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https://www.irs.gov/newsroom/new-issues-selected-for-the-irs-industry-issue-resolution-program

IR-2003-92, July 24, 2003 WASHINGTON — The Internal Revenue Service and the Treasury Department today announced new tax issues selected for resolution under the Industry Issue Resolution (IIR) Program. These issues have been identified by business taxpayers, industry associations, and other interested parties as being frequently disputed or burdensome. The selections for the 2003 IIR Program are: Application of Section 382 to U.S. branches of foreign banks (included on the Guidance Priority List as an item under the heading “Guidance under Section 382”. Guidance on health care provider incentive payments. Guidance on tax treatment of vendor allowances involving buildouts and image upgrades. Guidance under Section IRC 4051(a) (2) and (3) regarding “suitable for use.” Guidance on reporting procedures for successor organizations following Rev. Proc. 96-60. “The Industry Issues Resolution program provides a common-sense approach to resolving tax issues identified by the business community,” said Large and Mid-Size Business Division Commissioner Deborah M. Nolan. “Businesses and their representatives meet with IRS legal and technical experts to present their issues. We then try to find a way to resolve these areas of controversy in a way that will be less burdensome to taxpayers and allow us to focus our enforcement resources more appropriately.” IIR project selections are based on the criteria set forth in Revenue Procedure 2003-36. For each issue selected, a multi-functional team of IRS, Chief Counsel, and Treasury personnel will be assembled. The teams will gather and analyze the relevant facts from industry groups and taxpayers for each issue and recommend guidance.  Requests for guidance on tax issues under the IIR program can be submitted at any time to IIR@irs.gov . Submissions received are reviewed semi-annually with selections next being made from issues submitted by August 31, 2003. Related Items: Revenue Procedure 2003-36 (86KPDF) Information on Issues Selected for 2003 IIR Program (94KPDF) Information on Issues Not Selected for 2003 IIR Program (142KPDF)   Subscribe to IRS Newswire    

https://www.irs.gov/newsroom/advance-child-tax-credit-payments-begin-july-25-2003

IR-2003-91, July 24, 2003 WASHINGTON — Tomorrow, the federal government will mail the first of more than 25 million checks provided under a recent tax law change. According to the Internal Revenue Service, the checks represent an advance of this year’s child tax credit increase and will go to most parents who claimed the credit on their 2002 returns.  The Jobs and Growth Tax Relief Reconciliation Act increased the maximum credit amount from $600 to $1,000 per qualifying child and directed that taxpayers receive the increase this summer, rather than waiting until they file their 2003 returns. “As long as we have a good mailing address, taxpayers don’t have to do anything to get their checks,” said IRS Commissioner Mark W. Everson. Taxpayers should, however, notify the Post Office if they’ve moved since filing their last return. “The IRS will figure the advance amount based on each taxpayer’s 2002 return,” he said. The initial checks are going to those who filed early enough for the IRS to process their returns by early July. The mailing date depends on the last two digits of the taxpayer’s social security number: 00—33 – July 25 mailing 34—66 – August 1 mailing 67—99 – August 8 mailing People who filed after April 15 – for example, those with extensions – will get any advance payment they are entitled to receive after the IRS processes their 2002 return. Taxpayers who did not claim the Child Tax Credit last year are not eligible for an advance payment, even if they will be able to claim the credit on their 2003 returns. For example, if your only child is born this year, you will not get any advance payment, but you may qualify for the credit when you file your return next year. Some parents who claimed the Child Tax Credit last year will not receive an advance payment. A child may now be too old to qualify (over 16). Or the credit’s tax liability and earned income limitations may result in no increase for that taxpayer. Or the amount may be too small – the government won’t send a check when the calculated advance payment is less than $10. The IRS Web site has a new feature to let taxpayers know the amount and mailing date of their advance payment checks. Click on “Where’s My Advance Child Tax Credit?” for details on the information needed from the 2002 return to check on the status of a payment. The status check will also tell if a payment may be reduced because of taxes owed or an outstanding non-tax federal debt, or why a taxpayer with a child does not qualify for an advance payment. The Advance Child Tax Credit Status application is only for taxpayers who checked a box on line 6(c), column (4) of the return that a dependent was a qualifying child for the Child Tax Credit. Taxpayers without children who use this feature will get a generic message about the advance payments, but no specific information about their tax accounts. This Web feature should have information for a taxpayer about 11 days before the check mailing date. Currently, the information covers taxpayers whose checks will be mailed this week and next, as well as taxpayers who have children but are not eligible for an advance payment. By July 28, it should have information for all taxpayers included in the initial mailings. The system will be updated weekly with data from returns as they are processed. The IRS is also sending notices that contain the advance payment figure to eligible taxpayers. They should save these notices with other records that they will need to complete their 2003 tax returns. When preparing those returns, taxpayers will reduce the total Child Tax Credit by the advance payment already received. If the advance amount is more than the credit – which could result from a change in income or in the number of qualifying children – the recipients will not have to repay the difference. Related Items: Where's My Advance Child Tax Credit? — If you claimed the Child Tax Credit on your 2002 return, check on the status of your advance payment. Fact Sheet 2003-13 — Advance Child Tax Credit Payments New Law's Tax Cuts — an overview of recently-enacted savings Subscribe to IRS NewsWire

https://www.irs.gov/newsroom/eftps-online-gets-major-upgrade

IR-2003-90, July 21, 2003 WASHINGTON — The Internal Revenue Service announced today that the Internet version of the Electronic Federal Tax Payment System (EFTPS), the EFTPS-OnLine Web site, has undergone a major upgrade to include several new improvements to help taxpayers. The changes will provide users with more than a half-dozen new features, ranging from more convenience for scheduling payments to expanded ability to track payment history. These are major changes for EFTPS-OnLine, which was introduced almost two years ago and allows taxpayers to make their federal tax payments electronically.  “It’s important to keep the Internet feature fresh and flexible to grow with technology and the needs of taxpayers,” said Robert Hunt, IRS Director, Taxpayer Education and Communication. “We will continue to listen to what our users want, and make EFTPS-OnLine even better in the years to come.” Taxpayers using the system will see many improvements for payments. They will be able to: Schedule all four estimated tax payments, Form 1040ES, at once in one session without logging out. Access payment history for a 16-month period of time. Search, print or download payment history by date, tax type, amount, tax form and other factors. Previously, taxpayers could schedule only one estimated tax payment at a time and then would log out before scheduling another. Payment history was available for only 120 days. And, the payment history search and sort feature was not available. The upgraded site includes many other features that will make it much more user-friendly for those using the system. Taxpayers can: Change bank accounts by phone without completing a new enrollment. Select a PIN online when changing their bank account number and begin making payments from that account immediately, if electing to bypass bank account information verification by the bank. Access links to states with electronic tax payment systems directly from the EFTPS Web site. Use enhanced and updated glossary help and information. Take advantage of improved accessibility if visually impaired. EFTPS is a service provided free by two agencies of the U.S. Department of the Treasury, the IRS and the Financial Management Service. The system enables taxpayers and tax professionals to make federal tax payments electronically using EFTPS-OnLine, EFTPS-Phone or EFTPS Batch Provider software for professionals. EFTPS was introduced in 1996 and since that time more than 4 million taxpayers have enrolled in the system to make their federal tax payments electronically. More than $8.8 trillion dollars has been collected through EFTPS since 1996. Last year, $1.5 trillion dollars were collected. Over ninety-five percent of the employment tax dollars are collected through EFTPS each year. Taxpayers can make payments 24 hours a day, 7 days a week from home or office; schedule payments up to 120 days in advance (for businesses) or 365 days in advance (for individuals); review the last 16 months of tax payment history online or by calling Customer Service. In addition, taxpayers receive an EFT Acknowledgement Number for every EFTPS transaction for easy record keeping and as proof of the transaction. EFTPS is ideal for all business taxpayers and for individual taxpayers that make Form 1040 ES quarterly estimated payments. Taxpayers can enroll in EFTPS by visiting the EFTPS-Online Web site, or by calling EFTPS Customer Service at 1-800-555-4477 or 1-800-945-8400. Related Item: EFTPS-OnLine Subscribe to IRS NewsWire

https://www.irs.gov/newsroom/retirement-plans-need-not-file-fringe-benefit-information

IR-2003-89, July 14, 2003 WASHINGTON — The Internal Revenue Service reminds employers and retirement plan professionals that they no longer have to file information about fringe benefit plans. The IRS suspended the requirement for an annual Form 5500 and Schedule F last year for such so-called “pure fringe benefit plans.” The IRS has since eliminated Schedule F altogether and also modified Form 5500 so fringe benefit plans could not be reported.  However, based on past experience, the IRS is concerned that some employers may try to adapt prior year forms and schedules or add write-in information on a Form 5500 because they mistakenly think the filing requirement still exists.  In fact, pure fringe benefit plans have no IRS filing requirement and therefore should file neither a Form 5500 nor a Schedule F. After it announced the suspension of the fringe benefit plan filing requirement last year, the IRS received almost 70,000 unnecessary Form 5500/Schedule F returns.  This represented over 100,000 hours of unnecessary filing burden on the part of  employers and plan sponsors. Most employee benefit plans must file 2002 Forms 5500 by July 31, 2003.  The IRS noted that the filing requirement for welfare benefit plans that are subject to Title I of ERISA and that are associated with fringe benefit plans must still file Form 5500.  See the instructions to Form 5500 for detailed filing requirement information. To aid employers and plan sponsors with their filing requirements, the IRS recently posted  Form 5500 filing tips on its Web site.  These tips are based on frequently asked questions the agency receives concerning Form 5500 and related schedules, and on common reporting and filing errors the agency has analyzed from past years.  Paying attention to the tips should help employers and plan administrators avoid errors that can slow the processing of returns and cause extra correspondence between employers and the IRS.  The filing tips can be found on the IRS Web site. Related Items  Form 5500 Filing Tips  Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-guidance-on-fiber-optic-cable-for-cable-tv-distribution-system

IR-2003-88, July 9, 2003 WASHINGTON — Under the Industry Issue Resolution (IIR) Program, the Internal Revenue Service (IRS) today issued guidance on the treatment of fiber optic cable used in a cable television distribution system. This guidance is in Revenue Procedure 2003-63, which provides a safe harbor method under which the IRS will treat a node and fiber optic cable used in a cable television distribution system providing one-way and two-way communication services as the unit of property for computing depreciation under Sections 167 and 168 of the Internal Revenue Code. Cable television companies provide broadcast and video programming to subscribers. In recent years, many companies have upgraded their systems to provide new cable services such as digital television, Internet access through a cable modem, and telephony. Upgraded systems use fiber optic cable because optic fibers have immense capacity and are reliable, and transmissions over them are not susceptible to interference by outside signals. The fiber optic strands of glass (optic fibers) within fiber optic cables carry analog or digital signals in the form of light waves. The revenue procedure provides a method change procedure to obtain automatic consent to use the safe harbor method. The IIR Program, launched in 2001 by the IRS, tackles business tax issues submitted by taxpayers, associations and other groups representing taxpayers. The objective is to provide guidance to resolve frequently disputed or burdensome tax issues. Revenue Procedure 2003-63 will be published in Internal Revenue Bulletin 2003-32, dated Aug. 11, 2003. For information on the IIR program see Revenue Procedure 2003-36, which was published in Internal Revenue Bulletin 2003-18. Related Items: Revenue Procedure 2003-63 ( 55KPDF ) Reveue Procedure 2003-36 ( 86KPDF )   Subscribe to IRS Newswire

https://www.irs.gov/newsroom/web-site-for-political-organizations-improves-filing-and-disclosure

IR-2003-87, July 8, 2003 WASHINGTON — The Internal Revenue Service has launched a new Web site that makes it easier for political organizations to electronically file required documents and greatly improves the public’s access to them. The new Web site allows political organizations to electronically file their notices and reports as required by law. And, it allows the public to view, search or download the entire database of electronic filings by political organizations. The public can learn contributors’ names, contribution amounts and contribution dates as well as review a list of expenditures by the political organization. “It’s a major step in our efforts to make these documents available for public scrutiny and to make it easier for organizations to meet their legal obligation to file electronically,” said IRS Commissioner Mark W. Everson. The new Political Organizations Filing and Disclosure Web site was developed to reflect congressional changes in November 2002 intended to ensure that political organizations with tax exempt status, also known as Section 527 political organizations, disclose essential information on a timely basis. It replaces the prior filing and search site that was developed in 2000 in response to earlier legislation.  The new Web site, intended to be more user-friendly and simpler to navigate, contains two major components: The Political Organization Filing Center and the Political Organization Disclosure Page. The features of the Political Organization Filing Center include: Electronic filing of Form 8871, Political Organization Notice of Section 527 Status, Electronic filing of Form 8872, Political Organization Report of Contributions and Expenditures, Immediate electronic acknowledgement of filing, On-screen help, The ability to accept data uploads from financial software, The ability to save data so it can be viewed, completed and submitted at a later date, The ability to view and print submitted forms. The other key feature of the new site is the Political Organization Disclosure Page.  “Search and download capabilities are greatly improved on the new site,” said Steven T. Miller, Director of Exempt Organizations. “We heard the public’s concerns about the limitations of these features on the former site. With this new site we can now offer an improved tool to support public disclosure of political activity, allowing for a better informed public.”   The Political Organization Disclosure Page can be used to search paper and electronic filings of Forms 8871 and Forms 8872, as well as paper filings of Form 990, Return of Organization Exempt from Income Tax, filed by political organizations. Searches of paper filings are limited, but the system alerts the user to the boundaries of any search and gives tips on how to achieve the best results.   Users can conduct three different types of searches. The Basic Search locates information about political organizations by name, the date the report was received, or by the EIN (Employee Identification Number). The Advanced Search has the ability to go beyond the Basic Search by locating a political organization that filed electronically by all fields, such as the name of the organization’s contact person, the amount of a contribution, or the name of a contributor. The Popular Search provides easy access to routine information. A user simply chooses one of the pre-defined searches of available information, such as a listing of all organizations that filed any Form 8871 on the previous day, persons making yearly contributions in excess of an amount the user determines, or persons receiving payment in excess of an amount the user determines. In addition to the search capabilities, a user can download the entire database of electronically submitted Forms 8871 and Forms 8872.  During the initial transition to the new Political Organization Filing and Disclosure Web site, all electronic filings of forms are available to be searched, but only paper filings posted by June 13, 2003, are searchable. The remaining forms will be available shortly.  “From this point forward, however, the new Filing and Disclosure Web site will capture all of the information electronically filed by political organizations, significantly expanding the range and amount of searchable information,” Miller said. The new site has a number of entry points. Users can enter the IRS Keyword “political orgs” from the main page of the IRS website or type in the direct Web site address /polorgs. For more information about the filing requirements of 527 organizations see Fact Sheet 2002-13. Related Items: Political Organization Disclosure Political Organization Filing Center   Fact Sheet 2002-13, Section 527 Political Organizations Revised Tax Filing Requirements (206KPDF)   Subscribe to IRS Newswire

https://www.irs.gov/newsroom/national-taxpayer-advocate-issues-annual-fiscal-year-objectives-report-to-congress

IR-2003-86, July 7, 2003 WASHINGTON — In an annual report to Congress, National Taxpayer Advocate Nina E. Olson outlined her objectives for the Office of the Taxpayer Advocate for the coming fiscal year. The Taxpayer Advocate Service (TAS) has a dual mission to assist taxpayers in resolving problems with the IRS and to make administrative and legislative recommendations to mitigate those problems. "The Office of the Taxpayer Advocate will continue to partner with the IRS to resolve taxpayer problems, and ensure taxpayer rights and concerns are considered and protected during IRS program implementation," said Olson. In the annual Fiscal Year Objectives report, which is required by law, Olson reviews the accomplishments of her office during the current fiscal year and describes its focus and goals for the coming fiscal year. In fiscal year 2003 the Office of the Taxpayer Advocate worked with the IRS on several initiatives, including Earned Income Tax Credit certification, Offers-in-Compromise, Individual Taxpayer Identification Numbers, the Federal Payment Levy program, Collection Due Process hearings, and the implementation of the National Research Project. The report describes how TAS will continue to focus on these programs for the next fiscal year. The report identifies several new projects for fiscal year 2004 involving small business issues, electronic filing, and financial literacy. The Office of the Taxpayer Advocate is also sponsoring or participating in several research studies involving abusive tax schemes, the impact of representation on the outcome of EITC audits, and the reasons for lack of taxpayer response in EITC examinations. “A true partnership between TAS and the rest of the IRS in the planning and implementation of programs, reduces the risk of delivering programs that meet taxpayer resistance or that must be substantially reworked after implementation,” Olson said. In conjunction with her Annual Report, the National Taxpayer Advocate is also issuing a study that she commissioned on the role of ombudsmen in federal agencies.  Advocates and ombudsmen play an important role in an increasing number of federal agencies and departments.  The study details how these offices interact with various agencies and the importance of independence in achieving their mission.  This report, Agencies Within Agencies: A Survey of Federal Agency External Ombudsmen, will be available by calling 1-800-829-3676 and requesting Publication Number 4213. Related Items: The National Taxpayer Advocate’s Report to Congress: Fiscal Year 2004 Objectives  ( 989KPDF ) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-names-beverly-babers-as-new-chief-human-capital-officer

