by | Jul 16, 2020 | Tax Tips and News
Tax professionals across the country wrapped up a unique filing yesterday. While some still have to contend with an imposing stack of extensions that will be due on October 15, many are making plans to prepare for next filing season. It turns out that you should make room for another item on that checklist: paying the new Paid Tax Identification Number fee.
The Internal Revenue Service announced the resumption of annual PTIN fees for 2021 yesterday afternoon in a press release. The final regulations—titled “Preparer Tax Identification Number User Fee Update”—will officially publish in the Federal Register tomorrow. That means that the agency’s estimated 800,000 preparers will need to make room in their budget when applying for or renewing a PTIN.
How much is the new PTIN user fee?
The IRS says that PTINs will require a $21 application fee and $14.95 contractor fee for every new application or renewal. Since not having a PTIN means facing IRS penalties, tax professionals are incentivized to meet the December 31, 2020 deadline.
After a few years of not being required to pay, it’s only natural to wonder why there’s been a change. Here are a couple reasons:
- We noted in April that PTIN user fees initially went away in 2017 due to a DC District Court because of a legal challenge. That decision was overturned by the DC District Court of Appeals in 2019.
- The IRS is given the authority to charge the PTIN fee by the Independent Offices Appropriations Act of 1952, and the Office of Management and Budget places limits on those fees.
“The IRS is required (PDF) to conduct a biennial review of the PTIN user fee,” the IRS says in yesterday’s press release. “The agency determined that the full cost to administer the PTIN program going forward is $21 per application or renewal. This amount includes costs relating to PTIN misuse and maintaining the integrity of PTINs. The third-party contractor fee, $14.95, pays for several functions including processing applications, renewals and operating a call center.”
How do I apply for a PTIN?
The IRS says tax professionals have two options to apply for or renew a PTIN:
- Apply online at IRS.gov.
- Complete and file Form W-12.
To review the PTIN application process, visit the “PTIN Requirements for Tax Return Preparers” page on IRS.gov.
Source: IR-2020-159
– Story provided by TaxingSubjects.com
by | Jul 14, 2020 | Tax Tips and News
This time it’s for real.
The income tax filing and payment deadline has finally come around. Pushed back from its normal April 15 slot because of the COVID-19 pandemic, the deadline means it’s finally time to get the job done.
With the deadline pushed back to give practitioners and their taxpayers an extra three months to file and pay any tax due, one might think that everyone would have their returns filed by now. But some experts say they expect July 15 to be more like April 15 — only later.
At any rate, we thought a quick rundown of some available resources might make deadline day a little less hectic for everyone.
How do clients avoid the paper chase?
Tax pros have a big advantage when it comes to filing taxes. Unlike taxpayers who have to sweat through all the forms and jargon and then mail in their income tax return, professionals file taxes electronically, making the transmission of the return nearly instantaneous. Paper returns come with some significant drawbacks.
The IRS is experiencing delays in processing paper tax returns because they’re understaffed thanks to the pandemic’s effects. In addition, taxpayers who filed a paper return and expect a refund could see a delay in receiving their refund—as much as an extra four to six weeks from the time the return was mailed.
The IRS says it processes paper returns in the order they are received. If taxpayers have filed a paper return and their refund is delayed, they should not file the same return again or call the IRS.
Even with the delayed tax filing deadline, extensions can be obtained that push the filing deadline all the way to Oct. 15. There are two best ways to get an extension:
The automatic extension of time to file will process when taxpayers pay all or part of their taxes, electronically, by the July 15 due date. An extension to file is not an extension to pay. Taxes are still due by July 15.
Clients can pay easier electronically.
While a tax professional can get taxes filed quickly and easily, any tax due is the taxpayer’s responsibility. But the IRS has come up with a number of options so that even this once onerous obligation is easier than ever before.
Taxpayers can pay online, by phone, or with their mobile devices using the IRS2Go app. If they use a tax preparer, they should ask the tax pro to make the tax payment through an electronic funds withdrawal from a bank account. There are, however, other options available:
- IRS Direct Pay allows taxpayers to pay online directly from a checking or savings account for free, and to schedule payments up to 365 days in advance.
- Taxpayers can choose to pay with a credit card, debit card or digital wallet option through a payment processor. The payment processor adds a fee; no fees go to the IRS.
- The IRS2Go app provides the mobile-friendly payment options, including Direct Pay and through payment providers.
- Taxpayers may also enroll in the Electronic Federal Tax Payment System and have a choice of paying online or by phone by using the EFTPS Voice Response System.
Should clients set up an installment plan?
