Did you know that you can take the Registered Tax Return Preparer Test at the Las Vegas IRS Nationwide Tax Forum?  We also have test centers within 20 miles of all Tax Forum locations. Register for a Forum and then reserve your test slot. Stand out among your peers by becoming a Registered Tax Return Preparer this summer.

Special Edition Tax Tip 2012-11, June 12, 2012

Employers that hired unemployed veterans during late 2011 and early 2012 had an expanded period to request the required certification for claiming the expanded Work Opportunity Tax Credit (WOTC). That expanded period ends on Tuesday, June 19.

The IRS is reminding employers that for eligible veterans hired on or after Nov. 22, 2011 and before May 22, 2012, they have until June 19 to file certification forms with state workforce agencies.

Here are some important points to know about the credit and upcoming deadline:

• New rules provide for an expanded WOTC to employers that hire eligible unemployed veterans.
  
  
• The credit can be as high as $9,600 per veteran for for-profit employers or up to $6,240 per veteran for tax-exempt organizations.
  
  
• The amount of the credit depends on a number of factors, including the length of the veteran’s unemployment before hiring, the hours the veteran works and the amount of first-year wages paid.
  
  
• Employers hiring veterans with service-related disabilities may be eligible for the maximum credit.
  
  
• Normally, an eligible employer must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency within 28 days after an eligible worker starts work. But under a special rule employers have until June 19, 2012, to file this form for veterans hired on or after Nov. 22, 2011, and before May 22, 2012.
  
  
• The 28-day rule for timely filing applies for eligible veterans hired on or after May 22, 2012, and before Jan. 1, 2013.
  
  
• Form 8850 can be faxed or electronically transmitted to the state workforce agency, as long as the agency is able to receive the certification forms that way.
  
  
• For-profit employers claim the credit on their income tax return using Form 5884, Work Opportunity Credit, and Form 3800, General Business Credit.
  
  
• Tax-exempt organizations follow a separate claim procedure using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans.

More details about the expanded WOTC and the forms are available on IRS.gov.

IRS YouTube Video: New Tax Preparer Test Explained

WASHINGTON - The Internal Revenue Service today marked the third anniversary of its groundbreaking return preparer initiative and urged those paid tax return preparers required to pass a new competency test to take the test as soon as possible.

Three years ago the IRS took its first step toward ensuring standards for competency, continuing education and ethics would apply to all paid tax return preparers. Major facets of the initiative are now in place.

On June 4, 2009, IRS Commissioner Doug Shulman launched a six-month review focusing on the competency and conduct of paid tax return preparers. The review resulted from a recognition that paid tax return preparers were an important element in the integrity of the nation’s tax system.  The review included a series of public hearings with the tax preparation community, consumer advocates, oversight groups and taxpayers.

Six months later, the Return Preparer Review laid out a series of recommendations to extend oversight to certain areas of the preparer industry to enhance tax compliance and service to taxpayers.

Among the initiative highlights:

Mandatory registration and use of a Preparer Tax Identification Number (PTIN): Anyone who is paid to prepare, or help prepare, all or substantially all of a federal tax return now has to register with the IRS and obtain a PTIN, as do all enrolled agents. The PTIN is valid for a calendar year and must be renewed annually. Almost 850,000 preparers have registered since the requirement began.

Competency Test: In November 2011, a 120-question basic competency test was launched. Certain preparers are required to take the test by Dec. 31, 2013, to stay in business. The IRS urges an estimated 340,000 preparers required to take the test to do so as soon as possible to give them selves more time if they have to retake the test and to avoid a potential flood of last-minute test takers. Certified Public Accountants, Enrolled Agents and attorneys are exempt from the test because they already have other testing requirements as part of their credentials. Certain non-signing preparers supervised by CPAs, EAs or attorneys are exempt, as are non-1040 preparers.

Continuing Education (CE): The roughly 340,000 preparers who have a testing requirement also have a new requirement to complete 15 hours of continuing education courses each year. The CE credits must include 10 hours in federal tax law, three hours in federal tax law changes and two hours in ethics. This requirement became effective January 2012 and it applies even if the preparer has not yet taken the test. There are now hundreds of outlets offering IRS-approved CE courses. More details are available at www.irs.gov/taxpros/ce.

