March 1, 2005
In This Issue:
IRS Revises Form 941
Modification of Check the Box
Treasury and IRS Issue Guidance on Life Insurance and Annuity Contracts
Signature No Longer Needed on Corporate Extension Forms
IRS REVISES FORM 941
The IRS has revised Form 941 for 2005. According to the IRS, the redesigned form
features an improved layout, plain language instructions, simplified deposit reporting
and paid preparer identification. The form is also scannable, which is expected to
reduce transcription errors. You can download the new form from the Forms and
Publications section of the IRS web site (www.irs.gov) or obtain printed copies and
instructions by calling the IRS at 1-800-829-3676.
MODIFICATION OF CHECK THE BOX
The Treasury is set to publish final regulations (T.D. 9183) that clarify that qualified
REIT subsidiaries, qualified subchapter S subsidiaries, and single owner eligible
entities that are disregarded as entities separate from their owners are treated as
separate entities for purposes of any Federal tax liability for which the entity is liable.
The new regulations do not address whether a disregarded entity is subject to federal
tax. The new regulations take effect April 1, 2005.
TREASURY AND IRS ISSUE GUIDANCE ON LIFE INSURANCE AND ANNUITY
The Treasury Department and the Internal Revenue Service finalized a regulation that
would limit the use of life insurance and annuity contracts as a way to avoid current
taxation of investment earnings. The regulation, together with other guidance previously
issued, will prevent taxpayers from turning otherwise taxable investments in hedge funds
and other entities into tax-deferred or tax-free investments by purchasing the investments
through a life insurance or annuity contract.
Life insurance and annuity contracts receive favorable tax treatment in recognition of the
importance of protecting loved ones against the potentially devastating financial
consequences of death or the risk of exhausting savings while in retirement. The final
regulation, together with other guidance previously issued, provides guidance that will
help taxpayers purchasing a life insurance or annuity contract to be secure in the
knowledge that the contract complies with the tax laws. This regulation is part of the
effort to modernize the rules for these contracts in recognition of the developments that
have occurred in the financial markets in recent years. A copy of the new regulation,
which takes effect March 1, 2005 for most transactions, is available on the NSA web site
SIGNATURE NO LONGER NEEDED ON CORPORATE EXTENSION FORMS
The IRS has announced that a signature is on longer needed on Form 7004, Application
for Automatic Extension of Time to File Corporate Income Tax Return.