IRS Tax News

  • 11 Feb 2013 9:14 AM | Anonymous

    Please note that an incorrect link appeared in item 4 in the February 8 edition of the EO Update.  Below is the corrected item.

    To help tax-exempt organizations understand the compliance process, EO recently launched new webpages on audits.  Click here to review these new pages.

  • 11 Feb 2013 9:12 AM | Anonymous

    WASHINGTON - The Internal Revenue Service announced today that taxpayers will be able to start filing two major tax forms next week covering education credits and depreciation.

    Starting Sunday, Feb. 10, the IRS will start processing tax returns that contain Form 4562, Depreciation and Amortization. And on Thursday, Feb. 14, the IRS plans to start processing Form 8863, Education Credits.

    This step clears the way for almost all taxpayers to start filing their tax returns for 2012. These forms affected the largest groups of taxpayers who weren’t able to file following the Jan. 30 opening of the 2013 tax season.

    The IRS will be able to accept the education credits and depreciation forms following the completion of reprogramming and testing of its systems.  Work continues on preparing IRS systems to accept the remaining tax forms affected by the American Taxpayer Relief Act (ATRA) enacted by Congress on Jan. 2.

    The IRS also announced today it will start accepting the remaining forms affected by the January legislation the first week of March.  A specific date will be announced later. Most of those in this group file more complex tax returns and typically file closer to the deadline or obtain an extension. A full list of the forms that will be accepted the first week of March is available on IRS.gov.

    Next week’s opening covers two groups of taxpayers using:

    • Form 8863, Education Credits. Form 8863 is used to claim two higher education credits -- the American Opportunity Tax Credit and the Lifetime Learning Credit.
    • Form 4562, Depreciation and Amortization. Most of the people using the depreciation form tend to file later in the tax season or obtain a six-month extension. Non-1040 business filers using Form 4562 can also file starting Sunday.

    For taxpayers using e-file, most software companies are now accepting tax returns with these two forms and will submit them after the IRS begins accepting them next week.

    More information is available on IRS.gov.

  • 08 Feb 2013 10:52 AM | Anonymous

    ATTN: Software Developers, Return Transmitters and Authorized IRS e-file Providers/EROs

    Please be advised the Tax Year 2012 Publication 1346, Record Layout Nature of Changes #3, has been uploaded to IRS.gov. You may access this information using the following link:    

    Tax Year 2012 Publication 1346

  • 08 Feb 2013 10:16 AM | Anonymous

    It’s a good idea to have all your tax documents together before preparing your 2012 tax return. You will need your W-2, Wage and Tax Statement, which employers should send by the end of January. Give it two weeks to arrive by mail.

    If you have not received your W-2, follow these three steps:

    1. Contact your employer first.  Ask your employer – or former employer – to send your W-2 if it has not already been sent. Make sure your employer has your correct address.

    2. Contact the IRS. After February 14, you may call the IRS at 800-829-1040 if you have not yet received your W-2. Be prepared to provide your name, address, Social Security number and phone number. You should also have the following information when you call:

    • Your employer’s name, address and phone number;
    • Your employment dates; and
    • An estimate of your wages and federal income tax withheld in 2012, based upon your final pay stub or leave-and-earnings statement, if available.

    3. File your return on time. You should still file your tax return on or before April 15, 2013, even if you have not yet received your W-2. File Form 4852, Substitute for Form W-2, Wage and Tax Statement, in place of the W-2. Use the form to estimate your income and withholding taxes as accurately as possible. The IRS may delay processing your return while it verifies your information.

    If you need more time to file you can get a six-month extension of time. File Form 4868, Application for Automatic Extension of Time to File US Individual Income Tax Return.  If you are requesting an extension, you must file this form on or before April 15, 2013.

    If you receive the missing W-2 after filing your tax return and the information on the W-2 is different from what you reported using Form 4852, then you must correct your tax return. File Form 1040X, Amended U.S. Individual Income Tax Return to amend your tax return.

    Forms and instructions are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).


