2011 KICKOFF

The 2011 tax season kicked off with what is becoming its customary aura of uncertainty. The lame-duck Congress spent December inching toward a deal on extending all of the Bush tax cuts that would also reinstate the estate tax at a lower rate, extend unemployment benefits, cut payroll taxes, extend a number of credits, and patch the Alternative Minimum Tax. Some sort of deal looked likely, but the details will bear close examination by tax preparers, and the late date will mean delays in forms and software.

 

THE IRS REVS UP

The Internal Revenue Service, meanwhile, was busy getting ready for filing season as best it could. Based on promises from high-ranking lawmakers, Commissioner Douglas Shulman ordered the service to reprogram its computers with the assumption that the Alternative Minimum Tax would be patched by the end of the year. Congress had not passed the patch when we went to press.

The service continued to urge tax preparers to register for Preparer Tax ID Numbers, while noting that it planned to visit approximately 2,500 lucky preparers over the course of the filing season, chosen from among the 10,000 to whom it earlier sent letters about the mistakes they made with previous returns.

It also spelled out the new e-filing requirements that kicked in on January 1 for paid preparers who prepare returns for individuals, trusts and estates, and who reasonably expect to file 100 or more of them in 2011 - though it also released Notice 2010-85 on how to apply for a hardship waiver. The 100-return threshold is due to drop to 11 returns next year.

Among the flood of announcements, guidance and notices released by the IRS:

Tax season will be one weekend longer, with federal individual income tax returns (and requests for extension) due on Monday, April 18, due to an obscure Washington, D.C., holiday.

Guidance for employers to claim the small-business health care tax credit, in Notice 2010-82, the instructions to the new Form 8941, and the new Form 990-T.

Rules for the use of an electronic signature pad by EROs to have taxpayers sign Forms 8879 and 8878 (the taxpayer has to be in your office when they sign).

New filing thresholds for nonprofit organizations, including raising the threshold for filing the postcard Form 990-N from $25,000 to $50,000.

Revenue Ruling 2010-31 gave the interest rates on overpayments and underpayments beginning in January 2011: 3 percent for overpayments (2 percent for corporations); 3 percent for underpayments; 0.5 percent for the portion of a corporate overpayment exceeding $10,000, and 5 percent for large corporate underpayments.

Notice 2010-84 gives guidance on rollovers from 401(k) plans to designated Roth accounts in the same plan.

Revenue Procedure 2010-47 sets out the cost limitations for expensing property under Sec. 179 for taxable years beginning in 2010.

Notice 2010-90 on changes for certain requests to the IRS for opinion, advisory and determination letters starting Feb. 1, 2011.

Revenue Procedure 2010-52 on requesting an extension of amortization period for a multi-employer pension plan.

Notice 2010-88, with the mileage rates starting in January 2011: 51 cents per business mile; 19 cents per medical or moving mile; and 14 cents per charitable mile.

With so many tax laws and regulations changing, the service has also boosted its efforts to communicate with taxpayers and preparers, not least through its Twitter news feeds, @IRSnews, @IRStaxpros and @IRSenEspanol, as well as its YouTube channel.

With all that on its plate, the IRS also faced another major concern: the security of its staff. According to a report by the Treasury Inspector General for Tax Administration, a number of recent attacks and threats on IRS facilities and personnel has made keeping them safe a high priority - so don't make any sudden moves.

 

IN OTHER NEWS

A flood of end-of-the-year mergers swept through firms of all sizes, with more expected in the final days of 2010. (See Spotlight, page 8, and M&A Watch, page 24.)

 

KPMGannounced its global revenues for the most recent fiscal year: $20.63 billion, a 2.6 percent increase in dollars (0.1 percent in local currency). Growth was strongest in India, at over 20 percent.

 

The Public Company Accounting Oversight Board proposed a set of rules to begin overseeing the audits of securities brokers and dealers, per provisions of the Dodd-Frank Act passed last year. Comments on the proposed interim inspection program are due by Feb. 15.

 

The International Accounting Standards Board proposed new standards for accounting for hedging activities that it said would create "a much simpler model" and more closely align hedge accounting with the risk management undertaken by companies when hedging financial and non-financial risk exposures. The proposal is considered more comprehensive than FASB's recent Accounting Standards Update on accounting for financial instruments. Comments are due by March 9.

 

After less than three years at the helm, Sage North America president and chief executive Sue Swenson announced her retirement, in a several-month transition that will include her replacement by current Sage France CEO Pascal Houillon. Swenson will officially depart in "mid-2011."

 

Global revenues at Sage's parent, Sage Group, were $2.24 billion for the year ended Sept. 30, 2010, or flat compared to the prior year, though it did add 252,000 customers worldwide, including 123,000 in North America, where total revenue for the year was $857.8 million, down from $889.4 million in 2009.

 

The American Institute of CPAs is getting ready to launch a beta version of the exam that will ultimately become a requirement to obtain its Certified Information Technology Professional credential. Interest in the CITP credential has boomed over the past year.

 

Payroll giant Paychex Inc. acquired online payroll processor SurePayroll for an undisclosed amount. SurePayroll will operate as a wholly owned subsidiary of Paychex. The deal will allow Paychex customers to process payroll online or via an iPhone app.

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