2013-01-25TaxEalert: Court Strikes Down RTRP program, New Sec. 7216 Guidance, IRS 2013 Inflation Adjustments, New Simplified Home Office Rules, Proposed Regs on Health Insurance "Play or Pay" Rules, ATRA Changes to Monthly Transit Benefits and more.. 


    AICPA
     

    Jan. 29 webinar Critical Payroll and Tax Legislation for 2013: New Year, New Challenges for Every Small Business from 2-3:30 pm ET

           
      AICPA
    January 25, 2013
    Tax Section News
     
      Exclusive Tax Section member communications  
     
    In This Issue
        TOP NEWS  
    U.S. District Court Strikes Down IRS Preparer Regulation Program
    New Sec. 7216 Guidance
    IRS Releases Annual Inflation Adjustments for 2013
    Charitable Contributions Made From IRAs in January 2013 to Still Count for 2012 Returns
    New Simplified Home Office Deduction Option
    Proposed Regulations on Health Insurance “Play or Pay” Rules Issued
    The American Taxpayer Relief Act (ATRA) Retroactively Increases the Monthly Transit Benefit Limit to $240
    Long Awaited FATCA Final Regulations Issued
    AICPA Requests Additional IRS Guidance on ITIN Procedures
    IRS Released Guidance on Employee Plans Compliance Resolution System
    Other Tax News from the Journal of Accountancy
      TOOLS & RESOURCES
    Free Client Letters to Update Your Clients on Post-Fiscal Cliff Law
    Interactive Tax Checklists: Updates Planned to Incorporate ATRA Changes
      UPCOMING EVENTS
    AICPA Family Law Conference
    The NEW Doing Business in China International Business Conference
    Advanced Income Tax Strategies for the Mass Affluent: Post-Election Update 2013
    Critical Payroll and Tax Legislation for 2013: New Year, New Challenges for Every Small Business
    Post-Election Update 2013: Advanced Tax Strategies for High-Net-Worth
    TAX POWER HOUR

    Coming Up on the Tax Power Hour:
    Avoiding Staff Burnout
    Managing Extensions
    Contact us

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    Upcoming Events
     
    Advanced Income Tax Strategies for the Mass Affluent: Post-Election Update 2013
    Jan. 28, 2013
    12:30pm – 2:15pm ET
    Registration Options:
    - Discounted CPE (1 hour)
     
    Critical Payroll and Tax Legislation for 2013: New Year, New Challenges for Every Small Business
    Jan. 29, 2013
    2:00pm – 3:30pm ET
    Registration Options:
     - Discounted CPE (2 hours)
     
    Post-Election Update 2013: Advanced Tax Strategies for High-Net-Worth
    Feb. 4, 2013
    12:30pm – 1:45pm ET
    Registration Options:
     - Discounted CPE (1 hour)
     
    For a Full List of Upcoming Tax Section Webinars, Go to the Tax CPE & Events page on the AICPA’s Tax website.
       
    Next Tax Power Hour
     


    February on The Tax Power Hour:

    Avoiding Burnout: Tips to Motivate Staff
    Feb. 21 from 1pm - 2pm ET
    Free, No CPE Available

    This month, we turn our attention to your staff.  Busy season is… well, busy. Staff work long hours and often take multi-tasking to a whole new level. Pressures mount as deadlines approach and management is busy making sure the firm is running smoothly and clients are happy. Are you doing anything to keep your staff happy? On Feb. 21, we will discuss strategies to keep your team focused, motivated, energized and engaged. With last-minute legislation causing possible delays in IRS return processing schedules, this year may be more taxing than usual. How do you engage them day to day? We’ll hear how some practitioners have struggled with this challenge and what they are doing to address is.

     
     
     
    Top News
       
      U.S. District Court Strikes Down IRS Preparer Regulation Program

    On January 18, the United States District Court struck down the IRS registered tax return preparer program and enjoined it from enforcing the regulations (Loving, No. 12-385 (D.D.C. 1/18/13)). The IRS immediately issued a statement saying they "have confidence in the scope of its authority to administer the program." Indeed, on January 23, the IRS filed a motion to suspend the District Court’s injunction pending appeal which the Service intends to file within 30 days.

