Daily Tax Update - April 19, 2010

IRS ISSUES DRAFT SCHEDULE AND INSTRUCTIONS FOR UNCERTAIN TAX POSITIONS PROPOSAL: Today, the IRS issued a draft schedule (Schedule UTP) accompanied by draft instructions that provide a further explanation of the IRS proposal to require certain taxpayers to report uncertain tax positions. In Announcement 2010-9, the IRS announced that it was developing a schedule that would require certain business taxpayers with total assets of $10 million or more to report uncertain tax positions on their tax returns. In Announcement 2010-17, the IRS extended the comment period for the proposal and stated that it planned to require the filing of the new schedule for returns relating to the calendar year 2010 and for fiscal years that begin in 2010. In addition, the IRS stated that it planned to release a draft schedule and instructions in early April 2010. Today, in Announcement 2010-30, the IRS announced the release of the draft schedule and instructions for the reporting of uncertain tax positions, and requested comments on the prior announcements, the draft schedule, and the draft instructions by June 1, 2010. The draft schedule and instructions issued today address some but not all of the issues raised by the proposed reporting requirements. A more detailed summary of the draft schedule and instructions will be in tomorrow’s edition of the Daily Tax Update.

IRS INFORMS BUSINESSES OF BENEFITS OF NEW HEALTH CARE TAX CREDIT: This week, the IRS will begin mailing postcards to more than four million small businesses and tax-exempt organizations to make them aware of the benefits of the recently-enacted small business health care tax credit in the “Patient Protection and Affordable Care Act.”

  • IRS Commissioner Doug Shulman said, “We want to make sure small employers across the nation realize that—effective this tax year—they may be eligible for a valuable new tax credit. Our postcard mailing—which is targeted at small employers—is intended to get the attention of small employers and encourage them to find out more. We urge every small employer to take advantage of this credit if they qualify.”
  • According to the IRS, “In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ low and moderate income workers. For tax-years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. The maximum credit goes to smaller employers—those with 10 or fewer full-time equivalent (FTE) employees—paying annual average wages of $25,000 or less. The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals. Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011.”
  • Additional information can be accessed here and here.  

MISCELLANEOUS GUIDANCE RELEASED:
Revenue Ruling 2010-12 provides various prescribed rates for May 2010 for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274. The rates are published monthly for purposes of sections 42, 382, 412, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

Revenue Procedure 2010-16 explains how the Internal Revenue Service is informed of a change of address.

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.

STEPTOE & JOHNSON LLP - TAX PRACTICE
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.