etrent17/irs-articles huggingface dataset:
IR-2004-74, May 27, 2004
WASHINGTON — The Internal Revenue Service’s Advisory Committee on Tax Exempt and Government Entities (ACT) will hold a public meeting June 9, 2004, from 9:00 a.m. to 1:30 p.m. at IRS headquarters, 1111 Constitution Ave., N.W., Washington, D.C.
The 17-member panel includes external stakeholders and representatives who deal with employee retirement plans, tax-exempt organizations, tax-exempt bonds and federal, state, local and Indian tribal governments. ACT members are appointed by the Secretary of the Treasury and generally serve two-year terms. They advise the IRS on operational policies and procedures.
During the meeting, five project teams will present recommendations to the Commissioner and senior leadership of the IRS’s Tax Exempt and Government Entities Division (TE/GE). The projects cover:
Barriers to voluntary compliance by federal, state and local governments,
Indian tribal government guidance priorities,
Employee Plans operational guidance,
Audit cycle time and communications for Employee Plans and Tax Exempt Bonds, and
Enhancing enforcement and compliance efforts in Exempt Organizations.
The project reports and proceedings of the meeting will be made public under the Federal Advisory Committee Act.
Due to limited seating and security requirements, members of the public interested in attending the meeting should call Demetrice Bess to confirm their attendance. She can be reached at 202-283-9954 (not a toll-free number). Attendees are encouraged to arrive at least 30 minutes before the session begins.
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IR-2004-73, May 26, 2004
WASHINGTON — Using the Industry Issue Resolution (IIR) program, the Internal Revenue Service today issued guidance that provides clarification on the treatment by film producers of costs incurred in acquiring and developing screenplays, scripts and other creative properties.
Revenue Procedure 2004-36 provides a safe harbor that permits taxpayers to amortize creative property costs ratably over a 15-year period for properties that are not scheduled for production within three years of acquisition.  
Along with the revenue procedure, the IRS today issued Revenue Ruling 2004-58, informing taxpayers that unless they had formally established an intention to abandon the creative property they cannot claim a loss deduction for the capitalized costs of acquiring and developing the property. Also, should the property become worthless, the taxpayer can only take the related deduction if there is a closed and completed transaction fixed by an identifiable event establishing the worthlessness of the property.     
These two publication items were initiated as a result of an IIR Program request submitted on behalf of the Motion Picture Association of America.
The IIR program, launched in 2001 by IRS, tackles tax issues submitted by taxpayers, associations and other groups representing businesses. The objective is to resolve frequently disputed or burdensome tax issues. 
Information on the Industry Issue Resolution program may be found in Revenue Procedure 2003-36, 2003-18 I.R.B.859.
Related Items:

Revenue Procedure 2003-36PDF


Revenue Procedure 2004-36PDF


Revenue Ruling 2004-58PDF  

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IR-2004-72, May 26, 2004
WASHINGTON — The Internal Revenue Service reminds taxpayers that e-file, its electronic filing service, remains available for their use long after the regular April 15 filing deadline.
The IRS expects some 10 million taxpayers, out of approximately 130 million, to file after April 15. Among these are taxpayers who received an automatic four-month filing extension, filers in certain hardship situations who are eligible for an additional two-month extension and late filers who did not get an extension.
IRS e-file will be available through Oct. 15 to serve these taxpayers.
“The advantages of e-file don’t go away after April 15,” said IRS Commissioner Mark W. Everson. “Millions of taxpayers can still use e-file to submit their returns whether they have an extension or not. No matter what time of the year, e-filing is the fastest, easiest way to do taxes. There are fewer errors, and taxpayers get their refunds in less than half the time of paper returns.”
In addition, several private companies participating in the Free File program will also continue to provide free return preparation and e-filing services to eligible taxpayers through mid-October. About 60 percent of taxpayers qualify for Free File services, which are available through the IRS Web site.
Through May 21, 60 million taxpayers had e-filed their returns, marking a 15.5 percent increase from last year.
E-filing is the best way to avoid tax return problems. It is easier and less prone to errors than traditional paper filing.
And for taxpayers who didn’t get an extension, e-filing offers another advantage: e-filers get their returns to the IRS quicker, reducing the amount of interest and penalties they’ll owe.
Related Items:

