Tax Law Changes For 2011

Tax Law Changes For 2011

Tax Law Changes For 2011

Starting in 2011, anyone who prepares substantial elements of tax returns or refund requests is required to register with theInternal Revenue Service and attend continuing professional education (CPE) courses. Continuing education is required for all tax return preparers. IRS Enrolled Agents (EAs) have already had this requirement. EAspass online CPE every year. Since not all tax preparers are EAs, taxpayers will need toverify enrolled agent status if they require someone to represent them before the IRS. Only EAs, CPAs, and attorneys can represent taxpayers with the IRS. EAs can be located who belong to the National Association of Enrolled Agents and meetNAEA CE requirements as part of their membership. Continuing education courses consist of three hours of federal tax law updates, two hours of ethics, and ten hours of general tax law. Tax preparers will findfree online CPE coursesfrom the same sources EAs have used. This includesfree ethics CPE. The testing and continuing education requirements focus upon compliance measures intended to assure accurate tax reporting. These regulations set standards for reasonable inquiry into taxpayer information and the rendering of tax advice. To avoid understatements of income, tax practitioners are required to conduct due diligence on tax information furnished by a client that appears incorrect, inconsistent or incomplete. Tax professionals may not simply rely upon the argument that a client has misrepresented income as a sufficient defense. A new tax credit is provided in 2011 for small businesses that provide health insurance to employees. The IRS also announced how eligible tax-exempt organizations can claim the credit. Tax-exempt organizations are still subject to payroll taxes but not income tax on their charitable purposes. A new IRS form will be used with 2011 tax returns to obtain the credit. Small businesses will include the amount of the credit as a part of general business credits on income tax returns. Tax-exempt organizations will utilize Form 990-T, which is used to report and pay tax on unrelated business income, even if they do not owe taxes. In 2010, the credit has been available to small employers that contribute at least half the cost of single coverage towards health insurance for their employees. Until 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations.

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