The Scoop. Agenda. IRS Changes It s Tune 7/1/2015. Kristy Maitre Tax Specialist Center for Agricultural Law and Taxation July 1, 2015

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1 The Scoop Kristy Maitre Tax Specialist Center for Agricultural Law and Taxation July 1, 2015 Agenda Refund Problem POA s New Letter to Practitioners Address Changes Electronic Tax Administration Advisory Committee Circular 230 Stakeholder Liaison Contacts Form 1095 B and C/ Who files what? Grassley Bill IRS Changes It s Tune Care Act/Individuals and Families/ACA Individual Shared Responsibility Provision Minimum Essential Coverage 1

2 Proof of Insurance Taxpayers do not need to attach documentation or proof of insurance coverage (minimum essential coverage) to your tax return Although nothing in the IRS rules or regulations require you to provide proof of coverage at the time you file, if you have documents that verify your minimum essential coverage, you should show them to your tax preparer The IRS will follow its normal compliance approach to filed tax returns, and may ask you to substantiate the information on your tax return, therefore you should keep these documents with your tax records Care Act/Individuals and Families/Gathering Your Health Coverage Documentation for the Tax Filing Season Typical Refund Problem Situation is this : Couple living together not married, with one bank account in only one individual s name One party filed an extension and then filed the return in late May The refund was to be deposited into the other parties bank account Is there a way to cancel that account and have the refund redirected? Answer If the taxpayer made an election on the form and provided the routing number and bank account for the refund to be deposited, there are checks IRS will perform before the deposit occurs The refund should only be deposited directly into accounts that are in the taxpayers own name; your spouse s name or both if it s a joint account No more than three electronic refunds can be deposited into a single financial account or pre paid debit card Taxpayers who exceed the limit will receive an IRS notice and a paper refund They can direct the refund to any of their checking or savings accounts, but you cannot direct the refund to someone else s account, except for your spouse s account, if this is a joint refund Be very careful entering the account and routing numbers IRS will handle account or routing number errors on split refunds the same as for regular direct deposits and mistakes can result in several different scenarios 2

3 Examples Taxpayer omits a digit in the account or routing number of an account and the number does not pass IRS validation check, IRS will send you a paper check for the entire refund The taxpayer incorrectly enters an account or routing number and the designated financial institution rejects and returns the deposit to IRS, IRS will issue a paper check for that portion of your refund The taxpayer incorrectly enters an account or routing number that belongs to someone else and the designated financial institution accepts the deposit, the taxpayer must work directly with the respective financial institution to recover the funds Providers must advise taxpayers that they cannot rescind a Direct Deposit election and they cannot make changes to routing transit numbers of financial institutions or to their account numbers after the IRS has accepted the return Providers must not alter the Direct Deposit information in the electronic record after taxpayers have signed the tax return IRS assumes no responsibility for taxpayer error. Please, verify your account and routing numbers with your financial institution and double check the accuracy of the numbers you enter on your return. POA Does the IRS not allow electronic signatures on the POA? IRS will allow faxed or original signatures on a Power of Attorney. Electronic signatures are not allowed at this time. New Letters to Tax Preparers IRS is piloting a new capability for certain PTIN holders Enrolled agents who have filed at least fifty Form 1040 series returns this year (that have completed processing) can now view information in their PTIN account about Returns Filed Per PTIN IRS anticipates providing the information to more or all PTIN holders in the future, but are rolling it out slowly to control the impact to our PTIN helpline 3

4 Screen Shot Letter Dual Notice of Address Change As of January 2015, the IRS is legally required to issue both Notices CP148A and CP148B, confirmation of address change, to employers at the previous and new address on record The IRS is sending a high volume of notices due to simple mistakes when preparing employment tax returns, such as interchanging Street for St. or Ave. instead of Avenue 4

