IMRS Monthly Overview - February 2011
NEW IMRS ISSUES
Policy, Practice & Procedures
IMRS 11-0001414 – Transcripts for current year
Issue: For several years, practitioners have been asking for an application for estimated tax payments that would be similar to the "Where's My Refund?" program on www.IRS.gov. There is now an online "Order a Tax Return or Account Transcript" product on www.IRS.gov. We would like to have account transcripts for the current year available though this system so that taxpayers and tax practitioners can check estimated payments prior to filing Forms 1040.
IMRS 11-0001415 – Multiple attorneys on one Form 2848
Issue: An attorney stated that his office needs to include at least four attorneys on Form 2848, Power of Attorney and Declaration of Representative. They submit a four-page Form 2848, state on the form that their representatives are listed on two pages, and number the pages page one of four, etc. In addition, the fax cover letter provides the names and CAF numbers of the attorneys and indicates that the attached POA is four pages long and includes four attorneys. Nevertheless, it appears that the CAF unit does not always read the cover letter or treat the pages as a single POA document.
IMRS 11-0001421 – Erroneous rejection of Form 2848 by Centralized Authorization File
Issue: Unenrolled preparers may only represent taxpayers before the IRS if they prepared the return under audit. The CAF unit erroneously rejected Form 2848, stating that the preparer who used the "h" designation (for unenrolled preparer) on the form did not prepare the returns in question, when he did prepare the returns.
IMRS 11-0001422 – Late filing penalty abatement requests for Form 1041
Issue: The instructions for the 2009 Form 1041, U.S. Income Tax Return for Estates and Trusts, indicate that a reasonable cause request for abatement of the late filing penalty may be attached to a late filed return. As instructed, a tax practitioner attached reasonable cause abatement requests to 14 trust returns late filed for tax year 2009. The practitioner received letters from the IRS on three of the returns that stated that abatement could not occur before return processing and to wait until the penalty is assessed and a notice issued prior to submitting an abatement request. The instructions and the notices received appear to be in conflict.
RECENTLY CLOSED ISSUES
Communication & Outreach
IMRS Issue 11-0001355 – Addresses for submitting comments not included in articles soliciting comments
Issue: Two recent Newswire press releases regarding changes in the regulation of tax preparers solicited comments on the changes outlined in the articles. However, neither article contained any information regarding how to submit comments. It is suggested that Newswire contain a physical or email address when soliciting comments. In both cases, addresses were available but difficult/not possible for the public to locate on www.IRS.gov.
Response: Thank you for the suggestion you recently submitted. We will ensure that when proposed regulations are issued in the future, links for submitting comments are included in our email distributions.
Forms, Publications & Products
IMRS Issue 11-0001409 – Late receipt of 940 and 941
Issue: Taxpayers are complaining they still have not received Forms 940 and 941 for the end of 2010.
Response: Forms 940 and 941 were shipped late due to late law changes. Starting the first quarter of 2011, business taxpayers will no longer receive certain tax packages in the mail from the IRS. Most importantly, Form 941, Employer’s Quarterly Federal Tax Return, and Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, will no longer be mailed. Search “ business package mailings” on www.IRS.gov for the complete list of forms, publications and packages that will no longer be mailed.
IMRS Issue 11-0001410 – Form W-4 confirmed as correct
Issue: The new Form W-4 for 2011 has a much lower dollar indicator for married vs. single filing status than it has for the past few years. People are questioning whether the form is correct.
Response: All income limitation, deduction limitation and withholding table amounts on the 2011 Forms W-4 and W-4P have been confirmed with the U.S. Department of the Treasury as correct. Because withholding calculations take into account many factors, they may sometimes appear to be inappropriate. Specifically, the income limitation amounts $40,000 ($10,000 if married) included in the second bulleted item under Line H of Form W-4 (Line G for W-4P) have been verified as correct.
Policy, Practice & Procedures
Issue: A tax practitioner wants to know if the filing date for 2010 Forms 1040 will be affected by Emancipation day (Sat., Apr. 16, 2011), a legal holiday in the District of Columbia, or Patriot’s day (Mon., Apr. 18, 2011), a legal holiday in Massachusetts, where the Andover campus is located.
Response: Emancipation Day, which is observed in the District of Columbia, falls on Friday April 15. Therefore, all taxpayers have until Mon., Apr. 18, 2011 to file their 2010 individual tax returns and pay any tax due. By law, District of Columbia holidays affect tax deadlines in the same way that federal holidays do, so all taxpayers will have three extra days to file this year. Taxpayers requesting an extension will have until Oct. 17, 2011 to file their 2010 tax returns. See IR-2011-4, IRS Kicks Off 2011 Tax Season with Deadline Extended to April 18; Taxpayers Impacted by Recent Tax Breaks Can File Starting in Mid- to Late February, for more information on the start of the 2011 filing season.
Taxpayers in Massachusetts and Maine will also have until Mon., Apr. 18, 2011 to file their 2010 federal tax returns. The federal filing deadline has not been extended even though April 18 is Patriots Day, a legal holiday in these states.
IMRS Issue 11-0001411 – Workers’ take-home pay affected by changes in 2011 payroll taxes
Issue: Employees expected to see their take-home pay increase due to the 2% reduction in Social Security withholding, but checks are remaining about the same or even decreasing.
Response: Income tax withholding is increasing for many workers in 2011 due to the expiration of the Making Work Pay Credit. This income tax withholding increase, however, is partially or fully offset by a two-percentage point reduction in the social security employee tax rate in 2011, from 6.2 percent to 4.2 percent of wages paid, provided by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. The offset is partial for workers with modest incomes. Publication 15, (Circular E), Employer’s Tax Guide, contains the wage bracket tables. For any Social Security tax over withheld during Jan., employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than Mar. 31, 2011. The reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.
NOTE: Current and previous reports are also available on this site. The Monthly Overviews are posted for the prior two years through the current month. You can also access reports for issues closed in prior years on the same page.
We invite you to raise your issues/concerns with your local stakeholder liaison.