Tax Help – IRS Processing AMT Patch Returns
The Internal Revenue Service is now processing five tax forms affected by legislation involving the Alternative Minimum Tax (AMT).On Monday, IRS systems began to accept and process returns that include the five affected forms. After several days of processing, the IRS has confirmed all systems are working properly.
In late December, the IRS announced it would delay processing of several tax forms. For the vast majority of taxpayers, the filing season this year began on time. But for any taxpayer whose return included any of the five affected forms, filing opened on Feb. 11.
Taxpayers who use the five forms can now file their tax returns as normal.
The affected forms are:
- Form 8863, Education Credits
- Form 5695, Residential Energy Credits
- Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers;
- Form 8396, Mortgage Interest Credit
- Form 8859, District of Columbia First-Time Homebuyer Credit
Approximately 13.5 million taxpayers will use these forms this year. Altogether, the IRS expects to receive nearly 140 million individual tax return submissions this year.
The IRS has worked closely with the software industry and tax practitioners during the reprogramming process to minimize disruptions for taxpayers and the tax community.
For more information, see Alternative Minimum Tax –– How It Affects Filing Season 2008.
Tax Debt Help – Don’t Let the IRS Seize Your Assets
You have 30 days from the date of the Notice Of Levy issued by the Internal Revenue Service to pay in full or to find another solution. Ignoring this notice or doing nothing, will only make matters worse.
Analyze your situation to find the best course of action for you and avoid the levy. Once the 30 days has passed, the IRS does not have to give any further notice before seizing your assets, including your checking accounts, savings accounts, and your wages.
By securing a temporary freeze on further collection activity, you have sufficient time to analyze your situation and determine the best course of action.
For qualifying taxpayers, this could lead to a tax settlement through an Offer in Compromise.
The IRS has broad powers to seize assets to pay your tax liabilities. After the IRS has seized this property, it becomes the property of the United States Government. They will attempt to sell it at public auction. The IRS will advertise in local newspapers that they have seized your property for nonpayment of taxes and that such property is available at public auction. You should seek an Asset Levy Release as quickly as possible.
You need an experienced representative, whether that be an Attorney, CPA, or Enrolled Agent, to contact the IRS and resolve your outstanding tax liability.
S. Raines, Sr. Financial Advisor/Tax Preparer
Tax Debt Help – Filing Frivolous Returns
A frivolous return is one that does not contain enough information to calculate any tax. And the return can contain information that obviously shows the tax being claimed is erroneously incorrect. The IRS enacted this penalty in an attempt to lower the incidence rate of tax protest activities. Tax protest activities include:
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Protesting military expenses by claiming unallowable deductions.
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Deliberately using the incorrect Tax Table to calculate taxes.
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Obviously inconsistent information found on tax returns. (Like claiming one exemption, but listing 50 dependents).
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Crossing out or altering the printed tax form information.
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Interferring with the administration of federal income tax laws.
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Deliberately delaying the processing of your income tax return.
What is unique about this tax penalty is the fact it is the only one not based on your tax liability. If you are found filing a frivolous return by the IRS, you will be assessed the penalty immediately. This penalty is added to any other penalty as required by the IRS law. And, you may have to pay $500.
Even if you protest the tax penalty, the IRS requires that you pay it when you receive notice of it.
S. Raines, Sr. Financial Advisor/Tax Preparer
Tax Debt Help – EITC Awareness Kicks Off Today; Free Tax Help Available
EITC Awareness Kicks Off Today; Free Tax Help Available
WASHINGTON — The Department of Treasury, the Internal Revenue Service and scores of community partners nationwide today kicked off EITC Awareness Day to promote the refundable tax credit for low-wage workers and options for free tax preparation.
January 31 – designated as EITC Awareness Day by the IRS – also marks the deadline for employers sending Forms W-2 to employees which enable them to file their tax returns. More than 60 percent of tax returns claiming the Earned Income Tax Credit are filed during the month of February.
More than 22.4 million taxpayers received more than $43.7 billion in EITC on their 2006 federal income tax returns. The IRS estimates that approximately one in four eligible taxpayers fails to claim EITC. Eligibility requirements for the credit can be complex. Also, people who have earned income but may not have a filing requirement, non-English speakers, non-traditional families, the homeless, childless workers and rural residents are among those who may not realize they qualify.
