Posts Tagged ‘IRS’
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
Friday, October 15th, 2010 by Moore McLaughlin
The following is the tenth in a series of blog posts providing a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
Simplified per diem rates lowered effective October 1, 2010.
Reimbursements of an employee’s business travel costs (lodging, meal and incidental expenses (M&IE)) at a per diem rate are payroll-and income-tax free if simplified substantiation is provided and the daily rate does not exceed the federal per diem rate (the maximum amount that the federal government reimburses its employees) for the locality of travel for that day. While the per diem rates vary by travel destination, employers can make reimbursements at the simplified “high-low” per diem rates, which assign one per diem rate to high-cost areas within the continental U.S., and another to non-high-cost areas. The IRS has issued the “high-low” simplified per diem rates for post-September 30, 2010, travel. An employer may reimburse up to $233 for high-cost localities ($168 for lodging and $65 for M&IE) and $160 for other localities ($108 for lodging and $52 for M&IE). The list of high-cost areas is also updated.
For more information, please contact Partner Moore McLaughlin at 401-421-5115 ext 212 or by e-mail at mmclaughlin@mclaughlinquinn.com.
Tags: employee's business travel costs, federal per diem rate, income tax, Internal Revenue Service, IRS, IRS and state tax collections, mclaughlin & quinn, Moore McLaughlin, per diem, per diem rates, Providence, Rhode Island, tax, Tax planning, Thomas P. Quinn
Posted in Current Events, IRS and state tax collections, Tax Current Events and News, Tax planning
Friday, October 15th, 2010 by Moore McLaughlin
The following is the ninth in a series of blog posts providing a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
Over-the-counter drug costs will no longer be reimbursable.
Effective January 1, 2011, unless prescribed or insulin, the cost of over-the-counter medicines cannot be reimbursed from flexible spending arrangements (FSA), health reimbursement arrangements (HRA), Health Savings Accounts (HSA) and Archer Medical Savings Accounts (Archer MSA). The IRS has issued guidance explaining that an individual may be reimbursed for over-the counter medicines or drugs, so long as the individual obtains a prescription for the medicines or drugs. It also makes clear that expenses incurred for over-the-counter medicines or drugs purchased without a prescription before January 1, 2011 may be reimbursed tax-free at any time by an employer-provided plan, including an FSA or HRA, under the terms of the employer’s plan.
For more information, please contact Partner Moore McLaughlin at 401-421-5115 ext 212 or by e-mail at mmclaughlin@mclaughlinquinn.com.
Tags: Archer Medical Savings Accounts, elder law, elderlaw, Elderlaw/Law For Life, Estate Planning, flexible spending arrangements, FSA, health reimbursement arrangements, Health Savings Accounts, HRA, income tax, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, Jill E. Sugarman, Jill Sugarman, mclaughlin & quinn, Moore McLaughlin, Providence, Rhode Island, seniors, tax, Tax planning
Posted in Asset Protection Planning, Current Events, Elderlaw/Law For Life, Tax Current Events and News, Tax planning
Friday, October 15th, 2010 by Moore McLaughlin
The following is the eighth in a series of blog posts providing a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
Relief for homeowners with corrosive drywall.
The IRS is allowing individuals with corrosive drywall to apply a safe harbor formula to treat the costs of repairing the defective drywall as a casualty loss. The safe harbor applies for original and amended federal income tax returns filed after September 29, 2010. Reported problems have occurred with certain imported drywall installed in homes between 2001 and 2008. Homeowners have reported blackening or corrosion of copper electrical wiring and copper components of household appliances, as well as the presence of sulfur gas odors. In the case of any individual who pays to repair damage to his personal residence or household appliances that results from corrosive drywall, the IRS won’t challenge his treatment of damage resulting from corrosive drywall as a casualty loss (which might otherwise be difficult to achieve under the regular rules) if the loss is determined and reported under the safe harbor rule. A taxpayer who does not have a pending claim for reimbursement may claim as a loss all unreimbursed amounts paid during the tax year to repair damage to his personal residence and household appliances resulting from corrosive drywall. A taxpayer who has a pending claim (or intends to pursue reimbursement) may claim a loss for 75% of the unreimbursed amount paid during the tax year to repair damage to the taxpayer’s personal residence and household appliances that resulted from corrosive drywall.
For more information, please contact Partner Moore McLaughlin at 401-421-5115 ext 212 or by e-mail at mmclaughlin@mclaughlinquinn.com.
