IRS Offers New Tax Guide to Help Prepare 2013 Taxes

 

The Internal Revenue Service has published a newly revised comprehensive tax guide on IRS.gov to help taxpayers get the most out of various tax benefits. However, the IRS is discontinuing its printed wall calendar listing various tax due dates.

Publication 17, Your Federal Income Tax, features details on taking advantage of a wide range of tax-saving opportunities, such as the American Opportunity Tax Credit for parents and college students, and the Child Tax Credit and Earned Income Tax Credit for low- and moderate-income workers. It also includes a rundown on tax changes for 2013 including information on revised tax rates and new limits on various tax benefits for some taxpayers.  This useful 292-page guide also provides thousands of interactive links to help taxpayers quickly get answers to their questions

Publication 17 has been published annually by the IRS since the 1940s and has been available on the IRS web site since 1996. As in prior years, this publication is packed with basic tax-filing information and tips on what income to report and how to report it, figuring capital gains and losses, claiming dependents, choosing the standard deduction versus itemizing deductions, and using IRAs to save for retirement.

 

Besides Publication 17, IRS.gov offers many other resources for those doing year-end tax planning. Many 2013 forms are already posted, and updated versions of other forms, instructions and publications are being posted almost every day. Forms already available include Form 1040 and short Forms 1040A and1040EZ.

For tax professionals, the IRS also recently released the latest edition of its tax calendars in Publication 509, listing the due dates for various individual and business tax forms. However, according to a reader of Accounting Today, the IRS has discontinued the printed wall calendar that used to list the due dates on the pages of each month.

The IRS noted on the cover of Publication 509 that Publication 1518, IRS Tax Calendar for Small 
Businesses and Self-Employed, has been discontinued after 2013. However, the IRS said that an IRS Tax Calendar and most of the information previously contained in Publication 1518 can be found atwww.irs.gov/taxcalendar. The calendar dates can be imported into a user's own calendar sofware through the IRS CalendarConnector, and users can also subscribe to the IRS's Small Businesses Calendar through Outlook 2007 or 2010, or Mac iCal.

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Shutdown for Business Modernized e-File (MeF)

Subject:  Shutdown for Business Modernized e-File (MeF)

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Attention: (MeF) Participants - Transmitters, Software Developers, Practitioners and States To ensure that all BMF tax returns e-filed through the Modernized e-File (MeF) system are processed timely, the following MeF Production shutdown/cut over and acknowledgment retrieval schedule has been established. It is imperative that everyone adhere to the schedule shown below. Business MeF Production Shutdown/Cut Over Schedule Shutdown is scheduled to begin on Thursday, December 26, 2013 in order to prepare the system for the upcoming 2014 Filing Season. A QuickAlert will be issued once the BMF start up date for the 2014 Filing Season has been finalized. Important Note: States who schedule retrieval of their state submissions may have to change their schedule in order to retrieve submissions in time to validate returns and submit acknowledgements by 11:30 a.m., Eastern on December 26th. Anything not retrieved thru MeF by 11:59 a.m. on December 26th cannot be accessed again until MeF reopens for Production in January 2014. Shutdown Deadlines on Thursday, December 26, 2013 Eastern Time                   Transmitters:       Transmitting Submissions (State & Federal)        10:00 a.m.       Retrieving Acknowledgements                           11:59 a.m. States:       Transmitting Acknowledgements                        11:30 a.m.                                                                                                                                                            MeF Assurance Testing System (ATS) Schedule ATS will remain open throughout this production shutdown/cut over period (12/26/2013 - 01/2014). Please monitor the MeF Status Page for any updates.  We apologize for any inconveniences and thank you for your cooperation.

IRPAC Issues Annual Report for 2013

IRPAC Issues Annual Report for 2013

WASHINGTON — The Information Reporting Program Advisory Committee (IRPAC) today released its annual report for 2013, including numerous recommendations to the Commissioner of Internal Revenue on new and existing issues in tax administration.

“In their report, IRPAC members provide valuable feedback to the IRS on a wide range of information reporting issues,” IRS Acting Commissioner Danny Werfel said. “Committee members have graciously offered their time and expertise. The IRS will carefully consider their recommendations.”

In the 2013 report, IRPAC recommends that IRS:

• Extend truncation of taxpayer identification numbers (TINs) to employer identification numbers (EINs)
• Expand the TIN matching program to permit matching on a greater number of return types
• Improve instructions to reduce errors on Form 1099-MISC and
• Provide additional guidance with regard to merchant card reporting on Form 1099-K

The committee also commented on cost basis reporting for debt instruments, specifically addressing requirements, practices and capabilities for reporting market premium and discount. There are also extensive discussions of reporting requirements under the Foreign Account Tax Compliance Act (FATCA) and the Affordable Care Act.

