The IRS will soon be looking over the shoulders of tax return preparers and their clients when they report stock sales on Schedule D, Form 1040. 

For stock acquired and sold after 2010, the IRS will receive information returns from security brokers reporting the adjusted basis of the stock sold and whether the capital gain or loss on the sale is short-term or long-term. These information returns will allow the IRS to double check what you report for your clients on Schedule D.

The silver lining for your clients is that they will have some control over what their brokers report in certain situations. Your clients should receive information and advice from their brokers about the new rules. However, if there are slip-ups, you are going to have to explain to your clients why their tax bill is higher than they expected. » Read more..

A tax return is signed under penalties of perjury and is not an opening offer, quipped journalist Lee Sheppard.  True, but we all make mistakes.  Besides, some items—like an amended an Form K-1 or 1099, may show up after you’ve filed.  The IRS doesn’texactly allow tax return do-overs. 

Still, if you discover an error on your tax return, the only way to fix it is to amend your return.  There are many myths about amended returns, but the IRS recently listed some things they want you to know.  See IRS Summertime Tax Tip 2011-12.

Do Amend.  If your filing status, dependents, total income, deductions or credits were reported incorrectly, amend. » Read more..

Same-sex married couples have tough tax filing issues, far more complex than heterosexual couples.  Clearly that shouldn’t be true, but for the time being it is.  To its credit, New York State has released helpful information about tax filing under the Marriage Equality Act.  The Marriage Equality Act was signed into law June 24, 2011.  Little more than a month later the New York Department of Taxation and Finance weighed in with this guidance. 

Here are the highlights:

Different Filing Status.  Same-sex married couples in New York must file their personal tax returns as married even though their marriage isn’t recognized for federal tax purposes.  You use a filing status of single or head of household on your federal Form 1040, but for New York, either married filing » Read more..

You may think the IRS pursues all taxes equally but they don’t.  The IRS is especially vigorous in going after payroll taxes withheld from wages that somehow don’t get paid to the government.  This is trust fund money that belongs to the government and was withheld from wages. 

That makes any failure to pay—or even late payment—much worse.  In fact, that’s so regardless of how or why the employer or its principals use the money.  See No Get-Out-Of-Jail-Free Card For Payroll Tax Liability.

When a tax shortfall occurs in this setting, the IRS will usually make personal assessments against allresponsible persons who have ownership in or signature authority over the company and its payables. » Read more..

Starting 2012 (2011 Tax year) all tax returns, prepared by tax return preparers who are paid for their services and prepare more than 10 tax returns, must be electronically filed. That includes 1040, 1120, 1120S, 1041, 1065, 990, and all extensions. IRS counts extensions as part of 10 returns. According to the IRS rules if you prepare more than 10 tax returns and do not file tax returns electronically there will be a $50 penalty to the taxpayer. Most states have jumped at the chance of reducing their work force as well. New York, for example, has made it mandatory to e-file and e-pay returns and in 2012 there will be more states that will follow. 

In 2011 new regulations came into affect requiring all paid tax return preparers to obtain a PTIN (Preparer Tax Identification Number). This will be a yearly renewal and for 2012 it is expected to start » Read more..

Recent IRS News

View recent, tax-related IRS news releases below.

Resources for Tax Preparers:

• IRS Releases Specifications for Registered Tax Return Preparer Test IR-2011-89, Sept. 6, 2011

  WASHINGTON — The Internal Revenue Service today released the specifications for the competency test individuals must pass to become a Registered Tax Return Preparer.

  The test is part of an ongoing effort by the IRS to enhance oversight of the tax preparation industry. Preparers who pass this test, a background check and tax compliance check as well as complete 15 hours of continuing education annually will have a new designation: Registered Tax Return Preparer.

  The specifications identify the major topics that will be covered by the test, which will be available starting this fall. Although individuals who already have a provisional preparer tax identification number (PTIN) from the IRS do not have to pass the exam until Dec. 31, 2013, they may take the exam at any time once it is available.

  The test will have approximately 120 questions in a combination of multiple choice and true or false format. Questions will be weighted and individuals will receive a pass or fail score,

  » Read more..