July IRS Updates

IRS Stakeholder Liaison will hold a Practitioner Liaison Meeting - PLM on Thursday, September 23, 2010 from 9:00 am to Noon in the Jackson Federal Building in Seattle.  A PLM is an opportunity for practitioners to meet with IRS officials from Exam, Collection, Appeals, TAS etc.  The goal of the PLM is to foster a better understanding between the IRS and the practitioner community.  It is your chance to ask questions of and to hear from IRS representatives.   If you plan to attend, contact Gregory A. Thompson, Senior Stakeholder Liaison by e-mail at gregory.a.thompson@irs.gov, or by phone at (206) 220-5309.

Hiring Incentives to Restore Employment (HIRE) Act Webinar             

This event will be archived for later viewing, approximately two weeks after the date of the event, July 8, on the new IRS Video Portal.

Learn

• The HIRE Act payroll tax exemption and retention income tax credit for employers who hire previously unemployed workers.
• Who qualifies as an eligible individual for each benefit.
• What businesses may claim each benefit.
• How business can claim those HIRE benefits.

Additional Information
Visit www.irs.gov and search Webinars for information on other programs available. If you experience difficulty viewing the event, please use the e-mail option on the event page or call (866) 956-4770.

 

IRS Updates and News Releases

IRC Section 179 Increase Extended
A qualifying taxpayer can choose to treat the cost of certain property as an expense instead of depreciating it over several years.  Recent legislation extends the dates for expensing depreciable business assets.

Information Return Changes
IRS Commissioner Doug Shulman discussed information reporting at a program hosted by the American Payroll Association. While discussing a change in the law that requires reporting on payments made from businesses to corporations, the Commissioner explained that the IRS would use its administrative authority to exempt from the reporting requirements transactions conducted between businesses and corporations when using payment cards. 

New Procedure to Obtain Validation of SSN for Backup - Withholding
Announcement 2010-41 announces a change in procedures for individual payees to follow to obtain validation of social security numbers (“SSNs”) from the Social Security Administration (“SSA”) to prevent or stop backup withholding under section 3406 of the Internal Revenue Code following receipt of a second “B notice” from a payor. 

Income from Fishing
The Fishing Tax Center provides links to the most common topics in the fishing industry including recordkeeping guidelines for fishermen.

Applying for an EIN Requires Identification of Responsible Party
All applications for an Employer Identification Number must clearly identify the applicant’s true owner.  New Headliner Volume 297 provides a detailed explanation of who is considered a responsible party when applying for an EIN.

IRS Issues Regulations on Tax on Tanning Services Effective July 1
The IRS announced the release of regulations outlining the administration of the 10-percent excise tax imposed on indoor tanning services by the Patient Protection and Affordable Care Act.  Effective July 1, providers of indoor tanning services are required to collect the tax at the time the purchaser pays for tanning services. The provider then pays over these amounts to the government, quarterly, along with Form 720, Quarterly Federal Excise Tax Return.  Written and electronic comments on the regulations must be received by September 13, 2010.

TE/GE Advisory Committee Issues Report of Recommendations
The Advisory Committee on Tax Exempt and Government Entities (ACT) released its ninth report at its public meeting on June 9, 2010.  The report includes Getting It Right -An Online Guide to Setting Executive Compensation for Charities which describes a prototype webinar on compensation developed by the EO members of the ACT.

Prepared Remarks of Commissioner of Internal Revenue Douglas H. Shulman before the OECD/BIAC
On June 8, 2010, Commissioner Doug Shulman discussed international tax administration, offshore tax compliance and information exchanges.

IRS ETAAC Presents Annual Report to Congress
The Electronic Tax Administration Advisory Committee (ETAAC) this month presented its 2010 Annual Report (PDF) to Congress. The ETAAC provides feedback on the development and implementation of the Internal Revenue Service’s electronic tax administration strategy.   The report includes recommendations to further expand the use of electronic filing. The report recommends the IRS use a three-year phase-in approach to successfully implement the tax preparer requirement to electronically file individual tax returns. The report also calls for continued funding and completion of the modernization of IRS systems as well as collaboration between the IRS and industry regarding tax software standards and the implementation of the return preparer regulations.

