More On Legal & Compliancefrom The Advisor's Professional Library
- Updating Form ADV and Form U4 When it comes to disclosure on Form ADV, RIAs should assume information would be material to investors. When in doubt, RIAs should disclose information rather than arguing later with securities regulators that it was not material.
- The New and Improved Form ADV Whether an RIA is describing its investment strategy in advertisements or in the new Form ADV Part 2, it is important the firm articulates material risks faced by advisory clients and avoids language that might be construed as a guarantee.
Time is short for any tax preparers who have yet to meet the January 2012 deadline to become Authorized IRS e-file Providers.
Starting in January, tax professionals and tax firms that expect to prepare and file 11 or more Form 1040 series returns, Form 1041 returns or a combination of these generally must use IRS e-file, though their clients may independently choose to file by paper.
To become authorized e-file providers, preparers must create an e-Services account, apply for an Electronic Filing Identification Number and pass a suitability check. All this can take 45 days, the IRS said in an alert issued last week.
The 2012 requirement will conclude the final implementation phase of a law intended to boost the e-filing rate of income tax returns for individuals, trusts and estates. In 2011, the e-file mandate pertained to any paid tax professional that anticipated preparing and filing 100 or more returns. The e-file rate by paid preparers increased 12% in 2011.
At present, nearly 80% of individual tax returns are filed electronically. The IRS said it had processed more than 1 billion individual tax returns since the nationwide debut of electronic filing in 1990.
The agency said that if the e-file requirement proves too onerous, preparers may seek a one-year waiver by submitting Form 8944, Preparer e-file Hardship Waiver Request. If a client wants to file a paper return, the preparer should include Form 8948, Preparer Explanation for Not Filing Electronically, with the return. A taxpayer choice statement should be obtained and kept with the preparer’s records.
Form 8948 does not have to be submitted with returns that the IRS does not currently accept electronically or has instructed taxpayers not to file electronically. These returns are exempt from the federal e-file requirement. Other limited exemptions may apply.