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Minnesota Society
of Enrolled Agents
July/August 2011 Newsletter
Table of Contents: Working Together Seminars
Upcoming Events p. 2 A Joint Effort of Public & Private Tax Professionals
Quote of the Month/Classifieds p. 2
Punch Cards p. 2 Topics Include:
President’s Message p. 3
IRS Tax Forums p. 3 Amended Returns Appeals
2011 Annual Meeting photos p. 4 Hobby vs. Business Tax Fraud
Why NAEA? p. 5
NAEA Dues/CPE Waivers p. 5 Foreign Income WI Update
Miscellaneous Tidbits p. 6 WI/MN Sales & Use Tax
Change in Annuity Rules p. 7 Panel Discussion on WI/MN Differences
Change in FUTA Rates p. 7
MN Charities Lose Status p. 8 Speakers: IRS, MNDOR, WI Revenue
Transfer on Death Deed p. 8
Board Members and Committees p. 9
Locations:
August 1st & 2nd
American Best Value Inn & Suites
Working Together Seminars 1625 S Broadway Rochester, MN 55904
507-281-2211
Registration/Breakfast 7:30 am Rooms available for $75.00/night
Seminar, including lunch 8:30 am August 4th & 5th
St. Cloud Best Western Kelly Inn
Text will be e-mailed prior to the seminar 100 4th Ave So. St. Cloud, MN 56301
320-253-0606
Rooms Available for $79.00/night
Cost: $99.00 - Print your own book
$129.00 with hardcopy book
Register online at www.mnsea.org
Or
Contact: Merle Davis
Minnesota Society of Enrolled Agents
612-722-4776 or mnsea.education@gmail.com
Upcoming Events Punch Cards
Due to the change from 2-hour evening meetings to full
August 1 - 2, 2011 - Working Together Seminar, Rochester, MN day seminars the punch cards have been discontinued.
16 hours CPE
You will have until December 31, 2011 to redeem your
August 4 - 5, 2011 - Working Together Seminar St. Cloud, MN full or partial card. If your card is full you will receive a
16 hours CPE check for $100.00, if it is not complete you will receive
$12.50/punch.
August 7-10, 2011 - NAEA National Conference, Las Vegas, NV
To redeem your card please put your name and address
September 8 - 9, 2011 - Joint MN/WI Conference 16 hours CPE
on the back and either turn it in at the next meeting you
September 21-22, 2011 - Minnesota NATP Annual Meeting & attend or mail to : Linda Ferwerda
Conference. St. Cloud, MN 4730 White Bear Plaza
White Bear Lake, MN 55110
October 13 - 14, 2011 - Hot Topics and Federal Update
Chris Bird 8-10 hours CPE
October 24 - 26, 2011 - Best in the West Reno NV
November 9 - 10, 2011 (Wed - Thurs) - 1040 in Depth - Bob
Jennings & Bill Leonard/Jennings Seminars 16 hours CPE
November 28 - 30. 2011 - Best in the West Las Vegas, NV
January 5, 2012 - Federal, MN, & WI updates 6 hours CPE
*MnSEA Board of Directors meets at 1:00 pm at the office of Barb
Hoium. All members are welcome to attend and observe the meet- Classifieds
ing.
Tax Business for sale.
Quote of the Month
Who said it? "Our new Constitution is now established, Sole Proprietor moving out of state. Gates Ac-
and has an appearance that promises permanency; but counting and Tax Inc has been in business in
in this world nothing can be said to be certain, except Woodbury, MN for 11 years. Small but loyal cli-
death and taxes." entele.
Answer on page 6
Contact :
Daryl Gates: 651-274-3158
dbgates2001@yahoo.com
Editor’s Notes
Please direct comments, submissions for publication, arti-
cles, etc. to:
Dorothy J. Anderson, EA Classified Ad Policy
PO Box 748
Crosslake, MN 56442 Classified advertising will be accepted for Help
Phone: 218-692-2650 Fax: 218-692-3364 Wanted and Sale of Business. Ads will run for
E-mail: info@andersontaxandaccounting.com
2 consecutive Newsletters. Ads may be re-
Classified Ads: Free to members and associates –others
$20.00 per issue. Please fax, e-mail, or mail your ad, etc,. newed if space permits.
