Daily Tax Update - March 4, 2008

IRS AUTOMATES INSTALLMENT AGREEMENT USER FEES:  Today, the IRS announced that it has automated the user fee calculations for taxpayers entering into an installment agreement. Previously, taxpayers were required to submit a paper Form 13844 to request a reduced user fee. Now, eligibility for reduced fees is determined automatically by the IRS.

• According to the IRS, “An installment agreement allows taxpayers to pay their full tax debt in smaller, more manageable amounts, though penalties and interest continue to accrue on the unpaid portion of that debt. Taxpayers are charged a one-time fee to set up an installment agreement with the IRS. A reduced fee is available for qualifying taxpayers.” The IRS added, “Generally, user fees are $105 for non-direct debit agreements, $52 for direct debit agreements and $45 for reinstatements. However, the fee is only $43 for taxpayers with income at or below certain US Department of Health and Human Services poverty guidelines. All taxpayers entering into an installment agreement will automatically be considered for the reduced user fee using information the IRS already has on hand from the taxpayer’s current tax return. Those who qualify will be charged the reduced $43 fee for all installment agreements established through any method. These include the Online Payment Agreement application on the IRS Website at IRS.gov, telephone, face-to-face or mail.”  
• Acting IRS Commissioner Linda Stiff said, “This new process will improve service for and reduce the paperwork burden on taxpayers applying for an installment agreement. Now, taxpayers who are eligible for the reduced fee will automatically receive it without extra work on their part.”
• Additional information can be accessed via: http://www.irs.gov/newsroom/article/0,,id=179737,00.html 

JOINT TAX COMMITTEE RELEASES REPORT ON TAX TREATMENT OF DERIVATIVES:  In conjunction with tomorrow’s Select Revenue Measures Subcommittee hearing, the Joint Committee on Taxation has released a report titled, “Present Law And Analysis Relating To The Tax Treatment Of Derivatives.” 

• The document can be accessed via: http://www.house.gov/jct/x-21-08.pdf  

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

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