Certain Taxpayers May Now File Their Employment Taxes Annually

File Just One, Consider It Done!

To reduce burden on small employers, the Internal Revenue Service (IRS) has simplified the rules for filing employment tax returns to report social security, Medicare, and withheld federal income taxes.
If you have been filing Form 941, Employer's QUARTERLY Federal Tax Return, and believe your employment taxes for the calendar year will be $1,000 or less and would like to file Form 944, Employers ANNUAL Federal Tax Return, instead of Form 941, you must contact the IRS to request to file Form 944 rather than Form 941. You may make the request by calling the IRS at 1-800-829-4933 by April 1 of the current year, or by sending a written request, postmarked by March 15 of the current year, to:
Department of Treasury, Internal Revenue Service,
Ogden, UT 84201-0038
or
Department of Treasury, Internal Revenue Service,
Cincinnati, OH 45999-0038.
Select the appropriate addresses above based on the state you are in. See "Without a payment" under the "Where Should You File" section of the Instructions for Form 944.

If you do not receive written notice from the IRS to file Form 944, you must file Forms 941 for the current calendar year.

What if you want to file Forms 941 instead of the Form 944?

You must file Form 944 if the IRS has notified you to do so, unless you contact the IRS to request, and receive written notice, to file quarterly Form 941 instead. This is true even if your employment taxes for the year will be over $1,000.  If you receive notice to file Form 944, you do not have the option to file quarterly Form 941, unless you follow the procedures to opt out of the Form 944 program. If you are required to file Form 944 but file a Form 941, you will be notified that the Form 941 you submitted will not be processed and advised that you must file a Form 944 unless you follow the procedures to opt out of the Form 944 program. Additionally, you must deposit employment taxes using the form number that the IRS has notified you to file, and using the correct deposit rules based on your tax liabilities as discussed below.

To request to file quarterly Forms 941 to report your social security, Medicare, and withheld federal income taxes for the current calendar you may make the request by calling the IRS by April 1 of the current year, or by sending a written request, postmarked by March 15 of the current year using the same contact information as above.

The IRS will send you a written notice that your filing requirement has been changed. If you do not receive this notice, you must file Form 944 for the current calendar year. See Rev. Proc. 2009-51, 2009-45 I.R.B. 625, for additional information.  Read more

IRS Has Video Help For Filing 2014 Returns

IRS Offers Videos to Help Taxpayers Preparing to File in 2014

WASHINGTON — The Internal Revenue Service is offering taxpayers a number of instructional YouTube videos to help prepare their taxes for the upcoming filing season, which begins on Jan. 31.

Several options are available to help taxpayers prepare for the 2014 tax season and get their refunds as easily as possible. Many software companies are expected to begin accepting tax returns in January and hold those returns until the IRS systems open on Jan. 31. This includes the Free File partners that offer access to their software for free at irs.gov/Free File. The IRS will not process any tax returns before Jan. 31, so there is no advantage to filing on paper before the opening date. Taxpayers will receive their tax refunds much faster by using e-file or Free File with the direct deposit option.

In addition, the IRS has short and informative YouTube videos on a number of tax-related topics in English, Spanish and American Sign Language (ASL). The channels have received nearly 6.5 million views:

• IRS Videos — http://www.youtube.com/irsvideos
• ASL Videos — http://www.youtube.com/IRSvideosASL
• Multilingual Videos —http://www.youtube.com/IRSvideosMultilingua

Specific videos that taxpayers may view to help them get ready over the coming weeks include:

• Do-It-Yourself Free Tax Preparation ─ Helps taxpayers find free help from certified volunteers to electronically file tax returns. Taxpayers interested in helping their own communities can also watch a video to learn aboutbecoming involved in the Volunteer Income Tax Assistance or Tax Counseling for the Elderly programs.
• Do I Have to File a Tax Return? ─ Learn about the requirements for filing a tax return, including income limits and age, and why taxpayers may want to file even if they don't have to.
• How to Get 1040 Forms ─  Provides tips on the quickest way to get the various 1040 forms on IRS.gov.
• Tax Scams ─  Offers some tips on how to protect personal information and avoid becoming a tax scam victim.
• Record-keeping ─  Learn which financial and tax files to keep and how long to keep them.
• Changed Your Name After Marriage or Divorce? ─  Find out what you need to do if you have changed your name before you file your tax return.
• Choosing a Tax Preparer ─ Hear some useful tips for choosing a reputable tax preparer.

