Honda Compressed Natural Gas Vehicle is Certified for the Qualified Alternative Fuel Motor Vehicle Tax Credit
WASHINGTON — The Internal Revenue Service has acknowledged the certification by American Honda Motor Company, Inc., that its Honda Civic GX Model Year 2008 vehicle meets the requirements of the Qualified Alternative Fuel Motor Vehicle Credit.
The Qualified Alternative Fuel Motor Vehicle Credit was enacted by the Energy Policy Act of 2005. To qualify these vehicles can operate only on alternative fuels or mixed fuels (a combination of alternative fuel and petroleum based fuel). The 2008 Honda Civic GX is an alternative fueled vehicle that operates on compressed natural gas. This vehicle should not be confused with hybrid vehicles.
The Qualified Alternative Fuel Motor Vehicle Credit amount for the Honda Civic GX Model Year 2008 is $4,000.
Wednesday, October 31, 2007
IR-2007-180: IRS Seeks Applications for TE/GE Advisory Committee
IRS Seeks Applications for TE/GE Advisory Committee
WASHINGTON – The Internal Revenue Service is seeking applications for vacancies on the Advisory Committee on Tax Exempt and Government Entities (ACT). The committee provides a venue for public input into critical tax administration areas.
Vacancies exist in the following customer segments:
* Employee Plans – two vacancies
* Exempt Organizations – two vacancies
* Tax Exempt Bonds – one vacancy
* Indian Tribal Governments – one vacancy
* Federal, State and Local Governments – two vacancies.
The ACT is an organized public forum for the IRS and representatives who deal with employee plans, exempt organizations, tax-exempt bonds, and federal, state, local and Indian tribal governments. The ACT allows the IRS to receive regular input on administrative policy and procedures of the Tax Exempt and Government Entities Division.
Members are appointed by the Secretary of the Treasury and serve two-year terms, beginning in June 2008. Applications can be made by letter or by completing an application form, available on the IRS Web site. In either case, applications should reflect the proposed member’s qualifications. A notice published in the Federal Register, dated Oct. 31, 2007, contains more details about the ACT and the application process.
Applications will be accepted through Nov. 30, 2007
Applications should be sent to Steven Pyrek, TE/GE Communications and Liaison Director, Internal Revenue Service, 1111 Constitution Ave., NW – SE:T:CL Penn Bldg., Washington, DC 20224, or by fax to 202-283-9966 (not a toll-free number).
WASHINGTON – The Internal Revenue Service is seeking applications for vacancies on the Advisory Committee on Tax Exempt and Government Entities (ACT). The committee provides a venue for public input into critical tax administration areas.
Vacancies exist in the following customer segments:
* Employee Plans – two vacancies
* Exempt Organizations – two vacancies
* Tax Exempt Bonds – one vacancy
* Indian Tribal Governments – one vacancy
* Federal, State and Local Governments – two vacancies.
The ACT is an organized public forum for the IRS and representatives who deal with employee plans, exempt organizations, tax-exempt bonds, and federal, state, local and Indian tribal governments. The ACT allows the IRS to receive regular input on administrative policy and procedures of the Tax Exempt and Government Entities Division.
Members are appointed by the Secretary of the Treasury and serve two-year terms, beginning in June 2008. Applications can be made by letter or by completing an application form, available on the IRS Web site. In either case, applications should reflect the proposed member’s qualifications. A notice published in the Federal Register, dated Oct. 31, 2007, contains more details about the ACT and the application process.
Applications will be accepted through Nov. 30, 2007
Applications should be sent to Steven Pyrek, TE/GE Communications and Liaison Director, Internal Revenue Service, 1111 Constitution Ave., NW – SE:T:CL Penn Bldg., Washington, DC 20224, or by fax to 202-283-9966 (not a toll-free number).
IR-2007-179: IRS Tax Talk Today Focuses on Worker Classification
IRS Tax Talk Today Focuses on Worker Classification
WASHINGTON — The IRS’s November 6, 2007 Tax Talk Today Webcast, “What’s Hot in Employment Taxes: Independent Contractor or Employee?”, will focus exclusively on worker classification issues. The program starts at 2 p.m. ET.
A critical issue for all businesses is properly classifying workers as employees or independent contractors.
During the live, one-hour Webcast, a panel of experts will discuss legislative and judicial background and recent changes regarding worker classification, why the worker classification issue is important and what the IRS is doing about it, and what workers who feel they have been misclassified can do to correct their situation.
Tax professionals and business persons who wish to learn about the subject of worker classification are encouraged to watch and submit questions. The live Webcast enables viewers to ask questions via e-mail to the panelists and receive on-air answers.
Panelists will be Mary C. Gorman, Attorney, IRS Counsel; Richard Schampers, Senior Program Analyst, Employment Tax Policy, IRS; Joseph Tiberio, Program Manager, Employment Tax Policy, IRS; Rebecca Wilson, Attorney, IRS Counsel; Michael P. O'Toole, Esq., Senior Director, Publications and Government Relations, American Payroll Association; and F. Gordon Spoor, CPA/PFS, Spoor & Associates, P.A.
To access the Webcast at no charge, viewers can register online at www.TaxTalkToday.tv. Tax professionals in need of continuing education credits (CECs) are eligible to receive one CEC by viewing the November Webcast.
Archived shows are available on the Web site.
Mark your calendars for the Tuesday, December 11, 2007 and Tuesday, January 8, 2008 shows, which focus on “Getting Ready for Filing Season 2008” for individuals and businesses respectively.
October’s show – “The ABC’s of OPR” – is now available to view via archive.
WASHINGTON — The IRS’s November 6, 2007 Tax Talk Today Webcast, “What’s Hot in Employment Taxes: Independent Contractor or Employee?”, will focus exclusively on worker classification issues. The program starts at 2 p.m. ET.
A critical issue for all businesses is properly classifying workers as employees or independent contractors.
During the live, one-hour Webcast, a panel of experts will discuss legislative and judicial background and recent changes regarding worker classification, why the worker classification issue is important and what the IRS is doing about it, and what workers who feel they have been misclassified can do to correct their situation.
Tax professionals and business persons who wish to learn about the subject of worker classification are encouraged to watch and submit questions. The live Webcast enables viewers to ask questions via e-mail to the panelists and receive on-air answers.
Panelists will be Mary C. Gorman, Attorney, IRS Counsel; Richard Schampers, Senior Program Analyst, Employment Tax Policy, IRS; Joseph Tiberio, Program Manager, Employment Tax Policy, IRS; Rebecca Wilson, Attorney, IRS Counsel; Michael P. O'Toole, Esq., Senior Director, Publications and Government Relations, American Payroll Association; and F. Gordon Spoor, CPA/PFS, Spoor & Associates, P.A.
To access the Webcast at no charge, viewers can register online at www.TaxTalkToday.tv. Tax professionals in need of continuing education credits (CECs) are eligible to receive one CEC by viewing the November Webcast.
Archived shows are available on the Web site.
Mark your calendars for the Tuesday, December 11, 2007 and Tuesday, January 8, 2008 shows, which focus on “Getting Ready for Filing Season 2008” for individuals and businesses respectively.
October’s show – “The ABC’s of OPR” – is now available to view via archive.
Tuesday, October 30, 2007
IR-2007-178: IRS Grants Tax Relief for Southern California Wildfire Victims
IRS Grants Tax Relief for Southern California Wildfire Victims
WASHINGTON — The Internal Revenue Service is extending tax return filing and payment deadlines for victims of the severe Southern California wildfires.
Taxpayers in the Presidential Disaster Area –– consisting of Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara and Ventura counties –– will have until Jan. 31, 2008, to file returns, pay taxes and perform other time-sensitive acts.
