IRS Tax News

New Rule Will Not Affect Teacher Salaries in Upcoming School Year

2007-08-07T10:56:00.000-05:00

New Rule Will Not Affect Teacher Salaries in Upcoming School Year

IR-2007-142, Aug. 7, 2007

WASHINGTON — Moving to clear up confusion about a recent tax law change, the Internal Revenue Service today reassured teachers and other school employees that new deferred-compensation rules will not affect the way their pay is taxed during the upcoming school year.

Recently, the IRS has received inquiries from teachers who had been told that they had to make certain decisions about their pay this month or risk severe penalties. At issue is a 2004 law change that applies to people who decide to defer compensation from one year to a future year. In April, the Treasury Department and the IRS issued final rules implementing this law change.

Under the 2004 law, when teachers and other employees are given an annualization election – that is, they are allowed to choose between being paid only during the school year and being paid over a 12-month period – and they choose the 12-month period, they are deferring part of their income from one year to the next. For instance, a teacher who chooses to get paid over a 12-month period, running from August of one year through July of the next year, rather than over the August to May school year, falls under this law.

The IRS clarified that the new rules do not require school districts to offer teachers an annualization election. Thus, school districts that have not been offering teachers this election are not required to start.

School districts that offer annualization elections may have to make some changes in their procedures. The IRS announced that the new deferred-compensation rules will not be applied to annualization elections for school years beginning before Jan. 1, 2008, so school districts and teachers will have time to make any changes that are needed.

A list of Frequently Asked Questions contains more information.

IRS Seeks New Issues for Industry Issue Resolution Program

2007-08-06T10:56:00.000-05:00

IRS Seeks New Issues for Industry Issue Resolution Program

IR-2007-141, Aug. 6, 2007

WASHINGTON — The Internal Revenue Service is encouraging business taxpayers, associations and other interested parties to submit controversial or frequently disputed tax issues to the Industry Issue Resolution (IIR) Program.

The purpose of the IIR program is to clarify and recommend guidance that resolves an issue and benefits both taxpayers and the IRS by reducing the time and expense of resolving the issue through case-by-case tax examinations. Since the program began in 2000, there have been 89 submissions, of which 25 resulted in determinations that taxpayers can rely on.

While business associations and business taxpayers may submit tax issues for resolution at any time, in order to be considered during the fall review, submissions must be received by Aug. 31, 2007.

Business issues selected for consideration generally have two or more of the following characteristics:

When assessing a common factual situation, interpretation of the tax regulations is uncertain.
This uncertainty results in frequent, and often repetitive, examinations of the same issue among significant numbers of taxpayers.
The uncertainty results in undue taxpayer burden.
The issue is significant and affects a large number of taxpayers, either within an industry or across industry lines.
The issue requires extensive factual development, and an understanding of industry practices and views of the issue would assist the IRS in determining proper and consistent tax treatment for the future.

Although there is no set format for submitting an issue for review, there are specific data that need to be included in the submission. The IIR project submission procedures are available in Revenue Procedure 2003-36. Interested parties should submit issues by e-mail to IIR@IRS.GOV.

Alternatively, submissions may be mailed or faxed to:

Internal Revenue Service, Office of Prefiling and Technical Services
Large and Mid-Size Business Division LM: PFT
Mint Building 3rd Floor M3-420
1111 Constitution Avenue NW
Washington, DC 20224

Fax: 202-283-8406

Purchasers of Ford Hybrids Still Qualify for Tax Credit

2007-08-06T10:54:00.000-05:00

Purchasers of Ford Hybrids Still Qualify for Tax Credit

IR-2007–140, Aug, 6 , 2007

WASHINGTON — The Internal Revenue Service announced that purchasers of qualified Ford Motor Company vehicles may continue to claim the Alternative Motor Vehicle Credit.

The announcement comes after the IRS concluded its quarterly review of the number of hybrid vehicles sold. Ford sold 6,272 qualifying vehicles to retail dealers during the quarter ending June 30, 2007. This brings the total number of Ford qualifying hybrids reported to date to 33,547.

The credit amount and make and model of the certified vehicles sold are:

Ford Escape 2WD Hybrid, Model Year 2008 — $3,000
Ford Escape 2WD, Model Years 2005, 2006 and 2007 — $2,600
Ford Escape 4WD Hybrid, Model Year 2008 — $2,200
Ford Escape 4WD, Model Years 2005, 2006 and 2007 — $1,950
Mercury Mariner 4WD Hybrid, Model year 2008 — $2,200
Mercury Mariner 4WD, Model Years 2006 and 2007 — $1,950
Mercury Mariner 2WD Hybrid, Model Year 2008 — $3,000

Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.

Phase-Out Credit for Toyota and Lexus Hybrids Continues With Reporting of Second Quarter Sales

2007-08-06T10:52:00.000-05:00

Phase-Out Credit for Toyota and Lexus Hybrids Continues With Reporting of Second Quarter Sales

IR-2007-139, Aug. 6, 2007

WASHINGTON — After reviewing the second quarter 2007 sales of Toyota Motor Sales USA Inc., the Internal Revenue Service announced that purchasers of qualifying Toyota and Lexus vehicles may continue to claim the Alternative Motor Vehicle Credit. Given the number of vehicles sold, the phase out period for Toyota vehicles began on Oct. 1, 2006.

Toyota sold 70,641 qualifying vehicles to retail dealers in the quarter ending June 30, 2007. This brings the cumulative sales of qualified Toyota hybrid vehicles sold from the period of Jan. 1, 2006, through June 30, 2007, to 344,083.

Taxpayers may claim the full amount of the credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th qualified vehicle. The sale of Toyota’s 60,000^th qualified vehicle occurred in the quarter ending June 30, 2006. Therefore, for qualifying vehicles purchased between Oct. 1, 2006, and March 31, 2007, consumers may claim 50% of the credit amount. Consumers who purchase qualifying vehicles between April 1, 2007, and Sept. 30, 2007, may only claim 25% of the credit amount.

No credit is allowed after Sept. 30, 2007.

The applicable credit amounts are as follows:

Qualifying Vehicle	Full Credit When Purchased By 9/30/06	Reduced Credit When Purchased From 10/1/06 Through 3/31/07	Reduced Credit When Purchased From 4/1/07 Through 9/30/07	No Credit When Purchased After 9/30/07
05, 06 and 07 Toyota Prius	$3,150	$1,575	$787.50	$0
06 and 07 Toyota Highlander 2WD and 4WD	$2,600	$1,300	$650	$0
07 Toyota Camry Hybrid	$2,600	$1,300	$650	$0
06 and 07 Lexus RX 400h 2WD and 4WD	$2,200	$1,100	$550	$0
07 Lexus GS450h	$1,550	$775	$387.50	$0

IRS Seeks Comments on Updates to Corporate and Partnership Tax Forms

2007-08-02T10:51:00.000-05:00

IRS Seeks Comments on Updates to Corporate and Partnership Tax Forms

IR-2007-138, Aug. 2, 2007

WASHINGTON — The Internal Revenue Service has released for comment and discussion draft revisions to Form 1065, U.S. Return of Partnership Income, and Form 1120, U.S. Corporation Income Tax Return. The IRS plans to have the forms and related schedules ready for use for taxable years ending on or after Dec. 31, 2008. Comments are due from the public by Sept. 14, 2007.

The changes to Forms 1065 and 1120 will provide the IRS with a more accurate understanding of these entities and their ownership structures. The proposed changes will enable the IRS to focus compliance resources on returns and issues that warrant examination. The IRS is soliciting comments from the public as to whether the proposed revisions will enhance compliance and the extent to which the changes may affect taxpayer burden.

“The current business models of our taxpayers involve multiple entities operating in different forms, both foreign and domestic,” said Deborah M. Nolan, Commissioner of the Large and Mid-Size Business Division. “These changes are designed to increase the transparency of the relationships between entities that make up these enterprises, enabling us to be much more efficient and effective.”

The major change to Form 1120 involves ownership. In particular, a corporation will be required to identify entities which own 10 percent or more of the corporation and individuals who own 50 percent or more of the corporation. A corporation will also be required to identify any foreign or domestic corporation in which it owns 10 percent or more of the total stock voting power, any disregarded entity that it owns and any foreign or domestic partnership or trust in which it owns an interest of 10 percent or more.

Additionally, a new Schedule B is added for Form 1120 filers required to file Schedule M-3. New Schedule B asks questions concerning ownership, allocations, transfers of interest, cost sharing arrangements and changes in methods of accounting. Small corporations, those having less than $10 million in assets, will not be required to file the new Schedule B.

The major changes to the Form 1065 also involve ownership issues. The revisions add new questions to the existing Schedule B. The revised Schedule B includes reporting requirements for partnerships having complex ownership structures. These partnerships are required to identify entities having direct and indirect (through attribution) ownership interests of 10 percent or more in the partnership and to identify entities in which the partnership owns interests of 10 percent or more. The revised Schedule B also asks for information about cancelled debt, and like-kind exchanges that the partnership may have participated in at any time during the tax year.

Additionally, for Form 1065 filers required to file Schedule M-3, there is a new Schedule C requiring the partnership to provide additional information about related party transactions. The new Schedule C also asks for the identity of individuals or entities owning 50 percent or more of the partnership and of other entities required to file U.S. income tax returns.

Minor revisions have been made to Schedule K-1. These revisions require the partnership to identify contributions and distributions of built-in gain or loss property and to identify the maximum percentage of a partner’s share of profit, loss and capital in cases where those amounts change during the year.

Some small partnerships will have a reduction in burden, as the asset threshold for filing certain schedules with Form 1065 has been increased from $600,000 to $1,000,000. However, partnerships with complicated ownership structures, related party transactions, contributions and distributions of built in gain or loss property, special allocation issues and optional basis adjustments may spend more time providing information.

The IRS has taken care to ask only for information that in most cases will be readily available. The redesign of the Forms 1065 and 1120 is based on two guiding principles:

Promoting compliance by accurately reflecting the entity’s ownership structure so the IRS may efficiently assess the risk of noncompliance; and
Minimizing the filing burden on most taxpayers by requiring this information only from complex entities.

The redesigned forms are available under Draft Forms on IRS.gov.

Questions and comments should be e-mailed to the IRS at Judith.A.McNamara@irs.gov by Sept. 14, 2007.

Related Items:

Treasury, IRS Release Report on Improving Voluntary Compliance

2007-08-02T10:50:00.000-05:00

Treasury, IRS Release Report on Improving Voluntary Compliance

IR-2007-137, Aug. 2, 2007

WASHINGTON — The Treasury Department and the Internal Revenue Service (IRS) released today an IRS report addressing the agency’s implementation of the 2006 strategy to improve voluntary compliance with federal tax laws. A copy of the report is attached.

The IRS report, Reducing the Federal Tax Gap: A Report on Improving Voluntary Compliance, details steps currently being taken by the IRS, as well as those under development, to address key elements of the “tax gap.” The report builds on the seven components of the Comprehensive Strategy for Reducing the Tax Gap, which the Treasury Department released in September 2006. Those components are:

Reducing Opportunities for Evasion
Making a Multi-Year Commitment to Research
Continuing Improvements in Information Technology
Improving Compliance Activities
Enhancing Taxpayer Service
Reforming and Simplifying the Tax Law
Coordinating with Partners and Stakeholders

In each of these areas, the report sets out compliance objectives and initiatives, along with targeted completion dates, that the IRS is implementing to improve tax compliance over the next several years.

Detailed information is provided on each step currently being taken to reduce opportunities for tax evasion, leverage technology and support legislative proposals that, as implemented, will improve compliance. At the same time, the report reaffirms that taxpayer rights must be respected and burdens on compliant taxpayers must be minimized. The report also presents an outreach approach to ensure all taxpayers understand their tax obligations. Additionally, it recognizes the importance of having a multi-year research program that will assist in understanding both the scope of and reasons for noncompliance.

Full implementation of the initiatives outlined in the report will have a positive effect on the rate of voluntary compliance. The report reflects the commitment of the IRS to apply its resources where they are of most value in reducing noncompliance while ensuring fairness, observing taxpayer rights, and minimizing the burden on taxpayers who comply.

The overall compliance rate achieved under the U.S. revenue system is quite high. For the 2001 tax year, the IRS estimates that over 86 percent of tax liabilities were collected, after factoring in late payments and recoveries from IRS enforcement activities. Nevertheless, an unacceptable amount of the tax that should be paid every year is not, short-changing the vast majority of Americans who pay their taxes accurately and giving rise to the tax gap. The gross tax gap was estimated to be $345 billion in 2001. After enforcement effects and late payments, this number was reduced to a net tax gap of approximately $290 billion.

George Blaine Named Associate Chief Counsel, Income Tax & Accounting

2007-08-01T09:51:00.000-05:00

George Blaine Named Associate Chief Counsel, Income Tax & Accounting

IR-2007-136, Aug. 1, 2007

WASHINGTON — The Internal Revenue Service announced today the appointment of George Blaine to the position of Associate Chief Counsel, Income Tax and Accounting, (ITA) effective August. 3, 2007. He will replace Lewis Fernandez who will retire on that date.

"We in the Office of Chief Counsel have been extremely fortunate that Lew Fernandez was willing a year ago to take on the top leadership role within Income Tax and Accounting,” said Donald L. Korb, IRS Chief Counsel. “The approach Lew has taken to revitalize that very important part of our National Office has set the stage for his successor to take the organization to the next level. After leaving the Office of Chief Counsel, Mr. Fernandez will continue his tax career at PricewaterhouseCoopers in Washington, D.C.”

“George Blaine is an outstanding choice for this important assignment,” Korb added. “His many years of service to the Office of Chief Counsel and his extensive experience and strong technical knowledge of Income Tax and Accounting issues have prepared him well to take over this role.”

The Associate Chief Counsel, ITA, provides legal advice and support services regarding federal tax matters involving tax accounting and a wide variety of issues relating to corporate and individual income taxation. The Associate Chief Counsel, ITA, also serves as senior legal advisor and expert consultant on litigation and other legal matters as they pertain to tax accounting and individual income taxation issues and represents the Office of Chief Counsel on sensitive and controversial legal matters related to these areas.

Since November 2003, Blaine has served as Deputy Associate Chief Counsel, ITA. As one of two Deputies to the Associate Chief Counsel, Blaine supervises approximately 115 professionals responsible for the basic income tax rules in Subchapter A, inclusions, exclusions, most individual deductions and credits, recognition, timing and special methods of accounting.

From 2000 to 2003, Blaine served as the Deputy Assistant Chief Counsel, Administrative Provisions and Judicial Practice Division. Blaine served as Chief of two branches in ITA from 1995 through 2000. In 1999, he received the Office of Chief Counsel’s “Manager of the Year” award. From 1988 to 1994, he was the Special Counsel in the Tax Litigation (later Field Service) Division.

Blaine received an LL.M in Taxation from the George Washington University in 1987. He received his B.A. in 1971 and a J.D. in 1974 from Temple University.

Summertime Tax Tips Available on IRS.gov and via E-Mail

2007-08-01T09:49:00.000-05:00

Summertime Tax Tips Available on IRS.gov and via E-Mail

IR-2007-135, Aug. 1, 2007

WASHINGTON — To help people with tax planning, the Internal Revenue Service is publishing Summertime Tax Tips to provide useful and concise advice on topics that affect millions of taxpayers.

Many taxpayers don’t think about their taxes until the start of the filing season in January. That can be a mistake. Steps such as getting the proper receipts from charities, adjusting your withholding or pursuing a tax strategy to increase your deductions are most effective if they are done well before year’s end.

The IRS is publishing three tax tips per week. Topics range from how parents can get credit for sending their kids to day camp to using an online calculator to fine tune your federal withholdings. Tips published on Fridays focus on the tax concerns of small business owners.

Tips in August will cover a range of topics, including charitable contributions, back-to-school advice, the saver’s credit, selling your home and tax scams.

You can receive new tips via email as they are published by subscribing through the E-News Subscription page on this Web site. When you subscribe, you will receive a confirmation message by e-mail. You must respond to the e-mail in order to verify your subscription.

Related Items:

Victims of 2005 Hurricanes Get Additional Year to Sell Vacant Land

2007-07-31T09:50:00.000-05:00

Victims of 2005 Hurricanes Get Additional Year to Sell Vacant Land

IR-2007-134, July 31, 2007

WASHINGTON — The Internal Revenue Service is extending for an additional year the time limit within which victims of Hurricanes Katrina, Rita and Wilma have to sell vacant land that they had owned and used as part of their principal residence that was destroyed as a result of the hurricanes.

Federal tax rules state that individuals have two years within which to sell the vacant land to be able to take advantage of the exclusion on gain from the sale of a principal residence.

Given that the two-year anniversary is approaching for victims of the 2005 hurricanes, the IRS has decided to provide additional time to take advantage of the exclusion. The IRS is granting relief by declaring that these victims now have three years after the destruction of their principal residence as a result of the hurricanes to sell their vacant land that they had owned and used as part of the principal residence.

IRS.gov has specific information on this provision for disaster victims. IRS.gov also has more information on the tax relief extended to victims of hurricanes Katrina, Rita and Wilma.

Hydrogen-Powered Honda Vehicle Qualifies for Tax Credit

2007-07-25T15:55:00.000-05:00

Hydrogen-Powered Honda Vehicle Qualifies for Tax Credit

IR-2007-133, July 25, 2007

WASHINGTON — The Internal Revenue Service acknowledged the certification by American Honda Motor Company, Inc, that one of its vehicles meets the requirements of the Alternative Motor Vehicle Credit as a qualified fuel cell vehicle.

Purchasers of the 2005 and 2006 Honda FCX, which is only capable of operating on hydrogen, may rely on their certification concerning the vehicle’s qualification for the Qualified Fuel Cell Motor Vehicle Credit.

The credit amount for the 2005 and 2006 Honda FCX is $12,000.

IRS Releases Interim Report on Tax-Exempt Hospitals and Community Benefit Project

2007-07-19T15:55:00.000-05:00

IRS Releases Interim Report on Tax-Exempt Hospitals and Community Benefit Project

IR-2007-132, July 19, 2007

WASHINGTON — The Internal Revenue Service released an interim report summarizing responses from almost 500 tax-exempt hospitals to a May 2006 questionnaire about how they provide and report benefits to the community. Providing community benefit is required for hospitals seeking and retaining tax-exempt status as charities.

Today’s report on the hospital compliance project contains preliminary information on the way nonprofit hospitals, which comprise one of the largest components of the tax-exempt sector, responded to questions about how they provide community benefit. The IRS is still in the process of analyzing the reported data.

“This is an important first step in our ongoing review of community benefit and tax-exempt hospitals,” said Lois G. Lerner, director of the IRS’s Exempt Organizations division. “As the report states, this project gives the IRS a unique and valuable insight into the manner in which hospitals report on and attempt to meet the community benefit standard.”

According to the report, nearly all hospitals reported that they provided various types of community benefit that were the subject of the questionnaire. Although 97 percent of responding hospitals said they have a written uncompensated care policy, no uniform definition of what constitutes “uncompensated care” emerged from the responses. Further, there appear to be significant differences in the way other components of community benefit are reported.

“The lack of consistency or uniformity in classifying and reporting uncompensated care and various types of community benefit often makes it difficult to assess whether a hospital is in compliance with current law,” Lerner said. “That’s one reason more analysis is needed.”

While the interim report summarizes but does not analyze the information reported by the hospitals, the IRS’s hospital project team did recommend developing a separate Form 990 schedule for hospitals, as a way to address the lack of uniformity in definitions and reporting. A new Schedule H, Hospitals, is part of the recently released discussion draft of that form.

In addition, the hospitals were questioned on how they set and report executive compensation. Additional information will be made available as the IRS completes its analysis of that component of the project.

Related item:

Interim hospital report and other resources

National Taxpayer Advocate Releases Report to Congress; Identifies Priority Challenges and Issues for Upcoming Year

2007-07-19T15:53:00.000-05:00

National Taxpayer Advocate Releases Report to Congress; Identifies Priority Challenges and Issues for Upcoming Year

IR-2007-131, July 19, 2007

WASHINGTON — National Taxpayer Advocate Nina E. Olson today delivered a report to Congress that identifies the priority issues the Office of the Taxpayer Advocate will address in the coming fiscal year. Among the key areas of focus will be improving taxpayer services, ensuring that taxpayer rights are protected in the IRS’s private debt collection initiative, and making the IRS’s offer-in-compromise program more accessible for taxpayers who are unable to pay their tax debts in full.

The report also addresses the challenges the IRS is facing because of pressure to close the tax gap quickly. The tax gap represents the difference between the amount of tax owed and the amount of tax collected. “For fiscal year 2008, both the IRS and the Taxpayer Advocate Service (TAS) face similar challenges,” Olson wrote. “The IRS is under scrutiny for its efforts to close the tax gap, while TAS is struggling to address taxpayer difficulties that arise as a result of these very efforts.”

In prior reports to Congress, Olson has identified the tax gap as one of the most serious challenges in tax administration, and she has advanced numerous proposals to help address it. At the same time, she has expressed concern that the IRS may ramp up enforcement excessively and begin to “cut corners” in its treatment of taxpayers if it is pressured to do too much too quickly.

She emphasized that Congress can play an important role in helping to achieve an appropriate balance. “IRS oversight should not just be limited to urging the IRS to collect more tax revenue,” Olson wrote. “Even as Congress directs the IRS to address specific areas of noncompliance, Congress should require the IRS to adopt a long-term research strategy that focuses not only on “closing the tax gap” but also on understanding what it takes to encourage taxpayers to be voluntarily compliant and how to change taxpayer behavior.”

The Advocate’s report, which is required by law, sets out the objectives of the Office of the Taxpayer Advocate for the upcoming fiscal year and provides substantive analysis of issues as well as statistical information. The report identifies three areas for particular emphasis in FY 2008:

1. Improve Taxpayer Services. In April 2007, the IRS published a strategic plan detailing its taxpayer service priorities for the next five years. The report, known as the Taxpayer Assistance Blueprint or “TAB,” was developed in response to an Appropriations directive. OIson was a participant in the development of the TAB, and she generally praised the product. She notes, however, that the TAB is only a “first step” because the IRS still faces challenges in implementing the plan. She urges the IRS to conduct further research on taxpayer needs and preferences and to maintain a commitment to providing face-to-face service for taxpayers who need it. Working with the IRS to implement the TAB will be a top TAS priority in FY 2008.

2. Ensure that Taxpayer Rights Are Protected in the IRS’s Private Debt Collection Initiative. In 2006, the IRS began to use private debt collection agencies to collect certain tax debts. Olson has previously stated her opposition to the initiative, citing risks to taxpayer privacy and confidence in the federal tax system. However, her office has worked closely with the IRS to ensure that taxpayer rights are protected to the maximum extent possible. Her office will continue to work closely with the IRS toward this end in the coming year.

3. Make the IRS’s Offer In Compromise Program Accessible for Appropriate Taxpayers. A taxpayer who is unable to pay his or her tax liability in full may seek to compromise the debt by submitting an “offer in compromise.” The offer program is a good deal for both the government and the taxpayer. The government benefits because it frequently collects more than it would in the absence of the program and the taxpayer is induced to pay taxes on time and in full in the future; a taxpayer whose offer is accepted must remain fully compliant for five years or face reinstatement of the compromised tax debt. The taxpayer benefits because he or she is able to make a fresh start. Legislation enacted in 2006 requires taxpayers who submit “lump sum” offers to make a down payment of 20 percent of the amount of the offer with the submission. To determine the impact of this requirement on bona fide offers, TAS reviewed a sample of 414 offers that the IRS accepted prior to the enactment of the down-payment requirement. In about 70 percent of those cases, the taxpayer did not have access to sufficient liquid funds to make the required down payment. The National Taxpayer Advocate will work with the IRS and the Treasury Department to try to improve the accessibility of the offer program.

The report includes an update on a review the Office of the Taxpayer Advocate conducted on IRS compliance with Freedom of Information Act (FOIA) and related transparency guidelines. The results of the review were published in the National’s Taxpayer Advocate’s 2006 year-end report to Congress. In the current report, the National Taxpayer Advocate states that the IRS has made major strides toward improving the transparency of its procedures.

The report also describes the challenges TAS itself is facing due to rapidly growing case inventories and staffing declines. By statute, TAS is required to maintain at least one office in every state, and it currently maintains 75 offices. TAS assists taxpayers who either are experiencing significant economic harm or are having difficulty resolving their problems through normal IRS processes. From FY 2004 through FY 2006, TAS’s case receipts have grown by 43 percent, while the number of case advocates available to work those cases has declined by 8 percent. The report states that TAS has been making process changes to achieve efficiencies but faces significant challenges in the next few years to continue to deliver high quality taxpayer service to help taxpayers resolve their tax problems.