5 CP 148A Notice When IRS changes a business address in their records, they send a CP 148A to the new address. They issued a notice of confirmation of an address change to both the employer's former and new address If the address change is correct, you don t need to do anything If the address change is not correct, please return the notice to IRS with a completed Form 8822 B, Change of Address or Responsible Party Business The taxpayer may want to Keep the notice for your permanent records. Submit a Form 8822 B when they need to update the address CP148B Notice When IRS changes a business address in their records, they send a CP 148B to the old address They issue a notice of confirmation of an address change to both the employer's former and new address What you need to do If the address change is correct, you don t need to do anything. If the address change is not correct, please return the notice to us with a completed Form 8822 B, Change of Address or Responsible Party Business. They may want to Keep the notice for their permanent records Submit a Form 8822 B when they need to update your address Electronic Tax Administration Advisory Committee Annual Report to Congress IRS HAS INCREASED E FILE RATES ON ALL MAJOR TAX RETURNS AND HAS REACHED THE 80% E FILE GOAL ON ALMOST ALL MAJOR RETURN TYPES The IRS continues to look to improve e signature and authentication to fight tax identity theft, and recently formed a Security Summit tasked with addressing these challenges The IRS has started developing strategies and a tentative five year roadmap to improve the taxpayer and tax professional experience through one comprehensive online account The IRS has worked with the Department of Health and Human Services to allow taxpayers who received advance payments of the Premium Tax Credit under the Patient Protection and Affordable Care Act (ACA) to view the payment amounts before filing Legislative proposals for the IRS to have correctable error authority could enhance the IRS s ability to proactively identify and correct ACA reporting errors on taxpayer returns FUTURE CHALLENGES REQUIRE DIGITAL TRANSFORMATION AT THE IRS 5

6 Electronic Tax Administration Advisory Committee Annual Report to Congress RECOMMENDATIONS IN FOUR KEY AREAS Key Outcome 1: Accelerated digital first taxpayer service strategy that: Meets growing taxpayer demand for digital interaction, Is supported by key stakeholders, and Is prioritized to deliver measurable and cost effective long term improvements to taxpayer service and compliance Key Outcome 2: Increased taxpayer preference for comprehensive and easyto use IRS digital service tools that will reduce burden, increase compliance and improve taxpayer service Key Outcome 3: The IRS digital first strategy advanced across the industry, through tax software providers and tax professionals, to decrease IRS and taxpayer burden and increase overall compliance Key Outcome 4: Improved website experience that provides relevant and accurate information in a user friendly format to support a digital first taxpayer service strategy E File Growth E File Projected

7 1099 s Circular 230 The most important Circular 230 provisions for tax professionals to review are either new or are areas where professionals are most likely to make errors including: Diligence as to Accuracy (10.22) Due Diligence Standards for Signing and Advising Returns/Docs (10.34) Negotiation of Taxpayer Checks (10.31) Giving False or Misleading Info (10.51(a)(4)) Willfully Assisting, Counseling or Encouraging a Client to Evade Taxes or Payment Thereof (10.51(a)(7)) Conflicting Interests (10.29) Due Diligence for Written Advice (10.37) Competence (10.35) Expedited Suspension (10.82) Stakeholder Liaison Local Contacts 7

8 1095 B Heads Up 1095 B Heads Up Can a Timely Filed Return Claim be Supplemented/Amended Based on an Overpayment Credit Remaining in the Taxpayer s Account A timely filed protective refund claim may be supplemented/amended up until the final action is taken on the claim Once a claim is allowed in full or disallowed there is no longer a claim in existence to amend or supplement But, once an election is made to pay the refund forward to for example estimated tax in that case the refund is barred until the next years return is filed CCA

9 ACA and Collective Bargaining When the employer mandate becomes effective, employers will have what amounts to a duty to see to it that their full time employees are offered employer subsidized participation in a health plan that satisfies the statutory description, and that the offer is made at the proper time, and yet those employers participating in a multiemployer health plan may well have no direct control over the plan and no timely access to vital information ACA and Collective Bargaining ACA Whistleblower provision amends the Fair Labor Standards Act to protect employees from retaliation for : Reporting alleged violations of Title I of the ACA, or Receiving a health insurance tax credit or federal subsidy to purchase health insurance on an Exchange ACA Forms Who Sends What? 9

