FEDERAL TAX ALERT PAGE 1 september 2012

NEWS StoriES

A pUbLICAtION OF tHe NAtIONAL sOCIetY OF tAX prOFessIONALs september 2012A pUbLICAtION OF tHe NAtIONAL sOCIetY OF tAX prOFessIONALs september 2012

ITIN CoNTroversY News Items Page 3

New TIp reporTINg guIdaNCe

IRs actIoN News Page 4

BusINess v. NoNBusINess Bad deBTs

couRt oPINIoNs Page 10

CoNCerNs over CommerCIal pTIN dIreCTorY

ethIcs coRNeR Page 11

BaseBall sTar’s BaNkrupTCY Tax dIlemma

et ceteRa Page 12

CoNTeNTsNews Items ..............................1IRS Action News .....................4Court Opinions .................... 10Ethics Corner ....................... 11Et Cetera ................................ 12Quotes.................................... 12

INserTsFederal Tax Update SeminarsRTRP Exam Prep CoursesNSTP Has Moved

seNaTe CommITTee Clears exTeNder BIll BuT FINal aCTIoN wIll Have To waIT

The Senate Finance Committee has approved a bill to extend the many tax breaks that expired at the beginning of 2012. The measure, the Family and Busi-ness Tax Cut Certainty Act of 2012, is the first major action this year addressing only the most pressing expiring tax provisions. The bill also includes a statement supporting “compre-hensive tax reform.” Included in the $200 billion package are the usual provisions, including the research and development credit, the tuition deduction, the state and local sales tax deduc-tion, extended mortgage debt forgiveness exclusion, the deduc-tion for mortgage insurance, and an alternative minimum tax patch. The bill was praised by the National Federation of Inde-pendent Business for extending higher expensing limitations for investments in depreciable property.

The legislation gathered Republican support by limiting the extenders included in the measure. Instead of potentially extending 73 tax provisions, the Finance Committee only addressed 54, representing about a 25 percent reduction. U.S. Senator Orrin Hatch (R-Utah), ranking member of the Senate Finance Committee, praised the Committee action as “a step

towards the ultimate goal of comprehensive tax reform.” Six out of 11 Republicans on the Finance Committee voted in favor of the legislation, setting the stage for a bipartisan effort to enact the bill when Congress reconvenes in September after the summer recess.

A summary of the bill is available on the Senate Finance Committee website at http://www.finance.senate.gov/newsroom/chairman/release/?id=e3290a69-8fa4-4a6d-8c3a-756ea03a4224.

dIreCTor oF Irs reTurN preparer oFFICe leavINg IN sepTemBer

At a crucial time for bringing tax preparers into the registra-tion system, the Director of the IRS Return Preparer Office, David Williams, has announced that he is leaving the agency to return to Capitol Hill. Carol Campbell, currently the IRS Deputy Chief of Staff, will take over the position. The leadership change, effective in September, takes place just three years after the IRS started its new preparer regulation program. Williams was the first head of the new Office.

Campbell has more than 20 years experience with the IRS. Starting in 1991, she spent eight years as a senior docket attorney in the Office of IRS Chief Counsel before becoming

Counsel to the National Taxpayer Advocate. In 2003, Carol became Division Counsel for Wage and Investment, where she played key roles on major initiatives, including the filing season and the American Recovery and Reinvestment Act. In May 2010, she became Deputy Chief of Staff in the Commissioner’s office.

Campbell received her law degree from the College of William and Mary and her undergraduate degree from the University of Virginia. Before joining the IRS, she served as Deputy Associate Chief Counsel for the Department of Labor’s Benefits Review Board.

Progress on Competency Testing Slow

The Return Preparer Office leadership change comes amid concerns that so far, only 10,000 unenrolled preparers have taken the competency test to become a Registered Tax Return Preparer. The IRS has estimated that close to 330,000 preparers still need to take the test before the December 31, 2013 deadline.

The Return Preparer Office recently sent reminder emails to provisional PTIN holders who still need to pass the Registered Tax Return Preparer compe-tency test. The email contains information on the advantages of taking the test soon, as well as how to prepare. Tax Preparers with a foreign address did not receive the reminder emails because the IRS has not begun offering the RTRP test in foreign countries.

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FroM tHE EDitor“Congress limps off,” notes a headline from the Atlanta Journal Constitution

of August 4, 2012. This simple sentiment captures the essence of this past Summer on Capitol Hill. Before leaving for the August recess, both parties proposed a number of last-minute tax bills which were doomed from the start. Only two measures can claim bipartisan support, a Senate extenders bill and two companion House and Senate bills to increase tax identity theft penalties, both summarized in this issue. When Congress gets back in September, these bills may be revisited.

IRS Action News this month has articles on tip reporting, the tanning excise tax, new rules for becoming an e-file provider, and several revealing studies by IRS watchdog agencies, such as the GAO, National Taxpayer Advocate, and TIGTA. Other new guidance from the IRS explains how to apply the 50% limitation on meal and entertainment expenses in the case of multiple parties. See page 6.

The Court Opinions section this month features a case explaining the difference between business and nonbusiness bad debts. See the Haury case on page 10. The other two cases involve application of the $1 million mortgage limitation for purposes of the interest deduction and the distribution rules for inherited IRAs. See page 10.

Ethics Corner explains the IRS’s concern about the low numbers of competency exam applicants and what the agency is doing to get provisional PTIN holders to sit for the test. Another article describes a new PTIN web directory that has some tax professionals concerned about the use of their information. See page 11.

Et Cetera includes articles on the U.S. and Japan deficit problems. Japan is taking bold action with a new 10% national sales tax. See page 12. Finally, baseball star Jose Canseco has some harsh words about the IRS, given his tax debt and impending bankruptcy. See page 12 for his colorful story.

Fall is in the air!

Lucia Smeal, Esq.EditorProfessor, Masters in Taxation Programlucia@nstp.org

Technical Editor:Ronald F. Larson, Esq.

increase in the amount of education credits claimed by taxpayers, the credit’s effect on attendance is less clear. Recent research has shown that even though over the past four years, 2009 –2012, federal education tax credits have increased college attendance by about 7%, 93% of those individuals would have attended college without receiving tax credits. The CRS report identifies three options that Congress may consider regarding the credit: (1) allow the credit to expire as scheduled, (2) extend or modify the credit, or (3) consolidate the credit with other educational tax benefits. Alternatively, Congress may want to examine other ways to reduce the cost of higher education, the report suggests.

A copy of the report is available at http://www.fas.org/sgp/crs/misc/R42561.pdf.

Tax FouNdaTIoN maps average savINgs From exTeNsIoN oF BusH Tax CuTs

The Tax Foundation, a nonpartisan tax research group based in Washington, D.C., has developed a map program on its website that shows the average tax savings from a one-year extension of the Bush tax cuts. The analysis reveals that Connecticut taxpayers will have the highest average savings, at $5,783, if the tax cuts are extended, while Mississippi will have the lowest average savings at $1,310. The map shows tax savings per state for tax year 2013.

To access the map, go to http://taxfoun-dation.org/blog/monday-map-average-tax-savings-one-year-extension-bush-tax-cuts.

House passes BIll To INCrease peNalTIes, proseCuTIoN raTe For Tax reTurN IdeNTITY THeFT

The House of Representatives has passed a bipartisan bill introduced by Reps. Debbie Wasserman Schultz, D-Fla., and House Judiciary Committee Chairman Lamar Smith, R-Texas, to increase penalties for tax return identity theft. The Stopping Tax Offenders and Prosecuting Identity Theft Act, H.R. 4362, also would add tax fraud to the list of criminal offenses subject to two- to five-year mandatory sentencing guidelines. The legislation would expand the definition of identity theft victims to include businesses and charitable organiza-tions, which in recent years have been the

CoNgressIoNal researCH servICe QuesTIoNs eFFeCTIveNess oF College TuITIoN CredIT

The Congressional Research Service (CRS), the research arm of Congress, has released an analysis questioning the effective-ness of the American Opportunity Credit,

which expires at the end of 2012. Taxpayers may receive a credit of up to $2,500 per eligible student with 40% refundable. The credit is allowed only for the first four years of undergraduate education and is subject to income limitations. CRS’s concern is that the availability of the credit is not increasing college attendance. While the enactment of the credit has resulted in a substantial

Contributing Writers:Robert J. LandyKittrella MikellKimberly Keeley

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FEDERAL TAX ALERT PAGE 2 september 2012 FEDERAL TAX ALERT PAGE 3 september 2012

The Federal Tax Alert is published 10 times a year by the National Society of Tax Professionals.

Mailing address: The Federal Tax Alert, 11700 NE 95th St., Suite 100 Vancouver, WA 98682. Telephone: 800-367-8130.

Opinions expressed in The Federal Tax Alert are those of the editors and contributors.

Editor: Lucia Smeal; Technical Editor: Ronald Larson; Subscription Services: Glyness Scott;

Printer: BRIDGETOWN PRINTING, Portland, Oregon.

subjects of a number of tax scams involving misrepresentation of their identities.

The bill also mandates that the U.S. Attorney General use all existing resources of the Justice Department to investigate and prosecute this crime. According to the IRS, last year alone more than 850,000 tax returns and $5.8 billion were associated with fraudulent tax refunds involving iden-tity theft. Most tax identity theft victims do not even realize what has happened until they file their taxes, only to learn from the IRS that someone else has already filed and claimed their hard-earned tax refund.

Senate Bill Would Restrict Access to Social Security Death Master File

A similar bill has been introduced in the Senate by Finance Committee members Bill Nelson, D-Fla., and Tom Coburn, R-Okla. The Identity Theft Tax Fraud Prevention Act, S. 1534, would attack the problem by restricting access to the Social Security Administration’s Death Master File. This database, which has been used to steal iden-tities of deceased persons, includes a public listing of the Social Security numbers of deceased individuals. The bill also would increase penalties for using a false identify in connection with tax fraud and would increase penalties for improper disclosure or use of taxpayer information by return preparers.

ITIN CoNTroversY HeaTs up as TIgTa reveals Irs emploYees FaIled To address Fraud

A recent Treasury Inspector General for Tax Administration (TIGTA) report on the Individual Taxpayer Identification Number (ITIN) program has found that the IRS is failing to effectively detect fraudulent applications. The IRS issues ITIN numbers to individuals ineligible for Social Security Numbers, including illegal immigrants. The report concludes that substantial changes are needed to the IRS oversight program. Of most concern is TIGTA’s statement based on investigation of employee complaints that “IRS management is not concerned with addressing questionable applications and is interested only in the volume of applications that can be processed, regardless of whether

they are fraudulent.”

House Member Calls for Shulman’s Resignation

In response to the report, House Ways and Means Committee Member Sam Johnson, R-Texas, in an August 8 letter to IRS Commissioner Douglas Shulman, asked Shulman to resign in light of TIGTA’s findings. Johnson’s letter cites TIGTA’s find-ings that:

• “Management has created an environ-ment which discourages employees from detecting fraudulent applications;”

• “Management has eliminated processes used to identify questionable Individual Taxpayer Identification Number applica-tion patterns and schemes;” and

• “The assignment of an ITIN based on questionable documentation enables individuals to then use this ITIN to file tax returns to commit tax refund fraud.”

