e-News for Tax Professionals Issue 2011-50

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Issue Number:  2011-50

Inside This Issue

1. Tax Preparers Need to File Due Diligence Checklist with All Earned Income Tax Credit Claims Starting Jan. 1
2. Plan Now to Get Full Benefit of Saver’s Credit
3. PTIN System Unavailable for New Applications from Dec. 26 until Jan. 9
4. Coming in 2012: One-Day IRS Workshop for Exempt Organizations
5. Technical Guidance

The IRS issued final regulations requiring paid tax return preparers to file a due diligence checklist, Form 8867, with any federal return claiming the Earned Income Tax Credit (EITC) beginning Jan. 1, 2012. This is the same form that is currently required to be completed and retained in a preparer’s records.

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Low- and moderate-income workers can take steps now to save for retirement and earn a special tax credit in 2011 and the years ahead.

The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.

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Due to previously scheduled maintenance on IRS systems, the PTIN system will be unavailable for new applications from 5:00 PM ET on Friday, Dec. 26 until approximately 9:00 AM ET on Monday, Jan. 9. Preparers are still able to renew existing PTINs during this window. We sincerely apologize for the inconvenience. We are exploring ways to mitigate the outage for preparers who cannot meet the December 26 deadline.  More to come on this issue.

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The Tax Exempt and Government Entities Division of the Internal Revenue Service invites you to a one-day workshop for small and medium-sized 501(c)(3) organizations. The workshop, presented by experienced IRS Exempt Organizations specialists, will explain what 501(c)(3) entities must do to keep their tax exempt status and comply with tax obligations.

This introductory workshop is designed for administrators or volunteers responsible for tax compliance and organization representatives.

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Revenue Ruling 2012-02 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate and the adjusted federal long-term tax-exempt rate for the month of January 2012. These rates are determined as prescribed by § 1274.

Notice 2012-06 extends and expands the transition relief provided under Rev. Rul. 2011-1, 2011-2 I.R.B. 251, and Rev. Rul. 2008-40, 2008-2 C.B. 166, for certain group trusts, certain retirement trusts that qualify under the Puerto Rico Internal Revenue Code (Puerto Rico Code) and that participate in group trusts and certain qualified retirement plans that benefit Puerto Rico residents. This notice also provides additional time for governmental retiree benefit plans described in § 401(a)(24) of the Internal Revenue Code (Code) (§ 401(a)(24) plans) to be amended to satisfy the applicable requirements of Rev. Rul. 2011-1.

Notice 2012-07 suspends certain requirements under section 42 of the Internal Revenue Code for certain low-income housing credit properties in Iowa in order to provide emergency housing relief needed as a result of the devastation in Iowa caused by flooding during the period of May 25, 2011, to August 1, 2011.

Announcement 2011-82 describes several important changes to the Employee Plans determination letter program.

Notice 2011-101 requests comments regarding when (and under what circumstances) transfers by a trustee of all or a portion of the principal of an irrevocable trust (Distributing Trust) to another irrevocable trust (Receiving Trust), sometimes called “decanting,” that result in a change in the beneficial interests in the trust are not subject to income, gift, estate, and/or generation-skipping transfer (GST) taxes.

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