Archive for the ‘Tax Current Events and News’ Category
Wednesday, February 2nd, 2011 by Moore McLaughlin
In Notice 2011-11, the IRS has provided relief to tax return preparers who have made a good faith effort to obtain a preparer tax identification number (PTIN) by allowing them to prepare tax returns for compensation, even though they have not received a PTIN.
Background. In January 2010, the IRS released a study on the U.S. return preparer industry carrying detailed recommendations on new standards for preparers other than attorneys, certified public accountants (CPAs), and enrolled agents (EAs). Subsequently, the IRS rolled out a new set of rules subjecting tax return preparers who are not attorneys, CPAs or EAs to new registration requirements, including mandatory use of PTINs for tax returns or refund claims filed after December 31, 2010, competency testing, continuing education (CE) rules, and ethical standards (i.e., Circular 230). Under the rules, all individuals who are compensated for preparing, or assisting in the preparation of, all or substantially all of a tax return or claim for refund of tax must have a PTIN.
In early January 2011, the IRS issued Notice 2011-6, which dialed back some of the most controversial aspects of the new tax return preparer initiative. It provides guidance on the implementation of the new regulations requiring tax return preparers to obtain a PTIN for tax returns or refund claims filed after December 31, 2010. It also softened key aspects of earlier guidance. For example, it provides that properly supervised nonsigning preparers are not required to undergo a competency exam and are not subject to the CE requirements.
Notice 2011-6, states that, unless otherwise provided in it or other guidance, the IRS expects tax return preparers to comply with the new requirement to obtain a PTIN as soon as possible. Tax return preparers who used the new online application system available through IRS’s website at http://www.irs.gov/taxpros generally will receive their PTIN number when the application process has been completed. Preparers who apply for a PTIN using the paper Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application, generally will receive their PTIN four to six weeks after the application and payment are received.
However, the IRS recognizes that some tax return preparers are experiencing or may experience difficulty in obtaining a PTIN. If preparers using the online system are unsuccessful in obtaining a PTIN, the IRS system will notify them that their application was not processed and provide appropriate instructions. Complying with these instructions before the preparation of a tax return or refund claim for compensation will establish that these individuals were making a good faith effort to comply with the new PTIN requirement.
Preparer relief. In Notice 2011-11, the IRS provides that any tax return preparer receiving: (1) notice from the IRS that it was unable to process their online PTIN application, or (2) an acknowledgment of receipt of the paper PTIN application, will be allowed to prepare and file tax returns or claims for refund for compensation after the tax return preparer complies with all instructions provided in the notification or acknowledgment letter. This relief only applies during the 2011 filing season (i.e., 2010 returns) and does not apply to individuals who engage in conduct that constitutes a willful violation of the applicable duties and restrictions set out in, or disreputable conduct under §10.51 of, Circular 230.
A tax return preparer may use a PTIN issued before September 28, 2010 (or his Social Security number if he does not have a previously issued PTIN) as his PTIN during the 2011 filing season or until they receive a new PTIN, whichever is earlier. Once a new PTIN is obtained, the new PTIN must be used.
Preparers who rely on the relief provision of Notice 2011-6 to prepare returns or refund claims for compensation must pay the $64.25 PTIN application fee for the 2011 filing season, even though the processing of their application may be delayed. Payment must be submitted as instructed by IRS. Preparers who rely on this relief must keep a copy of the notification or acknowledgment letter as documentation of their good faith effort in the event that the preparer is contacted by IRS during the 2011 filing season or in the future.
IRS notes that tax return preparers who applied for a PTIN using paper Form W-12 before Notice 2011-11 is published in the Internal Revenue Bulletin (February 14, 2011) and have not received a PTIN generally will receive a PTIN or an acknowledgment of receipt of the PTIN application within six weeks of IRS’s receipt of the PTIN application or within six weeks of Notice 2011-11 ‘s date of publication, whichever is later. Preparers who apply for a PTIN using paper Form W-12 after Notice 2011-11 ‘s date of publication generally will receive a PTIN or an acknowledgment of receipt of the PTIN application within six weeks from the date the application is submitted. For individuals who do not attempt to submit a PTIN application via the online system, the submission of a processible paper Form W-12 and payment generally constitutes a good faith attempt to comply with the requirement to obtain a PTIN.