Representative Johnson previously intro-duced a bill to require individuals to provide a Social Security number to claim refund-able child tax credits, which are claimed in large numbers by those with ITINs. The measure, H.R. 1956, was initially in the December 2011 payroll tax cut legislation but was dropped before final passage.

Oversight Subcommittee Questions Shulman

House Ways and Means Oversight Subcommittee Chairman Charles W. Boustany, Jr., R-Louisiana, also wrote Shulman a letter asking for a response to ten multi-part questions about the IRS’s ITIN fraud detection practices. The response was due by the end of August. The letter cites numerous instances of obvious fraud, such as the fact that 154 mailing addresses were used 1000 times or more on ITIN applications. Boustany’s letter is avail-able at http://waysandmeans.house.gov/uploadedfiles/boustany_letter_to_commis-sioner_shulman_8.8.2012.pdf.

Lax Documentation RequirementsIn Year 2011, the IRS processed more

than 2.9 million ITIN tax returns resulting in tax refunds of $6.8 billion. The TIGTA audit found that the ITIN application review

and verification process is so deficient that there is no assurance that ITINs are not being assigned to individuals submitting questionable applications. Because of lax documentation requirements to obtain an ITIN, tax fraud can go undetected. TIGTA said that IRS management also eliminated successful processes used to identify ques-tionable ITIN application fraud patterns and schemes.

What TIGTA Recommended, IRS’s Response

TIGTA recommended that the IRS develop detailed procedures and provide adequate training to identify questionable documents, establish a process to evaluate questionable applications, and develop a business process to include analyzing the current system to identify trends and schemes. In addition, the IRS should require as support for an ITIN application only original or certified copies of docu-ments (i.e., certified by the issuing agency). The IRS, TIGTA said, should discontinue the Certifying Acceptance Agent designa-tion. To its credit, the IRS has responded by changing the documentation requirements for ITIN applications. See page 6 of this edition for a description of those changes.

Postscript: Commissioner Shulman announced that he will leave his position when his five-year term ends in November.

House aNd seNaTe memBers INTroduCe resoluTIoNs dIsapprovINg Irs rules oN HealTH INsuraNCe premIum Tax CredIT

Even with the Supreme Court’s upholding of the individual mandate in the Obama health care plan, the fight to derail the program continues. Now, House and Senate Republicans have adopted a new tactic to stop the program, disapproving by resolu-tion the IRS regulations to implement the health insurance premium credit. H.J. Res. 112 and its companion bill, S.J. Res. 48, have been introduced in each House and referred to the tax-writing committees. The text of H.J. Res. 112 is shown below. Both resolu-tions would declare IRS final regulations issued earlier this year to have “no force or effect.” (See page 5 of the June 2012 issue of

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the Federal Tax Alert for a description of the health insurance premium tax credit rules.) Despite these recent actions, the fate of the Obama health care program likely will not be decided until the elections are over and opponents score their successes not only in the White House, but also in both Houses of Congress.

irS ACtioN NEWS

New guIdaNCe For FICa Tax oN TIps explaINs emploYer, emploYee respoNsIBIlTIes

The IRS has updated its guidance on FICA taxation of tips to explain in ques-tion and answer format both employer and employee responsibilities for reporting and paying the tax. Revenue Ruling 2012-18 clarifies that employees who receive $20 or more in cash tips in a single calendar month must furnish written documentation of the tips to their employer. If this is not done, then the employee is liable for the employee portion of the FICA taxes and is subject to penalties. In this situation, the employer is only liable for the employer portion of FICA taxes after a notice or demand is received from the IRS. The employer is not responsible for withholding and paying the employee share of FICA taxes on the unre-ported tips. Cash tips include tips received from customers, charged tips (e.g., credit and debit card charges) distributed to the employee by the employer, and tips received from other employees under any tip-sharing arrangement.

Characterization of TipsThe ruling also explains how to deter-

mine whether a payment is a tip or a service

charge for FICA purposes. The employer’s characterization of payments is not deter-minative. Instead, the IRS lists factors to be considered. The following criteria generally characterizes a payment as a tip:

• The payment must be made free from compulsion.

• The customer must be able to determine the amount of the payment.

• The payment should not be negotiated or dictated by the employer.

• The customer should have the right to decide who receives the payment.

If any of the above factors are not present, then it is doubtful that the payment is a tip. The ruling gives the example of a restaurant charging a set amount for parties of six or more. In this case, the charge is not a tip, but rather is a service charge, which is reported as nontip wages.

Notice and Demand There is no specific form or procedure for

the IRS notice and demand. This require-ment is fulfilled when the IRS advises the employer in writing of the amount of tips received by an employee who failed to report or underreported tips. To constitute a Notice and Demand, the document must use the words “notice and demand,” must state the amount of tips received by the employee, and must identify the period to which the tips relate. Once the IRS makes a demand, the employer reports the FICA tax liability as a current period liability on the employer’s Form 941 for the calendar quarter in which notice and demand is made. The period of limitation for the IRS to assess the employer share of FICA after a Notice and Demand is three years. Note also that the employer will not be liable for interest on the employer’s FICA tax liability for unreported tips if the employer pays the tax on or before the due date of the Form 941 for the quarter during which notice and demand is made. If the employer does not pay the tax by that time, interest will accrue on the underpayment from the due date of the return.

Guidance to Examiners, Public Comments

The IRS also released audit guidelines for businesses where tipping is customary or where a business adds service charges to customers’ bills which are then distributed to employees. The guidance memo instructs

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Technical Tax advice provided by NSTP Hotline staff is based upon specific information conveyed by the member. Members should take special care in relying upon recommendations and opinions that reflect the understanding of the Hotline staff member. NSTP and the Hotline staff are not responsible for misapplication of information given. Members are resposible for the utimate verification and application of any information provided by NSTP.

112TH CONGRESS 2D SESSION

H. J. RES. 112

Disapproving the rule submitted by the Internal Revenue Service relating to the health insurance premium tax credit.

IN THE HOUSE OF REPRESENTATIVES

JUNE 18, 2012

Mr. DESJARLAIS (for himself and Mr. ROE of Tennessee) introduced the following joint resolution; which was referred to

the Committee on Ways and Means

JOINT RESOLUTION

Disapproving the rule submitted by the Internal Revenue Service relating to the health insurance premium tax credit. Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Internal Revenue Service relating to the health insurance premium tax credit (published at 77 Fed. Reg. 30377 (Wednesday, May 23, 2012)), and such rule shall have no force or effect.

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IRS examiners to give businesses not currently in compliance with the revised FICA reporting procedures additional time to amend their business practices and make system changes. The IRS has asked for public comments on the interim guidance and whether additional time is needed to ensure that employer reporting systems are compliant. Comments should be submitted by September 24, 2012, either electronically at TIP.Program@irs.gov or in writing to:

Internal Revenue Service National Tip Reporting Compliance 3251 North Evergreen Dr. NE Grand Rapids, MI 49525

The IRS intends to request public comments at a future date on proposed changes to voluntary tip compliance agree-ments. The IRS is considering significant changes to the Tip Reporting Alternative Commitment (TRAC) program to place a greater emphasis on computations from Point of Sale systems and the use of credit and debit cards.

More information on FICA taxes on employee tips can be found at http://www.irs.gov/faqs/faq/0,,id=199639,00.html.

Rev. Rul. 2012-18 is available at http://www.irs.gov/irb/2012-26_IRB/ar07.html.

proposed rules explaIN wHeN BasIs INCrease allowed For BaCk-To-BaCk loaNs BY s CorporaTIoN sHareHolders

Under current law, S Corporation share-holders can only take losses and deductions into account if they have sufficient basis in the entity. A shareholder’s basis includes the adjusted basis of the shareholder’s stock in the corporation as well as the adjusted basis of any indebtedness of the corporation to the shareholder. In the past, the IRS and the courts have typically denied a basis increase to shareholders who borrow funds from a related entity (instead of a third-party lender) that is then loaned to the S Corpo-ration, referred to as a “back-to-back loan.” The IRS’s position has resulted in confusion as to when and if shareholders can increase their basis in an S Corporation when they make a legitimate loan to the S corpora-tion. New proposed regulations relax the IRS position and allow a basis increase if the indebtedness is bona fide. The loan also must run directly to the shareholder, meaning that there must be a bona fide

creditor/debtor relationship between the shareholder and the S Corporation. The regulations give the following example:

Example 3. Back-to-back loan transac-tion. A is the sole shareholder of two S corporations, S1 and S2. S1 loaned $200,000 to A. A then loaned $200,000 to S2. Whether the loan from A to S2 constitutes bona fide indebtedness from S2 to A is determined under general Federal tax principles and depends upon all of the facts and circumstances. If A’s loan to S2 constitutes bona fide indebtedness from S2 to A, A’s back-to-back loan increases A’s basis of indebt-edness in S2.

The rules also reaffirm that a shareholder acting as guarantor of S corporation indebt-edness does not create or increase basis of indebtedness simply by becoming a guar-antor. The shareholder must actually make payments on the loan.

ABA and AICPA Asked for Change Over the last few years, both the American

Bar Association (ABA) and the American Institute of Certified Public Accountants (AICPA) have been urging the IRS to recon-sider its position, arguing that back-to-back loans are not inherently abusive transactions regardless of whether funds are provided by unrelated or related parties. While the IRS did not adopt the AICPA’s safe harbor idea in the regulations, it did clarify situations in which it will consider a shareholder loan obligation sufficient to increase basis.

Comments on the proposed rules were due by September 10, 2012 and can be viewed online at www.regulations.gov by searching “IRS REG-134042-07” in the search box. The IRS will hold a public hearing on the rules on October 9, 2012.

applICaTIoNs To BeCome aN Irs e-FIle provIder musT Be suBmITTed oNlINe

Beginning October 1, 2012, applications to become an IRS e-file provider must be submitted online. “We will no longer accept paper e-file applications,” the IRS said in an email to tax professionals. Previously, tax professionals could submit Form 8633, Application to Participate in the IRS e-file Program, on paper. However, the IRS will no longer accept paper e-file applications.

You can become an e-file provider in 3 easy steps:

1. Create an IRS e-Services account.

2. Submit your e-file provider application online.

3. Pass a suitability check.

For IRS FAQs on the e-file provider appli-cation process, see http://www.irs.gov/efile/article/0,,id=118979,00.html.