The National Taxpayer Advocate is required by statute to submit two annual reports to the House Committee on Ways and Means and the Senate Committee on Finance. The statute requires these reports to be submitted directly to the Committees without any prior review or comment from the Commissioner of Internal Revenue, the Secretary of the Treasury, the IRS Oversight Board, any other officer or employee of the Department of the Treasury, or the Office of Management and Budget. The first report is submitted mid-year and must identify the objectives of the Office of the Taxpayer Advocate for the fiscal year beginning in that calendar year. The second report, due on December 31 of each year, must identify at least 20 of the most serious problems encountered by taxpayers, discuss the 10 tax issues most frequently litigated in the courts during the prior year, and make administrative and legislative recommendations to resolve taxpayer problems.

About the Taxpayer Advocate Service

The Taxpayer Advocate Service is an independent organization within the IRS that assists taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. Taxpayers may be eligible for assistance if:

They are experiencing economic harm or significant cost (including fees for professional representation);
They have experienced a delay of more than 30 days to resolve a tax issue; or
They have not received a response or resolution to their problem by the date promised by the IRS.

The service is free, confidential, tailored to meet taxpayers’ needs, and available for businesses as well as individuals. There is at least one local taxpayer advocate in each state, the District of Columbia and Puerto Rico.

Taxpayers can contact the Taxpayer Advocate Service by calling its toll-free case intake line at 1-877-777-4778 or TTY/TTD 1-800-829-4059 to determine whether they are eligible for assistance. They can also call or write to their local taxpayer advocate, whose phone number and address are listed in the local telephone directory and in Publication 1546, The Taxpayer Advocate Service of the IRS - How to Get Help With Unresolved Tax Problems, which is available on the IRS website at IRS.gov.

Related link:

National Taxpayer Advocate’s 2008 Objectives Report to Congress — http://www.irs-tas.com.

New Electronic PIN Signature Requirement Begins in 2008

2007-07-16T15:53:00.000-05:00

New Electronic PIN Signature Requirement Begins in 2008

IR-2007-130, July 16, 2007

WASHINGTON — The Internal Revenue Service will simplify the signature process for electronically filed individual income tax returns submitted by tax practitioners. The simplification eliminates the need for a paper signature document to be sent to the IRS in support of electronically filed tax returns.

Beginning with the 2008 filing season, tax practitioners can e-file individual income tax returns only if the returns are signed electronically using one of two methods: either a Self-Select Personal Identification Number (PIN) or a Practitioner PIN. A Self-Select PIN allows taxpayers to electronically sign their e-filed return by selecting a five-digit PIN. A Practitioner PIN is used when a taxpayer authorizes an Electronic Return Originator (ERO) to input an electronic signature on behalf of the taxpayer.

Practitioner PINs require the use of Form 8879, IRS e-file Signature Authorization, which is retained by the ERO.

“Nearly 90 percent of tax professionals already use electronic signatures to sign returns,” Acting IRS Commissioner Kevin M. Brown said. “It’s the right time to take the next step toward truly paperless filing.”

Out of some 55 million e-filed returns that have come from tax professionals this year, more than 49 million used the Self-Select PIN or the Practitioner PIN. Overall, more than 77 million individual tax returns have been e-filed so far this year.

The change will simplify tracking, verification and follow-up on the paper signature documents, which were required for tax returns that did not use an electronic signature.

Tax practitioners will no longer submit a paper signature for e-filed returns by using Form 8453, U.S. Individual Income Tax Declaration for an IRS e-file Return. Instead, a newly designed Form 8453 will be used to transmit supporting paper documents that are required to be submitted to the IRS with e-filed returns. The new Form 8453 will be released later for use during the 2008 filing season.

IRS to Notify Small Tax-Exempt Organizations of New Information Reporting Requirement

2007-07-12T15:53:00.000-05:00

IRS to Notify Small Tax-Exempt Organizations of New Information Reporting Requirement

IR-2007-129, July 12, 2007

WASHINGTON — The Internal Revenue Service today announced that it began mailing educational letters this month to more than 650,000 small tax-exempt organizations that may be required to submit a new annual notice, Form 990-N, “Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ.”

IRS expects to mail the letters over a period of several months, finishing in December.
With the enactment of the Pension Protection Act of 2006 (PPA), the majority of small tax-exempt organizations are now required to submit the e-Postcard. Previously, tax-exempt organizations with gross receipts of $25,000 or less were not required to submit information returns. The first e-Postcards are due in calendar year 2008. The IRS intends to have an option available for free electronic submission of the e-Postcard.

“We’re sending these educational letters to all the small exempt organizations in our records because we want to make sure they all know about the new requirement,” said Lois G. Lerner, director of the IRS Exempt Organizations division. “The new e-Postcard reporting requirement is simple and straightforward, but organizations shouldn’t ignore it, or they risk losing their tax-exempt status.”

Any organization that fails to meet its annual reporting requirement for three consecutive years automatically loses its tax-exempt status under the new law. An organization that wants to regain its exempt status will then have to reapply for recognition as a tax-exempt organization.

Short, Easy, Free and Electronic

“The IRS calls the new form an e-Postcard because it is short, easy and electronic,” Lerner said. “And organizations will be able to submit it free of charge.”

The e-Postcard requires small organizations to provide a legal name and mailing address, any other names used, a Web address if one exists, the name and address of a principal officer and a statement confirming the organization’s annual gross receipts are normally $25,000 or less.

In addition to sending out educational letters, IRS is encouraging everyone –– individual volunteers, tax practitioners and larger organizations –– to spread the word about the new e-Postcard reporting requirement.

“People do a lot to help their communities by volunteering their time and money to local charities. We're asking them to also offer a helping hand by making sure that charities know about the law change," Lerner said. "We don’t want those organizations to lose their tax-exempt status because they didn’t know about the new reporting requirement.”

The IRS is developing a free reporting system for the e-Postcard and an application to make the information available to the public on IRS.gov. Information about these systems will be announced as soon as it becomes available.

Further details, including frequently asked questions and a copy of the educational letter, are available in the charities and non-profits section of IRS.gov.

Electronic Excise Tax Filing Is Coming; IRS Will Accept Paper Forms 2290 in Interim

2007-07-12T15:52:00.000-05:00

Electronic Excise Tax Filing Is Coming; IRS Will Accept Paper Forms 2290 in Interim

IR-2007-128, July 12, 2007

WASHINGTON — The Internal Revenue Service will add three excise tax forms this year to the ever-expanding list of federal tax returns and schedules that can be filed electronically.

“Electronic filing is a key component to modernizing our tax system,” IRS Acting Commissioner Kevin M. Brown said. “Expanding e-file opportunities to include excise tax returns will help improve service to taxpayers using these forms.”

The 2007 tax filing season set a number of electronic records, highlighted by more than 77 million electronically-filed individual tax returns.

IRS expects to receive the first electronically-filed excise tax return this summer, when Form 2290, Heavy Highway Vehicle Use Tax Return, becomes the first available excise tax return that can be e-filed. Last year, more than 575,000 Forms 2290 were filed with the IRS.

As the IRS begins implementation of electronic filing for excise tax returns later this year, taxpayers may continue to file paper Forms 2290, including those reporting 25 or more vehicles. IRS will issue further guidance regarding the applicable tax code section, IRC section 4481(e).

Form 720, Quarterly Federal Excise Tax Return, and Form 8849, Claim for Refund of Excise Taxes, will be available to e-file later this year.

Additional information about Electronic Excise is available.

Related Items:

Chief Counsel Seeking Comment on Gift Tax Consequences of Trusts Employing Distribution Committee

2007-07-09T15:51:00.000-05:00

Chief Counsel Seeking Comment on Gift Tax Consequences of Trusts Employing Distribution Committee

IR-2007-127, July 9, 2007

WASHINGTON — The Internal Revenue Service announced today that it is reconsidering a series of private letter rulings (PLRs) issued by the Office of the Associate Chief Counsel, Passthroughs & Special Industries.

The PLRs address, in part, the gift tax consequences under sections 2511 and 2514 of the Internal Revenue Code of trusts that utilize a distribution committee consisting of trust beneficiaries who direct distributions of trust income and corpus. It has come to the Office of Chief Counsel’s attention that the conclusions in the PLRs regarding the application of section 2514 may not be consistent with Rev. Rul. 76-503, 1976-2 C.B. 275, and Rev. Rul. 77-158, 1977-1 C.B. 285. Accordingly, the Office of Chief Counsel is requesting comments as to whether the conclusions in these PLRs regarding section 2514 can be reconciled with the revenue rulings.

These PLRs involve a situation where trust distributions are made at the unanimous consent of a distribution committee that consists of trust beneficiaries, or at the discretion of an individual committee member with the consent of the grantor. If a distribution committee member resigns or dies, the committee member is replaced with another person. The PLRs conclude that the distribution committee members have substantial adverse interests to each other for purposes of section 2514. Therefore, they do not possess general powers of appointment over the trust. Accordingly, distributions from the trust will not be subject to gift tax with respect to the distribution committee members.

However, the holdings in Rev. Rul. 76-503 and Rev. Rul. 77-158 indicate that because the committee members are replaced if they resign or die, they would be treated as possessing general powers of appointment over the trust corpus. It has been suggested that the facts presented in the PLRs are distinguishable from the revenue rulings because in the PLRs, the grantor’s gift to the trust is incomplete since the grantor retains a testamentary special power of appointment. See, however, section 25.2514-1(e), Example (1) of the Gift Tax Regulations, and Rev. Rul. 67-370, 1967-2 C.B. 324.

Before the Office of Chief Counsel takes any action with respect to the PLRs, the Office of the Associate Chief Counsel, Passthroughs & Special Industries is requesting comments regarding the question of whether the distribution committee members possess general powers of appointment under section 2514. The comments could also include suggestions for a substantially similar trust structures that would achieve the intended income, gift, and estate tax objectives of the transactions described in the PLRs.

Comments should be provided within ninety (90) days of the date of this news release. Send written comments to: Internal Revenue Service, Attn: CC:PA:LPD:PR (CC:PSI:4), room 5203, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (CC:PSI:4), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave, N.W., Washington, DC, or sent electronically, via Notice.comments@irscounsel.treas.gov (indicate CC:PSI:4)

Mazda Vehicles Certified As Qualified Hybrid Vehicles

2007-07-06T15:51:00.000-05:00

Mazda Vehicles Certified As Qualified Hybrid Vehicles

IR-2007-126, July 6, 2007

WASHINGTON — The Internal Revenue Service has acknowledged the certification by Mazda Motor of America, Inc., that several of its Model Year 2008 vehicles meet the requirements of the Alternative Motor Vehicle Credit as qualified hybrid motor vehicles.

The credit amount for the certified 2008 model year hybrid vehicles are:

Mazda Tribute 2WD Hybrid — $3,000
Mazda Tribute 4WD Hybrid — $2,200

Revised Innocent Spouse Form Now Available

2007-07-05T15:50:00.000-05:00

Revised Innocent Spouse Form Now Available

IR-2007-125, July 5, 2007

WASHINGTON — The Internal Revenue Service today announced a redesigned Form 8857, Request for Innocent Spouse Relief, that will help reduce follow-up questions and reduce the burden on taxpayers.

The form will ask more questions initially, but collecting critical information early in the process will mean faster processing of the request. Previously, Form 12510, Questionnaire for the Requesting Spouse, was separate from Form 8857. The redesign will combine and streamline the two forms. The redesigned form will be easier to understand and complete and will help educate taxpayers about the process.

The new design will eliminate an estimated 30,000 follow-up letters annually. This will result in reduced burden, quicker responses to taxpayers and less cost to the government. The revisions were based on suggestions from an IRS process improvement team led by the Office of Taxpayer Burden Reduction.

When a taxpayer files a joint return, both spouses are jointly and individually responsible for the tax. Innocent Spouse relief provides an opportunity for a spouse to be relieved from the joint debt under certain circumstances. If a taxpayer believes that only his or her spouse or former spouse should be responsible for the tax, the taxpayer can request relief from the tax liability.

Related Items:

Form 8857, Request for Innocent Spouse Relief
Tax Information for Innocent Spouses

IRS Launches Four New “Life Cycles” on IRS.gov to Help Tax-Exempt Organizations Comply with the Law

2007-06-28T15:49:00.000-05:00

IRS Launches Four New “Life Cycles” on IRS.gov to Help Tax-Exempt Organizations Comply with the Law

IR-2007-124, June 28, 2007

WASHINGTON — The Internal Revenue Service today launched four new "Life Cycles" — Web-based information tools — to help guide tax-exempt organizations through the federal tax rules and requirements that pertain to them.

The new tools, patterned after existing life cycles for public charities and private foundations, provide easy navigation through the IRS Web site for:

Social welfare organizations — under Internal Revenue Code section 501(c)(4).
Labor organizations — 501(c)(5).
Agricultural and horticultural organizations, such as farm bureaus — 501(c)(5).
Trade associations and other business leagues — 501(c)(6).

Each life cycle provides a graphical snapshot of five stages organizations typically go through during their existence: starting the organization; applying for tax-exempt status; filing required returns and other documents; maintaining compliance; and terminating the organization.

“The exempt organizations community has enthusiastically embraced the life cycle concept for public charities and private foundations. We thought it made sense to develop similar helpful tools for other sectors of the exempt organizations community," said Lois G. Lerner, director of the IRS’s Exempt Organizations division. “These Web pages are designed to be an easy-to-use service for this community.”

The concept of these user-friendly, Web-based, compliance resources first originated with the Advisory Committee on Tax Exempt and Government Entities (ACT).

Like their predecessors, the new life cycles explain an array of issues, such as how to acquire an employer identification number; how to avoid jeopardizing an organization’s exemption; how political campaign involvement could affect the organization’s status and tax responsibilities; and how disclosure requirements must be met.

Related Item: Life Cycle of an Exempt Organization

IRS Expands Project to Ensure Eligible Public School Employees Are Allowed to Participate in Retirement Annuities

2007-06-21T15:49:00.000-05:00

IRS Expands Project to Ensure Eligible Public School Employees Are Allowed to Participate in Retirement Annuities

IR-2007-123, June 21, 2007

WASHINGTON — The Internal Revenue Service is expanding an outreach effort to ensure that public schools throughout the United States are complying with the universal availability requirement for retirement annuities they may offer. Some schools and school districts may be overlooking offering employees the opportunity to participate in these retirement plans.

To assess the level of compliance, the IRS’s Employee Plans Compliance Unit (EPCU), has started sending questionnaires to public school districts in all 50 states under the auspices of the 403(b) Universal Availability project.

This expansion builds upon a pilot project that began in June 2006 with questionnaires that were sent to public schools and districts in New Jersey, Missouri and Washington. In the initial phase of the expansion, the IRS has begun contacting school districts in Alaska, Florida, Hawaii, Illinois, Nevada, Pennsylvania, Tennessee and Virginia. School districts in the remaining states will be contacted as part of the project through 2008.

“Our pilot project in three states showed fairly widespread noncompliance by schools with the universal availability requirement for 403(b) plans,” said Joseph Grant, Director of the IRS Employee Plans division. “But we believe most of it was due to a lack of understanding about what the law requires, not a deliberate failure to comply.”

Typical noncompliance involves excluding participation by certain classes of employees, such as substitute teachers, janitors, cafeteria workers and nurses. The law requires that all public school employees normally expected to work 20 hours per week must be offered the opportunity to participate in a 403(b) plan if the school or district sponsors one.

Schools that receive the questionnaire should answer it completely and accurately. If a potential problem is identified, the IRS will correspond with the school or district to help it analyze its 403(b) plan to determine whether it is in noncompliance. If school officials find a problem, they should use one of the correction methods outlined in the IRS’s follow-up letter. If a school makes the necessary corrections timely, the IRS will not impose a sanction.

“We know from our pilot project and from talking to representatives from schools and districts across the country that most of the problems stem from either misunderstanding the law or from confusion because of differing rules in various states,” said Grant. “The project will give schools the chance to identify problems with their plans and to correct them on their own.”

A 403(b) plan is a retirement plan for certain employees of public schools, employees of certain tax-exempt organizations, and certain ministers.

For more information on this and other EPCU projects, visit the EPCU Web page at www.irs.gov/ep.

Related Items:

Additional Information on 403(b)Project

No Change in the Interest Rates for the Third Quarter of 2007

2007-06-20T15:49:00.000-05:00

No Change in the Interest Rates for the Third Quarter of 2007

IR-2007-122, June 20, 2007

WASHINGTON — The Internal Revenue Service today announced there will be no change in the interest rates for the calendar quarter beginning July 1, 2007. The interest rates are as follows:

eight (8) percent for overpayments [seven (7) percent in the case of a corporation];
eight (8) percent for underpayments;
ten (10) percent for large corporate underpayments; and
five and one-half (5.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during April 2007.

Revenue Ruling 2007-39, announcing the new rates of interest, appears in Internal Revenue Bulletin No. 2007-26, dated June 25, 2007.

IRS Advises Employers, Payers, Agents to Use New Appointment Form 2678

2007-06-20T15:48:00.000-05:00

IRS Advises Employers, Payers, Agents to Use New Appointment Form 2678

IR-2007-121, June 20, 2007

WASHINGTON — The Internal Revenue Service recommends that employers, payers and their agents begin using a new, improved version of the agent appointment form immediately, to avoid delays in having the IRS approve the agent appointments.

All versions prior to the May 2007 form are now obsolete.

Form 2678, Employer/Payer Appointment of Agent, authorizes an agent to file tax returns and deposit and pay employment or other withholding taxes on an employer or payer’s behalf. However, the employer retains responsibility for filing Form 940, Employer’s Annual Federal Unemployment [FUTA] Tax Return, and depositing and paying FUTA tax.

The IRS recently redesigned Form 2678 to make it clearer and more user-friendly. The redesign resulted from an initiative led by the IRS Office of Taxpayer Burden Reduction.

The IRS receives about 15,000 Forms 2678 annually, encompassing approximately 3,000 agents and 20,000 employers.

The new Form 2678 contains several enhancements that clarify the appointment form and simplify the authorization process, including:

Plain language instructions;
Signature lines for both the employer/payer and the agent to request the agent’s authority, eliminating the need for any additional authorization requests;
Easier revocation, with only one signature — either the employer’s/payer’s or the agent’s — required to revoke authority;
Check boxes that clearly establish which form(s) the agent is authorized to file on the employer’s/payer’s behalf;
A check box for the agent to indicate whether the employer is a disabled individual or other welfare recipient receiving home-care services through a state or local program; and
Disclosure language, authorizing the IRS to disclose information about the taxes and periods covered to the agent and any third party the agent may contract with, such as a reporting agent or CPA.

Employers, payers and agents should complete and send Forms 2678 to the address in the self-contained instructions 60 days before the date they want an appointment to become effective. Those with approved appointments already on file with the IRS do not need to take any action unless, using the new form, they wish to revoke an existing appointment.

IRS will return any obsolete versions of Forms 2678 that are filed and ask senders to submit the May 2007 revision instead.

When the IRS approves Form 2678, both the employer or payer and the agent are liable for the employer’s employment tax, under federal tax law.

The new Form 2678 may be downloaded from this Web site or ordered by calling toll-free 1-800-TAX-FORM (1-800-829-3676).

Related Items:

Form 2678, Employer/Payer Appointment of Agent
Form 940, Employer’s Annual Federal Unemployment [FUTA] Tax Return
Office of Taxpayer Burden Reduction (TBR)

IRS Chief Counsel Announces New Executive Appointments

2007-06-19T15:47:00.000-05:00

IRS Chief Counsel Announces New Executive Appointments

IR-2007-120, June 19, 2007

WASHINGTON –– Internal Revenue Service Chief Counsel Donald L. Korb has announced the following Senior Executive Service moves:

Deputy Chief Counsel (Operations) Donald T. Rocen will retire effective July 27, 2007. Rocen joined the Office of Chief Counsel in May 2004 as Special Counsel to the Chief Counsel after serving in the Washington, D.C. office of PricewaterhouseCoopers, LLP. Rocen previously served as Assistant to IRS Commissioner Lawrence Gibbs from 1986 to 1989 and, before that, beginning in 1971, held a variety of positions in the Office of Chief Counsel over a span of 15 years.
Small Business/Self-Employed Area Counsel H. Stephen Kesselman will replace Rocen as Deputy Chief Counsel (Operations). Kesselman has over 35 years of experience as a litigator, manager and executive with the Office of Chief Counsel in several field offices. He earned a B.A. from Lafayette College in 1968 and J.D. from Rutgers University in 1971. Kesselman is also an adjunct faculty member at Villanova University Law School’s Graduate Tax Division.
Associate Chief Counsel (Financial Institutions and Products) Lon B. Smith will undertake a new assignment as the National Counsel to the Chief Counsel for Special Projects. Smith will serve as the principal focal point for some of the most critical projects and initiatives of the Office of Chief Counsel. Smith has served as an attorney in positions of progressive responsibility with the Office of Chief Counsel for nearly 30 years. He received his B.A. from the University of Rochester in 1974, J.D. from the University of Pittsburgh Law School in 1977 and LL.M in taxation from Georgetown University in 1986.

“Don Rocen has been a close friend for over three decades and his tax expertise, consummate professionalism and wonderful sense of humor will be sorely missed in our office,” said Korb. “Don’s three years of service as my Deputy Chief Counsel (Operations) was another major milestone in an enormously successful career in tax law in both the public and the private sectors.”

After Rocen leaves the Office of Chief Counsel, he will continue his career with the Washington law firm of Miller & Chevalier.

“I am delighted that Steve Kesselman, one of our top senior attorneys with a wealth of field experience, will join the front office in Washington as Deputy Chief Counsel following Don’s departure,” said Korb. “I am particularly pleased that I am able to fill the Deputy Chief Counsel’s position from within our current executive ranks. Steve is a great example of why the Office of Chief Counsel is not only a great place to start a tax career, but also a great place to spend a career in tax as well.”

“I am also pleased that Lon Smith has agreed to join the front office as the National Counsel to the Chief Counsel for Special Projects," said Korb. “His leadership skills will enable him to fulfill a vitally important role in coordinating a number of cross-office activities, helping us to institutionalize the changes we have been making to the Office of Chief Counsel over the past three years, and helping with the oversight of our major initiatives during the remainder of my term as Chief Counsel and beyond. Lon’s outstanding experience and seasoned judgment as both a tax lawyer and executive will be extraordinarily helpful as we continue to shape the Office of Chief Counsel to meet our client’s current and future legal needs.”

Smith will continue as the Associate Chief Counsel (Financial Institutions and Products) until a replacement is named.

Within the next week or two, an announcement will be published on USAjobs.

“We are looking for someone who will be able to build on the changes Lon has made in redirecting the efforts of FIP. As I announced previously, FIP not only reacquired the branch responsible for tax-exempt bonds, but it also realigned its other branches to create one branch that would focus on transactions in the field and one that would identify and address new financial products as soon as they enter the marketplace. The goal of the realignment is to provide faster and more informed legal support to the Commissioner, to become more current with new developments in the financial markets, and to resolve the most current legal issues, while maintaining a commitment to our more traditional work arising in the published guidance and letter ruling programs,” said Korb.

IRS Issues Spring 2007 Statistics of Income Bulletin

2007-06-18T15:47:00.000-05:00

IRS Issues Spring 2007 Statistics of Income Bulletin

IR-2007-119, June 18, 2007

WASHINGTON — The Internal Revenue Service today announced the release of the spring 2007 issue of the Statistics of Income Bulletin. Highlights include articles on high-income individual income tax returns, taxpayers reporting noncash contributions, farm proprietorship returns, qualified zone academy bonds, international boycott reports and S corporations.

The article on farm proprietorship returns is the first published by IRS in more than 20 years. In addition, this issue of the Bulletin presents selected tax year 1990-2004 individual income tax return data that have been indexed for inflation and tax year 2005 individual income tax return statistics classified by state and size of adjusted gross income.

For tax year 2004, there were 3,021,435 individual income tax returns filed with adjusted gross income (AGI) of $200,000 or more and 3,067,602 returns with expanded income of $200,000 or more.

