Daily Tax Update - January 3, 2011: PTIN Guidance Issued


IRS ISSUES GUIDANCE ON NEW RULES FOR TAX RETURN PREPARERS: On December 30, 2010, the IRS issued Notice 2011-6, which provides guidance regarding the implementation of recently promulgated regulations governing tax return preparers and the requirement to obtain a preparer tax identification number (“PTIN”).

  • According to the notice, the IRS has decided to allow certain individuals who are not attorneys, certified public accountants, enrolled agents, or registered tax return preparers to obtain a PTIN and prepare or assist in the preparation of a tax return in certain circumstances. Such individuals must generally be supervised by an attorney, CPA, enrolled agent, enrolled retirement plan agent, or enrolled actuary who signs the returns or claims for refund prepared by these individuals.
  • The notice specifies that, unless otherwise provided by the IRS, all tax returns, claims for refund, or other tax forms submitted to the IRS are considered tax returns or claims for refund for purposes of the new regulations governing tax return preparers. However, the notice identifies several forms that are not subject to the requirements of the new regulations, including (i) Form 2848, Power of Attorney and Declaration of Representative, (ii) Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, (iii) Form 872, Consent to Extend the Time to Assess Tax, (iv) Form 906, Closing Agreement on Final Determination Covering Specific Matters, (v) Form 3115, Application for Change in Accounting Method, and (vi) the Form 1099 series.
  • The notice also provides interim rules applicable to certain PTIN holders during the implementation phase of the new regulations.

Announcement 2011-05 provides an opportunity for small business/self employed taxpayers to use Fast Track Settlement (FTS) to expedite case resolution within the IRS's Small Business/Self Employed (SB/SE) organization in certain locations.

Announcement 2011-06 modifies Revenue Procedure 2009-44, 2009-40 I.R.B. 462, Announcement 2008-111, 2008-48 I.R.B. 1224, and Revenue Procedure 2006-44, 2006-2 C.B. 800, by extending the two-year test of the mediation and arbitration procedures for Offer in Compromise (OIC) and Trust Fund Recovery Penalty (TFRP) cases that are under the jurisdiction of the Office of Appeals until December 31, 2012.

Revenue Ruling 2011-3 provides tables of covered compensation under § 401(l)(5)(E) of the Internal Revenue Code (the “Code”) and the Income Tax Regulations thereunder, for the 2011 plan year.

Notice 2011-4 provides procedures for Blue Cross and Blue Shield organizations and certain other health insurance organizations to obtain automatic consent to change their methods of accounting for unearned premiums if they fail to meet the MLR requirement, or if they meet the MLR requirement after failing to meet that requirement in a prior taxable year. The Patient Protection and Affordable Care Act (H.R. 3590, P.L. 111-148) amended section 833 of the Code, which provides special tax rules for Blue Cross and Blue Shield organizations and certain other health insurance organizations. The amendment limits the special tax rules to organizations that meet the 85-percent medical loss ratio (MLR) requirement of § 833(c)(5).

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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