IRS E-NEWS FOR TAX PROFESSIONALSAPRIL 2008

● The IRS will discontinue mailing paper Form 1040-ES, Estimated Tax for Individuals, vouchers and envelopes to your ES clients who file electronically. ES filers who file a paper return will receive only one mailing instead of quarterly mailings.

● Practitioners can call the e-Help Desk a at 1-866-255-0654, or the same type of inquiries can be sent to irs.e-helpmail@irs.gov

● ECONOMIC STIMULUS PAYMENTS (Rebates) IR 2008-44 has the payment schedules; an

on-line calculator is available.

Pub 4668 Low income Workers Not Required to File

Pub. 4663 Social Security Recipients

Pub. 4664 Certain Veterans Benefit Recipients

Pub 4669 Railroad Retirement Recipients

● IR 2008-41 has 2008's "Dirty Dozen", the list the 12 most egregious tax schemes and scams.

● Notice 2008-34 identifies the Distressed Asset Trust Transaction as a listed transaction under section 1.6011-4.

● Issue Management Resolution System item 08-0000731 raised the question about filing 83B elections on electronically filed returns. Here is your answer:

The 83(b) Election and Form 8453 – Not a good pairing: Many practitioners have asked about attaching the Section 83(b) election to Form 8453. Practitioners should not attach a copy of the Section 83(b) election to the Form 8453 transmittal. Form 8453 should only be used to send any required paper forms listed next to the checkboxes. Do you have other issues about procedures to raise? Contact Ann Makres!Ann Makres(651) 726-1596

Ann.P.Makres@irs.gov

● U.S. Small Business Administration is partnering with the American Institute of Certified Public Accountants (AICPA) to train owners of small accounting firms on SBA products and services. SBA and AICPA have signed a Strategic Alliance Memorandum to share resources to help start, maintain and expand small businesses.

RECENT TECHNICAL GUIDANCE

The 2008 Allowable Living Expense are available. Publication 1854 tells How to Prepare a Collection Information Statement (Form 433-A).

● IR 2008-33 The IRS has automated the user fee calculations for installment agreements. Eligibility for reduced fees is determined automatically by the IRS.. If a taxpayer does not get a reduced user fee even though they believe they should qualify for one, request a reduced fee by completing Form 13844 and submit it within 30 days. The IRS will evaluate the application and respond to the taxpayer.

● The IRS reminds tournament sponsors that beginning March 4, 2008, they are required to report tournament winnings of more than $5,000, usually on Form W-2G.

● Headliner 225 A business can use the system to verify the company they hired to make the tax payments did so, on time, and in the proper amount.

● Headliner 226 Adjusted Employment Tax Returns (Forms 94X)

● Headliner 227 Instructions for Claiming the Leaking Underground Storage Tank Tax Refund Using Form 8849.

● Fact sheet FS 2008-18 provides guidance to taxpayers regarding the rules and regulations governing deferred like-kind exchanges.

● IRS Employee Plans is hosting a roundtable discussion with the governmental plans community to raise awareness of the need to comply with the tax qualification requirements.

● Announcement 2008-18 sets forth a voluntary compliance initiative that encourages foreign insurance companies who has failed to pay excise taxes due under section 4371, or failed to disclose that it has claimed a waiver from the taxes pursuant to an income tax treaty, to become compliant with its obligations. 

● Announcement 2008-23 states that the Service will soon issue opinion and advisory letters for pre-approved master and prototype and volume submitter defined contribution plans.

● IR 2008-23 shows phaseouts on Honda hybrid vehicles.

● IR 2008-25 The IRS launched an electronic filing system that small tax-exempt organizations may use to comply with a new law requiring them to file an annual return.

● IR 2008-26 The IRS is initiating enforcement action involving more than 100 U.S. taxpayers to ensure proper income reporting and tax payment in connection with accounts in Liechtenstein.

● IR 2008-29. The IRS announced updated procedures related to the Tax Exempt Bond Voluntary Closing Agreement Program (TEB VCAP) and also solicits comments from the public on ways the program could be refined and expanded.

● IR 2008-31 You are encouraged to submit to the Industry Issue Resolution (IIR) Program tax issues for resolution involving a controversy, a dispute or an unnecessary burden on taxpayers.

● IR-2008-35 The Treasury Department and the Internal Revenue Service issued proposed regulations to clarify the treatment of expenditures incurred in selling, acquiring, producing or improving tangible assets.

● IR-2008-36—Guidance has been issued on the proper pooling treatment of automobiles, light-duty trucks, and crossover vehicles which have characteristics of trucks and cars under the dollar-value, last-in, first out (LIFO) inventory method.

● IR 2008-38 Low Income Taxpayer Clinics grants have been awarded for 2008. 

