This year’s IRS Tax Forum has been announced.  There are six cities from which you can pick to attend.

Forum Locations and Dates

Atlanta, GA – June 28-30

Orlando, FL – July 12-14

Dallas, TX – July 26 – July 28

San Jose, CA – August 9-11

Las Vegas, NV – August 16-18

National Harbor, MD (Washington DC area) August 30 – September 1

This is a wonderful chance for Tax Professionals from all over the nation to come together to:

• Get the latest tax news, laws, and general updates
• Earn valuable CPE/CFP credits towards your continuing education requirements.
• Browse the expo for any tax-related applications, agencies, and companies providing products and services.

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Eight Facts on Penalties For Filing Late Tax Returns – Tax Year 2010

When it comes to filing a tax return – or not filing one – the IRS can assess a penalty if you fail to file, fail to pay or both. Here are eight important points the IRS wants you to know about the two different penalties you may face if you do not file or pay timely.

1. If you do not file by the deadline, you might face a failure-to-file penalty. If you do not pay by the due date, you could face a failure-to-pay penalty.
2. The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return on time and explore other payment options in the meantime. The IRS will work with you.
3. The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.
4. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
5. If you do not pay your taxes by the due date, you will generally have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.
6. If you timely filed a request for an extension of time to file and you paid at least 90 percent of your actual tax liability by the original due date, you will not be faced with a failure-to-pay penalty if the remaining balance is paid by the extended due date.
7. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.
8. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.

Additional Link: Avoiding Penalties and the Tax Gap

Source: http://www.irs.gov/newsroom/article/0,,id=205326,00.html

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The EEOC is beginning a new, periodic retrospective review of its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed, to make the EEOC’s regulatory program more effective and/or less burdensome in achieving its regulatory objectives. The EEOC is acting pursuant to Executive Order 13563, which applies across the federal government. 76 Fed. Reg. 3821 (Jan. 21, 2011), http://federalregister.gov/a/2011-1385.

The EEOC’s mission is to promote equality of opportunity in the workplace and enforce federal laws prohibiting discrimination in employment. Our regulatory program supports effective enforcement of six employment nondiscrimination laws:

• Title VII of the Civil Rights Act of 1964, as amended;
• the Equal Pay Act of 1963, as amended;
• the Age Discrimination in Employment Act of 1967, as amended;
• Titles I and V of the Americans with Disabilities Act, as amended;
• Sections 501 and 505 of the Rehabilitation Act, as amended; and
• Title II of the Genetic Information Nondiscrimination Act.

Input on EEOC’s Plan for Retrospective Review of its Significant Regulations

The EEOC wants your help in designing our plan for this review.  For example, you may have suggestions about factors we should consider in doing the review, or about the process we should use to select rules for review.  Or, you may believe that the review should be focused on particular types of regulations.  Ultimately, our plan must be integrated with other existing legal requirements for regulatory reviews.  (For example, the Regulatory Flexibility Act, 5 U.S.C. § 610, requires agencies to publish in the Federal Register a plan for periodic review of the rules issued by the agency which have or will have a significant economic impact upon a substantial number of small entities. This provision calls for review of agency rules every ten years.) It also will be tailored to reflect our resources and rulemaking priorities.

Input Regarding Specific Regulations

We are interested in what you think should be included in EEOC’s initial list of regulations for review over the next two years. You can offer input on specific regulations including:

• why you believe the regulation should be modified, streamlined, expanded, or repealed;
• any available data on the costs and benefits of the regulation; and
• how we can better achieve the regulation’s objective.

We are accepting your comments from now through March 22, 2011. Late-filed comments will be considered to the extent practicable. We will not be able to acknowledge individual comments, but we value your input and will give your ideas careful consideration. We plan to post the retrospective review plan on this website.

Thank you in advance for your input on this important effort.

Please submit all public comments to Public.Comments.RegulatoryReview@eeoc.gov.

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(The Accounting Today Top 100 Firms, 2011 edition)

So, when’s the rebound?

The revenue decline is the second in a row for the profession’s largest firms, prompting Accounting Today managing editor Daniel Hood to liken the conditions to a “deep freeze.”

Although the top-line shrinkage is slowing, firms continue to cut back partners and staff. Forty-four firms report flat or declining revenue in the 2011 Top 100, up from 34 in the 2010 Top 100;  and 62 report flat or declining staff numbers, against 53 the previous year.

