Under recently enacted federal law, taxpayers who file for the earned income tax credit (EITC) or the Additional Child Tax Credit (ACTC) will have their refunds delayed until at least February 15th of year in which they file. Traditionally, EITC filers would file their returns immediately at the beginning of the year. For many taxpayers the refunds (including the EITC) represent a large portion of their income in many cases thousands of dollars. The immediate filing would result in a rapid influx of income at the beginning of the year. However, this is an area subject to fraud and abuse and the IRS was concerned that many of the refunds were not legitimate. To give them more time to analyze returns and minimize abuse, the quick turnaround of EITC returns is now gone and the IRS will have additional time to make sure the taxpayer is deserving of the credit. The IRS must now delay the entire refund, not just that portion regarding the EITC. Tax preparers should advise EITC clients that the quick turnaround and influx of cash from a large refund will not occur as rapidly as in the past.
Under The Protecting Americans from Tax Hikes (PATH) Act, employers must now file copies of Form W-2, to the Social Security Administration, by Jan. 31. The new Jan. 31 filing deadline also applies to certain Forms 1099-MISC reporting non-employee compensation such as payments to independent contractors. In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit their copies of these forms. In addition, there are changes in requesting an extension to file the Form W-2. Only one 30-day extension to file Form W-2 is available and this extension is not automatic. If an extension is necessary, a Form 8809 Application for Extension of Time to File Information Returns must be completed as soon as you know an extension is necessary, but by January 31. Please carefully review the instructions for Form 8809, for more information. “As tax season approaches, the IRS wants to be sure employers, especially smaller businesses, are aware of these new deadlines,” said IRS Commissioner John Koskinen. “We are working with the payroll community and other partners to share this information widely.” The new accelerated deadline will help the IRS improve its efforts to spot errors on returns filed by taxpayers. Having these W-2s and 1099s earlier will make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them. In many instances, this will enable the IRS to release tax refunds more quickly than in the past. The Jan. 31 deadline has long applied to employers furnishing copies of these forms to their employees and that date remains unchanged.
Employers must be vigilant and meet these filing deadlines as the penalties for failure to do so are very steep and the IRS is unforgiving in this area. If your business has employees then make sure that your accounting and bookkeeping staff is aware of the new changes so that you avoid penalties for failing to comply with the new law.
The Internal Revenue Service recently issued a warning to taxpayers and tax professionals that scam artists are now sending fake tax bills regarding the Affordable Care Act (ACA). Taxpayers have reported to the IRS that scammers are sending a fake version of a CP2000 notice for tax year 2015. The Treasury Inspector General for Tax Administration is now aware of the fake tax bills scam and issued advice to the public. The matter is under continuing investigation. This comes after widespread arrests of phone scammers around the world. New scams pop up all the time and the public must be vigilant about sending money or providing confidential information to someone on the phone. Everyone is a potential victim. If you are unsure whether you owe money, or if the letter you receive just does not look right, then call the IRS at 1-800 829-1040. A legitimate revenue officer will help. In the meantime, the IRS issues the advice below. For more information go to https://www.irs.gov/uac/beware-of-fake-irs-tax-bill-notices.
This scam may arrive by email, as an attachment, or by mail. It has many signs of being a fake:
The CP2000 notices appear to be issued from an Austin, Texas, address;
The letter says the issue is related to the Affordable Care Act and requests information regarding 2014 coverage;
The payment voucher lists the letter number as 105C;
Requests checks made out to I.R.S. and sent to the “Austin Processing Center” at a post office box.
Authorities have announced the arrest of IRS phone scammers. In the past week over a hundred scammers were arrested by authorities around the world for pretending to be IRS agents collecting individual tax liabilities. It turns out the liabilities were fabricated and the scam artists were simply calling everyone in the phone book. While the scam was well known within the tax world, the general population was unaware of it and lost hundreds of millions of dollars. After years of successful operations, the authorities finally made wide scale arrests and tried to shut this scam down. While this is a step in the right direction, there are many more copy cats out there still making the same calls. Anyone with a telephone is a potential victim and should be aware of the scam tactics as well as the legitimate tactics that the IRS uses to contact and collect tax debts. The IRS has well established procedures for collecting debts and they do not involve calling and demanding immediate payment at the threat of impending arrests. The agents do not use scare tactics and they always provide their identification, telephone number and badge number. Finally, if you owe the IRS or if you have not filed in many years, you will receive correspondence with a telephone number to call. If you are unsure whether you owe money or not simply call the IRS at 1-800-829-1040. You will be on hold for awhile, but you will eventually speak to a legitimate revenue officer who can help. The scammers know just enough to sound very threatening and intimidating. If you are unsure whether you owe money or whether you should send them money, simply hang up and call the number above. Do not become a victim to this horrible scam!
