IRS Tax News

New Rule Will Not Affect Teacher Salaries in Upcoming School Year

noreply@blogger.com (The Tax Guy) — Tue, 07 Aug 2007 15:56:00 +0000

New Rule Will Not Affect Teacher Salaries in Upcoming School Year

IR-2007-142, Aug. 7, 2007

WASHINGTON — Moving to clear up confusion about a recent tax law change, the Internal Revenue Service today reassured teachers and other school employees that new deferred-compensation rules will not affect the way their pay is taxed during the upcoming school year.

Recently, the IRS has received inquiries from teachers who had been told that they had to make certain decisions about their pay this month or risk severe penalties. At issue is a 2004 law change that applies to people who decide to defer compensation from one year to a future year. In April, the Treasury Department and the IRS issued final rules implementing this law change.

Under the 2004 law, when teachers and other employees are given an annualization election – that is, they are allowed to choose between being paid only during the school year and being paid over a 12-month period – and they choose the 12-month period, they are deferring part of their income from one year to the next. For instance, a teacher who chooses to get paid over a 12-month period, running from August of one year through July of the next year, rather than over the August to May school year, falls under this law.

The IRS clarified that the new rules do not require school districts to offer teachers an annualization election. Thus, school districts that have not been offering teachers this election are not required to start.

School districts that offer annualization elections may have to make some changes in their procedures. The IRS announced that the new deferred-compensation rules will not be applied to annualization elections for school years beginning before Jan. 1, 2008, so school districts and teachers will have time to make any changes that are needed.

A list of Frequently Asked Questions contains more information.

IRS Seeks New Issues for Industry Issue Resolution Program

noreply@blogger.com (The Tax Guy) — Mon, 06 Aug 2007 15:56:00 +0000

IRS Seeks New Issues for Industry Issue Resolution Program

IR-2007-141, Aug. 6, 2007

WASHINGTON — The Internal Revenue Service is encouraging business taxpayers, associations and other interested parties to submit controversial or frequently disputed tax issues to the Industry Issue Resolution (IIR) Program.

The purpose of the IIR program is to clarify and recommend guidance that resolves an issue and benefits both taxpayers and the IRS by reducing the time and expense of resolving the issue through case-by-case tax examinations. Since the program began in 2000, there have been 89 submissions, of which 25 resulted in determinations that taxpayers can rely on.

While business associations and business taxpayers may submit tax issues for resolution at any time, in order to be considered during the fall review, submissions must be received by Aug. 31, 2007.

Business issues selected for consideration generally have two or more of the following characteristics:

When assessing a common factual situation, interpretation of the tax regulations is uncertain.
This uncertainty results in frequent, and often repetitive, examinations of the same issue among significant numbers of taxpayers.
The uncertainty results in undue taxpayer burden.
The issue is significant and affects a large number of taxpayers, either within an industry or across industry lines.
The issue requires extensive factual development, and an understanding of industry practices and views of the issue would assist the IRS in determining proper and consistent tax treatment for the future.

Although there is no set format for submitting an issue for review, there are specific data that need to be included in the submission. The IIR project submission procedures are available in Revenue Procedure 2003-36. Interested parties should submit issues by e-mail to IIR@IRS.GOV.

Alternatively, submissions may be mailed or faxed to:

Internal Revenue Service, Office of Prefiling and Technical Services
Large and Mid-Size Business Division LM: PFT
Mint Building 3rd Floor M3-420
1111 Constitution Avenue NW
Washington, DC 20224

Fax: 202-283-8406

Purchasers of Ford Hybrids Still Qualify for Tax Credit

noreply@blogger.com (The Tax Guy) — Mon, 06 Aug 2007 15:54:00 +0000

Purchasers of Ford Hybrids Still Qualify for Tax Credit

IR-2007–140, Aug, 6 , 2007

WASHINGTON — The Internal Revenue Service announced that purchasers of qualified Ford Motor Company vehicles may continue to claim the Alternative Motor Vehicle Credit.

The announcement comes after the IRS concluded its quarterly review of the number of hybrid vehicles sold. Ford sold 6,272 qualifying vehicles to retail dealers during the quarter ending June 30, 2007. This brings the total number of Ford qualifying hybrids reported to date to 33,547.

The credit amount and make and model of the certified vehicles sold are:

Ford Escape 2WD Hybrid, Model Year 2008 — $3,000
Ford Escape 2WD, Model Years 2005, 2006 and 2007 — $2,600
Ford Escape 4WD Hybrid, Model Year 2008 — $2,200
Ford Escape 4WD, Model Years 2005, 2006 and 2007 — $1,950
Mercury Mariner 4WD Hybrid, Model year 2008 — $2,200
Mercury Mariner 4WD, Model Years 2006 and 2007 — $1,950
Mercury Mariner 2WD Hybrid, Model Year 2008 — $3,000

Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.

Phase-Out Credit for Toyota and Lexus Hybrids Continues With Reporting of Second Quarter Sales

noreply@blogger.com (The Tax Guy) — Mon, 06 Aug 2007 15:52:00 +0000

Phase-Out Credit for Toyota and Lexus Hybrids Continues With Reporting of Second Quarter Sales

IR-2007-139, Aug. 6, 2007

WASHINGTON — After reviewing the second quarter 2007 sales of Toyota Motor Sales USA Inc., the Internal Revenue Service announced that purchasers of qualifying Toyota and Lexus vehicles may continue to claim the Alternative Motor Vehicle Credit. Given the number of vehicles sold, the phase out period for Toyota vehicles began on Oct. 1, 2006.

Toyota sold 70,641 qualifying vehicles to retail dealers in the quarter ending June 30, 2007. This brings the cumulative sales of qualified Toyota hybrid vehicles sold from the period of Jan. 1, 2006, through June 30, 2007, to 344,083.

Taxpayers may claim the full amount of the credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th qualified vehicle. The sale of Toyota’s 60,000^th qualified vehicle occurred in the quarter ending June 30, 2006. Therefore, for qualifying vehicles purchased between Oct. 1, 2006, and March 31, 2007, consumers may claim 50% of the credit amount. Consumers who purchase qualifying vehicles between April 1, 2007, and Sept. 30, 2007, may only claim 25% of the credit amount.

No credit is allowed after Sept. 30, 2007.

The applicable credit amounts are as follows:

Qualifying Vehicle	Full Credit When Purchased By 9/30/06	Reduced Credit When Purchased From 10/1/06 Through 3/31/07	Reduced Credit When Purchased From 4/1/07 Through 9/30/07	No Credit When Purchased After 9/30/07
05, 06 and 07 Toyota Prius	$3,150	$1,575	$787.50	$0
06 and 07 Toyota Highlander 2WD and 4WD	$2,600	$1,300	$650	$0
07 Toyota Camry Hybrid	$2,600	$1,300	$650	$0
06 and 07 Lexus RX 400h 2WD and 4WD	$2,200	$1,100	$550	$0
07 Lexus GS450h	$1,550	$775	$387.50	$0

IRS Seeks Comments on Updates to Corporate and Partnership Tax Forms

noreply@blogger.com (The Tax Guy) — Thu, 02 Aug 2007 15:51:00 +0000

IRS Seeks Comments on Updates to Corporate and Partnership Tax Forms

IR-2007-138, Aug. 2, 2007

WASHINGTON — The Internal Revenue Service has released for comment and discussion draft revisions to Form 1065, U.S. Return of Partnership Income, and Form 1120, U.S. Corporation Income Tax Return. The IRS plans to have the forms and related schedules ready for use for taxable years ending on or after Dec. 31, 2008. Comments are due from the public by Sept. 14, 2007.

