etrent17/irs-articles huggingface dataset:
IR-2004-92, July 7, 2004
WASHINGTON — The Treasury Department and the Internal Revenue Service today issued a revenue procedure that streamlines the disclosure by taxpayers of transactions with a significant book-tax difference. This revenue procedure eliminates the overlap between the revised return disclosure regulations finalized in February 2003 and the new Schedule M-3 that the IRS also issued today. In addition, this revenue procedure simplifies the reporting of book-tax differences by businesses that are not required to complete the new Schedule M-3.
Some taxpayers engaging in abusive transactions have benefited from the different rules for financial, or book, accounting and tax accounting by claiming tax benefits that have no corresponding financial cost. The new Schedule M-3 requires all C corporations under the jurisdiction of the IRS Large and Mid-Size Business Division (LMSB) to disclose detailed information about book-tax differences as part of their tax returns for 2004 and later taxable years. These corporations will be treated as satisfying the disclosure requirements under the return disclosure regulations by completing the new Schedule M 3. In addition, taxpayers that are not required to file the new schedule may satisfy their disclosure obligations by using the standardized reporting format contained in the new Schedule M-3 or by following the return disclosure regulations.
"Large book-tax differences frequently indicate the existence of an abusive transaction. The new Schedule M-3 will enable the IRS to identify quickly those differences that warrant additional scrutiny," said Acting Assistant Secretary for Tax Policy Greg Jenner. "By allowing all taxpayers to use the new Schedule M-3, the revenue procedure will simplify reporting and reduce taxpayer burden."
“The alternative reporting under the revenue procedure will provide taxpayers flexibility in deciding how to disclose significant book-tax differences and will encourage taxpayers to adopt the standard format of the new Schedule M-3 earlier,” said Deborah M. Nolan, IRS Large and Mid-Size Business Division Commissioner.Related Item:

Revenue Procedure 2004-45 (17KPDF)


IR-2004-91, Treasury and IRS Issue Revised Tax Form for Corporate Tax Returns

Subscribe to IRS Newswire
IR-2004-90, July 6, 2004
WASHINGTON — The IRS has issued guidance today to health insurance companies and health maintenance organizations (HMOs) giving them more than 2½ months from the end of their tax year to make incentive payments and still take the related deduction.
Health insurance companies and HMOs have developed arrangements with physicians, groups of physicians and other health care providers where, after the end of the insurer’s taxable year, they make incentive payments to the health care providers for meeting objectives related to providing quality health care in a cost-efficient manner.
Normally, the company could not take a deduction for the payments for the year for which the incentive payment applies if they were made more than 2½ months after the end of the taxable year. These companies face unique administrative challenges in performing the relevant calculations, and often need more than 2½ months to collect the necessary data and complete those calculations. Under the guidance issued today, these companies will not be held to the 2½-month period.
“We believe that this guidance eliminates any controversy over treatment of incentive payments to physicians and other health care providers and relieves health insurers and HMOs of an administrative burden that is unnecessary, in light of the special rules that apply to insurance companies under the tax law,” said Deborah Nolan, Commissioner of the Large and Mid-Size Business Division of the Internal Revenue Service. “This guidance was a direct result of IRS employees working with representatives of the health insurance industry to solve tax problems through the Industry Issue Resolution program.”
The Industry Issue Resolution (IIR) program was launched in 2001 by the IRS and tackles tax issues submitted by taxpayers, associations and other groups representing businesses. The objective is to resolve frequently disputed or burdensome tax issues more efficiently.
The guidance is contained in Revenue Procedure 2004-41. Information on the IIR program is found in Revenue Procedure 2003-36.
Related Items:

Revenue Procedure 2004-41, (25K)PDF


Revenue Procedure 2003-36, (82K)PDF

Subscribe to IRS Newswire
IR-2004-91, July 7, 2004
WASHINGTON — To increase the transparency of corporate tax return filings, today the Treasury Department and Internal Revenue Service released a draft of the final version of the Schedule M-3, Net Income (Loss) Reconciliation for Corporations with Total Assets of $10 Million or More, for use by certain corporate taxpayers filing Form 1120, U.S. Corporation Income Tax Return. The original draft version of Schedule M-3 was released for public comment on Jan. 28, 2004.
Schedule M-3 is effective for any taxable year ending on or after Dec. 31, 2004, and, in general, must be filed by a corporation required to file Form 1120, U.S. Corporation Income Tax Return, that reports on Form 1120 at the end of the corporation’s taxable year total assets that equal or exceed $10 million. However, a corporation required to file Schedule M-3 is only required to complete certain sections of Schedule M-3 in the first taxable year the corporation is required to file Schedule M-3.
“The purpose of this project has been to make differences between financial accounting net income and taxable income more transparent. Schedule M-3 accomplishes this. Schedule M-3 provides information that will identify taxpayers that may have engaged in aggressive transactions and therefore should be audited,” stated Acting Treasury Assistant Secretary for Tax Policy Greg Jenner.
"The new disclosures will help us target our examination efforts on high-risk areas, thereby improving and speeding the audit process," said IRS Commissioner Mark W. Everson.
"The increased transparency and uniform reporting requirements for corporate taxpayers filing Schedule M-3 will allow agents to swiftly focus on emerging issues and evolving business trends. This will result in a quicker and more current and efficient examination process aimed at those returns with the greatest compliance risk," said Deborah M. Nolan, IRS Large and Mid-Size Business Division Commissioner.
The Schedule M-3, the draft instructions for Schedule M-3 released on March 11, 2004, and a set of Frequently Asked Questions to assist corporations, practitioners, and programmers preparing to implement Schedule M-3 are linked below. The final instructions for Schedule M-3 will be released later this year and will also be available on IRS.gov.

