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NAEA Summer School is in Session and Registration is Open!
Join NAEA and your fellow tax experts August 3-25 for a month filled with sessions covering the hottest topics, latest IRS updates, and a host of relevant, timely topics to support your practice and your clients. When you purchase this bundle, you’ll get access to all 12 webinars – watch them live, or access them at your leisure – for up to 22 CE! The right courses at the right time at the right price—what’s not to like?
NAEA Continues Fight on Electronic Signatures
NAEA Government Relations staff has worked with our supporters in the Senate and House to communicate the need for the IRS to comply with the requirements of the Taxpayer First Act in regard to the use of private sector electronic signatures for Form 2848 (powers of attorney) and Form 8821 (disclosure authorization). As part of Tuesday’s Senate Finance Committee hearing on the endless 2020 filing season (the “endless” added by E@lert; that’s not Senator Grassley’s style), Senator Rob Portman (R-OH) sent a formal question to Commissioner Charles Rettig asking him to explain the IRS’s lack of action.
Additionally, in NAEA conversations with Ways & Means Committee Ranking Member Kevin Brady (R-TX) and the staff of Congressman Tom Rice (R-SC), both taxwriters have agreed to raise the issue with the Commissioner in a soon-to-be-held scheduled call.
Successful advocacy is a long game, played patiently and strategically. Members who contribute to NAEA PAC and members who participate in our annual Fly-in events are no small part of our overall success. Thank you each and all.
It Seemed Like a Harmless Little Gig…
Smartphones and apps have made it easier in recent years for millions of people to find work through new online marketplaces. Companies hiring these “platform” or “gig” workers typically classify them as independent contractors rather than employees, and (naturally) do not withhold taxes from their earnings (because who does that?). In a new report, the Government Accountability Office (GAO) found these workers may not receive information on their earnings, creating compliance challenges for them and, more importantly for effective tax administration, enforcement challenges for IRS.
The GAO made seven recommendations to IRS to promote compliance, including actions to enhance its communications plan, increase information reporting for platform workers, and allow voluntary withholding. The IRS disagreed with for four recommendations related to information reporting and voluntary withholding saying it was unable to agree because it could not commit to an implementation date due to higher priorities. The GAO said it didn’t “understand why current higher priorities would prevent IRS from taking future corrective actions” and believes all of their recommendations are valid (don’t we all?).
COVID-19 Provides Stress Test to IRS Work Processes and Systems
In our discussions this year with Congress and the press, NAEA has been emphasizing that COVID-19 crisis has highlighted the problems at IRS where Congress and the agency need to focus future investments and attention. Now, the Taxpayer Advocate has joined our call to action. In her 2021 Objectives Report to Congress, National Taxpayer Advocate, Erin M. Collins, highlights what the IRS must do to avoid in the future challenges it faced during this crisis.
As the IRS climbs out of the proverbial operational hole, the National Taxpayer Advocate recommends the IRS consider implementing additional procedures and increase the use of electronic exchange of documents and correspondence with taxpayers, institute the necessary improvements to its telephone systems allowing assistors to handle calls remotely, and continue to upgrade its computer systems to work in a secure remote environment. (page 8)
These recommendations echo both NAEA’s letters (here and here) at the beginning of the crisis, which called on the Service to reopen and modernize the Centralized Authorization File (CAF), comply with the Taxpayer First Act requirements (which are there largely at NAEA’s request) to issue guidance on using private sector electronic signatures, and to fully implement secured messaging applications for all levels of the agency.
Otherwise, here’s a summary of new (or new-ish) notable legislative, regulatory, and tax administration issues since we last wrote:
- High-income, complex finances? According to new IRS data, households with incomes over $1 million are the most likely to use this year’s delay in tax filing. Tax returns filed by that top income group declined 56% while overall tax returns declined 14%, according to new IRS data comparing mid-May 2019 and 2020. The drop in returns increases with income and exceeded 30% for all income groups above $200,000.
- They heard you, Bob! “I don’t see any reason to extend further a filing season that is already more than twice its usual length,” opined our own EVP Bob Kerr, EA to a question from Bloomberg Tax. “It won’t help IRS catch up with its backlog, it won’t bring the procrastinators into the fold, it won’t allow for alignment with state requirements,” he said. “It would, however, be confusing and a messaging nightmare.” In response (we like to think), the Department of the Treasury and IRS announced Monday that the 2019 tax filing deadline remains July 15, 2020. (IR-2020-134)
- Have you taken your RMD rollover? The IRS announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020. The 60-day rollover period for any RMDs already taken this year has been extended to August 31, 2020. (IR-2020-127)
- OIC and COVID-19. IRS recently updated its FAQs providing relief to taxpayers with Offers in Compromise and affected by COVID-19.
