e-News for Tax Professionals Issue 2013-45

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Issue Number:  2013-45

Inside This Issue

1. IRSAC Releases 2013 Annual Report
2. EITC Due Diligence Compliance Audits Underway
3. Technical Guidance

The Internal Revenue Service Advisory Council (IRSAC) released its annual report featuring recommendations on a wide range of tax administration matters.

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The IRS is starting this year’s EITC due diligence compliance audits of return preparers. The audits highlight the need to file accurate claims for EITC and other refundable credits.

The IRS visits include a review of EITC claims for compliance with Internal Revenue Code Section 6695(g). Requirements include:
• Completion and submission of Form 8867, Paid Preparer’s Earned Income Credit Checklist
• Completion of the EITC worksheet
• Compliance with the “knowledge”  requirement
• Compliance with record keeping requirements 

Non-compliant return preparers face penalties of $500 per return and other consequences. Additionally, IRS auditors will conduct a review of the return preparer’s tax identification number or PTIN registration status and personal federal tax filing requirements. Visit EITC Central and review the preparer EITC due diligence training resources to learn more about preventing EITC errors and avoiding penalties.

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Revenue Ruling 2013-26 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. These rates are determined as prescribed by Section 1274.

The rates are published monthly for purposes of sections 42, 382, 412, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

Revenue Ruling 2013-26 will be in IRB 2013-50, dated Dec. 9, 2013.

Revenue Procedure 2013-36 sets forth for purposes of section 846 of the Internal Revenue Code the loss payment patterns and discount factors for each property and casualty line of business for the 2013 accident year. These factors are to be used by property and casualty insurance companies in discounting unpaid losses.

Revenue Procedure 2013-37 sets forth for purposes of section 832 of the Internal Revenue Code the salvage discount factors and payment patterns for each property and casualty line of business for the 2013 accident year. These factors are to be used by property and casualty insurance companies to discount estimated salvage recoverable.

Both will appear in IRB 2013-49 dated Dec. 2, 2013.

Notice 2013-78 provides for public comment a proposed revision of the procedures for requesting assistance from the U.S. competent authority under the provisions of an income, estate, or gift tax treaty to which the United States is a party.

Notice 2013-79 requests comments from the public on a proposed revision to Rev. Proc. 2006-9, the procedural guidance to taxpayers on filing advance pricing agreement (“APA”) requests and on the administration of APAs.

Both Notice 2013-78 & Notice 2013-79 will be in IRB 2013-50, dated December 9, 2013.

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