The changes to Forms 1065 and 1120 will provide the IRS with a more accurate understanding of these entities and their ownership structures. The proposed changes will enable the IRS to focus compliance resources on returns and issues that warrant examination. The IRS is soliciting comments from the public as to whether the proposed revisions will enhance compliance and the extent to which the changes may affect taxpayer burden.

“The current business models of our taxpayers involve multiple entities operating in different forms, both foreign and domestic,” said Deborah M. Nolan, Commissioner of the Large and Mid-Size Business Division. “These changes are designed to increase the transparency of the relationships between entities that make up these enterprises, enabling us to be much more efficient and effective.”

The major change to Form 1120 involves ownership. In particular, a corporation will be required to identify entities which own 10 percent or more of the corporation and individuals who own 50 percent or more of the corporation. A corporation will also be required to identify any foreign or domestic corporation in which it owns 10 percent or more of the total stock voting power, any disregarded entity that it owns and any foreign or domestic partnership or trust in which it owns an interest of 10 percent or more.

Additionally, a new Schedule B is added for Form 1120 filers required to file Schedule M-3. New Schedule B asks questions concerning ownership, allocations, transfers of interest, cost sharing arrangements and changes in methods of accounting. Small corporations, those having less than $10 million in assets, will not be required to file the new Schedule B.

The major changes to the Form 1065 also involve ownership issues. The revisions add new questions to the existing Schedule B. The revised Schedule B includes reporting requirements for partnerships having complex ownership structures. These partnerships are required to identify entities having direct and indirect (through attribution) ownership interests of 10 percent or more in the partnership and to identify entities in which the partnership owns interests of 10 percent or more. The revised Schedule B also asks for information about cancelled debt, and like-kind exchanges that the partnership may have participated in at any time during the tax year.

Additionally, for Form 1065 filers required to file Schedule M-3, there is a new Schedule C requiring the partnership to provide additional information about related party transactions. The new Schedule C also asks for the identity of individuals or entities owning 50 percent or more of the partnership and of other entities required to file U.S. income tax returns.

Minor revisions have been made to Schedule K-1. These revisions require the partnership to identify contributions and distributions of built-in gain or loss property and to identify the maximum percentage of a partner’s share of profit, loss and capital in cases where those amounts change during the year.

Some small partnerships will have a reduction in burden, as the asset threshold for filing certain schedules with Form 1065 has been increased from $600,000 to $1,000,000. However, partnerships with complicated ownership structures, related party transactions, contributions and distributions of built in gain or loss property, special allocation issues and optional basis adjustments may spend more time providing information.

The IRS has taken care to ask only for information that in most cases will be readily available. The redesign of the Forms 1065 and 1120 is based on two guiding principles:

Promoting compliance by accurately reflecting the entity’s ownership structure so the IRS may efficiently assess the risk of noncompliance; and
Minimizing the filing burden on most taxpayers by requiring this information only from complex entities.

The redesigned forms are available under Draft Forms on IRS.gov.

Questions and comments should be e-mailed to the IRS at Judith.A.McNamara@irs.gov by Sept. 14, 2007.

Related Items:

Treasury, IRS Release Report on Improving Voluntary Compliance

noreply@blogger.com (The Tax Guy) — Thu, 02 Aug 2007 15:50:00 +0000

Treasury, IRS Release Report on Improving Voluntary Compliance

IR-2007-137, Aug. 2, 2007

WASHINGTON — The Treasury Department and the Internal Revenue Service (IRS) released today an IRS report addressing the agency’s implementation of the 2006 strategy to improve voluntary compliance with federal tax laws. A copy of the report is attached.

The IRS report, Reducing the Federal Tax Gap: A Report on Improving Voluntary Compliance, details steps currently being taken by the IRS, as well as those under development, to address key elements of the “tax gap.” The report builds on the seven components of the Comprehensive Strategy for Reducing the Tax Gap, which the Treasury Department released in September 2006. Those components are:

Reducing Opportunities for Evasion
Making a Multi-Year Commitment to Research
Continuing Improvements in Information Technology
Improving Compliance Activities
Enhancing Taxpayer Service
Reforming and Simplifying the Tax Law
Coordinating with Partners and Stakeholders

In each of these areas, the report sets out compliance objectives and initiatives, along with targeted completion dates, that the IRS is implementing to improve tax compliance over the next several years.

Detailed information is provided on each step currently being taken to reduce opportunities for tax evasion, leverage technology and support legislative proposals that, as implemented, will improve compliance. At the same time, the report reaffirms that taxpayer rights must be respected and burdens on compliant taxpayers must be minimized. The report also presents an outreach approach to ensure all taxpayers understand their tax obligations. Additionally, it recognizes the importance of having a multi-year research program that will assist in understanding both the scope of and reasons for noncompliance.

Full implementation of the initiatives outlined in the report will have a positive effect on the rate of voluntary compliance. The report reflects the commitment of the IRS to apply its resources where they are of most value in reducing noncompliance while ensuring fairness, observing taxpayer rights, and minimizing the burden on taxpayers who comply.

The overall compliance rate achieved under the U.S. revenue system is quite high. For the 2001 tax year, the IRS estimates that over 86 percent of tax liabilities were collected, after factoring in late payments and recoveries from IRS enforcement activities. Nevertheless, an unacceptable amount of the tax that should be paid every year is not, short-changing the vast majority of Americans who pay their taxes accurately and giving rise to the tax gap. The gross tax gap was estimated to be $345 billion in 2001. After enforcement effects and late payments, this number was reduced to a net tax gap of approximately $290 billion.

George Blaine Named Associate Chief Counsel, Income Tax & Accounting

noreply@blogger.com (The Tax Guy) — Wed, 01 Aug 2007 14:51:00 +0000

George Blaine Named Associate Chief Counsel, Income Tax & Accounting

IR-2007-136, Aug. 1, 2007

WASHINGTON — The Internal Revenue Service announced today the appointment of George Blaine to the position of Associate Chief Counsel, Income Tax and Accounting, (ITA) effective August. 3, 2007. He will replace Lewis Fernandez who will retire on that date.

"We in the Office of Chief Counsel have been extremely fortunate that Lew Fernandez was willing a year ago to take on the top leadership role within Income Tax and Accounting,” said Donald L. Korb, IRS Chief Counsel. “The approach Lew has taken to revitalize that very important part of our National Office has set the stage for his successor to take the organization to the next level. After leaving the Office of Chief Counsel, Mr. Fernandez will continue his tax career at PricewaterhouseCoopers in Washington, D.C.”