    Simply stated, the District Court indicated in its ruling that Congress never contemplated that the 1884 law that created rules for practice before Treasury, Circular 230, would define “practice” to cover tax return preparation. However, the pre-existing Circular 230 rules, beyond the new tax return preparation rules, continue to apply to CPAs, attorneys, & Enrolled Agents.

    Because the Court’s injunction was effective immediately, the IRS closed down the PTIN registration system. The unavailability of the PTIN system creates an administrative challenge for CPAs who may still need to renew their PTIN or obtain one for the first time – actions still required by the Internal Revenue Code. The AICPA has contacted IRS and they are aware of this issue and are working to resolve it. We continue to monitor the situation and interact with the IRS on developments, and will post updates on our website as they become available.

     
      New Sec. 7216 Guidance

    As accounting firms continue preparations for the 2013 tax filing season, CPAs should closely review the final regulations and new revenue procedure recently released by the IRS under Internal Revenue Code section 7216.  This Code section involves the disclosure or use of tax return information by a tax return preparer.  Some aspects to be aware of include:

    Accounting Services. The preamble to the final regulations (TD 9608) suggests that the solicitation of a current tax client about new accounting services (including payroll return preparation) may necessitate obtaining the written consent of the client.
    Rev. Proc. 2013-14 provides revised language that tax return preparers must include in written consent forms provided to clients regarding disclosures or use of tax return information.
    Electronic Signatures. Rev. Proc. section 6 addresses the procedures for taxpayers furnishing the tax return preparer with an electronic signature verifying that the taxpayer consented to the disclosure or use of the tax return information.
    Consent Form Language. Rev. Proc. section 7 provides examples of the modified language for consent forms to be provided to clients filing returns in the Form 1040 series.
    Effective Date. Consents obtained on or after January 1 must contain the modified consent form language highlighted in the Rev. Proc.
     
      IRS Releases Annual Inflation Adjustments for 2013
     

    On January 11 in IRS Notice IR 2013-4, the IRS announced the annual inflation adjustments for tax year 2013. The tax rate schedules, with details on all the new tax brackets for 2013 including the new 39.6% bracket, as well as the Alternative Minimum Tax exemption amounts and other tax changes from the recently passed American Taxpayer Relief Act of 2012. The notice also includes the phase out levels for the new rules on itemized deduction limitations. These details are included in IRS Revenue Procedure 2013-15, which will be published on January 28.

     
      Charitable Contributions Made From IRAs in January 2013 to Still Count for 2012 Returns
     

    Included within the list of expiring provisions that Congress recently extended is a provision that permits IRA owners above age 70 ½ to make Qualified Charitable Contributions (QCD) directly from their Individual Retirement Account (IRA) and exclude from gross income up to $100,000 each year.

    IRS Notice IR-2013-6, issued on January 16, provides guidance that clients have until January 31 to make these contributions and still deduct up to the $100,000 on their 2012 tax returns. A direct transfer to the QCD must be made by January 31, or alternatively if the client received an IRA distribution in December 2012, they can contribute in cash all or part of the distribution received to an eligible charity.

    This extended rollover period was made to accommodate taxpayers who were contemplating making these contributions for 2012 but had to wait until Congress finally decided to extend this provision. Due to the late decision, Congress took the unusual action of extending the contribution periods due date by one month. Those clients who had contacted you about this issue should be notified at once while the window is still open to take advantage of it.

     
      New Simplified Home Office Deduction Option
     

    On January 15, the IRS released Revenue Procedure 2013-13, which outlines a new, simpler method for calculating the home office deduction. This new option is available for tax years beginning on or after January 31, 2013. Learn more in this short article from Ami Oppe, CPA, a member of our Tax Practice Management Committee..

     
      Proposed Regulations on Health Insurance “Play or Pay” Rules Issued
     

    The employer shared responsibility, otherwise known as the “play or pay” requirements were issued in 2010 as part of the Affordable Care Act. The rules mandate that large employers must offer their full-time employees and dependents minimum essential health insurance coverage or pay a penalty. The new requirements go into effect beginning January 1, 2014.