Irs weBsITe redesIgNedThe IRS has migrated its website, IRS.gov,

to a new platform, launched August 30th. The new navigation structure is “intent-driven” based on how visitors have tradi-tionally used the site. This means that the site will have the capability to recognize the intent of the user and then direct that user to the information they are seeking. The IRS notes that it thoroughly analyzed IRS.gov usage data to identify the most visited pages and most used tools. As a result, the agency modified its main navigation to accommo-date the primary needs of its visitors. The “Information for...” menu, located at the top of every page, allows you to select your role (individual, business, non-profit, tax profes-sional, retirement plan administrator, etc.) to navigate the new IRS.gov. The Search function will better tag and target content to deliver the most relevant and meaningful search results. In addition, related forms and publications will be featured in a sepa-rate section on the search results page. The IRS said the platform will allow it to deliver more, and at a faster pace, to keep up with demand for online services.

regulaTIoNs reQuIre CompleTe aNd TImelY esTaTe Tax reTurNs For deCeased spouse uNused exClusIoN

New proposed and temporary regulations issued by the IRS require that a full estate tax return be filed on time in order for a surviving spouse to elect portability of a deceased spouse unused exclusion amount. Amended regulations allow portability of the exclusion amount between spouses if the “first spouse” dies after 2010. Under the proposed rules, some small estates will be able to estimate the value of the gross estate, thereby simplifying the return filing process. The proposed regulation sets forth the following requirements to receive the unused exclusion: (1) timely filing of the estate tax return, (2) a complete and prop-erly filed estate tax return, (3) executor of the estate must make the portability elec-

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tion, and (4) if the executor does not want to apply the election, this must be stated on the estate tax return. The proposed regula-tion also states how to compute the unused exclusion and how the surviving spouse can use the exclusion amount. Comments are due by September 17, 2012 and can be submitted online at http://www.regulations.gov by searching for “IRS-REG-141832-11” in the search box. A public hearing will be held on October 18, 2012.

proposed regulaTIoNs ClarIFY How 50% deduCTIoN lImIT oN meals aNd eNTerTaINmeNT applIes To mulTIple parTIes

The IRS has issued proposed regulations that explain how the 50% deduction limita-tion on meals and entertainment expenses applies when multiple parties are involved. The rules are designed to impose the limit on only one party. The 50% limitation generally does not apply when a taxpayer is performing services for another person under a reimbursement or other expense allowance arrangement. The proposed rules offer a new definition of reimbursement or expense allowance arrangement and include an example of how the rules apply to multi-party reimbursement arrangements.

In the case of independent contractors, the parties can enter into their own agree-ment as to who will be subject to the 50% deduction limitation. If no agreement is reached, the limit will be applied to the inde-pendent contractor if the contractor does not properly substantiate the expense and to the client or customer if the contractor meets the substantiation requirements.

The proposed regulations also clarify exceptions to the deduction limit when reimbursing an employee. Any party that reimburses an employee is a payor and is subject to the limitation if the payment is not treated as compensation or wages to the employee.

Comments on REG-101812-07 are due on October 30, 2012. The proposed regula-tions are available at http://www.irs.gov/irb/2012-34_IRB/ar11.html.

New Irs regs address applICaTIoN oF INdoor TaNNINg exCIse Tax To dIsregarded eNTITIes

The IRS has published temporary and

proposed regulations on disregarded entities and the collection process for the indoor tanning services excise tax. The rules explain the responsibility of these taxpayers, including subchapter S subsidiaries, to pay the excise tax. For taxes imposed on amounts paid on or after July 1, 2012, the temporary regulations treat a disregarded entity as a separate entity for purposes of the excise tax. The rules also treat as a corporation a single-owner disregarded entity, making the corporation responsible for reporting the tax.

Entity Must Report Tax The indoor tanning services excise tax is

reported on Form 720 “Quarterly Federal Excise Tax Return”. Under the regulations, a Form 720 must be filed under the name and employer identification number (EIN) of the entity rather than under the name and EIN of the disregarded entity’s owner. This rule affects returns of this tax that are due on or after October 31, 2012. For taxes imposed on amounts paid before July 1, 2012, the IRS will treat payments made by a disregarded entity as having been made by the owner of that entity.

The IRS is seeking public comments on the new rules by September 24, 2012. More about the implications of these proposed regulations can be found by searching “IRS REG-125570-11” at http://www.regulations.gov.

Irs TIgHTeNs ITIN applICaTIoN reQuIremeNTs

The IRS has announced interim changes it says will strengthen its procedures for issuing Individual Taxpayer Identifica-tion Numbers (ITINs). An ITIN is a tax processing number issued by the IRS which has nine-digits and always begins with the number 9 and has a 7 or 8 in the fourth digit, for example 9XX-7X-XXXX. The interim rules apply from now through the end of the year. ITINs are issued to people who are not eligible to obtain a Social Secu-rity Number, usually foreign nationals and nonresident aliens. The IRS will only issue ITINs to individuals who provide proper documentation from an issuing agency including: passports, birth certificates, or certified documents. Notarized documents are no longer accepted to support applica-tions. In addition, ITINs will not be issued based on applications submitted through certifying acceptance agents unless they

attach original documentation or copies of original documents certified by the issuing agency. A “certifying acceptance agent” is an individual, business or organization authorized by IRS to assist alien individuals and other foreign persons in obtaining ITINs. They review applicants’ documenta-tion, complete a certificate of accuracy, and forward the certificate and application to the IRS for processing. Final rules will be issued before the 2013 filing season.

Application ProceduresThe procedures apply to most applicants

submitting Form W-7, Application for IRS Individual Taxpayer Identification Number. ITINs for most individuals are issued during the tax filing season with the submission of a Form 1040, U.S. Individual Income Tax Return. Because the April 17 filing dead-line has passed, the IRS anticipates that a small number of taxpayers will need ITINs between now and the end of the year. During this interim period, people who need ITINS to get their tax return processed can get one by submitting by mail their original docu-mentation or certified copies of their docu-mentation. Documentation will be accepted at IRS walk-in sites but will be forwarded to the ITIN centralized site for processing.

Spouses and dependents of U.S. military personnel who need ITINs are not subject to these changes and should follow the current procedures outlined in the Form W-7 instructions. These persons include:

• Military spouses and dependents without an SSN who need an ITIN (Mili-tary spouses use box e on Form W-7 and dependents use box d). Exceptions to the interim document standards will be made for military family members satisfying the documentation requirements by providing a copy of the spouse or parent’s U.S. military identification, or applying from an overseas APO/FPO address.

• Nonresident aliens applying for ITINs for the purpose of claiming tax treaty bene-fits (use boxes a and h on Form W-7).

No additional action is required for people who have already filed ITIN requests unless they are contacted by the IRS.

More information about ITINs can be found under 2012 ITIN Review Frequently Asked Questions on the IRS website at http://www.irs.gov/individuals/article/0,,id=96287,00.html.

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TIgTa saYs Irs NoT NoTIFYINg TaxpaYer represeNTaTIves aBouT lIeNs

TIGTA, the Treasury Inspector General of Tax Administration, recently conducted an audit on the lien notice process used by the IRS and found that the agency is not following its own regulations. When the IRS issues a Notice of Federal Tax Lien, it is supposed to not only notify the taxpayer in a timely manner but also notify the taxpayer’s representative of the lien. For a 12-month period ending June 30, 2011, TIGTA estimates that more than 40,000 people may have been affected by the IRS’s non- compliance. TIGTA recommends that the different IRS divisions communicate to improve the controls and oversight of the undelivered lien notices. TIGTA further recommends that the IRS be consistent with the procedures for the Automated Collec-tion System and Collection Field function. The IRS agrees with the recommendations.

Irs oFFsHore ComplIaNCe eFForTs NeT $5 BIllIoN

The IRS has announced that its offshore voluntary disclosure programs have exceeded the $5 billion mark and has released new details on the program, including the fact that it is tightening the eligibility requirements. The program has so far resulted in the collection of more than $5 billion in back taxes, interest and penalties from 33,000 voluntary disclosures made under the first two programs. In addi-tion, another 1,500 disclosures have been made under the new program announced last January. The IRS also indicated that it has closed a loophole that’s been used by some taxpayers with offshore accounts. Under existing law, if a taxpayer challenges disclosure of tax information in a foreign court, the taxpayer is required to notify the U.S. Justice Department. The IRS rules now provide that if the taxpayer fails to comply with this law and does not notify the U.S. Justice Department of the foreign challenge, the taxpayer will no longer be eligible for the Offshore Voluntary Disclosure Program. This program will be open for an indefinite period until otherwise announced

Additional details are available in a new set of questions and answers available at http://www.irs.gov/businesses/small/inter-national/article/0,,id=256774,00.html.

deduCTIoNs allowed For doNaTIoNs To sINgle memBer llCs owNed BY CHarITIes

The IRS has issued a notice confirming that a charitable contribution to a limited liability company which is owned by a charity will be deductible for tax purposes. The LLC must be wholly owned by a chari-table organization and must be classified as a disregarded entity for federal income tax purposes. The contribution will be treated as a contribution to a branch or division of the charitable organization.

Notice 2012-52 is available at the following link: http://www.irs.gov/pub/irs-drop/n-12-52.pdf.

deduCTIoN rules For eNTerTaINmeNT use oF BusINess aIrCraFT

The IRS has finalized rules on the deduc-tion limitation for entertainment use of business aircraft. The final rules continue the policy established by the 2007 proposed regulations that companies must allocate expenses between business and personal use on the basis of occupied seat hours or occupied seat miles, calculated as the yearly total hours or total miles flown by passen-gers multiplied by the number of occupied passenger seats. The total aircraft operating costs for the year are divided by occupied seat hours or occupied seat miles to arrive at cost per occupied seat hour or occupied seat mile.

Taxpayers also may allocate costs on a flight-by-flight basis which divides the total aircraft operating costs for the year by the number of flight hours or flight miles for the year to determine cost per hour or cost per mile. The cost per flight is then allocated to its passengers on a per capita basis.

The final rules are available at http://www.irs.gov/irb/2012-34_IRB/ar07.html

Irs Has plaN To Help u.s. CITIZeNs overseas CaTCH up wITH Tax FIlINgs

The IRS has developed a plan to help U.S. citizens residing overseas, including dual citizens, to catch up with tax filing obliga-tions and to provide assistance for people with foreign retirement plan issues. A new option that goes into effect on September 1, 2012 will help some U.S. citizens and others

residing abroad who have not been filing tax returns come into compliance without paying penalties or being subject to addi-tional enforcement action. These people generally will have simple tax returns and owe $1,500 or less in tax for any of the covered years. The new streamlined proce-dures also will allow resolution of issues related to foreign retirement plans, such as Canadian Registered Retirement Savings Plans.

Taxpayers using the new procedures will be required to file not only delinquent tax returns along with appropriate related information returns for the past three years, but also delinquent Reports of Foreign Bank and Financial Accounts (FBARs) for the past six years. Submissions from taxpayers that present higher compliance risk will be subject to a more thorough review, and potentially an audit, which could cover more than three tax years.

For more information on the new procedures , see http://www.irs .gov/b u s i n e s s e s / s m a l l / i n t e r n a t i o n a l /ar t icle/0, , id=256772,00.html.

Irs gIves relIeF To FlorIda vICTIms oF TropICal sTorm deBBIe

Victims of tropical storm Debby that began on June 23, 2012 in parts of Florida may qualify for tax relief from the IRS. The President has declared Baker, Brad-ford, Clay, Columbia, Duval, Franklin, Hernando, Highlands, Nassau, Pasco, Pinellas Suwannee, Union and Wakulla counties in Florida a federal disaster area. Thus, individuals who reside or have a busi-ness in these counties may qualify for tax relief. The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, deadlines falling on or after June 23, but before Aug. 22, have been postponed to Aug. 22, 2012. In addition, the IRS waived the failure-to-deposit penalties for employment and excise tax deposits due on or after June 23, but before July 9, as long as the deposits were made by July 9, 2012. Penalties or interest will be abated for taxpayers who have an original or extended filing, payment or deposit due date that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief.

