Tip compliance agreement program extended
The IRS has announced that the Tip Rate Determination and Education Program is to be extended indefinitely beyond its original 2005 expiry date. Since the program was introduced, voluntary compliance has significantly increased. In 1995, tip wages reported were $9.45 billion. For 2003, the amount exceeded $18 billion. To date over 15,000 employers have entered into tip agreements, representing nearly 47,000 individual establishments.

With the indefinite extension of the tip program, the IRS will administer existing tip agreements without the need for employers to re-sign agreements.

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...back to 16 September 2004


Further information:
www.irs.gov/newsroom/article/0,,id=129379,00.html
www.irs.gov/businesses/small/industries/article/0,,id=98367,00.html

IRS technical guidance
The IRS has launched a new service to make technical guidance available via e-mail to tax professionals when the documents are issued. Through the IRS GuideWire list server, subscribers receive notification of and links to IRS announcements, notices, revenue procedures and revenue rulings as they are issued.

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...back to 5 August 2004


Further information:
www.irs.gov/newsroom/page/0,,id=123315,00.html

New computer system for taxpayer returns
The IRS has announced that a modernized system designed to replace the IRS central database of taxpayer account information has processed its first live returns. The Customer Account Data Engine (CADE) started processing an initial set of 1040EZ tax returns in the past week. The returns being processed are the most basic of 1040EZ forms and have a narrow range of taxpayer information, but it marks the first time since the 1960s that individual tax returns have been processed in a new way.

CADE will be used to process more than 2 million 1040EZ tax returns during the 2005 filing season. The CADE system is scheduled to be phased in over several years, processing increasingly more complex tax returns in stages, ultimately replacing the 40-year-old system the IRS now uses to process tax return data.

When fully operational, CADE will be a modern database that will house tax information for more than 200 million individual and business taxpayers. It replaces an antiquated system called the Master File. The magnetic tape-based system came into use four decades ago, takes a week to update records and creates delays in providing accurate account information for taxpayers. When completed, CADE will provide a variety of benefits to taxpayers, such as faster refunds along with daily postings of transactions and updating of accounts.

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...back to 22 July 2004


Further information:
www.irs.gov/newsroom/article/0,,id=125546,00.html

Partnership with the states to target abusive tax avoidance schemes
Starting in September 2003, the IRS, 48 states and the City of New York and the District of Columbia launched the Abusive Tax Avoidance Transaction (ATAT) partnership. Since then, more than 28,000 leads of those participating in such transactions have been shared between the state and federal government. The IRS states that it has seen promising early results from this partnership. So far, tens of millions of dollars in previously unidentified abusive transactions have been uncovered during the early stages of the program and the program is to be extended to include money laundering.

Two of the joint initiatives under consideration are:

• State Income Tax Reverse Filing Match: Under this initiative, the IRS will match state income tax filing information against federal data to identify discrepancies, including potential non-filers and those underreporting income.
  
  
• Federal State Internet Employee Identification Number (EIN): In this burden reduction initiative, taxpayers will be able to obtain simultaneously via the Internet an EIN from the IRS and a registration number for sales tax and/or income tax from their home state. This one-stop approach would reduce paperwork and save time.

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...back to 10 June 2004


Further information:
www.irs.gov/newsroom/article/0,,id=123817,00.html
www.irs.gov/newsroom/article/0,,id=112866,00.html
www.irs.gov/newsroom/article/0,,id=112866,00.html

Taxpayers encouraged to report systemic tax issues
Members of the public who encounter systemic tax problems can now use the Internet to bring them directly to the attention of the IRS Taxpayer Advocate Service (TAS), an independent organization within the Internal Revenue Service that helps taxpayers resolve problems with the IRS and recommends changes that will prevent problems.

In contrast with taxpayer-specific cases, systemic issues affect segments of the taxpayer population - locally, regionally or nationally. Advocacy projects are initiated on those items that affect multiple taxpayers and relate to IRS systems, policies and procedures. They may require administrative or legislative solutions.

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...back to 20 May 2004


Further information:
www.irs.gov/newsroom/article/0,,id=123209,00.html
www.irs.gov/advocate

IRS Tax Forums planned for the summer
The Internal Revenue Service will host a series of six Tax Forums this summer to help educate and serve the tax practitioner community. The three-day Forums are offered in July, August and September. Attendance at the Forums, now in their 14th year, has grown steadily. Almost 17,000 tax professionals attended the Forums in 2003, an increase of about 2,000 from the year before.