    On December 28, the IRS issued proposed regulations [REG-138006-12] as well as a list of questions and answers to provide employers a detailed road map for employers to follow when implementing the “play or pay” requirements. They also provide various safe harbors and transitions rules to help ease the administrative burden of implementing the rules in 2014. Additional information these rules and other Affordable Care Act provisions can be found at the AICPA’s Health Care Reform Resource Center.

     
      The American Taxpayer Relief Act (ATRA) Retroactively Increases the Monthly Transit Benefit Limit to $240
     

    At the end of 2011 Congress had allowed several tax provisions to expire, including the monthly transit benefit limit of $240 per month. This was reduced to $125 per month effective January 1, 2012. ATRA reinstated the higher limit of $240 retroactive to the beginning of 2012.

    This week the IRS issued Notice 2013-8 providing guidance on how to make a retroactive change where the employer continued to provide employees the higher transit limit. The notice provides guidance on how to make these changes for the employee and employer. The retroactive change does not mean an employer can pay these additional funds now, the relief is only where the employer continued to pay the higher amount and reflected the tax benefit on the reduced amount of $125.

     
      Long Awaited FATCA Final Regulations Issued
     

    On January 17, IRS and Treasury released final regulations (TD 9610) related to information reporting by foreign financial institutions and withholding on certain payments to foreign financial institutions and other foreign entities. The regulations provide a much needed road map for financial institutions to follow to be FATCA compliant including account identification and information reporting as well as withholding requirements for FFIs, certain nonfinancial foreign entities, and U.S withholding agents.

     
      AICPA Requests Additional IRS Guidance on ITIN Procedures
     

    The AICPA recently submitted a letter to the IRS seeking further guidance regarding clarification of several technical issues involving the updated Individual Taxpayer Identification Number (ITIN) procedures released on November 29. The letter raised several questions regarding certain aspects of the revised ITIN procedures which are effective January 1, 2012. Among other issues, the AICPA letter requests that the IRS clarify:

    1. the procedures for Certified Acceptance Agents;
    2. the processes involving the five year time limit regarding expiration of ITINs; and
    3. the instances in which documentation from a consulate may be acceptable as original documentation. The AICPA will inform the membership of any new ITIN guidance released by the IRS.
      IRS Released Guidance on Employee Plans Compliance Resolution System
     

    On December 31 the Internal Revenue Service (IRS) released Revenue Procedure 2013-12, which provides significant changes to the Employee Plans Compliance Resolution System (EPCRS). The Revenue Procedure provides for expanded corrections for 403(b) plan failures, revised submission procedures for the Voluntary Correction Program (VCP), rules for plans subject to Section 436 restrictions, and changes to safe harbor correction methods and fee structures. For more information on the Revenue Procedure as well as the Employee Plans Compliance Resolution System, see the AICPA Employee Benefits Tax Guidance Tracker.

     
      Other Tax News from the Journal of Accountancy
    Sec. 6038D reporting of specified foreign financial assets postponed for one year (01/23/13)
    Federal court strikes down IRS tax return preparer registration program (01/22/13)
    FATCA final regulations cover all the bases (1/18/13)
    IRS provides penalty relief for farmers hit by delayed start of tax season (01/18/13)
    Retroactive procedures implement qualified transportation fringe benefits parity for 2012 (1/16/13)
    IRS corrects 2013 tax tables in revenue procedure (1/10/13)
    Appeals Court reverses Claims Court, disallows LILO deductions (01/10/13)
     
     
    AICPA TOOLS & RESOURCES
       
      Free Client Letters to Update Your Clients on Post-Fiscal Cliff Law
     

    Use letters in the AICPA’s Tax Practitioner’s Toolkit to answer questions that your individual or small business clients may have about what is in the new American Taxpayer Relief Act that affects them. The AICPA will also be releasing a new brochure that highlights tax issues and changes for the current filing season.

