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Happy belated Valentine’s Day from all of us at NAEA (don’t worry about us, we’ve been cookied to the gills). We hope your tax filing season is going well and that you’ve girded your loins for the upcoming early filing season peak. We have much to report from Washington this week, so grab your favorite beverage and dig in to this week’s E@lert.
| || LEGISLATIVE & TAX ADMINISTRATION NEWS|
Commissioner Rettig attended a recent stakeholders meeting to discuss what IRS has done, and continues to do, to resume operations after the unprecedented, 35-day government shutdown. He even gave a shout-out to NAEA’s EVP, Bob Kerr, for his recent public comments (in Bloomberg) that tax refunds aren’t the correct metric to use when talking about tax cuts or increases. It was obvious from the bleary eyes around the table that both IRS staff and practitioners have been working overtime to meet the demands of this extraordinary tax year. Below are some key takeaways and suggestions for the filing season.
- EA Renewals – This may be the practitioner area most impacted by the shutdown, according to IRS officials. Right after the government reopened, the polar vortex hit and the office in Detroit that processes EA renewals was shut down for weather – a one-two punch. During the shutdown, approximately 14,000 renewal applications were received and 3,000 new enrolled agent applications were filed. In light of these developments, IRS has decided to extend the deadline for enrolled agent renewals. Applications will be processed on a first in, first out basis.
- If your Social Security number ends in 0, 1, 2, or 3 and you have not already filed, do so immediately via Pay.gov.
- The Return Preparer Office has advised all revenue officers and agents to allow enrolled agents whose renewals have been delayed to continue to practice without interruption.
- Returns per PTIN - Tax filing season, unfortunately, attracts unscrupulous and fraudulent actors who are increasingly focusing on tax professionals. As part of IRS’s ongoing efforts to protect taxpayers and practitioners from digital thieves, it will expand the “Returns per PTIN” program to cover all PTIN holders as of February 25 (previously, only PTIN holders who were also credentialed could participate). Once you have filed at least 50 individual tax returns, you may compare the number of returns you have filed with your PTIN to the number IRS has processed with your PTIN. Significant discrepancies between these two numbers should be reported immediately via Form 14157, Return Preparer Complaint.
To access PTIN information, follow these steps:
- Visit irs.gov/ptin and log into the PTIN System.
- From the Main Menu, under “Additional Activities,” select “View My Summary of Returns Filed.”
- A count of individual income tax returns filed and processed in the current year will be displayed. The information is updated weekly.
- PTINs (Part Two) – If you haven’t renewed your PTIN, you need to do so pronto. The renewal is required annually, and even if you’re an EA who doesn’t prepare returns, you are required to hold a valid PTIN. Evidently, non-renewed PTINs are still operational, but…
- President’s Day – The day after President’s Day is the single busiest day of the year for the IRS phone system. Be prepared to wait and make sure to have everything you need before the call, especially a current Form 8821 or Form 2848. To avoid jammed phone lines, check the IRS Service Guide – the information you need may already be on the IRS website.
In other news, the Taxpayer Advocate released her annual report to Congress this week. We’ll start unpacking its contents next week.
- Refunds/Withholding – For many taxpayers, this tax season may hold some surprises because of the TCJA and changes to withholding.
- Some taxpayers may have failed to adjust withholding (or pay the requisite amount of estimated taxes) in the wake of the TCJA and related Form W-4 changes. IRS will waive underpayment penalties this year for taxpayers who paid at least 85 percent (rather than the normal 90 percent) of their total tax liability. Notice 2019-11 provides more details.
- If clients are unhappy with their refund (or lack thereof) this year, you may want to level set for next year. While most tax software will project for tax year 2019 (TY19) (based on this year’s return), IRS provides a withholding calculator. We suggest discussing refund expectations with your clients; while we judge a return by its accuracy (and by total tax), many clients simply judge a return by the refund size.
- For taxpayers who find themselves owing tax this year and cannot pay in full, IRS has outlined a number of payment options, including online payment and installment agreements.
No More Shutdowns This Year
Congressional negotiators finally reached a deal on funding the government through September. The Senate passed the bill on Thursday and the House passed it as well, both by veto-proof majorities, just in time for the president to sign it into law before the midnight deadline.
Despite some last minute jockeying to attach the extenders to the funding bill, the provisions were not included in the final deal. Senator Grassley has publicly stated he has not given up on extending these provisions as soon as possible. This will require attaching them to another revenue measure. The outlook for moving tax legislation at this point in the filing season, however, is unclear.
Victims of the earthquake that shook parts of Alaska on November 30 may qualify for tax relief from IRS, including additional time to file returns.
Revenue Information Bulletin No. 19-006, released in January, updates the calculation method to be used by both corporate and individual taxpayers for Form 1099-G, Certain Government Payments.
The February Maine Tax Alert has been released and includes some helpful updates for this tax filing season.
In a recent technical memorandum, the New York Department of Taxation and Finance explains how the recent TCJA provisions on overseas income will be treated, including mandatory deemed repatriation income and global intangible low-taxed income (GILTI).
In a recent publication, Pub. 19, Business Personal Property Audits, the Utah State Tax Commission details the audit process for businesses with personal property tax issues.
| || EVERYTHING BUT THE KITCHEN SINK|
- Valentine’s Day may be over but you can continue to strengthen your relationship by doing some…financial planning.
- The thrill is gone — Amazon has cancelled its plans to open a new facility in Queens because of political opposition to the tax incentives Amazon would receive from New York.
- A taxing "Situation" — The accountant for former Jersey Shore reality star, Michael "The Situation" Sorrentino, was sentenced to four years of probation for filing a false tax return on behalf of his reality TV "star" client. Sorrentino already confessed to tax evasion and is spending eight months in prison.
- They're Back - In honor of President's Day, here is a great story about the comeback of the American Bald Eagle. It's a video in case you're tired of reading (this is a long E@lert).
NOW ACCEPTING APPLICATIONS
for the annual NAEA Fly-In on May 14!
Applications are due March 22, 2019.
We hope to see you in D.C.
"In whatever position you find yourself determine first your objective."
--Ferdinand Foch (1851-1929) French soldier
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NAEA E@lert | Volume 1: Issue 14
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