IRS NEWS FOR TAX PROFESSIONALS
OCTOBER 2009
● The 2010 version of the Tax Calendar for Small Businesses and Self-employed is available to preorder.
● IR 09-80 The IRS seeks comments from unenrolled preparers at the upcoming public forum to Improve
Tax Preparer Standards. Comments may be e-mailed to Notice.Comments@irscounsel.treas.gov.
Please include “Notice 2009-60” in the subject line of any e-mail messages.
A transcript of the consumer and tax preparer panel discussions from the July 30 public forum is now
available. For up-to-date news on the Tax Return Preparer Review, visit IRS.gov.
● IR 09-72 and IR 09-79 Eligible individuals have until Oct. 15 to take advantage of the expanded
business loss carry back option included in the American Recovery and Reinvestment Act. Calendar-year
corporations have until Sept. 15.
● Due to high volumes, the processing time for Form 1040X is extended to 12-16 weeks instead of the
normal 8-12 weeks. It is not necessary to contact the IRS regarding the status of a return; returns are
being processed as quickly as possible.
EDUCATION:
● For 2009, students attending schools located in declared Midwest disaster areas are eligible for
enhanced Hope & lifetime Learning credits, per Publication 4492-B.
Filers will want to compute education credits both ways on Form 8863 to find the method that is most
beneficial for them.
● Education Benefits: IR-09-78 has a special section highlights college benefits.
FS-09-12 explains how 529 Plans have been expanded by the American Recovery and Reinvestment
Act of 2009. See also Publication 970, Tax Benefits for Education.
● Find the right retirement plans for a business with the new IRS Retirement Plans Navigator:
http://www.retirementplans.irs.gov/. On this website you can compare, choose, and correct plans suitable
for a business.
● Coming next filing season, filers will be able to purchase Series I Savings Bonds with their tax refund,
using Form 8888.
● IR 09-76 IRS is on Youtube and Itunes. http://www.youtube.com/irsvideos
FOR YOUR CLIENTS
● A chart offers information for businesses about records needed to prove expenses for travel,
entertainment, gift, and transportation expenses Generally, a business must have documentary evidence,
such as receipts, canceled checks, or bills, to support expenses.
● Summertime Tax Tip 09-16, Five Facts about the Home Office Deduction
● Summertime Tax Tip 09-17, Top Ten Tips for Taxpayers Deducting Casualty and Theft Losses
● Summertime Tax Tip 09-18, Eight Important Questions for Hobbyists
● Summertime Tax Tip 09-20 has the top ten things every business owner should know about hiring
people as independent contractors versus hiring them as employees.
RECENT TECHNICAL GUIDANCE
● The user fees for tax exempt organization applications will change for applications postmarked after
January 3, 2010. They will change again during 2010 after the introduction of a software program
designed to help 501(c)(3) applicants complete the application.
● Headliner 274 advises that COBRA subsidy recipients who later become eligible for insurance
coverage should notify their former employer to avoid a penalty.
● IR-2009-75 An agreement that will result in the IRS receiving an unprecedented amount of information
on U.S. holders of accounts at the Swiss bank UBS.
● IR 09-77, The summer 2009 issue of the Statistics of Income Bulletin features sole proprietorship data
for tax year 2007.
● Notice 09-64 provides a proposed revenue ruling concerning the depreciation of tangible assets that are
used in converting corn to fuel grade ethanol.
● Notice 09-73 announces the inflation adjustment factor and phase-out amount for the enhanced oil
recovery credit for taxable years beginning in calendar year 2009.
● Notice 09-74 announces the applicable percentage under section 613A of the Code to be used in
determining percentage depletion for marginal properties for the 2009 calendar year.
● Revenue Ruling 09-25 holds that disallowed interest under § 264(a)(4) reduces earnings and profits for
the taxable year in which the interest would have been allowable as a deduction, but for its disallowance
under § 264(a)(4). It does not further reduce E&P when the death benefit is received under a life
insurance contract.