Tags: corporate tax, income tax, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, Moore McLaughlin, Notice 2011-11, Notice 2011-6, PTIN, PTIN registration process, state taxes, tax, Thomas P. Quinn
Posted in Current Events, IRS and state tax collections, Tax Current Events and News
Sunday, December 19th, 2010 by Moore McLaughlin
Under pre-Act law, the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, other than those made permanent or extended by subsequent legislation, were set to sunset and no longer apply to tax or limitation years beginning after 2010. Beginning in 2011, the EGTRRA sunset would have wiped out a host of favorable tax rules, such as: favorable income tax rate structure for individuals; marriage penalty relief; and liberal education-related deduction rules. Similarly, under Sec. 303 of the Jobs and Growth Tax Relief Reconciliation Act of 2003, the favorable tax treatment of long-term capital gain and qualified dividends would have ended after 2010.
The alternative minimum tax (AMT) exemption amounts were “temporarily” increased for four years by EGTRRA, and then “temporarily” increased again by a succession of tax laws. The ability of individuals to use most nonrefundable personal credits to offset AMT also is “temporary,” and has been extended over the years by a series of new laws. Under pre-Act law, after 2010, the AMT exemption amounts were to have plummeted to their pre-EGTRRA level, and individuals would not have been able to use most nonrefundable personal credits to offset AMT.
Finally, the American Recovery and Reinvestment Act of 2009 temporarily boosted the credit incentives for higher education (i.e., created the American Opportunity Tax Credit, or AOTC), and liberalized the rules for the refundable child tax credit and the earned income tax credit (EITC). Under pre-Act law, these ARRA incentives would have ended on December 31, 2010.
New law. Under 2010 Tax Relief Act Secs. 101 through 103, the Sec. 901 EGTRRA sunset, the Sec. 303 JGTRRA sunset, and the ARRA sunsets relating to the AOTC, child tax credit, and EITC are extended for two years (one year in case of the adoption rules).
Caution: Unless Congress acts, all of the favorable rules will revert after 2012 to their pre-EGTRRA, pre-EGTRRA, and pre-ARRA rules. For example, the tax rates for individuals in 2013 will be 15%, 28%, 31%, 36%, and 39.6%.
Stay tuned for more posts about this new tax law.
Tags: asset protection, Asset Protection Planning, business tax, Capital gains tax, corporate tax, income tax, internal revenue code, Internal Revenue Service, IRS and state tax collections, Moore McLaughlin, Providence, Rhode Island, Small Business Act, state taxes, tax, Tax planning, Thomas P. Quinn
Posted in 1031 Exchanges, Asset Protection Planning, Current Events, Estate Planning, IRS and state tax collections, Tax Current Events and News, Tax planning, Uncategorized
Sunday, December 19th, 2010 by Moore McLaughlin
At about 3:50 p.m. on Friday, December 17, 2010, President Obama signed into law the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.” This new law is a sweeping tax package that includes, among many other items, an extension of the Bush-era tax cuts for two years, estate tax relief, a two-year “patch” of the alternative minimum tax (AMT), a two-percentage-point cut in employee-paid payroll taxes and in self-employment tax for 2011, new incentives to invest in machinery and equipment, and a host of retroactively resuscitated and extended tax breaks for individuals and businesses. Here’s a look at the key elements of the package:
- The current income tax rates will be retained for two years (2011 and 2012), with a top rate of 35% on ordinary income and 15% on qualified dividends and long-term capital gains.
- Employees and self-employed workers will receive a reduction of two percentage points in Social Security payroll tax in 2011, bringing the rate down from 6.2% to 4.2% for employees, and from 12.4% to 10.4% for the self-employed.
- A two-year AMT “patch” for 2010 and 2011 will keep the AMT exemption near current levels and allow personal credits to offset AMT. Without the patch, an estimated 21 million additional taxpayers would have owed AMT for 2010.