The extended deadline applies to items due on or after Oct. 21, 2007, when the fires began, and on or before Jan. 31, 2008. This includes the federal withholding tax return, Form 941, normally due Oct. 31, and the estimated tax payment for the fourth quarter, normally due Jan. 15.
In addition, the IRS is waiving the failure to deposit penalty for employment and excise deposits due on or after Oct. 21, 2007, and on or before Nov. 5, 2007, as long as the deposits are made by Nov. 5, 2007.
If any affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply during the period from Oct. 21, 2007, to Jan. 31, 2008, or Oct. 21, 2007, through Nov. 5, 2007, for failure to deposit penalties. No penalty or interest will be abated for taxpayers that do not have a filing, payment or deposit due date, including an extended filing or payment due date, during this period.
“As California taxpayers start the recovery process, the last thing they should worry about is meeting a tax deadline,” said IRS Acting Commissioner Linda Stiff. “The IRS offers many resources for disaster victims online at IRS.gov, over the phone and in person.”
IRS computer systems automatically identify taxpayers located in the covered disaster area and apply automatic filing and payment relief. Taxpayers within the covered disaster area do not need to identify themselves as affected by the wildfires by writing on their returns or using the disaster designation in their tax software.
Affected taxpayers who reside or have a business located outside the covered disaster area are required to call the IRS disaster hotline at 1-866-562-5227 to identify themselves as eligible for disaster relief.
Casualty Losses
Affected taxpayers in a presidentially declared disaster area also have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. For details on figuring a casualty loss deduction, see IRS Publication 547, “Casualties, Disasters and Thefts.”
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “California Wildfires” at the top of the form so that the IRS can expedite the processing of the refund.
Related Information
See the local news release for more specific disaster relief provisions -- http://www.irs.gov/newsroom/article/0,,id=175261,00.html
WASHINGTON — The Internal Revenue Service is extending tax return filing and payment deadlines for victims of the severe Southern California wildfires.
Taxpayers in the Presidential Disaster Area –– consisting of Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara and Ventura counties –– will have until Jan. 31, 2008, to file returns, pay taxes and perform other time-sensitive acts.
The extended deadline applies to items due on or after Oct. 21, 2007, when the fires began, and on or before Jan. 31, 2008. This includes the federal withholding tax return, Form 941, normally due Oct. 31, and the estimated tax payment for the fourth quarter, normally due Jan. 15.
In addition, the IRS is waiving the failure to deposit penalty for employment and excise deposits due on or after Oct. 21, 2007, and on or before Nov. 5, 2007, as long as the deposits are made by Nov. 5, 2007.
If any affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply during the period from Oct. 21, 2007, to Jan. 31, 2008, or Oct. 21, 2007, through Nov. 5, 2007, for failure to deposit penalties. No penalty or interest will be abated for taxpayers that do not have a filing, payment or deposit due date, including an extended filing or payment due date, during this period.
“As California taxpayers start the recovery process, the last thing they should worry about is meeting a tax deadline,” said IRS Acting Commissioner Linda Stiff. “The IRS offers many resources for disaster victims online at IRS.gov, over the phone and in person.”
IRS computer systems automatically identify taxpayers located in the covered disaster area and apply automatic filing and payment relief. Taxpayers within the covered disaster area do not need to identify themselves as affected by the wildfires by writing on their returns or using the disaster designation in their tax software.
Affected taxpayers who reside or have a business located outside the covered disaster area are required to call the IRS disaster hotline at 1-866-562-5227 to identify themselves as eligible for disaster relief.
Casualty Losses
Affected taxpayers in a presidentially declared disaster area also have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. For details on figuring a casualty loss deduction, see IRS Publication 547, “Casualties, Disasters and Thefts.”
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “California Wildfires” at the top of the form so that the IRS can expedite the processing of the refund.
Related Information
See the local news release for more specific disaster relief provisions -- http://www.irs.gov/newsroom/article/0,,id=175261,00.html
Friday, October 26, 2007
IR-2007-177: IRS and GWU Host 20th Annual International Tax Conference
IRS and GWU Host 20th Annual International Tax Conference
WASHINGTON — Senior law professors from The George Washington University Law School will join with officials from the Treasury Department and IRS as well as officials from the tax authorities of Korea, Mexico and the United Kingdom to discuss significant tax compliance and treaty issues at the 20th Annual Institute on Current Issues in International Taxation.
The two-day program will be held on Dec. 13 and 14, 2007, at the Grand Hyatt Washington Hotel located at 1000 H Street, N.W., Washington, D.C. Those interested in attending can find out more about the topics, speakers and registration from the GWU Law School web site: http://www.law.gwu.edu/ciit.
The program is designed primarily for corporate tax executives responsible for international tax matters, tax counsels of domestic and foreign multinational corporations, lawyers working in the international tax area and accounting firm partners and managers working in the international tax area.
The conference has been arranged to provide opportunities for lively exchanges between members on the panels who represent government, academia and the private sector and to offer question and answer periods with members of the audience. It will include the perennially popular ‘ask the IRS’ session where IRS officials respond to questions from the audience.
The conference is further described in Announcement 2007-100 -- IRS and GWU Host 20th Annual International Tax Conference
WASHINGTON — Senior law professors from The George Washington University Law School will join with officials from the Treasury Department and IRS as well as officials from the tax authorities of Korea, Mexico and the United Kingdom to discuss significant tax compliance and treaty issues at the 20th Annual Institute on Current Issues in International Taxation.
The two-day program will be held on Dec. 13 and 14, 2007, at the Grand Hyatt Washington Hotel located at 1000 H Street, N.W., Washington, D.C. Those interested in attending can find out more about the topics, speakers and registration from the GWU Law School web site: http://www.law.gwu.edu/ciit.
The program is designed primarily for corporate tax executives responsible for international tax matters, tax counsels of domestic and foreign multinational corporations, lawyers working in the international tax area and accounting firm partners and managers working in the international tax area.
The conference has been arranged to provide opportunities for lively exchanges between members on the panels who represent government, academia and the private sector and to offer question and answer periods with members of the audience. It will include the perennially popular ‘ask the IRS’ session where IRS officials respond to questions from the audience.
The conference is further described in Announcement 2007-100.
.
WASHINGTON — Senior law professors from The George Washington University Law School will join with officials from the Treasury Department and IRS as well as officials from the tax authorities of Korea, Mexico and the United Kingdom to discuss significant tax compliance and treaty issues at the 20th Annual Institute on Current Issues in International Taxation.
The two-day program will be held on Dec. 13 and 14, 2007, at the Grand Hyatt Washington Hotel located at 1000 H Street, N.W., Washington, D.C. Those interested in attending can find out more about the topics, speakers and registration from the GWU Law School web site: http://www.law.gwu.edu/ciit.
The program is designed primarily for corporate tax executives responsible for international tax matters, tax counsels of domestic and foreign multinational corporations, lawyers working in the international tax area and accounting firm partners and managers working in the international tax area.
The conference has been arranged to provide opportunities for lively exchanges between members on the panels who represent government, academia and the private sector and to offer question and answer periods with members of the audience. It will include the perennially popular ‘ask the IRS’ session where IRS officials respond to questions from the audience.
The conference is further described in Announcement 2007-100 -- IRS and GWU Host 20th Annual International Tax Conference
WASHINGTON — Senior law professors from The George Washington University Law School will join with officials from the Treasury Department and IRS as well as officials from the tax authorities of Korea, Mexico and the United Kingdom to discuss significant tax compliance and treaty issues at the 20th Annual Institute on Current Issues in International Taxation.