The IRS uses social media tools and platforms to share the latest information on tax changes, initiatives, products and services. These social media platforms include the IRS2Go phone application, YouTube, Tumblr, Twitter and Facebook. To protect taxpayer privacy, the IRS only uses social media tools to share public information, not to answer personal tax or account questions. It advises taxpayers to never post confidential information, like a Social Security number, on social media sites. A listing is available on IRS.gov.

IRS Announces 2014 Standard Mileage Rates for Business, Medical and Moving

2014 Standard Mileage Rates for Business, Medical and Moving Announced

WASHINGTON — The Internal Revenue Service today issued the 2014 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 56 cents per mile for business miles driven
• 23.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The business, medical, and moving expense rates decrease one-half cent from the 2013 rates.  The charitable rate is based on statute.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.  In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.  Notice 2013-80 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

Affordable Care Act Timeline; Provided by TaxACT

Q and A On Affordable Care Act 2014 Premium Tax Credit and Penalties

Can provisions of the Affordable Care Act help you pay for health insurance coverage?

Yes! Starting January 1, 2014, you are generally required to have adequate health insurance or pay a penalty.

The good news is that if your income is within certain limits, you may qualify for an advanced premium tax credit to help pay for that coverage. This credit is paid directly to your insurance company as a subsidy.

How do I know if I qualify for a premium tax credit (subsidy)?

You may be able to get this tax credit if your employer doesn’t offer health insurance, or if they do, it covers less than 60% of covered benefits, or the premiums would cost you more than 9.5% of your annual household income.

To qualify, you must purchase insurance coverage through your state’s “marketplace” – the website for insurance.

Your income must not be too low or too high. You cannot get the credit if you qualify for government programs like Medicare and Medicaid. You are only eligible for the credit if your household income is above between 100% and 400% of the federal poverty level.

To see if you may qualify for the credit, use TaxACT’s Health Care Tax Credit Calculator.

How do I claim the credit?

You start by applying for insurance through your state’s health insurance marketplaces, also known as an exchange.

You must enroll before March 31, 2014, to receive health insurance through the exchange.
When you apply through an exchange, you’ll answer questions to determine whether you qualify for the credit.

What happens if my income is higher or lower than I expected?

Most of us can’t predict exactly how much we’ll make in a year. Make the best estimate you can, and when you file your 2014 income tax return, the amount is reconciled with the tax credit you should receive based on your actual income for the year.

If you incorrectly estimate your income, you may receive a bigger or smaller tax credit than you were entitled to. If you were entitled to a larger credit, you will get that money back. If you qualified for a smaller or no credit, you may have to pay back some or all of the credit.

If you don’t like the possibility of having to pay back money at the end of the year, you can pay your entire premium yourself during the year.

That way, you would receive your entire credit as a refund when you file your income tax return, provided you were entitled to one.

Who doesn’t have to get health insurance or pay a penalty?

Not everyone has to buy insurance or pay a penalty. You won’t be penalized for not having insurance if your income is low enough that the lowest cost plan would cost more than 8% of your 2014 income, or if you are not required to file a tax return based on your income level.

There are also exceptions for people whose religious beliefs prohibit medical treatment, members of a recognized health care sharing ministry, members of a federally recognized tribe, and people in other special situations.

How much penalty do I pay if I don’t get insurance?

The penalty for 2014, which will be paid on your tax return due April 2015, is 1% of your annual 2014 income or $95 per person, whichever is higher.

If you have children under age 18, the penalty is $47.50 per child – up to $285 total per family.
The penalty rises for 2015, and again for 2016. The maximum penalty per family in 2016 is $2,085.

Paying a penalty does not mean you are covered or entitled to any medical services.

2014 Pension Plan Limitations, Contributions to 401(k) Plans

Most of the following information is provided because, the IRS must distribute all information involved with a particular topic.  What you really need to know is in the title.  The balance of the announcement is supporting documents, tax codes and the details involved in pension plan limitation and contribution limit(s) to retirement plans in 2014. 

