2010 Software Developers Conference

The 2010 IRS Software Developers Conference will be held June 29-30, 2010 in Arlington, VA. The conference is designed to provide software developers with the most up-to-date information relating to the preparation, transmission and processing of electronic returns. The agenda includes informational sessions, workshops and question and answer opportunities on issues of interest to IRS e-file software developers and transmitters. Specific topics/sessions for this year’s conference include:

• HIRE and other tax law changes;
• Modernized e-File updates; and
• Various breakout sessions.

This conference offers the software community an excellent opportunity to provide input to the Service’s plans for current and future electronic programs and services geared toward tax professionals, individual taxpayers and businesses.

For additional information or questions about this free conference, please contact the Conference Coordinator, Roxanne Barkley at (202) 283-0629 or send an e-mail to IRS.SW.CONF@irs.gov.

Saturday June 5th Open House – Get help with your tax problems at IRS’s nationwide open houses

Approximately two hundred IRS Taxpayer Assistance Centers across the country will open on Saturday, June 5th, to provide help to individual taxpayers dealing with notices and payments, return preparation and a variety of other tax issues. Each office will be open from 9:00 a.m. until 2:00 p.m. local time.

Here is the information for those participating offices.

Form to Claim Payroll Tax Exemption for Hiring New Workers Now Available

IR-2010-64, May 18, 2010

WASHINGTON — The Internal Revenue Service has issued the newly revised payroll tax form that most eligible employers can use to claim the special payroll tax exemption that applies to many new workers hired during 2010.

Designed to encourage employers to hire and retain new workers, the payroll tax exemption and the related new hire retention credit were created by the Hiring Incentives to Restore Employment (HIRE) Act signed by President Obama on March 18.

Employers who hire unemployed workers this year (after Feb. 3, 2010, and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from the employer’s share of Social Security tax on wages paid to these workers after March 18. This reduction will have no effect on the employee’s future Social Security benefits. The employee’s 6.2 percent share of Social Security tax and the employer and employee’s shares of Medicare tax still apply to all wages.

In addition, for each qualified employee retained for at least a year whose wages did not significantly decrease in the second half of the year, businesses may claim a new hire retention credit of up to $1,000 per worker on their income tax return. Further details on both the tax credit and the payroll tax exemption can be found in a recently-expanded list of answers to frequently-asked questions about the new law now.

How to Claim the Payroll Tax Exemption

Form 941, Employer’s QUARTERLY Federal Tax Return, revised for use beginning with the second calendar quarter of 2010, will be filed by most employers claiming the payroll tax exemption for wages paid to qualified employees. The HIRE Act does not allow employers to claim the exemption for wages paid in the first quarter but provides for a credit in the second quarter. The instructions for the new Form 941 explain how this credit for wages paid from March 19 through March 31 can be claimed on the second quarter return.

The HIRE Act requires that employers get a signed statement from each eligible new hire, certifying under penalties of perjury, that he or she was not employed for more than 40 hours during the 60 days before beginning employment with that employer. Employers can use new Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, released last month, to meet this requirement. Though employers need this certification to claim both the payroll tax exemption and the new hire retention credit, they do not file these statements with the IRS. Instead, they must retain them along with other payroll and income tax records.

These two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify as long as they are replacing workers who left voluntarily or who were terminated for cause and otherwise are qualified employees. Family members and other relatives do not qualify for either of these tax benefits.

Businesses, agricultural employers, tax-exempt organizations, tribal governments and public colleges and universities all qualify to claim the payroll tax exemption for eligible newly-hired employees. Household employers and federal, state and local government employers, other than public colleges and universities, are not eligible.

Statement of IRS Commissioner Doug Shulman on the Filing Deadline for Small Charities

Now that the May 17 filing deadline has passed, it appears that many small tax-exempt organizations have not filed the required information return in time. These organizations are vital to communities across the United States, and I understand their concerns about possibly losing their tax-exempt status.

The IRS has conducted an unprecedented outreach effort in the tax-exempt sector on the 2006 law’s new filing requirements, but many of these smaller organizations are just now learning of the May 17 deadline. I want to reassure these small organizations that the IRS will do what it can to help them avoid losing their tax-exempt status.

The IRS will be providing additional guidance in the near future on how it will help these organizations maintain their important tax-exempt status — even if they missed the May 17 deadline. The guidance will offer relief to these small organizations and provide them with the opportunity to keep their critical tax-exempt status intact.