IRS e-file


Free File

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IR-2004-67, May 12, 2004
The Internal Revenue Service will host a series of six Tax Forums this summer to help educate and serve the tax practitioner community. The three-day Forums are offered in July, August and September.
Attendance at the Forums, now in their 14th year, has grown steadily. Almost 17,000 tax professionals attended the Forums in 2003, an increase of about 2,000 from the year before.  
The agenda for the 2004 Forums includes seminars on the new IRS e-Services program, retirement plans for small businesses, abusive tax avoidance transactions, the proposed revisions to IRS guidance on ethics and professional responsibility, privacy, faster account resolution, tax law changes and compliance initiatives, among others. The Forums will also continue the popular workshops “Applying for Tax-Exempt Status” and “How to Become an Enrolled Agent.” In addition, practitioners will have an opportunity at each Forum to bring their toughest unresolved case or question to IRS representatives for on-site resolution. IRS employees will also be on hand at each Forum to assist interested tax professionals in completing an application to participate in the IRS electronic return filing program. 
The Forums feature a variety of basic and advanced seminars designed to provide the tax professional community with the latest and most complete information on a variety of IRS programs, practices and policies. In addition to receiving updates directly from top IRS executives, the Forums provide practitioners with an opportunity to meet and exchange ideas with other practitioners and to view vendor exhibits to learn about the latest business technologies.
The National Association of Enrolled Agents, the National Association of Tax Professionals, the National Society of Accountants and the National Society of Tax Professionals will present seminars at the upcoming Forums. The American Institute of Certified Public Accountants is also participating in the Forums this year.
The dates and locations of this year’s six Forums are:

July 6-8 in Atlantic City, New Jersey.


July 20-22 in Orlando, Florida.


August 3-5 in Minneapolis, Minnesota.


August 17-19 in New Orleans, Louisiana.


August 31-September 2 in San Antonio, Texas.


September 14-16 in Las Vegas, Nevada.

Enrolled agents can earn up to 22 continuing professional education credits at each Forum. Other professional groups should consult their prospective licensing group regarding qualifying credits.
The fees for this year’s Tax Forums are $99 per person per city for pre-registration and $200 for late or on-site registration. Pre-registration ends three weeks before the start of each Forum (for Atlantic City, it ends two weeks before). Attendees can now register online.  
For additional information or to register, see the IRS Tax Forum page. Prospective attendees should register early to be sure of reserving hotel accommodations and space at special events.
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IR-2004-66, May 11, 2004
Members of the public who encounter systemic tax problems can now use the Internet to bring them directly to the attention of the IRS Taxpayer Advocate Service.
The Taxpayer Advocate Service is an independent organization within the Internal Revenue Service that helps taxpayers resolve problems with the IRS and recommends changes that will prevent problems.
"Individuals who have identified systemic issues that affect taxpayers on an ongoing basis will find it both easier and faster to use this new system," said Nina E. Olson, the National Taxpayer Advocate. "This will improve our ability to be responsive to taxpayers and speed the process of addressing their ongoing concerns."
Those wishing to bring issues to the attention of TAS can go to /advocate and click on “What is Systemic Advocacy.” Private information, such as taxpayer names and identification numbers, will be screened out of any submissions. The system will also automatically generate a receipt notice for those taxpayers, tax practitioners, academicians and researchers who use it.
Advocacy projects will be initiated on those items that affect multiple taxpayers and relate to IRS systems, policies and procedures.
TAS opens advocacy projects on systemic issues that affect individual taxpayers, business taxpayers or both. In contrast with taxpayer-specific cases, systemic issues affect segments of the taxpayer population — locally, regionally or nationally. The issues require study and analysis, and may require administrative or legislative solutions. The advocacy projects developed from these issues are designed to accomplish four fundamental goals:

Protecting taxpayer rights,


Easing or preventing taxpayer burden,


Ensuring equitable treatment of taxpayers, or


Providing essential services to taxpayers.

To submit suggestions for advocacy projects, taxpayers previously were required to complete IRS Form 14411, “Systemic Advocacy Issue Submission Form,” online and then e mail or fax the submission. While this method is still available, taxpayers generally should find the Web-based application easier to use, Olson said. Taxpayers who lack Internet access can obtain Form 14411 by calling 1-800-TAX-FORM (1-800-829-3676).
Related Item:

Taxpayer Advocate Service

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IR-2004-63, May 3, 2004
WASHINGTON — The Treasury Department and the Internal Revenue Service today issued a revenue procedure providing guidance on the use of statistical sampling in determining deductible business meal and entertainment (M&E) expenses.
“Today’s announcement reflects our goal to impose the least amount of burden necessary for taxpayers to meet their tax responsibilities,” said IRS Commissioner Mark W. Everson. “We’re pleased to take this step and any others that will help reduce burden.”
"Use of statistical sampling in this context significantly reduces taxpayer burden," said Acting Assistant Secretary for Tax Policy Gregory F. Jenner. "Providing guidance on how to use statistical sampling provides certainty and will reduce future controversy."
Deductions for M&E expenses generally are limited to 50 percent of the expense. However, the 50 percent disallowance does not apply to certain M&E expenses. This revenue procedure provides a statistical sampling methodology for use in establishing the amount of substantiated M&E expenses excepted from the 50 percent disallowance. The proper use of statistical sampling will relieve taxpayers, especially those with large M&E accounts, of the burden of scrutinizing each and every item relating to an M&E amount. 
Rev. Proc 2004-29 is available on IRS.gov and will be published in Internal Revenue Bulletin 2004-20, dated May 17, 2004.
Related Item:  Rev. Proc. 2004-29 (268KPDF)
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IR-2004-62, May 3, 2004
WASHINGTON — The National Taxpayer Advocate, Nina E. Olson, announced today that the 2005 Low Income Taxpayer Clinic (LITC) grant application process is now open. Non profit organizations providing free or nominal fee representation to people involved in tax disputes can apply for grants worth up to $100,000 for 2005 grant cycle. Grants are also available for programs that inform taxpayers for whom English is a second language of their tax rights and responsibilities.
The National Taxpayer Advocate sees funding of the low income taxpayer clinics and the provision of free or nominal fee tax representation as a significant step toward a more equitable tax system. The IRS is committed to achieving the maximum access to representation for low income taxpayers possible under the terms of this grant program. The IRS matching grant program encourages the establishment and operation of low income taxpayer clinics across the nation. These clinics provide an important resource to taxpayers who may not be able to afford a tax professional.
The Low Income Taxpayer Clinic grant program is entering into its seventh year and continues to expand. Under the program, the IRS awards matching grants of up to $100,000 a year to develop, expand or continue low income taxpayer clinics. In 2004, the IRS awarded $7.5 million to 135 organizations representing 49 states, the District of Columbia and Puerto Rico.
The application period for the 2005 LITC grant program is from May 1, 2004 to July 1, 2004. Applications for Low Income Taxpayer Clinic grants must be received at Internal Revenue Service, Taxpayer Advocate Service, Mail Stop 211-D, LITC Program Office, 401 West Peachtree St. NW, Atlanta, GA 30308, no later than July 1, 2004. The application package (Publication 3319) is available at /advocate or may be ordered from the IRS Forms Distribution Centerby calling 1-800-829-3676. Applicants can also file electronically at www.grants.gov.
Each application will be given due consideration and the LITC Program Office will mail a notification letter to each applicant. Grant decisions will be made by November 15, 2004, for the grant period commencing in January 2005.
Qualifying tax clinics may be run by either law, business or accounting schools whose students represent taxpayers in tax disputes with the IRS or Tax Court and by tax-exempt organizations. These organizations can represent taxpayers in tax-related matters, refer taxpayers to pro-bono qualified representatives and provide non-English-speaking taxpayers information about their tax rights and responsibilities.

Questions about the LITC Program or grant application process should be addressed to the LITC Program Office at 404-338-7185 or by email at LITCProgramOffice@irs.gov.
Related Items:

Low Income Taxpayer Clinic (LITC) Program and Guidelines


Taxpayer Advocate


E-mail the LITC Program Office

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IR-2004-61, May 3, 2004
WASHINGTON — Tax Commissioners of Australia, Canada, the United Kingdom and the United States have now established a joint task force to increase collaboration and coordinate information about abusive tax transactions by signing a Memorandum of Understanding (attached) in Williamsburg, Virginia on April 23, 2004.
An initial focus of the work will include the ways in which financial products are used in abusive tax transactions by corporations and individuals to reduce their tax liabilities, and the identification of promoters developing and marketing those products and arrangements.
The joint task force will assist the respective tax administrations in addressing challenges arising from abusive tax transactions. While the tax administrations operate primarily within their own borders, many abusive tax transactions employ strategies that cross borders, and many of the promoters of these transactions operate globally. Setting up a joint task force will enable the four countries to:
Share expertise, best practices and experiences in the field of tax administration to identify and better understand abusive tax transactions and emerging schemes, as well as those who promote them.
Exchange information about specific abusive tax transactions and their promoters and investors within the framework of the countries’ existing bilateral tax treaties.
Carry out their individual abusive tax transaction enforcement activities more effectively and efficiently.
"This represents an unprecedented international effort to combat the plague of abusive tax shelters," IRS Commissioner Mark W. Everson said. "The creation of this group sends a strong, unmistakable message to promoters who cross borders to cloak tax schemes. This effort will help us build faith in our country's commitment to a fair tax system."
Officials of the tax administrations will work together in Washington, DC during the initial phase of the task force’s operations. The Commissioners will review the operation of the task force after twelve months.
Related Item — Joint International Tax Shelter Information Centre Memorandum of Understanding (60KPDF)
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IR-2004-86, June 30, 2004
WASHINGTON — Today the Treasury Department and the Internal Revenue Service issued a notice to advise taxpayers that the IRS intends to disallow improper charitable contribution deductions for transfers of easements on real property to charitable organizations and for transfers of easements in connection with purchases of real property from charitable organizations. Taxpayers claiming improper charitable contribution deductions for such transfers may be subject to accuracy-related penalties.
“We’ve uncovered numerous instances where the tax benefits of preserving open spaces and historic buildings have been twisted for inappropriate individual benefit,” said IRS Commissioner Mark W. Everson. “Taxpayers who want to game the system and the charities that assist them will be called to account.”
The IRS is aware that some taxpayers are claiming inappropriate charitable contribution deductions for easement transfers that do not qualify as qualified conservation contributions, or are claiming deductions for amounts that exceed the fair market value of the donated easement.
In addition, the IRS is aware that some taxpayers are claiming inappropriate charitable contribution deductions for cash payments or easement transfers to charitable organizations in connection with the taxpayers’ purchases of real property.
The IRS may impose penalties on promoters, appraisers and other persons involved in these transactions. In appropriate cases, the IRS may challenge the tax-exempt status of the charitable organization, based on the organization’s operation for a substantial nonexempt purpose or impermissible private benefit.
One of the agency’s four service-wide enforcement priorities is to discourage and deter non-compliance within tax-exempt and government entities and misuse of such entities by third parties for tax avoidance and other unintended purposes.
Related Item: Notice 2004-41 (64KPDF) — Charitable Contributions and Conservation Easements
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165K)

