IRS Update: The Foreign Account Tax Compliance Act and Your Customer

As a reminder, the new reporting requirements under the Foreign Account Tax Compliance Act (FATCA) have been in effect for the past two filing seasons. It is important to understand the FATCA rules so that you can help your customers comply with these reporting requirements.

Below is a brief list of what is considered a foreign financial asset:

• Bank accounts maintained in a foreign bank
• Any interest in a foreign entity
• Click here to read more.

Under FATCA, a taxpayer must file Form 8938 (Statement of Specified Foreign Financial Assets) with their Federal income tax for each year that they meet the following foreign financial asset reporting thresholds:

• Foreign financial assets of more than $50,000 ($100,000 for joint taxpayers) on the last day of the year; or
• More than $75,000 ($150,000 for joint taxpayers) at any time during the year.

The penalty for not filing Form 8938 when it is required is a $10,000 fine. There is also an additional penalty of $10,000 per month (maximum of $50,000) if Form 8938 is not filed within 90 days after the IRS mails the taxpayer a notice of failure to file.

Click here to read the entire CrossLink Tax Update that includes further information on the Foreign Account Tax Compliance Act and how it affects your customers.

IRS Update: Who is a Supervised Preparer?

How is a supervised preparer different from a registered tax return preparer?

A supervised preparer:

• Must obtain a PTIN
• Does not have to pass the competency test
• Does not have to meet the yearly continuing education requirements

Who is considered to be a Supervised Preparer?

Under IRS Notice 2011-6 a Supervised Preparer is an individual who is:

• Employed by an attorney or CPA firm; or
• Employed by other recognized firms that are at least 80% owned by attorneys, CPAs or enrolled agents.
• Click here to read more

Click here to read the entire CrossLink Tax Update that includes further information on how a Supervised Preparer is different from a Registered Tax Return Preparer.

IRS Update: IRS “Fresh Start” Initiative and Changes to IRS Offer-in-Compromise Program

As part of their continuing “Fresh Start” initiative, the IRS has announced that they will be offering more flexible terms to its Offer-in-Compromise (OIC) program. This will enable some of the most financially distressed taxpayers to resolve their tax problems more quickly.

The IRS has made the following changes to the OIC program to more closely reflect real-world situations:

• When calculating a taxpayer’s reasonable collection period, it will now look at future income as follows:
• Offers paid in 5 or fewer months: 1 year (down from 4 years)
• Offers paid in 6 to 24 months: 2 years (down from 5 years)
• Allowing taxpayers to pay their student loans
• Click here to read more

The IRS “Fresh Start” Initiative began in 2008 and has included the following:

• In 2008: Lien relief for taxpayers trying to refinance or sell a home
• In 2009: New flexibility for taxpayers facing payment or collection problems
• Click here to read more

Click here to read the entire CrossLink Tax Update that includes further information regarding the IRS "Fresh Start" Initiative and Changes to IRS Offer-in-Compromise Program.

A message from Charles Petz, CPA

Thank you for another great year!

I wanted to take a moment to personally thank you for selecting CrossLink as your professional tax software solution. It is customers like you that have helped us to become the fastest growing professional tax software solution in the country* and I am proud to say that, based on the results of our annual customer survey, we have done so while maintaining our industry-leading customer satisfaction scores.

In the past year we expanded our operations in Rome, GA – and we are not done growing! To continue to meet your needs, this summer we will be doubling our office space in Bellevue, WA. Additionally, we continue to look at ways to improve our solutions and integrate additional technologies to enable your success. Along those lines, I am happy to report that a 64-bit driver for Motorola Symbol scanners will be available on your archive disk in early June.

As many of you will remember from last year, I strongly believe that well rested employees are essential to meeting your needs and ensuring our continued success. In support of this, I wanted to let you know in advance that our employees will be out of office for the period between May 28th and June 1st. During these four business days the entire PEI Team will be recharging their batteries so that when we return to the office on Monday, June 4th we do so with the energy, creativity, and passion you have come to expect from CrossLink. During this period, CrossLink Technical Support will be checking emails and voicemails to ensure urgent matters are supported.

Should you have any questions regarding this break, please do not hesitate to contact your CrossLink Account Team for additional information. Thank you very much for your business!

Charles Petz, CPA
Chief Financial Officer
Petz Enterprises, Inc.

* Based on "Freedom of Information Act data from Third Party Data Store extract listing currently authorized Electronic Return Originators".

IRS Update: Federal Tax Provisions Not Applicable for 2012 Tax Returns

As we move towards the 2013 Filing Season you will need to keep an eye out on what Congress does with regard to the “Extender” tax provisions that expired at the end of 2011.

Here are two lists of the provisions that will have the most impact on individual Tax Year 2012 Federal returns.

Provisions that are no longer applicable for Tax Year 2012 Federal returns:

• $250 Educator Expense Deduction – Form 1040, line 23
• Tuition and Fees Deduction – Form 8917
• Itemized Deduction for Sales Tax
• All personal nonrefundable tax credits allowed when calculating Alternative Minimum Tax
• Click here to read more

Provisions that changed significantly for Tax Year 2012 returns:

• Alternative Minimum Tax (AMT) exemption amounts revert to what they were for Tax Year 2000: Tax Year 2012 AMT exemption amount is:
• Single/Head of Household: $33,750
• Married Filing Joint: $45,000
• Married Filing Separate: $22,500
• Maximum Section 179 Deduction amount has been reduced to $139,000 for Tax Year 2012
• Click here to read more

Click here to read the entire CrossLink Tax Update that includes further information regarding Federal tax provisions that are not applicable or have been changed for Tax Year 2012 Federal tax returns.