Wisconsin Department of Revenue. Tax Updates

Transcription

1 Wisconsin Department of Revenue Tax Updates Wendy Miller Wisconsin Department of Revenue December

2 Agenda Processing and e-file Update Common Pitfalls in Filing Returns Refund Fraud and Identity Theft Other DOR Initiatives DOR Resources 2

3 Law Changes Medical care insurance subtraction increased from 25% to 45% of amount paid by persons who are employees and employer pays portion of insurance (100% for 2013 returns) Child and dependent care expense subtraction up to $1,500 for one child and $3,000 for two 3

4 Law Changes Tuition Expense Subtraction $6,543 for 2012 ($6,185 in 2011) Donation Check-Offs New check-off for Special Olympics No more symbols for check-offs Cancer check-offs combined 4

5 New Credit Schedules for 2012 EM Electronic Medical Records VE Veteran Employment Credit BC Biodiesel Fuel Production Credit 5

6 2012 Homestead Credit No indexing, similar to 2011 Maximum income - $24,680 Maximum Property and Rent Constituting Property Taxes $1,460 Maximum Credit - $1,168 6

7 2012 Earned Income Credit Number of Qualifying Children % of Federal EITC Allowed for Wisconsin (Same as 2011) Maximum Credit for Wisconsin 0 None None 1 4% $ % $ % $2,003 7

8 E-file Rates (2011) Individual 82% Sales/Use 89% Withholding (WT-7) 87% Pass-Through Withholding 79% Corporation 61% Partnership 86% Composite (1CNS & 1CNP) 60% 8

9 New Reject Codes in 2012 Missing IP address Incomplete Schedule EIC-A 9

10 Wage Statements and Information Returns Employers don t have to submit W-2s to WI if no WI withholding and submitted to IRS Employers with 50 or more employees must e-file W-2s to WI 10

11 Wage Statements and Information Returns Request Form 1099-G electronically at 11

12 My Tax Account (MTA) Updates Additional access for third party preparers Submit name and address change Request to close or reactivate accounts View collection information Request a payment plan 12

13 My Tax Account (MTA) Updates Additional tax types Form PW-1 Pass-Through Withholding Form 1CNP and 1CNS Composite Returns for Nonresident Partners and S- Corp Shareholders Liquor, Beer, Wine, and Cider Returns Revised payment page 13

14 My Tax Account (MTA) Updates More taxpayers are using MTA for filing appeals Coming soon: Electronic power of attorney (POA) form Delinquent tax information access 14

15 Common Pitfalls in Filing Returns Check Estimated Tax Payment Inquiry The most common return error is using incorrect estimated tax payments Use DOR inquiry application to verify estimated tax payment and carryover from prior year. Look for "Online Services" link at Electronic returns rejected if estimated payments on return don t match DOR records 15

16 W-RA Issues Common Pitfalls W-RA is for attachments to electronically filed returns Send the W-RA and atttachments within 48 hours of filing the return Don't file a W-RA unless you are filing electronically Don't include a copy of the return with the W-RA You may submit the W-RA and required attachments electronically. Look for "Online Services" link at 16

17 Common Pitfalls Many Wisconsin credits are taxable income Credit amount must be reported as an addition modification in the computation of Wisconsin taxable income Includes adjustments flowing through from K-1s While most are considered taxable income, the ones most frequently claimed are not considered taxable income Credits that are NOT taxable income are on the next slide: 17

18 Credits That Are NOT Considered Taxable Income Angel Investment Credit Armed Forces Member Credit Early Stage Seed Investment Credit* Veterans and Surviving Spouses Tax Credit Historic Rehabilitation Credits* Earned Income Credit Homestead Credit Itemized Deduction Credit Manufacturer's Sales Tax Credit Carryforward Married Couple Credit Net Income Tax Paid to Another State School Property Tax Credit *Must reduce basis of asset the credit was claimed for (basis reduction equal to amount of credit) 18

19 Other Common Pitfalls Filing status mismatch e.g. one spouse files MFJ or MFS and other spouse files as single Credit for taxes paid to other states Remember to attach copy of tax return from the other state (submit with a W-RA if filing electronically) See Publication 125, Credit for Taxes paid to Other States 19

20 Voluntary Disclosure Policy 12% interest for Nonfilers Look back period remains at four years, plus current No agreement needed for amended returns More information at: (Tax Professionals>Tax Preparers>Voluntary Disclosure) 20

21 Refund Fraud and Identity Theft Engaging third party service provider of data sources and analytics Increased staffing and cross-training to review more refund claims while ensuring "good" refunds are as timely as possible 21

22 Refund Fraud and Identity Theft Building predictive modeling capabilities to detect anomalies and identify theft Collaborating with other state agencies to share information Leveraging TIN information from IRS which was recently made available for tax compliance purposes Outreach to practitioner community and general public to report suspected fraud 22

23 Report Suspected Fraud Complete Form P-626, Wisconsin Tax Information Referral Form DOR does not offer rewards for reporting this information Not required to identify yourself although helpful if additional information needed Your identity can be kept confidential Privacy and disclosure laws prohibit the DOR from sharing information on any action taken based on information provided You may also call

24 Identity Theft If taxpayer feels identity has been stolen, direct them to contact the Wisconsin Department of Agriculture, Trade, and Consumer Protection (DATCP) Toll-free (800) Local (608) Fax (608) Taxpayer should complete 3 items: DATCP complaint form Police report Notarized, sworn statement 24

25 Identity Theft For ID theft related to Wisconsin tax returns, send DATCP complaint form, police report, and notarized sworn statement to: Wisconsin Department of Revenue Central Audit Unit L, Mail Stop PO Box 8906 Madison WI FAX (608)

26 Other DOR Initiatives Customer Service in Delinquent Tax Collections Average hold times reduced to less than one minute for the past 5 months Electronic payment plan request and wage attachment reductions Additional self-help 26

27 Other DOR Initiatives Mail Scanning and Automatic Assignment Automated "warning letters" requesting taxpayers to file amended returns if they had federal data matching/audit adjustments Closing Certificate Automation 27

28 Pass-Through Withholding Simplification Initiative We have an annual approval process for exemption for pass-through entity withholding For calendar year entities, nonresident members requesting exemption must file Form PW-2 by January 31 or February 28, depending on entity type Developed ability to pre-approve some nonresidents so they no longer have to file PW-2 each year 28

29 Pass-Through Withholding Simplification Initiative Sending 580 blanket approval letters to nonresidents this week Letter advises the nonresident to provide the letter to the pass-through entity No response to DOR is necessary Seeking input from practitioner community on whether any other pass-through entity issues (forms, etc.) can be simplified 29

30 List Servs DOR Resources Electronic Mailing Lists Sales & Use Tax Tax Professionals Wisconsin Economic Outlook Withholding Tax Subscribe at: 30

31 DOR Resources Practitioner Assistance Phone: **Do Not Share This Information** 31

32 DOR Resources References DOR Website Wisconsin Tax Bulletins Withholding Tax Update Form 1 Instructions Schedule I Instructions 32

33 Speaker Information Wendy Miller Director, Audit Bureau Phone: 608/