File more business tax forms electronically. The IRS last month eliminated several regulatory burdens to online business tax filing. In the past, the IRS encouraged online filing but often required signatures on certain forms, which gave little incentive for taxpayers to file this way. The new rules eliminate the signature requirement on certain forms as long as taxpayers keep a signed copy in their records. (IRS Reg 116664-01) Among the forms affected: Form 1120, U.S. Corporation Income Tax Return and Form 1120S, U.S. Corporate Income Tax Return for an S Corporation.
IRS shifting jobs from clerical to crackdown. The IRS announced this month that it plans to trim 2,400 clerical jobs, mostly by ceasing tax-return processing at its Memphis office. But it will add 2,200 new criminal investigators and revenue agents "to pursue cheating by high-income individuals and corporations." The shift in resources comes on the heals, no coincidence, of a General Accounting Office report that says abusive tax-avoidance schemes are growing faster than the IRS anticipated, and the agency doesn't have enough resources to fight them.
Educate yourself on Health Savings Accounts. The recently passed Medicare law introduced Health Savings Accounts (HSAs), a new kind of "medical IRA" that we described in our Dec. 29 issue. Money contributed to an HSA is tax deductible and withdrawals can be used to pay various medical expenses. The IRS just published new guidelines in Q&A format that provide more details on what HSAs are, who can have one and how contributions and withdrawals are treated tax-wise. Read the Q&A at www.irs.gov/pub/irs-drop/n-04-2.pdf.