The two-day program will be held on Dec. 13 and 14, 2007, at the Grand Hyatt Washington Hotel located at 1000 H Street, N.W., Washington, D.C. Those interested in attending can find out more about the topics, speakers and registration from the GWU Law School web site: http://www.law.gwu.edu/ciit.
The program is designed primarily for corporate tax executives responsible for international tax matters, tax counsels of domestic and foreign multinational corporations, lawyers working in the international tax area and accounting firm partners and managers working in the international tax area.
The conference has been arranged to provide opportunities for lively exchanges between members on the panels who represent government, academia and the private sector and to offer question and answer periods with members of the audience. It will include the perennially popular ‘ask the IRS’ session where IRS officials respond to questions from the audience.
The conference is further described in Announcement 2007-100.
.
IR-2007-176: IRS to Hold Workshops for Small and Mid-Sized 501(c)(3) Exempt Organizations
IRS TO HOLD WORKSHOPS FOR SMALL AND MID-SIZED 501(C)(3) EXEMPT ORGANIZATIONS
WASHINGTON — The Internal Revenue Service today announced that it is offering one-day workshops for small and mid-sized section 501(c)(3) exempt organizations during fall and winter 2007 and spring 2008.
The workshop is designed for administrators, volunteers or tax practitioners who are responsible for an organization's tax compliance. Each workshop is limited to 200 attendees and will be filled on a first-come, first-served basis. The non-refundable cost is $45 and includes a text and other IRS forms and publications. Pre-registration is required.
The dates and locations for the one-day workshops in 2007 are as follows:
* Salt Lake City, Utah — Nov. 13, 14 and 15
* Columbia, S. C. — Dec. 4, 5 and 6
* Sacramento, Calif. — Dec. 18, 19 and 20
* Arlington, Va. — April 1, 2 and 3
* Austin, Texas — May 6, 7 and 8
* Columbus, Ohio — May 20, 21 and 22
The workshops will explain what 501(c)(3) organizations must do to keep their tax-exempt status and comply with tax obligations. Each workshop will cover the benefits and responsibilities of tax-exempt status and actions that could jeopardize that status; unrelated business income and gaming; employment issues; an explanation of Form 990 and the new "e-Postcard" filing requirement; and required disclosures. Workshop leaders will also discuss how the Pension Protection Act of 2006 affects exempt organizations.
The workshop does not cover how to apply for tax-exempt status or compliance requirements for non-501(c)(3) organizations.
For more information or to register, go to the Charities & Non-Profits page on the IRS Web site at www.irs.gov/eo and click on the “Calendar of Events” link. Information and registration is also available by calling Events by Design, the IRS’ registration services provider, at 1-800-521-3980.
WASHINGTON — The Internal Revenue Service today announced that it is offering one-day workshops for small and mid-sized section 501(c)(3) exempt organizations during fall and winter 2007 and spring 2008.
The workshop is designed for administrators, volunteers or tax practitioners who are responsible for an organization's tax compliance. Each workshop is limited to 200 attendees and will be filled on a first-come, first-served basis. The non-refundable cost is $45 and includes a text and other IRS forms and publications. Pre-registration is required.
The dates and locations for the one-day workshops in 2007 are as follows:
* Salt Lake City, Utah — Nov. 13, 14 and 15
* Columbia, S. C. — Dec. 4, 5 and 6
* Sacramento, Calif. — Dec. 18, 19 and 20
* Arlington, Va. — April 1, 2 and 3
* Austin, Texas — May 6, 7 and 8
* Columbus, Ohio — May 20, 21 and 22
The workshops will explain what 501(c)(3) organizations must do to keep their tax-exempt status and comply with tax obligations. Each workshop will cover the benefits and responsibilities of tax-exempt status and actions that could jeopardize that status; unrelated business income and gaming; employment issues; an explanation of Form 990 and the new "e-Postcard" filing requirement; and required disclosures. Workshop leaders will also discuss how the Pension Protection Act of 2006 affects exempt organizations.
The workshop does not cover how to apply for tax-exempt status or compliance requirements for non-501(c)(3) organizations.
For more information or to register, go to the Charities & Non-Profits page on the IRS Web site at www.irs.gov/eo and click on the “Calendar of Events” link. Information and registration is also available by calling Events by Design, the IRS’ registration services provider, at 1-800-521-3980.
Thursday, October 25, 2007
IR-2007-175: Purchasers of GM Hybrids Still Qualify for Tax Credit
Purchasers of GM Hybrids Still Qualify for Tax Credit
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 123 qualifying vehicles to retail dealers in the quarter ending Sept 30, 2007. This brings the cumulative number of qualified GM hybrid vehicles sold to 9,577. 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 2006 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.
Original owners 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.
Related Item: Hybrid Cars and Alternative Fuel Vehicles
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 123 qualifying vehicles to retail dealers in the quarter ending Sept 30, 2007. This brings the cumulative number of qualified GM hybrid vehicles sold to 9,577. 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 2006 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.
Original owners 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.
Related Item: Hybrid Cars and Alternative Fuel Vehicles
IR-2007-174: Purchasers of Ford Hybrids Still Qualify for Tax Credit
Purchasers of Ford Hybrids Still Qualify for Tax Credit
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 5,196 qualifying vehicles to retail dealers during the quarter ending Sept. 30, 2007. This brings the cumulative number of qualified Ford hybrid vehicles sold to 38,743.
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
Purchasers of Ford’s qualified vehicles may continue to rely on the certifications concerning the vehicles’ qualification for the credit.
Original owners 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.
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 5,196 qualifying vehicles to retail dealers during the quarter ending Sept. 30, 2007. This brings the cumulative number of qualified Ford hybrid vehicles sold to 38,743.
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
Purchasers of Ford’s qualified vehicles may continue to rely on the certifications concerning the vehicles’ qualification for the credit.
Original owners 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.
IR-2007-173: Poker Tournament Winnings Must be Reported to the IRS
Poker Tournament Winnings Must be Reported to the IRS
WASHINGTON — Starting next year, casinos and other sponsors of poker tournaments will be required to report most winnings to winners and the Internal Revenue Service, according to the IRS.
The new requirement, which goes into effect on March 4, 2008, was contained in guidance released Sept. 4 by the Treasury Department and the IRS. The guidance is designed to clear up confusion about the tax reporting rules that apply to poker tournaments. In recent years, some casinos and players have been confused over whether poker tournament sponsors who hold the money for participants in a poker tournament are required to report the winnings to the IRS and withhold tax on the winnings.
For tournaments completed during 2007 and before March 4, 2008, casinos and other sponsors of poker tournaments will not be required to report the winnings to the IRS or withhold tax on the winnings. But beginning March 4, 2008, the IRS will require all tournament sponsors to report tournament winnings of more than $5,000, usually on an IRS Form W-2G.
Tournament sponsors who comply with this reporting requirement will not need to withhold federal income tax at the end of a tournament. If any tournament sponsor does not report the tournament winnings, the IRS will enforce the reporting requirement and also require the sponsor to pay any tax that should have been withheld from the winner if the withholding requirement had been asserted. The withholding amount is normally 25 percent of any amounts that should have been reported.
So that tournament sponsors can comply with this requirement, tournament winners must provide their taxpayer identification number, usually a social security number, to the tournament sponsor. If a winner fails to provide this identification number, the tournament sponsor must withhold federal income tax at the rate of 28 percent.
The IRS reminds tournament winners that, by law, they must report all their winnings on their federal income tax returns. This rule applies regardless of the amount and regardless of whether the winner receives a Form W-2G or any other reporting form. This is true for 2007 and earlier years, and will continue to be the case after the new reporting requirement goes into effect.