The full 2013 IRPAC Public Report is available on IRS.gov.
IRPAC is a federal advisory committee that provides an organized public forum for discussion of information reporting issues. It is comprised of a diverse cross-section of individuals drawn from the tax professional community, financial institutions, small and large businesses, universities and colleges, and securities and payroll firms

IRS to Employers: Hire Veterans by Dec. 31 and Save on Taxes

IRS to Employers: Hire Veterans by Dec. 31 and Save on Taxes

If you plan to hire soon, consider hiring veterans. If you do, you may be able to claim the federal Work Opportunity Tax Credit worth thousands of dollars.

You must act soon. The WOTC is available to employers that hire qualified veterans before the new year.

Here are six key facts about the WOTC:

1. Hiring Deadline.  Employers hiring qualified veterans before Jan. 1, 2014, may be able to claim the WOTC. The credit was set to expire at the end of 2012. The American Taxpayer Relief Act of 2012 extended it for one year.

2. Maximum Credit.  The tax credit limit is $9,600 per worker for employers that operate a taxable business. The limit for tax-exempt employers is $6,240 per worker.

3. Credit Factors.  The credit amount depends on a number of factors. They include the length of time a veteran was unemployed, the number of hours worked and the amount of the wages paid during the first year of employment.

4. Disabled Veterans.  Employers hiring veterans with service-related disabilities may be eligible for the maximum tax credit.

5. State Certification.  Employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. They must file the form within 28 days after the qualified veteran starts work. For more information, visit the U.S. Department of Labor’s WOTC website.

6. E-file.  Some states accept Form 8850 electronically.

For more about this topic, visit IRS.gov and enter ‘WOTC’ in the search box.


Additional IRS Resources:

• Work Opportunity Tax Credit Extended
• Work Opportunity Tax Credit - Frequently Asked Questions and Answers
• Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit

IRS Will Issue Proposed Guidance for Tax-Exempt Social Welfare Organizations

Treasury, IRS Will Issue Proposed Guidance for Tax-Exempt Social Welfare Organizations

Initial Proposed Guidance Clarifies Qualification Requirements and Seeks Public Input

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service today will issue initial guidance regarding qualification requirements for tax-exemption as a social welfare organization under section 501(c)(4) of the Internal Revenue Code. This proposed guidance defines the term “candidate-related political activity,” and would amend current regulations by indicating that the promotion of social welfare does not include this type of activity. The proposed guidance also seeks initial comments on other aspects of the qualification requirements, including what proportion of a 501(c)(4) organization’s activities must promote social welfare.

The proposed guidance is expected to be posted on the Federal Register later today.

There are a number of steps in the regulatory process that must be taken before any final guidance can be issued. Given the significant public interest in these and related issues, Treasury and the IRS expect to receive a large number of comments. Treasury and the IRS are committed to carefully and comprehensively considering all of the comments received before issuing additional proposed guidance or final rules.

“This is part of ongoing efforts within the IRS that are improving our work in the tax-exempt area,” said IRS Acting Commissioner Danny Werfel. “Once final, this proposed guidance will continue moving us forward and provide clarity for this important segment of exempt organizations.”

“This proposed guidance is a first critical step toward creating clear-cut definitions of political activity by tax-exempt social welfare organizations,” said Treasury Assistant Secretary for Tax Policy Mark J. Mazur. “We are committed to getting this right before issuing final guidance that may affect a broad group of organizations. It will take time to work through the regulatory process and carefully consider all public feedback as we strive to ensure that the standards for tax-exemption are clear and can be applied consistently.”

Organizations may apply for tax-exempt status under section 501(c)(4) of the tax code if they operate to promote social welfare. The IRS currently applies a “facts and circumstances” test to determine whether an organization is engaged in political campaign activities that do not promote social welfare. Today’s proposed guidance would reduce the need to conduct fact-intensive inquiries by replacing this test with more definitive rules.

In defining the new term, “candidate-related political activity,” Treasury and the IRS drew upon existing definitions of political activity under federal and state campaign finance laws, other IRS provisions, as well as suggestions made in unsolicited public comments.

Under the proposed guidelines, candidate-related political activity includes:

1. Communications

• Communications that expressly advocate for a clearly identified political candidate or candidates of a political party.
• Communications that are made within 60 days of a general election (or within 30 days of a primary election) and clearly identify a candidate or political party.
• Communications expenditures that must be reported to the Federal Election Commission.

2. Grants and Contributions

• Any contribution that is recognized under campaign finance law as a reportable contribution.
• Grants to section 527 political organizations and other tax-exempt organizations that conduct candidate-related political activities (note that a grantor can rely on a written certification from a grantee stating that it does not engage in, and will not use grant funds for, candidate-related political activity).

