Daily Tax Update - July 16, 2007

IRS TO REQUIRE NEW ELECTRONIC PIN SIGNATURE IN 2008:  Today, the IRS announced that it will simplify the signature process for electronically filed individual income tax returns submitted by tax practitioners.  According to the IRS, “Beginning with the 2008 filing season, tax practitioners can e-file individual income tax returns only if the returns are signed electronically using one of two methods: either a Self-Select Personal Identification Number (PIN) or a Practitioner PIN.  A Self-Select PIN allows taxpayers to electronically sign their e-filed return by selecting a five-digit PIN. A Practitioner PIN is used when a taxpayer authorizes an Electronic Return Originator (ERO) to input an electronic signature on behalf of the taxpayer.  Practitioner PINs require the use of Form 8879, IRS e-file Signature Authorization, which is retained by the ERO.”

  • Acting IRS Commissioner Kevin M. Brown said, “Nearly 90 percent of tax professionals already use electronic signatures to sign returns.  It’s the right time to take the next step toward truly paperless filing.”
  • Additional information can be accessed via: http://www.irs.gov/pub/irs-pdf/f8879.pdf 

JOINT TAX RELEASES INCOME TAX TREATY DOCUMENTS:  In connection with a hearing scheduled by the Senate Committee on Foreign Relations for July 17, 2007, the Joint Committee on Taxation has issued Explanation Of Proposed Income Tax Treaty Between The United States And Belgium (JCX-45-07), Explanation Of Proposed Protocol To The Income Tax Treaty Between The United States And Denmark (JCX-46-07), Explanation Of Proposed Protocol To The Income Tax Treaty Between The United States And Germany (JCX-47-07), and Explanation Of Proposed Protocol To The Income Tax Treaty Between The United States And Finland (JCX-48-07).

TRANSFER PRICING DOCUMENTATION DEADLINE ON SEPTEMBER 15, 2007 FOR CALENDAR YEAR TAXPAYERS:  To avoid penalties, taxpayers should have appropriate documentation of their transfer pricing methodologies and results by the time they file their tax returns.  For calendar year taxpayers, this means that the documentation must be completed by September 15.  IRS agents have been instructed to look critically at this documentation, so companies may want to reconsider the standards they have used in the past for determining whether their documentation is rigorous and specific enough.  Steptoe's transfer pricing group is available and particularly well-situated to assist with that work.  Click here for more information

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Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving. Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.