| The IRS proposes regulations ( www.access.gpo.gov/su_docs/fedreg/a020802c.html
) requiring certain financial institutions to report
interest payments made to nonresident aliens who reside in
specified countries and maintain deposits in the U.S. offices of
such entities. Currently the service mandates reporting of this
interest only if a financial institution pays it to a U.S.
person or to a nonresident alien residing in Canada. The IRS
withdrew an earlier proposal with broader applications. |
The IRS publishes final regulations involving amendments to Circular 230 ( www.irs.gov/pub/irs-irbs/irb02-33.pdf ), which governs the practice of CPAs and others before the service. Among the issues these rules cover are submitting taxpayer records to the IRS; handling a client’s act of noncompliance, error or omission; contingent fees; returning a client’s records; advertising and solicitations; and IRS disciplinary proceedings.
In August the IRS issued final regulations ( www.irs.gov/pub/irs-regs/td9013.pdf ) pertaining to treatment of self-charged items of income and expense under IRC section 469. The changes recharacterize a percentage of certain portfolio income and expense as passive income and expense (that is, self-charged items) when a taxpayer engages in a lending transaction with a partnership or an S corporation (that is, a pass-through entity) in which the taxpayer owns an interest and the loan proceeds are used in a passive activity.
The IRS gives tax professionals early notice of where their clients’ 2002 tax returns should be filed in 2003. To improve customer service, it redistributed tax-return workloads among its 10 regional processing centers. It published ( www.irs.gov/pub/irs-news/ir-02-92.pdf ) the location of the processing center for each geographic area.