I S-Cc<:omI>. _
rcenor oma. cr
in..,.,..,.,"",. and I'O'jalLies. taJrm
ans
af’n
aSas. 4
[
"e .
reduce
without
taxpayers.
opportunities for evasion Without unduly burdening honest taxpayers. Collectively, the- .
the
Treasury
thesel6
Department of Treasur.y estimates that these16 legislative proposals would generate $29.5
10 years.
encouraged
billion over the next 10 y~ars. The IRS is eAco~ragecl to see that thfl:J8 of the proposals have
three
already
law (in
Congress
alread~ become lew (in,modified form) and that Oengress is taking action on a,nomberof·the
a number of 1he
remaining proposals.
rema~ning propos~ls.
Public Law 110-28, TiUe VIII, the Small Business and Work Opportunlty Tax Act of 2007,
110-28. Title VIII.
Opportunity
enacted proposals on amending the colleCtion due process procedures for employment tax
collection
liabilities,
penalties,
erroneous
nabilitles.. expanding preparer penalties. and creating an erreneous refund Claim penaltY.
claim penalty.
These proposals, alOng with otherseohtained in the FY 2008 Budget, are described beloW in
along
others contained
FY
Budget,
below
more detail:
.
Expanding Infonnation Refio/flg:
EXRf!nding Information RePOrtina: Third-party reporting is critical for ensuring voluntary
re~rting
voluntary
data.
compliance. Without reliable third-party data, the IRS cannot easily detect errors In the
cannot
in
expensive and intrusive
IRS
absence of exPensive and lntruSive audits. The IRS receives over 1.5 bllnoo information
OVeJ' 1 .5 billion
returns
income
retums a year, reporting Income from employers, financial institutions, third-party payers, and
institlJtions, third-party. ~YElrs.
IRS
information on certain
state and federal governments. However, the IRS still lacks reliable information en Certaln
govemments~
types of income, most notably Income earned by small businesses and the self-employed.
ofincome, most n~bly income earned, bys~1I
and
self~mployed.
Information reporting proposals in the Administration’s FY 2008 Budget would:
in
Budget Would;
Information repol'ting
Admin[stra~ion's FY
•
Require information reporting on payments to COI'fXJrafiQns. This proposal would require a
Informa(iop f8ptJJrtiI7g payments corporations. This proposal would
a
business to file an information return for payments aggregating to 1eQO or more in a
file'em information retum
payments ag~ating to $600 or more in ~
calendar year to a corporation (except a tax-exempt corporation). This proposal is
to a corporation (ex~pt a tax.-exe.mpt corporation). This proposalls
estimated to generate $7.7 billion over the next ten years.
estimated to generate $7.7 bJlJwn oV, r the next ten years.
e
i •
•
Require basis reporting on security sales. This proposal would require certain brokers to
Require basis repplfing on seclJ.rlty $BIBs. This propoSal
req~ire certain broke~ to
report information regarding adjusted basis in connection with the sale of certain publicly
report fnformatlon regardfng adjusted basis In conriection with the sale'of certain publicly
traded securities. Brokers would also be required to report Jtc;qulsl\fon .or disposition
to report acquisition or disposition
traded securities. Brokers would also be
dates to help determine gain or loss for taxpayers. This proposal is estimated to generate
dates to help detennine gain or loss for taxpayers~ This proposaf Is e&tiMQ.ted to gEtJ'l$rate
$6.7 billion over the next ten years.
$6.7 billion ever the next ten years.
I
!
• Expandbroker/nformation reporting. This proposal would require a broker who is an
Expand brOker inronnstion rep!)rting. This proppssl wot)Id requIre a broker Who is an
auctioneer or operates a consignment business (electronic or other) to file an lnformfiltion
auctioj'leer Qr operates a consignment busine$S (electrOhic or other) to file an information
return showing customer information and gross proceeds from the sale of tangible
returo-showtng custoOler information and gross proceeds from tbe sale of tangible
personal property. The requirement would apply only for customers ·~h 100 or more
J)Etrsonal propertY. The reqalrement would apply only for-customf)rs with 100 or more
separate transactions generating at least $5000 in gross proceeds in a year. This
separate transactfons generatil'lg at least $5,000 In gross proceeds tn a year. This
proposal is estimated to generate $2.0 billion over the next ten years. ~
proposal i$ estlmated to generate $2.0 billion over the next len years.
20
20
D036
Exh.2
• Require information
on
payment
reimbursements.
proposal
• Require information reporting on merchant pjJym8f1t card re;mbufStlmenfs. This proposal
would provide the IRS with authority to put into effect ~i.Jlatlons ~uiring mercha;nt
IRS
regulations requiring merchant
acquiring
(organizations that
merchants) to report
a~ujring banks (organizatlofl$ that process card payments for merchants1te report to
the IRS annually the gfPSs reimbursement payments made to merchants in a calendar
the gross
in
proposal
to
the
$10.7 billion
year. This proposal is estimated tp generate $10,1 billiQn over th~ next ten years.
• Require a certifletj 'raxpaye,r Identification Number !;om contra.cIors. This proposal
certified Taxpayer
from contractors.
proposal
a
or more in calendar
a
requires a contractor receiving payments of $600 or mo~ In a ,calendar year from a
particular business to furnish to the business its certified Taxpayer Identification Number \
(TIN). This
require a
TIN
to
IRS.
(TIN). 'this proposal would requite a business fo verify the TIN,with the IRS, which
authorized disclose whether
TIN-name
IRS
would be authorizSd to dJsclose whetfter the 'fIN-name combination matches IRScontractor
furnish
TIN,
records. If a contractor: fails to fumi'sh an accurate certified TIN. the business would then
proposal is
million over
be required to withhold a flat rate. This propOsal Is estimated to raise $749 millIOn OVer
the next ten years.
•
information reporting r
go vernment psymellis
Require increased InfonnstiQn reportif1/l for certain govemment payments for property
and serviaes,,- rills pro~1 would auttiortze the IRS and Treasury Department to issue
services. This proposal
authorize
regulations reqlJfrigg information reporting
federal,
~ula~ons requiring Infonnation reporting on all non-wage payments by federal. state
non-wag,
and I~I govemments to procure property and services. Thls proposal is e$tJmated to
local governments procure pro~rty
This pro~1 estimated
generate $390 million over the next ten years.
•
Increase information return penalties. This proposal WOUld,increase the $50 and $100
would increasEftne
retum. pensltles. This~
penalty amounts to $100 and $250. respectJyely. and would Inore~ the $250.000 ~~
respectively, and
increase
$100
$250,000 and
$100,000 penalty .caps to $1,500.000 and $500.000, respectively. This proposalls
caps to $1,500,000 and $500,000. respeCtively.
proposal is
$100,000
estimated to generate $546 million over the next ten years.
estimated generate
rrUlllon oyer tfle next
0"
; ImprovllJO Compliance byiLsñ7esses: More efficient filing mechanisms. clearer rules on
b'l'Businesses: More effICientflllng mechanisms! cl~arer' liJles
~ who is liable for employment taxes, and streamlined collection due process will contribute to
wh9 Is Ii~ble
employment taxes, and
collect;on due process Will contribute to
improved business tax compliance.
improved
tax eompliance.
•
Require e-fihing by certain large organizations. This proposal would require all
Require e-Rling by certaIn farge organizations. This proposal Would require an
corporations and partnerships required to file Schedule M-3 to file their income tax
corporations ancfpartnershlps required to
Sch8dule M-3 tOlftle thflir1r'OOme tax
returns electronically. In the case of large taxpayers not required to file Schedule M-3,
returns electrdnically. In the case of large,taxpayers not required to file Sctledule M-3.
such as exempt organizations. the regulatory authority to require electronic filing would
such as exempt organizations,
te.guratory authority to require electronic filln9.-would
be expanded beyond the current 250-return minimum.
be expanded oayond1he current 250 ..retum minimUm.
•
Implement standards clarifying when employee leasing companies can be held liable for
Implement standards clarifYIng' when employ86 leasing fJjJmpanies can be hjJ/d liable for
their dllents’federal employment taxes. This proposal would set standards for hotdin,g
thlJlrdlentS'fsderal employment taxes. ThiS p~RQSSI woultfsf)t standards for holding
employee leasing companies jointly and severally liable with their clients for federal
employee leasing companies 'ointly and severalty liable with their olients for
employment taxes. This proposal would provide standards for holding employee leasing
employment taxes. This propOsal would prov~ standards for holding e~ployee leasIng
companies solely liable if they meet specified requirements. This proposal is estimated
companies solelY liable If they meet specified requirements. This propOsal is estimated
to generate $57 million over the next ten years.
to generate $57 million·overthe ne>rt ten years,
federal'"
• Amend collection due process procedures for employment tax liabilities. Legislation was
• Amend colteCfjon due 'P~ proCeclures lor employment tax liabilitieS. Legislation was
signed May 25. 2007, implementing a modified version of this proposal. It expands the
signed May 25. 2001. implementing a modified version of this proposal. tt expands the
exception to the requirement for pre-levy Collection Due Process proceedings to include
exception to the requiRtment for pre-f~vy ColleetJon Due Process prDceedlngs to Include
certain levies issued to collect federal employment taxes. The change will generate an
certain leVies is~ued to conect ted~ral employment taxes. The change will generate an
estimated $364 million over the next ten years.
estimated $364 million over the next ten years.
21
21
D037
Exh.2