IMRS Hot Issues

September 8, 2009

IRS Withholding Calculator The American Recovery and Reinvestment Act of 2009 introduced several changes that affect the Withholding Calculator: (1) The new Making Work Pay Credit: The new withholding tables that employers should have implemented by April 1 have been incorporated into the calculator. Use this calculator to ensure that the reduced withholding will not result in having too little income tax withheld if you are an employee with two concurrent jobs, you and your spouse both work, or you can be claimed as a dependent on someone else’s tax return (since you are not eligible for this credit). (2) Pension income: Non-government pension income is not eligible for the Making Work Pay Credit, and the calculator now accounts for this. (3) Unemployment Compensation: The first $2,400 of unemployment compensation an individual receives in 2009 is now tax free. The Withholding Calculator now accounts for this, so enter the full amount into the calculator.

For Many Small Businesses, Filing Deadline Looms for Special Refund Claims Under the American Recovery and Reinvestment Act (ARRA), many small businesses that had expenses exceeding their income for 2008 can choose to carry the resulting loss back for up to five years, instead of the usual two. The option is available for an eligible small business (ESB) that has no more than an average of $15 million in gross receipts over a three-year period ending with the tax year of the NOL. A calendar-year corporation that qualifies as an ESB must file a claim by Sept. 15, 2009. For individuals, the deadline is Oct. 15, 2009. Deadlines vary for fiscal-year taxpayers, depending upon when their fiscal year ends and whether they are making the choice for the tax year that ends or begins in 2008. See IR-2009-72 for additional information.

Columbus Day Power Outages - (IMRS 09-0000982 Revisited) Last year you told us we created problems when we had e-File and e-Services outages during the Columbus Day holiday, just before the big October 15th filing deadline, and that if we could not reschedule the outages, we needed to provide plenty of advance warning. These outages are required so that the IRS can perform critical operations and maintenance programs to enhance the reliability of the building infrastructure. In response to your complaints, we promised to represent practitioner interests in determining the dates for the 2009 power outages. We did, but we weren’t able to find reasonable alternatives. However, in response to your requests, we are giving you advanced warning that e-File and e-Services will be unavailable from Sunday, October 11, 2009 at 9:00 p.m. Eastern Time through Tuesday, October 13, 2009 at 5:00 a.m. Eastern Time. We apologize in advance for any inconvenience.

Improved Document Receipt Confirmation for Campus Correspondence Exams The IRS will now send an interim acknowledgement letter, Letter 3500, upon receipt by the campus exam operation of a response to a correspondence exam inquiry. We previously sent this letter only on cases that weren't resolved within 30 days. It generally takes a little over a week from the time exam receives the correspondence until we send the Letter 3500. Beginning in January 2010, IRS will send an entirely new acknowledgement letter to let taxpayers know when we have received their correspondence. If a final determination is not made within 30 days, the Letter 3500 will go out as an interim letter to let taxpayers know that we are still working on their case. If there is no power of attorney on file when the mail is received, the letter will be sent only to the taxpayer.