Related Links:

Final draft Schedule M-3 (47KPDF)


Draft Schedule M-3 instructions (82KPDF)


Schedule M-3 Frequently Asked Questions (160KPDF)


IR-2004-92, Treasury, IRS Streamline Reporting of Significant Book-Tax Differences

Subscribe to IRS Newswire
IR-2004-112, Aug. 30, 2004
WASHINGTON — The Internal Revenue Service today announced there will be a one percentage point increase in the interest rates for the calendar quarter beginning October 1, 2004. The interest rates are as follows:

five (5) percent for overpayments [four (4) percent in the case of a corporation];


five (5) percent for underpayments;


seven (7) percent for large corporate underpayments; and


two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.  Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points.  The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.  The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during July 2004.
Related Item: Revenue Ruling 2004-92PDF
Subscribe to IRS Newswire
IR-2004-111, Aug. 23, 2004
WASHINGTON — The Internal Revenue Service today announced the selection of Donald T. Rocen as Acting Deputy Chief Counsel for Operations. In this role, Rocen will direct approximately 1,000 attorneys serving the IRS operating divisions and other specialized areas and oversee the Office of Chief Counsel’s nationwide tax litigation, non-tax legal services and managerial support programs.
Rocen joined the Office of Chief Counsel in May as Special Counsel to the Chief Counsel after serving in the Washington, D.C., office of PricewaterhouseCoopers, LLP, since 1989.
“Don is reentering public service as the IRS continues to increase its emphasis on enforcement and compliance,” Chief Counsel Donald Korb said. “Don’s previous experience at the IRS and in the private sector will serve us well at this critical time.”
At PricewaterhouseCoopers, Rocen worked on the resolution of a wide range of federal tax compliance issues. His consulting engagements involved clients in the energy, utility, entertainment, media, manufacturing, financial services and technology industries.
Prior to his work for PricewaterhouseCoopers, Rocen served from 1986 to 1989 as Assistant to IRS Commissioner Lawrence B. Gibbs, focusing on technical guidance in such areas as income tax accounting, pension and exempt organizations, tax exempt bonds, excise taxes and compliance procedures. From 1971 to 1986, he served in a number of Office of Chief Counsel positions, including docket attorney in the General Litigation Division, branch chief and assistant director in the Disclosure Litigation Division, trial attorney in the Denver District Counsel Office and, finally, deputy associate chief counsel, litigation.
Rocen received an advanced law degree in taxation from Georgetown University in 1976. He was awarded a law degree from Northwestern University School of Law in 1970 and a bachelor’s degree from John Carroll University in 1967.
Rocen’s selection, which was effective July 27, is subject to confirmation by the Office of Personnel Management.
Subscribe to IRS Newswire
IR-2004-108, Aug. 16, 2004
(Updated 8/24/04 to add Flagler County)
(Updated 8/31/04 to add incident ending date)
(Updated 9/10/04 to lengthen Extension Period from Oct. 15 to Dec. 30)
WASHINGTON — The Internal Revenue Service today announced special tax relief for taxpayers in the Presidential Disaster Area that was struck by Tropical Storm Bonnie and Hurricane Charley during the period Aug. 11-30, 2004.
Taxpayers in 26 Florida counties generally will have until Dec. 30 to file tax returns and submit tax payments. The IRS will abate interest and any late filing or late payment penalties that would apply.
“Storm victims shouldn’t be worrying about taxes at a time like this,” said IRS Commissioner Mark W. Everson. “The special tax relief announced today will give people more time to file and pay their taxes.”
The IRS announcement coincides with Aug. 16, which is the national deadline for almost 8.5 million taxpayers who received an automatic extension to file tax returns originally due on April 15.
The disaster area consists of 26 Florida counties: Brevard, Charlotte, Collier, DeSoto, Dixie, Duval, Flagler, Glades, Hardee, Hendry, Highlands, Indian River, Lake, Lee, Levy, Manatee, Monroe, Okeechobee, Orange, Osceola, Pasco, Polk, St. Johns, Sarasota, Seminole and Volusia. Among the tax relief details:

The Federal Tax Deposit (FTD) Penalty Waiver Period for employment and excise tax deposits is Aug. 11-23, 2004.


The Extension Period for returns and other tax payments is Aug. 11 – Dec. 30, 2004.


The Disaster Designation for this area is “Bonnie/Charley” — taxpayers mark certain relief-related forms with this designation.

Relief Provisions
Related items:
Notice 2004-66 (22KPDF) — Owners of certain housing projects in Florida will not lose their low-income housing credits if they temporarily rent vacant units to persons displaced by Hurricanes Charley or Frances without regard to income.
	 
