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February 26th, 2010 by

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August 2010

IRS Updates & News Releases:

IRS Requests Public Input on Expanded Information Reporting Requirement

http://www.irs.gov/newsroom/article/0,,id=225029,00.html

The Internal Revenue Service invites public comment on how to most effectively carry out a law change that, starting in 2012, will require businesses to report a wider range of payments to contractors, vendors and others, usually on Form 1099. These comments will help the IRS issue guidance that implements this provision in a manner that minimizes burden and avoids duplicate reporting. Under a proposed regulation, many business purchases made with credit or debit cards would be exempt from the new reporting requirement because they are already reported by banks and other payment processors. The IRS seeks comments on additional circumstances in which duplicate reporting might otherwise occur and on rules that would prevent such duplicate reporting. The change, enacted in March but not effective until 2012, expanded existing reporting requirements to include a business’s payments related to goods and other property, and payments to most corporations. With some exceptions, payments to corporations are currently exempt from this requirement.

See the full article for the three ways to submit comments. The deadline is Sept. 29, 2010. Further details are in Notice 2010-51.

IRS Removes Debt Indicator for 2011 Tax Filing Season

http://www.irs.gov/newsroom/article/0,,id=226310,00.html

Starting with next year’s tax filing season IRS will no longer provide tax preparers and associated financial institutions with the “debt indicator,” which is used to facilitate refund anticipation loans (RALs). The IRS has been reviewing refund settlement products, such as RALs and Refund Anticipation Checks (RACs), as part of the Return Preparer Review released in January. RALs are loans secured by a taxpayer’s anticipated tax refund. Currently, tax preparers who electronically submit a client’s tax return receive in the acknowledgment file an indication of whether an individual taxpayer will have any portion of the refund offset for delinquent tax or other debts, such as unpaid child support or delinquent federally funded student loans. This acknowledgment is known as the debt indicator, and is used as an underwriting tool for RALs.

“As we prepare for tax season every year, we look at past practices and consider whether they still make sense. We no longer see a need for the debt indicator in a world where we can process a tax return and deliver a refund in 10 days,” IRS Commissioner Doug Shulman said. “We encourage taxpayers to use e-file with direct deposit so they can get their refunds in just a few days. Refund Anticipation Loans are often targeted at lower-income taxpayers. With e-file and direct deposit, these taxpayers now have other ways to quickly access their cash.”

IRS Releases Proposed Regulations Related to Fees for Preparer Tax Identification Numbers

http://www.irs.gov/newsroom/article/0,,id=225875,00.html

The Internal Revenue Service today released proposed regulations that would establish a fee for individuals who apply for a preparer tax identification number (PTIN). Proposed regulations that were issued in March would require certain tax return preparers to obtain a PTIN. The IRS is working to finalize those proposed regulations, which are the first of a series of steps planned to increase oversight of federal tax return preparation.

The proposed regulations (REG-139343-08) would establish a fee of $50, payable to the IRS, to cover technology costs, as well as compliance and outreach efforts associated with the new PTIN program. The proposed regulations would also provide for an additional fee (expected to be substantially lower than $50) to be charged by the third-party vendor chosen to operate the new online system. That fee amount is expected to be announced soon, as well as additional details about the launch of a new online application system. These fees could change in future years as program costs are reevaluated.

IRS Offers One-Time Special Filing Relief Program for Small Charities; Oct. 15 Due Date to Preserve Tax-Exempt Status

http://www.irs.gov/newsroom/article/0,,id=225959,00.html

Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program. The IRS posted on a special page of IRS.gov the names and last-known addresses of these at-risk organizations, along with guidance about how to come back into compliance. The organizations on the list have return due dates between May 17 and Oct. 15, 2010, but the IRS has no record that they filed the required returns for any of the past three years. Two types of relief are available for small exempt organizations — a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice (e-Postcard) , and a voluntary compliance program (VCP) for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.

Six Tax Tips for New Business Owners

http://www.irs.gov/newsroom/article/0,,id=172970,00.html

Are you opening a new business this summer? The IRS has many resources available for individuals that are opening a new business. See the article for six tax tips the IRS wants new business owners to know, such as tips on the different types of business entities, general types of business taxes, when an Employer Identification Number is needed, recordkeeping, and choosing an accounting period and method.

Seven Things to Know about the Taxpayer Advocate Service

http://www.irs.gov/newsroom/article/0,,id=226047,00.html

The Taxpayer Advocate Service is an independent organization within the Internal Revenue Service. TAS helps taxpayers who are experiencing economic harm such as not being able to provide necessities like housing, transportation, or food, taxpayers who are seeking help in resolving problems with the IRS, and those who believe an IRS system or procedure is not working as it should.