WASHINGTON — The Internal Revenue Service announced today the selection of Beverly Ortega Babers as the new Chief Human Capital Officer.  In this new position, Babers will report to John Dalrymple, Deputy Commissioner for Operations Support. Federal law requires executive departments and agencies to name or appoint a senior official to be the agency's Chief Human Capital Officer.  “Beverly brings a wealth of experience and breadth of knowledge in not only human resources but tax litigation and tax administration to this critical position on my senior leadership team,” said IRS Commissioner Mark W. Everson.  “Moreover, she will bring a fresh perspective and focus to the many challenges facing our workforce.” Currently, Babers is the Director, Technical Services, in the IRS Appeal Division, overseeing tax policy and procedure, technical guidance and processing services functions within Appeals. Babers joined the IRS in 1999 as an Assistant to the Commissioner, providing advice on tax policy and tax administration matters. Before coming to the IRS, Babers was Chief of Staff and Counsel to the Assistant Attorney General of the Tax Division of the Department of Justice, where she made recommendations for appellate and litigation strategy and oversaw administrative functions. Previous to her government service, Babers was an associate with the law office of Jones, Day, Reavis & Pogue in Washington, DC. Babers is a 1989 graduate of the Boalt Hall School of Law, University of California at Berkeley. Subscribe to IRS Newswire  

https://www.irs.gov/newsroom/ir-2003-84

IR-2003-84, July 2, 2003 WASHINGTON — The Internal Revenue Service today announced a closing agreement with Ernst & Young, LLP, resolving issues relating to an examination of Ernst & Young’s compliance with the registration and list maintenance requirements regarding the firm’s marketing of tax shelters. The agreement requires Ernst & Young to make a non-deductible payment of $15 million. In addition to the payment, Ernst & Young has agreed to work with the IRS to ensure ongoing compliance with the registration and list maintenance provisions of the Internal Revenue Code and regulations.  To this end, Ernst & Young will implement a Quality and Integrity Program to ensure the highest standards of practice and ongoing compliance with the law and regulations. The IRS may, upon its request, review documents prepared as part of this program. “We are pleased that Ernst & Young has cooperated fully with the IRS in resolving these matters,” said IRS Commissioner Mark W. Everson. “In particular, the ability of the IRS to review the firm’s compliance on an ongoing basis will help to reduce the likelihood of future violations of the registration and list maintenance requirements. This represents a real breakthrough and is a good working model for agreements with practitioners.” “This agreement constitutes a significant development in our continuing efforts to identify potentially abusive tax transactions,” said Everson. The examination is one of over 90 investigations the IRS has opened of professional service firms. The closing agreement included a disclosure authorization that allowed the IRS to issue this release. Section 6103 of the Internal Revenue Code strictly limits the IRS in disclosing taxpayer information. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/new-law-allows-postponement-of-portion-of-september-2003-estimated-tax-installment-for-corporations

IR-2003-105, Aug. 28, 2003 Washington — Corporations making estimated tax payments may postpone part of their Sept. 15, 2003, payment due to a provision in the new tax law enacted in May. This law allows 25 percent of the September estimated installment to be made by Oct. 1, 2003. For example, if a corporation owes an estimated tax payment of $4,000 due Sept. 15, 2003, then the corporation could opt to pay $3,000 (75 percent) by Sept. 15, 2003, and the remaining $1,000 (25 percent) by Oct. 1, 2003. Generally, corporations use one of two options when making their estimated tax payments: the Electronic Federal Tax Payment System (EFTPS) or by submitting Form 8109, Federal Tax Deposit Coupon, to their financial institution. Neither process is affected by the October 1 payment date. For more information, you may call the IRS at 1-800-829-4933. Related Item: The Electronic Federal Tax Payment System (EFTPS) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/us-austria-reach-agreement-on-taxing-deferred-payments-to-us-citizens-residing-in-austria

IR-2003-104, Aug. 27, 2003 WASHINGTON — The U.S. and Austrian Competent Authorities have entered into a competent authority agreement. This agreement provides that the U.S.-Austria Income Tax Treaty signed on October 25, 1956, does not prohibit Austria from taxing deferred payments for services earned by U.S. citizens while working and residing in the United States, when such compensation was paid after these employees became residents of Austria. The agreement also confirms, however, that Austria shall deduct from its tax the amount of U.S. taxes imposed on the deferred payments for services, as required by the treaty. The 1956 income tax treaty is applicable for assessment periods up to and including 1998. Inquiries concerning this agreement may be directed to Mr. Lynn Bartlett of the IRS at (202) 435-5021. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/us-swiss-competent-authorities-provide-guidance-on-treaty-benefits

IR-2003-103, Aug. 22, 2003 WASHINGTON — The U.S. and Swiss competent authorities concluded an agreement on August 20, 2003 regarding the Limitation on Benefits Article of the income tax treaty and accompanying Revised Memorandum of Understanding between the United States and the Swiss Confederation. The agreement provides guidance regarding application of the “derivative benefits” provisions of Article 22(3) of the treaty and paragraph 7 of the Revised MOU, under which a Swiss company may be entitled to treaty benefits based, in part, on the residence of its ultimate beneficial owners. The agreement provides that certain categories of U.S. residents will be taken into account for purposes of the derivative benefits ownership tests of Article 22(3) and paragraph 7. The qualifying categories of U.S. residents are: individuals who are residents of the United States (as determined under Article 4 of the Treaty); the United States; political subdivisions of the United States; instrumentalities of the United States or a political subdivision thereof; and companies incorporated in the United States whose principal class of shares is primarily and regularly traded on a recognized stock exchange. To view the text of the U.S.-Swiss Competent Authority Agreement, go to www.irs.gov and click on “Business” in the “Contents” area, then choose “International Business.” Related Item: U.S.-Swiss Competent Authority AgreementDOC  (Word 32K)

https://www.irs.gov/newsroom/irs-offers-weekly-electronic-newsletter-for-tax-professionals

IR-2003-102, Aug. 20, 2003 WASHINGTON — The IRS is now publishing the Digital Dispatch on a weekly basis instead of biweekly. By sending the e-mail dispatch out each week, the IRS can better help tax professionals stay current with important new developments.  The Digital Dispatch is a newsletter for tax professionals e-mailed to 100,000 subscribers, free of charge. It provides subscribers with important upcoming tax dates and events, summaries of and links to IRS news releases, alerts, and all of the week’s technical guidance – announcements, notices, revenue procedures and revenue rulings. Anyone with e-mail and access to the internet can subscribe by visiting IRS.gov. The IRS provides numerous electronic subscription options besides the Digital Dispatch: e-News For Tax Professionals is an electronic mail service designed to provide localized, targeted  and immediate information for tax professionals in each state. IRS Newswire e-mails news releases to subscribers from the National Media Relations Office. IRS Tax Tips provides daily e-mails of tax information to subscribers during the tax filing season (Jan 1 – April 15) and periodically during the rest of the year.  Employee Plan News is a newsletter about current developments and upcoming events within the retirement plan arena that is e-mailed to subscribers, quarterly. Tax Stats Dispatch Mailing List provides subscribers with the announcements about the most recent tax statistics. SB/SE Mailing List provides  information to subscribers about IRS outreach products and programs for small businesses and self-employed taxpayers. FSLG Newsletter is e-mailed periodically to subscribers to provide information about current developments and upcoming events of interest to government entities. “Quick Alerts” e-file Messaging System keeps subscribers in touch with first hand knowledge of processing delays, the moment they happen. Related Item: e-News Subscriptions Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-selects-maya-a-bernstein-as-privacy-advocate

IR-2003-101, Aug. 18, 2003 WASHINGTON — The Internal Revenue Service announced today the appointment of Maya A. Bernstein as the agency’s Privacy Advocate. The Privacy Advocate develops policies to protect taxpayer and IRS employee privacy and ensures that they are integrated into all IRS practices and modernization efforts. The Privacy Advocate also ensures that taxpayers and employees are aware of their privacy rights.    “We are fortunate indeed to have someone with Maya’s level of expertise directing the IRS’s privacy office,” said David R. Williams, Chief of the Communications and Liaison division, of which the Office of the Privacy Advocate is part. “As technology enables the IRS to modernize, privacy becomes an ever more important issue.”    Bernstein, an attorney, has special expertise in information policy and electronic commerce, including data protection, privacy compliance and electronic signature law. She comes to the IRS from the private sector, where most recently she was a consultant in information policy and administrative law. Before that, she was an associate at a law firm.  Previously, she was a Senior Policy Analyst at the Office of Management and Budget.  During her nine-year tenure, Bernstein was responsible for reviewing a wide variety of agency regulations, ensuring compliance by federal agencies with the Administrative Procedure Act, Regulatory Flexibility Act, Paperwork Reduction Act and the policy of the President. She was also OMB’s lead analyst on privacy policy and, in that capacity, routinely advised attorneys throughout the government on implementation of the Privacy Act of 1974. She has taught courses and lectured on privacy. Bernstein earned a Juris Doctor, cum laude, from the Washington College of Law, American University, pursued graduate study in the program on Science, Technology and Society at the Massachusetts Institute of Technology, and earned a Bachelor of Arts from the University of Michigan with honors. She is admitted to the bars of California and the District of Columbia. Related Items IRS Privacy Policy Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-grants-tax-relief-to-power-blackout-victims

IR-2003-100, Aug. 15, 2003 WASHINGTON — The Internal Revenue Service announced tax relief for those hit by the power blackout in the Northeastern United States. The IRS will consider as timely any tax returns or payments due from today through next Friday, Aug. 22, if they are completed by Aug. 22, 2003. However, the law does not allow the agency to abate interest on any overdue taxes during this period. While the IRS cannot extend the time for making employment and excise tax deposits, it will waive penalties on such deposits due during this period for affected taxpayers due to reasonable cause if the deposits are made by Aug. 22, 2003. “We recognize that individuals and businesses will need time to recover after the power is restored, which is why we are granting this additional time,” said IRS Commissioner Mark W. Everson. For the purposes of this tax relief, affected taxpayers include individuals and businesses located in the blackout area, and those whose tax records, including records needed for tax deposits, are located in the area of the power blackout. To qualify for this relief, affected taxpayers should put “NORTHEAST BLACKOUT” in red ink at the top of the return relying on this relief. Individuals or businesses located in the blackout area – or taxpayers outside the area that were directly affected by the power blackout – should contact the IRS if they receive penalties for filing returns or paying taxes late. The IRS will monitor this ongoing situation to determine if any additional relief is warranted. The IRS toll-free number for general tax questions is 1-800-829-1040. Related Item: Labor Dept. release granting additional time for filing Form 5500 (76KPDF) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-announces-application-fee-for-offers-in-compromise

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

https://www.irs.gov/newsroom/taxpayers-can-track-advance-child-tax-credit-checks-on-irsgov

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

https://www.irs.gov/newsroom/irs-to-launch-eitc-certification-pilot-program-in-2004-filing-season

IR-2003-97, Aug. 5, 2003 WASHINGTON — The Internal Revenue Service announced today it will launch the Earned Income Tax Credit certification pilot program in early 2004. The EITC program is aimed at rewarding work and helping families out of poverty. The new pilot program will allow the IRS to use an integrated approach to address potential erroneous claims by identifying cases that have the highest likelihood of error before they are accepted for processing and before any EITC benefits are paid.  The General Accounting Office has identified EITC as a “high risk” area for the government because of the high rate of erroneous payments. The announcement of the EITC certification program on June 13 included a 30-day comment period that ended in July. After reviewing the comments, the IRS is incorporating a number of useful suggestions by tax practitioners, social welfare groups, the general public and others. “The EITC program helps lift millions of working families, especially single mothers, out of poverty each year. But it has consistently been found to have an erroneous payment rate higher than many other government benefit programs. To protect the long-term viability of this critical program, we must ensure those who qualify receive the credit they are due — but only those who qualify,” IRS Commissioner Mark W. Everson said. “After reviewing many constructive public comments, we have identified a number of steps we can take to improve the certification pilot and strengthen the integrity of the EITC program.” To make the changes, the IRS will start the program in the 2004 filing season. The IRS will ask 25,000 EITC claimants to certify when they file that the eligible child claimed for EITC purposes resided with them for more than half a year as required by law. Suggestions now being incorporated in the program’s launch include: Targeting a better start date. By starting efforts during the 2004 filing season, EITC claimants will have access to information about certification during a critical period. According to public comments, the effort needs to start in the filing season because some tax practitioners dealing with EITC claimants only operate during this peak period. Tax professionals prepare about 70 percent of EITC claims. The new pilot would start during the 2004 filing season, with the first notices going out shortly before year’s end.   Improving forms. The IRS will improve the form and instructions for the pilot, incorporating comments and suggestions on how to improve usability and reduce complexity. The goal will be to make the forms easier to understand and to ensure participation in the program.   Improving outreach and effectiveness of the pilot. The IRS received a number of comments on outreach efforts and the size of the pilot. The IRS agreed to reduce the pilot sample size from 45,000 to 25,000. This group will provide an adequate basis for statistical verification, which will help give the agency an accurate assessment of the program’s future course. At the same time, it will enable the IRS to direct additional resources to outreach efforts. The IRS will also seek an outside group to validate its sample selection and data. In addition, the IRS also announced today it would maintain a sustained level of compliance activities by expanding efforts to reduce erroneous payments to taxpayers who underreport their income in order to claim the credit. Next year, the IRS will expand its compliance efforts involving at least 300,000 taxpayers who claim the credit but failed in the past to report all of their income. These taxpayers may not be eligible because the EITC has an income cap. This group will also include EITC claimants who misrepresent their filing status. Following the 2004 certification pilot, the IRS will carefully assess the pilot results and performance before deciding on how to proceed with the program. The goal of the certification pilot is to evaluate high-risk EITC claims before they are paid, using a process that is less burdensome to taxpayers and less costly to the government than an audit. In addition, the certification program will enable eligible taxpayers to receive their refunds faster than if their refunds were to be held pending an examination. All these actions are a continuing part of a five-point initiative for improving the effectiveness of the EITC announced by the IRS in June. “Our goal is a fair and balanced EITC program — one that clearly encourages eligible people to apply while reducing erroneous claims,” Everson said. “We want to make sure this pilot meets those important standards.” The EITC is a refundable credit for low-wage taxpayers. Approximately 19 million taxpayers claimed more than $32 billion in EITC for tax year 2002. It is intended as an offset for Social Security taxes and as an incentive to work. Families with children receive a larger EITC credit. However, studies consistently have shown a high rate of erroneous payments. A recent study indicated the error rate was between $8.5 billion and $9.9 billion (27 percent to 31.7 percent) for tax year 1999. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-grants-tax-relief-for-hurricane-isabel-victims

IR-2003-112, Sept. 24, 2003 (Updated 10/2/03 to add 10 counties in North Carolina) (Updated 10/9/03 to add 11 more counties in North Carolina) WASHINGTON — The Internal Revenue Service today announced special tax relief for residents in the Presidential Disaster Areas that were struck by Hurricane Isabel, beginning Sept. 18, 2003. This relief applies in the District of Columbia and parts of four states which the Federal Emergency Management Agency has declared eligible for individual assistance. The relief gives affected individual and business taxpayers additional time to file and pay certain taxes, and it provides affected employers extra time to make federal tax deposits. “We are providing relief to taxpayers in four states hit by Hurricane Isabel, which is consistent with our practice in Presidential Disaster Areas,” said IRS Commissioner Mark W. Everson. “Especially in these difficult circumstances, the IRS wants to help people meet their tax obligations with the least amount of burden.” Those states and counties covered by today’s announcement are: In Delaware, the counties of: Kent, New Castle and Sussex. In Maryland, the City of Baltimore and the counties of: Allegany, Anne Arundel, Baltimore, Calvert, Caroline, Carroll, Cecil, Charles, Dorchester, Frederick, Garrett, Harford, Howard, Kent, Montgomery, Prince George's, Queen Anne's, Somerset, St. Mary's, Talbot, Washington, Wicomico and Worcester. In North Carolina, the counties of: Beaufort, Bertie, Bladen, Brunswick, Camden, Carteret, Chowan, Columbus, Craven, Cumberland, Currituck, Dare, Davidson, Duplin, Durham, Edgecombe, Franklin, Gates, Granville, Greene, Halifax, Harnett, Hertford, Hyde, Johnston, Jones, Lenoir, Martin, Nash, New Hanover, Northampton, Onslow, Pamlico, Pasquotank, Pender, Perquimans, Person, Pitt, Robeson, Sampson, Tyrrell, Vance, Wake, Warren, Washington, Wayne and Wilson. In Virginia, the cities of: Alexandria, Bedford, Buena Vista, Charlottesville, Chesapeake, Colonial Heights, Danville, Emporia, Falls Church, Fairfax, Franklin, Fredericksburg, Hampton, Harrisonburg, Hopewell, Lynchburg, Manassas, Manassas Park, Newport News, Norfolk, Petersburg, Poquoson, Portsmouth, Richmond, Staunton, Suffolk, Virginia Beach, Waynesboro, Williamsburg and Winchester; and the counties of: Accomack, Albemarle, Amelia, Amherst, Appomattox, Arlington, Augusta, Bedford, Brunswick, Buckingham, Campbell, Caroline, Charles City, Charlotte, Chesterfield, Clarke, Culpeper, Cumberland, Dinwiddie, Essex, Fairfax, Fauquier, Fluvanna, Frederick, Gloucester, Goochland, Greene, Greensville, Halifax, Hanover, Henrico, Isle of Wight, James City, King George, King William, King and Queen, Lancaster, Louisa, Loudoun, Lunenburg, Madison, Mathews, Mecklenburg, Middlesex, Nelson, New Kent, Northampton, Northumberland, Nottoway, Orange, Page, Pittsylvania, Powhatan, Prince Edward, Prince George, Prince William, Rappahannock, Richmond, Rockbridge, Rockingham, Shenandoah, Southampton, Spotsylvania, Stafford, Surry, Sussex, Warren, Westmoreland and York. The Extension Date for the items described below under “Extensions to File or Pay Taxes” is Nov. 18, 2003, except for Federal Tax Deposits for which the extension date is Sept. 29. The Designated Period for extensions is Sept. 18 through Nov. 18, 2003. The Disaster Designation for this area is “Hurricane Isabel” — taxpayers mark certain relief-related forms with this designation. Affected Taxpayers For the purposes of this tax relief, affected taxpayers include individuals and businesses located in the disaster area, those whose tax records are located in the disaster area, and relief workers. The same relief will also apply to any counties added to the Presidential disaster area. Extensions to File or Pay Taxes The IRS gives affected taxpayers until the Extension Date to file tax returns or make tax payments that have either an original or extended due date falling within the Designated Period. The IRS will abate interest and any late filing or late payment penalties that would apply during these dates to returns or payments subject to these extensions. The IRS also gives affected taxpayers until the Extension Date to perform certain other time-sensitive actions described in Treasury Regulation § 301.7508A-1(c)(1) and Rev. Proc. 2002-71, 2002-46 I.R.B. 850, that are due to be performed during the Designated Period. This relief includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2002-71. This extension to file and pay does not apply to information returns (other than Form 5500 series), or employment and excise tax deposits; however, penalties on deposits due during this period may be abated based on reasonable cause, as long as the tax deposit is made by Sept. 29, 2003. To qualify for this relief, affected taxpayers should put the Disaster Designation assigned for their area in red ink at the top of the return, except for Form 5500, where filers should check Box D in Part 1 and attach a statement, following the form’s instructions. Individuals or businesses located in the disaster area — or taxpayersoutside the area that were directly affected by these storms — should contact the IRS if they receive penalties for filing returns or paying taxes late. Casualty Losses Affected taxpayers in a Presidential Disaster Area have the option of claiming disaster-related casualty losses on either their 2002 or 2003 federal income tax returns. Claiming the loss on an original or amended 2002 return will get the taxpayer an earlier refund, but waiting to claim the loss on the 2003 return could result in a greater tax saving, depending on other income factors. Individuals may deduct personal property losses that are not covered by insurance or other reimbursements, but they must first subtract $100 for each casualty event and then subtract ten percent of their adjusted gross income from their total casualty losses for the year. For details on figuring a casualty loss deduction, see IRS Publication 547, “Casualties, Disasters and Thefts.”  Affected taxpayers claiming the disaster loss on a 2002 return should put the Disaster Designation assigned for their area in red ink at the top of the form so that the IRS can expedite the processing of the refund. Other Relief The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers who need them to apply for benefits or to file amended returns claiming casualty losses. Such taxpayers should put the Disaster Designation assigned for their area in red ink at the top of Form 4506, “Request for Copy or Transcript of Tax Form,” and submit it to the IRS. Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case. Taxpayers may download forms and publications from the IRS Web site at www.irs.gov or may order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040. Related Items: Rev. Proc. 2002-71, time-sensitive actions (104KPDF) Pub. 547, Casualties, Disasters and Thefts (125KPDF) Pub. 584, Casualty, Disaster and Theft Loss Workbook (140KPDF) Pub. 584B, Business Casualty, Disaster and Theft Loss Workbook (66KPDF) Pub. 3833, Disaster Relief: Providing Assistance through Charitable Organizations (507KPDF) — explains how the public can use charitable organizations to help victims of disasters, and how new organizations to aid disaster victims may obtain tax-exempt status Form 1040X, Amended Federal Income Tax Return (27KPDF) Instructions for Form 1040X (45KPDF) Form 4506, Request for Copy or Transcript of Tax Form (36KPDF) (You may complete and print a fill-in form online, but Acrobat Reader may not save your entries with the file.) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-and-states-announce-partnership-to-target-abusive-tax-avoidance-transactions

IR-2003-111, Sept. 16, 2003 WASHINGTON — Internal Revenue Service and state tax officials today announced the establishment of a new nationwide partnership to combat abusive tax avoidance. Under agreements with individual states, the IRS will share information on abusive tax avoidance transactions and those taxpayers who participate in them. The agreements creating this partnership are designed to enable both state and federal governments to move more aggressively in the fight to ensure all taxpayers pay their fair share. Forty states and the District of Columbia join the IRS today in announcing the signing of agreements. "This agreement marks a milestone in state and federal cooperation," said IRS Commissioner Mark W. Everson. "From today forward, we will work together combating abusive tax schemes. We will share information and coordinate case management. This agreement effectively extends the resources of the IRS and the states.” Under the partnership, the IRS will exchange information about abusive tax avoidance transaction leads with participating states.  This will allow the IRS and state agencies to avoid duplication and to piggyback on the results of each other’s work.  The states and the IRS will then share information on any resulting tax adjustments, reducing the need for duplicating lengthy taxpayer examinations by both a state and the IRS.  Representatives from California, Louisiana, Maryland, Massachusetts, New Jersey, New York, Virginia and the District of Columbia joined with Everson for today’s announcement of the historic initiative. “The states and the IRS share a common goal to dry up abusive schemes,” said Stephen M. Cordi, President of the Federation of Tax Administrators and deputy comptroller of Maryland.  “This new partnership will strengthen overall tax administration at the federal and state levels and present a united compliance front against those taxpayers tempted by improper avoidance transactions.” The Federation of Tax Administrators (FTA) represents all state tax agencies in the 50 states, the District of Columbia and New York City. The additional 33 states announcing the signing of the partnership agreement include:  Alabama, Arizona, Arkansas, Connecticut, Georgia, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Washington, West Virginia and Wisconsin.  More states are expected to sign the agreement in the weeks ahead.    The Abusive Tax Avoidance Transactions (ATAT) memorandum of understanding between individual states and the IRS was a joint effort, negotiated over the past year, by representatives of the IRS Small Business/Self-Employed (SB/SE) Division, FTA and several state tax agencies.  SB/SE Commissioner Dale F. Hart stated at today’s event, “This agreement is a testament to the positive impact that partnering can have on good tax administration.  It’s a smart, common-sense approach and the latest in the government’s ongoing efforts to ensure the fairness of the American tax system.” The ATAT memorandum of understanding focuses solely on abusive tax avoidance transactions.  The agreement leaves procedures governing communication on more routine taxpayer compliance efforts unchanged.  This maintains the important separation of federal and state tax authority and protection of taxpayer privacy. “We treat taxpayer privacy as a top priority,” said Everson.  “This agreement does not impede our high standards for protecting taxpayer rights or privacy.  The information shared under this agreement will be strictly limited to that pertaining to abusive transactions.” In addition to greater cooperation in sharing leads in the area of abusive tax transactions, the partnership with the states includes joint outreach activities to the public to more effectively counter the claims of those marketing tax schemes and scams. Related Items: IRS, States Move Forward in Fight Against Abusive Tax Avoidance — Feb. 2004 Remarks from IRS Commissioner Mark Everson Remarks from Dale Hart, Commissioner, SB/SE Division Statements from State Tax Administrators Memorandum of Understanding Tax Shelter Updates   Subscribe to IRS Newswire  

https://www.irs.gov/newsroom/change-in-interest-rates-for-the-fourth-quarter-of-2003

WASHINGTON — The Internal Revenue Service today announced there will be a change in the interest rates for the calendar quarter beginning October 1, 2003.  The interest rates are as follows:   four (4) percent for overpayments [three (3) percent in the case of a corporation]; four (4) percent for underpayments; six (6) percent for large corporate underpayments; and one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000. Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.  Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points.  The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.  The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point. The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during July 2003. Rev. Rul. 2003-104, announcing the new rates of interest, will appear in Internal Revenue Bulletin No. 2003-39, dated September 29, 2003. Related Item:  Revenue Ruling 2003-104PDF Subscibe to IRS Newswire

https://www.irs.gov/newsroom/irs-reminds-businesses-of-retirement-plan-deadline

IR-2003-109, Sept. 15, 2003 WASHINGTON — The Internal Revenue Service today reminded approximately 750,000 small and mid-size businesses using “off-the-shelf” retirement plan documents that they must update their plans by Sept. 30, 2003, to maintain the tax benefits. Businesses that act after the deadline must pay a compliance fee to avoid loss of tax benefits. The Sept. 30 deadline applies to small businesses that obtain certain IRS approved “off-the-shelf” plan documents from plan sponsors, such as banks, brokers, insurance companies, lawyers or consultants. The plans are the so-called Master & Prototype (M&P) plans and Volume Submitter plans. Even though such plans are approved and sponsors have updated them, businesses must still formally adopt the updated plans by Sept. 30. To do so, businesses should contact their plan sponsor. Some M&P and Volume Submitter plans must also file determination letter requests in order to keep their plans in compliance with the law. In Revenue Procedure 2003-72, the IRS extended the deadline for filing a determination letter request to Jan. 31, 2004, for employers who adopt their plan amendments by the Sept. 30, 2003, deadline. Employers who fail to amend their plans by Sept. 30, 2003, must apply for a determination letter to avoid plan disqualification, and, under the Revenue Procedure 2003-72, they will also have until Jan. 31, 2004, to apply. But they must pay a $250 compliance fee with their application. Paul Shultz, director of IRS’s Employee Plans Rulings & Agreements, said, “We’ve heard from the benefits community about the pressure that the fast-approaching deadline will cause on employers, especially small business owners. We’re trying to encourage employers to act now and contact their plan sponsors.” Both businesses and their employees enjoy tax benefits from retirement plans that are in compliance with the law. Failure – even inadvertent failure – to act by the deadline could cost a retirement plan tax-favored status. Employers or plan sponsors in need of more information should visit the Retirement Plans Web page, or call customer account services toll-free at 1-877-829-5500. Related Items: Retirement Plans Employee Plans News, Special Edition, August 2003 -- Includes a discussion of Revenue Procedure 2003-72 (64KPDF) Revenue Procedure 2003-72 (77KPDF) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/over-the-counter-drugs-to-be-covered-by-health-care-flexible-spending-accounts

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

https://www.irs.gov/newsroom/irs-selects-five-new-members-for-electronic-tax-administration-advisory-committee

IR-2003-107, Sept. 3, 2003 WASHINGTON — The Internal Revenue Service today announced the selection of five new members for the Electronic Tax Administration Advisory Committee (ETAAC). The new members will serve concurrently with, and then replace, five current members whose terms end in 2003. ETAAC serves as a public forum for discussion of electronic tax administration issues. The group supports the goal of increasing electronic interaction between taxpayers and the IRS. Currently, the group is comprised of 14 members, including the five outgoing members. The addition of the five new members will ensure continuity when the terms of the current members end. The new members are: David H. Boucher of Goshen, New York. Boucher is the president of Decision Modeling, Inc. Boucher created the interest analysis software InterestNet, a product used in the federal interest computations.        Grace Dietrich of Sarasota, Florida. Dietrich is Senior Vice President – Technology with Jackson Hewitt. As the chief information officer for Jackson Hewitt, Dietrich has direct responsibility for electronic filing and bank product processing.    Mary Jane Egr, of Lincoln, Nebraska. Egr is the state tax commissioner for Nebraska and is responsible for all electronic tax administration in the state of Nebraska. During her tenure, Nebraska has initiated many federal and state electronic options for filing and paying taxes.    Larry L. Gray of Rolla, Missouri. Gray is the owner of Alfermann, Gray & Co., CPA (AG Investments). Gray is a member of professional organizations such as the National Association of Tax Preparers and the American Institute of Certified Public Accountants, and uses electronic filing and paying in his practice.   Leonard B. Holt of Rome, Georgia. Holt is Vice President, Operations, for Universal Tax Systems, Inc. Holt has successfully used, developed and marketed electronic tax products for a number of companies over the course of his career. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/teachers-should-save-receipts-for-educators-deduction

IR-2003-106, Sept. 2, 2003 WASHINGTON — As the new school year begins, the Internal Revenue Service reminds teachers and other educators to save their receipts for purchases of books and classroom supplies. These out-of-pocket expenses may lower their 2003 taxes. The deduction is available to eligible educators in public or private elementary or secondary schools. To be eligible, a person must work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide. Taxpayers may subtract up to $250 of qualified expenses when figuring their adjusted gross income (AGI) for 2003. This deduction is available whether or not the taxpayer itemizes deductions on Schedule A. The IRS suggests that educators keep records of qualifying expenses in a folder or envelope with a label such as “Educator Expenses Deduction,” noting the date, amount and purpose of each purchase. This will help prevent a missed deduction at tax time. This is scheduled to be the last year for this deduction. Last year’s Job Creation and Worker Assistance Act put it in place for 2002 and 2003 only. For more information, call the IRS Tele-Tax system toll-free at 1-800-829-4477 and select Topic 458, or read it online. Related Item: Tax Topic 458 — Educator Expense Deduction Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-grants-tax-relief-for-victims-of-california-wildfires

IR-2003-126, Oct. 28, 2003 (Updated 11/3/03 to add Riverside County.) (Updated 12/5/03 to add incident ending date) (Updated  2/6/04 to expand disaster description and extend incident ending date) WASHINGTON — The Internal Revenue Service today announced special tax relief for Southern California residents in the Presidential Disaster Area that was struck by wildfires, flooding, mudflow and debris flow beginning Oct. 21, 2003, and ending Mar. 31, 2004. The disaster area counties are: Los Angeles, Riverside, San Bernardino, San Diego and Ventura. The FTD Penalty Waiver Period for employment and excise tax deposits is Oct. 21 - Nov. 7, 2003. The Extension Period for returns and other tax payments is Oct. 21 through Dec. 29, 2003. The Disaster Designation for this area is “CA Wildfires” – taxpayers mark certain relief-related forms with this designation. Relief Provisions Subscribe to IRS Newswire

https://www.irs.gov/newsroom/millions-in-refund-and-child-credit-checks-returned-to-irs-taxpayers-urged-to-update-addresses-by-dec-5

IR-2003-125, Oct. 27, 2003 WASHINGTON — IRS Commissioner Mark W. Everson reminded taxpayers they have until Dec. 5 to claim 115,744 undelivered checks from this summer’s advance child tax credit. After the December cut-off, taxpayers cannot claim the checks until they file their tax returns next year. These undelivered checks are among nearly 24 million issued this summer and fall for the advance child tax credit. In all, more than $14 billion in child credit checks have been issued. “Time is running out to get an advance child credit check,” Everson said. “We encourage taxpayers to visit IRS.gov to see if they have an undelivered check from the advance child tax credit mail-out.” In all, the IRS has money for more than 200,000 taxpayers whose income tax refund or advance child tax credit checks were undelivered and returned to the agency. Taxpayers need to update their addresses before the IRS can reissue the checks, which total more than $118 million. In addition to the 115,744 child credit checks worth more than $50 million, there were another 92,810 “regular” tax refund checks, those issued to refund tax overpayments, returned to the IRS as undelivered. These “regular” refund checks total more than $66 million — an average of $722 per check. "Our Web site makes it easy for taxpayers to track undelivered checks," Everson said. “Our goal is to get this money back in the hands of the people it belongs to, and we want to get the checks out as soon as possible.” IRS.gov, the IRS Web site, lets taxpayers track both their refund and their advance child tax credit. "Where's My Refund?" provides information about refunds and “Where’s My Advance Child Tax Credit?” provides information about the tax credit. Both are available on the IRS home page. To use the resources on IRS.gov, taxpayers enter information including their Social Security number and their filing status (such as single or married filing jointly). In addition, the refund amount shown on their 2002 tax return is required for refunds. To get information on the advance child tax credit, taxpayers must also enter the number of exemptions shown on their 2002 tax return. When the information is submitted online, taxpayers see Web pages that show the status of their refund or advance child tax credit check. In many cases, they also get instructions they need to resolve problems. “All we need is a good address,” Everson said. “As soon as we get the correct address we can start the check on its way. We urge taxpayers to act before Dec. 5 for the advance payments so we can reissue the checks before the end of the year.” Taxpayers without access to the Internet who think they may be missing a refund or advance child tax credit check should first check their records or contact their tax preparer before calling the IRS toll-free assistance line at 1-800-829-1040 to update their address. Taxpayers can avoid undelivered refund checks by having their refunds deposited directly into a personal checking or savings account. Direct deposit also guards against theft or lost refund checks. The option is available on both paper returns and electronically filed returns. More than 44 million taxpayers chose direct deposit this filing season, up 11.6 percent from last year. Direct deposit was not available for the advance child tax credit checks. Refund checks go astray for reasons that can vary with each taxpayer. Often, it’s because a life change causes an address change. If taxpayers move or change their address and fail to notify the IRS or the U.S. Postal Service, a check sent to their last known address is returned to the IRS. The Postal Service says more than 40 million Americans change addresses annually. Taxpayers who have moved since filing their last tax return can ensure the IRS has their correct address by filing Form 8822, Change of Address, with the IRS. Download the form or request it by calling 1-800-TAX-FORM (1-800-829-3676). Related Items: Where’s My Refund? Where’s My Advance Child Tax Credit? Form 8822, Change of Address (24KPDF) (You may complete and print a fill-in form online, but Acrobat Reader may not save your entries with the file.) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-reminds-taxpayers-of-application-fee-for-offers-in-compromise