Ethics and Tax Compliance: Ethical requirements that previously applied only to CPAs, EAs and attorneys now apply to all paid return preparers. All paid preparers also will undergo a tax compliance check and are subject to the standards for practice outlined in Treasury Department Circular 230.

Registered Tax Return Preparer: Preparers who pass the competency test and tax compliance check are given a new credential: Registered Tax Return Preparer. To date, over 4,800 people have become Registered Tax Return Preparers.  Beginning in 2014, only Registered Tax Return Preparers, Enrolled Agents, Certified Public Accountants, and attorneys will be authorized to prepare individual income tax returns for compensation.

Public Database: The IRS also will create a publicly searchable database that will allow taxpayers to see if their tax preparers have met IRS standards or to find a tax preparer in their zip code area. The IRS will have a public education campaign to inform taxpayers to use only CPAs, EAs, attorneys or Registered Tax Return Preparers if they pay to have their taxes prepared.

The database will also show any credentials held by the preparer, including the new RTRP credential, as well as those who are EAs, CPAs and attorneys.

The RTRP competency test is available at more than 260 vendor testing centers nationwide. Preparers can determine if they have a test requirement by going to their online PTIN Account at www.irs.gov/ptin. Preparers also can set a test date, time and location through their online PTIN Account.

Meeting: Tax Related Guidance for Child Care Providers
Date(s): June 5, 2012
Time: 2:00 p.m. (ET); 1:00 p.m. (CT); 12:00 p.m. (MT); 11:00 a.m. (PT)
Location: Your Home or Office
Contact: IRS SB/SE Webinars; E-mail: sbse.webinars@irs.gov
Event Information: This FREE webinar is for:

• Enrolled Agents
• Registered Tax Return Preparers
• CPAs
• Other Tax Professionals
• Child & Day Care operators and owners

Topics include:

• Tax related issues pertaining to businesses in the child care provider industry
• Income items
• Recordkeeping tips
• Business use of the home calculation
• Expense issues
• Depreciation rules and reporting
• Food Program Reimbursements (CACFP)

Earn Continuing Professional Education credit:

To receive a certificate of completion, you must:

• View the broadcast on June 5, 2012 for at least 50 minutes from the start of the program
• View the presentation while signed in using the same email address that you used to register (you will not receive credit by watching on someone else’s computer). This will confirm your attendance and generate your certificate of completion (emailed in approximately one week after the broadcast).
• Register individually. Groups cannot register with one email address and then receive separate certificates. If certificates are needed, each person must register separately.
• If you are an Enrolled Agent or a Registered Tax Return Preparer, you must register with your accurate PTIN (P plus 8 digits) to receive credit from the IRS Return Preparer Office.
• Other tax professionals and business owners and operators, who qualify, will be sent a certificate and may receive credit if the broadcast meets their organizations' or states' CPE requirements.

To register for this event, visit the Internal Revenue Service Webinar Registration Web Site. This event will be archived on the IRS Video Portal for later viewing approximately three weeks after the date of the event.
Sponsored by: Internal Revenue Service Small Business and Self-Employed Division

Interest Rates Unchanged for the Third Quarter of 2012

WASHINGTON - The Internal Revenue Service today announced another expansion of its "Fresh Start" initiative by offering more flexible terms to its Offer in Compromise (OIC) program that will enable some of the most financially distressed taxpayers to clear up their tax problems and in many cases more quickly than in the past.

"This phase of Fresh Start will assist some taxpayers who have faced the most financial hardship in recent years," said IRS Commissioner Doug Shulman. "It is part of our multiyear effort to help taxpayers who are struggling to make ends meet."

Today’s announcement focuses on the financial analysis used to determine which taxpayers qualify for an OIC. This announcement also enables some taxpayers to resolve their tax problems in as little as two years compared to four or five years in the past.

In certain circumstances, the changes announced today include:

• Revising the calculation for the taxpayer’s future income.
• Allowing taxpayers to repay their student loans.
• Allowing taxpayers to pay state and local delinquent taxes.
• Expanding the Allowable Living Expense allowance category and amount.