“George Blaine is an outstanding choice for this important assignment,” Korb added. “His many years of service to the Office of Chief Counsel and his extensive experience and strong technical knowledge of Income Tax and Accounting issues have prepared him well to take over this role.”

The Associate Chief Counsel, ITA, provides legal advice and support services regarding federal tax matters involving tax accounting and a wide variety of issues relating to corporate and individual income taxation. The Associate Chief Counsel, ITA, also serves as senior legal advisor and expert consultant on litigation and other legal matters as they pertain to tax accounting and individual income taxation issues and represents the Office of Chief Counsel on sensitive and controversial legal matters related to these areas.

Since November 2003, Blaine has served as Deputy Associate Chief Counsel, ITA. As one of two Deputies to the Associate Chief Counsel, Blaine supervises approximately 115 professionals responsible for the basic income tax rules in Subchapter A, inclusions, exclusions, most individual deductions and credits, recognition, timing and special methods of accounting.

From 2000 to 2003, Blaine served as the Deputy Assistant Chief Counsel, Administrative Provisions and Judicial Practice Division. Blaine served as Chief of two branches in ITA from 1995 through 2000. In 1999, he received the Office of Chief Counsel’s “Manager of the Year” award. From 1988 to 1994, he was the Special Counsel in the Tax Litigation (later Field Service) Division.

Blaine received an LL.M in Taxation from the George Washington University in 1987. He received his B.A. in 1971 and a J.D. in 1974 from Temple University.

Summertime Tax Tips Available on IRS.gov and via E-Mail

noreply@blogger.com (The Tax Guy) — Wed, 01 Aug 2007 14:49:00 +0000

Summertime Tax Tips Available on IRS.gov and via E-Mail

IR-2007-135, Aug. 1, 2007

WASHINGTON — To help people with tax planning, the Internal Revenue Service is publishing Summertime Tax Tips to provide useful and concise advice on topics that affect millions of taxpayers.

Many taxpayers don’t think about their taxes until the start of the filing season in January. That can be a mistake. Steps such as getting the proper receipts from charities, adjusting your withholding or pursuing a tax strategy to increase your deductions are most effective if they are done well before year’s end.

The IRS is publishing three tax tips per week. Topics range from how parents can get credit for sending their kids to day camp to using an online calculator to fine tune your federal withholdings. Tips published on Fridays focus on the tax concerns of small business owners.

Tips in August will cover a range of topics, including charitable contributions, back-to-school advice, the saver’s credit, selling your home and tax scams.

You can receive new tips via email as they are published by subscribing through the E-News Subscription page on this Web site. When you subscribe, you will receive a confirmation message by e-mail. You must respond to the e-mail in order to verify your subscription.

Related Items:

Victims of 2005 Hurricanes Get Additional Year to Sell Vacant Land

noreply@blogger.com (The Tax Guy) — Tue, 31 Jul 2007 14:50:00 +0000

Victims of 2005 Hurricanes Get Additional Year to Sell Vacant Land

IR-2007-134, July 31, 2007

WASHINGTON — The Internal Revenue Service is extending for an additional year the time limit within which victims of Hurricanes Katrina, Rita and Wilma have to sell vacant land that they had owned and used as part of their principal residence that was destroyed as a result of the hurricanes.

Federal tax rules state that individuals have two years within which to sell the vacant land to be able to take advantage of the exclusion on gain from the sale of a principal residence.

Given that the two-year anniversary is approaching for victims of the 2005 hurricanes, the IRS has decided to provide additional time to take advantage of the exclusion. The IRS is granting relief by declaring that these victims now have three years after the destruction of their principal residence as a result of the hurricanes to sell their vacant land that they had owned and used as part of the principal residence.

IRS.gov has specific information on this provision for disaster victims. IRS.gov also has more information on the tax relief extended to victims of hurricanes Katrina, Rita and Wilma.

Hydrogen-Powered Honda Vehicle Qualifies for Tax Credit

noreply@blogger.com (The Tax Guy) — Wed, 25 Jul 2007 20:55:00 +0000

Hydrogen-Powered Honda Vehicle Qualifies for Tax Credit

IR-2007-133, July 25, 2007

WASHINGTON — The Internal Revenue Service acknowledged the certification by American Honda Motor Company, Inc, that one of its vehicles meets the requirements of the Alternative Motor Vehicle Credit as a qualified fuel cell vehicle.

Purchasers of the 2005 and 2006 Honda FCX, which is only capable of operating on hydrogen, may rely on their certification concerning the vehicle’s qualification for the Qualified Fuel Cell Motor Vehicle Credit.

The credit amount for the 2005 and 2006 Honda FCX is $12,000.

IRS Releases Interim Report on Tax-Exempt Hospitals and Community Benefit Project

noreply@blogger.com (The Tax Guy) — Thu, 19 Jul 2007 20:55:00 +0000

IRS Releases Interim Report on Tax-Exempt Hospitals and Community Benefit Project

IR-2007-132, July 19, 2007

WASHINGTON — The Internal Revenue Service released an interim report summarizing responses from almost 500 tax-exempt hospitals to a May 2006 questionnaire about how they provide and report benefits to the community. Providing community benefit is required for hospitals seeking and retaining tax-exempt status as charities.

Today’s report on the hospital compliance project contains preliminary information on the way nonprofit hospitals, which comprise one of the largest components of the tax-exempt sector, responded to questions about how they provide community benefit. The IRS is still in the process of analyzing the reported data.

“This is an important first step in our ongoing review of community benefit and tax-exempt hospitals,” said Lois G. Lerner, director of the IRS’s Exempt Organizations division. “As the report states, this project gives the IRS a unique and valuable insight into the manner in which hospitals report on and attempt to meet the community benefit standard.”

According to the report, nearly all hospitals reported that they provided various types of community benefit that were the subject of the questionnaire. Although 97 percent of responding hospitals said they have a written uncompensated care policy, no uniform definition of what constitutes “uncompensated care” emerged from the responses. Further, there appear to be significant differences in the way other components of community benefit are reported.

“The lack of consistency or uniformity in classifying and reporting uncompensated care and various types of community benefit often makes it difficult to assess whether a hospital is in compliance with current law,” Lerner said. “That’s one reason more analysis is needed.”

While the interim report summarizes but does not analyze the information reported by the hospitals, the IRS’s hospital project team did recommend developing a separate Form 990 schedule for hospitals, as a way to address the lack of uniformity in definitions and reporting. A new Schedule H, Hospitals, is part of the recently released discussion draft of that form.

In addition, the hospitals were questioned on how they set and report executive compensation. Additional information will be made available as the IRS completes its analysis of that component of the project.

Related item:

Interim hospital report and other resources

National Taxpayer Advocate Releases Report to Congress; Identifies Priority Challenges and Issues for Upcoming Year

noreply@blogger.com (The Tax Guy) — Thu, 19 Jul 2007 20:53:00 +0000

National Taxpayer Advocate Releases Report to Congress; Identifies Priority Challenges and Issues for Upcoming Year

IR-2007-131, July 19, 2007

WASHINGTON — National Taxpayer Advocate Nina E. Olson today delivered a report to Congress that identifies the priority issues the Office of the Taxpayer Advocate will address in the coming fiscal year. Among the key areas of focus will be improving taxpayer services, ensuring that taxpayer rights are protected in the IRS’s private debt collection initiative, and making the IRS’s offer-in-compromise program more accessible for taxpayers who are unable to pay their tax debts in full.

