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NewsNotes Lesli S. Laffie, J.D., LL.M. SSTSs * Wealth Care Kit * Tax Court Courtesy Calls * EIC Due Diligence * Estate Tax Automatic Extension
SSTSs Effective Oct. 31, 2000, enforceable Statements on Standards for Tax Services (SSTSs) replace the Statements on Responsibilities in Tax Practice (SRTPs). (For backgound, see "Tax Executive Committee Exposes Proposed Statements on Standards for Tax Services," TTA, May 2000, p. 357, and DC Currents: "TEC Initiatives," TTA, Nov. 2000, p. 809.) The Preface to the SSTSs states that, while the number and names of the SSTSs and the substantive rules remain the same as in the SRTPs, the language has been edited to clarify and reflect the SSTSs' enforceability. The standards' applicability is not limited to Federal income tax practice; thus, the language has been changed to mirror the broader scope. The SSTSs are intended to be part of an ongoing process that may require continuing change and interpretation. The eight SSTSs and one Interpretation are as follows: 1. Tax Return Positions and Interpretation No. 1-1, "Realistic Possibility Standard." 2. Answers to Questions on Returns. 3. Certain Procedural Aspects of Preparing Returns. 4. Use of Estimates. 5. Departure From a Position Previously Concluded in an Administrative Proceeding or Court Decision. 6. Knowledge of Error: Return Preparation. 7. Knowledge of Error: Administrative Proceedings. 8. Form and Content of Advice to Taxpayers. The SSTSs can be downloaded or ordered from the AICPA Website, http://www.aicpa.org/members/div/tax/exsumsts2.htm, by clicking on an appropriate link near the bottom of that page. (Downloading requires use of an Adobe Acrobat Reader.) The paperbound version is $24.95 for members; $31.95 for nonmembers; order No. 065013.
Miscellaneous The National Endowment for Financial Education's (NEFE's) Wealth Care Kit provides the essential first steps to help individuals take charge of their financial lives. Using worksheets and checklists, it allows individuals and families to evaluate their current financial situation, set goals and begin to develop strategies to meet them. Information is presented in five main areas: insurance, investments, taxes and retirement and estate planning. By reading the materials and completing the exercises provided, users can develop a personal balance sheet, determine and rank investment objectives and start to plan for retirement. Individual copies of the Wealth Care Kit are available free from the NEFE; write to: National Endowment for Financial Education, 5299 DTC Boulevard, Suite 1300, Englewood, CO 80111-3334; its Website is http://www.nefe.org.
The Tax Court has instituted a new procedure of calling litigants when an opinion in their case has been issued. The "courtesy calls" have grown out of practitioner complaints that such opinions have appeared on the Tax Court Website without notifying the litigating parties first. According to Chief Judge Thomas B. Wells, a Tax Court employee now calls petitioners at about 3:30 pm EST to inform them that the opinion in their case has been placed on the Tax Court Website (http://www.ustaxcourt.gov). The court reporter's office first calls the petitioner's counsel (the petitioner, if pro se); IRS counsel is then notified. However, if the petitioner or his counsel cannot be reached in person or by message, no further call is made.
Regulations New regulations (TD 8905, 10/17/00) detail the due diligence requirements for paid preparers of returns or refund claims involving the earned income credit (EIC). Sec. 6695(g), added by the Taxpayer Relief Act of 1997, must meet these requirements for applicable returns to avoid a $100-per-occurrence penalty. Under Regs. Sec. 1.6695-2, a paid preparer must: 1. Complete Form 8867, Paid Preparer's Earned Income Credit Checklist (or otherwise record the information needed to complete the checklist). 2. Complete the EIC Worksheet contained in the Form 1040 instructions (or otherwise record the information needed to complete the worksheet). 3. Have no knowledge or reason to know that the information used to determine eligibility for (or the amount of) the EIC is incorrect. 4. Retain the checklist, worksheet and other records used to determine eligibility for and the amount of the EIC for three years after the June 30 following the date the return or refund claim was presented to the taxpayer for signature. This information may be maintained as a paper record, in magnetic media format or in an electronic storage media system. Practitioners will not be liable for a Sec. 6695(g) penalty if they can demonstrate to the IRS's satisfaction that, under the facts and circumstances, (1) their normal office procedures are reasonably designed and routinely followed to ensure compliance with the due diligence requirements; and (2) a particular failure was isolated and inadvertent.
Estate Tax Automatic Extension Proposed amendments to Regs. Sec. 20.6081-1 (NPRM REG-106511-00, 10/20/00) would allow an executor an automatic six-month extension of time to file Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, beyond the nine months after the date of death now provided in Sec. 6075(a). Currently, an IRS district director or service center has the discretion to grant an extension to file an estate tax return on a showing of "good and sufficient cause" for up to six months for executors who are not abroad. To provide certainty to executors, the IRS and Treasury believe it is appropriate to amend Regs. Sec. 20.6081-1 to provide an automatic six-month extension of time to file Form 706. Under the proposed regulations, executors may request an automatic six-month extension by submitting Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes. An automatic extension will be permitted if the application (1) is filed on or before the due date prescribed in Sec. 6075(a); (2) is filed with the IRS office designated in the application's instructions (excepting hand-carried documents); and (3) includes an estimate of estate and/or generation-skipping transfer tax liability for the estate. The proposed regulations would continue to permit executors abroad to request extensions beyond the automatic six-month period. The proposed regulations also revise Regs. Sec. 20.6075-1 to conform to the changes proposed in Regs. Sec. 20.6081-1. The portion of the proposed regulations pertaining to the automatic six-month filing extension would apply to estate tax returns due after the date final regulations are published in the Federal Register. A public hearing has been scheduled for Jan. 24, 2001; interested parties have until Jan. 19, 2001, to submit comments and until Jan. 3, 2001, to submit hearing topic outlines. Submissions should be sent to:
Comments may also be submitted electronically via the IRS Website at http://www.irs.gov. Select the "Tax Regs in English" section, followed by "Tax Regulations." |
