Green Mountain Payroll Conference

1. Green Mountain Payroll Conference Joseph McCarthy CPA IRS Senior Stakeholder Liaison 203.415.1015 cell 860.756.4431 office joseph.s.mccarthy@irs.gov Small Business/Self-Employed Division

2. E-News For Payroll Professionals Free IRS e-mail service for payroll professionals Latest information on payroll topics IRS doesn’t share your e-mail address No IRS tracking Unsubscribe at any time

3. Issue Management Resolution System (IMRS)

4. What is IMRS? • Provides a mechanism for raising concerns about • IRS policies, practices and procedures • Systemic problems • Facilitates issue identification, resolution and feedback

5. Submitting an Issue • Gather all information • Contact local stakeholder liaison staff – search “stakeholder liaison” at IRS.gov

6. Reporting Cost of Employer Sponsored Health Coverage

8. Health Coverage for Older Children Exclusion from gross income for reimbursements for medical care under an employer-provided accident or health plan • Employee’s child under 27 • Effective as of 3/30/10 • Child does not have to be a dependent IRC 105(b)

9. Small Business Health Care Tax Credit • Maximum credit is 35% of premiums paid by the employer • Two part phase out of credit • Fewer than 25 full-time equivalent employees • Average wages less than $50,000 per employee • Excluded employees don’t qualify IRC 45R

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11. IRS Forms No Longer Being Mailed

12. From 941 The Form 941, Employer’s Quarterly Federal Tax Return will no longer be mailed.

14. Social security and Medicare tax for 2011. • For 2011, the employee tax rate for social security is 4.2%. • Reduced Social Security withholding will have no effect on the employee’s future Social Security benefits. IRS Notice 1036

15. New Rules for Federal Tax Return Preparers

16. Who needs a PTIN? Any individual who is compensated for preparing, or assisting in the preparation of, all or substantially all of a U.S. federal tax return or claim for refund

17. New Online Sign-Up Systemwww.IRS.gov/taxpros

18. Competency Testing • Many preparers will be required to pass a competency test by Dec. 31, 2013 • Testing will begin approximately mid-2011 • Exempt from testing: • Attorneys, CPAs, and enrolled agents • Certain supervised preparers • Those who prepare no Form 1040 series returns

19. Competency Testing • The initial test(s) will be for individuals who prepare Form 1040 series returns • After competency testing has begun, new non-exempt preparers will be required to pass a competency test prior to obtaining a PTIN • After passing the test, the individual is officially an “Registered Tax Return Preparer”

20. Continuing Education • Registered Tax Return Preparers will have a new requirement to complete 15 continuing education hours per year: • three hours of federal tax law updates • two hours of ethics • ten hours of federal tax law • The CE requirement has not begun. The earliest it will begin is Fall 2011

21. Background Checks Fingerprint checks will potentially be implemented in mid-2011 for individuals who are not attorneys, CPAs, or enrolled agents

22. Additional Ongoing Efforts • Extension of Circular 230 ethical standards to all paid tax return preparers • Development of a comprehensive return preparer enforcement strategy • Development of a public awareness campaign to educate taxpayers, preparers, and employees on the new requirements and standards • Creation of a public database