Source: http://mastertype.blogspot.com/2012/02/
Timestamp: 2018-07-17 15:49:27
Document Index: 333091504

Matched Legal Cases: ['§39', '§301', '§9005', '§2043', '§162', '§9014', '§9015', '§1513', '§1514', '§1001', '§39']

Accounting and Tax Tips: February 2012
Posted by Kenneth Reid at 2/21/2012 08:01:00 AM No comments: Links to this post
Posted by Kenneth Reid at 2/14/2012 12:03:00 PM No comments: Links to this post
New Tax Information Reporting Regulations Proposed for Passport Applicants
The IRS has issued new proposed regulations under Code Sec. 6039E to replace regulations proposed in 1992 for tax information reporting by applicants for U.S. passports (NPRM REG-208274-86). The new proposed regulations, unlike regulations from 1992, do not provide rules concerning information reporting by individuals applying for permanent residency status.
The proposed regulations require information including: the applicant's full name; address of principal residence within the country of residence; taxpayer identification number (TIN), if the applicant has one, and date of birth. The information is required "regardless of where the applicant resides at the time it is submitted," the IRS explained.
Reference: PTE §39,135.30
Posted by Kenneth Reid at 2/14/2012 12:02:00 PM No comments: Links to this post
Posted by Kenneth Reid at 2/09/2012 01:58:00 PM No comments: Links to this post
Employers who fail to file a correct Form W-2 by the due date are subject to the following penalty, which is based on when a correct Form W-2 is filed:
(1) $30 per Form W-2 if correctly filed within 30 days after the due date (by March 30 if the due date is February 28), up to a maximum of $250,000 a year ($75,000 for certain small businesses);
(2) $60 per Form W-2 if correctly filed more than 30 days after the due date but by August 1, up to a maximum of $500,000 a year ($200,000 for small businesses); and
(3) $100 per Form W-2 if filed after August 1 or not filed, up to a maximum of $1,500,000 a year ($500,000 for small businesses).
Failure to file correctly means failure to include all information required to be shown on Form W-2, including:
* incorrect information,
* filing on paper when filing electronically is required,
* reporting an incorrect taxpayer identification number (TIN),
* failing to report a TIN, or
* failing to file paper Forms W-2 that are machine readable.
An inconsequential error or omission is not considered a failure to include correct information. However, errors and omissions relating to a TIN, a payee's surname, and money amounts are never considered inconsequential (Code Sec. 6721; Reg. §§301.6721-1(a)(2), 301.6721-1(c)).
Posted by Kenneth Reid at 2/08/2012 12:29:00 PM No comments: Links to this post
IRS Indicates 2012 Filing Season Brings Many New Changes
The 2012 filing season brings in many changes for tax return preparers and taxpayers, reported IRS officials Preston Benoit, deputy director of Return Preparer Office, and Jason Langley, lead tax law specialist of Tax Forms and Publications.
At a January 10 webcast hosted by Tax Talk Today, Benoit outlined the format of the registered return preparer competency exam, which is required for return preparers who want to be designated as Registered Tax Return Preparers. Langley also discussed changes to existing forms and the introduction of new tax forms for the 2012 filing season.
Some of the new forms are Form 8949 for reporting capital gains and losses, and an updated Form 1040-EZ and Form 1040-NR-EZ, which will reflect the payroll tax cut legislation when they are released in the next few months.
As part of its initiative to improve the return preparer industry, the IRS, in 2011, began requiring that return preparers who are not attorneys, CPAs or enrolled agents, must obtain a Preparer Tax Identification Number (PTIN). The second prong of the initiative requires that return preparers pass the registered tax return preparer competency test by December 31, 2013.
"The exam is a basic minimal competency exam," Benoit explained. "The examination is 120 questions; they're all mostly multiple choice or true and false." Exam takers are not allowed to bring prepared materials or notes with them into the exam, but the IRS will provide several resources such as Publication 17, the Tax Guide, and the long version of Form 1040 and its instructions. Benoit cautioned that the exam "is structured in such a way that, if a taker has to look up each and every answer, there may be trouble." The IRS will provide review materials on its website (http://www.irs.gov), and the likelihood of commercial study courses arising in the next two years should enable exam takers to more than adequately prepare for the test. For those who do not pass the exam on the first try, Benoit explained, "They can take the exam as many times as necessary."
In the meantime, return preparers who have not yet applied for their PTIN must do so. Benoit reported that the IRS has released applicants from the controversial fingerprinting requirement, although they are still subject to checks on their tax compliance status.
Registered Tax Return Preparer Status
Registered Tax Return Preparers who have passed the competency exam must maintain their status by annually renewing their PTIN and obtaining a minimum of 15 continuing education credits. These include two hours of ethics or professional conduct, three hours of federal tax law updates and 10 hours of federal tax law topics. Attorneys, CPAs and enrolled agents are subject to requirements of their own states, bar associations or other professional organizations and are generally not required to fulfill the IRS continuing education requirements. They must, however, still annually renew their PTINs.
