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IRS Implements Enhanced
Standards of Conduct for Tax Return Preparers
On Monday, December 31, the IRS issued
Notice 2008-13 that implements a May 2007 law expanding the tax return
preparer penalty and raising the standards of conduct that must be met by
tax return preparers in order to avoid that penalty. For undisclosed
positions on a tax return, the new law replaced the realistic possibility
standard with a requirement that there be a reasonable belief that the tax
treatment of the position would more likely than not be sustained on its
merits. In cases in which the taxpayer discloses the position on the tax
return, the notice implements the new law that states there must be a
reasonable basis for the tax treatment of the position taken on the tax
return. The notice provides interim rules to implement and interpret these
heightened standards. In July, the AICPA spoke out against the new law in
this
press release. Notice 2008-13 also solicits input from the tax return
preparer community on a planned overhaul of the tax return preparer penalty
regime anticipated to be completed by the end of 2008.
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Updated Contacts,
Links Provided by IRS Liaison
In an effort to make contacting the IRS easier during the filing season,
the Stakeholder Liaison has again this year updated the filing season letter
with current telephone numbers, and links to important information on
IRS.gov. Download the letter and
one-page contact sheet.
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Find Michigan Tax Forms
Online
Some 2007 Michigan Individual Income Tax and
Single Business Tax forms and instructions are now available on the state’s
web site at
www.michigan.gov/taxes. The remaining forms and instructions are
expected soon. The 2008 Michigan Business Tax (MBT) quarterly estimate form
and special instructions are available on the
MBT web page. The new Michigan Business Tax took effect January 1, 2008.
Any Michigan business with an annual combined MBT liability expected to
exceed $800 must make estimated payments. The sum of a taxpayer’s estimated
payments must equal at least 85 percent of the firm’s total liability and
the amount of each payment must reasonably approximate the tax liability
incurred during the period.
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IRS Outlines New
Electronic PIN Signature Requirement and New Use for IRS Form 8453
Beginning with the 2008 filing season, tax practitioners can e-file
individual income tax returns only if the returns are signed electronically
using one of two methods: either the Self-Select Personal Identification
Number (PIN) method or the Practitioner PIN method. The Self-Select PIN
method allows taxpayers to electronically sign their e-file returns using a
five-digit PIN and either their Adjusted Gross Income or PIN from the prior
year. The Practitioner PIN method does not require taxpayers to use either
Adjusted Gross Income or PIN from the prior year. Plus, tax practitioners
will no longer submit a paper signature for e-file returns using Form 8453,
U.S. Individual Income Tax Declaration for an IRS e-file Return. Instead,
the newly designed Form 8453 will be used to transmit supporting paper
documents that are required to be submitted to the IRS with e-file returns.
Read more on the IRS signature requirements and form 8453 in this
IRS article.
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Michigan Signature
Requirements Don’t Change
In a recent message to the tax practitioner
LISTSERV, the Michigan Department of Treasury said the change in the IRS
signature requirements do not affect the Michigan e-file signature
requirements. The Michigan e-file signature process for individual income
tax returns is outlined in the
Michigan Tax Preparer Handbook for Alternative Filing Programs,
beginning on page 16.
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AICPA Asks IRS to
Reconsider Foreign Tax Credits
The American Institute of CPAs has written to
the IRS and the Treasury Department requesting them to revise their proposed
regulations on foreign tax credits. The Department of Treasury and the
IRS should reconsider the approach taken in proposed regulations on foreign
tax credits, the AICPA said in comments to the agencies. The proposed
Internal Revenue Code section 901 regulations would provide guidance on
whether a payment is compulsory for an increase in a foreign subsidiary’s
foreign tax liability due to the sharing of losses or because of a combined
settlement with a foreign taxing authority. In the comments, AICPA said,
“…the AICPA recommends that the IRS draft new language with respect to
whether a payment is compulsory for an increase in a foreign subsidiary’s
foreign tax liability due to the sharing of losses or because of a combined
settlement with a foreign taxing authority.” Read the AICPA’s
comments
and accompanying
cover letter.
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IRS, Treasury Propose
Pension Regulations
The IRS and the Treasury Department have
proposed two sets of regulations relating to pension plans. First, the
Treasury Department and the IRS issued proposed regulations that provide
employers sponsoring
single-employer defined benefit plans with guidance regarding the
measurement of pension assets and liabilities under the new funding rules
enacted as part of the Pension Protection Act of 2006. In addition, the
agencies issued proposed regulations relating to
cash balance plans and other hybrid pension plans.
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SEC Issues Year-End Help
For Expensing Employee Stock Options
The SEC released a new Staff Accounting
Bulletin to assist public companies in
valuing stock option grants to their employees for income statement
purposes. As a result of new SAB 110, eligible public companies may continue
to use a simplified method for estimating the expense of stock options if
their own historical experience isn't sufficient to provide a reasonable
basis.
Without this action, otherwise eligible public companies would have lost the
option to use the simplified method as of December 31, 2007.
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New SEC Internet Tool
Offers Instant Comparisons of Executive Pay
Investors can easily and instantly compare
what 500 of the largest American companies are paying their top executives
with a new
online tool from the SEC. The new database highlights the power of
interactive data to transform financial disclosure. The Executive
Compensation Reader – available on the SEC's web site at
www.sec.gov/xbrl –
builds on the Commission's new requirements that went into effect earlier
this year to dramatically enhance clarity and completeness of executive
compensation disclosure.
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Is it Time For Your
Small Business to Upgrade to a Server?
Small businesses may need a server to improve their efficiency even if they
just have two computers because access to data is essential to small
business owners and those on the go. Servers also provide data security for
businesses, particularly in terms of backed up information and the ability
to recover corrupted or deleted files.
To read this article in its entirety and learn much more about developments
in technology, access
Technology and
Productivity Weekly, the MACPA's electronic technology newsletter for
industry professionals, sponsored by Information, Inc.
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