The Bulletin also contains articles with the following information:

For tax year 2004, there were 25.3 million individual taxpayers who itemized deductions and reported a deduction for noncash charitable contributions. Those taxpayers reported $43.4 billion in deductions for these noncash contributions. Individuals whose total noncash charitable deductions on Schedule A, Itemized Deductions, exceed $500 are required to report these donations in detail on Form 8283, Noncash Charitable Contributions. For 2004, a total of 6.6 million individuals, representing a little more than a quarter of those who reported noncash charitable contributions, filed Form 8283. These individuals reported noncash contributions valued at almost $37.2 billion, or nearly 86 percent of all noncash contributions.
The number of farm proprietorship returns declined between tax years 1998 and 2004, with the majority of farm proprietorship returns showing a farm net loss. For tax year 2004, some 1.4 million farm proprietorship returns, or 70 percent of the total, had a farm net loss. Gross farm income reported on sole proprietorship returns totaled $93.3 billion for tax year 1998 and increased 8.3 percent to $101.0 billion in 2004. Total farm expenses grew even more during this period, by 12.9 percent, from $101.2 billion in 1998 to $114.3 billion in 2004.
The Qualified Zone Academy Bond (QZAB) program has authorized the issuance of $400 million in principal amount of tax credit bonds by the United States and its territories in each year from 1998 through 2007. QZAB credits claimed by qualified financial institutions in tax year 2004 totaled $117.5 million, based on total reported QZAB principal holdings of $1.6 billion. Total authorized issuance between 1998 and 2003 was $2.4 billion. No state issued its full allocation of QZAB credits during this period, although Vermont and Michigan issued more than 90 percent of their allocations. By year of issuance, the reported principal of QZAB issuance rose from $90.7 million in 1998-1999 to a peak of $766.3 million in 2001, after which it fell again to $91.0 million in 2003-2004.
For tax year 2003, some 1,268 taxpayers filed Form 5713, International Boycott Report; of these, 124 reported receiving boycott requests, and 36 agreed to participate in a boycott. There were 41 taxpayers who lost a portion of their tax benefits as a result of their participation in a boycott or because they had operations in a boycotting country and claimed the extraterritorial income exclusion. Similarly, 1,343 Forms 5713 were filed for tax year 2004; of these, 131 taxpayers reported boycott requests, 45 agreed to participate, and 46 taxpayers reported tax consequences. For both years, the percentage of filers who lost tax benefits was approximately 3 percent.
The final Bulletin article takes a look at the dominance of the wholesale and retail trade division among S corporations since 1959. For tax year 2004, some 45 years after the creation of S corporations, wholesale and retail represented the largest portion of total receipts, total deductions, portfolio income, total net income (less deficit) and total assets

The Bulletin includes historical data on income, deductions and tax reported on returns filed by individuals, corporations and unincorporated businesses, with selected data presented for estates. Statistics are also presented on tax collections, including excise taxes by type and refunds for recent years.

The Statistics of Income Bulletin is available from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. The annual subscription rate is $53 ($74.20 foreign), single issues cost $39 ($48.75 foreign). For more information about these data, write the Director, Statistics of Income (SOI) Division, RAS:S, Internal Revenue Service, P.O. Box 2608, Washington, DC 20013-2608; call SOI's Statistical Information Services at (202) 874-0410; or fax, (202) 874-0964. To access the spring 2007 issue of the Statistics of Income Bulletin, visit the IRS Web site www.irs.gov and click on “Tax Stats” in the upper left-hand corner. From the Tax Stats page, select “SOI Bulletins” under “Products, Publications, & Papers.”

Related Items:

Spring 2007 Statistics of Income Bulletin

IRS Reminds Tax Professionals to Register Early for Tax Forum

2007-06-15T15:46:00.000-05:00

IRS Reminds Tax Professionals to Register Early for Tax Forum

IR-2007-118, June 15, 2007

WASHINGTON — As the Nationwide Tax Forums begin, tax professionals are being reminded to make reservations now for one of six forums being held throughout the country.

The Nationwide Tax Forums are three-day events that provide tax professionals with the most up-to-date tax information through training seminars presented by IRS experts and partnering organizations. Forums offer an opportunity to receive up to 18 continuing professional education (CPE) credits through a variety of training seminars.

The locations are:

Atlanta — July 17-19
Chicago — July 31-Aug. 2
Las Vegas — Aug. 21-23
New York — Aug. 28-30
Anaheim — Sept. 11-13
Orlando — Sept. 18-20

This year 41 separate seminars are being offered, each of which qualifies for CPE credit for Enrolled Agents and Certified Public Accountants. Additionally, 28 of the 41 qualify for continuing education credit for Certified Financial Planners.

Members of the participating associations below qualify for discounted enrollment costs:

American Association of Attorney-Certified Public Accountants
American Bar Association
American Institute of Certified Public Accountants
National Association of Enrolled Agents
National Association of Tax Professionals
National Society of Accountants
National Society of Tax Professionals

In addition to the seminars, the forums also feature a two-day expo with representatives from the IRS, tax, financial and business communities offering their products, services and expertise.

The cost of enrollment is $165 per person, per city for pre-registration and $299 for late or on-site registration. The pre-registration period ends two weeks prior to the start of each forum.

In a survey of 2006 attendees the forums received a 94 percent satisfaction rate and a 99 percent overall quality rating. Attendees stated that their participation enabled them to offer greater technical expertise to meet their clients’ needs. 2007 marks the 17th year that the IRS has used this successful format to help educate and interact with the tax professional community.

Related Item: IRS Nationwide Tax Forums

IRS Releases Discussion Draft of Redesigned Form 990 for Tax-Exempt Organizations

2007-06-14T15:45:00.000-05:00

IRS Releases Discussion Draft of Redesigned Form 990 for Tax-Exempt Organizations

IR-2007-117, June 14, 2007

WASHINGTON — The Internal Revenue Service today released for comment and discussion a draft Form 990, the annual return required to be filed by tax-exempt organizations to report information about their operations. The IRS hopes to have the form ready for use for the 2008 filing year (returns filed in 2009).

“The tax-exempt sector has changed markedly since the Form 990 was last overhauled more than a quarter of a century ago," said Kevin Brown, Acting Commissioner of the IRS. “We need a Form 990 that reflects the way this growing sector operates in the 21st century. The new 990 aims to give both the IRS and the public an improved window into the way tax-exempt organizations go about their vital mission.”

The redesign of Form 990 is based on three guiding principles:

Enhancing transparency to provide the IRS and the public with a realistic picture of the organization;
Promoting compliance by accurately reflecting the organization’s operations so the IRS may efficiently assess the risk of noncompliance; and
Minimizing the burden on filing organizations.

The draft released today consists of a core form to be completed by each Form 990 filer and a series of schedules designed to require reporting of information only from those organizations that conduct particular activities.

“Most organizations should not experience a change in burden,” said Lois G. Lerner, director of the IRS’s Exempt Organizations division. “However, those with complicated compensation arrangements, related entity structures and activities that raise compliance concerns may have to spend more time providing meaningful information to the public.”

In releasing this redesigned form, the IRS said it is soliciting comments, especially in connection with the goals of increased transparency of information and use as a compliance tool. The comment period lasts until Sept. 14, 2007.

The form, instructions and background material explaining the principles underlying the redesign of the form are available on the exempt organizations portion of this Web site.

Questions and comments should be e-mailed to the IRS at Form990Revision@irs.gov or mailed to:

IRS
Form 990 Redesign, SE:T:EO
1111 Constitution Avenue, NW
Washington, DC 20224

Related Item: More information on the draft redesigned Form 990, schedules and instructions

Deadline Extended until July 2 for Reporting on Foreign Bank and Financial Accounts

2007-06-13T15:45:00.000-05:00

Deadline Extended until July 2 for Reporting on Foreign Bank and Financial Accounts

IR-2007-116, June 13, 2007

WASHINGTON — Taxpayers have an additional two days this year, until July 2, 2007, to file the Report of Foreign Bank and Financial Accounts (FBAR), Form TD F 90-22.1, the Internal Revenue Service announced today.

The deadline for FBAR forms is June 30, 2007. But because June 30 falls on a Saturday, the IRS is allowing taxpayers to file by July 2.

FBAR information returns for the 2006 calendar year must be filed with the U.S. Department of Treasury, P.O. Box 32621, Detroit, Mich., 48232-0621. The address for commercial delivery is: U.S. Department of Treasury, Currency Transaction Reporting, 985 Michigan Avenue, Detroit, Mich., 48226.

The FBAR form is not available for electronic filing, but many income tax software packages can prepare a printed copy. FBAR forms and instructions are also available on this Web site or FinCEN Web site and from the IRS via telephone at 1-800-829-3676.

The FBAR form is required for each U.S. person who has a financial interest in, or signature authority, or other authority, over any financial accounts, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year.

Taxpayers who need assistance completing Form TD F 90-22.1 can contact the IRS by telephone at 1-800-800-2877, option 2, or via email at FBARquestions@irs.gov.

Transitional Penalty Relief Provided to Tax Return Preparers

2007-06-11T15:44:00.000-05:00

Transitional Penalty Relief Provided to Tax Return Preparers

IR-2007-115, June 11, 2007

WASHINGTON — The Internal Revenue Service and Treasury Department today released Notice 2007-54, providing guidance and transitional relief for the return preparer penalty provisions amended by the Small Business and Work Opportunity Act of 2007. The new amendments are effective for returns prepared after May 25, 2007.

The new law amended several provisions of the Internal Revenue Code to extend the return preparer penalties under section 6694 to preparers of all tax returns, including estate and gift tax returns, employment tax returns, and excise tax returns. Prior to the new law, these penalties applied only to the preparers of income tax returns. The new law also increased the amount of the penalties and changed the standards of conduct that must be met by return preparers in order to avoid penalties under section 6694.

The transitional relief provided by Notice 2007-54 will apply to all returns, amended returns and refund claims due on or before December 31, 2007, including those returns, amended returns and refund claims filed pursuant to extensions to file due on or before December 31, 2007; to 2007 estimated tax returns due on or before January 15, 2008; and to 2007 employment and excise tax returns due on or before January 31, 2008.

Government Moves to Curb Telephone Tax Refund Fraud; Tax Preparers Indicted in Four States, One Enters Guilty Plea

2007-06-08T15:44:00.000-05:00

Government Moves to Curb Telephone Tax Refund Fraud; Tax Preparers Indicted in Four States, One Enters Guilty Plea

IR-2007-114, June 8, 2007

WASHINGTON — Moving to curb abuse of this year’s one-time telephone excise tax refund program, the Justice Department and the Internal Revenue Service obtained federal indictments this spring against tax preparers who allegedly filed thousands of dollars in fraudulent refund claims.

In recent weeks, the alleged refund schemes involving preparers in Miami, Fla., Norcross, Ga., Dallas, Texas, and Riverside, Calif., led to federal indictments. This week, the defendant in the Miami case pled guilty to one count of making and presenting fraudulent federal income tax refund claims to the IRS. The indictments stemmed from search warrants carried out this winter by special agents from IRS Criminal Investigation

“We saw limited but serious instances of abuse,” said IRS Acting Commissioner Kevin M. Brown. “We used our enforcement resources to move swiftly and decisively to protect this valuable refund for the vast majority of taxpayers and tax preparers who are requesting it properly. We want everyone who is eligible for the telephone tax refund to get it but not to inflate the amount requested.”

The IRS has been monitoring telephone excise tax refund requests for potential problems. Shortly after the tax-filing season opened in early January, the agency observed problems with returns from some tax preparers that indicated possible criminal intent. Along with the search warrants carried out by the IRS, other tax preparers across the nation who prepared questionable telephone tax refund requests received visits from IRS revenue agents (auditors) and special agents. The IRS has advised taxpayers to stay away from unscrupulous promoters and tax preparers who make false claims about the telephone tax refund and suggest that many, if not most, phone customers can get hundreds of dollars or more back under this program.

At the same time, the IRS this year urged taxpayers filling out their 2006 returns not to overlook the telephone tax refund. About 30 percent of taxpayers did not request this special refund so far this year, and although some of them may not be eligible, others may qualify and not know it. The IRS urges eligible taxpayers who already filed, but overlooked the refund, to request it by filing an amended return on Form 1040X.

The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. Officials also authorized a one-time refund of the federal excise tax paid on service billed during the previous 41 months, stretching from the beginning of March 2003 to the end of July 2006. The tax continues to apply to local-only phone service.

To make the refund easier to figure, the government established a standard refund amount, based on personal exemptions, ranging from $30 to $60. If taxpayers have phone bills and other records, they can request the actual amount of excise tax paid. Though using the standard amount is optional, it is easy to figure and approximates the eligible amount for most individual taxpayers. Taxpayers only need to fill out one line on their return, and they don’t need to present proof to the IRS.

The most reliable information on this unique refund can be found in the Telephone Excise Tax Refund section on this Web site. There, taxpayers can download forms, find answers to frequently-asked questions and link to participating private-sector Free File partners offering free electronic-filing services.

Related Items:

IRS Updates National Research Program for Individuals

2007-06-06T15:43:00.000-05:00

IRS Updates National Research Program for Individuals

IR-2007-113, June 6, 2007

WASHINGTON — Internal Revenue Service officials today announced plans to launch a new National Research Program (NRP) reporting compliance study for individual taxpayers that will provide updated and more accurate audit selection tools and support efforts to reduce the nation’s tax gap.

The latest NRP study will be the first of an ongoing series of annual individual studies using an innovative multi-year rolling methodology. The study will start in October 2007 and examine about 13,000 randomly selected tax year 2006 individual returns. Similar sample sizes will be used in subsequent tax years.

An advantage of using this method, which combines results over rolling three-year periods, is the IRS will be able to make annual updates to compliance estimates and develop more efficient workload plans on an annual basis, after the initial three annual studies. Previous studies started from scratch, drew tax returns from a single tax year and involved examinations of more than 45,000 taxpayers.

“The new program will be a big step forward for tax research,” said Acting IRS Commissioner Kevin M. Brown. “Our approach will reduce burden on taxpayers, improve our audit selection techniques and give us more timely information to help reduce the tax gap.”

The tax gap is the difference between what taxpayers should have paid and what they actually paid on a timely basis. Based in part on the prior NRP reporting compliance study of individual income tax returns, IRS officials estimate that the net tax gap for tax year 2001 was $290 billion.

Using research from the prior NRP study, the IRS updated its audit selection system. Updated statistics enable the IRS to audit more efficiently and improve the detection of underreported income and overstated deductions and credits. The data also enables the IRS to audit fewer taxpayers with accurate tax returns, which lessens the burden on compliant taxpayers.

The research on individuals needs updating because as time passes, patterns of noncompliance change. The sample for the latest individual NRP is constructed to ensure that it contains sub-samples of individuals at different income levels as well as those engaged in farm and sole proprietor business activities.

The initial group of taxpayers whose returns are selected for audit under the new NRP study will start receiving official letters in October informing them that they are part of the research study. The majority of individuals will have specific lines of their returns confirmed through in-person audits with an IRS examiner. Some of the individuals whose returns are selected for inclusion will not be contacted if the IRS can obtain matching and third-party data that confirms the accuracy of their return. The targeted research design of the new individual NRP avoids the need for IRS agents to routinely check all the lines of a taxpayer’s return.

In addition to the NRP for individuals, the IRS is in the final stages of a compliance research project examining reporting compliance of S corporations. This research encompasses approximately 5,000 returns filed for tax years 2003 and 2004. Since the income and expense items for S corporations flow through to individual shareholders, this study will also help refine the tax gap estimates for individual income tax.

Related Item:

The Tax Gap

Application Available for Reduced Installment Agreement User Fee

2007-06-05T15:42:00.001-05:00

Application Available for Reduced Installment Agreement User Fee

IR-2007-112, June 5, 2007

WASHINGTON — The application for requesting a reduced fee for entering into an installment agreement for the payment of federal taxes owed is available, the Internal Revenue Service announced today. Form 13844, Application for Reduced User Fee for Installment Agreements, is used to request the reduction. The IRS is working to automate the application process to calculate the appropriate user fees up front, eventually phasing out Form 13844.

Effective January 1, 2007, user fees rose to $105 for non-direct debit agreements, $52 for direct debit agreements and $45 for reinstatements.

Individuals entering into an installment agreement with income at or below certain established levels, based on the Department of Health and Human Services poverty guidelines, can apply to pay a reduced user fee of $43 for new agreements. This also includes agreements where payments are deducted directly from a bank account.

Form 13844 contains steps an individual can use to determine if they qualify for a reduced fee. Qualified applicants should submit the form to the IRS within 30 days from the date of their installment agreement acceptance letter.

Form 13844 does not prevent an applicant’s current year refunds, if any, from being applied to prior taxes being paid in installments or to prior taxes the IRS has deemed currently not collectible.

To be eligible for an installment agreement, a taxpayer must first file all tax returns they are required to file and be current with estimated tax payments, if applicable.

The reduced user fee for individuals with incomes at or below the established levels does not apply to corporations or partnerships. And there are no user fees for continuous wage levies initiated by IRS collection personnel. Form 13844 should not be filed for these situations.

Form 13844 is available in the Forms and Publications section of the IRS Web site at IRS.gov or may be ordered by calling toll-free 1-800-TAX-FORM (1-800-829-3676).

Related Items:

IR-2006-196, IRS Announces Installment Agreement User Fee Increases for Some Taxpayers
IR-2006-159, IRS Announces Online Payment Agreement Application
Payment Plans, Installment Agreements

IRS Chief Counsel Selects Gregg D. Polsky as 2007-2008 Professor in Residence

2007-06-05T15:42:00.000-05:00

IRS Chief Counsel Selects Gregg D. Polsky as 2007-2008 Professor in Residence

IR-2007-111, June 5, 2007

WASHINGTON –– Internal Revenue Service Chief Counsel Donald L. Korb has selected Gregg D. Polsky as the 2007-2008 Professor in Residence. He succeeds Calvin Johnson, whose term as Professor in Residence concluded on May 31, 2007.

Polsky is a nationally known scholar who recently joined the faculty at Florida State University’s College of Law as the Sheila M. McDevitt Professor of Law after serving for six years on the faculty at the University of Minnesota Law School. Before entering academia, Polsky practiced with the law firm of White & Case, LLP, in its Miami office. Polsky received his J.D. and LL.M. in taxation from the University of Florida’s Levin College of Law.

Polsky is one of four authors of the forthcoming casebook, Federal Income Taxation of Individuals, 6th Edition. He has authored numerous law review articles on tax law and policy and is a frequent contributor to such leading tax publications as Tax Notes and the Journal of Taxation.

The Internal Revenue Service Office of Chief Counsel revived its Professor in Residence program earlier this year. Dormant since the late 1980s, the program provides some of the nation’s top legal academicians the opportunity to contribute to the development of legal tax policy and administration. Reporting directly to the Chief Counsel, the Professor in Residence provides advice and assistance on a wide array of legal issues within the scope of his or her expertise.

Polsky will begin his nine month term as Professor in Residence in September.

IRS Encourages Taxpayers to Safeguard Tax, Financial Records In Preparation for Hurricane Season

2007-06-01T13:39:00.000-05:00

IRS Encourages Taxpayers to Safeguard Tax, Financial Records In Preparation for Hurricane Season

IR-2007-110, June 1, 2007

WASHINGTON — As the hurricane season begins today, the Internal Revenue Service encourages taxpayers to safeguard their records. Some simple steps can help taxpayers and businesses protect financial and tax records in case of hurricanes and other disasters.

“With forecasts calling for an active Atlantic hurricane season, the IRS encourages taxpayers to protect tax and financial documents that can be hard to replace,” IRS Acting Commissioner Kevin M. Brown said. “A little planning can help safeguard valuable information in case a hurricane or other disaster strikes.”

Listed below are tips for individuals and businesses on maintaining financial and tax records.

Paperless Recordkeeping

Many people now receive bank statements and documents by e-mail or over the Web. Paper records such as W-2s, tax returns and other documents can be scanned into an electronic format.

With documents in electronic form, taxpayers can copy them onto a USB drive as a backup, which can be sent to a relative in another city for safe-keeping in case the taxpayer’s computer and paper files are destroyed.

Other options include copying files onto a CD or DVD. Many retail stores also sell computer software packages that can be used for recordkeeping.

Documenting Valuables

Another way a taxpayer can prepare for disaster is to photograph or videotape the contents of his or her home, especially items of greater value. The IRS has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-by-room list of belongings.

This can help an individual prove the market value of items for insurance and casualty loss claims. Photos should be stored with a friend or family member who lives outside the area.

Check on Fiduciary Bonds

Employers who use payroll service providers should ask the provider if they have a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

Update Emergency Plans

Emergency plans should be reviewed annually. Personal and business situations change over time as do preparedness needs. Individual taxpayers should make sure they are saving documents everybody should keep including such things as W-2s, home closing statements and insurance records. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.

IRS Is Ready to Help

When disaster strikes, the IRS is ready to help with valuable information that can be requested if tax records are destroyed.

Immediately after a casualty, a taxpayer can request a copy of a return and all attachments (including Form W-2) by using Form 4506, Request for Copy of Tax Return.

An information return or transcript can be ordered by calling 1-800-829-1040 or using Form 4506-T, Request for Transcript of Tax Return. There is no fee for a transcript. Transcripts are available for the current year and returns processed in the three prior years.

This Web site, IRS.gov, is also an indispensable resource. The following pages and publications contain information regarding disaster preparedness and what to do when a disaster strikes:

Tax Relief in Disaster Situations
Reconstructing Your Records
Publication 552, Recordingkeeping for Individuals
Publication 583, Starting a Business and Keeping Records

IRS Warns Taxpayers of New E-mail Scams

2007-05-31T11:44:00.000-05:00

IRS Warns Taxpayers of New E-mail Scams

Updated June 19, 2007 — In another recent scam, consumers have received a "Tax Avoidance Investigation" e-mail claiming to come from the IRS' "Fraud Department" in which the recipient is asked to complete an "investigation form," for which there is a link contained in the e-mail, because of possible fraud that the recipient committed. It is believed that clicking on the link may activate a Trojan Horse.

IR-2007-109, May 31, 2007

WASHINGTON — The Internal Revenue Service today alerted taxpayers to the latest versions of an e-mail scam intended to fool people into believing they are under investigation by the agency’s Criminal Investigation division.

The e-mail purporting to be from IRS Criminal Investigation falsely states that the person is under a criminal probe for submitting a false tax return to the California Franchise Tax Board. The e-mail seeks to entice people to click on a link or open an attachment to learn more information about the complaint against them. The IRS warned people that the e-mail link and attachment is a Trojan Horse that can take over the person’s computer hard drive and allow someone to have remote access to the computer.

The IRS urged people not to click the link in the e-mail or open the attachment.
Similar e-mail variations suggest a customer has filed a complaint against a company and the IRS can act as an arbitrator. The latest versions appear aimed at business taxpayers as well as individual taxpayers.

The IRS does not send out unsolicited e-mails or ask for detailed personal and financial information. Additionally, the IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

“Everyone should beware of these scam artists,” said Kevin M. Brown, Acting IRS Commissioner. “Always exercise caution when you receive unsolicited e-mails or e-mails from senders you don’t know.”

Recipients of questionable e-mails claiming to come from the IRS should not open any attachments or click on any links contained in the e-mails. Instead, they should forward the e-mails to phishing@irs.gov (follow the instructions).

The IRS also sees other e-mail scams that involve tricking victims into revealing private personal and financial information over the Internet, a practice that is known as “phishing” for information.

The IRS and the Treasury Inspector General for Tax Administration work with the U.S. Computer Emergency Readiness Team (US-CERT) and various Internet service providers and international CERT teams to have the phishing sites taken offline as soon as they are reported.

Since the establishment of the mail box last year, the IRS has received more than 17,700 e-mails from taxpayers reporting more than 240 separate phishing incidents. To date, investigations by TIGTA have identified host sites in at least 27 different countries, as well as in the United States.

Other fraudulent e-mail scams try to entice taxpayers to click their way to a fake IRS Web site and ask for bank account numbers. Another widespread e-mail tells taxpayers the IRS is holding a refund (often $63.80) for them and seeks financial account information. Still another email claims the IRS’s ‘anti-fraud commission’ is investigating their tax returns.

Related Item:

Suspicious e-Mails and Identity Theft

Terri McField Named Special Counsel to the Chief Counsel (Legislation)

2007-05-25T11:43:00.000-05:00

Terri McField Named Special Counsel to the Chief Counsel (Legislation)

IR-2007-107, May 25, 2007

WASHINGTON — The Internal Revenue Service announced the appointment of Terri McField to the position of Special Counsel to the Chief Counsel (Legislation) effective May, 29. She will be replacing Clarissa Potter who became the Deputy Chief Counsel in September 2006.

"We are extremely fortunate to have Terri McField join the Office of Chief Counsel,” said Donald L. Korb, IRS Chief Counsel. “Ms. McField’s extensive experience and her substantial knowledge of the legislative process make her an excellent candidate for this position."

The Special Counsel to the Chief Counsel (Legislation) serves as program manager and senior advisor to the Chief Counsel on a broad array of activities designed to fulfill the Chief Counsel’s responsibilities to prepare, review, and assist in the preparation of proposed legislation, and to provide legal support to the Internal Revenue Service in fulfilling its legislative responsibilities.

