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News & Press: Federal Tax News

Pacific Northwest Action Wednesday IMRS Call

Thursday, May 21, 2020  
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Submitted by Carol M. Wild, EA, LTC 29891-C  CarolWild1040@gmail.com - any questions should go to her.

May 20, 2020
Pacific Northwest Action Wednesday IMRS Call
Virtual Meeting via WebEx
Time: 10:00 am –11:00 am (PDT)


Attendees: 

Internal Revenue Service

  • John Blakeman, Stakeholder Liaison 
  • Cathye Mason, Stakeholder Liaison
  • Kristen Hoiby, Stakeholder Liaison
  • Brian Wozniak, Stakeholder Liaison
  • Deborah Rodgers, Stakeholder Liaison
  • Neki Cox, Stakeholder Liaison
  • Karen Brehmer, Stakeholder Liaison
  • Leslie Chambers, Stakeholder Liaison
  • Dennis Hills, Local Taxpayer Advocate

Practitioner Representatives

  • Therese Sharp, Chair, Alaska Society of CPAs (ASCPA)
  • Lisa Rogers, ASCPA
  • John Rodgers, ASCPA
  • Sarah Lora, Lewis and Clark Low Income Taxpayer Clinic
  • Daniel Stearns, Oregon Society of Enrolled Agents
  • Terry Bakker, Oregon Association of Independent Accountants
  • Carol Wild, Oregon Association of Tax Consultants
  • Doug Henne, Oregon Society of CPAs (OSCPA)
  • Sarah Northcutt, OSCPA
  • Paula Moore, Attorney
  • Heather Jackson, OSCPA
  • Harriet Strothers, OSCPA
  • Gregory Nunn, CPA WA
  • Adam Abplanalp, OSCPA

Meeting Summary

John Blakeman, Stakeholder Liaison

John shared information on the current status of Economic Impact Payments (EIP) as provided on IRS.gov at the links shown below.  He also shared that the toll free number for EIP now has live assistance-please listen through the automated message to get to a live assistor at the end:  800-919-9835

·         Coronavirus Tax Relief and Economic Impact Payments and

·         Coronavirus and Economic Impact Payments: Resources and Guidance

One very important thing to know about the non-filer tool on IRS.gov. This would be the place where people without a filing requirement and not receiving any benefits such as SSA or VA, etc, can put in their information to receive the economic impact payment. If the taxpayer used the non-filer tool when they had a filing requirement for 2019, their return will reject when you try to file it.  We are working on a resolution to this right now.

Brian Wozniak, Stakeholder Liaison

Brian shared the following from Coronavirus Tax Relief: Filing and Payment Deadlines and Filing and Payment Deadlines Questions and Answers that has all the latest postponement updates:

·         Launched on April 22nd as primary resource for all issues on Coronavirus Tax Relief specifically related to IRS Filing and Payment Deadline Postponements.

·         Most federal tax filing and payment deadlines with a due date between April 1 and July 14, have been automatically postponed to July 15, 2020, to all taxpayers

·         Taxpayers needing more time to file beyond the July 15 deadline – must request an extension to file and they must submit that extension request by the “new” July 15th due date (Forms 4868 and/or Form 7004).

·         Again, this applies to both filing and payment deadlines.  Therefore, taxpayers can also defer federal income tax payments due until July 15, 2020.

·         Will be no penalties or interest assessed, regardless of the amount owed. Including all individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.

·         IRS encourages taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days

·         For 2016 tax year returns, the normal April 15 deadline to claim a refund has also been postponed to July 15, 2020.

·         Has a complete listing of ALL the forms eligible for the postponed deadline and the listing is broken down into categories. 

·         All the IRS News Releases and the Official Guidance on the filing and payment deadline postponement is on this page.

·         Includes two official guidance Notices 2020-18 and 2020-23 along with corresponding Internal Revenue News Releases IR-2020-58 and IR-2020-66

Brian also shared information relating to Retirement Accounts (see the FAQ link regarding postponement deadlines above… related Q&A are in the middle of the page).

Brian finished his portion of the presentation today with information about IRS Operations During COVID-19: Mission-Critical Functions Continue:

·         Use electronic options to support physical distancing and speed the processing of tax returns, refunds and payments.

