Final Reminder for PTIN Renewal With the launch of filing season, the IRS Return Preparer Office has sent PTIN expiration letters to those return preparers who have not yet renewed their PTINs. Following is a copy of the letter: Dear Tax Professional, As of January 27, 2020, our records indicate that you have not renewed your IRS preparer tax identification number (PTIN) for 2020. Your PTIN expired on December 31, 2019. If you renewed your PTIN after January 27, 2020 or recently sent a paper renewal, you may disregard this letter. If you do not renew your PTIN, you can no longer prepare federal tax returns for compensation. If you intend to renew your PTIN for 2020, you can renew online or submit a paper application. Online Renewal You can renew online at www.irs.gov/ptin. Paper Renewal If you prefer, you can renew by paper using Form W-12, available at www.irs.gov, and checking the “renewal” box. It will take 4-6 weeks to process. You should not prepare returns until you receive notification that your PTIN renewal is complete. We monitor expired PTINs. If you continue to prepare returns, you may be subject to penalties or other actions imposed by the Internal Revenue Service. If you … Read More
NSTP, Tax Stakeholder Organizations Provide Recommendations to IRS on the Implementation of the Taxpayer First Act Washington, D.C. (January 30, 2020) – The NSTP has joined a group of stakeholder organizations to provide the Internal Revenue Service (IRS) with recommendations as it prepares reports to Congress as mandated by the Taxpayer First Act. In the letter, the group notes that they are providing “collective input” as the IRS prepares these reports and “most importantly,” recommend the IRS establish a new Practitioner Services Division as an integral part of the organizational modernization. “The IRS…needs to adopt a visionary approach looking beyond immediate constraints to develop long-term goals…The IRS should provide flexibility in its design to ensure the agency will continue to evolve,” the group said. In their feedback, the tax practitioners highlighted key priorities in each of the three areas in which reports are being submitted to Congress. The letter outlines recommendations for providing taxpayers access to empowered IRS employees, timely information and tailored resources; placing greater emphasis on customer-focused employee training; and improving the technological and organizational infrastructure.
Ghost Tax Return Preparers With the start of the 2020 tax filing season near, the Internal Revenue Service is reminding taxpayers to avoid unethical “ghost” tax return preparers. According to the IRS, a ghost preparer does not sign a tax return they prepare. Unscrupulous ghost preparers will print the return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost will prepare but refuse to digitally sign as the paid preparer. By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number, or PTIN. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a fast buck by promising a big refund or charging fees based on the size of the refund. Ghost tax return preparers may also: Require payment in cash only and not provide a receipt. Invent income to qualify their clients for tax credits. Claim fake deductions to boost the size of the refund. Direct refunds into their bank account, not the taxpayer’s account. The IRS urges taxpayers to choose … Read More
Backup Withholding Forms Filing Deadlines Some businesses and other payers take out backup withholding from payments they make to certain people. These entities have an upcoming filing deadline. Description of backup withholding The person or business paying the taxpayer doesn’t generally withhold taxes from certain payments. They don’t do this because it’s assumed the taxpayer will report and pay taxes on this income when they file their federal tax return. There are, however, situations when the payer is required to withhold a certain percentage of tax to make sure the IRS receives the tax due on this income. This is what’s known as backup withholding. If a payer does backup withholding, they are required to deposit that withholding on those payments with the IRS. Form 945, Annual Return of Withheld Federal Income Tax Businesses and other payers must report backup withholding and any other federal income tax withheld from nonpayroll payments on Form 945. The deadline for filing Form 945 for tax year 2019 is Friday, January 31, 2020. However, if the payer made deposits on time and in full, the deadline is Monday, February 10, 2020. Information Returns The information returns listed below are used to report backup withholding for … Read More
Relief for Financial Institutions that Incorrectly Report IRA Required Minimum Distributions The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), among other items, changed the requirement for minimum distributions from qualified plans and IRAs. With the December 20th enactment date, financial institutions have had only a short time to change their systems. In Notice 2020-6, the IRS has provided relief for financial institutions that send a statement to an IRA owner, e.g., on Form 5498 (IRA Contribution Information), stating that the owner who turns 70½ in 2020 has a 2020 required minimum distribution (RMD) requirement. The new required beginning date for an IRA owner is April 1 of the calendar year following the calendar year in which the individual attains age 72; formerly, it was April 1 of the calendar year following the calendar year in which the individual attains age 70½. This amendment to Code Sec. 401(a)(9) is effective for distributions required to be made after December 31, 2019, with respect to individuals who will attain age 70½ after that date. As a result of this change, IRA owners who will attain age 70½ in 2020 will not have a required beginning date of April … Read More
January 31 Credential Renewal Deadline for Some Enrolled Agents Enrolled agents (EAs) with Social Security Numbers (SSNs) ending in 4, 5 or 6 are required to renew their enrollment by January 31st or their EA status will expire on March 31, 2020. Background—EAs. Section 10.4(a) of Circular 230 authorizes the IRS to grant EA status to individuals who demonstrate special competence in tax matters by passing A written examination (Special Enrollment Examination) and A background check that shows they have not engaged in any conduct that would justify suspension or disbarment under Circular 230. EAs are eligible to practice before the IRS and are subject to the rules in Circular 230. Once an individual becomes eligible for EA status by passing the written exam and background check, the individual must file an application for enrollment with the IRS and pay a nonrefundable user fee. (31 CFR 10.5) To maintain active status and ability to practice before the IRS, every three years EAs must complete continuing education requirements, file an application to renew their enrollment and pay a nonrefundable user fee. The renewal periods are staggered based on the last digit of the EA's SSN. (31 CFR 10.6(d)) 2020 enrollment renewal application … Read More