IR-2008-93, August 7, 2008

WASHINGTON — Businesses and associations have until Aug. 31 to submit tax issues to the Internal Revenue Service to be included in the Fall 2008 review in the Industry Issue Resolution (IIR) Program.

IIR is an IRS program to resolve business tax issues common to significant numbers of taxpayers through new and improved guidance. In past years, issues submitted by associations and others representing both small and large business taxpayers, resulted in tax guidance that has affected thousands of taxpayers.

Recent submissions accepted into the IIR program include:

• Integrated Public Utilities - regarding an optional method to be used by integrated utility companies in computing their qualified production activities income under IRC section 199(c).
• Auto Last In First Out - for automobile wholesalers, manufacturers and dealers regarding the proper treatment of the dollar-value, LIFO inventory method for pooling purposes of crossover vehicles, which have characteristics of trucks and cars.

Recent guidance issued as a result of the IIR program includes:

IR-2008-94, Aug. 7, 2008

WASHINGTON — Individuals and organizations with 25 or more trucks, tractors or other heavy vehicles used on highways now are required to make their excise tax filings with the Internal Revenue Service electronically, rather than by paper.

Form 2290, Heavy Highway Vehicle Use Tax Return, is used to report and pay highway-use excise taxes.   Last year truckers and others filed over 700,000 Forms 2290 and paid over $1 billion in federal highway use taxes.   E-filing of Form 2290 began in August 2007.

Electronic filing streamlines the processing of the Form 2290, is more safe and reliable than paper filing and reduces preparation and processing errors.  Although electronically-filing Form 2290 is not required for taxpayers reporting fewer than 25 vehicles, all taxpayers are encouraged to file their forms electronically.  Most Forms 2290 are due by August 31. 

Another advantage of e-filing Form 2290 is that taxpayers don’t have to wait for a stamped version of the Schedule 1, Schedule of Heavy Highway Vehicles, to be returned by mail because they will almost instantly receive the equivalent of a stamped version electronically.  This means truckers won't have to wait to register their vehicles with the appropriate state authority when obtaining the proper license tags.

IR-2008-95, Aug. 11, 2008

WASHINGTON — IRS Commissioner Doug Shulman today named J. Richard (Dick) Harvey Jr. as senior advisor to the commissioner. Harvey will assume his post September 2.

Harvey currently is a partner at PricewaterhouseCoopers, where he serves as the U.S. Banking and Capital Markets Team Leader. In addition to being a nationally recognized expert in financial services tax issues, he also has extensive experience in the financial accounting for income taxes, including both Financial Accounting Standards Board (FASB) rules and International Financial Reporting Standards (IFRS).

“Dick Harvey brings tremendous experience and expertise on accounting and tax issues to the IRS,” said Shulman. “International and corporate tax issues are at the center of our strategic agenda. We are fortunate to have someone of Dick’s caliber working on behalf of American taxpayers.”

The senior advisor to the commissioner serves as an expert providing guidance and assistance on matters of policy and tax administration.  He also will maintain a close partnership between the commissioner’s office and the business units responsible for key programs in his areas of expertise, such as the Large and Mid-Size Business Division.

Harvey joined Price Waterhouse in 1978 in its audit practice and transferred to the tax practice in 1981. He transferred to the Price Waterhouse’s Washington National Tax Office in 1985. In 1986, he joined the Treasury Department’s Office of Tax Policy where he drafted legislation and regulations and did extensive work on the 1986 Tax Reform Act. He rejoined Price Waterhouse (later renamed PricewaterhouseCoopers) in 1988 as a tax partner in New York City focusing on financial institutions.

IR-2008-96, Aug. 14, 2008

WASHINGTON –– The Internal Revenue Service today issued updated guidance on the voluntary correction program for employee retirement plans – the Employee Plans Compliance Resolution System (EPCRS).