- Key tax credits for working families that were enacted or expanded in the American Recovery and Reinvestment Act of 2009 will be retained. Specifically, the new law extends the $1,000 child tax credit and maintains its expanded refundability for two years, extends rules expanding the earned income credit for larger families and married couples, and extends the higher education tax credit (the American Opportunity tax credit) and its partial refundability for two years.
- Businesses can write off 100% of their equipment and machinery purchases, effective for property placed in service after September 8, 2010 and through December 31, 2011. For property placed in service in 2012, the new law provides for 50% additional first-year depreciation.
- Many of the “traditional” tax extenders are extended for two years, retroactively to 2010 and through the end of 2011. Among many others, the extended provisions include the election to take an itemized deduction for state and local general sales taxes in lieu of the itemized deduction for state and local income taxes; the $250 above-the-line deduction for certain expenses of elementary and secondary school teachers; and the research credit.
- After a one-year hiatus, the estate tax will be reinstated for 2011 and 2012, with a top rate of 35%. The exemption amount will be $5 million per individual in 2011 and will be indexed to inflation in following years. Estates of people who died in 2010 can choose to follow either 2010′s or 2011′s rules.
- Omitted from the new law: Repeal of a controversial expansion of Form 1099 reporting requirements.
- Also not included: Extension of the Build America Bonds program, which permits state and localities to issue federally-subsidized municipal bonds.
Watch for upcoming posts containing more detail on this new law. In the meantime, feel free to contact us with any questions you may have.
Tags: 1031 exchange real estate investment, alternative minimum tax, American Recovery and Reinvestment Act of 2009, AMT, and Job Creation Act of 2010, asset protection, Asset Protection Planning, business tax, Capital gains tax, collection, corporate tax, elderlaw, Estate Planning, income tax, internal revenue code, IRS and state tax collections, mclaughlin & quinn, Moore McLaughlin, Providence, real estate, Rhode Island, seniors, Social Security payroll tax, Tax planning, tax relief, Thomas P. Quinn, Unemployment Insurance Reauthorization
Posted in 1031 Exchanges, Asset Protection Planning, Bankruptcy, Current Events, Elderlaw/Law For Life, Estate Planning, Financial workout, IRS and state tax collections, Self-directed IRAs, Tax Current Events and News, Tax planning
Friday, November 5th, 2010 by Moore McLaughlin
Some individuals with substantial income in addition to salaries may find that the amount of tax withheld from their salaries is not enough to cover their required estimated tax payments. This may be the result of miscalculation, or forgotten surprises pleasant and unpleasant. A pleasant forgotten surprise might be a windfall on the sale of a capital asset earlier this year. An unpleasant one might be the realization by a taxpayer who claimed a first time homebuyer credit in 2008 that he must begin repaying the credit in 25 installments, beginning with the 2010 tax year. Increased withholding, as well as a couple of creative workarounds, can stave off an estimated tax penalty.
Background. An individual subject to the estimated tax must pay, on each of four installment dates (April 15, June 15, September 15 and January 15 of the following year for a calendar-year taxpayer), 25% of his “required annual payment” for the current year. The required annual payment generally is the lesser of 100% of the tax shown on the taxpayer’s return for the preceding year or 90% of his tax for the current year. However, in figuring 2010 estimated taxes, taxpayers whose 2009 AGI was over $150,000 have to pay the lesser of 110% of the tax shown on the 2009 return or 90% of their 2010 tax liability.
The applicable test is applied separately to each installment. Thus, a taxpayer may be penalized for the underpayment of estimated taxes for any installment for which his estimated tax payments plus taxes withheld from his salary don’t total at least 25% of his required annual payment.
An individual who has underpaid an estimated tax installment can’t avoid the penalty by increasing his estimated tax payment for a later period (although payment in a later period will reduce the period for which the penalty applies).
Increased withholding is one possible solution. Income tax withheld by an employer from an employee’s wages or salary is treated as paid in equal amounts on each of the four installment due dates unless the individual establishes the dates on which the amounts were actually withheld. Thus, if an employee asks his employer to withhold sufficient additional amounts for the rest of the year, the penalty can be retroactively eliminated. This is because the heavy year-end withholding will be treated as paid equally over the four installment due dates.