·         To protect the public and employees, and in compliance with orders of local health authorities around the country, certain IRS services such as live assistance on telephones, processing paper tax returns and responding to paper correspondence are extremely LIMITED and/or COMPLETELY suspended until further notice. We can share that the PPS phone lines are open on a limited basis and Cathye will share some details shortly as part of the People First Initiative.

·         All Taxpayer Assistance Centers remain temporarily closed – these are field offices including the “walk-in” offices

Cathye Mason, Stakeholder Liaison

Cathye shared the following from IRS Unveils New People First Initiative; COVID-19 Effort Temporarily Adjusts, Suspends Key Compliance Program and Installment Agreement Direct Debit Frequently Asked Questions:

·         New liens and levies by field revenue officers and Campus automated systems are suspended

·         No new referrals to private debt collectors

·         No new field, office or correspondence exams, exception being refund claims to try to get clarification and resolution as soon as possible to ease taxpayer burden

·         Any actions where there is risk of expiration of the applicable statute of limitations will continue - of course taxpayers are encouraged to consent to statute extensions when offered. This will allow both sides to work outstanding issues once normal operations resume.

·         Payments on existing Offers in Compromise can be suspended using the same procedures as for the DDIA’s

·         Interest continues to accrue and the taxpayer needs to instruct the bank, if applicable, to resume after July 15 or risk default at that time

·         The FAQ’s on liens and levies provide procedures to follow to suspend levies or to get liens released during this period when normal communications are limited.

Leslie Chambers, Stakeholder Liaison

The PPS phone lines are open but with limited assistors-about 2/3 of the operators are available. Wait times will be lengthy as the employees are also taking calls for other open specialty lines and are also working on “paper issues” such as amended returns, refund claims and correspondence.  They cannot answer EIP questions. They also cannot transfer calls to other assistors except for the Automated Collections System (ACS) assistors.  If you have a Form 2848 or 8821 you will be able to fax it to a provided number and they can work with you on the call. The CAF units are still closed so the forms cannot be entered in the CAF database-this means you will need to have the forms ready to fax if you need to call in again for the same client. Apologies for the inconvenience-we expect operations to return to normal as we slowly bring back full staffing levels for the agency.

Deborah Rogers, Stakeholder Liaison

Deborah shared Treasury, IRS and Labor Announce Plan to Implement Coronavirus-Related Paid Leave for Workers and Tax Credits for Small and Midsize Businesses to Swiftly Recover the Cost of Providing Coronavirus-related Leave and Employee Retention Credit for Employers Subject to Closure Due to COVID-19 Crisis. Brief summary on the Families First Coronavirus Response Act (FFCRA) follows:

The Families First Coronavirus Response Act provides small and midsize employers( those with fewer than 500 employees) refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing required paid sick and paid family leave wages to their employees for leave related to COVID-19 that occurs on or after April 1 through December 31, 2020.

KEY TAKEAWAYS:

       Credit covers wages, health expenses/health insurance and employer portion of Medicare tax, wages are not subject to employer portion of SS tax for FFCRA purposes

       Regular pay rate at max of $511/day for 10 days for personal COVID illness or quarantine

       2/3 regular pay capped at $200/day to care for family member with COVID illness for up to 10 days

       2/3 regular pay capped at $200/day to care for children without regular daycare provider due to COVID-19 for up to 10 weeks

       Sick leave coverage is mandatory; employers with less than 50 employees may seek a hardship exemption for family sick leave and family leave.

       Credit claimed by holding back employment tax deposits and claiming an advance refund on Form 7200 if needed. Reconciliations done on employment tax returns quarterly or annually for annual filers.

 

Neki Cox, Stakeholder Liaison

Neki shared information on the Employee Retention Credit (ERC). The employee retention credit is a refundable tax credit equal to 50 percent of up to $10,000 in qualified wages (including health plan expenses), paid by eligible employers after March 12, 2020 and before January 1, 2021.

  Eligible employers are those businesses with operations that have been partially or fully suspended due to governmental orders due to COVID-19, or businesses that have a significant decline in gross receipts compared to 2019.
• The refundable credit is capped at $5,000 per employee and applies against certain employment taxes on wages paid to all employees.
• Eligible employers can reduce federal employment tax deposits in anticipation of the credit. They can also request an advance of the employee retention credit for any amounts not covered by the reduction in deposits.