Notice 2004-62 (22KPDF) — Relief for certain employee benefit plans in the Florida counties declared disaster areas because of the storms Bonnie, Charley or Frances. These plans will have until Oct. 15, 2004, to make minimum funding contributions, or apply for waivers, if the deadline for such actions was from Aug. 11 through Oct. 14, 2004.
	 
FL 2004-11 / NFL 2004-15 — Businesses unable to deposit taxes may still get penalty relief
	 
IR-2004-115 — Relief for Floridians hit by Hurricane Frances
Subscribe to IRS Newswire
IR-2004-107, Aug. 13, 2004
WASHINGTON — The Internal Revenue Service Office of Chief Counsel today announced the selection of Jonathan Zelnik as acting Senior Counsel to the Chief Counsel. In this role, Zelnik will be the primary adviser on abusive tax transactions to the Chief Counsel.
"Halting the promotion and use of abusive tax schemes is one of my top priorities," IRS Chief Counsel Donald Korb said. “We have many talented and dedicated attorneys in Counsel working on shelters, and the Senior Counsel will play a key role as my principal advisor in achieving this goal. Jonathan’s background analyzing complex tax shelters and experience in the Office of Chief Counsel make him a solid choice for this important position.”
As Senior Counsel, Zelnik works with the IRS and Treasury's Office of Tax Policy to identify, analyze and issue timely administrative guidance to address abusive transactions. The Senior Counsel's role is to improve how the Office of Chief Counsel addresses abusive shelters, from improving communication and coordination within Counsel to helping the IRS identify and stop the marketing of abusive shelters in a timely manner.
To date the IRS and Treasury have identified 31 listed tax transactions–potentially abusive schemes that must be disclosed to the IRS. Recently listed transactions address complex, questionable situations involving partnerships, S corporations, foreign tax credit intermediary transactions, Roth IRA transactions, employee stock ownership plans, and offsetting foreign currency option contracts.
Zelnik has worked for Chief Counsel since October 1994. A 1994 graduate of Loyola Law School in Los Angeles, he started in the Office of the Assistant Chief Counsel, Financial Institutions and Products. Later he became the Senior Legal Counsel, Corporate Tax Shelters, in the Office of the Division Counsel for Large and Mid-Size Business and most recently was Special Counsel to the Senior Counsel.
Zelnik’s appointment, which was effective July 27, is subject to certification by the Office of Personnel Management.
Related link: Tax Shelter Updates
Subscribe to IRS Newswire
IR-2004-106, Aug. 10, 2004
WASHINGTON — The Internal Revenue Service today announced a new enforcement effort to identify and halt abuses by tax-exempt organizations that pay excessive compensation and benefits to their officers and other insiders.
As part of the Tax Exempt Compensation Enforcement Project, the IRS will contact nearly 2,000 charities and foundations to seek more information about their compensation practices and procedures. The IRS said the enforcement project will consist of examinations as well as other contacts. Because part of the project’s objective is to gather information regarding current practices, contact by the IRS should not necessarily imply improper activity by an organization.
“We are concerned that some charities and private foundations are abusing their tax-exempt status by paying exorbitant compensation to their officers and others,” said Mark W. Everson, Commissioner of the Internal Revenue Service.
“Particular organizations that we contact may or may not have problems in the compensation area, but specific aspects of their operations have raised questions that must be answered,” he said. “The IRS has an obligation to investigate questionable compensation practices and put a stop to abuses we find,” he said. “We won’t let the misbehavior of a few organizations damage the credibility of the vast majority of law-abiding charities and foundations.”
The purposes of this project are to:

address the compensation of specific individuals or instances of questionable compensation practices,


increase awareness of tax issues as organizations set compensation in the future,


learn more about the practices organizations are following as they set compensation and report it to the IRS and the public on their annual Form 990 returns.


The initiative will focus on particular areas including the compensation of specific officers and various kinds of insider transactions, such as loans and the sale, exchange or leasing of property to officers and others. The IRS will also focus on Form 990 reporting, including how organizations answered question 89(b) on their Form 990 — about excess benefit transactions — and other compensation information.
The IRS began this enforcement project at the end of July and says it will continue into 2005.
Related link: IR-2004-81, Testimony: Charitable Giving Problems and Best Practices
 
Subscribe to IRS Newswire
IR-2004-105, Aug. 4, 2004
WASHINGTON — The Internal Revenue Service is launching a new service to make technical guidance available via e-mail to tax professionals when the documents are issued.
“This is an easy way for tax professionals to get copies of important guidance quickly and directly,” said IRS Chief Counsel Don Korb. “This is a valuable resource tool for people who need time-sensitive guidance in advance of publication in the Internal Revenue Bulletin.”
Through the IRS Guidewire list server, subscribers will receive notification of and links to IRS announcements, notices, revenue procedures and revenue rulings as they are issued. To subscribe to the service, individuals should request being added to the list server by going to the Subscribe to IRS GuideWire page.
The IRS has several other e-mail services available besides Guidewire:

A weekly summary of IRS technical guidance and other important news is available by subscribing to the Digital Dispatch.