Top 10 Things Every Taxpayer Should Know about Identity Theft

http://www.irs.gov/newsroom/article/0,,id=211493,00.html

Taxpayers need to be careful to protect their personal information. Identity thieves use many methods to steal personal information and then they use the information to file a tax return and get a refund. See the full article for 10 things the IRS wants you to know about identity theft so you can avoid becoming the victim of an identity thief.

Closing Deadline Extended to Sept. 30 for Eligible Homebuyer Credit Purchases

http://www.irs.gov/irs/article/0,,id=225078,00.html

Eligible taxpayers who contracted to buy a home, qualifying for the first-time homebuyer credit, before the end of April now have until Sept. 30, 2010 to close the deal, according to the Internal Revenue Service. The Homebuyer Assistance and Improvement Act of 2010, signed by the President today, extended the closing deadline from June 30 to Sept. 30 for any eligible homebuyer who entered into a binding purchase contract on or before April 30 to close on the purchase of the home on or before June 30, 2010. The new law addresses concerns that many homebuyers might be unable to meet the original June 30 closing deadline. The IRS reminds taxpayers that special filing and documentation requirements apply to anyone claiming the homebuyer credit. To avoid refund delays, those who entered into a purchase contract on or before April 30, but closed after that date, should attach to their return a copy of the pages from the signed contract showing all parties' names and signatures if required by local law, the property address, the purchase price, and the date of the contract.

IRS Issues Regulations on 10-Percent Tax on Tanning Services Effective July 1

http://www.irs.gov/newsroom/article/0,,id=224313,00.html

The Internal Revenue Service today issued regulations outlining the administration of a 10-percent excise tax on indoor tanning services that goes into effect on July 1.

The regulations were published today in the Federal Register. In general, providers of indoor tanning services will collect the tax at the time the purchaser pays for the tanning services. The provider then pays over these amounts to the government, quarterly, along with IRS Form 720, Quarterly Federal Excise Tax Return. The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises. The regulations also provide an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee. The IRS and Treasury Department invite comments.

Nine Tips on the 10 Percent Tax on Tanning Services

http://www.irs.gov/newsroom/article/0,,id=224968,00.html

YouTube Video: Tanning Services Excise Tax: English | ASL

Starting July 1, 2010, many businesses offering tanning services must collect a 10 percent excise tax on the tanning services they provide. This excise tax requirement is part of the Affordable Care Act that was enacted in March 2010. See the full article for nine tips on the tanning excise tax that providers must collect, including which services are subject to the tax, when it much be collected, and how to report it.

For example, did you know?

If the customer fails to pay the excise tax, the tanning service provider is liable for the tax.
The tax does not apply to spray-on tanning services.

Do You Need to Amend Your Return?

http://www.irs.gov/newsroom/article/0,,id=172656,00.html

If you forgot to include some income or to take a deduction on your tax return – you can correct it by amending your tax return. In some cases, you do not need to amend your tax return. The Internal Revenue Service usually corrects math errors or requests missing forms – such as W-2s or schedules – when processing an original return. In these instances, do not amend your return. See the article for situations where you should file an amended return.

IRS Highlights Job Opportunities for New Grads on YouTube

http://www.irs.gov/irs/article/0,,id=225245,00.html

The Internal Revenue Service has a new job search tool on YouTube dedicated to helping job seekers learn about employment opportunities at the IRS. As many recent high school and college graduates actively seek employment, the IRS’s new YouTube playlist, Working at the IRS, provides information about various career paths available throughout the nation’s tax administration agency. The playlist features “Day in the Life” videos in which IRS employees discuss their jobs, the diversity of the IRS workforce and the culture of the agency.

IRS Opens Dedicated Phone Line for Gulf Oil Spill Victims

http://www.irs.gov/newsroom/article/0,,id=225434,00.html

The Internal Revenue Service announced the opening of a special telephone line for taxpayers affected by the Gulf oil spill. Individuals who have questions about the BP payments or who are experiencing filing or payment hardships because of the oil spill should contact the IRS at 866-562-5227. The special services phone line will operate weekdays from 7 a.m. to 10 p.m. local time.

Recent Articles from e-News for Small Businesses

National Taxpayer Advocate issues mid-year report to Congress

The National Taxpayer Advocate mid-year report to Congress expresses concern about the new information reporting burdens facing small businesses and certain IRS collection practices. IR-2010-83 has more information.

