News – Page 16 – Larson Accounting Group

20 de April de 2022

The IRS lost my 2020 tax return. Well, according to the notice I got yesterday, the IRS says it “never received” the return. But I’m sticking with “lost.”

Let me explain:
As TaxVox readers may remember, I—and at least 3.4 million other tax filers—got caught in an IRS security trap last year. In a well-intended but remarkably badly designed effort to protect against identity theft, the IRS requires e-filers to report their prior year adjusted gross income (AGI) on their current year return.

In theory, this match would prove that you are you. Or, least, the IRS would know that whoever e-filed this year had access to your last year’s return information.
Sadly, the AGI on my 2019 return didn’t match the number I gave the IRS in 2020. Actually, it did match but the IRS insisted it didn’t.

Beaten by the system
I did not know then, though lots of others did, that there was an easy way to fool the system: just plug in zero for that prior year AGI. Wild guess here, but I imagine identity thieves figured this out too, thus entirely defeating the purpose of the AGI check.

There are two lessons here: 1) I am a really bad hacker and 2) The IRS’s ID protection system only catches computer idiots or honest folks.
I spent days trying to fix this. TurboTax, the software program I used to create my return, was no help. I tried calling the IRS. You know how that turned out.

Next, I tried to sort out the mess by creating an online account at IRS.gov. No luck. The service would not let me set up an account because it could not confirm that my mobile phone number is my mobile phone number. Note to IRS: It is. Really.

Failing all this, I had no choice but to mail my return. This was the last thing I wanted. And the last thing the IRS says it wanted. But it gave me no other options. Since I had a balance due, I also sent a check.

The IRS got the check. In fact, it cashed the check just six days after I mailed it. Very impressive.

The lost tax return
So imagine my surprise when I got a notice eight months later that the IRS “never received” my 2020 Form 1040.

It most likely did receive it, but somehow lost it in the piles of paper returns and other mail that have been waiting to be processed, in some cases for more than a year. Unlike many filers, at least I wasn’t expecting a refund.

Much of this was beyond the agency’s control. It already was short-staffed due to budget cuts. Like almost every employer, it got hammered by pandemic-related absences. And Congress saddled the agency with distributing multiple Economic Impact Payments (aka stimulus checks) and, later, monthly Child Tax Credit payments.

But some of this mess was directly due to bungled systems and poor management. The agency has known for at least five years that its AGI identity check did not work. It knew it was unable to answer phone calls. And it knew its system for confirming identities through mobile phone numbers was a mess. Yet it fixed none of this. And all of these failures drove me and others to do the one thing the IRS was trying to avoid: Stick a return in an envelope and mail it.

What now?
What do I do now? The IRS, as only it can, gave me two choices: Either mail a return to the IRS or mail a copy of the return I already filed. Second note to the IRS: These are sort of the same thing.

Either way, I’m about to add to the agency’s deepening pile of unread mail. For the second time.

Keep in mind that the IRS is starting the current tax season with 9 million unprocessed individual and business returns, another 3 million unprocessed amended returns, and nearly 5 million pieces of correspondence from prior tax years it has not yet addressed. The agency calls this “substantially elevated inventory.” This is something like describing Mt. Everest as a substantially elevated hill.

The IRS is warning taxpayers and Congress that the new filing season is going to be painfully slow. And it is practically begging taxpayers to e-file. Yet it continues to make it unnecessarily difficult to do so. Third note to IRS: If you want people to do something, stop making it hard.

In November, the IRS announced it will try to fix the identification verification problem by requiring online users to sign up with a new system called ID.me. Forgive me if I am skeptical.

Meanwhile, I will trundle off to the post office with yet another copy of my 2020 return. Then I’ll get to work on my tax year 2021 return. And await this year’s Adventures in Tax Filing.

Source: Forbes

by Larson Accounting

18 de April de 2022

WASHINGTON — The Internal Revenue Service is reminding taxpayers the deadline to file and pay tax owed for most individual income tax returns is Monday, April 18. The agency wants last-minute filers to know tax help is available to file a tax return, request an extension or make a payment, 24 hours a day on IRS.gov.

The IRS encourages taxpayers to file electronically because tax software does the calculations, flags common errors and reduces tax return errors by prompting taxpayers for missing information. The fastest way to receive a refund is to file electronically and use direct deposit.

IRS Free File is available to any person or family with an adjusted gross income (AGI) of $73,000 or less in 2021. Leading tax software providers make their online products available for free. Taxpayers can use IRS Free File to claim the remaining amount of their Child Tax Credit, the Earned Income Tax Credit and other important credits. IRS Free File Fillable Forms is available to anyone who is comfortable preparing their own tax return – so there is a free option for everyone.

Online Account provides information to help file an accurate return, including Advance Child Tax Credit and Economic Impact Payment amounts, Adjusted Gross Income amounts from last year’s tax return, estimated tax payment amounts and refunds applied as a credit.

Get a 6-month extension to file

The IRS estimates 15 million taxpayers will request an extension of time to file and the easiest way to request an extension to file is using IRS Free File. In a matter of minutes, anyone can request an extension until October 17, using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. An extension of time to file is not an extension of time to pay, however, and taxpayers must estimate their tax liability on this form and pay any amount due by the April 18 filing deadline to avoid penalties and interest.

Taxpayers can also request more time by paying all or part of their estimated income tax due and indicate that the payment is for an extension. They can do this using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a debit, credit card or digital wallet. This way they don’t have to file a separate extension form and will receive a confirmation number for their records.

IRS Form 4868 can also be downloaded from Forms, Instructions & Publications, completed and addressed to the correct IRS office, and must be postmarked by the filing deadline.

Who automatically has more time to file?

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in areas covered by Federal Emergency Management Agency disaster declarations. Deadlines to file tax returns and make tax payments are extended for affected taxpayers in certain areas of Arkansas, Colorado, Kentucky and Tennessee until May 16, 2022, and for Puerto Rico until June 15, 2022. For details on all available relief, visit the Around the Nation page on IRS.gov.