News releases are available on a same-day basis through the IRS Newswire.


IRS Tax Tips provides helpful tax information for taxpayers. Tax Tips are distributed on a daily basis during the filing season in January through April and periodically through the rest of the year.

These services and others are available on the Newsroom at “ e-News Subscriptions.”
Related Item:  IRS GuideWire subscription page
Subscribe to IRS Newswire
IR-2004-103, Aug. 2, 2004
WASHINGTON — Most taxpayers already have filed their tax year 2003 federal income tax returns. But for almost 8.5 million taxpayers who opted for the automatic extension of time to file, the deadline is August 16.
The IRS reminds extension filers that e-filing remains available. So far this year, more than 60 million returns have been e-filed.
“Why not e-file? More than 60 million Americans already have,” said IRS Commissioner Mark W. Everson. “No matter what time of the year, e-filing is the fastest, safest, easiest way to do taxes. There are fewer errors, and taxpayers get their refunds in less than half the time of paper returns.”
The Internal Revenue Service reminds taxpayers with extensions to file their returns by August 16 to avoid the late filing penalty, which is 5 percent per month of the unpaid tax. Help may be available, however, for people who cannot file by August 16.
Taxpayers with special circumstances, such as a hardship, that prevent them from preparing and filing their tax forms by August 16 may request an additional two-month extension by completing Form 2688, giving them until October 15 to file their income tax returns. These taxpayers will be granted an extension of time to file even if they cannot send in payment of outstanding 2003 taxes with the extension request.
Taxpayers granted the additional time to file will not be penalized for late payment of tax if they pay the balance of their 2003 tax when they file the tax return by October 15, provided 90 percent of their total tax was paid by April 15. However they will owe interest on any taxes not paid by April 15.
To request the additional time to file, taxpayers must file Form 2688 with the IRS by August 16. Form 2688 is available on the IRS Web site, IRS.gov. Form 2688 can be filed electronically or mailed to the IRS.
The IRS will advise filers in writing whether or not their requests are granted. Approval for those who file electronically will be sent back on the Acknowledgement Record.
The IRS expects to receive more than 3 million Forms 2688 during 2004.
To e-file, taxpayers can use tax preparation software on their own computers or file electronically through an authorized e-file provider. Both options offer taxpayers security and accuracy in filing their returns as well as faster refunds. Taxpayers may continue to take advantage of electronic filing and the Free File program until October 15. Free File enables qualifying taxpayers to e-file for free; 3.48 million taxpayers have used Free File to e-file their tax returns this year.
Once taxpayers have filed their tax returns, they can use the “Where’s My Refund” feature on IRS.gov to check the status of their refund checks.
Related Items:

Free File Home Page

Subscribe to IRS Newswire
IR-2004-121, Sept. 30, 2004
WASHINGTON — Although most taxpayers have long since filed their 2003 federal income tax returns, the Internal Revenue Service said today that more than a million people still face the Oct. 15 deadline.
However, there are many taxpayers in presidentially declared disaster areas who have been granted additional time to file their tax returns. These extension affect taxpayers in parts of Alabama, Florida, Georgia, Louisiana, Mississippi, Pennsylvania, North Carolina, Ohio and Virginia.
The IRS reminded taxpayers who received an additional extension in August that they should file their returns by Oct. 15 to avoid the late filing penalty, which is generally 5 percent per month of any unpaid tax. Last year, the IRS received more than 2 million returns in October.
Taxpayers may file returns electronically until Oct. 15; some may be able to file for free through the free file program through IRS.gov. Taxpayers may use tax software on their own computers or e-file through an authorized provider. These options offer taxpayers security and accuracy in filing their returns, as well as faster refunds.
Taxpayers who already filed a timely tax return are approaching the deadline for recharacterizing — or reversing — a 2003 conversion of a traditional IRA to a Roth IRA. This might be desirable because of a sharp decline in the IRA’s value. To do so, a taxpayer must arrange with the IRA trustee to complete the recharacterization by Oct. 15. An amended tax return may get the taxpayer a refund on the resulting lower income.
Related Items:

Free File


Electronic Payment Options

Subscribe to the IRS Newswire
IR-2004-120, Sept. 28, 2004
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 starting in 2005. The changes are a result of redistributing workload among the seven IRS processing centers to provide better service.
For tax year 2004, the changes affect returns, with or without payments, from Connecticut and Virginia and for returns with payments from Arizona and Utah.
Tax professionals should send:

Returns from Connecticut without payments to the IRS in Kansas City, Mo., 


Returns from Connecticut with payments to the IRS in St. Louis, Mo.,


Returns from Virginia without payments to the IRS in Fresno, Calif., and


Returns from Arizona, Utah and Virginia with payments to the IRS in San Francisco. 

