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Dear members —
We have been working for the better part of the past year and a half to address education at NAEA, and the larger question of how do we provide essential, actionable education to a profession that has implicitly dedicated itself to lifelong learning. We are working with the board, with volunteers, and with consultants to build a map, and we are structuring our staff to carry out decisions as they come to pass.
You will receive a separate message today on our August learning series, Tax Summer School, which is an "all you can eat" event member-priced at $199. Please check out the offerings and complete the pre-registration form. I will "see" you there as I, too, need to bring home my CE units.
I recently received a request for more specificity on the e-file amended return launch date. An unimpeachable source shared with me the following:
For Tax Year 2019, beginning 08/17/20, MeF will be accepting amended returns. Software packages that support the Form 1040-X, will utilize the Form 1040 schema to submit the amended return electronically. An amended return indicator checkbox has been added to the electronic version of the 1040. This checkbox must be marked to indicate a Form 1040-X is attached.
While this date is NOT a guarantee, we at least have a date on our calendar (other than 07/15/20 ... maybe) to which we can look forward.
Finally, I remain excited about our new member benefits—and our existing ones as well. First, we have recently created new webinars focused on leveraging our CCH IntelliConnect access: a deep dive on federal tax issues, on state tax issues, and—my favorite (possibly because I am co-hosting) — on how our affiliates could use the powerful research tool to inform state-level advocacy. We still offer a made-for-tax pros cyber insurance policy. Fraudsters are not relaxing, they are redoubling their efforts instead. Are you prepared?
Robert Kerr, EA
Executive Vice President
Call for Awards Nominations
Do you know someone who is active in the EA community and should be recognized for his or her outstanding contributions? How about someone who tirelessly sacrifices his or her time to enhance the enrolled agent profession?
NAEA is accepting nominations for the following awards:
Submit nominations online.
- NAEA Founders Award
- NAEA Excellence in Education Award
- Excellence in Public Awareness Award
- EA Mentor Award
- Outstanding Volunteer Award
- Outstanding Supporter of EAs Award
- Bill Payne Advocacy Award
- The Emerging Leader Award
Deadline to submit nominations is June 30, 2020.
IRS and e-Signatures: A Tale of Two Policies
For many years now, IRS has supported two different, inconsistent policies on the use of electronic signatures for disclosure authorizations and powers of attorney (Forms 8821 and 2848, respectively). On the one hand, the Service has provided guidance and support to the banking industry for the use of private-sector electronic signatures for Forms 4506-T. On the other, the Service has prohibited a similar use for Forms 8821 and 2848. NAEA spent considerable political capital in Congress to include a requirement in the 2019 Taxpayer First Act (§2302) to force IRS to issue uniform guidance on the use of private-sector electronic signatures across all these forms. The deadline for the Service to act was January 1, 2020. With apologies to Bono, all was quiet on New Year's Day.
Other than issuing an IRM lumping together a hodgepodge of various standards and policies — but glaringly omitting Forms 8821 and 2848 — IRS has let the statutorily mandated deadline come and go without meeting the black letter requirements of the law. (See our May 2019 and April 2020 letters on this issue.)
Fast forward to the coronavirus pandemic, IRS suddenly found itself with tens of thousands of employees working from home with no working Centralized Authorization File or frankly any practical means for signing many documents because of the lack of a coherent policy on the use of electronic signatures. While E@lert would never look at it this way, one could conclude IRS suddenly realized its non-policy was gumming up work, not the taxpayers' business or the practitioners', but heaven forbid its own. We know IRS was forced to abandon its 21st century Berlin Wall-esque policy on private sector electronic signatures and allow practitioners' clients to use whatever means necessary to sign documents. The problem is without formal guidance, the private sector software providers will not go through the time and expense to update their tax software for practitioners, leaving enrolled agents to scrounge up solutions on an ad hoc basis.
Now that the agency has reopened, officials are slowly moving back to their limited approach to private sector electronic signature use. While the policy on whatever-goes is still in effect through the end of the year for the convenience of IRS personnel working from home, the agency this week signaled to the bankers that it is full speed ahead on their permanent guidance on their use of private sector solutions. Additionally, NAEA has been reliably informed that IRS provided a special briefing to technology companies and the large chain preparers, while ignoring similar requests from Circular 230 tax practitioners — the sole group referred to in the statute.
A Taxpayer-Friendly IRS Decision
IRS announced interest on individual 2019 refunds reflected on returns filed by July 15, 2020, will generally be paid from April 15, 2020, until the date of the refund. According to Richard Rubin at The Wall Street Journal, "Any individual income tax refunds issued after April 15 will be paid with interest ... That IRS decision ... stems from a quirk in the tax code and in the way the filing season deadline was extended."
Further details from The Motley Fool. The interest rate for the second quarter is 5 percent per year and for the third quarter is 3 percent per year. And yes, the interest is income and therefore taxable.
See the USA in Your
We hear lawmakers are considering an "Explore America" tax credit (Morris Armstrong, EA, is quoted, BTW) in an effort to stimulate the economy. The proposal would allow Americans to get a tax credit up to $4,000 on domestic travel. The tax credit would let individuals claim a credit up to 50 percent of their 2020 and 2021 U.S. airline, rental car company, theme park, hotel, and restaurant expenses. Spoiler alert: lots of support by the U.S. travel industry; many details yet to be answered.