Qualified taxpayers can choose to pay any tax owed over time through an installment agreement with the IRS. An online payment plan can be set up in a matter of minutes. Taxpayers should be aware that interest and late-payment penalties will continue to accrue after July 15.
Here, too, there are options. The taxpayer’s specific tax situation will determine which payment option is available, either a short-term payment plan of 120-days or less, or a long-term payment plan that runs more than 120 days.
For information about their federal tax account, taxpayers can visit IRS.gov/account. There they can view the amount they owe, access their tax records online, review their payment history and see key tax-return information for the most recent tax return as it was originally filed.
– Story provided by TaxingSubjects.com
by | Jul 11, 2020 | Tax Tips and News
The IRS has been steadily working through its IVES backlog.
Here’s some good news for a change: The Internal Revenue Service today issued an IVES Program update announcing that the Income Verification Express Services (IVES) will start accepting new submissions on Tuesday, July 14, 2020. That means tax professionals who need to submit a stack of Forms 4506-T don’t have much longer to wait.
The IRS announcement notes that they have been working diligently on finishing the backlog created when coronavirus concerns led to employees being sent home. While the IRS is about to fling open the doors to IVES, the newsletter passes along some important tips for anyone about to send in new transcript requests.
How do I get my submissions processed as quickly as possible?
“If you are sending your oldest inventory first, please ensure the taxpayers’ signatures meet the 120-day requirement,” the IRS advises. “We will be sending acknowledgements out to confirm the work we have received from you, so do not send us duplicate requests.”
The IRS also says that it’s important to fax documents to the IVES processing site designated for your area. Here are the fax numbers provided in the update:
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Fax number
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Site
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(844) 249-6238
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Austin
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(844) 249-6239
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Fresno
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(844) 249-8128
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Kansas City
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(844) 249-8129
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Ogden
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While following these tips should help keep new requests moving along, the IRS cautions that tax pros need to temper their expectations.
“We want to remind you that we still have limited staffing, so processing time will be delayed,” the IRS explains. “Please know that we are aware of the urgency to accept additional work, and we’re working hard to restore full service to you while also protecting our employees.”
Source: IVES Program e-News and Updates (July 10, 2020)
– Story provided by TaxingSubjects.com
by | Jul 10, 2020 | Tax Tips and News
The American Institute of CPAs is asking the Internal Revenue Service to further extend the deadline for filing and paying income taxes. The deadline for filing and payment of tax due is July 15, and the IRS says the agency won’t push back the deadline further.
Accounting Today magazine reports the AICPA makes its case in a letter to the IRS, saying the the COVID-19 pandemic continues to spread and record numbers of cases have been reported across the U.S.
The AICPA sets forth three major areas where the institute believes further relief should be issued:
Penalty Relief
Just like on a regular April 15 tax deadline, taxpayers who fail to file a return or pay the tax due by the July 15 deadline face a penalty. Accounting Today reports the AICPA recommends the IRS waive penalties automatically for the 2019 tax year all the way through the extended filing period for all taxpayers. The institute goes further, asking the IRS to take another look at the impact of the coronavirus during 2021 and consider offering similar penalty relief for the 2020 tax year as well.
Delay in IRS Collections
The AICPA has recommended the IRS stop its automatic collections of liens and levies for at least an additional 90 days after the July 15 deadline. The institute suggests reassessing restarting any collection activities at that time.
Normally, taxpayers receive a series of automated notices if they don’t pay their taxes in full at the time they’re due. The notices demand payment while reminding them of the amount owed and any penalties and interest accrued. The notices are a precursor of the automatic collection process, which continues until the tax debt is paid, or the case is moved to a revenue officer, or the IRS is no longer able to collect the tax legally.
Installment Agreements
At present, taxpayers who can’t pay their full tax bill in one payment can enter into an installment agreement with the IRS. AICPA suggests the IRS create an expedited installment agreement approval process, based on realistic payment arrangements for taxpayers who’ve been affected by the pandemic.
Accounting Today reports the AICPA recognizes the “hardship and uncertainty for taxpayers, and their advisers, and for the IRS,” created by the coronavirus. The institute’s suggestions, AICPA says, simply ask the IRS to do their part in a slowly opening environment.
For its part, the IRS maintains that the July 15 deadline will stay as-is. The agency maintains that its People First Initiative “endeavored to provide unprecedented relief to help those who owed federal taxes and allow them extra time.” But the bottom line remains: taxpayers who didn’t make previously owed tax payments between March 25 and July 15 because they were given extra time to do so, now need to pay up or face penalties or possibly default on their payment agreements.
Our thanks to Accounting Today and to AT Editor Michael Cohn.
