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In This Issue of NSAlert:
IRS CPE System Still Offline – May Affect CPE Credits
The IRS CPE system went offline in September with the anticipation that a new and improved system would be available "soon." Well, the system is STILL offline, so CPE providers, including NSA, have been unable to upload CPE credit information to the IRS for any programs taken since September 14.
What does that mean for CPE providers and tax professionals? It basically means that you need to have patience.
The IRS is obviously working through some issues with the new system. CPE providers were originally told in September that new system would be available in early October. At the end of October, providers received another "coming soon" email and yet another one on December 6. Meanwhile, CPE providers were told to contact IRS to receive emergency CPE program numbers to ensure that tax professionals could be assured that the program would qualify for IRS credit.
In that last December 6 email providers were also told that the IRS would stop taking requests for emergency programs numbers as of the midnight on December 8.
Please be assured that any CPE credits you have earned, whether with NSA or another authorized CPE provider with be uploaded to the IRS as soon as possible.
Tax Filing Season Officially Starts On January 23, 2017
The IRS has announced that it will begin accepting electronic and paper returns on January 23, making the beginning of the 2017 income tax filing season.
The agency said it would process returns and send out refunds as early as possible that that some early filers – those who claim certain tax credits such as the Earned Income Tax Credit and the Additional Child Tax Credit - should expect to wait until the week of Feb. 27—for their refunds. The refund delay for these returns is due to a new law that requires the IRS to hold refunds claiming the credits until Feb. 15; after that, it will take several workdays for the refunds to be released and processed through financial institutions, the IRS said.
The IRS also said the return filing deadline will be April 18 instead of April 15, because the 15th falls on a Saturday and the Emancipation Day holiday in the District of Columbia is on April 17.
Spending Bill Extends IRS Funding Through Tax Filing Season
President Obama signed into law on December 10 a spending bill that will extend IRS funding at current levels through April 28, but at existing levels. The bill is a so-called continuing resolution that will fund government through April while Congress figures out what to do about overall spending, tax reform and other issues in light of a new Administration led by Donald Trump.
Readers will recall that the IRS received an extra $290 million for customer service – i.e., answering the phone and combatting identity theft – last year, but the bill approved by Congress does not provide for this extra amount.
IRS Commissioner John Koskinen has repeatedly said that lawmakers must understand the level of funding for the agency is directly related to the quality of service taxpayers receive. So, get ready for more "courtesy disconnects," and hours spent waiting for someone at the IRS to answer a telephone call.
FASB Issues Technical Corrections
The Financial Accounting Standards Board issued technical corrections to multiple accounting rules. The corrections include six topics that are expected to result in changes to current practice because of either misapplication or misunderstanding of current rules.
The six Accounting Standards Codification topics where amendments might cause practice changes are:
- Subtopic 350-40, Intangibles—Goodwill and Other—Internal-Use Software;
- Subtopic 360-20, Property, Plant, and Equipment—Real Estate Sales;
- Topic 820, Fair Value Measurement;
- Subtopic 405-40, Liabilities—Obligations Resulting From Joint and Several Liability Arrangements;
- Subtopic 860-20, Transfers and Servicing—Sales of Financial Assets; and
- Subtopic 860-50, Transfers and Servicing—Servicing Assets and Liabilities.
Overall, the amendments clarify, correct or make minor improvements to the codification literature of accounting standards. They were issued Dec. 14 under ASU No. 2016-19, Technical Corrections and Improvements.
A copy of ASA 2016-19 is available here.
Wrongful Incarceration Retroactive Refund Claims Due December 19
The IRS is reminding taxpayers and tax professionals that the window for taxpayers who were wrongfully incarcerated to use a special retroactive tax exclusion and claim a refund will end on December 19.
The exclusion, enacted in the Protecting Americans from Tax Hikes (PATH) Act, provides a one-year window for claiming a refund on awards received and reported in an earlier tax year, even if the statute of limitations has expired for that year. Absent this provision, refund claims for tax years 2012 and earlier would be barred, the IRS said.
A bill (H.R. 6438) extending the deadline to file a claim with the IRS t passed the House by unanimous consent December 6. Sen. John Cornyn (R-Texas) has introduced a similar bill in the Senate but there is no opportunity to further consider the measure in this Congress.
Small Public Companies Seek Relief From FASB Reporting Burdens
The should consider a tiered standard-setting approach so that small public companies falling under a certain market capitalization range would have alternative reporting requirements, a Financial Accounting Standards Board small public company advisory committee has recommended.
Small public companies, strapped for staff and internal resources, are buckling under the weight of accounting rules and compliance regulation, according to committee discussion on December 1. Small public companies must still comply with the same reporting and regulatory requirements although they don't have the same internal resources as larger public companies, according to the discussions. In order to escape some of these requirements, some public companies might be forced to go private, committee members said.
"It does become such a burden that you're just going to lose more and more small companies; they're going to end up going private—they get orphaned and there's no sponsorship, a whole segment of the economy gets left out," said Tim Caffrey, president and portfolio manager of Wellesley, Mass.-based Ty View Capital. "I wonder whether you could put in minimum market cap or revenue sizes for incremental rules so these guys can focus more on running their business than on compliance and regulation," Caffrey said.
The comments were part of discussions about financial reporting disclosures and other reporting topics on which FASB sought feedback.
Foreign Real Estate Buyers Now Must Report Tax Data to IRS
U.S. limited liability companies with a single foreign owner, a common structure used in investment property deals, will have to report tax information to the IRS starting next year as the government continues to push toward tax transparency, according to final regulations issued by the Treasury Department on December 12.
The regulations treat single-owner LLCs as domestic corporations separate from their owners.
In addition to getting employer identification numbers from the agency, these foreign owners will have to file an information return aimed at disclosing all transactions with foreign related parties. The owners will have to report to the Internal Revenue Service in the same way already required for 25 percent foreign-owned corporations.
The final regulations will largely affect foreigners investing in U.S. real estate who frequently use single-member LLCs to purchase U.S condominiums as investment properties rather than residences.
The final regulations are available here.
2017 Standard Mileage Rates Reduced
The 2017 standard mileage rate used to calculate the deductible costs of operating a car for business purposes will to decrease to 53.5 cents a mile from 54 cents in 2016, the Internal Revenue Service said on December 13 in news release IR-2016-169.
The IRS announcement also said that:
The rate for medical care or the use of an automobile as part of a move for which the expenses are deductible will decrease to 17 cents a mile from 19 cents a mile in 2016;
The rate for operating an automobile in the service of charitable organizations is not adjusted by the IRS and remains unchanged at 14 cents a mile;
The maximum standard automobile cost that may be used in computing the allowance under a fixed- or -2016-169 is available at https://www.irs.gov/uac/2017-standard-mileage-rates-for-business-and-medical-and-moving-announcedvariable-rate plan falls to $27,900 in 2017 from $28,000 for automobiles, excluding trucks and vans, and increases to $31,300 in 2017 from $31,000 for trucks and vans.
A copy of the IRS News Release is available here.
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