President Barack Obama has signed the extension of the First-Time Homebuyer Tax Credit, along with an extension of unemployment benefits. The bill allows those buying a primary residence for the first time to claim 10 percent of its purchase price, up to $8,000 for single taxpayers or married taxpayers filing jointly.
“The duration of the availability of the credit, the allowable income ranges of purchasers and the restriction to first-time buyers have all been liberalized,” said CCH principal federal tax analyst Mark Luscombe.
The credit has been extended in time to cover purchases made before May 1, 2010. However, if a purchaser signs a binding contract by that date, the purchase will still qualify as long as closing takes place before July 1, 2010. Members of the military serving outside the United States for at least 90 days can take advantage of the credit until June 30, 2011.
The income range for eligible purchasers has been expanded so that the credit doesn’t begin to phase out until the modified adjusted gross income of purchasers exceeds $125,000 for single filers, $225,000 for joint filers. The old phase-out thresholds were $75,000 and $125,000, respectively.
The credit has also been expanded to cover purchases of a new principal residence by people who have lived in their current principal residences for at least five out of the last eight years. However, they will only be eligible for a $6,500 maximum credit.
One rule that isn’t changing is that a purchaser can treat the purchase as having occurred on December 31 of the previous year, and claim the credit against that year’s taxes.
Responding to concerns about fraud and misuse of the credit, the legislation also caps the purchase price of eligible homes at $800,000, excludes purchasers under 18 years of age and tightens other requirements.
Earlier this year, the American Recovery and Reinvestment Act allowed businesses to carry back net operating losses (NOLs) from 2008 for three, four or five years rather than the standard two years, but limited this opportunity to businesses with average gross receipts of no more than $15 million. The new law provides a similar election to all U.S. businesses of every size, but with a 50-percent income limit on NOL offsets in the fifth year. The provision applies to NOLs incurred in either 2008 or 2009, but not for both years. However, a small business that elected to carry back 2008 NOLs under the Recovery Act can make the election for an additional year, carrying back NOLs from both 2008 and 2009 for up to five years.
“This is a major expansion of the NOL rules,” Luscombe said. “Like the homebuyer’s credit, it can produce a quick refund from an amended return, which businesses can use for any purpose they wish.”
The bill would also require electronic filing by all return preparers “except those who neither prepare nor reasonably expect to prepare ten or more individual income tax returns in a calendar year.” The measure is effective for returns prepared after Dec. 31, 2010.
It also extends unemployment benefits for 14 weeks. The 27 states with unemployment rates of 8.5 percent or higher would gain an extra six weeks on top of that, but all states would be eligible for the 14 weeks of extended benefits
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
Monday, November 9, 2009
Reduce the chance of getting audited
Except for tax protestors, no one wants to fight with the Internal Revenue Service. That's why there's such a mystique about avoiding an audit. While what-triggers-an-audit theories abound, there are some basic things you can do to reduce your chances of being picked for an audit or at least to make any interactions with the IRS less traumatic.
1. Don't claim flaky deductions
"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." Helvering v. Gregory, 69 F.2d 809, 810 (2d Cir. 1934).
So don't be scared to take deductions and losses you're entitled to, but don't take tax positions you aren't comfortable defending. If you take reasonable tax positions, you'll likely find you won't end up needing to defend them. And if you do face an audit, it will likely be far easier.
There are many old wives tales saying that certain items trigger an audit: home office deductions, passive losses, schedule C (sole proprietorship) activities, etc. You can't predict the trigger (and you can drive yourself crazy trying), but you can adopt the "be reasonable" mantra about every item on your return, including these. So if you don't have a decent claim for a home office, don't claim it. If your money-losing sole proprietorship is really more a fun hobby, treat it as such. (For more on the IRS and hobbies click here.)
2. Check your math.
Make sure you add, subtract and multiply accurately. Check your numbers through each step and do some simple math checks when you finish. This is another reason to use a software program. Remember, even if you use a software program, you don't have to file electronically. You can print out your returns and mail them in. If you do make a math mistake, you are likely to get a math correction notice from the IRS. This isn't an audit. But your goal is to minimize such interaction with the IRS bureaucracy, which isn't known for the best mail handling practices. ("Watchdog Growls At IRS' Audits By Mail.")
