Will Refunds Be Delayed Next Year?

Acting IRS commissioner Steven Miller recently sat before a congressional panel and hinted that the best way to combat the explosion of tax fraud may be to either delay the tax filing season, or wait to release all refunds until after the filing season concludes on April 15th.

The reasoning goes something like this:  The vast majority of fraud involving income taxes occurs early in the filing season (January & February). Delaying the filing season will reduce fraud because a) It gives the IRS a chance to cross reference filed tax data with what employers are required to send to the IRS and b) There will simply be less time to perpetrate fraud and thus less cases.  Looking simply at the black & white numbers, yes this would seem like a good idea.  However, like the tax code, this is not a black & white issue.  Millions of honest taxpayers file their returns as early as possible because they really need the money.  These are usually lower-income taxpayers who depend on their refunds to pay bills, rent, and put food on the table.  When you consider the money spent for the holiday season, the urgency for these refunds is magnified.   Delaying the start of the filing season could seriously put these taxpayers at risk.

Another proposal involves waiting until after April 15th to issue all refunds.  That way every tax return can be reviewed and verified before refunds are released, and would virtually eliminate the majority of fraud cases.  However, under current IRS regulations, the government would be required to pay taxpayers interest on their delayed refunds.  This cost of combating fraud could outweigh the cost of the fraud itself.

Either way, it is very early to speculate proposed changes and whether or not they will be implemented. Nevertheless, if either of these proposals are ultimately implemented in full or in part, it appears the group that will be affected the most will be the lower income taxpayer.

Source: Chicago Tribune

The IRS’ new “Modernized E-File Production (MeP) & Assurance Testing Systems” have been experiencing retrieval errors this past week.  The IRS issued the following statement on their website:

ETIN Retrieval Errors (Posted 2:00 pm, Eastern on 4/12/2013)

The Modernized e-File Production and Assurance Testing Systems are experiencing an issue with ETIN Retrieval errors that started around 12:00 noon Eastern Time. The IRS is working to resolve the problem as a top priority. Please refrain from accessing the MeF Production and ATS systems to transmit submissions, get acknowledgements, retrieve state submissions, send state acknowledgements or submit any other service requests until further notice.

The IRS will issue a Technical QuickAlert when the MeF system is operational.

We apologize for any inconvenience and thank you for your cooperation.

This means that no tax return can be electronically filed during this time.  This is at least the second time this week that the MeF systems have been down for an extended period of time.  With all the problems related to the delay of this tax season & tax forms/credits due to the fiscal cliff, continued MeF outages is the last thing the IRS (and taxpayers) need with only 3 days left to the tax deadline.

UPDATE:

The IRS has issued the following alert that the MeF system is now operational and accepting all tax returns.

MeF Alerts:

Update – Resolution of ETIN Retrieval Errors (Posted 12:00am, Eastern, 4/13/2013)

The IRS successfully resolved the issue causing the ETIN Retrieval errors impacting the Modernized e-File Production and Assurance Testing Systems.
Please resume transmitting submissions, transmitting other service requests, and retrieving acknowledgements.

We thank you for your patience and support.

The status of the IRS’ MeF system can be checked by clicking here.

Tick-Tock, The Deadline Approaches

As the April 15th Deadline rapidly approaches, there are still hundreds of thousands of taxpayers expected to file the final week of the tax season.  The late start to the tax season and the fact that we are getting reports from clients that they still have not received all their tax documentation in order to file is making  this last minute crunch even more magnified.  Here are some last minuted tax-tips (even if you’ve filed already)

1) IRS E-mails: If you’ve received an email from the IRS relating to your refund or requesting taxpayer information, DON’T REPLY!  This is a common scam that thieves use to steal your identity.  Don’t even open the email if you can avoid doing so as some of these emails contain viruses or malware.  The IRS never initiates contact via E-mail.  If the IRS needs information from a taxpayer, they will send a formal notification via USPS mail on official letter head.  If you receive any suspicious communications you believe are scams via email, forward them to phishing@irs.gov.

2) April 15th Deadline: Many taxpayers don’t realize that the deadline for filing a tax return only applies to those that owe money to the government.  If you are due a refund the IRS allows you 4 years to file.  It is always best to file and receive your refund the year you are due it, as the IRS does not pay interest.  So, if you believe you are due a refund and you haven’t filed, have no fear, you’ve got plenty of time.  No need to wait on line to file before the deadline.  R&G Brenner has offices open after the tax season and throughout the year.  Even if you file a day after the deadline, you should have no wait time to see a professional.

