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April 2011


President Obama yesterday signed formal legislation to repeal the cumbersome 1099 reporting requirements in health care law and Small Business Jobs Act.

Congress, earlier this month, repealed the 1099 requirements after votes on different versions of the legislation. Now with the President's signature, the widely controversial requirement that would have asked all businesses to report any purchases of goods of more than $600 from an outside vendor to report said transaction to the IRS on Form 1099-MISC is moot. The repeal also covers 1099 requirements imposed on taxpayers who receive rental income.


TSCPA’s Federal Tax Policy Committee (and AICPA) asked IRS in February to provide interim guidance under IRC section 67(e) on the treatment of fiduciary administrative costs for 2010 and future returns until final regulations are issued. In Notice 2011-37 issued April 13, the IRS will not require fiduciary fees to be unbundled for any taxable year beginning before the publication of final regulations under section 1.67-4. The notice did not indicate when IRS expects to issue the final regulations.


On March 8, the Senate passed S. 23 the America Invents Act that includes a provision the profession supports to stop patents of tax strategies. Patent reform legislation is also moving through the other chamber. Texas Chairman Lamar Smith (R-21) of the House Judiciary Committee introduced a comprehensive reform bill in H.R. 1249 (same title) with a similar provision addressing the problem of tax strategy patents.

The Judiciary Committee is scheduled to mark up H.R. 1249 on April 14. TSCPA has expressed its appreciation to Chairman Smith and has asked other Texas members of the Judiciary Committee — Rep. Louie Gohmert (R-01), Rep. Sheila Jackson Lee (D-18), and Rep. Ted Poe (R-02)—to support this pro-taxpayer provision.  

IRS extends due date for Form 8939 beyond April 18

The Internal Revenue Service announced that Form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent, is not due on April 18, 2011, and should not be filed with the final Form 1040 of persons who died in 2010 (IR-2011-33). The IRS did not announce a new due date, but promised to issue further guidance, a new due date, and a final Form 8939 for 2010.  This does not change the due date for the decedent's 1040, which remains April 18, subject to extensions.

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In December, TSCPA’s Federal Tax Policy Committee issued comments to the IRS on REG-100194-10, proposed regulations on the electronic filing mandate for tax return preparers who reasonably expect to file more than 10 individual income tax returns in a calendar year. Last week the IRS released its final regulations. Here are some things that the FTP did and did not receive:


·        For married taxpayers who wish to paper file a joint return, the IRS will allow one spouse’s signature to be sufficient on the taxpayer opt out statement. Sample language can be found in Rev Proc 2011-25.

·         The IRS did not make changes to allow the preparer or firm to mail a client’s paper return. However, the IRS provided a transition rule for the 2011 calendar year only, for preparer to mail the return under certain circumstances. This includes obtaining a hand-signed and dated statement that the taxpayer not only requests to paper file, but also requests that the preparer mail the return. Sample language can be found in Notice 2011-27.

·        The committee asked for a phase-in period or more gradual approach to give preparers with between 11 and 100 returns some time to adapt and to upgrade software, etc. The IRS did not adjust the “more than 10” threshold that starts 2012 and clarified that the lack of a preparer’s proper equipment and technology to meet the requirement does not qualify for a hardship waiver in and of itself.

·        The final regulations specify and provide five examples of when a return preparer reasonably expects to fall within the e-filing mandate.  


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