EA-Mail - 5/1/97 - from National Association of Enrolled Agents
E@LERT
Tax news & updates from National Association of Enrolled Agents
Published semi-monthly - May 1, 1997
COMMISSIONER RICHARDSON TO LEAVE SOON, her last day likely in mid-May. NAEA
Members & staff attended a farewell reception April 30.
NO ANNOUNCEMENT YET OF A REPLACEMENT or even of an acting commissioner.
Rumor mill has JIM WETZLER, a member of the National Commission on
Restructuring the IRS, taking her place. He's a former New York State Revenue
Commissioner, led a successful overhaul of computer system there and he's a
former Deputy Chief of Staff on the Congressional Joint Committee on
Taxation. He's now with Deloitte & Touche.
COMMISSION ON RESTRUCTURING IRS HEADS INTO HOMESTRETCH...report due out last
week of June. Co-chairmen Senator Bob Kerrey (D-NE) and Congressman Rob
Portman (R-OH) plan to introduce legislation after July 1 but before the
August recess. The legislation will restructure the Service with more
emphasis on customer service and tax code simplification with a particular
focus on the EARNED INCOME TAX CREDIT and the ALTERNATIVE MINIMUM TAX...will
urge Congressional action before year end.
NEXT RESTRUCTURING COMMISSION FIELD HEARING is slated for May 12 in Des
Moines...Iowa Society of Enrolled Agents will present testimony.
NAEA testified on the ELECTRONIC FEDERAL TAX PAYMENT SYSTEM (EFTPS) at a
Ways & Means Oversight hearing, April 16. The testimony presented by JUDY
AKIN, EA, was based in part on two EFTPS online surveys conducted by NAEA in
December and March. The results shared with subcommittee members and staff:
overall, those using the system are satisfied; some problems with local
banks, both large and small; many states already using or going to an
electronic tax payment system, so this is the wave of the future. Small
business representatives remain unconvinced about using EFTPS. Judy's
testimony is available online (Tax Channel on AOL & www.naea.org) and by NAEA
TaxFax (doc. #727). Call 800-804-1040...have your NAEA Membership number
handy.
DON'T WAIT UNTIL JULY 1 TO TRY OUT EFTPS. The Commissioner announced a
PENALTY FREE period now through June 30 for those taxpayers enrolled and
using the system...goal is to work out any bugs.
TREASURY TO CRACK DOWN ON EITC ERRORS with mix of legislative proposals and
administrative action...follows study showing errors totaling $4.4 billion or
25.8% of total EITC in returns filed January-April 1995. IRS enforcement
reduced error rate to 23.5% in 1995 and continued enforcement is expected to
lower error rate to 20.7% on 1996 returns. Still high, but less than 1988
TCMP audits showing 35.4% error rate. ONE LEGISLATIVE PROPOSAL CALLS FOR NEW
PENALTIES ON PREPARERS...would hit preparers who did not fulfill due
diligence requirements. Penalty would be $50 up to full amount of EITC
overclaim. See NAEA TaxFax doc. #728 for details.
SOCIAL SECURITY CHECKS MAILED ON A STAGGERED SCHEDULE...if you start to
receive Social Security benefits for the first time after May 1, you will
receive them on a staggered schedule -- on the first, second, third, or
fourth Wednesday of the month, depending on your birthday.
CONGRESSIONAL TAX ACTIONS
ANTI-BROWSING LEGISLATION HAS BEEN APPROVED by both the House and
Senate...would subject IRS employees and contractors, plus any other federal
or state employee with access to federal taxpayer information, to fines of up
to $1,000 and a year in jail...calls for firing offenders and notifying
victims...would permit victims to sue for civil damages.
FEDERAL TAX AMNESTY IN THE WORKS? House Ways & Means Chairman Bill Archer
(R-TX) asked the Joint Committee on Taxation to study and report back on the
feasibility of a federal tax amnesty program. Speaker Gingrich backs amnesty
to raise revenue for balancing the federal budget.
Meanwhile, federal budget negotiators are still at work on a comprehensive
BALANCED BUDGET AGREEMENT. The latest package is rumored to include $80-$100
billion in tax cuts over 5 years, including some type of capital gains
reduction and a $500 credit for families with children...also a reduction in
the Consumer Price Index which would affect Social Security payments and
adjustments to income tax brackets.
ESTATE TAX ISSUES still on the table...despite remarks of Treasury Deputy
Secretary Larry Summers that supporters of estate tax relief are selfish.
Sen. Kit Bond (R-MO) introduces SMALL BUSINESS TAX BILL which provides full
deductibility of health insurance premiums by the self-employed...clarifies
the home office deduction and independent contractor issues.
TAXPAYER BILL OF RIGHTS 3 and TAX SIMPLIFICATION proposals released by
Treasury...60 proposals total.
TBOR 3 would amend limitations period for refunds in Tax Court and provide
uniform "reasonable cause" exception for penalties.