The Forums feature a variety of basic and advanced seminars designed to provide the tax professional community with the latest and most complete information on a variety of IRS programs, practices and policies. The agenda for the 2004 Forums includes seminars on the new IRS e-Services program, retirement plans for small businesses, abusive tax avoidance transactions, the proposed revisions to IRS guidance on ethics and professional responsibility, privacy, faster account resolution, tax law changes and compliance initiatives, among others.

The dates and locations of this year's six Forums are:

• July 6-8 in Atlantic City, New Jersey
• July 20-22 in Orlando, Florida
• August 3-5 in Minneapolis, Minnesota
• August 17-19 in New Orleans, Louisiana
• August 31-September 2 in San Antonio, Texas
• September 14-16 in Las Vegas, Nevada

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...back to 20 May 2004


Further information:
www.irs.gov/newsroom/article/0,,id=123219,00.html
www.taxforuminfo.com

Identity fraud scheme involving bogus e-mails
The U.S. Department of the Treasury and the Internal Revenue Service has warned taxpayers of an e-mail-based scheme that attempts to trick taxpayers into revealing personal information such as social security numbers, driver's license information and bank and credit card numbers.

In this ploy, unsuspecting consumers receive an e-mail, claiming they are under investigation for tax fraud and are subject to prosecution. The e-mail informs recipients they can "help" the investigation by providing "real" information and directs them to an official-looking Web site, http://deptreas.org/irs/7634//, where detailed personal information must be provided to dispute the charge.

The IRS does not use e-mail to contact taxpayers about issues related to their accounts.

Further information:
www.irs.gov/newsroom/article/0,,id=122997,00.html
...back to 6 May 2004

IRS nationwide tax forums
A number of forums are being arranged by the IRS to provide tax professionals with current guidance on tax law, compliance and tax practice and procedure. The locations and dates announced so far are:

Volunteers sought for the Taxpayer Advocacy Panel
The IRS is inviting taxpayers to apply for membership of the Taxpayer Advocacy Panel. The panel provides a forum for citizens from each state to make suggestions regarding IRS decision making. To qualify, applicants must be U.S. citizens and be able to commit about 300 hours during the year to the panel. The deadline for applications is April 30, 2004.

Further information:
www.irs.gov/newsroom/article/0,,id=122442,00.html
...back to 8 April 2004

Any suggestions?
Business taxpayers are encouraged to submit tax issues they believe could be resolved more efficiently with new or improved guidance for the Industry Issue Resolution Program (IIR) by March 31, 2004, to be considered for the next selection process.

Under the IIR Program, taxpayers, industry associations, and other interested parties submit business tax issues for possible resolution through published or administrative guidance. For each issue selected, an IIR team of IRS and Treasury personnel gather relevant facts from taxpayers or other interested parties and recommend guidance to resolve the issue.

The goal is to resolve tax issues that are common to a significant number of business taxpayers by providing more effective guidance. Under the program, the IRS has issued guidance that reduced costs, burden and uncertainty for taxpayers.

Further information:
www.irs.gov/businesses/article/0,,id=109645,00.html
www.irs.gov/pub/irs-drop/rp-03-36.pdf
...back to 4 March 2004

Taxpayer Advocate recommends changes to tax law
In her third annual report to Congress, Nina E. Olson, National Taxpayer Advocate, argues for a repeal of the Alternative Minimum Tax or measures to lessen its impact on middle-income taxpayers. In addition, she proposes a new withholding requirement to collect some of the $81 million in lost tax Revenue from independent contractor sole proprietors.

The other top taxpayer problems include Earned Income Tax Credit compliance strategy, the IRS Appeals implementation of the Collection Due Process program, and the administration of Individual Taxpayer Identification Numbers.

The Taxpayer Advocate Service is an independent organization within the IRS, helping individuals to solve ongoing tax problems with the IRS.

Further information:
www.irs.gov/newsroom/article/0,,id=119518,00.html
www.irs.gov/pub/irs-utl/nta_2003_annual_report2.pdf
www.irs.gov/advocate/index.html
...back to 15 January 2004

Improvements in operational efficiency at the IRS
The IRS has announced a number of operational changes, including the closure of the Memphis tax return processing operations and a reduction in the number of locations involved in back-office processing from 92 to 4. The changes will take place from 2005 onwards.

It is estimated that around 2,400 employees will be involuntarily separated, allowing the IRS to create new positions in areas of enforcement.

Further information:
www.irs.gov/newsroom/article/0,,id=119136,00.html
...back to 8 January 2004