October 2011 Newsletter

Bethe Davis, AKCPA Treasurer

Three of the many benefits of our AKCPA

1.  Professional networking or access to the "brain trust".  No matter the situation with a client, and IRS audit, or another issue, someone within the society has likely come across it before and can share their knowledge, opinions, and experiences.  Being a member puts me in touch with the right people.

2.  Keeping current.  Being an active member of the society helps me keep current via the newsletter and participating in AKCPA events.  Sometimes it is easy to get lost in the data that is constantly delivered, but the local CPA community focuses on issues that impact us and our particular clients.

3. Social networking.  Members of the society are a fun bunch and I enjoy interacting with the members socially and keeping in touch with professional colleagues from all over the state.

I believe that all of the reasons noted above have a huge positive impact on my professional development.  A good CPA needs people skills, depth of knowledge, and to keep current in a changing world to best serve our clients.

Alaska State Board of Public Accountancy Report

Melody Schneider, CPA - Board Liaison

In August the Board of Public Accountancy met in Fairbanks. Issues associated with the Executive Administrator position were discussed including the process and participation associated with the hiring. Since the meeting applications and interviews have been processed and the position was re-opened recently.

Don Habager, Division Director, reported the State is in the process of hiring a licensing examiner to fill the current vacancy for the Board of Public Accountancy. One has not yet been hired.

A resolution was approved by the Board to be forwarded to the governor regarding the need for travel and the challenges currently faced by the Board associated with arbitrary restrictions limiting the ability of members to attend national and regional meetings. The chair, Carla Bassler, met with the governor to discuss the issues and provide him with the resolution approved at the board meeting and the prior travel budget was restored.

The Board approved a renewal penalty of $100 to be in place beginning with the upcoming renewals. All renewals postmarked after December 31^st will be charged the penalty.

The Board is considering regulation that would require notation by inactive and retired licensees as to their limited status when using the CPA designation.

The western regional meeting of NASBA will be in Anchorage next June. Additional information and opportunities for support and attendance will be reported as the information is available.

November 3^rd & 4^th the Board will be in Anchorage. A joint luncheon with the ASCPA will be held on Thursday at noon.

Patent Reform Bill Moves to President Obama for Signature; Tax Strategy Patents Provision Included

On September 8, the U.S. Senate passed the America Invents Act. The bill was identical to the one passed recently by the House of Representatives, sending the bill to President Obama for him to sign it into law. The measure includes a provision that ends the patenting of tax strategies, a legislative remedy the AICPA and state CPA societies have been advocating on behalf of their members for the past five years. For more information, read this JournalofAccountancy.com article.

Alaska Center for the Environment (ACE) Seeks Board Members

A high-performing board of a dynamic organization has three openings beginning in Jan. 2012. Please consider joining our work to enhance Alaskans’ quality of life by protecting wild places, fostering sustainable communities, and promoting recreational opportunities.

The board specifically seeks applicants with the following backgrounds: 1) CPA or financial management, 2) nonprofit/organizational development, and 3) small business management. However, applicants of all skill sets will be considered. This is a working board; so only apply if you have the time and commitment to be an active participant.

To learn more about ACE and to submit an application please visit www.akcenter.org. If you have questions regarding serving on the board of directors please call Denice Elison, CPA at 345-7476.

IRS Updates and News Releases

PTIN Testing Update

The Internal Revenue Service released the specifications for the competency test individuals must pass to become a Registered Tax Return Preparer.

The specifications identify the major topics that will be covered by the test, which will be available starting this fall.  Although individuals who already have a provisional preparer tax identification number (PTIN) from the IRS do not have to pass the exam until Dec. 31, 2013, they may take the exam at any time once it is available.  The test will have approximately 120 questions in a combination of multiple choice and true or false format.  Questions will be weighted and individuals will receive a pass or fail score, with diagnostic feedback provided to those who fail.  Test vendor Prometric Inc. worked with the IRS and the tax preparer community to develop the test. The time limit for the test is expected to be between two and three hours.  The test must be taken at one of the roughly 260 Prometric facilities nationwide.

The IRS will notify those preparers who have a testing requirement and provide more details.  Once the test is available, preparers who have on-line accounts at www.irs.gov/ptin can use their accounts to schedule a test time and select a Prometric site.  You can find updated information on competency testing on the Tax Professionals page of IRS.gov.

New Form for Miscellaneous Determination Requests

The IRS has released a new form that tax-exempt organizations will use to request certain determinations about their tax-exempt status.  In addition to foundation status issues, organizations will use Form 8940, Request for Miscellaneous Determination, to obtain advance approval of certain activities and exemption from Form 990 filing requirements.  Organizations applying for recognition of exemption and at the same time requesting advance approval of scholarship procedures or exception from filing Form 990 should include their request with their Form 1023, Application for Recognition of Exemption Under Section 501(c)(3), rather than file Form 8940.

FAQs on Section 3402(t) Withholding

Tax Exempt and Government Entities has posted FAQs on Section 3402(t) Withholding on IRS.gov. The page contains some common questions and answers that have arisen concerning the withholding requirements established by new section 3402(t). They are arranged in groups under general topical headings. As we continue to receive questions and determine answers to them, we will add these questions and the answers to this page.

IRS Warns of Tax Refund Scam

The IRS says scammers are targeting senior citizens and people with low incomes in this new YouTube video.  Watch this and other videos on the IRS’s YouTube Channel.