2011 Tax Form Changes
There will be fewer processing delays for the 2011 tax year than there were for 2010. The delays in 2011 were due mainly to the last-minute tax legislation passed by Congress in 2010. "Because there is a lot of last-minute give-and-take to reach a deal, sometimes behind closed doors, we never know what the final legislation is going to be," said Langley. But he offered his assurances: "We don't expect to have any delays for 2011."
Some important changes to the 2011 tax forms include:
Form 1040. Form 1040 now has several blanks where taxpayers may directly input their foreign addresses, eliminating the need to file that information on a separate form.
Schedule L. Schedule L will no longer be required to figure the standard deduction.
Form 1040 and Individual Tax Return Identity Theft. The IRS has included a box for the identity theft protection PIN for victims of identity theft. It appears on the bottom of the second page, to the right of the blank for the spouse's occupation. Taxpayers who suffered identity theft (that is, someone whose information was used to file a fraudulent tax return and not simply someone whose credit cards were stolen) should have received a letter from the IRS at the end of 2011 that contained their PIN. Langley warned e-filers that they must include their PIN. "If they don't enter the PIN, and they received the letter, the return will probably be rejected." Additionally, â€˜if they have lost the PIN, there is nothing they can do."
Foreign Financial Assets. Form 8938, Statement of Specified Foreign Financial Assets, has been released. Because of the penalties associated with the failure to file this form when required, preparers and taxpayers should familiarize themselves with the form and its instructions. "They define exactly what a foreign financial asset is, which I think is going to confuse a lot of people," said Langley.
Capital Gains and Losses. Schedule D, which traditionally was used to report capital gains and losses, has been replaced by Form 8949. Schedule D is now a recapitulation of items appearing elsewhere. The new system may change in the future as the IRS receives feedback. "We did focus test the 8949 as we developed itâ€¦and Schedule D as well," said Langley. "And depending on the feedbackâ€¦there will be further changes, I'm sure, to tweak this."
Refundable Credits. Finally, Langley stated that taxpayers who qualify for some refundable credits, such as the adoption credit or the first-time homebuyer credit, must file their returns on paper.
Posted by Kenneth Reid at 2/08/2012 12:25:00 PM No comments: Links to this post
The IRS has issued the priority guidance plan for 2011-2012. The payroll related items relating to executive compensation, health care, and benefits are below.
(1) Guidance under Code Sec. 51(d) on whether a state workforce agency may accept a Form 8850 Pre-Screening Notice and Certification Request for the Work Opportunity Credit with faxed signatures of the job applicant and the employer.
(2) Revenue ruling under Code Sec. 62(c) on wage recharacterization.
(3) Regulations under Code Sec. 83 to incorporate the holding in Revenue Ruling 2005-48.
(4) Revenue procedure providing model language on Code Sec. 83(b) elections.
(5) Final regulations on cafeteria plans under Code Sec. 125.
(6) Guidance on the $2,500 annual limit on salary reduction contributions to cafeteria plan health Flexible Spending Arrangements (health FSAs) under Code Sec. 125(i), as added by §9005 of the Patient Protection and Affordable Care Act (ACA).
(7) Notice on the applicability of Code Sec. 132(d) and (e) to employer-provided cell phones following enactment of §2043 of the Small Business Jobs Act of 2010. Published: 9/19/11 in IRB 2011-38 as Notice. 2011-72 (Released 9/14/11).
(8) Guidance under Code Sec. 132(f) on the use of smart cards, debit cards and credit cards in providing qualified transportation fringe benefits.
(9) Guidance under Reg. §162(m) on the application of the deduction limitation to certain payments of dividends or dividend equivalents.
(10) Guidance under Code Sec. 162(m)(6), as added by §9014 of the ACA.
(11) Notice under Code Sec. 223 on the effect of Indian Health Service coverage on eligibility to contribute to a Health Savings Account (HSA).
(12) Revenue ruling under Code Sec. 280G and Code Sec. 4999(a) on change in ownership.
(13) Guidance on application of Code Sec. 402(b) to participants in foreign nonqualified deferred compensation plans.
(14) Guidance under Code Sec. 404 on the application of the "in which or with which ends" rule and the exceptions to that rule in Code Sec. 1.404(a)-12(b).
(15) Final regulations on income inclusion under Code Sec. 409A. Proposed regulations were published on December 8, 2008.
(16) Notice on the application of Code Sec. 409A(b), as amended by the Pension Protection Act of 2006.
(17) Guidance under Code Sec. 419A on the definition of post-retirement medical benefits.
(18) Guidance under Code Sec. 424(c)(1)(B) on whether there is a disposition of Incentive Stock Option or Employee Stock Purchase Plan shares on receipt of boot by a target shareholder in a Code Sec. 368(a)(1) reorganization.
(19) Regulations under Code Sec. 457(f) on ineligible plans.
(20) Regulations under Code Sec. 512 explaining how to compute unrelated business taxable income of voluntary employees' beneficiary associations described in Code Sec. 501(c)(9).
(21) Guidance on the employee retention credit under Code Sec. 1400R.