    Additional IRS Resources:

    • Form 4852, Substitute for Form W-2, Wage and Tax Statement
    • Form 1040X, Amended U.S. Individual Income Tax Return 

    IRS YouTube Videos:

  • 07 Feb 2013 2:19 PM | Anonymous

    The IRS has noticed that a large number of returns with the Form 8867, Paid Preparer’s Earned Income Credit Checklist, have incomplete information. Although the IRS will not reject a return if information is missing on Form 8867, these returns will be suspended causing a potential delay in refunds if the information is missing.

    We are asking software developers and transmitters to communicate the Form 8867 information requirements through their software and other communication channels. Specifically, when Form 8867 is present in a return and Earned Income Credit is claimed, entries for lines 22, 23, 24, 25, both parts of 26, and 27 must be present. We recommend that the software ensures these lines on Form 8867 have entries in order to avoid processing delays that could impact refunds.

    We also ask that you remind preparers that they could be assessed a penalty if they fail to comply with the due diligence requirements.
  • 07 Feb 2013 2:18 PM | Anonymous

    On Friday, Jan. 18, 2013, the United States District Court for the District of Columbia enjoined the Internal Revenue Service from enforcing the regulatory requirements for registered tax return preparers. In accordance with this order, tax return preparers covered by this program are not required to complete competency testing or secure continuing education. The ruling does not affect the regulatory practice requirements for CPAs, attorneys, enrolled agents, enrolled retirement plan agents or enrolled actuaries.

    On Friday, Feb. 1, the court modified its order to clarify that the order does not affect the requirement for all paid tax return preparers to obtain a preparer tax identification number (PTIN). Consistent with this modification, the IRS has reopened the online PTIN system.

    The IRS continues to have confidence in the scope of its authority to administer this program and is working with the Department of Justice to address all options, including a planned appeal.

    Please continue to www.irs.gov/taxpros for additional information as it becomes available.

  • 07 Feb 2013 10:13 AM | Anonymous

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    WASHINGTON – Continuing a year-long enforcement push against refund fraud and identity theft, the Internal Revenue Service today announced the results of a massive national sweep in recent weeks targeting identity theft suspects in 32 states and Puerto Rico, which involved 215 cities and surrounding areas.

    The coast-to-coast effort against 389 identity theft suspects led to 734 enforcement actions in January, including indictments, informations, complaints and arrests. The effort comes on top of a growing identity theft effort that led to 2,400 other enforcement actions against identity thieves during fiscal year 2012.

    The January crackdown, a joint effort with the Department of Justice and local U.S. Attorneys offices, unfolded as the IRS opened the 2013 tax season. IRS Criminal Investigation expanded its efforts during January, pushing the total number of identity theft investigations to more than 1,460 since the start of the federal 2012 fiscal year on Oct. 1, 2011.

    “As tax season begins this year, we want to be clear that there is a heavy price to pay for perpetrators of refund fraud and identity theft,” said IRS Acting Commissioner Steven T. Miller. “We have aggressively stepped up our efforts to pursue and prevent refund fraud and identity theft, and we will continue to intensely focus on this area. This is part of a much wider effort underway for the 2013 tax season to stop fraud.”

    The national effort with the Justice Department and other federal, state and local agencies is part of a larger, comprehensive identity theft strategy the IRS has embarked on that is focused on preventing, detecting and resolving identity theft cases as soon as possible.

    The identity theft effort – which intensified in January as the 2013 filing season opened – involved 734 enforcement actions related to identity theft and refund fraud. The effort led to actions taking place throughout the country involving 389 individuals. The effort included 109 arrests, 189 indictments, informations and complaints, as well as 47 search warrants.

    In addition to the criminal actions, IRS auditors and criminal investigators conducted a special compliance effort starting on Jan. 28 to visit 197 money service businesses to help make sure these businesses are not assisting identity theft or refund fraud when they cash checks.  The compliance visits occurred in 17 high-risk places identified by the IRS covering areas in and surrounding New York, Philadelphia, Atlanta, Tampa, Miami, Chicago, Houston, Phoenix, Los Angeles, San Diego, El Paso, Tucson, Birmingham, Detroit, San Francisco, Oakland and San Jose.

    A map of the locations and additional details on the January enforcement actions and compliance visits are available on IRS.gov. The latest updates on the identity theft enforcement efforts and individual cases are available on a special Identity Theft Schemes page on IRS.gov. More information on enforcement actions can be found on a DOJ Tax Division page.

    The identity theft push over the last several weeks reflects a wider effort underway at the IRS. Among the highlights:

    • The number of IRS criminal investigations into identity theft issues more than tripled in fiscal year 2012. The IRS started 276 investigations in fiscal year 2011, a number that jumped to 898 in fiscal year 2012. So far in fiscal year 2013, there have been more than 560 criminal identity theft investigations opened.
    • Total enforcement actions continue to rapidly increase against identity thieves. This category covers actions ranging from indictments and arrests to search warrants. In fiscal year 2012, enforcement actions totaled 2,400 against 1,310 suspects. After just four months in fiscal 2013, enforcement actions totaled 1,703 against 907 suspects.
    • Sentencings of convicted identity thieves continue to increase. There were 80 sentencings in fiscal year 2011, which increased to 223 in fiscal year 2012.
    • Jail time is increasing for identity thieves. The average sentence in fiscal year 2012 was four years or 48 months – a four-month increase from the average in fiscal year 2011. So far this fiscal year, sentences have ranged from 4 to 300 months.

    More information on IRS Criminal Investigation efforts is available on IRS fact sheet FS-2013-12.

    In addition to the national “sweeps” effort announced today, IRS work on identity theft and refund fraud continues to grow. For the 2013 filing season, the IRS has expanded these efforts to better protect taxpayers and help victims.

    To stop identity thieves up front, the IRS has made a significant increase for the 2013 tax season in the number and quality of identity theft screening filters that spot fraudulent tax returns before refunds are issued. The IRS has dozens of identity theft screens now in place to protect tax refunds.

    These efforts helped the IRS in 2012 protect $20 billion of fraudulent refunds, including those related to identity theft, compared with $14 billion in 2011.

    By late 2012, the IRS assigned more than 3,000 IRS employees undefined over double from 2011 undefined to work on identity theft-related issues. IRS employees are working to prevent refund fraud, investigate identity theft-related crimes and help taxpayers who have been victimized by identity thieves. In addition, the IRS has trained 35,000 employees who work with taxpayers to recognize identity theft indicators and help people victimized by identity theft.

    “We are strengthening our processing systems to watch for identity theft and detect refund fraud before it occurs,” Miller said. “And we continue to put more resources on helping people who are victims of identity theft and resolve these complex cases as quickly as possible.”

    Taxpayers can encounter identity theft involving their tax returns in several ways. One instance is where identity thieves try filing fraudulent refund claims using another person’s identifying information, which has been stolen. Innocent taxpayers are victimized because their refunds are delayed.

    To help taxpayers, the IRS has a special section on IRS.gov dedicated to identity theft issues, including YouTube videos, tips for taxpayers and a special guide to assistance. For victims, the information includes how to contact the IRS Identity Protection Specialized Unit. For other taxpayers, there are tips on how taxpayers can protect themselves against identity theft.

    If a taxpayer receives a notice from the IRS indicating identity theft, they should follow the instructions in that notice. A taxpayer who believes they are at risk of identity theft due to lost or stolen personal information should contact the IRS immediately so the agency can take action to secure their tax account. The taxpayer should contact the IRS Identity Protection Specialized Unit at 800-908-4490.  The taxpayer will be asked to complete the IRS Identity Theft Affidavit, Form 14039, and follow the instructions on the back of the form based on their situation.

    Taxpayers looking for additional information can consult the special identity protection page on IRS.gov.

  • 07 Feb 2013 10:08 AM | Anonymous

    While each individual tax return is unique, there are some tax rules that affect every person who files a federal income tax return. These rules involve dependents and exemptions. The IRS has six important facts about dependents and exemptions that will help you file your 2012 tax return.

