* FREE FILE AND IRS EXTEND PARTNERSHIP: The Internal Revenue Service and the Free File Alliance have extended their partnership, a pact that provides free tax services and electronic filing to an eligible pool of 93 million taxpayers, and agreed to provide important new consumer protections.Free File debuted during the 2003 filing season as a strategy of providing free services to moderate- and low-income taxpayers. The alliance is a consortium of tax software vendors that set their own criteria for taxpayer eligibility for free use of their software. The agreement calls for services to be provided to 70 percent of the nation's taxpayers. The extended agreement includes the following consumer protections:
* Alliance members that offer refund anticipation loans will provide the highest standards of consumer protection, upholding greater disclosure and consent requirements related to ancillary financial products - fees and interest rates, information on other options for refunds, and full disclosure of RALs as loans rather than refunds.
* Members will provide additional tax forms such as Form 4868, which allows for extensions to file.
* Alliance members' Web sites will display whether state online tax preparation and filing services are available, and the associated fees, if any.
"We think this is a constructive step forward. It allows Free File to continue to grow, but it also contains important new consumer protections," said IRS Commissioner Mark W. Everson, in a statement.
Taxpayers can access Free File through www.irs.gov. Alliance member services will be available beginning in January 2006 on the IRS Web site.
* IRS OFFERS TAX SHELTER REPRIEVES: The Internal Revenue Service announced a limited opportunity for taxpayers to come forward and settle an array of transactions that the IRS considers abusive. Taxpayers who participated in any of the 21 tax shelters identified by the IRS (www.irs.gov/pub/irs-drop/a-05-80.pdf) will have until Jan. 23, 2006, to submit settlement papers to the agency.
The initiative identifies 21 transactions that are eligible for the program - including a wide cluster of schemes involving funds used for employee benefits, charitable remainder trusts, offsetting foreign currency option contracts, debt straddles, lease strips and certain abusive conservation easements. All eligible transactions carry the same settlement terms except the applicable penalty level.
The IRS has identified more than 4,000 taxpayers involved in any of the outlined transactions, and continues to uncover additional participants through tax return examinations and the agency's promoter audit program. The transactions had been specifically marketed to wealthy individuals, large corporations and small business taxpayers.
Under the settlement terms, participants will be required to pay 100 percent of the taxes owed, interest and, depending on the transaction, either a quarter or a half of the penalty that the IRS would normally seek. The program follows the fundamental terms of prior settlement initiatives, including those for Son of Boss transactions and schemes involving transfers by executives of stock options to family-controlled entities.
* IRS OFFERS TAX RELIEF FOR HURRICANE WILMA VICTIMS: The Internal Revenue Service announced relief for taxpayers affected by Hurricane Wilma. Deadlines for taxpayers affected by the hurricane to file returns, pay taxes and perform other time-sensitive acts have been postponed to Feb. 28, 2006, the same date granted to taxpayers affected by Hurricanes Katrina and Rita. Twenty Florida counties have been included in the Federal Emergency Management Agency disaster area, including: Brevard, Broward, Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Highlands, Indian River, Lee, Martin, Miami-Dade, Monroe, Okeechobee, Osceola, Palm Beach, Polk, St. Lucie and Sarasota.
Affected taxpayers will need to identify themselves to the IRS as hurricane victims by writing "Hurricane Wilma" in red ink at the top of their tax forms or any other documents filed with the IRS. Taxpayers who have other hurricane-related questions can also call the special IRS disaster hotline at (866) 562-5227.
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