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IRS Updates

IRS Updates. October 5, 2017. Field Assistance. October 5, 2017. Taxpayer Assistance Centers.

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IRS Updates

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  1. IRS Updates October 5, 2017

  2. Field Assistance October 5, 2017

  3. Taxpayer Assistance Centers • Taxpayer Assistance Centers (TAC) provide face-to-face assistance to taxpayers whose issues cannot be resolved through other convenient and efficient methods, or to taxpayers who choose to obtain information and assistance in the TAC.

  4. Taxpayer Assistance Centers - Continued • Keep in mind, many questions can be resolved online without visiting a TAC. • All TAC offices are by appointment. • To make an appointment call 844-545-5640. • Taxpayers will be asked to provide valid photo identification to receive services. • Taxpayers who simply want to drop off a payment or a tax return or even pick up a tax form can still do that without an appointment.

  5. General TAC Services • Account inquiries (help with letters, notices and levies on wages or bank account) • Adjustments (changes to tax account information or payments) • Alien clearances (Sailing Permits) • Assistance with Affordable Care Act tax provision questions for individuals

  6. Individual Taxpayer Identification Numbers Service • General and renewal Individual Taxpayer Identification Number (ITIN) application services are provided in all TACs and include review, acceptance, and forwarding to Submission Processing. • Currently, about half of our TACs will authenticate certain identification documents for those who submit Form W-7, Application for IRS Individual Taxpayer Identification Number in person.

  7. ITIN Service - Continued • This service allows taxpayers to retain their original identification documents while their ITIN applications are being processed. • For the closest ITIN authenticating TAC near you, visit: https://www.irs.gov/uac/TAC-Locations-Where-In-Person-Document-Verification-is-Provided.

  8. Additional Assistance Options • You can get help with IRS letters you have received or resolve tax account issues from our toll free assistors. • Call the number shown on the letter you received, or for general questions and help, dial 800-829-1040 for individual tax issues or 800-829-4933 for business-related tax issues.

  9. Additional Assistance Options- Continued • Other toll-free lines devoted to tax exempt organizations, tax professionals and other specialties are listed on www.irs.gov • To make an appointment at a TAC call 844-545-5640.

  10. Filing Information ReturnsElectronically October 5, 2017

  11. FIRE Overview • Information returns are: • Tax documents • Required by IRC regulations • Used to report payments to IRS • FIRE system set up for filing information returns electronically • http://fire.irs.gov • File Form W-2 with SSA not IRS

  12. Benefits of Using FIRE • Cost-effective • Paperless • Secure • Easy to use • Efficient • Fast • Flexible

  13. Who Can Participate in FIRE • Anyone that files information returns • Entities who file 250 information returns are required to file electronically via FIRE • The 250 or more requirement applies separately to: • Each type of form • Original returns and corrected returns • Amounts filed not aggregated

  14. How to Participate in FIRE • You will need to : • Create properly formatted electronic files using software • Submit Form 4419 to obtain a TCC • Fax form to: 877-477-0572 (toll-free) • Submit 30 days before due date of returns for current year processing • Create a FIRE account

  15. Software/Vendor Information • You must have software to create properly formatted files to use FIRE • Files must be in ASCII code • Find the list of Approved IRSe-file for Business Providers containing a listing for Information Return Providers on IRS.gov • Pub 1582, Information Returns Vendor List, is online; type “Pub 1582” in the search box on IRS.gov

  16. Create Your FIRE Account • Information needed to create FIRE account: • Company’s name • Company’s address • Company’s phone number • Contact name and email address Go to http://fire.irs.gov to create FIRE account.

  17. Ready to Log on to FIRE? Testing • Do you have the required software to create the files? • Have you filed Form 4419? • Have you received your TCC? • Have you created your FIRE account? Test your hardware and software using the FIRE test system at http://fire.test.irs.gov Go to http://fire.irs.gov to create FIRE account.

  18. Helpful Publications • Pub 1220 • Pub 1187 • Pub 1239 • Pub 4810 • Pub 3609 • Pub 1582

  19. Work Opportunity Tax Credit October 2017

  20. WOTC • Retroactive for employees hired between Dec. 31, 2014 and Jan. 1, 2020 • Tax-exempt employers hiring qualified veterans (Dec. 31, 2014-Jan. 1, 2020) included • New target group employees • Qualified long-term unemployment recipients

  21. New Target Group • Qualified Long-Term Unemployment Recipient • Hired on or after January 1, 2016

  22. Transitional Relief • Notice 2016-22provides employers that hire members of targeted groups additional time beyond the 28-day deadline for submitting Form 8850. • PATH Act extended the Work Opportunity Tax Credit retroactively for 2015. • Form 8850 must be submitted by May 31, 2016. • Qualified long term employment recipients deadline June 29, 2016.

  23. Pre-screening and Certification • All employers must obtain certification that an individual is a member of the targeted group, before the employer may claim the credit • Employers should contact their individual state workforce agency with any specific processing questions for Forms 8850.

  24. Claiming the WOTC • The process for taxable businesses claiming the WOTC for all categories remains the same. • Claim credit as a general business credit • Tax-exempt employers claiming the WOTC for veterans categories, follow the instructions shown on Form 5884-C.