3. Account for every Form 1099
The Form 1099 comes in many varieties, including 1099-INT for interest, 1099-DIV for dividends, 1099-G for tax refunds, 1099-R for pensions and 1099-MISC for miscellaneous income. These forms are sent by payers of such funds to both you and the IRS. So regardless of how many 1099s you receive, make sure they all are accounted for on your return. There are also Forms 1098 which lenders send (to you and the IRS) recording how much interest you paid. The IRS matches your return against the 1098s and 1099s. So one way to guarantee an IRS query is to fail to account for something. If a Form 1099 is wrong--say it reports more income than you had--you can explain or deduct it on the return, but you need to first report it. (For more advice on 1099, errors and corrections, click here.)
4. Disclose just enough.
You'd be surprised how many professionals and amateurs alike try to submit too much information. True, if your return is complex, you may need to add explanations or disclosures in footnotes. Be concise, truthful and accurate, but don't provide copies of sales agreements, settlement agreements, bank statements, etc., unless you are later asked to by the IRS.
Disclosures can be made on regular paper or special IRS forms. Tax return preparers distinguish "white paper" disclosures from those on IRS Forms 8275 and 8275-R. A Form 8275 "Disclosure Statement" on plain paper can be used any time you need to disclose something that can't be adequately disclosed on the forms. Form 8275-R "Regulation Disclosure Statement," is for disclosing positions that are contrary to IRS Regulations or other authority. You shouldn't be filing a Form 8275-R--or taking a tax return position that would require it--without professional help.
5. Assemble your return correctly
Follow the IRS instructions for assembling your return. Usually that means the return itself, followed by schedules in alphabetical order, ancillary forms in numerical order, and plain paper statements and footnotes at the end. Attach Forms W-2 where specified, but don't attach forms that are not required such as 1099s.
6. If you receive a small bill, pay it.
If you take reasonable tax positions, and complete your return accurately, checking your math, why should you pay a bill if the IRS sends you one? The answer is more practical than principled. It usually doesn't pay to fight with the IRS, so if the tax bill is small, don't get into the system and risk bigger problems for a few dollars. Just pay it and move on. Of course, what is small to one person is a major bill to someone else. There's no absolute standard here. But at least consider the possibility of paying a tax bill unless you are sure you're better off contesting it.
7. Don't amend without thinking.
The flip side of paying a small bill is not amending a tax return just to get a small refund. Amended returns are reviewed much more regularly than initial returns. So if you forgot a deduction or otherwise think you can get a small amount back by amending, think twice before amending your return. Consider whether you might have bigger problems if other matters on your return, unrelated to the amendment, are reviewed.
8. Don't ask for your money back.
If you are entitled to a refund, consider applying it to your next year's tax payments, rather than asking for the refund in cash. You'll have a lower profile if you file a return applying a whopping refund to estimated tax payments for the current or future years. This logic applies to both initial returns and to amended ones.
9. No matter how careful you are, there's no way to guarantee you'll never have a tax controversy. Sometimes your number just comes up. While audit rates for most types of tax returns are now at historic lows, IRS enforcement efforts are on the uptick, particularly when it comes to upper income taxpayers.
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
1. Don't claim flaky deductions
"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." Helvering v. Gregory, 69 F.2d 809, 810 (2d Cir. 1934).
So don't be scared to take deductions and losses you're entitled to, but don't take tax positions you aren't comfortable defending. If you take reasonable tax positions, you'll likely find you won't end up needing to defend them. And if you do face an audit, it will likely be far easier.
There are many old wives tales saying that certain items trigger an audit: home office deductions, passive losses, schedule C (sole proprietorship) activities, etc. You can't predict the trigger (and you can drive yourself crazy trying), but you can adopt the "be reasonable" mantra about every item on your return, including these. So if you don't have a decent claim for a home office, don't claim it. If your money-losing sole proprietorship is really more a fun hobby, treat it as such. (For more on the IRS and hobbies click here.)
2. Check your math.
Make sure you add, subtract and multiply accurately. Check your numbers through each step and do some simple math checks when you finish. This is another reason to use a software program. Remember, even if you use a software program, you don't have to file electronically. You can print out your returns and mail them in. If you do make a math mistake, you are likely to get a math correction notice from the IRS. This isn't an audit. But your goal is to minimize such interaction with the IRS bureaucracy, which isn't known for the best mail handling practices. ("Watchdog Growls At IRS' Audits By Mail.")
