Recent IRS news releases that may affect your small business
IRS Updates & News Releases:
IRS Announces 2011 Standard Mileage Rates
The 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes have been issued.
Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
§ 51 cents per mile for business miles driven
§ 19 cents per mile driven for medical or moving purposes
§ 14 cents per mile driven in service of charitable organizations
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study. Beginning in 2011, a taxpayer may use the business standard mileage rate for vehicles used for hire, such as taxicabs. Revenue Procedure 2010-51 and Notice 2010-88 contain additional details regarding the standard mileage rates.
IRS Helps Small Employers Claim New Health Care Tax Credit; Forms and Additional Guidance Now Available on Small Business Health Care Tax Credit
Final guidance is now available for small employers eligible to claim the new small business health care tax credit for the 2010 tax year. New Form 8941, Credit for Small Employer Health Insurance Premiums, and newly revised Form 990-T are now available on IRS.gov. The IRS also posted on its website the instructions to Form 8941 and Notice 2010-82 , both of which are designed to help small employers correctly figure and claim the credit. Included in the Affordable Care Act enacted in March, the small business health care tax credit is designed to encourage both small businesses and small tax-exempt organizations to offer health insurance coverage to their employees for the first time or maintain coverage they already have. The new guidance addresses small business questions about which firms qualify for the credit by clarifying that a broad range of employers meet the eligibility requirements, including religious institutions that provide coverage through denominational organizations, small employers that cover their workers through insured multiemployer health and welfare plans, and employers that subsidize their employees’ health care costs through a broad range of contribution arrangements.
Small Business Jobs Act of 2010 Tax Provisions
The Small Business Jobs Act of 2010 was enacted on September 27, 2010. The SBJA contains some tax provisions that take effect this year. Other tax provisions will be implemented during the next several years. Several of the provisions are designed to encourage investment and provide access to capital for businesses. The following is a list of those specific tax provisions now in effect; additional information will be added to this page as it becomes available.
Starting in 2011, Many Paid Preparers Must e-File Federal Income Tax Returns for Individuals, Estates and Trusts
The Internal Revenue Service has detailed how, starting Jan. 1, 2011, paid tax return preparers can comply with a new law that requires paid tax return preparers who meet the definition of “specified tax return preparer” under the new law to electronically file (e-file) federal income tax returns that they prepare and file for individuals, trusts and estates.
The e-file requirement will be phased in over two years. Starting Jan. 1, 2011, paid preparers who prepare income tax returns for individuals, trusts and estates, such as Forms 1040, 1040A, 1040EZ, and Forms 1041, and who reasonably expect to file 100 or more of these income tax returns in 2011 are specified tax return preparers required to file these returns electronically. Tax return preparers who are members of a firm are specified tax return preparers and must electronically file the income tax returns they prepare and file if the firm’s preparers, in the aggregate, expect to file 100 or more of these income tax returns in 2011. Starting Jan. 1, 2012, the 100-return threshold will be reduced to 11 or more income tax returns that the preparer, or the preparer’s firm in the aggregate, expect to file in 2012 for individuals, trusts and estates.
IRS Continues Efforts to Ensure Accurate Return Preparation; Reminds Tax Preparers to Sign Up for PTINs
The Internal Revenue Service has started sending out more than 10,000 letters to tax return preparers nationwide to remind them of their obligation to prepare accurate tax returns on behalf of their clients. Also, during the 2011 filing season, IRS representatives will visit approximately 2,500 tax return preparers who received these letters to further discuss their responsibilities as a return preparer and to verify their compliance with existing requirements. The tax agency is sending the letters to paid preparers who completed tax returns in which the IRS has identified common errors. The letter includes an enclosure that reminds tax return preparers of their responsibilities and consequences of filing incorrect returns.
While most return preparers are professionals who provide honest and excellent service to their clients, some make basic errors or engage in fraud and other illegal activities. The IRS will continue to work closely with the Department of Justice to pursue civil or criminal action as appropriate. The IRS urges taxpayers to be careful when choosing a preparer. Reputable return preparers will ask to see receipts and will ask multiple questions to determine whether expenses may be claimed as deductions or otherwise qualify for favorable tax treatment. By doing so, they are trying to help their clients avoid penalties, interest or additional taxes that could result from an IRS examination.
The IRS recently launched a new online application system to obtain a Preparer Tax Identification Number (PTIN). All paid tax return preparers who prepare all or substantially all of a tax return are required to use the new registration system to obtain a PTIN.
IRS Expands Use of Twitter to Help Taxpayers, Tax Professionals
The Internal Revenue Service announced the availability of expanded Twitter feeds to share timely information with taxpayers and the tax professional community.
The IRS Twitter news feed, @IRSnews, provides the latest federal tax news and information for taxpayers. The focus of the IRS Twitter messages will be on easy-to-use information, including tax tips, tax law changes and important IRS programs such as e-file, the earned income tax credit and “Where’s My Refund." Anyone with a Twitter account can follow @IRSnews by going to http://twitter.com/IRSnews. Another important IRS Twitter feed, @IRStaxpros, is designed for the tax professional community. Follow @IRStaxpros by going tohttp://twitter.com/IRStaxpros. The IRS also tweets tax news and information in Spanish at @IRSenEspanol. Follow this Twitter feed by going to http://twitter.com/IRSenEspanol.