Special rules may apply for some military personnel serving in a combat zone or a qualified hazardous duty area. This also applies to individuals serving in the combat zone in support of the U.S. Armed Forces. A complete list of designated combat zone localities can be found in Publication 3, Armed Forces’ Tax Guide, available on IRS.gov. U.S. citizens and resident aliens living outside the United States have until June 15, 2022, to file their 2021 tax returns and pay any tax due.

$1.5 billion in unclaimed 2018 refunds

The IRS estimates 1.5 million taxpayers did not file a 2018 tax return to claim tax refunds worth more than $1.5 billion. The three-year window of opportunity to claim a 2018 tax refund closes April 18, 2022, for most taxpayers. If they do not file a 2018 tax return by April 18, 2022, the money becomes the property of the U.S. Treasury. The law requires taxpayers to properly address, mail and ensure the 2018 tax return is postmarked by that date.

Other April 18 deadlines

April 18 is also the deadline to make 2021 contributions to Individual Retirement Arrangements (IRAs). Contributions can be made to a traditional or Roth IRA until the filing due date, April 18, but must be designated for 2021 to the financial institution. For more information, see Retirement Plans FAQs Regarding IRAs or Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs).

Employment taxes are due April 18 for household employees including housekeepers, maids, babysitters, gardeners and others who work in or around a private residence as an employee if they were paid $2,300. For more information, see Publication 926, Household Employer’s Tax Guide.

The deadline to submit 2021 tax returns or an extension to file and pay tax owed this year falls on April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia. Taxpayers in Maine or Massachusetts have until April 19, 2022, to file their returns due to the Patriots’ Day holiday in those states.

The first quarter estimated tax payment for 2022 is also due on April 18. Taxpayers are encouraged to check their withholding for 2022 after they’ve filed their 2021 tax return. It can protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year. It can also help taxpayers adjust their tax withheld up front, so taxpayers receive a bigger paycheck and smaller refund at tax time.

Source: IRS

by Larson Accounting

15 de April de 2022

Deputy Secretary of the Treasury Wally Adeyemo and IRS Commissioner Charles P. Rettig traveled to the IRS Campus in Philadelphia where they thanked employees for their tireless efforts and outlined an aggressive plan that will end the pandemic backlog this year.

“Since the pandemic began, IRS employees have been called on to go above and beyond for the American people, and they have met the moment. But they’ve had to do so without adequate resources and funding, which is why the agency faces the challenges that it does today. The Biden Administration is committed to getting the IRS the stable, long-term funding it needs to be able to serve the American people,” said Deputy Secretary Adeyemo.

This year, millions of taxpayers are awaiting the processing of their tax returns and receipt of their refunds. The backlog—unprocessed returns and correspondence sent to the IRS but yet unanswered—has created one of the most challenging tax filing seasons in our nation’s history.

“IRS employees have been working tirelessly to process backlogged returns and taxpayer correspondence. To ensure inventory is back to a healthy level for next filing season, we are leaving no stone unturned—taking an all- hands-on-deck approach to ensure as many employees as possible are dedicating time to return processing,” said Commissioner Rettig. “This includes bringing on new employees and reassigning current IRS employees to process inventory.”

The IRS’s backlog challenges today stem from two key sources.

First, the agency has been chronically underfunded for more than a decade, with its budget cut by nearly 20% since 2010. Today’s historically low level of funding means that the IRS isn’t equipped to provide the American people the service they deserve. This is all a result of resource constraints: The IRS workforce is the same size it was in 1970, though the U.S. population has grown by 60 percent and the complexity of the economy has increased exponentially. In the first half of 2021, fewer than 15,000 workers handled nearly 200 million calls received, which translates to one person for every 13,000 calls.

Second, the pandemic created a unique set of new operational challenges for the IRS. The agency was called upon to support emergency relief for taxpayers, like distributing an unprecedented three rounds of Economic Impact Payments, totaling over $830 billion, to 85% of American households. Including individual refunds, the IRS has distributed over $1.5 trillion to Americans since the pandemic began. This was all done at a time when the IRS budget was at historic lows, and while adjusting operating protocols to ensure the IRS workforce was safe and healthy in the midst of the pandemic.

These circumstances have created significant challenges. Entering a normal filing season, the IRS typically has well under one million pieces of inventory. This year, the IRS entered the filing season with a backlog that is more than 15 times as large. This has a huge impact on people, and Commissioner Rettig has committed to addressing the backlog and returning to normal, healthy levels by the end of this year.

To meet this commitment, the IRS has laid out an ‘all-hands-on-deck’ approach:

HIRING AND SURGING THOUSANDS OF EMPLOYEES TO TACKLE THE BACKLOG

Hiring 10,000 new employees: The IRS today announced plans to hold job fairs across the country in March in Kansas City (March 18-19), Austin (March 24-25) and Ogden (March 31-April 1) with the aim of filling 5,000 open positions in the coming months. Working with Treasury, the Office of Personnel Management, and the National Treasury Employees Union, the IRS recently secured direct hiring authority for these employees, as well as an additional 5,000 new hires to be made over the course of the next year. Congress also helpfully provided hiring flexibilities in the House-passed omnibus to further expedite hiring in critical positions. This will allow for onboarding and training new emergency teams which will begin working on inventory within just a few weeks.