TAX SIMPLIFICATION proposals include an increase in the standard deduction
attributable to dependent unearned income... elimination of household
maintenance test for child and dependent care tax credit... clarification of
Tax Court jurisdiction over interest determinations and overpayment
determinations... exclusion of capital gains on sale of principal
residence... modification and simplification of Sec. 1031 like-kind exchange
rules... simplification of corporate alternative minimum tax for small
firms... independent contractor proposals... estate and gift tax
simplification... excise tax simplification proposals.
"BEST EVER," says Commissioner Richardson of the recently completed 1997
FILING SEASON. IRS claims to have handled over 70 percent of callers...IRS
Website had 114 million hits since January 1, double last filing season's
volume. See below for latest filing season statistics.
1997 FILING SEASON STATISTICS
Cumulative through the week ending 4/12/96 and 4/11/97
1996 1997 % Change
Individual Income Tax Returns
Total Receipts 76,334,000 75,698,000 -0.8%
Total Processed 61,673,000 61,857,000 -1.3%
Filing Alternatives -- Total Receipts
Standard Electronic 11,427,000 13,501,000 18.1
TeleFile 2,679,000 4,246,000 58.5
1040PC Format 4,480,000 5,186,000 15.8
Refunds Certified by the Martinsburg Computing Center
Number 50,927,000 50,916,000 -0.0
Amt principal ($ Bil.) $63.060 66.919 6.1
Average refund $1,238 $1,314 6.1
(NOTE: Refund data should not be compared to the "processed" numbers above,
since those figures reflect Service Center processing, which is completed at
least a week before refunds are certified at the Computing Center.)
IRS NEWS...Assistant District Director (Southern California) TOM PALMER has
been named the new DISTRICT DIRECTOR for the NORTH CENTRAL DISTRICT
headquartered in St. Paul, MN. JOSEPH BRIMACOMBE will replace Palmer as
Assistant District Director. Brimacombe currently serves in the Southwest
District.
PLAN YOUR OFF-SEASON EDUCATION AROUND THE NAEA EDUCATION FOUNDATION'S
EXCITING 1997 CLASSROOM SCHEDULE!
Attend NAEA'S 25TH ANNIVERSARY ANNUAL CONVENTION IN SEATTLE, AUGUST 22-26.
Take away 20 hours of top-notch CPE and enjoy the great weather and
activities...your local host is the Washington Society of Enrolled Agents.
See the May/June EA Journal to register.
INTRO TO NTPI IS A TERRIFIC INTRODUCTION TO REPRESENTATION SERVICES...learn
to resolve most issues at the lowest administrative level of the IRS... how
to prepare written communication... the meaning of words, phrases and
acronyms, and the official and unofficial language used by IRS personnel...
and what not to put in writing. The course is offered at all three 1997 NTPI
locations for a bargain price and yields attendees 4 CPE credits. Call NAEA
if you did not receive a registration form in the mail.
NTPI EARLY REGISTRATION DISCOUNTS ARE STILL AVAILABLE for the courses in
Arlington, VA and Long Beach, CA -- but you must register by May 15. Register
today...call NAEA at 301-212-9608.
NEW DATES ANNOUNCED for "The Steve and Bob Show Presents: Tax Practice Made
Profitable" in Minneapolis...September 5-6, 1997. YOU SHOULD ALREADY HAVE
RECEIVED A GREENISH-BLUE BROCHURE listing all the courses from the Education
Foundation in 1997.
"EA MACHINE" PENTIUM LAPTOP COMPUTER GAINS MMX CHIP...the NAEA
Member-discounted laptop from Trogon Computers now comes with the new Intel
MMX Pentium 166 Mhz CPU chip. In addition, you should know about the
following upgrades that come as stock equipment in the current version of
this blazing-speed laptop:
...40 MB fast EDO RAM
...33.6Kbaud PCMCIA fax/modem
...accelerated 128-bit fast video with zoom video
...Upgraded Wave-Table sound card
...1.7 GB hard disk drive
...8X CD ROM drive
All these system components are self-contained in the case -- no external
peripherals. Dimensions: 12 x 9 x 2 inches. Weight: 7.12 lbs. NAEA Member
price: $3,495. Call toll-free 888-2-TROGON.
Want to receive the E@lert within an hour of the final edit? Just e-mail
your e-mail address to: NAEA1@AOL.COM.
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E@lert (ISSN #0891-592X) is published semi-monthly by the National
Association of Enrolled Agents, 200 Orchard Ridge Drive, #302, Gaithersburg,
MD 20878. E@lert is available only to NAEA Members. Copyright 1997 NAEA.
Executive Editor: Bobbie Lerg, EA. Tax Editor: Sharon Cranford. Managing
Editor: Cliff Weiss. Vol. 7, No. 9. INQUIRIES: 301-212-9608, fax
301-990-1611, e-mail naea1@aol.com. NAEA online: America Online, keyword Tax
Channel; on the World Wide Web: http://www.naea.org