The report also addresses the challenges the IRS is facing because of pressure to close the tax gap quickly. The tax gap represents the difference between the amount of tax owed and the amount of tax collected. “For fiscal year 2008, both the IRS and the Taxpayer Advocate Service (TAS) face similar challenges,” Olson wrote. “The IRS is under scrutiny for its efforts to close the tax gap, while TAS is struggling to address taxpayer difficulties that arise as a result of these very efforts.”

In prior reports to Congress, Olson has identified the tax gap as one of the most serious challenges in tax administration, and she has advanced numerous proposals to help address it. At the same time, she has expressed concern that the IRS may ramp up enforcement excessively and begin to “cut corners” in its treatment of taxpayers if it is pressured to do too much too quickly.

She emphasized that Congress can play an important role in helping to achieve an appropriate balance. “IRS oversight should not just be limited to urging the IRS to collect more tax revenue,” Olson wrote. “Even as Congress directs the IRS to address specific areas of noncompliance, Congress should require the IRS to adopt a long-term research strategy that focuses not only on “closing the tax gap” but also on understanding what it takes to encourage taxpayers to be voluntarily compliant and how to change taxpayer behavior.”

The Advocate’s report, which is required by law, sets out the objectives of the Office of the Taxpayer Advocate for the upcoming fiscal year and provides substantive analysis of issues as well as statistical information. The report identifies three areas for particular emphasis in FY 2008:

1. Improve Taxpayer Services. In April 2007, the IRS published a strategic plan detailing its taxpayer service priorities for the next five years. The report, known as the Taxpayer Assistance Blueprint or “TAB,” was developed in response to an Appropriations directive. OIson was a participant in the development of the TAB, and she generally praised the product. She notes, however, that the TAB is only a “first step” because the IRS still faces challenges in implementing the plan. She urges the IRS to conduct further research on taxpayer needs and preferences and to maintain a commitment to providing face-to-face service for taxpayers who need it. Working with the IRS to implement the TAB will be a top TAS priority in FY 2008.

2. Ensure that Taxpayer Rights Are Protected in the IRS’s Private Debt Collection Initiative. In 2006, the IRS began to use private debt collection agencies to collect certain tax debts. Olson has previously stated her opposition to the initiative, citing risks to taxpayer privacy and confidence in the federal tax system. However, her office has worked closely with the IRS to ensure that taxpayer rights are protected to the maximum extent possible. Her office will continue to work closely with the IRS toward this end in the coming year.

3. Make the IRS’s Offer In Compromise Program Accessible for Appropriate Taxpayers. A taxpayer who is unable to pay his or her tax liability in full may seek to compromise the debt by submitting an “offer in compromise.” The offer program is a good deal for both the government and the taxpayer. The government benefits because it frequently collects more than it would in the absence of the program and the taxpayer is induced to pay taxes on time and in full in the future; a taxpayer whose offer is accepted must remain fully compliant for five years or face reinstatement of the compromised tax debt. The taxpayer benefits because he or she is able to make a fresh start. Legislation enacted in 2006 requires taxpayers who submit “lump sum” offers to make a down payment of 20 percent of the amount of the offer with the submission. To determine the impact of this requirement on bona fide offers, TAS reviewed a sample of 414 offers that the IRS accepted prior to the enactment of the down-payment requirement. In about 70 percent of those cases, the taxpayer did not have access to sufficient liquid funds to make the required down payment. The National Taxpayer Advocate will work with the IRS and the Treasury Department to try to improve the accessibility of the offer program.

The report includes an update on a review the Office of the Taxpayer Advocate conducted on IRS compliance with Freedom of Information Act (FOIA) and related transparency guidelines. The results of the review were published in the National’s Taxpayer Advocate’s 2006 year-end report to Congress. In the current report, the National Taxpayer Advocate states that the IRS has made major strides toward improving the transparency of its procedures.

The report also describes the challenges TAS itself is facing due to rapidly growing case inventories and staffing declines. By statute, TAS is required to maintain at least one office in every state, and it currently maintains 75 offices. TAS assists taxpayers who either are experiencing significant economic harm or are having difficulty resolving their problems through normal IRS processes. From FY 2004 through FY 2006, TAS’s case receipts have grown by 43 percent, while the number of case advocates available to work those cases has declined by 8 percent. The report states that TAS has been making process changes to achieve efficiencies but faces significant challenges in the next few years to continue to deliver high quality taxpayer service to help taxpayers resolve their tax problems.

The National Taxpayer Advocate is required by statute to submit two annual reports to the House Committee on Ways and Means and the Senate Committee on Finance. The statute requires these reports to be submitted directly to the Committees without any prior review or comment from the Commissioner of Internal Revenue, the Secretary of the Treasury, the IRS Oversight Board, any other officer or employee of the Department of the Treasury, or the Office of Management and Budget. The first report is submitted mid-year and must identify the objectives of the Office of the Taxpayer Advocate for the fiscal year beginning in that calendar year. The second report, due on December 31 of each year, must identify at least 20 of the most serious problems encountered by taxpayers, discuss the 10 tax issues most frequently litigated in the courts during the prior year, and make administrative and legislative recommendations to resolve taxpayer problems.

About the Taxpayer Advocate Service

The Taxpayer Advocate Service is an independent organization within the IRS that assists taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. Taxpayers may be eligible for assistance if:

They are experiencing economic harm or significant cost (including fees for professional representation);
They have experienced a delay of more than 30 days to resolve a tax issue; or
They have not received a response or resolution to their problem by the date promised by the IRS.

The service is free, confidential, tailored to meet taxpayers’ needs, and available for businesses as well as individuals. There is at least one local taxpayer advocate in each state, the District of Columbia and Puerto Rico.

Taxpayers can contact the Taxpayer Advocate Service by calling its toll-free case intake line at 1-877-777-4778 or TTY/TTD 1-800-829-4059 to determine whether they are eligible for assistance. They can also call or write to their local taxpayer advocate, whose phone number and address are listed in the local telephone directory and in Publication 1546, The Taxpayer Advocate Service of the IRS - How to Get Help With Unresolved Tax Problems, which is available on the IRS website at IRS.gov.

Related link:

National Taxpayer Advocate’s 2008 Objectives Report to Congress — http://www.irs-tas.com.

New Electronic PIN Signature Requirement Begins in 2008

noreply@blogger.com (The Tax Guy) — Mon, 16 Jul 2007 20:53:00 +0000

New Electronic PIN Signature Requirement Begins in 2008

IR-2007-130, July 16, 2007

WASHINGTON — The Internal Revenue Service will simplify the signature process for electronically filed individual income tax returns submitted by tax practitioners. The simplification eliminates the need for a paper signature document to be sent to the IRS in support of electronically filed tax returns.

