IRS Updates. Payroll Tax Exemption. HIRE Act - Two New Benefits

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1 IRS Updates Catherine Murphy Senior Stakeholder Liaison HIRE Act - Two New Benefits Employers who hire certain previously unemployed workers are eligible for: Payroll tax exemption New hire retention credit Payroll Tax Exemption Exemption from the employer s 6.2% share of social security tax Effective for wages paid from March 19, 2010, through December 31, 2010 Employee social security and Medicare tax still apply to all wages Election out 1

2 New Hire Retention Credit General business credit Up to $1000 per retained qualified employee Affidavit Form W-11 or substitute Signed under penalties of perjury May be signed electronically Retained by employer, not filed with IRS More Information HIRE Act: Questions and Answers for Employers /0,,id=220745,00.html 2

3 Small Business Health Care Tax Credit Eligibility Rules Providing health care coverage Firm size Average annual wage Both taxable (for profit) and taxexempt firms qualify Amount of Credit Maximum Amount Phase-out 3

4 Upcoming Changes for Federal Tax Return Preparers Tax Return Preparer For purposes of obtaining a preparer tax identification number (PTIN) only, a tax return preparer is any individual who is compensated for preparing, or assisting in the preparation of, all or substantially all of a federal tax return or claim for refund 1. Mandate that Tax Return Preparers Obtain and Use a PTIN and Pay a User Fee Mandatory sign-up for all preparers beginning approximately Sept. 2010, including those who already have a PTIN User fee $ annually (exact amount to be announced soon) PTIN mandatory on all paid preparer s returns beginning Jan. 1,

5 2. Suitability Checks - Tax Compliance All preparers will be subject to tax compliance checks: Have all returns been filed? Have all taxes been paid (or proper payment arrangements made)? Tip: Be proactive. Resolve any tax compliance issues now. 2. Suitability Checks - Background All preparers will be asked: Have you been convicted of a felony in the past 10 years? Fingerprint checks will potentially be implemented when testing begins for those required to test 3. Competency Testing Unenrolled paid tax return preparers will be required to pass a competency test by Dec. 31, 2013 Attorneys, CPAs, and enrolled agents will be exempt from testing Testing will begin approximately June 2011 After passing the test, the individual is officially an IRS Registered Tax Return Preparer (more) 5

6 3. Competency Testing There will be two levels of competency tests 1) Wage and non-business 1040 returns and 2) Wage and small business 1040 returns The initial two tests will be for individuals who prepare Form 1040 series returns. Additional guidance for individuals who do not prepare Form 1040 series returns will be provided when testing is implemented. After competency testing has begun, new preparers will be required to pass a competency test prior to obtaining a PTIN 4. Continuing Education All unenrolled preparers will have a new requirement to complete 15 continuing education hours per year: 3 hours of federal tax law updates 2 hours of ethics 10 hours of federal tax law Effective date not yet determined Target Implementation Timeline PTIN renewals begin CE requirement begins - TBD PTIN revoked if competency test not passed PTIN sign-up begins September 1 Testing available June 1 September 1 December 31 January 31 Searchable database available

7 Questions??? Communicating with IRS Notices Telephone Taxpayer Assistance Centers E-services What if you get a Notice? If you receive a letter or notice from the IRS, it will explain the reason for the correspondence and provide instructions. Many of these letters and notices can be dealt with simply, without having to call or visit an IRS office. 7

8 Redesigned Notices Notices Call and Talk to IRS 8

9 Taxpayer Assistance Centers Face-to-face Tax Help IRS Taxpayer Assistance Centers are your source for personal tax help when you believe your tax issue cannot be handled online or by phone, and you want face-to-face assistance. IRS e-services Basic Tools for the Tax Pro 9

10 Basic Tools for the Tax Pro Basic Tools for the Tax Pro Basic Tools for the Tax Pro 10

11 Tax Pro News and Events e-news for Tax Professionals e-news for Small Businesses 11

12 Topic Search Word(s) Employer ID Number Employment Taxes E-File for Business Tax Information for Specific Industries or Professions Electronic Federal Tax Payment System (EFTPS) EIN employment taxes e-file for business industries eftps Electronic Newsletters Small Business Tax Workshops, Phone Forums and Webinars e-news subscribe workshop Topic Virtual Small Business Workshop CD Tax Calendar for Small Businesses and Self- Employed Local IRS Office Locations IRS Hotlines and Local Numbers State Resources for Small Business Links to Other Small Business Resources Search Word(s) virtual cd small calendar office hotlines state small business resources Enter the associated word(s) in the Keyword/Search Terms box to quickly find the right Web page Visit Topic Small Business and Self-Employed One- Stop Resource Business-Related News Starting, Operating, or Closing a Business Business Taxes Business Expenses Search Word(s) self-employed business-related news starting, operating, or closing business tax business expense 12

13 More Information Available on IRS.gov Small Business Tax Workshop DVD IRS phone forums Tax practitioner video and audio presentations IRS tax calendar for SB/SE 13