by | Apr 13, 2020 | Tax Tips and News
The Internal Revenue Service says it is extending additional tax deadlines for individuals and businesses.
This latest Notice 2020-23, builds on the original announcement that taxpayers have until July 15 to file and pay federal income taxes. No penalties or interest will be due for filing or paying late. The update expands the original relief to additional returns, tax payments and other actions.
The extensions now generally apply to all taxpayers who have a filing or payment deadline falling on or after April 1 and before July 15.
Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for this expanded timetable. This means anyone — including those Americans who live and work abroad — can now wait until July 15 to file their 2019 federal income tax return and pay any tax due.
Further Extension Available Beyond July 15
Individual taxpayers who need additional time to file beyond the expanded July 15 deadline can request an extension to October 15 by filing Form 4868 using their tax professional, tax software or online provider. Businesses who need extra time can request their extension using Form 7004.
Remember than an extension to file past the expanded deadline of July 15 does not give an individual or business more time to pay beyond July 15. Those with estimated tax liabilities should pay any taxes owed by the July 15 deadline to avoid additional interest and penalties.
Estimated Tax Payments
Notice 2020-23 also extends relief to any estimated tax payments that would otherwise be due on June 15, 2020. Any individual or corporation that has a quarterly estimated tax payment due on or after April 1 and before July 15 can wait until July 15 to make that payment, without penalty.
Unclaimed Refunds from 2016
Normally, April 15 would be the deadline to claim a refund from 2016 tax returns. With this latest Notice, that has been extended to July 15. The law provides a three-year window of opportunity to claim a refund. If a return isn’t filed within three years, any refund money becomes property of the U.S. Treasury. Taxpayers are required to properly address and mail the return and to ensure it is postmarked by the July 15 date in order to qualify.
Assistance for Taxpayers
The IRS has closed down its telephone support lines for taxpayers due to the coronavirus pandemic. The agency says normal operations will resume “when possible.”
In the meantime the IRS website offers a variety of online tools that can help taxpayers find answers to their tax questions. Search the Interactive Tax Assistant, Tax Topics, Frequently Asked Questions, and Tax Trails to get answers to common problems. Those who have already filed can check their refund status by visiting IRS.gov/Refunds.
– Story provided by TaxingSubjects.com
by | Apr 11, 2020 | Tax Tips and News
The IRS unveiled a new online tool to help non-filers register to receive an Economic Impact Payment (EIP): the “Non-Filers: Enter Payment Info Here” feature on IRS.gov. This new resource was quickly developed to help more qualifying Americans receive their payment, since the Treasury will begin sending EIPs next week.
While the IRS has repeatedly explained that the vast majority of taxpayers won’t have to do anything to receive an EIP, eligible non-filers who aren’t recipients of Social Security, Railroad Retirement, or Social Security Disability Insurance still need to provide some basic information to get the payment. In general, this includes:
- Individual non-filers with an AGI less than $12,200
- Married non-filers with a combined AGI of less than $24,400
The reason is that the IRS is currently required to use filing information from tax-year 2018 and 2019 returns and Forms SSA-1099 and RRB-1099 to determine whether filers qualify for an EIP and where it will be sent. The IRS simply doesn’t have up-to-date information for those who haven’t filed for more than a couple of years and aren’t receiving the government benefits mentioned above.
Luckily, the IRS says that using the “Non-Filers: Enter Payment Info Here” tool should be a straightforward affair: “First, visit IRS.gov, and look for ‘Non-Filers: Enter Payment Info Here.’ Then provide basic information including Social Security number, name, address, and dependents. The IRS will use this information to confirm eligibility and calculate and send an Economic Impact Payment.” Filers who want to receive their payment via direct deposit will be able to choose that option while filling out their information.
The IRS is also launching the “Get My Payment” tool on April 17, which the agency says will “help everyone check on the status of their payments … including the date their payment is scheduled to be deposited into their bank account or mailed to them.” Those who had not previously supplied direct-deposit banking information will be able to use Get My Payment to do just that.
