Services and Enforcement. Klotsche will assist IRS efforts to prioritize enforcement initiatives and reengineer processes to enhance compliance with the tax laws.
“Along with the arrival of Mark Matthews, John adds to an already strong team of IRS executives,” Everson said. “We are fortunate to have a man of John’s caliber willing to undertake a period of public service. John’s experience in the global corporate and legal environment, combined with his management skills and tax expertise, equip him to make a unique contribution to our ongoing efforts to combat abusive tax shelters.”
Klotsche held a variety of prominent roles at Baker & McKenzie during a 32-year career. He specialized in international tax and financial matters after joining Baker & McKenzie in 1968. He retired in 2000 after serving for five years as chairman of the firm’s Executive Committee.
In his role as chairman, Klotsche had day-to-day management and administrative responsibility for the firm’s global business operations, which included 7,000 employees, 2,500 lawyers, 550 partners and revenues of $1 billion.
Klotsche graduated in 1964 from the University of Arizona with an economics degree. He received his law degree from the University of Wisconsin. After his career with Baker & McKenzie, he has served on several boards and as a consultant to technology companies doing business in the legal industry.
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IR-2003-114, Oct. 6, 2003
WASHINGTON — The Internal Revenue Service has certified the 2004 Toyota Prius as being eligible for the clean-burning fuel deduction. The certification means taxpayers who purchase a new hybrid vehicle may claim a tax deduction of up to $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 current law, the clean-burning fuel deduction will be reduced incrementally until it expires beginning 2007. Purchasers of IRS-certified cars will be able to claim a deduction of $2,000 if the vehicle is placed in service on or before Dec. 31, 2003. The $2,000 maximum deduction will be reduced by 25 percent for vehicles placed into service in 2004, by 50 percent in 2005 and by 75 percent in 2006. No deduction will be allowed for vehicles placed in service after Dec. 31, 2006.
Under the law, the one-time deduction must be taken in the year the vehicle was originally used. The taxpayer must be the original owner. Individuals take this benefit as an adjustment to income on their Form 1040. They do not have to itemize deductions on their tax returns to claim it. To claim the deduction, write “clean fuel” on Line 33 of the 2003 Form 1040. Also, see the Instructions for Form 1040.
The amount of the deduction for the Prius 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 IRS previously certified the Toyota Prius for model years 2001, 2002 and 2003. The IRS also previously certified the Honda Insight for model years 2000, 2001 and 2002 and the Honda Civic Hybrid for model year 2003.
Related Item:  Clean-Fuel Vehicle Deduction for Certain Models
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IR-2003-113 Oct. 2, 2003
WASHINGTON — The Internal Revenue Service is urging tax professionals to be aware of changes that will affect where they send tax returns and payments for clients in 10 states starting in 2004. The changes are a result of redistributing workload among the 10 IRS processing centers to provide better service.
Tax professionals whose clients are in the Metro New York area and Alabama, Arkansas, Delaware, Michigan, Montana, Rhode Island, Tennessee, Utah and Wyoming will be filing their returns with different IRS centers during the 2004 filing season. For clients in Arizona and Washington, they will send returns with payments to different IRS addresses although other returns will continue to go to the IRS center in Fresno.
Because many tax professionals will need the addresses for IRS centers before the tax filing season, the IRS is providing them now. 
For taxpayers who file paper returns, the new center addresses will be provided on the envelopes in the tax packages. Taxpayers who e-file will not be affected by these changes. More than a third of all individuals choose to e-file their federal tax returns.
Related Item: Where to File Tax Returns in 2004 for Tax Professionals (65KPDF)
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IR-2003-133, Nov. 25, 2003

WASHINGTON — IRS Commissioner Mark W. Everson reminded taxpayers they have until Dec. 5 to claim undelivered checks from this summer’s advance child tax credit. After the December cut-off, taxpayers cannot claim the money until they file their tax returns next year.
“Time is running out to get an advance credit check,” Everson said. “I encourage taxpayers to visit IRS.gov to see if they have an undelivered check from the advance child tax credit mail-out.”
Taxpayers need to update their addresses with the IRS by Dec. 5 so their checks, which total more than $50 million, can be reissued. Taxpayers who miss the cutoff won’t miss their child tax credit, however, they simply claim the credit when they complete their 2003 tax return.
“Our Web site makes it easy for taxpayers to track undelivered checks,” Everson said. “Our goal is to get this money back in the hands of the people it belongs to, and we want to get the checks out as soon as possible.”
IRS.gov gives taxpayers a way to track their advance child tax credit by using “Where’s My Advance Child Tax Credit?” available through the IRS home page. Taxpayers enter information including their Social Security number, their filing status (such as single or married filing jointly) and the number of exemptions shown on their 2002 tax return.
“All we need is a good address,” Everson said. “As soon as we get the correct address we can start the check on its way. I urge taxpayers to act before Dec. 5 for the advance payments so we can reissue the checks before the end of the year.”
Taxpayers without access to the Internet who think they may be missing an advance child tax credit check should first check their records or contact their tax preparer before calling the IRS at 1-800-829-1040 to update their address before Dec. 5. 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).