3. Activities Closely Related to Elections or Candidates

• Voter registration drives and “get-out-the-vote” drives.
• Distribution of any material prepared by or on behalf of a candidate or by a section 527 political organization.
• Preparation or distribution of voter guides that refer to candidates (or, in a general election, to political parties).
• Holding an event within 60 days of a general election (or within 30 days of a primary election) at which a candidate appears as part of the program.

These proposed rules reduce the need to conduct fact-intensive inquiries, including inquiries into whether activities or communications are neutral and unbiased.

Treasury and the IRS are planning to issue additional guidance that will address other issues relating to the standards for tax exemption under section 501(c)(4). In particular, there has been considerable public focus regarding the proportion of a section 501(c)(4) organization’s activities that must promote social welfare. Due to the importance of this aspect of the regulation, the proposed guidance requests initial comments on this issue.

The proposed guidance also seeks comments regarding whether standards similar to those proposed today should be adopted to define the political activities that do not further the tax-exempt purposes of other tax-exempt organizations and to promote consistent definitions across the tax-exempt sector.

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IR-2013-90: IRS Warns Consumers of Possible Scams Relating to Relief of Typhoon Victims

IR-2013-90: IRS Warns Consumers of Possible Scams Relating to Relief of Typhoon Victims

IRS Warns Consumers of Possible Scams Relating to Relief of Typhoon Victims

WASHINGTON ― The Internal Revenue Service today issued a consumer alert about possible scams taking place in the wake of Typhoon Haiyan. On Nov. 8, 2013, Typhoon Haiyan – known as Yolanda in the Philippines – made landfall in the central Philippines, bringing strong winds and heavy rains that have resulted in flooding, landslides, and widespread damage.

Following major disasters, it is common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Such fraudulent schemes may involve contact by telephone, social media, email or in-person solicitations.

The IRS cautions people wishing to make disaster-related charitable donations to avoid scam artists by following these tips:

• To help disaster victims, donate to recognized charities.
• Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, through which people may find legitimate, qualified charities; donations to these charities may be tax-deductible. Legitimate charities may also be found on the Federal Emergency Management Agency (FEMA) website at fema.gov.
• Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money.
• Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.
• If you plan to make a contribution for which you would like to claim a deduction, see IRS Publication 526, Charitable Contributions, to read about the kinds of organizations that can receive deductible contributions.

Bogus websites may solicit funds for disaster victims. Such fraudulent sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade members of the public to send money or provide personal financial information that can be used to steal identities or financial resources.   Additionally, scammers often send e-mail that steers the recipient to bogus websites that appear to be affiliated with legitimate charitable causes.

Taxpayers suspecting disaster-related frauds should visit IRS.gov and search for the keywords “Report Phishing.” More information about tax scams and schemes may be found at IRS.gov using the keywords “scams and schemes.”

 

You may have violated tax law

You may have violated tax law

by submitting inaccurate returns

Our review of the Earned Income Tax Credit (EITC) returns you prepared for tax year 2012 indicates you may

have submitted inaccurate returns on behalf of your clients. Intentionally disregarding EITC tax law could

result in penalties and other consequences for you as the paid preparer and your clients. The primary issue we

identified on your TY 2012 returns is questionable income and expenses reported on Schedule Cs.

Letter 5025-C (Rev. 10-2013)

Catalog Number 59927S

Department of the Treasury

Internal Revenue Service

Date:

Tax year:

Contact telephone number:

If you file inaccurate EITC returns:

Your client may face:

• A ban for 2 or 10 years from claiming the EITC, depending on the reason we disallowed the EITC

• Accuracy-related or fraud penalties

• Interest charges on the amount he or she must repay

You may face:

• A $500 penalty for each failure to comply with EITC due diligence requirements (section 6695(g) of the

Internal Revenue Code)

• A penalty of at least $1,000 for each disallowed EITC claim if any part of the tax liability is understated

due to an unreasonable position (section 6694(a) of the Internal Revenue Code)

• A penalty of at least $5,000 for each disallowed EITC claim if any part of the tax liability is understated

due to willful or reckless conduct (section 6694(b) of the Internal Revenue Code)

If we assess return-related penalties against you, we might also:

• Revoke your status as a registered return preparer

• Bar you from preparing tax returns

• Refer you for criminal investigation

• Suspend or remove you or your firm from IRS e-file

• Conduct a due diligence audit

Last year, over 90% of due diligence audits resulted in a preparer penalty.