Resources for small businesses

The IRS.gov Small Business Resources section offers links to a broad range of information from federal and state agencies.

IRS.gov checklists for small businesses

Checklists provide the basic steps to follow when:

Starting a business

Closing a Business

Understanding an IRS notice or letter

The IRS Letters and Notices video provides an overview of how to respond to written contacts from the IRS.

Tax-Free Employer-Provided Health Coverage Now Available for Children under Age 27

http://www.irs.gov/newsroom/article/0,,id=222193,00.html

As a result of changes made by the recently enacted Affordable Care Act, health coverage provided for an employee's children under 27 years of age is now generally tax-free to the employee, effective March 30, 2010. The Internal Revenue Service announced that these changes immediately allow employers with cafeteria plans –– plans that allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits –– to permit employees to begin making pre-tax contributions to pay for this expanded benefit. IRS Notice 2010-38 explains these changes and provides further guidance to employers, employees, health insurers and other interested taxpayers.

IRS Reaches Out to Millions of Employers on Benefits of New Health Care Tax Credit

http://www.irs.gov/newsroom/article/0,,id=221511,00.html

The Internal Revenue Service this week began mailing postcards to more than four million small businesses and tax-exempt organizations to make them aware of the benefits of the recently-enacted small business health care tax credit. Included in the Patient Protection and Affordable Care Act approved by Congress last month and signed into law by President Obama, the credit is one of the first health care reform provisions to go into effect. The credit, which takes effect this year, is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ low- and moderate-income workers.

For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. The maximum credit goes to smaller employers — those with 10 or fewer full-time equivalent (FTE) employees — paying annual average wages of $25,000 or less. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals. The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more.

Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt organizations, the IRS will provide further information on how to claim the credit.

View the postcard.

View state-by-state information on distribution of the postcard.

Also see more information about the credit, including a step-by-step guide and answers to frequently asked questions.

More on the health care tax credit: Revenue Ruling 2010-13 publishes the State average premium rates for the small group market for purposes of calculating the section 45R tax credit for small employers. Section 45R was added to the Code by Section 1421 of the Patient Protection and Affordable Care Act. Revenue Ruling 2010-13 will be published in Internal Revenue Bulletin 2010-21 on May 24, 2010.

Special Payroll Tax Exemption Form Now Available

http://www.irs.gov/newsroom/article/0,,id=221036,00.html

The Internal Revenue Service has released a new form that will help employers claim the special payroll tax exemption that applies to many newly-hired workers during 2010, created by the Hiring Incentives to Restore Employment (HIRE) Act signed by President Obama on March 18. New Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, is now posted on IRS.gov, along with answers to frequently-asked questions about the payroll tax exemption and the related new hire retention credit. The new law requires that employers get a statement from each eligible new hire, certifying under penalties of perjury, that he or she was unemployed during the 60 days before beginning work or, alternatively, worked less than a total of 40 hours for anyone during the 60-day period. Employers can use Form W-11 to meet this requirement. Though employers need this certification to claim both the payroll tax exemption and the new hire retention credit, they do not file these statements with the IRS. Instead, they must retain them along with other payroll and income tax records.

Most eligible employers then use Form 941, Employer’s Quarterly Federal Tax Return, to claim the payroll tax exemption for eligible new hires. This form, revised for use beginning with the second calendar quarter of 2010, is currently posted as a draft form on IRS.gov and will be released next month as a final along with the form’s instructions.

COBRA Subsidy Eligibility Period Extended to May 31

http://www.irs.gov/newsroom/article/0,,id=222173,00.html

Workers who lose their jobs during April and May may qualify for a 65-percent subsidy on their COBRA health insurance premiums. The American Recovery and Reinvestment Act established this subsidy to help workers who lost their jobs as a result of the recession maintain their employer sponsored health insurance. The Continuing Extension Act of 2010, enacted April 15, reinstated the COBRA subsidy, which had expired on March 31. As a result, workers who are involuntarily terminated from employment between Sept. 1, 2008 and May 31, 2010, may be eligible for a 65-percent subsidy of their COBRA premiums for a period of up to 15 months. In some cases, workers who had their hours reduced and later lose their jobs may also be eligible for the subsidy.

Recent Articles from e-News for Small Businesses

Cash Audit Techniques Guide

The newly published Cash Audit Techniques Guide offers an inside look at what IRS examiners look for when auditing cash intensive businesses.

Separate business from pleasure when deducting travel

Travel expenses are deductable if the trip was entirely business related. If the trip was primarily for personal reasons, such as a vacation, the entire cost is a nondeductible personal expense. However, expenses at the destination directly related to business may be deductable.