To the editor by the first of the month.
2
President's Letter 2011 IRS Tax Forums
I would like to thank all of you who voted for me at the
June Annual Meeting. It was a very tough race as I did NAEA Discount Code
not know the OTHER candidate. It was a hard fought
race but in the end I guess I won as I am writing this col- The NAEA discount code for the IRS Tax Forums is
umn. %2011%NAEA. The website for more information or to
I would like to first thank Bruce Swanberg, EA for his register for the Forums is www.irstaxforum.com. Mem-
willingness to step in as President when our President bers should register as "Attendee/Partner Association
Ron Beighley had to step down due to health issues. Member," and then enter this code on the Payment screen
Bruce did a great job in holding our board together and where it asks registrants to "Enter Membership Num-
letting the education committee take off in a new direc- ber." Members should select NAEA in the drop down box
tion, that of having full day seminars. Once again thank for Partner Organization; enter their membership ID and
you Bruce for stepping up to the plate and doing a very then the code %2011%NAEA. The code gives a $10
good job. discount on regular registration fees for the Forums (no
discount is available for late registration).
Next I would like to congratulate Mark E. Kohls, EA, for
being named the EA of the Year. Prior to becoming an
EA Mark had worked on our website and is still doing a Remaining Forums
good job of not only getting the newsletter out but also
helping those members, such as myself, get registered on
Pre-Registration
our website for our seminars. Mark also stepped forward City Dates
Deadline
last year and served on the board to finish off the one
year that Linda Ferwerda, EA had left as a director when Dallas, Texas July 26- 28 July 12, 2011
she ran and became our current Treasurer. We need more San Jose, Califor-
August 9 - 11 July 26, 2011
of our young members to come forward and to become nia
involved in our organization. Las Vegas, Nevada August 16 - 18 August 2, 2011
As your newly elected President I feel that we as an or- Washington DC August 30-
August 16, 2011
ganization have two main goals. The first one is to offer National Harbor September 1
the best education possible to not only our current mem-
bers but also to anyone who is governed by Circular 230.
In order to accomplish this we will continue to offer more
full one and two day seminars. By now you should have
received our yellow flyer outlining the various seminars
we will be offering for the balance of 2011. All together
we are offering over 80 hours of continuing education for
2011.
Our second goal is to increase our membership so that we
can continue to offer excellent education. This can only
be done with all of your help by inviting individuals to
our seminars and offering them the opportunity to join
our organization.
Both of these goals can only be met with the help of all of
our current members. You, the members make this or-
ganization, because without you there would be no
MNSEA.
Hope to see many of you at the Working Together Semi-
nars in August. We will be in Rochester on August 1st
and 2nd and in St. Cloud on August 4th & 5th.
Have a great summer.
Ronald C. Kohls, EA, MBA
3
2011 Annual Meeting & Installation
Pres. Elect: Merle Davis, EA
President: Ron Kohls, EA
Treas: Linda Ferwerda, EA
Speaker: Beanna Whitlock, EA
Sec: Laura Passe, EA
Directors: Sandra Gravelle, EA; Clair Hemenway,
EA; Barb Hoium, EA; Ginger Decker, EA 2011-2012 Board
Past Presidents: Ron Beighley, EA and
Bruce Swanberg, EA
2011 EA of the year:
Mark Kohls, EA
4
Why NAEA? website. Members can download valuable resources, in-
cluding:
NAEA is the only association dedicated to serving your The NAEA logo for use on business cards and market-
interests as an enrolled agent by helping build your busi- ing material
ness, advocating on your behalf with federal and state leg- Customizable print ads
islative bodies and educating the public on the advantages Press releases that can be personalized and used
of hiring an enrolled agent. NAEA does this through: to announce career milestones to local media
Advocacy Brochures that you can order and distribute in
Safeguarding Your Interests your area
NAEA is your voice to government, representing your distinct Easy-to-print flyers that explain “What is an En-
interests as an enrolled agent and protecting your right to prac- rolled Agent?”