PPP Extension on the Way
As we went to press on Thursday morning, the House followed the upper chamber’s suit and passed a bill extending the Payroll Protection Program until August 8. We see this fueled in part by a desire to reprogram the “unused” funds, including, we are told from a Senate office with which we’ve been speaking, provisions for non-profits currently ineligible. Fortune takes a nice run at dissecting the PPP action and what it means.
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’ll see “Coronavirus/COVID-19 Pandemic,” and immediately beneath that, you’ll have access to a document that updates in real time.
You may also want to consider the following:
- Michigan Treasury extends to June 30 date by which a principal residence exemption (PRE) may be claimed for the 2020 summer tax levy in the 2020 tax year. Taxpayers must meet eligibility requirements for the PRE and are subject to assessor review.
- New Hampshire Gov. Chris Sununu (R), pursuant to his March 13 state of emergency declaration in response to COVID-19 and various executive orders, issued an emergency order authorizing municipalities to enter into agreements with property taxpayers for the payment of property taxes on an agreed schedule, which may include a reduction or waiver of any interest on such taxes. New Hampshire may be a low-tax state but it has the highest property tax rates of any U.S. state.
- In N-20-8, issued on June 11, 2020, New York State Department of Tax and Finance gave estimated tax payment guidance clarifying, but conflicting with, their prior guidance in N-20-2. The new notice indicates taxpayers should treat the June 15 payment (2nd quarter payment) as their first quarter payment and the July 15th payment (the 1st quarter payment originally due 4/15/2020) as their second quarter payment. Hat tip to NYSSEA, whose members’ heads were exploding, for following up with NYSDTF. N-20-8 is incorrect! The NYS first quarter payment is due June 15, 2020, and the second quarter payment is (was) due June 15, 2020.
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Everything but the Kitchen Sink
Since last we spoke, comedy genius Carl Reiner passed away at 98. In a Wall Street Journal eulogy, Jerry Seinfeld said, “His comedy energy was one of pure joyfulness.” Additionally, ESPN reports Cam Newton has signed an “incentive-laden” one-year deal with the former employer of Mr. Gisele Bündchen (we can’t bring ourselves to say the “P” word).
We’re beginning to wonder about our musical taste these days: Marc Cohn (plus a questionable Cher cover); Ronnie Milsap (we grew up on both kinds of music: country and western); and the Andrews Sisters. And we’re watching TED Talks on working from home (spoiler alert: we are sitting wrong); Ocean’s 11 (the Clooney (George not Rosemary) version, of course); the Aspen Institute Executive Leadership Seminars (Learning in Times of Confinement) and, of course, Independence Day.
Otherwise, please consider this list of tax-related items, curated for America’s tax experts:
- Here’s an interesting take on EIP provided to decedents. And here’s the GAO report, which is an interesting read, even given the context Slate provides, and the new GAO layout makes the reports easier to read.
- How did we miss this: A judge is being asked to shut down Joe Exotic’s former zoo because of…wait for it…delinquent sales taxes.
- It’s that time of year: IRS is reminding 1.4 million taxpayers are about to be SOL. The statute of limitations on 2016 tax return refunds will lapse on July 15th and, absent returns, $1.5 billion is about to revert to Uncle Sugar. TY19 filers who want to pay balances due with cash, meanwhile, now have additional options.
- In the unlikely event you’re casting about for reading material, here’s IRS’ update on its strategic plan.
- IRS is providing a limited-time settlement offer to certain taxpayers with docketed Tax Court cases involving syndicated conservation easement transactions. Forbes unpacks the tax issue and Pro Publica, not surprisingly, provides its own unflattering assessment of IRS’ syndicated conservation easement efforts.
- Fortune writes “coronavirus telecommuters could face a tax nightmare.” Not surprisingly, New York plays a prominent role in the article.
“Independence is a heady draft, and if you drink it in your youth, it can have the same effect on the brain as young wine does. It does not matter that its taste is not always appealing. It is addictive and with each drink you want more.”
— Maya Angelou (1928 – 2014), American poet, memoirist, and civil rights activist, in “Letter to My Daughter”
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