“Ensuring that more eligible families receive their EITC is important this year, as it is every year. I encourage people all across America to check to see if you are eligible for the Earned Income Tax Credit,” said Treasury Secretary Henry M. Paulson, Jr.
“Believe it or not, there are many taxpayers who are eligible to receive the Earned Income Tax Credit, but fail to claim it simply because they are not informed. That is why the many partners involved in today’s effort – from Congress, to state local and community leaders – are so critical,” said U.S. Treasurer Anna Escobedo Cabral.
“The IRS wants all eligible taxpayers to claim this important tax credit. We also want people to know that free help is available. There are volunteers staffing free tax-help sites nationwide. Free File at IRS.gov offers free software and e-filing. And, many professional tax preparers also donate their time and services to low-income taxpayers,” said Acting IRS Commissioner Linda Stiff.
Many organizations offering free tax help also are encouraging taxpayers to save a little money or open a bank account. The IRS has helped in this effort by creating a split-refund program that allows all taxpayers to divide their refunds among up to three financial accounts, such as checking, savings and retirement.
More than 150 coalitions and partners across the nation will mark EITC Awareness Day with a series of news conferences or news releases promoting this refundable tax credit for low-wage taxpayers. These organizations operate free tax preparation sites for low-income individuals, for seniors and for other eligible taxpayers.
EITC claimants are eligible for free tax preparation services provided at nearly 12,000 volunteer sites nationwide, they can also link to Free File through IRS.gov if they wish to prepare their own returns or many tax professionals also offer free service as part of their pro bono requirements.
The credit was created in 1975 in part to offset the burden of Social Security taxes and to serve as a work incentive. The amount of the credit varies but it is generally determined by income and family size. Some states also have a local version of EITC also can increase a taxpayer’s refund.
For the 2007 tax year, the maximum credit is $4,716 for a family with two or more children; $2,853 for a family with one child and $428 if the taxpayer does not reside with children.
The maximum amount of earned income allowed is higher for tax year 2007 than it was for 2006. Please see Fact Sheet 2008-11 for all eligibility requirements. Generally, a taxpayer may be able to take the credit for tax year 2007 if the taxpayer:
- has more than one qualifying child and earns less than $37,783 ($39,783 if married filing jointly),
- has one qualifying child and earns less than $33,241 ($35,241 if married filing jointly), or
- does not have a qualifying child and earns less than $12,590 ($14,590 if married filing jointly).
The maximum amount of investment income also increased to $2,900 for tax year 2007. For families, there also are certain requirements for child residency that must be met.
Nearly 70 percent of all EITC returns are prepared by a third party or tax professional. The IRS reminds tax professionals that they must perform due diligence when preparing an EITC tax return. To help, the IRS created an EITC Tax Preparer Electronic Toolkit which is available at www.eitcfortaxpreparers.com.
Taxpayers should seek out reputable tax preparers. People should be wary of tax preparers who offer larger refunds based on ETIC fraud or make other enticements based on EITC. False EITC returns have serious consequences and deliberate inaccuracies can result in a lengthy ban on eligibility.
This year, the IRS also will keep 70 Taxpayer Assistance Centers open the first three Saturdays during February to help prepare EITC returns. These will be located in areas underserved by volunteer tax preparation sites.
Tax preparers and taxpayers can find a wealth of information at IRS.gov. Both can use the EITC Assistant at www.irs.gov/eitc which is an easy-to-use interactive tool to help determine if the taxpayer is qualified for EITC. This step-by-step online program helps answer questions about eligibility, filing status, qualifying children and credit amount. The EITC Assistant also is available in Spanish.
In addition to on-line tools, the IRS also produces Publication 596, Earned Income Credit, which explains all the eligibility rules and also includes a worksheet to determine eligibility. The publication is available in English and Spanish.
There also is an electronic press kit for the media available at www.irs-eitc.info. This kit provides state-by-state EITC statistics; lists the states that provide local EITC benefits and provides other information of interest.
Related Items:
- EITC Awareness Day Partner Activity Highlights
- IR-2008-12, IRS Partners Host Free Tax Help for Low-Income, Elderly Taxpayers
- Fact Sheet 2008-11, Eligibility Rules Outlined for EITC
Tax Debt Help – Free Tax Help for Low-Income, Elderly Taxpayers
IRS Partners Host Free Tax Help for Low-Income, Elderly Taxpayers
WASHINGTON — Nearly 12,000 free tax preparation sites will be open nationwide this year as the Internal Revenue Service continues to expand its partnerships with nonprofit and community organizations performing vital tax preparation services for low-income and elderly taxpayers.
