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Tax notes. (Tax Matters).

* The IRS proposes regulations (www. access.gpo.gov/su_docs/fedreg/a02080 2c.html) requiring certain financial institutions to report interest payments made to nonresident aliens who reside in specified countries and maintain deposits in the U.S. offices of such entities. Currently the service mandates reporting of this interest only if a financial institution pays it to a U.S. person or to a nonresident alien residing in Canada. The IRS withdrew an earlier proposal with broader applications.

* The IRS publishes final regulations involving amendments to Circular 230 (www.irs.gov/pub/irs-irbs/irb0233.pdf), which governs the practice of CPAs and others before the service. Among the issues these rules cover are submitting taxpayer records to the IRS; handling a client's act of noncompliance, error or omission; contingent fees; returning a client's records; advertising and solicitations; and IRS disciplinary proceedings.

* In August the IRS issued final regulations (www.irs.gov/pub/irs-regs/ td9013.pdf) pertaining to treatment of self-charged items of income and expense under IRC section 469. The changes recharacterize a percentage of certain portfolio income and expense as passive income and expense (that is, self-charged items) when a taxpayer engages in a lending transaction with a partnership or an S corporation (that is, a pass-through entity) in which the taxpayer owns an interest and the loan proceeds are used in a passive activity.

* The IRS gives tax professionals early notice of where their clients' 2002 tax returns should be filed in 2003. To improve customer service, it redistributed tax-return workloads among its 10 regional processing centers. It published (www.irs.gov/ pub/irs-news/ir-02-92.pdf) the location of the processing center for each geographic area.

For single-click access to further coverage of the news stories listed here, visit the Journal of Accountancy Web site at www.aicpa. org/pubs/jofa/joahome.htm.
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Publication:Journal of Accountancy
Date:Nov 1, 2002
Words:306
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