Meanwhile, in case you are in the market for an electric vehicle, IRS just gave the §30D nod to Bentley's Bentayga (we have found the fancier the car, the less pronounceable the model). Base price: $160,000. Beats highway mileage of the non-electric version. Not so much, according to Car & Driver (perhaps Bill Nemeth, EA, will be penning another letter to the editor). Call us cynical. It would not be the first time. We do not believe subsidizing $160,000 hybrids is the intent of §30D.
Otherwise, here is a summary of new (or newish) notable legislative, regulatory, and tax administration issues since we last wrote:
- Another round of direct payments may be "on the table" for the next pandemic relief package, though negotiations are not expected to pick up until after the July 4 recess.
- The government may consider postponing the TY19 filing deadline a second time. Treasury Secretary Steven Mnuchin reportedly said, "As of now, we're not intending on doing that but it is something we may consider." Meanwhile, NAEA's EVP Bob Kerr, EA, said to several tax beat reporters, "Enrolled agents would greet such a decision with a Bronx cheer." And then he said some things not suitable for a family publication.
- A bipartisan group of senators wants to encourage more gifts to charities during the pandemic by building on a deduction provided in the CARES Act. The bill introduced by Senators Chris Coons (D-DE) and James Lankford (R-OK) would make available — for TY19 and TY20 — an above-the-line deduction for charitable giving on federal income taxes valued at up to one-third of the standard deduction (around $4,000-single/$8,000-MFJ).
An IRS Employee by Any Other Name ...
Did you know IRS employees may use fake names when interacting with taxpayers? Apparently they have been doing so for decades. The IRS authorized a pseudonym program 27 years ago to help protect employees concerned they might be harassed, threatened, or assaulted in the performance of their duties. According to a recent Treasury Inspector General for Tax Administration (TIGTA) report, delays in oversight enforcement and controls have resulted in "current inaccurate and incomplete records."
TIGTA found delays in implementing controls over the program, and failure to update historical records, significantly contributed to inaccurate and incomplete records. IRS could not readily provide documentation to justify use of pseudonyms for 51 percent of a 129-person sample. TIGTA has recommended IRS create a complete, accurate list of pseudonyms, with justification for their usage and managerial approval. The IRS agreed to create a standardized request form to obtain pseudonyms.
IRS is giving victims of the April tornadoes, severe storms, and flooding that took place in parts of Mississippi, Tennessee, and South Carolina until October 15, 2020, to file various individual and business tax returns and make payments. Relief is being offered to any area designated by FEMA as qualifying for assistance. (IR-2020-126)
Through NAEA's relationship with Wolters Kluwer, you have the ability to find in one place state tax filing relief. Once you log in through NAEA's website, you will see "Coronavirus/COVID-19 Pandemic," and immediately beneath that, you will have access to a document that updates in real time.
You may also want to consider the following:
- The District of Columbia enacted emergency legislation allowing an 80 percent deduction for apportioned DC NOL carryovers.
- Massachusetts starts its new fiscal year the same date as NAEA's: July 1. Unlike NAEA, it has no budget and nothing in sight. MassLive has details. Possible solutions — unsurprisingly — involve tax changes.
| || GOVERNMENT RELATIONS NEWS|
Everything but the Kitchen Sink
Since last we spoke, we found a month-by-month list of movies, shows, and books debuting this summer; some IRA strategies under the CARES Act that IRS may not be loving; why you should revisit (or if you are like most of us, E@lert included, visit) Paradise Lost; and the hard truth of poker (and life) — why you are never due for good cards.
We are still in the 1980s as far as music goes: U2 (War and Bad), INXS, and Foreigner (all of which we owned on cassette). And because these are difficult times professionally and personally, we are reading Fast Company (how to have a rest ethic as strong as our work ethic) and what disruption really means.
Otherwise, please consider this list of tax-related items, curated for America's Tax Experts®:
- Politico wrote earlier this week that some 44,000 people threw away their EIP debit cards. Here is how to request reissued debit cards.
- Memphis and Ogden CAF Units are both back online. Initial response time, according to several NAEA super users, is good
- Senate Finance Committee Chairman Charles Grassley (R-IA) announced IRS Commissioner Charles Rettig will testify June 30 at a Senate Finance Committee hearing on the 2020 filing season and the agency's recovery from the COVID-19 pandemic.
- File under "location, location:" IRS reportedly purchased access to a commercial database that records cellphone location data. The data, which the agency attempted to match to individual devices present during a series of crime-related transactions and obtained by subscription through a government contractor, did not include names or cellphone numbers.
- The U.S. Tax Court announced it will resume receiving mail effective July 10. Any items currently being held by the USPS and private delivery services will be delivered to the Court on that day. The building remains closed to the public, and until further notice, documents may not be hand-delivered.
- We found this WaPo op-ed piece on the tax gap and IRS enforcement opportunities by former Treasury Secretary Larry Summers absolutely fascinating. One of the money quotes, "Less than 1 percent of high-income non-filers are responsible for a full third of the high-income non-filing tax gap. Indeed, roughly one-fourth of the high-income non-filing tax gap — about $10 billion between 2014-2016 — is attributable to just 100 of the most egregious non-filers in each year."
"In a sort of ghastly simplicity we remove the organ and demand the function. We make men without chests and expect of them virtue and enterprise. We laugh at honor and are shocked to find traitors in our midst."
— C.S. Lewis (1898 – 1963), British writer and lay theologian
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