Registration and PTIN Required
The IRS released its long-awaited Tax Preparer Regulation Proposal. The proposal does not provide a time line for implementation but notes that the proposal’s recommendations can be implemented through regulations. Consequently, we can expect to see more substance about what will be required in the near future.
The proposal specifies the following with respect to registration:
- IRS will require all individuals who are required to sign a federal tax return as a paid tax return preparer to register and obtain a preparer tax identification number. The IRS may charge a reasonable, nonrefundable fee to register as a tax return preparer. The preparer tax identification number will be the exclusive number used to identify any tax return preparer submitting returns to the IRS.
- The IRS will study the impact and necessity of expanding this registration requirement to nonsigning tax return preparers in the future.
- The IRS will make tax return preparer registration effective for three-year periods and require tax return preparers to renew their registration every three years.
NSA has learned that the IRS intends the registration requirement to be in place next year at this time, and preparers will need a PTIN to sign returns reporting income for 2010. The IRS proposal is unclear as to whether a preparer who already has a PTIN will be required to re-register for this purpose.
Minimum Competency Testing to Be Required for All Preparers Except Those Covered by Circular 230
The IRS is proposing to establish minimum competency testing for tax return preparers who are not attorneys, certified public accountants, or enrolled agents. The IRS is not proposing a competency testing program for attorneys, certified public accountants, or enrolled agents currently, but the IRS will consider expanding testing to those individuals if data is collected in the future that identifies a need for this testing.
Initially, two examinations will be offered for tax return preparers who are not attorneys, certified public accountants, or enrolled agents. The first test will cover wage and non-business income Form 1040 series returns. The second test will cover wage and small business income Form 1040 series returns.
It is important to note that the IRS currently has no idea how it will test preparers, who will do the testing, and what database will be used. Consequently, there is no indication as to when this proposal can be implemented.
The IRS will not “grandfather” any tax return preparer from the testing requirement based on return preparation experience. This means that preparers who have taken and passed the examination offered in Oregon, or who pass the examination expected to be offered in the future in Maryland, will also have to take the proposed federal examination.
The IRS intends that the examinations offered in Oregon, Maryland and by third parties such as the Accreditation Council for Accountancy and Taxation will continue to have a useful role in the tax preparation industry by identifying preparers who are experienced and have taken difficult examinations demonstrating expertise in more complex areas of the tax law. In fact, IRS officials have reviewed the ACAT examinations and found them too difficult for the minimum competency testing that the IRS has in mind.
The IRS will place all signing and nonsigning tax return preparers under Treasury Department Circular 230. Thus, all such preparers will be subject to the same ethics rules currently applicable to CPAs, attorneys and enrolled agents. The authority granted to those individuals who do not have professional licenses and who are not enrolled agents, enrolled actuaries or enrolled retirement plan agents will be limited to preparing tax returns and representing their clients as currently permitted during an examination of any return prepared by the tax return preparer.
The IRS will also develop a consumer awareness campaign and develop a searchable database of registered tax return preparers.
Click here to view a copy of the Tax Preparer Regulation Proposal
Source: National Society of Accountants
IRS Announces 2010 Standard Mileage Rates
WASHINGTON — The Internal Revenue Service today issued the 2010 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 50 cents per mile for business miles driven
- 16.5 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Revenue Procedure 2009-54 contains additional details regarding the standard mileage rates.
Membership Areas of Practice Survey
As another benefit of membership, the Accountants Society of Virginia is asking each member to pick from the list below those areas where s/he is comfortable being listed as a resource to other members should a question or need for help arise.
This index will be available only to other ASV members. This is a great way for members to help members so it is hoped that you will participate.
Please complete and return to ASV at either accnsocietyva@aol.com or fax 703-530-9653. Thank you.
Click here to download the SURVEY...
2009 Virginia Legislative Summary - State Taxes
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CATCH A SUMMER BREEZE...
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ASV's 61stAnnual Conference was held on June 19-20, 2009!