Beginning with the 2008 filing season, tax practitioners can e-file individual income tax returns only if the returns are signed electronically using one of two methods: either a Self-Select Personal Identification Number (PIN) or a Practitioner PIN. A Self-Select PIN allows taxpayers to electronically sign their e-filed return by selecting a five-digit PIN. A Practitioner PIN is used when a taxpayer authorizes an Electronic Return Originator (ERO) to input an electronic signature on behalf of the taxpayer.

Practitioner PINs require the use of Form 8879, IRS e-file Signature Authorization, which is retained by the ERO.

“Nearly 90 percent of tax professionals already use electronic signatures to sign returns,” Acting IRS Commissioner Kevin M. Brown said. “It’s the right time to take the next step toward truly paperless filing.”

Out of some 55 million e-filed returns that have come from tax professionals this year, more than 49 million used the Self-Select PIN or the Practitioner PIN. Overall, more than 77 million individual tax returns have been e-filed so far this year.

The change will simplify tracking, verification and follow-up on the paper signature documents, which were required for tax returns that did not use an electronic signature.

Tax practitioners will no longer submit a paper signature for e-filed returns by using Form 8453, U.S. Individual Income Tax Declaration for an IRS e-file Return. Instead, a newly designed Form 8453 will be used to transmit supporting paper documents that are required to be submitted to the IRS with e-filed returns. The new Form 8453 will be released later for use during the 2008 filing season.

IRS to Notify Small Tax-Exempt Organizations of New Information Reporting Requirement

noreply@blogger.com (The Tax Guy) — Thu, 12 Jul 2007 20:53:00 +0000

IRS to Notify Small Tax-Exempt Organizations of New Information Reporting Requirement

IR-2007-129, July 12, 2007

WASHINGTON — The Internal Revenue Service today announced that it began mailing educational letters this month to more than 650,000 small tax-exempt organizations that may be required to submit a new annual notice, Form 990-N, “Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ.”

IRS expects to mail the letters over a period of several months, finishing in December.
With the enactment of the Pension Protection Act of 2006 (PPA), the majority of small tax-exempt organizations are now required to submit the e-Postcard. Previously, tax-exempt organizations with gross receipts of $25,000 or less were not required to submit information returns. The first e-Postcards are due in calendar year 2008. The IRS intends to have an option available for free electronic submission of the e-Postcard.

“We’re sending these educational letters to all the small exempt organizations in our records because we want to make sure they all know about the new requirement,” said Lois G. Lerner, director of the IRS Exempt Organizations division. “The new e-Postcard reporting requirement is simple and straightforward, but organizations shouldn’t ignore it, or they risk losing their tax-exempt status.”

Any organization that fails to meet its annual reporting requirement for three consecutive years automatically loses its tax-exempt status under the new law. An organization that wants to regain its exempt status will then have to reapply for recognition as a tax-exempt organization.

Short, Easy, Free and Electronic

“The IRS calls the new form an e-Postcard because it is short, easy and electronic,” Lerner said. “And organizations will be able to submit it free of charge.”

The e-Postcard requires small organizations to provide a legal name and mailing address, any other names used, a Web address if one exists, the name and address of a principal officer and a statement confirming the organization’s annual gross receipts are normally $25,000 or less.

In addition to sending out educational letters, IRS is encouraging everyone –– individual volunteers, tax practitioners and larger organizations –– to spread the word about the new e-Postcard reporting requirement.

“People do a lot to help their communities by volunteering their time and money to local charities. We're asking them to also offer a helping hand by making sure that charities know about the law change," Lerner said. "We don’t want those organizations to lose their tax-exempt status because they didn’t know about the new reporting requirement.”

The IRS is developing a free reporting system for the e-Postcard and an application to make the information available to the public on IRS.gov. Information about these systems will be announced as soon as it becomes available.

Further details, including frequently asked questions and a copy of the educational letter, are available in the charities and non-profits section of IRS.gov.

Electronic Excise Tax Filing Is Coming; IRS Will Accept Paper Forms 2290 in Interim

noreply@blogger.com (The Tax Guy) — Thu, 12 Jul 2007 20:52:00 +0000

Electronic Excise Tax Filing Is Coming; IRS Will Accept Paper Forms 2290 in Interim

IR-2007-128, July 12, 2007

WASHINGTON — The Internal Revenue Service will add three excise tax forms this year to the ever-expanding list of federal tax returns and schedules that can be filed electronically.

“Electronic filing is a key component to modernizing our tax system,” IRS Acting Commissioner Kevin M. Brown said. “Expanding e-file opportunities to include excise tax returns will help improve service to taxpayers using these forms.”

The 2007 tax filing season set a number of electronic records, highlighted by more than 77 million electronically-filed individual tax returns.

IRS expects to receive the first electronically-filed excise tax return this summer, when Form 2290, Heavy Highway Vehicle Use Tax Return, becomes the first available excise tax return that can be e-filed. Last year, more than 575,000 Forms 2290 were filed with the IRS.

As the IRS begins implementation of electronic filing for excise tax returns later this year, taxpayers may continue to file paper Forms 2290, including those reporting 25 or more vehicles. IRS will issue further guidance regarding the applicable tax code section, IRC section 4481(e).

Form 720, Quarterly Federal Excise Tax Return, and Form 8849, Claim for Refund of Excise Taxes, will be available to e-file later this year.

Additional information about Electronic Excise is available.

Related Items:

Chief Counsel Seeking Comment on Gift Tax Consequences of Trusts Employing Distribution Committee

noreply@blogger.com (The Tax Guy) — Mon, 09 Jul 2007 20:51:00 +0000

Chief Counsel Seeking Comment on Gift Tax Consequences of Trusts Employing Distribution Committee

IR-2007-127, July 9, 2007

WASHINGTON — The Internal Revenue Service announced today that it is reconsidering a series of private letter rulings (PLRs) issued by the Office of the Associate Chief Counsel, Passthroughs & Special Industries.

The PLRs address, in part, the gift tax consequences under sections 2511 and 2514 of the Internal Revenue Code of trusts that utilize a distribution committee consisting of trust beneficiaries who direct distributions of trust income and corpus. It has come to the Office of Chief Counsel’s attention that the conclusions in the PLRs regarding the application of section 2514 may not be consistent with Rev. Rul. 76-503, 1976-2 C.B. 275, and Rev. Rul. 77-158, 1977-1 C.B. 285. Accordingly, the Office of Chief Counsel is requesting comments as to whether the conclusions in these PLRs regarding section 2514 can be reconciled with the revenue rulings.

These PLRs involve a situation where trust distributions are made at the unanimous consent of a distribution committee that consists of trust beneficiaries, or at the discretion of an individual committee member with the consent of the grantor. If a distribution committee member resigns or dies, the committee member is replaced with another person. The PLRs conclude that the distribution committee members have substantial adverse interests to each other for purposes of section 2514. Therefore, they do not possess general powers of appointment over the trust. Accordingly, distributions from the trust will not be subject to gift tax with respect to the distribution committee members.