Illustration: Jennifer expects her 2010 tax liability to be $15,000. Her 2009 return showed a liability of $14,000. Her withholding for 2010 will total only $10,500 and she has made no estimated tax payments. If she makes an additional estimated tax payment of $3,000 on January 15, 2011, she will avoid any underpayment penalty for the last installment ($10,500 plus $3,000 equals $13,500, which is 90% of $15,000) but she may still be penalized for underpaying the first three installments. But if Jennifer instead has her employer withhold an additional $3,000 before the end of 2010, her total withholding ($13,500) will be treated as estimated tax payments of $3,375 on each of the installment due dates. Since $3,375 is 25% of $13,500 (90% of $15,000), the underpayment penalty would be completely avoided for all four installments.
Other amounts may also be treated as retroactive payments of estimated tax. The same rules described above in regard to amounts withheld from wages and salaries also apply to overpayments of Social Security taxes and to income taxes withheld from:
- supplemental unemployment compensation benefits, sick pay, pensions, annuities and other deferred income (e.g., 20% withholding on certain “eligible rollover distributions” from qualified retirement plans and other deferred income arrangements).
- interest and dividends subject to backup withholding.
- gambling winnings.
Recommendation: Another possible option for a taxpayer who has underpaid estimated tax is to take an eligible rollover distribution from a qualified plan before the end of 2010. Income tax will be withheld from the distribution and will be applied toward the taxes owed for 2010. The taxpayer can then timely roll over the gross amount of the distribution, as increased by the amount of withheld tax, to a traditional IRA. No part of the distribution will be includible in income for 2010, but the withheld tax will be applied pro rata over the full tax year to reduce previous underpayments of estimated tax.
Tags: 2010 estimated taxes, asset protection, Asset Protection Planning, business tax, Capital gains tax, estimated tax payments, estimated taxes, first time homebuyer credit, income tax, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, mclaughlin & quinn, Moore McLaughlin, Providence, Rhode Island, tax, Tax planning, Thomas P. Quinn, year-end planning, year-end tax planning
Posted in Asset Protection Planning, IRS and state tax collections, Tax Current Events and News, Tax planning
Monday, November 1st, 2010 by Moore McLaughlin
December 31, 2010 is an important deadline for individuals who inherited an IRA from an IRA owner who died in 2009. Where there are multiple beneficiaries for the IRA, splitting up the account into several accounts no later than December 31, 2010, can yield important tax and other benefits for each beneficiary.
Background. Designating several beneficiaries for an IRA may put the younger one (or ones) at a disadvantage if they want to keep required minimum distributions (RMDs) as small as possible and keep IRA deferrals going for as long as possible. Reason: As a general rule, where there is more than one IRA designated beneficiary, the one with the shortest life expectancy (that is, the oldest one) is treated as the designated beneficiary for determining distributions.
Observation: The oldest-beneficiary rule comes into play for determining RMDs after the IRA owner’s death. Regardless of whether the IRA owner died before or after his required beginning date, if the IRA owner was older than any of the beneficiaries, the remaining IRA balance at the owner’s death is paid out over the remaining life expectancy of the oldest designated beneficiary.
Illustration : Anne designated her son, Seth, and her daughter, Carol, as equal beneficiaries of his IRA. Anne died in 2009 at the age of 74. Seth, age 50 this year, wants to invest the inherited IRA in emerging markets mutual funds. Carol, age 44 this year, wants to invest the inherited IRA in a target-retirement-date mutual fund. If the IRA is left as-is, annual RMDs for both Seth and Carol, which must commence in 2010, are based on Seth’s life expectancy, which is shorter than Carol’s. And they may find it hard to reconcile their differing investment philosophies.
Post-mortem planning solution. The beneficiaries can split up the IRA into separate accounts no later than the end of the year following the year in which the decedent died. Where an IRA is divided into separate accounts (i.e., subaccounts), the RMD rules separately apply to each separate account, effective for years after the year in which the separate accounts were created, or the IRA owner’s date of death, if later.