Creating new 700-person surge team to process new returns: The IRS is in the process of shifting approximately 700 employees at the Austin, Ogden, and Kansas City campuses to process original returns. These efforts will address the historically high inventories of paper tax returns. At full capacity, this surge will close millions of cases each month.
Maintaining initial surge team to process amended returns and taxpayer correspondence: The second surge effort builds on efforts earlier in filing season, when the IRS moved hundreds of existing employees with previous experience to address the backlog. The IRS currently has approximately 800 people on this team, which started in February.
Paying overtime to thousands of IRS employees: The IRS has required mandatory overtime for the over 6,000 employees processing original returns. Overtime is also available for approximately 10,000 employees processing amended returns and taxpayer correspondence. In all three submission processing centers, employees are working night shifts to work on return and correspondence processing.
Supporting additional contractor support for inventory: The IRS is quickly pursuing additional contracting options to help with original return processing, including mailroom operations, transcription, and input of paper returns into IRS systems.

INCREASED TAXPAYER ASSISTANCE TO REDUCE PROCESSING DELAYS

Communicating directly with taxpayers to ensure accurate returns: A large share of the backlog stems from small errors by millions of taxpayers on their tax returns, which then require manual review by IRS employees before they can be processed. By helping taxpayers file accurately, the IRS can ensure that refunds are issued quickly (an error-free electronic return is processed within 21 days). Accurate individual filings also proactively reduce inventory by decreasing the share of returns that require time- intensive manual attention by employees. Efforts help taxpayers file accurately include:
- Sending taxpayers more information than ever to prevent processing delays. The IRS has sent more than 100 million letters to taxpayers to prevent delays in processing. In the letters, the IRS proactively calculates the amounts received by individual taxpayers in both third Economic Impact Payments and the advance Child Tax Credit to ensure more accurate returns.
- Providing online help. The IRS created and expanded self-service portals for taxpayers, including for online payment agreements, requesting payment transcripts, requesting Identity Protection PINs, and updating personal information. In just the last year, 9.4 million taxpayers have accessed their online accounts, allowing for important information—on benefits received, notices, and taxpayer payment history—to be easily and securely accessed.
- Providing in-person help. The IRS has increased the availability of in-person support for taxpayers through extra hours (including weekends) at Taxpayer Assistance Centers throughout the filing season. It also awarded $41 million of support to over 330 organizations across the United States, including Tax Counseling for the Elderly and Volunteer Income Tax Assistance organizations which provide free federal tax return preparation for the underserved.
- Providing help on the phones. The IRS has expanded customer callbacks to 70% of its toll-free lines. Already this fiscal year, an callback option has been offered to more than three million taxpayers, saving those preparing their taxes almost one million hours of wait time. Additionally, the IRS has deployed 2,000 contractors to respond to taxpayer questions about Economic Impact Payments and the advance Child Tax Credit. Since the summer of 2021, these contractors have answered over 40 million calls.

DEVELOPING AND DEPLOYING UPDATED TECHNOLOGY TO AUTOMATE FUNCTIONS

New automated tool to correct return errors: Last filing season, any error on a tax return required manual review by an IRS processing employee, meaning that just a few dozen such returns could be processed each hour. For this filing season, the IRS developed an automated tool that dramatically expands efficiencies and has helped the IRS close 1.5 million error resolution cases in a single week.
Suspension of dozens of common notices to prevent inventory increases: To provide relief for taxpayers, the IRS reconfigured its systems to temporarily halt sending approximately 40 form notices to taxpayers, including mailing automated collection notices that are normally issued when a taxpayer owes additional tax, and the IRS has no record of a taxpayer filing a return. This action provides important relief for taxpayers who otherwise could have received a notice for taxes already paid, but not processed due to the backlog. Importantly, this also results in less inventory since taxpayers won’t contact the IRS to inquire about the notices received.
Improving automated tools for taxpayer assistance: The IRS developed new automated support technology to help taxpayers, including online live assistance and new voice and chat bots (in English and Spanish) to quickly answer taxpayer queries. Taxpayers’ use of automated services more than doubled in the last year. The improvement of automated phone assistance and other tools has allowed the IRS to move many phone service representatives to work inventory given the exigencies of this filing season.

Ultimately, these approaches are short-term salves for 2022’s tax season but don’t address the much deeper structural problem at the IRS. Had Congress funded the IRS adequately for the past decade, it would have entered the pandemic with the resources it needed – and would not have millions of tax returns waiting to be processed. The IRS and Treasury have worked closely with legislators to highlight these needs, and this year’s House-passed omnibus represents the largest funding increase for the agency in the last two decades. This is a meaningful step that will help the IRS hire thousands of new employees and secure contractor support that will expedite the processing of returns and correspondence.

But it is far from sufficient. The agency needs stable, long-term funding to be able to modernize outdated technological infrastructure and transition much of its manual work into automated processes that will be more efficient. IRS employees should not be hand-transcribing paper returns. Taxpayers should interact with the agency using state-of-the-art online tools. And every taxpayer who wants to call the IRS with a question should have their call and questions answered promptly. Providing the IRS the resources it needs to rebuild and modernize into the 21st century is critical to ensuring that the agency is able to serve the American people and the nation.

Source: U.S. DEPARTMENT OF THE TREASURY

by Larson Accounting

14 de April de 2022

The Internal Revenue Service plans to hire 10,000 employees in a push to cut into its backlog of tens of millions of tax returns by recruiting for jobs across the agency that have gone unfilled for years, according to four people familiar with the plan.

The agency will accelerate recruiting in the coming weeks for 80 distinct positions, from entry-level clerical workers to advanced engineers and tax attorneys, one person familiar with the plan said. Among the recruiting targets are high-skill technology professionals to modernize its outdated infrastructure, according to those familiar with the plan, who spoke on the condition of anonymity because the details have not been publicly released.

The agency plans to use money from its existing budget, a large share of it from coronavirus stimulus funding, to pay for the new hires, to be made over the next two years. The number of new jobs would represent a 14 percent increase in the IRS workforce. It remains unclear how much the agency will spend on the hiring plan, officials said, but it will be significantly smaller than President Biden’s proposed IRS investment of $80 billion over the next decade.

