In 2010, the IRS SB/SE Division expanded its enforcement capabilities by requesting the electronic accounting software files of small businesses under examination.
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IRS Practice & Procedure
IRS Launches New Round of Preparer Office Visits
The IRS has sent letters to tax return preparers whom the IRS has identified as at high risk of not complying with their responsibilities as return preparers. The IRS will follow up with office visits to some of these preparers who appear to have serious compliance issues.
Competency Testing for Registered Tax Return Preparers Set to Start
As part of its ongoing initiative to regulate previously unenrolled tax return preparers, the IRS announced on November 22 that competency testing for registered tax return preparers will start next week.
Shulman Announces Delay in Fingerprinting Requirement
The IRS will delay and reconsider its fingerprinting requirement for tax return preparers, IRS Commissioner Doug Shulman told the AICPA National Tax Conference on November 8.
The Codified Economic Substance Doctrine and Related Penalties
The IRS issued a directive providing details on a multistep process that examiners must follow before the ultimate application of the economic substance doctrine in an examination. It also provides guidance on related penalties that might be imposed upon the application of the doctrine.
Employers Immune from Suit for Complying with IRS Levy
This item addresses an employer’s rights and responsibilities when required to comply with an IRS wage levy against an employee.
IRS Revamps Lien Procedures to Help Struggling Taxpayers
The IRS has revised its tax lien filing practices and provisions.
Offers in Compromise and the Consideration of Dissipated Assets
This item reviews the qualification requirements for an offer in compromise, a form of administrative relief offered to financially distressed taxpayers with outstanding tax liabilities who are unable to satisfy their obligations to the government.
Final Regs. Issued on Reportable Transaction Penalties
The IRS issued final regulations governing the Sec. 6707A penalty regime for failure to report reportable transactions, to reflect changes made by the Small Business Jobs Act of 2010.
Conflicts of Interest: IRS Rules Differ from AICPA Professional Standards
Circular 230 forbids federal tax practitioners from having conflicts of interest, defined as representation of one client that is directly adverse to that of another client, or representing a client in circumstances creating a significant risk that the representation of one or more clients will be materially limited by the practitioner’s responsibilities to another client, a former client, or a third person or by a personal interest of the practitioner.
Patent Reform Act Stops New Tax Strategy Patents
On September 16, President Barack Obama signed into law the Leahy-Smith America Invents Act, which reforms the U.S. patent system and stops the granting of patents for tax strategies.
Accounting Software Examination Guidance Issued, IRS Meets with AICPA
The IRS Small Business/Self-Employed Division has issued guidance for its field examiners on when to request backup files of taxpayers’ accounting software during an examination, what the limits are on reviewing those electronic files, and how examiners must safeguard those records.
IRS Gives Penalty Relief, Delays Backup Withholding for Payment Card Reporting
The IRS postponed for a year the effective date of the backup withholding requirement for payments in settlement of payment card and third-party network transactions.
AICPA Expresses Concerns and Requests Review of Procedure Regarding Release of PTIN Holder Information
The AICPA’s Tax team has had, and continues to have, numerous conversations with IRS regarding its recent release of PTIN holder information.
President Signs Bill Increasing EITC Due Diligence Penalty
President Barack Obama signed into law a bill that increases from $100 to $500 the penalty for failure by preparers to exercise due diligence with respect to the EITC.
Inflation Adjustments Made to Many Tax Items for 2012
The IRS released its annual revenue procedure making inflation adjustments to the income tax tables and many tax credits and other items for tax years beginning in 2012.
PTIN System Opens for 2012 Renewals
The IRS on October 20 announced that it has opened its preparer tax identification number (PTIN) registration system to accept renewals for the 2012 filing season
Estate Tax Protective Claim Procedures Detailed
The IRS issued guidance on filing a protective claim for refund of estate tax and notifying the IRS that the claim is ready for consideration.
Trade Bills Pass Congress with Tax Provisions
The EITC due diligence penalty will increase to $500 under a bill passed by Congress Oct. 12.
TIGTA Finds Problems with IRS Purchase Cards, Network Security
TIGTA released a pair of reports finding problems with the security of the IRS Windows environment and a lack of control over IRS purchase cards.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
