15% Domain 1: Preliminary Work and Collection of Taxpayer Data
22% Domain 2: Treatment of Income and Assets
22% Domain 3: Deductions and Credits
11% Domain 4: Other Taxes
10% Domain 5: Completion of the Filing Process
5% Domain 6: Practices and Procedures
15% Domain 7: Ethics – Circular 230 Subparts A, B, and C (excluding D, E)

You can find more details at: http://www.irs.gov/newsroom/article/0,,id=245207,00.html

http://www.irs.gov/taxpros/article/0,,id=243833,00.html

· Areas of tax law to be covered in the exam and the percentage of how much of each topic to be covered
· Question format (e.g., multiple choice, short-answer, written tax calculation problems, or a combination of all three)
· Difficulty and length of the exam
· Detail of the results (e.g., numeric scale vs. pass/fail)
· Time of year to revise the exam for tax law changes and updates
· How often the exam should be administered
· How much time must elapse before preparers are allowed to re-take the test if they do not pass
· Whether or not to administer the exam in other languages and which languages to consider
· Any items to include in the special enrollment exam for enrolled agents or enrolled retirement plan agents

Those interested in providing feedback can send emails by July 7, 2011 to Notice.Comments@irscounsel.treas.gov with “Notice 2011-48” in the subject line (http://www.irs.gov/pub/irs-drop/n-11-48.pdf).

Until a paid preparer obtains a PTIN, undergoes tax compliance and suitability checks, and passes the certification exam, s/he is not an official IRS Registered Tax Return Preparer. The individual cannot prepare tax returns for compensation or practice before the IRS. The IRS restricts the use of the term “registered” until such time as the competency exam is offered. Once the registered status is obtained, the preparer must comply with the rules as outlined in Circular 230 (http://www.ofr.gov/OFRUpload/OFRData/2011-13666_PI.pdf).

The standard mileage rates for 2010 and 2011 are summarized below:

Form 8939, Allocation of Increase in Basis for Property Acquired from a Decedent, is an informational return used to establish basis for income tax purposes of property acquired from a person who died in 2010.

Under the Economic Growth and Tax Relief Reconciliation Act of 2001, the estate tax was repealed for persons who died in 2010. The executors of the estates of certain decedents who died in 2010 were previously required to file an information return (Form 8939) relating to large transfers at death, which was due on the date of the decedent’s final Form 1040 or a later date specified in regulations issued by the Treasury Department.

Enacted in December of last year, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reinstated the estate tax for persons who died in 2010. The law allows executors of the estates of decedents who died in 2010 to elect to have the rules of the estate tax not apply to the property of a decedent’s estate. This election is to be made at the time and in the manner prescribed by the Treasury Department.

Treasury and the IRS plan to issue future guidance that will provide a deadline for filing Form 8939 and for electing to have the estate tax rules not apply to the estates of persons who died in 2010. The prior deadline was April 18, which remains the deadline for filing a decedent’s final Form 1040 this filing season. The forthcoming guidance will also explain the manner in which an executor of an estate may elect to have the estate tax not apply.

A reasonable period of time for preparation and filing will be given between issuance of the guidance and the deadline for filing Form 8939 and for electing to have the estate tax rules not apply. The Form 8939 is not currently available, but will be made available soon after the guidance is issued. Both will be made available on IRS.gov.

The release also links to Notice 1036, which provides percentage method tables for 2011 income tax withholding. The 2011 version of Publication 15 (Circular E, Employer’s Tax Guide) has recently been posted to the IRS site.

Employers should start using the new withholding tables and applying the social security tax reduction as soon as possible in 2011, and no later than January 31, 2011.

Note: For self-employed taxpayers, the social security tax rate is reduced from 12.4% to 10.4% for 2011. Thus the self-employment tax total for 2011 is 13.3% rather than 15.3%.

Rules for provisional PTIN holders.
Those who are not EAs, attorneys or CPAs are allowed to obtain a provisional PTIN before the IRS begins to offer a competency exam in mid-2011. The IRS does not plan to offer provisional PTINs after the competency exam is released. However, provisional PTINs existing at that time may be renewed until December 31, 2013.