“Employers and plan administrators want to comply with the tax laws and regulations to protect plan participants,” said Michael Julianelle, director of the IRS’s Employee Plans division.  “EPCRS helps employers and plan administrators take a proactive role in identifying and fixing mistakes. It also encourages implementation of practices and procedures that ensure retirement plans comply with laws and regulations.”   

Under EPCRS, plan sponsors and plan professionals can correct certain errors in employee retirement plans, in some cases without having to notify the IRS.  Correcting plans in this way allows participants to continue receiving tax-favored retirement benefits and protects the retirement benefits of employees and retirees.

There are three levels of correction programs in EPCRS:

IR-2008-97, Aug. 18, 2008

WASHINGTON — The Internal Revenue Service today released the summer 2008 issue of the Statistics of Income Bulletin, which features tax year 2005 data on the growth in profits and tax liability reported by foreign-controlled domestic corporations.

According to 2005 data, there were 61,820 foreign-controlled domestic corporations (FCDCs), accounting for 1.1 percent of the total of all U.S. corporations. However, FCDCs generated $3.5 trillion of total receipts with $9.2 trillion of total assets, accounting for 13.7 percent of receipts and 13.9 percent of assets reported on all U.S. corporation income tax returns.

Profits, or net income less deficit, reported by FCDCs for tax purposes were $165.2 billion, an 81.9 percent increase from $90.8 billion reported in 2004. The U.S. tax liability for FCDCs, total income tax after credits, was $42.4 billion for 2005, a 41.7 percent increase since 2004.

The Bulletin also features articles on the following:

IR-2008-98, Aug. 19, 2008

WASHINGTON –– The Internal Revenue Service released the revised instructions that tax-exempt organizations will need to fill out the redesigned Form 990, which must be filed starting with tax year 2008 (filed in 2009).

Most charities and other tax-exempt organizations must file an annual informational return with the IRS to maintain their tax-exempt status. Information reported on Form 990 is made available to the public.

“These instructions are the final step in a tremendous effort to bring the Form 990 up to date and to reflect the diversity and complexity of the tax-exempt community,” said IRS Commissioner Doug Shulman. "The revised form will give the IRS and the public a much better view of how exempt organizations operate. The improved transparency provided by these changes will also benefit the tax-exempt community.”

Form 990 had previously not seen major revisions since 1979. The revised instructions and redesigned Form 990 can be found on this Web site.

The revised instructions feature several new tools that make it easier to answer questions line-by-line and that facilitate uniform reporting. Input from the tax-exempt community played a major role in how the new instructions were designed.

IR-2008-99, Aug. 25, 2008

WASHINGTON —  The Internal Revenue Service’s next Tax Talk Today Web cast on Tuesday, Sept. 9, 2008 at 2 p.m. focuses on “EITC Due Diligence - It’s Your Responsibility.”

Practitioners who prepare Earned Income Tax Credit (EITC) claims must meet four due diligence requirements. For example, they must ask the required questions on Form 8867, Paid Preparer's Earned Income Credit Checklist, and probe further when information seems incorrect, inconsistent or incomplete. 

Failure to meet the due diligence requirements can result in a $100 penalty for each failure. 

The broadcast will be a good opportunity for return preparers to review the requirements and get the latest information from the IRS executive and technical staff responsible for this $43 billion program.

Moderated by Les Witmer, panelists for the September program are: Debra S. Holland, EITC program director;  Sue Gaston, director of industry operations, H&R Block; Sherrill L. Gregory, an Orange County, Calif., tax practitioner; and  Bridget E. Tombul, IRS counsel.

Tax Talk Today is a Web cast aimed at educating tax and payroll professionals on the most current and complex tax issues. Tax professionals are encouraged to watch and submit questions.

To access the Web cast at no charge, viewers can register online. Tax professionals in need of continuing education credits are eligible to receive one CPE credit by viewing the September 9 Web cast.

Archived shows are available on the site also.

The next show is on Tuesday, Nov. 4. 2008 when the topic will be “Preparing for the New Form 990.”

Notes: