The Scoop Kristy Maitre Tax Specialist Center for Agricultural Law - - PDF document

2/8/2016 1

The Scoop

Kristy Maitre – Tax Specialist Center for Agricultural Law and Taxation February 10, 2015

Agenda

• Age matters – Good reminders
• Ordering Publication 17
• Estate Closing letters
• Refunds
• ACS support sites
• Scam Phone calls
• Will be easier to get a replacement Social Security card in the future
• Superseded Returns
• Rejects
• Using Form 8879 as a signature document
• FAFSA date change to apply for financial aid
• Deceased clients
• Form 8948 review
• Excise Tax information
• Farmer extension
• Abatement of certain penalties available for 2014
• E‐File
• Tax Court
• Fin Cen issue

When Age Matters

• 0‐Birth – Dependence exemption for

newborn child

• Age 13 – Child Care Credit no longer allowed
• Age 17 – Child Tax Credit does not apply
• Age 18

– Social Security taxes apply if employed by parent – No more contribution to a Coverdell Education Savings Account – No adoption credit

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When Age Matters

• Age 19 – No more dependent exemption

unless a full time student

• Age 24 – Still a full time student

– Cannot claim as a dependent any longer – Kiddy tax rules no longer apply

• Age 25 – Age necessary to claim the Earned

Income Tax credit

• Age 27 – Child drops off parent’s health

insurance plan

When Age Matters

• Age 30

– Coverdell Savings Accounts must be distributed or rollover to another qualifying family member – Balance of myRA must be rolled into a ROTH account

• Age 40 – May deduct long term care insurance

premiums as a medical expense

• Age 50

– Additional “catch up” contributions can be made to retirement accounts – Qualified public safety employees are not subject to an early withdraw penalty of their employer’s retirement plan

When Age Matters

• Age 55 – No early withdrawal penalty for if the

taxpayer separates from service

• Age 59 1/2 – No penalty for early withdrawal from

retirement plan

• Age 62 – Eligible for reduced social security benefits
• Age 65

– Higher standard deduction – The 7.5% adjustment still applies thru 2016 – 10% after 2016 – No more Earned Income Tax Credit without a qualified child – No Heath Savings Account contributions once eligible for Medicare

2/8/2016 3

When Age Matters

• Age 70 – No more deduction for long term care

insurance

• Age – 70 ½

– Required minimum distributions must be made or penalty – Qualified charitable distribution applies – May roll retirement account into a Qualified Longevity Annuity Contract

• Age 85 – Must begin distributions from a

Qualified Longevity Annuity Contract

Publication 17

• Publication 17 is not available in paper format

from the IRS

• However, you can buy a copy from the

Government Printing Office for $10 this year

• https://bookstore.gpo.gov/products/sku/048‐

004‐02580‐9

Transcripts in Lieu of Estate Tax Closing Letters – using E‐Services or Form 4506‐T

• https://www.irs.gov/irspup/Businesses/Small‐Businesses‐%26‐

Self‐Employed/Transcripts‐in‐Lieu‐of‐Estate‐Tax‐Closing‐Letters

• Account transcripts, which reflect transactions including the

acceptance of Form 706 and the completion of an examination, may be an acceptable substitute for the estate tax closing letter

– Transcript Delivery Service (TDS) – Form 4506‐T

• For all estate tax returns filed on or after June 1, 2015, estate tax

closing letters will be issued only upon request by the taxpayer

• In lieu of an estate tax closing letter, account transcripts are

available online to tax professionals

• An account transcript from the Transcript Delivery System (TDS)

reflects transactions including the acceptance of Form 706 and/or the completion of an examination

2/8/2016 4 Refund Check Campus Location Identifier

• Requests on how to return a refund check, the

customer service representative (CSR) or tax examiner at the Campus RI Unit will advise taxpayer to write "void" in the endorsement area on the back of the check

• Advise taxpayer to mail the check with a letter of

explanation to the issuing campus Refund InquiryUnit

• The issuing campus location is on the front, at the

bottom of the check, and displays all or the first six letters of the campus

• Advise the taxpayer not to write on the front of the

check

IRM 21.4.3.4.4 Returned Refund Checks

• The Receipt and Control (R&C) function within a

Campus receives the returned refund check and directs them to the Campus Refund Inquiry (RI) Unit

• Returned refund checks must be worked by

campuses in the appropriate BOD

• Individual Master File (IMF) returned checks will

be worked at IMF campuses

• BMF will be worked at BMF campuses
• IRS will send misrouted cases to the appropriate

campus

IRM 21.4.3.4.4 Returned Refund Checks

• Letter 4427C, Acknowledgement of Returned

Refund Check, should be sent to the taxpayer, unless a completed Form 3913, acknowledgement of Returned Refund Check, is received with the case from an IRS Taxpayer Assistance Center (TAC)

