Urgent: IRS provides an extra day for taxpayers to file, pay their taxes following system issues. File by midnight, April 18. 

Did You Know? Paid tax professionals aren’t permitted to endorse or otherwise negotiate a refund check issued to a taxpayer. This is true, even if the taxpayer requests their refund be directed into your bank account or in your name. Failure to comply could result in an Internal Revenue Code, Section 6695(f) penalty of $510 for each tax return with no maximum penalty amount and no reasonable cause exceptions.

For more information on Preparer Penalties visit: www.irs.gov/tax-professionals/summary-of-preparer-penalties-under-title-26

Did You Know? Internal Revenue Code, Section 6107(b) requires tax return preparers to:

a. Retain a completed copy of all returns prepared or a list containing the names, taxpayer identification numbers, tax years, and types of all returns prepared, and

b. Make such records available for inspection upon request by the IRS for a three-year period

For each failure to comply, you could be subject to an Internal Revenue Code Section 6695(d) penalty of $50 with a maximum penalty of $25,500 per year.

For more information on Preparer Penalties visit: www.irs.gov/tax-professionals/summary-of-preparer-penalties-under-title-26

Preparer Penalty Awareness: IRC 6695(c) Failure to Furnish Identifying Number

Did You Know? Internal Revenue Code, Section 6109(a)(4) requires paid tax return preparers to include an identifying number along with their name when signing the return. IRS regulations require the identifying number be a Preparer Tax Identification Number (PTIN). Failure to provide a PTIN may result in an Internal Revenue Code, Section 6695(c) penalty of $50 for each failure with a maximum penalty of $25,500 in any calendar year.

For more information on Preparer Penalties visit: www.irs.gov/tax-professionals/summary-of-preparer-penalties-under-title-26

Winter storm extension: Many businesses have extra time to request a 6-month extension

WASHINGTON — The Internal Revenue Service today granted many businesses affected by severe winter storms additional time to request a six-month extension to file their 2017 federal income tax returns.

The IRS is providing this relief to victims and tax professionals affected by last week’s storm--known as Winter Storm Quinn—and this week’s storm –known as Winter Storm Skylar--that primarily hit portions of the Northeast and Mid-Atlantic.

Business taxpayers who are unable to file their return by the regular due date—Thursday, March 15, 2018--can request an automatic extension by filing Form 7004, on or before Tuesday, March 20, 2018.  Form 7004,  available on IRS.gov, provides a six-month extension for returns filed by partnerships (Forms 1065 and 1065-B) and S corporations (Form 1120S).

Eligible taxpayers taking advantage of this relief should write, “Winter Storm Quinn” or “Winter Storm Skylar,” on their Form 7004 extension request (if filing this form on paper).  As always, the fastest and easiest way to get an extension is to file this form electronically. 

The IRS will continue to monitor conditions and provide additional relief if circumstances warrant.

Dear Tax Professional

You play an important role in the nation’s tax system by helping taxpayers file their returns and meet their tax obligations. To ensure paid tax return preparers are following the law, we want to highlight some potential penalties with respect to preparation of clients’ tax returns. The goal of this campaign entitled “Did You Know” is to make sure you’re not engaging in return preparation practices that may subject you to a preparer penalty. Over the next few weeks you’ll receive emails about five of the most common preparer penalties.

Here is the first: Preparer Penalty Awareness: IRC 6695(a) Failure to Furnish Copy to Taxpayer

Did You Know? Internal Revenue Code, Section 6107(a) requires all paid tax preparers to furnish the taxpayer with a completed copy of their tax return before (or at the same time) the return is presented to the taxpayer for signature. Failure to comply with this law may subject you to an Internal Revenue Code, Section 6695(a) penalty of $50 per occurrence with a maximum assessment of $25,500 in any calendar year. You may provide the taxpayer a copy in any acceptable media, including electronic. It must include all information submitted to the IRS, except it isn’t required to contain your Preparer Tax Identification Number (PTIN).

For more information on Preparer Penalties visit: www.irs.gov/tax-professionals/summary-of-preparer-penalties-under-title-26

WASHINGTON – The Internal Revenue Service today said that it is ready to process tax year 2017 returns claiming three popular tax benefits recently renewed retroactively into law.

The Bipartisan Budget Act, enacted on Feb. 9, renewed for tax year 2017 a wide range of individual and business tax benefits that had expired at the end of 2016. The IRS has now reprogrammed its processing systems to handle the three benefits most likely to be claimed on returns filed early in the tax season.

As a result, taxpayers can now file returns claiming:

• Exclusion from gross income of discharge of qualified principal residence indebtedness (often, foreclosure-related debt forgiveness), claimed on Form 982,
• Mortgage insurance premiums treated as qualified residence interest, generally claimed by low- and middle-income filers on Schedule A, and
• Deduction for qualified tuition and related expenses claimed on Form 8917.

The IRS is working closely with tax professionals and the tax-preparation industry to ensure that their available software processes can now accommodate these new provisions. As always, filing electronically and choosing direct deposit is the fastest, most accurate and most convenient way to receive a tax refund. Last year, nearly 87 percent of individual returns were filed electronically and nearly 80 percent of refunds were direct deposited.

The IRS is continuing to update its systems to handle returns claiming the other tax benefits extended by the new law, enacted on Feb. 9. In general, these benefits affect a smaller number of taxpayers. Taxpayers eligible for these benefits can avoid delays or possibly needing to file an amended return later, by filing after IRS systems have been updated to reflect these changes. Check IRS.gov/Extenders for future updates.

Taxpayers who have already filed their 2017 federal tax return and now wish to claim one of these renewed tax benefits can do so by filing an amended return on Form 1040X. Amended returns cannot be filed electronically and can take up to 16 weeks to process. Visit IRS.gov for details.  

If your client has an expired Individual Taxpayer Identification Number (ITIN), he or she should renew it as soon as possible. Tax returns with expired ITINs will face processing delays, and affected taxpayers may lose eligibility for key tax benefits until they renew the ITIN.

IRS Publication 2043, IRS Refund Information Guidelines for the Tax Preparation Community, is now available for 2018. The publication provides the latest refund information and guidelines including specific information for your clients claiming the Earned Income Tax Credit or Advance Child Tax Credit.

Please note, although the IRS issues most refunds in less than 21 days, it is possible some tax returns may require additional review resulting in delayed refunds.

With the surge of tax returns expected during the upcoming Presidents’ Day weekend, the IRS has several tips and various time-saving resources for tax pros to obtain help quickly and easily.