However, the holdings in Rev. Rul. 76-503 and Rev. Rul. 77-158 indicate that because the committee members are replaced if they resign or die, they would be treated as possessing general powers of appointment over the trust corpus. It has been suggested that the facts presented in the PLRs are distinguishable from the revenue rulings because in the PLRs, the grantor’s gift to the trust is incomplete since the grantor retains a testamentary special power of appointment. See, however, section 25.2514-1(e), Example (1) of the Gift Tax Regulations, and Rev. Rul. 67-370, 1967-2 C.B. 324.

Before the Office of Chief Counsel takes any action with respect to the PLRs, the Office of the Associate Chief Counsel, Passthroughs & Special Industries is requesting comments regarding the question of whether the distribution committee members possess general powers of appointment under section 2514. The comments could also include suggestions for a substantially similar trust structures that would achieve the intended income, gift, and estate tax objectives of the transactions described in the PLRs.

Comments should be provided within ninety (90) days of the date of this news release. Send written comments to: Internal Revenue Service, Attn: CC:PA:LPD:PR (CC:PSI:4), room 5203, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (CC:PSI:4), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave, N.W., Washington, DC, or sent electronically, via Notice.comments@irscounsel.treas.gov (indicate CC:PSI:4)

Mazda Vehicles Certified As Qualified Hybrid Vehicles

noreply@blogger.com (The Tax Guy) — Fri, 06 Jul 2007 20:51:00 +0000

Mazda Vehicles Certified As Qualified Hybrid Vehicles

IR-2007-126, July 6, 2007

WASHINGTON — The Internal Revenue Service has acknowledged the certification by Mazda Motor of America, Inc., that several of its Model Year 2008 vehicles meet the requirements of the Alternative Motor Vehicle Credit as qualified hybrid motor vehicles.

The credit amount for the certified 2008 model year hybrid vehicles are:

Mazda Tribute 2WD Hybrid — $3,000
Mazda Tribute 4WD Hybrid — $2,200

Revised Innocent Spouse Form Now Available

noreply@blogger.com (The Tax Guy) — Thu, 05 Jul 2007 20:50:00 +0000

Revised Innocent Spouse Form Now Available

IR-2007-125, July 5, 2007

WASHINGTON — The Internal Revenue Service today announced a redesigned Form 8857, Request for Innocent Spouse Relief, that will help reduce follow-up questions and reduce the burden on taxpayers.

The form will ask more questions initially, but collecting critical information early in the process will mean faster processing of the request. Previously, Form 12510, Questionnaire for the Requesting Spouse, was separate from Form 8857. The redesign will combine and streamline the two forms. The redesigned form will be easier to understand and complete and will help educate taxpayers about the process.

The new design will eliminate an estimated 30,000 follow-up letters annually. This will result in reduced burden, quicker responses to taxpayers and less cost to the government. The revisions were based on suggestions from an IRS process improvement team led by the Office of Taxpayer Burden Reduction.

When a taxpayer files a joint return, both spouses are jointly and individually responsible for the tax. Innocent Spouse relief provides an opportunity for a spouse to be relieved from the joint debt under certain circumstances. If a taxpayer believes that only his or her spouse or former spouse should be responsible for the tax, the taxpayer can request relief from the tax liability.

Related Items:

Form 8857, Request for Innocent Spouse Relief
Tax Information for Innocent Spouses

IRS Launches Four New “Life Cycles” on IRS.gov to Help Tax-Exempt Organizations Comply with the Law

noreply@blogger.com (The Tax Guy) — Thu, 28 Jun 2007 20:49:00 +0000

IRS Launches Four New “Life Cycles” on IRS.gov to Help Tax-Exempt Organizations Comply with the Law

IR-2007-124, June 28, 2007

WASHINGTON — The Internal Revenue Service today launched four new "Life Cycles" — Web-based information tools — to help guide tax-exempt organizations through the federal tax rules and requirements that pertain to them.

The new tools, patterned after existing life cycles for public charities and private foundations, provide easy navigation through the IRS Web site for:

Social welfare organizations — under Internal Revenue Code section 501(c)(4).
Labor organizations — 501(c)(5).
Agricultural and horticultural organizations, such as farm bureaus — 501(c)(5).
Trade associations and other business leagues — 501(c)(6).

Each life cycle provides a graphical snapshot of five stages organizations typically go through during their existence: starting the organization; applying for tax-exempt status; filing required returns and other documents; maintaining compliance; and terminating the organization.

“The exempt organizations community has enthusiastically embraced the life cycle concept for public charities and private foundations. We thought it made sense to develop similar helpful tools for other sectors of the exempt organizations community," said Lois G. Lerner, director of the IRS’s Exempt Organizations division. “These Web pages are designed to be an easy-to-use service for this community.”

The concept of these user-friendly, Web-based, compliance resources first originated with the Advisory Committee on Tax Exempt and Government Entities (ACT).

Like their predecessors, the new life cycles explain an array of issues, such as how to acquire an employer identification number; how to avoid jeopardizing an organization’s exemption; how political campaign involvement could affect the organization’s status and tax responsibilities; and how disclosure requirements must be met.

Related Item: Life Cycle of an Exempt Organization

IRS Expands Project to Ensure Eligible Public School Employees Are Allowed to Participate in Retirement Annuities

noreply@blogger.com (The Tax Guy) — Thu, 21 Jun 2007 20:49:00 +0000

IRS Expands Project to Ensure Eligible Public School Employees Are Allowed to Participate in Retirement Annuities

IR-2007-123, June 21, 2007

WASHINGTON — The Internal Revenue Service is expanding an outreach effort to ensure that public schools throughout the United States are complying with the universal availability requirement for retirement annuities they may offer. Some schools and school districts may be overlooking offering employees the opportunity to participate in these retirement plans.

To assess the level of compliance, the IRS’s Employee Plans Compliance Unit (EPCU), has started sending questionnaires to public school districts in all 50 states under the auspices of the 403(b) Universal Availability project.

This expansion builds upon a pilot project that began in June 2006 with questionnaires that were sent to public schools and districts in New Jersey, Missouri and Washington. In the initial phase of the expansion, the IRS has begun contacting school districts in Alaska, Florida, Hawaii, Illinois, Nevada, Pennsylvania, Tennessee and Virginia. School districts in the remaining states will be contacted as part of the project through 2008.

“Our pilot project in three states showed fairly widespread noncompliance by schools with the universal availability requirement for 403(b) plans,” said Joseph Grant, Director of the IRS Employee Plans division. “But we believe most of it was due to a lack of understanding about what the law requires, not a deliberate failure to comply.”

Typical noncompliance involves excluding participation by certain classes of employees, such as substitute teachers, janitors, cafeteria workers and nurses. The law requires that all public school employees normally expected to work 20 hours per week must be offered the opportunity to participate in a 403(b) plan if the school or district sponsors one.

Schools that receive the questionnaire should answer it completely and accurately. If a potential problem is identified, the IRS will correspond with the school or district to help it analyze its 403(b) plan to determine whether it is in noncompliance. If school officials find a problem, they should use one of the correction methods outlined in the IRS’s follow-up letter. If a school makes the necessary corrections timely, the IRS will not impose a sanction.

“We know from our pilot project and from talking to representatives from schools and districts across the country that most of the problems stem from either misunderstanding the law or from confusion because of differing rules in various states,” said Grant. “The project will give schools the chance to identify problems with their plans and to correct them on their own.”