Issues & Status  

Lisa Rogers presented a concern at our previous December AK PLM meeting with efile authorizations (Form 8879). The authorization for Form 1040 can be electronically signed using Docusign however other returns available for efile (eg. F 1120, F 1120-S, F1065) cannot be authorized electronically on F 8879. Cathye elevated this issue to the national issue management system. After the COVID-19 pandemic hit, the IRS loosened some restrictions on electronic signatures and is allowing true electronic signatures from some international taxpayers. The Taxpayer First Act (TFA) office has announced that they are reviewing the new COVID-related procedures and intend to implement some of them as part of the TFA mandates and reorganization, so we continue to be hopeful about full electronic signature allowance for tax returns. We will keep the group updated on this.

New Issues

From Daniel:

Is it possible to issue a reject if the ITIN has expired? Sometimes the client and preparer are unaware that the client’s ITIN has expired. When filing with an expired ITIN the IRS will accept the return and then a few months down the road the client gets a letter saying their ITIN was expired and their credits (American Opportunity Credit, for example) are denied. Is there any way the IRS could NOT accept a return with an expired ITIN (perhaps a reject code when filing), which would give the taxpayer time to send in the W-7 before the return is filed/accepted?

From Therese Sharp:

Taxpayers’ return for 2019 was filed and the amount owed was electronically debited from their bank account as scheduled, but their estimated tax payment, scheduled for 4/15 was not. So there is no idea as to whether the 6/15 payment will be paid. Have you seen any issues like this?

Answer: Brian recommended that they call their tax software company to see if there is any issue there, and he will also work one-on-one with Therese to see where the issue lies.

From Terry Bakker:

A question on Economic Impact Payments; Taxpayers are married filing jointly and one spouse passes away on May 13. The EIP is received on May 15th. The payment for the deceased person must be returned, but will be filing MFJ (surviving spouse) for 2020. Will the surviving spouse get the funds back in 2020 as a credit?

 

Answer from Karen: There is no answer on this yet, but the issue has been elevated and we are awaiting guidance.

From Terry Bakker:

Is the Form 990 postponement deadline also July 15?  Many Exempt Org forms are listed in the FAQs, but not the actual 990.

Answer from Cathye: Yes, the filing date has been postponed until July 15 for the 990 as well as any on extension until 5/15.

From Therese:

We understand that the IRS isn’t fully opened yet. What is the best way to send in the POA Form 2848? Should we fax or mail them?

Answer: the general consensus from the Stakeholder Liaisons present is to wait until the CAF unit opens again, then fax them in. While we cannot promise anything, it looks like we may be bringing some folks back to a few of the campuses (like Ogden, where the CAF unit is for most of the west coast) in early June.

From Terry:

People First Initiative is not clear on whether taxpayers must work with their bank to suspend payments until July 15, or if IRS will automatically suspend debiting accounts and reinstate after July 15?

Answer from Cathye: Taxpayers need to work with their bank. The IRS will not automatically suspend DDIA ACH orders.

From Harriet:

Is there a preferred method for contacting an agent during a correspondence audit at this time?

Answer from Cathye: There is no preferred method for contacting the examining agent. People First Initiative generally suspends or extends any previously set exam deadlines and we recommend that you wait to hear from us…if there is a statute imminent we will reach out for an extension.

From Carol:

A fellow practitioner has a client who is trying to get an EIN for a new business. They have tried the online application multiple times without success. The client has an ITIN. Could this be the issue?

Answer from Cathye: ITIN holders cannot currently use the online application. Instead, they might consider sending in Form SS-4, information on which can be found at the following link: https://www.irs.gov/forms-pubs/about-form-ss-4 .

From Daniel:

We are concerned with the 1040X being processed as a superseding return rather than versus an amended return. Will the 1040Xs submitted, but potentially not processed until after the due date, be treated as superseding returns?

Answer: from Dennis and SLs: the consensus is that the mailed returns are being date stamped, so a superseding return should be processed as such when normal operations resume.

From Lisa:

Can a trust with a disregarded entity LLC get an online EIN?

Answer: Two of the attendees have volunteered to help Lisa with this issue, so please be prepared to share how it worked out at the next meeting.


Next Scheduled Meeting

The next meeting is scheduled for June 17th.


more Calendar

5/20/2020 » 8/19/2020
ON-DEMAND WEBINAR - OATC 2020 Safety Net: "The Twists and Turns of Schedules C & E" (6 hrs CE)

5/28/2020
CANCELLED Westside: Education: “The Road Between Subchapter C and Subchapter S" - 5/28/20

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