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Storm ravaged taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Casualty Losses Affected taxpayers in a federally declared

disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors. Individuals may deduct personal property losses that are not covered by insurance or other reim-bursements. For details, see Form 4684 and its instructions. Taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Florida/Tropical Storm Debby” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief The IRS will waive the usual fees and

expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS. Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Irs provIdes sample laNguage For eleCTINg Tax TreaTmeNT oF properTY TraNsFerred For servICes

The IRS has provided guidance, including examples, on the reporting of property transferred for services. Under current law, stock or other property transferred to an employee for services performed is included in the employee’s income for the tax year the property becomes transferable or no longer subject to a substantial risk of forfeiture. Typically, these rules apply to stock options granted to executive employees. Employees may elect to include in income the excess of the fair market value of the property over the amount the employee paid for it as

compensation for services.

The new revenue procedure establishes an alternative way to report the amount received when property is still subject to forfeiture. It applies to taxpayers who receive nonvested property in connection with the performance of services and wish to file an election to report the income. Under the guidance, if this election is made and the taxpayer reports nonvested prop-erty, any later appreciation in value will not be taxable as compensation. Further, no compensation will be includible in gross income when the property later becomes substantially vested.

For the text of Rev. Proc. 2012-29, see http://www.irs.gov/irb/2012-28_IRB/ar12.html.

Irs explaINs wHeN dIvIdeNds aNd dIvIdeNd eQuIvaleNTs are INCluded IN exeCuTIve CompeNsaTIoN

Revenue Ruling 2012-19 explains when dividends and dividend equivalents for restricted stock qualify as performance based compensation. The revenue ruling provides two different scenarios describing situations in which compensation will be considered either performance based or payable despite performance. Under the ruling, if an employee receives dividends or dividend equivalents for restricted stock whether or not performance goals are satis-fied, then the amount the employee receives will be counted toward the $1 million limit on deductions for executive compensation. Compensation will be excluded from the limit only if it is truly tied to performance goals. Revenue Ruling 2012-19 is available on the IRS website at the following link: http://www.irs.gov/irb/2012-28_IRB/ar07.html

NaTIoNal TaxpaYer advoCaTe CITes CoNCerN over Irs’s aTTempT To lImIT dIreCTIves

National Taxpayer Advocate (NTA) Nina Olson has sent Congress the NTA’s Objec-tives Report for Fiscal Year 2013. The report identifies areas of concern and issues that the NTA wants Congress to address. The main topics of discussion are: (1) expiring tax provisions; (2) the impact of tax fraud and tax-related identity theft; (3) how the IRS is ignoring Taxpayer Advocate Direc-

tives and attempting to limit their reach; and (4) the IRS’s increased use of automated processes which decrease taxpayers’ direct contact with IRS employees.

For the text of the National Taxpayer Advocate’s FY 2013 Objectives Report to Congress, see http://www.taxpayeradvo-cate.irs.gov/Annual-Reports-To-Congress/fy-2013-objectives-report-to-congress-full-report.

Irs wHIsTleBlower NumBers dowN

The IRS Whistleblower Office has released its 2011 report to Congress noting drops in the program numbers as shown in the table below.

Delay in Payments Under ProgramThe IRS pays whistleblower awards from

collected proceeds which result from an audit or investigation. Because payments are not made until the taxpayer has exhausted all appeal rights and the statutory period for the filing of a claim for refund has expired or been waived by the taxpayer, the IRS may not make payments for several years after the whistleblower has filed the claim. In FY 2011, the IRS received 314 submissions identifying 732 taxpayers. Many of the individuals submitting information claim to have inside knowledge of the transac-tions they are reporting, and often provide extensive documentation to support their claims. The IRS cannot yet tell how many of the cases will result in collected proceeds, and whether the whistleblowers’ estimates of the amounts in dispute are accurate.

Congress Concerned About Low Numbers

At least one key member of Congress has criticized the IRS’s handling of the whistle-blower program given the low number of awards. Senate Finance Committee member Chuck Grassley, R-Iowa, held up nomina-tions for several key Treasury positions until the IRS agreed to address problems with the program. According to Grassley, the IRS still has not committed to prioritizing claims raised by whistleblowers. (For more infor-

2010 2011Cases 7577 7471# of Awards Paid 97 97Awards over $2 million 9 4Total Awards Paid $18.7 MM $8 MMTotal Amount Collected $465 MM $48 MM

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mation on the Senator’s website, see http://www.grassley.senate.gov/news/Article.cfm?customel_dataPageID_1502=42085.) In response, the IRS and Treasury have assured Grassley that the IRS is taking steps to ensure more timely processing of cases which will result in more payments made in the future.

eleCTroNIC Tax admINIsTraTIoN advIsorY group Calls For e-FIlINg oF emploYmeNT Tax reTurNs

The Electronic Tax Administration Advi-sory Committee, ETAAC, recently presented its 2012 report to Congress, praising the IRS for meeting its goal of having at least 80% of taxpayers e-file in 2012, and urging the agency to move forward with employment tax return e-filing. The group also recom-mended action on the following key issues:

• Reinforcing standards for security, privacy, and fraud prevention.

• Creating Internet tools for taxpayers and tax professionals.

• Leveraging tax delivery service chan-nels.

• Funding Modernized e-File and Customer Account Data Engine to comple-tion.

The report is available at http://www.irs.gov/pub/irs-pdf/p3415.pdf. Public comments on the report may be sent to etaac@irs.gov.

Irs esTaBlIsHes saFe HarBor For puBlIClY Traded parTNersHIps wITH CaNCellaTIoN oF deBT INCome

Master limited partnerships traded on public exchanges run the risk of being taxed as corporations if 90 percent or more of their income is not “qualifying income.” One source of possible nonqualifying income is income from the cancellation of debt. The IRS has recently released long-awaited guidance in Revenue Procedure 2012-28 which provides a safe harbor under which the IRS will consider cancelled debt as qualifying income if the discharged debt has a direct connection with partnership activities that generate qualifying income. A master limited partnership may use any reasonable method to show the direct connection, such as tracing the proceeds of

the debt to qualifying activities. The revenue procedure also states that taxpayers may request a private letter ruling on whether their method of tracing the connection to qualifying income is reasonable.

Revenue Procedure 2012-28 is available at http://www.irs.gov/irb/2012-27_IRB/ar06.html.

INTeresT IN moNeY markeT FuNd Is a CasH ITem For purposes oF reIT asseT TesT

Real Estate Investment Trusts, or REITs, are corporations or trusts that use pooled funds from many investors to buy and manage property or invest in mortgages. REITS may deduct dividends paid to members, so effectively REITS do not pay tax at the corporate level. Rather, REIT income is passed through to the individual investors as dividends. To qualify as a REIT, certain tests must be met, including asset tests.

One of the asset tests requires that 75% of the total asset value of the REIT must be comprised of real estate assets, cash or cash items, and government (as opposed to investment) securities. The IRS has ruled in Rev. Rul. 2012-17 that interest in money market funds is now considered to be a “cash item” instead of an investment security. The IRS agrees with the Securities and Exchange Commission’s earlier finding that money market fund shares are similar to cash due to the high degree of liquidity and return of the principal amount.

Revenue Ruling 2012-17 may be found at http://www.irs.gov/irb/2012-25_IRB/ar05.html.

Irs Issues proposed rules oN ageNTs FIlINg CoNsolIdaTed reTurNs For aFFIlIaTed groups

The IRS has issued proposed regulations on agents that file a consolidated return for an affiliated group. The proposed regulations clarify existing law by explaining when the IRS is allowed to designate a substituted agent. The proposed rules also address terminated agents and default successors. More on this proposed regulation can be found by searching, “IRS REG-142561-07,” in the search box at http://www.regulations.gov.

dIsCIplINed praCTITIoNers IdeNTIFIed oN Irs weBsITe

The IRS Office of Professional Responsi-bility (OPR) has published a list of practi-tioners subject to recent disciplinary action. These practitioners include attorneys, certi-fied public accounts, enrolled agents, and appraisers who have violated regulations on practicing before the IRS. The list can be found by searching, “IRB 2012-23” in the search box on the www.irs.gov home page. Then click on the first link and go to page 982.

Irs seTTles wITH aCCouNTINg FIrm THaT promoTed Tax sHelTers

BDO USA, LLP and the IRS came to an agreement in June that the firm will pay about $34.4 million dollars in civil penalties for violating law on tax shelter registration from 1997 to 2003. The firm allegedly failed to register tax shelters with the IRS in an attempt to assist high-income taxpayers in evading federal income taxes. BDO was charged with one count of engaging in a tax fraud conspiracy. Specifically, through a group within the firm known as The Tax Solutions Group, BDO developed, marketed, sold and implemented fraudu-lent tax shelter products to high net worth individuals, who had, or expected to have, reportable income or gains in excess of $5 million, according to an IRS release. These fraudulent tax shelters, although designed to appear to the IRS to be investments, were a series of pre-planned steps that assisted BDO’s high net worth clients to evade indi-vidual income taxes of approximately $1.3 billion, IRS said.

The penalty is part of a $50 million payment that BDO has agreed to pay the United States in connection with the criminal charge. In addition to the civil penalty payment, BDO has agreed to coop-erate with the IRS in civil matters, including IRS audits and litigation relating to its tax shelter products and to work with the IRS to ensure that it is in compliance with federal tax laws involving tax shelters.

oversIgHT Board warNs CoNgress THaT Irs resourCes are ‘sTreTCHed THIN’

In its annual report to Congress, the IRS Oversight Board warned that the agency will have difficulty meeting its many responsibilities due to a reduction in the IRS’s resources. The report stated the goals approved by the Board in 2008 and identi-

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(NPGS) and NPS Systems, Inc. (NPS), two information systems companies for which he also worked. NPS paid him a salary in 2005 and 2006, but NPGS did not. During 2007, he was the chief executive officer and owned 48.3% of NPGS, and he also owned 49.2% of NPS and was president, secretary, and the sole member of its board of directors. To cover development costs of the two companies in 2007 on a govern-ment subcontract, Haury withdrew money ($434,933) from his IRA and loaned it to the companies, executing promissory notes. The companies were required to pay on demand. In December 2007, the deal fell through and Haury demanded that the companies repay the funds transferred from his IRA. Haury was only partially repaid.

In 2010, the IRS prepared a substitute return for Haury’s 2007 tax year showing wage income of $149,216 and a $434,964 early withdrawal from his IRA. Later that year, Haury filed his petition with the Tax Court and subsequently filed a 2007 return on which he reported a bad debt deduction of $413,156, wage income of $149,217, a retirement distribution of $434,964, and a 10% additional tax of $31,996.

