IRS SIMPLIFIES E-SIGNATURESWASHINGTON, D.C. - The Internal Revenue Service said that it plans to simplify the signature process for electronically filed individual tax returns by allowing tax practitioners to avoid the need to send a paper signature document in support of their clients' e-filed returns.
Starting in 2008, practitioners will be able to e-file individual income tax returns if they are electronically signed with either a Self-Select Personal Identification Number or a Practitioner PIN. Practitioners will no longer need to submit a paper signature using Form 8453. Instead, a newly designed Form 8453 will be available to transmit supporting paper documents.
PUBLICIZING THE SAVER'S CREDIT
WASHINGTON, D.C. - Senate Finance Committee Chairman Max Baucus, D-Mont., and fellow committee member Chuck Grassley, R-Iowa, are calling on the Internal Revenue Service to do a better job of publicizing the Saver's Credit to encourage more low-to-middle-income workers to save money for retirement.
The credit applies to up to 50 percent of the first $2,000 of retirement contributions for families earning up to $50,000 a year.
The senators wrote a letter to Acting IRS Commissioner Kevin Brown urging him to advertise the credit more extensively. They want taxpayers to be able to claim it on Form 1040EZ, and to see it mentioned on the instructions for Form W-2 and on the IRA deduction worksheet. They have also asked Brown to have the IRS consistently use the term "Saver's Credit" in its forms and instructions to encourage maximum exposure of the credit.
CHARITIES OWE E-POSTCARDS TO IRS
WASHINGTON, D.C. - The Internal Revenue Service has begun mailing educational letters to more than 650,000 small tax-exempt organizations to let them know that they need to start submitting a new annual electronic notice known as an e-Postcard.
Form 990-N is intended for tax-exempt organizations with gross receipts of $25,000 or less. Prior to 2006, charities of that size weren't required to submit either the Form 990 or 990-EZ. A 2006 law now requires them to electronically file the 990-N e-Postcard annually, starting in calendar year 2008. The IRS intends to set up a reporting system that will allow the organizations to file their e-Postcards free of charge. The agency will announce the system on its Web site, www.irs.gov, when it's available.
WAYS AND MEANS COMMITTEE VOTES DOWN PRIVATE TAX COLLECTIONS
WASHINGTON, D.C. - The House Ways and Means Committee voted along mainly party lines in mid-July to repeal the ability of the Internal Revenue Service to enter into private debt collection contracts, with a vote of 23 to 18 on the Democrat-backed bill.
Under current law, the IRS can use private debt collection companies to find and contact taxpayers who owe outstanding tax liabilities and arrange payment. The companies can keep up to 25 percent of the amount collected, and the IRS can retain another 25 percent for additional enforcement activities. The Tax Collection Responsibility Act of 2007 would repeal that authority, which critics fear could lead to abusive tax collection practices.
The bill contains several other provisions to make up for the estimated $1.1 billion that could be lost in tax revenue over the next 10 years. One provision would increase the penalties on failures to provide Form 1099 information returns. Another provision would temporarily increase, for three months in 2012, the required estimated tax payments for certain large corporations. Revised tax rules in the bill would also impose an immediate tax on individuals who renounce their U.S. citizenship.
To gain wider support, the bill also contained a provision that would delay for one year, to Dec. 31, 2011, the application of the 3 percent withholding requirement on government payments for goods and services.
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