Since 2001, McField has served as the Vice President and General Counsel for Black Entertainment Television’s subsidiary, BET Interactive. In this position she was responsible for legal matters pertaining to BET’s internet company. From 1998-2001, McField was Vice President and Associate General Counsel for BET, where she assisted with the company’s legislative and tax matters. Prior to those positions, she worked as a Legislative Tax Counsel to a member of Congress on the House Committee on Ways and Means and served as a Senior Tax Associate at Coopers & Lybrand. She began her tax career as a Revenue Agent for IRS in New Orleans where she obtained her CPA certificate.

McField received her LL.M. in taxation from Georgetown University Law Center, and also earned her J.D., cum laude, from Howard University School of Law. She received her MBA and a B.S. in Accounting from the University of New Orleans.

Ford Hybrids Still Qualify for Tax Credit

2007-05-24T11:44:00.000-05:00

Ford Hybrids Still Qualify for Tax Credit

IR-2007-108, May 24, 2007

WASHINGTON — The Internal Revenue Service announced that purchasers of qualified Ford Motor Company vehicles may continue to claim the Alternative Motor Vehicle Credit.

The announcement comes after the IRS concluded its quarterly review of the number of hybrid vehicles sold. Ford sold 5,149 qualifying vehicles to retail dealers during the quarter ending March 31, 2007. This brings the total number of Ford qualifying hybrids reported to date to 27, 275.

The credit amount and make and model of the certified vehicles sold are:

Ford Escape 2WD Hybrid Model Year 2008 — $3,000
Ford Escape 2WD, Model Years 2005, 2006 and 2007 — $2,600
Ford Escape 4WD Hybrid Model Year 2008 — $2,200
Ford Escape 4WD, Model Years 2005, 2006 and 2007 — $1,950
Mercury Mariner 4WD Hybrid Model year 2008 — $2,200
Mercury Mariner 4WD, Model Years 2006 and 2007 — $1,950
Mercury Mariner 2WD Hybrid Model Year 2008 — $3,000

IRS Seeking ETAAC Applicants from Large Businesses

2007-05-24T11:43:00.000-05:00

IRS Seeking ETAAC Applicants from Large Businesses

IR-2007-106, May 24, 2007

WASHINGTON — The Internal Revenue Service is seeking applicants from large businesses who file annual corporation or partnership returns for membership on the Electronic Tax Administration Advisory Committee (ETAAC). The IRS defines large businesses as enterprises with assets greater than $10 million.

The 13-member ETAAC panel provides an organized public forum for discussion of electronic tax administration issues in support of the overriding goal that paperless filing as the preferred and most convenient method of filing tax and information returns.

“ETAAC members convey the public’s perception of IRS electronic tax administration activities, offer constructive observations on current or proposed policies and programs," said Bert DuMars, IRS Electronic Tax Administration director. “It is critically important that our ETAAC includes members with a strong background in corporate and partnership tax issues.”

The ETAAC also provides an annual report to Congress on IRS’s progress in meeting the Restructuring and Reform Act of 1998 goals for electronic filing of tax returns. The ETAAC researches, analyzes and make recommendations on a wide range of electronic tax administration issues and provides input into the development of the strategic plan for Electronic Tax Administration.

Application packages should include a resume and a completed application form. They can be submitted via email at ETAAC@irs.gov. They can also be mailed to:

Internal Revenue Service
ATTN: Cassandra Daniels
5000 Ellin Rd
C4-226, SE:W:ETA:S:RM
Lanham, MD 20706.

Packages can also be faxed to 202-283-2845 (not a toll-free call).

The deadline for submitting applications is June 6, 2007

Related Item:

ETAAC Membership Application

IRS Announces Public Meeting of ACT, Names New Members

2007-05-23T11:42:00.000-05:00

IRS Announces Public Meeting of ACT, Names New Members

IR-2007-105, May 23, 2007

WASHINGTON — The Internal Revenue Service’s Advisory Committee on Tax Exempt and Government Entities (ACT) will hold a public meeting June 13, 2007, at 9 a.m. at 1111 Constitution Ave., N.W., Washington, D.C. At the public meeting, six ACT project teams will present recommendations to the IRS Commissioner and senior leadership of the IRS’s Tax Exempt and Government Entities Division (TE/GE). The projects are:

A Review of the Voluntary Self-Compliance Program for Indian Tribal Governments,
A Proposal for an Exempt Organizations Voluntary Compliance Program,
After the Bonds Are Issued: What Then?,
Improving Compliance for Adopters of Pre-Approved Plans,
A Prototype for Public Sector Defined Contribution Plans, and
Public Employers’ Withholding and Reporting for Non-Resident Aliens.

The IRS has also named six new members who will begin their two-year terms on the ACT in June. They join 15 returning committee members. The six new members of the ACT are listed below by area of expertise.

Employee Plans

Michael M. Spickard, Summit Retirement Plan Services, Inc., Akron, Ohio

Michael M. Spickard is the owner, chief executive officer and chief actuary of Summit Retirement Plans Services, a leading third-party administrator in northern Ohio. He is an Enrolled Actuary and has more than 16 years experience designing and administering all types of retirement plans, with in-depth experience in the areas of salaried, hourly and union defined benefit plans. Mr. Spickard holds a Bachelor of Science in Applied Mathematics from the University of Akron.

Marcia S. Wagner, The Wagner Law Group, Boston

Marcia S. Wagner is a principal of The Wagner Law Group, specializing in pension and employee benefits law. Previously, she was a partner at the Boston law firm of Warner & Stackpole LLP and the head of its ERISA/Employee Benefits Practice Group. In her practice, Ms. Wagner’s “core” client is in the small or mid-sized market, and her firm advises clients on matters concerning qualified, nonqualified and welfare benefits plans. Ms. Wagner received her Juris Doctorate from Harvard Law School.

Exempt Organizations

Fred T. Goldberg, Jr., Skadden, Arps, Slate, Meagher & Flom, LLP, Washington, D.C.

Fred T. Goldberg is a partner at Skadden, Arps, Slate, Meagher & Flom LLP, with extensive experience not only in the area of exempt organizations, but also employee plans and tax-exempt bonds. Mr. Goldberg was Assistant Secretary for Tax Policy, U.S. Department of the Treasury (1992). He also served as Commissioner of Internal Revenue (1986–89) and Chief Counsel of the Internal Revenue Service (1984–86). He holds a Juris Doctorate from Yale University.

Mary Rauschenberg, Deloitte Tax LLP, Chicago

Mary Rauschenberg is Director of Deloitte Tax LLP’s Chicago healthcare and not-for-profit tax practices. Her clients include academic medical centers, colleges and universities, teaching hospitals, cultural organizations, trade associations, public and private foundations, and other tax-exempt organizations. Ms. Rauschenberg holds a Masters of Accounting Science from the University of Illinois.

Government Entities: Indian Tribal Governments

Dennis Puzz, Jr., Best & Flanagan LLC, Minneapolis

Dennis Puzz is a member of the Yurok Tribe of Northern California and an attorney in the Native American Law section of Best & Flanagan. Mr. Puzz focuses his practice on representing tribal governments in the areas of gaming, economic development, constitution, ordinance and regulation drafting, and employment. Prior to rejoining the firm, he was executive director of the Yurok Tribe, in Klamath, Calif. As executive director, he oversaw all operations of the tribal government, which employs approximately 250 employees and operates on a yearly budget of $12 million. He was also tasked with managing all Tribal Council initiatives internally, representing the Tribe on these issues with outside entities, and managing four outside law firm relationships regarding these projects. Mr. Puzz has a Juris Doctorate from the University of Minnesota Law School.

Government Entities: Tax Exempt Bonds

John G. Pasicznyk, Dormitory Authority of the State of New York, Albany, N.Y.

John G. Pasicznyk is the chief financial officer and treasurer of the Dormitory Authority of the State of New York, one of the largest issuers of tax-exempt debt and one of the largest public construction companies in the nation. In this position, Mr. Pasicznyk is responsible for all treasury, accounting, computer and information services functions related to a $34 billion debt portfolio. In addition to being responsible for administering all outstanding bond issues, he is also responsible for investments and arbitrage rebate compliance. Mr. Pasicznyk holds a Masters of Business Administration from the Duke University Fuqua School of Business.

ACT Members Continuing on the Committee

Employee Plans

Susan D. Diehl, PenServ, Inc., Horsham, Pa.
Dodi Walker Gross, Reed Smith, LLP, Pittsburgh
Daniel J. Schwartz, Greensfelder, Hemker & Gale, P.C., St. Louis
Michael S. Sirkin, Proskauer Rose LLP, New York

Exempt Organizations

Betsy Buchalter Adler, Silk, Adler & Colvin, San Francisco
Bonnie Brier, The Children’s Hospital of Philadelphia, Philadelphia
Sean Delany, Lawyers Alliance for New York, New York
Ana Thompson, The Charles and Helen Schwab Foundation, San Mateo, Calif.

Government Entities – Federal, State and Local Governments

Steven W. Hoffman, The Ohio State University, Columbus, Ohio.
Nicholas C. Merrill, Jr., State Employees’ Retirement System of Illinois, Springfield, Ill.
Julian Regan, Fidelity Employer Services Company, Marlborough, Mass.

Government Entities – Indian Tribal Governments

Sandra Starnes, Port Gamble S’Klallam Tribe, Kingston, Wash.
Mary J. Streitz, Dorsey & Whitney LLP, Minneapolis

Government Entities – Tax Exempt Bonds

Joan M. DiMarco, BondResources Partners, LP, Philadelphia
Maxwell D. Solet, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston

ACT Members Leaving the Committee in June 2007

Employee Plans

Charles M. Lax, Maddin, Hauser, Wartell, Roth & Heller, P.C., Southfield, Mich.
Charles F. Plenge, Hayes and Boone, LLP, Dallas

Exempt Organizations

Julie L. Floch, Eiser LLP, New York
Suzanne Ross McDowell, Steptoe & Johnson, LLP, Washington, D.C.

Government Entities – Indian Tribal Governments

Lenor A. Scheffler, Best & Flanagan LLC, Minneapolis

Government Entities – Tax Exempt Bonds

Robert E. Donovan, Rhode Island Health and Educational Building Corporation, Providence, R.I.

Maxwell D. Solet, with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., will be the ACT Chair for 2007–2008.

The 21-member advisory committee includes external stakeholders and representatives who deal with employee retirement plans, tax-exempt organizations, tax-exempt bonds and federal, state, local and Indian tribal governments. ACT members are appointed by the Secretary of the Treasury and generally serve two-year terms. They advise the IRS on operational policies and procedures.

The ACT was established in May 2001 under the Federal Advisory Committee Act to provide an organized public forum for discussion of relevant issues affecting the tax exempt and government entities communities. It allows the IRS to receive regular input with respect to the development and implementation of policy concerning employee plans, exempt organizations, tax-exempt bonds and federal, state, local and Indian tribal government issues.

The project reports and proceedings of the June 13 meeting will be made public under the Federal Advisory Committee Act. The report will be available on this Web site.

Due to limited seating and security requirements, members of the public interested in attending the public meeting should call Cynthia Phillips Grady to confirm their attendance. She can be reached at 202-283-9954 (not a toll-free call). Attendees must have photo identification and are encouraged to arrive at least 30 minutes before the session begins.

Joint International Tax Shelter Information Centre Expands and Opens a Second Office in the United Kingdom

2007-05-23T11:41:00.001-05:00

Joint International Tax Shelter Information Centre Expands and Opens a Second Office in the United Kingdom

IR-2007-104, May 23, 2007

WASHINGTON — The Commissioners of the Australian, Canadian, United Kingdom and United States tax administrations have decided to open a second office of the Joint International Tax Shelter Information Centre (JITSIC) in London in fall 2007. Additionally, Japan has accepted an invitation to join JITSIC, and a representative of the National Tax Agency will be present at the London centre.

The Commissioners agreed that exchanging information in real-time is making a significant difference to the complex task of tracking tax avoidance and abusive cross-border transactions. JITSIC members have identified and challenged the following highly artificial arrangements:

A cross-border scheme was marketed, involving hundreds of taxpayers and tens of millions of dollars in improper deductions and unreported income from retirement account withdrawals.
Highly structured financing transactions created by financial institutions in which taxpayers generated inappropriate foreign tax credit benefits
Brokers provided made-to-order losses on futures and options transactions for individuals in other JITSIC jurisdictions, leading to a tax loss of more than $100,000,000.

The Commissioners have also made further plans for the future development of JITSIC, along with the measured expansion to cover North America, Europe and Asia - broadening the focus of its activities, further sharing best practices on risk assessment and other key areas of interest, and particularly increasing the transparency of cross-border transactions in order to create a level playing field for taxpayers who are voluntarily compliant.

JITSIC was established in 2004 by the tax administrations of Australia, Canada, the United Kingdom and the United States to supplement the ongoing work of the Australian Taxation Office, the Canada Revenue Agency, HM Revenue and Customs, and the Internal Revenue Service in identifying and curbing tax avoidance and shelters and those who promote them and invest in them.

To date, delegates from each of the four countries have been based in Washington DC, and exchange information on abusive tax schemes, their promoters and investors, consistent with the provisions of bilateral tax conventions.

Sidley Austin LLP Pays IRS $39.4 Million Penalty

2007-05-23T11:41:00.000-05:00

Sidley Austin LLP Pays IRS $39.4 Million Penalty

IR-2007-103, May 23, 2007

WASHINGTON — The Internal Revenue Service today announced that it has reached a settlement with the law firm of Sidley Austin, LLP, the successor firm of the merger in 2001 between Sidley & Austin and Brown & Wood, LLP, which has paid a civil tax shelter promoter penalty of $39.4 million. The penalty stems from the firm’s promotion of abusive tax shelters and a failure to comply with tax shelter registration requirements.

“Sidley Austin has paid a significant penalty for its role in promoting abusive tax shelters,” said IRS Acting Commissioner Kevin M. Brown. “The firm has also concrete steps to prevent a recurrence of this behavior in the future, which they have agreed to maintain going forward. We appreciate their actions and their cooperation in our ongoing investigations.”

The firm issued opinions in connection with potentially abusive tax shelters to over high-net worth individuals and corporations. Some of the packages marketed to these individuals included listed transactions such as BOSS (Bond & Option Sale Strategy), variants of the so-called “Son of BOSS” shelter that went by names of COBRA (Currency Options Bring Reward Alternatives), BLIPS (Bond Linked Issue Premium Structure) and COINS (Currency Option Investment Strategy), and others that went by the names of FLIP (Foreign Leveraged Investment Program), OPIS (Offshore Portfolio Investment Strategy) and POPS (Partnership Option Portfolio Securities).

The firm also issued tax opinions in connection with certain potentially abusive non-listed transactions involving distressed assets, bond and equity strips and lease strips.

Sidley Austin LLP has offices in Beijing, Brussels, Chicago, Dallas, Frankfurt, Geneva, Hong Kong, London, Los Angeles, New York, San Francisco, Shanghai, Singapore, Tokyo and Washington, D.C.

IRS Announces 2007 Low Income Taxpayer Clinics Grant Recipients

2007-05-21T11:40:00.000-05:00

IRS Announces 2007 Low Income Taxpayer Clinics Grant Recipients

IR-2007-102, May 21, 2007

WASHINGTON — National Taxpayer Advocate Nina E. Olson announced today that the Internal Revenue Service has awarded almost $8 million in matching grants to Low Income Taxpayer Clinics (LITCs) for the 2007 grant cycle (Jan. 1, 2007, through Dec. 31, 2007).

LITCs are qualifying organizations that provide representation for free or a nominal fee to low-income taxpayers involved in tax disputes with the IRS or that provide education on taxpayer rights and responsibilities to taxpayers for whom English is a second language or who have limited English proficiency. For more details about languages other than English served by LITCs, see IRS Publication 4134, Low Income Taxpayer Clinic List.

Under the LITC program, the IRS awards matching grants of up to $100,000 a year to qualifying organizations. For the 2007 grant cycle, the IRS awarded LITC grants to 154 organizations representing 49 states plus the District of Columbia, Puerto Rico and Guam.

Currently there are no LITCs in the state of Colorado. The LITC Program Office will open a supplemental period for accepting LITC applications for the 2007 grant cycle for the state of Colorado. The supplemental application period will run from April 27 to May 25, 2007. LITC applications for this grant must be electronically submitted or postmarked by May 25, 2007. The 2007 Grant Application Package and Guidelines, IRS Publication 3319 (Rev. 5-2006), is available on the Taxpayer Advocate Web site.

Questions about the LITC Program can be addressed to the LITC Program Office at (202) 622-4711 (not a toll-free call) or by e-mail at LITCProgramOffice@irs.gov.

A list of organizations awarded a matching grant for the 2007 grant cycle is available.

IRS Accepting Applications for Low Income Taxpayer Clinic Matching Grants

2007-05-17T11:40:00.000-05:00

IRS Accepting Applications for Low Income Taxpayer Clinic Matching Grants

IR-2007-101, May 17, 2007

WASHINGTON — National Taxpayer Advocate Nina E. Olson announced today that the 2008 Low Income Taxpayer Clinic (LITC) grant application process is now open. The LITC grant program is a federal program administered by the Taxpayer Advocate Service, an independent organization within the IRS that helps taxpayers resolve problems with the IRS and recommends changes to prevent taxpayer problems.

Under the LITC grant program, the IRS awards matching grants of up to $100,000 per year to develop, expand or maintain low income taxpayer clinics. The program is in its ninth year and continues to expand. To date in 2007, the LITC Program Office has awarded LITC grants to 154 organizations in 49 states, the District of Columbia, Puerto Rico and Guam. There are currently no LITCs in the state of Colorado, but the IRS has opened a supplemental period for accepting applications for Colorado for the remainder of the 2007 grant cycle.

LITCs are qualifying organizations that provide representation for free or a nominal fee to low income taxpayers involved in tax disputes with the IRS. They also provide education on taxpayer rights and responsibilities to taxpayers for whom English is a second language or who have limited English proficiency. Examples of qualifying organizations include:

Clinical programs at accredited law, business or accounting schools, whose students may represent low income taxpayers in tax disputes with the IRS, and
Organizations exempt from tax under I.R.C. § 501(a) that represent low income taxpayers in tax disputes with the IRS or refer those taxpayers to qualified representatives.

The application period for this grant will run from May 7, 2007, to July 6, 2007. The grant will cover the 2008 grant cycle, from Jan. 1, 2008, through Dec. 31, 2008. Applications must be postmarked or filed electronically by July 6, 2007.

Copies of the 2008 Grant Application Package and Guidelines, IRS Publication 3319 (Rev. 5-2007), are available on the Taxpayer Advocate Service Web site. Applicants may also order application packages from the IRS Distribution Center by calling 1-800-829-3676. Applicants can also file electronically at Grants.gov –– those applying through this Web site should use the Funding Number TREAS-GRANTS-052008-001.

Questions about the LITC Program or grant application process can be addressed to the LITC Program Office at (202) 622-7186, not a toll-free call, or by e-mail at LITCProgramOffice@irs.gov.

2007 Tax Season Sets Records for E-file, Direct Deposit, IRS.gov

2007-05-15T11:39:00.000-05:00

2007 Tax Season Sets Records for E-file, Direct Deposit, IRS.gov

IR-2007-100, May 15, 2007

WASHINGTON — The recently completed 2007 tax filing season set a number of electronic records, highlighted by over 76 million electronically-filed individual tax returns and more than 140 million visits to IRS.gov, the Internal Revenue Service said today.

“E-file and our other electronic services helped us deliver a strong filing season for the nation’s taxpayers,” said IRS Acting Commissioner Kevin M. Brown. “Again this year, millions of additional taxpayers gave up paper tax returns to file electronically. E-file and IRS.gov were among several factors that helped us overcome one of the most challenging filing seasons ever for the IRS.”

This year’s tax season saw a surge in electronic filing among last-minute filers, a group that has traditionally sent in paper returns. During the week that included this year’s tax-filing deadline (April 14 to 20) alone, the number of electronically-filed returns received by the IRS jumped 35 percent over the same week last year, even though the overall number of returns (paper and electronic) received during the same week only rose 12 percent.

New records were also set for the number of returns e-filed by home computer users, the number of balance-due returns filed electronically and the number and amount of direct-deposit refunds. Among the highlights of new statistics released today:

The over 76.7 million e-filed returns accepted through May 4 topped the more than 73.2 million electronically-filed returns received for all of 2006. It’s also an 8.9 percent increase over last year at this time, with most of the increase coming in March and April. Based on current trends, the agency expects about 58 percent of all returns to be e-filed this year. Taxpayers who filed for extensions can use e-file until Oct. 15.
A record 22 million taxpayers e-filed from a home computer, up 11 percent over the same time last year and eclipsing 2006’s year-long total of 20.3 million.
This filing season visits to IRS.gov, the agency’s popular Web site, climbed almost 10 percent to more than 140 million.
The average refund this year is $2,255, a 2.5 percent increase over last year at this time. More than 59 million refunds, a new record, were deposited directly into savings, checking and brokerage accounts, representing more than 61 percent of all refunds issued. Those who choose direct deposit get their refunds at least a week sooner. Available year-round, direct deposit eliminates the chance of a lost, stolen or undeliverable refund. Taxpayers claiming refunds who have not yet filed may want to consider using direct deposit to get a head start on their 2007 IRA contribution.
Nearly $158 billion have been directly deposited so far this year, an 11 percent jump over last year at this time. This surpasses the 2006 year-end total of $149.2 billion.
The number of balance-due returns filed electronically surged 14.2 percent to a record 9.4 million. For all of last year, almost 8.9 million balance-due returns were filed electronically.

2007 FILING SEASON STATISTICS
Cumulative through the weeks ending 5/5/06 and 5/4/07
Individual Income Tax Returns	2006		2007		% Change
Total Receipts	124,383,000		127,959,000		2.9%
Total Processed	110,558,000		114,122,000		3.2%

E-filing Receipts:
TOTAL	70,501,000		76,771,000		8.9%
Tax Professionals	50,624,000		54,693,000		8.0%
Self-prepared	19,877,000		22,078,000		11.1%

Web Usage:
Visits to IRS.gov	127,580,000		140,159,000		9.9%

Total Refunds:
Number	92,612,000		96,266,000		3.9%
Amount	$203.685	Billion	$217.066	Billion	6.6%
Average refund	$2,199		$2,255		2.5%

Direct Deposit Refunds:
Number	54,848,000		59,217,000		8.0%
Amount	$142.028	Billion	$157.880	Billion	11.2%
Average refund	$2,590		$2,666		3.0%

2007 FILING SEASON STATISTICS
Cumulative through the weeks ending 4/21/06 and 4/20/07
Individual Income Tax Returns	2006		2007		% Change
Total Receipts	122,721,000		124,965,000		1.8%
Total Processed	102,148,000		105,159,000		2.9%

E-filing Receipts:
TOTAL	70,069,000		76,159,000		8.7%
Tax Professionals	50,329,000		54,324,000		7.9%
Self-prepared	19,740,000		21,835,000		10.6%

Web Usage:
Visits to IRS.gov	121,635,000		133,496,000		9.8%

Total Refunds:
Number	85,151,000		88,168,000		3.5%
Amount	$190.521	Billion	$203.021	Billion	6.6%
Average refund	$2,237		$2,303		2.9%

Direct Deposit Refunds:
Number	53,056,000		57,155,000		7.7%
Amount	$138.304	Billion	$153.486	Billion	11.0%
Average refund	$2,607		$2,685		3.0%

Many Churches, Nonprofits Qualify for Telephone Tax Refund

2007-05-11T11:38:00.000-05:00

Many Churches, Nonprofits Qualify for Telephone Tax Refund

IR-2007-99, May 11, 2007

WASHINGTON — Churches, charities and other tax-exempt organizations that paid the federal excise tax on long-distance or bundled telephone service qualify for this year’s one-time telephone excise tax refund, according to the Internal Revenue Service.

With the annual May 15 filing deadline fast approaching for many nonprofits, the IRS urges any of these organizations that paid the 3 percent tax to be sure to request this special refund. The telephone tax refund is also available to churches and small tax-exempt organizations that don’t normally file annual returns with the IRS.

The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. Federal officials also authorized a one-time refund of the 3 percent tax collected on long-distance or bundled service billed after Feb. 28, 2003, and before Aug. 1, 2006. The tax continues to apply to local-only phone service.

Organizations can request the refund by filing Form 990-T, Exempt Organization Business Income Tax Return and attaching Form 8913, Credit for Federal Telephone Excise Tax Paid. Organizations that obtain a credit or refund from their service providers are not eligible to file a refund request with the IRS.