Thus, in the illustration above, if Seth and Carol direct the IRA trustee to split Anne’s IRA into two separate and equal IRAs no later than December 31, 2010, with each the sole beneficiary of one of the equal IRAs, Seth’s RMD will be based on his table life expectancy, and Carol’s will be based on her life expectancy, which is longer than Seth’s. Seth can invest his half of the inherited IRA in emerging markets mutual funds, and Carol can invest her half in the mutual fund of her choice.
For purposes of the RMD rules, separate accounts in an IRA account are separate portions of the IRA owner’s benefit reflecting the separate interests of the IRA’s beneficiaries as of the date of the IRA owner’s death for which separate accounting is maintained.
For the separate or “subaccount” IRA to be treated as a separate account for RMD purposes, it must be established no later than the last day of the year following the year of the IRA owner’s death. Additionally, a separate accounting must allocate all post-death investment gains and losses for the period before the separate accounts were established on a pro rata basis in a reasonable and consistent manner among the separate accounts. However, once the separate accounts are actually established, separate accounting can provide for separate investments for each separate account under which gains and losses from the investment of the account are only allocated to that account. Alternatively, investment gain or losses can continue to be allocated among the separate accounts on a pro rata basis. A separate accounting must allocate any post-death distribution to the separate account of the beneficiary receiving that distribution.
Tags: asset protection, Asset Protection Planning, Capital gains tax, elder law, elderlaw, Elderlaw/Law For Life, Estate Planning, income tax, individual retirement account, internal revenue code, Internal Revenue Service, IRA, IRS, IRS and state tax collections, Jill E. Sugarman, Jill Sugarman, Long-term care, long-term care insurance, Massachusetts, mclaughlin & quinn, Medicaid, Medicaid planning, Moore McLaughlin, nursing homes, Providence, required minimum distribution, Rhode Island, rmd, seniors, Tax planning
Posted in Asset Protection Planning, Elderlaw/Law For Life, Estate Planning, Self-directed IRAs, Tax Current Events and News, Tax planning
Tuesday, October 26th, 2010 by Moore McLaughlin
Tax relief comes in many forms, whether it means eliminating penalties, settling your debt, or ensuring that the IRS does not seize your bank accounts or garnish your wages. If you owe money on your taxes, your plan for resolving this debt should include addressing all possible angles: Protection from IRS actions, determining ways to reduce the amount owed, and putting a plan into place that will permanently make worrying about taxes a thing of the past. 
McLaughlin & Quinn, LLC has published “9 Secrets to Success When You Owe the IRS” This list has been developed by the attorneys at McLaughlin & Quinn, LLC over the course of dozens of years in private practice and dozens more working for the IRS. Avoiding these landmines will significantly increase the odds of getting one’s tax life in order and moving on. Failure to know these secrets, and use them to your advantage can turn a potentially minor problem into a federal case.
This is the most straight-forward guide you will find anywhere on resolving taxes. In it you will learn:
- 9 Different Ways to Keep the IRS from Taking Action Against You
- How not to be afraid of the IRS
- How to avoid common mistakes
- Simple steps to keep you out of trouble
Downloading this guide is absolutely free.
Click here to download this Free guide.
Tags: 9 Secrets to Success When You Owe the IRS, asset protection, Asset Protection Planning, business tax, Capital gains tax, collection, corporate tax, Estate Planning, income tax, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, levy, lien, mclaughlin & quinn, Moore McLaughlin, Owe the IRS, Providence, Rhode Island, sales tax, state taxes, tax, Tax planning, tax relief, Thomas P. Quinn
Posted in Asset Protection Planning, Bankruptcy, Current Events, Elderlaw/Law For Life, Estate Planning, Financial workout, IRS and state tax collections, McLaughlin & Quinn News, Tax Current Events and News, Tax planning
Tuesday, October 26th, 2010 by Moore McLaughlin
This past year has seen a multitude of new cases affecting Massachusetts taxes. Click here for a well written summary of these cases by Scott M. Susko and Richard L. Jones. These cases range from domicile cases in the personal income tax context to sales tax nexus cases to the sales-factor sourcing rules, and others.