 

IRS Announces 2014 Pension Plan Limitations; Taxpayers May Contribute up to $17,500 to their 401(k) plans in 2014

 

WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2014.

Some pension limitations such as those governing 401(k) plans and IRAs will remain unchanged because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment. However, other pension plan limitations will increase for 2014. Highlights include the following:

• The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $17,500.
• The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $5,500.
• The limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
• The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $60,000 and $70,000, up from $59,000 and $69,000 in 2013. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $96,000 to $116,000, up from $95,000 to $115,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $181,000 and $191,000, up from $178,000 and $188,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
• The AGI phase-out range for taxpayers making contributions to a Roth IRA is $181,000 to $191,000 for married couples filing jointly, up from $178,000 to $188,000 in 2013. For singles and heads of household, the income phase-out range is $114,000 to $129,000, up from $112,000 to $127,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
• The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $60,000 for married couples filing jointly, up from $59,000 in 2013; $45,000 for heads of household, up from $44,250; and $30,000 for married individuals filing separately and for singles, up from $29,500.

Below are details on both the unchanged and adjusted limitations.

Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost of living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made pursuant to adjustment procedures which are similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.

Effective January 1, 2014, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $205,000 to $210,000. For a participant who separated from service before January 1, 2014, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2013, by 1.0155.

The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2014 from $51,000 to $52,000.

The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2014 are as follows:

The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $17,500.

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $255,000 to $260,000.

The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $165,000 to $170,000.

The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5 year distribution period is increased from $1,035,000 to $1,050,000, while the dollar amount used to determine the lengthening of the 5 year distribution period is increased from $205,000 to $210,000.

The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $115,000.

The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $5,500. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $2,500.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $380,000 to $385,000.

The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $550.

The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $12,000.

The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $17,500.

The compensation amount under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation purposes is increased from $100,000 to $105,000. The compensation amount under Section 1.61 21(f)(5)(iii) is increased from $205,000 to $210,000.

The Code also provides that several pension-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2014 are as follows:

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return is increased from $35,500 to $36,000; the limitation under Section 25B(b)(1)(B) is increased from $38,500 to $39,000; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $59,000 to $60,000.
The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $26,625 to $27,000; the limitation under Section 25B(b)(1)(B) is increased from $28,875 to $29,250; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $44,250 to $45,000.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $17,750 to $18,000; the limitation under Section 25B(b)(1)(B) is increased from $19,250 to $19,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $29,500 to $30,000.

The deductible amount under Section 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,500.

The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $95,000 to $96,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $59,000 to $60,000. The applicable dollar amount under Section 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $178,000 to $181,000.

The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $178,000 to $181,000. The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $112,000 to $114,000. The applicable dollar amount under Section 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.

The dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under Section 430(c)(2)(D) has been made is increased from $1,066,000 to $1,084,000.

Certain Tax Benefits Increase in 2014; Important Information for Taxpayers

In 2014, Various Tax Benefits Increase Due to Inflation Adjustments

 

WASHINGTON — For tax year 2014, the Internal Revenue Service announced today annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2013-35 provides details about these annual adjustments.

The tax items for tax year 2014 of greatest interest to most taxpayers include the following dollar amounts.

• The tax rate of 39.6 percent affects singles whose income exceeds $406,750 ($457,600 for married taxpayers filing a joint return), up from $400,000 and $450,000, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds are described in the revenue procedure.
• The standard deduction rises to $6,200 for singles and married persons filing separate returns and $12,400 for married couples filing jointly, up from $6,100 and $12,200, respectively, for tax year 2013. The standard deduction for heads of household rises to $9,100, up from $8,950.
• The limitation for itemized deductions claimed on tax year 2014 returns of individuals begins with incomes of $254,200 or more ($305,050 for married couples filing jointly).
• The personal exemption rises to $3,950, up from the 2013 exemption of $3,900. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $254,200 ($305,050 for married couples filing jointly). It phases out completely at $376,700 ($427,550 for married couples filing jointly.)
• The Alternative Minimum Tax exemption amount for tax year 2014 is $52,800 ($82,100, for married couples filing jointly). The 2013 exemption amount was $51,900 ($80,800 for married couples filing jointly).
• The maximum Earned Income Credit amount is $6,143 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,044 for tax year 2013. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
• Estates of decedents who die during 2014 have a basic exclusion amount of $5,340,000, up from a total of $5,250,000 for estates of decedents who died in 2013.
• The annual exclusion for gifts remains at $14,000 for 2014.
• The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) remains unchanged at $2,500.
• The foreign earned income exclusion rises to $99,200 for tax year 2014, up from $97,600, for 2013.
• The small employer health insurance credit provides that the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,400 for tax year 2014, up from $25,000 for 2013.