If your church or organization paid the tax, here are some tips to help you figure the refund correctly and get it quickly:

Start by filling out Form 8913. This form is used to figure the refund, including interest. Current interest factors for corporations, including tax-exempt organizations, can be found on the telephone excise tax refund page on IRS.gov.
You have two choices for figuring the refund. Base your request on the actual amount of tax paid on service billed from the beginning of March 2003 to the end of July 2006, using your phone bills or other records, or estimate the amount of tax paid using a worksheet included in the instructions for Form 8913. Choosing to use the estimation worksheet may save time and paperwork, especially if you lack ready access to complete phone records for the past few years. If you file Form 990, Return of Organization Exempt From Income Tax, the amount you entered for telephone expense on Line 34 may help you figure the credit. Publication 4589, TETR for Exempt Organizations, helps explain these calculations.
Carry the total amount figured on Form 8913 to Form 990-T, Line 44f. Follow the instructions for completing the rest of Form 990-T. Normally, Form 990-T is used by organizations to report business activities unrelated to their tax-exempt purpose and figure the tax on these activities. If, like most organizations, you do not engage in unrelated business activities, you can just complete the top section (above Part I) of Form 990-T. Be sure to write, “Request for TETR Credit” on the top of the form.
Many cell phone customers mistakenly believe they are not eligible for the telephone tax refund. The refund is normally available to cell phone users, as well as land-line, fax and Internet phone customers. The method of phone signal transmission does not affect the refund.
The refund applies to the federal excise tax paid on both long-distance and bundled telephone service. Bundled service is local and long-distance service provided under a plan that does not separately list the charge for local service. Bundled service includes, for example, phone plans that provide both local and long-distance service for either a flat monthly fee or a charge that varies with the time for which the service is used. It is the type of service provided by many cell phone companies.
When figuring the refund, do not count amounts paid for prepaid phone cards and prepaid cell phones. Ordinarily, the customer is not liable for the federal excise tax on prepaid cards and phones and thus, not eligible to request the refund.
If you’re not sure whether you paid the tax, check the portion of your telephone bill that relates to long-distance or bundled service. Service providers use a number of different terms to identify the tax. Phrases to look for on English-language phone bills include: Federal, Federal Excise 3%, Federal Excise @ 3%, Federal Excise Tax, Federal Tax, Fed Excise Tax and FET; Spanish-language phone bills; Impuesto Indirecto Federal and Impuesto federal. Typically, this federal tax amount is not commingled with any other tax or surcharge on a customer's bill. In other words, it is normally shown as a separate line item. For information about accessing old phone records from various service providers, visit the “telephone companies” link on the Telephone Excise Tax Refund page of this Web site..
Use the Telephone Excise Tax Refund page on this Web site. Here, you can download forms and find answers to frequently-asked questions. You can also find special instructions for nonprofit hospitals, schools and government agencies that may have paid federal telephone taxes in error, as well as alternate procedures for political organizations.

Form 990-T Instructions

Form 8913, Credit for Federal Telephone Excise Tax Paid

Form 8913 Instructions

Form 990, Return of Organization Exempt from Income Tax

Form 990 Instructions

Publication 4589, TETR for Exempt Organizations

Telephone Excise Tax Refund

Interest Factors

Deadline for Submitting Clean Coal Allocation Requests Remains June 30

2007-05-09T11:37:00.000-05:00

Deadline for Submitting Clean Coal Allocation Requests Remains June 30

IR-2007-98, May 9, 2007

WASHINGTON — Applications for the 2007 allocation for clean coal projects are due to the Department of Energy (DOE) on or before June 30, 2007. Contrary to the expectation in an earlier information release (IR-2006-184), the Internal Revenue Service no longer expects to change the deadline to June 1.

The Energy Policy Act of 2005 authorized $1.65 billion in tax credits for clean coal projects. Approximately $650 million of this amount is available for allocation to clean coal projects in 2007. Of this total, $267 million will be available for integrated gasification combined cycle (IGCC) sub-bituminous coal projects, $133 million will be available for IGCC lignite projects, $250 million will be available for non-IGCC advanced coal electricity generation projects and $337,000 will be available for gasification projects.

IRS Notices 2006-24 and 2006-25 provide complete instructions for submitting an application for the 2007 credit allocation. Under those notices, the application for DOE certification for the 2007 allocation is due to the DOE on or before June 30, 2007.

Nissan Hybrid Still Qualifies for Tax Credit

2007-05-07T11:37:00.000-05:00

Nissan Hybrid Still Qualifies for Tax Credit

IR-2007-97, May 7, 2007

WASHINGTON — The Internal Revenue Service announced that purchasers of qualified Nissan North America Inc. vehicles may continue to claim the Alternative Motor Vehicle Credit. The announcement comes after the IRS concluded its quarterly review of the number of hybrid vehicles sold.

Nissan sold 2,094 qualifying vehicles to retail dealers in the quarter ending March 31, 2007. The allowable credit amount for the 2007 Altima Hybrid — Nissan’s only certified hybrid vehicle — is $2,350.

Consumers seeking the credit may want to buy early because the full credit is only available for a limited time. Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.

Phase-Out of Credit for Toyota and Lexus Hybrids Continues With Reporting of First Quarter Sales

2007-05-02T11:36:00.000-05:00

Phase-Out of Credit for Toyota and Lexus Hybrids Continues With Reporting of First Quarter Sales

IR-2007-96, May 2, 2007

WASHINGTON — After reviewing Toyota Motor Sales USA, Inc.’s, 2007 first quarter sales, the Internal Revenue Service announced that purchasers of Toyota and Lexus vehicles may continue to claim the Alternative Motor Vehicle Credit. Based on the number of vehicles sold, the phase-out period for Toyota vehicles began on Oct. 1, 2006.

Toyota sold 61,369 qualifying vehicles to retail dealers in the quarter ending March 31, 2007. This brings the cumulative sales of qualified Toyota hybrid vehicles sold from the period of Jan. 1, 2006, through March 31, 2007, to 273,442.

Taxpayers may claim the full amount of the credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th qualified vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter. The sale of Toyota’s 60,000th qualified vehicle occurred in the quarter ending June 30, 2006.

The applicable credit amounts are as follows:

Qualifying Vehicle	Full Credit When Purchased By 9/30/06	Reduced Credit When Purchased From 10/1/06 through 3/31/07	Reduced Credit When Purchased From 4/1/07 through 9/30/07	Beginning 10/1/07
05, 06 and 07 Toyota Prius	$3,150	$1,575	$787.50	$0
06 and 07 Toyota Highlander 2WD and 4WD	$2,600	$1,300	$650	$0
07 Toyota Camry Hybrid	$2,600	$1,300	$650	$0
06 and 07 Lexus RX 400h 2WD and 4WD	$2,200	$1,100	$550	$0
07 Lexus GS450h	$1,550	$775	$387.50	$0

GM Hybrids Still Qualify for Tax Credit

2007-05-02T11:35:00.000-05:00

GM Hybrids Still Qualify for Tax Credit

IR-2007-95, May 2, 2007

WASHINGTON — The Internal Revenue Service announced that purchasers of qualified General Motors Corp. hybrid vehicles may continue to claim the Alternative Motor Vehicle Credit.

GMC sold 2,927 qualifying vehicles to retail dealers in the quarter ending March 31, 2007. This brings the cumulative number of qualified GM hybrid vehicles sold to 8,485. The credit amount and make and model of qualified vehicles sold are:

Chevrolet Silverado Hybrid 2WD, Model Years 2006 and 2007 $250
Chevrolet Silverado Hybrid 4WD, Model Years 2006 and 2007 $650
GMC Sierra Hybrid 2WD, Model Years 2006 and 2007 $250
GMC Sierra Hybrid 4WD, Model Years 200 and 2007 $650
Saturn Vue Green Line, Model Year 2007 $650
Saturn Aura Hybrid, Model Year 2007 $1,300

Purchasers of GMC’s qualified vehicles may continue to rely on the certifications concerning the vehicles’ qualification for the credit.

IRS Draft Form 1120-F and New Schedule M-3 (1120-F) Now Available for Public Comment

2007-05-01T11:35:00.000-05:00

IRS Draft Form 1120-F and New Schedule M-3 (1120-F) Now Available for Public Comment

IR-2007-94, May 1, 2007

WASHINGTON — The Internal Revenue Service has issued for public comment draft versions of the revised Form 1120-F, U.S. Income Tax Return of a Foreign Corporation, for tax year 2007 and related schedules, including Schedule M-3, new for 2007. Taxpayers with $10 million or more in total reportable assets filing Form 1120-F for tax years ending on or after Dec. 31, 2007 will be required to file Schedule M-3.

Three other new schedules for Form 1120-F include:

Schedule H, Deductions Allocated To Effectively Connected Income Under Regulations Section 1.861-8
Schedule I, Interest Expense Allocated Under Regulations Section 1.882-5
Schedule P, List of Foreign Partner Interest in Partnerships

The new schedules will provide for increased disclosure of information regarding such items as allocable interest expense and home office deductions, as well as effectively- and non-effectively-connected income that is included in Form K-1 reported by a partnership to a foreign corporate partner and that is reportable by the partner on Form 1120-F. The new schedules also provide a consistent reporting format for all taxpayers.

In addition, Schedules M-1 and M-2, previously included in Form 1120-F, are now separate forms. Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return is used by corporations with assets under $10 million. Schedule M-2, Analysis of Unappropriated Retained Earnings per Books, is used by all asset size corporations.

The draft Form 1120-F and related schedules are available on this Web site. Comments should be submitted by May 25, 2007, via e-mail to SchM3@irs.gov.

Related Item: Draft Forms and Schedules

IRS Seeks Nominations for Internal Revenue Service Advisory Council

2007-04-27T11:33:00.000-05:00

IRS Seeks Nominations for Internal Revenue Service Advisory Council

IR-2007-93, April 27, 2007

WASHINGTON — The Internal Revenue Service is requesting membership nominations for the Internal Revenue Service Advisory Council (IRSAC). Applications will be accepted from May 1, 2007, through June 15, 2007.

Originally called the Commissioner’s Advisory Group (CAG) and renamed in 1998, IRSAC’s purpose is to provide an organized public forum for IRS officials and representatives of the public to discuss relevant tax administration issues. The committee presents a report to the Commissioner of Internal Revenue each year at a public meeting in the fall.

In order to effectively advise the Commissioner and IRS executives, members are drawn from substantially diverse backgrounds. Membership is balanced to include representation from the tax professional community, including, but not limited to, tax attorneys, certified public accountants, enrolled agents, enrolled actuaries and appraisers, as well as large and small business representatives and other tax practitioners.

IRSAC is comprised of up to 30 members, who are appointed to three-year terms by the Commissioner. Nominations are currently being accepted for five to seven appointments that will begin January 2008.

Interested parties may nominate themselves and/or one other qualified person for membership. Nominees should be in good standing regarding their own tax obligations, and should represent professional and ethical ideals. All nominees must complete an application and a tax check waiver form. In addition, FBI criminal and subversive checks using fingerprints and, if applicable, practitioner checks are required of all nominees.

More information, including application packages, is available on the Tax Professional’s Page. Questions about the nomination process can be sent to the following e-mail address: *public_liaison@irs.gov.

IRS Gives Northeast Storms Victims Until April 26 to File Tax Returns

2007-04-18T11:38:00.000-05:00

IRS Gives Northeast Storms Victims Until April 26 to File Tax Returns

IR-2007-92, April 18, 2007

WASHINGTON — Taxpayers affected by the major storm that hit the Northeastern United States April 16 now have until Thursday, April 26 to file their tax returns, the Internal Revenue Service said today.

Earlier this week, the IRS gave taxpayers directly impacted by the storm an additional two days beyond the April 17 deadline to meet their tax filing obligations without incurring late filing and payment penalties. After further assessment of conditions across the region affected by the April 16 storm, the IRS has decided to allow affected taxpayers an additional seven days to fulfill their tax filing obligations.

Power outages and public transportation problems made it impossible in some cases for some taxpayers and tax professionals to meet the April 17 filing deadline.

Affected taxpayers can mark their paper tax returns with the words “April 16 Storm.” Taxpayers who e-file their returns can use their software’s “disaster” feature, if available.

This news release supercedes IR-2007-89.

Taxpayers, Tax Professionals with TurboTax Problems Have Until Midnight April 19 to e-file

2007-04-18T11:37:00.000-05:00

Taxpayers, Tax Professionals with TurboTax Problems Have Until Midnight April 19 to e-file

IR-2007-91, April 18, 2007

WASHINGTON — Taxpayers who were unable to e-file their tax returns Tuesday using Intuit Inc. software products have until midnight on Thursday, April 19, to file their returns, the Internal Revenue Service announced Wednesday.

Potentially up to several hundred thousand last-minute tax filers were affected by company server problems on Tuesday evening, and they or their accountants may have been unable to electronically file returns. Intuit confirmed Wednesday that those problems had been resolved, and it was successfully accepting e-file returns on Wednesday.

The company said affected taxpayers and tax professionals include those using “TurboTax,” “ProSeries,” “Lacerte” and Intuit’s Free File offering,“TurboTax Freedom.”

Intuit product users who were unable to file their returns through the company’s servers Tuesday should e-file as soon as possible. The IRS will not apply late filing penalties to taxpayers who were affected by this problem.

Overall, the IRS has seen a strong year for e-filing. Taxpayers filed more than 75 million returns electronically through April 17, shattering last year’s record of 73.2 million.

E-file and Free File will remain available through Oct. 15, 2007, to taxpayers who have requested a six-month filing extension.

IRS Grants Six-Month Filing, Payment Extension Following Virginia Tech Shooting

2007-04-17T11:36:00.000-05:00

IRS Grants Six-Month Filing, Payment Extension Following Virginia Tech Shooting

IR-2007-90, April 17, 2007

WASHINGTON — The Internal Revenue Service today granted a six-month tax filing and payment extension to those affected by the shootings Monday at Virginia Tech, in Blacksburg, Va. This relief applies to the victims, their families, emergency responders and university students and employees.

“Taxes are the last thing the Virginia Tech family should be worried about at this time,” IRS Commissioner Mark W. Everson said. “Our hearts go out to the people affected by this tragic event.”

The relief announced today allows taxpayers affected by the events at Virginia Tech to have until Oct. 15, 2007, to file and make payments associated with their 2006 individual tax returns due April 17. No filing and payment penalties will be due for those who qualify for this extension as long as the returns are filed and payments are made by Oct. 15, 2007.

In order to claim this relief, taxpayers need to call the IRS at 1-866-562-5227 and identify themselves to the IRS before they file and or make payment.

Please note that taxpayers with questions not related to the Virginia Tech situation should visit IRS.gov or contact the regular IRS toll-free number at 1-800-829-1040.

IRS Gives April 16 Storm Victims Additional 48 Hours to File Income Tax Returns

2007-04-16T11:35:00.001-05:00

IRS Gives April 16 Storm Victims Additional 48 Hours to File Income Tax Returns

SUPERCEDED BY IR-2007-92

IR-2007-89, April 16, 2007

WASHINGTON — Victims of the major storm affecting several Northeastern states on Monday, April 16 will have two additional days to file their tax returns beyond the April 17 tax deadline, the Internal Revenue Service announced today.

Taxpayers directly impacted by the storm have until midnight April 19 to meet their tax filing obligations without incurring late filing and payment penalties.

Across the Northeast, there have been power outages and public transportation problems making it difficult in some cases, if not impossible, for some taxpayers and tax professionals to meet the April 17 filing deadline.

“Because this unusually forceful storm hit within 24 hours of the filing deadline, we are giving affected taxpayers 48 additional hours,” IRS Commissioner Mark W. Everson said.

Affected taxpayers can mark their paper tax returns with the words “April 16 Storm.” Taxpayers who e-file their returns can use their software’s “disaster” feature, if available.

Taxpayers can keep up to date by visiting the IRS.gov Web site and clicking on “Newsroom.”

Related Item:

Frequently Asked Questions on the April 17, 2007, Storm Relief

IRS Offers Last-Minute Reminders

2007-04-16T11:35:00.000-05:00

IRS Offers Last-Minute Reminders

IR-2007-88, April 16, 2007

Read below for information on e-file, Free File, Telephone Excise Tax Refund, Earned Income Tax Refund, errors in filling out returns, electronic payments, extensions of time to file and pay and installment agreements. And check out 1040 Central, your one-stop shop for all of your tax filing and paying information needs.

WASHINGTON — With the April 17 tax return filing and tax payment deadline imminent, the Internal Revenue Service offers last-minute tips for those who haven’t yet filed or paid.

Taxpayers can minimize any possible interest assessments and late filing or late payment penalties by filing and paying by the due date.

File Electronically

Filing electronically is fast, accurate and easy. The electronic filing program checks for errors and necessary information, increasing the accuracy of the return and reducing the need for correspondence with the IRS to clarify errors or omissions. The computer software leads the user step-by-step. Most people can usually file a state tax return at the same time they electronically file their federal return. Once the return is accepted for processing, the IRS electronically acknowledges receipt of the return. Generally, when someone files electronically, their refund will be issued in about half the time it would take if they had filed a paper return. Those who choose direct deposit will get their refund in even less time. More information on e-file is available on this Web site.

Use IRS Free File

Nearly 20 companies are offering free electronic filing to taxpayers whose 2006 adjusted gross income was $52,000 or less. That means 70 percent of all taxpayers, 95 million individuals, can take advantage of the IRS-sponsored Free File program. Free File cannot be accessed through tax preparation Web sites that inaccurately say they are part of the Free File Alliance. The only way to access this program is through the IRS’s own secure, official Web site, IRS.gov, where a link to Free File may be found on the home page.

Don’t Overlook These Benefits

Telephone Excise Tax Refund–– This is a one-time refund of long distance excise taxes available on 2006 income tax returns. The refund applies to charges billed from March 2003 through July 2006. The IRS offers a standard refund amount of $30 to $60, or taxpayers can calculate the actual tax paid. Even if the taxpayer does not normally have to file a return, Form 1040EZ-T can be used to request this refund. Businesses and exempt organizations can also request it. Taxpayers can find more information on this special payment on this Web site.
Earned Income Tax Credit–– Earned income of less than $39,000 in 2006 may qualify a taxpayer to claim the earned income tax credit. This credit could be worth up to $4,536. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return. An electronic special “EITC Assistant” is available on IRS.gov to help taxpayers determine whether they are eligible. Taxpayers can access more information on this credit by clicking on “1040 Central” on the front page of this Web site.

Make Sure the Paper Return is Error-free

Those who file a paper return can improve their chances of avoiding common errors that might result in a delay in the processing of their return or increase the need for correspondence with the IRS to clarify errors or omissions if they:

Put all required Social Security numbers on the return
Double-check their figures
Sign their form
Attach all required schedules
Send their return or request an extension by the April filing deadline

Pay Electronically

Taxpayers who file electronically can e-file and e-pay in a single step by authorizing an electronic funds withdrawal or by credit card. Electronic payment options are convenient, safe and secure methods for paying taxes or user fees. Taxpayers can charge taxes on their American Express, MasterCard, Visa or Discover cards, using an IRS-authorized service provider listed on IRS.gov. The service providers charge a convenience fee based on the amount of tax the taxpayer is paying. Taxpayers should not add the convenience fee to their tax payment. A link to the “electronic IRS” is located on the front page of this Web site.

For those who can’t file or pay on time, the IRS has alternative options.

Request an Extension of Time to File

If a taxpayer can't meet the filing deadline to file their tax return, they can get an automatic six month extension of time to file from the IRS, but they must submit the request by April 17. The extension gives taxpayers until October 15 to file the tax return. However, an extension of time to file does not give the taxpayer an extension of time to pay, which must be separately requested. Those who owe taxes can make a payment when they file the extension either by mailing a check made out to the U.S. Department of the Treasury or by several electronic payment methods, such as electronic funds withdrawals from bank accounts and credit card payments. Taxpayers can get an automatic six-month extension of time to file their tax returns by filing Form 4868, Automatic Extension of Time to File. Taxpayers can e-file the extension request from a home computer or through a tax professional who uses e-file. Taxpayers can e-file their extensions at no cost. Several companies offer free e-filing of extensions through the Free File Alliance; these companies are listed on this Web site.

Request an Extension of Time to Pay

Based on the circumstances, a taxpayer could qualify for an extension of time to pay. The IRS is willing to allow extensions of time to pay in order to assist in tax debt repayment. A taxpayer can request an extension from 30 to 120 days depending on the specific situation. Taxpayers qualifying for an extension of time to pay of 30 to 120 days generally will pay less in penalties and interest than if the debt were repaid through an installment agreement. Taxpayers can request an extension of time to pay using the Online Payment Agreement option available on this Web site.

Apply for an Installment Agreement

The IRS may allow taxpayers to pay any remaining balance in monthly installments through an installment agreement. Taxpayers who owe $25,000 or less may apply for a payment plan electronically, using the Online Payment Agreement application. Alternatively, taxpayers may attach a Form 9465, Installment Agreement Request, to the front of their tax return. Taxpayers must show the amount of their proposed monthly payment and the date they wish to make their payment each month. The IRS charges a $105 fee for setting up an installment agreement. The fee is reduced to $52 for those who establish a direct debit installment agreement and $43 for those with an income below a certain level (more information is available on Form 13844). Taxpayers are required to pay interest plus a late payment penalty on the unpaid taxes for each month, or part of a month, after the due date that the tax is not paid. A taxpayer who does not file the return by the due date — including extensions — may have to pay a failure-to-file penalty. More information can be found on the “Payment Plans, Installment Agreements” page on this Web site.

For more information about filing and paying taxes on this Web site, choose “1040 Central” or refer to the Form 1040 instructions or IRS Publication 17, Your Federal Income Tax. Taxpayers can download forms and publications from this Web site or request a free copy by calling toll free 800-TAX-FORM (800-829-3676).

Related Items:

e-file
Free File
Telephone Excise Tax Refund
Earned Income Tax Credit
electronic IRS
Form 4868, Automatic Extension of Time to File
Online Payment Agreement
Form 9465, Installment Agreement Request
Form 13844, Application for Reduced Fee for Installment Agreements
Payment Plans, Installment Agreements
1040 Central
Form 1040 instructions
Pub. 17, Your Federal Income Tax

Late Tax Scam Discovered; Free File Users Reminded to Use IRS.gov

2007-04-13T11:21:00.000-05:00

Late Tax Scam Discovered; Free File Users Reminded to Use IRS.gov

IR-2007-87, April 13, 2007

WASHINGTON — The Internal Revenue Service learned late Friday of a new tax scam on the Internet that lures taxpayers into filing tax information on a site masquerading as a member of the Free File Alliance. The IRS reminded taxpayers the only place to access the Free File program is through the official IRS.gov Web site.

“The final days of the tax season always bring tax scams,” IRS Commissioner Mark W. Everson said. “Make sure you’re really dealing with the IRS. Taxpayers can feel safe using Free File, but the only way to do it is through the secure IRS.gov Web site.”

The latest twist on tax scams involves tax preparation Web sites that inaccurately say they are part of the Free File Alliance, a partnership between 19 tax software companies and the IRS. The IRS is working with the Treasury Inspector General for Tax Administration to look into allegations that the Web sites accepted tax information from taxpayers, changed the taxpayers’ bank account numbers to their own and then filed the return through a legitimate Free File partner.

Taxpayers can avoid this problem by using the official Free File site on IRS.gov. Seventy percent of the nation’s taxpayers are eligible to use the free electronic filing system.

The IRS stressed that Free File is a great way for taxpayers to get a refund quickly or schedule their tax payment for April 17. To qualify for Free File, taxpayers need to have an adjusted gross income of $52,000 or less. Ninety-five million out of the 136 million taxpayers meet this qualification.

The only way to access this program is through the IRS's Web site, IRS.gov. Click "2007 Free File" on the home page. Then, click "Start Now." Taxpayers can use the "Guide Me to a Company!" wizard to help decide which software to choose using criteria such as the state they live in, their estimated AGI and their age.

If taxpayers owe money, they can use Free File to electronically file their return on time and schedule their payment on the last possible day, April 17. As with any e-file product, Free File reassures taxpayers they have filed on time by issuing an acknowledgment from the IRS saying the return has been received.

Modernized e-File Allows Electronic Filing of Partnership Returns

2007-04-13T11:20:00.000-05:00

Modernized e-File Allows Electronic Filing of Partnership Returns

IR-2007-86, April 13, 2007

WASHINGTON — The Internal Revenue Service today reminded taxpayers that the new electronic platform, Modernized e-File, allows partnerships to electronically file Form 1065, U.S. Return of Partnership Income, and Form 1065-B, U.S. Return of Income of Electing Large Partnerships. Partnerships can also submit their request for extensions through Modernized e- File.

Previously, using an older IRS system known as Partnership e-File, partnerships could electronically file Form 1065, but not Form 1065-B. Modernized e-File supports the filing of both and improves the e-file experience for taxpayers and practitioners.

Since tax year 1986, the IRS has offered electronic filing of Form 1065. The existing 1065 e-File platform, Partnership e-File, uses a proprietary data transmission format. However, the Modernized e-File platform uses the Extensible Markup Language (XML) format, which is an industry-standard method of identifying, storing and transmitting data. Both e-File platforms offer improved speed and accuracy of tax return filing. But Modernized e-File offers additional benefits, including transactional processing instead of batch processing, allowance for binary file attachments, elimination of the duplicate filing of International returns and a federal/state partnership program.