The IRS entered the tax season this year with 24 million unprocessed paper returns and correspondence, almost all dating back to the 2020 filing season. Taxpayer advocates and members of Congress have been calling on the agency to tackle the backlog, citing potentially dire financial consequences for Americans who rely on their tax credits and refunds for basic living expenses.

A government official said the IRS does not expect to resolve the backlog until the end of 2022. But it hopes the hiring surge, the largest at the IRS in decades, will galvanize a strong response to the mountain of unprocessed paperwork at the agency. It also hopes to restore public confidence in the tax collector after the coronavirus pandemic sidelined much of its staff, hobbled customer service and led to a rash of unexpected retirements.

The IRS staffing demands have been compounded by recruiting challenges and low pay across its operations. Vacancies range from entry-level jobs crucial to a smooth filing season to more specialized roles for technology experts who can upgrade computer systems and tax attorneys to lead complex audits of wealthy taxpayers and businesses.

The IRS won approval from federal personnel officials this week to accelerate the hiring process by bypassing the time-consuming recruiting and vetting procedures common to federal hiring, the people said. Officials will also be able to offer competitive salaries to lure experts from the private sector.

Hiring managers across the government have chafed for years at the logjams they confront when seeking new talent along with the salary limits in many roles that pay higher at private companies. By gaining what is known as direct hiring authority, the IRS will be able to expedite hiring with a less complicated process, eliminating some selection requirements.

The agency also will be able to get around a salary cap that for years restricted the pay of many workers, although it is unclear how many jobs that would cover. But experts warn that the reinforcements may come too late to spare taxpayers from mounting delays during the 2022 filing season.

Commissioner Charles Rettig announced in February that he was temporarily reassigning 1,200 employees as part of a “surge team” to help. But those workers only began their new details this week, a person familiar with the hiring plans said. A second “surge team,” the person said, is now being formed with staff to be pulled from departments around the agency.

Meanwhile, thousands of employees are working overtime to plow through the accumulation of paper and amended returns and correspondence leftover from last year’s filing season, and are bringing in outside contractors to help with processing.

The internal staff shuffling came after the IRS advertised for 5,000 new positions in the division that answers phones and handles correspondence, in hopes of laying the groundwork for a smooth tax season this year. But fewer than 200 new employees were hired due to the challenging labor market.

Many of the positions included in the new hiring authority require months of training. For instance, tax examiners in the wage and investment division, the agency’s largest taxpayer services section, need between eight and 18 weeks of training before they can begin work. Contact service representatives, the workers who answer phones, respond to mail and log data from paper returns, need more than 37 weeks of training.

The fresh recruitment efforts for IT professionals could take even longer to pay off. The IRS is in the midst of revamping the backbone of the tax administration infrastructure, a program called the “individual master file,” that was built in the 1960s using a coding language that has largely gone extinct.

The most ambitious estimate for the project’s completion is 2030, according to the Government Accountability Office, but developments have been slowed each time Congress passes new tax laws, which mandate the already limited IRS staff to reprogram parts of the software.

The IRS administration of stimulus payments and the child care tax credit forced the agency to divert staff from modernization efforts to plugging programming holes. Experts say that has given the IRS a poor reputation among IT professionals who believe the agency is not committed to modernization, and that top talent can be reassigned at the whim of Congress.

“The IRS entered the filing season so far behind on processing that it’s going to take until December to sort through all this paperwork,” said Nina Olson, executive director of the Center for Taxpayer Rights, and the former national taxpayer advocate. “If they get authority to hire people, even if they’re only bringing in 100 people at a time here and there but on a regular basis over the next months, that will help. But what it will do is allow the IRS to enter the 2023 filing season not in a hole. I don’t want people to get their hopes up about 2022.”

The IRS applied for direct hiring authority from the Office of Personnel Management, the federal government’s human resources department, in the spring of 2021, but OPM rejected the request, saying it was too broad, according to an official with knowledge of that effort.

Staffing has long been one of the IRS’s most pressing obstacles. The agency has lost nearly 20,000 employees since 2010. The division responsible for opening paper returns and manually transcribing them into a computer file lost about 20 percent of its staff last year to retirements and departures, two agency officials familiar with the situation said.

Chronic underfunding from Republican-mandated budget cuts over a decade, with its annual legislative appropriation adjusted for inflation falling by about $2.5 billion in that span, has meant the IRS often cannot replace employees who retire or leave for other jobs.

Another wave could hit the agency soon. Leaders predict another 5,590 workers will retire this year. Close to a quarter of the workforce of 74,000 is eligible for retirement.

“For so many years, they were underfunded and they had a steady workforce, so they weren’t focused on recruiting,” said Rebecca Thompson, vice president at the civil rights group Prosperity Now and a member of the Internal Revenue Service Advisory Council. “Now the rubber is about to hit the road.”

Complicating the ambitious expansion is the intense competition for workers trained in the complexities of the U.S. tax code and the IRS internal processes. The agency has long paid well below the private sector for comparable positions. Employees who answer taxpayer questions on the phone and handle correspondence make between $24,000 and $41,000 annually, depending on seniority.

“It just sets up a situation where the IRS will continue to be completely outgunned by the professional wealth-defense industry that obviously compensates their professional wealth-hiders at much higher levels,” said Chuck Collins, a senior scholar at the Institute for Policy Studies think tank and author of “The Wealth Hoarders.”

Besides allowing its workforce to shrink, those critical of the IRS say it has not invested in new technologies for those who remain, in recent years because it has been focused on beefing up electronic processing of returns.

At the agency’s Kansas City, Mo., tax processing center, employees are working six-day weeks with mandatory overtime, said Shannon Ellis, president of the local chapter of the National Treasury Employees Union, which represents IRS employees.

For years, the IRS has struggled to attract local job applicants, as nearby employers boost their own wages. A local Amazon facility is offering $19 an hour, she said. A nearby Target just began advertising $24 an hour wages. Entry level IRS employees in Kansas City make $15 an hour. The staffing crunch in Kansas City could worsen, she said. Nearly half of the campus’s 5,000 workers will be eligible for retirement in the next two years.