Related Items:

Form 8822, Change of Address (24KPDF)

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Updated March 6, 2008 — Pub. 4221 has been superseded by Pubs. 4221-PCPDF, Compliance Guide For 501(c)(3) Public Charities, and 4221-PFPDF, Compliance Guide For 501(c)(3) Private Foundations
IR-2003-131, Nov. 17, 2003
WASHINGTON — The Internal Revenue Service has published two new brochures to help charities understand the tax laws conferring tax-exempt status.
One brochure is designed to help prospective charities apply for tax exemption under the tax law. The other is a compliance guide that explains the record keeping, return filing and disclosure rules for those organizations.
IRS Publication 4220, Applying for 501(c)(3) Tax-Exempt Status, and Publication 4221, Compliance Guide for 501(c)(3) Tax-Exempt Organizations, are concise, easy-to-use brochures that contain the information most tax-exempt organizations need in order to obtain and maintain their tax-exempt status.
They provide references to other IRS publications and forms, as well as special telephone numbers organizations can call if they need specific help on more complex issues.
Publications 4220 and 4221 are available now on this Web site or can be ordered by calling toll-free 1-800-829-3676.
Related Items:

Publication 4220, Applying for 501(c)(3) Tax-Exempt Status (285KPDF)

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IR-2003-129, Nov. 6, 2003
WASHINGTON — The Internal Revenue Service is seeking nominations for vacancies on the Advisory Committee on Tax Exempt and Government Entities (ACT), which provides a venue for public input into critical tax administrative areas.
Vacancies exist in the following customer segments: employee plans (2 vacancies), exempt organizations (2 vacancies), federal, state and local governments (1 vacancy), Indian tribal governments (2 vacancies) and tax exempt bonds (1 vacancy).
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 (TE/GE) Division.
Members will be appointed by the Secretary of the Treasury and will serve two-year terms, beginning in May 2004. Nominations should reflect the proposed member's qualifications. A notice published in the Federal Register on Nov. 5, 2003, (Volume 68, Number 214) contains more details about the ACT and the nomination process.
Nominations should be sent to Steven Pyrek; TE/GE Communications and Liaison Director; Internal Revenue Service; 1111 Constitution Ave. N.W., SE:T:CL Penn Bldg; Washington, D.C. 20224, or by fax 202-283-9956 (not a toll-free number).
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IR-2003-127, Nov. 3, 2003
WASHINGTON — The Internal Revenue Service reminded taxpayers who took advantage of this year’s low interest rates to refinance their mortgages that they may be eligible to deduct some costs associated with their loans.
Generally, taxpayers who itemize may deduct the “points” paid to obtain a home mortgage as interest. They may deduct the points on the mortgage related to a home purchase or a home improvement in the year paid, but for other loans – such as a refinanced mortgage – they must deduct the points over the life of the loan.
To figure the annual deduction amount, divide the total points paid by the number of payments to be made over the life of the loan. Usually, this information is available from the lender. For example, a homeowner who paid $2,000 in points on a 30-year mortgage (360 monthly payments) could deduct $5.56 per payment, or a total of $66.72 for 12 payments. Taxpayers may deduct points only for those payments actually made in the tax year.
A taxpayer who uses part of the refinanced mortgage money to pay for improvements to the home, and meets certain other requirements, may generally deduct the points associated with the home improvements in the year paid, spreading out the rest of the points over the life of the loan.
When refinancing for a second time, or paying off a loan early, a taxpayer may deduct all the not-yet-deducted points from the first refinancing when that loan is paid off.
Other closing costs, such as appraisal fees and processing fees, generally are not deductible. Taxpayers with adjusted gross income above $139,500 – $69,750 if married filing separately – also face limits on the amount of deductions they can take.
IRS Publication 936, Home Mortgage Interest Deduction, has details on deductions related to refinancing.
Related Item: Pub. 936 (124KPDF)
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