Beginning with tax years ending on or after December 31, 2007, Form 1065-B must be filed electronically using the Modernized e-File system.

The e-filing of partnership returns is mandatory for most Form 1065 filers with more than 100 partners. Form 1065 may still be e-filed using the existing Partnership e-File system this year. However, beginning in January 2008, Modernized e-File will be the only e-File platform available to e-File partnership returns.

Related Items:

Modernized e-File (MeF) for Partnerships
IR-2007-02, Modernized e-File Available for Partnership Returns

IRS Offers Several Tax Payment Options

2007-04-12T11:20:00.000-05:00

IRS Offers Several Tax Payment Options

IR-2007-85, April 12, 2007

WASHINGTON — The Internal Revenue Service today reminded taxpayers to file their tax returns by the April 17 deadline and to pay as much as they can of any taxes they owe to minimize any accrued penalties and interest.

There are also alternative payment options to consider:

Request an Extension of Time to Pay — Based on the circumstances, a taxpayer could qualify for an extension of time to pay. The IRS is willing to allow extensions of time to pay in order to assist in tax debt repayment. A taxpayer can request an extension from 30 to 120 days depending on the specific situation. Taxpayers qualifying for an extension of time to pay of 30 to 120 days generally will pay less in penalties and interest than if the debt were repaid through an installment agreement. Taxpayers can request an extension of time to pay using the Online Payment Agreement option available on thisWeb site.
Apply for an Installment Agreement — The IRS may allow taxpayers to pay any remaining balance in monthly installments through an installment agreement. Taxpayers who owe $25,000 or less may apply for a payment plan electronically, using the Online Payment Agreement application. Alternatively, taxpayers may attach a Form 9465, Installment Agreement Request, to the front of their tax return. Taxpayers must show the amount of their proposed monthly payment and the date they wish to make their payment each month. The IRS charges a $105 fee for setting up an installment agreement. The fee is reduced to $52 for those who establish a direct debit installment agreement and $43 for those with an income below a certain level (for more information, see Form 13844). Taxpayers are required to pay interest plus a late payment penalty on the unpaid taxes for each month or part of a month, after the due date that the tax is not paid. A taxpayer who does not file the return by the due date — including extensions — may have to pay a failure-to-file penalty.
Pay by Credit Card — Taxpayers can charge taxes on their American Express, MasterCard, Visa or Discover cards. To pay by credit card, taxpayers should contact one of the service providers at its telephone number or Web site listed below and follow the instructions. The service providers charge a convenience fee based on the amount of tax the taxpayer is paying. Taxpayers should not add the convenience fee to their tax payment.
- Link2Gov Corporation: 888-PAY-1040 (888-729-1040), www.pay1040.com
- OfficialPayments Corporation: 800-2PAY-TAX (800-272-9829), www.officialpayments.com

For more information about filing and paying your taxes, choose “1040 Central” on this Web site or refer to the Form 1040 Instructions or IRS Publication 17, Your Federal Income Tax. Taxpayers can download forms and publications from this Web site or request a free copy by calling toll free 800-TAX-FORM (800-829-3676).

2007 FILING SEASON STATISTICS
Cumulative through the weeks ending 4/7/06 and 4/6/07
Individual Income Tax Returns	2006		2007		% Change
Total Receipts	87,732,000		88,581,000		1.0%
Total Processed	82,747,000		84,215,000		1.8%

E-filing Receipts:
TOTAL	57,740,000		61,345,000		6.2%
Tax Professionals	41,939,000		44,210,000		5.4%
Self-prepared	15,801,000		17,135,000		8.4%

Web Usage:
Visits to IRS.gov	102,281,000		111,215,000		8.7%

Total Refunds:
Number	71,835,000		73,622,000		2.5%
Amount	$164.499	Billion	$174.164	Billion	5.9%
Average refund	$2,290		$2,366		3.3%

Direct Deposit Refunds:
Number	46,917,000		49,935,000		6.4%
Amount	$124.366	Billion	$136.605	Billion	9.8%
Average refund	$2,651		$2,736		3.2%

Related Items:

Electronic Payment Options
Online Payment Agreement Application
Payment Plans, Installment Agreements
Form 9465, Installment Agreement Request
Form 13844, Application for Reduced User Fee for Installment Agreements
1040 Central
Form 1040 instructions
Pub. 17, Your Federal Income Tax

IRS Completes Taxpayer Assistance Blueprint

2007-04-11T11:19:00.000-05:00

IRS Completes Taxpayer Assistance Blueprint

IR-2007-84, April 11, 2007

WASHINGTON — The Internal Revenue Service today announced it has submitted to Congress the completed Taxpayer Assistance Blueprint. The Blueprint is the joint response of the IRS, the IRS Oversight Board and the National Taxpayer Advocate to a congressional mandate for the development of a five-year plan for the delivery of taxpayer service.

The Blueprint represents the most extensive IRS research ever conducted into the needs, preferences and behaviors of taxpayers and partners who assist them in complying with the tax laws, such as volunteer and paid tax return preparers. This research formed the foundation for the strategic plan for taxpayer service outlined in the Blueprint. The plan includes a variety of specific recommendations for improving IRS services for taxpayers and partners. Improving taxpayer service is an important part of a comprehensive strategy to reduce the “tax gap” –– the difference between the amount of tax that taxpayers pay and the amount that they owe –– by helping taxpayers understand and meet their tax obligations.

“As this filing season draws to a close, we are committed to providing good service to taxpayers and enforcing the law,” IRS Commissioner Mark W. Everson said. “This document is an important step to help us continue to improve our taxpayer services.”

To address congressional and stakeholder interests, the Blueprint was designed to:

Establish a taxpayer and partner baseline of needs, preferences and behaviors;
Create a transparent process for making service-related resource and operational decisions;
Develop a framework to improve service delivery; and
Define both short-term performance and long-term business goals and metrics to assess service value.

“The Blueprint outlines the way forward,” said Richard Morgante, Commissioner of the IRS Wage and Investment Division. “It responds to the needs of taxpayers and partners and supports the government’s compliance objectives, all within the context of our budget.”

“It is critical that the IRS understand what services taxpayers need and their preferences for receiving them,” IRS Oversight Board Chairman Paul B. Jones said. “The Taxpayer Assistance Blueprint is based on extensive research and provides a strategic five-year plan to help the IRS make the most out of its investments in taxpayer services.”

"I am pleased that the IRS recognizes the need for a taxpayer-centric approach to taxpayer service –– one that is based on sound research and observation,” National Taxpayer Advocate Nina Olson said. “The TAB is a much-needed first step to delivering this service in ways that meet taxpayer needs."

The Blueprint offers recommendations to expand, simplify, standardize and automate services, and to improve and expand technology infrastructure. It includes recommendations for increasing education and outreach to taxpayers, partners and IRS employees, and incorporating feedback from these stakeholders into future service decisions.

Link:

Taxpayer Assistance Blueprint

IRS E-File for Business Tops One Million Returns

2007-04-11T11:18:00.000-05:00

IRS E-File for Business Tops One Million Returns

IR-2007-83, April 11, 2007

WASHINGTON — The Internal Revenue Service announced today that more than one million business taxpayers have electronically filed tax returns so far this year. Corporate e-filed returns have increased by nearly 50 percent over this period last year.

Corporations with assets of $10 million or more that file at least 250 returns (including W-2’s, 1099’s and others) are now included in the mandate to e-file. The deadline for most corporate filers was March 15, 2007.

On the day of the deadline, IRS systems successfully processed more than 200,000 business returns, of which more than 50,000 were returns of corporations. Over 400,000 (actual 414k) corporate taxpayers have e-filed their returns so far this year. Corporate returns can be thousands of pages.

More than 4,700 of the nation’s largest corporations — those with at least $50 million in assets — filed electronic returns by the due date. Nearly 6,400 of the newly mandated smaller corporations did so.

“As we did last year when we initiated the program, this year we worked with tax professionals, software developers and corporate taxpayers to remove barriers to facilitate taxpayers’ ability to comply with the mandate,” said LMSB Commissioner Deborah M. Nolan. “Our experience shows that our systems can handle simultaneous transmission of multiple complex returns.”

Corporations that operate on the calendar year can request an extension to file until September 15 and many elect to do so. This year, 634,000 taxpayers used e-file to file Form 7004 to request an extension.

Non-corporate business filers are also using e-file. Close to 185,000 (actual 185,809) businesses electronically filed their partnership returns this year. Partnerships are required to file a schedule K-1 for every partner. The IRS has received more than 1.1 million e-filed K-1s so far this year, above and beyond the million returns.

In addition, the IRS received 847 million electronically filed information returns (W-2s, W-4s, 1099s, 1098s, etc.) last year, more than 80 percent of the total 1.2 billion information returns.

IRS Urges Taxpayers to e-file Extension Requests By April 17 Filing Deadline

2007-04-10T11:17:00.000-05:00

IRS Urges Taxpayers to e-file Extension Requests By April 17 Filing Deadline

IR-2007-82, April 10, 2007

WASHINGTON — The Internal Revenue Service urges taxpayers who need additional time to complete their tax return to submit their request for an automatic extension electronically by April 17. E-filing an extension is convenient, safe and secure, and taxpayers receive confirmation to keep with their records.

The extension gives taxpayers until October 15 to file the tax return. An extension does not give the taxpayer an extension of time to pay. Those who owe taxes can make a payment when they file the extension either by mailing a check or by several electronic payment methods, such as electronic funds withdrawals from bank accounts and credit card payments.

IRS expects to receive 9.9 million extensions during 2007 compared with 9.5 million extensions in 2006. Of the extensions filed last year, 1.8 million were filed electronically.

Taxpayers can get an automatic six-month extension of time to file their tax returns by filing Form 4868, Automatic Extension of Time to File. Before last year, only a four-month extension was automatic and taxpayers who needed more time had to make a second request.

Taxpayers can e-file the extension from a home computer or through a tax professional who uses e-file. Taxpayers can e-file their extensions at no cost. Several companies offer free e-filing of extensions through the Free File Alliance; these companies are listed on IRS.gov.

IRS Offers Last-Minute Tips for Taxpayers

2007-04-09T11:17:00.000-05:00

IRS Offers Last-Minute Tips for Taxpayers

IR-2007-81, April 9, 2007

WASHINGTON — With the April 17 tax filing deadline close at hand, the IRS offers some tips for those still working on their paper tax forms. Those are:

Consider filing electronically instead of using paper tax forms
Put all required Social Security numbers on the return
Double-check your figures
Sign your form
Attach all required schedules
Send your return or request an extension by the April filing deadline.

Choosing to e-file your tax return instead of preparing a paper tax form is the best step you can take to ensure that your return is accurate and complete.

When you file a paper return, the numbers to check most carefully on the tax return are the identification numbers — usually Social Security numbers — for each person listed. This includes the taxpayer, spouse, dependents and persons listed in relation to claims for the Child Care or Earned Income Tax Credits. Missing, incorrect or illegible Social Security Numbers can delay or reduce a tax refund.

Taxpayers filing paper returns should also double-check that they have correctly figured the refund or balance due and have used the right figure from the tax table.

Taxpayers must sign and date their returns. Both spouses must sign a joint return, even if only one had income. Anyone paid to prepare a return must also sign it.

People sending a payment should make the check out to “United States Treasury” and should enclose it with, but not attach it to, the tax return or the Form 1040-V, Payment Voucher, if used. The check should include the taxpayer’s Social Security number, daytime phone number, the tax year and the type of form filed.

By the April due date, taxpayers should either file a return or request an extension of time to file. Remember, the extension of time to file is not an extension of time to pay.
Forms and publications and helpful information on a variety of tax subjects are available around the clock on the IRS Web site at IRS.gov.

Related Items:

Overlooked Tax Benefits
1040 Central

Trends Show Last-minute Tax Filers Using E-file More

2007-04-06T11:16:00.000-05:00

Trends Show Last-minute Tax Filers Using E-file More

IR-2007-80, April 6, 2007

WASHINGTON — With electronic filing running at a record pace, new Internal Revenue Service data released today shows more and more taxpayers are using e-file in advance of the April 17 tax deadline than in years past.

Historically, most e-file returns have come in during the early part of the tax season as taxpayers expecting big refunds use the service to get their refunds quickly. But new statistics show that a trend that appeared in recent years is growing this year, as more late filers abandon paper in favor of e-file. Traditionally, more late filers owe the government money and have more often used paper tax returns than e-file.

New statistics also show an increasing number of taxpayers are paying what they owe electronically — by credit card or direct debit.

“Electronic filing is more than just a quick refund,” said IRS Commissioner Mark W. Everson. “E-file is a great option for last-minute filers, because the IRS verifies that it has received your return. People who file electronically make fewer mistakes, too. That can give you real peace of mind when you’re rushing to meet the deadline.”

New IRS statistics show that while e-file is up for this year, the increase was even more significant during the month of March. Here are some of the highlights, based on statistics through March 30:

Overall, nearly 57 million returns have already been e-filed this year, up 5.9 percent over last year at this time. Nearly one-third of those returns were e-filed during March alone, up more than 10 percent over last March.
More than 16 million taxpayers have e-filed their returns from their home computers this year, an 8.3 percent increase over last year at this time. A quarter of them were e-filed in March, up 11 percent over last March.
The average refund this year is $2,394, up from $2,314 last year.
So far this year, the IRS has received nearly 4 million e-filed returns showing a balance due, up 7.6 percent over last year at this time.

More information about electronic payment options can be found on the IRS Web site at IRS.gov.

In addition, the IRS urges all taxpayers with incomes at or below $52,000 to file their returns for free using the Free File link on IRS.gov. Telephone customers can also use Free File to request this year’s one-time telephone excise tax refund.

2007 FILING SEASON STATISTICS
Cumulative through the weeks ending 3/31/06 and 3/30/07
Individual Income Tax Returns	2006		2007		% Change
Total Receipts	79,979,000		80,800,000		1.0%
Total Processed	75,697,000		77,171,000		1.9%

E-filing Receipts:
TOTAL	53,797,000		56,994,000		5.9%
Tax Professionals	38,951,000		40,910,000		5.0%
Self-prepared	14,846,000		16,084,000		8.3%

Web Usage:
Visits to IRS.gov	95,406,000		103,780,000		8.8%

Total Refunds:
Number	66,710,000		68,274,000		2.3%
Amount	$154.388	Billion	$163.431	Billion	5.9%
Average refund	$2,314		$2,394		3.4%

Direct Deposit Refunds:
Number	44,572,000		47,339,000		6.2%
Amount	$118.873	Billion	$130.331	Billion	9.6%
Average refund	$2,667		$2,753		3.2%

Related Items:

Free File
Telephone Excise Tax Refund
FS-2007-11, Electronic Payment Options for 2007

April 17 Tax Deadline Rapidly Approaching

2007-04-04T14:59:00.000-05:00

April 17 Tax Deadline Rapidly Approaching

IR-2007-79, April 4, 2007

WASHINGTON — The Internal Revenue Service today issued a reminder that 2006 federal tax returns must be filed, and any taxes owed must be paid, by no later than April 17, 2007.

Traditionally, the deadline for filing and paying is April 15. This year, however, taxpayers nationwide will have extra time to file and pay because April 15 falls on a Sunday and the following day, Monday, April 16, is Emancipation Day, a legal holiday in the District of Columbia.

Previously, the April 17 deadline applied just to individuals in the District of Columbia and six eastern states who are served by an IRS processing facility in Massachusetts, where the Massachusetts state holiday Patriots Day will be observed on April 16.

Under a federal statute enacted decades ago, holidays observed in the District of Columbia have impact nationwide on tax issues, not just in D.C. Under recently-enacted city legislation, April 16 is a holiday in the District of Columbia. Officials recently became aware of the intersection of the national filing day and the local observance of the new Emancipation Day holiday after most forms and publications for the current tax filing season went to print.

The April 17, 2007 deadline will apply to any of the following:

2006 federal individual income tax returns, whether filed electronically or on paper.
Requests for an automatic six-month tax-filing extension, whether submitted electronically or on Form 4868.
Tax year 2006 balance due payments, whether made electronically (direct debit or credit card) or by check.
Tax-year 2006 contributions to a Roth or traditional IRA.
Individual estimated tax payments for the first quarter of 2007, whether made electronically or by check.
Individual refund claims for tax year 2003, where the regular three-year statute of limitations is expiring.

Other tax-filing and payment requirements affected by this change are described in IRS Publication 509, Tax Calendars for 2007, available on this Web site.

Most taxpayers will not have to change their plans in response to this announcement. Three out of four individual filers get refunds. Typically, returns claiming refunds are filed early in the tax season.

Even with the extra time, taxpayers can skip the last-minute rush and avoid needless mistakes by filing as early as possible, taking advantage of the speed and convenience of electronic filing, choosing direct deposit for any refunds and paying any taxes due by direct debit or credit card. Check this Web site for further details on electronic filing and payment options and links to companies providing these services.

Related Items:

Questions and Answers — April 17 Deadline
Pub. 509
electronic IRS
IR-2007-15, Taxpayers Have until April 17 to File and Pay

IRS Seeks Applicants for the Electronic Tax Administration Advisory Committee

2007-04-03T14:58:00.000-05:00

IRS Seeks Applicants for the Electronic Tax Administration Advisory Committee

IR-2007-78, April 3, 2007

WASHINGTON — The Internal Revenue Service is seeking applicants for vacancies on the Electronic Tax Administration Advisory Committee (ETAAC) during the fall of 2007. ETAAC members are appointed by the Secretary of the Treasury and serve a three-year term.

ETAAC, a congressionally authorized panel, provides an organized public forum for discussion of electronic tax administration issues in support of a major IRS goal: paperless filing of tax and information returns. Each June, ETAAC provides an annual report to Congress recommending actions the IRS should take in electronic tax administration.

The IRS is looking for a balanced membership that includes representatives from tax practitioners and preparers, large and small business owners, transmitters of electronic returns, tax software developers, academic (marketing, sales or technical perspectives), and financial industry (payers, payment options and best practices).

Applicants should submit a resume and complete Form 13768, Electronic Tax Administration Advisory Committee (ETAAC) Membership Application available on IRS.gov.

A notice published in the Federal Register dated March 15, 2007, contains more details about ETAAC and the application process. In addition, all applicants for final consideration will have their income tax records reviewed for currency of tax return filing and payment, as well as undergo a background review by the Federal Bureau of Investigation (FBI).

Applications will be accepted through April 30, 2007.

Applications can be submitted via email ETAAC@irs.gov, mailed to Internal Revenue Service, ATTN: Cassandra Daniels, 5000 Ellin Rd C4-226 SE:W:ETA:S:RM , Lanham, MD 20706, or by fax to 202-283-4829 (not a toll-free number).

IRS Urges Taxpayers to Avoid Common Mistakes

2007-04-03T14:57:00.000-05:00

IRS Urges Taxpayers to Avoid Common Mistakes

IR-2007-77, April 3, 2007

WASHINGTON — The Internal Revenue Service today urged taxpayers to review their tax returns for common errors that could delay the processing of their return and refund.

Here are some ways to avoid common tax return errors:

File electronically. If you choose to e-file, many of the common errors are avoided or corrected by the computer software. If your income is under $52,000 you may be able to e-file for free using IRS Free File.
Use the peel-off label if you choose to mail a paper return. You may line through and make necessary corrections right on the label. Be sure to fill in your Social Security number in the box provided on the return. If you do not have a peel-off label, fill in all requested information clearly, including the Social Security numbers.
Check only one filing status on the tax return and check the appropriate exemption boxes. Enter the correct Social Security numbers for each of those exemptions.
Use the correct Tax Table column for your filing status.
Double check all figures on the return. Math errors are common mistakes.
Make sure that the financial institution routing and account numbers you have entered on the return for a direct deposit of your refund are accurate. Incorrect numbers can cause the refund to be delayed or misdirected.
Sign and date the return. If filing a joint return, both spouses must sign and date the return.
Attach all Forms W-2, Wage and Tax Statement, and other forms that reflect tax withheld to the front of the return. Attach all other necessary forms and schedules.
Remember to request the Telephone Excise Tax Refund. Don’t short-change yourself, most households are eligible for a special one-time only Telephone Tax Refund, typically between $30-$60, that can be requested on the 2006 tax return.
Do you owe tax? If so, enclose a check or money order made payable to the “United States Treasury” and Form 1040-V, Payment Voucher, if used. Or, you may choose to pay by credit card by contacting one of the credit card service providers.

Related Items:

IRS Seeks Nominations for Information Reporting Program Advisory Committee

2007-04-03T14:55:00.000-05:00

IRS Seeks Nominations for Information Reporting Program Advisory Committee

IR-2007-76, April 3, 2007

WASHINGTON — The Internal Revenue Service is requesting membership nominations for the Information Reporting Program Advisory Committee. The deadline for submitting applications is May 31, 2007.

Established in 1991, IRPAC provides recommendations to IRS leadership on a wide range of information reporting and administration issues. The committee presents a report to the commissioner of the IRS each year at a public meeting in the fall.

In order to effectively advise the IRS commissioner and executives, members are drawn from substantially diverse backgrounds. Members include representatives of the taxpaying public, the tax professional community, small and large businesses, colleges and universities, state tax administrations, banks, the insurance industry and the payroll community.

IRPAC is comprised of up to 23 members who are appointed to three-year terms by the commissioner. Each year, approximately one-third of the membership terms expire. Nominations are currently being accepted for up to eight appointments that begin January 2008.

Interested parties may nominate themselves or a qualified person for membership. All nominees must complete an application and federal tax check waiver form. In addition, FBI background checks using fingerprints and, if applicable, practitioner checks are required of all nominees.

More information, including application packages, is available on the Tax Professional’s Page on the IRS's Web site, IRS.gov. Questions about the nomination process can be sent to the following e-mail address: *public_liaison@irs.gov.

IRS Warns of Phony e-Mails Claiming to Come from the IRS

2007-04-02T13:10:00.000-05:00

IRS Warns of Phony e-Mails Claiming to Come from the IRS

IR-2007-75, April 2, 2007

WASHINGTON — The Internal Revenue Service today alerted taxpayers about Internet scams in which fraudulent e-mails are sent that appear to be from the IRS.

The e-mails direct the consumer to a Web link that requests personal and financial information, such as Social Security, bank account or credit card numbers. The practice of tricking victims into revealing private personal and financial information over the Internet is known as “phishing” for information.

The IRS does not send out unsolicited e-mails or ask for detailed personal and financial information. Additionally, the IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

The information fraudulently obtained by scammers is used to steal the taxpayer’s identity and then his or her financial assets. Generally, identity thieves use someone’s personal data to steal his or her financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name and even file fraudulent tax returns to obtain refunds rightfully belonging to the victim.

“Don’t be fooled by these shameless scam artists. The IRS doesn’t send unsolicited e-mail,” said IRS Commissioner Mark W. Everson. “Always exercise caution when you receive unsolicited e-mails or e-mails from senders you don’t know, and always verify the source.”

Last year, the IRS established an electronic mail box, phishing@irs.gov, to receive copies of possibly fraudulent e-mails involving misuse of the IRS name, logo or Web site for investigation. Since the establishment of the mail box, the IRS has received more than 17,700 e-mails from taxpayers reporting more than 240 separate phishing incidents. To date, investigations by the Treasury Inspector General for Tax Administration (TIGTA) have identified host sites in at least 27 different countries, as well as in the United States.

In the on-going e-mail schemes that use the IRS name, about which the IRS has warned the public before, the recipients are asked to click on links to take them to the “IRS” Web site. The links appear authentic and connect the victim to sites that resemble the genuine IRS Web site. The sites then prompt the victim for personal identifiers, credit card numbers, PIN numbers or similar financial information. The phony sites appear legitimate because most of the images and content are copied from actual pages on the genuine IRS Web site before being modified by the fraudsters to include their loaded questions.

The schemes have a few variations. In one, the bogus e-mail tells the recipient that he or she is eligible to receive a federal tax refund for a given amount (often $63.80) and sends the recipient to a Web site to complete a form to “submit the tax refund request.” The form then asks for the personal and financial information.

The IRS does not notify taxpayers of refunds via e-mail. Additionally, taxpayers do not have to complete a special form or provide detailed financial information to obtain a refund. Refunds are based on information contained on the federal income tax return filed by the taxpayer.

In another scheme, the e-mail states that the IRS’s “Antifraud Comission” (sic) has found that someone tried to pay their taxes through the Electronic Federal Tax Payment System, or EFTPS, using the e-mail recipient’s credit card and that, as a result, some of the recipient’s money was lost and the remaining “founds” (sic) were blocked. The e-mail contains visual elements copied from the genuine IRS Web site in an attempt to make the e-mail appear legitimate. The e-mail includes a link that sends the recipient to a Web site that asks the recipient to enter personal and financial information, such as SSN and account numbers, in order to unblock their funds.

