Tax return preparers will have to pay attention to an amendment added in the Senate version of the Worker, Homeownership, and Business Assistance Act of 2009, which extended the First Time Homeowner Credit and unemployment benefits, because beginning in 2010, this amendment will require tax return preparers to file any individual tax return electronically unless the preparer expects to file fewer than 10 returns in a calendar year. This means that individual tax return preparers will be required to apply for an EFIN, the Electronic Filing Identification Number, which will help the Internal Revenue Service (IRS) to track their returns. The requirement applies to individual tax returns, estate, and trust returns. Note: This new law does not affect 2009 tax returns filed in 2010.
Other amendments tacked on to the bill by the Senate:
· Extend the 0.2‐percent Federal Unemployment Tax Act (FUTA) surtax through June 30, 2011 to pay for the extension of unemployment insurance benefits
· Increase penalties for failure to file Partnership or S Corporation returns from $89 to $195 per month per partner or shareholder effective December 31, 2009. The penalty may also be imposed for incomplete returns of Schedules K-1.
- Increase the required estimated tax due from corporations with assets of at least $1 billion due in July, August or September 2014 by 33 percentage points, to 133.25 percent of the payment otherwise due for the quarter. The payment due in the following quarter is reduced by a corresponding amount.
Reports of widespread fraud and abuse in the preparation of tax returns, particularly in regard to the Earned Income Credit and the First-time Homebuyer's Credit, prompted the IRS to prepare a set of recommendations for Congress and the President to address this fraud. The final IRS recommendations for registration of tax return preparers will be made public in early January, according to the American Institute of Certified Public Accountants (AICPA).
In a video presentation
on their web site, Barry Melancon, AICPA president, and Alan Einhorn, chairman of the AICPA's Tax Executive Committee, review what has happened so far in the discussion of tax preparer fraud prevention, and emphasize that the AICPA supports "a reasonable solution," but express concern about possible damage to the CPA credential. One part of a "reasonable solution" is a single preparer indentifying number and making all preparers subject to existing penalties under Circular 230, but Melancon and Einhorn expressed concern about other kinds of registration and testing. If Congress votes to create a new certification and exam, Melancon says, "The process would go too far."
The original version of the Act also permits all businesses, regardless of their gross receipts, to carry back net operating losses incurred in 2009 for up to five years (with a 50 percent income limit in the fifth year).