Related link: Publication 463, Travel, Entertainment, Gift, and Car Expenses

SSA/IRS Reporter

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

April 2010

IRS Updates & News Releases:

New for 2010: Tax Credit Helps Small Employers Provide Health Insurance Coverage

http://www.irs.gov/newsroom/article/0,,id=220848,00.html

Many small businesses and tax-exempt organizations that provide health insurance coverage to their employees now qualify for a special tax credit, according to the Internal Revenue Service. Included in the health care reform legislation, the Patient Protection and Affordable Care Act, approved by Congress and signed by President Obama on March 23, the credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. The maximum credit goes to smaller employers — those with 10 or fewer FTEs — paying annual average wages of $25,000 or less. Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt employers, the IRS will provide further information on how to claim the credit.

The IRS will use postcards to reach out to millions of small businesses that may qualify for the credit. The postcards will encourage small business owners to take advantage of the credit if they qualify. More information about the credit, including tax tips, guides and answers to frequently asked questions, is now available on the IRS Web site, IRS.gov.

Small Business Health Care Tax Credit

http://www.irs.gov/newsroom/article/0,,id=220809,00.html

Small Business Health Care Tax Credit: Frequently Asked Questions

http://www.irs.gov/newsroom/article/0,,id=220839,00.html

Special Payroll Tax Exemption Form Now Available

http://www.irs.gov/newsroom/article/0,,id=221036,00.html

Reminders for Last-Minute Tax Filers

http://www.irs.gov/newsroom/article/0,,id=220954,00.html

With the April 15 tax filing deadline right around the corner, the Internal Revenue Service offers taxpayers who have not yet filed a few last-minute tips.

Don’t Miss the Deadline: If you have a balance due and don’t file a tax return by April 15, you face interest on the unpaid taxes as well as a failure-to-file penalty. Interest and penalties are added to your balance due. If you can't meet the April 15 filing deadline, get an automatic six-month extension of time to file by filing Form 4868, Automatic Extension of Time to File. The form needs to be submitted by April 15.
Get Recovery Tax Breaks: Last year’s American Recovery and Reinvestment Act created a full slate of tax breaks, which can be claimed on tax returns right now. You can get information on Recovery credits at IRS.gov/recovery.
File Electronically: Most tax returns are now filed electronically – either from home using purchased tax software, by a tax professional or through Free File. Free electronic filing is available to everyone.
Choose Direct Deposit for Refunds: Whether you file electronically or on paper, your refund can be automatically deposited into the bank or financial account of your choosing. Direct deposit is faster than a paper check.
Check for Errors
Pay Electronically: Electronic payment options are safe and secure methods for paying taxes or user fees. You can pay online, by phone using a credit or debit card, or through the Electronic Federal Tax Payment System.
Apply for an Installment Agreement: If you can’t pay your entire balance due, an installment agreement will allow you to pay any remaining balance in monthly installments. If you owe $25,000 or less, you may apply for a payment plan using the Online Payment Agreement application or just attach Form 9465, Installment Agreement Request, to the front of your return. You’ll need to list the amount of your proposed monthly payment and the date you wish to make your payment each month. The IRS charges $105 for setting up the agreement, or $52 if the payments are deducted directly from your bank account.

Video: Owe Taxes But Can't Pay?: English | Spanish

Top Ten Tips for Last Minute Filers

http://www.irs.gov/newsroom/article/0,,id=108651,00.html

With the tax filing deadline close at hand, here are the top 10 tips the IRS wants you to know if you are still working on your federal tax return. Also see the full list of Tax Tips for 2010 at http://www.irs.gov/newsroom/content/0,,id=104608,00.html

Going Green May Reduce Your Taxes

http://www.irs.gov/newsroom/article/0,,id=220989,00.html

When you invest in energy-efficient products, you may be saving money on both your energy bills and your tax return. The Internal Revenue Service wants you to know about six energy-related tax credits created or expanded by the American Recovery and Reinvestment Act of 2009.

Three New Issues to Be Addressed by IRS Industry Issue Resolution Program

http://www.irs.gov/newsroom/article/0,,id=220962,00.html

The Internal Revenue Service and the Treasury Department today announced that guidance will be developed and published under the IRS’s Industry Issue Resolution (IIR) program for several significant issues affecting the telecommunications and retail industries. Telecommunication issues include the proper treatment of unit of property for network assets, and the appropriate asset class for wireless telecommunications assets. The retail industry issue selected will address vendor mark-down allowances under the retail inventory method. These issues affect nearly all taxpayers in the respective industries.