In general, an OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. An OIC is generally not accepted if the IRS believes the liability can be paid in full as a lump sum or a through payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination of the taxpayer’s reasonable collection potential. OICs are subject to acceptance on legal requirements.

The IRS recognizes that many taxpayers are still struggling to pay their bills so the agency has been working to put in place common-sense changes to the OIC program to more closely reflect real-world situations.

When the IRS calculates a taxpayer’s reasonable collection potential, it will now look at only one year of future income for offers paid in five or fewer months, down from four years, and two years of future income for offers paid in six to 24 months, down from five years. All offers must be fully paid within 24 months of the date the offer is accepted. The Form 656-B, Offer in Compromise Booklet, and Form 656, Offer in Compromise, has been revised to reflect the changes.

Other changes to the program include narrowed parameters and clarification of when a dissipated asset will be included in the calculation of reasonable collection potential. In addition, equity in income producing assets generally will not be included in the calculation of reasonable collection potential for on-going businesses.

Allowable Living Expenses

The Allowable Living Expense standards are used in cases requiring financial analysis to determine a taxpayer’s ability to pay. The standard allowances provide consistency and fairness in collection determinations by incorporating average expenditures for basic necessities for citizens in similar geographic areas. These standards are used when evaluating installment agreement and offer in compromise requests.

The National Standard miscellaneous allowance has been expanded to include additional items. Taxpayers can use the miscellaneous allowance for expenses such as credit card payments and bank fees and charges.

Guidance has also been clarified to allow payments for loans guaranteed by the federal government for the taxpayer's post-high school education. In addition, payments for delinquent state and local taxes may be allowed based on percentage basis of tax owed to the state and IRS.

This is another in a series of steps to help struggling taxpayers under the Fresh Start initiative.

In 2008, IRS announced lien relief for taxpayers trying to refinance or sell a home. The IRS added new flexibility for taxpayers facing payment or collection problems in 2009. The IRS made changes to lien policies in 2011 and expanded the threshold for small businesses to resolve tax issues through installment agreements. And, earlier this year, the IRS increased the threshold for a streamlined installment agreement allowing individual taxpayers to set up an installment agreement without providing a significant amount of financial information.

The 2012 IRS Nationwide Tax Forums are three-day events presented by IRS experts and partner organizations that offer up-to-date information on federal and state tax issues. Tax professionals that take advantage of early registration will receive a significant discount on the registration fee. Keep in mind that the early registration period closes two weeks prior to each forum.

Here are 10 things Enrolled Agents, Certified Public Accountants, Certified Financial Planners, Registered Tax Return Preparers and other tax professionals need to know about the 2012 IRS Nationwide Tax Forums.

1. Forums are held June through August in Orlando, Atlanta, San Diego, Las Vegas, Chicago and New York.

2. Those who sign up early can qualify for discounted registration fee. Pre-registration ends two weeks prior to the start of each forum.

3. Forums offer an opportunity to receive up to 18 continuing education credits through a variety of training seminars and workshops.

4. Forums will offer 43 separate seminars and workshops on valuable and relevant tax topics.

5. Forums will also feature a two-day expo with representatives from the IRS as well as other tax, financial, and business communities offering their products, services, and expertise.

6. Visit with IRS Oversight Board representatives and offer your comments on various IRS initiatives and programs.

7. Tax professionals attending a forum can bring their toughest unresolved cases to meet with IRS personnel who may be able to help.

8. Registering for a tax forum is easy! Register by internet, fax or mail.

9. For more information or to register visit www.irstaxforum.com.

Effective May 21, the IRS will begin issuing only one employer identification number per responsible party each day, a change from the current limit of five per day. This limit applies to all requests for an EIN whether online or by phone, fax or mail. This policy was implemented to ensure fair and equitable access to all applicants with legitimate tax administration-related needs. It also ensures the EIN system continues to operate effectively. We apologize if this change affects your current business practice.

For additional information about applying for an employer identification number, go to IRS.gov or click on the links below.

Apply for an EIN Online

Employer ID Numbers (EINs)

Understanding your EIN

You Tube Video Employer Identification Number