  Update Jan. 6, 2014 — Use Form 656 BookletPDF, Offer in Compromise, to find the correct form to use.IR-2003-124, Oct. 23, 2003 WASHINGTON — Starting Nov. 1, 2003, the Internal Revenue Service will begin charging, with some exceptions, a $150 application fee to process offers in compromise. An offer in compromise (OIC) allows taxpayers to settle their tax liabilities for less than the full amount. The fee will help offset the cost of providing this service, as well as reduce the number of offers that are filed inappropriately, for example, only to delay collection. Taxpayers will be exempt from the fee if their monthly income falls at or below levels based on the Department of Health and Human Services poverty guidelines or if they file offers based solely on doubt as to liability. The poverty guideline exception applies only to individuals. Taxpayers who claim the poverty guideline exception must certify their eligibility using Form 656-A, “Offer in Compromise Application Fee Instructions and Certification.” To submit an OIC, taxpayers must use the May 2001 version of Form 656, "Offer in Compromise." Those requesting an OIC must have filed all required federal tax returns and not be a debtor in a bankruptcy case. If in business, they must also have filed and paid any required employment tax returns on time for the two quarters prior to filing the OIC and be current with deposits for the quarter in which the offer in compromise was submitted. Those who file an OIC postmarked on or after Nov. 1, 2003, and do not meet one of the exceptions, must submit the application fee using a check or money order made payable to the United States Treasury. Cash payments will not be accepted. Related Item: IR 2003-99 — News Release announcing OIC application fee (You may complete and print a fill-in form online, but Acrobat Reader may not save your entries with the file.) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-issues-summer-2003-statistics-of-income-bulletin

IR-2003-123, Oct. 16, 2003 WASHINGTON — The Internal Revenue Service today announced the release of the Summer 2003 issue of the Statistics of Income Bulletin. It includes articles on sole proprietorship returns, corporation income tax returns, foreign-controlled domestic corporations, sales of capital assets reports on individual income tax returns, U.S. possessions corporation returns and foreign recipients of U.S. income. The Bulletin contains an in-depth look at nonfarm sole proprietorship profits, which increased 1.2 percent for Tax Year 2001 to $217.4 billion. The largest percentage increase in profits for a major industrial sector was 7.8 percent for transportation and warehousing. Health care and social assistance had the largest dollar increase ($2.8 billion) and second largest percentage increase, with 7.6 percent. In addition, the Bulletin contains the following articles: Corporate pre-tax profits for 2000 remained near 1999 levels, decreasing slightly from $929.0 billion for 1999 to $927.5 billion for 2000, or 0.2 percent. Despite this leveling off, there was an increase in profits reported by corporations with positive net income.  Corporations also claimed more tax credits for 2000, but the amount payable to the U.S. Government still grew from $193.0 billion for 1999 to $204.0 billion for 2000, an increase of 5.7 percent.   Foreign-controlled domestic corporations (FCDC's) in the United States reported $2.6 trillion of total receipts for 2000, an increase of $444.5 billion over 1999. Two industrial sectors, manufacturing and wholesale trade, generated more than 67 percent of the total receipts. Manufacturers produced $1.2 trillion, while wholesalers accounted for an additional $0.6 trillion. Japan produced 20.3 percent of the FCDC total with $529.8 billion. The United Kingdom was second with 14.0 percent, followed by Germany with 12.8 percent and the Netherlands with 12.7 percent.    Net capital gains increased to $530.7 billion for Tax Year 1999 – up more than 22 percent over the previous year. Taxpayers reported 182.4 million transactions, an increase of more than 28 percent. More than 57 percent of these transactions were corporate stock sales. The total sales price for all assets increased by more than 54 percent to approximately $3.6 trillion over the previous year’s amount.    For 1997 and 1999, the number of corporations claiming a possessions tax credit and the total amount of the credit continued to decline. U.S. possessions corporations reported $2.8 billion and $1.6 billion of possessions tax credits for 1997 and 1999, respectively. As in prior years, the majority of claims are from corporations located in Puerto Rico. Drug manufacturers reported the bulk of the possessions tax credit, claiming $1.6 billion and $866 million for 1997 and 1999, respectively.   The final Bulletin article shows that United States-source income payments to “foreign persons” totaled $139.7 billion in 2000. This represents a decrease of 12 percent from 1999. Tax withheld on U.S.-source income payments fell 38.4 percent, to $2.3 billion, while the effective U.S. tax rate on payments made to foreign recipients (U.S. tax withheld divided by total U.S.-source income) fell from 2.3 percent to 1.6 percent for Tax Year 2000. Meanwhile, the total number of payments reported on Form 1042S rose to an all-time high of 2.53 million. Nearly 88 percent ($122.3 billion) of all income paid to foreign persons came from interest payments, an increase of 18.5 percent. The Bulletin includes historical data on income, deductions and tax reported on returns filed by individuals, corporations and unincorporated businesses, with selected data presented for estates. Statistics are also presented on tax collections, including excise taxes by type, and refunds for recent years. The Statistics of Income Bulletin is available from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. The annual subscription rate is $53 ($74.20 foreign), single issues cost $39 ($48.75 foreign). For more information about these data, write the Director, Statistics of Income (SOI) Division, RAS:S, Internal Revenue Service, P.O. Box 2608, Washington, DC 20013-2608; call the SOI Statistical Information Services office at (202) 874-0410; or fax, (202) 874-0964.  Related Items: Summer 2003 SOI Bulletin SOI Bulletins — back to Winter 1997-98 issue Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-announces-pension-plan-limitations-for-2004

IR-2003-122, Oct.16, 2003 WASHINGTON — The Internal Revenue Service today announced cost‑of‑living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2004.  Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. It also requires that the Commissioner annually adjust these limits for cost‑of‑living increases. Many of the pension plan limitations will change for 2004. For most of the limitations, the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. Furthermore, several limitations, set by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), are scheduled to increase at the beginning of 2004. For example, under EGTRRA, the limitation under section 402(g)(1) on the exclusion for elective deferrals described in section 402(g)(3) is increased from $12,000 to $13,000.  This limitation affects elective deferrals to section 401(k) plans and to the Federal Government’s Thrift Savings Plan, among other plans. Cost-of-Living limits for 2004 Effective January 1, 2004, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) is increased from $160,000 to $165,000.  For participants who separated from service before January 1, 2004, the limitation for defined benefit plans under section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2003, by 1.0220. The limitation for defined contribution plans under section 415(c)(1)(A) is increased from $40,000 to $41,000. The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of section 415(b)(1)(A).  These dollar amounts and the adjusted amounts are as follows: The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $200,000 to $205,000. The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $130,000. The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5‑year distribution period is increased from $810,000 to $830,000, while the dollar amount used to determine the lengthening of the 5‑year distribution period is increased from $160,000 to $165,000. The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $90,000. The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost‑of‑living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $300,000 to $305,000. The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $450. The compensation amounts under Section 1.61‑21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation purposes remains unchanged at $80,000. The compensation amount under Section 1.61‑21(f)(5)(iii) is increased from $160,000 to $165,000. Limitations specified by statute The Code, as amended by the Economic Growth and Tax Relief Act of 2001 (EGTRRA), specifies the applicable dollar amount for a particular year for certain limitations. These applicable dollar amounts are as follows: The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) is increased from $12,000 to $13,000. The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $8,000 to $9,000. The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $12,000 to $13,000. The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or 408 (p) for individuals aged 50 or over is increased from $2,000 to $3,000. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or 408 (p) for individuals aged 50 or over is increased from $1,000 to $1,500. Administrators of defined benefit or defined contribution plans that have received favorable determination letters should not request new determination letters solely because of yearly amendments to adjust maximum limitations in the plans. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/2004-standard-mileage-rates-set-800000-more-businesses-eligible

IR-2003-121, Oct. 15, 2003 WASHINGTON — The Internal Revenue Service today released the optional standard mileage rates to use for 2004 in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes. To reduce a recordkeeping burden, the IRS also announced that taxpayers who use no more than four vehicles at the same time for business purposes may use the standard mileage rate, starting in 2004. Currently, those using more than one vehicle at a time cannot use the standard rate at all, leaving them to track the actual expenses for each vehicle. “With this change, more than 800,000 businesses will become eligible to use the standard mileage rate,” said IRS Commissioner Mark W. Everson. “This reflects our ongoing interest in reducing the burden for businesses to comply with the tax laws.” Although many taxpayers may still claim actual vehicle expenses for various reasons, the IRS estimates that small businesses will save 8-10 million hours a year in recordkeeping with this expansion of the standard rate option. A taxpayer may not use the standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, or for any vehicle used for hire. Beginning Jan. 1, 2004, the standard mileage rates for the use of a car (including vans, pickups, or panel trucks) will be: 37.5 cents a mile for all business miles driven, up from 36 cents a mile in 2003; 14 cents a mile when computing deductible medical or moving expenses, up from 12 cents a mile in 2003; and 14 cents a mile when giving services to a charitable organization. Members of Congress welcomed the change. Senator Olympia  J. Snowe of Maine, chair of the Senate Committee on Small Business and Entrepreneurship, said, "I applaud the IRS for adopting this simplification measure for small businesses. This change will allow certain small businesses to put a stop to the time-consuming, costly and inconvenient practice of maintaining detailed paper records and, instead, use a simpler, standard mileage rate for business travel expenses when preparing their taxes. The IRS is providing the kind of relief that small business owners critically need:  relief that allows them to cut the time spent complying with tax laws while expanding the time left over to do what they do best, namely running their businesses and creating critical jobs for this economy." Rep. Don Manzullo of Illinois, chairman of the House Small Business Committee, said, "These changes by the Internal Revenue Service will provide additional needed tax relief to our struggling small businesses so they can once again lead us to recovery. More than 800,000 small businesses will benefit from these changes. In addition to the tax reductions, they will save eight to 10 million hours a year in record-keeping burdens so that they can now focus on their businesses. I congratulate IRS Commissioner Everson for his leadership in making these changes and helping America's small businesses." Rep. Doug Ose of California, Chairman of the House Government Reform Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs, which has principal oversight over paperwork reduction, said,  "I applaud Commissioner Everson’s initiative, which will result in a 8-10 million hour burden reduction for small businesses. The paperwork burden on small business is enormous. This reduction in tax recordkeeping is a step in the right direction." The standard mileage rates for business, medical and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile. The primary reason for the mileage rate increases is the rise in fuel prices during the study period, which ended on June 30. An independent contractor, Runzheimer International, conducted the study on behalf of the IRS. The charitable standard mileage rate is set by law. Revenue Procedure 2003-76 contains additional information on these standard mileage rates. It will appear in Internal Revenue Bulletin 2003-43, dated October 27, 2003. Related Item:  Rev. Proc. 2003-76 (151K)PDF Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-ftc-and-state-regulators-urge-care-when-seeking-help-from-credit-counseling-organizations

IR-2003-120, Oct. 14, 2003 WASHINGTON — The Internal Revenue Service, the Federal Trade Commission and state regulators today issued a consumer alert for those seeking assistance from tax-exempt credit counseling organizations. Paying bills is never easy, but job loss, divorce or unexpected medical bills can be devastating to a consumer. Many consumers seek help from non-profit credit counseling organizations in managing their debt or “repairing” damaged credit. The IRS, FTC and state agencies urge consumers to be cautious when choosing a credit counseling organization. Many credit counseling organizations provide valuable advice, education and assistance to those seeking to better manage their debt. But an increasing number of complaints to federal and state agencies indicates that some organizations are engaging in questionable activities. Federal and state regulators are concerned that some credit counseling organizations using questionable practices may seek tax-exempt status in order to circumvent state and federal consumer protection laws. State and federal statutes regulating credit counseling agencies often do not apply to Section 501(c)(3) tax-exempt organizations. “Many of these groups provide a valuable service to consumers, but some use the tax code to skirt consumer-protection laws,” said IRS Commissioner Mark W. Everson. “The IRS will work to protect the integrity of the tax law to ensure that tax-exempt organizations understand and comply with the rules. We will work with other federal agencies and state regulators to combat abuse in this area. It is not fair to taxpayers struggling with financial problems to be taken advantage of by credit counseling groups exploiting gaps in the law.” Consumers need to be wary of the “quick fixes” offered by some organizations. “Consumers who are struggling financially need to be careful not to lose even more money to someone offering a quick and easy way to fix credit problems,” said Timothy J. Muris, Chairman of the FTC. “We want all consumers seeking help to take some common sense precautions.” Consumers can help protect themselves from deceptive credit counseling practices by following these tips: Check that the organization will help you manage your finances better through counseling and education. Carefully read through any written agreement that a credit counseling organization offers. It should describe in detail the services to be performed; the payment terms for these services, including their total cost; how long it will take to achieve results; any guarantees offered; and the organization’s business name and address. Beware of high fees or required “voluntary contributions” that, with high monthly service charges, may add to your debt and defeat your efforts to pay your bills. It is illegal to represent that negative information, such as bankruptcy, can be removed from your credit report. Promises to “help you get out of debt easily” are a red flag. Make sure that your creditors are willing to work with the agency you choose. If they are, follow up with those creditors regularly to make sure your debt is being paid off. Check with state agencies and your local Better Business Bureau to find out about a specific credit counseling organization’s record. A list of helpful Web sites appears at the bottom of this release. “State charity officials are working with other state and federal agencies to remedy abuses in this area, and to assure that nonprofit credit counseling organizations operate in accordance with the charitable trust or non-profit corporation laws under which they are formed,” said Mark Pacella, president of the National Association of State Charity Officials (NASCO). To address some of the concerns, the IRS has stepped up its enforcement efforts to ensure that existing Section 501(c)(3) organizations are complying with the applicable rules and regulations. Further information and background can be found in Fact Sheet 2003-117. If consumers believe that they have been victims of credit improvement fraud, they should immediately file a complaint with the FTC by calling toll free: 1-877-FTC-HELP, or online at the Federal Trade Commission Web site. Additional Media Contacts: Cathy MacFarlane Office of Public Affairs Federal Trade Commission 202-326-2180 Mark Pacella President National Association of State Charity Officials 717-783-2853 Related Items: Commissioner Mark W. Everson's congressional testimony on credit counseling organizations, Nov. 20, 2003 ( 142KPDF) Fact Sheet 2003-117 Federal Trade Commission — Become familiar with the latest scam alerts; file complaints. Tax Information for Charities & Other Non-Profits — Determine whether the organization is tax-exempt and what an organization must do to maintain that status. National Association of State Charity Officials — Obtain a list of state charity official offices. On the FTC website — Fiscal Fitness: Choosing a Credit Counselor and Knee Deep in Debt Subscribe to IRS Newswire

https://www.irs.gov/newsroom/new-irs-fax-guidelines-ease-burden-on-taxpayers

IR-2003-119, Oct. 9, 2003 WASHINGTON — The Internal Revenue Service today announced new facsimile guidelines that will make it easier for taxpayers and tax professional to correspond with the agency. The new guidelines will expand the list of documents and information the IRS will accept via fax. The expanded guidelines stem from recommendations from tax professional organizations. The changes are aimed at reducing the burden on taxpayers and practitioners and shortening the time it takes to resolve tax inquiries and cases. The new guidelines became effective Oct. 1, 2003.   These guidelines will save time and effort. The changes will mean taxpayers can resolve issues before the IRS more quickly. The IRS also thanks the National Society of Accountants and other tax professional groups who brought this issue forward. The agency is committed to considering any good idea that will ease the burden on taxpayers. The new fax guidelines apply only to taxpayers and their representatives who are engaged in an on-going contact with the IRS, such as an examination or resolving questions about tax returns that are being processed. The fax can only take place after a discussion with the IRS employee who is requesting the information.   These general guidelines are applicable to all divisions and cover operations related to income tax, employment tax, excise tax, estate tax, gift tax, and generation skipping tax, as well as tax exempt and employee plans determinations. While the IRS has previously accepted forms via fax in limited situations (such as 1120-S elections and Powers-of-Attorney) the new guidelines permit an expanded number of forms and other types of documentation to be submitted by fax in the course of many return related inquiries. Related Item: FAX Guidelines Subscribe to IRS Newswire

https://www.irs.gov/newsroom/new-irs-material-helps-retirement-plans-stay-compliant