MNMid-Minnesota Legal Assistance, Inc, . Minneapolis

Regents of the University of Minnesota, Minneapolis

NDLegal Services of North Dakota, New TownWI Wisconsin Judicare Incorporated, WausauLegal Aid Society of Milwaukee Inc, MilwaukeeUniversity of Wisconsin - Whitewater Foundation, Inc.,WhitewaterUniversity of Wisconsin-Milwaukee Lubar School of Business, MilwaukeeSDBlack Hills State University Foundation, SpearfishIAIowa Legal Aid, Des MoinesNELegal Aid of Nebraska, Omaha

● Notice 2008-29 provides that pending further guidance, employers who maintain qualified defined benefit pension plans may continue to use the mortality tables in Revenue Ruling. 96-7 to determine present values with for individuals entitled to benefits as a result of a disability.  
 
● Notice 2008-30, issued in question and answer format, addresses issues on distributions pursuant to the Pension Protection Act of 2006, and the issue of gap-period earnings and the plan amendment process.   

● Notice 2008-31 provides updated procedures for issuers of tax-exempt bonds and tax credit bonds to submit requests to enter into voluntary closing agreements (VCAPs) with the IRS under the TEB VCAP program.

● Notice 2008-32 provides interim guidance on the treatment under section 67 of the Code of investment advisory costs and other costs subject to the 2-percent floor under section 67(a). 

● Notice 2008-35 and Notice 2008-36 clarify the meaning of the terms equivalent rating network and eligible contractor for the Certification of Energy Efficient Home Credit, clarifies the process for removing software from the list of approved software, and provides for the extension of the tax credit through Dec. 31, 2008.

● Notice 2008-38 requests public comments regarding guidance to Government entities required to withhold on certain payments made by entities for services and property.

● Notice 2008-39 reiterates the current IRS position that corporate refund claims involving research credits (except claims stated in original tax returns) must generally be filed at a central address.  The proposed notice eliminates a prior approach allowing taxpayers under audit to submit (with IRS approval) certain research credit claims directly to IRS auditors. 

● IR 2008-40 clarifies and amplifies Notice 2006-52 by providing additional guidance relating to the deduction for energy efficient commercial buildings under section 179D of the Code.

● Revenue Procedure 2008-17 provides issuers of qualified mortgage bonds and mortgage credit certificates with (1) nationwide average purchase prices for residences located in the United States, and (2) average area purchase price safe harbors for residences located in statistical areas in each state, the District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands and Guam.
 
● Revenue Procedure 2008-18 provides a special rule for a bank required to change from the reserve method of accounting on becoming an S corporation.

● Revenue Procedure 2008-19 provides issuers with the United States median gross income figure, one of the figures required for determining high housing cost areas under section 143(f)(5)(D), and informs them of the availability from HUD of the state and area income figures required to be used for this purpose.

● Revenue Procedure 2008-22 provides inflation adjusted tables showing depreciation limitations and lease inclusion amounts under section 280F for passenger automobiles first placed in service (or first leased) in calendar year 2008.

● Revenue Procedure 2008-23 provides an alternative dollar-value last-in, first-out (LIFO) pooling method, the Vehicle-Pool Method, for retail dealers and wholesale distributors (collectively, "resellers") of cars and light-duty trucks.

● Revenue Procedure 2008-24 supersedes the interim guidance provided in Notice 2003-51, 2003-2 C.B. 362, concerning the treatment under sections 1035 and 72 of the partial exchange of an annuity contract.

● Revenue Procedure 2008-25 provides a safe harbor method of accounting for taxpayers using an accrual method of accounting that incur FICA tax and FUTA tax ("payroll tax") liabilities for compensation (including bonuses and vacation pay), and also provides procedures for taxpayers to obtain the automatic consent of the Commissioner of Internal Revenue to change to the safe harbor method of accounting.

● Revenue Ruling 2008-15 describes the insurance excise tax consequences (under section 4371) of insurance premiums paid by one foreign insurer (foreign insurer) to another (foreign reinsurer).  In particular the ruling addresses the excise tax consequences of such payments where the foreign insurer is eligible for a waiver of the excise tax by income tax treaty but the foreign reinsurer is not. There are two types of insurance excise tax waivers provided by treaty. The revenue ruling addresses both types of waivers.

● Revenue Ruling 2008-16 provides guidance for S corporations that made charitable contributions of appreciated property during a taxable year beginning after Dec. 31, 2005 and before Jan. 1, 2008.

● Revenue Ruling 2008-17 assists a foreign corporation engaged in the international operation of ships or aircraft, and its shareholders, in determining whether the foreign corporation is organized in a country that grants an "equivalent exemption" from tax for purposes of section 883(a) and (c) of the Internal Revenue Code. The revenue ruling also assists a nonresident alien individual engaged in the international operation of ships or aircraft in determining whether a country grants an equivalent exemption for purposes of section 872(b) of the Code.  The revenue ruling does not, however, provide substantive guidance under section 883 of the Code.

● Revenue Ruling 2008-18 provides guidance for S corporations that will undergo a type F reorganization where the operating S corporation becomes a QSub of a new holding corporation.  This revenue ruling also explains which EIN each entity is to use, as well as provides guidance for corporations that have already engaged in the transaction described above.