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July 19-Aug. 15, 2010 | accounting today 17
The Internal Revenue Service needs to
screen and monitor electronic filing providers more carefully, according to a new report
from the Treasury Inspector General for Tax
Administration, which found that while the
IRS has an effective process for ensuring applicants meet age requirements and have no
tax compliance issues, the agency is not consistently verifying that new applicants are U.S.
citizens or legal aliens authorized to work in
the United States.
As of June 21, 2009, there were 207,419
electronic return originators who e-filed
about 61 million (66 percent) of the approximately 92 million e-filed tax returns accepted
in 2009. To become an e-file provider, an applicant must meet required screening and
verification checks. Applicants must be U.S.
IRS should toughen e-file monitoring
WASHINGTON, D.C.
taxnews
citizens or legal aliens and at least 21 years of
age. An applicant who is not an attorney, CPA
or enrolled agent must supply a fingerprint
card, which is used to conduct a criminal
background check.
The report found that the IRS also needs
to verify that some e-file providers claiming
nonprofit status are indeed nonprofit organizations. Nonprofits are excluded from all
e-file program requirements and suitabil-ity checks that for-profit organization must
complete.
The IRS did not verify the nonprofit status
of some e-file providers participating in the
IRS’s Volunteer Program. The Volunteer Pro-
gram provides no-cost federal tax preparation
and e-filing services to low- and moderate-
income taxpayers who are elderly, disabled
or have limited English proficiency.
sent a letter dated May 7, 2010, to the chairs
of both FASB and the IASB, signed by Arnold
Hanish, chair of the FEI’s Committee on
Corporate Reporting. For decades, the CCR
has opposed essentially every new proposed
standard, usually claiming the insurmountability of such obstacles as compliance cost
and recording effort, as well as complexity,
but virtually never (if ever) seriously addressing the question of whether the proposal
would produce decision-useful information.
In this case, Hanish asked the boards to slow
down the fast pace of coming Type One converged standards.
Despite the difference in the FEI’s views
and ours, Hanish’s words ironically echoed
ours from a few columns back (“To the SEC:
Forget the Timetable and Stop the Runaway
Train,” March 15, 2010) when we questioned
the wisdom of trying to complete 10 or more
major projects with simultaneous multiple
exposure drafts over the next 12 months.
As we see it, only bad things will happen if
the boards hastily develop compromises that
merely address the pragmatic political issue
(i.e., “Do we have enough votes to pass this
standard?”), instead of the real underlying
market-efficiency issue (i.e., “Will this stan-
dard unveil truth that users need?”). Given
that standards tend to last for decades, it’s a
major misstep to rush through the process as
the boards set out to do.
IRS LEAVES HSA RATES IN PLACE
WASHINGTON, D.C. — The Internal Revenue Service has left the 2011 inflation-adjusted amounts for health savings
accounts unchanged from 2010, citing
the Consumer Price Index.
In Revenue Procedure 2010-22, the
IRS said that for calendar year 2011, the
annual limitation for deductions for an
individual with self-only coverage under
a high-deductible health plan would
remain $3,050. The annual limitation on
deductions for an individual with family
coverage would remain $6,150 in 2011.
For calendar year 2011, a high-deductible health plan is defined as a health
plan with an annual deductible that is
not less than $1,200 for self-only coverage or $2,400 for family coverage, and
where the annual out-of-pocket expenses
(deductibles, co-payments and other
amounts, but not premiums) do not
exceed $5,950 for self-only coverage or
$11,900 for family coverage.
PRINCIPLES AND RULES
Just to be clear, we’ll repeat our stand on the
principles vs. rules issue. Certainly, we’re all
in favor of principles, but only at the conceptual framework level where they can help
standard-setters produce detailed rules that
generate useful information for decisions.
What’s needed are enforceable and discre-tion-removing rules based on principles that
support decision-usefulness.
STRANGE BEDFELLOWS
Just when we were thinking it could not get
any better, Financial Executives International
SO THERE!
Whether it’s taking Tom Jones’ words with
a grain of salt, comprehending the chief accountant’s messages, reading the research
out of Texas and Iowa on litigation, seeing the
FEI oppose a rushed convergence, or heaving
a sigh of relief over the two boards’ decision
to tap the brakes, momentum against the
urge to converge (both Types One and Two)
is losing steam.
And that is a good thing. AT
to $4,800 for most residents residing in the
designated county. The credit is claimed on
Form 8850.
TWO NEW HIRING TAX BENEFITS
An employer hiring credit of up to $1,000 is
also available in 2011 for non-family employ-
ees hired after Feb. 3, 2010, and retained for
at least 12 months. The employee must either
be hired for a newly created position, or be a
replacement of an employee who quit or was
let go “for cause.”
So as not to put further strain on the Social
Security system, the payroll tax reduction un-
der the HIRE Act will be transferred from the
federal General Fund.
CONCLUSION
Employee candidates who spend a little extra
time researching the tax breaks that they can
provide their new employer will significantly improve their chances of getting hired. It
will set them apart from other candidates,
demonstrating their knowledge of what
they can do to benefit their potential future
employer. In addition, their job security can
also improve, since the credits are often conditioned upon some period of retention by
the employer. AT
TAX DEPARTMENTS FOCUSING
MORE ON COMPLIANCE
CHICAGO — An overwhelming majority of
senior financial executives say that their
tax department’s top priority is not tax
savings or their effective rate, but timely
and accurate tax return and financial
reporting, according to a new survey by
Grant Thornton.
Both Congress and the IRS have
recently taken steps to beef up compli-
ance tools for what they see as too much
aggressive tax planning. The IRS is cur-
rently developing a tax return schedule
that will force large corporations to list
and disclose detailed information on any
tax position that meets the IRS definition
of “uncertain.” And Congress just passed
legislation that changes the rules and
dramatically increases penalties for trans-
actions that “lack economic substance.”
But Grant Thornton’s survey found
that financial executives want their tax
departments focused on compliance,
not aggressive tax planning. Nearly two
thirds (62 percent) said that their top
priority is either timely and accurate
financial reporting, or timely and accurate
tax return preparation and compliance.
Another 10 percent listed accurate tax
risk assessment and appropriate manage-
ment as the top priority. Just 12 percent
ranked overall effective tax rate as the
top priority and just 16 percent said that
it was actual tax savings or deferrals.