IR-2003-118, Oct. 8, 2003 WASHINGTON — The Internal Revenue Service today released new materials, including a CD-ROM, to help small businesses and plan administrators understand how to keep employee retirement plans eligible for tax-favored status. These materials, in various formats, explain the IRS programs available to assist employee-retirement plan administrators navigate the complex tax laws. The materials also explain how to correct errors in the plans, often without even having to notify or correspond with the IRS. Errors could have tax implications not only for employee plans but also for employees. “The IRS is committed to providing businesses and plan sponsors with all the information they need and to presenting it in any format they find helpful,” said Carol Gold, director of employee plans for IRS. “We want all plans to stay compliant, and we will do what we can to help.” First, Publication 4224, “Retirement Plan Correction Programs,” is a pamphlet that provides a synopsis of the various correction programs operated by the IRS, the Department of Labor (DOL) and the Pension Benefit Guaranty Corporation (PBGC). This tool, which is especially helpful to plan sponsors and practitioners, explains the help available for a variety of plan problems. Second, Publication 4050, “Retirement Plan Correction Programs,” is a CD-ROM, that offers a more in-depth guide to the correction programs sponsored by the IRS, DOL and PBGC. Highlights of the CD-ROM include: IRS Revenue Procedure 2003-44, which sets forth the procedures relating to the IRS’s correction programs, and a linked in-depth topical index. A plain-language explanation of the IRS’s retirement plan correction programs and procedures, with links to definitions and relevant sections of Revenue Procedure 2003-44. Video clips explaining the need for ongoing retirement plan self-audit programs and available correction programs. A “Guide to Common Qualification Requirements” to help employers understand their responsibilities under the law. Examination Guidelines. Links to the IRS, DOL and PBGC web sites. Frequently asked questions (FAQs) on IRS and DOL correction programs. FAQs on IRA-Based Plans (SEP, SARSEP and SIMPLE). The CD-ROM is an excellent reference tool for tax practitioners and plan sponsors, as well as for businesses that maintain plans for their employees. Finally, at IRS.gov is an online version of the CD-ROM materials (minus video clips). This material is available at the Retirement Plans web page. This online information allows plan sponsors and practitioners to keep up with the latest information or any changes to the IRS correction programs that would not be reflected on the CD-ROM. In June 2003, the IRS announced it had streamlined its system of voluntary correction programs designed to help retirement plan sponsors, administrators and businesses retain the favorable tax status of their plans. The changes will make it easier for employee retirement plans to come into compliance with the law and protect the retirement benefits of participating employees. The new materials provide information on programs available to businesses and plan experts under the Employee Plans Compliance Resolution System, or EPCRS. The pamphlet and the CD-ROM can be ordered by calling 1-800-829-3676. Related Items: Employee Plans Compliance Resolution System Publication 4224, “Retirement Plan Correction Programs ( 630KPDF) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-selects-carl-t-froehlich-as-chief-of-agency-wide-shared-services

IR-2003-117,  Oct. 8, 2003 WASHINGTON — The Internal Revenue Service announced today the appointment of Carl T. Froehlich to head Agency-Wide Shared Services. AWSS develops procedures and implements policy for the IRS’s internal real estate and facilities management, EEO and Diversity, personnel, procurement and customer support activities.  “Carl brings a wide range of expertise to lead an important part of the IRS,” said IRS Commissioner Mark W. Everson. “AWSS provides the internal support needed to help the IRS fulfill its tax administration mission.” Froehlich comes to the IRS from the Department of the Treasury, where he was the Director of the Office of Performance Budgeting. Previously, he had been the Director of Strategic Planning and Evaluation, which later merged with the Budget Office to create the Office of Performance Budgeting. While at Treasury, Froehlich led the department’s effort toward performance budget formulation. He led initiatives to formally link program financial execution, program performance and program budget development. He also was responsible for developing and implementing the department’s strategic plan. Prior to joining Treasury in 2002, Froehlich was technical director of a consulting firm doing business with the Department of the Navy. Froehlich has also held the position of vice president of an information technology firm. In June 2000, Froehlich completed 24 years of Navy service. His last active duty position was as Director, Department of the Navy Business Reform, on the staff of the Chief of Naval Operation. Froehlich received his Master’s of Science in Nuclear Engineering and Bachelor’s of Science in Electrical Engineering degrees from the Georgia Institute of Technology. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/the-us-and-the-netherlands-develop-new-administrative-arrangements-for-mutual-agreement-procedure

IR-2003-116, Oct. 7, 2003 WASHINGTON — The competent authorities of the United States and the Netherlands have agreed to new Administrative Arrangements that outline guiding principles to follow when using the Mutual Agreement Procedure (the MAP) found in Article 29 of the U.S.-Netherlands income Tax Convention. The Arrangements were developed to ensure that the MAP process works as efficiently and effectively as possible. The text of the Agreement is as follows: Administrative Arrangements for the Implementation of the Mutual Agreement Procedure (Article 29) of the Convention Between theKingdom of the Netherlands and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains (Signed on December 18, 1992, as Amended by Protocols) (the “Convention”) The competent authorities of the Netherlands and the United States hereby enter into an agreement under the Mutual Agreement Procedure Article (Article 29) of the Convention, with a view to the effective administration and resolution of cases conducted between them under the process. The Mutual Agreement Procedure (the “MAP”) of the Convention provides that the competent authorities of the two Contracting States shall endeavour to resolve by mutual agreement cases of taxation not in accordance with this Convention. The Netherlands and the United States are committed to assisting taxpayers in the conduct of cases under the MAP, to ensuring taxpayers know what they can expect from the competent authorities, and to making the MAP as expeditious and effective as possible. Particular areas in which MAP cases arise include, but are not limited to: determination of appropriate transfer pricing methodologies to be applied to cross-border transactions between associated enterprises and/or whether transfer prices used in cross-border transactions between associated enterprises are established at arm's length; determination of appropriate attributions of profits to the permanent establishments of enterprises; and determination of residence under Article 4 of the Convention. In these and other areas of difficulties and doubts arising as to the interpretation or application of the Convention, the Netherlands and the United States are committed to promoting and supporting domestic initiatives and programs designed to assist taxpayers and to helping taxpayers in avoiding or resolving disputes which might arise. These Arrangements set out certain objectives and practices the Netherlands and the United States will adopt in dealing with cases under the MAP of the Convention with a view to ensuring taxation in accordance with the Convention. Progress of the Mutual Agreement Procedure The Netherlands and the United States agree that requests presented under Article 29 of the Convention shall be dealt with as expeditiously as possible. The objective is to resolve cases accepted for consideration by the competent authorities within 18 months from transmittal of a position paper by one Contracting State to the other, excluding time during which the issues presented for competent authority consideration are under consideration by appellate or judicial authorities where permitted under applicable national procedures. In order to ensure timely progress in the procedure, the competent authority of the country that made the adjustment (the "relevant competent authority") will endeavour to deliver a position paper to its counterpart (the "responding competent authority") within 120 days of acceptance of a case from a taxpayer.  The case will be discussed without a written response unless such a response is needed to facilitate substantive discussion.   If a written response is needed in a case concerning attribution of profits or transfer pricing adjustments under Article 7 or 9 of the Convention, the responding competent authority will endeavor to provide a position paper within 240 days after receipt of the first position paper.   In all other cases in which a written response is needed, the responding competent authority will endeavor to deliver a position paper within 120 days of receipt of the first position paper.  In cases of Advance Pricing Agreements or Arrangements, the competent authorities will endeavor to agree upon a joint target timetable for each stage of the consideration, with the aim of securing Mutual Agreements within a similar overall timeframe, taking into account the complexities of the particular cases involved. The role of the taxpayer during procedure The Netherlands and the United States agree that, in law, the negotiation of a MAP is a government-to-government process. A taxpayer has no legal right to attend negotiations between the competent authorities or to observe the negotiations. However, it is also recognized that the taxpayer is a key stakeholder in the MAP process.  The competent authorities therefore agree that they will keep taxpayers informed about the progress of a case under the MAP and will invite them to provide such further information as may be helpful in reaching a resolution.  At their discretion, they may allow information to be provided to them in a joint presentation by the taxpayer. Resolution of cases While the staff of the respective competent authority offices will continue to carry on the primary negotiation of cases arising under Mutual Agreement Article of the Convention, the Netherlands and the United States agree that in any case that extends beyond the applicable timeframe agreed upon above, senior officials who have not been present at the competent authority meetings when the case was discussed or otherwise been personally involved in the decision making on the case will undertake a review of the case to ensure that all appropriate action is being taken to facilitate resolution of the matter.   The Netherlands and the United States will upon request also seek to resolve the issue for subsequent taxable periods, to the extent permitted under their respective national procedures. Collection and interest It is understood that where the competent authorities are endeavoring to resolve a case pursuant to Article 29 of the Convention, the Netherlands and the United States generally will not seek to collect the tax in dispute until the mutual agreement procedure has been completed.  Any tax that is due upon the completion of the mutual agreement procedure shall, however, be subject to interest charges, and, if appropriate, surcharges or penalties, to the extent provided by applicable national law.  Any tax that is refunded upon completion of the mutual agreement procedure will be subject to interest payable on refunds, to the extent provided by applicable national law. Confidentiality of taxpayer information The Netherlands and the United States are committed to ensuring confidentiality concerning taxpayer information, under the Convention and their respective laws. Meetings Schedule The Netherlands and the United States agree to meet at least twice a year to conduct face-to-face discussions. Interim meetings and other communications also will be conducted as necessary in an effort to resolve cases. The Netherlands and the United States have agreed to publish these Arrangements to assist taxpayers in understanding and making full and appropriate use of the MAP in the Convention.  The Arrangements will be reviewed from time to time. Agreed to August 25, 2003: For the United States:                            For the Netherlands: Carol A. Dunahoo                                   Paul Vlaanderen Director for International (LMSB)         Director for International Tax Policy and Legislation Internal Revenue Service                      Ministry of Finance Subscribe to IRS Newswire

https://www.irs.gov/newsroom/klotsche-named-senior-advisor

IR-2003-115, Oct. 6, 2003 WASHINGTON — John C. Klotsche, a former chairman with leading international law firm Baker & McKenzie, will join the Internal Revenue Service to help coordinate the agency’s efforts to combat abusive tax shelters and improve enforcement processes. He will serve as Senior Advisor to IRS Commissioner Mark W. Everson and will also work with Mark E. Matthews, the Deputy Commissioner for Services and Enforcement. Klotsche will assist IRS efforts to prioritize enforcement initiatives and reengineer processes to enhance compliance with the tax laws. “Along with the arrival of Mark Matthews, John adds to an already strong team of IRS executives,” Everson said. “We are fortunate to have a man of John’s caliber willing to undertake a period of public service. John’s experience in the global corporate and legal environment, combined with his management skills and tax expertise, equip him to make a unique contribution to our ongoing efforts to combat abusive tax shelters.” Klotsche held a variety of prominent roles at Baker & McKenzie during a 32-year career. He specialized in international tax and financial matters after joining Baker & McKenzie in 1968. He retired in 2000 after serving for five years as chairman of the firm’s Executive Committee. In his role as chairman, Klotsche had day-to-day management and administrative responsibility for the firm’s global business operations, which included 7,000 employees, 2,500 lawyers, 550 partners and revenues of $1 billion. Klotsche graduated in 1964 from the University of Arizona with an economics degree. He received his law degree from the University of Wisconsin. After his career with Baker & McKenzie, he has served on several boards and as a consultant to technology companies doing business in the legal industry. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/2004-toyota-prius-certified-for-clean-burning-fuel-deduction

IR-2003-114, Oct. 6, 2003 WASHINGTON — The Internal Revenue Service has certified the 2004 Toyota Prius as being eligible for the clean-burning fuel deduction. The certification means taxpayers who purchase a new hybrid vehicle may claim a tax deduction of up to $2,000 on Form 1040. Federal tax law allows individuals to claim a deduction for the incremental cost of buying a motor vehicle that is propelled by a clean-burning fuel. By combining an electric motor with a gasoline-powered engine, these hybrid vehicles obtain greater fuel efficiency and produce fewer emissions than similar vehicles powered solely by conventional gasoline-powered engines. Under current law, the clean-burning fuel deduction will be reduced incrementally until it expires beginning 2007. Purchasers of IRS-certified cars will be able to claim a deduction of $2,000 if the vehicle is placed in service on or before Dec. 31, 2003. The $2,000 maximum deduction will be reduced by 25 percent for vehicles placed into service in 2004, by 50 percent in 2005 and by 75 percent in 2006. No deduction will be allowed for vehicles placed in service after Dec. 31, 2006. Under the law, the one-time deduction must be taken in the year the vehicle was originally used. The taxpayer must be the original owner. Individuals take this benefit as an adjustment to income on their Form 1040. They do not have to itemize deductions on their tax returns to claim it. To claim the deduction, write “clean fuel” on Line 33 of the 2003 Form 1040. Also, see the Instructions for Form 1040. The amount of the deduction for the Prius was set after the manufacturer, Toyota Motor Sales, U.S.A., Inc., documented for the IRS the incremental cost related to the vehicle’s electric motor and related equipment. The IRS previously certified the Toyota Prius for model years 2001, 2002 and 2003. The IRS also previously certified the Honda Insight for model years 2000, 2001 and 2002 and the Honda Civic Hybrid for model year 2003. Related Item:  Clean-Fuel Vehicle Deduction for Certain Models Subscribe to IRS Newswire

https://www.irs.gov/newsroom/tax-professionals-to-send-some-returns-to-different-irs-centers-than-last-year

IR-2003-113 Oct. 2, 2003 WASHINGTON — The Internal Revenue Service is urging tax professionals to be aware of changes that will affect where they send tax returns and payments for clients in 10 states starting in 2004. The changes are a result of redistributing workload among the 10 IRS processing centers to provide better service. Tax professionals whose clients are in the Metro New York area and Alabama, Arkansas, Delaware, Michigan, Montana, Rhode Island, Tennessee, Utah and Wyoming will be filing their returns with different IRS centers during the 2004 filing season. For clients in Arizona and Washington, they will send returns with payments to different IRS addresses although other returns will continue to go to the IRS center in Fresno. Because many tax professionals will need the addresses for IRS centers before the tax filing season, the IRS is providing them now.  For taxpayers who file paper returns, the new center addresses will be provided on the envelopes in the tax packages. Taxpayers who e-file will not be affected by these changes. More than a third of all individuals choose to e-file their federal tax returns. Related Item: Where to File Tax Returns in 2004 for Tax Professionals (65KPDF) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/taxpayers-must-update-addresses-by-dec-5-to-receive-child-credit-checks-this-year

IR-2003-133, Nov. 25, 2003 WASHINGTON — IRS Commissioner Mark W. Everson reminded taxpayers they have until Dec. 5 to claim undelivered checks from this summer’s advance child tax credit. After the December cut-off, taxpayers cannot claim the money until they file their tax returns next year. “Time is running out to get an advance credit check,” Everson said. “I encourage taxpayers to visit IRS.gov to see if they have an undelivered check from the advance child tax credit mail-out.” Taxpayers need to update their addresses with the IRS by Dec. 5 so their checks, which total more than $50 million, can be reissued. Taxpayers who miss the cutoff won’t miss their child tax credit, however, they simply claim the credit when they complete their 2003 tax return. “Our Web site makes it easy for taxpayers to track undelivered checks,” Everson said. “Our goal is to get this money back in the hands of the people it belongs to, and we want to get the checks out as soon as possible.” IRS.gov gives taxpayers a way to track their advance child tax credit by using “Where’s My Advance Child Tax Credit?” available through the IRS home page. Taxpayers enter information including their Social Security number, their filing status (such as single or married filing jointly) and the number of exemptions shown on their 2002 tax return. “All we need is a good address,” Everson said. “As soon as we get the correct address we can start the check on its way. I urge taxpayers to act before Dec. 5 for the advance payments so we can reissue the checks before the end of the year.” Taxpayers without access to the Internet who think they may be missing an advance child tax credit check should first check their records or contact their tax preparer before calling the IRS at 1-800-829-1040 to update their address before Dec. 5. Taxpayers who have moved since filing their last tax return can ensure the IRS has their correct address by filing Form 8822, Change of Address, with the IRS. Download the form or request it by calling 1-800-TAX-FORM (1-800-829-3676). Related Items: Form 8822, Change of Address (24KPDF) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-helps-military-personnel-get-new-laws-tax-breaks

