FIRMA National Risk Management Training Conference Fort Worth, Texas March 26, 2012 © 2012, The Tax Reporting Group 1

Cheryl Riedlinger The Tax Reporting Group (336) © 2012, The Tax Reporting Group 2

3  Tax years after penalty increases to $100 and $1.5 million ceiling.  B Notices were issued in September/October 2011 for CG Penalty Notices issued in August 2011 for Many penalties from 2007 are in the appeals stage.  Additional forms to be added to 972CG Proposed Penalty Notice including Form 1042-S.

© 2012, The Tax Reporting Group4  New Forms W-9 issued in 2011 allow customers to designate S and C Corporations.  MISC reporting for corporations and merchandise REPEALED. Legal and medical corporations reportable.  State reporting – CFS and separate, direct filing requirements including new Form 1099-K and/or withholding.

© 2012, The Tax Reporting Group 5  Cost basis reporting required on Form 1099-B for covered securities (including stock in 2011 DRPs and RIC shares in 2012 and other securities in 2013). See latest Form 1099-B changes.  Proposed regulations issued on options and other debt instruments issued or acquired after  Transfer statements required in  Corporations must post/report corporate actions that impact shareholders’ cost basis. See new Form 8937.

© 2012, The Tax Reporting Group 6  FATCA – Regulations issued 2/9/2012 modify previous IRS Notices and give guidance to FFIs on identifying and documenting U.S. customers with offshore accounts.  FATCA is effective in Comments due April 30. Hearing May 15, Proposed regulations:  Addressed industry concerns in many areas.  Refined the definition of a “financial account” – generally bank, brokerage and money market accounts.  Electronic searches for accounts less than $1 million.  Exclude accounts under $50,000.  Certain FFIs such as pension plans may self-certify they are a “deemed compliant” entity.  Obligations outstanding on 1/1/2013 are grandfathered.  Officer certification addressed.  Transition rule for reporting gross proceeds.  Withholding on passthru payments delayed until 2017.

© 2012, The Tax Reporting Group7  U.S. issued joint statement with 5 countries (France, Germany, Italy, Spain and UK) that outlines an alternative approach to FATCA, allowing for reciprocity.  Proposed regulations provided guidance on credit default swaps, NPC and other financial instruments.  NRA reporting and withholding is a Tier One audit issue. Proposed reporting on Form 1042-S requires bank deposit interest to be reported to all NRAs (currently Canadians).

© 2012, The Tax Reporting Group 8  FinCEN Notice extends the deadline in Notices and by one year to 6/30/2013 for investment advisors, etc. who have signature authority but no financial interest in a financial account.  Revenue Procedure and allow electronic (substitute) K-1 for a partnership under 6031(b).  6050W reporting on new 2011 Form 1099-K, but withholding delayed on payment card payments to FAQs issued.  Truncate SSNs and TINs (not EINs) until  More 1099-A & C reporting due to foreclosures, modifications, credit card debt plus more scrutiny from states and debtors’ attorneys.

© 2012, The Tax Reporting Group 9  See also drafts of 2012 forms with major changes including:  Form 1099-C would require specific identifiable event.  Form 1099-B checkbox for non-covered securities.  Elimination of mortgage insurance box on Form 1098.

© 2012, The Tax Reporting Group Tax Reporting & Withholding Conference will be held May 6 – 8 in Arlington, Virginia. For further information about our services, contact: Cheryl Riedlinger (336)

Any tax advice included in this written communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed by any governmental taxing authority or agency. © 2012, The Tax Reporting Group 11