IRS Updates for January 2007
Federal Disaster Declared for Washington Counties
President Bush has made a federal disaster declaration for the November flooding in 11 counties. To see the news release from the Washington state web site: http://www.wadisasternews.com/posted/1105/Governor_Announces_Federal_Aid_Available_for_ Families_.139726.pdf To see information on the declaration from FEMA’s web site: http://www.fema.gov/news/event.fema?id=7366
No Change in Interest Rates for the First Quarter of 2007
The Internal Revenue Service today announced there will be no change in the interest rates for the calendar quarter beginning January 1, 2007. Revenue Ruling 2006-63 provides the rates for interest on tax overpayments and underpayments for the calendar quarter beginning January 1, 2007. http://www.irs.gov/newsroom/article/0,,id=164931,00.html
National Taxpayer Advocate Releases 2006 Report to Congress
IR-2007-04, Jan. 9, 2007 WASHINGTON — National Taxpayer Advocate Nina E. Olson today released her annual report to Congress, designating the alternative minimum tax for individuals (AMT) and the federal tax gap as the most serious problems facing taxpayers. The report also focuses extensively on concerns about IRS collection policies and the transparency of IRS information to the taxpaying public. http://www.irs.gov/newsroom/article/0,,id=165832,00.html
IRS, Treasury Issue Guidance on New Distribution Provisions of the Pension Protection Act The Treasury Department and the IRS issued a notice today providing
extensive guidance on several Pension Protection Act rules relating to distributions from taxqualified retirement plans. The guidance addresses many questions on PPA provisions, including: interest rate assumptions for lump sum distributions, hardship distributions from a 401(k) and similar plans, early distributions from qualified plans to terminated public safety employees, rollovers from qualified plans to IRAs for non-spouse beneficiaries, distributions to pay for health insurance for retired public safety officers, earlier vesting of certain employer contributions and the new rules for the notice and consent period for distributions. See Notice 2007-7at: http://www.irs.gov/pub/irs-drop/n-07-07.pdf
IRS Plans Feb. 3 Start Date for Processing Extender Claims
The Internal Revenue Service plans a Feb. 3 start date for processing tax returns that claim key tax provisions enacted in December. The IRS announced that it will begin processing both e-file and paper tax returns on Feb. 3 that include claims for the major “extender” provisions, including deductions for state and local sales taxes, higher education tuition and fees, and educator expenses. Any other tax returns for individuals that do not claim the extender provision can be filed as normal this month. The Feb. 3 date allows the IRS enough time to update its systems to accommodate the tax law changes without disrupting other operations tied to the tax filing season. More information at: http://www.irs.gov/newsroom/article/0,,id=165779,00.html
IRS Announces Installment Agreement User Fee Increases for Some Taxpayers
Beginning Jan. 1, 2007, the Internal Revenue Service will implement revised user fees for installment agreements. For eligible individuals with income at or below certain levels, the fee for entering new agreements will not increase but remain at the 2006 level. User fees for entering into a non-direct debit installment agreement will increase from $43 to $105, and the fee for direct debit installment agreements will increase from $43 to $52. See the entire article at: http://www.irs.gov/irs/article/0,,id=165543,00.html
Revenue Procedure 2007-16 provides the procedures for obtaining the automatic consent of
the Commissioner of Internal Revenue to make a change in method of accounting for certain
changes in depreciation or amortization. It will be in IRB 2007- 4 dated January 22, 2007. http://www.irs.gov/pub/irs-drop/rp-07-16.pdf
The Tax Gap: New Fact Sheet on Deducting Business Supply Expenses
http://www.irs.gov/newsroom/article/0,,id=165272,00.html The tax law allows for the deduction of business supply expenses. This fact sheet, the seventh in a series, helps taxpayers understand the rules pertaining to business supply expense deductions. To find more resources on the tax gap — the difference between the amount of tax that taxpayers should pay and the amount that is paid voluntarily and on time, go to the Tax Gap Web site.