Pub. 4303 — A Donor’s Guide to Car Donations  (179KPDF)

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IR-2004-84, June 29, 2004
WASHINGTON — Internal Revenue Service officials today announced the release of two new publications dealing with car donations as part of an effort to help taxpayers avoid potential pitfalls when they donate automobiles to charities.
The first publication, Publication 4302, “A Charity’s Guide to Car Donations,” addresses issues that charities need to know to properly operate car donation programs. The second publication, Publication 4303, “A Donor’s Guide to Car Donations,” is focused on individuals who make such donations.
“We want people and the charities to make sure they are taking the proper steps involving vehicle donations,” said IRS Commissioner Mark W. Everson. ”Supporting charitable activities through tax deductible contributions is an important element of tax law and serves the national interest. But we encourage people to proceed carefully when donating vehicles. There are instances where the donations may provide little benefit to the charity.”
For a taxpayer, the appeal of a car donation is simple: Unload an old car, help a worthy cause and take advantage of tax provisions designed to support the generosity of Americans. Taxpayers who itemize their deductions may be able to claim a charitable contribution for the cars they donate to charity. The deduction may not exceed the fair market value of the car.
In recent years, the number of car donation programs has increased dramatically. This growth, however, has taken place without taxpayers and charities always understanding their obligations under tax law.
Both publications were written in conjunction with state charity officials, as part of an ongoing effort by state and federal officials to work together to educate taxpayers and charities.
Publication 4302, A Charity’s Guide to Car Donations, provides descriptions of several different car donation programs, filing and disclosure requirements for charities operating these programs and related information. Included among the description of vehicle donation programs is an example of an arrangement that would fail to preserve the deductibility of a contribution.
 
Publication 4303, A Donor’s Guide to Car Donations, reminds taxpayer that they need to make sure they are donating their vehicle to a qualified organization, receive a written acknowledgement from the charity, keep records and properly assess the fair market value of their vehicle.
Both publications are intended to assist individual taxpayers and those operating car donation programs to comply with tax law. Related Items:

Pub. 4302 — A Charity’s Guide to Car Donations (165KPDF)


Pub. 4303 — A Donor’s Guide to Car Donations  (179KPDF)

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IR-2004-83, June 25, 2004
WASHINGTON — The Internal Revenue Service announced today that the Pacific Association of Tax Administrators (PATA) has finalized internal operational guidance with respect to mutual agreement procedures (MAP) and bilateral advance pricing arrangements (BAPA). PATA is an inter-governmental organization whose members include Australia, Canada, Japan, and the United States.
The first document is entitled “MAP Operational Guidance for Member Countries of the Pacific Association of Tax Administrators.” The purpose of this MAP guidance document is to facilitate and support resolution of MAP cases among PATA members as well as to ensure consistent and timely treatment of such cases.
The second document is entitled “BAPA Operational Guidance for Member Countries of the Pacific Association of Tax Administrators”. The purpose of this BAPA guidance document is to establish a common approach for treating taxpayers in a fair and consistent manner when seeking a BAPA, to provide a working framework that enables the smooth and timely completion of BAPAs, and to encourage and facilitate the use of BAPAs among PATA members.
The purpose of releasing these internal working documents is to increase the level of transparency in the MAP and BAPA processes within PATA member countries.
Related Items:

Mutual Agreement Procedures (MAP) Guidance (195KPDF)