Analysis and Conclusion: The Tax Court determined that the unpaid loan amount claimed on Schedule C was not deductible as a bad debt related to Haury’s trade or business. Instead, the Court found it was a nonbusiness bad debt which had become worthless in 2007 and which should have been treated as a short-term capital loss. The Tax Court noted that while Haury designed the software used by the companies and invested a significant amount of time and money to ensure their success, his dominant motive in making the loans was to protect his investment interests in the companies, rather than to protect his salary. Therefore, the Tax Court held that Haury’s loans to the companies were nonbusiness debt and his deduction was limited to a capital loss.

The Court noted that Haury’s transfers of the IRA proceeds which had first been distributed to him to the companies were bona fide loans arising from a debtor-creditor relationship. Each transfer was structured as, and intended to be, a loan. The transfers were documented by valid enforceable interest-bearing notes, and Haury expected and demanded repayment. Furthermore, NPGS and Haury consistently treated the transfers as loans on NPGS’s Federal income tax returns.

tioner paid the mortgage with her own funds during 2007. Petitioner elected the “married filing separately” filing status on her 2007 tax return and deducted the interest paid on the entire $1 million of mortgage indebted-ness. The IRS issued a notice of deficiency which determined that Petitioner as a result of her filing status was limited to a deduc-tion for interest paid on $500,000 of home acquisition indebtedness plus interest paid on $50,000 of home equity indebtedness.

Analysis and Conclusion: While the relevant statute, Section 163 of the Internal Revenue Code, allows a deduction for quali-fied residence interest on up to $1,000,000 of mortgage debt and on up to $100,000 of home equity debt, the Code specifically states that married taxpayers filing sepa-rately are only entitled to deduct interest on one-half of those amounts. The Tax Court, therefore, held that Petitioner is entitled to a deduction for interest paid on only $500,000 of home acquisition indebtedness plus interest paid on only $50,000 of home equity indebtedness. The Court also upheld an accuracy-related penalty against the taxpayer, finding that Petitioner had ignored the plain meaning of the statute.

Notes: Home acquisition debt is consid-ered qualified residence interest under Code Section 163 if it is used to construct or improve the taxpayer’s principal residence. The debt that may be treated as home acquisition indebtedness is limited to $1 million or $500,000 for married taxpayers filing separate returns. The Tax Court has ruled that the $1 million limitation is only available to co-owners who are married and who file a joint return. In this case, the Peti-tioner’s husband did not have joint owner-ship of the property and the couple did not file a joint return. Therefore, the full interest deduction was not available to them.

employee-stockholder’s unpaid loans to Corporations are Nonbusiness Bad debts:

HAURY v. COMMR. u.s. Tax CourT T.C. memo. 2012-215 July 30, 2012

Issue: Whether software engineer’s unpaid loans to a company in which he is a signifi-cant shareholder-employee are business or nonbusiness bad debts.

Facts: Mr. Haury, a software engineer, developed software and licensed it to NuParadigm Government Systems, Inc.

fied specific problems the IRS is facing in meeting those goals, as follows:

- Goal 1: Improve Service to Make Volun-tary Compliance Easier.

- Challenges to Goal 1: IRS will have a low budget for toll-free telephone calls, lacks updated technology to help offset their telephone service, and must deal with the rise in identity theft refunds.

- Goal 2: Enforce the Tax Law to Ensure Everyone Meets Their Obligation to Pay Taxes.

- Challenges to Goal 2: IRS will need to obtain more information on reporting stock basis and merchant credit card payments, and will need resources to administer the offshore voluntary disclosure program including the Foreign Account Tax Compli-ance Act (FATCA) program.

The IRS Oversight Board has previously reported that the tax administration system has two serious systemic weaknesses that require attention: the tax gap and IRS’ archaic information technology (IT) systems. The Board observed that the IRS made “notable progress” with its IT modernization program, but the tax gap continues to be a serious problem. Reductions in IRS service and enforcement resources in FY2011 and FY2012 will hinder the IRS’s efforts to reduce the tax gap, the Board noted.

The text of the 82-page report is avail-able at http://www.treasury.gov/irsob//reports/2012/IRSOB%20Annual%20Report%202011.pdf.

CoUrt oPiNioNS

married Filing separate Taxpayer subject to mortgage Interest deduction limits:

FAINA BRONSTEIN v. COMMR. u.s. Tax CourT 138 T.C. No. 21 may 17, 2012

Issue: Whether a taxpayer with the status of married filing separately can deduct interest paid on an entire $1 million mort-gage indebtedness.

Facts: Petitioner obtained a $1 million mortgage to help finance her purchase of a home owned by herself and her father-in-law. She and her father-in-law were liable on the mortgage. Although she was married, Peti-

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Indirect rollover of Inherited Ira is Taxable distribution:

BEECH v. COMMR. u.s. Tax CourT T.C. summarY op. 2012-74 July 26, 2012

Issue: Whether a distribution from an inherited IRA at one financial institution, by means of giving the funds to the beneficiary, who then deposited them into an inherited traditional IRA account at another financial institution, was a taxable distribution.

Facts: Petitioner’s mother died on March 22, 2008. Petitioner was the beneficiary of her mother’s traditional IRA that was managed by Citi Smith Barney (Citi). Citi made two death benefit distributions to Petitioner -- one on May 21, 2008, for $2,828 and one on May 23, 2008, for $35,358. The distribution check for $35,358 was made out to Peti-tioner. Petitioner established an inherited traditional IRA with American Funds and deposited the death benefit distribution of $35,358 into the inherited traditional IRA in June 2008. Petitioner and her husband reported an IRA distribution of $38,194 on line 15a, nontaxable IRA distributions, on their 2008 Form 1040, U.S. Individual Income Tax Return. They reported $2,828 as the taxable amount of the distribution on line 15b of their return. The IRS argued that all of the retirement income was taxable. Petitioner argued that her intent was to effect a trustee-to-trustee transfer and that she substantially complied with the law.

Analysis and Conclusion: The Tax Court upheld the IRS assessment. According to the Court, while Petitioner’s intent may have been to effect a trustee-to-trustee transfer, a taxpayer’s good intentions do not determine the tax consequences of his or her transac-tions. What actually is done, the Court said, determines the proper tax treatment. The Court held that because the funds were from an inherited IRA, a trustee-to-trustee transfer was the only way for the Petitioner to avoid taxation of the distribution. While the transfer and redeposit complied with the general IRA rollover rules, the Court noted that the tax law expressly denies roll-over treatment to an inherited IRA.

Notes: Rollover treatment is not available in the case of an inherited IRA. An IRA is treated as inherited if the individual for whose benefit the account is maintained acquired that account by reason of the death of another individual who was not his or her spouse. A

taxpayer is not treated as having received a taxable distribution from an IRA, however, if funds in the IRA are transferred from one account trustee directly to another account trustee without the IRA owner’s or beneficia-ry’s ever gaining control or use of the funds.

EtHiCS CorNErIrs makes ImprovemeNTs To pTIN regIsTraTIoN sYsTem

The IRS has changed the look and feel of the PTIN registration system in preparation for the PTIN renewal season that begins in mid-October. The changes include: • a new look and feel, including enhanced

log-in page. • consolidation of Main Menu and PTIN

Menu. • pop-up help messages. • better instructions for required format

in numerical fields, including an imme-diate error message for entering the wrong format.

• redesigned address entry screen, including a “copy from” feature and a zip code lookup feature.

• improved ability to review or edit a summary of all information before submission.

• streamlined data entry for a supervisor PTIN and for professional credential data.

More enhancements are in process and will launch when the PTIN renewal season begins, the IRS said.

reTurN preparer oFFICe seNds emaIls urgINg exam CompleTIoN

The IRS Return Preparer Office has sent emails to Registered Tax Return Preparer candidates urging them to take the test now, rather than later, to get their RTRP desig-nation well before the December 31, 2013 deadline. The IRS is understandably nervous that 330,000 tax preparers with provisional PTINs still need to complete their tests. Only 10,000 unenrolled preparers have passed the exam to date and have received their RTRP designations. If provisional PTIN holders do not pass the test by the end of 2013, they will lose their PTIN and will be unable to prepare tax returns. After January 1, 2014, those who want to prepare taxes will have to pass the competency exam before they will be issued the required PTIN.

Did you know… that there are more tax preparers than safety officers in the U.S. There are up to 1.2 million tax preparers in the U.S., while law enforcement officers number 756,000 and professional fire-fighters total 310,400. These statistics are offered by the group Face the Facts USA, available at http://www.facethefactsusa.org/facts/when-tax-complexity-puts-dinner-on-the-table/.

CommerCIal pTIN dIreCTorY weBsITe CoNCerNs some praCTITIoNers

A new commercial PTIN directory, www.PTINdirectory.com, is touting its site as “the only national directory of licensed tax preparers”; however, use caution when you evaluate its services. Various industry articles and practitioner blogs on the web are expressing concern about the use of the information and the representations being made about the listings. The site offers a searchable database of over 700,000 tax return preparers which can be purchased from the IRS for $35.00 under Freedom of Information Act procedures. The first release of IRS PTIN information contained e-mail addresses of tax preparers, attorneys, CPAs, and EAs as well as the home addresses and phone numbers of many PTIN holders, who were previously required to provide this information. The IRS later changed the rules to allow preparers to conceal their home addresses. However, anyone who purchased the original list through FOIA obtained this personal information. It is unclear which version of the list the PTIN Directory is using, although the FTA Editor has received some reports from colleagues that the PTIN Directory may contain the originally-released list. The PTIN Direc-tory site allows you to block some of your information if you register with the site and update your information.

A press release issued by the company states that, “It is expected that tens of thousands of individuals, business owners, agencies, and financial institutions will use PTINdirectory.com over the coming months to verify and find tax preparers authorized by the IRS to prepare tax returns. Tax preparers can be found by IRS sanctioned creden-tials, industries, and services offered and geographic criteria.” Some preparers have expressed concern that the current PTIN Directory purports to be a listing of licensed return preparers when the provisional PTIN process is still ongoing and most unenrolled

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preparers have not yet attained their RTRP designation. Thus, many names on the existing PTIN Directory site are not yet licensed by the IRS. It is unclear at this point how the PTIN Directory site will update their list to maintain accurate lists of IRS-licensed tax return preparers.

The site encourages preparers to verify and update their information. It also offers an “Upgrade” to your listing for a fee of $25.00. The upgrade promises to give you top positioning in the search, give you lead prospects, link to your business website, and give you a “Gold Seal of PTIN Registry.” The business is run out of Wantagh, New York, according to its contact information, and the company is a subsidiary of CPAdi-rectory.com, founded by New York CPA Michael Rosedale, who also runs CPAclas-sifieds.com, FreeCPE.com, CPAUniversity.com and 1800Accountant.com.

The IRS plans to launch its own PTIN directory listing registered preparers in May 2013.

oldesT regIsTered Tax reTurN preparer gIves aCCouNT oF CompeTeNCY exam

The IRS Return Preparer Office has posted on its Facebook site the account of a 94-year-old woman who recently sat for and passed the Registered Return Preparer Exam. She started her bookkeeping career in 1958 and started studying tax returns and eventually began preparing them. She gives this advice on taking the exam: “If you prepare tax returns, you have to know what is asked. But it never hurts to read, and certainly reviewing publications or subscribing to an exam program will never hurt. When you are in front of the (test vendor) computer, try not to be anxious. I kept telling myself that the worst thing that can happen is to have to do it again, as unpleasant as it might be.”