Benefits of Qualified Joint Ventures for Family Businesses - Why a Husband and Wife Might Not Want to be Treated as a Partnership

http://www.irs.gov/businesses/small/article/0,,id=221082,00.html

An unincorporated business jointly owned by a married couple is generally classified as a partnership for federal tax purposes. Previously, married individuals in a business together were considered partners and required to file an annual Form 1065, as well as Form 1040. For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a “qualified joint venture,” whose only members are a husband and a wife filing a joint return, can elect not to be treated as a partnership for federal tax purposes.

The QJV option simplifies the filing requirements by allowing husband and wife businesses to be treated as sole proprietorships and file a Form 1040 federal tax return rather than partnerships for tax purposes. It eliminates filing a Form 1065 tax return for qualified joint ventures. The option also helps to ensure each spouse gets proper Social Security credit.

Haiti Relief Workers Qualify for Combat Zone Extension; Military Personnel and Designated Civilians Have at Least 180 Days to File and Pay

http://www.irs.gov/newsroom/article/0,,id=221316,00.html

Members of the military and certain civilians providing earthquake relief in Haiti have additional time to file their 2009 returns and pay any taxes due. This relief applies to members of the military, Red Cross personnel, accredited correspondents, and civilian support personnel acting under the direction of the Armed Forces. In most cases, the relief also applies to spouses.

Beware of IRS’ 2010 “Dirty Dozen” Tax Scams

http://www.irs.gov/newsroom/article/0,,id=220238,00.html

The Internal Revenue Service today issued its 2010 “dirty dozen” list of tax scams, including schemes involving return preparer fraud, hiding income offshore and phishing.

“Taxpayers should be wary of anyone peddling scams that seem too good to be true,” IRS Commissioner Doug Shulman said. “The IRS fights fraud by pursuing taxpayers who hide income abroad and by ensuring taxpayers get competent, ethical service from qualified professionals at home in the U.S.”

Tax schemes are illegal and can lead to imprisonment and fines for both scam artists and taxpayers. Taxpayers pulled into these schemes must repay unpaid taxes plus interest and penalties. The IRS pursues and shuts down promoters of these and numerous other scams. See the full article for the list of common schemes IRS.

Ten Things the IRS Wants You to Know About Identity Theft

http://www.irs.gov/newsroom/article/0,,id=202865,00.html

Criminals use many methods to steal personal information from taxpayers. They can use your information to steal your identity and file a tax return in order to receive a refund. Here are 10 things the IRS wants you to know about identity theft so you can avoid becoming the victim of a scam artist.

IRS Issues 2010 Filing Season Statistics

http://www.irs.gov/newsroom/article/0,,id=220489,00.html

Electronically filed tax returns are on track with last year and overall refunds are running nearly 10 percent higher so far in 2010, according to statistics issued by the Internal Revenue Service. The statistics, covering the period through March 12, show that while the overall number of tax returns filed this year is down slightly, the percentage of returns using e-file remains strong. More than 82 percent of the 69 million returns received this year have come in via e-file. Home usage of e-file is up almost 7 percent compared to this time last year. Additionally, the average federal refund totaled $3,036, an increase of $266 compared with the same period a year ago. The refund increase follows a number of federal tax incentives enacted last year as part of the American Recovery and Reinvestment Act, such as the homebuyer credit and the American Opportunity Credit. Taxpayers can check their eligibility for these credits and deductions on the Recovery page of this Web site. This special section also contains instructions on how to claim the available tax incentives and provides answers to frequently asked questions.

Recent Articles from e-News for Small Businesses

Penalty increase for partnership and S Corp returns

The late filing penalty for partnership and S Corporation returns increases from $89 to $195 per partner or shareholder for taxable years beginning after Dec. 31, 2009.

Latest news on employee plans

The Spring 2010 edition of Employee Plans News is now online.

March 2010

IRS Updates & News Releases:

Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers

http://www.irs.gov/newsroom/article/0,,id=220326,00.html

Two new tax benefits are now available to employers hiring workers who were previously unemployed or only working part time. These provisions are part of the Hiring Incentives to Restore Employment (HIRE) Act enacted into law March 18, 2010.

Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.

In addition, for each worker retained for at least a year, businesses may claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns.

NOTE: If you’d like more details, here is a direct link to the full text of the HIRE Act bill:

http://www.gpo.gov/fdsys/pkg/BILLS-111hr2847EAS2/pdf/BILLS-111hr2847EAS2.pdf

In addition, a comprehensive explanation of the Act’s provisions can be found in JCX-4-10, the Joint Committee Staff’s Technical Explanation of the Act, and a detailed analysis of the Act’s Estimated Budget Effects can be found in the Joint Committee’s report JCX-6-10.

