President signs payroll tax-cut bill

President Obama signed into law a payroll tax extension, maintaining the 2-percentage-point payroll reduction through year-end 2012 for employees and the self-employed. For more information on the payroll tax cut extension bill, go to IR-2012-27. The payroll tax cut extension is reflected in revised 2012 Form 941, available Form 941.

Cutting corporate-tax rates and loopholes eyed by Administration

According to the New York Times (2/22/12), President Barack Obama’s proposed overhaul of corporate taxes would reduce the basic tax rate from 35% to 28% while eliminating dozens of subsidies and loopholes. Manufacturers would be given incentives that bring their effective tax rate down to 25%, while a new minimum tax rate for multinational corporations would be established to curb “accounting games to shift profits abroad.” See the New York Times for details.

E-Verify Self Check worker eligibility available nationwide

The U.S. Citizenship and Immigration Services (USCIS) E-Verify Self Check is now available in all 50 states, as well as in Washington, D.C.; Guam; Puerto Rico; the U.S. Virgin Islands; and the Commonwealth of Northern Mariana Islands. E-Verify is a free, Internet-based system that determines the employment eligibility of new hires by comparing information from the worker’s Form I-9, Employment Eligibility Verification, to Department of Homeland Security (DHS) and Social Security Administration (SSA) records. For more information on USCIS Self Check, the site can be accessed at www.uscis.gov/selfcheck.

Energy savings for partial energy efficient commercial building deduction

IRS has provided additional guidance on the energy savings percentages that taxpayers can use to qualify for a partial Code Sec. 179D deduction for energy efficient commercial buildings. These new energy savings percentages, which are effective for property placed in service on or after Mar. 12, 2012, are:  25% for the interior lighting system; 15% for the heating ventilation and air conditioning (HVAC) and hot water systems, and 10% for the building envelope. See IRS Notice 2012-22 for more details.

IRS offers tips on new Form 8949 and Schedule D

The IRS issued a new tax tip for the use of the new Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D, Capital Gains and Losses; Form 8949 must be used to report most capital gains and losses from transactions relating to investment property. Previously, these transactions would have been reported on Schedule D or D-1. Additional tax tips with links to the subject forms can be viewed on the IRS website at IRS Tax Tip 2012-28.

IRS final regulations clarify whistleblower award computation
The IRS issued final guidance that clarifies the definition of proceeds of amounts collected and collected proceeds for whistleblower awards. Whistleblower provisions reward up to 30 percent of the proceeds collected to persons helping the IRS detect underpayments and violations of the tax laws. Details can be found in the Federal Register,

Rewards and Awards for Information Relating to Violations of Internal Revenue Laws.

Overpayment and underpayment rates unchanged for 2^nd quarter 2012

IRS has announced that the interest rates for tax overpayments and underpayments for the calendar quarter beginning Apr. 1, 2012, will remain the same as for the first quarter of 2012. See IR-2012-28 for more details.

Partnerships can file Schedule K-1 electronically
Effective Mar. 5, 2012, partnerships can provide Schedule K-1, Partner’s Share of Current Year Income, Deductions, Credits, and Other Items electronically to partners. IRS guidance permitting electronic filing is effective Mar. 5, 2012. Instructions on Schedule K-1 electronic filing are available at Rev Proc 2012-17.

FinCEN extends FBAR filing deadline again for certain individuals
Treasury’s Financial Crimes Enforcement Network (FinCEN) extended the filing deadline for three groups of employees and officers of an investment advisor with only signature authority over certain foreign financial accounts, who are required to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). These groups have been granted a one-year extension beyond the previously extended filing date of June 30, 2012 until June 30, 2013 for these individuals. All other U.S. persons required to file an FBAR form this year must meet the original filing date of June 30, 2012. Details at FinCEN Notice 2012-1.