10 Grassley Bill Introduced S th Congress ( ) A bill to provide an exception from certain group health plan requirements to allow small businesses to use pre tax dollars to assist employees in the purchase of policies in the individual health Scoop Dates for Post Filing Season July 15, 2015 August 5, 2015 September 23, 2015 October 21, 2015 July Webinars The Affordable Care Act July 1, Noon to 2:00 (2 hours of CPE) A review of the ACA provisions and changes that have occurred with the law since enactment will be discussed. We will review the basics aspects you faced during the 2015 filing season and provide additional clarification on issues that were problematic. In addition, we will review some of the more difficult reconciliation issues as it relates to the Premium Tax Credit. Foreign Account Tax Compliance Act (FATCA) July 2, Noon to 1:00 The Foreign Account Tax Compliance Act (FATCA) is a United States federal law that requires United States persons, including individuals who live outside the United States, to report their financial accounts held outside of the United States, and requires foreign financial institutions to report to the Internal Revenue Service (IRS) about their U.S. clients. We will provide an overview of the law and filing requirements. Preparing for a Gambling Audit July 6, Noon to 1:00 Your client gambles, whether it slots or poker we will review the recent IRS issues as they relate to auditing your client who has gaming income. What advice should you give a client with this type of income and what records will IRS accept during the audit process will be discussed. Basis of a Partnership July 7, Noon to 1:00 Discussion will include filing requirements, hiring employees, how to make estimated tax payments and how the income will show up on the personal return. A general overview of the partnership and some of the problematic issues related to filing for this business entity. The Partnership Form K 1 July 8, Noon to 1:00 An overview of Form 1065 K 1 preparation and the resulting Form 1040 income issues will be discussed. Bartering and Trading Income July 13, Noon to 1:00 A question IRS auditor always ask, Dow you have any bartering or trading income? How this income is reported and the adjustments needed to be made on the tax return will be discussed. 10

11 July Webinars Correspondence Audits July 14, Noon 1:00 IRS s chief audit stream is correspondence audit. They do more of them than face to face and other types of audits combined. Responding to the audit request and providing logical and concise information to resolve the issue is an important part of the audit process. What are the do s and don ts in providing the information and how best to handle the audit will be discussed. FinCEN July 10, Noon to 1:00 FinCEN s mission is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities. We will review the application process to file a FinCen Form 114 and the BSA E Filing overview. If your client has a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require them to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR). Report of Foreign Bank and Financial Accounts (FBAR) July 21, Noon to 1:00 United States persons are required to file an FBAR if: (1)The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and (2) The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported. This session will review the FBAR filing requirements and provide you with information when both the FBAR and the Form 114 both need to be filed, as well as an explanation of the differences between to the two requirements. Preparing for an IRS Audit July 22, Noon to 1:00 Your client has been informed that they will be subject to and IRS audit. Tips on how to preparer, what information you should gather, pre audit analysis and other issues will be discussed. Issues Related to Estates, Procedures and Developments in Estate Tax Law July 23, Noon to 1:00 What s new with Estates tax law? An overview of some of the recent estate issues and a review of typical estate tax issues that you face with your clients. CALT Website Tour of the CALT Website 11

12 CALT Staff Roger A. McEowen CALT Director and is a Leonard Dolezal Professor in Agricultural Law mceowen@iastate.edu Phone: (515) Fax: (515) Kristine A. Tidgren Staff Attorney E mail: ktidgren@iastate.edu Phone: (515) Fax: (515) CALT Staff Kristy S. Maitre Tax Specialist E mail: ksmaitre@iastate.edu Phone: (515) Fax: (515) Tiffany Kayser Program Administrator tlkayser@iastate.edu Phone: (515) Fax: (515)