IRS Provides Guidance on Identifying Numbers for Tax Return Preparers

http://www.irs.gov/newsroom/article/0,,id=220607,00.html

The Internal Revenue Service today issued proposed regulations allowing the IRS to require that tax return preparers use Preparer Tax Identification Numbers (PTINs) as the preparer’s identifying number on all tax returns and tax refund claims that they prepare. These regulations when final will implement some of the recommendations in Publication 4832, Return Preparer Review.

“These regulations allow the IRS to better identify and match tax return preparers with the tax forms and claims they prepare. This proposed PTIN system will help us ensure taxpayers receive competent, ethical service from qualified professionals and strengthen the integrity of our tax system,” said IRS Commissioner Doug Shulman.

Under the proposed regulations, the IRS will issue forms, instructions, or other guidance that will require paid tax return preparers to begin using PTINs for all tax returns and refund claims filed after Dec. 31, 2010. Currently, tax return preparers must use either a PTIN or their social security number on tax returns or refund claims that they prepare.

Tax professionals and other interested parties have until April 26, 2010 to submit comments regarding the attached proposed regulations.

IRS Outlines Additional Steps to Assist Unemployed Taxpayers and Others

http://www.irs.gov/newsroom/article/0,,id=220001,00.html

The Internal Revenue Service today announced several additional steps it is taking this tax season to help people having difficulties meeting their tax obligations because of unemployment or other financial problems. The steps –– an expansion of efforts that began more than a year ago –– include additional flexibility on offers in compromise for struggling taxpayers, a series of Saturday “open houses” offering taxpayers extra opportunities to work out tax problems face to face with the IRS, special outreach with partner groups to unemployed taxpayers and the availability of more information on a special section of the IRS Web site.

Tax Season 2010

http://www.irs.gov/newsroom/article/0,,id=217826,00.html

News releases, fact sheets, tax tips, YouTube videos and podcasts that provide helpful information for filing your tax return.

IRS on YouTube

Did you know that the IRS now has its own channel on YouTube? You can visit it here: http://www.youtube.com/irsvideos. There are videos on tax tips, the various tax changes that resulted from the Recovery Act, and even IRS commercials. If you’d like, here is a hyperlink to it that you can post on your website or send out in e-newsletters:

Visit the IRS Channel on YouTube.

IRS SSA Reporter Spring 2010 Issue Available

http://www.irs.gov/pub/irs-utl/p1693.pdf

The Spring 2010 issue of the IRS SSA Reporter is now available on line. The issue includes articles ranging from the IRS Employment Tax Research Study to Improvement to the IRS Virtual Small Business Tax Workshops. See http://www.irs.gov/businesses/small/article/0,,id=109886,00.html for the Spanish version of the Spring issue, as well as past IRS SSA Reporter newsletters.

Additional Standard Deduction for Real Estate Taxes

http://www.irs.gov/newsroom/article/0,,id=205172,00.html

The IRS wants taxpayers who pay state or local real estate taxes but don’t qualify to itemize their tax deductions, to know that they may qualify for an increased standard deduction. This is the last year that the higher standard deduction for real estate taxes is available. See the full article for six things you need to know about the higher standard deduction for real estate taxes.

Ten Facts about Mortgage Debt Forgiveness

http://www.irs.gov/newsroom/article/0,,id=205004,00.html

If your mortgage debt is partly or entirely forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence. See the full article for 10 facts the IRS wants you to know about Mortgage Debt Forgiveness.

IRS Has $1.3 Billion for People Who Have Not Filed a 2006 Tax Return

http://www.irs.gov/newsroom/article/0,,id=219727,00.html

Unclaimed refunds totaling more than $1.3 billion are awaiting nearly 1.4 million people who did not file a federal income tax return for 2006, the Internal Revenue Service announced today. However, to collect the money, a return for 2006 must be filed with the IRS no later than Thursday, April 15, 2010. The IRS estimates that the median unclaimed refund for tax-year 2006 is $604.

Recent Articles from e-News for Small Businesses

Sound too good to be true? It may be…

IRS.gov has information about abusive schemes that target home-based small businesses.

Business.gov: Business link to the federal government

The Business.gov Small Business FAQs Web page offers answers to many frequently asked questions and provides links to related resources.

Identify responsible party on EIN applications

Revised language in the instructions and on Form SS-4, Application for Employer Identification Number, requests the name of the “responsible party” rather than the “principal officer, general partner, grantor, owner, or trustor.”