A 403(b) plan is a retirement plan for certain employees of public schools, employees of certain tax-exempt organizations, and certain ministers.

For more information on this and other EPCU projects, visit the EPCU Web page at www.irs.gov/ep.

Related Items:

Additional Information on 403(b)Project

No Change in the Interest Rates for the Third Quarter of 2007

noreply@blogger.com (The Tax Guy) — Wed, 20 Jun 2007 20:49:00 +0000

No Change in the Interest Rates for the Third Quarter of 2007

IR-2007-122, June 20, 2007

WASHINGTON — The Internal Revenue Service today announced there will be no change in the interest rates for the calendar quarter beginning July 1, 2007. The interest rates are as follows:

eight (8) percent for overpayments [seven (7) percent in the case of a corporation];
eight (8) percent for underpayments;
ten (10) percent for large corporate underpayments; and
five and one-half (5.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during April 2007.

Revenue Ruling 2007-39, announcing the new rates of interest, appears in Internal Revenue Bulletin No. 2007-26, dated June 25, 2007.

IRS Advises Employers, Payers, Agents to Use New Appointment Form 2678

noreply@blogger.com (The Tax Guy) — Wed, 20 Jun 2007 20:48:00 +0000

IRS Advises Employers, Payers, Agents to Use New Appointment Form 2678

IR-2007-121, June 20, 2007

WASHINGTON — The Internal Revenue Service recommends that employers, payers and their agents begin using a new, improved version of the agent appointment form immediately, to avoid delays in having the IRS approve the agent appointments.

All versions prior to the May 2007 form are now obsolete.

Form 2678, Employer/Payer Appointment of Agent, authorizes an agent to file tax returns and deposit and pay employment or other withholding taxes on an employer or payer’s behalf. However, the employer retains responsibility for filing Form 940, Employer’s Annual Federal Unemployment [FUTA] Tax Return, and depositing and paying FUTA tax.

The IRS recently redesigned Form 2678 to make it clearer and more user-friendly. The redesign resulted from an initiative led by the IRS Office of Taxpayer Burden Reduction.

The IRS receives about 15,000 Forms 2678 annually, encompassing approximately 3,000 agents and 20,000 employers.

The new Form 2678 contains several enhancements that clarify the appointment form and simplify the authorization process, including:

Plain language instructions;
Signature lines for both the employer/payer and the agent to request the agent’s authority, eliminating the need for any additional authorization requests;
Easier revocation, with only one signature — either the employer’s/payer’s or the agent’s — required to revoke authority;
Check boxes that clearly establish which form(s) the agent is authorized to file on the employer’s/payer’s behalf;
A check box for the agent to indicate whether the employer is a disabled individual or other welfare recipient receiving home-care services through a state or local program; and
Disclosure language, authorizing the IRS to disclose information about the taxes and periods covered to the agent and any third party the agent may contract with, such as a reporting agent or CPA.

Employers, payers and agents should complete and send Forms 2678 to the address in the self-contained instructions 60 days before the date they want an appointment to become effective. Those with approved appointments already on file with the IRS do not need to take any action unless, using the new form, they wish to revoke an existing appointment.

IRS will return any obsolete versions of Forms 2678 that are filed and ask senders to submit the May 2007 revision instead.

When the IRS approves Form 2678, both the employer or payer and the agent are liable for the employer’s employment tax, under federal tax law.

The new Form 2678 may be downloaded from this Web site or ordered by calling toll-free 1-800-TAX-FORM (1-800-829-3676).

Related Items:

Form 2678, Employer/Payer Appointment of Agent
Form 940, Employer’s Annual Federal Unemployment [FUTA] Tax Return
Office of Taxpayer Burden Reduction (TBR)

IRS Chief Counsel Announces New Executive Appointments

noreply@blogger.com (The Tax Guy) — Tue, 19 Jun 2007 20:47:00 +0000

IRS Chief Counsel Announces New Executive Appointments

IR-2007-120, June 19, 2007

WASHINGTON –– Internal Revenue Service Chief Counsel Donald L. Korb has announced the following Senior Executive Service moves:

Deputy Chief Counsel (Operations) Donald T. Rocen will retire effective July 27, 2007. Rocen joined the Office of Chief Counsel in May 2004 as Special Counsel to the Chief Counsel after serving in the Washington, D.C. office of PricewaterhouseCoopers, LLP. Rocen previously served as Assistant to IRS Commissioner Lawrence Gibbs from 1986 to 1989 and, before that, beginning in 1971, held a variety of positions in the Office of Chief Counsel over a span of 15 years.
Small Business/Self-Employed Area Counsel H. Stephen Kesselman will replace Rocen as Deputy Chief Counsel (Operations). Kesselman has over 35 years of experience as a litigator, manager and executive with the Office of Chief Counsel in several field offices. He earned a B.A. from Lafayette College in 1968 and J.D. from Rutgers University in 1971. Kesselman is also an adjunct faculty member at Villanova University Law School’s Graduate Tax Division.
Associate Chief Counsel (Financial Institutions and Products) Lon B. Smith will undertake a new assignment as the National Counsel to the Chief Counsel for Special Projects. Smith will serve as the principal focal point for some of the most critical projects and initiatives of the Office of Chief Counsel. Smith has served as an attorney in positions of progressive responsibility with the Office of Chief Counsel for nearly 30 years. He received his B.A. from the University of Rochester in 1974, J.D. from the University of Pittsburgh Law School in 1977 and LL.M in taxation from Georgetown University in 1986.

“Don Rocen has been a close friend for over three decades and his tax expertise, consummate professionalism and wonderful sense of humor will be sorely missed in our office,” said Korb. “Don’s three years of service as my Deputy Chief Counsel (Operations) was another major milestone in an enormously successful career in tax law in both the public and the private sectors.”

After Rocen leaves the Office of Chief Counsel, he will continue his career with the Washington law firm of Miller & Chevalier.

“I am delighted that Steve Kesselman, one of our top senior attorneys with a wealth of field experience, will join the front office in Washington as Deputy Chief Counsel following Don’s departure,” said Korb. “I am particularly pleased that I am able to fill the Deputy Chief Counsel’s position from within our current executive ranks. Steve is a great example of why the Office of Chief Counsel is not only a great place to start a tax career, but also a great place to spend a career in tax as well.”

“I am also pleased that Lon Smith has agreed to join the front office as the National Counsel to the Chief Counsel for Special Projects," said Korb. “His leadership skills will enable him to fulfill a vitally important role in coordinating a number of cross-office activities, helping us to institutionalize the changes we have been making to the Office of Chief Counsel over the past three years, and helping with the oversight of our major initiatives during the remainder of my term as Chief Counsel and beyond. Lon’s outstanding experience and seasoned judgment as both a tax lawyer and executive will be extraordinarily helpful as we continue to shape the Office of Chief Counsel to meet our client’s current and future legal needs.”

Smith will continue as the Associate Chief Counsel (Financial Institutions and Products) until a replacement is named.

Within the next week or two, an announcement will be published on USAjobs.

