Wednesday, July 21, 2021

WHAT THE IRS SHOULD DO


In reaction/response to the COVID-19 pandemic the Internal Revenue totally closed down all operations and offices for many months in 2020.  During this period, the IRS did not process tax returns – current and amended – and did not process taxpayer and tax professional correspondence.  I do not know the extent to which payments made during this period were acknowledged and processed.
 
The “correctness” of the extent and duration of the IRS closure is open to interpretation.  But it happened and we must now deal with the consequences. 
 
When the IRS finally opened up again its system continued to spew out automatic intimidating balance due notices based on the information in the system prior to the closure.  However, much of the backlog of unopened and unprocessed correspondence were responses by taxpayers and tax professionals to erroneous balance due assessments, explaining the IRS error or correcting a taxpayer error.
 
Taxpayers in general are truly intimidated by continual, however erroneous, IRS notices.  And they will pay the requested balance due although they know the amount requested being wrong.  Many taxpayers paid the IRS what it asked for, despite having previously written, or had their tax professional write, to the IRS to explain errors in the assessment.
 
The IRS has acknowledged the backlog of returns and correspondence.  But it continues to automatically issue balance due notices, regardless of the fact that it is aware that the taxpayer may have previously responded to the notice providing information and documentation.  These continued notices assume the taxpayer had totally ignored all previous notices, which is often not true.
 
Responses to the continued erroneous mailings create more correspondence and increase the already humongous backlog.  And taxpayer erroneous overpayment of incorrect assessments must be addressed by taxpayers and tax pros, creating more correspondence to add to the pile.  This only compounds the problem.
 
What the IRS should have done, and should do now, is put a temporary hold on all open balance due accounts and cease from sending out automatic notices and other collection activities for these accounts until the backlog of correspondence is processed.  As correspondence regarding a taxpayer notice is acknowledged in the IRS system the hold must be continued until the issue is resolved.
 
Tax professional membership organizations should join together to urge the IRS to do this now.
 
TTFN










Tuesday, July 20, 2021

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?


* Attention NJ taxpayers – you may soon be getting a check in the mail from your Uncle Phil for up to $500 (highlight is mine) -   
 
Beginning July 2, 2021, the Middle Class Tax Rebate will be issued to eligible New Jersey residents that file a 2020 resident Income Tax return (NJ-1040) with a tax balance of $1 or more. There is no need to apply for this rebate. A rebate will be calculated automatically for eligible taxpayers when you file your NJ-1040.”
 
For more information go here.
 
* Kay Bell provides a “Guide to IRS online ways to get, track or change Advance Child Tax Credit payments” at DON’T MESS WITH TAXES.
 
She prefaces the post with a warning –
 
Don't fall for scammers who falsely say they can help you get, or get more, of the enhanced Child Tax Credit amounts that started going out this week. Instead, get help from a tax pro or use the Internal Revenue Service's online tools.”
 

* The recent report by the National Taxpayer Advocate reported that at the end of the 2021 tax filing season the IRS faced a backlog of over 35 million individual and business income tax returns that require manual processing.  This includes about 16.8 million manual (paper) returns waiting to be processed and about 2.7 million amended returns awaiting processing.  And that does not count the backlog of correspondence.

 

Russ Fox emphasizes what you need when waiting for a federal refund or a response to correspondence in “At Least I’m Not Classified as “Dead” at TAXABLE TALK -

 

The overall theme when dealing with the IRS remains the same: patience.  You need it when dealing with the IRS.  I do expect things to slowly improve once the IRS moves employees back to the Service Centers (probably this Fall), but given the humongous backlog it will takes years for the IRS to be back to normal.”

 

There is hope for those waiting for refunds.  I have heard from 3 clients recently who have finally received their 2020 refunds.

 

BTW – a few years ago I also had a client who received a letter from the IRS telling him the Service was not issuing his requested refund because he was dead.  Thankfully it did not take 7 years to fix.

 

TTFN




{Once again I DID NOT enter the first few paragraphs in all caps. The Blogger system is apparently totally FU-ed and automatically does this - I have no idea why.}













Tuesday, July 6, 2021

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?

* Kay Bell tells usMost U.S.taxpayers believe tax cheating is wrong” at DON’T MESS WITH TAXES –

 

87 percent said it is not at all acceptable to cheat on their income taxes.

 

Even more, 94 percent, believe it is a civic duty to pay their fair share of taxes.

 

Another 91 percent said everyone who cheats on their taxes should be held accountable.”

 

* And Kay outlines “3 Advance Child Tax Credit moves (& more!) to make in July”.

 

* Following up on an earlier post titled "The Tax Field Is Broken" Jason Dinesen provides his thoughts “On Clients Hating TheirTax Pro”.

 

Jason makes an excellent point about the task of today’s sincere and ethical tax pro -

 

Taxes are hard — I used to be fascinated by the complexity of taxes; now the complexity simply scares me. I spend so much time trying to get things right on tax returns and deal with the constant changes and the complexity and the risk . . .”