Related Item: Revenue Procedure 2007-57 in Internal Revenue Bulletin 2007-36 -- http://www.irs.gov/pub/irs-irbs/irb07-42.pdf
WASHINGTON — Starting next year, casinos and other sponsors of poker tournaments will be required to report most winnings to winners and the Internal Revenue Service, according to the IRS.
The new requirement, which goes into effect on March 4, 2008, was contained in guidance released Sept. 4 by the Treasury Department and the IRS. The guidance is designed to clear up confusion about the tax reporting rules that apply to poker tournaments. In recent years, some casinos and players have been confused over whether poker tournament sponsors who hold the money for participants in a poker tournament are required to report the winnings to the IRS and withhold tax on the winnings.
For tournaments completed during 2007 and before March 4, 2008, casinos and other sponsors of poker tournaments will not be required to report the winnings to the IRS or withhold tax on the winnings. But beginning March 4, 2008, the IRS will require all tournament sponsors to report tournament winnings of more than $5,000, usually on an IRS Form W-2G.
Tournament sponsors who comply with this reporting requirement will not need to withhold federal income tax at the end of a tournament. If any tournament sponsor does not report the tournament winnings, the IRS will enforce the reporting requirement and also require the sponsor to pay any tax that should have been withheld from the winner if the withholding requirement had been asserted. The withholding amount is normally 25 percent of any amounts that should have been reported.
So that tournament sponsors can comply with this requirement, tournament winners must provide their taxpayer identification number, usually a social security number, to the tournament sponsor. If a winner fails to provide this identification number, the tournament sponsor must withhold federal income tax at the rate of 28 percent.
The IRS reminds tournament winners that, by law, they must report all their winnings on their federal income tax returns. This rule applies regardless of the amount and regardless of whether the winner receives a Form W-2G or any other reporting form. This is true for 2007 and earlier years, and will continue to be the case after the new reporting requirement goes into effect.
Related Item: Revenue Procedure 2007-57 in Internal Revenue Bulletin 2007-36 -- http://www.irs.gov/pub/irs-irbs/irb07-42.pdf
IR-2007-172: 2008 Inflation Adjustments Widen Tax Brackets, Raise IRA/401(k) Limits and Expand Tax Benefits
2008 Inflation Adjustments Widen Tax Brackets, Raise IRA/401(k) Limits and Expand Tax Benefits
WASHINGTON — For 2008, personal exemptions and standard deductions will rise, tax brackets will widen and workers will be able to save more for retirement, thanks to inflation adjustments announced today by the Internal Revenue Service.
By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, are being adjusted for 2008. Key changes affecting 2008 returns, filed by most taxpayers in early 2009, include the following:
* The value of each personal and dependency exemption, available to most taxpayers, is $3,500, up $100 from 2007.
* The new standard deduction is $10,900 for married couples filing a joint return (up $200), $5,450 for singles and married individuals filing separately (up $100) and $8,000 for heads of household (up $150). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
* Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $65,100, up from $63,700 in 2007.
* The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $4,824, up from $4,716. The income limit for the credit for joint return filers with two or more children is $41,646, up from $39,783.
* The maximum Hope credit, available for the first two years of post-secondary education, is $1,800, up from $1,650 in 2007.
* The income limit for the savers credit is $53,000 for joint filers (up $1,000), $39,750 for heads of household (up $750) and $26,500 for singles and married persons filing separately (up$500). Low-and moderate income workers who contribute to a retirement plan, such as an IRA or 401(k), may qualify for the credit, which is available in addition to any other tax savings that apply.
* The contribution amount allowed for Roth IRAs begins to phase out for joint filers with incomes exceeding $159,000 (up from $156,000) and $101,000 (up from $99,000) for singles and heads of household.
* For contributions to a traditional IRA, the deduction phase-out range for an individual covered by a retirement plan at work begins at income of $85,000 for joint filers (up from $83,000) and $53,000 for a single person or head of household (up from $52,000).
* Participants in most employer-sponsored 401(k) plans and 403(b) plans for employees of public schools and certain tax-exempt organizations can contribute up to $15,500, unchanged from 2007. Individuals, age 50 or over, can make an additional contribution of up to $5,000, also unchanged from 2007.
* Individuals participating in SIMPLE retirement plans can contribute $10,500, unchanged from 2007. Those, age 50 or over, can make an additional contribution of up to $2,500, also unchanged from 2007.
* The annual contribution limit for most defined contribution plans rises to $46,000, up from $45,000 in 2007.
More information about the pension and retirement plan-related changes can be found in IR-2007-171. Other inflation adjustments are described in Revenue Procedure 2007-66.
Related Items:
* Revenue Procedure 2007-66 -- http://www.irs.gov/pub/irs-drop/rp-07-66.pdf
* IR-2007-171, IRS Announces Pension Plan Limitations for 2008 -- http://www.irs.gov/newsroom/article/0,,id=174873,00.html
WASHINGTON — For 2008, personal exemptions and standard deductions will rise, tax brackets will widen and workers will be able to save more for retirement, thanks to inflation adjustments announced today by the Internal Revenue Service.
By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, are being adjusted for 2008. Key changes affecting 2008 returns, filed by most taxpayers in early 2009, include the following:
* The value of each personal and dependency exemption, available to most taxpayers, is $3,500, up $100 from 2007.
* The new standard deduction is $10,900 for married couples filing a joint return (up $200), $5,450 for singles and married individuals filing separately (up $100) and $8,000 for heads of household (up $150). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
* Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $65,100, up from $63,700 in 2007.
* The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $4,824, up from $4,716. The income limit for the credit for joint return filers with two or more children is $41,646, up from $39,783.
* The maximum Hope credit, available for the first two years of post-secondary education, is $1,800, up from $1,650 in 2007.
* The income limit for the savers credit is $53,000 for joint filers (up $1,000), $39,750 for heads of household (up $750) and $26,500 for singles and married persons filing separately (up$500). Low-and moderate income workers who contribute to a retirement plan, such as an IRA or 401(k), may qualify for the credit, which is available in addition to any other tax savings that apply.
* The contribution amount allowed for Roth IRAs begins to phase out for joint filers with incomes exceeding $159,000 (up from $156,000) and $101,000 (up from $99,000) for singles and heads of household.
* For contributions to a traditional IRA, the deduction phase-out range for an individual covered by a retirement plan at work begins at income of $85,000 for joint filers (up from $83,000) and $53,000 for a single person or head of household (up from $52,000).
* Participants in most employer-sponsored 401(k) plans and 403(b) plans for employees of public schools and certain tax-exempt organizations can contribute up to $15,500, unchanged from 2007. Individuals, age 50 or over, can make an additional contribution of up to $5,000, also unchanged from 2007.
* Individuals participating in SIMPLE retirement plans can contribute $10,500, unchanged from 2007. Those, age 50 or over, can make an additional contribution of up to $2,500, also unchanged from 2007.
* The annual contribution limit for most defined contribution plans rises to $46,000, up from $45,000 in 2007.
More information about the pension and retirement plan-related changes can be found in IR-2007-171. Other inflation adjustments are described in Revenue Procedure 2007-66.
Related Items:
* Revenue Procedure 2007-66 -- http://www.irs.gov/pub/irs-drop/rp-07-66.pdf
* IR-2007-171, IRS Announces Pension Plan Limitations for 2008 -- http://www.irs.gov/newsroom/article/0,,id=174873,00.html
IR-2007-171: IRS Announces Pension Plan Limitations for 2008
IRS Announces Pension Plan Limitations for 2008
WASHINGTON The Internal Revenue Service today announced cost of living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2008.
Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. It also requires that the Commissioner annually adjust these limits for cost of living increases.