  25. IRS.gov www.irs.gov Enter WOTC in the search box

  26. Don’t Take the Bait Series • https://www.irs.gov/e-file-providers/dont-take-the-bait

  27. Affordable Care Act (ACA) Employer Information October 5, 2017

  28. Affordable Care Act Estimator Tools Four tools for estimating healthcare tax credits and payments: Premium Tax Credit Change Estimator Individual Shared Responsibility Provision-Payment Estimator Small Business Health Care Tax Credit Employer Shared Responsibility Payment Estimator taxpayeradvocate.irs.gov is the Website

  29. Employer Shared Responsibility Provision Estimator Employers – use this online tool to determine: • Number of full-time employees, including FTEs, • If your company might be an applicable large employer, and • If you are, an estimate of the maximum amount of the potential shared responsibility payment that could apply, if you fail to offer coverage to your full-time employees To learn more visit: taxpayeradvocate.irs.gov

  30. Determining ALE Status • An employer is considered an ALE if it has 50 or more full-time employees or full-time equivalent employees • Number of employees and their hours of service in preceding year determines ALE status for the current year • Common ownership and controlled groups

  31. Determining FTEs • Full-time employee = at least 30 hours a week • Full-time Equivalent = hours non-full-time employees worked divided by 120 • Seasonal employee • Military coverage, including Tricare or Veterans’ coverage

  32. Information Reporting Requirements for ALES • Requires ALEs to file an information return to report health care coverage offered to the employer’s full-time employees for the calendar year • Applies to employers who are subject to the employer shared responsibility provisions (§4980H) • Information is used to (1) administer the employer shared responsibility provisions (§4980H) and (2) determine an employee’s eligibility for the premium tax credit

  33. ALE Information Reporting Forms • 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns): • Employer name, address, EIN, and contact information • # of 1095-Cs submitted • ALE member information • 1095-C (Employer-Provided Health Insurance Offer and Coverage): • Employee name, TIN, and address • Employer name, EIN, and contact information • Offer of coverage (by month) • Covered individuals

  34. Due dates to employees and IRS Required for calendar year 2015 (filed in 2016) and beyond • Furnished to Employee by January 31 • Filed with the IRS by February 28 (March 31 if filed electronically)

  35. Filing – Paper / Electronic (AIR) • Paper filing available only if submitting 250 or fewer information returns • Must electronically file if submitting more than 250 information returns • Details on Information Return filing preparation is on IRS.gov (search term ‘AIR’) • AIR Publications and page

  36. Employer Shared Responsibility Payment Liability exists if employer: • Does not offer coverage to at least 95% of FT employees (and their dependents) and at least one FT employee receives the PTC OR • Does offer to 95% of FT employees s (and their dependents), but at least one FT employee receives the PTC because, for that full-time employee, coverage was • not offered • unaffordable, or • did not provide minimum value

  37. Definition of Affordability and Minimum Value • Affordability • Affordable if employee’s share of lowest cost self-only coverage does not exceed 9.5% of household income • Three employer “safe harbors” • Minimum value • Covers at least 60% total cost of benefits

  38. Amount of ESRP • Offer to less than 95% (70% for 2015) • Payment of 1/12 of $2,000 (adjusted annually) per FT employee, above 30 threshold (per month) • Offer to at least 95% • Payment of 1/12 of $3,000 (adjusted annually) per PTC-receiving FT employee, (per month), subject to limitation

  39. ESRP Assessment and Payment • Employer will not make a payment with a return • IRS will determine amount and notify employer • Employer will have opportunity to respond before assessment • IRS will send a notice and demand after assessment

  40. ACA Provisions for Large and Small Employers • Health coverage provider reporting requirements –Section 6055 • All self-insured employers (including self-insured ALEs) are subject to these reporting requirements • W-2 Reporting requirement • Additional Medicare Tax withholding

  41. Due Dates for W-2s, W-3s & 1099-MISC, box 7 October 5, 2017

  42. Due Date January 31 • PATH Act requires due dates for certain information reporting forms by January 31 • Electronic and paper Forms W-2 & W-3 are due to the Social Security Administration • Forms 1099-MISC, box 7 (for non-employee compensation) are due to the Internal Revenue Service

  43. Information Return Penalties • Failure to file these forms correctly and timely may result in penalties • For more information • Pub 1586, “Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs” • Tax Topic 752

  44. Information Return Penalties • Find more information about these penalties: • Search IRS.gov for: information return penalties • Scroll to find page, Increase in Information Return Penalties – IRS tax forms • Includes links to PDF versions of instruction for: • Forms W-2 and W-3 • Certain Information Returns

  45. Stay Up-to-Date • Subscribe to: • E-News for Tax Professionals • E-News for Payroll Professionals • QuickAlerts • Follow: • @IRStaxpros

  46. W-2 Verification CodePilot Update October 5, 2017

  47. Form W-2 Verification Code Pilot • To verify wage/withholding data included with e-filed Form 1040 • On 47 million Forms W-2 in filing season 2017 • ADP, Ceridian, Intuit, Paychex, Payroll, People, Prime Pay & Ultimate Software • Each included the VC on the W-2s of some of their clients • 708,000 EINs in total

  48. Form W-2 Verification Code Pilot • Unique, 16-character, alphanumeric code • Calculated using data from the W-2 • In box, “Verification Code,” on copies B & C • B: "To be filed with employee's federal tax return” • C: "For employee's records”

  49. Form W-2 Verification Code Pilot W-2 Instructions: • If this field is populated, enter this code when it is requested by your tax return preparation software • It is possible your software or preparer will not request the code • The code is not entered on paper-filed returns

  50. Form W-2 Verification Code Pilot • Missing or incorrect VCs did not prevent or delay the processing of a return or refund • IRS calculated the VC and compared it with the VC the taxpayer entered • Allows validation before any data is received from SSA • If VC validated, we treated the W-2 data submitted with a 1040 to be valid, thereby reducing false fraud-selections

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