[OSSSA218] Fwd: IRS Updates - December 2008

Tue Dec 16 10:06:04 PST 2008

Good morning again,

More valuable information from the IRS.

Karen Park
State Social Security Coordinator
Oregon PERS
503 603-7633
karen.park at state.or.us

SL2

Please note: I will be out of the office starting the afternoon of Wednesday, Dec 16, 2008 returning Monday, Jan 5, 2009. 

Happy Holidays!

>>> On 12/15/2008 at 4:25 PM, in message <9687ABA174F26649B8F916101422A5BF03BE9E36 at FRS0010CP3MB02.ds.irsnet.gov>, "Marshall KayDel D" <KayDel.Marshall at irs.gov> wrote:

Practitioner:

Attachments:

1.  Q&A from the October National Phone Forum on Small Business Recordkeeping.  There is a lot of information in here that could be useful to your clients.  

 2.  Fact Sheet 2008-26:  " IRS Reminder: Make Use of Recent Tax Law Changes for 2008 and December 31, 2008 is the last day for most of these actions".  It contains Podcasts in English and Spanish that your are free to post on your Web sites.

 IRS Updates & News Releases:

Tax Talk Today will be discontinued 
Tax Talk Today will be discontinued after the May 2009 program. Archived programs will be available through September 30.

New Exempt Organization Video  
For those of you interested in the new Form 990, IRS Exempt Organization has developed a video mini-course on Preparing to File the New Form 990. You can stop the presentation at any time, come back, and resume where you left off.  

Retirement Plan Information  
Find tips on how to find, fix, and avoid common mistakes in:  SEP, SIMPLE IRA Plan, and 401(k) Fix-It Guides Available

Retirement News for Employers - Fall 2008 Edition
This edition includes articles such as Help Your Employees Weather the Storm: Hardship Withdrawals and Loans from Retirement Plans; Do the Right Thing Even When Times are Tough!; Is My Plan the Right Plan?; Required Minimum Distribution Reminder; RNE Survey; Failure to Provide a Safe Harbor 401(k) Plan Notice; 2009 Retirement Plan Limits Announced; and DOL News.

Campus Compliance Services – A Dialogue with Practitioners
This video addresses questions from tax professionals on topics such as Power of Attorney, Automated Underreporter, Correspondence Audit, Centralized Offer-in-Compromise and Practitioner Priority Service.

IRS Advancing e-File Study Phase 1 Executive Summary
The Internal Revenue Service (IRS) Advancing E-file Study Phase 1 Report is a major effort to collect, synthesize, and analyze all substantial data in one document on the IRS e-file program.  

Wage Compensation for S Corporation Officers
http://www.irs.gov/newsroom/article/0,,id=200293,00.html
The Internal Revenue Code establishes that any officer of a corporation, including S corporations, is an employee of the corporation for federal employment tax purposes.  S corporations should not attempt to avoid paying employment taxes by having their officers treat their compensation as cash distributions, payments of personal expenses, and/or loans rather than as wages.  This fact sheet clarifies information that small business taxpayers should understand regarding the tax law for corporate officers who perform services.

IRS Announces 2009 Standard Mileage Rates
http://www.irs.gov/newsroom/article/0,,id=200505,00.html
Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
55 cents per mile for business miles driven 
24 cents per mile driven for medical or moving purposes 
14 cents per mile driven in service of charitable organizations
The new rates for business, medical and moving purposes are slightly lower than rates for the second half of 2008 that were raised by a special adjustment mid-year in response to a spike in gasoline prices. The rate for charitable purposes is set by law and is unchanged from 2008.  The business mileage rate was 50.5 cents in the first half of 2008 and 58.5 cents in the second half. The medical and moving rate was 19 cents in the first half and 27 cents in the second half. 

Invitation to Participate in Web-Based Cash Economy Survey
We hope that you will participate in a new Web-Based Cash Economy Survey:  http://chrome.osis.gov/cash_econ/index_cookie.html
The IRS is following up to its previous focus group initiatives to increase compliance in the Cash Economy with an anonymous web-based survey.  The survey is designed to be completed in about eight minutes and solicits responses on key IRS education and outreach activities.  We hope you will extend this invitation to participate in the survey to your constituents (members).