The IRS Volunteer Income Tax Assistance (VITA) Program offers free tax help to people who earn less than $40,000. The Tax Counseling for the Elderly (TCE) Program offers free tax help to taxpayers who are 60 and older.
Today, more than 150 of these partners and local officials will be hosting news conferences or issuing news releases nationwide to highlight the Earned Income Tax Credit and their free tax preparation programs. The EITC is already the government’s largest cash assistance program targeted to low-income Americans. However, not all eligible taxpayers may be aware or claim the credit.
Taxpayers need to bring to the VITA/TCE sites the following items:
- Photo identification
- Valid Social Security cards for the taxpayer, spouse and dependents
- Birth dates for primary, secondary and dependents on the tax return
- Current year’s tax package, if received
- Wage and earning statement(s) Form W-2, W-2G, 1099-R, from all employers
- Interest and dividend statements from banks (Forms 1099)
- A copy of last year’s federal and state returns, if available
- Bank routing numbers and account numbers for direct deposit
- Other relevant information about income and expenses
- Total paid for day care
- Day care provider’s identifying number
To file taxes electronically on a Married Filing Jointly tax return, both spouses must be present to sign the required forms.
Trained community volunteers can help eligible taxpayers with all special credits, such as the Child Tax Credit or Credit for the Elderly. Also, many sites have language specialists to assist people with limited English skills.
In addition to free tax return preparation assistance, most sites use free electronic filing (e-filing). Individuals taking advantage of the e-file program will receive their refunds in half the time compared to returns filed on paper — even faster if taxpayers have their refund deposited directly into their bank accounts.
As part of the IRS-sponsored TCE Program, AARP offers the Tax-Aide counseling program at nearly 8,000 sites nationwide during the filing season. Trained and certified AARP Tax-Aide volunteer counselors help people of low-to-middle income with special attention to people age 60 and older. To locate the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP’s Internet site.
The military also partners with the IRS to provide free tax assistance to military personnel and their families. The Armed Forces Tax Council (AFTC) consists of the tax program coordinators for the Army, Air Force, Navy, Marine Corps and Coast Guard. The AFTC oversees the operation of the military tax programs worldwide, and serves as the main conduit for outreach by the IRS to military personnel and their families. Volunteers are trained and equipped to address military specific tax issues, such as combat zone tax benefits and the effect of the EITC guidelines.
If taxpayers owe, they can make a payment April 15 by authorizing an electronic funds withdrawal (direct debit) from a checking or savings account, paying by credit (Discover Card®, American Express®, MasterCard® or VISA® Card), or by check or money order(made out to the United States Treasury) using Form 1040-V, Payment Voucher.
Related Items:
- IR-2008-13, EITC Awareness Kicks Off Today; Free Tax Help Available
- EITC Awareness Day Partner Activity Highlights
- Fact Sheet 2008-11, Eligibility Rules Outlined for EITC
- VITA Home Page
- EITC Home Page
Tax Debt Help – IRS Warns of New E-Mail & Telephone Scams
Issue Number: IR-2008-011
Inside This Issue
IRS Warns of New E-Mail and Telephone Scams Using the IRS Name; Advance Payment Scams Starting
WASHINGTON — The Internal Revenue Service today warned taxpayers to beware of several current e-mail and telephone scams that use the IRS name as a lure. The IRS expects such scams to continue through the end of tax return filing season and beyond.
The IRS cautioned taxpayers to be on the lookout for scams involving proposed advance payment checks. Although the government has not yet enacted an economic stimulus package in which the IRS would provide advance payments, known informally as rebates to many Americans, a scam which uses the proposed rebates as bait has already cropped up.
The goal of the scams is to trick people into revealing personal and financial information, such as Social Security, bank account or credit card numbers, which the scammers can use to commit identity theft.
Typically, identity thieves use a victim’s personal and financial data to empty the victim’s financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name, file fraudulent tax returns or even commit crimes. Most of these fraudulent activities can be committed electronically from a remote location, including overseas. Committing these activities in cyberspace allows scamsters to act quickly and cover their tracks before the victim becomes aware of the theft.