• In those cases, Form 3913 will serve as an

acknowledgement letter

• No interim letter is required, unless the 60 day

time frame indicated on Form 3913 cannot be met

2/8/2016 5

ACS Support Sites

Five Easy Ways to Spot a Scam Phone Call

• 1. Call you to demand immediate payment. IRS will

not call about taxes you owe without first mailing you a bill

• 2. Demand that you pay taxes without giving you

the chance to question or appeal the amount they say you owe

• 3. Require you to use a certain payment method

for your taxes, such as a prepaid debit card

• 4. Ask for credit or debit card numbers over the

phone

• 5. Threaten to bring in local police or other law‐

enforcement to have you arrested for not paying

Lost Your Social Security Card?

• The new online version of the Application for a

Replacement Social Security Card allows people in some states to request a replacement card

• nline through our secure my Social Security

portal without traveling to a field office

• Currently available in the District of Columbia,

Michigan, Nebraska, Washington, and Wisconsin, it’s an easy, convenient, and secure way to request a replacement card online

2/8/2016 6

Lost Your Social Security Card?

• To take advantage of this new service option,

you must:

– Have or create a my Social Security account – Have a valid driver’s license in a participating state or the District of Columbia (or a state‐issued identification card in some states) – Be age 18 or older and a United States citizen with a domestic U.S. mailing address (this includes APO, FPO, and DPO addresses) and – Not be requesting a name change or any other changes to your card

my Social Security

• First, you’ll need to create a my Social Security

account

• The application process has built‐in features to

detect fraud and confirm your identity

• In certain cases, security experts at Social

Security will contact you to ensure it is a legitimate application

• SSA will only issue a replacement card if there’s

no suspicion of fraud and then they only mail it to a verified address

my Social Security

• Log into your personal my Social Security

account and select “Request a Replacement Card”

• Next, answer the screening questions to

confirm eligibility, complete personal data, and you’re done

• More states will be added in the future

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Superseding Returns

• A superseding return is a return filed subsequent to

the originally‐filed return and filed within the filing period (including extensions)

• The filer must indicate that the return supersedes the
• riginal return by checking the appropriate box on the

return or designating “Superseded Return” on the top

• f the first return page
• An amended return is a return filed subsequent to the
• riginally‐filed or superseding return and filed after

the expiration of the filing period (including extensions)

Superseding Returns

• If a taxpayer files two returns for the same

period on or before the due date, the IRS generally will consider the second return filed as the original return

• IRM 120.1.3.2.7 and Rev. Ruls. 78‐256 and 83‐36
• For example, if taxpayer files an income tax

return on February 1 and then files a second return on March 15, the March 15 return will supersede the February 1 return

• The IRS treats the last return filed on or before

March 15 as "the return" for all Code purposes

Superseding Returns and the Statute

• f Limitations
• In recent Chief Counsel Advice (CCA)

200645019, the IRS concluded that a taxpayer’s superseding tax return filed on the extended due date is the return that starts the assessment SOL

2/8/2016 8

Rejects in General

• Rejected electronic individual income tax return

data can be corrected and retransmitted without new signatures or authorizations if changes do not differ from the amount on the original electronic return by more than:

– $50 to "Total income" or "AGI", or more than – $14 to "Total tax," "Federal income tax withheld," "Refund" or "Amount owed

• The EROS must give taxpayers copies of the new

electronic return data

Using Form 8879 as A Signature Document

• If you have a rejected return and are unable to get the taxpayer

into your office to sign the original return, you can use the procedure below for the FEDERAL RETURN ONLY, I would attached the IRM section to the federal return

• NOTE: This procedure will not work for the State of Iowa or other

states as this is just for federal returns

• Correspond for a required missing signature unless:

– a. "Substitute for Return Prepared by IRS" is noted, a signed form 1040X is attached for the same period, , "See 1040X" is noted, or "dummy" return – b. "Section 6020(b)" or "prompt assessment" is noted or Form 4810 is attached – c. Return is "amended", "corrected", "revised", "tentative", or "superseding" (See the amended return instructions in IRM 3.11.3.7.2.1.) – d. Form 8879 is attached with a valid original signature, and there is any indication of rejected electronic filing or prior year