3. Account for every Form 1099
The Form 1099 comes in many varieties, including 1099-INT for interest, 1099-DIV for dividends, 1099-G for tax refunds, 1099-R for pensions and 1099-MISC for miscellaneous income. These forms are sent by payers of such funds to both you and the IRS. So regardless of how many 1099s you receive, make sure they all are accounted for on your return. There are also Forms 1098 which lenders send (to you and the IRS) recording how much interest you paid. The IRS matches your return against the 1098s and 1099s. So one way to guarantee an IRS query is to fail to account for something. If a Form 1099 is wrong--say it reports more income than you had--you can explain or deduct it on the return, but you need to first report it. (For more advice on 1099, errors and corrections, click here.)
4. Disclose just enough.
You'd be surprised how many professionals and amateurs alike try to submit too much information. True, if your return is complex, you may need to add explanations or disclosures in footnotes. Be concise, truthful and accurate, but don't provide copies of sales agreements, settlement agreements, bank statements, etc., unless you are later asked to by the IRS.
Disclosures can be made on regular paper or special IRS forms. Tax return preparers distinguish "white paper" disclosures from those on IRS Forms 8275 and 8275-R. A Form 8275 "Disclosure Statement" on plain paper can be used any time you need to disclose something that can't be adequately disclosed on the forms. Form 8275-R "Regulation Disclosure Statement," is for disclosing positions that are contrary to IRS Regulations or other authority. You shouldn't be filing a Form 8275-R--or taking a tax return position that would require it--without professional help.
5. Assemble your return correctly
Follow the IRS instructions for assembling your return. Usually that means the return itself, followed by schedules in alphabetical order, ancillary forms in numerical order, and plain paper statements and footnotes at the end. Attach Forms W-2 where specified, but don't attach forms that are not required such as 1099s.
6. If you receive a small bill, pay it.
If you take reasonable tax positions, and complete your return accurately, checking your math, why should you pay a bill if the IRS sends you one? The answer is more practical than principled. It usually doesn't pay to fight with the IRS, so if the tax bill is small, don't get into the system and risk bigger problems for a few dollars. Just pay it and move on. Of course, what is small to one person is a major bill to someone else. There's no absolute standard here. But at least consider the possibility of paying a tax bill unless you are sure you're better off contesting it.
7. Don't amend without thinking.
The flip side of paying a small bill is not amending a tax return just to get a small refund. Amended returns are reviewed much more regularly than initial returns. So if you forgot a deduction or otherwise think you can get a small amount back by amending, think twice before amending your return. Consider whether you might have bigger problems if other matters on your return, unrelated to the amendment, are reviewed.
8. Don't ask for your money back.
If you are entitled to a refund, consider applying it to your next year's tax payments, rather than asking for the refund in cash. You'll have a lower profile if you file a return applying a whopping refund to estimated tax payments for the current or future years. This logic applies to both initial returns and to amended ones.
9. No matter how careful you are, there's no way to guarantee you'll never have a tax controversy. Sometimes your number just comes up. While audit rates for most types of tax returns are now at historic lows, IRS enforcement efforts are on the uptick, particularly when it comes to upper income taxpayers.
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
Friday, November 6, 2009
$123.5 million in refund checks returned to the IRS so far in 2009
The Internal Revenue Service is looking for taxpayers who are due to receive a combined $123.5 million from 107,831 refund checks that were returned to the IRS by the U.S. Postal Service due to mailing address errors.
“We are eager to get this money into the hands of taxpayers, so don’t delay if you think you are missing a refund,” said IRS Commissioner Doug Shulman in a statement. “The sooner you update your address information, the quicker you can get your refund.”
All a taxpayer has to do is update his or her address once. The IRS will then send out all checks due. Undeliverable refund checks average $1,148 this year, compared to $990 last year. Some taxpayers are due more than one check.
Average undeliverable refunds rose by 16 percent this year, which was in line with the 16 percent rise in average refunds for all tax returns in the latest filing season. Several changes in the tax laws likely played a role in boosting refunds, including the First-Time Homebuyer’s Credit and the Recovery Rebate Credit, among others.