2014 PTIN Renewal Period Underway for Tax Professionals

2014 PTIN Renewal Period Underway for Tax Professionals

 

WASHINGTON — The Internal Revenue Service today reminded the nation’s almost 690,000 federal tax return preparers that they must renew their Preparer Tax Identification Numbers (PTINs) for 2014. All current PTINs will expire on Dec. 31, 2013.

Anyone who, for compensation, prepares or helps prepare any federal return or claim for refund must have a valid PTIN from the IRS. The PTIN must be used as the identifying number on returns prepared.

“We ask that you renew your PTIN as soon as possible to avoid a last-minute rush. It’s easy to let this slip as the holiday season approaches,” said Carol A. Campbell, Director, IRS Return Preparer Office.

The PTIN system is ready to accept applications for 2014.

For those who already have a 2013 PTIN, the renewal process can be completed online and only takes a few moments. The renewal fee is $63. If you can’t remember your user ID and password, there are online tools to assist you. Preparers can get started at www.irs.gov/ptin.

If you are registering for the first time, the PTIN application fee is $64.25 and the process may also be completed online.

Form W-12, IRS Paid Preparer Tax Identification Number Application and Renewal, is available for paper applications and renewals, but takes four to six weeks to process. Failure to have and use a valid PTIN may result in penalties. All enrolled agents, regardless of whether they prepare returns, must have a PTIN in order to maintain their status.
There have been a number of enhancements to the online PTIN system since last year. They include:

• The fully functional "Manage My Account" tool allowing preparers to self-correct almost any field at any time (including professional credentials). Previously, most changes had to be made during renewal. A phone call was required for users to make changes during the rest of the year. However, for security reasons, name changes still require written documentation.
• Preparers can now view completed continuing education programs reported by IRS-approved providers beginning with 2013 courses. Providers report completed CE programs to the IRS based on your PTIN number. Enrolled agents must have a minimum of 16 CE hours annually and a total of 72 hours every three years. Others can also view voluntary programs completed. If something is missing, contact your provider directly as we only display what providers send to us.
• Planning to take a year off for any reason? A new function allows certain preparers to inactivate their PTINs voluntarily and then reactivate the same number when they return to work. This is only for those preparers who plan to take a full year off. If you are paid to prepare tax returns during any part of a year, you must have a valid PTIN. Note: Enrolled agents must maintain a valid PTIN each year in order to maintain their EA credential and therefore are not eligible to inactivate their PTIN.

For more information about requirements for federal tax professionals and access to the online PTIN system, go to www.irs.gov/for-Tax-Pros.

Tax Breaks Set to Expire in 2014

 

Tax breaks set to expire at the end of the year include:

-- The deduction of up to $250 for K-12 teachers' out-of-pocket expenses.

-- The above-the-line deduction for tuition and fees for qualified higher education expenses.

-- The ability to exclude up to $2 million in cancellation-of-debt income in connection with a qualified principal residence.

-- The deduction of mortgage insurance premiums by homeowners.

-- The Personal Energy Property Credit, a tax credit (with a $500 lifetime cap) for qualified residential energy efficiency projects.

-- The Qualified Small Business Stock gain exclusion. Qualified Small Business Stock acquired after Dec. 31 will qualify for a 50-percent gain exclusion, not the 100-percent exclusion currently allowed.

-- Beginning in 2014, taxpayers can no longer deduct up to $250,000 of qualified leasehold, restaurant and retail property improvements.

