The Information Reporting Program Advisory Committee has released its annual report for 2013, including numerous recommendations to the IRS commissioner on new and existing issues in tax administration.
Among the emerging compliance issues on which IRPAC weighed in were Section 6050W and Form 1099-K reporting, cost basis reporting, and the shortening of Taxpayer Identification Numbers.
Section 6050W was included as a pay-for in the Housing and Economic Recovery Act of 2008, on the premise that wherever you have third-party reporting, compliance increases. Form 1099-K reports payments made by credit cards to merchants. IRPAC advocates more guidance from the IRS on Form 1099-K, Payment Card and Third Party Network Transactions reporting.
IRPAC made a number of recommendations regarding Section 6050W and Form 1099-K, mainly relating to the need for additional guidance.
IRPAC requested more time, IRS guidance and communications related to cost basis reporting that now must also take into consideration various taxpayer elections. Final cost basis regulations and temporary/proposed regulations have addressed the connection between income earned on fixed-income holdings and the ongoing adjustments to those amounts and the cost basis of the instruments. As a result, many changes must be made to existing information return forms and specific guidance is needed, IRPAC said.
Notice 2009-93 authorized filers of certain information returns to shorten an individual payee’s nine-digit identifying number on specified statements. IRPAC recommends that the TIN truncation program be extended to Employer Identification Numbers, as it sees the program as effective and as an assistance in efforts to protect against payees’ identity theft.
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