IR-2003-132, Nov. 24, 2003 WASHINGTON — The Internal Revenue Service is helping taxpayers use a new law providing income exclusions for death benefit payments and certain home sales. Both provisions are retroactive, so some qualifying taxpayers must file amended returns to claim these tax breaks. The IRS asks them to put the words “Military Family Tax Relief Act” in red at the top of such returns to speed processing. The new law doubled the gratuity paid to survivors of deceased Armed Forces members to $12,000, made the entire amount tax-free and made the changes effective for deaths occurring after Sept. 10, 2001. Previously, only $3,000 was tax-free. Recipients who already paid tax on benefits received for deaths after the effective date may file an amended return on Form 1040X, reducing their adjusted gross income by the $3,000 they had reported as taxable. Those who receive such gratuities in 2003 and future years will not have to report them on their tax returns. Taxpayers may exclude gain on a home sale, provided they have owned and used the home as a principal residence for two of the five years before the sale. A reduced maximum exclusion may apply to those who satisfy part of the two-year rule. Military personnel often retain ownership of a home while away on duty but eventually sell it without returning to live in it, perhaps failing the use test completely. The new law allows persons on qualified extended duty in the U.S. Armed Services or the Foreign Service to suspend this five-year test period for up to 10 years of such duty time. A taxpayer is on qualified extended duty when at a duty station that is at least 50 miles from the residence sold, or when residing under orders in government housing, for more than 90 days or for an indefinite period. This change applies to home sales after May 6, 1997. A taxpayer may use this provision for only one property at a time and may exclude gain on only one home sale in any two-year period. Although an amended return must usually be filed within three years of the original return’s due date, the law gives qualifying taxpayers who sold a home before 2001 until Nov. 10, 2004, to file an amended return claiming the exclusion. A taxpayer may use Form 4506, “Request for Copy or Transcript of Return,” to get an earlier year’s tax return. This form and Form 1040X are available on the IRS Web site or by calling 1-800-TAX–FORM (1-800-829-3676). Here are four examples illustrating how the new home sale exclusion rule works: Example #1 — Lt. Green owned a house in Georgia and lived there from December 1988 until deployed overseas in January 1991. When he returned to the United States in July 1999, he was stationed 90 miles from the house. Preferring not to commute this distance, he sold the house four months later, realizing a gain of $150,000. Because he had not used the house as his principal residence during the 5 years preceding the sale, he reported this capital gain on his 1999 return. Under the new law, he can disregard both the 8½ years he was overseas and the 4 months after his return to the States, since he was stationed more than 50 miles from old residence. His five-year test period for ownership and use now consists of the 5 years before January 1991, when he went overseas. Since he owned and lived in the house for more than two years during this test period, he may exclude the gain on the sale. He must file an amended return by Nov. 10, 2004, to recover the capital gain tax paid on the 1999 return. Example #2 — Assume the same facts as Example #1, except that when Lt. Green returned to the U.S., his duty station was 40 miles from the house. Only the time overseas may be disregarded, because his duty station after returning to the U.S. was within 50 miles of the old residence. His five-year test period for ownership and use now consists of 4 months in 1999 and the 56 months before January 1991, when he went overseas. Since he lived in the house for more than two years during this test period, he may exclude the gain on the sale. He must file an amended return by Nov. 10, 2004, to recover the capital gain tax paid on the 1999 return. Example #3 — Col. White owned and lived in her Ohio house for three years before being stationed overseas in January 1988. She was still overseas when she sold the house in January 2003. She may disregard only 10 of her 15 years overseas, so her 5-year test period consists entirely of years in which she did not live in the house, leaving her not eligible for the home sale exclusion. Example #4 — Sgt. Brown owned and lived in a Virginia townhouse for 10 months before being deployed overseas in February 1991. She returned in 1995 and lived in the townhouse for 16 months before she was assigned to a Texas duty station in late August 1996. She married and when the couple returned to Virginia in July 1999, they bought a nearby house. In July 2001, they sold the townhouse. Having lived in the townhouse only one month in the five years preceding its sale, they reported the capital gain on their 2001 return. Under the new law, they may disregard the time spent overseas and in Texas when determining the 5-year test period, which would then consist of the two years from July 1999 to July 2001, when they lived nearby, the 16 months she lived in the townhouse in 1995-96, and the 20 months before the February 1991 overseas deployment. During this test period, Sgt. Brown owned and lived in the townhouse for 26 months, so she may exclude up to $250,000 of gain on its sale. Because her husband never lived in the townhouse, he does not qualify for any exclusion. The Browns have until Apr. 15, 2005, to file an amended return claiming a refund of the capital gain tax paid on the excludable amount. Related Items: Tax Information for Members of the U.S. Armed Forces Form 1040X — Amended U.S. Individual Income Tax Return (27KPDF) Instructions for Form 1040X (45KPDF) Form 4506 — Request for Copy or Transcript of Tax Form (35KPDF) (You may complete and print a fill-in form online, but Acrobat Reader may not save your entries with the file.) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-issues-new-guides-for-charitable-organizations

Updated March 6, 2008 — Pub. 4221 has been superseded by Pubs. 4221-PCPDF, Compliance Guide For 501(c)(3) Public Charities, and 4221-PFPDF, Compliance Guide For 501(c)(3) Private Foundations IR-2003-131, Nov. 17, 2003 WASHINGTON — The Internal Revenue Service has published two new brochures to help charities understand the tax laws conferring tax-exempt status. One brochure is designed to help prospective charities apply for tax exemption under the tax law. The other is a compliance guide that explains the record keeping, return filing and disclosure rules for those organizations. IRS Publication 4220, Applying for 501(c)(3) Tax-Exempt Status, and Publication 4221, Compliance Guide for 501(c)(3) Tax-Exempt Organizations, are concise, easy-to-use brochures that contain the information most tax-exempt organizations need in order to obtain and maintain their tax-exempt status. They provide references to other IRS publications and forms, as well as special telephone numbers organizations can call if they need specific help on more complex issues. Publications 4220 and 4221 are available now on this Web site or can be ordered by calling toll-free 1-800-829-3676. Related Items: Publication 4220, Applying for 501(c)(3) Tax-Exempt Status (285KPDF) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/time-running-short-for-2003-tax-moves

IR-2003-130, Nov. 10, 2003 WASHINGTON — The Internal Revenue Service today reminded taxpayers they have less than eight weeks to make their final financial moves for the 2003 tax year. Taxpayers can take the first step toward advance tax planning by reviewing tax law changes featured on the IRS Web site, www.irs.gov. A little advance planning now could save taxpayers time — and perhaps even money — later. For many families, tax planning means locating the IRS notice for their Advance Child Tax Credit. For teachers, it means keeping those receipts for school supplies they purchase with their own money. For investors, it may mean deciding which stocks should be sold or purchased. This summer, nearly 24 million taxpayers received an Advance Child Tax Credit of up to $400 per child because the credit was increased to $1,000 per child from $600 per child. People got part of their Child Tax Credit in advance this summer, so they must subtract that amount when figuring the credit when they complete their 2003 taxes. Taxpayers should have kept their IRS letter (Notice 1319) that notified them of the amount of the credit they were to receive. Forgot the advance payment amount? Check IRS.gov under the “Individuals” section for the online tool, “Where’s My Advance Child Tax Credit?” Also, taxpayers who do not receive an Advance Child Tax Credit check by Dec. 31 may claim the increased credit on their 2003 tax return. Again, IRS.gov provides details on child tax credit eligibility. End-of-the-year planning may be useful for educators who may claim up to $250 for out-of-pocket classroom expenses, students who may deduct interest on college loans and spouses who make alimony payments. These items are among the tax deductions that can reduce taxable income. Some taxpayers may benefit more by itemizing their deductions on Schedule A of Form 1040. Taxpayers should consider using Schedule A if their itemized deductions exceed the amount of the standard deductions. On average, approximately one-third of the nation’s taxpayers itemize their deductions. For the 2003 tax year, the standard deduction is $4,750 for taxpayers filing as single or married filing separately, $7,000 for individuals filing as head of household and $9,500 for taxpayers filing as married filing jointly. Among the common deductions itemized on Schedule A are state and local income taxes, real estate taxes and mortgage interest. Charitable donations also are deductible on Schedule A and taxpayers should keep a record of their contributions. Certain medical expenses, such as laser surgery or obesity weight loss programs, are deductible if the total medical expenses exceed 7.5 percent of gross income. Also, for the 2003 tax year, taxpayers may make gifts of up to $11,000 per person and exclude the amount from the gift tax. Those receiving the gift are not required to pay taxes on the amount received. Tax-free flexible spending accounts also can lower taxable income amounts and the IRS recently ruled medical spending accounts can be used to purchase non-prescription medication. Again, taxpayers should keep receipts. The maximum tax rate for most capital gains taken after May 5, 2003 has been reduced to 15 percent for most individuals and generally 5 percent for low-income individuals. Dividends also are taxed at a maximum rate of 15 percent and generally 5 percent for low-income individuals. In most cases, the expenditures must take place during the tax year in order to be deductible. However, taxpayers do have time next year to contribute to their Individual Retirement Accounts. The maximum IRA contribution for the 2003 tax year is $3,000. Taxpayers who are age 50 or over by Dec. 31 can contribute $3,500. Taxpayers should consider seeking out additional information either through IRS.gov or a tax professional. Related Items: Tax Law Changes — Links to recent tax law changes including the Advance Child Tax Credit and others affecting businesses. Where's My Advance Child Tax Credit? Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-seeks-nominations-for-te-ge-advisory-committee-1

IR-2003-129, Nov. 6, 2003 WASHINGTON — The Internal Revenue Service is seeking nominations for vacancies on the Advisory Committee on Tax Exempt and Government Entities (ACT), which provides a venue for public input into critical tax administrative areas. Vacancies exist in the following customer segments: employee plans (2 vacancies), exempt organizations (2 vacancies), federal, state and local governments (1 vacancy), Indian tribal governments (2 vacancies) and tax exempt bonds (1 vacancy). The ACT is an organized public forum for the IRS and representatives who deal with employee plans, exempt organizations, tax-exempt bonds, and federal, state, local and Indian tribal governments. The ACT allows IRS to receive regular input on administrative policy and procedures of the Tax Exempt and Government Entities (TE/GE) Division. Members will be appointed by the Secretary of the Treasury and will serve two-year terms, beginning in May 2004. Nominations should reflect the proposed member's qualifications. A notice published in the Federal Register on Nov. 5, 2003, (Volume 68, Number 214) contains more details about the ACT and the nomination process. Nominations should be sent to Steven Pyrek; TE/GE Communications and Liaison Director; Internal Revenue Service; 1111 Constitution Ave. N.W., SE:T:CL Penn Bldg; Washington, D.C. 20224, or by fax 202-283-9956 (not a toll-free number). Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-launches-first-of-online-business-tools

IR-2003-128, Nov. 6, 2003 WASHINGTON — The Internal Revenue Service has launched the first of a suite of Internet-based business tools that give tax professionals and financial institutions easier access to client information. Known collectively as e-services, the suite of products provides tax professionals with new choices for working electronically with the IRS. The first three products provide a foundation for future services that will significantly enhance how the IRS does business with tax professionals and those who file selected information returns, such as banks and other financial institutions. "These new e-services begin a series of steps that will improve how tax professionals interact with the IRS," said IRS Commissioner Mark W. Everson. "Through the use of technology, we are working to simplify and reduce burden on thousands of tax professionals and more than 4 million firms that send us special information returns." Three e-services applications are being introduced today: Registration — Before using other e-services products, tax professionals must register online to create an electronic account. The registration process is a one-time process for tax professionals to select a user name, password and personal identification number. An on-screen acknowledgment immediately confirms the registration process. For security purposes, a confirmation code is also mailed to the tax professional to complete the registration process. Preparer Tax Identification Number Application — The Preparer Tax Identification Number, or PTIN application, lets a paid preparer apply for and receive a PTIN immediately over the Internet. There is no longer the need to complete and mail a paper Form W-7P. It reduces processing time and input errors associated with a paper application. Anyone paid to prepare a tax return must sign the return and provide either a PTIN or a Social Security Number. The ability to substitute a PTIN for a Social Security Number began in 1999 to address concerns that clients and others outside the IRS could use a preparer’s Social Security Number inappropriately. Interactive Taxpayer Identification Number Matching — Interactive Taxpayer Identification Number Matching, or TIN Matching, is a new, pre-filing service offered to banks or others that pay income subject to backup withholding. Authorized payers can match up to 25 taxpayer identification number and name combinations against IRS records before submitting an information return. Results of the match are returned within seconds. This pre-filing check prevents mismatches and possible penalties for the payer. In the past, only federal agencies could request TIN matching. Future e-services include an online application for those who want to become authorized e-filers, an expansion of TIN Matching that allows bulk matching of thousands of Taxpayer Identification Numbers within 24 hours, and special incentive products for e-filers who file more than 100 electronic returns. Tax professionals can register for e-services immediately through the Tax Professional's page on IRS.gov. E-services joins several IRS Business Systems Modernization products already working to reduce taxpayer burden and improve IRS employee’s service to taxpayers. These new products and services include: Customer Communications — Modernized call systems cut by half taxpayers’ call-waiting time and the number of abandoned calls. It also introduced bilingual voice recognition capabilities, which helped double the number of Spanish calls.    Where’s My Refund? — Provides taxpayers with their refund status over the Internet. Taxpayers used the service more than 17.6 million times in 2003.    Where’s My Advance Child Tax Credit? — Gives taxpayers the status of their Advance Child Tax Credit checks over the Internet. So far, taxpayers have used the service nearly 15 million times.   Customer Relationship Management — Provided nearly 4,000 revenue agents with direct laptop access to tax computation software.   Internet EIN — Allows small businesses and others to apply for and receive an Employer Identification Number online. The IRS has issued more than 380,000 EINs through this online application process.    HR Connect — Allows 73,000 IRS users to perform many personnel actions online. Links on IRS.gov: E-services Registration What are the e-services products? Subscribe to IRS Newswire

https://www.irs.gov/newsroom/some-refinancing-costs-may-be-deductible

IR-2003-127, Nov. 3, 2003 WASHINGTON — The Internal Revenue Service reminded taxpayers who took advantage of this year’s low interest rates to refinance their mortgages that they may be eligible to deduct some costs associated with their loans. Generally, taxpayers who itemize may deduct the “points” paid to obtain a home mortgage as interest. They may deduct the points on the mortgage related to a home purchase or a home improvement in the year paid, but for other loans – such as a refinanced mortgage – they must deduct the points over the life of the loan. To figure the annual deduction amount, divide the total points paid by the number of payments to be made over the life of the loan. Usually, this information is available from the lender. For example, a homeowner who paid $2,000 in points on a 30-year mortgage (360 monthly payments) could deduct $5.56 per payment, or a total of $66.72 for 12 payments. Taxpayers may deduct points only for those payments actually made in the tax year. A taxpayer who uses part of the refinanced mortgage money to pay for improvements to the home, and meets certain other requirements, may generally deduct the points associated with the home improvements in the year paid, spreading out the rest of the points over the life of the loan. When refinancing for a second time, or paying off a loan early, a taxpayer may deduct all the not-yet-deducted points from the first refinancing when that loan is paid off. Other closing costs, such as appraisal fees and processing fees, generally are not deductible. Taxpayers with adjusted gross income above $139,500 – $69,750 if married filing separately – also face limits on the amount of deductions they can take. IRS Publication 936, Home Mortgage Interest Deduction, has details on deductions related to refinancing. Related Item: Pub. 936 (124KPDF) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/new-director-named-for-irs-office-of-professional-responsibility

IR-2003-148, Dec. 29, 2003 WASHINGTON — As part of a broader effort to strengthen professional standards, IRS Commissioner Mark W. Everson announced today the selection of Cono Namorato as the Director of the Office of Professional Responsibility. Combined with other changes unveiled today involving Circular 230 and abusive tax shelters, Namorato’s selection represents an important part of the agency’s continuing efforts to ensure high professional standards and build faith in the tax system. “I am delighted that a professional of Cono’s status is taking on this assignment,” Everson said. “He shares my concern about the erosion of professional standards among some attorneys and accountants. This appointment should signal an expectation that tax practitioners live up to their professional obligations.” The Office of Professional Responsibility investigates allegations of misconduct or negligence against tax practitioners and enforces the standards of practice for those who represent taxpayers before the IRS, as detailed in Circular 230. The office also licenses “enrolled agents,” who are tax professionals meeting certain testing or experience requirements. Everson has taken several steps recently to enhance the effectiveness of this office. Over the last year, staff of the office has been doubled and its Director sits on the IRS Enforcement Committee, a panel of senior agency executives who meet regularly to develop strategies on the top compliance problems facing the IRS. The Commissioner also recently charged OPR with conducting a broader review of the IRS’ overall relationship with the practitioner community. Namorato has been a member of the Washington law firm of Caplin & Drysdale since 1978, representing and advising clients on criminal and civil tax matters. He began his career as an IRS Special Agent in Brooklyn from 1963 to 1968, then spent 10 years in the Justice Department’s Tax Division, rising to the position of Deputy Assistant Attorney General in 1977. While Chair of an American Bar Association subcommittee on Criminal Tax Policy, Namorato co-authored and supervised completion of two reports on the IRS Criminal Investigation Division: The Future of the Criminal Investigation Division (1998) and Redirecting Criminal Tax Enforcement To Improve Voluntary Compliance (1991). A Brooklyn native, Namorato earned a bachelor’s degree in accounting summa cum laude from Iona College in New Rochelle, NY, and a law degree from Brooklyn Law School. Related Item: IR-2003-147, Treasury Issues Rules to Increase Transparency and Halt Abusive Tax Avoidance Transactions Subscribe to IRS Newswire

https://www.irs.gov/newsroom/treasury-issues-rules-to-increase-transparency-halt-abusive-tax-avoidance-transactions

