Minnesota Department of Revenue Launches New e-Services System

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On October 3, 2011, the Minnesota Department of Revenue announced the launch of its new e-Services online system. This new system is replacing e-File Minnesota and will offer a wider variety of services to 400,000 business taxpayers. The new system was the product of at least four years of diligent work by the Department.

The new E-Services not only provides the ability for business taxpayers to file and pay their taxes, it also allows taxpayers to update their contact information, register new accounts, and send the department secured messages. In addition, business taxpayers will have the ability to view all account information in one location. They can now view their payment history, returns they have filed and all correspondence sent to them by the Department of Revenue.

The functionality being added provides more security flexibility to the business taxpayer. Businesses can create unique user ID’s and passwords which grant online access to tax practitioners and accounts they partner with.

Finally, e-Services will also allow self-service activities 24 hours a day, seven days a week. Business taxpayers now have the ability to handle their tax needs online when it is convenient for them.

The transition to the new system will begin on October 17, 2011 and is currently projected to finish by mid-January of 2012. During the transition, groups of taxpayers will be added each Monday, until all 400,000 business taxpayers have access to e-Services.

IRS Proposed Regulations Require Tax Preparers to File Form 8867 with 2012 EITC Claims

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On October 6, 2011, The Internal Revenue Service announced that it is issuing proposed regulations that would require paid tax return preparers, beginning in 2012, to file a due diligence checklist, Form 8867, with any federal return claiming the Earned Income Tax Credit (EITC). It is the same form that is currently required to be completed and retained in a preparer’s records.

The due diligence requirement, enacted by Congress over a decade ago, was designed to reduce errors on returns claiming the EITC, most of which are prepared by tax professionals.

The EITC benefits low-and moderate-income workers and working families and the tax benefit varies by income, family size and filing status. The EITC is a refundable tax credit – taxpayers can get it even if they owe no tax. For 2011 tax returns, the maximum credit will be $5,751.

Tax Return Extension Deadline for Most Filers: October 17, 2011 and Some Exceptions

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October 17, 2011 is the deadline for most of those individual taxpayers who filed Form 4868 to request a six-month extension on filing of their tax returns. Traditionally, October 15 would have been the deadline, but it falls on Saturday this year. Therefore, the IRS extended the deadline until October 17, 2011.

Note that this deadline of October 17, 2011, includes U.S. taxpayers living abroad, even though their tax filing deadline is automatically extended to June 15. It is also important to emphasize that the extension to file your federal tax return does not in any way affect the obligation to file the FBARs by June 30, 2011.

Some taxpayers, however, are not subject to October 17, 2011 deadline this year. The two most prominent exceptions are qualified military personnel and victims of Hurricane Irene. Victims of Hurricane Irene will have until October 31, 2011 to file their tax returns. The new deadline primarily concerns residents of certain counties in Connecticut, Massachusetts, North Carolina, New Hampshire, New Jersey, New York, Pennsylvania, Puerto Rico, Texas, and Vermont.

It is important to emphasize that an extension of time to file is not equivalent to an extension of time to pay. It is generally true that, under the relevant Treasury regulations and IRS Notice 93-22, individual taxpayers still can file a valid Form 4868 and obtain an automatic extension without paying the properly estimated tax in full – this means, of course, that no late filing penalty is likely to be assessed. However, the taxpayers will still owe interest on any past due tax amount and may be subject to a late payment penalty if payment is not made by the regular due date of the return.

IRS Form 5471 and US Persons Who Own Shares in Foreign Corporations

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Do you own 10% or more of the shares in a foreign corporation?  Then you may be required to file IRS Form 5471 (“Information Return of U.S. Persons With Respect to Certain Foreign Corporations”).

IRS Form 5471

Form 5471 is a required informational return for certain categories of filers (there are four different categories of U.S. persons who are required to file this form), and is utilized to satisfy the reporting requirements of IRC Sections 6038 and 6046, and applicable regulations. Form 5471 applies to specified US citizens and residents who are shareholders, officers, or directors in certain foreign corporations.  In general, US taxpayers who own 10% or more of the total value or voting percentage of foreign corporations are required to file the form.

The form itself is very complex and requires reporting of significant amounts of corporate information in the accompanying schedules.  Moreover, this reporting usually must meet GAAP requirements.

Contact Sherayzen Law Office NOW for Legal and Accounting Help with Form 5471

This article is intended to give a brief look at some of the important issues surrounding Form 5471, and it should not be construed as legal or tax advice.  If you have further questions regarding the filing of Form 5471 as it pertains to your own tax and accounting circumstance, Sherayzen Law Office offers professional advice in all of your tax and international tax needs.  Call (952) 500-8159 to discuss your tax situation with an experienced international business tax lawyer.

Benefits of Participating in VCSP

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On September 21, 2011, the Internal Revenue Service launched a new program, the Voluntary Classification Settlement Program (“VCSP”) that will enable many employers to resolve past worker classification issues and achieve certainty under the tax law at a low cost by voluntarily reclassifying their workers.

The main benefit of the new program is that it will allow employers the opportunity to get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit.  This is part of a larger “Fresh Start” initiative at the IRS to help taxpayers and businesses address their tax responsibilities.

“This settlement program provides certainty and relief to employers in an important area,” said IRS Commissioner Doug Shulman. “This is part of a wider effort to help taxpayers and businesses to help give them a fresh start with their tax obligations.”

In essence, employers accepted into the program will pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year. No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years. Participating employers will, for the first three years under the program, be subject to a special six-year statute of limitations, rather than the usual three years that generally applies to payroll taxes.

Contact Sherayzen Law Office NOW to Obtain VCSP Representation

If you wish to participate in the VCSP, you should contact Sherayzen Law Office immediately.  Our experienced tax firm will rigorously represent your interests during the entire process of the Voluntary Classification Settlement Program and strive to achieve the most satisfactory and efficient resolution of your case.