Pension Plan Limitations for 2012 will change

IR-2011-103, Oct. 20, 2011

WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2012. In general, many of the pension plan limitations will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged.  Highlights include:

• The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $16,500 to $17,000. » Read more..

IR-2011-100, Oct. 12, 2011

WASHINGTON — The Internal Revenue Service today advised tax professionals and tax firms that do not have Electronic Filing Identification Numbers (EFINs) to start the process to obtain EFINs now so they can meet new e-file requirements for 2012.

Starting in January 2012, any paid preparer or firm that reasonably anticipates preparing and filing 11 or more Form 1040 series returns, Form 1041 returns, or a combination of Form 1040 series returns and Form 1041 returns generally must use IRS e-file. Their clients who file these forms, however, may independently choose to file by paper. » Read more..

Don’t Overlook Special Individual and Small Business Tax Benefits

IR-2011-101, Oct. 12, 2011

WASHINGTON — The Internal Revenue Service today urged taxpayers whose tax-filing extensions run out soon to double check their returns for expanded individual and business tax benefits, and then file their returns electronically using IRS e-file or the Free File system.

Many of the nearly 10.1 million taxpayers who requested an automatic six-month extension this year have yet to file. IRS e-file is fast, accurate and secure, making it an ideal option for those rushing to meet the Oct. 17 deadline that applies to » Read more..

Tax services provider H&R Block said it will not offer refund anticipation loans during the 2012 tax season, but will continue to provide other low-cost financial products.

A refund anticipation loan (RAL) is a short-term loan based on a taxpayer’s anticipated federal tax refund and is a highly profitable business for tax preparers. The loans usually last 7-14 days until taxpayers receive their refunds from the U.S. Internal Revenue Service.

“Knowing we had a strong 2011 tax season without RALs, our analysis did not present a compelling reason to bring back the product in 2012,” Chief Executive Bill Cobb said in a statement.

H&R Block was unable to offer RALs in 2011 after regulators directed its third-party lending bank to stop funding the product.

The Kansas city, Missouri-based company said it will continue to offer other low-cost financial services such as refund anticipation checks (RACs).

RACs allow taxpayers to deduct the cost of tax preparation from their tax refund.

Source (Reuters)

Tax preparers are chewing their pencils as the U.S. Internal Revenue Service gets ready to impose the first comprehensive program of fees and rules on the industry’s 730,000 practitioners.

Some fear the IRS campaign against tax fraud could squeeze out small, independent businesses and allow large competitors such as H&R Block Inc and Jackson Hewitt Tax Service Inc to capture market share.

The IRS, which plans to finalize the new fees in coming months, recently said it was open to ways to mitigate costs.

To get certified, preparers will need to register » Read more..

IRS Issues Proposed Regulations That Would Require Tax Preparers to File Due Diligence Checklist with All EITC Claims Submitted in 2012

IR-2011-98, Oct. 6, 2011

WASHINGTON —The Internal Revenue Service announced today that it is issuing proposed regulations that would require paid tax return preparers, beginning in 2012, to file a due diligence checklist, Form 8867, with any federal return claiming the Earned Income Tax Credit (EITC). It is the same form that is currently required to be completed and retained in a preparer’s records.

The due diligence requirement, enacted by Congress over a decade ago, was designed to reduce errors on returns claiming the EITC, most of which are prepared by tax professionals. » Read more..

EITC Preparer Compliance – Targeted, Tailored and Tiered

According to the latest IRS release, because of the multiple system abuse by taxpayers and tax preparers not doing their due diligence when it comes to EITC the following steps will be necessary to stop system wide abuse.

This is what they will do for 2012 tax season: 

It’s

 Why Have a Preparer Compliance Program?

We estimate 24 to 29 percent of all EITC claims have some type of mistake which costs the government $13 billion to $16 billion each year. » Read more..