tice. As the regulation of all paid preparers rolls out, NAEA is in
frequent communication with IRS, staying involved and on top
of any changes that will affect EAs. In addition, NAEA advo- Visit www.naea.org to find out more ways to take full
cates for enrolled agents through: advantage of your membership. Also be sure to verify
Member testimonies before the House and Senate on issues your address and e-mail address
that make a difference in your practice
Local level partnerships with state affiliates on state-based
legislation and regulatory issues
NAEA PAC (a bipartisan political action committee), a Dues/CPE Waiver Policy
significant grassroots force that helps elect public officials
that understand and share the priorities of enrolled agents If due to extenuating circumstances you are unable to pay
Public Awareness your NAEA Dues or were unable to complete the required
Educating the Public about EAs CPE you may apply for a waiver. You may find the
NAEA is constantly educating the public on the advan- waiver form in the “Member Resources” area of the
tages of hiring an enrolled agent. When you see enrolled NAEA website.
agents featured in national and local media, there’s a good
chance that NAEA made it happen. Spreading the word In the Member Resources center you will also find sample
that EAs are the tax professionals of choice— letters, EA ads, “Let’s Talk Taxes” columns you may per-
communicating the value you bring to your clients and sonalize and insert in your local paper, customizable news
potential clients—is a primary association goal! In addi- releases, taxpayer brochures and much more. Take advan-
tion to garnering coverage in traditional print and broad-
cast media, NAEA has broken new ground by putting EAs tage of your membership and use these excellent re-
in the media spotlight: sources.
NBC’s Today Show, The Wall Street Journal, USA
Today and Fox Business News
NPR’s “Marketplace” Hot Enough For You?
In-flight broadcasts of Sky Radio (American and
Northwest Airlines)
XM Radio’s “Oprah & Friends”
The nationally-syndicated column “Dear Abby”
Online at MarketWatch.com
Practice Resources
NAEA Helps You Build Your Business
Let NAEA help you build your business by supporting you
with resources, promotion, information…and clients!
The online NAEA Tax Research Service has the answers
you need. NAEA members have complimentary access to
the tax knowledge database and discounted fees for the
research service.
The marketing “tool kit” available through the NAEA
5
Miscellaneous Tidbits
Change in SSN Assignment Method Don’t be a Phish!
Effective June 25, 2011 new applicants for a SSN will be The IRS is continuing to war about the fraudulent use of
assigned a random number. This will eliminate the geo- the IRS name or logo by phishers to gain access to a tax-
graphical significance of the first 3 digits of the SSN and payers financial information. While phishing has been
will introduce previously unassigned area numbers. SSA around for years scammers are finding new ways to access
will not assign area numbers 000, 666, and numbers be- personal information.
tween 900 and 999. Also, SSA will not assign a group Some of the recent scams include:
number, (the 4th and 5th digits), of 00 or a serial number,
(the last 4 digits), of 0000. The length of the SSN will re- $ E-mails containing attachments which, when
main the same - 9 digits downloaded, attack the recipients computer
$ E-mail claiming to be from the IRS offering to pay
The new process will only apply to those receiving a SSN taxpayers $80 for filling out an online customer sat-
for the first time but under certain circumstances a new isfaction survey. This results in the scammer ob-
number may be issued as a replacement number. taining personal, financial, and credit card informa-
tion from the unwitting taxpayer.
The circumstances are:
Sequential numbers assigned to members of the $ E-mails claiming to be from the IRS where the re-
same family cipient is asked to complete an investigation form.
More than one person using the same number The IRS believes the link contains a Trojan house
Religious or cultural objections to a certain number type virus
or digits in the original number $ E-mails claiming to come from tax-
A victim of identity theft
refunds@irs.gov, admin@irs.gov and similar offi-
Situations of harassment, abuse or life endanger-
cial looking e-mail addresses. Of course the goal is
ment
to obtain personal and financial information.
One problem with these schemes is that the links in the e-
mail go to sites that look very official - they are not. It
cannot be stressed strongly enough that the IRS NEVER
corresponds with taxpayers via e-mail.
If you or your clients receive a suspicious e-mail forward
it to phishing@irs.gov and then promptly delete it. Do not
Are you in Compliance? open any attachments the e-mail may include.