“Staring down the often lethal combination of a rough economy and increased competition, many in the 2011 class of the T100 struggled to at least maintain flat revenues over the prior year — with mixed success,” editor-in-chief Bill Carlino says in his introduction to the 32-page special report.

The bigger the firm, the tougher the year:

• Only Deloitte, No. 1 in the rankings with $10.9 billion in revenue, could boast of revenue gains — up 2%.
• You need to go to the 14th spot on the list to find the next firm with positive results — Marcum, up 7% to $251 million. And then skip a few rungs to LarsonAllen at 18th, Reznick at 21st, and Eide Bailly at 24th.
• In all, 43 of the the top 100 suffered revenue declines; 19 of them were among the top 25.
• 37 firms cut partners; 16 of them were among the top 25 firms.
• 54 firms cut professionals; 19 in the top 25.

The biggest losers:

1. UHY Advisors, down 13%, to $205 million.
2. Mohler, Nixon & Williams, -10%, $33 million.
3. Anchin, Block & Anchin, -8%, $89 million.
4. Baker Tilly Virchow Krause, -8%, $238 million.
5. Ernst & Young, -7%, $7.1 billion
6. Aronson, -7%, $57 million.
7. SVA, -7%, $45 million.
8. Holtz Rubinstein & Reminick, -7%, $33 million.
9. Joseph Decosimo & Co., -6%, $38 million.
10. Kaufman Rossin & Co., -6%, $44 million.

Overall, the top 100 firms garnered $42.6 billion in revenue, down 2% from the year before; and total employment sank about 1%, to 184,429 partners and professionals.

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IRS Tax Tip 2011-45, March 4, 2011

Do you rent property to others? If so, you’ll want to read the following seven tips from the IRS about rental income and expenses.

You generally must include in your gross income all amounts you receive as rent. Rental income is any payment you receive for the use of or occupation of property. Expenses of renting property can be deducted from your gross rental income. You generally deduct your rental expenses in the year you pay them.  Publication 527, Residential Rental Property, includes information on the expenses you can deduct if you rent property.

1.  When to report income. You generally must report rental income on your tax return in the year that you actually receive it.

2.  Advance rent. Advance rent is any amount you receive before the period that it covers.  Include advance rent in your rental income in the year you receive it, regardless of the period covered.

3.  Security deposits. Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year.

4.   Property or services in lieu of rent.  If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income.  If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary.

5.  Expenses paid by tenant. If your tenant pays any of your expenses, the payments are rental income. You must include them in your income. You can deduct the expenses if they are deductible rental expenses. See Rental Expenses in Publication 527, for more information.

6.  Rental expenses.  Generally, the expenses of renting your property, such as maintenance, insurance, taxes, and interest, can be deducted from your rental income.

7.  Personal use of vacation home. If you have any personal use of a vacation home or other dwelling unit that you rent out, you must divide your expenses between rental use and personal use.  If your expenses for rental use are more than your rental income, you may not be able to deduct all of the rental expenses.

For more information on rental income and expenses see Publication 527. This publication can be downloaded from http://www.irs.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Links:  Publication 527, Residential Rental Property

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Accounting Today Magazine Online, Washington, D.C. (March 15, 2011);  Written By: Michael Cohn

The Internal Revenue Service has paid a $1.1 million reward to an anonymous whistleblower for information that exposed an alleged tax fraud scheme by Enron, Bankers Trust and others before the company collapsed.

It is one of the few whistleblower rewards the new IRS Whistleblower Office has made since Congress created the IRS Whistleblower Office and a new tax whistleblower program in 2006. The IRS made the award under the previous whistleblower program (known as the IRS 211 program), which allowed the IRS to award whistleblowers nothing or up to 15 percent of the tax funds the IRS recovered as a result of the whistleblower’s information.

The whistleblower, a Wall Street banker who has chosen to remain anonymous to protect his job and career, received the maximum reward of 15 percent. The announcement of the reward was made by the law firm that represented him, Phillips & Cohn LLP.

“Enron was able to inflate its book earnings due to abusive tax shelters allegedly set up with the help of Wall Street banks,” said Erika A. Kelton, a Washington, D.C., attorney with Phillips & Cohen. “My client’s knowledge of how Wall Street operates and his unflagging persistence in convincing the IRS to investigate Enron were instrumental in the government’s recovery.”