Connect with the IRS Using Social Media

Use your Smart Phone, YouTube, Twitter, etc., to get tax tips year-round from the IRS in this YouTube video.  Watch this and other videos on the IRS’s YouTube Channel

Return Preparer PTIN Listing

The Return Preparer Office recently provided information about all PTIN holders to the IRS Electronic Reading Room as required by Freedom of Information Act laws.  The Registered Preparer Listing includes the following items:

• Name
• Mailing Address
• Email Address
• Business Name
• Business Physical Address
• Business Phone Number
• Business Website Address

The following procedures for ordering the list are now in place and will soon be posted to IRS.gov.  The Listing is available in a text delimited format on a CD (compact disc). The fee for the current listing is $35.00.   If you request a customized listing, the fee may vary depending on costs associated with producing a specialized listing.

Mail your request for the current listing with a check or money order for $35.00 made payable to U.S. Treasury to:

Internal Revenue Service

Disclosure Program Office

Room 1621

1111 Constitution Avenue NW

Washington, DC 20224

TIGTA Report on IRS Customer Service

The Internal Revenue Service (IRS) provides helpful and accurate tax law assistance, but taxpayers experience lengthy wait times to speak with assistors, according to a new report publicly released by the Treasury Inspector General for Tax Administration (TIGTA).  The audit, a follow-up review to a prior TIGTA report, was initiated to determine the quality of customer service the IRS provides taxpayers who seek assistance with understanding the tax laws and preparing their tax returns.  Read the report.

Latest Direct Sellers Webinar on IRS Video Portal

Direct Sellers webinar includes basic tax information for direct sellers including the nine factors used to determine if an activity is engaged in for profit.

Request a Tax Return Transcript

To request either transcript online, go to www.irs.gov and use our online tool called Order A Transcript. To order by phone, call 800-908-9946 and follow the prompts in the recorded message.  To request a 1040, 1040A or 1040EZ tax return transcript through the mail, complete IRS Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Businesses, partnerships and individuals who need transcript information from other forms or need a tax account transcript must use the Form 4506T, Request for Transcript of Tax Return.

• Order a Transcript - Online Service
• Form 4506-T-EZ, Short Form Request for Individual Tax Return Transcript (PDF)
• Form 4506-T, Request for Transcript of Tax Return (PDF)
• Form 4506, Request for Copy of Tax Form (PDF)
• Tax Return Transcripts

FUTA Surcharge Expires

The Federal Unemployment Tax Act surcharge of 0.2 percent expired June 30. Starting July 1, the FUTA rate for employers is 6.0 percent.  Headliner Volume 312 has more information.

Draft 2012 Form 941

The latest draft of the 2012 Form 941, Employer’s Quarterly Federal Tax Return is now available on IRS.gov.

Substantiating Travel Expenses

Announcement 2011-42 advises taxpayers the IRS will discontinue authorizing the high-low per diem method for substantiating expenses incurred in traveling away from home. This was originally announced in Rev. Proc. 2010-39.

Employee Plans News

To read the August 23, 2011 Edition, please visit the Employee Plans News page in the Retirement Plans Community section of the IRS.gov Web site.

Retirement Plan News

To read the Summer edition, please visit the Retirement News for Employers page in the Retirement Plans Community section of the IRS.gov Web site.

CPA Volunteers

The IRS National Public Liaison Office in Washington DC is soliciting CPA’s to volunteer in testing the new 2011 National Tax Forum Online NTFO Courses.  Please consider giving of your time and energy to work for making education resources readily available to the public.  If you decide to volunteer, please contact Maria Jaramillo at (202) 622-6725 or maria.g.jaramillo@irs.gov.

Three Tips for Employers Outsourcing Their Payroll

• Employer Responsibility: The employer is ultimately responsible for the deposit and payment of federal tax liabilities. Even though you forward the tax payments to the third party to make the tax deposits, you - the employer - are the responsible party.  If the third party fails to make the federal tax payments, the IRS may assess penalties and interest. The employer is liable for all taxes, penalties and interest due. The IRS can also hold you personally liable for certain unpaid federal taxes.
• Correspondence: If there are any issues with an account, the IRS will send correspondence to the address of record. The IRS strongly suggests you do not change the address of record to that of the payroll service provider. That could limit your ability to stay informed of tax matters involving your business.
• EFTPS: Choose a payroll service provider that uses the Electronic Federal Tax Payment System. You can register on the EFTPS system to get your own PIN to verify the payments.

Links:

• Outsourcing Payroll and Third Party Payers
• Outsourcing Payroll Duties
• EFTPS: The Electronic Federal Tax Payment System
• Publication 966 - The Secure Way to Pay Your Federal Taxes for Businesses and Individuals

Technical Guidance

Notice 2011-68 provides interim guidance on the application of these amendments and requests comments on issues to be addressed in future guidance concerning the taxation of annuity and life insurance contracts with a long-term care insurance feature. The Pension Protection Act amended the tax rules for qualified long-term care insurance, annuity, and life insurance contracts.

Revenue Ruling 2011-19 holds that the RBC, in combination with the remittance basis of taxation, is an income tax for which a credit is allowable under section 901 of the Internal Revenue Code. The Remittance Basis Charge (RBC), a tax imposed by the government of the United Kingdom on long-term non-domiciliaries who elect to be taxed under the remittance basis of taxation.

Revenue Ruling 2011-20 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274. The rates are published monthly for purposes of sections 42, 382, 412, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

Revenue Ruling 2011-18 provides the rates for interest on tax overpayments and underpayments for the calendar quarter beginning October 1, 2011.  The interest rates will be 3 percent for overpayments (2 percent in the case of a corporation), 3 percent for underpayments, 0 and one-half percent for the portion of a corporate overpayment exceeding 10,000, and 5 percent for large corporate underpayments.  This quarterly determination is required by section 6621 of the Internal Revenue Code.

Notice 2011-71 provides guidance under section 6050W of the Internal Revenue Code regarding the documentation and reporting obligations of payment settlement entities that are United States payors making payment outside the United States to an offshore account.