Participation will assist the IRS toward a better understanding of how citizens view their tax reporting obligations in this area, and help to improve services.  A key component of this process is obtaining input from the experience of paid tax preparers.

Responses are very valuable as we consider ways to improve compliance, reduce burden on the taxpayer, and improve services.

You can access the web-based survey at the link below from December 8, 2008 until January 9, 2009, or until 2,500 responses are received.  Once we receive 2,500 responses, the survey will no longer be available.  The link will also be posted on the irs.gov Tax Professionals Page.  We do request one response per participant.

Job Loss Creates Tax Issues: IRS Publication 4128 Provides Helpful Information
http://www.irs.gov/pub/irs-pdf/p4128.pdf
The Internal Revenue Service recognizes that the loss of a job may create new tax issues. This IRS publication provides the information on severance pay, unemployment, getting a W-2 from an employer that’s out of business or in bankruptcy, what to do if you owe taxes and cannot pay them right away, and more.

SSA W2 News If you are interested in W2 information from the Social Security Administration check out the latest issue of W2 News at: http://www.ssa.gov/employer/w2news/index.htm    

SSA Podcast on Retirement Decisions The decision on when to collect Social Security benefits is a very personal decision and this podcast will explore some of the issues that should be considered.  

To hear or download the podcast, go to www.socialsecurity.gov/podcasts. We also ask that you share this information with your members, colleagues and other interested parties.  Together, we can provide Americans with information that will help them better plan for a secure retirement.

Winter Issue of SSA/IRS Reporter Available  http://www.irs.gov/pub/irs-utl/ssa_irs_reporter_winter_08_english.pdf
The SSA/IRS Reporter provides small to medium-sized employers and the self-employed with information on electronic tax-filing and payment of employment taxes. The Reporter also carries general information about best payroll and employment tax practices, and announcements about IRS and SSA products and services. Articles in the winter issue include: 
Social Security Announces Wage Base Increase for 2009 
Business Information Reporting and Backup Withholding Responsibilities 
2009 Changes in IRS Forms 
Employer Responsibilities: Outsourcing Payroll 
SBA Disaster Loans 
Reminders for Successful Year-End Processing 
Many Employees Overlooking Valuable EITC Tax Credit 
A quarterly newsletter, the Reporter is a collaborative effort among the Social Security Administration, IRS, and other federal government agencies. It is enclosed with quarterly Forms 941 mailed to approximately 2,000,000 employers. Past issues, in English and Spanish, are also available online at http://www.irs.gov/businesses/small/article/0,,id=109886,00.html

IRS Offers Tips for Year-End Donations
http://www.irs.gov/newsroom/article/0,,id=201076,00.html
Individuals and businesses making contributions to charity should keep in mind several important tax law provisions that have taken effect in recent years.
One provision offers older owners of individual retirement arrangements (IRAs) a different way to give to charity. There are also rules designed to provide both taxpayers and the government greater certainty in determining what may be deducted as a charitable contribution. Some of these changes include the following.

Interest Rates Drop for the First Quarter of 2009
http://www.irs.gov/newsroom/article/0,,id=201115,00.html
The Internal Revenue Service today announced in Revenue Ruling 2008-54 that interest rates for the calendar quarter beginning Jan. 1, 2009 will drop by one percentage point. See article for new rates.

IRS Issues Fall 2008 Statistics of Income Bulletin
http://www.irs.gov/newsroom/article/0,,id=200506,00.html
The Internal Revenue Service today released the fall 2008 issue of the Statistics of Income Bulletin, which features information on 138.4 million individual income tax returns filed for tax year 2006.

New on IRS.gov: Small business Video and Audio Presentations
A new page on IRS.gov features video and audio presentations on a variety of topics for small businesses and self-employed taxpayers. Visit it here: http://www.irs.gov/businesses/small/article/0,,id=97726,00.html

An online audio podcast for first-time Schedule C filers includes basic tips to help new business owners avoid potential problems.  Visit it here: http://www.irs.gov/businesses/small/article/0,,id=200424,00.html

Recent Articles from e-News for Small Businesses

SBA’s frequently asked questions
The latest update to the Small Business Administration’s Office of Advocacy small business publication, Frequently Asked Questions, has a variety of statistical data and other information for small businesses. 

APA reminders for a successful year-end
The American Payroll Association has some tried-and-true tips to help ease year-end processing for employers. 