The IRS does not have an Antifraud Commission, does not have the authority to freeze a taxpayer’s credit card or bank account because of potential theft or fraud perpetrated against the taxpayer, and does not use e-mail to initiate contact with taxpayers.

A third, recent scheme asks the recipient to wire thousands of dollars in order to retrieve the winnings on a lottery. One such e-mail instructed the recipient to wire $42,000 to retrieve the winnings on a British lottery. This e-mail used a simulated IRS letterhead with the actual address of an IRS office at 290 Broadway, Manhattan, NYC, in an attempt to persuade the recipient of the legitimacy of the e-mail.

The IRS does not handle lottery distributions and does not initiate contact with taxpayers via e-mail. Additionally, lottery winnings are generally reported by the winner to the IRS with his or her annual federal income tax return, at which time any taxes due must be paid.

Recipients of questionable e-mails claiming to come from the IRS should not open any attachments or click on any links contained in the e-mails. Instead, they should forward the e-mails to phishing@irs.gov (the instructions may be found on IRS.gov by entering the term phishing in the search box) or notify TIGTA’s toll-free hotline at 1-800-366-4484. The IRS and TIGTA work with the U.S. Computer Emergency Readiness Team (US-CERT) and various Internet service providers and international CERT teams to have the phishing sites taken offline as soon as they are reported.

Recently, the IRS has become aware of commercial Internet sites that bear a striking resemblance to the real IRS site or that contain the some form of the IRS name in their address but with a .com, .net, .org or other designation in the address instead of .gov. Though these sites may not be phishing sites — that is, they may not request private financial data in an attempt to steal the consumer’s identity — the IRS urges consumers not to be misled into thinking such sites are the genuine IRS Web site or have some connection to the real IRS.

The only genuine IRS Web site is IRS.gov.

More information on phishing schemes and others, including abusive tax avoidance transactions, frivolous arguments and more, may be found on the Compliance and Enforcement page on this Web site. For information on preventing or handling the aftermath of identity theft, visit the Federal Trade Commission (FTC) ’s Web site.

Related Items:

Phishing, Identity Theft and Scams
Suspicious e-Mails and Identity Theft
Instructions for phishing@irs.gov
IR-2006-116, Electronic Federal Tax Payment System Cited in New E-mail Scam
IR-2006-49, IRS Establishes e-Mail Box for Taxpayers to Report Phony e-Mails
Phishing and Identity Theft Public Service Announcements
Compliance and Enforcement
TIGTA Web site
FTC Web site

E-File Returns Running at Record Pace

2007-03-30T13:08:00.000-05:00

E-File Returns Running at Record Pace

IR-2007-74, March 30, 2007

WASHINGTON — The Internal Revenue Service announced today that taxpayers are continuing to electronically file their tax returns at a record pace, up almost 6 percent from the same period last year.

“Taxpayers can rely on e-file as a safe, accurate way to quickly finish their taxes and get a refund,” said IRS Commissioner Mark W. Everson. “We encourage people to consider e-file and Free File as the tax deadline approaches. For those who haven’t filed, they should make sure to request the telephone excise tax refund if they are eligible.”

According to the new filing season statistics for the week ending March 23, 2007, one of the biggest areas of growth is in returns electronically filed from home. Self-prepared e-filed returns have grown more than 8 percent from last year. E-filed returns from tax professionals have climbed almost 5 percent.

So far this tax filing season, almost 72 percent of all returns have been e-filed, compared to 68 percent for the same period last year. As of last Friday, 29 percent of e-filed returns were filed by people using their home computers, up from 28 percent of e-filed returns for the same period last year.

Also, more people than ever before are opting to have their refunds directly deposited. So far this year, the IRS has directly deposited almost 45 million refunds, or 71 percent of all refunds issued this tax filing season, up from almost 69 percent of the total for the same period last year.

People are visiting the IRS Web site at IRS.gov in record numbers. The IRS has recorded more than 97 million unique visits to IRS.gov this year, up from about 89 million for the same period last year, an increase of almost 9 percent.

Meanwhile, this year’s filings still show that about three in 10 tax returns are not requesting the one-time telephone tax refund. Although some of these taxpayers may not be eligible, others may qualify and not know it. The IRS urges taxpayers to check their eligibility for this special refund by visiting the Telephone Excise Tax Refund section on this Web site.

The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. Federal officials also authorized a one-time refund of the 3 percent federal excise tax collected on service billed during the previous 41 months, stretching from the beginning of March 2003 to the end of July 2006. The tax continues to apply to local-only phone service.

Of those requesting the telephone tax refund, 99 percent are choosing the standard amount, and the rest are basing their request on the actual amount of tax paid. The standard amount ranges from $30 to $60 and is based on the number of exemptions taxpayers are eligible to claim on their return. Alternatively, taxpayers can request a refund based on the tax shown on their phone bills and other records.

Taxpayers can request the telephone excise tax refund, as well as file their entire tax return electronically, for no cost using the IRS's Free File program. Seventy percent of Americans are eligible for the Free File program because they earn an adjusted earned income of $52,000 or less. Free File can only be accessed through IRS.gov. On the home page, click on "2007 Free File" and follow the directions.

2007 FILING SEASON STATISTICS
Cumulative through the weeks ending 3/24/06 and 3/23/07
Individual Income Tax Returns	2006		2007		% Change
Total Receipts	73,438,000		74,150,000		1.0%
Total Processed	69,196,000		70,529,000		1.9%

E-filing Receipts:
TOTAL	50,296,000		53,145,000		5.7%
Tax Professionals	36,268,000		37,942,000		4.6%
Self-prepared	14,028,000		15,203,000		8.4%

Web Usage:
Visits to IRS.gov	89,246,000		97,102,000		8.8%

Total Refunds:
Number	61,660,000		62,951,000		2.1%
Amount	$144.513	Billion	$152.801	Billion	5.7%
Average refund	$2,344		$2,427		3.6%

Direct Deposit Refunds:
Number	42,252,000		44,779,000		6.0%
Amount	$113.414	Billion	$124.101	Billion	9.4%
Average refund	$2,684		$2,771		3.2%

Related Items:

e-file
Tax Tip 2007-19, Receive Your Refund Faster with Direct Depoist
Telephone excise tax refund
Free File

IRS Issues Regulations on Transactions Designed to Artificially Generate Foreign Tax Credits

2007-03-29T13:07:00.000-05:00

IRS Issues Regulations on Transactions Designed to Artificially Generate Foreign Tax Credits

IR-2007-73, March 29, 2007

WASHINGTON — The Internal Revenue Service and Treasury Department today announced the release of proposed regulations that would disallow foreign tax credits for foreign taxes purportedly paid in connection with certain artificially engineered, highly structured transactions.

Foreign tax credits are designed to relieve U.S.taxpayers from double taxation of their foreign source income. Transactions addressed by the regulations, in contrast, are structured so that a U.S.taxpayer voluntarily subjects itself to foreign tax where an ordinary business transaction generally would result in little or no foreign tax paid by the U.S. taxpayer.

“The proposed regulations complement the vigorous enforcement efforts of the IRS to identify and, in appropriate cases, to challenge the tax benefits claimed in these foreign tax credit generator transactions under principles of existing law,” said IRS Chief Counsel Donald L. Korb.

The significant impact of these transactions on the U.S.tax base was brought to the attention of the IRS by members of the Joint International Tax Shelter Information Centre (JITSIC). JITSIC is an information exchange arrangement under which the US, the UK, Canada and Austrailia exchange information bilaterally on tax avoidance schemes.

The IRS is aggressively pursuing cases uncovered through JITSIC or other sources involving inappropriate claims of foreign tax credits. Foreign tax credit abuse is among the IRS’s top compliance concerns for large corporate taxpayers.

IRS Encourages Taxpayers to Take Advantage of Overlooked Tax Benefits

2007-03-29T11:54:00.000-05:00

IRS Encourages Taxpayers to Take Advantage of Overlooked Tax Benefits

IR-2007-72, March 29, 2007

WASHINGTON — The Internal Revenue Service today urged taxpayers to take a moment before they file their income tax returns to be sure they do not overlook several important benefits to which they may be entitled.

“Many taxpayers are missing out this year on the special telephone excise tax refund and other benefits such as the Earned Income Tax Credit,” IRS Commissioner Mark W. Everson said. “If you don’t claim it, you don’t get it. That’s money down the drain for millions of Americans.”

In addition to the telephone excise tax refund and the Earned Income Tax Credit, many taxpayers also overlook free services available to them, such as free tax help and the Free File program.

Still others lose out by not filing a return. Even if a taxpayer does not owe tax and is not required by law to file a return, he or she may miss out on a refund or tax credit that is available.

Following are five refunds, credits or services that taxpayers frequently overlook:

Telephone Excise Tax Refund –– This is a one-time refund of long distance excise taxes available on 2006 income tax returns. The refund applies to charges billed from March 2003 through July 2006. The IRS offers a standard refund amount of $30 to $60, or taxpayers can calculate the actual tax paid. Even if the taxpayer does not normally have to file a return, Form 1040EZ-T can be used to request this refund. Businesses and exempt organizations can also request it. Taxpayers can visit IRS.gov for more information on this special payment.

IRS Free File –– Nearly 20 companies are offering free electronic filing to taxpayers whose 2006 adjusted gross income was $52,000 or less. That means 70 percent of all taxpayers, 95 million individuals, can take advantage of the IRS-sponsored Free File program. A link to Free File offerings is located on the IRS.gov homepage.

Earned Income Tax Credit –– Earned income of less than $39,000 in 2006 may qualify a taxpayer to claim the earned income tax credit. This credit could be worth up to $4,536. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return. An electronic special “EITC Assistant” is available on IRS.gov to help taxpayers determine whether they are eligible. Taxpayers can access more information on this credit by visiting IRS.gov and clicking on “1040 Central.”

Free Tax Help –– Tax help sites in libraries, churches, community centers and other locations are staffed by trained volunteers. Taxpayers who earned less than $39,000 and file a simple tax return can call 1-800-829-1040 to locate the nearest Volunteer Income Tax Assistance Program site. In addition, senior citizens can take advantage of the free IRS Tax Counseling for the Elderly program by calling 1-800-829-1040 or AARP’s Tax-Aide counseling program at 1-888-227-7669.

Unclaimed Refunds –– Refunds totaling approximately $2.2 billion are waiting for approximately 1.8 million people who failed to file a federal income tax return for 2003. In order to collect the money, a return for 2003 must be filed no later than April 17, 2007. The IRS estimates that half of those who could claim refunds would receive more than $611. In some cases, individuals had taxes withheld from their wages, or made payments against their taxes out of self-employed earnings, but had too little income to require filing a tax return. Current and prior year tax forms and instructions are available on the Forms and Publications page of IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676). Taxpayers who need help also can call the IRS help line at 1-800-829-1040.

Links:

Jenkens & Gilchrist Admits It Is Subject to $76 Million IRS Penalty

2007-03-29T11:53:00.000-05:00

Jenkens & Gilchrist Admits It Is Subject to $76 Million IRS Penalty

IR-2007-71, March 29, 2007

WASHINGTON — The Internal Revenue Service today announced that it has reached a settlement with the law firm of Jenkens & Gilchrist, which agreed that they are subject to a penalty of $76 million. The penalty stems from the firm’s promotion of abusive and fraudulent tax shelters and violation of the tax law concerning tax shelter registration and maintenance and turnover to the IRS of tax shelter investor lists.

“While it is unfortunate that the 56-year-old national firm of Jenkens & Gilchrist is terminating its legal practice, this should be a lesson to all tax professionals that they must not aid or abet tax evasion by clients or promote potentially abusive or illegal tax shelters, or ignore their responsibilities to register or disclose tax shelters,” said IRS Commissioner Mark W. Everson. “Pursuing abusive tax shelters is a top priority for the IRS.”

The firm aggressively marketed potentially abusive tax shelters to high-net-worth individuals. Some of the packages marketed to these individuals included listed transactions such as COBRA (Currency Options Bring Reward Alternatives); BEST (Short Option/Basis Enhancing Securities Transaction); BLISS (Basis Leveraged Investment Swap Spreads); OPS (Option Partnership Strategy); BEDS (Basis Enhancing Derivatives Structure); and BOSS (Bond & Option Sale Strategy).

The firm also marketed two transactions that are not listed transactions — HOMER (Hedge Option Monetization of Economic Remainders) and BART (Basis Adjustment Remainder Trusts).

The agency estimates that 1,400 investors are affected by the firm’s advice and will owe interest and penalties on their underpayment of tax. Jenkens & Gilchrist, which was once a 600-lawyer national firm, is in the process of winding down its legal practice and business affairs.

The national law firm of Jenkens & Gilchrist is composed of a corporation in Dallas, Texas; a corporation in Chicago, Illinois; a partnership in Los Angeles, California; and a partnership in New York City.

Related Items:

Many Cell Phone Customers May Be Overlooking Telephone Tax Refund; Before You File, See if You Qualify, IRS Advises

2007-03-27T11:53:00.000-05:00

Many Cell Phone Customers May Be Overlooking Telephone Tax Refund; Before You File, See if You Qualify, IRS Advises

IR-2007-70, March 27, 2007

WASHINGTON — Many cell-phone users appear to be overlooking the telephone tax refund in the mistaken belief that this one-time refund only applies to land-line customers.

According to the Internal Revenue Service, most cell-phone users qualify for the federal telephone excise tax refund. In most cases, the refund is also available to land-line, fax and Internet phone customers as well. The method of phone signal transmission does not affect the refund. The telephone-tax refund can add $30 to $60 — or even more — onto a taxpayer’s refund.

“Many taxpayers are overlooking this special refund and the chance to get a bigger refund,” said IRS Commissioner Mark W. Everson. “We encourage taxpayers to spend a few extra minutes reviewing their tax return to make sure they are making an accurate request. A little extra time can mean a bigger refund check.”

The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. The tax continues to apply to local-only phone service.

Federal officials also authorized a one-time refund of the three-percent tax collected on long-distance or bundled service billed after Feb. 28, 2003, and before Aug. 1, 2006. Bundled service is local and long-distance service provided under a plan that does not separately list the charge for local service. Bundled service includes, for example, phone plans that provide both local and long-distance service for either a flat monthly fee or a charge that varies with the time for which the service is used. It is the type of service provided by many cell-phone companies.

“We want all taxpayers entitled to this refund to get it, whether they are using a tax preparer or doing the return themselves,” Everson said.

So far this year, about three in 10 tax returns received by the IRS are not requesting the telephone-tax refund. If you paid the tax and haven’t filed yet, here are some tips to help you figure the refund correctly and get it quickly:

Consider using the standard-refund amount. About 99 percent of returns requesting the telephone-tax refund are choosing the standard amount. Though the standard amount is optional, it is easy to figure and approximates the eligible amount for most telephone customers. You only have to fill out one line on your return, and you don’t need to present proof to the IRS. The standard amount, ranging from $30 to $60, is based on the number of exemptions you can claim on your return. If you can be claimed as a dependent on someone else’s return, you cannot use the standard amount.
If you paid more than the standard amount, you may figure your refund using the actual amount of tax shown on your phone bills and other records. Base your refund request on the three-percent federal tax paid, not the total phone bill. Do not count tax paid on local-only service. You must have the phone bills or other records adequate to support the amount you are requesting. These documents should not be sent along with the refund request but should be retained in case the IRS questions the amount requested.
If you’re not sure whether you paid the tax, check the portion of your telephone bill that relates to long-distance or bundled service. Service providers use a number of different terms to identify the tax. Phrases to look for include: English-language phone bills: Federal, Federal Excise 3%, Federal Excise @ 3%, Federal Excise Tax, Federal Tax, Fed Excise Tax and FET; Spanish-language phone bills; Impuesto Indirecto Federal and Impuesto federal. Typically, this federal tax amount is not commingled with any other tax or surcharge on a customer's bill. In other words, it is normally shown as a separate line item.
Do not file duplicate requests. If you file a regular income-tax return, do not file Form 1040EZ-T. Designed exclusively for requesting the telephone-tax refund, this simple form is for people who don’t need to file a regular income-tax return. If you want to take advantage of the earned income tax credit for low and moderate income workers, the child tax credit or other tax breaks, file a regular return and include your telephone-tax refund request on that return.
File electronically. Electronic-filing software flags often overlooked tax breaks, such as the telephone-tax refund, and helps you figure them accurately and report them properly. If you use a professional tax preparer, ask that person to e-file your return.
E-file for free. If your income is $52,000 or less, use the Free File link on IRS.gov to connect to a private-sector company offering free e-file services.
Choose direct deposit. Whether you file electronically or on paper, you can get your refund at least a week sooner by having it deposited directly into your checking or savings account.
If your income is low and you prefer having someone else prepare your refund request, you can get free help by visiting one of more than 12,000 neighborhood tax-assistance sites nationwide. Trained community volunteers fill out telephone-tax refund requests and basic income-tax returns for low-income people and senior citizens. To locate the nearest volunteer tax-help site, call AARP at 1-888-227-7669 or the IRS at 1-800-829-1040.
If you already filed your return but failed to request the telephone-tax refund, you can file an amended return using Form 1040X. This form, available on IRS.gov, cannot be e-filed; it must be filed on paper. To avoid delaying a refund request, mail your completed Form 1040X at least three weeks after you filed your original return (if it was e-filed) or at least eight weeks later (if filed on paper).
Stay away from tax preparers who falsely claim that many, if not most, phone customers can get hundreds of dollars or more back under this program.
Use the Telephone Excise Tax Refund section on the front page of IRS.gov. Here, you can download forms, find answers to frequently-asked questions and link to participating Free File partners.

Related Item:

Telephone Excise Tax Refund

Williams Will Head IRS’ ETA Office; Holland to Direct EITC Program

2007-03-26T11:52:00.000-05:00

Williams Will Head IRS’ ETA Office; Holland to Direct EITC Program

IR-2007-69, March 26, 2007

WASHINGTON — The Internal Revenue Service today announced the appointment of David R. Williams as Director, Electronic Tax Administration and Refundable Credits. Reporting to Williams and focusing entirely on administration of the Earned Income Tax Credit program will be Debra Holland, Director, EITC.

Williams most recently served as the IRS Director in charge of the Earned Income Tax Credit, Health Coverage Tax Credit and Telephone Excise Tax Refund programs. He will maintain responsibility for those programs in his new capacity as he assumes the responsibility for Electronic Tax Administration including its e-file, e-services and internet programs.

“We’re very fortunate to have someone with David’s expertise and background to take over this very important program,” said IRS Commissioner Mark W. Everson. “He has the knowledge and experience to bring together the private sector to work with the IRS to achieve significant advances in our shared goal of effective electronic tax administration. We see this move as a step forward for both the program and the IRS as a whole.”

The Electronic Tax Administration Office (ETA) is responsible for all aspects of the growing exchange of electronic information between the IRS and individual taxpayers, businesses and practitioners. This includes the IRS e-file program now used by most taxpayers, the IRS.gov web site, and the development of additional electronic interactions with taxpayers and tax practitioners.

Prior to joining the IRS in 1998 as Chief of Communications and Liaison under IRS Commissioner Charles O. Rossotti, Williams was a Deputy Assistant Secretary with the Department of the Treasury and had worked on Capitol Hill. He holds a Master of Public Policy from the John F. Kennedy School of Government at Harvard University, and a Bachelor of Science in Business Administration from Colorado State University.

Holland most recently served as the Director, Pre-Refund Program Office, and she previously served as the Director of Business Systems Planning within the Wage and Investment Operating Division. Holland has held top-level positions in the IRS Joint Operations Center and Accounts Managements organizations.

“Debra brings a unique blend of business management and technology expertise to the position that will serve her well as she oversees the important EITC program,” said Richard Morgante, Commissioner of the IRS Wage and Investment Division.

As Director of EITC, Holland will balance the IRS’s nationwide outreach aimed at ensuring that every eligible taxpayer receives the credit with the equal responsibility to ensure that only those eligible for the credit receive it.

Williams and Holland are working to ensure a smooth transition. The moves will be effective later this year.

IRS Announces Enhancements to Online Payment Agreement Application

2007-03-23T11:51:00.000-05:00

IRS Announces Enhancements to Online Payment Agreement Application

IR-2007-68, March 23, 2007

WASHINGTON — With the filing deadline approaching, the Internal Revenue Service today announced enhancements to the interactive Online Payment Agreement application on IRS.gov.

The Web-based application allows eligible taxpayers or their authorized representatives to self-qualify, apply and receive immediate notification of approval for installment agreements – including paperless direct debit agreements.

Two recent enhancements provide added functionality. The first permits individuals who have not yet received a bill to establish pre-assessed agreements on current tax year Form 1040 liabilities. The second allows practitioners with valid authorizations to remain in the application to request agreements for multiple clients.

The IRS estimates that over 75% of those eligible for an installment agreement can establish one using this application. Since launching in October, about 3,000 taxpayers have successfully used it to set up a payment agreement with the IRS.

Paying taxes on time and in full avoids unnecessary penalties and interest. However, taxpayers who cannot pay in full may request a payment agreement. To be eligible, a taxpayer must first file all required tax returns and be current with estimated tax payments if applicable.

Individuals with a balance due notice can access the application using the following information:

Taxpayer identification number (generally a Social Security Number) and
Personal identification number, which can be established online using the caller identification number from the balance due notice.

Individuals who have not yet received a bill must provide the following information to establish pre-assessed agreements on current year returns:

The balance due shown on the return
Taxpayer identification number
Spouse’s taxpayer identification number (if applicable)
Date of birth
Adjusted Gross Income from last year’s income tax return
Total tax from last year’s income tax return.

Three payment options are available when applying online:

Pay in full — Taxpayers who pay within 10 days save interest and penalties.
Short-term extension — Receive a short-term extension of up to 120 days. No fee is charged, but additional penalties and interest will accrue.
Monthly payment plan — A user fee will be added to the amount owed, and interest and penalty will continue to accrue on the unpaid balance.User fees are $105 for non-direct debit agreements and $52 for direct debit agreements. A reduced fee of $43 is available for individuals with income at or below certain levels.

To access the application, use the pull-down menu under “I need to...” on the front page of IRS.gov and select “Set Up a Payment Plan.” The application is available Monday through Friday from 6 a.m. to 12:30 a.m., Saturday from 6 a.m. to 10 p.m. and Sunday from 4 p.m. to midnight (all are Eastern Time).

IRS Further Extends Deadline for Settlement Offered To Certain Foreign Embassy Staff

2007-03-22T11:50:00.000-05:00

IRS Further Extends Deadline for Settlement Offered To Certain Foreign Embassy Staff

IR-2007-67, March 22, 2007

WASHINGTON — The Internal Revenue Service is providing a further extension, until June 30, 2007, of the deadline for current and former U.S.-based employees of foreign embassies, consular offices and missions and international organizations to participate in a one-time settlement initiative to resolve outstanding tax matters related to their employment.

Following requests from several embassies, the date is again being extended to make certain those wishing to participate in the initiative have the opportunity to do so.

The offer is open to employees of those organizations who are U.S. citizens, green-card holders and foreign employees who have tax obligations. Accredited diplomatic personnel are generally exempt from income taxes on their wages under the Internal Revenue Code and international treaties or agreements.

The IRS estimates that as many as half of these employees subject to U.S. tax fail to report their wages, claim deductions they are not entitled to, incorrectly establish SEP/IRA retirement plans, fail to pay self-employment tax or fail to file tax returns.

To participate, employees must submit amended or original tax returns for tax years 2004 and 2005 that properly reflect their income and expenses. Participants in the settlement will not be required to provide tax year 2003 returns, which was previously part of the settlement eligibility requirement. In addition, participants with erroneously established SEP/IRA plans will not be required to distribute amounts contributed to these SEP/IRAs for tax years prior to the 2004 tax year. This change follows discussions with embassies and provides consistency with the income tax portion of the settlement initiative.

IRS will remove the 2003 tax year issues from the settlement elections previously received from taxpayers.

IRS encourages those affected taxpayers to act quickly so to avoid a future audit process that could prove costly. Foreign embassy, consular office or international organization employees who fail to come forward may be subject to IRS audits and penalties which could cover more than just three years.

IRS Invites Taxpayers to Apply for Taxpayer Advocacy Panel

2007-03-22T11:49:00.001-05:00

IRS Invites Taxpayers to Apply for Taxpayer Advocacy Panel

IR-2007-66, March 22, 2007

WASHINGTON — The Internal Revenue Service is inviting civic-minded individuals to help improve the nation’s tax agency by applying to be members of the Taxpayer Advocacy Panel. The Panel provides a forum for citizens from each state to make suggestions regarding IRS decision making.