3) Filing Extensions:  As stated above, if you are due a refund, you have 4 years to file your tax return and there is no need to file an extension.  However, if you believe you will owe the IRS/State(s) and have not received all of your tax documents or you are simply not ready to file, you should consider filing an extension.  Nevertheless, an extension for filing your tax return does not automatically grant you an extension to pay your taxes; the IRS still expects to be paid before the deadline.  If you cannot pay all that is due, simply send what you can.  The IRS will charge you interest on the balance due and you can set up a payment plan if you wish.  If you do not pay, not only with the IRS charge interest but also a late filing penalty.  The more money you owe, the steeper the penalty will be.  So, file on time, or file an extension.

4) File Yourself or Use A Tax Pro?:  The tax code is very complicated and littered with special credits & deductions.  Unless you are filing a very simple return, it is almost never a good idea to file your own taxes.  Simply put, even in this day and age, a computer questionnaire is not an adequate replacement for a professional.  Check out the True Cost of Doing Your Own Taxes.  On average, refunds using a Tax-Pro are $347-$841 HIGHER than Do-It-Yourself programs.  The time you save is just as valuable–if not more so–that the money you’d spend on a professional.

If you need help with any of the above, contact an R&G Brenner Tax Professional today, or call us toll free at (888) APRIL-15.

The following short video reviews some important information and common mistakes that taxpayers often make which can subject their tax returns to an Audit:

For more information, please contact an R&G Brenner Tax Professional today!

Source: CBS

$917 Million In Unclaimed Refunds

The IRS currently has $917 Million for clients in unclaimed refunds for taxpayers just like you, that have not filed a 2009 tax return.  If these returns are not filed by the April, 15th deadline, your money then becomes the property of the U.S. treasury.  The most common reason for not filing a tax return is that many workers believe they did not make enough money to have to file a return. This very well may be true however, if you worked, you most likely had taxes taken out of your paycheck.  This could equate to hundreds or even thousands of dollars that the IRS will be putting into their pockets instead of yours.

If you did not file a 2009 tax return and you worked that year, you may be due a refund.  Please contact an R&G Brenner professional today, and we will help you determine if filing a tax return can get you back the cash you deserve.

Check out this article for more information.

Certain H&R Block Client’s Refunds Are Delayed

H&R Block (HRB)–the largest public retail tax preparation company in the United States–has confirmed that they have filed many tax returns containing certain delayed credits too early, causing their clients refunds to be delayed.  The primary issue is the Education Tax Credit which was not accepted for electronic filing until recently (February 22nd).  This has prompted the IRS to send letters to HRB clients instead of their expected refunds.  HRB has released the following statement:

“H&R Block has confirmed with the IRS that there was an issue with certain tax returns filed before February 22, 2013 that included certain education tax credits claimed on Form 8863.  We have worked with the IRS to expedite a solution to this issue for all of our affected clients.”

If you are a current HRB client, and have received notification from the IRS concerning the early filing of your tax return–or you think you may be affected–it is advised that you contact your local HRB office, or contact their executive headquarters by calling 1-800-HRBLOCK.

Source: ABC

Refund Delays For Some

According to a recent article, refunds are being delayed for some lower income taxpayers; especially those that file for the Earned Income Tax Credit (EITC).  The primary reason for the delay is these taxpayers tend to file early, and these returns are particularly susceptible to Identity Theft & fraud.  Highlights include:

• Delays are due to the closer scrutiny the IRS is paying to these returns in an effort to combat fraud/Identity Theft
• IRS spokesmen Terry Lemons claims that fewer than 5% of these types of tax returns are being delayed
• Wal-Mart has reported that they have cashed $1.7 Billion in refund checks this year so far, compared to about $3 billion in 2012.  This significant drop is attributed to the delay in the tax filing season this year.
• Over 13 million filers claimed the EITC last year.  Using the 5% figure above, that equates to about 650,000 delayed refunds
• The IRS is asking taxpayers to provide documentation for children living with them like birth certificates, doctors bills or report cards

Source: Reuters

Name Change Tax Checklist

If you recently changed your name (most commonly due to a recent marriage or divorce), the following are some valuable IRS tax tips to follow to ensure your tax return is not negatively impacted due to the name change:

1. If you took your spouse’s last name — or if you hyphenated your last names — you may run into complications if you don’t notify the SSA. When newlyweds file a tax return using their new last names, IRS computers can’t match the new name with the Social Security number.

2. If you recently divorced and changed back to your previous last name, you’ll also need to notify the SSA of this name change.

3. Informing the SSA of a name change is easy. Simply file a Form SS-5, Application for a Social Security Card, at your local SSA office or by mail and provide a recently issued document as proof of your legal name change.

