Category Archives: IRS Updates and Tax Tips

Tax cuts package extends ethanol incentives

The $858-billion package includes a one-year extension on a tax credit that pays 45 cents per gallon for ethanol blended into gasoline, a move that’s estimated to cost about $6 billion. Congress also extended a tariff on foreign-made ethanol. Industry officials say the credits help ethanol stay competitive with oil and preserve jobs tied to ethanol plants.

The major national ethanol subsidy — called the Volumetric Ethanol Excise Tax Credit, or VEETC — pays 45 cents per gallon to ethanol blenders. Ethanol supporters estimate that leads to a 4.5 cent per gallon decrease at the pump.The tax-cut package also extends credits for small ethanol producers and owners of alternative fuel vehicles. And it keeps a tariff of 54 cents per gallon on ethanol made outside the United States.

Tax credits for Hydrogen fuel from IRS.

IRS Updates Alternative Fuel Excise Tax Forms

The Internal Revenue Service (IRS) has updated several tax forms used to claim the Alternative Fuel Excise Tax Credit. As a result of these updates, taxpayers claiming a rebate or payment for the $0.50 per gallon credit mustfile Form 8849, Schedule 3 (PDF 189 KB). Additionally, corporations and businesses may use Form 8849, Schedule 3 to claim a quarterly credit instead of using Form 4136 (PDF 263 KB) to claim an annual credit. According to the IRS, claimants that intend to file Form 8849, Schedule 3 must file no later than the end of the quarter following the quarter in which the fuel was used or sold.

Do You Need to Make the Switch to EFTPS?

IRS has issued proposed regs designed to expand the making of electronic tax deposits. The regs would eliminate the use of paper-based federal tax deposit (FTD) coupons after 2010. The existing rules for making electronic deposits would otherwise generally remain unchanged.

Currently, taxpayers whose aggregate annual deposits of certain taxes exceed $200,000 are generally required to use Electronic Funds Transfer (EFT) to make FTDs. Taxes taken into account in determining whether the $200,000 threshold has been met include withheld income and FICA taxes, corporate income and estimated taxes, certain taxes imposed on tax-exempt organizations, taxes withheld on nonresident aliens and foreign corporations, estimated taxes of certain trusts, FUTA taxes, and excise taxes, as well as others. Once taxpayers exceed the $200,000 threshold, they have a one–year grace period before being required to use EFT, and then they are required to use EFT in all later years even if their deposits fall below the threshold. The Electronic Federal Tax Payment System (EFTPS) is the EFT system currently used by IRS to collect FTDs. Continue reading →

IRS Reminds Paid Tax Preparers to Register Now for PTINs

WASHINGTON — As year end approaches, the Internal Revenue Service today strongly encouraged paid tax return preparers to register now for their new or renewed Preparer Tax Identification Numbers (PTINs) to avoid any last-minute rush.

Starting Jan. 1, 2011, use of the PTIN will be mandatory on all federal tax returns and claims for refund prepared by a paid tax preparer. Individuals who, for compensation, prepare all or substantially all of any federal tax return or claim for refund must use PTINs. Paid preparers must apply for a new or renewed PTIN through the new sign-up system at www.irs.gov/taxpros. Continue reading →

Eight Things to Know If You Receive an IRS Notice

Did you receive a notice from the IRS this year? Every year the IRS sends millions of letters and notices to taxpayers but that doesn’t mean you need to worry. Here are eight things every taxpayer should know about IRS notices – just in case one shows up in your mailbox.

1. Don’t panic. Many of these letters can be dealt with simply and painlessly.

2. There are number of reasons the IRS sends notices to taxpayers. The notice may request payment of taxes, notify you of a change to your account or request additional information. The notice you receive normally covers a very specific issue about your account or tax return.

3. Each letter and notice offers specific instructions on what you need to do to satisfy the inquiry. Continue reading →