McLaughlin & Quinn, LLC Partners Moore McLaughlin and Tom Quinn represent Massachusetts taxpayers, both individuals and businesses, on a regular basis in tax planning matters as well as audits, appeals and in court. Feel free to contact either Moore McLaughlin at 401-421-5115 ext. 212 or by e-mail at mmclaughlin@mclaughlinquinn.com or Tom Quinn at 401-421-5115 ext. 218 or by e-mail at tquinn@mclaughlinquinn.com.
Tags: business tax, domicile, income tax, IRS and state tax collections, LLC, Massachusetts, Massachusetts domicile, Massachusetts personal income tax, Massachusetts sales tax nexus, Massachusetts sales-factor sourcing rules, Massachusetts taxes, mclaughlin & quinn, Moore McLaughlin, personal income tax, sales tax, sales tax nexus, sales-factor sourcing rules, Thomas P. Quinn
Posted in Asset Protection Planning, Estate Planning, IRS and state tax collections, Tax Current Events and News, Tax planning
Sunday, October 24th, 2010 by Moore McLaughlin
Join the attorneys from McLaughlin & Quinn as they present at SCORE’s 14th Annual Tax Update Seminar on Friday, December 4, 2010 at the Crowne Plaza Hotel in Warwick, Rhode Island. This seminar will qualify for up to 8 hours of CPE.
SCORE is the Service Corps of Retired Executives. Small business owners can tap into the vast resources of the retired executives at SCORE for assistance in all aspects on running a small business. The funds raised at the 14th Annual Tax Update Seminar will support the good work done by the men and women of SCORE.
Register on-line at www.McLaughlinQuinn.com soon. Space is limited. Register before November 3 to receive the earlybird discount.
We hope to see you there at this great event.
Tags: 14th Annual Tax Update, Crowne Plaza Hotel, Frank Fiore, Jill E. Sugarman, Jill Sugarman, mclaughlin & quinn, Moore McLaughlin, Providence, Rhode Island, SCORE, Service Corps of Retired Executives, Small Business Act, Small Business Jobs Act, Small Business Jobs Act of 2010, state taxes, tax, Thomas P. Quinn
Posted in Current Events, McLaughlin & Quinn News, Seminars, Tax Current Events and News, Tax planning
Sunday, October 24th, 2010 by Moore McLaughlin
The IRS has updated its online FAQs explaining the new post-2010 requirement for tax return preparers to obtain and furnish a preparer tax identification number (PTIN) on tax returns and claims for refund of tax that they prepare. The FAQs supplement final regulations issued on the PTIN requirement and the application process, and update FAQs issued earlier this year. Among the subjects covered are how applicants are “compliant” with their federal tax obligations, and whether fingerprints will be required.
Background. Under new final regulations, for tax returns or refund claims filed after December 31, 2010, the identifying number that a domestic or foreign tax return preparer must include with the preparer’s signature on tax returns and refund claims is his PTIN or such other number as IRS prescribes in forms, instructions, or other guidance. Tax return preparers won’t be able to use a SSN as a preparer identifying number unless specifically prescribed by IRS in forms, instructions, or other guidance. The regulations also explain who may obtain a PTIN and who is a tax return preparer. (Preamble to TD 9501, 09/28/2010, Reg. § 1.6109-2)
Separate new regulations establish a new annual user fee for individuals who apply for or renew a tax return preparer tax identification number (PTIN), and a new information release explains the online PTIN registration process. (T.D. 9503, 09/28/2010; Reg. § 300.9; IR 2010-99)
Supplemental guidance on PTIN application process. The new FAQs provide additional guidance on a number of different aspects of the PTIN application process for tax return preparers, including the following information:
- All PTIN applicants must attest that they are compliant with their personal and business tax obligations, or provide an explanation if they are not. Being in tax compliance means all returns that are due have been filed (or an extension requested), and all taxes that are due have been paid (or acceptable payment arrangements have been established). (Online PTIN System, FAQ 18)
- IRS is not currently conducting fingerprint checks as part of the PTIN application process, but may do so for certain applicants in the future. (New PTIN Requirements, FAQ 11)
- Obtaining a PTIN through the new registration system does not trigger any new continuing education requirement (the beginning date for CPE has not been determined). Once the CPE requirement begins, affected preparers will have a full twelve months to meet their first year’s requirement. (Attorneys, CPAs, enrolled agents, enrolled actuaries, or enrolled retirement plan agents won’t need to meet the new CPE requirements due to their existing education requirements.) (CPE Requirements, FAQ 1)
- Every PTIN holder must have his or her own e-mail account. Thus an organization cannot use one e-mail account to create accounts for all of its employees.