Retirement News for Employers

The winter 2010 issue of Retirement News for Employers is now online.

IR-2010-22 Interest Rates Remain the same for the Second Quarter of 2010

Subscribe to e-News for Small Businesses

If you would like to receive e-News for Small Businesses, please visit this link to subscribe: http://www.irs.gov/businesses/small/content/0,,id=154826,00.html

Recommend e-News for Small Businesses

If you already receive e-News for Small Businesses, you can share it with a business acquaintance, colleague or employee. Just forward this link to them to view a sample edition and subscribe.

February 2010

Announcements & Upcoming Events:

IRS on YouTube

Visit the IRS Channel on YouTube.

IRS Updates & News Releases:

Free File: Spread the Word With Widgets

http://www.efile.irs.gov/

The Free File program provides free federal income tax preparation and electronic filing for eligible taxpayers through a partnership between the Internal Revenue Service and the Free File Alliance LLC, a group of private sector tax software companies. Many companies offer free or paid state tax preparation and e-filing services. Some companies may not offer state tax preparation and e-file services for all states. Explore which Free File service — offered exclusively at IRS.gov/freefile — fits your situation: easy-to-use, step-by-step tax preparation software or fillable forms. All taxpayers can use this service.

We have an excellent electronic tool we think you’ll enjoy seeing on your organization’s Web site – and it’s easy to place there. It’s a “Web widget,” a portable, on-screen ad for Free File with a countdown clock that changes daily to let your Web site visitors know how many days are left in the filing season. It also links to more information about Free File on IRS.gov/.

To place the widget on your Web site, just visit http://www.efile.irs.gov, look for the “Tax Season Countdown” ad with the green banner at the top. Click “Get & Share” at the bottom, then “copy code” from the box at the bottom-right. Paste this computer code to your Web site, and let the countdown begin. You can also share the widget on a social networking site, such as Facebook, if you prefer. Just follow the “Get & Share” instructions.

Reminder: Haiti Relief Donations Made Before March 1 Qualify for 2009 Deduction

http://www.irs.gov/newsroom/article/0,,id=218678,00.html

People who give to charities providing earthquake relief in Haiti can claim these donations on the tax return they are completing this season. Taxpayers who itemize deductions on their 2009 return qualify for this special tax relief provision, enacted Jan. 22. Only cash contributions made to these charities after Jan. 11, 2010, and before March 1, 2010, are eligible. This includes contributions made by text message, check, credit card or debit card. The new law only applies to cash (as opposed to property) contributions. The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti. Taxpayers have the option of deducting these contributions on either their 2009 or 2010 returns, but not both.

Additional Information Regarding Signature Requirements for First-Time Homebuyer Credit Documentation

http://www.irs.gov/newsroom/article/0,,id=219241,00.html

The IRS has provided additional clarification regarding documentation requirements on the First-Time Homebuyer Credit. The IRS encourages buyers seeking the homebuyer credit to sign the settlement statement when they file their tax return — even in cases where the settlement form does not include a signature line. The IRS recognizes that elements of the settlement document, often a Form HUD-1, may vary from jurisdiction to jurisdiction and may not reflect the signatures of both the buyer and seller. While the Form 5405 instructions indicate that a properly executed settlement statement should show the signatures of all parties, the IRS has clarified that it will accept a settlement statement if it is complete and valid according to local law. In areas where signatures are not required on the settlement document, the IRS encourages the buyer to sign the settlement statement prior to attaching it to the tax return. In situations where the signature of the seller is not on the settlement document, the IRS advises the buyer to still sign the document.

Link: Information on the First-Time Homebuyer Credit

IRS Debunks Frivolous Tax Arguments

http://www.irs.gov/newsroom/article/0,,id=219104,00.html

The Internal Revenue Service today released the 2010 version of its discussion and rebuttal of many of the more common frivolous arguments made by individuals and groups that oppose compliance with federal tax laws. Anyone who contemplates arguing on legal grounds against paying their fair share of taxes should first read the 80-page document, The Truth about Frivolous Tax Arguments. The document explains many of the common frivolous arguments made in recent years and it describes the legal responses that refute these claims. It will help taxpayers avoid wasting their time and money with frivolous arguments and incurring penalties.