The whistleblower first provided the IRS with detailed information in 1999 about abusive tax shelters that Bankers Trust and other Wall Street firms allegedly helped Enron create that allowed Enron to operate tax free while lying about its reported profits for years before Enron declared bankruptcy in 2001. The shelters, including one nicknamed “Project Cochise” and another called “Project Steel,” involved artificial duplication of tax deductions so that Enron would generate fictitious pre-tax income on its financial statements.

The tax fraud allowed Enron to evade taxes on more than $600 million of taxable income, resulting in more than $200 million of federal tax savings and the bogus reporting of over $300 million of financial accounting income. The IRS was able to recover only a percentage of taxes and penalties owed due to Enron’s bankruptcy.

“If the IRS had pursued this information in 1999 when my client first informed them of these abusive tax shelters, the government might have realized the depth of Enron’s problems and perhaps taken steps that might have helped avoid a total meltdown,” Kelton said.

The whistleblower testified anonymously in 2004 before the Senate Finance Committee about problems with the IRS whistleblower program at that time. He said the greatest problem was “the agency’s resistance to take seriously outside information from knowledgeable insiders.”

“There are still pockets of strong institutional resistance to whistleblowers at the IRS,” said Kelton. “The IRS Whistleblower Office works extremely hard to investigate and pursue whistleblower claims. But they are only one office in a vast bureaucracy.”

The Tax Relief and Health Act of 2006, enacted after Phillips & Cohen’s client notified the IRS about Enron’s abusive tax shelters, requires that whistleblowers receive 15 percent to 30 percent of the amount the IRS recovers if the tax fraud or tax underpayments exceed $2 million (including penalties and interest).

As first read on: http://www.accountingtoday.com/news/Enron-Whistleblower-Scores-Reward-IRS-57636-1.html?ET=webcpa:e1343:206946a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_031611

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As first read on Accounting Today Magazine, Online Ed.

New York (March 14, 2011), Written By Michael Cohn

With the tax benefits of the 2009 stimulus ebbing, the tax burden is pushing slowly higher and is now at its highest level in two years, according to Deloitte. As the economy improves, more households are pushed into higher tax brackets, raising the government’s take, the firm found.

The Deloitte Consumer Spending Index rose in February, driven primarily by the slight improvements in real home prices and initial jobless claims.  The index attempts to track consumer cash flow as an indicator of future consumer spending.

“Despite the small gains in the index, the recent sharp rise in energy prices could weaken consumer purchasing power in the months ahead,” said Deloitte chief economist Carl Steidtmann, the author of the monthly index. “The stabilization in real home prices may also be temporary given the persistent strain on the housing market. On the upside, should the slow but steady improvement in employment continue, it may help offset price increases.”

The index, which comprises four components — tax burden, initial unemployment claims, real wages, and real home prices — rose to 4.02 percent, from an upwardly revised gain of 3.92 percent a month ago.

“Unsurprisingly, some retailers are concerned about rising costs and whether they can avoid passing them on to consumers,” said Deloitte LLP vice chairman and retail sector leader Alison Paul. “Retailers should consider costs across the entire supply chain, from strategic sourcing at the back end to the technologies and analysis they use for monitoring inventories and product movement at the front end.”

Initial unemployment claims continued to improve, albeit at a slower pace. The four- week average for claims is right at 400,000. Moving below this level would be a sign of significant improvement in the labor market.

Wage growth, adjusted for inflation, ticked up in February. Future gains are at risk from rising energy prices.

Inflation-adjusted prices for new homes were up slightly from a year ago. Prices for existing homes continue to be well below the replacement cost of homes, keeping a lid on home construction and new home prices.

http://www.accountingtoday.com/news/More-Households-Higher-Tax-Brackets-57614-1.html?ET=webcpa:e1341:206946a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_031411

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The following is an article in the March edition of the Nat’l Association of Tax Professionals, TAXPRO Monthly:

Albert Lawrence Bomer represented himself in a strange case he brought to Tax Court involving the IRS’s disallowance of his claim for the Earned Income Credit, and the imposition of an accuracy-related penalty on his 2007 self-prepared federal income tax return.