Signature

• IRM 3.11.3.14.10 (01‐01‐2015)
• This IRM covers other issues related to

signatures

2/8/2016 9

Federal Student Aid Application Date Change ‐ Make Sure Your Clients Are Aware

• Free Application for Federal Student Aid (FAFSA), is changing its

application date to better accommodate the availability to obtain a copy of the federal tax returns filed by families and students

• If at the time the tax return was submitted to the IRS, the amount
• wed had not been paid in full, there is generally a delay in

processing

• The tax return itself is accepted within a day or two of the return

being electronically filed, but IRS is mandated to issue refunds as a first priority to avoid paying interest

• If the return is filed on paper and even longer acceptance and

processing time can occur

• Refunds issued within 45 days of the filing deadline, this year April

18, 2016, will not accrue interest

• Therefore the more refunds issued within that time frame the

more interest is saved

Federal Student Aid Application Date Change ‐ Make Sure Your Clients Are Aware

• Balance due returns are generally delayed for processing until after the

45 day time frame has passed or even later in some situations, depending on the volume of refund returns filed late in the season

• Individuals with balance due returns that have not been processed

cannot utilize the IRS Data Retrieval Tool (DRT) to obtain a copy of the return for the college

• That processing time can range from May – September depending on the

year

• This places and additional burden on students and families who depend
• n some guarantee of financial aid
• Beginning with the 2017/18 academic year, the application to begin the

process of financial aid will be available as early as October 1, 2016

• The applicant will be allowed to use income information from tax returns

that have already been filed in an earlier year; thus, students (parents) may submit 2015 (rather than 2016) tax return information, as the new filing dates transition

Website

• The Department of Education has provided a

table to better demonstrate how the change will be implemented and what tax year’s information will be needed for the academic periods

• The website at:

https://studentaid.ed.gov/sa/about/announc ements/fafsa‐changes provides additional information.

2/8/2016 10

Table Deceased Clients

• IRS is freezing the accounts of deceased

individual

• Prevents potential long identity theft reviews
• Impact is on surviving spouse
• File and paper with Form 8948 and file

documentation

Form 8948

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Form 8948 Required Statement Excise Tax Returns

• Biodiesel and Alternative Fuels; Claims for 2015;

Excise Tax

• Notice 2016 – 05

– HOW TO MAKE A ONE ‐ TIME CLAIM FOR CREDITS AND PAYMENTS ALLOWABLE UNDER §§ 6426(c), 6426(d), AND 6427(e) – CLAIM PERIOD AND DUE DATE FOR BIODIESEL AND ALTERNATIVE FUEL INCENTIVES – HOW TO MAKE AN ALTERNATIVE FUEL MIXTURE CLAIM UNDER § 6426(e) – CLAIM PERIOD AND DUE DATE FOR ALTERNATIVE FUEL MIXTURE CREDITS

Excise Tax Returns NOTICE HAS NO EFFECT ON THE FOLLOWING FILINGS

• This notice has no effect on the 2015 nonrefundable income tax

credit under § 40(b)(6) for :

• Second generation biofuel producers
• The nonrefundable income tax credits under § 40A(b)(1) for

biodiesel mixtures

• §40A(b)(2) for biodiesel (including renewable diesel)
• § 40A(b)(4) for the small agri‐biodiesel producer credit

– Those credits use Form 8864, Biodiesel and Renewable Diesel Fuels Credit

• Similarly, this notice does not affect 2015 claims for the refundable

income tax credit under:

• § 34 for biodiesel mixtures or alternative fuel

– Taxpayers should continue to submit these claims separately on, and in accordance with, Form 4136, Credit for Federal Tax Paid on Fuels

2/8/2016 12

Farmer Extension

• Forms 1095‐B and 1095‐C have delays in

being filed and provided to the client

• The returns can be filed without these forms
• Perform your due diligence to address

whether they have heath insurance and for what months

• No farmer or fisherman extension applies
• Form 1095‐A must be received before a tax

return can be prepared

Notice 2015‐9 Request Abatement of Penalty

• A penalty under § 6651(a)(2) of the Internal Revenue

Code for late payment of a balance due

• A penalty under § 6654(a) for underpayment of

estimated tax

• Must request abatement – not automatic
• Taxable year 2014 for taxpayers who

– (i) Are otherwise current with their filing and payment

• bligations

– (ii) Have a balance due for the 2014 taxable year due to excess advance payments of the premium tax credit – (iii) Report the amount of excess advance credit payments

• n their 2014 tax return timely filed, including extensions

IRS Statement on Experiencing Systems Outage

• The IRS experienced a hardware failure affecting a

number of tax processing systems, which were unavailable

• Several of the systems were not operating, including:

– Modernized e‐file system – Where’s My Refund – Direct Pay

• You can continue to prepare and file the tax returns as

you normally would

• You can continue to send the tax returns to your e‐file

provider; these companies will hold the tax returns until the IRS resumes accepting electronic tax returns

2/8/2016 13

Tax Court

• Electronic filing of Tax Court petitions is

coming soon

• Currently, the Court accepts petitions for a

redress of taxes only via the mail or by hand delivery

• It’s now proposing to allow petitions and
• ther pleadings to be e‐filed with the Court
• Kiplinger Newsletter Jan 29, 2016

FIN CEN

• Current FIN CEN report does not allow for

alternative reporting methods

– Parent company reporting for a subsidiary

• FIN CEN requesting comments on a revised

report and layout

• https://s3.amazonaws.com/public‐

inspection.federalregister.gov/2016‐01825.pdf

Fall Tax Schools

• Though they are names the Farm and Urban Tax Schools

the schools cover more than farm issues

• Common return issues for all kinds of returns are covered
• All kinds of business entities
• Problematic issues
• Sometimes we even get into to issues that you many

encounter only once or twice a year or tax season

• The Tax Schools are a blend of diverse topics of interest to

all tax professionals

• New instructors with diverse backgrounds
• Your adventure awaits at Iowa State’s Center for

Agricultural Law and Taxation

2/8/2016 14

Farm and Urban Tax Schools 2016

• November 2, 2016 to December 13, 2016
• 8 Locations in Iowa and Online Webinar
• Save the Date for the 2016 Annual Farm and Urban Income Tax Schools
• The program is intended for tax professionals and is designed to provide

up‐to‐date training on current tax law and regulations

– November 2‐3: Maquoketa – November 7‐8: Red Oak – November 9‐10: Sheldon – November 14‐15: Mason City – November 17‐18: Ottumwa – November 21‐22: Waterloo – December 5‐6: Denison – December 12‐13: Ames and Live Webinar

Summer Webinars

• S Corporation Reasonable Compensation
• ABLE Accounts
• Travel, Meals and Entertainment
• Preparing for a Gambling Audit
• Your Client Dies, What’s Next?
• Innocent Spouse
• Above the Line Deductions
• Roth IRA’s
• Net Operating Losses
• The Portability Election
• IRS Return Preparer Penalties Overview
• Miscellaneous Income
• New Developments

Summer Webinars

• Employee vs. Independent Contractor
• Cancellation of Debt
• Tax Research with Limited Resources
• Injured Spouse
• IRS Representation
• Let’s Talk Dependents
• Inventory Issues
• Preparing for an IRS Audit
• Getting your Client Right with IRS
• Appeals – How to Write Your Appeals Request
• Start Up Costs
• Hobby Losses

2/8/2016 15 Beginning Tax Preparers Class

• CALT is working on offering a basic class for NEW tax preparers this fall in

October

• The week long webinar will cover the basics an individual needs to know

such as:

– Requirement to file – Dependents – Filing Status – Itemized deductions – Earned Income Tax – Education Credits

• Other issues a first or second year preparer needs to know as well as a

refresher for others who need to brush up on issues

• The class will be a week long or more and will be offered at a special rate

The Scoop

• Throughout the filing season two Scoops will be held
• n Scoop Dates

– 8:00 – 8:30 am Central time – 12:00 – 12:30 Central time

• This assists with accommodating our west coast

practitioners

• The same information will be shared at both sessions
• You have the option of registering for whatever

session suits your schedule

• https://www.calt.iastate.edu/calendar‐node‐field‐

seminar‐date/month

Future Scoop Dates

• Feb 24, 2016
• Mar 09, 2016
• Mar 23, 2016
• Apr 06, 2016
• http://www.calt.iastate.edu/calendar‐node‐

field‐seminar‐date/month

2/8/2016 16

The CALT Staff

John D. Lawrence Interim Director Associate Dean, College of Agriculture & Life Sciences Extension Programs and Outreach Director, Agriculture & Natural Resources Extension 132 Curtiss Hall Iowa State University Ames, Iowa 50011‐1050 Kristine A. Tidgren Staff Attorney E‐mail: ktidgren@iastate.edu Phone: (515) 294‐6365 Fax: (515) 294‐0700

The CALT Staff

Kristy S. Maitre Tax Specialist E‐mail: ksmaitre@iastate.edu Phone: (515) 296‐3810 Fax: (515) 294‐0700 Tiffany L. Kayser Program Administrator E‐mail: tlkayser@iastate.edu Phone: (515) 294‐5217 Fax: (515) 294‐0700