Many of the pension plan limitations will change for 2008 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, for others, the limitation will remain unchanged. For example, the limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $15,500. This limitation affects elective deferrals to Section 401(k) plans and to the Federal Government’s Thrift Savings Plan, among other plans.
Effective January 1, 2008, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $180,000 to $185,000. For participants who separated from service before January 1, 2008, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2007, by 1.0236.
The limitation for defined contribution plans under Section 415(c)(1)(A) is increased from $45,000 to $46,000.
The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). These dollar amounts and the adjusted amounts are as follows:
The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $15,500.
The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $225,000 to $230,000.
The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $145,000 to $150,000.
The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5 year distribution period is increased from $915,000 to $935,000, while the dollar amount used to determine the lengthening of the 5 year distribution period is increased from $180,000 to $185,000.
The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $100,000 to $105,000.
The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $5,000. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $2,500.
The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $335,000 to $345,000.
The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $500.
The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $10,500.
The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $15,500.
The compensation amounts under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation purposes remains unchanged at $90,000. The compensation amount under Section 1.61 21(f)(5)(iii) is increased from $180,000 to $185,000.
The Code also provides that several pension-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). These dollar amounts and the adjustments are as follows:
The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing a joint return is increased from $31,000 to $32,000; the limitation under Section 25B(b)(1)(B) is increased from $34,000 to $34,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), from $52,000 to $53,000.
The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $23,250 to $24,000; the limitation under Section 25B(b)(1)(B) is increased from $25,500 to $25,875; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), from $39,000 to $39,750.
The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $15,500 to $16,000; the limitation under Section 25B(b)(1)(B) is increased from $17,000 to $17,250; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), from $26,000 to $26,500.
The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $83,000 to $85,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $52,000 to $53,000. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $156,000 to $159,000.
The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(I) for determining the maximum Roth IRA contribution for taxpayers filing a joint return or as a qualifying widow(er) is increased from $156,000 to $159,000. The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $99,000 to $101,000.
Administrators of defined benefit or defined contribution plans that have received favorable determination letters should not request new determination letters solely because of yearly amendments to adjust maximum limitations in the plans.
WASHINGTON The Internal Revenue Service today announced cost of living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2008.
Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. It also requires that the Commissioner annually adjust these limits for cost of living increases.
Many of the pension plan limitations will change for 2008 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, for others, the limitation will remain unchanged. For example, the limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $15,500. This limitation affects elective deferrals to Section 401(k) plans and to the Federal Government’s Thrift Savings Plan, among other plans.
Effective January 1, 2008, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $180,000 to $185,000. For participants who separated from service before January 1, 2008, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2007, by 1.0236.
The limitation for defined contribution plans under Section 415(c)(1)(A) is increased from $45,000 to $46,000.
The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). These dollar amounts and the adjusted amounts are as follows:
The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $15,500.
The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $225,000 to $230,000.
The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $145,000 to $150,000.
The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5 year distribution period is increased from $915,000 to $935,000, while the dollar amount used to determine the lengthening of the 5 year distribution period is increased from $180,000 to $185,000.
The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $100,000 to $105,000.
The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $5,000. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $2,500.
The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $335,000 to $345,000.
The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $500.
The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $10,500.
The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $15,500.
The compensation amounts under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation purposes remains unchanged at $90,000. The compensation amount under Section 1.61 21(f)(5)(iii) is increased from $180,000 to $185,000.
The Code also provides that several pension-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). These dollar amounts and the adjustments are as follows:
The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing a joint return is increased from $31,000 to $32,000; the limitation under Section 25B(b)(1)(B) is increased from $34,000 to $34,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), from $52,000 to $53,000.
The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $23,250 to $24,000; the limitation under Section 25B(b)(1)(B) is increased from $25,500 to $25,875; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), from $39,000 to $39,750.
The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $15,500 to $16,000; the limitation under Section 25B(b)(1)(B) is increased from $17,000 to $17,250; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), from $26,000 to $26,500.
The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $83,000 to $85,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $52,000 to $53,000. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $156,000 to $159,000.
The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(I) for determining the maximum Roth IRA contribution for taxpayers filing a joint return or as a qualifying widow(er) is increased from $156,000 to $159,000. The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $99,000 to $101,000.
Administrators of defined benefit or defined contribution plans that have received favorable determination letters should not request new determination letters solely because of yearly amendments to adjust maximum limitations in the plans.
IR-2007-170: IRS Warns Taxpayers About Certain Trust Arrangements Sold As Welfare Benefit Funds
IRS Warns Taxpayers About Certain Trust Arrangements Sold As Welfare Benefit Funds
WASHINGTON – The Internal Revenue Service and the Treasury Department cautioned taxpayers about participating in certain trust arrangements being sold to professional corporations and other small businesses as welfare benefit funds and identified some of the arrangements as listed transactions.
There are many legitimate welfare benefit funds that provide benefits, such as health insurance and life insurance, to employees and retirees. However, the arrangements the IRS is cautioning employers about primarily benefit the owners or other key employees of businesses, sometimes in the form of distributions of cash, loans, or life insurance policies.
“The guidance targets specific abuses involving a limited group of arrangements that claim to be welfare benefit funds,” said Donald L. Korb, Chief Counsel for the IRS. “Today’s action sends a strong signal that these abusive schemes must stop.”
The guidance explains that, depending on the facts and circumstances, a particular arrangement could be providing dividends to the owners of a business that are includible in the owners’ income and not deductible by the business. The arrangement could also be a plan of nonqualified deferred compensation. Even some arrangements providing welfare benefits may have tax consequences different than what is claimed.
In Notice 2007-83, the IRS identified certain trust arrangements involving cash value life insurance policies, and substantially similar arrangements, as listed transactions. If a transaction is designated as a listed transaction, affected persons have disclosure obligations and may be subject to applicable penalties. Taxpayers who otherwise would be required to file a disclosure statement prior to Jan. 15, 2008, as a result of Notice 2007-83 have until Jan. 15, 2008, to make the disclosure.
In Notice 2007-84, the IRS cautioned taxpayers that the tax treatment of trusts that, in form, provide post-retirement medical and life insurance benefits to owners and other key employees may vary from the treatment claimed. The IRS may issue further guidance to address these arrangements, and taxpayers should not assume that the guidance will be applied prospectively only.
Today, the IRS also issued related Revenue Ruling 2007-65 to address situations where an arrangement is considered a welfare benefit fund but the employer’s deduction for its contributions to the fund is denied in whole or part for premiums paid by the trust on cash value life insurance policies.
Related Items:
* Revenue Ruling 2007-65 -- http://www.irs.gov/pub/irs-drop/rr-07-65.pdf
* Notice 2007-83 -- http://www.irs.gov/pub/irs-drop/n-07-83.pdf
* Notice 2007-84 -- http://www.irs.gov/pub/irs-drop/n-07-84.pdf
WASHINGTON – The Internal Revenue Service and the Treasury Department cautioned taxpayers about participating in certain trust arrangements being sold to professional corporations and other small businesses as welfare benefit funds and identified some of the arrangements as listed transactions.
There are many legitimate welfare benefit funds that provide benefits, such as health insurance and life insurance, to employees and retirees. However, the arrangements the IRS is cautioning employers about primarily benefit the owners or other key employees of businesses, sometimes in the form of distributions of cash, loans, or life insurance policies.
“The guidance targets specific abuses involving a limited group of arrangements that claim to be welfare benefit funds,” said Donald L. Korb, Chief Counsel for the IRS. “Today’s action sends a strong signal that these abusive schemes must stop.”
The guidance explains that, depending on the facts and circumstances, a particular arrangement could be providing dividends to the owners of a business that are includible in the owners’ income and not deductible by the business. The arrangement could also be a plan of nonqualified deferred compensation. Even some arrangements providing welfare benefits may have tax consequences different than what is claimed.
