The administration's fiscal-year 2012 revenue proposals.

• Author: Goldstein, Benson S.

President Barack Obama and Congress are currently discussing the outlines of the fiscal-year 2012 federal budget. Part of this discussion involves a number of tax administration initiatives being proposed by the Obama administration as highlighted in the Department of the Treasury's February 2011 General Explanations of the Administration's Fiscal Year 2012 Revenue Proposals. This document (referred to as the Green Book) is important because previous revenue proposals have made it into law in recent years, such as the preparer e-file mandate, which went into effect during the 2011 filing season, and the recently repealed increase in information reporting requirements (Forms 1099) for businesses.

The Green Book, about 150 pages in length, addresses revenue initiatives in such tax areas (among others) as individuals, corporations, partnerships, international taxation, exempt organizations, and employee benefits. This column focuses on some of the tax administration initiatives proposed by Treasury that are likely to be of strong interest to tax professionals.

Certified TIN for Contractors

This proposal would require a contractor to provide a certified taxpayer identification number (TIN) to a business if the contractor receives payments of $600 or more from that business during a calendar year. In addition, the proposal requires the business to verify the contractor's TIN with the IRS; the IRS would be authorized to disclose (solely for this purpose) whether the TIN and contractor name match IRS records. Should the TIN be considered inaccurate, the business would be required to withhold a flat-rate percentage of the contractor's gross payments. For the component of the initiative that many commentators believe may prove difficult to implement, the proposal would require the business to withhold 15%, 25%, 30%, or 35% of the gross payments, with the flat-rate withholding percentage selected by the contractor.

Repeal of Nonrefundable Payment Requirement for Offers in Compromise

Treasury is calling for repeal of a provision added to Sec. 7122 in 2006 that generally requires taxpayers to provide a nonrefundable payment with their application for an offer in compromise. Under current law, if the taxpayer is filing a lump-sum offer application with the IRS, he or she must generally include a nonrefundable payment of 20% of the initial offer amount with the offer application. In addition, with the submission of a periodic payment offer, current law...