● Revenue Ruling 09-26 illustrates the application of insurance principles to a reinsurance arrangement
involving the reinsurance of a block of insurance contracts through two situations: one where the only
business of the assuming company is the block of insurance contracts and the other where multiple
blocks of contracts are assumed, with one of the blocks containing only 1 contract.
● Revenue Procedure 09-37 provides the exclusive procedures for taxpayers to make an election to defer
recognizing discharge of indebtedness income (“COD income”),
● Revenue Procedure 09-38 provides the conditions under which the IRS will not assert that certain
entities (or any portion thereof) created in connection with the Public-Private Investment Program
constitute taxable mortgage pools for purposes of section 7701(i) of the Code.
● Revenue Procedure 09-39 discusses changes in accounting periods and in methods of accounting, as
announced in Announcement 09-67.
● Revenue Procedure 09-40 provides the amounts of unused housing credit carryovers allocated to
qualified states under § 42(h)(3)(D) of the Internal Revenue Code for calendar year 2009.
● Revenue Procedure 09-41 provides guidance with regard to eligible entities seeking relief to file late
classification elections. Generally, the revenue procedure provides late relief if the request is filed within
3 years and 75 days of the requested effective date of the eligible entity’s classification. The revenue
procedure also provides guidance for those eligible entities that do not qualify for relief under this revenue
procedure.
● Revenue Procedure 09-42 describes the conditions under which a regulated investment company (RIC)
that invests in a public-private investment partnership (PPIP) is treated for purposes of the asset
diversification test of section 851(b)(3) as if it directly invested in the assets held by the PPIP.
● Revenue Procedure 09-43 provides that the Service will automatically approve a revocation request if
certain requirements are met. IRC 204 of WRERA permits a plan to revoke the election to treat the plan
as being funded at the prior year's certified level with the approval of the Service.
● Revenue Procedure 2009-44 expands and clarifies the types of cases that may be mediated in
Appeals. Generally, this program is available for cases in which a limited number of legal and factual
issues remain unresolved following settlement discussions in Appeals.
RETIREMENT PLAN ITEMS
● The September 2009 issues of Retirement News for Employers and Employee Plans News are
available. Additionally, the IRS has issued the following technical guidance
 Revenue Ruling 09-30 has guidance on how automatic enrollment in a § 401(k) plan can work
when there is an escalator feature included..
 Revenue Ruling 09-31 has guidance on the tax consequences of an amendment to a tax-qualified
retirement plan to permit annual contributions of an employee’s unused paid time off under the
employer’s paid time off plan.
 Revenue Ruling 09-32 provides guidance on the tax consequences of an amendment to a taxqualified retirement plan to permit contributions for an employee’s accumulated and unused paid
time off under the employer’s paid time off plan at a participant’s termination of employment.
 Notice 09-65 provides two sample amendments that sponsors of § 401(k) plans can use to add
automatic enrollment features to their plans.
 Notice 09-66 provides guidance to facilitate automatic enrollment in SIMPLE IRA plans.
 Notice 09-67 provides a sample amendment that can be used by a sponsor of a SIMPLE IRA Plan
described to add an automatic contribution arrangement to the plan.
 Notice 09-68 contains two safe harbor explanations that may be provided to recipients of eligible
rollover distributions from an employer plan in order to satisfy § 402(f) of the Code.
● TD 9457 covers Employer Comparable Contributions to Health Savings Accounts and Requirement of
Return for Filing of the Excise Tax.
● TD 9458 has Temporary Regulations regarding Modification to Consolidated Return Regulation
Permitting an Election to Treat a Liquidation of a Target, Followed by a Reorganization to a New Target,
as a Cross-Chain Reorganization.
● TD 9459 has final regulations on the Reasonable Good Faith Interpretation of Required Minimum
Distribution Rules by Governmental Plans.
● REG-136563-07 contains proposed regulations that provide rules relating to the disclosure of listed
transactions and transactions of interest with respect to the generation-skipping transfer tax.