Notice 2013-15 provides for the waiver of additions to tax under section 6654(a) of the Internal Revenue Code for underpayment of estimated taxes for certain farmers and fishermen due to the delayed start for filing 2012 tax year returns.  The IRS issued a press release on January 18, 2013, which indicated that it will issue this guidance on this issue.   

Notice 2013-05 will be published in Internal Revenue Bulletin2013-9 on February 25, 2013.

WASHINGTON - As preparations continue for the Jan. 30 opening of the 2013 filing season for most taxpayers, the Internal Revenue Service announced today that processing of tax returns claiming education credits will begin by the middle of February. 

Taxpayers using Form 8863, Education Credits, can begin filing their tax returns after the IRS updates its processing systems. Form 8863 is used to claim two higher education credits -- the American Opportunity Tax Credit and the Lifetime Learning Credit.

The IRS emphasized that the delayed start will have no impact on taxpayers claiming other education-related tax benefits, such as the tuition and fees deduction and the student loan interest deduction. People otherwise able to file and claiming these benefits can start filing Jan. 30.

As it does every year, the IRS reviews and tests its systems in advance of the opening of the tax season to protect taxpayers from processing errors and refund delays. The IRS discovered during testing that programming modifications are needed to accurately process Forms 8863.  Filers who are otherwise able to file but use the Form 8863 will be able to file by mid-February. No action needs to be taken by the taxpayer or their tax professional.  Typically through the mid-February period, about 3 million tax returns include Form 8863, less than a quarter of those filed during the year.

The IRS remains on track to open the tax season on Jan. 30 for most taxpayers. The Jan. 30 opening includes people claiming the student loan interest deduction on the Form 1040 series or the higher education tuition or fees on Form 8917, Tuition and Fees Deduction. Forms that will be able to be filed later are listed on IRS.gov.

Updated information will be posted on IRS.gov.

If you received income during 2012, you may need to file a tax return in 2013. The amount of your income, your filing status, your age and the type of income you received will determine whether you’re required to file. Even if you are not required to file a tax return, you may still want to file. You may get a refund if you’ve had too much federal income tax withheld from your pay or qualify for certain tax credits.

You can find income tax filing requirements on IRS.gov. The instructions for Forms 1040, 1040A or 1040EZ also list filing requirements. The Interactive Tax Assistant tool, also available on the IRS website, is another helpful resource. The ITA tool answers many of your tax law questions including whether you need to file a return.

Even if you’ve determined that you don’t need to file a tax return this year, you may still want to file. Here are five reasons why:

1. Federal Income Tax Withheld.  If your employer withheld federal income tax from your pay, if you made estimated tax payments, or if you had a prior year overpayment applied to this year’s tax, you could be due a refund. File a return to claim any excess tax you paid during the year.

2. Earned Income Tax Credit.  If you worked but earned less than $50,270 last year, you may qualify for EITC. EITC is a refundable tax credit; which means if you qualify you could receive EITC as a tax refund. Families with qualifying children may qualify to get up to $5,891 dollars. You can’t get the credit unless you file a return and claim it. Use the EITC Assistant to find out if you qualify.

3. Additional Child Tax Credit.  If you have at least one qualifying child and you don’t get the full amount of the Child Tax Credit, you may qualify for this additional refundable credit. You must file and use new Schedule 8812, Child Tax Credit, to claim the credit.

4. American Opportunity Credit.  If you or someone you support is a student, you might be eligible for this credit. Students in their first four years of postsecondary education may qualify for as much as $2,500 through this partially refundable credit. Even those who owe no tax can get up to $1,000 of the credit as cash back for each eligible student. You must file Form 8863, Education Credits, and submit it with your tax return to claim the credit.

5. Health Coverage Tax Credit.  If you’re receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation, you may be eligible for a 2012 Health Coverage Tax Credit. Spouses and dependents may also be eligible. If you’re eligible, you can receive a 72.5 percent tax credit on payments you made for qualified health insurance premiums.

Want more information about filing requirements and tax credits? Visit IRS.gov.

Additional IRS Resources:

• Interactive Tax Assistant
• EITC Assistant
• Publication 596, Earned Income Credit
• Schedule 8812, Child Tax Credit
• Publication 972, Child Tax Credit
• Form 8863, Education Credits
• Publication 970, Tax Benefits for Education
• Health Coverage Tax Credit 

IRS YouTube Videos:

• Do I Have To File a Tax Return? - English | Spanish | ASL  
• Education Tax Credits and Deductions - English | Spanish | ASL  

IRS Podcasts:

• Education Tax Credits and Deductions - English | Spanish

January 25, 2013: Latest IRS Court Case Update

Today, John Ams, NSA Executive Director is attending American Bar Association Tax Section Meeting in Orlando, FL. Here's the latest information from this afternoon's panel made up of IRS lawyers.

