Previous month:
September 2011
Next month:
January 2012

October 2011

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.