“We are looking for someone who will be able to build on the changes Lon has made in redirecting the efforts of FIP. As I announced previously, FIP not only reacquired the branch responsible for tax-exempt bonds, but it also realigned its other branches to create one branch that would focus on transactions in the field and one that would identify and address new financial products as soon as they enter the marketplace. The goal of the realignment is to provide faster and more informed legal support to the Commissioner, to become more current with new developments in the financial markets, and to resolve the most current legal issues, while maintaining a commitment to our more traditional work arising in the published guidance and letter ruling programs,” said Korb.

IRS Issues Spring 2007 Statistics of Income Bulletin

noreply@blogger.com (The Tax Guy) — Mon, 18 Jun 2007 20:47:00 +0000

IRS Issues Spring 2007 Statistics of Income Bulletin

IR-2007-119, June 18, 2007

WASHINGTON — The Internal Revenue Service today announced the release of the spring 2007 issue of the Statistics of Income Bulletin. Highlights include articles on high-income individual income tax returns, taxpayers reporting noncash contributions, farm proprietorship returns, qualified zone academy bonds, international boycott reports and S corporations.

The article on farm proprietorship returns is the first published by IRS in more than 20 years. In addition, this issue of the Bulletin presents selected tax year 1990-2004 individual income tax return data that have been indexed for inflation and tax year 2005 individual income tax return statistics classified by state and size of adjusted gross income.

For tax year 2004, there were 3,021,435 individual income tax returns filed with adjusted gross income (AGI) of $200,000 or more and 3,067,602 returns with expanded income of $200,000 or more.

The Bulletin also contains articles with the following information:

For tax year 2004, there were 25.3 million individual taxpayers who itemized deductions and reported a deduction for noncash charitable contributions. Those taxpayers reported $43.4 billion in deductions for these noncash contributions. Individuals whose total noncash charitable deductions on Schedule A, Itemized Deductions, exceed $500 are required to report these donations in detail on Form 8283, Noncash Charitable Contributions. For 2004, a total of 6.6 million individuals, representing a little more than a quarter of those who reported noncash charitable contributions, filed Form 8283. These individuals reported noncash contributions valued at almost $37.2 billion, or nearly 86 percent of all noncash contributions.
The number of farm proprietorship returns declined between tax years 1998 and 2004, with the majority of farm proprietorship returns showing a farm net loss. For tax year 2004, some 1.4 million farm proprietorship returns, or 70 percent of the total, had a farm net loss. Gross farm income reported on sole proprietorship returns totaled $93.3 billion for tax year 1998 and increased 8.3 percent to $101.0 billion in 2004. Total farm expenses grew even more during this period, by 12.9 percent, from $101.2 billion in 1998 to $114.3 billion in 2004.
The Qualified Zone Academy Bond (QZAB) program has authorized the issuance of $400 million in principal amount of tax credit bonds by the United States and its territories in each year from 1998 through 2007. QZAB credits claimed by qualified financial institutions in tax year 2004 totaled $117.5 million, based on total reported QZAB principal holdings of $1.6 billion. Total authorized issuance between 1998 and 2003 was $2.4 billion. No state issued its full allocation of QZAB credits during this period, although Vermont and Michigan issued more than 90 percent of their allocations. By year of issuance, the reported principal of QZAB issuance rose from $90.7 million in 1998-1999 to a peak of $766.3 million in 2001, after which it fell again to $91.0 million in 2003-2004.
For tax year 2003, some 1,268 taxpayers filed Form 5713, International Boycott Report; of these, 124 reported receiving boycott requests, and 36 agreed to participate in a boycott. There were 41 taxpayers who lost a portion of their tax benefits as a result of their participation in a boycott or because they had operations in a boycotting country and claimed the extraterritorial income exclusion. Similarly, 1,343 Forms 5713 were filed for tax year 2004; of these, 131 taxpayers reported boycott requests, 45 agreed to participate, and 46 taxpayers reported tax consequences. For both years, the percentage of filers who lost tax benefits was approximately 3 percent.
The final Bulletin article takes a look at the dominance of the wholesale and retail trade division among S corporations since 1959. For tax year 2004, some 45 years after the creation of S corporations, wholesale and retail represented the largest portion of total receipts, total deductions, portfolio income, total net income (less deficit) and total assets

The Bulletin includes historical data on income, deductions and tax reported on returns filed by individuals, corporations and unincorporated businesses, with selected data presented for estates. Statistics are also presented on tax collections, including excise taxes by type and refunds for recent years.

The Statistics of Income Bulletin is available from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. The annual subscription rate is $53 ($74.20 foreign), single issues cost $39 ($48.75 foreign). For more information about these data, write the Director, Statistics of Income (SOI) Division, RAS:S, Internal Revenue Service, P.O. Box 2608, Washington, DC 20013-2608; call SOI's Statistical Information Services at (202) 874-0410; or fax, (202) 874-0964. To access the spring 2007 issue of the Statistics of Income Bulletin, visit the IRS Web site www.irs.gov and click on “Tax Stats” in the upper left-hand corner. From the Tax Stats page, select “SOI Bulletins” under “Products, Publications, & Papers.”

Related Items:

Spring 2007 Statistics of Income Bulletin

IRS Reminds Tax Professionals to Register Early for Tax Forum

noreply@blogger.com (The Tax Guy) — Fri, 15 Jun 2007 20:46:00 +0000

IRS Reminds Tax Professionals to Register Early for Tax Forum

IR-2007-118, June 15, 2007

WASHINGTON — As the Nationwide Tax Forums begin, tax professionals are being reminded to make reservations now for one of six forums being held throughout the country.

The Nationwide Tax Forums are three-day events that provide tax professionals with the most up-to-date tax information through training seminars presented by IRS experts and partnering organizations. Forums offer an opportunity to receive up to 18 continuing professional education (CPE) credits through a variety of training seminars.

The locations are:

Atlanta — July 17-19
Chicago — July 31-Aug. 2
Las Vegas — Aug. 21-23
New York — Aug. 28-30
Anaheim — Sept. 11-13
Orlando — Sept. 18-20

This year 41 separate seminars are being offered, each of which qualifies for CPE credit for Enrolled Agents and Certified Public Accountants. Additionally, 28 of the 41 qualify for continuing education credit for Certified Financial Planners.

Members of the participating associations below qualify for discounted enrollment costs:

American Association of Attorney-Certified Public Accountants
American Bar Association
American Institute of Certified Public Accountants
National Association of Enrolled Agents
National Association of Tax Professionals
National Society of Accountants
National Society of Tax Professionals

In addition to the seminars, the forums also feature a two-day expo with representatives from the IRS, tax, financial and business communities offering their products, services and expertise.

The cost of enrollment is $165 per person, per city for pre-registration and $299 for late or on-site registration. The pre-registration period ends two weeks prior to the start of each forum.

In a survey of 2006 attendees the forums received a 94 percent satisfaction rate and a 99 percent overall quality rating. Attendees stated that their participation enabled them to offer greater technical expertise to meet their clients’ needs. 2007 marks the 17th year that the IRS has used this successful format to help educate and interact with the tax professional community.

Related Item: IRS Nationwide Tax Forums