COBRA Subsidy Eligibility Period Extended Through February; 15-Months Subsidy Now Available to Those Who Qualify

http://www.irs.gov/newsroom/article/0,,id=218522,00.html

Workers who lose their jobs during January and February may qualify for a 65-percent subsidy on their COBRA health insurance premiums, and these newly-eligible individuals, along with those already receiving the subsidy, can now receive it for up to 15 months, according to the Internal Revenue Service. Created by the American Recovery and Reinvestment Act of 2009, the COBRA subsidy eligibility period was originally scheduled to expire at the end of 2009, and eligible individuals only qualified for the subsidy for nine months. But the Department of Defense Appropriations Act, 2010, enacted on Dec. 19, extended the eligibility period and the maximum duration of COBRA premium assistance.

As a result, workers who are involuntarily terminated from employment between Sept. 1, 2008, and Feb. 28, 2010, may be eligible for a 65-percent subsidy of their COBRA premiums for a period of up to 15 months. Involuntarily terminated employees who meet certain other requirements, and certain family members of those individuals, are referred to as “assistance-eligible individuals.”

Reminder: 2009 Economic Recovery Payment Must Be Verified Through Other Agencies
http://www.irs.gov/newsroom/article/0,,id=204468,00.html

A one-time payment of $250 was made in 2009 to recipients receiving benefits from the Social Security Administration, disabled veterans receiving benefits from the U.S. Department of Veterans Affairs, and Railroad Retirement beneficiaries. Taxpayers who need verification about receipt of the 2009 economic recovery payment should personally contact their respective agency for confirmation, not the IRS, before completing and filing their 2009 tax return in 2010.

Recent Articles from e-News for Small Businesses

Filing Season Central

The Small Business Filing Season Central is your one-stop assistance center for filing business tax returns.

Small Business Administration offers online resources

The SBA's Small Business Training Network is a virtual campus housing free training courses, workshops and educational resources.

Haven't filed last year's income tax return?

Taxpayers should file all tax returns that are due, regardless of whether or not full payment can be made with the return.

Filing a past due return may not be as difficult as you think.

Husband and wife businesses

There are several tax issues to consider when a husband and wife have a small business.

A husband and wife operating a business together might want to make an election not to be treated as a partnership.

Tax calendar

The online Publication 15, (Circular E), Employer's Tax Guide offers a tax calendar with useful reminders of what forms employers must file by Jan. 31 and in the coming months.

Filing forms W-2

Form W-2 – Where, When, and How to File offers detailed instructions for preparing and filing the forms timely and correctly.

Employers filing 250 or more Forms W-2 must file electronically unless granted a waiver. However, all employers are encouraged to file Forms W-2 electronically.

Navigation

Pages:

Tax-Free Employer-Provided Health Coverage Now Available for Children under Age 27

IRS Reaches Out to Millions of Employers on Benefits of New Health Care Tax Credit

Special Payroll Tax Exemption Form Now Available

COBRA Subsidy Eligibility Period Extended to May 31

New for 2010: Tax Credit Helps Small Employers Provide Health Insurance Coverage

Special Payroll Tax Exemption Form Now Available

Reminders for Last-Minute Tax Filers

With the April 15 tax filing deadline right around the corner, the Internal Revenue Service offers taxpayers who have not yet filed a few last-minute tips.

Video: Owe Taxes But Can't Pay?: English | Spanish

Top Ten Tips for Last Minute Filers

With the tax filing deadline close at hand, here are the top 10 tips the IRS wants you to know if you are still working on your federal tax return. Also see the full list of Tax Tips for 2010 at http://www.irs.gov/newsroom/content/0,,id=104608,00.html

Going Green May Reduce Your Taxes

Three New Issues to Be Addressed by IRS Industry Issue Resolution Program

Haiti Relief Workers Qualify for Combat Zone Extension; Military Personnel and Designated Civilians Have at Least 180 Days to File and Pay

Beware of IRS’ 2010 “Dirty Dozen” Tax Scams

Ten Things the IRS Wants You to Know About Identity Theft

IRS Issues 2010 Filing Season Statistics

Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers

IRS Provides Guidance on Identifying Numbers for Tax Return Preparers

IRS Outlines Additional Steps to Assist Unemployed Taxpayers and Others

Tax Season 2010

Additional Standard Deduction for Real Estate Taxes

Ten Facts about Mortgage Debt Forgiveness

IRS Has $1.3 Billion for People Who Have Not Filed a 2006 Tax Return

Free File: Spread the Word With Widgets

Reminder: Haiti Relief Donations Made Before March 1 Qualify for 2009 Deduction

Additional Information Regarding Signature Requirements for First-Time Homebuyer Credit Documentation

IRS Debunks Frivolous Tax Arguments

COBRA Subsidy Eligibility Period Extended Through February; 15-Months Subsidy Now Available to Those Who Qualify