Tags: corrosive drywall, drywall, income tax, Internal Revenue Service, IRS, IRS and state tax collections, mclaughlin & quinn, Moore McLaughlin, Providence, Rhode Island, tax, Tax planning, Thomas P. Quinn
Posted in Current Events, Tax Current Events and News, Tax planning
Wednesday, October 13th, 2010 by Moore McLaughlin
The following is the seventh in a series of blog posts providing a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
Financial reform package changes mark-to-market rule.
The “Restoring American Financial Stability Act of 2010” was signed into law on July, 21, 2010. This landmark financial reform package contained a tax provision broadening the list of contracts that are excepted from mark-to-market treatment. Taxpayers must report gains and losses from regulated futures contracts and other “Section 1256 contracts” on an annual basis under the “mark-to-market” rule. The term Section 1256 contract means: regulated futures contracts, foreign currency contracts, nonequity options, dealer equity options, and dealer securities futures contracts. It does not include any securities futures contract or option on such a contract unless the contract or option is a dealer securities futures contract. Under the new law, for tax years beginning after July 21, 2010, all of the following also are excepted from the definition of a Section 1256 contract: any interest rate swap; currency swap, basis swap, interest rate cap, interest rate floor, commodity swap, equity swap, equity index swap, credit default swap, or similar agreement.
For more information, please contact Partner Moore McLaughlin at 401-421-5115 ext 212 or by e-mail at mmclaughlin@mclaughlinquinn.com.
Tags: 1031 exchange real estate investment, basis swap, business tax, Capital gains tax, commodity swap, corporate tax, credit default swap, currency swap, equity index swap, financial reform, futures contracts, interest rate cap, interest rate swap, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, mark-to-market, mark-to-market treatment, mclaughlin & quinn, Moore McLaughlin, Providence, regulated futures contracts, Restoring American Financial Stability Act of 2010, Rhode Island, Section 1256 contracts, tax, Tax planning
Posted in Asset Protection Planning, Bankruptcy, Current Events, Financial workout, IRS and state tax collections, Tax Current Events and News, Tax planning
Wednesday, October 13th, 2010 by Moore McLaughlin
The following is the sixth in a series of blog posts providing a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
Legislation ends foreign loopholes and advance EITC.
The Education Jobs and Medicaid Assistance Act, which was signed into law on August 10, 2010, includes provisions closing a number of foreign-tax-credit related loopholes and repealing the advanced earned income tax credit (EITC). Specifically, this legislation tightens the rules on the use of foreign tax credits that multinationals use to lower their U.S. tax bill. In general, these provisions attempt to (1) make foreign tax credits (FTCs) available only when the income to which the FTCs relate is actually taxed by the U.S., (2) prevent artificial inflation of foreign source income, and (3) modify the resourcing rules to limit FTCs. Also, under the new law, starting in 2011, eligible low- and moderate-income workers who qualify for the EITC will no longer be able to elect to receive the credit in advance.
For more information, please contact Partner Moore McLaughlin at 401-421-5115 ext 212 or by e-mail at mmclaughlin@mclaughlinquinn.com.
Tags: asset protection, Asset Protection Planning, assisted living facilities, business tax, Capital gains tax, corporate tax, earned income tax credit, Education Jobs and Medicaid Assistance Act, EITC, elder law, elderlaw, Estate Planning, foreign tax credit, income tax, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, mclaughlin & quinn, Moore McLaughlin, Providence, Rhode Island, state taxes, tax, tax credit, Tax planning
Posted in Bankruptcy, Current Events, Elderlaw/Law For Life, Financial workout, IRS and state tax collections, Tax Current Events and News, Tax planning
Tuesday, October 12th, 2010 by Moore McLaughlin
The following is the fifth in a series of blog posts providing a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
Regulations on election to defer COD income.
For debt discharges in tax years ending after December 31, 2008, a taxpayer may elect to have any cancellation of debt (COD) income from the reacquisition of an applicable debt instrument after December 31, 2008, and before January 1, 2011, included in gross income ratably over five tax years. The IRS has issued two sets of regulations on this rule: one applies to C corporations, the other applies to partnerships and S corporations. The regulations cover many complicated issues that arise with the election. For example, the C corporation regulations cover topics such as acceleration of deferred cancellation of debt (COD) income and deferred original issue discount deductions, and the calculation of earnings and profits as a result of making an election.
For more information, please contact Partner Moore McLaughlin at 401-421-5115 ext 212 or by e-mail at mmclaughlin@mclaughlinquinn.com.