 

* The WASHINGTON POST reports “IRS faces 35 million unprocessed tax returns as backlog swells, watchdog says” -

 

The Internal Revenue Service closed the most recent filing season with more than 35 million in unprocessed tax returns, as the agency’s backlog grew markedly amid a crush of challenges related to the pandemic and economic relief efforts, a government watchdog said Wednesday.

 

Erin Collins, the National Taxpayer Advocate, said in her report that about 17 million paper tax returns are still waiting to be processed and approximately 16 million additional returns have been placed on hold because they require further review manually. Another 2.7 million amended tax returns have not been processed.”

 

* A reminder – don’t call or email your tax preparer to ask where your refund is.

 

THE LAST WORD –

 

If you are not part of the solution you are part of the problem.

 

Every single Republican who does not vocally oppose, denounce and disavow Trump and his lies is equally as responsible as Trump and the current Republican leadership for the damage being done to America, Americans, American values and American democracy.

 

TTFN

 



{editorial note - I have no idea why the blogger system printed the first item in all caps and all italics and the second item in all caps.  This is not how I entered the text.  Blogger is FU-ed - or it really likes Kay Bell.}

 

 







 

Sunday, July 4, 2021

HAPPY FOURTH OF JULY!


America truly has a reason to celebrate this July 4th.  

Thankfully we now have a President with intelligence, integrity and humanity - something that was truly lacking on the past four July 4ths.


















Friday, June 25, 2021

THE 2021 CHILD TAX CREDIT

For tax year 2021, families claiming the Child Tax Credit will receive up to $3,000 for each qualifying child who is between the ages of 6 and 17 at the end of 2021. They will receive $3,600 per qualifying child under the age 6 at the end of 2021.     

The increase – the additional $1,000 or $1,600 - is reduced (phased out), for incomes over $150,000 for married taxpayers filing a joint return, $112,500 for heads of household, and $75,000 for all other taxpayers.  The remaining $2,000 is phased out based on the pre-2021 rules.  For 2021 the credit is fully refundable. 

Advance payments of up to 50% of the 2021 Child Tax Credit will begin to be made regularly from July through December to eligible taxpayers who have a main home in the United States for more than half the year.  You can elect not to receive these advance payments.   

Like the advance premium tax credit, any advance payment of the Child Tax Credit will be reconciled on the 2021 Form 1040.  Please be aware that if you do receive advance Child Tax Credit payments in 2021 this will reduce the potential federal refund on your 2020 Form 1040.

The IRS website has established the following tools to assist families in dealing with the changes to the credit. 

Child Tax Credit Eligibility Assistant: allows families to answer a series of questions to quickly determine whether they qualify for the advance credit

Child Tax Credit Update Portal: allows families to verify their eligibility for the payments and, if they choose to, unenroll or opt out from receiving the monthly payments

Child Tax Credit Non-filer Sign-up Tool: allows eligible individuals who don’t normally file an income tax return to register for payments

It is my understanding that the IRS will provide those who receive advance payments with a statement in January.  Be sure to save this statement and give it to your tax preparer.       

TTFN








Wednesday, June 23, 2021

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?

 A day late, but hopefully not a dollar short.

* “I Haven’t Received My IRS Refund. Can You HelpMe?  I have received several emails with this message.  So has Russ Fox of TAXABLE TALK and many other fellow tax pros.

 

Russ joins me in pointing out (the highlights are mine) –

 

Neither I nor any other tax professional can speed up your IRS refund.”

 

And –

 

Your tax professional cannot fix this.  There is no one to call to have this resolved.  Indeed, the IRS asks that you do not call them as there really is nothing that can be done.  Please don’t call your tax professional either; he or she cannot make your refund come to you any faster this year.  You must just be patient.”

 

* Speaking of Russ, he provides a review of “The 2021 Tax Season (Part 1)”.  Part 1 refers to the period ending May 15th – Part 2 ends October 15th.

 

* BTW - have you seen my annual review of THAT WAS THE TAX SEASON THAT WAS yet? 

 

Why not?

 

* A blast from the not-so-distant past that is still valid from Paul Murray at THE GOOD MONEY LIFE (new to me) - “4 Reasons We Picked 529 College Savings Plans for Our Children”.

 

* Kay Bell explains “Taxpayers now can go online to optout of Advance Child Tax Credit payments, verify eligibility” at DON’T MESS WITH TAXES.

 

THE LAST WORD –

 

Take the NO GOP PLEDGE.  The future of American democracy depends on it.

 

TTFN










Tuesday, June 15, 2021

READ MY LIPS . . . . .

 


There is absolutely NOTHING I, or any tax professional, can do to expedite the processing of your 2020 federal or state income tax return or to find out why your anticipated federal or state refund has not been issued yet.
 
There is NOTHING I, or any tax professional, can do to find out the status of your 2020 federal or state tax return that you cannot do yourself – by going to http://www.irs.gov/refunds or the corresponding tool on your state tax agency’s website.
 
The IRS is backed up due to its offices being closed for too many months in 2020.  You need to be patient.
 
DO NOT call or email me, or your tax professional, to ask about your 2020 refund. 
 
Got it?
 
TTFN