In Notice 2007-83, the IRS identified certain trust arrangements involving cash value life insurance policies, and substantially similar arrangements, as listed transactions. If a transaction is designated as a listed transaction, affected persons have disclosure obligations and may be subject to applicable penalties. Taxpayers who otherwise would be required to file a disclosure statement prior to Jan. 15, 2008, as a result of Notice 2007-83 have until Jan. 15, 2008, to make the disclosure.
In Notice 2007-84, the IRS cautioned taxpayers that the tax treatment of trusts that, in form, provide post-retirement medical and life insurance benefits to owners and other key employees may vary from the treatment claimed. The IRS may issue further guidance to address these arrangements, and taxpayers should not assume that the guidance will be applied prospectively only.
Today, the IRS also issued related Revenue Ruling 2007-65 to address situations where an arrangement is considered a welfare benefit fund but the employer’s deduction for its contributions to the fund is denied in whole or part for premiums paid by the trust on cash value life insurance policies.
Related Items:
* Revenue Ruling 2007-65 -- http://www.irs.gov/pub/irs-drop/rr-07-65.pdf
* Notice 2007-83 -- http://www.irs.gov/pub/irs-drop/n-07-83.pdf
* Notice 2007-84 -- http://www.irs.gov/pub/irs-drop/n-07-84.pdf
Friday, October 12, 2007
IR-2007-169: Tax Talk Today Features Office of Professional Responsibility
Tax Talk Today Features Office of Professional Responsibility
WASHINGTON — The Internal Revenue Service announced today that the October Tax Talk Today program will be “The ABCs of OPR.” The live hour-long Webcast will focus on the IRS’s Office of Professional Responsibility (OPR), which is responsible for setting, communicating and enforcing standards of competence, integrity and conduct among tax professionals who practice before the IRS.
The Webcast is scheduled for Tuesday, October 16, at 2 p.m. ET. Discussion topics on the Webcast will include an overview of OPR, Circular 230 and monetary penalties.
Panelists will be Michael Chesman, Director, IRS Office of Professional Responsibility; Deborah Butler, IRS, Associate Chief Counsel, Procedure and Administration; Mark Kaizan, IRS, Associate Chief Counsel, General Legal Services; and Pamela Olson, a partner at Skadden, Arps, Slate, Meagher & Flom, and former Assistant Secretary for Tax Policy at the U.S. Department of the Treasury.
Tax Talk Today is a Webcast aimed at educating tax and payroll professionals on the most current and complex tax issues. Tax professionals who wish to learn about OPR are encouraged to watch and submit questions.
To access the Webcast at no charge, viewers can register online at www.TaxTalkToday.tv. Tax professionals in need of continuing education credits (CECs) are eligible to receive one CEC by viewing the October 16 Webcast.
Archived shows are available on www.TaxTalkToday.tv
NOTE: The next show will be November 6 on “What’s Hot in Employment Taxes: Independent Contractor or Employee?”
WASHINGTON — The Internal Revenue Service announced today that the October Tax Talk Today program will be “The ABCs of OPR.” The live hour-long Webcast will focus on the IRS’s Office of Professional Responsibility (OPR), which is responsible for setting, communicating and enforcing standards of competence, integrity and conduct among tax professionals who practice before the IRS.
The Webcast is scheduled for Tuesday, October 16, at 2 p.m. ET. Discussion topics on the Webcast will include an overview of OPR, Circular 230 and monetary penalties.
Panelists will be Michael Chesman, Director, IRS Office of Professional Responsibility; Deborah Butler, IRS, Associate Chief Counsel, Procedure and Administration; Mark Kaizan, IRS, Associate Chief Counsel, General Legal Services; and Pamela Olson, a partner at Skadden, Arps, Slate, Meagher & Flom, and former Assistant Secretary for Tax Policy at the U.S. Department of the Treasury.
Tax Talk Today is a Webcast aimed at educating tax and payroll professionals on the most current and complex tax issues. Tax professionals who wish to learn about OPR are encouraged to watch and submit questions.
To access the Webcast at no charge, viewers can register online at www.TaxTalkToday.tv. Tax professionals in need of continuing education credits (CECs) are eligible to receive one CEC by viewing the October 16 Webcast.
Archived shows are available on www.TaxTalkToday.tv
NOTE: The next show will be November 6 on “What’s Hot in Employment Taxes: Independent Contractor or Employee?”
IR-2007-168: Honda Vehicle Certified As Qualified Hybrid Vehicle
Honda Vehicle Certified As Qualified Hybrid Vehicle
WASHINGTON — The Internal Revenue Service has acknowledged the certification by American Honda Motor Company, Inc. that its Model Year 2008 Honda Civic Hybrid CVT meets the requirements of the Alternative Motor Vehicle Credit as a qualified hybrid motor vehicle.
The credit amount for the 2008 Honda Civic Hybrid CVT is $2,100.
Original owners 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.
As of June 30, 2007, Honda sold a total of 58,872 qualifying hybrid vehicles.
Related Items:
* Hybrid Cars and Alternative Motor Vehicles -- http://www.irs.gov/newsroom/article/0,,id=157632,00.html
WASHINGTON — The Internal Revenue Service has acknowledged the certification by American Honda Motor Company, Inc. that its Model Year 2008 Honda Civic Hybrid CVT meets the requirements of the Alternative Motor Vehicle Credit as a qualified hybrid motor vehicle.
The credit amount for the 2008 Honda Civic Hybrid CVT is $2,100.
Original owners 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.
As of June 30, 2007, Honda sold a total of 58,872 qualifying hybrid vehicles.
Related Items:
* Hybrid Cars and Alternative Motor Vehicles -- http://www.irs.gov/newsroom/article/0,,id=157632,00.html
Tuesday, October 9, 2007
IR-2007-166: IRS Offers Relief for Late S Corporation Elections
IRS Offers Relief for Late S Corporation Elections
WASHINGTON — Businesses that are eligible to elect S corporation tax treatment now have a simpler process for requesting relief for late elections under a change announced by the Internal Revenue Service today.
Revenue Procedure 2007-62 allows small businesses that missed filing Form 2553, Election by a Small Business Corporation, before filing their first Form 1120S, U.S. Income Tax Return for an S Corporation, to file both forms simultaneously. The change is effective for taxable years that end on or after Dec. 31, 2007. Internal Revenue Bulletin 2007-41, published on Oct. 9, 2007, includes this new guidance.
The IRS cautioned that the requirement for filing Form 2553 to establish the election in advance of filing the initial Form 1120S remains in effect. However, the new process will save time and effort for those taxpayers who can establish reasonable cause for making a late election.
Form 2553 will be updated to reflect the new rules, so taxpayers filing paper Forms 2553 should download the most recent revision from IRS.gov. Form 2553 can also be submitted electronically as an attachment to an e-filed Form 1120S.
There is relief under earlier guidance for late elections for taxpayers who meet certain conditions. Previously, taxpayers had to submit Form 2553 along with a statement explaining the reasons for the late election. The new guidance provides a simplified method to request relief by permitting taxpayers to file their first Form 1120S along with Form 2553 and include the statement on the form.
Small business corporations that are eligible for tax treatment under Subchapter S of the Internal Revenue Code enjoy the advantages of the corporate structure while being taxed similarly to a partnership or sole proprietorship.
The new procedure will reduce taxpayer burden by allowing the agency to process a properly completed tax return and its corresponding election without delays or additional contacts with taxpayers to resolve the issue of a missing election.
The change, based on suggestions from tax professionals and small business owners, resulted from the work of an IRS process improvement team led by the Office of Taxpayer Burden Reduction.
