For small businesses that were dreading the thought of having to produce a Form 1099 for every payee to which they paid at least $600, President Barack Obama offered the prospect of relief in his State of the Union speech Jan. 25 when he said, “We can start right now
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Tax
Audit Guide Covers Capitalization Rules
Practitioners have been making use of a resource arising from the IRS’ ongoing audit initiative concerning capitalization rules. The IRS issued Capitalization v. Repairs Audit Technique Guide (LB&I-4-0910-023) as a framework for examining agents to follow when determining whether a business’s expenses should be capitalized or an immediate deduction allowed,
Bill Introduced to Address Tax Strategy Patents
On Tuesday, Sens. Max Baucus, D-Mont., and Chuck Grassley, R-Iowa, introduced legislation intended to stop the granting of patents for tax strategies. The Equal Access to Tax Planning Act of 2011 (S 139) would provide that “any strategy for reducing, avoiding, or deferring tax liability” is deemed to be “prior
IRS Targets 1040 Schedules, Procedures in Preparer Compliance Visits
In its current round of office visits involving tax preparer compliance, the IRS is targeting practitioners who prepare a high percentage of returns with certain Form 1040 schedules and is checking preparers’ procedures and recordkeeping. For a second tax season, the IRS has sent reminders to tax preparers of their
IRS Launches Smartphone App
The IRS on Monday announced the launch of a new application for smartphones: IRS2Go. The application will let taxpayers check on the status of their refunds and get tax tips. In a press release, IRS Commissioner Doug Shulman described the application as showing the IRS’ “commitment to modernizing the agency
IRS Gives Relief to Return Preparers With Pending PTIN Applications
Because some return preparers are having trouble with the IRS’ new online preparer tax identification number (PTIN) application, the IRS on Jan. 24 announced that it is providing relief for preparers who make a good-faith effort to comply with the new PTIN requirement (Notice 2011-11). The IRS will permit preparers
IRS Announces Date to Start Processing Delayed Returns
The IRS announced that it plans to be able to start processing tax returns delayed by the late enactment of the 2010 Tax Relief Act on Feb. 14. On Dec. 23, the IRS warned that because of the late enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation
Lack of Economic Substance Guidance May Chill Legitimate Planning, Organizations Warn
The AICPA and the American Bar Association (ABA) Tax Section jointly issued a comprehensive set of recommendations to the IRS to encourage the Service to quickly establish guidance for applying the economic substance doctrine. In the absence of specific guidance, the organizations warn in a 65-page report released Jan. 18
AICPA Offers Congress 13 Suggested Cleanups for the Tax Code
Noncontroversial and straightforward tweaks to a tax code that contains more than 3.5 million words are not easy to find, but the AICPA has several such proposals that, if enacted, could eliminate a few headaches for taxpayers and CPAs alike. The AICPA’s second annual compendium of legislative proposals, distributed to
IRS Will Not Meet 80% E-File Goal, Oversight Board Says
The IRS Oversight Board released its Electronic Filing 2010 Annual Report to Congress on Wednesday, including the news that its goal that 80% of all major tax return types be electronically filed will likely not be met by 2012. The 80% e-file goal was originally implemented by the IRS Restructuring
IRS Allows More Small Exempt Organizations to File E-Postcard
The IRS has raised the gross receipts threshold for Form 990, Return of Organization Exempt From Income Tax, from $25,000 to $50,000, allowing more tax-exempt organizations to avoid filing a full Form 990 or 990-EZ (Revenue Procedure 2011-15). Tax-exempt organizations are generally required to file either a Form 990 or
The 20 Most Popular Stories of 2010
2010 was a busy year for regulatory reform and changes to standards that affect the practices and responsibilities of CPAs. It’s no surprise that the JofA’s readers were interested in regulatory reform over the past year, particularly the health care and Wall Street Reform bills passed in March and July,
2011 Tax Filing Season Gets Under Way With Many Changes
The IRS started accepting e-filed and Free File returns on Jan. 14, marking the official start of the 2011 tax filing season. However, many taxpayers will not be able to file until some time in February while the IRS updates forms and reprograms its systems to account for legislative changes
Social Security “Do-Over” Now Limited
The Social Security Administration issued a final rule that limits beneficiaries’ ability to stop their Social Security retirement payments, repay their cumulative past benefits, and start receiving higher payments available to older applicants. The SSA said the restrictions were necessary to prevent abuse of the option, which has been called
Treasury Introduces Prepaid Debit Cards for Tax Refunds
The Treasury Department on Thursday announced a pilot program of prepaid debit cards to allow taxpayers without bank accounts to receive their tax refunds more quickly. The Visa debit cards will be available only to taxpayers who receive an offer letter from the Treasury Department. During the pilot program, the
IRS Oversight Board Releases Latest Taxpayer Attitude Survey Results
The IRS Oversight Board has released the results of its 2010 Taxpayer Attitude Survey showing that taxpayers feel that income tax cheating is unacceptable and are generally satisfied with their personal interaction with the IRS. The nine-member IRS Oversight Board was created by the IRS Restructuring and Reform Act of
Automatic Procedures for Changing Accounting Methods Updated, Expanded
The IRS on Monday released updated procedures under which taxpayers can receive automatic consent to change their accounting methods (Revenue Procedure 2011-14). The revenue procedure updates prior guidance contained in Revenue Procedures 2008-52 and 2009-39 and gives additional accounting method changes for which taxpayers can obtain automatic consent. The revenue
PTINs a Pain for Some CPAs
As the start of tax filing season looms, some CPA preparers are reporting difficulties meeting the new IRS requirement to register and obtain or renew a preparer tax identification number (PTIN). All paid tax return preparers, including CPAs, now must use a PTIN when signing all tax returns, forms or
Establish a College-Based Volunteer Income Tax Assistance Program
Volunteer Income Tax Assistance (VITA) is an IRS program that provides free, reliable income tax return preparation to low- to moderate-income taxpayers. Many nonprofit organizations sponsor sites, including colleges and universities, which often integrate the program into teaching taxation to give students some practical experience. I was privileged to help
Tax Court Again Takes Dim View of Benistar Plan
In McGehee Family Clinic the Tax Court ruled that a clinic and shareholder’s investment in an employee benefit plan marketed under the name “Benistar” was a listed transaction substantially similar to the transaction described in Notice 95-34 (1995-1 C.B. 309). This is at least the second case in which the
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