Tags: asset protection, Asset Protection Planning, cancellation of indebtedness income, Capital gains tax, COD, corporate tax, debt cancellation, income tax, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, mclaughlin & quinn, Moore McLaughlin, Providence, Rhode Island, Small Business Act, Small Business Jobs Act, Small Business Jobs Act of 2010, state taxes, tax, Tax planning, Thomas P. Quinn
Posted in Asset Protection Planning, Bankruptcy, Current Events, Financial workout, IRS and state tax collections, Tax Current Events and News, Tax planning
Tuesday, October 12th, 2010 by Moore McLaughlin
The following is the fourth in a series of blog posts providing a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
Guidance explains longer NOL carryback option for businesses.
The IRS has issued guidance in a question and answer (Q&A) format to address a number of specialized issues that have arisen under the new optional longer net operating loss (NOL) carryback period that was provided by the Worker, Homeownership, and Business Assistance Act of 2009 (WHBAA). Under WHBAA, an irrevocable election of a 3, 4, or 5-year carryback period for an applicable NOL for a tax year ending after December 31, 2007, and beginning before January 1, 2010, is generally available for one tax year (except for an eligible small business (ESB) loss). The WHBAA election is an expansion of the increased carryback period election provided by the American Recovery and Reinvestment Act of 2009 (ARRA), which was available only to ESBs, and only for 2008 NOLs. The guidance addresses many questions left unanswered by the statutory provisions. For example, it makes clear that if a taxpayer previously made an ARRA election, it does not have to continue to qualify as an ESB in the year of the WHBAA NOL in order to make a WHBAA election. A taxpayer must qualify as an ESB only for the tax year of the ARRA election. Also, the IRS has revised the Instructions for Form 1139, Corporation Application for Tentative Refund (Rev. August 2010), to explain how businesses make the WHBAA election.
For more information, please contact Partner Moore McLaughlin at 401-421-5115 ext 212 or by e-mail at mmclaughlin@mclaughlinquinn.com.
Tags: ARRA, asset protection, Asset Protection Planning, ESB, income tax, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, mclaughlin & quinn, Moore McLaughlin, net operating loss, Net operating loss carryback, NOL, NOL carryback, Providence, Rhode Island, Small Business Act, Small Business Jobs Act, Small Business Jobs Act of 2010, state taxes, tax, Tax planning, Thomas P. Quinn, WHBAA
Posted in Current Events, Financial workout, IRS and state tax collections, Tax Current Events and News, Tax planning
Tuesday, October 12th, 2010 by Moore McLaughlin
The following is the third in a series of blog posts providing a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
Guidance addresses tax breaks for hiring new employees.
Employers are exempted from paying the employer 6.2% share of Social Security (i.e., OASDI) employment taxes on wages paid in 2010 to newly hired qualified individuals. These are workers who: (1) begin employment with the employer after February 3, 2010 and before January 1, 2011, (2) certify by signed affidavit, under penalties of perjury, that they have not been employed for more than 40 hours during the 60-day period ending on the date the individual begins employment with the qualified employer; (3) do not replace other employees of the employer (unless those employees left voluntarily or for cause), and (4) are not related to the employer under special definitions. The payroll tax relief applies only for wages paid from March 19, 2010 through December 31, 2010.
Employers also may qualify for an up-to-$1,000 tax credit for retaining qualified individuals. The workers must be employed by the employer for a period of not less than 52 consecutive weeks, and their wages for such employment during the last 26 weeks of the period must equal at least 80% of the wages for the first 26 weeks of the period.
The IRS had issued guidance on these tax breaks in the form of frequently asked questions (FAQs). Updated FAQs explain: when an employee is considered to begin work; how the exemption can be claimed for a new hire who replaces a prior employee; that the exemption can be taken for someone who was self-employed for the entire 60-day lookback period; that minors may sign the HIRE Act employee affidavit (Form W-11); and what counts as wages for the retention credit.
For more information, please contact Partner Moore McLaughlin at 401-421-5115 ext 212 or by e-mail at mmclaughlin@mclaughlinquinn.com.
Tags: business tax, Capital gains tax, corporate tax, HIRE Act, income tax, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, mclaughlin & quinn, Moore McLaughlin, Providence, Rhode Island, Small Business Act, Small Business Jobs Act, Small Business Jobs Act of 2010, tax, Tax planning, Thomas P. Quinn
Posted in Current Events, Tax Current Events and News, Tax planning