As you know the IRS on Wednesday, January 23, 2013 filed a motion for a stay of the court decision in Loving v. Commissioner.

Per the court rules, the plaintiffs will file legal motions in response to the IRS request on Tuesday, January 29, 2013.

Two days later on Thursday, January 31, 2013, the IRS will have a chance to file motions in response to whatever the plantiffs file on Tuesday.

It therefore seems clear that the court will not have any future rulings until after the start of filing season on January 30, 2013.

Announcement 2013-13 contains corrections to Revenue Procedure 2013-6, as published on January 2, 2013 (2013-1 I.R.B. 198).  In particular, this announcement clarifies [as provided below] that applications for determination letters should continue to be submitted to the Covington, KY address in section 6.15 of Rev. Proc. 2013-6.  Comments submitted by interested parties in connection with the determination letter process should be sent to a different address in Cincinnati, OH in section 17.02 of Rev. Proc. 2013-6.  

Announcement 2013-13 will be published in the Internal Revenue Bulletin 2013-9 on Feb. 25, 2013. 

Announcement 2013-13 amends Revenue Procedure 2013-6 to: 

• correct the address for interested party comments, and

• clarify that the mailing address for determination letter applications has not changed.

The corrected mailing address for interested party comments is:

Internal Revenue Service
EP Determinations
Attn: Customer Service Manager
P.O. Box 2508
Cincinnati, OH 45202

Applicants should continue to send their determination letters applications to:

Internal Revenue Service
EP Determinations
P.O. Box 12192
Covington, KY 41012-0192

Sign up now for this Feb. 21 Phone Forum. Revenue Procedure 2013-12 made various changes to the IRS correction programs that plan sponsors and practitioners can use to fix mistakes in retirement plans. The changes include being able to now correct 403(b) plan document failures and new Voluntary Compliance Program procedures. Janet Mak, Manager of EP Voluntary Compliance, and Paul C. Hogan, EP Voluntary Compliance Program Coordinator will discuss the new revenue procedure. If you have a specific matter that you would like addressed, please email us at ep.phoneforum@irs.gov by Feb. 15.

Note: This forum will be held twice on Feb. 21. The first session will be held at 11:00am ET and the second session will be held at 2:00pm ET. Please register only for the session in which you plan to participate. The port cannot be freed up for another participant if you can't attend the session you are registered for.

Review the following annual procedure updates that affect tax-exempt organizations:

• Rev. Proc. 2013-4 
  Rulings and information letters; issuance procedures. Revised procedures are provided for furnishing ruling letters, information letters, etc., on matters related to sections of the Code currently under the jurisdiction of the Office of the Division Commissioner, Tax Exempt and Government Entities. Rev. Proc. 2012-4 superseded.
• Rev. Proc. 2013-5
  Technical advice. Revised procedures are provided for furnishing technical advice to area managers and appeals office by the Office of the Division Commissioner, Tax Exempt and Government Entities, regarding issues in the employee plans area (including actuarial matters) and in the exempt organizations area. Rev. Proc. 2012-5 superseded.
• Rev. Proc. 2013-8
  User fees for employee plans and exempt organizations. Current guidance for complying with the user fee program of the Service as it pertains to requests for letter rulings, determination letters, etc., on matters under the jurisdiction of the Office of the Division Commissioner, Tax Exempt and Government Entities Division, is provided. Rev. Proc. 2012-8 superseded.
• Rev. Proc. 2013-9
  Determination letters and rulings. This document sets forth procedures for issuing determination letters and rulings on the exempt status of organizations under sections 501 and 521 of the Code. The procedures also apply to the revocation and modification of determination letters or rulings, and provide guidance on the exhaustion of administrative remedies for purposes of declaratory judgment under section 7428 of the Code. Rev. Proc. 2012-9 superseded.
• Rev. Proc. 2013-10
  This document sets forth procedures for issuing determination letters and rulings on private foundation status under section 509(a) of the Code, operating foundation status under section 4942(j)(3), and exempt operating foundation status under section 4940(d)(2), of organizations exempt from Federal income tax under section 501(c)(3). This revenue procedure also applies to the issuance of determination letters on the foundation status under section 509(a)(3) of nonexempt charitable trusts described in section 4947(a)(1). Rev. Proc. 2012-10 superseded.

The American Taxpayer Relief Act of 2012 extended a modification of the tax treatment of payments to controlling exempt organizations to January 1, 2014. The special rule previously applied only to payments received or accrued before January 1, 2012. 

Generally, interest, annuities, royalties and rents received by controlling organizations from controlled entities are subject to tax under section 512(b)(13). However, exempt organizations may exclude “qualifying specified payments” from unrelated business income if received or accrued before January 1, 2014. 

