WASHINGTON - The Internal Revenue Service announced today annual inflation adjustments for tax year 2013, including the tax rate schedules, and other tax changes from the recently passed American Taxpayer Relief Act of 2012. 

The tax items for 2013 of greatest interest to most taxpayers include the following changes.

• Beginning in tax year 2013 (generally for tax returns filed in 2014), a new tax rate of 39.6 percent has been added for individuals whose income exceeds $400,000 ($450,000 for married taxpayers filing a joint return). The other marginal rates undefined 10, 15, 25, 28, 33 and 35 percent undefined remain the same as in prior years. The guidance contains the taxable income thresholds for each of the marginal rates.
• The standard deduction rises to $6,100 ($12,200 for married couples filing jointly), up from $5,950 ($11,900 for married couples filing jointly) for tax year 2012.
• The American Taxpayer Relief Act of 2012 added a limitation for itemized deductions claimed on 2013 returns of individuals with incomes of $250,000 or more ($300,000 for married couples filing jointly).
• The personal exemption rises to $3,900, up from the 2012 exemption of $3,800. However beginning in 2013, the exemption is subject to a phase-out that begins with adjusted gross incomes of $250,000 ($300,000 for married couples filing jointly). It phases out completely at $372,500 ($422,500 for married couples filing jointly.)
• The Alternative Minimum Tax exemption amount for tax year 2013 is $51,900 ($80,800, for married couples filing jointly), set by the American Taxpayer Relief Act of 2012, which indexes future amounts for inflation. The 2012 exemption amount was $50,600 ($78,750 for married couples filing jointly).
• The maximum Earned Income Credit amount is $6,044 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $5,891 for tax year 2012.
• Estates of decedents who die during 2013 have a basic exclusion amount of $5,250,000, up from a total of $5,120,000 for estates of decedents who died in 2012.
• For tax year 2013, the monthly limitation regarding the aggregate fringe benefit exclusion amount for transit passes and transportation in a commuter highway vehicle is $245, up from $240 for tax year 2012 (the legislation provided a retroactive increase from the $125 limit that had been in place).

Details on these inflation adjustments and others are contained in Revenue Procedure 2013-15, which will be published in Internal Revenue Bulletin 2013-5 on Jan.28, 2013. Other inflation adjusted items were published in October 2012 in Revenue Procedure 2012-41.

Due to late tax law changes, the 2013 filing season for processing individual income tax returns will begin on January 30, 2013.

Certain tax returns will not be accepted, either electronically or on paper, until later in the filing season. Details on affected forms are in IRS News Release IR- 2013-2.

EROs and Online Providers may hold tax returns containing one or more of these forms until the IRS can accept them. EROs and Online Providers must advise taxpayers that the returns will not be e-filed until the IRS can accept the returns beginning January 30. Clearly explain to the taxpayer that this means the period for processing the return and/or checking the taxpayer's refund status cannot begin before January 31, 2013.

Therefore, the e-file stockpiling rule does not apply in this situation. For more details on stockpiling, see Publication 1345 Authorized IRS e-file Providers e-filing Individual Income Tax Returns.

Dear Virginia Tax Practitioner,

As the IRS Stakeholder Liaison area manager for Virginia, I want to thank you for your past support and ask for your continued partnership with you local stakeholder liaisons and me. SL is proud to be in our seventh year as the practitioner's gateway to the IRS. 

We introduced the Issue Management Resolution System (IMRS) seven years ago and have received more than a thousand IMRS issues. Check out some of the successes in our IMRS report on IRS.gov.  Please continue to tell us when you see a problem or have a suggestion to improve our processes.

Redesigned www.irs.gov

Our website has been recently redesigned. The new platform will deliver what you need at a faster pace.  Highlights from the redesigned website include:

·         Return to the home page from anywhere on the site by clicking on the IRS logo

·         Find familiar headings (individuals, businesses, charities, etc.) by clicking on the down-arrow at “Information For" in the top right-hand corner

·         Find a database listing of tax-exempt organizations, called "EO Select Check", under "Information For" Charities

·         Find Resources for Tax Professionals all on one page

·         Locate all our social media on our New Media page

·         Search our new Third Party Reporting Information Center for guidance on Forms Series 1099, etc.