Additional EIP- and COVID-19-related updates will be available on the “Coronavirus Tax Relief and Economic Impact Payments” page on IRS.gov.
Source: IR-2020-69
– Story provided by TaxingSubjects.com
by | Apr 10, 2020 | Tax Tips and News
Internal Revenue Service suggests that taxpayers e-file their tax returns instead.
In a press release encouraging taxpayers to electronically file their tax returns, the Internal Revenue Service yesterday evening said that it was not currently processing paper tax returns.
As if we needed further evidence that COVID-9 has upended everything that’s familiar in the US, the IRS announcing that it has temporarily suspended the processing of paper tax returns underscores another facet of our “new normal” post-coronavirus.
At the beginning of April, the IRS—pursuant to a recommendation from the Office of Personnel Management—notified its remaining on-site employees that they would be need to start working from home to prevent the spread of the coronavirus. This shift to “telework” also meant that many IRS services would be temporarily suspended.
The IRS has specifically cited the temporary suspension of the following services as a result of taking precautionary measures against COVID-19:
- Live phone support
- Processing paper correspondence
- Taxpayer Assistance Centers
- Distribution of paper forms
- IVES Request Processing
In addition to urging taxpayers to use electronic resources to file a tax return, the IRS suggested using online tools for other tax-related services, like requesting a transcript, paying tax owed, and checking the status of a tax refund.
Finally, if any of your clients have already filed a paper return, the IRS does not want them to e-file another tax return. Alluding to a substantial backlog for other written requests, the agency said, “Paper returns will be processed once processing centers are able to open.”
Source: IR-2020-68
– Story provided by TaxingSubjects.com
by | Apr 9, 2020 | Tax Tips and News
Erin Collins apparently loves a challenge. Collins, recently named the new National Taxpayer Advocate, has started her new position ahead of time in order to provide the Taxpayer Advocate Service (TAS) with complete leadership during this unsettled time.
Collins’ appointment as Advocate is a critical position inside the IRS, leading the TAS while serving as a voice for taxpayers inside the IRS and a senior advisor to the leadership of the agency. The National Taxpayer Advocate is also crucial for recommending potential changes in legislation.
“Collins is an excellent choice for this key position because she is familiar with tax issues from inside and outside the IRS,” said IRS Commissioner Charles Rettig. “The IRS leadership team and I look forward to a meaningful, productive working relationship with Collins and the Taxpayer Advocate Service to help improve our tax system for everyone.”
Not one to walk away from crisis, Collins said she’ll meet the challenge head-on.
“I will be starting my position as the National Taxpayer Advocate earlier than originally planned due to the recent national emergency,” Collins said. “I can’t imagine a more critical time to lead the Taxpayer Advocate Service and to help the nation’s taxpayers during this time.”
Collins was appointed in February by Treasury Secretary Steven Mnuchin. She replaces Nina Olson, who retired in July 2019 after serving as the nation’s Taxpayer Advocate for more than 18 years.
Commissioner Rettig also voiced his thanks to Bridget Roberts, who served as the acting Advocate when Olson left. Roberts now returns to her former post as Deputy National Taxpayer Advocate.
Tax Pro with a Proud History
Collins has extensive background in the tax community including 20 years as a managing director of KPMG’s Tax Controversy Services practice for the Western Area. Before that, she was an attorney in the IRS Office of Chief Counsel for 15 years. Throughout her career, she represented individuals, partnerships and corporate taxpayers on technical and procedural tax matters.
Collins has also provided pro bono services to taxpayers to resolve disputes with the IRS. Collins also donated her time to non-profit boards focusing on underserved communities where English is typically not the primary language spoken at home.
“Her interests fit in perfectly with the priorities of the Taxpayer Advocate Service, specifically, and the IRS, more generally,” Rettig added.