So I urge these organizations to go ahead and file — even though the May 17 deadline has passed.

Filing a tax return for the small organizations is easier than you’d think. It just takes a few minutes to fill out the electronic notice Form 990-N (e-Postcard). This is available for small tax-exempt organizations with annual receipts of $25,000 or less.

IRS Offers Details on New Small Business Health Care Tax Credit

IR-2010-63, May 17, 2010

WASHINGTON — The Internal Revenue Service today issued new guidance to make it easier for small businesses to determine whether they are eligible for the new health care tax credit under the Affordable Care Act and how large a credit they will receive. The guidance makes clear that small businesses receiving state health care tax credits may still qualify for the full federal tax credit. Additionally, the guidance allows small businesses to receive the credit not only for regular health insurance but also for add-on dental and vision coverage.

Notice 2010-44 provides detailed guidelines, illustrated by more than a dozen examples, to help small employers determine whether they qualify for the credit and estimate the amount of the credit. The notice also requests public comment on issues that should be addressed in future guidance.

Included in the Affordable Care Act approved by Congress in March and signed into law by the President, the small business health care tax credit, which is in effect this year, is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.

For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less. The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals.

Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt organizations, the IRS will provide further information on how to claim the credit.

Health Savings Accounts (HSAs)

2010 Changes

Eligibility. For 2010, a qualifying high deductible health plan (HDHP) must have a deductible of at least $1,200 for self-only coverage or $2,400 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $5,950 for self-only coverage and $11,900 for family coverage.

Employer contributions. Up to specified dollar limits, cash contributions to the HSA of a qualified individual (determined monthly) are exempt from federal income tax withholding, social security tax, Medicare tax, and FUTA tax. For 2010, you can contribute up to the following amounts to a qualified individual’s HSA.

• $3,050 for self-only coverage or $6,150 for family coverage.
• $4,050 for self-only coverage or $7,150 for family coverage for a qualified individual who is age 55 or older at any time during the year. The $7,150 limit is increased by $1,000 for two married individuals who are age 55 or older at any time during the year provided and each spouse has a separate HSA.

Employers are allowed to make larger HSA contributions for a nonhighly compensated employee than for a highly compensated employee.

Save Money, Sign Up Now for the 2010 IRS Nationwide Tax Forums

IR-2010-60, May 13, 2010

WASHINGTON — As the IRS Nationwide Tax Forums are about to begin, the IRS invites enrolled agents, certified public accountants, certified financial planners and other tax professionals to make their reservations for one of six forums being held throughout the country this summer. Those who sign up by the pre-registration date will save $129.

The IRS Nationwide Tax Forums are three-day events that provide tax professionals with the most up-to-date information on federal and state tax issues presented by IRS experts and partner organizations. The forums offer an opportunity to receive up to 18 continuing education credits through a variety of training seminars and workshops.

2010 Registration Fees, Dates and Locations:

The cost of enrollment for those who pre-register is $206 per person, a savings of $129 off the late or on-site registration price of $335. Pre-registration ends two weeks prior to the start of each forum.

Location Forum Dates Pre-Registration Deadline

Atlanta June 22-24 June 8

Chicago July 13-15 June 29

Orlando , Fla July 27-29 July 13

New York August 10-12 July 27

Las Vegas August 24-26 August 10

San Diego August 31 – September 2 August 17

This year, 43 separate seminars and workshops are being offered, each of which qualifies for continuing professional education credit for enrolled agents and certified public accountants.  Additionally, these seminars may qualify for continuing education credit for certified financial planners, pending review and acceptance by the Certified Financial Planner Board.

Members of the participating associations below qualify for discounted enrollment costs if they meet the pre-registration deadlines above. Members should contact their association directly for more information:

• American Bar Association (ABA)
• American Institute of Certified Public Accountants (AICPA)
• National Association of Enrolled Agents (NAEA)
• National Association of Tax Professionals (NATP)
• National Society of Accountants (NSA)
• National Society of Tax Professionals (NSTP)

In addition to the seminars, the forums also feature a two-day expo with representatives from the IRS as well as other tax, financial, and business communities offering their products, services, and expertise designed with the tax professional in mind.  Attendees can visit the IRS Preparer Services Room and sign up to become an Authorized IRS e-file Provider or learn about other electronic Services to benefit their business.