To view the entire list you can download the PDF

Big Mess Over the IRS's Announcement to Delay the 2014 Tax Season

Rep. Dave Camp, R-Mich., the influential chairman of the tax-writing House Ways and Means Committee, has written a letter to the acting head of the Internal Revenue Service complaining that the IRS’s decision to delay tax season because of the government shutdown will be a financial burden to people who count on early tax refunds.

The IRS announced Tuesday that the 16-day government shutdown this month had delayed the testing of its tax-processing systems, and it was still dealing with a backlog of correspondence it received during the recently ended shutdown (see IRS: Shutdown to Delay Tax Season). In a letter Wednesday, addressed to IRS acting commissioner Danny Werfel, Camp said it appears the agency is putting a higher priority on implementing ObamaCare than tending to its core mission of processing nearly 150 million tax returns.

“The IRS claims that it will be unable to process tax returns on time, despite being able to do so multiple times in the past when it has been responsible for adopting major changes to tax law,” Camp wrote. “Given that the agency has already had nine full months, and still has nearly three more, there is no reason the IRS should not be able to do its job on time. The failure of the IRS to start the filing season as scheduled will be a financial burden to potentially millions of hardworking taxpayers who depend on an early tax refund to pay their rent, make a car payment or pay off bills from the holiday season. While the IRS says it cannot start the filing season on time, somehow it found the most essential operation to be the implementation of the President’s health care law. The IRS needs to explain why implementing the President’s health care law is more important than processing tax returns in a timely manner.”

House Republicans, including Camp, had held up approval of a continuing resolution to fund the government, in addition to legislation to raise the debt ceiling, in an effort to force the Obama administration and Democrats in Congress to agree to defund or at least delay by a year the health care reform law.

Ultimately, after Obama and congressional Democrats refused to give in to those and other demands, Republican lawmakers agreed to end the government shutdown and raise the debt ceiling as pressure mounted and their poll numbers declined precipitously.

Camp’s Democratic counterpart on the Ways and Means Committee, ranking member Sander Levin, D-Mich., had a far different reaction to the IRS’s announcement of a tax season delay.

“This is yet another unfortunate effect of a shutdown that Republicans should have never caused,” Levin said in a statement Tuesday. “The entirety of the shutdown’s harmful impact won’t be known for months, if not longer. But what is already clear is that it has cost our economy tens of billions of dollars and tens of thousands of jobs. This tax-filing delay just adds insult to injury for Americans hoping to get a jump start on their tax refunds in January.”

Camp’s press office, however, said the IRS’s delay effectively “stiffs early filers as it dedicates time to ObamaCare.” No later than November 6, Camp called on the IRS to provide the following information:

• Is it your position that IRS officials working on ACA implementation are essential for the protection of “life or property?”
• Notwithstanding the plan, which deemed 81 IRS employees as essential for ObamaCare implementation, how many IRS employees worked in this capacity during the shutdown, and for how many hours?
• What system changes, updates or testing is necessary to open the start of the filing season given that no substantive changes have been made to tax law over the last year?
• Specifically, what additional changes or testing does the IRS need to complete prior to the opening of the filing season that are directly related to the implementation of ObamaCare?
• How many IRS staff would have been required to have been deemed essential in order to ensure that tax filing season could open on time?
• According to the IRS’s announcement, “nearly 150 million,” filers will face delays. To date, how many applications for ObamaCare has the IRS been directly involved in processing?
• Did the IRS consult with the Treasury Department or White House in the creation of the Plan or regarding its operation during the shutdown? and
• Provide all communication between IRS and the U.S. Department of the Treasury and/or White House regarding the Plan and/or ObamaCare implementation during the shutdown.

Camp’s office noted that in light of the fact that the IRS is 13 weeks away from the originally scheduled start of tax filing season, it claims it cannot make-up 12 work days lost during the government shutdown. In the letter, Camp pointed out the IRS did not delay last year’s filing season after changes to the tax code were signed into law just 13 days before its start.

Urgent Information: 2014 Tax Season Will Be Delayed According to the IRS

The IRS backlog due to the recent government shutdown appears to be serious.  Here is information which was in my in-box directly from the IRS from yesterday late afternoon.

