Tax Notes


In revenue ruling 2004-92 the IRS announced a 1% increase in interest rates for underpayments and overpayments for the calendar quarter beginning October 1, 2004 ( www.irs.gov/pub/irs-drop/rr-04-92.pdf ). The new rate of interest determined under IRC section 6621 is 5% for overpayments (4% in the case of a corporation), 5% for underpayments and 7% for large corporate underpayments. Interest on the portion of a corporate overpayment exceeding $10,000 will be 2.5%.

New e-service speeds transcript delivery ( www.irs.gov/newsroom/article/0,,id=129058,00.html ). Tax practitioners now can request transcripts of clients’ tax records and receive them within minutes through a new online tool delivered through the IRS business system modernization program. The transcript delivery system (TDS) is one of three premium e-services the IRS developed for practitioners who have successfully e-filed 100 or more individual tax returns. The other two—disclosure authorization and electronic account resolution—were released in July 2004.

The IRS is indefinitely extending its tip rate determination and education program, a voluntary compliance tool that has helped nearly double the reporting of income from gratuities ( www.irs.gov/newsroom/article/0,,id=129379,00.html ). Developed in 1993 for the food and beverage industry, the program was set to expire in 2005. It offers multiple voluntary agreement options designed to provide nonburdensome methods for employers and employees to comply with tip reporting laws, including the tip rate determination agreement (TRDA), the tip reporting alternative commitment (TRAC) and the employer-designed TRAC. The IRS will continue to administer existing tip agreements without the need for employers to re-sign them.

Half a million more small businesses will be eligible to file simplified expense forms for tax year 2005 returns filed in 2006—an increase of 15% ( www.irs.gov/newsroom/article/0,,id=129561,00.html ). The IRS will raise to $5,000 from $2,500 the business expense threshold for filing form 1040, schedule C-EZ, saving small business taxpayers approximately 5 million hours of paperwork.

For single-click access to the Web addresses in these tax stories, visit the Journal of Accountancy Web site at www.aicpa.org/pubs/jofa/joahome.htm .

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