If a refund check is returned to the IRS as undeliverable, taxpayers can generally update their addresses with the “Where’s My Refund?” tool on IRS.gov. A telephone version of “Where’s My Refund?” is available at (800) 829-1954
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
“We are eager to get this money into the hands of taxpayers, so don’t delay if you think you are missing a refund,” said IRS Commissioner Doug Shulman in a statement. “The sooner you update your address information, the quicker you can get your refund.”
All a taxpayer has to do is update his or her address once. The IRS will then send out all checks due. Undeliverable refund checks average $1,148 this year, compared to $990 last year. Some taxpayers are due more than one check.
Average undeliverable refunds rose by 16 percent this year, which was in line with the 16 percent rise in average refunds for all tax returns in the latest filing season. Several changes in the tax laws likely played a role in boosting refunds, including the First-Time Homebuyer’s Credit and the Recovery Rebate Credit, among others.
If a refund check is returned to the IRS as undeliverable, taxpayers can generally update their addresses with the “Where’s My Refund?” tool on IRS.gov. A telephone version of “Where’s My Refund?” is available at (800) 829-1954
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
Thursday, November 5, 2009
Health Coverage Tax Credit
The Treasury Inspector General for Tax Administration (TIGTA) today publicly released its audit of the Internal Revenue Service's processing of the Health Coverage Tax Credit (HCTC). The HCTC is intended to make health coverage more affordable for certain groups of people who might otherwise not be insured.
TIGTA found that 72 percent of the tax year 2006 individual tax returns that it sampled did not have the necessary documentation attached for purposes of claiming the HCTC. TIGTA also identified 1,260 individuals who appear to have erroneously claimed about $1.8 million in HCTCs on their 2007 returns.
TIGTA concluded that improvements are needed to ensure that individuals claiming the HCTC on their tax returns accurately compute the credit. The IRS also should implement a process to identify inaccurate HCTC claims at the time a tax return is filed to prevent erroneous refunds from being issued.
TIGTA recommended that the IRS develop processes to: 1) ensure that taxpayers who claim the HCTC on their tax returns provide the required documentation to support their claims; and 2) identify erroneous HCTC claims at the time tax returns are initially processed.
IRS management agreed with TIGTA's first recommendation and further agreed with the premise of the second recommendation but proposed an alternative corrective action. Specifically, the IRS will identify potentially erroneous claims during processing, program additional error codes, inform taxpayers of their appeal rights, and request that taxpayers provide documentation to prove their claims. TIGTA agreed that the IRS's proposed alternative corrective action will satisfy the intent of its original recommendation.
"The IRS's identification of erroneous Health Coverage Tax Credit claims could put more than $9 million of funds to better use over 5 years," commented J. Russell George, the Treasury Inspector General for Tax Administration. "Developing such a process will improve the effectiveness of the HCTC program as it continues to expand," added Inspector General George.
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
TIGTA found that 72 percent of the tax year 2006 individual tax returns that it sampled did not have the necessary documentation attached for purposes of claiming the HCTC. TIGTA also identified 1,260 individuals who appear to have erroneously claimed about $1.8 million in HCTCs on their 2007 returns.
TIGTA concluded that improvements are needed to ensure that individuals claiming the HCTC on their tax returns accurately compute the credit. The IRS also should implement a process to identify inaccurate HCTC claims at the time a tax return is filed to prevent erroneous refunds from being issued.
TIGTA recommended that the IRS develop processes to: 1) ensure that taxpayers who claim the HCTC on their tax returns provide the required documentation to support their claims; and 2) identify erroneous HCTC claims at the time tax returns are initially processed.
IRS management agreed with TIGTA's first recommendation and further agreed with the premise of the second recommendation but proposed an alternative corrective action. Specifically, the IRS will identify potentially erroneous claims during processing, program additional error codes, inform taxpayers of their appeal rights, and request that taxpayers provide documentation to prove their claims. TIGTA agreed that the IRS's proposed alternative corrective action will satisfy the intent of its original recommendation.