 

** 

 

2014 Tax Season to Start Later Following Government Closure; IRS Sees Heavy Demand As Operations Resume

 

WASHINGTON–The Internal Revenue Service today announced a delay of approximately one to two weeks to the start of the 2014 filing season to allow adequate time to program and test tax processing systems following the 16-day federal government closure.

The IRS is exploring options to shorten the expected delay and will announce a final decision on the start of the 2014 filing season in December, Acting IRS Commissioner Danny Werfel said. The original start date of the 2014 filing season was Jan. 21, and with a one- to two-week delay, the IRS would start accepting and processing 2013 individual tax returns no earlier than Jan. 28 and no later than Feb. 4.

The government closure came during the peak period for preparing IRS systems for the 2014 filing season. Programming, testing and deployment of more than 50 IRS systems is needed to handle processing of nearly 150 million tax returns. Updating these core systems is a complex, year-round process with the majority of the work beginning in the fall of each year.

About 90 percent of IRS operations were closed during the shutdown, with some major workstreams closed entirely during this period, putting the IRS nearly three weeks behind its tight timetable for being ready to start the 2014 filing season. There are additional training, programming and testing demands on IRS systems this year in order to provide additional refund fraud and identity theft detection and prevention.

“Readying our systems to handle the tax season is an intricate, detailed process, and we must take the time to get it right,” Werfel said. “The adjustment to the start of the filing season provides us the necessary time to program, test and validate our systems so that we can provide a smooth filing and refund process for the nation’s taxpayers. We want the public and tax professionals to know about the delay well in advance so they can prepare for a later start of the filing season.”

The IRS will not process paper tax returns before the start date, which will be announced in December. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit. The April 15 tax deadline is set by statute and will remain in place. However, the IRS reminds taxpayers that anyone can request an automatic six-month extension to file their tax return. The request is easily done with Form 4868, which can be filed electronically or on paper.

IRS processes, applications and databases must be updated annually to reflect tax law updates, business process changes, and programming updates in time for the start of the filing season.
The IRS continues resuming and assessing operations following the 16-day closure. The IRS is seeing heavy demand on its toll-free telephone lines, walk-in sites and other services from taxpayers and tax practitioners.

During the closure, the IRS received 400,000 pieces of correspondence, on top of the 1 million items already being processed before the shutdown.

The IRS encourages taxpayers to wait to call or visit if their issue is not urgent, and to continue to use automated applications on IRS.gov whenever possible.

“In the days ahead, we will continue assessing the impact of the shutdown on IRS operations, and we will do everything we can to work through the backlog and pent-up demand,” Werfel said. “We greatly appreciate the patience of taxpayers and the tax professional community during this period.”

Information on the New Health Care Bill Provided by the IRS

Lots of people are asking questions about the new Health Care Bill.  Yours truly is also learning the news ends and outs.  The hold up for some tax professionals is the wait for IRS affiliate tax attorneys to explain the Health Care Bill, so we don't misinterpret or get it wrong.  For some reason, the explanation of the new Health Care Bill is slow in coming.

 

The IRS has launched a new site and below is the information pertaining to that site and more information on the Health Care Bill

 

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The IRS has launched a new Affordable Care Act Tax Provisions website at IRS.gov/aca to educate individuals and businesses on how the health care law may affect them. The new home page has three sections, which explain the tax benefits and responsibilities for individuals and families, employers, and other organizations, with links and information for each group. The site provides information about tax provisions that are in effect now and those that will go into effect in 2014 and beyond.

Topics include premium tax credits for individuals, new benefits and responsibilities for employers, and tax provisions for insurers, tax-exempt organizations and certain other business types.

Visitors to the new site will find information about the law and its provisions, legal guidance, the latest news, frequently asked questions and links to additional resources.

Several other federal agencies have a role in implementing the health care law, including the Department of Health and Human Services, which has primary responsibility. To help locate additional online resources from the Department of Health and Human Services, the Department of Labor and the Small Business Administration, the IRS has issued a new Web-based flyer - Healthcare Law Online Resources (Publication 5093).