Online Registration System for Paid Tax Return Preparers

All compensated tax return preparers are required to register under the new registration system and get a PTIN before preparing returns in 2011. Individuals who currently possess a PTIN will need to reapply under the new system but generally will be reassigned the same number.

Registration fee is $64.25, regardless of whether you currently possess a PTIN or not. Attorneys, Certified Public Accountants (CPAs), and Enrolled Agents (EAs) are not exempt.

Link to the New Registration System

Paid Preparers should apply for or renew their PTINs before January 1st, 2011.

Late filing Penalty for S Corp

Time is running out and the tax returns for S Corporation are due soon.
The final deadline to file S Corp tax returns (Form 1120S) is September 15th, 2010 if an extension was requested.

S Corporation's no longer enjoy the luxury to file late and not pay the penalty. One of the recent changes by the IRS is charging penalty on late filing of the S Corporation tax returns.

For tax years beginning after 2009, the late filing penalty for an S corporation return is $195 for each month or part of a month (up to 12 months) the return is late (or does not contain the required information) multiplied by the total number of persons who were shareholders in the corporation during any part of the corporation's tax year

So for a S Corp with two or more stockholders this penalty could add up to an exhorbitant amount.

Relief from penalty is available only if the S Corp shows that the late filing was due to reasonable cause.

Tax Tip - Review your 2009 Tax Return to determine the need to Amend the Return.

If you forgot to include some income or to take a deduction or to claim a credit(including the first time homebuyer or repeat homebuyer credit) on your tax return – you can correct it by amending your tax return.

Generally, to claim a refund, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.

Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct a previously filed Form 1040, 1040A or 1040EZ. Be sure to check the box for the year of the return you are amending on the Form 1040X, Line B. The newly revised Form 1040X (Rev. January 2010) has only one column used to show the corrected figures and an area on the front of the form where you explain why you are filing Form 1040X.

One-Time Special Filing Relief Program for Small Charities

Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program.

The relief announced is not available to larger organizations required to file the Form 990 or to private foundations that file the Form 990-PF.

IRS 2009 IRPAC Report

The Information Reporting Program Advisory Committee (IRPAC) released the advisory group’s 2009 recommendations on a wide range of tax administration issues.
Key recommendation were -

• Creating a new form and modified rules on information reporting of payments made in settlement of payment card and third party network transactions.
• Providing guidance on tax information reporting and withholding.
• Reporting of customer’s basis in securities transactions.
• Creating online Form W-4 instructions for non-resident aliens.
• Withholding on certain payments made by government entities
• Providing additional guidance to government entities that must comply with the withholding provisions.
• Permitting payers to issue payee statements showing only the last four digits of a payee’s TIN.

Source: http://www.irs.gov/

IRS To Help Financially Distressed Taxpayers

Taxpayers in hardship situations may be able to adjust payments for back taxes, avoid defaulting on payment agreements or possibly defer collection action as IRS is considering several options to help the taxpayers.

Some of the areas considered by IRS to help the taxpayers-

• Postponement of Collection Actions in certain hardship situation.
• Added Flexibility for Missed Payments in existing Installment Agreements who have difficulty making payments because of a job loss or other financial hardship.
• Additional Review for Offers in Compromise on Home Values.
• Prevention of Offer in Compromise Defaults by considering other available options.
• Expedited Levy Releases for hardship reasons.

For detailed information-

http://www.irs.gov/newsroom/article/0,,id=202244,00.html

Source:IR-2009-2, Jan. 6, 2009