Year-end planning is now behind us. Many believe that the failure of the joint congressional committee to reach a deficit reduction agreement pushes fundamental tax reform off at least until after the 2012 elections. Some tax changes are still possible with respect to jobs promotion and extending expiring provisions, but those efforts will be primarily focused on 2012. So, what do we know now about what is new for the 2011 tax return filing season?

E-FILING MANDATE

Most tax preparers have already shifted to e-filing by now, but the mandatory e-filing requirements keep increasing. For tax year 2011 returns filed in 2012, a return preparer must e-file if they are filing 11 or more returns. This is lower than the 100 returns for the last filing season. Clients may instruct the preparer in writing that they want to opt out of e-filing. Also, a return preparer can apply to opt out due to hardship by filing Form 8944.

BROKER REPORTING OF BASIS

Form 1099-B has been revised to provide for brokers to report the basis of transactions during the year. This information should match the basis reported on the return. Although brokers this year are only required to report basis for transactions involving stock sales where the stock was acquired after Jan. 1, 2011, and only if the broker or a predecessor broker handled the acquisition, it is possible that brokers will report more basis information on the 1099-B than they are technically required to report. These transactions will also no longer be reported directly on Schedule D, but on Form 8949, a new supporting form for Schedule D.

CREDIT CARD/MERCHANT PAYMENTS

Form 1099-K is now required to be filed by payment settlement entities, such as credit card processors and online payment processors, reporting payments made. There is a de minimis reporting exception for total payments of less than $20,000 or fewer than 200 transactions. The reports will generally be made of gross payments, so adjustments for fees, chargebacks and returns may have to be explained to account for any differences from the amounts reported on the Form 1099-K. Your clients will probably want to start keeping track of these adjustments in separate accounts so that they can verify the gross payment information reported on the Form 1099-K and trace the adjustments.

New lines have been added for Forms 1040 Schedules C, E and F; Form 1065; and Forms 1120 and 1120S to reflect the information from the Form 1099-K. A merchant that fails to provide a federal employer identification number or Social Security number to the processor or fails to pay the tax may be subject to back-up withholding.

FATCA REPORTING

In addition to the prior obligation to report foreign accounts on Form TDF90-22.1 (FBAR), a new Form 8938 will require foreign assets to be reported if those assets have a total value of more than $50,000 ($100,000 if married filing jointly). Foreign assets have a broader definition than the FBAR reporting of foreign accounts, and include stock or securities issued by someone other than a U.S. "person," any interest in a foreign entity, and any financial instrument or contract that has an issuer or counterparty other than a U.S. "person." Failure to report foreign assets also comes with a separate set of penalties from those associated with failure to make FBAR reports.

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