People whose identities have been stolen can spend months or years — and their hard-earned money — cleaning up the mess thieves have made of their reputations and credit records. In the meantime, victims may lose job opportunities, may be refused loans, education, housing or cars, or even get arrested for crimes they didn’t commit.
The most recent scams brought to IRS attention are described below.
Rebate Phone Call
At least one scheme using the word “rebate” as part of the lure has been identified. In that scam, consumers receive a phone call from someone identifying himself as an IRS employee. The caller tells the targeted victim that he is eligible for a sizable rebate for filing his taxes early. The caller then states that he needs the target’s bank account information for the direct deposit of the rebate. If the target refuses, he is told that he cannot receive the rebate.
This phone call is a scam. No legislation has yet been enacted that would allow the IRS to provide advance payments to taxpayers or that determines the details of those payments. Moreover, the IRS does not force taxpayers to use direct deposit. Those who opt for direct deposit do so by completing the appropriate section of their tax return, with bank routing and account information, when they file; the IRS does not gather the information by telephone.
Refund e-Mail
The IRS has seen several variations of a refund-related bogus e-mail which falsely claims to come from the IRS, tells the recipient that he or she is eligible for a tax refund for a specific amount, and instructs the recipient to click on a link in the e-mail to access a refund claim form. The form asks the recipient to enter personal information that the scamsters can then use to access the e-mail recipient’s bank or credit card account.
In a new wrinkle, the current version of the refund scam includes two paragraphs that appear to be directed toward tax-exempt organizations that distribute funds to other organizations or individuals. The e-mail contains the name and supposed signature of the Director of the IRS’s Exempt Organizations business division.
This e-mail is a phony. The IRS does not send unsolicited e-mail about tax account matters to individual, business, tax-exempt or other taxpayers.
Filing a tax return is the only way to apply for a tax refund; there is no separate application form. Taxpayers who wish to find out if they are due a refund from their last annual tax return filing may use the “Where’s My Refund?” interactive application on the IRS Web site at IRS.gov. The only official IRS Web site is located at www.irs.gov.
Audit e-Mail
Another new scam brought to IRS attention contains features not seen before by the IRS. Using a technique calculated to get almost anyone’s attention, the e-mail notifies the recipient that his or her tax return will be audited. This is the first scam of which the IRS is aware that uses this to get the victim to respond.
Unusual for a scam e-mail, it may contain a salutation in the body addressed to the specific recipient by name. Most scam e-mails seen by the IRS are sent using the same technique used by spammers, in which hundreds of thousands of messages are sent to potential victims based on Internet address. Because of the volume, the typical scam e-mail is not personalized.
This e-mail instructs the recipient to click on links to complete forms with personal and account information, which the scammers will use to commit identity theft.
This e-mail is a phony. The IRS does not send unsolicited, tax-account related e-mails to taxpayers.
Changes to Tax Law e-Mail
This bogus e-mail is addressed to businesses, accountants and “Treasury” managers. It instructs them to download information on tax law changes by clicking on a series of links to publications on businesses, estate taxes, excise taxes, exempt organizations and IRAs and other retirement plans. The IRS believes that clicking on a link downloads malware onto the recipient’s computer. Malware is malicious code that can take over the victim’s computer hard drive, giving someone remote access to the computer, or it could look for passwords and other information and send them to the scamster. There are other types of malware, as well.
The urls contained in the link are not legitimate IRS Web addresses. All IRS.gov Web page addresses begin with http://www.irs.gov/.
Paper Check Phone Call
In a current telephone scam, a caller claims to be an IRS employee who is calling because the IRS sent a check to the individual being called. The caller states that because the check has not been cashed, the IRS wants to verify the individual’s bank account number. The caller may have a foreign accent.
In reality, the IRS leaves it entirely up to the individual to choose to cash or not cash a paper check. The IRS has no business need to know, and does not ask for, bank account or similar information, except when taxpayers indicate on their tax return that they are opting for the direct electronic deposit of their refund. In that case, however, it is the individual’s responsibility to provide the IRS with the correct bank routing and account numbers on the tax return; the IRS does not contact taxpayers to verify the information.
What to Do
Anyone wishing to access the IRS Web site should initiate contact by typing the IRS.gov address into their Internet address window, rather than clicking on a link in an e-mail or opening an attachment.