Other provisions in the Taxpayer Relief Act that affect charitable organizations:

The Pension Protection Act of 2006 contained several time-limited provisions for favorable tax treatment of certain contributions. These provisions generally expired at the end of 2007 and have been extended several times for two-year periods, most recently in 2010. Some, but not all, of these provisions are extended by the TRA. Specifically, TRA extends the following through the end of 2013:

• IRA Charity Contribution (Code Section 408(d)(8)(F), permitting a distribution of up to $100,000 tax-free from an IRA to a qualifying charity by those over 70 ½ years old. As in the previous extension, taxpayers have the month of January 2013 to elect to make charitable distributions treated as effective in 2012. See related article and IRS news release. 
• Contribution of Conservation Easement (Code Section 170(b)(1)(E)(vi)), permitting favorable deductions for donating conservation interests in capital gain real property to charity
• Contribution of Food Inventory (Code Section 170(e)(3)(C)(iv)), permitting enhanced deductions for contributions of food inventories
• Contributions of property by S corporations (Code Section 1367(a)), limiting an S corporation shareholder’s reduction in basis of the S corporation’s stock to a pro rata share of basis (rather than fair market value) of property contributed by the corporation

Two provisions for enhanced charitable deductions – contributions of book inventories to public schools and corporate contributions of computer inventory – were not extended. These were in Code Sections 170(e)(3)(D)(iv) and 170(e)(6)(G), respectively.

Starting in 2014, certain employers – including certain for-profit, non-profit, and government entity employers – must offer health coverage to their full-time employees or a shared responsibility payment may apply. On Dec. 28, 2012, the Treasury Department and the IRS issued proposed regulations on the Employer Shared Responsibility provisions. Comments may be submitted electronically, by mail or hand delivered to the IRS. For additional information on the Employer Shared Responsibility provisions and the proposed regulations, see our questions and answers.

The Earned Income Tax Credit has made the lives of working people a little easier since 1975. EITC can be a boost for workers who earned $50,270 or less in 2012. Yet the IRS estimates that one out of five eligible taxpayers fails to claim their EITC each year. The IRS wants everyone who is eligible for the credit to get the credit that they’ve earned.

Here are the top five things the IRS wants you to know about this credit.

1. EITC is valuable.  The EITC not only reduces the federal tax you owe, but could result in a refund. You base the amount of EITC on your earned income and the number of qualifying children in your household. The average credit was around $2,200 last year. If you qualify, the credit could be worth up to $5,891. 

2. Review your eligibility.  If your financial, marital or parental situations change from year to year, you should review the EITC eligibility rules. Just because you didn’t qualify last year doesn’t mean you won’t this year.

3. File your return.  If you are eligible for the EITC, you must file a federal income tax return to claim the credit – even if you are not otherwise required to file. Remember to include Schedule EIC, Earned Income Credit, when you file your Form 1040. If you file Form 1040A, use the EIC worksheet and keep it for your records. If you use IRS e-file to prepare and file your tax return, the software will guide you and not let you forget this important step. E-file does the work and figures your EITC for you!

4. Know the qualifications.  You should understand the qualifications for EITC before claiming it, including:

• • You do not qualify for EITC if your tax filing status is Married Filing Separately.
  • You must have a valid Social Security number for yourself, your spouse – if filing a joint tax return – and any qualifying child listed on Schedule EIC.
  • You must have earned income. You have earned income if you are paid wages, you are self-employed, you have income from farming or you receive disability income.
  • Married couples and single people without children may qualify. If you do not have qualifying children, you must also meet age and residency requirements as well as dependency rules.
  • Special rules apply to members of the U.S. Armed Forces in combat zones. Members of the military can elect to include their nontaxable combat pay as earned income for the purpose of computing the EITC. Even if you make this choice, your combat pay will remain nontaxable.

5. Use the EITC Assistant.  It’s easy to determine if you qualify. The EITC Assistant, a helpful tool available on IRS.gov, removes the guesswork from eligibility rules. Just answer a few simple questions to find out if you qualify and to estimate the amount of your EITC.

With IRS Free File, you can claim EITC by using brand name tax preparation software to prepare and e-file your tax return for free. It's available exclusively at IRS.gov/freefile. Free help preparing your return to claim your EITC is also available at one of thousands of Volunteer Income Tax Assistance sites around the country. To find the volunteer site nearest to you, use the VITA locator tool on IRS.gov.

For more information about the EITC, see IRS Publication 596, Earned Income Credit. It’s available in English and Spanish on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• EITC Assistant
• IRS Free File
• VITA locator tool
• Schedule EIC
• Publication 596, Earned Income Credit (EIC)

IRS YouTube Videos:

• Earned Income Tax Credit - English | Spanish

IRS Podcasts:

• Earned Income Tax Credit - English | Spanish