     
      Interactive Tax Checklists: Updates Planned to Incorporate ATRA Changes
      taxpowerhour

    We are updating the Interactive Tax Checklists for the new legislative changes that Congress approved on January 1.  However, tax practitioners can start using the interactive versions now and by the end of the month, the checklists will  contain prompts for updated questions and/or any additional questions related to the new law. (We anticipate very minor changes to checklists for  Forms 1041, 709 and 706.) The checklists will also be available in a Word and PDF format once all the changes have been finalized to the checklists.  In the meantime, if you want a copy of the PDF checklists, log into the Interactive Tax Checklists and print a blank or completed PDF. Curious what Interactive is about?  Use the quick tutorial to get started. 

    You can also start using the engagement letters, organizers, tax form preparation guides and State and Local tax practice guides on the website as these do not require updating. 

    Please look at the FAQs section for further information regarding the Interactive Tax Checklists.

     
      UPCOMING EVENTS
       
      AICPA Family Law Conference
     

    May 8-10
    Caesars Palace, Las Vegas, NV

    This conference breaks new ground—strategically focusing on the tax issues of property division. Learn the technical know-how you need to competently deal with these issues, as well as insights and ideas that will add value to your services and raise the trust level with your clients.  Tax related sessions include:  Tax Rules under 1041 and The Hidden Information Within Tax Returns.

     
      The NEW Doing Business in China International Business Conference
     

    May 30-31
    Georgetown University; Washington DC

    The 2013 International Business Conference will focus on providing strategic thinking, expert insights and practical solutions for doing business in China. This intensive one and one-half day seminar will feature renowned speakers and a full agenda of sessions to provide the latest on business trends evolving in China.

     
      taxpowerhour

    Advanced Income Tax Strategies for the Mass Affluent: Post-Election Update 2013
    Jan 28 from 12:30pm – 2:15pm ET

    This session will look at tax planning opportunities in 2013 and beyond, in light of what did (and did not) happen at the end of 2012 and the outcome of the election, with a focus on income tax planning issues and concerns for the mass affluent. 

    Tax and PFP Section members (inclusive of PFS credential holders) may attend this seminar for free without receiving CPE credit.

      Critical Payroll and Tax Legislation for 2013: New Year, New Challenges for Every Small Business
     

    Jan 29 from 2:00pm – 3:30pm ET

    This live audio webcast identifies the critical business regulations to be aware of in 2013, and better prepares you to both respond to inquiries and proactively engage clients & employers regarding important new legislation.

    Tax and PFP Section members (inclusive of PFS credential holders) may attend this seminar for additional savings.

      Post-Election Update 2013: Advanced Tax Strategies for High-Net-Worth
      Feb 4 from 12:30pm – 1:45pm ET

    This session will address financial planning strategies for high-net-worth clients, paying special attention to any potential changes in tax law stemming from the Fiscal Cliff legislation..

    Tax and PFP Section members (inclusive of PFS credential holders) may attend this seminar for free without receiving CPE credit.
      Coming Up on the Tax Power Hour:
    Avoiding Staff Burnout & Managing Extensions
      taxpowerhour

    In February, we turn our attention to your staff.  Busy season is…well, busy. Staff work long hours and often take multi-tasking to a whole new level. Pressures mount as deadlines approach and management is busy making sure the firm is running smoothly and clients are happy. Are you doing anything to keep your staff happy? We will discuss strategies to keep your team focused, motivated, energized and engaged. With last-minute legislation causing possible delays in IRS return processing schedules, this year may be more taxing than usual. How do you engage staff day-to-day? We’ll hear how some practitioners have struggled with this challenge and what they are doing to address is.

    In March, we will review strategies for managing the extension process. Join us March 21st when we will review the recent IRS guidance on signature requirements for electronically filed extensions and consider their implications for the entire extension process.

    The Tax Power Hour is our monthly webcast for Tax Section members only, that focuses on strategies to help tax practitioners save time, reduce stress and run an efficient practice through practical discussions on topics such as Practice Management, Business Development, Leveraging Technology and more.  Speakers are tax practitioners and other experts sharing their advice and best practices to help make you more profitable.

    If you missed a previous Tax Power Hour, you can listen again anytime.  Archives are available for one year after each event.

     
     
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