You have probably already heard that the IRS has sent
notices to approximately 100,000 tax preparers who ei-
ther did not obtain a PTIN or did not renew their PTIN.
The good news is that about 712,000 tax preparers have
registered and either obtained or renewed a PTIN.
Along with the letters sent to non-compliant preparers the
IRS is sending letters to taxpayers with returns that ap-
pear to have been prepared by someone other than the
taxpayer but with no paid preparer signature.
One benefit of registration is that the IRS is finally get-
ting a handle on how many preparers are out there
6
i io k Wr i a
d asnl h na F n mj ne B
Change in Annuity Exchange Rules DEF. His new basis in DEF is $50,000.00
New Rules: The facts are the same as the Old Rules ex-
Generally there is no gain or loss recognized when one ample except that instead of a withdrawal from ABC Ron
annuity contract is exchanged for another. A partial ex- takes a series of annuity payments that will last a mini-
change is a tax-free exchange under Ref. Proc. 2008-24 mum of 10 years from the ABC annuity. The annuitized
if: payments do not constitute a withdrawal for determining
the tax status of the transfer to DEF. The pro-rated basis
There was no withdrawal or surrender of either
carries forward from ABD to DEF and the transfer re-
contract during the 12 months beginning on the
mains tax-free.
date of the partial transfer or
If the taxpayer demonstrated one of the conditions
described in Section 72(q)(2) applied between the
date of the transfer and the date of withdrawal or
surrender.
Not following these rules resulted in the transfer being
treated as a taxable distribution from the first annuity and
a subsequent payment to the second annuity.
Under the new rules outlined in Rev. Proc. 2011-38 the
following changes are made to the procedure:
The 12 month period is reduced to 180 days
The rule requiring that one of the Sections 72(q)(2)
conditions be met is eliminated
Limitations on withdrawals from or received under
an annuity contract involved in a partial exchange
do not apply to amounts received as an annuity for
a period of 10 years or more during one or more Change in FUTA Rates
lives
Federal Unemployment rates have been reduced as of July
The automatic characterization of a transfer as ei- 1, 2011 from 6.2% to 6%. The amount of wages per em-
ther a tax-free exchange under Section 1035 or a ployee per calendar year subject to FUTA remains at
distribution taxable under Section 72(e) followed $7,000. The maximum state tax credit remains at 5.4% of
by a payment for a second contract is eliminated. wages.
These rules are effective for exchanges that are completed Employers are subject to FUTA on non-farm wages if he/
she pays wages of $1,500 or more in any calendar quarter
on or after October 24, 2011 or has one or more employees for at lest some part of a day
Examples: in any 20 or more different weeks.
Old Rules: Ron had an annuity with ABC valued at Employers are subject to FUTA for farm workers if he/she
pays wages of $20,000 or more to farm workers during any
$100,000 with a basis of $50,000. He transferred $50,000
calendar quarter of employs 10 or more farm workers dur-
to an annuity with DEF. Ron did not meet any of the con- ing at lest some part of a day during 20 or more different
ditions in Sections 72(q)(2) and four months later her weeks.
took a withdrawal from ABC annuity. The exchange
Employers are subject to FUTA on wages paid to house-
from ABC to DEF is now considered a taxable exchange
hold employees if he/she pays wages of $1,000 or more in
and Ron must establish the basis on the amount trans- any calendar quarter.
ferred and pay tax on the taxable amount transferred to
7
5417 MN Charities Lose Status Transfer on Death Deed
Have your aging clients ever asked you about how to
The IRS has published a list of organizations that have had
their federal tax-exempt status automatically revoked for avoid probate on the transfer of their real estate while
failing to file an annual information return or notice with maintaining control of the property? Since 2008 Minne-
the IRS for three consecutive years. There are currently sota has been one of the 13 states offering a Transfer on
5,417 organizations from Minnesota on the list including Death Deed, (TODD), or it’s equivalent. The TODD is
many chambers of commerce, alumni associations, PTAs,
similar to a payable on death designation on a bank ac-
Knights of Columbus and Lions organizations and many
others. count or securities. This differs from a joint tenancy in that
the grantor retains full ownership of the property.