Plans to hire more employees could improve morale and productivity, Ellis said, but she and her colleagues remain skeptical. They’ve seen the IRS advertise for job openings previously, only for the agency to fall well short of its recruitment goals or for newly hired colleagues to leave their jobs within months because of frustrating working conditions.

“Expediting the hiring process is one thing and that can help, but you’ve still got to get the people interested,” she said. “You’ve got to increase the wages to entice people to come.”

Source: Washington Post

by Larson Accounting

11 de April de 2022

The Internal Revenue Service today reminded all taxpayers – particularly those who are identity theft victims – of an important step they should take to protect themselves from tax fraud.

Some identity thieves use taxpayers’ information to file fraudulent tax returns. By requesting Identity Protection PINs from the Get an IP PIN tool on IRS.gov, taxpayers can prevent thieves from claiming tax refunds in their names.

Identity Protection PINs and how to get one

An IP PIN is a six-digit number the IRS assigns to an individual to help prevent the misuse of their Social Security number or Individual Taxpayer Identification Number (ITIN) on federal income tax returns. The IP PIN protects the taxpayer’s account, even if they’re no longer required to file a tax return, by rejecting any e-filed return without the taxpayer’s IP PIN

Taxpayers should request an IP PIN:

If they want to protect their SSN or ITIN with the IRS,
If they want to protect their dependent’s SSN or ITIN with the IRS,
If they think their SSN, ITIN or personal information was exposed by theft or fraudulent acts or
If they suspect or confirm they’re a victim of identity theft.

Taxpayers can go to IRS.gov/getanippin to complete a thorough authentication check. Once authentication is complete, an IP PIN will be provided online immediately. A new IP PIN is generated every year for added security. Once an individual is enrolled in the IP PIN program, there’s no way to opt-out.

The IRS may automatically assign an IP PIN if the IRS determines the taxpayer’s a victim of tax-related identity theft. The taxpayer will receive a notification confirming the tax-related ID theft incident along with an assigned IP PIN for future tax-return filings.

Taxpayers will either receive a notice with their new IP PIN every year in early January for the next filing season or they must retrieve their IP PIN by going to IRS.gov.

Tax-related identity theft and how to handle it

Tax-related identity theft occurs when someone uses a taxpayer’s stolen SSN to file a tax return claiming a fraudulent refund. In the vast majority of tax-related identity theft cases, the IRS identifies a suspicious tax return and pulls the suspicious return for review. The IRS then sends a letter to the taxpayer and won’t process the tax return until the taxpayer responds.

Depending on the situation, the taxpayer will receive one of three letters asking them to verify their identity:

Letter 5071C, asks them to use an online tool to verify their identity and tell the IRS if they filed the return in question.
Letter 4883C, asks the taxpayer to call the IRS to verify their identity and tell the IRS if they filed the return.
For those who have been a victim of a data breach, they may receive Letter 5747C and be asked to verify their identity in-person at a Taxpayer Assistance Center.

If the taxpayer receives any of these letters, they don’t need to file an Identity Theft Affidavit (Form 14039). Instead, they should follow the instructions in the letter.

When to file an Identity Theft Affidavit

If a taxpayer hasn’t heard from the IRS but suspects tax-related identity theft, they should complete and submit a Form 14039, Identity Theft Affidavit PDF. Signs of possible tax-related identity theft include:

A taxpayer can’t e-file their tax return because a duplicate tax return was filed using their Social Security number. (Check that there’s no error in the SSN, such as transposed numbers.)
A taxpayer can’t e-file because a dependent’s Social Security number or ITIN was already used by someone on another return without the taxpayer’s knowledge or permission. (Also check that the SSN or ITIN is correct and be sure the dependent hasn’t filed a separate tax return.)
A taxpayer receives a tax transcript in the mail they did not request.
A taxpayer receives a notice from a tax preparation software company confirming an online account was created in their name, and they did not create one.
A taxpayer receives a notice from their tax preparation software company that their existing online account was accessed or disabled when they took no action.
A taxpayer receives an IRS notice informing them that they owe additional tax, or their refund was offset to a balance due, or that they have had collection actions taken against them for a year they did not earn any income or file a tax return.
The IRS sends a taxpayer a notice indicating that the taxpayer received wages or other income from an employer for whom they didn’t work.
The taxpayer was assigned an Employer Identification Number (EIN), but they did not request or apply for an EIN.

The IRS will work to verify the legitimate taxpayer, clear the fraudulent return from the taxpayer’s account and, generally, place a special marker on the account that will generate an IP PIN each year for the taxpayer who is a confirmed victim.

For information about tax-related identity theft, see Identity Protection: Prevention, Detection and Victim Assistance and IRS Identity Theft Victim Assistance: How It Works on IRS.gov. The Federal Trade Commission website also includes information about tax-related identity theft.

Source: IRS – 2022-78, April 11, 2022

by Larson Accounting

8 de April de 2022

The Internal Revenue Service today reminds those who make estimated tax payments such as self-employed individuals, retirees, investors, businesses, corporations and others that the payment for the first quarter of 2022 is due Monday, April 18. The 2022 Form 1040-ES, Estimated Tax for Individuals, can help taxpayers estimate their first quarterly tax payment.

Income taxes are a pay-as-you-go process. This means, by law, taxes must be paid as income is earned or received during the year. Most people pay their taxes through withholding from paychecks, pension payments, Social Security benefits or certain other government payments including unemployment compensation.

Most often, those who are self-employed or in the gig economy need to make estimated tax payments. Similarly, investors, retirees and others often need to make these payments because a substantial portion of their income is not subject to withholding. Other income generally not subject to withholding includes interest, dividends, capital gains, alimony and rental income. Paying quarterly estimated taxes will usually lessen and may even eliminate any penalties.