Because many tax professionals will need the addresses for IRS centers before the tax filing season, the IRS is providing them now.  The addresses for all of the states are attached.
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.  Almost half of all individuals chose to e-file their federal tax returns in 2004.
Related Item:  Where to file list for tax professionals.
Subscribe to IRS Newswire
IR-2004-119, Sept. 23, 2004
WASHINGTON — The Internal Revenue Service today announced it will expand the number of small businesses eligible to file a simplified expense form, a move that will save money and reduce paperwork burden.
The IRS will double the business expense threshold to $5,000 from $2,500 for filing the Form 1040, Schedule C-EZ. The change will mean a savings of 5 million hours of paperwork burden for small business taxpayers. The threshold change means approximately 500,000 more small businesses – a 15 percent increase – will be able to file the Schedule C-EZ.
“This is another example of the IRS taking the lead in reducing the burden on taxpayers. The IRS’ Office of Taxpayer Burden Reduction is continually reviewing what steps we might take that will save money and work hours for both businesses and individuals,” said Mark W. Everson, Commissioner of the IRS.
The Form 1040, Schedule C-EZ was first established in 1992. It was intended to make it easier for small businesses with modest expenses to file a simplified form. Small business owners that file a Form 1040 use the Schedule C to report profits and expenses.
Related Items:

Congressional Statements


Schedule C-EZ (73KPDF)


Schedule C (119KPDF)

Subscribe to IRS Newswire
IR-2004-118, Sept. 22, 2004
(Updated 9/24/04 to add 41 Alabama counties)
(Updated 10/12/04 to add 12 Alabama counties)
(Updated 12/10/04 to add 22 Florida counties)
WASHINGTON — The Internal Revenue Service today announced special tax relief for taxpayers in the Presidential Disaster Areas of four Gulf Coast states struck by Hurricane Ivan – Alabama, Florida, Louisiana and Mississippi.
These taxpayers generally will have until Dec. 30 to file tax returns and submit tax payments. The IRS will abate interest and any late filing or late payment penalties that would apply. This relief includes the Sept. 15th due date for estimated taxes and for calendar-year corporate returns with automatic extensions
“Hurricane victims have more than enough concerns – taxes shouldn’t be among them,” said IRS Commissioner Mark W. Everson. “We hope our relief provisions will help taxpayers in their financial recovery from this storm.”
The disaster areas include:

65 Alabama counties: Autauga, Baldwin, Barbour, Bibb, Blount, Bullock, Butler, Calhoun, Chambers, Chilton, Choctaw, Clarke, Clay, Coffee, Colbert, Conecuh, Coosa, Covington, Crenshaw, Cullman, Dale, Dallas, DeKalb, Elmore, Escambia, Etowah, Fayette, Franklin, Geneva, Greene, Hale, Henry, Houston, Jackson, Jefferson, Lamar, Lauderdale, Lawrence, Lee, Limestone, Lowndes, Macon, Madison, Marengo, Marshall, Marion, Mobile, Monroe, Montgomery, Morgan, Perry, Pickens, Pike, Randolph, Russell, St. Clair, Shelby, Sumter, Talladega, Tallapoosa, Tuscaloosa, Walker, Washington, Wilcox and Winston;


38 Florida counties: Bay, Brevard, Calhoun, Citrus, Clay, Duval, Escambia, Flagler, Franklin, Gadsden, Gulf, Highlands, Holmes, Indian River, Jackson, Lake, Lee, Leon, Liberty, Manatee, Marion, Martin, Okaloosa, Okeechobee, Osceola, Orange, Palm Beach, Pasco, Polk, Santa Rosa, Seminole, St. Johns, St. Lucie, Taylor, Volusia, Wakulla, Walton and Washington;


8 Louisiana parishes: Jefferson, Lafourche, Orleans, Plaquemines, St. Bernard, St. Charles, St. Tammany and Terrebonne; and


10 Mississippi counties: Clarke, George, Greene, Hancock, Harrison, Jackson, Lauderdale, Perry, Stone and Wayne.

Among the tax relief details:

The Federal Tax Deposit (FTD) Penalty Waiver Period for employment and excise tax deposits is Sept. 13 – Oct. 1, 2004.


The Extension Period for returns and other tax payments is Sept. 13 – Dec. 30, 2004.


The Disaster Designation for this area is “Hurricane Ivan” — taxpayers mark certain relief-related forms with this designation in red.

Relief Provisions
Subscribe to IRS Newswire
IR-2004-117, Sept. 16, 2004
WASHINGTON — The Internal Revenue Service announced today it is indefinitely extending its Tip Rate Determination and Education Program, a voluntary compliance tool that has helped nearly double the reporting of tip income.
Originally developed by the IRS in 1993 for the food and beverage industry, the tip program was set to expire in 2005. Now, the successful program will continue without a sunset date.
“The tip program has proven to be a winner for employers, employees and the IRS. It reduces taxpayer burden and increases compliance. We hope more industries and employees will take advantage of this creative tool,” said Mark W. Everson, IRS Commissioner.
Since the program was introduced, voluntary compliance has significantly increased. In 1995, tip wages reported were $9.45 billion. For 2003, the amount exceeded $18 billion. To date over 15,000 employers have entered into tip agreements, representing nearly 47,000 individual establishments.
The tip program offers employers multiple voluntary agreement options designed to provide non-burdensome methods for employers and employees to comply with tip reporting laws. Options include:

Tip Rate Determination Agreement (TRDA);


Tip Reporting Alternative Commitment (TRAC);


EmTRAC – Employer-designed TRAC.