Those who have received a questionable e-mail claiming to come from the IRS may forward it to a mailbox the IRS has established to receive such e-mails, phishing@irs.gov, using instructions contained in an article on IRS.gov titled “How to Protect Yourself from Suspicious E-Mails or Phishing Schemes.” Following the instructions will help the IRS track the suspicious e-mail to its origins and shut down the scam. Find the article by visiting IRS.gov and entering the words “suspicious e-mails” into the search box in the upper right corner of the front page.
Those who have received a questionable telephone call that claims to come from the IRS may also use the phishing@irs.gov mailbox to notify the IRS of the scam.
The IRS has issued previous warnings on scams that use the IRS to lure victims into believing the scam is legitimate. More information on identity theft, phishing and telephone scams using the IRS name, logo or spoofed (copied) Web site is available on the IRS Web site at IRS.gov. Enter the terms “phishing,” “identity theft” or “e-mail scams” into the search box in the upper right corner of the front page.
Related Items:
- FS-2008-9, Identity Theft E-Mails Scams a Growing Problem
- IR-2007-109, IRS Warns Taxpayers of New E-mail Scams
- Suspicious e-Mails and Identity Theft
Tax Debt Help – Timing of Snipes Trial Couldn’t Be Better for IRS
http://www.cnn.com/2008/CRIME/01/29/snipes.trial.ap/index.html
OCALA, Florida (AP) — Even Hollywood couldn’t have written a more ideal script for the Internal Revenue Service than actor Wesley Snipes’ tax-fraud trial.At a time when millions of Americans are buckling down to prepare their taxes, Snipes is being cast as a villainous example of the dangers of joining with Internet-fueled activists who claim the IRS has no authority to collect taxes.Snipes, the star of the “Blade” films and “White Men Can’t Jump,” is on trial with two tax protesters in one of the biggest criminal cases in IRS history, and the agency hopes the media attention on the matter will dissuade others in the “tax avoidance” movement from trying to outwit the government.“
People who do it openly and notoriously, you’ve got to go after them,” said Sheldon Cohen, who was IRS commissioner and general counsel in the 1960s. “Not because he’s that important or the amount of money is that important, but because there are others who may be foolish enough to follow.”
Snipes, 45, could get up to 16 years in prison if convicted on all counts, although sentences that long are unusual.His two co-defendants are an anti-tax ideologue who refuses to defend himself in court and an accountant who lost his licenses. The trio rested their defense Monday without calling any witnesses, saying they didn’t need to.“Nobody likes paying taxes, but paying taxes is the price we pay to live in a civilized society,”
Assistant U.S. Attorney M. Scotland Morris said Tuesday in closing arguments. “And it’s the law, and that’s what this case is about. It’s about three men who felt they were above the law.”Defense attorney Robert Barnes conceded Snipes’ arguments may have been crazy, but insisted that didn’t make them criminal.“Disagreement with the IRS is not fraud of the IRS, is not deception,” Barnes said. “It was an attempt to engage the IRS, to go through the IRS procedures and processes and see who’s right.”In lengthy filings to the IRS, the three defendants claimed they did not legally have to pay taxes, citing an obscure section of the tax code that establishes that foreign sources of income for U.S. citizens are taxable.
Protesters take that to mean only foreign sources are taxable, and wages made in this country are not.“They string unconnected things together in a way that they’re just not intended to be strung together,” said Chris Rizek, a former Treasury Department lawyer who specialized in tax policy. “And the courts have repeatedly said ‘No, that’s the wrong interpretation, listen to this.’ And they just don’t listen.”Snipes, who is free on $1 million bond, was paying millions in federal income taxes until 2000 when, according to prosecutors, he accepted the arguments of his two co-defendants.
Snipes then began seeking nearly $12 million in illegal refunds for taxes he already paid.Snipes, alleged ringleader Eddie Ray Kahn and former CPA Douglas P. Rosile were indicted on eight counts alleging tax fraud, conspiracy and willful failure to file returns. Kahn now refuses to leave his jail cell because he believes the court has no jurisdiction to prosecute him.The government says Kahn founded a group in the 1990s, American Rights Litigators, and a successor group, Guiding Light of God Ministries, that purported to help members legally avoid paying taxes. Rosile, a former accountant who lost his licenses in Ohio and Florida, prepared the paperwork.
Snipes joined their group in 2000.Witnesses for the prosecution have said up to 4,000 people refused to pay taxes based on the group’s arguments.