4. Form SS-5 is available on SSA’s website at http://www.socialsecurity.gov/, by calling 800.772.1213 or at local offices. Your new card will have the same number as your previous card, but will show your new name.

5. If you adopted your spouse’s children after getting married and their names changed, you’ll need to update their names with SSA too. For adopted children without SSNs, the parents can apply for an Adoption Taxpayer Identification Number – or ATIN – by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions with the IRS. The ATIN is a temporary number used in place of an SSN on the tax return. Form W-7A is available on the IRS website at www.irs.gov or by calling 800-TAX-FORM (800.829.3676).

If you require assistance filing any name change application, an R&G Brenner professional can assist you by contacting us here.

Source: IRS.gov

Protect yourself from Identity Theft

Identity theft has become a huge problem for the IRS.  Last year alone, there were nearly 650,000 cases of Identity Theft reported to the IRS.  Some believe the skyrocketing amount of cases are a direct result that the IRS now requires all tax returns to be filed electronically.  The IRS has implemented “digital safeguards” this year to intercept returns which they deem have a high probability of identity theft, and have deployed a task force of 3,000 agents who’s job it is to investigate Identity Theft.  Unfortunately, many taxpayers who are legitimate “early filers” are bound to get caught up in the web of “digital safeguards” and have their much-needed refunds delayed. And while the Task Force the IRS has deployed to investigate cases is good, it’s effectiveness is limited to after identities are already stolen are returns are filed fraudulently; no real relief to the victims. While this influx of electronic data has clearly exposed the IRS safeguards of personal & private electronic data to be lacking, the are certain steps that the taxpayer can take to help secure their sensitive information:

1. Avoid sending or receiving W2′s, 1099′s or any other personal tax documentation to or from anyone by e-mail.  Encryption offers some defense, but there are still safer ways to communicate your tax data.  REMEMBER: A single W2 or 1099 contains your name, address, social security number/EIN; all the info that any would be thief needs to file a fraudulent return.  An email server can be anywhere in the world and could be susceptible to attack.  Furthermore, the email accounts of the sender and receiver are susceptible to hackers as well especially since it has been shown that password security for the average user is sorely lacking.  The best alternatives are to a) send everything by mail or b) fax your documentation (however many fax services are increasingly turning to “E-Fax” technology whereby faxes are converted to emails…thats why option a) is still the most secure.)
2. Do not carry your social security card with you, or supply your SS# to anyone over the phone/internet without confirming who they are and why they need it.  This appears to be a “no brainer”, but many taxpayers carry their Social Security numbers in their wallets/bags along with their driver’s licenses and IDs. Again, a lost wallet gives everything a thief needs to steal identities. Beware of online & phone scams as well asking for your SS#’s.  The IRS will NEVER request sensitive private information over the web/phone unsolicited.
3. Maintain physical safe-guards to protect your private data.  This is as simple as a locking file drawer or cabinet.
4. Maintain digital safe-guards.  Sometimes it is impossible to keep all your private information only in paper format.  If you keep data on your computer it is important to have in place: a) strong passwords which are changed frequently b) a firewall; never plug a wire directly into your computer from a your broadband modem c) anti-virus software.
5. Verify your credit report.  This should be done once every 12-18 months.  Anything out of the ordinary like a steep drop in your rating is a good indicator that your identity may have been compromised.
6. Optional: Obtain Identity Theft Protection.  If you have ever been a victim of identity theft, buying protection is recommended; who knows who still has your information out there?  If you relay or store a lot of personal data via the web, protection may be a good idea as well.  There are many affordable services that would be well worth the cost if you become a victim of Identity Theft just once.

While there is no “magic bullet” to prevent Identity Theft entirely, following the general rules above will limit your exposure. If you’d like more information on how to safeguard yourself and your family from Identity Theft–or have any tax related inquiries–feel free to contact and R&G Brenner professional here, or call us toll free (888) APRIL-15.

IRS To Accept Returns With Form 8863 Feb. 14th

The IRS has announced that as of February 10th, they will begin accepting tax returns with form 4562 (Depreciation & Amortization) attached. Furthermore, as of February 14th, tax returns with form 8863 (Education Credits) will be accepted for processing by the IRS as well.  The tax filing season this year was delayed until January 30th this year, however many taxpayer’s returns were delayed even further due to the IRS’ refusal to process forms 4562 & 8863.  This is welcome news to those that rely heavily on their tax refunds.

If you’d like any more information about which forms are now open for submission to the IRS, and which forms are still delayed, contact an R&G Brenner professional today.