"The IRS's identification of erroneous Health Coverage Tax Credit claims could put more than $9 million of funds to better use over 5 years," commented J. Russell George, the Treasury Inspector General for Tax Administration. "Developing such a process will improve the effectiveness of the HCTC program as it continues to expand," added Inspector General George.
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
Wednesday, November 4, 2009
Identity Theft when requesting IRS documents
According to a Treasury Inspector General Tax Administration report: 43% of Taxpayers Risk Identity Theft When IRS Makes Copies of Their Tax Returns
The Treasury Inspector General for Tax Administration today released Taxpayer Information Is at Risk When Copies of Tax Returns and Transcripts Are Ordered (2009-40-140):
TIGTA today publicly released its audit report of the IRS's processing of taxpayer requests for copies of tax returns and transcripts.
TIGTA's audit concluded that the IRS needs to strengthen its controls over taxpayer requests for copies of tax returns and transcripts in order to prevent unauthorized disclosure of taxpayer information. Tax transcripts provide most of the information contained in a tax return. Taxpayers request copies of their tax returns or transcripts for many reasons -- to obtain a loan to start a business, to buy a home, to attend college or to verify income for child support. In addition, third parties such as financial institutions, insurance companies or universities could also submit requests for tax returns or transcripts to the IRS on behalf of taxpayers. The IRS currently charges $57 for copies of tax returns, whether they were originally submitted on paper or electronically filed (e-filed).
According to the report, 43% of taxpayer requests for copies of tax returns or transcripts were processed incorrectly or not in accordance with IRS guidelines.
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
The Treasury Inspector General for Tax Administration today released Taxpayer Information Is at Risk When Copies of Tax Returns and Transcripts Are Ordered (2009-40-140):
TIGTA today publicly released its audit report of the IRS's processing of taxpayer requests for copies of tax returns and transcripts.
TIGTA's audit concluded that the IRS needs to strengthen its controls over taxpayer requests for copies of tax returns and transcripts in order to prevent unauthorized disclosure of taxpayer information. Tax transcripts provide most of the information contained in a tax return. Taxpayers request copies of their tax returns or transcripts for many reasons -- to obtain a loan to start a business, to buy a home, to attend college or to verify income for child support. In addition, third parties such as financial institutions, insurance companies or universities could also submit requests for tax returns or transcripts to the IRS on behalf of taxpayers. The IRS currently charges $57 for copies of tax returns, whether they were originally submitted on paper or electronically filed (e-filed).
According to the report, 43% of taxpayer requests for copies of tax returns or transcripts were processed incorrectly or not in accordance with IRS guidelines.
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
Tuesday, November 3, 2009
Nonbusiness Energy Property credit
Taxpayers who take energy saving steps this year may get bigger tax savings next year. The Nonbusiness Energy Property Credit, a tax credit for making energy efficient improvements to homes has been increased as part of the American Recovery and Reinvestment Act of 2009.
Seven things the IRS wants you to know about the Nonbusiness Energy Property Credit:
Seven things the IRS wants you to know about the Nonbusiness Energy Property Credit:
- The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 claimed for 2009 and 2010 combined.
- The credit applies to improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.
- To qualify as "energy efficient" for purposes of this tax credit, products generally must meet higher standards than the standards for the credit that was available in 2007.
- Manufacturers must certify that their products meet new standards and they must provide a written statement to the taxpayer such as with the packaging of the product or in a printable format on the manufacturers' Website.
- Qualifying improvements must be placed into service after December 31, 2008, and before January 1, 2011.
- The improvements must be made to the taxpayer's principal residence located in the United States.
- To claim the credit, attach Form 5695, Residential Energy Credits to either the 2009 or 2010 tax return. Taxpayers must claim the credit on the tax return for the year that the improvements are made.
Homeowners who have been considering some energy efficient home improvements may find these tax credits will get them bigger tax savings next year.