To read her full story, go to http://www.facebook.com/IRStaxpros#!/notes/irs-return-preparer-office/newest-rtrp-is-one-of-the-oldest-she-shares-her-advice-with-you/335401476546170.

Et CEtErA

INCrease IN NaTIoNal sales Tax approved IN wake oF JapaN’s deBT CrIsIs

Japan has officially crossed a hitherto unseen threshold: 1 Quadrillion yen in public debt. That number represents a thou-sand trillion or a million billion. (The U.S.

dollar equivalent is $12.6 trillion.) Japan’s national debt makes Greece’s debt look puny at over 2.2 times Japan’s gross domestic product (GDP). In comparison, the U.S. national debt comes in at around 1 times our GDP and Greece’s is about 1.6 times its GDP. Since the tsunami, Japan’s debt has greatly increased, but Japan’s problem was there before that catastrophe. The Japanese economy has been in a prolonged period of malaise since 1997. That was the year that a significant increase in the sales tax was enacted and many say was the cause of a decades-long economic slowdown.

Sales Tax SolutionSo what to do now? Both major political

parties have now agreed to double the national sales tax, from 5% to 10% by 2015, and the implementing legislation has received final approval. The measure is expected to bring in $128 billion in new revenue per year. However, critics say the new revenue will not help much with the existing debt as it will quickly get consumed by projected growth in retirement-program spending for the country’s rapidly growing population of seniors. On another note, Japan just recently lowered its corporate income tax rate, which previously was the highest of the major industrialized countries.

FasTeN Your seaTBelTs, BudgeT TurBuleNCe aHead

If you think the U.S. Federal Debt is bad now, wait until you see what the non-partisan Congressional Budget Office (CBO) has projected for the not-so-distant future.

Twenty-five years from now, in the year 2037, we can expect the debt to double, to an amount that will, at that time, be almost 200% of the U.S. Gross Domestic Product. In other words, the federal debt would be almost twice the amount of everything produced in the U.S. for one full year. The CBO is commissioned to come up with the most likely scenario, projecting forward where the U.S. will be if we continue with the current tax rates and fail to curb entitle-ment spending, now rising rapidly with the onslaught of Boomer retirements.

Home ruN or sTrIke ouT For BaseBall plaYer IN Tax dIsCHarge

Is 7 this taxpayer’s magic number? He played for 7 different Major league teams, receiving Rookie of the Year and MVP awards, along with millions of dollars. Now, at 48 and a current Las Vegas resident, Jose Canseco hopes his current 7 also serves him well in his IRS showdown-- Chapter 7 Bankruptcy.

“Let me tell you from first-hand experi-ence, the IRS are a bunch of thirsty pira-nhas,” Canseco spouted, after he acknowl-edged that he forgot to pay his taxes for a number of years. “They bled me dry.” Now he’s hoping that the half million dollar debt will be discharged in the bankruptcy action. Typically, tax debts must be at least three years old and not based on fraud or evasion to be eligible for bankruptcy discharge. “What will be interesting in that case is whether those taxes will be dischargeable or not,” says Brian Shapiro, on Lawyer.com. Shapiro is an attorney in Las Vegas who serves as a bankruptcy trustee.

Apparently, the IRS is not quite as thirsty as his friends and relatives, whom Canseco blames for using up over half of his income.

QUotES

“I can appreciate the feeling of some tax return preparers. It is hard when you are an adult and you have to take a test.” -- A 94-year-old who is identified by the IRS as the oldest Registered Tax Return Preparer in the U.S..

“Most taxpayers really don’t want to hear from the IRS even if you tell them it is good news.” -- David Williams, outgoing Director of the IRS Return Preparer Office.

“…it is utterly mystifying to me why the IRS would seek to squelch the authority of the National Taxpayer Advocate to raise taxpayer rights and taxpayer burden issues to the senior IRS leadership in this way, and we certainly will not accede to attempts to constrain our advocacy efforts of behalf of our nation’s taxpayers.” -- Nina Olson, National Taxpayer Advocate, in the NTA Objectives Report for Fiscal Year 2013.

“I’m proud to be paying taxes in the United States. The only thing is – I could be just as proud for half the money.” -- Arthur Godfrey, American radio and TV host

“IRS: We’ve got what it takes to take what you’ve got.” -- Anonymous

www.nstp.orgService to the Tax Profession

31393_A_FTA.indd 12 8/29/12 12:33:25 PM

2012 NSTP FEDERAL TAX UPDATE&

REVIEW SEMINARNSTP’s Federal Tax Update and Review Courses learning objectives are to provide the seasoned professional and the developing tax practitioner with an array of in-depth study of the field of federal tax law. .

NSTP’s course builds on basic principles of taxation in order to relate fundamental principles to practical real life issues. At the same time the course focuses on the development of the professional. The Fall Update and Review Course also gives a general review of new developments in the tax community introducing Legislative, Judicial and Administrative Updates.

Participants will receive a complete copy of the text used by the presenters of the course.

Topic Highlights for NSTP’s 2012 Federal Tax Update & Review Seminars:

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2012 Forms Review

Selected Provisions of New 2012 Legisla�on

Selected Provisions of “Tax Relief Act” and “Job Crea�on Act of 2010”

Update on Registra�on of Tax Preparers

Introduc�on to the “2010 Health Care Act” A�er the Supreme Court Decision

Tax Transac�ons in 2012 and Beyond Affected by the Legisla�on of the 21st Century

Update for Business Clients Affected by the Credit Card Transac�on Repor�ng Issues

Alterna�ve Minimum Tax (AMT): What's Happening?

NSTP Hotline Hot Topics

Schedule C Issues

§108 Home Mortgage Debt Relief Ready to Expire

Review of IRS Announcements and Regula�ons

Tax Court Case Review

Understanding the Importance of Focusing on AGI

Preferen�al Capital Gain Rate Issues: The Zero Rate S�ll Alive for 2012

Review of the New Basis Rules on Covered Securi�es and Form 8949

And A Whole Lot More...

National Society of Tax Professionals2012 REGISTRATION FORM

Please register me for the following seminar:Location: _______________________________________________________

Federal Update Seminar (8 CPE):

� Member - $165 � Non-Member - $215

Orlando Grand Event (12 CPE):

� Member - $250 � Non-Member - $300

Las Vegas Grand Event (16 CPE):

� Member - $325 � Non-Member - $375

Name: ____________________________________________________________________

Address: _________________________________________________________________

City: _________________________State: _____________Zip: __________________

Phone: __________________________ Fax: __________________________________

E

PTIN#:

-Mail: _____________________________________________________________________

_____________________________________________________________________

Payment: ❏ Check ❏ AMEX ❏ Discover ❏ Visa/MC

Please write each digit of your Credit Card Number in the 16 blocks provided below:

❏❏❏❏❏❏❏❏❏❏❏❏❏❏❏❏Exp. Date: ________ Security Code: ___________

Payment may be submitted to:

NSTP11700 NE 95th St., Suite 100

Vancouver, WA 98682(800) 367-8130 Fax: (360) 695-7115

WWW.NSTP.ORG

ALABAMA

Birmingham Oct 30Holiday Inn

5000 Richard Arrington Jr. Blvd NBirmingham, AL 35212

Phone: 205-313-2859

ARIZONA

Camp Verde Dec 14 Cliff Castle Casino Hotel

555 Middle Verde Road Camp Verde, AZ 86322

Phone: 928-567-6611

Phoenix Nov 26Sheraton Phoenix Airport

1600 S 52nd Street Tempe, AZ 85281

Phone: 480-967-6600

Tucson Dec 12Holiday Inn & Suites

Tucson Airport4550 S Palo Verde Road

Tucson, AZ 85714Phone: 520-746-1161

CALIFORNIA

Long Beach Dec 18Holiday Inn Long Beach Airport

2640 N Lakewood Blvd Long Beach, CA 90815

Phone: 562-597-4401

San Jose Dec 15Courtyard San Jose Airport

1727 Technology DriveSan Jose, CA 95110

Phone: 408-441-6111

COLORADO

Denver Nov 16DoubleTree by Hilton

3203 Quebec StreetDenver, CO 80207

Phone: 303-321-3333

CONNECTICUT

Hartford Dec 13Baymont Inn & Suites

260 Main StreetEast Windsor, CT 06088

Phone: 860-627-6585

FLORIDA - GRAND EVENT

Orlando Dec 10-11, 2012SpringHill Suites Orlando Airport

5828 Hazeltine National DriveOrlando, FL 32822

Phone: 407-816-5533

FLORIDA

Ft. Lauderdale/Hollywood Dec 12TBA

Tampa Nov 29TBA

GEORGIA

Atlanta Dec 4 Cobb Galleria Centre

2 Galleria ParkwayAtlanta, GA 30339

Phone: 770-955-8000

Savannah Nov 14TBA

ILLINOIS

Chicago Nov 14Sheraton Suites Elk Grove

121 Northwest Point BoulevardElk Grove Village, IL 60007

Phone: 847-290-1600

LOUISIANA

Natchitoches Nov 28Waskom, Brown & Associates

816 University ParkwaySuite A

Natchitoches, LA 71457

New Orleans Nov 30Four Points by Sheraton

New Orleans Airport6401 Veterans Memorial Blvd

Metairie, LA 70003

MARYLAND

Baltimore Nov 16TBA

College Park Dec 17Holiday Inn College Park10000 Baltimore AvenueCollege Park, MD 20740

Phone: 301-345-6700

MASSACHUSETTS

Boston/Quincy Nov 20TBA

MICHIGAN

Detroit Nov 9Four Points by Sheraton

Detroit Metro Airport8800 Wickham RoadRomulus, MI 48174

Phone: 734-729-9000

MINNESOTA

Minneapolis Nov 6TBA

NEVADA - GRAND EVENT

Las Vegas Jan 7-8, 2013The Orleans Hotel & Casino

4500 West Tropicana AveLas Vegas, NV 89103Phone: 800-675-3267

NEW HAMPSHIRE

Manchester Dec 12TBA

NEW JERSEY

Atlantic City Dec 7TBA

Carteret Nov 12Holiday Inn

1000 Roosevelt AvenueCarteret, NJ 07008

Phone: 732-541-9500

Toms River Dec 18Quality Inn

815 Route 37Toms River, NJ 08755Phone: 732-341-2400

NEW MEXICO

Albuquerque Dec 10Courtyard by Marriott

Albuquerque Airport1920 Yale Boulevard SEAlbuquerque, NM 87106

Phone: 505-843-6600

NEW YORK

Long Island Nov 19TBA

New York City Dec 19Courtyard by Marriott LaGuardia

90-10 Grand Central ParkwayEast Elmhurst, NY 11369

Phone: 718-446-4800

NORTH CAROLINA

Charlotte Dec 3Marriott Charlotte Executive Park

5700 W Park DriveCharlotte, NC 28217

Phone: 704-527-9650

OHIO

Canton Dec 6TBA

Dayton Nov 27Holiday Inn Dayton Airport NW

10 Rockridge RoadEnglewood, OH 45322

Phone: 937-832-1234

OREGON

Portland Dec 7Hilton Garden Inn

Portland Airport12048 NE Airport Way

Portland, OR 97220Phone: 503-255-8600

PENNSYLVANIA

Philadelphia Dec 20Holiday Inn Stadium

900 Packer AvenuePhiladelphia, PA 19148

Phone: 215-755-9500

Pittsburgh Dec 10Holiday Inn Pittsburgh Airport

8256 University BoulevardMoon Township, PA 15108

Phone: 412-262-3600

TEXAS

Dallas/Ft. Worth Dec 7TBA

Houston Dec 6TBA

San Antonio Dec 4Holiday Inn

San Antonio International Airport77 NE Loop 410

San Antonio, TX 78216Phone: 210-349-9900

VIRGINIA

Fredericksburg Nov 12Fredericksburg Expo &

Conference Center 2371 Carl D Silver Parkway

Fredericksburg, VA 22401 Phone: 540-548-5555

Springfield Dec5Hilton Springfield

6550 Loisdale RoadSpringfield, VA 22150Phone: 703-971-8900

Williamsburg Dec 17TBA

WASHINGTON

Tacoma/Seattle Dec 18LaQuinta Inn & Suites and Convention

Center1425 East 27th Street

Tacoma, WA 98421Phone: 253-383-0146

LOCATION DATE HOTEL

Orlando, FL December 10-11, 2012 SpringHill Suites12 CPE Orlando International Airport

5828 Hazeltine National DriveOrlando, FL 32822Phone: 407-816-5533

Las Vegas, NV January 7-8, 2013 The Orleans Hotel and Casino16 CPE 4500 Tropicana Ave.