·         Subscribe to our e-News Services.  All IRS subscriptions are sent from irs@service.govdelivery.com. PTIN reminders are also sent from this address. When in doubt about a link in an email, you can always go directly to www.irs.gov.

Keep up to date with RPO

Visit our Web page for PTIN Requirements for Tax Return Preparers to keep current on the rules and process your renewals. For additional PTIN information, contact the IRS Tax Professional PTIN Information line at 877-613-7846, available Monday-Friday, 8 a.m. - 5 p.m. CST.

 

How you can help your clients and colleagues

There are many ways you can assist us to further our partnership. Help us reach more practitioners by hosting joint events or webinars. Include IRS information in your newsletters or post an IRS tax center or web link on your website. You can even volunteer to teach a Small Business Tax Workshop in your community and share what you learn.

Finally, stay in touch with your local Stakeholder Liaison.  You may also contact me or if you need assistance in

Virginia, contact an SL below.

Herbert D. (Ley) Mills	Anna L. Falkenstein
Phone: 804-916-3892	Phone: 703-462-5925
Fax: 804-916-3895	Fax: 877-477-8418
Email: herbert.mills@irs.gov	Email: anna.l.falkenstein@irs.gov

Filing season can be a challenging and stressful time, but together we can make it easier. Use our free tools, products and services; and raise your issues and concerns through your local stakeholder liaison.

Sincerely,

David R. Yeskoo

Area Manager

Stakeholder Liaison Field,

South Atlantic

400 N. 8^th Street

Box 40– Room 1068

Richmond, VA     23219-4838

(excerpts from letter written by Carol Campbell, IRS RPO Director)

WASHINGTON - Following the January tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), the Internal Revenue Service announced today it plans to open the 2013 filing season and begin processing individual income tax returns on Jan. 30.

The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. This will reflect the bulk of the late tax law changes enacted Jan. 2. The announcement means that the vast majority of tax filers -- more than 120 million households -- should be able to start filing tax returns starting Jan 30.

The IRS estimates that remaining households will be able to start filing in late February or into March because of the need for more extensive form and processing systems changes. This group includes people claiming residential energy credits, depreciation of property or general business credits. Most of those in this group file more complex tax returns and typically file closer to the April 15 deadline or obtain an extension.

“We have worked hard to open tax season as soon as possible,” IRS Acting Commissioner Steven T. Miller said. “This date ensures we have the time we need to update and test our processing systems.”

The IRS will not process paper tax returns before the anticipated Jan. 30 opening date. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit.

“The best option for taxpayers is to file electronically,” Miller said.

The opening of the filing season follows passage by Congress of an extensive set of tax changes in ATRA on Jan. 1, 2013, with many affecting tax returns for 2012. While the IRS worked to anticipate the late tax law changes as much as possible, the final law required that the IRS update forms and instructions as well as make critical processing system adjustments before it can begin accepting tax returns.

The IRS originally planned to open electronic filing this year on Jan. 22; more than 80 percent of taxpayers filed electronically last year.

Who Can File Starting Jan. 30?

The IRS anticipates that the vast majority of all taxpayers can file starting Jan. 30, regardless of whether they file electronically or on paper. The IRS will be able to accept tax returns affected by the late Alternative Minimum Tax (AMT) patch as well as the three major “extender” provisions for people claiming the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.

Who Can’t File Until Later?

There are several forms affected by the late legislation that require more extensive programming and testing of IRS systems. The IRS hopes to begin accepting tax returns including these tax forms between late February and into March; a specific date will be announced in the near future.

The key forms that require more extensive programming changes include Form 5695 (Residential Energy Credits), Form 4562 (Depreciation and Amortization) and Form 3800 (General Business Credit). A full listing of the forms that won’t be accepted until later is available on IRS.gov.

