IRS issued a news bulletin on the Waiver Guidance. Although I suspect some of you subscribe to e-file news from the IRS, most of you may not receive them from the IRS. Accordingly, I have provided below the body of the news bulletin issued today.
 

Newsletter of Contents

1. IRS News Release Announcing Waiver Guidance
2. E-filing conference information
3. FAS 109 Training

1) Guidance on Waivers for Corporations Unable to Meet e-file Requirements

IRS publishes fact patterns describing situations in which waivers will generally be granted, or not granted, under IRS Notice 2005-88, which provides waiver guidance for corporations that cannot meet electronic filing requirements due to technology constraints; or where compliance with the requirements would result in undue financial burden.

IRS may determine that a corporation has failed to file if it files a paper return instead of a required electronically filed return without first receiving a waiver.

Additionally, elections attached to the paper filed return may be deemed invalid. The taxpayer may also be subject to additions to tax under I.R.C. §6651, which typically result in imposition of monetary penalties on the underpayment.

Another potential consequence is that Forms 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, attached to the paper filed return may be considered filed late, which may subject the taxpayer to the late filing penalty of $10,000 per form under I.R.C. § 6038(b).

Situations in Which e-file Waivers Will Generally be Granted

Catastrophic Event

A taxpayer who was subject to a catastrophic event and continues to incur undue hardship even after the period provided for under any specific IRS disaster or emergency relief procedures may request a waiver from the requirement to e-file. If approved, the taxpayer will be allowed to file a paper return.

Substituted Return Process

If a taxpayer has a business need to file a subsequent corporate income tax return for the same tax period prior to the extended due date of the return, the taxpayer should request a waiver. If the waiver is approved, the taxpayer will file the first return on paper and then the substituted (subsequent) return electronically.

Bankruptcy - Chapter 7

The taxpayer, otherwise required to e-file, has filed a petition with the bankruptcy court under Chapter 7 of the Bankruptcy Act.

Final or Last Required Return

The taxpayer, otherwise required to e-file, will be filing their Final return, or last return they are required to file, during 2006.

Situations in Which e-file Waivers Will Generally Not be Granted

Software Limitations

The Service will generally not approve a request to waive the electronic filing requirement if the software purchased or licensed by a taxpayer or a return prepare does not include all of the features necessary to comply with the Modernized e-File requirements set forth in IRS regulations, revenue procedures, publications, and other instructions posted to the irs.gov website.
 

2) E-filing conference

When: Friday, May 5th, 2006

Where: Harvard Club of New York City

Who: Large corporate taxpayers regardless of software vendor(s)

There are uncertainties with regard to electronic filing, especially, since the U.S. Federal return is one of the most complex tax returns in the world. It will require significant effort to comply with the e-filing requirements.
 

As part of TTI’s efforts to ease the concerns of its clients and other corporate taxpayers who have questions related to e-filing of U.S. Federal returns for Tax Year 2005, it has invited the leaders of IRS’ electronic filing team to the conference to answer such questions. One such leader is Elvin Hedgpeth, an executive with e-file responsibility in LMSB. Mr. Hedgpeth will present the e-filing requirements and related issues. To the extent possible, he and other IRS representatives will answer questions from conference participants.

The conference will be held at the Harvard Club of New York. Please check www.taxtechnologies.com/training for the conference agenda and registration information. If you are interested in attending this conference, please click here to register. For more information please contact TTI at 201-387-9451.

3) FAS 109 Training

TTI offers a two-day course designed to walk individuals through the logical steps required for preparation of the FAS 109 income tax disclosures while meeting today’s financial statement disclosure demands. Given the increased scrutiny on creating transparency for financial numbers and the tight timelines for meeting these reporting requirements, it is now more important than ever to have people that understand the impact of FAS 109 issues and efficient processes that ensure accurate tax disclosures. This course goes beyond accounting theory and actually teaches individuals the “how to” part of preparing the current and deferred tax components of the global corporate income tax provision. It provides assistance with difficult areas of the provision reporting process including items related to Stock Based Compensation, FAS 5 Tax Reserves, Valuation Allowances, Other Comprehensive Income, Currency Translation Adjustments, Tax Rate Change Adjustments, States, Net Operating Losses, and Foreign Tax Credits. This course continues to be very well-received by attendees as the topics are right on target and timely with the current scrutiny on provision processes.

For more information please contact TTI at 201-387-9451 or visit www.taxtechnologies.com/training/FAS109.asp.

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Regards,

J.D. Choi
CEO, Tax Technologies, Inc.
201-387-9451