After December 31, 2013, an individual who previously held a provisional PTIN may only obtain a PTIN if he or she passes the competency exam and is accepted as a Registered Tax Return Preparer (RTRP), or if the individual is an EA, attorney or CPA, or qualifies under the “supervision” rules discussed below. Provisional PTIN holders may take the competency exam as often as the exam is offered, but will be required to pay an exam user fee each time they sit for the exam. A provisional PTIN holder may represent a taxpayer during an examination only if the individual prepared the taxpayer’s return that is under examination.

Rules for PTIN holders.
RTRPs, along with EAs, attorneys, and CPAs, and individuals that qualify under the “supervision” rules discussed below, may apply for a regular PTIN.

Continuing Education.
There is no continuing education requirement for RTRPs or provisional PTIN holders during the first year of PTIN registration (PTIN registration opened September 30, 2010). Note: A 15 hour continuing education requirement is anticipated after this time.

Ethical and Professional Conduct Rules (Circular 230). Practice before the IRS by anyone who holds a provisional PTIN, or by any individual who prepares, or assists in the preparation of all, or a substantial portion of a document pertaining to a taxpayer’s tax liability for submission to the IRS, is subject to Circular 230’s duties and restrictions relating to practice before the IRS. The IRS may revoke a tax return preparer’s provisional PTIN if the individual engages in disreputable conduct under Section 10.51 or willfully violates applicable duties and restrictions imposed by Circular 230.

Supervision.
The IRS will permit unenrolled individuals that are 18 years or older to pay the PTIN user fee and obtain a PTIN if all of the following apply:

• The unenrolled individual is supervised by an EA, attorney, or CPA who is authorized to practice before the IRS under Circular 230,
• The supervising individual signs the tax returns prepared by the unenrolled individual,
• The unenrolled individual is employed at a law firm, certified public accounting firm, or other recognized firm of the tax return preparer who signs the tax return, and
• The unenrolled individual passes the tax compliance check and suitability check.

Unenrolled individuals working under supervision will not be permitted to sign any tax returns or represent taxpayers before the IRS in any capacity. However, they will be subject to ethical and professional conduct rules discussed above.

In addition, employers will be required to pay a special annual assessment in 2011. The special assessment is a share of Florida’s interest payment on a federal debt it incurred to pay unemployment compensation benefits. The DOR will notify employers of their special assessment liability by February 1, 2011. The assessment must be paid by June 30, 2011. (The increase and subsequent rollback of Florida’s unemployment wage base was discussed in TAX in the news March 9, 2010.)

• 4 percent for overpayments (3 percent in the case of a corporation);
• 4 percent for underpayments;
• 6 percent for large corporate underpayments; and
• 1.5 percent for the portion of a corporate overpayment exceeding $10,000.

An updated interest rate factor chart has been posted to “What are the IRS interest rate factors for late filed individual returns?” in the Tax Research Center.

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Businesses will need to file Form 720, Quarterly Federal Excise Tax Return, and remit the excise tax to the IRS. The first return to report the indoor tanning tax will be for the third quarter of 2010 (July, August, and September). The return is due on October 31, 2010. Businesses that do not timely file or remit the tax may be subject to penalties.

Compliance Penalties. Beginning with the third quarter 2010 Employer’s Quarter Report (UCT-6), a penalty on erroneous, incomplete, or insufficient reports equal to the greater of $50 or 10 percent of any tax due up to the $300 maximum (per report). The penalty will be waived if a corrected, complete, and accurate report is filed within 30 days of the penalty notice date. Note: the penalty may not be waived more than one time in a 12 month period.

Penalty for Failure to E-file. Effective July 1, 2010, the Florida Department of Revenue will assess employer penalties of $50 plus $1 for each employee if the report is not filed electronically using an approved filing method. Agents who prepared and reported for 100 or more employers in any quarter during the prior fiscal year will be assessed the same penalty for each quarterly report that was filed by an unapproved method.
Single Member LLCs. Limited Liability Companies (LLCs) are treated as the employer for Florida unemployment tax purposes.

The new law clarifies that a single member LLC must register and report wages for Florida unemployment tax separately from the owner.

Response deadlines for benefit claims. Employers have only 20 days from the mailing date to respond to an initial notice (Form UCB-412) regarding benefit claims if they want to remain eligible for noncharging of any benefit claim payments.

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