As part of this effort, the IRS will be working closely with the tax software industry and tax professional community to minimize delays and ensure as smooth a tax season as possible under the circumstances.

Updated information will be posted on IRS.gov.

Authorized IRS e-file Providers must not submit electronic returns to the IRS prior to the receipt of all Forms W-2, W-2G, and 1099-R from the taxpayers.

If taxpayers are unable to secure and provide a correct Form W-2, W-2G, or 1099-R, Providers may submit the electronic return only after securing Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Insurance Contracts, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs etc. in accordance with the use of that form. This is the only time Providers should submit an electronic return with information from pay stubs or Leave and Earning Statements (LES).

Compliance Monitoring

The IRS monitors Authorized IRS e-file Providers for compliance with this and other IRS e-file rules and requirements. The IRS may conduct monitoring visits to ensure compliance with Revenue Procedure 2007-40 and with IRS e-file rules and requirements included in IRS e-file publications.

Sanctions

The IRS may warn or sanction Providers that violate IRS e-file rules and requirements. Sanctions may be a written reprimand, suspension of one to two years or expulsion from participation from IRS e-file depending on the seriousness of the infraction. Providers may appeal sanctions through the Administrative Review Process. Additional information regarding sanctioning is available at IRS.gov in Publication 3112, IRS e-file Application and Participation.

The Modernized e-File (MeF) System successfully opened this morning at 9:00 am, Eastern Standard Time (January 7, 2013) and is now operational for the following Business Tax Returns:

o Fiscal year returns with a year ending prior to 12/31/2012
o All 2011 tax year and 2012 fiscal year business returns, including Form 1120 series
o 2012 tax year Form 2290, Heavy Highway Vehicle Use Tax Return
o 2012 tax year Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information and Other Returns
o Form 8868, Application for Extension of Time To File an Exempt Organization Return (omitted from previous listing)

We will share additional information when we can accept the remaining Tax Year 2012 Business forms as soon as it becomes available.

Note:  Please use https://la.www4.irs.gov/a2a/mef/  for ATS and Production returns. You should only use https://la.alt.www4.irs.gov/a2a/mef/  for troubleshooting when advised by IRS to do so.

The IRS continues to review the details and impact of the new tax law signed this week, but a number of these provisions will require changing forms and updating our processing systems involving non-1040 business returns. As a result, electronic filing of many business returns will be delayed while we update forms, related instructions and corresponding systems. This delay is not expected to significantly impact business filers since most of these returns with reporting periods ending Dec. 31, 2012, are not due until March or April 2013, depending on the form.

The IRS will not accept these business tax returns for processing through MeF at this time*:
§ All 2012 tax year business forms (other than Forms 2290 and 7004)
§ Form 8849, Schedule 3 - Certain Fuel Mixtures and the Alternative Fuel Credit
§ Form 990 series (Tax Exempt tax returns)

Beginning Jan. 7, 2013, the IRS will accept these forms for processing through MeF:
§ Fiscal year returns with a year ending prior to 12/31/2012
§ All 2011 tax year and 2012 fiscal year business returns, including Form 1120 series
§ 2012 tax year Form 2290, Heavy Highway Vehicle Use Tax Return
§ 2012 tax year Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information and Other Returns

We will share additional information on when we can accept the remaining 2012 tax year business forms as soon as it becomes available. More information will also be available soon regarding 2012 individual 1040 tax returns impacted by this week’s legislation.

* Note: Business tax returns not processable through MeF at this time will also not be processed if submitted on paper.

The Internal Revenue Service released updated income-tax withholding tables for 2013 reflecting this week’s changes by Congress.

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

IRS has posted Frequently Asked Questions (FAQs) to help Authorized IRS e-file Providers (Providers) understand the correct usage of Electronic Filing Identification Numbers (EFINs).  Providers must ensure that they are using their correct EFIN.

When a Provider is doing business with another Provider, you must check to see that the other Provider also has a valid EFIN.