Requirements for paid preparer due diligence

As a paid preparer, you must take extra steps to ensure your EITC returns are complete and correct (section

6695(g) of the Internal Revenue Code and section 1.6695-2 of the Treasury Regulations). You must use your

knowledge of the tax laws to ask your clients the right questions and document your questions and their

responses to meet the following four due diligence requirements:

Letter 5025-C (Rev. 10-2013)

Catalog Number 59927S

DUE DILIGENCE REQUIREMENTS

STEP 1 Complete Form 8867, Paid Preparer's Earned Income Credit Checklist, and submit it with

every EITC return you prepare.

STEP 2 Complete an EITC worksheet, or its equivalent, that shows how you computed the EITC.

STEP 3

• Analyze the information your client provides and ask appropriate questions in response

• Evaluate whether the information is incomplete and gather any missing facts

• Determine if the information is inconsistent or incorrect (recognize contradictions or

statements you know could not be true)

• Document your inquiries and your client's responses

STEP 4

Keep copies of:

• The completed Form 8867

• Your EITC worksheet

• Records of who provided you with EITC eligibility information and when they provided it

• Documents your clients provided that you relied on to determine eligibility for the EITC or

to compute the amount of the EITC

You must keep these records for 3 years from the later of:

• The due date of the return

• The date the return was e-filed

• The date the taxpayer signed the return

• The date you gave the part you prepared to the signing return preparer

Sincerely,

The most common reason we assess due diligence penalties is for failure to meet the knowledge requirement

(step 3 of the due diligence requirements). You should:

- Conduct an in-depth interview with every client, every year

- Apply a common sense standard to the information your client provides

- Ask additional probing and relevant questions if a reasonable and well-informed tax return preparer

knowledgeable in the law would conclude that any information appears to be incorrect, inconsistent, or

incomplete.

Tax software is a tool, not a substitute for your tax law knowledge and common sense. I am enclosing

Publication 4687, EITC Due Diligence Brochure.

For more information on EITC requirements or EITC due diligence

Visit our website at www.eitc.irs.gov/rptoolkit/main/. If you have further questions, you must call us within

30 days at the number at the top of this letter.

We will monitor your future returns to ensure that your accuracy improves.

Enclosure:

Publication 4687

Letter 5025-C (Rev. 10-2013)

Click to read actual PDF
http://www.eitc.irs.gov/EITCCentral/5025C.pdf

Catalog Number 59927S

2013 Enhancements for TaxPrep Software (Taxwise)

2013 Enhancements for TaxPrep Software (Taxwise)

New Menu Option for Program and Module Updates

• TaxWise has added two new menu options that allow you to download program and module updates without having to login to the Customer Support Site.

Latest News on TaxWise Home Page

• TaxWise created a new section on the Home Page that displays links to the latest news from the Customer Support Site. The Latest News puts important information right in front of you each time you visit the TaxWise Home Page.

Schedule Automatic Downloads of Program Updates

TaxWise now allows you to schedule the automatic download and installation of TaxWise Program Updates.

Integrated Refund Advantage


• Refund Advantage is no longer a third party bank. It is now fully integrated with the CCH SFS Electronic Filing Center processes.
• Check printing remains on the Refund Advantage system but all the data will flow into TaxWise


Changes to Extensions


• TaxWise now allows you to efile extensions without selecting the "Check here if using this form check box" on the extension forms. TaxWise will determine when to efile the form(s) based on the PIN check box(es) on the Main Information Sheet and state forms.



Expiration of E-Files
• Once an e-file has been created, you have 10 days to transmit it or TaxWise will display an Error 189 message during batching alerting you to recreate the e-file.
Section 508 Compliance
• TaxWise has implemented JAWS reader support needed for Section 508 compliance. This allows a screen reader to announce the fields and directions on screen to visually impaired preparers and is required for government contracts under the Americans with Disabilities Act.
1041 Returns Moved to MeF Platform
• Form 1041 returns now use the MeF platform instead of Legacy.
 
Form 5500 Allows Text Attachments
• In addition to PDF Attachments, Form 5500 returns now allow text (.txt) attachments due to agency requirements.
 
New Forms for tax year 2013
1040 Package
• Form 8959, Additional Medicare Tax
• Form 8960, Net Investment Income Tax
• Form 8967, Paid Preparer's Child Tax Credit Checklist
1065 Package
• Form 1065X, Amended Return or Administrative Adjustment Request (AAR)
1120S Package
• Form 1120S Schedule B-1, Information on Certain Shareholders of an S Corporation
• Form 1125-E, Compensation of Officers
1041 Package
• Form 8960, Net Investment Income Tax
 






Updated Return Query (F7)
TaxWise has updated the Return Query (F7) screen to show all refund solutions including Fee Collect and Fee Collect PS transactions and disbursements                   

2014 PTIN

2014 PTIN Renewal Period Underway for Tax Professionals

IR-2013-85, Oct. 31, 2013

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.