SPOTLIGHT The IRS Announced Plans to Regulate all Tax Return Preparers CPA’s are Exempted from Education and Testing Requirement On January 4th 2010, IRS Commissioner Shulman announced that the IRS would start phasing in for the 2011 filing season a process to regulate all paid tax return preparers. The proposal that will be implemented through IRS regulations that will mandate that by all paid tax return preparers both register with the IRS and obtain a Preparers Tax Identification Number (PTIN), to be used in signing all tax returns. As a part of this plan The IRS also will subject paid tax return preparers to an annual CPE requirement as well as an entry competency test. The proposal generally exempts CPA’s from both the testing and CPE requirements as they as they have already passed a licensing examination and are subject to continuing professional education requirements. Finally the IRS plans to require that all preparers be subject to the ethics requirements under Circular 230. The AICPA has been actively involved in the process announced by the IRS Commissioner last summer in which he indicated his intention to undertake this review. We will continue to work with the IRS as the many details of these proposals are disclosed. Specific details on the proposal are available at the IRS.GOV website. Revised Statements on Standards for Tax Services (SSTSs) are effective January 1, 2010. Learn More>> AICPA Releases Tax Reform Alternatives for the 21st Century. The AICPA strongly urges policymakers and the public to understand various tax reform options and their impacts.  The AICPA does not take a position on what is the best possible solution for reforming the federal income tax system; instead, it has published this report to foster informed discussion by providing unbiased facts and analysis. Tax E-Alerts available as a Pod Cast or sent as email. For news on important regulatory, judicial, legislative and practice developments. E-Alert Link or Pod Cast Link   Tax Discussion Forum  Post questions and interact with other Tax Section members in areas of specialized tax knowledge. Learn More>> Participate on Tax Division Committee. Apply online for service on Tax Division Committees. Deadline is May 15, 2010. Learn More>>

TAX CENTER NEWS AND UPDATES IRS Commissioner Shulman Proposes Requiring Many Companies to Disclose Uncertain Tax Positions on their Annual Tax Returns IRS Proposal to Disclose Uncertain Tax Positions in Tax Returns On Tuesday, January 26, 2010, the IRS announced a proposal that, if effective, would require many companies to disclose uncertain tax positions in their annual income tax return filings. IRS Commissioner Douglas Shulman made the announcement during remarks to the New York State Bar Association Tax Section, and indicated that this is a major step in the move towards increased transparency.  This proposal is the next step in the continuing saga between taxpayers and the IRS regarding tax accrual work papers. As proposed, the requirement would apply to business taxpayers who have both: • a financial statement prepared under FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48, now contained within FASB Accounting Standards Codification (ASC) 740-10, Income Taxes) or other similar accounting standards reflecting uncertain tax positions (such as International Financial Reporting Standards (IFRS) or country-specific generally accepted accounting standards), and • total assets over $10 million. A schedule or form would be included in applicable business tax returns annually.  Each uncertain tax position would require a concise description to determine the nature of the particular issue and would require the taxpayer to determine the maximum amount of potential federal tax liability attributable to each uncertain tax position. The IRS is evaluating additional options for penalties or sanctions for lack of adequate disclosure. Commissioner Shulman indicated that this proposal was intended to improve the efficiency and effectiveness of tax examinations and that he understands this is information that taxpayers have already prepared for financial reporting purposes.  He stressed that taxpayers would not be required to disclose how strong or weak they regarded their tax positions. This is not yet effective in its current form, and per Commissioner Shulman is not applicable to the 2009 filing season. However, it is presumed that the IRS intends to push this proposal forward quickly so taxpayers and practitioners will need to stay tuned for further developments. The IRS has invited comments on the proposal by March 29, 2010. The application and associated understanding of FIN 48 is still fairly new to many accountants.  FIN 48 was generally effective for public companies for fiscal years beginning after December 15, 2006. However, the effective date for private companies was deferred, and these companies are starting to see its application in their financial statements for annual financial statements for periods beginning after December 15, 2008. Therefore, many AICPA members may have been seeing and experiencing the application of FIN 48 to financial statements for the first time within the past year – either as an audit or tax practitioner in public accounting, or in an accounting or tax function of a private company. This proposal also has many implications and will generate much debate. The AICPA understands that this proposal will have a significant impact on our members if it becomes effective as initially proposed by the IRS and we are considering an appropriate response on behalf of our membership. AICPA Practice Guide on New Section 7216 Guidance The AICPA has completed a practice guide involving the guidance the IRS released in late December 2009 on Internal Revenue Code section 7216. On December 29 and 30, 2009, the IRS released new guidance designed to clarify a number of questions about the regulations under section 7216, involving the disclosure or use of tax return information by tax return preparers. Over the last several years, the AICPA has been focused on educating Congressional and Administration officials regarding the difficulties that certain interpretations of section 7216 and the regulations thereunder have on the traditional office practices and procedures of CPAs.  In response to the input of the AICPA and other stakeholders, the new guidance released by the Service includes final and temporary regulations (TD 9478), and Revenue Rulings (Rev. Rul.) 2010-4 and 2010-5. The practice guide provides a summary of major issues addressed by the new IRS guidance, such as: (1) the types of professional services considered “legal or accounting services” under Treas. reg. Section 301.7216-2(h)(1)(i); (2) the distribution of firm newsletters; (3) contacts with professional liability insurance carriers; and (4) disclosures of tax return information for purposes of conflict reviews. In addition, the section 7216 practice guide provides guidance on how to handle a client request to send a tax return to a third party such as a local bank or lender. Click here for Practice Guide.