Fall 2010 Statistics of Income Bulletin Is Now Available

According to their newest press release, the IRS has unveiled their fall 2010 issue of the Statistics of Income Bulletin. The report contains data on the 142.5 million individual income tax returns filed for tax year 2008 with adjusted gross income (AGI) totaling $8.3 trillion.

The Statistics of Income (SOI) Division of the IRS produces the SOI Bulletin on a quarterly basis. Articles included in the publication focus on key segments of the most recent data available from various tax and information returns filed by U.S. taxpayers.

The fall issue includes two additional articles: One features an analysis of partnership returns for tax year 2008. The other features an analysis of information returns of nonprofit charitable organizations filed for tax year 2007.

Prior SOI Bulletins can be found on the Tax Statistic page of this website. Historical Tables and Appendix of the Bulletin can also be found there.

The Statistics of Income Bulletin is available for download at IRS.gov/taxstats. Printed copies of the Statistics of Income Bulletin are available from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. The annual subscription rate is $53 ($74.20 foreign), single issues cost $39 ($48.75 foreign).

Continue reading at IRS.gov...

Roni Deutch, A Professional Tax Corporation Launches End-Of-Year Donation Drive

‘Tis the season for giving; what are you and your company doing to help your community? The incredible employees of my law firm put together an end-of-year food and clothing drive to benefit Sacramento Food Bank & Family Services. You can read more about it below.

The community action committee at Roni Deutch, A Professional Tax Corporation is ending the year with yet another charitable donation drive.

"This is the season of giving," explains The Tax Lady Roni Deutch, "and I am asking my employees to help bring holiday cheer to those less fortunate by participating in our end-of-year donation drive."

"Times are tough, and according to the California Employment Development Department the unemployment rate here in Sacramento is around 13%," explains Deutch. "There are so many families that depend on Sacramento Food Bank & Family Services, and I am proud to assist in the efforts of the Sacramento Food Bank & Family Services."

On November 30th, Sacramento Food Bank & Family Services dropped off two collection barrels at Deutch's North Highlands, CA office. One barrel will be used to collect non-perishable food donations, the other for clothing donations. The donation drive will last through January 4th. 2011.

Read more at PRweb.com...

IRS Announces 2011 Standard Mileage Rates

In their newest press release the IRS issued the 2011 standard mileage rates. These numbers are used to calculate deductions for an automobile that is used for either business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

51 cents per mile for business miles driven

19 cents per mile driven for medical or moving purposes

14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

IRS Commissioner Doug Shulman's Statement on UBS / Voluntary Disclosure Program

IRS Commissioner, Doug Shulman, gave his wrap up report on the UBS investigation and related Voluntary Disclosure Program. According to Shulman, during the Voluntary Disclosure Program, more than 15,000 taxpayers came forward; each case involved an average of $200,000 in unpaid taxes. Shulman also stated that the John Doe Summons that was issued to collect information from UBS has been withdrawn, since the IRS and Department of Justice have received all the information they were looking for. He also explains new changes in the agency's efforts to crack down on international tax compliance. You can find his full statement at IRS.gov.

Today, I’m pleased to announce the IRS has withdrawn the John Doe Summons in the UBS AG matter. We are taking this action in light of our success in obtaining the account holder information we sought through the summons and obtained under the August 2009 agreement with the Swiss government and UBS. We appreciate the help and assistance of the Swiss government and UBS during this process.

In addition, I’d especially like to thank the team at the U.S. Justice Department, for its tremendous work and support. We could not have done this without them. Working together, we were able to assure that the agreement was successfully implemented and the United States expectations under this landmark agreement were realized. We look forward to continued partnership with Justice as we continue our work.

Today’s announcement is yet another milestone in our ground-breaking efforts in the international tax compliance arena. Not only are we breaking through the walls of international bank secrecy, we are producing real results for U.S. taxpayers.

I can’t say this enough: When people cheat on their taxes, the vast majority of honest U.S. taxpayers suffer the consequences and have to make up the difference.

The John Doe Summons in the UBS case was just one piece of a much larger effort underway here at the IRS on international issues. There are many elements to it.

As part of our efforts, we have renamed and reshaped our large corporate division into the Large Business and International Division in order to further emphasize and specialize our international and offshore banking efforts. We also continue to work closely with other governments through the Organization for Economic Co-Operation and Development.

Today, I want to give you an update on our high-profile efforts that touch on our continuing offshore banking efforts.

First, here is an update on our offshore voluntary disclosure program:

We have had thousands more taxpayers come in through our voluntary disclosure program since our special program ended last year. We had approximately 15,000 voluntary disclosures from individuals who came in before the VDP program ended.

Continue reading at IRS.gov...

2010 IRPAC Report Made Available

According to the IRS' newest press release, the Information Reporting Program Advisory Committee (IRPAC) released its newest report. The annual report includes recommendations on a variety of tax issues.

IRPAC provides a public forum for the IRS and members of the information reporting community in the private sector to discuss relevant information reporting issues. The IRPAC is administered by the National Public Liaison Office of the IRS. IRPAC draws its members from the tax professional community

Based on its findings and discussions, IRPAC reviewed 30 issues and made recommendations on a broad array of issues and concerns, including the following:

• Health care reporting (Form W-2) for 2011.
• Information reporting (Form 1099-MISC) under the Patient Protection and Affordable Care Act of 2010.
• Cost basis reporting by financial institutions of customer cost basis in securities transactions.
• Payment reporting (Section 6050W) made in settlement of payment card and third party transactions.
• Withholding and tax information reporting of payments of U.S. source income to foreign financial institutions and non-financial foreign entities, under Foreign Account Tax Compliance Act (FATCA).

IRS to Hold Open House Sept. 25 for Veterans and Persons with Disabilities

In their newest press release the Internal Revenue Service announced a nationwide open house to be held on September 25 to help veterans and taxpayers with disabilities solve tax problems and respond to IRS notices.

One hundred offices, at least one in every state, will be open from 9 a.m. to 2 p.m. local time. IRS staff will be available on site or by telephone to help taxpayers work through issues and leave with solutions.

In many locations, the IRS will partner with organizations that serve veterans and the disabled to offer additional help and information to people in these communities. Partner organizations include the National Disability Institute (NDI), Vets First, Department of Veterans Affairs, National Council on Independent Living and the American Legion.

“Taxpayers have tremendous success solving their tax issues at our open houses,” IRS Commissioner Doug Shulman said. “I want to encourage veterans and people with disabilities to come in on Sept. 25. Just like we reached out earlier this year to small businesses and victims of the Gulf Oil Spill, we want to help other taxpayers put their toughest problems behind them.”

IRS locations will be equipped to handle issues involving notices and payments, return preparation, audits and a variety of other issues. At a previous IRS open house on June 5, over 6,700 taxpayers sought and received assistance and 96 percent had their issues resolved the same day.

At the Sept. 25 open house, anyone who has a tax question or has received a notice can speak with an IRS employee to get an answer to their question or a clear explanation of what is necessary to satisfy the request. A taxpayer who cannot pay a balance due can find out whether an installment agreement is appropriate and, if so, fill out the paperwork then and there. Assistance with offers-in-compromise — an agreement between a taxpayer and the IRS that settles the taxpayer’s debt for less than the full amount owed — will also be available. Likewise, a taxpayer struggling to complete a certain IRS form or schedule can work directly with IRS staff to get the job done.

IRS Seeks New Issues for the Industry Issue Resolution Program

In a new press release, the IRS encouraged business owners and other interested taxpayers to participate in the Industry Resolution Program by submitting tax issues that are in need of a resolution.

The objective of the IIR program is to resolve business tax issues common to significant numbers of taxpayers through new and improved guidance. In past years, issues have been submitted by associations and others representing both small and large business taxpayers, resulting in tax guidance that helps thousands of taxpayers.

Recent submissions accepted into the IIR program include:

• Network assets in the telecommunications industry (unit of property)
• Asset class determination under Revenue Procedure 87-56 for wireless telecommunication assets
• Vendor mark down allowances in calculation of inventory under the retail inventory method
• Network assets in the utilities industry (unit of property)

Guidance issued as a result of the IIR program includes:

• Technical terminations of publicly traded partnerships - procedures for requesting relief, delegation of authority for granting relief, and a sample closing agreement documenting the conditions under which relief is granted. (Industry Director Communication LMSB-04-0210-006)
• Auto Last In First Out - for automobile wholesalers, manufacturers and dealers regarding the proper treatment of the dollar-value, LIFO inventory method for pooling purposes of crossover vehicles, which have characteristics of trucks and cars. (Revenue Procedure 2008-33)

Expanded 120-Day Time Window Applies to Disclosure Authorizations

According the newest IRS press release, a new rule has expanded to 120 days for the time period during which the Internal Revenue Service may share a taxpayer’s tax-return information with third parties, based on a taxpayer’s written disclosure authorization.

The newly-expanded time window is retroactive to Oct. 19, 2009. Consequently, any disclosure authorization signed and dated by a taxpayer on or after Oct. 19 qualifies for the new 120-day window. Forms affected by this change include:

• Form 4506, Request for Copy of Tax Return,
• Form 4506-T, Request for Transcript of Tax Return,
• Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript and
• Form 8821, Tax Information Authorization.

Many taxpayers use these forms to authorize the sharing of their tax information with others, including financial service providers. The IRS will share the requested information with the designated third party, as long as the agency receives the disclosure authorization within 120 days of the date it is signed and dated by the taxpayer.

The IRS on Dec. 18, 2009 released Notice 2010-8, which set forth an interim rule extending from 60 to 120 days the period within which signed and dated authorizations to disclose taxpayers’ tax-return information to third parties must be received by the IRS in order to be effective. The IRS made this change because some institutions charged with assisting taxpayers in their financial dealings have encountered difficulty in obtaining written disclosure authorizations and submitting them to the IRS within the 60 days allowed by the existing regulation. The interim rule will remain in effect until the IRS amends the regulations under section 6103(c) of the Internal Revenue Code.

IRS Reminds Small Tax-Exempt Organizations to File e-Postcards

In a new press release the IRS is reminding “many small tax-exempt organizations to file their annual electronic informational return with the IRS by the May 15 deadline.”

This is the second year of the new requirement for tax-exempt organizations whose gross annual receipts are normally $25,000 or less to file Form 990-N also known as e-Postcards. The process is fast and easy.

The May 15 deadline applies to all small organizations whose tax year ends on Dec. 31. Organizations whose tax year is different from the calendar year must file the e-Postcard by the 15th day of the 5th month after the close of their tax year.

“The leadership of these small organizations tends to change rather frequently, so it is important to remind everyone of this filing requirement,” said Lois Lerner, director of the IRS’s Exempt Organizations division. “It’s important for an organization to file. If it fails to do so for three consecutive years, it will automatically lose its tax-exempt status.”

The e-Postcard is a simple, Internet-based form that asks a few identifying questions about the organization. The e-Postcard must be filed online; there is no paper option.

IRS Seeks Members for Electronic Tax Administration Advisory Committee

According to the IRS’ latest press release, they “are accepting applications to fill vacancies on the Electronic Tax Administration Advisory Committee. The committee members provide the IRS with constructive observations about current or proposed policies, programs and procedures in electronic tax administration.

Applicants should submit a resume and complete an application form by April 3, 2009. A notice in the Federal Register contains more details about the committee and application process.

The ETAAC provides an organized public forum for the discussion of issues in electronic tax administration. The ETAAC supports the overriding goal that paperless filing should be the preferred and most convenient method of filing tax and information returns. The ETAAC's members are approved by the Secretary of the Treasury and serve a three-year term. Each June, the ETAAC submits an annual report to Congress about the IRS’ progress with electronic transactions.

Membership will include tax practitioners and preparers, transmitters of electronic returns, tax software developers, large and small businesses, employers, payroll service providers, financial industry representatives, system integrators (technology providers) and academics (marketing, sales and technical perspectives).

Requests for more information or completed applications should be sent to etaac@irs.gov or faxed to 202-283-4845. This is not a toll-free number.”

Interest Rates Drop for the First Quarter of 2009

According to their newest press release, the IRS is announced earlier today that interest rates for the first quarter of 2009 (beginning January 1, 2009) will drop by one percentage.

The new rates will be:

• Five (5) percent for overpayments [four (4) percent in the case of a corporation];
• Five (5) percent for underpayments;
• Seven (7) percent for large corporate underpayments; and
• Two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000.

“Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.”

IRS Announces Two New Appeals Programs

According to their newest press release, the IRS is announcing “a two-year test of two programs: the post-Appeals mediation and arbitration procedures for Offer in Compromise (OIC) and Trust Fund Recovery Penalty (TFRP).

Beginning Dec. 1, 2008, for a two-year test period, Appeals will offer post-Appeals mediation and arbitration for OIC and TFRP cases for taxpayers whose appeals are considered at the Appeals office in Atlanta, Chicago, Cincinnati, Houston, Indianapolis, Louisville, Phoenix, and San Francisco.

Under these two alternative dispute resolution programs, the taxpayer or Appeals may request nonbinding mediation. The taxpayer may decline Appeals’ request for mediation. Appeals will evaluate a taxpayer’s request for mediation based on the criteria detailed in Revenue Procedure 2002-44 and Announcement 2008-111. A request for binding arbitration must be made jointly by the taxpayer and Appeals. The mediation and arbitration procedures do not create any additional authority for settlement by Appeals.

During the test period, Appeals employees will advise the taxpayer of the availability of these alternative dispute strategies and the deadline for timely requesting such strategies when a rejection of an OIC is sustained or a proposed TFRP assessment is sustained. An OIC submitted during Collection Due Process (CDP) as an alternative to a Collection action is not eligible for these alternative dispute resolution strategies during the test period.”

IRS Increases Deductions & Exemptions Due to Inflation

According to their newest press release, the IRS is making adjustments to more then tree dozen tax benefits for the tax 2009 tax year. Due to inflation adjustments personal exemptions and standard deductions will change and are likely to affect virtually every single taxpayer. According to the release, “key changes affecting 2009 returns, filed by most taxpayers in early 2010, include the following:

• The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.
• The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
• Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.
• The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.
• The annual gift exclusion rises to $13,000, up from $12,000 in 2008.”

IRS Announces New Members and a Chairman for ETAAC

According to their newest press release, the IRS has announced the selection of five new members and the new chairperson for the Electronic Tax Administration Advisory Committee (ETAAC).

“IRS is pleased by the continued support it receives from ETAAC,” said David R. Williams, director of IRS Electronic Tax Administration and Refundable Credits. “ETAAC helps the IRS work toward achieving its modernization goals and helps enhance tax administration on behalf of all taxpayers.”

“The 14-member ETAAC serves as a public forum for discussion of electronic tax administration issues and supports the goal of increasing electronic interactions between tax professionals and the IRS. ETAAC, which was created in 1998, submits an annual report to Congress on the progress of the IRS’ electronic tax initiatives.

Chris Beach of Sacramento, Calif., has been selected to serve as the Chairman of ETAAC for the 2008-2009 term. Beach, who joined ETAAC in 2006, is the Director of Filing Methods for the California Franchise Tax Board where he oversees business operations and product development for the state’s e-file and electronic services programs.

The new members, who will replace the outgoing members whose terms expired, will each serve three-year terms beginning October 2008 and ending October 2011.

The new members are:

Jean-Philippe Choudhry of Agoura Hills, Calif., is the Chief Process Officer for 1099 Pro Inc. where he is responsible for developing and defining processes to meet federal and state requirements for filing information returns. The company’s reporting methods include Web-based solutions and desktop software. 1099 Pro’s clients e-file hundreds of millions of information returns annually with the IRS FIRE (Filing Information Returns Electronically) system.

Paul Colombo of Colchester, Vt., is the former State Coordinator for the American Association of Retired Persons (AARP) Tax-Aide program. His accomplishments include achieving an 80 percent e-file rate, with the help of 120 volunteers, at three dozen sites serving 12,000 clients each year. He has extensive experience with web design, creation, and programming.

Phillip Poirier of San Diego, Calif., is Vice President of the Government and Consumer Tax Division at Intuit. He is responsible for government initiatives relating to Intuit’s consumer businesses (TurboTax and Quicken). Poirier has extensive experience in business development, with privacy/security matters in connection with electronic commerce initiatives and with providing legal and regulatory compliance counsel.

Andrew Sidamon-Eristoff of New York is a former Commissioner of the New York State Department of Taxation and Finance and the New York City Department of Finance. Sidamon-Eristoff has been a leader in conceiving, implementing and promoting e-filing and electronic taxpayer services at the state and local government levels. He is currently a private investor and international consultant in tax administration.

Princess Vlandamir of Dallas is a Tax Strategist and Project Manager for Ernst & Young, supporting the Tax Practice. She co-leads e-filing initiatives, assists in solving return reject problems and manages the filing- season readiness program. Vlandamir also works on tax software applications and eStorage.”

IRS Issues 2009 Inflation Adjustments

According to their newest press release, the IRS has issued new inflation adjustments for the year 2009. “By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. Consequently, more than three dozen tax benefits, affecting virtually every taxpayer, are being adjusted for 2009. Key changes affecting 2009 returns, filed by most taxpayers in early 2010, include the following:

• The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.
• The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.
• Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.
• The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.
• The annual gift exclusion rises to $13,000, up from $12,000 in 2008.”

Hurricane Grant Guidelines Now Available

According to their newest press release, the IRS has issued a notice designed to help eligible homeowners who received federal reimbursement grants stemming from Hurricanes Katrina, Rita or Wilma take advantage of a new tax provision.

“Notice 2008-95 provides guidelines to homeowners who received these grants, including the Louisiana Road Home Grants and the Mississippi Development Authority Hurricane Katrina Homeowner Grants.

The Housing and Economic Recovery Act, enacted this summer, included the new provision, aimed at helping grant recipients who previously claimed hurricane-related disaster-loss deductions on their main home. The new law gives affected homeowners the option of adjusting previously claimed deductions by treating their federal reimbursement grants as reimbursement for the losses they suffered on their main home from Hurricanes Katrina, Rita or Wilma.

Before this change, homeowners who claimed casualty loss deductions and received grants in a later tax year as reimbursement for the loss were required by law to pay tax on part or all of the grant to compensate for the tax benefit of the prior deduction. While individual circumstances varied, this meant that some taxpayers ended up paying more tax on the grant than they saved by claiming the deduction.

The notice explains how eligible taxpayers can amend prior-year returns to reduce the casualty loss deduction by the amount of the grant, and explains that taxpayers have one year to pay back any resulting tax due, penalty-free and interest-free. To qualify for this relief, these amended returns must be filed by July 30, 2009, and the entire resulting tax due paid by July 30, 2010, in most cases. The notice also provides special instructions for those taxpayers who have already filed an amended return.

Taxpayers should write the words, ‘Hurricane Grant Relief’ in dark, bold letters at the top of their amended return, Form 1040X, and mail it to: Internal Revenue Service Center, Austin, TX 73301-0255. Amended returns cannot be filed electronically.

The IRS cautioned that, although filing an amended return may be a good option for many, it will not necessarily be the right choice for everyone. The agency urges affected taxpayers and their representatives to consider carefully which option is best under their particular circumstances.”

IRS Sends Compliance Questionnaires to 400 Colleges and Universities

According to the newest IRS press release, “approximately four hundred U.S. colleges and universities will begin receiving compliance questionnaires from the Internal Revenue Service in the next few days as part of the agency’s focused effort to study key areas in the tax-exempt community. The college and university questionnaire will focus on unrelated business income, endowments and executive compensation practices. The questionnaires are being sent to a cross-section of small, mid-sized and large private and public four-year colleges and institutions.

Private nonprofit universities are generally exempt from tax under Internal Revenue Code section 501(c)(3) and like state universities are subject to unrelated business income tax.

‘This effort reflects our work to build a better understanding of the largest, most complex organizations in the tax-exempt sector,’ said Doug Shulman, IRS commissioner. ‘The information gathered will help us identify issues and areas that may need more outreach and education or further scrutiny.’

Among other things, the questionnaire will gather information from the schools about how they report revenues and expenses from their trade or business activities, classify their activities as exempt or taxable activities, and calculate and report income or losses on taxable activities. The questionnaire also will gather information regarding how the organization invests and uses its endowment funds and determines compensation of certain highly paid individuals.

The IRS said it expects to receive most of the responses within the next several months, analyze the results of the compliance questionnaire and conduct examinations of a sample of the organizations. The IRS said it expects to issue a report on the project in 2009.”

September Tax Talk Today Highlights EITC Due Diligence Rules

According to their newest press release, the IRS’ next Tax Talk Today Web cast will be next Tuesday (September 9, 2008) at 2 p.m. The topic of the next web case will be EITC Due Diligence - It’s Your Responsibility.

“Practitioners who prepare Earned Income Tax Credit (EITC) claims must meet four due diligence requirements. For example, they must ask the required questions on Form 8867, Paid Preparer's Earned Income Credit Checklist, and probe further when information seems incorrect, inconsistent or incomplete.

Failure to meet the due diligence requirements can result in a $100 penalty for each failure.

The broadcast will be a good opportunity for return preparers to review the requirements and get the latest information from the IRS executive and technical staff responsible for this $43 billion program.

Moderated by Les Witmer, panelists for the September program are: Debra S. Holland, EITC program director; Sue Gaston, director of industry operations, H&R Block; Sherrill L. Gregory, an Orange County, Calif., tax practitioner; and Bridget E. Tombul, IRS counsel.

Tax Talk Today is a Web cast aimed at educating tax and payroll professionals on the most current and complex tax issues. Tax professionals are encouraged to watch and submit questions.

To access the Web cast at no charge, viewers can register online. Tax professionals in need of continuing education credits are eligible to receive one CPE credit by viewing the September 9 Web cast.”

IRS Issues Summer 2008 Statistics Of Income Bulletin

According to their latest news release, “the Internal Revenue Service today released the summer 2008 issue of the Statistics of Income Bulletin, which features tax year 2005 data on the growth in profits and tax liability reported by foreign-controlled domestic corporations.

According to 2005 data, there were 61,820 foreign-controlled domestic corporations (FCDCs), accounting for 1.1 percent of the total of all U.S. corporations. However, FCDCs generated $3.5 trillion of total receipts with $9.2 trillion of total assets, accounting for 13.7 percent of receipts and 13.9 percent of assets reported on all U.S. corporation income tax returns.

Profits, or net income less deficit, reported by FCDCs for tax purposes were $165.2 billion, an 81.9 percent increase from $90.8 billion reported in 2004. The U.S. tax liability for FCDCs, total income tax after credits, was $42.4 billion for 2005, a 41.7 percent increase since 2004.

The Bulletin also features articles on the following:

• Foreign corporations controlled by U.S. multinational corporations: For tax year 2004, these controlled foreign corporations held $9.2 trillion in assets and reported $3.8 trillion in receipts.
• Corporations that claimed the foreign tax credit on their U.S. tax returns: For tax year 2004, corporations claimed foreign tax credits worth $56.6 billion, representing an all-time high and a 13.2 percent increase over the previous high amount in 2003. Use of this credit reduced their U.S. tax on worldwide income by 30.2 percent, from $187.5 billion to $130.9 billion.
• Growth trends in the number of partnership and sole proprietorship returns: While the number of partnership returns filed between 2002 and 2005 increased by 23 percent, the number of sole proprietorship returns increased by 1.9 percent.
• Federal gift tax returns filed for gifts given in 2005: Americans reported $38.5 billion in cash and other asset transfers. Almost 3 percent of gift tax returns were taxable with $1.7 billion in reported tax liability.
• Use of business credit for research activities: Corporations claimed almost $6.4 billion in these credits for tax year 2005, and corporations in the manufacturing industries claimed more than 70 percent of this amount.”

IRS Revises Voluntary Correction Program for Retirement Plans

According to the IRS’ latest news release, they have “updated guidance on the voluntary correction program for employee retirement plans – the Employee Plans Compliance Resolution System (EPCRS).

‘Employers and plan administrators want to comply with the tax laws and regulations to protect plan participants,’ said Michael Julianelle, director of the IRS’s Employee Plans division. ‘EPCRS helps employers and plan administrators take a proactive role in identifying and fixing mistakes. It also encourages implementation of practices and procedures that ensure retirement plans comply with laws and regulations.’

Under EPCRS, plan sponsors and plan professionals can correct certain errors in employee retirement plans, in some cases without having to notify the IRS. Correcting plans in this way allows participants to continue receiving tax-favored retirement benefits and protects the retirement benefits of employees and retirees.”

To read more on the IRS’ updates to the Employee Plans Compliance Resolution System click here.