IRS NEWS FOR TAX PROFESSIONALS
November, 2011
EVENTS
 An Oct. 31 webinar will explain the Affordable Care Act provision that requires some employers
to report health care coverage on Form W-2. IR 11-31 Frequently Asked Questions IR 11-92
includes three ways stakeholders can submit comments on the proposed affordability safe harbor
for employers that will apply to certain employers starting in 2014. The deadline for comments is
Dec. 13, 2011. (Section 4980H) Notice 11-73
IR 11-90 IR 11-90SP
 The annual Western Conference on Tax-Exempt Organizations will be held on November 17 &
18, 2011, in Los Angeles, CA.
 Register Now for Workshops for Small and Medium-Sized 501(c)(3) Organizations
 November 1, 2011 in St. Louis, MO
 November 3, 2011 in Springfield, MO
 Information on workshops planned for February 2012 in Bloomington and Indianapolis, IN
will be coming soon.
 Plan ahead- Here are the locations for the 2012 Tax Forums.
----------------------------------------------------------------------------------------------- IR 11-98 The IRS issued proposed regulations that would require paid tax return preparers,
beginning in 2012, to file a due diligence checklist, Form 8867, with any federal return claiming
the Earned Income Tax Credit (EITC). It is the same form that is currently required to be
completed and retained in a preparer’s records.
 EITC compliance now has new tiers of outreach, education and compliance, covering a broader
base of new and experienced preparers, for earlier error prevention.
 The Heavy Highway Vehicle Use Tax, Form 2290 has been extended. By November 30, 2011,
Form 2290 taxpayers will be required to file a return for the full tax year on vehicles first used in
July, August, or September 2011. A new video outlines recent changes.
 IR 11-91 The IRS announced that large estates of people who died in 2010 will have until early
next year to file various returns and pay any estate taxes due. Notice 11-76
 IR 11-97 Estates of married individuals dying after 2010 must file an estate tax return to pass
along their unused estate & gift tax exclusion amount to their surviving spouse. Notice 11-82
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YOUR PRACTICE:
 IR 11-96 The IRS provided additional clarification for tax return preparers about when to renew
their preparer tax identification numbers (PTINs), how suitability testing will be conducted, and
when the continuing education requirement will begin.
The competency exam for Registered Tax Return Preparers will be available starting in October.
Notice 11-80 provides guidance to individuals who have or will obtain a preparer tax identification
number (PTIN). IR 11-89 The IRS released the specifications for the competency test individuals
must pass to become a Registered Tax Return Preparer. IR 11-89SP
 There are limitations on the use of the term Registered Tax Return Preparer. All PTIN holders
are now subject to the advertising and solicitation provisions under Circular 230. No one, as of
yet, is a Registered Tax Return Preparer. You also should refrain from using variations, i.e.
Registered Tax Preparer or Registered Return Preparer. Review Notice 11-45 for further
guidance.
 Information about Notice 11-6 defines Supervised Preparers and Non-1040 Preparers. Notice
11-6.
All PTINs are required to be renewed annually; paid return preparers are encouraged to renew
online at www.irs.gov/ptin. PTINs now expire on a calendar year basis; all paid return preparers
need to renew by December 31 2011, or before preparing any 2012 returns.
IRS contracted with vendors to administer the Competency Test (Prometric) and the collection of
fingerprints for a background check (Prometric & Daon), and to administer application and
renewal services for Continuing Education Providers (Kinsail) that serve Registered Tax Return
Preparers (RTRP),
 New questions on the PTIN renewal/registration for 2012 will include:
● Do you prepare Form 1040 series tax returns (or accompanying schedules) for
compensation? (If you ONLY prepare Forms 1040-PR or 1040-SS for Puerto Rico
residents, answer “No”.)
● Answer the questions below to determine if you are a supervised preparer.
NOTE: Due to system limitations, attorneys, CPAs, and EAs must also answer the
questions below. We hope to resolve this issue in future system enhancements.
o Are you employed by an attorney or CPA firm or other recognized firm
at least 80 percent owned by attorneys, CPAs, or Enrolled Agents?
o Are you supervised by an attorney, CPA, Enrolled Agent, Enrolled
Retirement Plan Agent, or Enrolled Actuary?
o Does an attorney, CPA, Enrolled Agent, Enrolled Retirement Plan
Agent, or Enrolled Actuary sign all of the tax returns that you prepare?
● To identify yourself as a supervised preparer, select supervised preparer in the “Your Role”
box.
● Enter the PTIN of your supervisor in the space below. If you do not know your supervisor's
PTIN, you cannot proceed. Select “Main Menu” to save your application and return to it later.
