IRS Hot Topics 1/5/2016. Stakeholder Liaison Field. Overview of Topics. ACA - Reporting Coverage

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1 IRS Hot Topics Stakeholder Liaison Field Overview of Topics ACA provisions Information return penalties Changes in due dates Identity theft victim assistance Web resources ACA - Reporting Coverage Check box and leave entry space blank if everyone on the return had coverage for the full year 1

2 Information Statements Marketplace Form 1095-A, Health Insurance Marketplace Statement Insurers Form 1095-B, Health Coverage Large employers Form 1095-C, Employer- Provided Health Insurance Coverage and Offer 2

3 Return Preparer Interview Best Practices Use Form 1095-A, B or C to Verify coverage months and Who is covered Determine eligibility for exemption Marketplace Exemption Certificate Number Income below return filing threshold or IRS coverage exemptions Common Errors Eligible for coverage exemption but did not claim Income below filing threshold Not lawfully present Coverage gaps Miscalculated Shared Responsibility Payment Shared Responsibility Payment on dependent returns 3

4 2015: What You Need to Know Forms 1095-A, B and C Apply for Marketplace exemptions early ISRP amounts increase 2016 Marketplace enrollment Nov 1, 2015 to January 31, 2016 Special enrollment periods Increased Information Return Penalties Revised penalty structure for information returns Penalties imposed for: Failure to file information returns Failure to furnish information returns Filing incomplete information returns Filing returns with incorrect information Effective for returns and statements required to be filed/furnished after 12/31/2015 IRC 6721 & 6722 Increased Penalties The penalty for failure to file correct information returns and provide payee statements is $250 (total not to exceed $3 million) If corrected in 30 days penalty is $50 (total not to exceed $500,000) If corrected after 30 days but before August 1, penalty is $100 (total not to exceed $1.5 million) IRC

5 Form 1065 and 1120-S Due Dates Form 1065 and Form 1120-S Due Dates: Fifteenth day of third month following close of tax year (March 15 th for calendar year filers) Beginning tax years after (2016 tax years) IRC 6072(b) Form 1120 Due Date Form 1120 Due Dates: Fifteenth day of fourth month following close of tax year (April 15 th for calendar year filers) Beginning tax years after (2016 tax years) Special rule for years ending on June 30 th no change until after IRC 6072(b) Form 114 (FBAR) Due Date The due date of FinCEN Report 114 (relating to Report of Foreign Bank and Financial Accounts) shall be April 15 There is a maximum extension for a 6-month period ending on October 15 For taxable years beginning after December 31, 2015 PL Section 2006(b)(11) 5

6 Refundable Child Tax Credit / Foreign Earned Income Exclusion The Child Tax Credit is not refundable for taxpayers electing to exclude foreign earned income from gross income This law applies to taxable years beginning after December 31, 2014 IRC 24(d)(5) Six Year Statute of Limitations: Basis Six year statute of limitations for 25 percent omissions of income on tax assessments expanded to include: Understatement of gross income by reason of an overstatement of unrecovered cost or other basis is an omission from gross income; Tax may be assessed at any time within six years after the return was filed Effective for returns filed after 7/31/15 IRC 6501(e)(1) Form 1098 Reporting Requirements Information to be included on Form 1098: Amount of outstanding principal on the mortgage as of the beginning of such calendar year Date of the origination of the mortgage Address (or other description in the case of property without an address) of the property which secures the mortgage For statements required to be furnished, after December 31, 2016 IRC 6050H(b)(2) 6

7 Identity Protection Services Post-data breach protection services excluded from recipient s gross income Does not include cash in lieu of identity protection services Proceeds received under an identity theft insurance policy are includable income Identity protection services for reasons other than a data breach are includable in income IRS Announcement Tax-Related Identity Theft Three Warning Signs Taxpayer learns of a duplicate SSN either from an IRS notice or e-file return rejects IRS notice about additional tax owed, refund offset or collection action when no return filed Taxpayer receives information from an employer unknown to them Tax-Related Identity Theft Taxpayer Protection Program generates: Letter 4883C for prior-year suspicious returns Letter 5071C for current-year suspicious returns Most common correspondence Taxpayer self-verifies at Idverify.IRS.gov Letter 5447C for suspicious returns with foreign addresses 7

8 Steps for Victims of Tax-Related Identity Theft Complete and file IRS Form Respond to any IRS letters or notices Continue to pay taxes, even if by paper Place a fraud alert on credit accounts by contacting one of the three main credit bureaus Close any accounts opened by criminals File a complaint with the FTC Centralizing Victim Assistance Most victim assistance work centralized under one director New Identity Theft Victim Assistance organization created Policy and operations under one leadership team More consistent treatment for taxpayers Reviewing IDTVA process for improvements About the Identity Protection PIN (IP PIN) Six-digit number that adds an additional layer of protection along with the SSN or ITIN Victims notified once tax-related IDT case resolved Taxpayer will receive a CP01A notice containing a new IP PIN each year Some taxpayers have the option of getting an IP PIN from IRS.gov Enter numbers for all IP PIN holders 8

9 W-2 Verification Code Pilot Taxpayers enter verification codes on their e- filed federal tax returns When processing returns, IRS recalculates codes Matching codes = genuine W-2s Verification codes not included in W-2 data submitted to SSA, states or local departments of revenue Won t affect state or local tax returns Recap Victim Assistance Changes We ve centralized most of identity theft victim assistance work We re reviewing victim assistance procedures We re continuing to test the IP PIN in three locations, and We re strengthening verification procedures for Get Transcript and IP PIN Resources IRS.gov/for-Tax-Pros IRS.gov/DraftForms IRS.gov/ACA HealthCare.gov IRS.gov/Form8965 (for info and links to Form 8965 and its instructions) IRS.gov/Individuals-Identity-Protection 9

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