Bilateral Advance Pricing Arrangements (BAPA) Guidance (177KPDF)

IR-2003-32 — Pacific Association of Tax Administrators Finalizes Transfer Pricing Documentation
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IR-2004-82, June 23, 2004
WASHINGTON — Today, the Internal Revenue Service and the Japanese National Tax Agency respectively have issued guidance regarding the commencement of application of the new income tax treaty between the United States and Japan in each country.
The United States–Japan tax treaty, which was signed on November 6, 2003, entered into force on March 30, 2004. Pursuant to Article 30, the treaty generally is applicable with respect to withholding taxes on July 1, 2004. In the case of U.S. withholding taxes, the treaty is applicable for amounts paid or credited on or after July 1st. In the case of Japanese withholding taxes, the treaty is applicable for amounts taxable on or after July 1st.
The guidance issued today by the IRS provides illustrative examples regarding the application of the new treaty in the case of U.S. withholding taxes on dividends, interest, and royalties. Incorporated in the guidance is an attachment prepared by the Japanese National Tax Agency providing similar illustrative examples regarding the application of the new treaty in the case of Japanese withholding taxes on dividends, interest, and royalties. The Japanese National Tax Agency also has issued guidance providing these illustrative examples and incorporating the U.S. illustrative examples as an attachment.
Related Item:  IRS Guidance on the New U.S.-Japan Tax Convention (16KPDF)
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IR-2004-81, June 22, 2004
[Note: Because of its length, this text is in short Web pages, following the outline below. Items without separate links are with the text before or after them, as appropriate. No text is omitted. To download or print the entire testimony, please use the (487K)PDF.]
Written Statement of Mark W. Everson, Commissioner of Internal Revenue,
before the Committee on Finance, U.S. Senate:
Hearing on Charitable Giving Problems and Best Practices

INTRODUCTION
	 


DETERRENCE OF ABUSES WITHIN TAX-EXEMPT ORGANIZATIONS AND GOVERNMENT ENTITIES

The Need for Enhanced Governance

Specific Examples of Failures in Governance and the IRS Response

Credit Counseling Organizations


Compensation Issues


Terrorist Financing and Charities




Enhancing Governance – The Need for Better Coordination with the States and with Other Federal Agencies

Coordination with States


Coordination with Other Federal Agencies



Enhancing Governance – The Need for More Outreach
		 



DETERRENCE OF THIRD PARTY MISUSE OF TAX-EXEMPT AND GOVERNMENT ENTITIES

Abuse Involving Tax-exempt Accommodation Parties

Offsetting Foreign Currency Option Contracts


The S Corporation Transaction


Problems the IRS Faces in Addressing This Area

Disclosure


Lack of Sanction



IRS Response to Accommodation Party Strategies



Misuse of Tax-Exempt Entities by Donors and Investors

Section 509(a)(3) supporting organizations


Corporations Sole


Donor Advised Funds


Certain Employee Stock Ownership Plans (ESOPs)



In-Kind Donations to Charities—the Problem of Overvaluation and Other Issues

Intellectual Property


Conservation Easements


Vehicle Donations
			 




CONCLUSION

 
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IR-2004-80, June 15, 2004
Internal Revenue Service Commissioner Mark W. Everson today announced the appointment of Linda E. Stiff as deputy commissioner of the agency’s Small Business/Self-Employed Division (SB/SE).
Stiff, a 25-year veteran of the IRS, will help oversee SB/SE, one of four operating divisions within the IRS. The division employs almost 44,000 workers and oversees a variety of compliance programs for individuals and small businesses. It serves 45 million taxpayers.
“Linda brings with her an extensive background in tax administration that will serve her well in this key position,” Everson said. “As the IRS enhances its enforcement efforts, Linda’s strong background in compliance will be a real asset.”
Prior to her appointment, Stiff served as the Director, Compliance in the IRS Wage and Investment (W&I) Division, where she focused on taxpayer groups that demonstrated a high risk of non-payment and returns that posed a high risk of non-compliance.
“Linda’s insight and expertise will help SB/SE move forward on a variety of important areas,” SB/SE Commissioner Kevin Brown said. “She’s a valuable addition to the SB/SE team, and we look forward to working with her.”
Stiff began her IRS career in 1979 as a revenue agent in Jacksonville, Fla., and subsequently advanced into a number of management positions. She has served as the Business Review Executive for the Chief Operations Officer, the National Director of Governmental Liaison and Disclosure, the Chief of Staff to the IRS Commissioner, the Senior Advisor to the Chief Operations Officer and Senior Advisor to the Commissioner of W&I. Stiff also played an important role in the recent IRS reorganization.
She is a graduate of Rollins College in Winter Park, Fla., and holds a Bachelor of Science Degree in Accounting.
Related Item:  Small Business/Self-Employed Division At-a-Glance
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IR-2004-79, June 10, 2004
WASHINGTON — In a letter sent today to national political parties, the Internal Revenue Service reissued guidance regarding political activities by tax-exempt organizations, including churches. The letter supplements information contained in a news release issued by the IRS on April 28th of this year. The IRS has issued a similar news release in each presidential election year since 1992.
“We are sending the letters because we want to ensure that the political committees and the candidates they support understand the rules,” said IRS Commissioner Mark W. Everson. “As Congress considers changes to the law in this area, it is important that political organizations keep in mind the requirements of existing law. Today’s guidance does not represent a change in the rules or a change in how the IRS will administer the law in this area.”
Under the law, organizations described in section 501(c)(3) of the Internal Revenue Code that are exempt from federal income tax are prohibited from directly or indirectly participating or intervening in any political campaign on behalf of, or in opposition to, any candidate for public office. Charities, educational institutions and religious organizations, including churches, are among those that are tax-exempt under this code section. 
If the IRS finds a section 501(c)(3) organization engaged in prohibited campaign activity, the organization could lose its tax-exempt status and be subject to an excise tax on the amount of money spent in that activity.
The political campaign prohibition as it applies to churches is discussed in Publication 1828, Tax Guide for Churches and Religious Organizations. This publication, along with other information about the political campaign prohibition, is available on this Web site. 
Related Items:

Letter on political activity of 501(c)(3) organizationsPDF


Pub. 1828 (1.3MPDF) — Tax Guide for Churches and Religious Organizations


IR-2004-59  — Charities May Not Engage In Political Campaign Activities

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Update — The PO Box and fax numbers are no longer in service. For current information, please see Certification of U.S. Residency for Tax Treaty Purposes.
IR-2004-78, June 8, 2004
WASHINGTON — A new IRS tax form, Form 8802, Application for United States Residency Certification, will make it easier for U.S. individuals and businesses to establish that they are entitled to lower foreign tax rates provided by U.S. income tax treaties.
The United States has tax treaties with many countries, which generally will reduce the statutory tax rate for income paid to U.S. citizens and businesses investing or operating in those countries. Upon receiving proof of U.S. residency, some countries will allow withholding of that country’s tax at the treaty-reduced rate, some even as low as zero.
Beginning July 5, taxpayers who need proof of U.S. residence to qualify for lower treaty rates while working or investing overseas must use Form 8802. As in the past, IRS will then issue a letter that confirms the tax status of the taxpayer for purposes of claiming treaty benefits.
The new Form 8802 replaces the current procedure, which requires the requestor to write a letter to the IRS. “Sometimes the letters we get are incomplete,” said IRS Commissioner Mark W. Everson. “The new form is designed to streamline the process for these certification requests because the form asks for everything we need.”
The IRS issued more than 1.5 million residency certifications in 2003 and is expecting to issue nearly 3 million for 2004, largely because of the increase in investment overseas.
Although the mandatory use of the form does not become effective until July, the IRS will accept and process the new Form 8802 immediately. The form can be either:

Faxed to the IRS at 215-516-1035 or 215-516-2485 (not toll-free numbers), or
Mailed to the following address:
	Internal Revenue Service
	Philadelphia Service Center
	U.S. Residency Certification Request
	P.O. Box 16347
	Philadelphia, PA 19114-0447
	U.S.A.

Generally, processing of the form and issuing the certification takes less than 30 days. “We expect that the form will reduce the time it takes to get a certification and decrease the number of cases requiring additional information or correspondence,” Everson said.
Once received, the certificate of U.S. residency should be included with the application materials required by the country where the individual or business is seeking the reduced tax rate.
Form 8802 is available on the IRS Web site or by calling (toll-free) 1-800-TAX-FORM (1-800-829-3676).
Related Links:

Form 8802PDF, Application for United States Residency Certification (PDF)


Additional Information on Completing the New Form 8802, Application for United States Residency Certification

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IR-2004-76, June 2, 2004
WASHINGTON — The Internal Revenue Service today announced that interest rates for the calendar quarter beginning July 1, 2004, will drop by one percentage point, returning to the levels held from last October through March of this year. The new rates will be:

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 April 2004.
Rev. Rul. 2004-56, announcing the new rates of interest, is available on this site and will appear in Internal Revenue Bulletin 2004-24, dated June 14, 2004.
Related Item:  Rev. Rul. 2004-56 (41KPDF)
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IR-2004-101, July 29, 2004
WASHINGTON — The Internal Revenue Service and the Treasury Department have issued guidance today to ensure the collection of the appropriate amount of tax on imported gasoline, diesel fuel and kerosene.
“When Americans pay their taxes, they need to know their neighbors and competitors are doing the same,” said IRS Commissioner Mark W. Everson. “Non-registered fuel dealers can expect to see stepped up enforcement of compliance with the laws governing imported fuels.”
"We have found that abusive situations exist with regard to fuel imports," said Acting Assistant Secretary for Tax Policy Greg Jenner. "Some of the fuel dealers liable for the tax on imported gasoline, diesel fuel, and kerosene are not registered as required under IRS regulations and are not paying the tax on imported fuel. This not only gives noncompliant dealers a competitive advantage over their compliant competitors, but it also deprives the United States Treasury of revenue intended for the Highway Trust Fund."
The temporary regulations being issued today provide that importers and unregistered dealers are jointly and severally liable for the tax on fuel imported for unregistered dealers. Under existing Customs rules, the IRS will be able to collect any tax that is not paid by either the importer or the unregistered dealer by charging the importer's Customs bond.  Importers can avoid liability for the tax and the possibility of collection from their Customs bond by doing business only with fuel dealers that are registered with the IRS.  The temporary regulations provide a certification procedure that importers can use to verify a fuel dealer's registration.
“The temporary regulations issued today are an important step in halting the nonpayment of taxes due on imported fuel,” said Kevin Brown, Commissioner of the IRS Small Business/Self-Employed Division.
Related Item:  Related Treasury News Release and links to related Regulations
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IR-2004-100, July 29, 2004
WASHINGTON — The Internal Revenue Service and the Treasury Department today announced that tax issues confronting the banking and heavy equipment distributor industries have been selected for the Industry Issue Resolution (IIR) Program, which reviews complex business tax issues to provide consistency and clarity for affected taxpayers.
  
The banking industry issue involves how lending institutions should determine interest income on “non-performing” loans.  There are different book and tax accounting standards for when a loan becomes “non-performing” for purposes of determining interest accruals.
  
The heavy equipment distributor industry issue involves the valuation of parts inventory. Inventory valuation is a factor that determines the “cost-of-goods-sold.” IRS and the industry will seek to determine a valuation method that reduces burden and provides certainty and consistency for affected taxpayers.
  
"The IIR program provides clarity and consistency to complex tax issues, while reducing the burden for taxpayers,” said Large and Midsize Business Commissioner Deborah M. Nolan. “These are issues that can be resolved up front for all affected taxpayers so that they do not become contested issues downstream during tax audits on a case-by-case basis.”
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, including restaurants, gas stations, day-care providers, health-care providers, cable television and car dealerships. 
 
Business associations and taxpayers can submit at any time tax issues that they believe could be resolved though the IIR program.  The IIR project selection criteria and submission procedures are in Revenue Procedure 2003-36 available at IRS.gov.
Related Item:  Industry Issue Resolution Program Submissions (PDF 92KPDF)
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IR-2004-98, July 28, 2004
WASHINGTON — Today the Internal Revenue Service (IRS) released Rev. Rul. 2004-80. This revenue ruling applies the primarily designed test in section 145.4051-1(e)(1) and (2) of the Temporary Excise Tax Regulations Under the Highway Revenue Act of 1982 (Pub. L. 97-424) for purposes of determining whether a vehicle is a truck or a highway tractor.
The characterization of a vehicle as a truck or as a tractor is significant because the first retail sale of all highway tractors, regardless of size or use, is subject to the retail excise tax imposed by section 4051. Trucks under a certain weight, however, are not subject to this tax.
This guidance results from the Industry Issues Resolution (IIR) Program. Under IIR, taxpayers, associations and other groups representing businesses submit frequently disputed or burdensome tax issues for review. The goal, where possible, is to resolve these differences by providing more effective guidance.
“Our IIR teams take a detailed look at contentious tax issues facing industry,” said Director, Pre-filing and Technical Guidance, Kathy Petronchak. “We want to encourage other business representatives to submit issues for the program.”
Revenue Ruling 2004-80 will be in Internal Revenue Bulletin 2004-32, dated August 9, 2004, and will be posted on the IRS.gov  Information on the IIR Program and how to submit business tax issues for the program can be found in Rev. Proc. 2003-36, 2003-18 I.R.B. 859 (also available at the IRS.gov).Related Item:  Revenue Ruling 2004-80 (49KPDF)
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IR-2004-96, July 21, 2004
WASHINGTON — A modernized system designed to replace the IRS central database of taxpayer account information has processed its first live returns, the Internal Revenue Service announced today.
The Customer Account Data Engine (CADE) started processing an initial set of 1040EZ tax returns in the past week. The returns being processed are the most basic of 1040EZ forms and have a narrow range of taxpayer information, but it marks the first time since the 1960s that individual tax returns have been processed in a new way.
“For the first time in 40 years, the IRS is processing returns and issuing refunds on a new computer system,” IRS Commissioner Mark W. Everson said. “We’ve waited a long time for this moment. While long overdue, this is an important first step in modernizing our return processing technologies. We still have a long way to go and a lot of work ahead of us.”
CADE will be used to process more than 2 million 1040EZ tax returns during the 2005 filing season. The CADE system is scheduled to be phased in over several years, processing increasingly more complex tax returns in stages, ultimately replacing the 40-year-old system the IRS now uses to process tax return data.
When fully operational, CADE will be a modern database that will house tax information for more than 200 million individual and business taxpayers. It replaces an antiquated system called the Master File. The magnetic tape-based system came into use four decades ago, takes a week to update records and creates delays in providing accurate account information for taxpayers. When completed, CADE will provide a variety of benefits to taxpayers, such as faster refunds along with daily postings of transactions and updating of accounts.
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IR-2004-95, July 15, 2004
WASHINGTON — The Internal Revenue Service today formally unveiled an updated strategic plan that outlines three broad goals for the agency through 2009: Improved service to taxpayers, enhanced enforcement of the tax laws and modernized business processes and technology.

