During a speech at the National Press Club, Sen. Charles E. Schumer, D-N.Y., said that lowering the top individual tax rates would be a serious mistake and counterproductive to solving the nation’s economic woes. He added that federal policymakers eyeing an overhaul of the U.S. tax code in the coming months should abandon such thinking and focus on reducing the deficit. The IRS, meanwhile, has posted answers to frequently asked questions about same-sex couples, registered domestic partners, and same-sex spouses in community property states. The Service has also implemented two separate clarifying changes to its temporary procedures for issuing individual taxpayer identification numbers (ITINs).
Instead of luring Republicans to the table on a grand bargain with the promise of lower tax rates for the wealthy, Schumer said during his October 9 speech that Democrats should be prepared to offer to make significant reforms to entitlements. He proposed a three-pronged approach: curtailing tax expenditures; returning to a Clinton-era top rate; and reducing but not eliminating the tax preference for investment income. Schumer also rejected corporate tax reform as a source for new revenue. He argued that it is imperative that lawmakers seek to reduce the corporate tax rate from 35 percent and do it on a revenue-neutral basis in order to preserve international competitiveness.
Treasury/Information Technology. The Treasury Inspector General for Tax Administration issued a report that the IRS had successfully restructured its “help desk” End-User Equipment and Services (EUES) organization, which provides information technology support (Reference Number: 2012-20-086 ; TAXDAY, 2012/10/12, T.1 ). However, the IRS could take additional steps to cut costs and increase efficiency and must redouble its efforts to ensure that IRS employees use a self-service tool to resolve minor computer issues.
FinCEN Form/ITIN Requirements. The Financial Crimes Enforcement Network (FinCEN) has released the requirements for electronic filing of FinCEN’s Currency Transaction Report (CTR), Suspicious Activity Report (SAR), and Designation of Exempt Person (DOEP) Report (FinCEN Form 110) (TAXDAY, 2012/10/12, T.2 ). Among other changes, the instructions now clarify that the formatting of the Taxpayer Identification Number (TIN) must omit spaces, hyphens, and periods.
Domestic Partnership/Same-Sex Marriage FAQs. The IRS has posted answers to frequently asked questions about same-sex couples, registered domestic partners, and same-sex spouses in community property states (TAXDAY, 2012/10/11, I.1 ).
Shulman Term To End. The IRS has announced that IRS Commissioner Douglas H. Shulman will step down on November 9, the last day of his term (IR-2012-76 ; TAXDAY, 2012/10/11, I.2 ). Deputy Commissioner for Services and Enforcement Steven T. Miller will serve as acting IRS commissioner after Shulman steps down.
Current Plan Liability Rate. The IRS released for pension plan years beginning in October 2012 the corporate bond weighted average interest rate, the permissible range of interest rates used to calculate current plan liability and to determine the required contribution under Code Sec. 412(l) for plan years through 2012, and the current corporate bond yield curve and related segment rates for the purpose of establishing a plan’s funding target under Code Sec. 430(h)(2) (Notice 2012-64 ; TAXDAY, 2012/10/08, I.1 ).
ITIN Changes. The IRS has implemented two separate clarifying changes to its temporary procedures for issuing ITINs (TAXDAY, 2012/10/08, I.3 ). The IRS will allow individuals studying in the United States under the Student Exchange Visitors Program (SEVP) to obtain ITINs under a streamlined procedure and will also create special procedures for taxpayers who have an approved Tax Year 2011 extension to file their completed tax returns.
Whistleblower Award. The IRS awarded $2 million to a Wall Street whistleblower who exposed a corporation’s multimillion dollar tax-deduction scheme (TAXDAY, 2012/10/08, I.4 ). The whistleblower exposed an alleged tax-avoidance scheme by Illinois Tool Works Inc. (ITW) that cost the IRS hundreds of millions of dollars.
By Jeff Carlson and Jennifer J. Rodibaugh, CCH News Staff