During the 2007 tax year, Bomer resided at a maximum security prison in Michigan, where he had lived since 1997 as part of a 40-year sentence. Bomer filed a 2007 federal income tax return and reported wages of $15,640 and claimed an Earned Income Credit amount of $4,667. Because of the circumstances of his residence and the lack of records indicating wages, the IRS determined a deficiency in Bomer’s 2007 income tax of $4,667 and an accuracy-related penalty under §6662(a) and (b)(1) of $933.  Liability for the penalty was determined based on disregard of the rules or regulations.

The earned income credit under §32 is based on a taxpayer’s qualifying income as defined under that section and includes wages, salaries, tips and other employee compensation. However, §32(c)(2)(B) specifically excludes certain items from the definition of earned income. It provides that “no amount received for services provided by an individual while the individual is an inmate at a penal institution shall be taken into account” in determining a taxpayer’s earned income.

Although he was unable to tell the Tax Court how he earned the income, Bomer argued that the income he reported on his 2007 federal income tax return was not earned for work within the prison. The Court said it did not matter whether the income was earned working inside or outside a penal institution. The fact that Bomer had the status of an inmate at a penal institution for all of 2007 disqualified any income from being taken into account under §32.

Section 6664 provides an exception to the imposition of the accuracy-related penalty if the taxpayer establishes that there was reasonable cause for, and the taxpayer acted in good faith with respect to, the underpayment. The Tax Court ruled that Bomer did not have reasonable cause to believe that he was entitled to the Earned Income Credit.  Additionally, he did not act in good faith and the Court upheld the assessment of the accuracy-related penalty under §6662.

Bomer v. Commissioner
TC Summary Opinion 2010-54

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As reported on : http://www.irs.gov/newsroom/article/0,,id=106429,00.html 

IRS Tax Tip 2011-20, January 28, 2011

The Earned Income Tax Credit is a financial boost for workers earning $48,362 or less a year. Four of five eligible taxpayers filed for and received their EITC last year. The IRS wants you to get what you earned also, if you are eligible.

Here are the top 10 things the IRS wants you to know about this valuable credit, which has been making the lives of working people a little easier for 36 years.

1. As your financial, marital or parental situations change from year to year, you should review the EITC eligibility rules to determine whether you qualify. Just because you didn’t qualify last year, doesn’t mean you won’t this year.
2. If you qualify, the credit could be worth up to $5,666. EITC not only reduces the federal tax you owe, but could result in a refund. The amount of your EITC is based on your earned income and whether or not there are qualifying children in your household. The average credit was around $2,100 last year.
3. If you eligible for EITC, you must file a federal income tax return and specifically claim the credit – even if you are not otherwise required to file.Remember to include Schedule EIC, Earned Income Credit when you file your Form 1040 or, if you file Form 1040A, use and retain the EIC worksheet.
4. You do not qualify for EITC if your filing status is Married Filing Separately.
5. You must have a valid Social Security Number. You, your spouse – if filing a joint return – and any qualifying child listed on Schedule EIC must have a valid SSN issued by the Social Security Administration.
6. You must have earned income. You have earned income if you work for someone who pays you wages, you are self-employed, you have income from farming, or – in some cases – you receive disability income.
7. Married couples and single people without children may qualify. If you do not have qualifying children, you must also meet the age and residency requirements as well as dependency rules.
8. Special rules apply to members of the U.S. Armed Forces in combat zones. Members of the military can elect to include their nontaxable combat pay in earned income for the EITC. If you make this election, the combat pay remains nontaxable.
9. It’s easy to determine whether you qualify. The EITC Assistant, an interactive tool available on the IRS website, removes the guesswork from eligibility rules. Just answer a few simple questions to find out if you qualify and estimate the amount of your EITC.
10. Free help is available at Volunteer Income Tax Assistance sites and IRS Taxpayer Assistance Centers to help you prepare and claim your EITC. If you are preparing your taxes electronically, the software program you use will figure the credit for you. To find a VITA site or TAC near you, visit http://www.irs.gov.

For more information about the EITC, see IRS Publication 596, Earned Income Credit. This publication – available in both English and Spanish – can be downloaded from the IRS website or ordered by calling 800-TAX-FORM (800-829-3676).

Links:

• EITC Assistant
• Earned Income Tax Credit
• Publication 596, Earned Income Credit (EIC) (PDF 373K)
• Free File
• Tax Topic 601, Earned Income Credit

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