Failure to file information return extended assessment period for S corporation and majority shareholders

The assessment limitations period for an S corporation that failed to report required information, Code Sec. 6501(c)(8), was extended by the IRS for the entity and its two majority shareholders, who had control of the S corporation, but not for the remaining shareholders. Taxes are generally assessed within three years after a taxpayer’s return is filed, unless the returns are not timely filed. In the case of missing returns, the running of the limitations period may be suspended until three years after the required information is actually provided to IRS by the person required to file the return. Read more at IRS Chief Counsel Advice 201206014.

IRS guidance on veterans work opportunity tax credits

The IRS issued guidance on how veterans work opportunity tax credits work, extending the time employers have to comply with the required certification process. Notice 2012-13 permits employers who hired qualified veterans between Nov. 22, 2011, and May 22, 2012, to be considered to have satisfied the certification requirement if they submit a pre-screening notice to the designated local agency by June 19, 2012. The Notice also carries alternative ways to obtain a pre-screening notice that veterans qualify for the credit, and guidance for tax-exempt employers who claim the credit on new Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. Details at IRS Notice 2012-13.

No IRS explanation necessary for difference in income to credit-card receipts

According to John D. McKinnon in the Wall Street Journal Washington Wire Blog (Feb. 9, 2012), the IRS said in the letter to the National Federation of Independent Business that it would not require retailers and others to explain how and why their business income differs from their credit-card receipts, which Congress now is requiring card companies to report separately to the IRS. Details at credit-card receipts.

IRS FAQs for Patient Protection Act Provisions

The IRS and Treasury Department issued guidance providing answers to questions from employers and other stakeholders regarding the provisions of the Patient Protection and Affordable Care Act (Affordable Care Act) (P.L. 111.148 ) governing automatic enrollment, employer shared responsibility, and the 90-day limitation on waiting periods. Details at IRS 2012-17 FAQs.

IRS lists deals of foreign tax credit splitter transactions

The IRS provided taxpayers with a list of deals considered to be foreign tax credit splitter arrangements in temporary regulations found at REG-132736-11. Additional final regulations, clarify determination of who is considered to pay a foreign income tax.

In addition, IRS finalized proposed rules on determining who should pay a foreign income tax. Details at  T.D. 9576.

Schedule UTP additional guidance

The IRS released the 2011 version of Schedule UTP (Form 1120), Uncertain Tax Position Statement, and its instructions, which contains more guidance and examples than previous versions. The IRS UTP Statement and the 2011 Instructions for Schedule UTP are available on the IRS website.

Congressional bill proposed to eliminate small business reconciliation of 1099-K

Unless Congress has its way, the IRS plans to require a reconciliation between internal books and Forms 1099-K. Reps. Aaron Schock, R-Ill., and Bobby Schilling, R-Ill., introduced a bill that would keep the IRS from activating a new tax-reporting requirement for small businesses to reconcile their 1099-K reports from outside providers with their own records. Details at Accounting Today.

IRS Updates Disclosure Guidance for Understatement Penalties

 The IRS has made minor changes to its guidance describing when disclosure on a taxpayer’s income tax return is adequate to reduce an accuracy-related penalty for substantial understatement of income tax and to avoid a preparer penalty. For a copy of the update, see Rev. Proc. 2012-15.

Sales Tax Lower in 2011

Last year more states, counties and cities lowered their sales tax rates than in 2010, and the number of sales tax changes also went down. A new report by Thomson Reuters found that the average county sales tax was 1.15 percent in 2011, down from 1.23 percent in 2010; the average city sales tax was 1.67 percent in 2011, down from 1.72 percent in 2010. Sales tax software provider Vertex also released an End of Year Sales Tax Report that found the combined average sales tax rate and number of rate changes declined in 2011 compared to recent years. The highest city sales tax rate in 2011 was Wrangell, Alaska, at 7.00 percent. The highest combined sales tax rate of 13.725 percent is found in Tuba City, Coconino County, Ariz.