The tip agreements have common elements including:

Education – To help employers and employees better understand the federal tax laws regarding tips;


Simplification – To make it easier for tipped employees to calculate their tips, report their tips and pay their taxes;


Burden Reduction – To reduce the likelihood of, and to ease the financial burdens associated with, a tip examination.

With the indefinite extension of the tip program, the IRS will administer existing tip agreements without the need for employers to re-sign agreements.
Related Items:

Voluntary Tip Compliance Agreements – Restaurants


IR-2003-145 — IRS and Gaming Industry Partner on Voluntary Tip Compliance Agreements

Subscribe to IRS Newswire
IR-2004-116, Sept. 10, 2004
WASHINGTON — The Internal Revenue Service announced the appointment of Nancy J. Marks to the position of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities) effective September 5, 2004.  
"Nan Marks is a true asset to the Office of Chief Counsel,” said Donald L. Korb, IRS Chief Counsel. “We, and American taxpayers generally, are fortunate that people as talented as Nan have chosen to dedicate their careers to public service with this office."
The Division Counsel/Associate Chief Counsel provides executive oversight for the approximately 160 person legal staff in Washington and seven field offices. The office provides legal counsel and representation on diverse issues, including exempt organizations, employment taxes, executive compensation and other employee benefits, tax exempt bonds, and Federal, state, local and Indian tribal governments.
Since 1994, Marks has served as the Deputy Division Counsel/Deputy Associate Chief Counsel (TEGE). She is a recipient of the 2002 Presidential Rank Award for Meritorious Service. From 1973 to 1981, Marks held positions of increasing responsibility in the enforcement function of the IRS as an auditor and then revenue agent in corporate tax, employee benefits and exempt organizations, as a member of the review technical staff, and finally as an appeals officer. After receiving her law degree in 1981, she joined the Office of Chief Counsel in the Interpretative Division, and served in the EBEO Division as Special Assistant, Technical Assistant for Legislation, and Assistant Branch Chief Exempt Organizations. She also has served as a trial attorney with the U. S. Department of Justice. 
Marks received a law degree from the Suffolk University School of Law in 1981 and an undergraduate degree from Boston State College in 1970. 
Subscribe to IRS Newswire
IR-2004-115, Sept. 10, 2004
(Updated 9/13/04 to add 6 counties)
(Updated 9/27/04 to add 3 counties)
WASHINGTON — The Internal Revenue Service today announced special tax relief for Florida taxpayers in the Presidential Disaster Area that was struck by Hurricane Frances beginning Sept. 3, 2004. It also lengthened the extension period it had earlier granted for the disaster area counties struck by the storms Bonnie and Charley, most of which are also in the latest disaster area.
Taxpayers in either disaster area generally will have until Dec. 30 to file tax returns and submit tax payments. The IRS will abate interest and any late filing or late payment penalties that would apply.
“The severity of this hurricane season in Florida, compounded by multiple storms hitting the same counties, leads us to provide a longer period of tax relief than usual,” IRS Commissioner Mark W. Everson said. “The special tax relief will give affected taxpayers until Dec. 30 to file and pay their taxes. The IRS wants to help during this difficult time.”
The Hurricane Frances disaster area consists of 45 counties: Alachua, Baker, Bradford, Brevard, Broward, Charlotte, Citrus, Clay, Columbia, DeSoto, Dixie, Duval, Flagler, Gilchrist, Glades, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lake, Lee, Levy, Manatee, Marion, Martin, Miami-Dade, Nassau, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Sarasota, St. Johns, St. Lucie, Seminole, Sumter, Suwannee, Union and Volusia. Among the tax relief details:

The Federal Tax Deposit (FTD) Penalty Waiver Period for employment and excise tax deposits is Sept. 3-20, 2004.


The Extension Period for returns and other tax payments is Sept. 3 – Dec. 30, 2004.


The Disaster Designation for this area is “Hurricane Frances” — taxpayers mark certain relief-related forms with this designation in red.

Relief Provisions
Related Items:

Notice 2004-66 (22KPDF) — Owners of certain housing projects in Florida will not lose their low-income housing credits if they temporarily rent vacant units to persons displaced by Hurricanes Charley or Frances without regard to income.
	 


Notice 2004-62 (22KPDF) — Relief for certain employee benefit plans in the Florida counties declared disaster areas because of the storms Bonnie, Charley or Frances. These plans will have until Oct. 15, 2004, to make minimum funding contributions, or apply for waivers, if the deadline for such actions was from Aug. 11 through Oct. 14, 2004.
	 


IR-2004-113 — Excise tax penalties waived for wholesale dealers who sell dyed diesel fuel for highway use in Florida from Sept. 2 – Oct. 5, 2004.
	 