IR-2003-147, Dec. 29, 2003 Reins Tightened on Lawyers, Accountants, Other Tax Advisers WASHINGTON — Today the Treasury Department and the IRS issued four items of administrative guidance as part of their ongoing effort to halt abusive tax avoidance transactions and maximize effective use of IRS audit resources. The first of the items released today is aimed at strengthening the tax system through heightened standards for tax advisors. The other three are aimed at increasing transparency and disclosure of information to the IRS. Improved disclosure coupled with more effective use of the information disclosed are central to the Treasury Department and IRS’s strategy for identifying abusive tax avoidance transactions early and addressing them promptly. In addition, the transparency that disclosure brings serves as a deterrent to abusive tax avoidance transactions. “Taken together, the actions we are announcing today represent another significant step to end the proliferation of abusive tax avoidance transactions that has undermined confidence in our tax system,” said Treasury Assistant Secretary for Tax Policy Pam Olson. “We are proposing a set of best practices that makes clear that tax professionals should adhere to the highest ethical standards and ensure that their clients are well-advised of the law and any risks they are taking.” Proposed changes to Circular 230 that set high standards for the tax advisors and firms that provide opinions supporting tax-motivated transactions. The proposed rules set out clear and specific requirements for tax opinions provided by attorneys and accountants and expectations for those with supervisory responsibility for a professional services firm’s tax practice. In an effort to halt the rush to the bottom that pervaded the 1990s and restore the confidence of the public in tax professionals, the proposed changes also describe best practices for tax advisors and call on professional services firms to put in place procedures for all of the firm’s personnel that are consistent with these best practices. To ensure clients are well-advised, the proposed changes would obligate tax advisors to inform clients explicitly about what protections, if any, an opinion provides to the client. For example, tax advisors would have to advise clients about issues that the opinion does not address and warn the client if the opinion will not protect the client against penalties. The Treasury Department and the IRS are working with professional organizations to promote best practices among tax professionals through setting aspirational standards and self-regulation. The proposed changes would put in place a framework for that effort. The proposed changes replace changes proposed in January 2001. They reflect a careful consideration of the comments received on the January 2001 proposals and information gathered by the IRS in its audit of professional services firms’ compliance with the tax shelter rules. Final regulations that will increase the cost of failing to disclose abusive tax avoidance transactions. The regulations also apply to taxpayers who do not disclose that they have reported items on their tax returns that are based on the position that a Treasury regulation is invalid. Under the final regulations, for purposes of the imposition of penalties, a taxpayer’s failure to disclose an abusive tax avoidance transaction is treated as a strong indication that the taxpayer acted in bad faith with respect to any additional tax owed as a consequence of the transaction. Similarly, taxpayers who do not disclose items that are based on advice that a Treasury regulation is invalid will be deemed to have acted in bad faith with respect to any additional tax that is owed as a consequence of those items. “We are taking the administrative steps we can under current law to create downsides for those who choose not to disclose by making it clear that failing to disclose significantly increases the likelihood of penalties being imposed,” continued Assistant Secretary Olson. “Having the IRS hunt for an abusive transaction hidden on a tax return is a waste of IRS resources. If a taxpayer is willing to enter into a transaction, then the taxpayer should be willing to disclose that transaction on its return.” Revised final regulations clarifying that the disclosure of confidential transactions on a return is limited to transactions for which a promoter has imposed confidentiality on a taxpayer to protect the promoter’s tax strategies from disclosure. The revisions are intended to reduce unnecessary paperwork for taxpayers and advisors and to allow the IRS to focus its attention on transactions with potential for abusive tax avoidance, not on transactions for which confidentiality is required for non-tax reasons. “We continue to believe that sunshine is the best disinfectant for abusive transactions,” noted Assistant Secretary Olson. “Ensuring that the rules are focused appropriately on the transactions with potential for abusive tax avoidance will further that goal. Burdening taxpayers and burying the IRS with useless paper will not. As a consequence, we have narrowed the disclosure of confidential transactions to situations in which the promoter imposed confidentiality to keep the promoter’s tax strategy out of view.” Proposed new Form 8858 requiring information reporting by U.S. persons that own foreign entities that are disregarded for U.S. tax purposes. The need for information is not limited to the area of abusive tax avoidance transactions. Appropriately tailored disclosure and information reporting requirements providethe means to better focus the audit resources aimed at protecting the integrity of our tax system. Ready access to information allows the IRS to identify potential compliance issues efficiently and is critical to achieving the IRS’s commitment to reducing the time needed to complete an audit. The proposed Form 8858 will be required for annual accounting periods beginning after Dec. 31, 2003. Comments on the text of the proposed new Form 8858 are requested from the public by March 1, 2004. “Lack of information increases the time it takes for the IRS to identify and address potential compliance issues efficiently and effectively,” Assistant Secretary Olson stated. “The proposed new form will increase transparency for offshore entities, allowing the IRS to better focus its resources and improve compliance. The disclosure will also have a deterrent effect.” “The Treasury Department has adopted measures that do as much as possible to stem abusive tax avoidance transactions without legislative change. We urge Congress to pass the legislation the Treasury Department and IRS proposed in March 2002 to deter abusive tax avoidance and facilitate the upfront identification of questionable transactions,” concluded Assistant Secretary Olson. Related Items: IR-2003-148 — New Director Named for IRS Office of Professional Responsibility Penalty Policy Statement of the Internal Revenue Service ( 42KPDF) Circular 230PDF: Regulations Governing Practice before the Internal Revenue Service Final Regulations Clarifying the Rules Relating to Confidential Transactions ( 23KPDF) Final Regulations Intended to Promote Disclosure of Reportable Transactions (27KPDF) Announcement 2004-4: Information Reporting With Respect to Foreign Disregarded Entities (13KPDF) Form 8858, Information Reporting With Respect to Foreign Disregarded Entities (62KPDF) Schedule M to Form 8858 (34KPDF) These documents will be published in the Federal Register in the next few days and are subject to minor technical changes. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-issues-guidelines-for-tax-exempt-groups-engaged-in-public-advocacy

IR-2003-146, Dec. 23, 2003 WASHINGTON — The Internal Revenue Service today reminded tax-exempt organizations that their public advocacy activity must adhere to tax rules as well as campaign-finance laws. On the eve of an election year, the IRS has issued Revenue Ruling 2004-6 concerning certain public advocacy activities conducted by social welfare organizations, unions and trade associations. Under the Internal Revenue Code, social welfare organizations, unions and trade associations generally are permitted to engage in advocacy or lobbying related to their exempt purposes. However, they may engage in only limited political campaign activity. The guidance clarifies the tax implications of advocacy that meets the definition of political campaign activity. The guidance provides examples and sets forth factors to be taken into account in determining whether expenditures for issue advertising are taxable. The situations and factors contained in the ruling are not exhaustive. The guidance also serves as a reminder that the Bipartisan Reform Act of 2002 (McCain-Feingold) does not replace the tax rules on public advocacy by tax-exempt organizations. Tax exempt organizations, such as those described in sections 501(c) (4), (c)(5), and (c)(6) of the Internal Revenue Code, must adhere to both McCain-Feingold and the Internal Revenue Code. The IRS remains committed to ensuring that assets of tax-exempt organizations are used for exempt purposes and requests comments on situations or factors that the public believes should be covered in future guidance. Revenue Ruling 2004-6 will be published in Internal Revenue Bulletin 2004-4, Jan. 26, 2004. Comments may be sent to: Judy Kindell, T:EO:RA:G, 1111 Constitution Ave., NW, Washington, DC 20224. Related Item: Revenue Ruling 2004-6 Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-and-gaming-industry-partner-on-voluntary-tip-compliance-agreements

Note: For all agreements secured on or after May 2 ,2007, Revenue Procedure 2007-32PDF supersedes Rev. Proc. 2003-35.  IR-2003-145, Dec. 23, 2003 WASHINGTON — The Internal Revenue Service is expanding a new tip compliance agreement nationwide to the gaming industry. The agency encourages gaming industry employers to participate in the voluntary agreement and urges employees whose income includes tips to learn the benefits of participation. For employers, the agreement substantially reduces the recordkeeping and reporting burden. For employees, the improved income reporting procedures could potentially make them eligible for higher Social Security or other pension, Medicare, unemployment and workman’s compensation benefits. This could also help qualify them when applying for loans or other financial arrangements. The voluntary compliance process allows a gaming industry employer, employees and the IRS to work together to objectively determine tip rates for tipped employees in specified occupational categories. There are several steps to the process: The employer and the IRS sign a Gaming Industry Tip Compliance Agreement, which incorporates tip rates specific to that employer’s establishment and prescribes a minimum level of participation by the employer’s employees. The employer recruits his employees to voluntarily participate. Participating employees must then report their tip income to their employer at or above the established tip rates, unless their tip logs can substantiate a lesser amount. The employer withholds income tax from the employees and reports income on the employees’ Form W-2 based on the rates or the substantiated lesser amount. As long as tips are reported at or above the established tip rate, the compliance agreement generally prevents the IRS from auditing the employee’s tip income. In addition, as long as the employer meets certain commitments, the IRS will not assert a liability against the employer with respect to the tip income of participating employees while the agreement is in effect. The agreement may be renewed every three years. Representatives of the gaming industry, including employees, provided significant input into the development of the agreement. All employers operating a gaming establishment may participate in the Gaming Tip Compliance Agreement. Either the IRS or an employer may initiate participation. Revenue Procedure 2003-35, Gaming Industry Tip Compliance Agreement Program, has further details on the compliance agreement. Related Item: Revenue Procedure 2003-35 (103KPDF) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/eileen-t-powell-appointed-as-irs-chief-financial-officer

IR-2003-144, Dec. 23, 2003 WASHINGTON — Internal Revenue Service Commissioner Mark W. Everson announced today the appointment of Eileen T. Powell as the agency’s Chief Financial Officer. “Eileen brings a wealth of experience to the position that is critical for the success of the office and by extension, the agency,” said Everson. “Her experience implementing core accounting and logistics systems at the Veterans Administration and her leadership as the IRS Deputy CFO makes her particularly well qualified to serve as the agency’s CFO.” Prior to her appointment as CFO, Powell demonstrated her leadership ability while serving as the Acting CFO beginning June 30. As the CFO, Powell continues to have responsibility for the custodial accounting of $2 trillion in taxpayer receipts and the agency’s $10 billion annual operating budget. In addition, as CFO she serves as the principal advisor to the IRS Commissioner and his deputies on financial management, financial systems, strategic planning, performance measurement, budget formulation, budget execution and internal controls. Powell’s appointment as the CFO reflects her accomplishments while IRS Deputy Chief Financial Officer from September 2001 until June 2003. She joined the IRS in July 2001 as Director of Administrative Accounting. In this role, she led the development and management of the agency’s financial policies, procedures, and systems, as well as the accounting and reporting for the IRS operating budget. Before coming to the IRS, Powell was the project director responsible for implementing the Department of Veterans Affairs' new nationwide core accounting and logistics system. She joined the Department of Veterans Affairs in 1998 as the Associate Deputy Assistant Secretary for Financial Operations and was responsible for VA's franchise fund, purchase card program, automated travel management system and departmental accounting services. Powell has 32 years of technical and managerial experience in the fields of accounting, budgeting, auditing, disbursing and planning. She graduated magna cum laude from Virginia Polytechnic Institute with a Bachelor of Science degree in accounting. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-names-eight-new-members-to-irpac

IR-2003-143, Dec. 23, 2003 WASHINGTON — The Internal Revenue Service today announced the selection of eight new members for the Information Reporting Program Advisory Committee (IRPAC). The appointees will join 10 returning members who are in the second year of a three-year term. The committee will hold its first meeting on Feb. 3-4, 2004. The following people have been appointed to serve on the committee: Martha Bell of Lakeland, Fla., owner of Tax Advantage of Lakeland, LLC; Norman L. Bouchard of Parker, Colo, vice president for the Society of Certified Senior Advisors; David A. Corthell of Orlando, Fla., vice president and manager IRS compliance for Sun Trust Bank; Debra L. Heikkinen of Waterford, Conn., senior tax manager at Deloitte and Touche, LLP; Patricia A. McCauley of Baltimore, Md., vice president and associate general counsel at T. Rowe Price Associates, Inc.; Steven A. Neiss of Edison, N.J., vice president of Tax Prudential Insurance Company of America; Rachel J. Paliotti of Cranston, R.I., corporate manager at Blue Cross Blue Shield; Patricia A. Rhodes of Jacksonville, Fla., president of Pat Rhodes Accounting Firm. The IRPAC was established in 1991 and focuses on information reporting issues. The committee’s purpose is to provide an organized public forum for discussion of relevant tax administration issues between IRS officials and representatives of the public. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-names-new-members-to-irsac

IR-2003-142, Dec. 23, 2003 (updated 1/9/04) WASHINGTON — The Internal Revenue Service announced the selection of 10 new members for the Internal Revenue Service Advisory Council (IRSAC). These appointees will join 11 returning members who are in the second year of a three-year term. The council will hold its first meeting on Feb. 3 and 4, 2004. The following people have been appointed to serve on the council: Judith A. Akin, EA of Oklahoma City, Okla, owner of Judith A. Akin, EA, Tax and Financial Services; John M. Contreras of Fresno, Calif., senior tax manager with Deloitte & Touche, LLP. John A. Glennie of Calgary, Alberta, Canada, general manager, Tax and Insurance for Shell Canada Limited. Mary Harris of Little Rock, Ark., co-owner, Sirrah, Inc, d.b.a Jackson Hewitt Tax Services. Richard M. Lipton of Kenilworth, Ill., tax counsel for Baker and McKenzie. Kenneth C. Nirenberg of Austin, Texas, senior software developer for Intuit, Inc. William F. Reilly, EA of Palo Cedro, Calif., owner of William F. Reilly, EA. Gary Rohrs of Independence, Mo., president of A. Clyde Rohrs and Associates, Inc. David A. Uhler of Santa Barbara, Calif., partner with Bartlett, Pringle and Wolf, LLP. Thomas P. Wharton of New York, N.Y., vice president, taxation (Senior Tax Official) Pearson, Inc. The IRSAC was established in 1953 and focuses on broad policy matters. The council’s purpose is to provide an organized public forum for IRS officials and representatives of the public to discuss relevant tax administration issues. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-treasury-issue-notice-regarding-improper-deductions-for-charitable-contributions-of-patents-and-other-intellectual-property

