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November 2010

SENATE FAILS TO REPEAL 1099 REPORTING REQUIREMENTS

The Senate yesterday (Nov. 29) voted on both the Johanns and Baucus amendments to repeal the 1099 reporting requirements.     

Despite agreeing that the healthcare law's 1099 filing provision should be eliminated to keep businesses from bogging down in a sea of paper work and additional tax complications a consensus wasn’t reached.

Democrats and Republicans came to stand still and failed to get the necessary 67 votes (2/3 rule) when bipartisan dispute festered over how to move forward without the new tax reporting requirements.  

The 1099 issue is an unpopular element of the health care overhaul. This could be the last vote on the 1099 issue this year, leaving only one calendar year before the new 1099 reporting goes into effect.

TSCPA will continue to monitor this issue closely and keep members aware of the latest updates and they become available.


WHAT'S ON THE LAME DUCK AGENDA?

Congress is back in session today with plenty of work to do. The Republicans are gloating and the Democrats are trying to push through pet projects. However, they both return to face a deadline to avoid government shutdown on December 3rd, as Bush-era tax cuts that are holding the IRS 2011 withholding federal rates hostage, and unemployment benefits run out November 30th.

Senate Democrats wanting a vote on the Food Safety Modernization Act may have to consider votes on two Republican amendments to get there. One amendment is to ban all earmarks permanently. The other is TSCPA’s favorite, a repeal of the health care provision for Form 1099 expanded reporting requirements. The Democrats will bring up the big defense bill again blocked by Republicans because of the “Don’t ask, Don’t tell” debate. Senator Majority Leader Harry Reid wants a vote on his Dream Act. President Obama wants the Senate to take action on the nuclear weapons treaty between U.S. and Russia.

The House may also see votes to repeal parts of the health care bill. A vote is expected on an annual adjustment for doctors who treat Medicare patients. They may find time for a censure vote of Rep. Charles Rangel, D-NY, over ethics violations. Democrats don’t want to leave out immigration reform. In addition to these issues, there is another bill to patch the alternative minimum tax. 


CONGRESS PROMISES TO HELP TAXPAYERS WITH AMT

Congressional leaders from both parties aggreed this week to help spare more than 20 million taxpayers from substantial tax increases when they file returns next year by tweaking the alternative minimum tax (AMT) before the end of 2010.

According to Sen. Max Baucus, (D-Montana) Congress will work to craft a provision so not one additional tax payer will face higher taxes due to the AMT. He also hopes the IRS will do what it takes to plan for the revision.

"We urge the Internal Revenue Service to take all steps necessary to plan for changes that would be made by the legislation."

http://www.msnbc.msn.com/id/40094772/ns/business-personal_finance/


SHOULD NON-SIGNING PREPARERS REGISTER FOR PTINS?

IRS Commissioner Doug Shulman told participants of the AICPA National Tax Conference last week that non-signing preparer employees of licensed tax practitioners will “likely” be exempt from the testing and continuing education of the preparer tax identification number (PTIN) requirements. He offered that additional guidance is expected by year-end. The Commissioner and other IRS executives at the conference clearly stated that these non-signing preparers will still need to register for PTINs and pay the user fees before preparing any federal tax returns in 2011.

We understand that the natural preference is to wait until the IRS guidance is released, but waiting comes with its own problems. It is sometimes difficult to obtain a PTIN by way of the online PTIN application system, and the telephone hotline is frequently nonresponsive. The IRS asserts that it takes four to six weeks for the paper application to process. CPA firms should weigh their options and the risk that they would have staff that are not qualified to prepare returns because of failure to have a proper PTIN by January 2011.   

IRS Online PTIN Application Page

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