Green Mountain Payroll Conference Joseph McCarthy CPA IRS Senior Stakeholder Liaison cell office Joseph McCarthy CPA IRS Senior Stakeholder Liaison cell office Small Business/Self-Employed Division

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Issue Management Resolution System (IMRS)

What is IMRS? Provides a mechanism for raising concerns about –IRS policies, practices and procedures –Systemic problems Facilitates issue identification, resolution and feedback

Submitting an Issue Gather all information Contact local stakeholder liaison staff – search “stakeholder liaison” at IRS.gov

Reporting Cost of Employer Sponsored Health Coverage

Health Coverage for Older Children Exclusion from gross income for reimbursements for medical care under an employer-provided accident or health plan Employee’s child under 27 Effective as of 3/30/10 Child does not have to be a dependent IRC 105(b)

Small Business Health Care Tax Credit Maximum credit is 35% of premiums paid by the employer Two part phase out of credit –Fewer than 25 full-time equivalent employees –Average wages less than $50,000 per employee Excluded employees don’t qualify IRC 45R

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IRS Forms No Longer Being Mailed

From 941 The Form 941, Employer’s Quarterly Federal Tax Return will no longer be mailed.

Social security and Medicare tax for For 2011, the employee tax rate for social security is 4.2%. Reduced Social Security withholding will have no effect on the employee’s future Social Security benefits. IRS Notice 1036

New Rules for Federal Tax Return Preparers

Who needs a PTIN? Any individual who is compensated for preparing, or assisting in the preparation of, all or substantially all of a U.S. federal tax return or claim for refund

New Online Sign-Up System

Competency Testing Many preparers will be required to pass a competency test by Dec. 31, 2013 Testing will begin approximately mid-2011 Exempt from testing: –Attorneys, CPAs, and enrolled agents –Certain supervised preparers –Those who prepare no Form 1040 series returns

Competency Testing The initial test(s) will be for individuals who prepare Form 1040 series returns After competency testing has begun, new non-exempt preparers will be required to pass a competency test prior to obtaining a PTIN After passing the test, the individual is officially an “Registered Tax Return Preparer”

Continuing Education Registered Tax Return Preparers will have a new requirement to complete 15 continuing education hours per year: –three hours of federal tax law updates –two hours of ethics –ten hours of federal tax law The CE requirement has not begun. The earliest it will begin is Fall 2011

Background Checks Fingerprint checks will potentially be implemented in mid-2011 for individuals who are not attorneys, CPAs, or enrolled agents

Additional Ongoing Efforts Extension of Circular 230 ethical standards to all paid tax return preparers Development of a comprehensive return preparer enforcement strategy Development of a public awareness campaign to educate taxpayers, preparers, and employees on the new requirements and standards Creation of a public database