On May 18, the IRS posted a new version of Form 941, Employer’s QUARTERLY Federal Tax Return, and its instructions for claiming the special payroll tax exemption that applies to new workers hired in 2010. The Hiring Incentives to Restore Employment Act (HIRE Act) created a payroll tax exemption for
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Tax
IRS Guidance on Small Business Health Care Tax Credit
The IRS issued a notice Monday providing guidance to small businesses that are eligible to claim a tax credit for employee health insurance coverage (Notice 2010-44). The Patient Protection and Affordable Care Act (PL 111-148) enacted new IRC § 45R, which allows certain eligible small businesses to claim a tax
Automatic Revocation of Tax-Exempt Status to Start Monday
Monday, May 17, is the deadline for calendar-year tax-exempt organizations to file a Form 990 for 2009. It also marks the third filing deadline under the mandatory filing requirement instituted by the Pension Protection Act of 2006 (PL 109-280). Under the terms of that mandatory filing requirement, tax-exempt organizations that
Final Interim Regulations Issued on Adult Dependent Health Coverage
On Monday, the IRS, along with the Department of Labor and Department of Health and Human Services, issued interim final regulations for group health plans and health insurers relating to dependent coverage for children under the age of 26 (TD 9482). The regulations complement guidance issued by the IRS on
Tax Court Holds Invalid Temporary Regulations on Overstatement of Partnership Basis
On Thursday, the Tax Court held that temporary regulations issued by the IRS last year that defined an overstatement of partnership basis as an omission from gross income are invalid (Intermountain Ins. Serv. of Vail, LLC, 134 TC no. 11). In an earlier round of litigation, the Tax Court had
AICPA Testifies About Tax Return Preparer ID Plan
Patricia Thompson, CPA/PFS, vice chair of the AICPA’s Tax Executive Committee, spoke Thursday at an IRS hearing on the IRS’ plan to require all paid tax return preparers to obtain and use a preparer tax identification number (PTIN). She said the IRS’ PTIN proposal, along with its proposal to make
IRS Releases Average Premiums for Determining Small Business Health Care Credit
The IRS on Monday issued average small group market premiums for use in determining the new small business health care credit under IRC § 45R (Rev. Rul. 2010-13). The Patient Protection and Affordable Care Act, P.L. 111-148, provides tax credits for small businesses, beginning in years after 2009, designed to
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UNCERTAIN TAX POSITIONS SCHEDULE TO DEBUT FOR 2010; COMMENT PERIOD STILL OPEN The IRS extended until June 1 the comment period for its proposal to require large businesses to disclose uncertain tax positions and announced that it intends to make the requirement effective for tax years beginning in 2010. The
Prevent Payroll Errors
Payroll mistakes can be costly. Laws taking effect this year, including the Paycheck Fairness Act and Working Families Flexibility Act, and initiatives such as the IRS’ National Research Program and OSHA’s recordkeeping National Emphasis Program, can result in fines and penalties for errors or noncompliance. The following tips can help
Owner Held to Be a Responsible Person
In a 2–1 decision, the U.S. Court of Appeals for the Fourth Circuit upheld the decision of the U.S. District Court for the Middle District of North Carolina that a shareholder/officer of a corporation was personally liable for the corporation’s unpaid withholding and payroll taxes. The majority of the appellate
Changes in Tax Practice Standards Affect CPAs
Expansions in the regulatory environment in recent years are forcing CPA tax practitioners to consider many new compliance issues. Those issues include expanded statutory penalty provisions, revisions to regulations, and modifications to binding AICPA ethics rules related to tax engagements. CPAs subject to this wide array of rules and regulations
IRS Increases Disclosure Requirements
The IRS has drastically increased its examination tools over the past decade and increased disclosure burdens on taxpayers and preparers. Examples abound, but perhaps the most notable changes over the past decade concern reportable transactions, the introduction of Schedule M-3, and most recently the potential disclosure of uncertain tax positions
Sex-Change Surgery Deductible Medical Expense
In a case of first impression, the Tax Court ruled that the costs of hormone therapy and sex reassignment surgery for an individual diagnosed with gender identity disorder (GID) qualified as deductible medical expenses. However, the court also said the cost of breast augmentation surgery was cosmetic surgery and not
Registration of CPAs, Other Paid Tax Preparers to Start in 2011
The IRS recently provided additional details and a timetable for its proposed requirements for registration of all paid, signing tax return preparers including CPAs. The target date for starting implementation of the registration requirement is September 2010. Preparers who don’t already have one will need to obtain a Preparer Tax
CPAs Provide Expertise for Transfer Pricing Analyses
Transfer pricing, the process by which multinational companies set arm’s-length prices for cross-border transactions within a corporate group, is complex and consistently ranks as the No. 1 international tax issue facing multinational companies, according to Ernst & Young’s 2009 Global transfer pricing survey. To avoid penalties and potential interest, most
AICPA Positions on Recent IRS Proposals
Editor’s note: The AICPA Tax Division prepared this summary. IRS COMMISSIONER SHULMAN’S ANNOUNCEMENT ON UNCERTAIN TAX POSITIONS On Jan. 26, IRS Commissioner Doug Shulman released a new proposal (see tinyurl.com/ydy4v7e) that would require companies to disclose “uncertain” tax positions in their annual income tax return filings (based on FIN 48
Deducting LLC Losses
The Tax Court held that a managing member of a California LLC and S corporation was not prevented by the passive activity loss limitation rules of IRC § 469 from deducting his share of the entities’ net losses. The holding thus extended the reach of the court’s similar holding last
IRS Provides Guidance on Health Coverage for Adult Dependents, Addresses Discrepancies in Law
The IRS issued guidance Tuesday on the tax treatment of health coverage for children who have not yet turned 27 (Notice 2010-38). The health care reform legislation enacted in March extended the general exclusion from gross income for reimbursements for medical care under an employer-provided accident or health plan (under
AICPA Submits Comment Letter on IRS PTIN Proposal
The AICPA submitted comments to the IRS Monday on its proposed regulations (REG-134235-08) that would require tax return preparers, including nonsigning preparers, to apply for or renew a preparer tax identification number (PTIN) and exclusively use that PTIN when signing tax returns. (See prior JofA coverage on these proposed regulations,
IRS Announces Release of Draft Schedule to Report Uncertain Tax Positions
The IRS on Monday announced that it was releasing draft Schedule UTP and draft instructions as part of its initiative to require certain business taxpayers to report uncertain tax positions on their returns (Announcement 2010-30). (See previous JofA coverage of this proposal. The AICPA Tax Division has prepared a briefing
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