The Automatic Revocation of Exemption List (Auto-
Revocation List) is available in Adobe and Excel formats, Some of the pertinent facts are:
and divided into separate lists by jurisdiction. The Auto- The TODD does not affect homestead taxes or the
Revocation List provides the organization's name, em- ability to apply for a refund via form M1-PR
ployer identification number (EIN), organization
(subsection) code, last known address, effective date of The TODD does not require a gift tax return. The
revocation, and the date the organization's name was transfer is not effective until the owner’s death. A joint
posted on IRS.gov.
tenancy is effective immediately.
The list will be updated monthly as organizations lose The entire value of the property will be included in the
their tax-exempt status for not filing. Additional updates owner’s estate on death thus giving the beneficiary a
will be made as necessary. The date at the bottom of the
web page indicates when this page was last updated. stepped-up basis
The TODD must be recorded prior to the owners death
The list is available at:
to be legally effective.
http://www.irs.gov/charitiesarticle/0,,id=240099,00.html
The TODD has no effect on the current owners ability
Reinstatement after Revocation to obtain a mortgage or apply for medical assistance.
If an organization has had its tax-exempt status automati- The TODD may be revoked at any time prior to death
cally revoked and wishes to have that status reinstated, it by filing with the appropriate county - it may not be
must file an application for exemption and pay the appro- revoked through a will
priate user fee even if it was not required to apply for ex-
empt status initially. The current owner may sell the property without noti-
fying the beneficiary or beneficiaries
If the IRS determines that the organization meets the re-
quirements for tax-exempt status, it will issue a new deter- Other states offering some type of TODD deed are: Ari-
mination letter. The IRS also will include the reinstated zona, Arkansas, Colorado, Kansas, Indiana, Missouri,
organization in the next update of Publication 78, Cumula-
Montana, Nevada, New Mexico, Ohio, Oklahoma, and
tive List of Organizations described in Section 170(c) of
the Internal Revenue Code of 1986, and indicate in the IRS Wisconsin
Business Master File (BMF) extract that the organization
is eligible to receive tax-deductible contributions. Donors
and others may rely upon the new IRS determination letter
as of its stated effective date and on the updated Publica-
tion 78 and BMF extract listings.
In most cases, the effective date of reinstated exemption
will be the date that the organization’s exemption applica-
tion was submitted to the IRS. However, organizations
may choose to request that reinstatement be retroactive to
the effective date of revocation. The IRS will grant
retroactive reinstatement (link to application form) of ex-
emption under certain limited circumstances
8
Minnesota Society of Enrolled Agents
%Dorothy J. Anderson, EA
PO Box 748
Crosslake, MN 56442
FIRST CLASS
ars
www.mnsea.org min
r Se
og ethe
ki ng T
Wor
MnSEA OFFICERS AND BOARD MEMBERS
PRESIDENT VICE PRESIDENT TREASURER SECRETARY
Ronald Kohls, EA Merlin R, (Merle) Davis, EA Linda Ferwerda, EA Laura Passe, EA
763-425-8229 612-722-4776 651-774-2107 763-670-4529
rkohls@comcast.net dts_merle@hotmail.com linda@lindasaccounting.com laurapasse@q.com
DIRECTOR DIRECTOR DIRECTOR DIRECTOR
Sandra Gravelle, EA Clair Hemenway, EA Ginger Decker, EA Barb Hoium, EA
651-303-6383 651-385-7600 651-484-9160 763-574-0444
sandy@comcast.net clair@redwing.net jelliebeane@comcast.net bhoium@yahoo.com
PAST PRESIDENT
Bruce Swanberg, EA
763-473-4711
jbbds@comcast.net
2011/2012 MnSEA STANDING COMMITTEE CHAIRPERSONS
Nominating: Bruce Swanberg, EA Legislative: Merle Davis, EA
Ethics & Professional Conduct: Merle Davis EA Membership & Development: Laura Passe, EA
Continuing Education: Merle Davis, EA By-Laws: Ron Kohls, EA
Finance: Linda Ferwerda, EA Executive: Ron Kohls, EA
Historical: Ginger Decker, EA
Please contact a chairperson if you would be willing to serve on a committee
9
