IRS NEWS FOR TAX PROFESSIONALS

MAY 2010

● IR 10-37 All individuals who are compensated for preparing, or assisting in the preparation of, all or substantially all of a federal tax r eturn or claim for refund OR who sign, or are required to sign, a federal tax r eturn or claim for refund as paid tax r eturn preparer must obtain a PTIN and, if applicable, successfully pass an examination. The proposed Regulation 134235-08 invites your comment. Also see Frequently Asked Questions.

● HIRING INCENTIVES TO RESTORE EMPLOYMENT (HIRE)

▪ Announcement 10-22

▪ IR 10-43 Special Payroll Tax Exemption Form Now Available; Form W-11

▪ Payroll Tax Exemption for Hiring Unemployed Workers

▪ Business Credit for Retention of Certain Newly Hired Individuals in 2010

▪ IR 10-33, Two New Tax Benefits Aid Employers Who Hire and R etain Unemployed Workers;

IR 10-33(SP) in Spanish.

● Small Business Health Care Tax Credit and IR 10-38 pages have information. IR 10-38SP

● Notice 10-33  Three new frivolous positions have been defined, involving withholding(#22) Advanced Earned Income Credit (#27) and Original Issue Discount (#21).

● Headliner 294 Electing to be treated as a qualified joint venture allows husband-and-wife businesses to be treated as sole propri etorships rather than partnerships for tax purposes. The option also helps ensure each spouse g ets proper Social Security credit.

● Taxpayers who do not have a valid social security number and who had filing status other than Married Filing Jointly cannot take the Making Work Pay Credit. If a refund check for this has been received and has notbeen cashed, advise the taxpayer to write “void” in the endorsement area on the back of the check. Advise the taxpayer to r eturn the refund check, a copy of the CP notice, and a note of explanation, so the credit can be reversed. If the check has been cashed, advise the taxpayer to r eturn payment in the exact amount of the credit, a copy of the CP notice, and a note of explanation to the address on the CP notice, so the credit can be reversed. No interest will be due until after April 15 th.

● In responding to CP2000 notices, callers to the Practitioner Priority Service (PPS) toll-free number (866-860-4259) will now be able to self-direct their call to the Automated Underreporter (AUR) Unit using telephone prompts. They will be asked for the servicing center to ensure the call is routed to the proper Business Operating Division.

● Minnesota District Export Council businesses to attend a conference dealing with exporting to Africa, the Near East and South Asia on May 11-12 in Minneapolis.

Register At: www.exportassistance.com. For more information, please contact Sandy Renner at 651-222-4206 or gra@fastrack-global.com or Shannen Bornsen at 651-201-6658 or shannen.bornsen@state.mn.us

WEB TIPS OF THE MONTH

• The IRS web-based access  "Did I Receive an Economic Recovery Payment? look up tool is now available. Taxpayers will need to enter their SSN, date of birth, and zip code from the last filed r eturn. A separate Web inquiry must be made for each taxpayer, even if filing a joint tax r eturn.

● There is a Tax Center for Small Businesses for those who speak Spanish.

● Find many helpful Tax Tips for 2010, including recents ones on "Going Green" and "Appeal Rights".

RECENT TECHNICAL GUIDANCE

●There is a Tax Savings Tool on the White House Web site which helps people find credits for which they are eligible.

● Headliner 290: IRS has a new Form 941 Schedule R for aggregate filers.

● Assistors staffing the Practitioner Priority Service (PPS) lines will limit practitioners to no more than 5 clients per call.

● New Publication 4341, Information Guide for Employers Filing Form 942 or 944, (Frequently Asked Questions about the Reclassification of Workers as Employees), is available on-line.

● DOJ has gotten injunctions on preparers in Florida, Miami, Detroit and Kansas for fraudulent filing.

● The spring issue of the SSA/IRS Reporter offers tips on dealing with an IRS audit.

The Spring 2010 Employee Plans News is available.

● IR 10-30 The 2009 IRS Data Book has been released.

● IR 10-31 The IRS is encouraging business taxpayers, associations and other interested parties to submit issues to the Industry Issue Resolution (IIR) Program.

● IR 10-32 IRS’ 2010 “Dirty Dozen” Tax Scams: If it sounds too good to be true, it probably is.

● IR 10-35 Filing Statistics: Electronically filed tax r eturns are on track with last year and overall refunds are running nearly 10 percent higher so far in 2010.

● IR 10-40 Guidance will be developed and published under the IRS’s Industry Issue Resolution (IIR) program for several significant issues, including one submitted by the National R etail Federation on Vendor Mark Down Allowances under the R etail Inventory M ethod.

● IR 10-44 IRS Continues to Increase Oversight of Tax Return Preparers to Improve Compliance, Taxpayer Service

● IR 10-47 Members of the military and certain civilians providing earthquake relief in Haiti have additional time to file their 2009 r eturns and pay any taxes due.

● Announcement 10-19 applies to trusts that m et the requirements to be classified as a Type III supporting organization.

● Announcement 10-20 The IRS will soon issue opinion and advisory l etters for pre-approved defined benefit plans that have been restated for EGTRRA,  The Service will accept applications for individual d etermination l etters submitted by adopters of these pre-approved plans starting on May 1, 2010.  

● Announcement 10-21 is an annual report concerning Advance Pricing Agreements (APAs) and the APA Program. 

● Announcement 10-22 The IRS will provide guidance on the implementation of FATCA.  

(foreign accounts and cross-border transactions).

● Notice 10-17 provides the face amount of qualified school construction bonds (QSCBs) under § 54F(d) of the Code. 

● Notice 10-18 assists State Housing Credit Agencies in d etermining how to reduce the low-income housing tax credit ceiling.  The Notice also provides guidance concerning the effect of section 1602 funds on building basis and taxpayer income.  

● Notice 10-25 allows taxpayers to rely on proposed regulations for the rules for d etermining wh ether the continuity of interest requirement is satisfied, which is generally a requirement for a good reorganization.

● Notice 10-27 provides adjusted limitations on housing expenses for tax year 2010 for purposes of the foreign earned income and housing exclusion, section 911 of the Internal Revenue Code.

● Notice 10-28 provides interim guidance on stripping transactions for qualified tax credit bonds under section 54A of the Code.

● Notice 10-29 provides interim rules to the issuers of variable annuity contracts on issues that arise under §§ 807 and 816 as a result of the adoption of Actuarial Guideline XLIII.

● Notice 10-31 announces the 2009 section 45K credit for fuel produced from a nonconventional source.  For 2009, the section 45K credit is only available for fuel produced from coke or coke gas (other than from p etroleum based products) and is not subject to phase-out.

● Notice 10-32 provides interim guidance with regard to the application of the 2-percent floor under section 67 to certain investment advisory fees.   Specifically, this notice provides that, for taxable years beginning before January 1, 2010, non-grantor trusts and estates will not be required to “unbundled” a fiduciary fee into portions consisting of costs that are fully deductible and costs that are subject to the 2-percent floor.

● Notice 10-33  Three new frivolous positions have been defined, involving withholding, Earned Income Credit and Original Issue Discount.

● Notice 10-34 provides guidance about reporting obligations for certain shareholders of passive foreign investment companies who are subject to the annual filing requirement set forth in new section 1298(f).

● TD 9481 contains final regulations relating to travel expenses of state legislators while away from home.  The regulations affect eligible state legislators who make the election under section 162(h) of the Internal Revenue Code (Code).  The regulations clarify the amount of travel expenses that a state legislator may deduct under section 162(h).