(22) Regulations under Code Sec. 3101(b), Code Sec. 3102(f), and Code Sec. 1401(b) on additional Medicare tax on employees and self-employed individuals as added by §9015 of the ACA.
(23) Revenue ruling under Code Sec. 3121(q) updating Revenue Ruling 95-7 on tips.
(24) Regulations under Code Sec. 3127, Code Sec. 3121(b)(3)(A) and Code Sec. 3306(c)(5) making certain FICA exemptions available for disregarded entities.
(25) Regulations under Code Sec. 3504 designating certain parties who file employment tax returns under their employer identification numbers (EINs) for their clients' workers as persons required to perform acts of employers.
(26) Regulations under Code Sec. 4980G on interaction of Code Sec. 4980G and Code Sec. 125 with respect to comparable employer contributions to employees' HSAs.
(27) Guidance on shared responsibility for employers regarding health coverage under Code Sec. 4980H, as added by §1513 of the ACA. Published: 10/3/11 in IRB 2011-40 as Notice 2011-73 (Released 9/13/11).
(28) Guidance on the reporting requirements under Code Sec. 6056, as added by §1514 of the ACA.
(29) Guidance on the tax treatment of health insurance premium rebates under Public Health Service Act Code Sec. 2718(b), as added by §1001 of the ACA. (Treasury Office of Tax Policy and Internal Revenue Service,Second Quarter 2011-2012 Priority Guidance Plan, January 25, 2012.)
Posted by Kenneth Reid at 2/08/2012 12:20:00 PM No comments: Links to this post
IRS Reopens Offshore Voluntary Disclosure Program and Increases Top Penalty
The IRS has reopened the offshore voluntary disclosure program, which closed in 2011, to encourage taxpayers to disclose unreported foreign accounts. The revived program is open-ended, but the IRS reserved the right to change the terms of the program at any time going forward (IRS News Release 2012-5). Additional details will be posted on the IRS website, the IRS advised.
IRS Commissioner Douglas Shulman announced the reopening of the offshore voluntary disclosure program by lauding the success of past programs. Shulman reported that the IRS has collected $4.4 billion from the 2009 and 2011 programs. Shulman predicted the IRS will collect additional revenue from the 2011 program as it processes cases.
The reopened program is similar to the 2011 program, but there are some differences. The overall penalty framework requires individuals to pay a penalty of 27.5 percent of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the eight full tax years prior to disclosure.
The 2011 program imposed a penalty of 25 percent. Unchanged from the 2011 program are reduced penalties of 12.5 percent and five percent for qualified taxpayers, the IRS explained. Individuals who have made voluntary disclosures after the 2011 program ended will be able to be treated under the provisions of the revived program.
The 2009 and 2011 programs were temporary and required taxpayers to request to participate by certain deadlines. The reopened program has no set deadline. However, the terms of the revived program could change at any point, the IRS cautioned. The IRS indicated it could increase penalties in the program for all, or some, taxpayers or defined classes of taxpayers; or, it could decide to end the revived program entirely.
Shulman reported that the 2009 and 2011 programs have generated 33,000 voluntary disclosures to date.
In related news, the National Taxpayer Advocate recently has ordered the IRS Large Business & International and Small Business/Self-Employed Divisions in a Taxpayer Assistance Directive (TAD) to revoke a memorandum issued on March 1, 2011, to examiners of open cases in the 2009 offshore voluntary disclosure program. The memorandum directs examiners in certain listed categories of cases to stop using their discretion to determine whether to propose an offshore penalty less than 20 percent.
According to the National Taxpayer Advocate, the IRS materially changed the terms of the 2009 offshore voluntary disclosure program after taxpayers, who relied on the original terms, applied for it. This resulted in the IRS treating similarly situated taxpayers differently.
Reference: PTE §39,015.15
Posted by Kenneth Reid at 2/03/2012 01:04:00 PM No comments: Links to this post
Posted by Kenneth Reid at 2/01/2012 11:14:00 AM No comments: Links to this post
IRS Issues Regs On Exclusion For Injury/Sickness Damages
The IRS has released final regulations relating to the exclusion from gross income for amounts received on account of personal physical injuries or physical sickness. The final regulations reflect amendments made by the Small Business Job Protection Act of 1996 (P.L. 104-188) and affect taxpayers receiving damages on account of personal physical injuries or physical sickness and taxpayers paying these damages.
The final regulations adopt without substantive change proposed regulations (NPRM REG-127270-06) issued on September 15, 2009. The proposed regulations deleted the requirement that, to qualify for exclusion from gross income, damages received from a legal suit, action, or settlement agreement must be based upon "tort or tort type rights." The proposed regulations provided, instead, that the Code Sec. 104(a)(2) exclusion may apply to damages recovered for a personal physical injury or physical sickness under a statute that does not provide for a broad range of remedies, and that the injury need not be defined as a tort. These regulations are effective January 23, 2012, and apply to damages paid pursuant to a written binding agreement, court decree, or mediation award entered into or issued after September 13, 1995, and received after January 23, 2012. (T.D. 9573, January 20, 2012.)
Posted by Kenneth Reid at 2/01/2012 11:09:00 AM No comments: Links to this post