The three men claimed the IRS is not a legitimate government agency. Snipes also argued in long, bizarre letters that he was a nonresident alien; that the IRS terrorizes and deceives citizens; and that efforts to prosecute him would cause “increased collateral risk.”Most tax cases are handled in civil court, because the IRS does not have enough agents or time to pursue criminal charges against ordinary taxpayers who fudge a deduction or a decimal place on their tax returns.But pursuing the matter in criminal court carries other risks — the burden of proof is higher, and an acquittal would instantly galvanize the tax-avoidance movement, which already enjoys boundless exposure on the Internet.The IRS has been successful in pursuing criminal cases against the movement’s followers.
Last year, for example, a New Hampshire tax protester vowed to die fighting rather than be apprehended following criminal conviction on several tax charges. Several people were arrested trying to help Ed Brown and his wife avoid capture, and almost all of them were from other states.Brown and his wife were taken peacefully, but only after agents tricked the couple into surrender.
But there are exceptions. In 2003, FedEx pilot and tax protester Vernice Kuglin was acquitted because the jury found she sincerely believed she didn’t have to pay taxes.Kuglin’s assets were seized, and the government got its tax money.
Despite that, her case is held by some protesters as proof that the IRS is a sham, and citizens really don’t have to pay taxes.Cohen, the former IRS commissioner, said trials like Snipes’ are important to discourage potential tax scofflaws from defying the government.“Locks are important on windows to keep honest men from becoming thieves,” Cohen said. “Because a thief can get into a window even if it’s locked, right? But you do that as a deterrent.”
Tax Debt Help – IRS News Release #IR-2007-212
IRS, Treasury Issue Additional Proposed Regulations on Pension Protection Act Funding Rules
WASHINGTON — The Treasury Department and the Internal Revenue Service have issued proposed regulations that provide employers sponsoring single-employer defined benefit plans with guidance regarding the measurement of pension assets and liabilities under the new funding rules enacted as part of the Pension Protection Act of 2006.
These proposed regulations, together with proposed regulations related to mortality issued in May, proposed regulations relating to funding balances and funding-based benefit limitations issued in August, the yield curve guidance issued in October, and guidance on lump sum determinations issued in November will assist plan sponsors in determining the contribution requirements that apply to their defined benefit plans for the first year that the new funding rules apply.
Although the new funding rules are generally effective for plan years beginning on or after Jan. 1, 2008, these regulations are proposed to be effective for plan years beginning on or after Jan. 1, 2009. However, plan sponsors can rely on these proposed regulations for purposes of satisfying the requirements of section 430 for plan years beginning in 2008.
The Treasury Department and the Internal Revenue Service intend to issue guidance in the near future indicating that the proposed effective date for these regulations should also apply for the proposed regulations relating to employer-specific mortality tables issued in May and the proposed regulations related to funding balances and funding based-benefit limitations under sections 430(f) and 436 issued in August. Although final regulations will not apply to plan years beginning before January 1, 2009, plan sponsors may also rely on those proposed regulations for purposes of satisfying the statutory requirements for plan years beginning in 2008.
On Dec. 19, 2007, the Senate passed an amended version of the Pension Protection Technical Corrections Act of 2007. These proposed regulations, like the earlier proposed regulations, do not reflect any proposed technical corrections. Nor do they include any reflection of the proposed modification to the rules for determining asset values. After technical corrections are enacted, the regulations will be modified to take into account the enacted provisions.
S. Raines, Sr. Financial Advisor/Tax Preparer
Tax Debt Help – IRS News Release #IR-2007-211
This is a heads up from the IRS on proposed regulations for cash balance and other hybrid pension plans.
WASHINGTON — The Treasury Department and Internal Revenue Service (IRS) issued proposed regulations relating to cash balance plans and other hybrid pension plans.
The proposed regulations would interpret rules that were added to the tax law by the Pension Protection Act of 2006 (PPA), including an age discrimination safe harbor for hybrid pension plans, conversion protection for employees, and a 3-year minimum vesting requirement. The proposed regulations would also apply for purposes of the parallel rules that were added by PPA to the Employee Retirement Income Security Act of 1974 (ERISA).
The regulations are generally proposed to be effective for plan years beginning on and after Jan. 1, 2009. For periods before the effective date of these regulations, a plan must comply with the new PPA statutory provisions. During these periods, a plan is permitted to rely on the regulations for purposes of satisfying the new PPA statutory provisions.
S. Raines, Sr. Financial Advisor/Tax Preparer
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