For more information on this and other key tax provisions of the Recovery Act, visit
Energy Incentives for Individuals in the American Recovery and Reinvestment Act
IR-2009-98, Expanded Recovery Act Tax Credits Help Homeowners Winterize their Homes, Save Energy; Check Tax Credit Certification Before You Buy, IRS Advises
YouTube Video: Home Energy Credits: English Spanish ASL
Audio File for Podcast: Home Energy Credits: English Spanish
Personal exemption change for 2010
For the year 2010, the personal exemption amount is $3,650 for yourself, your spouse and each dependent you are eligible to claim. This amount is unchanged from the 2009 amount. However there's one significant change for 2010. Unlike previous years, personal exemptions will not be reduced as a person's income increases
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
Monday, November 2, 2009
IRS Offers Guidance on Barter Reporting
In its simplest form, bartering is the trading of one product or service for another, usually with no exchange of cash. With the economy in its present state, the IRS has seen an increase in bartering exchanges. As a result, the IRS created a web page with information on the reporting requirements and other related tax consequences of these arrangements. Full details are on the IRS website.
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
Treausry Inspector General Report - taxpayer advocacy service
The Treasury Inspector General for Tax Administration (TIGTA) found that the Taxpayer Advocacy Service (TAS), which provides staff that perform administrative support and technical-related duties for the Panel, needs to ensure effective use of its resources by providing a balance between the cost of administration and staff used to support the Panel, the large size of the Panel (currently composed of approximately 100 members), and the Panel's ability to help improve service to taxpayers. In addition, the National Taxpayer Advocate (NTA) should ensure that TAS spends its resources efficiently and that the Panel is at an optimal size.
TIGTA recommended that the NTA take the following actions: revise the staff time tracking system to evaluate whether resources are used efficiently; reevaluate the Panel's structure and size to ensure a balance between TAS staff and budgetary resources; and reevaluate the roles of TAS staff to ensure that the Panel functions independently. Also, TIGTA recommended that the NTA: revise the charter to reflect the roles of Panel members; validate data in the Panel database and correct erroneous entries; follow up with the IRS on the recommendations the Panel provided that are planned for future implementation; establish guidance for conducting tax compliance checks of Panel members; and verify that licensed tax practitioners serving on the Panel are in good standing with the IRS.
In response, the NTA agreed in full with seven recommendations and in part with one recommendation. The NTA did not fully agree to reevaluate the Panel's size to determine the optimal structure of the Panel's membership, indicating that there is no compelling data that the current structure is flawed, and that it would not be cost-effective to make any changes. In addition, the NTA noted that any changes to the Panel require approval by the Secretary of the Treasury and the IRS Commissioner. TIGTA disagreed with NTA's assertions, saying it is important to evaluate the program to identify any potential changes that could reduce costs and improve efficiency, especially because no new studies have been performed since the Panel was established in 2002.
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
TIGTA recommended that the NTA take the following actions: revise the staff time tracking system to evaluate whether resources are used efficiently; reevaluate the Panel's structure and size to ensure a balance between TAS staff and budgetary resources; and reevaluate the roles of TAS staff to ensure that the Panel functions independently. Also, TIGTA recommended that the NTA: revise the charter to reflect the roles of Panel members; validate data in the Panel database and correct erroneous entries; follow up with the IRS on the recommendations the Panel provided that are planned for future implementation; establish guidance for conducting tax compliance checks of Panel members; and verify that licensed tax practitioners serving on the Panel are in good standing with the IRS.
In response, the NTA agreed in full with seven recommendations and in part with one recommendation. The NTA did not fully agree to reevaluate the Panel's size to determine the optimal structure of the Panel's membership, indicating that there is no compelling data that the current structure is flawed, and that it would not be cost-effective to make any changes. In addition, the NTA noted that any changes to the Panel require approval by the Secretary of the Treasury and the IRS Commissioner. TIGTA disagreed with NTA's assertions, saying it is important to evaluate the program to identify any potential changes that could reduce costs and improve efficiency, especially because no new studies have been performed since the Panel was established in 2002.
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
Friday, October 30, 2009
941 vs. 944 filing - Revenue Proceedure
Revenue Procedure In Rev. Proc. 2009-51, IRS sets forth procedures for employers to opt in to filing Form 944 (Employer's Annual Federal Tax Return) and for employers previously notified to file Form 944 to opt out and file Forms 941 (Employer's Quarterly Federal Tax Return) instead.
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
John R. Dundon, EA - www.1040.com/jd - Taxpayer Advocate - Enrolled with the United States Department of Treasury to Practice before the IRS - Under contract with the United States Department of Treasury as a Certified ITIN Acceptance Agent- 720-234-1177
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