Information on SBTV.com
Visit SBTV.com’s IRS Partner Page for archived videos and other resources. 

Due date extended for some 2008 returns
Since Feb. 28 is a Saturday, the deadline for filing 2008 returns normally due that day is extended to March 2. This includes: 
Form W-2, Wage and Tax Statement (for wages paid to employees) 
Form 1099-MISC, Miscellaneous Income (for payments made in the course of a trade or business to nonemployees) 
Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips  
Electronic filers have until March 31 to file these returns. 

Technical Guidance

Notice 2008-104 provides additional transition relief with respect to the use of debit cards for medical expense reimbursements at stores with the Drug Stores and Pharmacies merchant category code. 

Revenue Ruling 2008-54 provides the rates for interest on tax overpayment and underpayments for the calendar quarter beginning January 1, 2009.  The interest rates will be 5 percent for overpayments (4 percent in the case of a corporation), 5 percent for underpayments, 2.5 percent for the portion of a corporation overpayment exceeding $10,000, and 7 percent for large corporate underpayments.  The quarterly determination is required by section 6621 of the Internal Revenue Code. 

Notice 2008-112 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code.  It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2).  In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.  

REG-158747-06 contains proposed regulations relating to withholding under section 3402(t) of the Internal Revenue Code (Code).  The proposed regulations reflect changes in the law made by the Tax Increase Prevention and Reconciliation Act of 2005 that require Federal, State, and local government entities to withhold income tax when making payments to persons providing property or services.  These proposed regulations provide guidance to assist the government entities in complying with section 3402(t).  The regulations also provide certain guidance to persons receiving payments for property or services from government entities.  This document also contains proposed amendments to regulations under sections 3406, 6011, 6051, 6071, and 6302 of the Code.

Notice 2008-113 gives taxpayers the ability to correct certain operational failures to comply with section 409A of the Internal Revenue Code,, or to limit the amount of additional taxes due to the failure to comply with section 409A.  Section 409A provides rules governing the taxation of nonqualified deferred compensation plans.  The notice expands upon and clarifies the program announced last year in Notice 2007-100, 2007-52 IRB 1243. 

Notice 2008-115 provides guidance to employers and payers on their reporting and wage withholding requirements for calendar year 2008 with respect to deferrals of compensation and amounts includible in gross income under section 409A of the Internal Revenue Code.  In addition, this notice provides guidance to service providers on their income tax reporting and tax payment requirements with respect to amounts includible in gross income under section 409A. 

Revenue Procedure 2008-68 provides temporary guidance regarding certain stock distributions by publicly traded corporations that are real estate investment trusts (REITs). For stock dividends declared on or after January 1, 2008 and before December 31, 2009, the Service will treat a stock distribution by a publicly traded real estate investment trust (REIT) pursuant to a stock-in-lieu-of-money election (under the terms defined in the revenue procedure) as a distribution of property to which section 301 applies by reason of section 305(b), and the amount of such distribution of stock will be considered to equal the amount of the money which could have been received instead. 

Notice 2008-116 provides interim guidance with regard to the application of the 2-percent floor under section 67 to certain investment advisory fees.   Specifically, this notice provides that, for taxable years beginning before January 1, 2009, non-grantor trusts and estates will not be required to “unbundled” a fiduciary fee into portions consisting of costs that are fully deductible and costs that are subject to the 2-percent floor. 

TD 9434 contains final regulations providing guidance regarding when and to what extent creditors of a corporation will be treated as proprietors of the corporation in determining whether continuity of interest (“COI”) is preserved in a potential reorganization.  These final regulations are necessary to provide clarity to parties engaging in reorganizations of insolvent corporations, both inside and outside of bankruptcy.  These final regulations affect corporations, their creditors, and their shareholders.  

Notice 2009-04 describes methodologies that the IRS is considering publishing as safe harbors to be used in the determination of basis in stock that is acquired in a “B” reorganization or other transferred basis transaction.  The methodologies are intended to respond to significant changes in market practice, and the issues raised by those changes, since the publication of Rev. Proc. 81-70, 1981-2 C.B. 729.  Also, the notice requests comments on the proposed methodologies and provides that, pending further guidance, taxpayers may rely on the safe harbors set forth in the notice. 

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