IRS EXPANDS SIMPLIFIED FILINGS FOR SMALLER EXEMPT ORGANIZATIONS

The IRS has doubled the $25,000 gross receipts threshold to $50,000 that allows exempt organizations to file an “e-postcard” Form 990-N, in lieu of a full Form 990. More particularly, an exempt organization with annual gross receipts of less than $50,000 can use the Form 990-N:

--if for the first year of existence, total gross receipts (including amounts pledged by donors) are $75,000 or less;

--if in the second or third year, $60,000 or less;

--if in fourth or later year, $50,000 or less.

Now don’t get too excited – as before, private foundations and Code §509(a)(3) organizations cannot use the Form 990-N. Nor does it relieve organizations of having to file a Form 990-T to report unrelated business income.

Foreign organizations and U.S. possession organizations cannot use this alternate filing if they have significant activity (including lobbying and political activity or the operation of a trade or business, but excluding investment activity) in the U.S.

Rev.Proc. 2011-15

AMENDED RETURNS AND THE TIMELY MAILED/TIMELY FILED RULE

A recent Chief Counsel Advice reveals the quirky nature of the timely mailed/timely filed rule as to amended returns. The CCA notes that the rule which treats a return as filed as of the date of mailing under Code Section 7502 will NOT apply to an amended return that shows an increase in tax due. This is because Section 7402 only applies to returns that are “required to be filed” and such returns are not required. Thus, under the CCA, a taxpayer who submitted an amended return that was timely when mailed, but beyond the statute of limitations for assessment of taxes when received by the IRS, could not be assessed taxes for the increased tax amount shown on the return.

However, the CCA notes that if the amended return included a claim for refund, then the timely mailed/timely filed rule WOULD apply since the law requires a claim to filed in such case.

Thus, this is quite a quirky situation where the timely mailed rule should be available to help taxpayers submitting amended returns seeking a refund (to save them from a late filing based on the day the IRS receives the return), but will  not be applied to help the IRS when such a return shows additional tax due.

CCA 201052003

TREASURY SET TO CHASE OFF MORE FOREIGN CAPITAL

The U.S. does not tax nonresident aliens on interest earned on their U.S. bank deposits. This is an implementation of a policy to draw their capital to the U.S.

The Treasury Department doesn’t care too much about this policy – its mission is to increase tax compliance and collections. This disconnect with the broader policy of nontaxation is evident in recent proposed regulations issued by the Treasury Department.

Presently, under current Regulations, U.S. bank deposit interest payments are reported to the IRS only if the interest is paid to a U.S. person or a nonresident alien who resides in Canada. Treas. Regs. §1.6049-8. The IRS has now issued new proposed Regulations that will extend information reporting requirements to include bank deposit interest paid to nonresident aliens who reside in any foreign country.

The rationale for the enhanced reporting is to strengthen the U.S. information exchange program (i.e., the U.S. reporting of tax information to other countries so that other countries can tax their residents) and reducing the ability of U.S. persons to avoid taxation by fraudulently claiming to be nonresident aliens.

Will this Regulation, if finalized, decrease U.S. bank deposits (and the resulting lending and increased economic activity that results from such deposits)? Well, it surely isn’t going to increase them.

Proposed Treas. Regs. §1.6049-4 , §1.6049-5 , §1.6049-6 ,§1.6049-8 , §1.3406(g)-1