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Archive for December, 2011

IRS and Treasury Department Publish Temporary Regulations on Treatment of Tangible Property

December 30th, 2011

The Internal Revenue Service and Treasury Department published in the
Federal Register temporary regulations that provide guidance to taxpayers on
the treatment of amounts paid to acquire, produce or improve tangible property
and regarding the accounting for, and dispositions of, property subject to
depreciation. These regulations provide objective standards and bright-line
rules intended to simplify compliance with the capitalization provisions
contained in section 263(a) of the Internal Revenue Code.

The temporary regulations generally are effective for expenditures made on
or after Jan. 1, 2012, and therefore these regulations do not affect taxpayers’
2011 tax returns.  The IRS and Treasury Department anticipate publishing
additional guidance that will advise taxpayers regarding how to obtain
automatic consent to change to a method of accounting provided in the temporary
regulations for taxable years beginning on or after Jan. 1, 2012.  These
automatic consent requests may be filed beginning with taxpayers’ 2012 tax
returns.  Taxpayers may not request a change to a method described in the
temporary regulations on their 2011 tax returns.

The temporary regulations also were released as a notice of proposed
rulemaking, offering taxpayers the opportunity to comment on the rules.
Written comments are requested by March 26, 2012, and a public hearing on the
regulations is scheduled for April 4, 2012.

Interest Rates Remain the Same for the First Quarter of 2012

December 5th, 2011

The Internal Revenue Service announced that interest rates will remain
the same for the calendar quarter beginning Jan. 1, 2012. The rates will be:

  • three (3) percent for overpayments [two (2) percent in
    the case of a corporation];
  • three (3) percent for underpayments;
  • five (5) percent for large corporate underpayments; and
  • one-half (0.5) percent for the portion of a corporate
    overpayment exceeding $10,000.

The 3 percent rate also applies to estimated tax underpayments for the first
calendar quarter in 2012 and for the first 15 days in April 2012.

Under the Internal Revenue Code, the rate of interest is determined on a
quarterly basis. For taxpayers other than corporations, the overpayment and
underpayment rate is the federal short-term rate plus 3 percentage points.
Generally, in the case of a corporation, the underpayment rate is the federal
short-term rate plus 3 percentage points and the overpayment rate is the
federal short-term rate plus 2 percentage points.

The rate for large corporate underpayments is the federal short-term rate
plus 5 percentage points. The rate on the portion of a corporate overpayment of
tax exceeding $10,000 for a taxable period is the federal short-term rate plus
one-half (0.5) of a percentage point. Further, the federal short-term rate that
applies during the third month following the taxable year also applies during
the first 15 days of the fourth month following the taxable year.

The interest rates announced today are computed from the federal short-term
rate during October 2011 to take effect Nov. 1, 2011, based on daily

Revenue Ruling 2011-32, announcing the rates of interest, is attached and will
appear in Internal Revenue Bulletin No. 2011-52, dated Dec. 27, 2011.

IRS Seeks to Return $153 Million in Undelivered Checks to Taxpayers; Recommends e-file, Direct Deposit to Avoid Future Delivery Problems

December 2nd, 2011

In an annual reminder to taxpayers, the Internal Revenue Service announced
that it is looking to return $153.3 million in undelivered tax refund
checks. In all, 99,123 taxpayers are due refund checks this year that could not
be delivered because of mailing address errors.

Undelivered refund checks average $1,547 this year.

Taxpayers who believe their refund check may have been returned to the IRS
as undelivered should use the “Where’s
My Refund?
” tool on The tool will provide the status of their
refund and, in some cases, instructions on how to resolve delivery problems.

Taxpayers checking on a refund over the phone will receive instructions on
how to update their addresses. Taxpayers can access a telephone version of
“Where’s My Refund?” by calling 1-800-829-1954.

While only a small percentage of checks mailed out by the IRS are returned
as undelivered, taxpayers can put an end to lost, stolen or undelivered checks
by choosing direct deposit when they file either paper or electronic returns.
Last year, more than 78.4 million taxpayers chose to receive their refund
through direct deposit. Taxpayers can receive refunds directly into their bank
account, split a tax refund into two or three financial accounts or even buy a
savings bond.

The IRS also recommends that taxpayers file their tax returns
electronically, because e-file eliminates the risk of lost paper returns.
E-file also reduces errors on tax returns and speeds up refunds. Nearly 8 out
of 10 taxpayers chose e-file last year. E-file combined with direct deposit is
the best option for taxpayers to avoid refund problems; it’s easy, fast and

The public should be aware that the IRS does not contact taxpayers by e-mail
to alert them of pending refunds and does not ask for personal or financial
information through email.  Such messages are common phishing scams.
The agency urges taxpayers receiving such messages not to release any personal
information, reply, open any attachments or click on any links to avoid
malicious code that can infect their computers.  The best way for an
individual to verify if she or he has a pending refund is going directly to and using the “Where’s My Refund?” tool.