Las Vegas, NV 89103Telephone: 800-675-3267www.orleanscasino.com/groupsRoom Rates:Jan. 6 - $39.00Jan. 7-10 - 42.00Reservation Methods:Online: www.orleanscasino.com/groups - Enter code A3TPC01By Phone: (800) 675-3267 - Mention National Society of Tax Professionals

Cost:

Orlando Grand Event: Las Vegas Grand Event:

$250 – Members $325 - Members$3 – Non-Members $375 – Non-Members

Orlando Agenda Las Vegas Agenda

Day 1: Day 1:7:15 AM Registration 7:30 AM Registration8:00 AM Class Begins 8:00 AM Class Begins4:30 PM Class Concludes 4:30 PM Class Concludes

Day 2: Day 2:7:30 AM Registration 7:30 AM Registration8:00 AM Class Begins 8:00 AM Class Begins12:00 PM Class Concludes 4:30 PM Class Concludes

For additional details and information visit www.nstp.org

West

25

Course level addresses Up-To-Date issues facing the Profession. It is recommended that participants have a working knowledge of the principles of Federal Income Tax Law.Advance preparation is not required.The course instruction is presented live by seasoned instructors who will allow your questions to be asked.

Course Level: Intermediate to Advanced

The National Society of Tax Professionals (NSTP) is registered with the National Association of State Boards of Accountancy (NASBA), as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. NASBA web site: www.nasba.org

These courses are recommended for CPA’s, Accountants, Tax Professionals, Lawyers and Enrolled Agents with basic knowledge of tax accounting.

Program Schedule7:30 AM Registration

8:00 AM Session Begins

12:00 PM Lunch (included in registration cost)

4: PM Session Concludes

Administrative PoliciesNSTP follows strict administrative policies.REFUNDS: NSTP provides refunds to registrants up to 14 days prior to the date of the education. For those registrants canceling within 14 days prior to the education date NSTP will allow attendance at another seminar site. If there are extraordinary circumstances NSTP will allow the participant to attend a future education course. An administrative charge of $25 will be assessed if cancelled.CONTACT INFORMATION: For more information regarding refund, complaint and/or program cancellation policies, please contact our offices at (800)367-8130.CANCELLATION: NSTP reserves the right to cancel any program or course for circumstances that are not under direct control of NSTP. If a course or program is cancelled, participants will be refunded 100% of their registration fee.

Register online at www.nstp.org or call 800-367-8130.

“Service to the Tax Profession”

30

ARIZONA

Phoenix Nov 278 CPE Credits Sheraton Phoenix Airport Hotel

1600 S 52nd Street Tempe, AZ 85281

Phone: 480-967-6600

Tucson Dec 138 CPE Credits Holiday Inn & Suites

Tucson Airport4550 S Palo Verde Road

Tucson, AZ 85714Phone: 520-746-1161

CALIFORNIA

Long Beach Dec 178 CPE Credits Holiday Inn Long Beach Airport

2640 N Lakewood Blvd Long Beach, CA 90815

Phone: 562-597-4401

San Jose Dec 148 CPE Credits Courtyard San Jose Airport

1727 Technology DriveSan Jose, CA 95110

Phone: 408-441-6111

CONNECTICUT

Hartford Nov 18 CPE Credits TBA

FLORIDA

Ft. Lauderdale Nov 2-315 CPE Credits TBA

Orlando Nov 5-615 CPE Credits SpringHill Suites Orlando Airport

5828 Hazeltine National Drive Orlando, FL 32822

Phone: 407-816-5533

Tampa Nov 308 CPE Credits TBA

GEORGIA

Atlanta Oct 26-2715 CPE Credits Cobb Galleria Centre

2 Galleria Parkway Atlanta, GA 30339

Phone: 770-955-8000

Savannah Nov 158 CPE Credits TBA

ILLINOIS

Chicago Oct 29-3015 CPE Credits Sheraton Suites Elk Grove

121 Northwest Point BoulevardElk Grove Village, IL 60007

Phone: 847-290-1600

NSTP 2012 Registered Tax Return Preparer (RTRP) Exam Preparation Course

Pricing:

Members Non-members1 Day (8 CPE) Course: $189 $239***2 Day (15 CPE) Course: $369 $419***

***Includes complimentary NSTP membership through 12/31/2012.

1 Day (8 CPE) Course:3 credits - Federal Tax Law Update5 credits - Other Federal Tax Law Topics

2 Day (15 CPE) Course:

How to Register:

Register online at www.nstp.org, call (800) 367-8130 or Fax registration to (360) 695-7115

“Registered Tax Return PreparerMinimum Competency Exam Preparation Program”

NSTP’s� RTRP Exam Preparation Course is geared to get every Tax Professional “ready to sit for and pass the minimum competency exam”. The course focuses on the tax principles needed

minimum competency that the exam addresses. Each participant will receive the most updated classroom materials available and will be able to review the information with NSTP’s seasoned instructors who are all tax preparers just like you.

This live program includes course materials designed by � NSTP’s test prep course of choice “Fast Forward Academy”. They are an experienced professional test prep group whose materi-als and methods have resulted in high pass rates for the EA examination and other professional

www.nstp.orgService to the Tax Profession

National Society of Tax Professionals2012 RTRP REGISTRATION FORM

Please register me for the following seminar:

Location:

**Includes complimentary NSTP membership through 12/31/2012

Name:

Address:

City: State: Zip:

Phone: Fax:

E-Mail:

PTIN #: ________________________________________________________________

Payment: Check AMEX Discover Visa/MC

Please write each digit of your Credit Card Number in the 16 blocks provided below:

Exp. Date: Security Code:

Payment may be submitted to:

NSTP

(800) 367-8130Fax: (360) 695-7115

WWW.NSTP.ORG

11700 NE 95th St., Suite 100Vancouver, WA 98682

Members Non-membersPricing:

1 Day (8 CPE) Course: ❏ $189 ❏ $239***

2 Day (15 CPE) Course: ❏ $369 ❏ $419***

NSTP 2012 Registered Tax Return Preparer (RTRP) Exam Preparation Course

Pricing:

Members Non-members1 Day (8 CPE) Course: $189 $239***2 Day (15 CPE) Course: $369 $419***

***Includes complimentary NSTP membership through 12/31/2012.

1 Day (8 CPE) Course:3 credits - Federal Tax Law Update5 credits - Other Federal Tax Law Topics

2 Day (15 CPE) Course:

How to Register:

Register online at www.nstp.org, call (800) 367-8130 or Fax registration to (360) 695-7115

“Registered Tax Return PreparerMinimum Competency Exam Preparation Program”

NSTP’s� RTRP Exam Preparation Course is geared to get every Tax Professional “ready to sit for and pass the minimum competency exam”. The course focuses on the tax principles needed

minimum competency that the exam addresses. Each participant will receive the most updated classroom materials available and will be able to review the information with NSTP’s seasoned instructors who are all tax preparers just like you.

This live program includes course materials designed by � NSTP’s test prep course of choice “Fast Forward Academy”. They are an experienced professional test prep group whose materi-als and methods have resulted in high pass rates for the EA examination and other professional

www.nstp.orgService to the Tax Profession

2 day events also include:

This course provides the Tax Professional with a common sense approach to the world of “ethics” as it applies to the tax preparing community in today’s changing and challenging environment. The standards that are required and needed in order to continue to be in compliance with the recent amendments to the IRS Circular 230 Regulations will be reviewed.

A review of the role of the Enrolled Agent, CPA and tax return preparer will be discussed and examined.

NSTP 2012 Registered Tax Return Preparer (RTRP) Exam Preparation Course

Pricing:

Members Non-members1 Day (8 CPE) Course: $189 $239***2 Day (15 CPE) Course: $369 $419***

***Includes complimentary NSTP membership through 12/31/2012.

1 Day (8 CPE) Course:3 credits - Federal Tax Law Update5 credits - Other Federal Tax Law Topics

2 Day (15 CPE) Course:

How to Register:

Register online at www.nstp.org, call (800) 367-8130 or Fax registration to (360) 695-7115

“Registered Tax Return PreparerMinimum Competency Exam Preparation Program”

NSTP’s� RTRP Exam Preparation Course is geared to get every Tax Professional “ready to sit for and pass the minimum competency exam”. The course focuses on the tax principles needed

minimum competency that the exam addresses. Each participant will receive the most updated classroom materials available and will be able to review the information with NSTP’s seasoned instructors who are all tax preparers just like you.

“Fast Forward Academy”. They are an experienced professional test prep group whose materi-als and methods have resulted in high pass rates for the EA examination and other professional

www.nstp.orgService to the Tax Profession

NSTP 2012 Registered Tax Return Preparer (RTRP) Exam Preparation Course

Pricing:

Members Non-members1 Day (8 CPE) Course: $189 $239***2 Day (15 CPE) Course: $369 $419***

***Includes complimentary NSTP membership through 12/31/2012.

1 Day (8 CPE) Course:3 credits - Federal Tax Law Update5 credits - Other Federal Tax Law Topics

2 Day (15 CPE) Course:

How to Register:

Register online at www.nstp.org, call (800) 367-8130 or Fax registration to (360) 695-7115

“Registered Tax Return PreparerMinimum Competency Exam Preparation Program”

NSTP’s� RTRP Exam Preparation Course is geared to get every Tax Professional “ready to sit for and pass the minimum competency exam”. The course focuses on the tax principles needed

minimum competency that the exam addresses. Each participant will receive the most updated classroom materials available and will be able to review the information with NSTP’s seasoned instructors who are all tax preparers just like you.