The mission of the Panel is to listen to taxpayers, identify taxpayers’ issues, and make recommendations for improving IRS service and customer satisfaction. Taxpayer Advocacy Panel (TAP) members:

Provide opportunities for citizen input and make recommendations to the IRS on customer-service issues.
Identify and prioritize taxpayer issues.
Report annually to Treasury, the IRS and the National Taxpayer Advocate.
Participate in meetings where taxpayers are invited to raise issues about their experiences with the IRS.
Participate in taxpayer outreach opportunities by speaking to individuals and groups about the Panel.

“As the IRS continues to examine taxpayers’ needs in the area of service, the Taxpayer Advocacy Panel has emerged as a vital source for gathering and providing information from the perspective of taxpayers,” said Nina E. Olson, National Taxpayer Advocate. “TAP’s role will ultimately aid taxpayers by helping the IRS to provide them with the top quality service they deserve."

To qualify as a TAP member, applicants must be U.S. citizens and be able to commit 300 to 500 hours during the year to the Panel. In addition, they must be current with their tax obligations and pass a criminal background check.

This year TAP is accepting applications from U.S. citizens who reside in the following locations: Alabama, Arkansas, California, Colorado, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Louisiana, Maine, Massachusetts, Michigan, Mississippi, Montana, Nebraska, New Hampshire, North Carolina, North Dakota, New Mexico, Nevada, Ohio, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, West Virginia, Wisconsin, Utah, Washington, Wyoming.

The application form will be available, and may be submitted electronically online, at www.improveirs.org (see link below) from March 19 through April 30, 2007.

If you do not have access to a computer, call 1-888-912-1227 to request a paper application form.

All applications, both electronic and paper, must be received no later than April 30, 2007.

Links:

Electronically Filed Returns Up More Than 5 Percent

2007-03-22T11:49:00.000-05:00

Electronically Filed Returns Up More Than 5 Percent

IR-2007-65, March 22, 2007

WASHINGTON — The Internal Revenue Service announced today that taxpayers are continuing to electronically file their tax returns at a record pace, up more than 5 percent from the same period last year.

“Taxpayers are filing electronically at a record pace this year,” said IRS Commissioner Mark W. Everson. “We encourage people to consider e-file and Free File as the tax deadline approaches. E-file reduces taxpayer errors and gets refunds back quickly.”

According to the new filing season statistics for the week ending March 16, 2007, one of the biggest areas of growth is in returns filed electronically from home. Self-prepared e-filed returns have grown more than 8 percent from last year. E-filed returns from tax professionals have climbed more than 4 percent.

So far this tax filing season, 73 percent of all returns have been e-filed, compared to 70 percent for the same period last year. As of last Friday, 29 percent of e-filed returns were filed by people using their home computers, up from 28 percent of e-filed returns for the same period last year.

Also, more people than ever before are opting to have their refunds directly deposited. So far this year, the IRS has directly deposited more than 42 million refunds, or 76 percent of all refunds issued this tax filing season, up from 71 percent of the total for the same period last year.

People are visiting the IRS Web site at IRS.gov in record numbers. The IRS has recorded more than 90 million unique visits to IRS.gov this year, up from about 83 million for the same period last year, an increase of 9.0 percent.

One of the most popular features of IRS.gov is "Where's My Refund?" As the name implies, taxpayers can check on the status of their tax refunds using this tool. Already this year, almost 24 million people have accessed this popular system, an increase of 23 percent over the same period last year.

The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. Federal officials also authorized a one-time refund of the 3 percent federal excise tax collected on service billed during the previous 41 months, stretching from the beginning of March 2003 to the end of July 2006. The tax continues to apply to local-only phone service.

Taxpayers can request the telephone tax refund, as well as file their entire tax return electronically, for no cost using the IRS's Free File program. Seventy percent of Americans are eligible for the Free File program because they earn an adjusted gross income of $52,000 or less. Free File can only be accessed through IRS.gov. Once on the home page, click on "2007 Free File" and follow the directions.

2007 FILING SEASON STATISTICS
Cumulative through the weeks ending 3/17/06 and 3/16/07
Individual Income Tax Returns	2006		2007		% Change
Total Receipts	67,077,000		67,703,000		0.9%
Total Processed	62,726,000		63,798,000		1.7%

E-filing Receipts:
TOTAL	46,874,000		49,401,000		5.4%
Tax Professionals	33,664,000		35,105,000		4.3%
Self-prepared	13,210,000		14,296,000		8.2%

Web Usage:
Visits to IRS.gov	82,974,000		90,424,000		9.0%

Total Refunds:
Number	56,320,000		55,186,000		-2.0%
Amount	$133.993	Billion	$139.297	Billion	4.0%
Average refund	$2,379		$2,524		6.1%

Direct Deposit Refunds:
Number	39,765,000		42,057,000		5.8%
Amount	$107.529	Billion	$117.429	Billion	9.2%
Average refund	$2,704		$2,792		3.3%

Related Items:

E-File

Where's My Refund?

Telephone Excise Tax Refund

Free File

2007 Saturn Aura Certified As Qualified Hybrid Vehicle

2007-03-19T12:30:00.000-05:00

2007 Saturn Aura Certified As Qualified Hybrid Vehicle

IR-2007-64, March 19, 2007

WASHINGTON — The Internal Revenue Service has acknowledged the certification by General Motors Corp. that its 2007 Saturn Aura Hybrid vehicle meets the requirements of the Alternative Motor Vehicle Credit as a qualified hybrid motor vehicle.

The credit amount for the hybrid vehicle certification of the 2007 Saturn Aura Hybrid is $1,300.

Consumers seeking the credit may want to buy early since the full credit is only available for a limited time. Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000^th vehicle. For the second and third calendar quarters after the quarter in which the 60,000^th vehicle is sold, taxpayers may claim 50 percent of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter.

IRS Releases 2006 Data Book

2007-03-16T15:45:00.001-05:00

IRS Releases 2006 Data Book

IR-2007-63, March 16, 2007

WASHINGTON — The Internal Revenue Service announced today that its 2006 Data Book is available on the IRS Web site. The report describes activities conducted by the IRS from October 1, 2005, through September 30, 2006, and includes information about returns filed and taxes collected, enforcement, taxpayer assistance and the IRS budget and workforce.

During Fiscal Year (FY) 2006, the IRS collected more than $2.2 trillion in tax and processed over 228 million returns. Over 80 million returns, including 54.3 percent of individual income tax returns, were filed electronically in FY 2006. Over 108 million individual income tax return filers received tax refunds totaling $243 billion. In FY 2006, IRS spent an average of 42 cents to collect each $100 of tax revenue.

IRS examined nearly 1.3 million individual income tax returns in FY 2006, more than double the number examined in FY 2000. Examinations of business tax returns grew for the second year in a row, reaching over 52,000 in 2006. IRS personnel answered over 32.6 million toll-free calls from taxpayers, and the IRS Web site received about 194 million visits.

Printed copies of the Fiscal Year 2006 IRS Data Book, Publication 55B, will be available by mid-April 2007 from the U.S. Government Printing Office. To obtain a copy, write to the Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954, call (202) 512 1800 for voice mail or fax a request to (202) 512-2250.

Related Item: 2006 Data Book

IRS Web Site, Where’s My Refund? See Increased Use

2007-03-16T15:43:00.000-05:00

IRS Web Site, Where’s My Refund? See Increased Use

IR-2007-62, March 16, 2007

WASHINGTON — The Internal Revenue Service released statistics today showing that taxpayers’ use of IRS.gov, which includes features such as Where’s My Refund? is increasing. Use of the IRS Web site has increased 9 percent over this time last year to 83.3 million visits.

Where’s My Refund? is the IRS Internet-based service taxpayers can use to check on the status of their federal income tax refunds. Nearly 21 million requests have been received on Where’s My Refund? this year, representing a growth of more than 3.9 million users compared to the same period last year.

“Where’s My Refund? is easy to use,” said IRS Commissioner Mark W. Everson. “It is the fastest way to check on a refund. Taxpayers who file Form 1040EZ-T can also take advantage of Where’s My Refund? to find out about the telephone excise tax refund.”

Taxpayers can check their refund status online anytime from anywhere. It is available 24 hours a day, 7 days a week, worldwide, only by visiting IRS.gov. Taxpayers can securely access their personal refund information by entering their Social Security number, filing status and the exact amount of their refund. These shared secrets, known only to the taxpayer and IRS, verify the person is authorized to access the account.

Taxpayers can check on the status of their federal income tax refunds seven days after they e-filed their return. If they file a paper return, they can check four to six weeks after mailing their return.

For the first time this year, taxpayers who chose direct deposit can split their refunds among as many as three accounts held by up to three different U.S. financial institutions.

Split refunds offer taxpayers the opportunity to manage their money by sending part of their refund to one account for immediate needs and another part to a savings or investment account. The average refund at this point, which typically declines between now and the end of the filing season, is more than $2,800.

Where’s My Refund? will include a message confirming the refund was split and the expected deposit date. It will not specify the amount of individual deposits or the accounts to which the deposits were made.

Taxpayers can use Where’s My Refund? to verify when their refunds are scheduled for direct deposits or mailing, initiate a trace on lost or missing refund checks, and/or notify IRS of address changes in case of undeliverable refund checks.

The IRS reminds taxpayers they can avoid undelivered refund checks by having their refund checks deposited into a personal checking or savings account. Direct deposit also guards against theft and lost refund checks. Direct deposit is available for both paper and electronically filed returns.

Compared to this time last year, there is a 5.6 percent increase in the number of taxpayers who have chosen direct deposit for their refund. So far, refunds total about $110 billion, a 9 percent increase over last year.

The IRS also reports a substantial increase in the number of taxpayers who are preparing their returns and filing online.

The table below shows an 8 percent increase in self-prepared online filing over the same period last year. Tax professional e-file also has increased by close to 4 percent over last year. Overall, e-filed returns are up nearly 5 percent, with about 45.5 million taxpayers e-filing their return.

In addition, this year’s filings show about three in 10 tax returns are not requesting the one-time telephone tax refund. The standard amount ranges from $30 to $60 and is based on the number of exemptions a taxpayer is eligible to claim on their return. Although some of these taxpayers may not be eligible, others may qualify and not know it. The IRS urges taxpayers to check their eligibility for this special refund by visiting the telephone excise tax refund section on this Web site. Taxpayers who are not required to file a return can request the telephone excise tax refund by filing the 1040-EZT.

2007 FILING SEASON STATISTICS
Cumulative through the weeks ending 3/10/06 and 3/9/07
Individual Income Tax Returns	2006		2007		% Change
Total Receipts	60,657,000		61,123,000		0.8%
Total Processed	56,028,000		56,974,000		1.7%

E-filing Receipts:
TOTAL	43,356,000		45,498,000		4.9%
Tax Professionals	31,010,000		32,156,000		3.7%
Self-prepared	12,346,000		13,342,000		8.1%

Web Usage:
Visits to IRS.gov	76,449,000		83,365,000		9.0%

Total Refunds:
Number	50,656,000		50,515,000		-0.3%
Amount	$122.752	Billion	$128.736	Billion	4.9%
Average refund	$2,423		$2,548		5.2%

Direct Deposit Refunds:
Number	37,031,000		39,088,000		5.6%
Amount	$101.009	Billion	$110.090	Billion	9.0%
Average refund	$2,728		$2,816		3.3%

Related Items: Where's My Refund?

IRS Identifies 40 Frivolous Positions for Taxpayers to Avoid

2007-03-15T13:30:00.000-05:00

IRS Identifies 40 Frivolous Positions for Taxpayers to Avoid

IR-2007-61, Mar. 15, 2007

WASHINGTON — The Internal Revenue Service today issued guidance identifying dozens of frivolous positions that taxpayers should avoid when filing their tax returns. The guidance lists 40 positions which have no basis for validity in existing law or which have been deemed frivolous by the United States Tax Court or other federal court.

If these or other frivolous positions are contained in a tax return, taxpayers could face a $5,000 penalty – 10 times the previous maximum.

“People should remember they are ultimately responsible for what is on their tax return even if some unscrupulous preparers have steered them in the wrong direction,” said IRS Commissioner Mark W. Everson. “The truth about these frivolous arguments is simple: They don’t work.”

In 2006, Congress increased the amount of the penalty for frivolous tax returns from $500 to $5,000. The increased penalty amount applies when a person submits a tax return, or other specified submission, and any portion of the submission is based on a position the IRS identifies as frivolous.

IRS Notice 2007-30 contains a list of frivolous positions that will trigger the increased penalty amount.

Four revenue rulings issued in conjunction with the notice address specific frivolous claims often made to the IRS. The revenue rulings center on:

False arguments that wages are not taxable income.
Filing returns and paying taxes are voluntary.
The IRS must provide taxpayers with a summary record of assessment made on a Form 23C, “Assessment Certificate-Summary Record of Assessments”, before overdue taxes may be collected.
Income is not subject to taxation when the taxpayer declares that he is not a United States citizen because he is a citizen of an individual State or claims he is not a person as defined by the Internal Revenue Code.

The revenue rulings emphasize the adverse consequences to taxpayers who fail to file returns or fail to pay taxes based on an erroneous belief in any of these frivolous arguments.

Additional information about frivolous positions is available on the IRS website at IRS.gov. “The Truth About Frivolous Arguments” is a 64-page document updated in December 2006 that addresses false arguments about the legality of not paying taxes or filing returns. The document includes citations from numerous cases decided by the courts and responds to 40 frivolous contentions.
The courts have not only rebuked these arguments numerous times, but also have imposed thousands of dollars in fines on taxpayers or their representatives for pursuing frivolous cases.

"Our rulings on frivolous arguments emphasize that the IRS and the courts reject these arguments about the validity of the income tax and ‘too good to be true’ schemes to eliminate tax liability," said IRS Chief Counsel Donald L. Korb.

The IRS continues to investigate promoters of frivolous arguments and to refer cases to the Department of Justice for criminal prosecution. In addition to tax and interest, taxpayers who file frivolous income tax returns face a $5,000 penalty, and may be subject to civil penalties of 20 or 75 percent of the underpaid tax. Those who pursue frivolous tax cases in court may face an additional penalty of up to $25,000.

Phone Card Retailers Usually Qualify for Telephone Tax Refund

2007-03-15T10:29:00.000-05:00

Phone Card Retailers Usually Qualify for Telephone Tax Refund

IR-2007-60, March 15, 2007 —

WASHINGTON — Under the law, retailers and other businesses that sell prepaid phone cards usually qualify for the telephone tax refund.

The Internal Revenue Service today reminded these businesses to check their eligibility for this special refund before filing their 2006 federal income tax return. Normally, the phone card retailer, not the phone company that issues the card or the customer who uses the card, is responsible for paying the three-percent federal excise tax. As long as the phone card was not restricted to local-only service, the retailer is eligible to request the telephone tax refund.

The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. Federal officials also authorized a one-time refund of the 3 percent federal excise tax collected on service billed during the previous 41 months, stretching from the beginning of March 2003 to the end of July 2006.

In most instances, the law places the responsibility for the collection of the excise tax on the carrier. The carrier, usually a phone company, has transferred the phone card to a retailer or other business. This retailer or other business is referred to as a transferee. The transferee most often is the first person that is not a carrier to whom a phone card is transferred. The transferee is generally liable for the payment of the excise tax, not the carrier.

Because the carrier is not usually liable for the tax, the carrier is not usually eligible for the refund. Also under the law the holder or end-user, that is the customer who purchases a phone card to use and not to resell, is ordinarily not liable for the tax and not entitled to the refund.

Businesses request the refund by filling out Form 8913, Credit for Federal Telephone Excise Tax Paid, and attaching it to their regular income-tax return. More information on the refund is available in the “Telephone Excise Tax Refund” section on the front page of IRS.gov.

The three-percent federal excise tax continues to apply to local-only phone service.

Free File Usage Tops 2 Million

2007-03-14T16:54:00.000-05:00

Free File Usage Tops 2 Million

IR-2007-59, March 14, 2007

WASHINGTON — The Internal Revenue Service reminds taxpayers to take advantage of Free File, which allows most taxpayers to electronically file their tax returns at no cost through this Web site. Through March 13, almost 2.6 million taxpayers have electronically filed their returns using Free File.

Seventy percent of U.S. taxpayers are eligible for Free File since they have an adjusted gross income of $52,000 or less. Free File can only be accessed through this Web site. The program is a partnership between the IRS and the Free File Alliance, a group of private sector tax preparation companies.

Free File is part of the IRS e-file program. Through early March, the number of overall e-filed returns increased by about 5 percent. And returns prepared on home computers — which include free file returns — jumped by 8 percent. For the Free File program alone, nearly 2.6 million taxpayers used the program, about a 4 percent drop from the nearly 2.7 million who used it during the same period last year. While Free File started out slowly this year, returns in recent weeks are now topping comparable weeks from last year, and the IRS expects the program to equal or surpass last year’s numbers by the end of the filing season.

"Several factors are behind Free File usage this year. It started out slowly, but the numbers are increasing each week. We believe some Free File users are switching over to other parts of our e-file program, which continues to grow this year," said IRS Commissioner Mark W. Everson." Taxpayers shouldn't overlook Free File, because we've made major improvements to the program this year."

The IRS reminds taxpayers that this year's Free File has major changes from the year before. Gone are sales pitches for refund anticipation loans and other products. Not only that, it's easier to find which Free File tax software company best suits the taxpayer by using the enhanced "Guide Me to a Company" wizard available on IRS.gov.

Several indicators show customer satisfaction for Free File continues to be high. One such indicator, the number of customer service inquiries, occurs on less than 1/10th of 1 percent of total Free File returns.

Taxpayers have consistently given high marks to Free File in satisfaction surveys. According to Russell Research, a market research firm contracted by the IRS, 96 percent said they found Free File very easy or somewhat easy to use, and 97 percent said they would recommend Free File to others. Convenience, not the free cost, was the most appealing factor of Free File.

Accessing Free File is easy. Just go to our home page, click "2007 Free File" and click "Start Now" on the Free File landing page. Taxpayers will see the "Guide Me to a Company" button. When they click it, the wizard will ask a few questions to determine which of the 20 participating tax software companies best fulfill the taxpayer's needs, such as the ability to file state returns in the taxpayer's state.

Taxpayers can use Free File to take advantage of recent tax changes. For example, users can request their telephone excise tax refund through Free File. This refund is only available this year. Taxpayers can also try one of the IRS's newest features: split refunds. It allows taxpayers to directly deposit their refunds in up to three financial accounts.

Related Item:

Free File

IRS Urges Caution about Internet Sites that Resemble the Official IRS Site

2007-03-13T09:54:00.000-05:00

IRS Urges Caution about Internet Sites that Resemble the Official IRS Site

IR-2007-58, March 13, 2007

WASHINGTON — The Internal Revenue Service today reminded taxpayers that the address of the official IRS government Web site is www.irs.gov.

Taxpayers may be confused by the proliferation of Internet sites that contain some form of the Internal Revenue Service name or IRS acronym with a .com, .net, .org or other designation in the address instead of .gov. Since many of these sites also bear a striking resemblance to the real IRS site, taxpayers may be misled into thinking that the site they have accessed is indeed the official IRS government site. These sites are not the official IRS Web site and have no connection to the official IRS site or to the IRS.

“There is one legitimate IRS site: IRS.gov,” said IRS Commissioner Mark W. Everson. “Always check carefully and make sure you know what Web site you are using.”

Because .com, .net and .org are such common parts of Internet addresses, taxpayers may automatically or inadvertently type these extensions, instead of .gov, into the address line of their Web browser when trying to find the genuine IRS Web site.

Following recent concerns that Internet sites may be causing confusion among taxpayers, the IRS is working with the Treasury Inspector General for Tax Administration on this matter. TIGTA has authority to review issues protecting the integrity of tax administration, including impersonation of the IRS. The IRS and TIGTA are committed to ensuring that taxpayers are not misled.

Although the IRS Web site offers interactive features, the tax or private financial information that these features ask the taxpayer for is extremely limited. The IRS reminds consumers who access unfamiliar sites, or sites they have never dealt with before, that they should never reveal any personal or financial information, such as credit, bank account or PIN numbers, without verifying the validity of the site.

The IRS also reminds consumers to be alert to an on-going Internet scam in which consumers receive an e-mail informing them of a federal tax refund. The e-mail, which
claims to be from the IRS, directs the consumer to a link — often a Web site resembling the IRS Web site — that requests personal and financial information, such as Social Security number and credit card information.

This scheme is an attempt to trick the e-mail recipients into disclosing their personal and financial data. The practice is called “phishing” for information.

The information fraudulently obtained is then used to steal the taxpayer’s identity and financial assets. Generally, identity thieves use someone’s personal data to steal his or her financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name and even file fraudulent tax returns.

Taxpayers who receive an unsolicited e-mail purporting to be from the IRS should never click on any links in the message, open any attachments or provide any personal or financial information to the sender.

Related Items:

IR-2007-37, Fraudulent Telephone Tax Refunds, Abusive Roth IRAs Top Off 2007 “Dirty Dozen” Tax Scams

IRS Reminds Corporations to E-File or File for an Extension by March 15

2007-03-12T16:38:00.000-05:00

IRS Reminds Corporations to E-File or File for an Extension by March 15

IR-2007-57, March 12, 2007

WASHINGTON — Today the Internal Revenue Service reminds certain corporations with assets of $10 million or more and whose tax year is the calendar year to e-file their returns or file for an extension by the March 15 filing deadline. Corporate taxpayers who chose to request extensions are encouraged to submit their requests through e-file.

"We are seeing significant increases in the number of electronically filed corporate tax returns due to the e-filing requirement for certain corporate taxpayers, the availability of enhanced electronic filing software, and the benefits realized by corporate taxpayers," said LMSB Commissioner Deborah M. Nolan. "E-filing brings increased efficiencies to the IRS which will ultimately benefit all taxpayers."

More than 22,000 large and mid-sized corporations with assets of $10 million or more that file at least 250 federal returns each year, such as Form W-2 and Form 1099, are now required to file electronic returns. Treasury temporary regulations requiring certain corporations to e-file became effective in January 2005, and have been phased in over a two year period.

Businesses which operate on a calendar year rather than a fiscal year basis must file their returns for the previous year or file an application for an extension by March 15, 2007. A corporate taxpayer who e-files an application for an extension using Form 7004 will receive immediate acknowledgement of that request and whether it has been accepted or rejected.

The requirement that businesses e-file their returns is determined by type of tax return to be filed, amount of the filer's assets, and the total number of federal returns filed by the business. By the end of the first week in March, more than 1,800 large and mid-sized corporations submitted their tax returns electronically. This represents a 250% increase over the number of large and midsized electronic returns filed during in same period last year.

Since introducing corporate e-file in 2004, IRS has continued to streamline its processes and improve e-filing technology. The IRS continues to work closely with e-file software developers and e-file service providers to ensure corporate taxpayers a smooth transition to electronic filing. According to Don McPartland, an IRS senior executive, the agency's goal is to continue to streamline e-file processes, integrate e-file software into existing tax preparation systems, and provide quality service to IRS's many stakeholders.

Detailed e-filing guidance and instructions are available at this Web site.

Related Item:

Form 7004, Application for Automatic 6-Month Extension of Time to File Certain Business Income Tax, Information, and Other Returns

Interest Factors for Corporations Requesting Telephone Tax Refund Posted On IRS.gov

2007-03-12T16:36:00.002-05:00

Interest Factors for Corporations Requesting Telephone Tax Refund Posted On IRS.gov

IR-2007-56, March 12, 2007

WASHINGTON — The Internal Revenue Service today reminded corporations, facing a March 15 tax-filing deadline, that they can use interest factors posted on IRS.gov to help them figure the one-time telephone excise tax refund.

Corporations, including S corporations, preparing calendar-year 2006 income-tax returns with a March 15 due date, should use the interest factors posted at http://www.irs.gov/pub/irs-dft/corp3-15.pdf, rather than those in the instructions for Form 8913, Credit for Telephone Excise Tax Paid. By law, the interest rates that apply to corporate tax overpayments are lower than those that apply to other taxpayers.

The interest factors in the Form 8913 instructions apply to non-corporate taxpayers with an April 17 filing deadline, including individuals, estates, trusts and partnerships that are basing their refund request on the actual amount of tax paid. Except for individuals choosing the standard amount, all taxpayers must use Form 8913 to request the telephone tax refund and related interest. This form is then attached to the taxpayer’s regular income-tax return.

The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. Federal officials also authorized a one-time refund of the 3-percent federal excise tax collected on service billed during the previous 41 months, stretching from the beginning of March 2003 to the end of July 2006.

The tax continues to apply to local-only phone service.

Releated Item: Telephone Excise Tax Refund