 IR 11-100 IRS Urges Tax Professionals to Prepare Now for New e-file Rules. Review
information on Modernized e-FIle (MeF) benefits, What practitioners need to know about
MeF, and State Participation in Modernized E-File.
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WEB TIPS OF THE MONTH
 A handy chart outlines exceptions to the 10% additional tax on certain distributions from IRAs or
other retirement plans.
 Special Edition Tax Tip 11-06 What Employers Need to Know About Claiming the Small
Business Health Care Tax Credit
Watch this and other videos on the IRS’s YouTube Channel:
Energy tax credit for qualifying purchases
Military combat pay YouTube video.
Time limit of innocent spouse request
Short videos offer an overview of various tax-related subjects
Home Office Deduction
Reporting Tips
Backup Withholding
Outsourcing Payroll; Tax Tip 11-05
Audit Techniques Guides
Owe Taxes? Understanding IRS Collection Efforts
Audit technique guides offer insight into specific industry issues:
Architects and Landscape Architects
Fishing
Excise Tax on Indoor Tanning Services
 View the Transcripts of a phone forum on the requirement to do 3% withholding on government
contractor payments established by section 3402(t).
Latest draft forms online:
Form 940 for 2011 - Employer's Annual Federal Unemployment Tax Return
Form 941 (Schedule R) - Allocation Schedule for Aggregate Form 941 Filers (rev. Jan. 2012)
2012 Instructions for Form W-2 and W-3
The new product page will have any updates on additional changes affecting Form W-2.
TECHNICAL GUIDANCE
 Find the new rules for foreign agricultural workers (H-SA visas).
PER DIEM
 Notice 11-81 provides the 2011-2012 special per diem rates for taxpayers to use in
substantiating the amount of ordinary and necessary business expenses incurred while traveling
away from home.  Revenue Procedure 11-47 provides the rules for employees to substantiate
the expenses..
 Read the latest edition of the Employee Plans News.
 The Taxpayer Advocate Service (TAS) is temporarily changing its criteria for accepting cases to
focus on taxpayers who need assistance most. TAS will no longer accept cases where the
problem involves an IRS delay in processing certain tax documents.
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 The Internal Revenue Service provides information in a question and answer format to
individuals who are subject to their state’s community property laws. These questions and
answers apply generally to same-sex spouses in California and to registered domestic partners in
California, Nevada, and Washington.
 IR 11-93 The Internal Revenue Service issued guidance designed to clarify the tax
treatment of employer-provided cell phones. Notice 11-72; IRS Memorandum SBSE-040911-083
 The Treasury Department's Office of Tax Policy and IRS use the Guidance Priority List each
year to identify and prioritize the tax issues that should be addressed through published
administrative guidance.
 IR 11-94 The IRS announces new details on the recently completed offshore program.
 IR 11-95 The IRS launched a new program that will enable many employers to resolve past
worker classification issues and achieve certainty under the tax law at a low cost by voluntarily
reclassifying their workers. Announcement 11-64
 IR 11-99 New Members of the Electronic Tax Administration Advisory Council include Timothy
Blevins of Mayetta, Kan. and Yasmine (Mimi) Nolan of Kansas City, Mo.,
 Notice 11-78 provides relief to insurance companies administering certain self-insurance
arrangements on behalf of an employer or other entity from any information reporting obligations
under section 6050W of the Internal Revenue Code. Insurance companies may rely on the notice
until the regulations under section 6050W are amended.
 Notice 11-79 explains the circumstances under which the 4-year replacement period is
extended for livestock sold on account of drought. The Appendix to this notice contains a list of
counties that experienced exceptional, extreme, or severe drought conditions during the 12month period ending August 31, 2011. Taxpayers may use this list to determine if an extension is
available. Certain counties in Illinois, Iowa, Oklahoma and Missouri , Minnesota, and Nebraska,
are eligible.
 Revenue Ruling 11-23 which sets forth the prevailing state assumed interest rates that are used
by insurance companies to determine their reserves under section 807 for contracts that are
issued in 2010 and 2011. The ruling supplements, in part, Rev. Rul. 92-19.
 Revenue Ruling 11-24 determines in certain situations whether a taxpayer providing
telecommunications services is deriving gross receipts from services, leasing or renting property,
or some combination thereof for purposes of the domestic production activities deduction under
section 199 of the Internal Revenue Code.
 Revenue Procedure 11-40 updates the specifications for filing 2011 Forms 1097, 1098, 1099,
3921, 3922, 5498, 8935, and W-2G through the IRS Filing Information Returns Electronically
system (FIRE).
 Revenue Procedure 11-44 modifies the procedures for church plans that are filing a request for
a determination letter. The revenue procedure provides that plan participants and other
interested parties be notified of the letter request.