Finally, attendees are invited to bring their most difficult unresolved case to the forums to work with IRS personnel in the Case Resolution Room for assistance.  Last year, representatives brought a total of 1,099 cases with a 95 percent on-site resolution rate.

In a survey of 2009 attendees, the forums received a 97 percent satisfaction rate. Attendees stated that their participation enabled them to offer greater technical expertise to meet their clients’ needs. 2010 marks the 20th year that the IRS has hosted these forums to help educate and interact with the tax professional community.

To register or to get more information visit the 2010 Nationwide Tax Forum web site.

Investment Credit

Generally, the energy credit from the following properties was scheduled to expire after 2008 but has been extended through 2016.

Qualified fuel cell property.

Qualified microturbine property.

Solar energy property.

For tax years beginning after October 3, 2008, the energy credit can offset the alternative minimum tax.

For periods after February 17, 2009, the investment credit includes the qualifying advanced energy project credit.

For periods after 2008, the $4,000 limit on the energy credit for qualified small wind energy is repealed.

You may elect to treat qualified property placed in service as part of a qualified investment credit facility after 2008 as energy property for purposes of the energy credit instead of taking  the renewable electricity production credit.

Qualified Transportation Fringe Benefits – Bicycle Commuting Reimbursement

2009 Changes

After 2008, qualified transportation fringe benefits include any qualified bicycle commuting reimbursement.

Qualified bicycle commuting reimbursement. For any calendar year, the exclusion for qualified bicycle commuting reimbursement includes any employer reimbursement during the 15-month period beginning with the first day of the calendar year for reasonable expenses incurred by the employee during the calendar year.

Reasonable expenses include the purchase of a bicycle and bicycle improvements, repair, and storage. These are considered reasonable expenses as long as the bicycle is regularly used for travel between the employee’s residence and place of employment.

Exclusion from wages. Generally, the value of transportation benefits that you provide to an employee during 2009 are excluded from the employee’s wages up to the following limits.

• For combined commuter highway vehicle transportation and transit passes:
• $120 per month for the months of January and February 2009, and
• $230 per month for any month beginning after February 2009.
• $230 per month for qualified parking.
• For a calendar year, $20 multiplied by the number of qualified bicycle commuting months during that year for qualified bicycle commuting reimbursement.

Qualified bicycle commuting month. For any employee, a qualified bicycle commuting month is any month the employee regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment and does not receive transportation in a commuter highway vehicle, any transit pass, or qualified parking benefits.

Generally, qualified transportation fringe benefits are excluded from an employee’s wages even if you provide them under a compensation reduction agreement. However, qualified bicycle commuting reimbursements do not qualify for this exclusion if made under a compensation reduction agreement.

Many Tax-Exempt Organizations Must File Form 990 by May 17 Deadline to Preserve Tax-Exempt Status with IRS

Audio File for Podcast: Don’t Throw Away Your Tax Exempt Status

IR-2010-59, May 7, 2010

WASHINGTON — A crucial filing deadline of May 17 is looming for many tax-exempt organizations that are required by law to file their Form 990 with the Internal Revenue Service or risk having their federal tax-exempt status revoked.

The Pension Protection Act of 2006 mandates that all non-profit organizations, other than churches and church related organizations, must file an information form with the IRS.  This requirement has been in effect since the beginning of 2007, which made 2009 the third consecutive year under the new law. Any organization that fails to file for three consecutive years automatically loses its federal tax-exempt status.

Form 990-series information returns are due on the 15th day of the fifth month after an organization’s fiscal year ends. Many organizations use the calendar year as their fiscal year, which makes May 15 the deadline for those tax-exempt organizations. May 15 falls on a Saturday this year so the deadline this year is actually Monday, May 17.  Organizations can request an extension of their filing date by filing Form 8868 by the original due date. Absent a request for extension, there is no grace period from filing by the original due date.

Small tax-exempt organizations with annual receipts of $25,000 or less can file an electronic notice Form 990-N (e-Postcard). This asks for a few basic pieces of information. Tax-exempts with annual receipts above $25,000 must file a Form 990 or 990-EZ, depending on their annual receipts. Private foundations file form 990-PF.

Any tax-exempt organization that has not filed the required form in the last three years automatically will lose its tax exempt status effective as of the due date of the annual filing. Under the law, the IRS does not have discretion in this matter.

A list of revoked organizations will be available to the public on IRS.gov.

If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.