This Strategic Plan provides a roadmap for IRS operations over the next five years. It underscores the IRS commitment to providing excellent service to taxpayers and enforcing America’s tax laws in a balanced manner. Service and enforcement are equally important priorities for the IRS.
“In recent years, the IRS has made significant progress in improving service,” IRS Commissioner Mark W. Everson said. “While the agency’s commitment to service continues, the IRS must now sharpen the focus on enforcement.”
The strategic plan supports the agency’s key enforcement priorities:
Discourage and deter non-compliance, with emphasis on corrosive activity by corporations, high income individual taxpayers and other contributors to the tax gap.
Assure that attorneys, accountants and other tax practitioners adhere to professional standards and follow the law.
Detect and deter domestic and off-shore based tax and financial criminal activity.
Discourage and deter non-compliance within tax-exempt and government entities and misuse of such entities by third parties for tax avoidance and other unintended purposes.
Everson emphasized that IRS enforcement programs must rest on a sound foundation of taxpayer rights.
The strategic plan’s third priority is to improve the efficiency of the tax administration system through modernization efforts that build upon the success of the e-file program and other recently introduced electronic tools for individual and business taxpayers. In addition to its emphasis on technological improvements, the modernization portion of the plan also focuses on implementation of streamlined business processes, productive work environments and security upgrades.

The plan was reviewed and approved by the IRS Oversight Board, which was created by the IRS Restructuring and Reform Act of 1998 to oversee the tax agency. A majority of the board’s members are from the private sector.
“The Board compliments Commissioner Everson on this new five-year plan,” IRS Oversight Board Chair Nancy Killefer said. “This is a balanced plan. It will help the IRS to continue to build on its customer service successes while addressing troubling deficiencies in enforcement and business systems modernization that the Board has previously noted in both its annual and budget reports.”
The IRS also received feedback from other groups, including the IRS Advisory Council, the Information Reporting Program Advisory Committee and the Federation of Tax Administrators.
“It is clear that in developing the plan the Service has given careful attention to all the competing needs of tax administration; we expect that this plan will serve the agency well in coming years,” said Harley Duncan, executive director of the Federation of Tax Administrators. “The strategy addresses all of the key challenges facing tax authorities.”
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IR-2004-94, July 13, 2004
WASHINGTON — The IRS has issued guidance today that relieves health insurance providers from preparing IRS Form 1099-H, “Health Coverage Tax Credit (HCTC) Advance Payments.” Unless the health insurance providers choose to prepare the form, the IRS HCTC Program Office will prepare the form, file it with the IRS and provide copies to the appropriate taxpayers.
Taxpayers who are eligible for the Health Coverage Tax Credit may receive the credit either in advance, to help pay qualified health plan premiums as they come due, or in a lump sum when they file their federal tax return. Approximately 250,000 individuals are potentially eligible for the HCTC. The IRS HCTC Program’s transaction center issues payments to the health insurance companies on behalf of eligible taxpayers claiming the credit in advance. In May 2004, payments were made to almost 600 health plans on behalf of one or more of their enrollees who claimed the HCTC in advance. Since the HCTC Program Office already has all the necessary financial information, it can file the form, relieving the health insurance company of that burden.
Normally, health insurance companies would provide Form 1099-H in January 2005 to taxpayers who received the advance Health Coverage Tax Credit payments in 2004 and also file the forms with the IRS in February 2005. Today’s guidance, Notice 2004-47, relieves these companies of their obligation to provide Form 1099-H to recipients and to file it with the IRS, and applies as well to forms the providers would otherwise have had to provide and file in 2004.
Related items:

HCTC Overview


Notice 2004-47PDF

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