 Revenue Procedure 11-46 provides a book safe harbor method of accounting for taxpayers
using the nonaccrual-experience (NAE) method of accounting under § 448(d)(5) of the Code and
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§ 1.448-2 of Regulations. In general, under the NAE book safe harbor method, taxpayers within
the scope of the revenue procedure may compute its uncollectible amount by multiplying the
portion of the year-end allowance for doubtful accounts on the taxpayer’s applicable financial
statement that is attributable to current year NAE-eligible accounts receivable by 95 percent. Rev.
Proc. 2011-46 also provides procedures for obtaining automatic consent to change to the NAE
book safe harbor method and to make certain changes within the NAE book safe harbor method.
 Revenue Procedure 11-49 is an update of Revenue Procedure 2005-16 which sets forth the
requirements for requesting opinion and advisory letters regarding the acceptability under §§ 401
and 403(a) of the Internal Revenue Code of the form of pre-approved plans (that is, master and
prototype (M&P) and volume submitter (VS) plans).
 TIGTA Press Release 11-62 According to a report issued by the Treasury Inspector General for
Tax Administration (TIGTA), additional steps are needed to ensure that the Internal Revenue
Service (IRS) expands audits to include returns from prior or subsequent years when taxpayers
being audited may owe substantial taxes,
 Speaking on a Sept. 13th Tax Talk Today webcast, Samuel Perdue, IRS business
implementation director, information reporting and document matching project, discussed the new
reporting requirements for businesses regarding electronic payments. Section 6050W requires
the gross amount of credit card and payment card transactions to be reported by transaction
processors on Form 1099-K. Third-party network payments, through services like PayPal, must
also be reported if the taxpayer makes more than 200 transactions and more than $ 20,000 in
sales.
 Publication 4744 The IRS is Speaking Your Language is written in Spanish,
Vietnamese, Korean, Chinese and Russian.
 Publication 4269 is a flashcard for someone to hold to indicate what language they speak.
DISASTER
 Protect Your Small Business with Flood Insurance from FloodSmart.gov
According to the National Flood Insurance Program, almost 40 percent of small businesses never
reopen their doors following a disaster. Note that business continuity insurance may not provide
coverage if the business doesn't have insurance on the underlying event.
 IR 11-87 IRS Provides Tax Relief to Victims of Hurricane Irene. The relief postpones
certain filing and payment deadlines to Oct. 31, 2011. IR 11-88 This relief primarily applies
to corporations, partnerships and trusts.
 Additional counties added for Disaster areas in New York, North Carolina, Pennsylvania (Irene),
Pennsylvania (Lee), Puerto Rico , Texas and Vermont. Announcement 11-62 (Notice 11-74)
provides for the suspension of certain requirements under section 42 of the Internal Revenue
Code for low-income housing credit projects to provide emergency housing relief needed as a
result of the devastation caused by Tropical Storm Irene in Vermont beginning on August 27,
2011.
 Notice 11-83 suspends certain requirements under section 42 of the Internal Revenue
Code for certain low-income housing credit properties in Pennsylvania to provide emergency
housing relief needed as a result of the devastation in Pennsylvania caused by either
Hurricane Irene during the period of August 26, 2011 to August 30, 2011, or Tropical Storm
Lee beginning on September 3, 2011.
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 A problem raised at the South Dakota Practitioner's Liaison Meeting in August 2011 was
about EFTPS deposits made at the beginning of a quarter or period. The tax preparer
commented that the default period changed to the current period, but often the deposit was
being made for the previous period. Errors are made because of this, requiring payment
transfers to correct.
The problem and suggested solution were submitted to the Issue Management Resolution
System. (IMRS) EFTPS believes it is a good change and will make the change when they
can, as funding permits. (Enhancements to EFTPS are currently on hold.)
 South Dakota WORKS: State Launches New Small Business Lending Program
 Find U.S. Government publications on-line at http://publications.usa.gov
 A private company has a You-tube demonstration of a barcode scanner being used to
populate W2 or other bar-code data, such as Schedule K1s, into Form 1040 tax return preparation
software. http://www.youtube.com/user/DrakeSoftware1?feature=mhum
The IRS does not endorse any particular software or hardware; this link is given here for general
demonstration purposes only.
 New Videos on How You Can Get a Business Counselor
SCORE's volunteers can counsel and mentor small business owners and entrepreneurs. They
have a new website, and an inspiring new series of videos.
 USDA Atlas of Rural and Small-Town America: A great source of data on small towns:
http://www.ers.usda.gov/data/ruralatlas/. It includes economic and farm management data.
 The Social Security Administration no longer assigns Social Security Numbers based on the
geographic location of the applicant. The new system will increase the pool of available numbers.
 Win at Iowa casinos? Find out your Iowa tax return filing requirements
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