Exceptions to the penalty and special rules apply to some groups of taxpayers, such as farmers and fishers, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year. See Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its instructions for more information.

How to pay estimated taxes

Form 1040-ES, Estimated Tax for Individuals, includes instructions to help taxpayers figure their estimated taxes. They can also visit IRS.gov/payments to pay electronically. The best way to make a payment is through IRS Online Account. There taxpayers can see their payment history, any pending payments and other useful tax information. Taxpayers can make an estimated tax payment by using IRS Direct Pay; Debit Card, Credit Card or Digital Wallet; or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS). If paying by check, taxpayers should be sure to make the check payable to the “United States Treasury.”

Publication 505, Tax Withholding and Estimated Tax, has additional details, including worksheets and examples, that can be especially helpful to those who have dividend or capital gain income, owe alternative minimum tax or self-employment tax, or have other special situations.

Source: IRS-2022-77, April 6, 2022

by Larson Accounting

5 de April de 2022

As the federal tax filing deadline approaches later this month, the Internal Revenue Service today announced that many Taxpayer Assistance Centers will be open around the country this Saturday, April 9 for face-to-face help.

This special Saturday help is available from 9 a.m. to 4 p.m., and no appointment is needed. Normally, TACs are only open by appointment on weekdays.

“We are inviting anyone who wants or needs some assistance to stop by,” said IRS Wage & Investment Division Commissioner and Taxpayer Experience Officer Ken Corbin. “We designed these extra weekend hours to make it easier for taxpayers to resolve an issue, inquire about their account or work with the IRS if they have an obligation they cannot meet. Whatever the case, face-to-face help will be available on this special day without an appointment.”

People can also ask about reconciling advance Child Tax Credit or third round Economic Impact Payments or inquire about various other services available while at an IRS office. If assistance from IRS employees specializing in these services is not available, the individual will receive a referral for these services. IRS staff will schedule appointments for a later date for deaf or hard of hearing individuals who need sign language interpreter services. Foreign language interpreters will be available.

While no tax return preparation will be available at any IRS TAC, the IRS.gov webpage, Contact your local office, lists all services provided. Taxpayers can make payments by check or money order. The IRS will not accept cash during these events.

Come prepared with paperwork

The IRS urges individuals to bring the following information:

Current government-issued photo identification
Social Security cards and/or ITINs for members of their household, including spouse and dependents (if applicable)
Any IRS letters or notices received and related tax and financial documents

During the visit, IRS staff may also request the following information:

A current mailing address, and
Bank account information, to receive payments or refunds by Direct Deposit.

The IRS follows Centers for Disease Control social distancing guidelines for COVID-19, and availability may change without notice. It’s mandatory for people to wear face masks and social distance at these events when required by CDC guidance, such as in high transmission counties.

Most taxpayers can get help preparing and filing their 2021 federal tax returns using these free, safe and convenient resources:

Any individual or family earning $73,000 or less in 2021 can use tax software from providers who make their online products available through IRS Free File at no cost. There are products in English and Spanish.
Free help preparing tax returns is available at a Volunteer Income Tax Assistance Center (VITA) or Tax Counseling for the Elderly location (TCE) sites. The income limit for VITA assistance is $58,000. To find the closest free tax return preparation help, use the VITA Locator Tool or call 800-906-9887. To find a TCE AARP Tax-Aide site, use the AARP Site Locator Toolor call 888-227-7669.

Source: IRS 2022-76, April 4, 2022

by Larson Accounting

4 de April de 2022

IRS is hiring! Jobs are available for people with many different career interests and because we offer plenty of training, no prior tax experience is required.

Get to know the IRS, its people and the issues that affect taxpayers

These are exciting times at the IRS. Like many other federal agencies and companies around the country, the pandemic created challenges for our operations, and we’re working hard to ensure we have the resources we need to provide better service to taxpayers. Now, thanks to support from Congress, we are conducting a major hiring surge unlike any effort in more than 20 years, so the timing may be right for you to consider a career at the IRS.

During the next several months, we’re looking to fill more than 5,000 positions in IRS processing centers in Austin, Texas; Kansas City, Missouri; and Ogden, Utah – part of a larger hiring effort underway. These positions include many entry-level clerk and tax examiner positions in my division. What I’m really excited about, and what’s great news for potential applicants, is that these positions fall under a special hiring condition called direct-hire authority, which enables us to bring on successful applicants within 30-45 days of their job offer. This is much faster than the normal process. In addition to these positions, there are other available jobs throughout our agency for interested applicants to consider.

I’m Ken Corbin, the Commissioner of the Wage and Investment Division (W&I) and the IRS’ Chief Taxpayer Experience Officer, and I began my career at the IRS in a position similar to the entry level ones available today. Coincidentally, so did the Deputy Commissioner of the W&I division, David Alito.

I’d like to give you a Closer Look at my IRS career journey – from my first job to my current role as a senior executive in the biggest division in the IRS – to show how entry-level positions at the IRS can lead to great careers and leadership opportunities for people from all walks of life. This is a great time to consider a career at the IRS, and our experiences show that someone starting in an entry-level position can someday become an executive and even lead some of our agency’s most visible projects and biggest divisions.

I have over 30 years of service at the IRS, having started my IRS career when I was still in high school in the mid-1980s. Having held various jobs within the IRS, I can say that these entry-level positions provide gratifying work and terrific opportunities for those just entering the job market and considering a federal career. Since no prior tax experience is required, and plenty of training is available, starting with one of these positions can be the beginning of a fulfilling career at the IRS, just like it did for me.

The IRS is a great place to work for people with a commitment to public service and a strong work ethic who want to contribute to a greater good. And while you might be thinking that you need an accounting or business background or degree to work at the IRS, there are jobs here for people with many different career interests. In fact, my college degrees were in philosophy and chemistry, not something people usually associate with tax administration.