IR-2004-108 — Relief for victims of storms Bonnie and Charley

Subscribe to IRS Newswire
IR-2004-114, Sept. 9, 2004
WASHINGTON — Tax practitioners can now request transcripts of their client’s tax records and receive them within minutes instead of days or weeks using a new online tool delivered through the IRS Business Systems Modernization program. The Transcript Delivery System (TDS) is the latest in a series of e-services that are revolutionizing how tax practitioners work with the Internal Revenue Service on behalf of their clients.
Authorized tax practitioners use the new electronic tool to order tax account and tax return transcripts and other tax information for their business and individual clients. The documents are returned to the practitioner’s computer through a secure online connection within minutes. Paper requests for the same information can take days or weeks to complete.
“This important new technology will help tax practitioners improve their services to taxpayers and is part of our continuing efforts to modernize the IRS,” said IRS Commissioner Mark W. Everson.”
Tax practitioners use transcripts when representing their clients before the IRS. Transcripts are printouts of a taxpayer’s account that show actions taken by the IRS or the taxpayer and any tax, penalties or interest assessed. Tax returns can also be printed as transcripts to show most of the numbers reported on the return and those from accompanying schedules or forms. In many cases, transcripts are used instead of making copies of tax returns.
TDS is one of three premium e-services the IRS has developed for practitioners who have successfully e-filed 100 or more individual tax returns and registered to use e-services. The other premium e-services, Disclosure Authorization and Electronic Account Resolution, were released in July.
"TDS is the greatest thing since sliced bread,” says enrolled agent Larry “Denny” Denman, a North Las Vegas tax practitioner who uses TDS and other IRS e-services. “I requested eight years of transcripts for one client and printed them out in no time. And the quality is better than anything I get through the mail or by fax.”
The Transcript Delivery System is the final product in a line of e-services developed through the Business Systems Modernization program in partnership with the PRIME Alliance group of contractors led by Computer Sciences Corporation.
Related Item:  What are the e-services products? 
Subscribe to IRS Newswire
IR-2004-113, Sept. 3, 2004
(Updated 9/7/04 to extend the period through Sept. 15, 2004)
(Updated 9/17/04 to further extend the period through Sept. 24, 2004)
(Updated 9/27/04 to further extend the period through Oct. 5, 2004)
WASHINGTON — The Internal Revenue Service announced today that it would not assert the excise tax penalty on dyed diesel fuel that wholesale dealers deliver or sell in Florida from Sept. 2 through Oct. 5 for highway use because of shortages of clear diesel fuel caused by Hurricanes Charley and Frances.
The penalty is either $1,000 or $10 per gallon, whichever is greater. To be eligible for the relief from this penalty, the wholesale dealer must report and pay the tax on the dyed diesel fuel that is delivered or sold for highway use. The tax return and the payment will be due on Oct. 31, 2004. Wholesale dealers should call, toll-free, 1-866-699-4096 for instructions on the proper method for reporting and paying this tax.
Dyed diesel fuel is not taxed, because it is sold for uses exempt from excise tax, such as to farmers for farming purposes and to local governments for buses.
Related Items:
Announcement 2004-70PDF — revised 9/7/04 and amended 9/17/04 & 9/27/04 to extend the period.

Publication 510, Excise Taxes for 2004PDF

Subscribe to IRS Newswire
IR-2004-131, Oct. 25, 2004
 
WASHINGTON — The Internal Revenue Service has the nation’s most reliable e-government Web site according to a leading private sector company that measures Web site performance.

Keynote Systems announced today that IRS.gov is one of the first winners of the Keynote Performance Awards, a new awards program designed to recognize excellence in Web site performance. Keynote honored the fastest and most reliable Web sites in three categories: e-commerce, e-government and online travel and hospitality.
In e-government, the IRS won the performance award for Best Transaction Reliability with an average score of 99.8 percent.
“The IRS is strongly committed to the use of technology to help taxpayers, and taxpayers are embracing this technology,” said IRS Commissioner Mark W. Everson. “More than 61 million tax returns were filed electronically this year. And IRS.gov received more than 139 million visits this year, making it one of the government’s busiest sites.”
“We’re proud to have IRS.gov recognized as the e-government leader in reliability,” said Jimi Stricklin, IRS director of Web Services. “This award validates our goal of improving service to America’s taxpayers by delivering fast and reliable online resources and tax information.”
The award is based on Keynote’s E-Government Web Transaction Performance Index. The index measures a visitor’s ability to click through a number of pages on the Web site and successfully find the needed information. Measurements were taken between December 2003 and July 2004 every hour, seven days a week from the nation’s 10 largest metropolitan areas. Three aspects of each transaction were measured: accessing the site’s home page, entering a search topic and selecting or clicking on a specific search result. The site with the highest success rate, out of 100 percent, is recognized for the “reliability” award.
Many of IRS.gov’s most useful Web applications are those made possible through new capabilities developed and delivered through the IRS Business Systems Modernization Program. The program is a multi-year effort to modernize and update the nation’s tax administration systems.