    1. Exemptions reduce taxable income.  There are two types of exemptions: personal exemptions and exemptions for dependents. You can deduct $3,800 for each exemption you claim on your 2012 tax return.

    2. Personal exemptions.  You usually may claim one exemption for yourself on your tax return. You also can claim one for your spouse if you are married and file a joint return. If you and your spouse file separate returns, you may claim the exemption for your spouse only if he or she had no gross income, is not filing a joint return and was not the dependent of another taxpayer.

    3. Exemptions for dependents.  Generally, you can claim an exemption for each of your dependents. A dependent is either your qualifying child or qualifying relative. If you are married, you may not claim your spouse as your dependent. You must list the Social Security Number of each dependent you claim on your return. See Publication 501, Exemptions, Standard Deduction, and Filing Information, for information about dependents who do not have Social Security numbers.

    4. Some people do not qualify as dependents.  While there are some exceptions, you generally may not claim a married person as a dependent if they file a joint return with their spouse.

    5. Dependents may have to file.  If you can claim someone else as your dependent on your tax return, that person may still be required to file his or her own tax return. Whether they must file a return depends on several factors, including the amount of their gross income (both earned and unearned income), their marital status and any special taxes they owe.

    6. Dependents can’t claim a personal exemption.  If you can claim another person as a dependent on your tax return, that person may not claim a personal exemption on his or her own tax return. This is true even if you do not actually claim that person as your dependent on your tax return. The fact that you could claim that person disqualifies them from claiming a personal exemption.

    Remember that a person must meet several tests in order for you to claim them as your dependent. See Publication 501 for the tests you will use to determine if you can claim a person as your dependent.

    You can view or download Publication 501 at IRS.gov or order it by calling 800-TAX-FORM (800-829-3676). You can also use the Interactive Tax Assistant at IRS.gov to find out if a person qualifies as your dependent. The ITA is a helpful tool that can answer many of your tax law questions.


    Additional IRS Resources:

  • 05 Feb 2013 3:07 PM | Anonymous

    ATTN: Software Developers, Return Transmitters and Authorized IRS e-file Providers/EROs

    The Business Rules for Form Family 1120 TY2012v2.0 have been updated on IRS.gov.

    Questions or comments may be directed to the e-help Desk at 1-866-255-0654.
  • 05 Feb 2013 10:47 AM | Anonymous
    You can now order your tax return or account transcript online. Using the IRS’s automated self-service
    applications to order transcripts is convenient and easy. A transcript is acceptable as a substitute for an
    exact copy of a previously filed tax return in many situations. The IRS offers two types of transcripts defined
    below:
    • A tax return transcript shows most line items from your tax return as originally filed, including any
    accompanying forms and schedules. It does not reflect any changes made after the return was filed.
    • A tax account transcript shows any later adjustments either you or the IRS made after the tax return
    was filed. This transcript shows basic information – including marital status, type of return filed,
    adjusted gross income and taxable income.

    The IRS does not charge a fee for these transcripts, which are available for the current tax year as well as
    the past three tax years. Whether you choose the online option or the automated phone service, you will find
    these self-service options available any time, day or night, when it’s convenient for you.

    To order online, go to www.irs.gov. Click on Tools in the middle of the page. Next, click on Order A
    Transcript
    and follow the three easy steps. You must provide your Social Security number or IRS Individual
    Taxpayer Identification number, date of birth, street address and ZIP Code or Postal Code. To order by
    phone, call the IRS automated phone line at 1-800-908-9946 and follow the voice prompts. You must provide
    your SSN or IRS ITIN and digits of your street address. Expect to receive the return or account transcript to
    your current address of record within 5 to 10 business days.

    To send your transcript to a different address, you must complete and mail Form 4506-T, Request for
    Transcript of Tax Return
    , available on www.irs.gov. You will find instructions and mailing addresses on page
    two of Form 4506-T. Processing times for 4506-T requests are provided on Form 4506-T.
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