CLICK HERE to see the Pictures!
ASV ANNOUNCES IT'S ONLINE PAYMENT SYSTEM!
ASV has instituted an ONLINE PAYMENT System through PayPal.com. It is fast and completely SECURE. You may become a member, renew your membership and pay for seminars!
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2009 Tax Stimulus Bill
Here are a couple of highlights from the Stimulus Package:
COBRA
- If unemployed, the IRS will subsidize 65% of COBRA if job was involuntarily lost between 9/1/2008 and 12/31/2009. (The former employer should be called immediately for more details.)
- Maximum of 9 months will be subsidized (Not retroactive)
- Terminates on offer of new coverage
- People who did not elect COBRA have 60 days to elect
- Phaseout starts at $125,000 for single taxpayers and $250,000 for married filling joint taxpayers
- Must have been participating in the health insurance plan when laid off
- Employer must continue to exist
Unemployment Income
- People getting unemployment compensation during 2009 will not have to pay taxes on the 1st $2,400
A summary of the tax provisions in the bill prepared by congressional staff may be found at the following weblink: http://waysandmeans.house.gov/media/pdf/111/arra.pdf
IRS Releases Information to Help Employers Claim COBRA Medical Coverage Credit on Payroll Tax Form
IR-2009-015
WASHINGTON — The Internal Revenue Service today released new detailed information that will help employers claim credit for the COBRA medical premiums they pay for their former employees.
The IRS unveiled new information on this Web site, IRS.gov, that includes an extensive set of questions and answers for employers. In addition, the Web site contains a revised version of the quarterly payroll tax return that employers will use to claim credit for the COBRA medical premiums they pay for their former employees.
Form 941, Employer’s Quarterly Federal Tax Return, will also be sent to about 2 million employers in mid-March. The form is used to claim the new COBRA premium assistance payments credit, beginning with the first quarter of 2009.
“This is the first step in our effort to provide employers with information on this important health benefit for people who have lost their jobs,” said IRS Commissioner Doug Shulman. “We will continue our work in the weeks ahead to help employers implement this crucial change for the nation’s unemployed.”
The American Recovery and Reinvestment Act of 2009, which became law last week, includes changes to the health benefit provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly referred to as COBRA. The new law will affect former employees and their families, employers and others involved in providing COBRA coverage.
Under the new law, eligible former employees, enrolled in their employer’s health plan at the time they lost their jobs, are required to pay only 35 percent of the cost of COBRA coverage. Employers must treat the 35 percent payment by eligible former employees as full payment, but the employers are entitled to a credit for the other 65 percent of the COBRA cost on their payroll tax return.
Employers must maintain supporting documentation for the credit claimed. This includes:
- Documentation of receipt of the employee’s 35 percent share of the premium.
- In the case of insured plans: A copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier.
- Declaration of the former employee’s involuntary termination.
COBRA provides certain former employees, retirees, spouses, former spouses and dependent children the right to temporary continuation of health coverage at group rates. COBRA generally covers health plans maintained by private-sector employers with 20 or more full and part-time employees. It also covers employee organizations or federal, state or local governments. It does not apply to churches and certain religious organizations. The new COBRA subsidy provisions also apply to insurers required to offer continuation coverage under state law similar to the federal COBRA.
More information about COBRA payments and the new law is available on www.dol.gov.
New Online Retirement Estimator!
Social Security has unveiled a new online financial and retirement planning tool, the Retirement Estimator, which allows individuals to get an immediate and personalized estimate of their potential Social Security retirement benefits.
Based partly on Social Security records and partly on user-entered information, e.g., last year's earnings, the Retirement Estimator provides real time estimates of retirement benefits at specific points in time - age 62, full retirement age, and age 70. "What if" scenarios can also be run by varying the information provided.
The Retirement Estimator is secure; only the benefit estimates are provided online and no personal information is revealed. Some identifying information is required to access the Estimator.
Click here for more information