TSCPA Federal Tax Policy Blog

PROPOSED TANGIBLE PROPERTY REPAIR REGULATIONS

The IRS issued temporary and proposed regulations on capitalization of tangible property expenditures, also known as "repairs" regulations. The new rules, generally effective for the 2012 tax year, will affect all taxpayers that acquire, produce or improve tangible property and may result in the filing of Form 3115, Application in Change of Accounting Method.

The regulations are possibly among the most important guidance to be released in recent years because they will impact virtually all companies, big and small. Comments are due to IRS by March 26, 2012.

TSCPA's Federal Tax Policy Committee is preparing to draft a comments letter and plans to respond to the IRS. If you have any specific concerns, you may forward them to the committee for consideration by March 1, 2012, to Patty Wyatt at pwyatt@tscpa.net

IR-2011-126, REG-168745-03.

COUPLES FILING JOINT RETURNS MUST NOW FILE SEPARATE POAs

Starting March 1, 2012, the IRS will no longer accept old versions of Form 2848, Power of Attorney (POA) and Declaration of Representative, and will accept only the version released in October 2011. The revised form requires a husband and wife who filed a joint tax return to each file a separate POA on separate Forms 2848 to designate the representative he or she chooses, even if it is the same person.

http://www.irs.gov/pub/irs-pdf/i2848.pdf

NEW REPORTING FOR SPECIFIED FOREIGN FINANCIAL ASSETS

Starting with 2011 income tax returns, foreign financial assets over $50,000, unless held by a U.S. Broker, must generally be attached to Form 1040 using Form 8938. Member Joseph D. Brophy wrote an article for the January 2012 issue of the Tax Adviser summarizing the new requirements.

http://www.tscpa.org/Content/Files/pdf/Resource Center/Tax Issues Community/assorted/ForeignAsset1040 Disclosures.pdf

IRS REMINDS TAX PREPARERS TO RENEW PTINs

The IRS is mailing information letters to tax practitioners who haven't renewed PTINs for the upcoming filing season. The letters were sent out last week and will continue until January 30.

http://www.journalofaccountancy.com/Web/20125034.htm

TEXAS CPAS COMMENT ON PROPOSED REGS ON ESTATE COSTS SUBJECT TO 2 PERCENT FLOOR

Carol Cantrell of Texas Society of Certified Public Accountants (TSCPA), in comments on the reproposed regulations explaining which costs incurred by estates or non-grantor trusts are subject to the 2 percent floor for miscellaneous itemized deductions, has suggested that the final regulations adopt a Hubert approach and a percentage safe harbor for bundled fees.

Comments Letter

Download TSCPA comments ltr to IRS REG-128224-06 new proposed regs IRC Sec 67(e) 1-6-11

PAYROLL TAX CUT TEMPORARILY EXTENDED INTO FEBRUARY 2012

The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through Feb. 29, 2012. The IRS will issue additional guidance as needed to implement the provisions of this new two-month extension.

Learn More

http://www.irs.gov/newsroom/article/0,,id=251650,00.html?portlet=108

 

IRS WEBSITE UNAVAILABLE FOR NEW PTIN APPLICANTS UNTIL JAN. 9

For registered preparers filing for a new Preparer Tax Identification Number (PTIN), you will be unable to do so until Jan. 9, due to previously scheduled maintenance on the Internal Revenue Service’s (IRS) systems. However, for those who need to renew a PTIN, those services are still available.

Learn More

http://www.irs.gov/taxpros/article/0,,id=210909,00.html?portlet=104

HOUSE PASSES REPEAL OF 3% WITHHOLDING RULE

The U.S. House of Representatives overwhelmingly passed H.R. 674 on Oct. 26, 2011, that would repeal the 3% withholding requirement on government contractors and vendors and recipients of Medicare and certain agricultural payments beginning in 2013. 

The 2005 legislation, with implementation delayed twice due to growing concern, mandates that federal, state and local governments withhold 3% on payments for property or services as a guard against possible business tax evasion. H.R. 674 now goes to the Senate for consideration. 

http://www.journalofaccountancy.com/NR/exeres/967DCF76-5B50-4A5A-BDED-281BEB66FAC3.htm?WBCMODE=PresentationUnpublished

TAX PREPARERS WHO PREPARE MORE THAN 10 RETURNS MUST NOW E-FILE

Starting in January 2012, any paid preparer or firm that reasonably anticipates preparing and filing more than 10 Form 1040 series returns, Form 1041 returns, or a combination of Form 1040 series returns and Form 1041 returns, will be required to e-file those returns. The 2012 requirement will mark the second and final phase of implementing a law that was intended to boost the electronic filing rate of income tax returns for individuals, trusts, and estates. In 2011, the e-file mandate pertained to any paid preparer or firm that anticipated preparing and filing 100 or more returns.

If the requirement will cause undue hardship, preparers may seek a one-year waiver by submitting Form 8944, Preparer e-file Hardship Waiver Request. If a client wants to file a paper return, the preparer should include Form 8948, Preparer Explanation for Not Filing Electronically, with the client's tax return. A taxpayer choice statement should be obtained and kept with the preparer’s records. Form 8948 does not have to be submitted with returns that are not currently accepted electronically by the IRS or the IRS has instructed taxpayers not to file them electronically. These returns are exempt from the federal e-file requirement. See the IRS link to e-file mandate FAQ: http://www.irs.gov/taxpros/article/0,,id=231871,00.html.  

TAX FORM 4768 DUE TODAY TO RECIEVE EXTENSION

Form 4768 must be filed by September 19, 2011 to obtain automatic six-month extension to file an estate tax return and pay estate taxes for decedents who died after December 31, 2009 and before December 17, 2010.

States did not necessarily extend their estate tax returns to coincide with the federal deadlines. Consult each state law to avoid or minimize penalties for late filing of state estate and inheritance tax returns.

For more information:

http://www.journalofaccountancy.com/Web/20114581.htm