This live program includes course materials designed by � NSTP’s test prep course of choice “Fast Forward Academy”. They are an experienced professional test prep group whose materi-als and methods have resulted in high pass rates for the EA examination and other professional

www.nstp.orgService to the Tax Profession

NSTP 2012 Registered Tax Return Preparer (RTRP) Exam Preparation Course

Pricing:

Members Non-members1 Day (8 CPE) Course: $189 $239***2 Day (15 CPE) Course: $369 $419***

***Includes complimentary NSTP membership through 12/31/2012.

1 Day (8 CPE) Course:3 credits - Federal Tax Law Update5 credits - Other Federal Tax Law Topics

2 Day (15 CPE) Course:

How to Register:

Register online at www.nstp.org, call (800) 367-8130 or Fax registration to (360) 695-7115

“Registered Tax Return PreparerMinimum Competency Exam Preparation Program”

NSTP’s� RTRP Exam Preparation Course is geared to get every Tax Professional “ready to sit for and pass the minimum competency exam”. The course focuses on the tax principles needed

minimum competency that the exam addresses. Each participant will receive the most updated classroom materials available and will be able to review the information with NSTP’s seasoned instructors who are all tax preparers just like you.

This live program includes course materials designed by � NSTP’s test prep course of choice “Fast Forward Academy”. They are an experienced professional test prep group whose materi-als and methods have resulted in high pass rates for the EA examination and other professional

www.nstp.orgService to the Tax Profession

NSTP 2012 Registered Tax Return Preparer (RTRP) Exam Preparation Course

Pricing:

Members Non-members1 Day (8 CPE) Course: $189 $239***2 Day (15 CPE) Course: $369 $419***

***Includes complimentary NSTP membership through 12/31/2012.

1 Day (8 CPE) Course:3 credits - Federal Tax Law Update5 credits - Other Federal Tax Law Topics

2 Day (15 CPE) Course:

How to Register:

Register online at www.nstp.org, call (800) 367-8130 or Fax registration to (360) 695-7115

“Registered Tax Return PreparerMinimum Competency Exam Preparation Program”

NSTP’s� RTRP Exam Preparation Course is geared to get every Tax Professional “ready to sit for and pass the minimum competency exam”. The course focuses on the tax principles needed

minimum competency that the exam addresses. Each participant will receive the most updated classroom materials available and will be able to review the information with NSTP’s seasoned instructors who are all tax preparers just like you.

This live program includes course materials designed by � NSTP’s test prep course of choice “Fast Forward Academy”. They are an experienced professional test prep group whose materi-als and methods have resulted in high pass rates for the EA examination and other professional

www.nstp.orgService to the Tax Profession

2 Day (15 CPE) Course:2 credits - Ethics3 credits - Federal Tax Law Update10 credits - Other Federal Tax Law Topics

1 Day (8 CPE) Course:3 credits - Federal Tax Law Update5 credits - Other Federal Tax Law Topics

NSTP 2012 Registered Tax Return Preparer (RTRP) Exam Preparation Course

Pricing:

Members Non-members1 Day (8 CPE) Course: $189 $239***2 Day (15 CPE) Course: $369 $419***

***Includes complimentary NSTP membership through 12/31/2012.

1 Day (8 CPE) Course:3 credits - Federal Tax Law Update5 credits - Other Federal Tax Law Topics

2 Day (15 CPE) Course:

How to Register:

Register online at www.nstp.org, call (800) 367-8130 or Fax registration to (360) 695-7115

“Registered Tax Return PreparerMinimum Competency Exam Preparation Program”

NSTP’s� RTRP Exam Preparation Course is geared to get every Tax Professional “ready to sit for and pass the minimum competency exam”. The course focuses on the tax principles needed

minimum competency that the exam addresses. Each participant will receive the most updated classroom materials available and will be able to review the information with NSTP’s seasoned instructors who are all tax preparers just like you.

This live program includes course materials designed by � NSTP’s test prep course of choice “Fast Forward Academy”. They are an experienced professional test prep group whose materi-

www.nstp.orgService to the Tax Profession

NSTP 2012 Registered Tax Return Preparer (RTRP) Exam Preparation Course

Pricing:

Members Non-members1 Day (8 CPE) Course: $189 $239***2 Day (15 CPE) Course: $369 $419***

***Includes complimentary NSTP membership through 12/31/2012.

1 Day (8 CPE) Course:3 credits - Federal Tax Law Update5 credits - Other Federal Tax Law Topics

2 Day (15 CPE) Course:

How to Register:

Register online at www.nstp.org, call (800) 367-8130 or Fax registration to (360) 695-7115

“Registered Tax Return PreparerMinimum Competency Exam Preparation Program”

NSTP’s� RTRP Exam Preparation Course is geared to get every Tax Professional “ready to sit for and pass the minimum competency exam”. The course focuses on the tax principles needed

minimum competency that the exam addresses. Each participant will receive the most updated classroom materials available and will be able to review the information with NSTP’s seasoned instructors who are all tax preparers just like you.

“Fast Forward Academy”. They are an experienced professional test prep group whose materi-als and methods have resulted in high pass rates for the EA examination and other professional

www.nstp.orgService to the Tax Profession

Ethics in 2012 and the Amended Circular 230 Issues

MARYLAND

Baltimore Oct 16-1715 CPE Credits TBA

College Park/Beltsville Nov 29 - 3015 CPE Credits Holiday Inn

College Park10000 Baltimore AvenueCollege Park, MD 20740

Phone: 301-345-6700

MASSACHUSETTS

Boston/Randolph Nov 2-315 CPE Credits TBA

MICHIGAN

Detroit Nov 88 CPE Credits Four Points by Sheraton

Detroit Metro Airport8800 Wickham RoadRomulus, MI 48174

Phone: 734-729-9000

MINNESOTA

Minneapolis Nov 58 CPE Credits TBA

NEVADA

Las Vegas Nov 2-315 CPE Credits TBA

NEW HAMPSHIRE

Manchester Dec 118 CPE Credits TBA

NEW JERSEY

Atlantic City Sept 218 CPE Credits Tropicana

2831 Boardwalk Atlantic City, NJ 08401

Phone: 800-345-8767

Carteret Nov 138 CPE Credits Holiday Inn

1000 Roosevelt AvenueCarteret, NJ 07008

Phone: 732-541-9500

NEW MEXICO

Albuquerque Dec 118 CPE Credits Courtyard by Marriott

Albuquerque Airport1920 Yale Boulevard SEAlbuquerque, NM 87106

Phone: 505-843-6600

NEW YORK

Long Island Nov 9-1015 CPE Credits TBA

New York City Nov 12-1315 CPE Credits Courtyard by Marriott LaGuardia

90-10 Grand Central ParkwayEast Elmhurst, NY 11369

Phone: 718-446-4800

NORTH CAROLINA

Asheville TBATBA

Charlotte Dec 48 CPE Credits Marriott Charlotte Executive Park

5700 W Park DriveCharlotte, NC 28217

Phone: 704-527-9650

OHIO

Canton TBATBA

Dayton TBATBA

OREGON

Portland Dec 68 CPE Credits Hilton Garden Inn

Portland Airport12048 NE Airport Way

Portland, OR 97220Phone: 503-255-8600

PENNSYLVANIA

Philadelphia Oct 18-1915 CPE Credits Holiday Inn Stadium

900 Packer Avenue Philadelphia, PA 19148

Phone: 215-755-9500

Pittsburgh Dec 118 CPE Credits Holiday Inn Pittsburgh Airport

8256 University BoulevardMoon Township, PA 15108-2591

Phone: 412-262-3600

TEXAS

Dallas/Ft. Worth Dec 68 CPE Credits TBA

Houston Dec 78 CPE Credits TBA

VIRGINIA

Springfield Sept138 CPE Credits Hilton Springfield

6550 Loisdale Road Springfield, VA 22150 Phone: 703-971-8900

Williamsburg Dec 188 CPE Credits TBA

WASHINGTON

Seattle/Tacoma Dec 178 CPE Credits LaQuinta Inn & Suites

and Convention Center 1425 East 27th Street

Tacoma, WA 98421 Phone: 253-383-0146

Program Schedule

7:45 AM Registration Begins8:15 AM Course Begins10:15 AM - 10:30 AM Break12:00 PM - 1:00 PM Lunch as a group - Included in registration fee1:00 PM - 3:00 PM Continuation of Program3:00 PM - 3:15 PM Break3:15 PM - 4:45 PM Continuation of Program

Course level addresses the challenges of the experienced tax professional with an introduction approach for the develop-ing practitioner. A working knowledge of tax law is recommended and the instructional method is a “Group Live” offering.

The course is a “roll up your sleeves” workshop course.

Advanced preparation is not required

The course provide for 8 hours of continuing education credits. Registered with NASBA and IRS.

Course Level: Review to Intermediate

The National Society of Tax Professionals (NSTP) is registered with the National Association of State Boards of Accountancy (NASBA), as a sponsor of continuing professional education on the National

authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. NASBA web site: www.nasba.org

This course is recommended for CPA’s, CFP’s, Accountants, Tax Practitioners, Lawyers and Enrolled Agents with basic knowledge of tax accounting.

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1 Day (8 CPE) Event Schedule

7:45 AM Registration Begins8:15 AM Course Begins10:15 AM - 10:30 AM Break12:00 PM - 1:00 PM Lunch - Included in registration fee1:00 PM - 3:00 PM Continuation of Program3:00 PM - 3:15 PM Break3:15 PM - 4:45 PM Continuation of Program

2 Day (15 CPE) Event Schedule - Each Day

8:00 AM Registration - Continental Breakfast8:30 AM Class Begins10:15 AM - 10:30 AM Break12:00 PM - 1:00 PM Lunch - Included in registration fee2:30 PM - 2:45 PM Break4:30 PM Class Concludes

Program Schedule

7:45 AM Registration Begins8:15 AM Course Begins10:15 AM - 10:30 AM Break12:00 PM - 1:00 PM Lunch as a group - Included in registration fee1:00 PM - 3:00 PM Continuation of Program3:00 PM - 3:15 PM Break3:15 PM - 4:45 PM Continuation of Program

Course level addresses the challenges of the experienced tax professional with an introduction approach for the develop-ing practitioner. A working knowledge of tax law is recommended and the instructional method is a “Group Live” offering.

The course is a “roll up your sleeves” workshop course.

Advanced preparation is not required

The course provide for 8 hours of continuing education credits. Registered with NASBA and IRS.

Course Level: Review to Intermediate

The National Society of Tax Professionals (NSTP) is registered with the National Association of State Boards of Accountancy (NASBA), as a sponsor of continuing professional education on the National

authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. NASBA web site: www.nasba.org

This course is recommended for CPA’s, CFP’s, Accountants, Tax Practitioners, Lawyers and Enrolled Agents with basic knowledge of tax accounting.

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NSTP HAS MOVED

Please note our new address:

11700 NE 95th St., Suite 100

Vancouver, WA 98682

All other contact information remains the same.

Phone: 1-800-367-8130Fax: 360-695-7115Email: taxes@nstp.orgWebsite: www.nstp.org