The Taxpayer Advocate Service helps taxpayers and protects taxpayer rights. The Service has at least one local taxpayer advocate office in every state as well as the District of Columbia and Puerto Rico. TAS can help taxpayers needing assistance resolving an IRS problem, if their problem is causing financial difficulty, or if the taxpayer believes an IRS system or procedure isn’t working as it should.
Taxpayers can call their local advocate, whose number is in their local directory. Check out the TAS website to learn more about the Taxpayer Advocate Service and how it can help.
– Story provided by TaxingSubjects.com
by | Apr 8, 2020 | Tax Tips and News
Use Drake Tax to file EIP returns!
Drake Software today announced that Drake Tax supports Economic Impact Payment (EIP) returns, providing customers a way to help those who don’t typically file a return receive the payment recently authorized by the CARES Act.
There has been some confusion surrounding the EIP program, specifically for those Americans who aren’t required to file but don’t receive Social Security benefits. That’s why the agency and professional tax software companies have worked hard to provide a solution for those who could be disproportionately affected if they do not timely receive EIP.
While those who have already filed a tax-year 2018 or 2019 return and Social Security beneficiaries are not required to do anything to receive EIP, the IRS still needs to confirm basic information, such as names, Social Security Numbers, dates of birth, dependents, physical address, and bank account information (if direct deposit is preferred) for those Americans who do not normally file a tax return.
The IRS this week notified tax professionals that guidance for helping this subset of Americans would soon be available in the e-Services mailbox. The agency is also expected to announce an online portal for affected Americans to report the information required to qualify for EIP. For Drake Software customers, filing an EIP return is a simple, four-step process that is currently available in Drake Tax.
While most EIP-return filers don’t have to worry about exceeding the $75,000 individual and $150,000 married-filing-jointly thresholds, there are a couple things they still need to consider. First, only filers with a Social Security Number are eligible for EIP, though there is an exception: ITIN-holding spouses of active members of the military may be eligible. Second, only SSN-holding dependents who are under 17 years old can be claimed on an EIP return.
To learn more about filing an EIP return with Drake Tax, check out the video tutorial on DrakeSoftware.com. Taxing Subjects will continue to provide updates related to COVID-19 procedures and EIP as the IRS issues them.
– Story provided by TaxingSubjects.com
by | Apr 7, 2020 | Tax Tips and News
For many of us, we’re living in a time that has no comparison. We’ve seen wars, famines, economic crashes, but no pandemic—until now. Jim Buttonow of Accounting Today magazine says for the Internal Revenue Service, a bad situation may be about to get even worse.
Buttonow sees the IRS in the unenviable position of being in the middle of a perfect storm for a federal agency. In the middle of a busy tax filing season, the IRS still has some 70 million individual tax returns to process, and it’s doing the job with 20,000 fewer workers than it had a decade ago.
But legislative remedies for the economic downturn caused by the coronavirus pandemic have also tasked the IRS with one of the biggest jobs in the country: distributing many of the benefit payments in the stimulus package passed by Congress. The IRS has been tasked with figuring out who gets a payment and then sending out millions of checks and electronic deposits. To cap it all off, there are changes to the Tax Code that were made part of the relief legislation that will have to be implemented in the IRS returns processing systems and other operations.
It’s a daunting to-do list at the very least.
In the short term, the virus is also forcing the IRS to make changes to the way it does business. The agency is trying to restructure operations so that it doesn’t require face-to-face contact with taxpayers, all the while attempting to conduct business as usual serving those taxpayers who need assistance.
One of the most urgent tasks is to create the capability for employees at IRS locations across the country to instead work from home. With about 70,000 employees nationwide, Buttonow says it will take the IRS some time to return to normal operations—and might not return to normal until long after the pandemic is declared over.
For taxpayers and tax pros alike, interacting with the IRS during this time will be completely different than we’re used to, Buttonow writes. He’s given us 10 important things to remember about IRS operations and just how to interact with the agency until the situation returns to something akin to normal.