* Related Item: Revenue Procedure 2007-62 -- http://www.irs.gov/pub/irs-drop/rp-07-62.pdf
WASHINGTON — Businesses that are eligible to elect S corporation tax treatment now have a simpler process for requesting relief for late elections under a change announced by the Internal Revenue Service today.
Revenue Procedure 2007-62 allows small businesses that missed filing Form 2553, Election by a Small Business Corporation, before filing their first Form 1120S, U.S. Income Tax Return for an S Corporation, to file both forms simultaneously. The change is effective for taxable years that end on or after Dec. 31, 2007. Internal Revenue Bulletin 2007-41, published on Oct. 9, 2007, includes this new guidance.
The IRS cautioned that the requirement for filing Form 2553 to establish the election in advance of filing the initial Form 1120S remains in effect. However, the new process will save time and effort for those taxpayers who can establish reasonable cause for making a late election.
Form 2553 will be updated to reflect the new rules, so taxpayers filing paper Forms 2553 should download the most recent revision from IRS.gov. Form 2553 can also be submitted electronically as an attachment to an e-filed Form 1120S.
There is relief under earlier guidance for late elections for taxpayers who meet certain conditions. Previously, taxpayers had to submit Form 2553 along with a statement explaining the reasons for the late election. The new guidance provides a simplified method to request relief by permitting taxpayers to file their first Form 1120S along with Form 2553 and include the statement on the form.
Small business corporations that are eligible for tax treatment under Subchapter S of the Internal Revenue Code enjoy the advantages of the corporate structure while being taxed similarly to a partnership or sole proprietorship.
The new procedure will reduce taxpayer burden by allowing the agency to process a properly completed tax return and its corresponding election without delays or additional contacts with taxpayers to resolve the issue of a missing election.
The change, based on suggestions from tax professionals and small business owners, resulted from the work of an IRS process improvement team led by the Office of Taxpayer Burden Reduction.
* Related Item: Revenue Procedure 2007-62 -- http://www.irs.gov/pub/irs-drop/rp-07-62.pdf
Friday, October 5, 2007
IR-2007-165: Tax-filing Extension Expires Oct. 15; Don’t Overlook Tax Breaks, Choose e-file or Free File, IRS Urges
Tax-filing Extension Expires Oct. 15; Don’t Overlook Tax Breaks, Choose e-file or Free File, IRS Urges
WASHINGTON — The Internal Revenue Service today urged taxpayers whose tax-filing extension runs out on Oct. 15 to double check their returns for often-overlooked tax breaks and then file their returns electronically using IRS e-file or the Free File system.
Many of the more than 10.2 million taxpayers who requested an automatic six-month extension this year have yet to file. IRS e-file is fast, accurate and secure, making it an ideal option for those rushing to meet the Oct. 15 deadline. The IRS verifies receipt of an e-filed return, and people who file electronically make fewer mistakes too. A record 58 percent of the 135.3 million returns received so far this year have been filed electronically.
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. Seven in 10 taxpayers qualify to use the software and electronic-filing services made available through the Free File Alliance, a public-private partnership between the IRS and a consortium of tax-preparation software manufacturers. Telephone customers can also use Free File to request this year’s one-time telephone excise tax refund.
Taxpayers who have purchased their own software or use a paid tax preparer are also urged to file their returns electronically. Almost 78.8 million individual taxpayers have already used IRS e-file, a 9 percent increase over last year at this time.
Taxpayers who file electronically can e-file and e-pay in a single step by authorizing an electronic funds withdrawal or making a credit card payment. The IRS does not charge a fee for processing an electronic funds withdrawal. However, credit-card payments are subject to convenience fees charged by the authorized service providers.
Paper filers, as well as electronic filers, who cannot pay what they owe, may be able to set up a payment agreement with the IRS. Check out the Online Payment Agreement section on IRS.gov for more information.
Anyone expecting a refund can get it sooner by choosing direct deposit. Nearly three in five refunds have been direct-deposited this year, a new record. This year for the first time, taxpayers can choose to have their refunds deposited into as many as three accounts.
Before filing, the IRS urges taxpayers to take a moment to check out these often-overlooked tax breaks:
* Telephone Excise Tax Refund: This is a one-time refund of long-distance excise taxes available on tax year 2006 income-tax returns. The refund applies to charges billed from March 2003 through July 2006. The government offers a standard refund amount of $30 to $60, or taxpayers can base their refund request on the actual amount of tax paid. Even if a taxpayer does not normally have to file a return, Form Form 1040EZ-T (also available through Free File) can be used to request this refund.
* Earned Income Tax Credit: Earned income of less than $38,348 in 2006 may qualify a taxpayer to claim the earned income tax credit. This credit, worth up to $4,536, is available to low and moderate-income workers and working families. A special interactive “EITC Assistant” is available on IRS.gov to help taxpayers determine whether they are eligible.
* Savers credit: Low-and moderate income workers who contributed to a retirement plan, such as an IRA or 401(k), may be able to take the savers credit. This credit is available in addition to any other tax savings that apply. Use Form 8880 to claim the credit.
* Extender tax breaks: Several popular tax breaks were renewed too late to be included on 2006 federal income tax forms. Accordingly, many taxpayers need to follow special instructions to claim the deduction for state and local sales taxes, the tuition and fees deduction, as well as the educator expense deduction. In addition, many who qualify for the tuition and fees deduction may reap greater tax savings by, instead, claiming the Hope credit or the lifetime learning credit for a particular student.
Some taxpayers can wait until after Oct.15, to file. This includes those serving in Iraq, Afghanistan or other combat zone localities and people affected by several recent natural disasters.
WASHINGTON — The Internal Revenue Service today urged taxpayers whose tax-filing extension runs out on Oct. 15 to double check their returns for often-overlooked tax breaks and then file their returns electronically using IRS e-file or the Free File system.
Many of the more than 10.2 million taxpayers who requested an automatic six-month extension this year have yet to file. IRS e-file is fast, accurate and secure, making it an ideal option for those rushing to meet the Oct. 15 deadline. The IRS verifies receipt of an e-filed return, and people who file electronically make fewer mistakes too. A record 58 percent of the 135.3 million returns received so far this year have been filed electronically.
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. Seven in 10 taxpayers qualify to use the software and electronic-filing services made available through the Free File Alliance, a public-private partnership between the IRS and a consortium of tax-preparation software manufacturers. Telephone customers can also use Free File to request this year’s one-time telephone excise tax refund.
Taxpayers who have purchased their own software or use a paid tax preparer are also urged to file their returns electronically. Almost 78.8 million individual taxpayers have already used IRS e-file, a 9 percent increase over last year at this time.
Taxpayers who file electronically can e-file and e-pay in a single step by authorizing an electronic funds withdrawal or making a credit card payment. The IRS does not charge a fee for processing an electronic funds withdrawal. However, credit-card payments are subject to convenience fees charged by the authorized service providers.
Paper filers, as well as electronic filers, who cannot pay what they owe, may be able to set up a payment agreement with the IRS. Check out the Online Payment Agreement section on IRS.gov for more information.
Anyone expecting a refund can get it sooner by choosing direct deposit. Nearly three in five refunds have been direct-deposited this year, a new record. This year for the first time, taxpayers can choose to have their refunds deposited into as many as three accounts.
Before filing, the IRS urges taxpayers to take a moment to check out these often-overlooked tax breaks:
* Telephone Excise Tax Refund: This is a one-time refund of long-distance excise taxes available on tax year 2006 income-tax returns. The refund applies to charges billed from March 2003 through July 2006. The government offers a standard refund amount of $30 to $60, or taxpayers can base their refund request on the actual amount of tax paid. Even if a taxpayer does not normally have to file a return, Form Form 1040EZ-T (also available through Free File) can be used to request this refund.