The IRS has positions for people pursuing careers not only in business, accounting and tax, but also customer service, criminal investigation, information technology, business administration, customer service, law, communications and so much more. And because we have so many lines of business and career opportunities, it’s a great place to start for someone unsure of what their career path is going to be. In our division and throughout the IRS, we’re always looking for people interested in innovation, tackling real-world challenges, and using skills acquired in high school, college or the private sector to help the IRS excel.

Climbing the Career Ladder

As I mentioned earlier, I started at the IRS while I was in high school, beginning as a GS-01 file clerk at the Atlanta campus – the lowest entry-level federal position possible at the agency. I worked weekends and part-time and continued working at the IRS through high school graduation and all throughout college. The jobs I had gave me the flexibility to work at night and on different kinds of shifts.

Over the years, I’ve been a clerk, a tax examiner, a customer service representative and analyst. I found training and work opportunities to grow my skills and get promotions. I participated in various professional development programs and applied for and advanced to front-line, mid-level and senior manager positions at the IRS, from customer service to enforcement. All the positions I’ve held over the years have given me insight into both the taxpayer and employee experiences and the opportunity to find ways to do things better. They also helped me reach the pinnacle of my career in the IRS as a member of the Senior Executive Service and become the current Commissioner of the Wage & Investment Division – one of the top positions at the IRS. I’m proof that no matter where you start in an organization, it’s possible to work your way up to the top.

And then in 2019, Congress passed the Taxpayer First Act that offered our agency a great opportunity to take a fresh look at the taxpayer experience, our employee training and how we’re structured at the IRS in order to better serve taxpayers and our nation. IRS Commissioner Chuck Rettig thought we needed to have a Taxpayer Experience Officer to lead that effort, so in January 2021, he asked me to take on that role as well, and I was honored and excited to be able to do that. Once again, my experience going back to when I was a GS-01 and working through each grade gave me insights into how we can better appreciate all the levels of contribution within the IRS in that effort. I think it’s a key part of what makes the IRS the best tax agency in the world.

How You Can Start a Career at the IRS

The IRS makes it easy to find an opportunity that suits various needs and talents. We’re looking to recruit and hire employees for a variety of positions, from entry-level to those in specialized fields and even management. In addition to the positions available now in this hiring surge, you might be surprised to learn about some of the interesting jobs in our agency that support innovation, combat crime and terrorism, help taxpayers, and ensure equality and fairness. The IRS offers competitive pay and benefits, on-the-job training, and opportunities for advancement. In many cases, individuals who join the IRS in entry level positions identify and pursue opportunities in other offices as they grow in their IRS career, staying with our agency for 20, 30, or even 40 years. For those willing to work hard, the sky is really the limit here.

Are you ready to get started? To learn about current job opportunities, the best thing to do is visit our IRS Careers page web page to learn about available jobs. You will need to visit usajobs.gov and setup an account to apply for jobs there. USA Jobs has helpful information to guide you through creating a resume and applying for positions.

Beyond the information available on our website, the IRS also hosts numerous virtual and in-person hiring events each month. At the in person direct hiring events for clerks and examiners in Austin, Kansas City and Ogden, human resources professionals will meet with applicants and review their resumes, and if they’re the right fit, they could get a job offer right on the spot – something that’s very unusual in federal government.

There are also IRS career information sessions and job fairs to provide insights about the variety of positions in our agency. In addition to events for certain lines of business, there are specific sessions for bilingual individuals, veterans, persons with disabilities, IT professionals, and Historically Black College and University graduates. There are even sessions to help applicants prepare for the application process, which could be really helpful to people new to federal employment. To stay up to date on events and open positions, bookmark our IRS Career Events page.

Looking back on my career in the IRS and the experiences I’ve had along the way, I’m certain that the IRS provides an excellent opportunity for meaningful work that contributes to a clear and vital mission. Our mission, as well as our focus on work/life balance, commitment to diversity and opportunities to grow and excel are some of the reasons that many applicants begin their careers at the IRS and a large number of employees stay here until they retire. I hope you’ll consider joining us as you start your career or decide to make a change.

Ken Corbin
IRS Wage and Investment Commissioner and Chief Taxpayer Experience Officer
Source: IRS – 2022

by Larson Accounting

30 de March de 2022

With the completion of special mailings of all Letters 6475 to recipients of the third-round of Economic Impact Payments, the Internal Revenue Service reminds people to accurately claim any remaining third-round stimulus payment on their 2021 income tax return as the 2021 Recovery Rebate Credit.

Through December 31, 2021, the IRS issued more than 175 million third-round payments totaling over $400 billion to individuals and families across the country. Most of the third-round payments were issued in the spring and early summer of 2021. The IRS continued to send plus-up payments through December if, after their 2020 tax return was processed last year, the taxpayer was eligible for additional amounts.

As required by law, the IRS is no longer issuing first-, second-, or third-round Economic Impact Payments. Instead, people who are missing a stimulus payment or got less than the full amount may be eligible to claim a Recovery Rebate Credit on their 2020 or 2021 federal tax return.

Most eligible people already received the full amount of their credit in advance and don’t need to include any information about this payment when they file their 2021 tax return. This includes the additional payments – called “Plus-Up” Payments – the IRS issued to individuals who initially received a third-round Economic Impact Payment based on information on their 2019 tax return and were later eligible for a larger amount based on information on their 2020 tax return.

Individuals may securely access their IRS Online Account to view the total amount of the third-round Economic Impact Payment issued to them. This information became available on January 15, 2022, under the Tax Records page in Online Account. For married individuals filing a joint return, each spouse will need to log into their own Online Account or review their own Letter 6475 for their portion of their joint total payment. See FAQs for Topic G: Finding the Third Economic Impact Payment Amount to Calculate the 2021 Recovery Rebate Credit, for more information.