Employee Plans News - Summer 2010 Edition
Our Employee Plans News is now in Web format. Read the Summer edition of the Employee Plans News for articles on:

• The Advisory Committee on TE/GE’s June 9th Report and New Members
• The Foreign Distributions Project Compliance Check
• The 401(k) Questionnaire Follow-Up
• Determination Application News
• Final Regulations on Investment Diversification Requirements  

IRS Provides Tax Help, Guidance to Gulf Oil Spill Victims
The Internal Revenue Service is providing guidance to individuals and businesses affected by the oil spill in the Gulf of Mexico and has announced a number of new efforts to help affected taxpayers, including a special Gulf Coast Assistance Day to be held at four locations on July 17.

Technical Guidance (PDFs)

Notice 2010-39 solicits comments regarding the application of certain requirements imposed by new section 501(r), added to the Internal Revenue Code (Code) by section 9007(a) of the Patient Protection and Affordable Care Act (Affordable Care Act), enacted March 23, 2010, Pub. L. No. 111-148.

Notice 2010-42 announces the phase-out of the new qualified hybrid motor vehicle credit and the new advanced lean burn technology motor vehicle credit for passenger automobiles and light trucks manufactured by Volkswagen Group of America that are purchased for use or lease in the United States beginning on July 1, 2010. 

Revenue Procedure 2010-22 provides the 2011 inflation adjusted amounts for health savings accounts under § 223 of the Code.   

Revenue Procedure 2010-23 provides bond issuers with the United States median gross income figure, one of the figures required for determining high housing cost areas under § 143(f)(5)(D), and informs them of the availability from HUD of the state and area income figures required to be used for this purpose.

Revenue Procedure 2010-24 modifies the inflation adjusted amounts in Revenue Procedure 2009-50 that apply to taxpayers who elect to expense certain property under § 179 to reflect changes enacted as part of the HIRE Act.

REG-106750-10 contains proposed regulations relating to the modification of debt instruments.  The regulations clarify the extent to which the deterioration in the financial condition of the issuer is taken into account to determine whether a modified debt instrument will be recharacterized as an instrument or property right that is not debt.  The regulations provide needed guidance to issuers and holders of debt instruments.  This document also provides notice of a public hearing on these proposed regulations.

Notice 2010-47 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code.  It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2).  In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007. 

TD 9485 contains final regulations under section 704(c) of the Internal Revenue Code (Code) providing that the section 704(c) anti-abuse rule takes into account the tax liabilities of both the partners in a partnership and certain direct and indirect owners of such partners.  These final regulations further provide that a section 704(c) allocation method cannot be used to achieve tax results inconsistent with the intent of subchapter K of the Code.  The final regulations affect partnerships and their partners. 

Notice 2010-49 invites public comments relating to possible modifications to the regulations under § 382 regarding the treatment of shareholders who are not 5-percent shareholders.
 
Notice 2010-50 provides guidance under IRC 382 for measuring owner shifts of loss corporations where there are fluctuations in values among different classes of stock and requests comments.

Revenue Ruling 2010-16 provides that for purposes of determining the new markets tax credit allowable under § 45D, the amount of the qualified equity investment made by an LLC classified as a partnership includes cash from a recourse loan to the LLC that the LLC invests as equity in a qualified community development entity.  

TD 9488 contains final regulations under section 6404(g)(2)(E) of the Internal Revenue Code on the suspension of any interest, penalty, addition to tax, or additional amount with respect to listed transactions or undisclosed reportable transactions.  The final regulations reflect changes to the law made by the Internal Revenue Service Restructuring and Reform Act of 1998, the American Jobs Creation Act of 2004, the Gulf Opportunity Zone Act of 2005, the Tax Relief and Health Care Act of 2006, and the Small Business and Work Opportunity Tax Act of 2007. The regulations provide guidance to individual taxpayers who have participated in listed transactions or undisclosed reportable transactions.  

TD 9487 contains final regulations that apply to loss corporations that have undergone an ownership change within the meaning of section 382.  These regulations provide guidance regarding the treatment of prepaid income under the built-in gain provisions of section 382(h).    

Notice 2010-46 impacts on the process for withholding and reporting by foreign intermediaries with respect to their payment and receipt of substitute dividend payments on underlying U.S. Securities.  Among its' provisions, Notice 2010-46 revokes Notice 97-66, 1997-2 C.B. 328, effective for substitute dividend payments made after September 13, 2010.  Following such date, the approach described in Notice 97-66 for addressing cascading withholding on U.S. source substitute dividends is replaced with revised documentation, withholding and reporting procedures and requirements described in Section II (Proposed Withholding and Reporting Framework) and Section III (Transition Rule) of the notice.

Source: IRS