IR-2003-141, Dec. 22, 2003 WASHINGTON — Today the Internal Revenue Service and Treasury Department issued a notice to advise taxpayers that the IRS intends to disallow improper deductions for charitable contributions of patents and other intellectual property. Taxpayers claiming improper deductions may be subject to penalties. In addition, the notice advises promoters and appraisers that the IRS intends to review promotions of transactions involving these improper deductions and that promoters and appraisers also may be subject to penalties. "As we approach the end of the year, it is important for taxpayers considering donations of patents or other intellectual property to focus on the limitations on these deductions," said IRS Commissioner Mark Everson. "We’re seeing an increasing number of donations that don’t pass the smell test. Donations that are overly inflated or made with strings attached are going to receive increased scrutiny.” The IRS is aware that some taxpayers transferring patents or other intellectual property to charitable organizations are claiming charitable contribution deductions in excess of the amounts to which they are entitled. In particular, the IRS is aware of purported charitable contributions of intellectual property involving: 1) transfers of nondeductible partial interests in intellectual property; 2) the expectation or receipt of benefits in exchange for transfers; 3) inadequate substantiation of contributions; or 4) overvaluation of intellectual property transferred. Related Item: Notice 2004-7, Charitable Contributions of Patents and Other Intellectual Property (69KPDF)

https://www.irs.gov/newsroom/irs-announces-revisions-to-itin-applications

IR-2003-140, Dec. 17, 2003 WASHINGTON — The Internal Revenue Service today announced several steps to strengthen controls over the issuance of Individual Taxpayer Identification Numbers. The changes will help ensure that ITINs are issued for their intended tax administration purpose for administering the tax code and not for other reasons, such as providing personal identification. In addition, the IRS is taking steps to help ensure that applicants can continue to obtain ITINs without undue burden. Beginning today, new ITIN applicants must use a revised Form W-7, Individual Taxpayer Identification Number Application. ITIN applicants also must provide proof that the ITIN will be used for tax administration purposes. For applicants seeking an ITIN in order to file a tax return, the return must be filed along with the W-7. “About one-quarter of the ITINs issued for tax return purposes never actually find their way onto a tax return,” said IRS Commissioner Mark W. Everson. “The steps taken today ensure ITINs will be issued only to those seeking to comply with their tax obligations.” Federal law requires individuals with U.S. income, regardless of immigration status, to pay U.S. taxes. The ITIN, a nine-digit number that begins with the number 9, was created for use on tax returns for those taxpayers who do not qualify for a Social Security Number. The IRS has issued 7 million ITINs since 1996. However, some ITINs issued by the IRS do not appear in tax filings or tax reporting documents and may have been procured solely to serve as a form of identification. Earlier this year, the IRS issued letters to all governors and state motor vehicle departments advising that ITINs were not designed to serve as personal identification and would not be suitable for determining identification of applicants for driver’s licenses. After a review of the ITIN program, the IRS will implement these changes effective immediately: All new ITIN applicants will have to show a federal tax purpose for seeking the ITIN. For those seeking an ITIN to meet their income tax filing obligations, this will require attaching a federal tax return to the Form W-7 when they are ready to file their tax return with the IRS. ITIN applications without proof of need for tax administration purposes will be rejected. The IRS will reduce to 13 from 40 the number of documents it will accept as proof of identity to obtain an ITIN. The 13 acceptable documents are listed in the new Form W-7 instructions. The IRS also will change the appearance of the ITIN from a card to an authorization letter to avoid any possible similarities with a Social Security Number card. A small number of non-U.S. residents apply for an ITIN to report income under a tax treaty, and a small number of U.S. resident and non-resident applicants apply for an ITIN to report income from a U.S. bank or brokerage account. Neither type of applicant will be required to file a tax return along with their ITIN application. Non-resident applicants will be required to furnish evidence of their ownership of the asset that gave rise to the reporting obligation. Resident applicants will be required to furnish evidence of actual rather than intended ownership of the bank or brokerage account. The IRS will continue to help individuals who seek ITINs comply with the tax laws. The IRS has found no indication of any differences in accuracy rates between tax returns filed with ITINs and tax returns filed with SSNs. The agency understands the need to continue to monitor challenges posed by ITINs, and will do so over the course of time. The IRS will continue to review ways to improve Form W-7 and will conduct a public comment period until June 15, 2004. The IRS will be publishing an announcement in the Internal Revenue Bulletin that will ask for comments on the revised form and the application process. Internal Revenue Bulletin 2004-2, to be published on Jan. 12, 2004, will give instructions on when and how comments may be submitted. Additional information is available at IRS.gov where English and Spanish versions of the Form W-7 are available. A list of frequently asked questions (FAQs) also is available. Related Items: ITIN Frequently Asked Questions Form W-7, Application for IRS Individual Taxpayer Identification Number (100KPDF) Forma W-7,  Solicitud de Número de Identificación Personal del Contribuyente del Servicio de Impuestos Internos (100KPDF) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/irs-officials-urge-caution-and-care-for-those-making-a-car-donation

IR-2003-139, Dec. 15, 2003 WASHINGTON — The Internal Revenue Service issued a consumer alert today to help taxpayers avoid potential pitfalls when they donate their automobiles to charities. The IRS advises that taxpayers contemplating such donations should ask many questions and carefully consider just how much of the proceeds from the car will go to their intended charity. A recent federal study indicates that in many instances such vehicle contributions may help the intended charities far less than taxpayers think. “We encourage people to proceed carefully when donating vehicles,” 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 people should know that in some cases the donation is providing little value." In one donation reviewed by the General Accounting Office (GAO), a taxpayer donated a 1983 truck valued at $2,400, but after the fundraiser sold the vehicle at auction and deducted administrative and advertising costs, the charity received $31.50. A California study revealed that 80 percent of charities contracting with fundraisers to run their car donation program received less than 60 cents for every dollar value of vehicle donated. Across the nation, an increasing number of charities have turned to car-donation programs in recent years as an effective way to raise money. And these programs, if well managed by the charity, can offer significant benefits for the exempt organization and the taxpayer. In addition, IRS officials are concerned that, as the end of the tax year approaches and taxpayers finalize their charitable donations, many may not know enough about IRS recordkeeping and filing requirements. Of 129 million individual returns filed for tax year 2000, the GAO estimates 733,000 returns had a tax deduction for a vehicle donation. These donations were valued at about $2.5 billion, reducing taxpayer liability by an estimated $654 million. 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 deductions on their tax return can deduct no more than the fair market value of their contributions to qualified charities. The proliferation of car donation programs, however, has taken place without taxpayers always understanding what they must do to take advantage of the deduction. “A few simple steps can help avoid headaches for taxpayers,” Everson said. IRS officials recommend that people who want to donate their vehicle take the following steps: Check that the Organization Is Qualified — Taxpayers must make certain that they contribute their car to an eligible organization; otherwise, their donation will not be tax deductible. Taxpayers can use the IRS Web site to check that an organization is qualified by searching Publication 78 at /bus_info/eo/ eosearch.html. Publication 78 is an annual, cumulative list of most organizations that are qualified to receive deductible contributions. Publication 78 is also available in many public libraries. In addition, taxpayers can call IRS Tax Exempt/Government Entities Customer Service at 1-877-829-5500. Be sure to have the organization’s correct name and its headquarters location, if possible. Churches, synagogues, temples, mosques and governments are not required to apply for this exemption in order to be qualified. They frequently are not listed in Publication 78. Donations to these institutions are tax deductible. Speak Directly to the Charity — Many donors also want to make sure their contribution is used for the charitable purpose they intend. The IRS urges donors to ask whether those soliciting the car donation are officials of the charity itself or a private fundraiser acting on the charity's behalf. If it is a private fundraiser, what will it do with the vehicle? Will the car be fixed up and given to the poor and needy? Or will it be resold? And if it is resold, what share of the proceeds will go to the charity? A donor can ensure the donation furthers the intended charitable purpose by obtaining acceptable responses to these questions. Examine State Filings for More Information — Taxpayers can also review the organization’s state registration and financial filings. These documents are commonly filed with a state charity regulator suss ch as the State Attorney General’s Office or the Secretary of State’s Office. Donors can use these records to find out how long a charity has been in existence and to compare the percentage of revenue the charity spends on its charitable programs to the percentage it spends on administrative costs. Itemize in Order to Benefit — Many taxpayers can’t take a deduction for car donations because they don’t itemize deductions on their personal tax return. For taxpayers, the decision to itemize is determined by whether their total itemized deductions are greater than the standard deduction (for 2003, the standard deduction will be $4,750 for single; $9,500 for married filing jointly). Just under one-third of the nearly 129 million individual taxpayers itemized in 2000, the last year for which complete data is available. Calculate the Fair Market Value — The donor must take many factors into consideration to establish the value of the car. Many used-car buying guides contain step-by-step instructions so that readers can make adjustments to the value of a car for accessories, mileage and other indicators of its general condition. Both IRS Publication 526, Charitable Deductions, and IRS Publication 561, Determining the Value of Donated Property, provide detailed instructions. Deduct Only The Car’s Fair Market Value — Some car donation program operators have mistakenly claimed that donors can take the full value of their car based on a used car pricing guide for a deduction. The IRS, however, will only allow a deduction for the fair market value of the car. Fair market value takes into account many factors, including the vehicle’s condition. The fair market value of the taxpayer’s car may be substantially different from the full value in a used car pricing guide. Document the Charitable Contribution Deduction — For vehicle donations, taxpayers must document the car donation and its fair market value. Recordkeeping requirements are comprehensive and vary depending on the amount of the contribution and the total amount of the charitable deduction. IRS Publication 526 details requirements for the types of receipts taxpayers must obtain and the forms they must file. Contact State Charity and IRS Officials When in Doubt — Donors with questions about whether a contribution is deductible should call the IRS at 1-800-829-1040 or for TTY/TDD help, call 1-800-829-4059. Donors concerned that contributions are being solicited for fraudulent purposes should contact the appropriate state charity official, who is often located in the state attorney general's office. A list of state charity official offices can be found online at www.nasconet.org, and a list of state attorneys general can be found at www.naag.org. In 2000, the last year for which complete data is available, about 37.5 million taxpayers made deductible charitable contributions totaling nearly $140.7 billion. Of these gifts, nearly $98.2 billion were cash donations. Related Items: Search for Charities Publication 526, Charitable Deductions (158KPDF) Publication 561, Determining the Value of Donated Propert (101KPDF) Tax Information for Charities & Other Non-Profits  National Association of Attorneys General   National Association of State Charity Officials    Subscribe to IRS Newswire

https://www.irs.gov/newsroom/no-change-in-interest-rates-for-the-first-quarter-of-2004

IR-2003-138, Dec. 12, 2003 WASHINGTON — The Internal Revenue Service today announced there will be no change in the interest rates for the calendar quarter beginning Jan. 1, 2004. The interest rates are as follows: four (4) percent for overpayments [three (3) percent in the case of a corporation]; four (4) percent for underpayments; six (6) percent for large corporate underpayments; and  one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000. Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point. The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during October 2003. Related Item: Revenue Ruling 2003-126PDF Subscribe to IRS Newsire

https://www.irs.gov/newsroom/irs-names-director-for-international-tax-matters-and-us-competent-authority

IR-2003-137, Dec. 11, 2003 WASHINGTON — The Internal Revenue Service announced the selection of Robert H. Green to lead the agency’s efforts on international tax issues. Green will serve as Director, International, and as the U.S. Competent Authority. In this position, Green will be responsible for a wide range of issues relating to international tax matters and global trading. These include ensuring consistent tax treatment of U.S. taxpayers concerning international issues, providing timely and effective implementation of tax treaty and tax information exchange. Green will report to the Commissioner, Large and Mid-Size Business Division. “Bob brings a broad range of experience and expertise to this position and we are very pleased to have him as a member of our leadership team,” LMSB Commissioner Deborah M. Nolan said. “Bob has a particular expertise in international tax issues relating to the tax treatment of foreign income. He has been a recognized leader in discussions between the U.S. and our major treaty partners. Working closely with Chief Counsel and Treasury, Bob and Deputy Director International Elvin Hedgpeth will lead our efforts to deal with the expanding global economy.” Green comes to the IRS from the Procter & Gamble Company, where he directed the company’s Taxes and Corporate Planning Office in Germany. Green previously served as Director of International Taxes for Procter & Gamble in the US. Prior to joining Procter & Gamble, Green served as Vice-President of Tax Policy for the National Foreign Trade Council, Inc (NFTC). Green received his undergraduate degree from Westminster College in Fulton, Mo., in 1969, and earned a law degree and L.L.M in Taxation from Georgetown University Law Center. Subscribe to IRS Newswire

https://www.irs.gov/newsroom/businesses-using-irsgov-to-get-employer-identification-numbers

IR-2003-136, Dec. 8, 2003 WASHINGTON — Businesses and tax professionals are turning to an online application form on IRS.gov to get new employer identification numbers. The Internal Revenue Service has issued more than 498,081 of the numbers through its online application since it became available in April. The online application form immediately issues a new employer identification number, or EIN, eliminating both paperwork and the usual four-to-10 day wait to receive an EIN through paper processes. The IRS assigns the nine-digit numbers to identify taxpayers. The number is required for a host of purposes and getting it quickly is important for someone starting a business. A business cannot establish a bank account, for instance, without a federal EIN. “Making EINs available to IRS customers on an immediate and permanent basis is an important step in improving our partnership with the business community,“ Commissioner Mark W. Everson said. "We want to reduce burden for businesses and tax professionals wherever possible." By the end of November 2003, the IRS was receiving 37.5 percent of all EIN applications through the Internet. The online application mimics the paper Form SS-4, Application for Employer Identification Number. EIN applications can also be submitted by phone, fax or by mail. Applications faxed or mailed are often incomplete, contain errors and frequently require additional contact with the applicant by an IRS employee. The online application requires that all information needed to process the application be submitted before the EIN is assigned to the taxpayer. The easiest way to get to the online EIN application is to type “EIN” in the IRS Keyword search on the IRS.gov home page. The online EIN application form joins several IRS Business Systems Modernization products already working to reduce taxpayer burden and improve IRS employee’s service to taxpayers. These new products and services include: Where’s My Refund? — Provides taxpayers with their refund status over the Internet. Taxpayers used the service more than 17.6 million times in 2003.    Where’s My Advance Child Tax Credit? — Gives taxpayers the status of their Advance Child Tax Credit checks over the Internet. So far, taxpayers have used the service nearly 15 million times.    e-services — A suite of products that provide tax professionals and those who file select information returns, such as banks and other financial institutions, with new choices for working electronically with the IRS.    Customer Communications — Modernized call systems cut by half taxpayers’ call-waiting time and the number of abandoned calls. It also introduced bilingual voice recognition capabilities, which helped double the number of Spanish calls.    Customer Relationship Management — Provided nearly 4,000 revenue agents with direct laptop access to tax computation software.    HR Connect — Allows 73,000 IRS users to perform many personnel actions online. Related Items: Online EIN Application SS-4, Application for Employer Identification Number (28KPDF) Instructions for Form SS-4 (71KPDF) Subscribe to IRS Newswire

https://www.irs.gov/newsroom/comprehensive-tax-guide-available-at-irsgov

IR-2003-135, Dec. 1, 2003 WASHINGTON — The IRS comprehensive tax guide for individuals has been updated for tax year 2003 and is now available at IRS.gov. IRS Publication 17, “Your Federal Income Tax,” has been published annually by the IRS for more than 60 years and has been available on the IRS Web site since 1996. Publication 17 has been updated with important changes for 2003, including tax breaks for men and women serving in the military resulting from the Military Family Tax Relief Act of 2003, which was signed into law on Nov. 11. Among other changes, Publication 17 explains the new dividend tax rates and provides the new lower income tax rates. As in prior years, the publication provides information on how to file an individual tax return, what to include as income, how to calculate capital gains and losses, how IRAs and other expenses can affect how much income to report, whether to take the standard deduction or itemize, and how to figure taxes and credits. Related Item: Publication 17, Your Federal Income TaxPDF   Subscribe to IRS Newswire

https://www.irs.gov/newsroom/simple-steps-can-help-taxpayers-with-charitable-donations

IR-2003-134, Dec. 1, 2003 WASHINGTON — As the end of the year approaches, the Internal Revenue Service reminds taxpayers that they may be able to use their gifts to tax-exempt charitable and religious groups to reduce their taxes. Taxpayers also need to keep in mind some simple steps to make sure they get appropriate benefit for their generous donations. In particular, there are some important guidelines for donating used cars and other property, such as stocks and bonds. The tax benefit for charitable contributions is only available for taxpayers who itemize deductions — about one-third of all filers. Those who take a standard deduction receive no additional tax benefit for their contributions. In 2000, the last year for which complete data is available, about 37.5 million taxpayers made deductible charitable contributions totaling nearly $140.7 billion. Of these gifts, nearly $98.2 billion were cash donations. Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec. 31, your 2003 deduction would be $200. You include credit card charges and payments by check in the year they are given to the charity, even though you may not pay the credit card bill or have your bank account debited until the next year. Those itemizing deductions reduce their taxable income by the total contributed to qualified tax-exempt organizations, with some limits. The tax saving usually equals the deduction times the marginal tax rate – the top rate for the person’s income level. For example, an individual with a taxable income of $50,000 donates $2,000 to his or her church. The tax savings from this generosity will be $500 — $2,000 times the taxpayer’s marginal tax rate of 25 percent. Donations of stock or other property are usually valued at the fair market value of the property. For stocks and bonds with an active market, the fair market value is the average price between highest and lowest selling price on the valuation date. Figuring the value of other personal property can be more complicated. For example, determining the value of a donated used car requires weighing several factors. Some car donation program operators have mistakenly suggested that donors can take as a deduction the full value listed in an established used car pricing guide. For additional information, see IRS News release 2001-112, IRS and State Charity Officials Urge Care When Making a Car Donation. The tax law, however, allows a deduction for only the fair market value of the car. Fair market value takes into account not only the year, the model and the mileage of the car, but also the local market and the vehicle’s condition. As a result, the fair market value of the taxpayer’s car may be substantially different than the average price listed in an established used car guide. The IRS also reminds taxpayers to keep appropriate records to substantiate the value of their gifts. For example, for any single gift of $250 or more, a taxpayer must have a written acknowledgement from the charity by the earlier of the date the person files the tax return or the filing deadline, including extensions. A person donating property valued at more than $5,000 must obtain a qualified written appraisal. Taxpayers can find help regarding the donations they make in Publication 526, Charitable Contributions. A second reference,  Publication 561, Determining the Value of Donated Property, answers many of the questions that donors have when they make noncash contributions. Both publications are available at the IRS Web site, www.irs.gov, or by calling 1-800-TAX-FORM (1-800-829-3676). Related Items: IR-2001-112, IRS and State Charity Officials Urge Care When Making a Car Donation (111KPDF) Publication 526, Charitable Contributions (158KPDF) Publication 561, Determining the Value of Donated Property (101KPDF) Subscribe to IRS Newswire