- Use .gov First to Get Answers to Questions
Even during regular income tax filing, the IRS phone system struggles to keep up with demand. Instead, Buttonow writes, use the IRS website to research questions. Many taxpayers are trying to call the IRS help line to get stimulus payment information when the best—and easiest—way to find that information is to check the IRS coronavirus web page.
- Live Assistance is Scarce
Taxpayer Assistance Centers have all been shut down for the foreseeable future and IRS phone lines are likely to be down for a number of weeks as well. Many other IRS hotlines are out of commission, whether for taxpayers or tax pros. Don’t expect any phone support until we get close to the new tax deadline of July 15. The agency has suspended almost all audits and collection activities until then.
- The IRS will be Hard to Reach from Here On
Expect a mountain of backlogged correspondence to face the IRS once the agency opens the gates. Even with its plans for other types of channels for taxpayer communications, such as email or its new e-fax lines, Buttonow says the agency likely will face a mountain of correspondence and clogged telephone lines after normal operations start up again.
- Put That Audit on Hold—Mostly
In its “People First Initiative,” the IRS announced all new audits had been suspended and wouldn’t resume until after July 15. However, Buttonow observes it’s realistic to expect the agency to continue to use audits in the meantime to stop suspicious or erroneous refunds. Any taxpayer with a questionable refund is likely to see the IRS filing filters stop their refunds until the taxpayer can verify the return is legitimate.
- Reprieve on Back Taxes
The IRS has halted collection enforcement activities through July 15. And, as part of the People First Initiative, liens, levies and passport restrictions are also on hold during that time. Proceeding of collection alternatives—including offers in compromise—are similarly suspended. Taxpayers can, however, still go to the IRS website to set up a new monthly payment plan for tax due.
- Monthly Installment Agreement Payment Not Needed—or Is It?
On one hand, the IRS “People First Initiative” said taxpayers aren’t required to make the monthly payment on an established installment agreement from April 1 through July 15. That’s fine for taxpayers who pay by check, but those who use direct debit are caught in the middle. Most banks say, “Hey, can’t stop the draft,” and taxpayers have to call the IRS directly to void a payment during the “free” Buttonow says that means taxpayers are really stuck.
“Taxpayers are in a pickle: IRS phone lines are closed, so taxpayers cannot contact the IRS to “skip” the automatic payments during this time. Also, the IRS is not automatically suspending direct debit payments. The IRS has not provided any guidance on how it will enable taxpayers to initiate a skip on their scheduled drafted payments,” Buttonow writes.
- Use IRS Transcripts to Answer Account-Related Questions
An official transcript from the IRS can help answer questions about AGI, estimated tax payments and more. Taxpayers can access transcripts immediately by setting up an IRS online account and using the “Get Transcript” tool on gov. They can also call the automated “Get Transcript” line and order a transcript to be delivered to the record on file with the IRS.
- Call Local Taxpayer Advocate Service (TAS) Office if You Have a Hardship
This includes taxpayers who experience a financial hardship due to a hold on a refund. The central TAS hotline is closed but taxpayers can contact a local advocate by phone. Go online for a list of local advocates: https://www.irs.gov/advocate/local-taxpayer-advocate
- File Now if You Can
The IRS is still processing tax returns and most stimulus payments will be figured from filed 2019 returns or from a 2018 return if a ’19 return hasn’t been filed yet. It’s a good time to file the required back tax returns, especially important for those who haven’t filed a 2018 and 2019 return.
- Stimulus Payments Won’t go for Tax Debts
The stimulus legislation says the IRS won’t apply the amount of the stimulus payment against any tax due owed. It can, however, be used for outstanding child support debt.
Buttonow notes that the IRS, while sending out the stimulus checks, is not in charge of deciding how much each taxpayer gets. That’s laid out in the stimulus legislation, and with any lawmaking process, it’s likely that some Americans will fall through the cracks.
Our thanks to Jim Buttonow and our friends at Accounting Today magazine for their article. You can access the full version here.
– Story provided by TaxingSubjects.com
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