– Story provided by TaxingSubjects.com
by | Jul 8, 2020 | Tax Tips and News
The Internal Revenue Service says it has expanded its list of retail partners who accept cash payments for federal taxes. This cash payment option is available for individual and business taxpayers alike.
The IRS has a continuing partnership with ACI Worldwide’s OfficialPayments.com and the PayNearMe Company that allows taxpayers to make their tax payments without a bank account or credit card. They can do so at participating 7-Eleven stores, Ace Cash Express and Casey’s General Stores nationwide.
Taxpayers wishing to use the cash payment option should:
- Go online to the gov/payments webpage;
- Select the cash option in the “Other Ways You Can Pay” section;
- Follow the directions.
- NOTE: There is a $1,000 payment limit per day and a $3.99 fee for each payment.
The PayNearMe process involves three steps, so the IRS strongly recommends cash payers choosing this option to start the process well ahead of any tax deadline to avoid interest and penalty charges.
For taxpayers who do not have a need to pay in cash, there are other options to pay online, by phone or with a mobile device and the IRS2Go app.
IRS Direct Pay is a secure online payment option that allows taxpayers to pay directly from their bank accounts — and it’s free. The IRS has partnered with Official Payments since 1999 for taxpayers who want to use a credit card to pay their tax bill.
The IRS reminds all taxpayers to be aware of email schemes. Taxpayers will only get an email from OfficialPayments.com or PayNearMe if they have initiated the payment process.
– Story provided by TaxingSubjects.com
by | Jul 7, 2020 | Tax Tips and News
The Internal Revenue Service has a little excess cash it would like to get rid of. It comes in the form of unclaimed income tax refunds for taxpayers who didn’t file a 2016 tax return.
The unclaimed refunds are worth some $1.5 billion and the IRS says about 1.4 million individual taxpayers could have a share in the haul if they file a 2016 return. But they need to do it quickly.
“The IRS wants to help taxpayers who are owed refunds but haven’t filed their 2016 tax returns yet,” said IRS Commissioner Chuck Rettig. “Time is quickly running out for these taxpayers. There’s only a three-year window to claim these refunds, and the window closes on July 15. To claim the refund, a return for tax year 2016 must be filed by July 15, 2020.”
IRS Notice 2020-23 extended the due date for filing tax year 2016 returns and claiming refunds for that year to July 15 because of the COVID-19 pandemic. To claim and collect a tax year 2016 refund, taxpayers must file their 2016 tax returns with the IRS no later than July 15.
The midpoint for the unclaimed 2016 refunds, the IRS notes, is $861 — that means half of the refunds are more; half are less. As the commissioner mentioned, there is a three-year period where the refunds can be claimed. After the July 15 tax deadline, any refunds that remain unclaimed become property of the Treasury.
No Penalty to File Late
If a refund is involved, there’s no penalty for filing late. But there are a few things to keep in mind. Taxpayers seeking a 2016 tax refund should know that their checks may be held if they have not filed tax returns for 2017 and 2018. In addition, the refund will be applied to any amounts owed to the IRS or a state tax agency and may be used to offset unpaid child support or past due federal debts, such as student loans.
There is another potential loss to consider for those who don’t make the July 15 filing deadline. Besides the potential loss of the waiting refund, the taxpayer who doesn’t file for 2016 may miss out on the Earned Income Tax Credit (EITC). For 2016, the EITC was worth as much as $6,269.
The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2016 were:
- $47,955 ($53,505 if married filing jointly) for those with three or more qualifying children;
- $44,648 ($50,198 if married filing jointly) for people with two qualifying children;
- $39,296 ($44,846 if married filing jointly) for those with one qualifying child, and;
- $14,880 ($20,430 if married filing jointly) for people without qualifying children.
The IRS says you should get paperwork in order now.
Taxpayers who are missing Forms W-2, 1098, 1099, or 5498 for the years 2016, 2017 or 2018 should get copies from their employer, bank or other payer. If they can’t get copies, taxpayers can order a free wage and income transcript at IRS.gov using the Get Transcript Online tool.
As an alternative, taxpayers can mail Form 4506-T to request a wage and income transcript, which shows data from information returns filed with the IRS such as Forms W-2, 1098, 1099, Form 5498 and even IRA contribution information. The information on the transcript can be used to file the corresponding tax return.
IRS figures show Texas with the largest estimated number of taxpayers with possible 2016 refunds at 143,400 taxpayers. Vermont has the smallest number with 2,800. Alaska leads with the largest median refund amount at $979. Idaho has the lowest median refund: $727.
– Story provided by TaxingSubjects.com
Arnold & Company, LLC