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| NPRC Website Announcement | ||
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| NPRC invites state and federal agency partners to post notices and announcements intended for employers and payroll service providers. There is no charge for this service. | ||
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| January, 2010 | ||
| NPRC Recommends Improvements to IRS Penalty Administration Policies | ||
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| NPRC was invited to provide testimony at the IRS Oversight Board’s annual meeting, and proposed a discussion paper entitled Restoring Fairness in IRS Penalty Administration. NPRC members are concerned that the IRS has removed virtually all human decision making from the consideration of penalty relief for reasonable cause. The IRS created an automated system to focus on achieving consistency in penalty relief considerations. However, in achieving consistency, the system created significant new financial and administrative burdens on taxpayers and the IRS. | ||
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| This issue has led to taxpayer perceptions that IRS penalty administration is unjust and arbitrary. A careful review of penalty relief consideration practices would help to improve taxpayer perceptions that the tax laws are fairly and appropriately enforced, which would promote voluntary compliance. | ||
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| NPRC Provides Input for IRS Tax Preparer Regulations | ||
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| NPRC responded to IRS Notice 2009-60, which considers alternatives to improve accountability, knowledge and performance standards for tax preparers, through registration and licensing, testing for competency and knowledge, and continuing education, among other things. The letter explains why Reporting Agents are unique among “return preparers”, and suggests that Reporting Agents should not be included in any broad new oversight provisions designed for individuals who are tax preparers, advisors or other tax professionals. | ||
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| January, 2009 | ||
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| NPRC Provides Recommendations to Congressional Tax-Writing Committees on Obama Administration Withholding Tax Credit Proposal | ||
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| NPRC members met with the Senate Finance Committee and House Ways and Means Committee to provide recommendations on the Social Security Tax Holiday concept and the Obama Administration's proposed Withholding Tax Credit. | ||
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| NPRC Wins Exclusion from IRS Return Preparer Regulations | ||
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| NPRC was successful in seeking appropriate exclusions from the IRS Return Preparer penalty regulations. The law would have otherwise made payroll service providers liable for penalties for tax positions taken by clients, even if the service provider did not give tax advice or exercise discretion on the client's underlying tax positions (such as determining whether workers are employees or independent contractors). | ||
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| The Return Preparer Penalty regulations contain specific examples to make it clear that Reporting Agents that do not provide tax advice or exercise discretion or independent judgment on a client's underlying tax positions fall under the category of providing mechanical assistance, and are not return preparers for the purposes of the return preparer penalty provisions. | ||
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NPRC Negotiates Exceptions from International Electronic Payment Format | ||
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| NACHA International ACH Transactions (IAT) | ||
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| The National Automated Clearing House Association (NACHA) recently created a new International ACH Transaction (IAT), effective September, 2009, which must be used for payments funded by banks outside of the U.S. Even domestic employers with 100% U.S.–based employees would have needed to use the expanded IAT format for making tax and child support payments if payroll funds originated from abroad. | ||
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| The National Payroll Reporting Consortium met with NACHA to confirm how the new rules would affect payroll taxes. Basically, if funding for a payroll comes from an account outside U.S. territorial borders, the IAT format is required for every ACH transaction related to the payroll, including subsequent payments to government agencies (e.g., UI contributions, income tax withholding, child support withholding etc.). | ||
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| Most multinational corporations; organizations with some degree of foreign ownership, or joint ventures abroad could be affected, and every tax authority would have needed need to make changes to accommodate them. The IAT was intended to provide sufficient identifying information for financial institutions to comply with U.S. Treasury payment screening requirements designed to prevent payments to terrorists and other designated individuals or organizations. Obviously, payments from employers to government entities would pose no risk, and accordingly, NPRC requested a broad exemption for such payments. The request was accepted by NACHA and the U.S. Treasury. This broad exemption eliminates significant systems development workload for both government and private sector organizations that either make or receive electronic payments. | ||
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| NPRC Members Improve Burdensome Proposed Electronic Filing Rules | ||
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| The IRS is implementing seven new security and privacy requirements for Authorized IRS e-file Providers participating in electronic filing in 2009. NPRC members were credited with turning around burdensome proposed electronic filing rules that would have applied broadly to all tax-related data collection via the Internet. It would have been impossible to provide ‘private label’ tax processing services, for example, and would have created new liability for failing to notify the IRS of perceived security breaches within one hour of discovery. Based on feedback received, the IRS announced several changes, including: | ||
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 | Eliminated the requirement that the Extended Validation SSL Certificate and the Domain Name Registration be under e-file Provider's legal name as it appears on his/her e-file application. | |
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| Eliminated the reference to 16 CFR Parts 313 and 314 from the “Information Privacy and Safeguard Policies” requirement. | |
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| Changed “within one hour of discovering the incident” to “within one hour of discovering, investigating and verifying the incident” to “not later than one (1) hour after confirmation of the incident.” | |
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| Eliminated the requirement for taking the website offline. | |
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| The current version of the rules is attached here. | ||
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| March, 2008 | ||
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| Federal Regulation of Payroll Service Providers | ||
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| Senator Snowe introduced S. 1773, which would regulate payroll service companies. The bill reflects NPRC recommendations, although members continue to pursue a regulatory mandate to require payroll service providers to make routine disclosures to clients. | |
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| The IRS Taxpayer Advocate recommended legislation to Congress in January 2008 to have the IRS regulate payroll service companies. We wrote to the Taxpayer Advocate to announce a strengthened proposal: The IRS should require disclosures, and make EFTPS mandatory for Reporting Agents, to enable clients to confirm tax deposits made on their behalf. | |
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| Federal Regulation of Payroll Service Providers | ||
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| The 2007 Small Business and Work Opportunity Tax Act broadened the scope of ‘Return Preparer’ provisions to include employment tax returns, and made “preparers” liable if taxpayers take unreasonable positions. NPRC met with IRS attorneys, as the “should have known” standard may lead to expectations that payroll service providers challenge questionable client input. Reporting Agents should be excluded from the regulations, under the category of providing “mechanical assistance”. | ||
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Government agencies are invited to post notices. Please contact us and provide your name, agency, and phone number.
Government CornerLast updated January 28, 2010