Highlights of these new Web applications include “Where’s My Refund?” which taxpayers can use to find out about their tax refund and e-services, a suite of IRS.gov tools that give tax practitioners and professionals new ways of working with the IRS using fast, efficient and convenient online processes.
Related links:

Where's My Refund?


e-services — New Products Now Available

Subscribe to IRS Newswire
Update Jan. 6, 2014 — Use Form 656 BookletPDF, Offer in Compromise, to find the correct form to use. 
IR-2004-129, Oct. 25, 2004
WASHINGTON — The Internal Revenue Service announced today that the newly revised taxpayer application for an offer in compromise, the Form 656 package, is now available.
An offer in compromise 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.
The Form 656 package was redesigned to make it easier for taxpayers to follow the instructions for and correctly prepare the application for an agreement. The form was last revised in 2001.
The new form also includes a signature block for the tax practitioner (if any) employed by the taxpayer to prepare the application form. This paid preparer signature block was added to discourage unscrupulous promoters who falsely market offers in compromise to taxpayers as a “pennies on the dollar” approach.
"This is part of our continuing effort to improve this program, which benefits both taxpayers and tax administration by allowing people to settle tax liabilities,” said IRS Commissioner Mark W. Everson. “The new application will help taxpayers determine if they are eligible to file for an offer and ease the application process.”
The IRS worked with and received recommendations from external groups and the National Taxpayer Advocate in revising the Form 656 package.
The package now includes Form 656-A, Income Certification for OIC Application Fee, and a worksheet to help taxpayers determine whether they meet the income exception to the $150 fee. The redesign also features:

A checklist to help taxpayers determine if they are eligible to file an OIC before they invest time in form preparation;


A step-by-step guide through the OIC process;


A Third Party Designee section, which allows a person other than the taxpayer to discuss any additional information that the IRS needs to process the offer; and


A summary checklist that reduces the chance that the application will be returned by the IRS for omissions.

Tax practitioners and the general public should begin using the 2004 revised package immediately and destroy any previous versions of the form they may have.
Applicants may order the package by calling the IRS toll-free at 1-800-TAX-FORM (1-800-829-3676). The Form 656 package is also available on this Web site in the Forms and Publications section.
Related Item: IR-2004-130, Check Carefully Before Applying for Offers in Compromise 
Subscribe to IRS Newswire
IR-2004-128, Oct. 20, 2004
WASHINGTON — The Appeals Division of the Internal Revenue Service has reassessed and tightened its settlement guidelines under which it will accept offers to settle cases with taxpayers that participated in certain abusive transactions, officials said today.
Last month, the IRS Appeals Division and the Large and Mid-Size Business Division began sending letters to taxpayers involved in three abusive transactions, advising them that the settlement terms available to resolve these transactions have changed. Certain taxpayers who reported losses and deductions from lease strips, inflated-basis assets derived from lease strips, and in intermediary transactions are being notified that the Appeals position has tightened.
"As we have been doing for some time, we continue to ratchet up the pressure on those entering into abusive transactions," said IRS Commissioner Mark W. Everson. "Both Congress and the courts are supporting us in this effort."
Under the new guidelines, the IRS will not settle unless taxpayers concede 100 percent of the claimed losses or deductions, reduced by only the amount of transaction costs up to 10 percent of the claimed losses or deductions.  Furthermore, taxpayers must concede 50 percent of the accuracy-related penalty at issue. If both the 40 percent gross valuation misstatement penalty and the 20 percent substantial understatement penalty were asserted, then the settlement will apply to the gross valuation misstatement penalty.
To settle these cases, taxpayers must enter into a closing agreement with the IRS.  IRS agents will be able to accept these proposed agreements if they conform to the revised settlement guidelines issued by Appeals.
"Notifying taxpayers of the change in the settlement guidelines is another example of the nimbleness of the IRS," said IRS Chief Counsel Donald Korb. "This action shows that the longer a taxpayer delays in settling, the greater the risk that we will tighten our settlement ranges in response to favorable litigation."
The IRS has won an increasing number of court cases involving abusive tax transactions. In late August, the IRS won the Long Term Capital Holdings case.
"Modifying our settlement guidelines was appropriate in light of Long Term Capital Holdings," said David Robison, chief of Appeals. "The court's careful analysis was a compelling reason to incorporate the case in our assessment of the litigating hazards for these cases."
“The court decision validated the IRS position on penalties,” said Deborah M. Nolan, LMSB commissioner. “A written tax opinion does not inoculate a taxpayer from penalties.  If the facts of a specific case show that the taxpayer did not rely on the advice in good faith or that the reliance wasn’t reasonable, penalties are appropriate, the court held.”
Subscribe to IRS Newswire
IR-2004-124, Oct. 13, 2004
WASHINGTON — The Internal Revenue Service today advised teachers and other educators to save their receipts for books and other classroom supplies. They will be able to deduct up to $250 of such expenses again this year, following recently-enacted legislation.
The Working Families Tax Relief Act of 2004 reinstated the educator expense deduction, which had expired at the end of last year, for both 2004 and 2005. Expenses incurred any time this year may qualify for the deduction, not just those since the Act was signed on October 4.
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.
An educator may subtract up to $250 of qualified out-of-pocket expenses when figuring adjusted gross income (AGI). This deduction is available whether or not the taxpayer itemizes deductions on Schedule A.
The IRS suggests that educators keep records of qualifying expenses in a folder or envelope with a label such as “Educator Expense Deduction,” noting the date, amount and purpose of each purchase. This will help prevent a missed deduction at tax time.
For more information, call the IRS Tele-Tax system toll-free at 1-800-829-4477 and select Topic 458, or read it on this site.
Related Item:  Tax Topic 458 — Educator Expense Deduction
Subscribe to IRS Newswire