* Earned Income Tax Credit: Earned income of less than $38,348 in 2006 may qualify a taxpayer to claim the earned income tax credit. This credit, worth up to $4,536, is available to low and moderate-income workers and working families. A special interactive “EITC Assistant” is available on IRS.gov to help taxpayers determine whether they are eligible.
* Savers credit: Low-and moderate income workers who contributed to a retirement plan, such as an IRA or 401(k), may be able to take the savers credit. This credit is available in addition to any other tax savings that apply. Use Form 8880 to claim the credit.
* Extender tax breaks: Several popular tax breaks were renewed too late to be included on 2006 federal income tax forms. Accordingly, many taxpayers need to follow special instructions to claim the deduction for state and local sales taxes, the tuition and fees deduction, as well as the educator expense deduction. In addition, many who qualify for the tuition and fees deduction may reap greater tax savings by, instead, claiming the Hope credit or the lifetime learning credit for a particular student.
Some taxpayers can wait until after Oct.15, to file. This includes those serving in Iraq, Afghanistan or other combat zone localities and people affected by several recent natural disasters.
Thursday, October 4, 2007
IR-2007-164: Jump In E-filed Corporate Tax Returns Produces Record
Jump In E-filed Corporate Tax Returns Produces Record
WASHINGTON – The Internal Revenue Service announced today that more than 800,000 of the nation’s small businesses and large corporations have electronically filed their tax returns so far this year, a 60 percent increase from last year.
Even though they have no electronic filing requirement, more than 780,000 small businesses have opted to e-file their tax returns this year, up more than 50 percent from last year.
Many large corporations are voluntarily e-filing as well. The more than 42,000 large corporations that e-filed far exceeded the approximately 22,000 that were required to file by the Sept. 17 deadline.
“This is a record-breaking year for electronically filed returns by corporations and businesses,” said Acting IRS Commissioner Linda Stiff. “We will continue to work with the business community, tax practitioners and the software industry to improve this important program.”
Starting in 2006, certain corporations with assets of more than $50 million were required to file their Form 1120 and 1120-S electronically. Approximately 15,500 of these corporations filed their returns electronically last year. Starting in 2007, certain corporations with assets of more than $10 million were required to file electronically.
“Corporations of all sizes are seeing the long range advantages of integrating their tax filing in an electronic environment along with their tax and financial accounting,” said IRS Treaty Administration Director Elvin Hedgpeth, who led the implementation of e-filing for large corporations. “While large and mid-size corporations are required to e-file, many small corporations are seeing the advantages of e-filing voluntarily.”
The collaboration with corporate practitioner, software development and technology stakeholder groups has facilitated the growth in corporate e-filing,” Hedgpeth went on to say. “Software and e-filing support services have become readily available to all corporations that want to transition their tax filing from paper to electronic,” he said.
WASHINGTON – The Internal Revenue Service announced today that more than 800,000 of the nation’s small businesses and large corporations have electronically filed their tax returns so far this year, a 60 percent increase from last year.
Even though they have no electronic filing requirement, more than 780,000 small businesses have opted to e-file their tax returns this year, up more than 50 percent from last year.
Many large corporations are voluntarily e-filing as well. The more than 42,000 large corporations that e-filed far exceeded the approximately 22,000 that were required to file by the Sept. 17 deadline.
“This is a record-breaking year for electronically filed returns by corporations and businesses,” said Acting IRS Commissioner Linda Stiff. “We will continue to work with the business community, tax practitioners and the software industry to improve this important program.”
Starting in 2006, certain corporations with assets of more than $50 million were required to file their Form 1120 and 1120-S electronically. Approximately 15,500 of these corporations filed their returns electronically last year. Starting in 2007, certain corporations with assets of more than $10 million were required to file electronically.
“Corporations of all sizes are seeing the long range advantages of integrating their tax filing in an electronic environment along with their tax and financial accounting,” said IRS Treaty Administration Director Elvin Hedgpeth, who led the implementation of e-filing for large corporations. “While large and mid-size corporations are required to e-file, many small corporations are seeing the advantages of e-filing voluntarily.”
The collaboration with corporate practitioner, software development and technology stakeholder groups has facilitated the growth in corporate e-filing,” Hedgpeth went on to say. “Software and e-filing support services have become readily available to all corporations that want to transition their tax filing from paper to electronic,” he said.
Monday, October 1, 2007
IRS Issues Redesigned Allowable Living Expense Standards
IRS Issues Redesigned Allowable Living Expense Standards
IR-2007-163, Oct. 1, 2007
WASHINGTON — The Internal Revenue Service today issued the 2007 allowable living expense standards.
Allowable living expense standards, also known as collection financial standards, are used to determine the ability of a taxpayer to pay a delinquent tax liability. For purposes of federal tax administration the standards are effective Oct. 1, 2007.
This year the standards have been redesigned to incorporate:
• a new category for out of pocket health care expenses
• the elimination of income ranges for national standards for food, clothing and other items
• a nationwide set of tables for national standard expenses, eliminating separate tables for Alaska and Hawaii
• an expanded number of household categories for housing and utilities
• an allowance for cell phone costs in housing and utilities
• equal allowances for first and second vehicles under transportation expenses
• fewer Metropolitan Statistical Areas for vehicle operating costs
• a separate nationwide public transportation allowance
The Allowable Living Expense standards rely on data from the Bureau of Labor Statistics, the Medical Expense Panel Survey and other governmental surveys of actual consumer expenditures and provide a basis for allowances. The IRS adjusts survey data for inflation according to the Consumer Price Index.
Expense information for use in bankruptcy calculations can be found on the Department of Justice U.S Trustee Program Web site. For bankruptcy purposes, the effective date for the new standards will be Jan. 1, 2008.
Links:
Collection Financial Standards: http://www.irs.gov/individuals/article/0,,id=96543,00.html
Details of Redesign: http://www.irs.gov/businesses/small/article/0,,id=173524,00.html
Department of Justice U.S. Trustee Program Web site: http://www.usdoj.gov/ust/
IR-2007-163, Oct. 1, 2007
WASHINGTON — The Internal Revenue Service today issued the 2007 allowable living expense standards.
Allowable living expense standards, also known as collection financial standards, are used to determine the ability of a taxpayer to pay a delinquent tax liability. For purposes of federal tax administration the standards are effective Oct. 1, 2007.
This year the standards have been redesigned to incorporate:
• a new category for out of pocket health care expenses
• the elimination of income ranges for national standards for food, clothing and other items
• a nationwide set of tables for national standard expenses, eliminating separate tables for Alaska and Hawaii
• an expanded number of household categories for housing and utilities
• an allowance for cell phone costs in housing and utilities
• equal allowances for first and second vehicles under transportation expenses
• fewer Metropolitan Statistical Areas for vehicle operating costs
• a separate nationwide public transportation allowance
The Allowable Living Expense standards rely on data from the Bureau of Labor Statistics, the Medical Expense Panel Survey and other governmental surveys of actual consumer expenditures and provide a basis for allowances. The IRS adjusts survey data for inflation according to the Consumer Price Index.
Expense information for use in bankruptcy calculations can be found on the Department of Justice U.S Trustee Program Web site. For bankruptcy purposes, the effective date for the new standards will be Jan. 1, 2008.
Links:
Collection Financial Standards: http://www.irs.gov/individuals/article/0,,id=96543,00.html
Details of Redesign: http://www.irs.gov/businesses/small/article/0,,id=173524,00.html
Department of Justice U.S. Trustee Program Web site: http://www.usdoj.gov/ust/
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