- The name to use when applying for a PTIN should be the name used on the applicant’s most recent Form 1040. If applicants are married filing jointly and both spouses apply for a PTIN, each must create a user account under different mail addresses and file a separate PTIN application. Each spouse must each enter his or her own information on separate applications (name, social security number and address). The spouse’s name or social security number should not be entered. (Online PTIN System, FAQ 8 )
All of the updated “New Requirements for Tax Return Preparers: Frequently Asked Questions” can be viewed by clicking through the categories on the IRS website at: http://www.irs.gov/taxpros/article/0,,id=218611,00.html.
Tags: collection, corporate tax, income tax, Internal Revenue Service, IRS, IRS and state tax collections, mclaughlin & quinn, Moore McLaughlin, preparer tax identification number, Providence, PTIN, PTIN registration process, Rhode Island, tax, Tax planning
Posted in IRS and state tax collections, Tax Current Events and News, Tax planning
Thursday, October 21st, 2010 by Moore McLaughlin
In Notice 2010-69, the IRS has announced that employers will not have to report the aggregate cost of employer-sponsored group health plan coverage on Forms W-2 issued for 2011. Reporting for 2011 will be optional, and employers taking advantage of the reprieve will not be treated as having failed to meet the wage and tax statement reporting requirements or be subject to any penalties. The IRS anticipates issuing guidance on this reporting requirement before the end of this year.
Background. For tax years beginning on or after January 1, 2011, Code Sec. 6051(a)(14), which was added by §9002 of the Patient Protection and Affordable Care Act of 2010 (Health Care Act, P.L. 111-148, 3/23/2010), generally provides that the aggregate cost of the applicable employer-sponsored health insurance coverage (as defined in Code Sec. 4980I(d)(1)) must be reported on Form W-2. For this purpose, the aggregate cost is to be determined under rules similar to the rules of Code Sec. 4980B(f)(4), referring to the definition of the “applicable premium” under the rules providing for COBRA continuation coverage.
Interim relief. Notice 2010-69 provides interim relief to employers with respect to reporting the cost of coverage under an employer-sponsored group health plan on Form W-2 under Code Sec. 6051(a)(14). Specifically, Notice 2010-69 provides that reporting the cost of this coverage is not mandatory for Forms W-2 issued for 2011. IRS has determined that this relief is necessary to provide employers with the time they need to make changes to their payroll systems or procedures in preparation for compliance with the new reporting requirement.
In addition, IRS announced that it has issued a draft Form W-2 for 2011. The draft Form W-2 includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan. The IRS will be publishing guidance on the new requirement later this year. The IRS stresses that the amounts reportable are not taxable, and that the new reporting requirement is intended to be informational only and to provide employees with greater transparency into overall health care costs. (IR 2010-103; click here to read more.)
Click here to view the draft Form W-2 (2011).
For tax years beginning after December 31, 2017, Form W-2 reporting of health insurance coverage will take on practical importance. Under Code Sec. 4980I, a 40% nondeductible excise tax will be levied on insurance companies and plan administrators for employer-sponsored health coverage to the extent that annual premiums exceed $10,200 for single coverage and $27,500 for family coverage. An additional threshold amount of $1,650 for single coverage and $3,450 for family coverage will apply for retired individuals age 55 and older and for plans that cover employees engaged in high risk professions.
Tags: business tax, COBRA, health insurance, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, mclaughlin & quinn, Moore McLaughlin, Notice 2010-69, Patient Protection and Affordable Care Act of 2010, Providence, Rhode Island, tax, Tax planning, W-2
Posted in Asset Protection Planning, Current Events, IRS and state tax collections, Tax Current Events and News, Tax planning
