The IRS on Wednesday issued proposed guidance on how return preparers may meet their new electronic filing requirement for individual and fiduciary income tax returns starting Jan. 1, 2011. The proposed regulations (REG-100194-10) and a proposed revenue procedure (Notice 2010-85) provide for a hardship exception to the requirement and specify
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TOPICS / TAX
Individual income taxation
Shulman Urges Congress to Fix AMT and Extender Issues Before Year-End
IRS Commissioner Doug Shulman urged Congress to pass tax legislation before the start of the next tax season. Shulman focused on the alternative minimum tax (AMT) patch and the extension of various income tax incentives for individuals. In identically worded letters to House Ways and Means Committee Chairman Sander Levin,
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EXPANDED ADOPTION CREDIT GETS INTERIM GUIDANCE The IRS issued interim guidance Sept. 29 on the child adoption credit and income exclusion for employer reimbursements of adoption expenses, as expanded by the Patient Protection and Affordable Care Act (PL 111-148). For tax years beginning in 2010 and 2011, the act made
Innocent Spouse Relief: Alternatives After the Lantz Case
This past June, the Seventh Circuit Court of Appeals in Cathy M. Lantz v. Commissioner (docket no. 09-3345, 6/8/2010) reversed the Tax Court and upheld the IRS’ position that innocent spouses seeking equitable relief under subsection (f) of IRC § 6015 are subject to the same two-year filing deadline that
Displaced Workers and Deduction for Travel Expenses
In today’s economy, employees may be displaced from long-held jobs. They travel to new assignments and locations as businesses cut costs. Sometimes, employees may have to choose between being laid off or reassigned. In these situations, workers have often tried to deduct business or employment travel under IRC § 162(a)(2).
AICPA VP Testifies on Changes Needed to IRS Return Preparer Plan
Edward Karl, AICPA vice president–Taxation, testified at an IRS hearing Oct. 8 about proposed amendments to Circular 230 that would put into place many parts of the IRS’ plan to register and regulate tax return preparers (REG-138637-07). The proposed regulations would clarify the definition of tax practice, establish a new
Deductibility of Work-Related Educational Expenses
The effects of the Great Recession are still being felt in high unemployment rates and other symptoms in the U.S. job market. The Business Roundtable reported in late 2009 that even as employment shrank, 60% of employers said they had trouble finding qualified applicants for the vacancies they had. Eighty-one
Notice Gives Guidance on In-Plan Roth Rollovers
On Friday, the IRS issued guidance on how plan participants can make rollovers from a 401(k) or 403(b) plan to a designated Roth account in the same plan (Notice 2010-84). Such in-plan Roth rollovers are now permitted under IRC § 402A(c)(4), as amended by the Small Business Jobs Act of
New Rules Require Rental Property Owners to Issue 1099s
The recently enacted Small Business Jobs Act contained one provision that may have escaped the notice of taxpayers who own rental property, but will affect them starting in January. Under the provision, owners of property who receive rental income will be required to issue Forms 1099 to service providers for
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FOREIGN TAX CREDIT RESTRICTIONS ENACTED New restrictions on the use of foreign tax credits (FTCs), along with other revenue-raising international tax provisions, were enacted Aug. 10, 2010, as part of the so-called Education Jobs Act (PL 111-226). The legislation adds IRC § 909, which provides generally that in the case
Preparer Registration Draws Concerns
The IRS moved ahead with its program to register tax return preparers, as aspects of the plan drew concerns and recommendations from a wide range of practitioners and policymakers, including the AICPA. In late September, the IRS issued final regulations (TD 9501 and TD 9503) on preparer tax identification numbers
IRS Releases Some Annual Inflation Adjustments, Many Unchanged for 2011
The IRS released on Thursday its annual revenue procedure making inflation adjustments for various credits and other tax items (Revenue Procedure 2010-40). However, unlike in past years, the guidance does not include updated tax rate tables or updated amounts for the child tax credit, Hope scholarship and lifetime learning credits,
IRS Commissioner Predicts Relief From Testing and Continuing Education for CPA-Supervised Nonsigning Preparers
The IRS will likely provide relief from testing and continuing education requirements for nonsigning tax preparers working under the supervision of a CPA or other federally authorized tax practitioner, such as an attorney or enrolled agent, in a CPA or other professional firm, IRS Commissioner Doug Shulman said Tuesday. In
IRS Provides PTIN Guidance for Preparers Without a Social Security Number
In Revenue Procedure 2010-41, released on Tuesday, the IRS has provided a process for individuals without a Social Security number to obtain a preparer tax identification number (PTIN). Paid tax return preparers are required to register with the IRS and obtain a PTIN, and part of the PTIN registration process
IRS Rules That Mortgages Over $1 Million Can Be Deductible
The IRS has ruled that indebtedness incurred by a taxpayer to acquire, construct or substantially improve a qualified residence can constitute “home equity indebtedness” to the extent it exceeds $1 million, up to an excess of $100,000 (Revenue Ruling 2010-25). In the fact situation discussed in the ruling, an unmarried
AICPA VP Testifies on Changes Needed to IRS Return Preparer Regulation Plan
Edward Karl, AICPA vice president–Taxation, testified at an IRS hearing on Friday about proposed amendments to Circular 230 that would put into place many parts of the IRS’ plan to register and regulate tax return preparers (REG-138637-07). The proposed regulations would clarify the definition of tax practice, establish a new
PTIN Registration Site Offline This Weekend
The IRS announced that its new online preparer tax identification number (PTIN) registration site will undergo system maintenance this weekend and be unavailable for use. The Service estimates that the site will be taken down at approximately 8 a.m. EDT Saturday, Oct. 9, and will remain unavailable until approximately 8
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IRS PROPOSES PTIN FEES The IRS proposed (REG-139343-08, issued July 23, 2010) to begin charging all authorized tax preparers a $50 user fee to obtain or renew annually a preparer tax identification number (PTIN). The fee would be on top of a fee charged by a third-party vendor that will
Taxpayers Who Built New Home Denied Exclusion
The Tax Court held that a married couple could not exclude gain under IRC § 121 from the sale of a house that they had never lived in, built after they had demolished their former residence on the same site. The court held that Congress intended that the exclusion should
Per Diem Travel Rates Updated
The IRS issued updated federal per diem rates and procedures Thursday (Revenue Procedure 2010-39) for substantiating deductible expenses or employer-paid allowances for lodging, meals and incidental expenses incurred in business-related travel away from home. The revenue procedure supersedes Revenue Procedure 2009-47, issued Sept. 30, 2009, and is generally effective for
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