e-News for Tax Professionals Issue 2012-51
Internal Revenue Service (IRS) sent this bulletin at 12/21/2012 03:59 PM EST
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Issue Number: 2012-51Inside This Issue
1. IRS Reminds Tax Preparers to Renew Their PTINs, Schedule the RTRP Test As Soon As Possible The Internal Revenue Service reminded professional tax return preparers to renew their Preparer Tax Identification Numbers (PTINs) if they plan to prepare returns in 2013. Current PTINs expire Dec. 31, 2012. Preparers who need to take a competency test are encouraged to schedule an appointment while they are renewing their PTINs. The registered tax return preparer (RTRP) test can be scheduled up to six months in advance, depending on location. Select “next steps and additional requirements” within the online PTIN account to schedule the RTRP test. 2. IRS Statement on Payroll Withholding The IRS issued the following statement today regarding payroll withholding tables: “We are aware that employers have questions with respect to 2013 withholding. Since Congress is still considering changes to the tax law, we continue to closely monitor the situation. We intend to issue guidance by the end of the year on appropriate withholding for 2013.” 3. IRS Offers Tips for Year-End Giving Individuals and businesses making contributions to charity should keep in mind some key tax provisions that have taken effect in recent years, especially those affecting donations of clothing and household items and monetary donations. 4. Tax Relief for Victims of Hurricane Sandy in Maryland Victims of Hurricane Sandy that began on Oct. 26 in parts of Maryland may qualify for tax relief from the Internal Revenue Service. 5. IRS Improves Identity Protection PIN to Help ID Theft Victims In mid-December 2012, the IRS sent notices to more than 600,000 taxpayers identified as victims (or potential victims) of identity theft. Notice CP01A "We've Assigned You An Identity Protection Personal Identification Number," provides the IP PIN that a victim will need to complete his or her 2012 tax return. The IP PIN helps the IRS quickly distinguish between the genuine taxpayer and a potential identity thief and helps prevent processing delays for victims’ federal tax returns. IP PINs are valid for the current year’s federal tax return only. The IRS issues a new IP PIN each December when the taxpayer remains at risk for identity theft. Important changes for this year: New notices. The CP01A notice replaces the 4869CS letter used last year. IP PIN requirement. If a required IP PIN is missing or incorrect on an electronic return, the return will be rejected. Taxpayers can correct or include the IP PIN, request a replacement IP PIN or file a paper return. If an IP PIN is missing or incorrect on a paper return, the return will require a manual review, which will delay any refund to which the taxpayer is entitled. This review is for the protection of the taxpayer who has previously been the victim of identity theft. Easier replacement IP PIN process. If a taxpayer misplaces the IP PIN, she can quickly get a replacement IP PIN by contacting the IRS by calling the Identity Theft Specialized Unit, or IPSU at 1-800-908-4490, ext. 245, or the IRS Help Desk at 1-800-829-1040 or by visiting a Taxpayer Assistance Center. The replacement IP PIN allows the return to be electronically "accepted" (subject to standard validation tests). However, the return will then require a manual review prior to processing, which may delay any refund to which the taxpayer is entitled. What should tax preparers do? • Ask the taxpayer, as part of the interview process, whether he contacted the IRS regarding identity theft or if the IRS notified them of potential identity theft. If so, ask if he received a notice from the IRS in December containing a six-digit Identity Protection PIN. Information for POAs Since the Identity Protection PIN issued in 2012 is for filing the tax year 2012 income tax return, the IP PIN is considered tax year 2012 information. IRS representatives have limited ability to discuss the IP PIN or any other tax information related to the 2012 tax year unless there is a valid Power of Attorney on file that includes 2012. Disclosure laws restrict the IRS from releasing any information to a third party unless the POA is valid for the year related to that information. If you have any questions, comments or suggestions regarding the Identity Protection PIN, please submit them to ippin.Questions@irs.gov. Please do not include sensitive or personally identifiable information in your email. Additionally, remember that the IRS does not initiate taxpayer communications through email. 6. The New Hardwood Timber Industry ATG is Now Available on IRS.gov The Hardwood Audit Techniques Guide explains industry-specific examination techniques and includes common as well as unique issues, business practices and terminology to help business owners and tax professionals when reporting various items related to the timber industry. For a complete list of all available industry audit techniques guides go to the main Audit Techniques Guides page on IRS.gov. 7. Webinar: Circular 230 Overview The recent webinar, Circular 230 Overview: Key Provisions and Responsibilities for Tax Professionals, will be rebroadcast on Jan. 29, 2013. Sign up now. 8. What to Expect for Refunds in 2013 The IRS is taking several steps to improve taxpayers' ability to understand their refund status in 2013. To begin with, taxpayers will get a personalized refund date