Taxsoftware.com News

User Fee For U.S. Residency Certification

Check Your Mailing Addresses

End of Long Distance Tax

Drought In Farms Extends Replacement Period For Farmers Selling Livestock

No Change In Interest Rates For Fourth-Quarter 2006

IRS Announces User Fee For U.S. Residency Certification

The IRS will begin charging user fees for processing Forms 8802, Application for United States Residency Certification, starting October 2, 2006. These fees were announced in Revenue Procedure 2006-35, which will be published in Internal Revenue Bulletin (IRB) 2006-37 dated Sept. 11, 2006.

Form 8802 is used to request Form 6166, a letter that applicants may use to prove U.S. residency to claim benefits under an income tax treaty or an exemption from a value added tax (VAT) imposed by a foreign country.

A single Form 8802 can be used to request multiple Forms 6166. The initial user fee of $35 covers one Form 8802 requesting up to 20 Forms 6166 for a single Taxpayer Identification Number (TIN), regardless of the country for which certification is requested or the tax period to which the certification applies. An additional $5 covers up to 20 additional Forms 6166 on the same Form 8802. Applicants are advised to include all Forms 6166 requests on a single Form 8802 to avoid a new $35 user fee charge for additional forms.

The following fee schedule applies based on the number of Forms 6166 requested per Form 8802:

The IRS implemented the new user fee pursuant to an Office of Management and Budget directive instructing federal agencies to charge fees reflecting the full cost of goods or services that “convey special benefits to recipients beyond those accruing to the general public.”

Taxpayers Should Check Mailing Addresses

For Chief Counsel Advice

Taxpayers seeking IRS Chief Counsel advice as outlined in Revenue Procedure (RP) 2006-1 should submit their requests and additional information to the addresses listed in the revenue procedure. There may be some confusion regarding which mailing address should be used, however, due to previous release IR-2006-138.

The correct RP 2006-1 mailing addresses for individuals and businesses using the U.S. Postal Service to transmit requests are:

• For all submissions as described in RP 2006-1 other than providing additional information on changes in accounting method or period, or a § 301.9100 request for an extension of time on a request for change in accounting method or period, under the jurisdiction of Income Tax & Accounting, direct mail to P.O. Box 7604, Ben Franklin Station, Washington, DC, 20044.

• When providing additional information to assist with the processing of requests for changes in accounting method or period, or a § 301.9100 request for an extension of time on a request for change in accounting method or period, under the jurisdiction of Income Tax & Accounting, direct mail to P.O. Box 14095, Ben Franklin Station, Washington, DC, 20044.

Generally, all other mail whether transmitted by the U.S. Postal Service or a private delivery service should be addressed as follows: (Name), (Title), Internal Revenue Service, Office of Chief Counsel (Office Symbols),1111 Constitution Ave., NW (Room Number), Washington, DC, 20224. The IRS mail contractor will receive, sort, and deliver mail addressed as above to personnel in the Office of Chief Counsel at CM #4 in Crystal City or other temporary locations.

New Temporary Address For Certain Hand-Delivered Documents

Extensive repairs necessary after a major flood have forced the closure of the IRS Headquarters. As a result, taxpayer requests for rulings, requests for determination letters, Applications for Change in Accounting Method (Form 3115), and similar requests permitted to be hand-delivered to the main IRS building will now be accepted at a new location.

Until further notice, these requests and applications should be delivered to: Courier's Desk, Room 105, First Floor, Internal Revenue Service, Attn: CC:PA:LPD:DRU, Crystal Mall 4 Building at 1901 S. Bell St. or 1941 Jeff Davis Highway in Arlington, Va. This address, as of Monday, August 14, 2006, will supersede the temporary address listed in IR-2006-103 and will be effective until further notice.

Complaints, subpoenas, or any other service of process, as well as public comments on published guidance such as proposed regulations, normally delivered to the main IRS Headquarters should also be temporarily delivered to this same address.

Documents that have been hand-delivered previously to the main IRS Headquarters will be processed in the ordinary course.

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Replacement Period Extended For Farmers Selling Livestock Because of Drought

The IRS has granted farmers affected by exceptional, extreme, or severe drought conditions additional time to purchase replacements for livestock they were forced to sell.

When drought conditions result in an area being declared eligible for assistance by the federal government, taxpayers ordinarily have four years to replace — without recognizing any capital gain —livestock they were forced to sell because of the drought. The livestock in question must have been held for draft, breeding, or dairy purposes.

The IRS is providing additional time to replace livestock that was sold as a result of the intense, prolonged drought in some parts of the U.S. Notice 2006-82 explains how a taxpayer can determine whether additional time is available. For example, the four-year replacement period scheduled to end on December 31, 2006, is extended for one additional year if, for any weekly period included in the 12-month period ending on August 31, 2006, severe, extreme, or exceptional drought conditions were reported for any location in the county that experienced the drought that forced the sale of the livestock or for any location in a neighboring county. The replacement period may be further extended if the drought conditions persist after August 31, 2006.

To assist a taxpayer in determining whether a replacement period has been extended, the IRS will publish in September a list of counties that experienced exceptional, extreme, or severe drought for the 12-month period ending on August 31, 2006. The list will be compiled after consultation with the National Drought Mitigation Center. The IRS expects to publish a similar list for succeeding years.

No Change In Interest Rates For Fourth-Quarter 2006

The IRS announced there will be no change in interest rates for the calendar quarter beginning October 1, 2006. The interest rates are as follows:

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.

The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during July 2006.