Third-round Economic Impact Payment not received? Double-check records first

Individuals are encouraged to double-check their bank accounts – especially in early spring and summer of 2021 – to see whether they received a third-round payment in advance last year.

If an individual did not receive a third-round payment – and their IRS Online Account shows a payment amount greater than $0, or they received Notice 1444-C or Letter 6475 indicating that a payment was issued to them – they should contact the IRS as soon as possible to see if a payment trace is needed. Note that Online Account shows the most current EIP information, so if a payment was issued and returned to the IRS, the amount shown in Online Account may be less than what is shown in their Letter 6475.

Taxpayers should not request a payment trace to determine if they were eligible for a payment or to confirm the amount of payment they should have received.

Individuals do not need to wait until their trace is complete to file their 2021 tax return. When completing the Recovery Rebate Credit Worksheet or answering EIP questions in the tax software, taxpayers have two options:

Use the amount on the Letter 6475 (or EIP 3 Amount from Online Account) to calculate the RRC amount on line 30.Contact the IRS to trace the EIP amount. Once the EIP trace is completed, the IRS and the taxpayer will receive notification of the results of the EIP trace (the account it was sent to and the amount or a copy of the cashed check).
- If the trace indicates the taxpayer received the EIP amount, no further action is necessary.
- If the EIP amount was not received by the taxpayer, the IRS will adjust the RRC amount on the tax return and issue any refund.
Use the amount of EIP the taxpayer believes they received to calculate the RRC amount on line 30. If the taxpayer’s calculation does not match the IRS calculation, the processing of the tax return will be delayed, the RRC amount will be adjusted to match IRS records and the taxpayer will receive a notice that includes a telephone number to contact if they disagree with the change to the tax return. If the taxpayer contacts the IRS and disagrees with the changes made, IRS will conduct a trace of the EIP, if necessary. Once the EIP trace is completed, the IRS and the taxpayer will receive notification of the results of the EIP trace (the account it was sent to and the amount or a copy of the cashed check).
- If the trace indicates the taxpayer received the EIP amount, no further action is necessary.
- If the EIP amount was not received by the taxpayer, the IRS will adjust the RRC amount on the return and issue any refund.

Correcting a mistake after the 2021 tax return is filed; no amended return needed

Individuals who made a mistake calculating the Recovery Rebate Credit and claimed an amount on line 30 for the 2021 Recovery Rebate Credit should not file an amended return. The IRS will correct the amount of the 2021 Recovery Rebate Credit and send a notice identifying the changes made.

If a correction is needed, there may be a delay in processing the return. If the taxpayer agrees with the changes made by the IRS, no response or action is required to indicate they agree with the changes. If the taxpayer disagrees, they can call the toll-free number listed on the top right corner of their notice.

Amended return may be needed for those eligible to claim the credit and IRS records show no Economic Impact Payment was issued

For eligible individuals who didn’t claim a Recovery Rebate Credit on their 2021 tax return (line 30 is blank or $0) and IRS records do not show the issuance of an Economic Impact Payment, they will need to file a Form 1040-X, Amended U.S. Individual Income Tax Return, to claim the remaining amount of stimulus money for which they are eligible. This includes individuals who may not have received the full amount of their third-round Economic Impact Payment because their circumstances in 2021 were different than they were in 2020.

Individuals can use the Interactive Tax Assistant, Should I File an Amended Return?, to help determine if they should amend their original tax return.

Taxpayers who need to file an amended return to claim the 2021 Recovery Rebate Credit – even if they don’t usually file taxes – should use the worksheet in the Form 1040-X to determine the amount of the credit. Enter the amount on the Refundable Credits section of the Form 1040-X and include “Recovery Rebate Credit” in the Explanation of Changes section.

Individuals who filed their 2021 return electronically and need to file an amended return, may be able to file Form 1040-X electronically.

If a taxpayer did not file their 2021 return electronically, they’ll need to submit a paper version of the Form 1040-X and should follow the instructions for preparing and mailing the paper form.

Source: IRS-2022-72, March 30, 2022

by Larson Accounting

29 de March de 2022

The tax filing deadline less than a month away. The IRS reminds all taxpayers but especially those who haven’t yet filed, to choose a tax return preparer wisely. Taxpayers are responsible for all the information on their income tax return regardless of who prepares the return.

Here are some tips to remember when selecting a tax return preparer:
Check the preparer’s qualifications. People can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with specific qualifications. The directory is a searchable and sortable listing of preparers.

Check the preparer’s history. Taxpayers can ask the local Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. Here’s how to check on specific types of preparers:

Enrolled Agents: Go to the verify enrolled agent status page on IRS.gov.
Certified Public Accountants: Check with the State Board of Accountancy.
Attorneys: Check with the State Bar Association.
Ask about service fees. People should avoid tax return preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition.

Ask to e-file. To avoid pandemic related paper delays, taxpayers should ask their preparer to file electronically and choose direct deposit.

Make sure the preparer is available. Taxpayers may want to contact their tax return preparer after this year’s April 18 due date.

Provide records and receipts. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure things like the total income, tax deductions and credits.

Never sign a blank return. Taxpayers should not use a tax return preparer who asks them to sign a blank tax form.

Review before signing. Before signing a tax return, the taxpayer should review it. They should ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it.

Review details about any refund. Taxpayers should confirm the routing and bank account number on their completed return if they’re requesting direct deposit.

Ensure the preparer signs the return and includes their PTIN. All paid tax return preparers must have a Preparer Tax Identification number. By law, paid preparers must sign returns and include their PTIN on the return they file. The taxpayer’s copy of the return is not required to have the PTIN on it.

Report abusive tax preparers to the IRS. Most tax return preparers are honest and provide great service to their clients. However, some preparers are dishonest. People can report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer PDF.

Source: IRS Tax Tip 2022-48, March 29, 2022