when they use Where’s My Refund? and the tool will have a new look. Where’s My Refund? will include a tracker that displays progress through 3 stages: (1) Return Received, (2) Refund Approved and (3) Refund Sent along with narrative that provides more detail such as the approved refund amount and the date the refund will be sent. Taxpayers will also be able to check on the status of their return sooner - within 24 hours after we’ve received an e-filed return or 4 weeks after a paper return is mailed. Where’s My Refund? will provide a refund date as soon as the IRS processes the tax return and approves the refund. This means taxpayers won’t get an estimated refund date right away. Instead Where’s My Refund? will give each taxpayer personalized refund information based on the processing of his or her own tax return. The IRS issued more than 9 out of 10 refunds to taxpayers in less than 21 days last year. The same results are expected in 2013. The Publication 2043, previously the Refund Cycle Chart, has been re-purposed as IRS Refund Information Guidelines for the Tax Preparation Community. The new "What to expect for refunds in 2013" page on IRS.gov includes official IRS 2013 refund communications, including • Pub 2043: IRS Refund Information Guidelines for the Tax Preparation Community Reminder: Any claims by Providers concerning faster refunds by virtue of electronic filing must be consistent with the language in official IRS publications. Per the advertising standards in Publication 3112, IRS e-file Applications and Participation, and Publication 1345, Handbook for Authorized IRS e-file Providers of Individual Income Tax, providers must not use improper or misleading advertising in relation to IRS e-file, including the time frames for refunds or other financial products. This reminder serves as the IRS’s request to the tax preparation community to follow these messaging guidelines. The IRS will monitor Industry practice during filing season, but anticipates and expects voluntary compliance from its partners in support of this important effort to help taxpayers understand their refund status. 9. IRA Distribution and Contribution Reminders Please remind your clients, age 70½ or older to take their 2012 required minimum distributions (RMD) by Dec. 31 or April 1, 2013, if they were 70½ in 2012, to avoid the 50 percent excise tax on any amount of an RMD they do not take on time. Additionally, if they have exceeded the 2012 IRA contribution limit, they may withdraw excess contributions from their accounts by the due date of their tax returns (including extensions). Otherwise, they must pay a 6 percent tax each year on the excess amounts remaining in their account. Go to the RMD page on IRS.gov for more information. 10. Technical Guidance Rev. Rul. 2013-1 This revenue ruling provides various prescribed rates for federal income tax purposes for January 2013 (the current month). Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code. Table 2 contains the short-term, mid-term, and long-term adjusted applicable federal rates (adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate percentages for determining the low-income housing credit described in section 42(b)(1) for buildings placed in service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, and before December 31, 2013, shall not be less than 9%. Table 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520. Finally, Table 6 contains the deemed rate of return for transfers made during calendar year 2013 to pooled income funds described in ' 642(c)(5) that have been in existence for less than 3 taxable years immediately preceding the taxable year in which the transfer was made. -------------------------------------------------------------------------------- REV. RUL. 2013-1 TABLE 1 Applicable Federal Rates (AFR) for January 2013 Period for Compounding Annual Semiannual Quarterly Monthly Short-term
AFR .21% .21% .21% .21% 110% AFR .23% .23% .23% .23% 120% AFR .25% .25% .25% .25% 130% AFR .27% .27% .27% .27% Mid-term
AFR .87% .87% .87% .87% 110% AFR .96% .96% .96% .96% 120% AFR 1.04% 1.04% 1.04% 1.04% 130% AFR 1.13% 1.13% 1.13% 1.13% 150% AFR 1.31% 1.31% 1.31% 1.31% 175% AFR 1.53% 1.52% 1.52% 1.52%
Long-term AFR 2.31% 2.30% 2.29% 2.29% 110% AFR 2.55% 2.53% 2.52% 2.52% 120% AFR 2.78% 2.76% 2.75% 2.74% 130% AFR 3.01% 2.99% 2.98% 2.97%
REV. RUL. 2013-1 TABLE 2
Adjusted AFR for January 2013 Period for Compounding Annual Semiannual Quarterly Monthly Short-term adjusted AFR .25% .25% .25% .25% Mid-term adjusted AFR .94% .94% .94% .94% Long-term adjusted AFR 2.66% 2.64% 2.63% 2.63%
REV. RUL. 2013-1 TABLE 3 Rates Under Section 382 for January 2013 Adjusted federal long-term rate for the current month 2.66% Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal long-term rates for the current month and the prior two months.) 2.84%
REV. RUL. 2013-1 TABLE 4 Appropriate Percentages Under Section 42(b)(1) for January 2013 Note: Under Section 42(b)(2), the applicable percentage for non-federally Appropriate percentage for the 70% present value low-income housing credit 7.36% Appropriate percentage for the 30% present value low-income housing credit 3.16%
REV. RUL. 2013-1 TABLE 5
Rate Under Section 7520 for January 2013 Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a remainder or reversionary interest 1.0%
REV. RUL. 2013-1 TABLE 6
Deemed rate of return for transfers during 2013 to pooled income funds that have been in existence for less than 3 taxable years 1.8%
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