Blog Archives
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How to obtain penalty relief for clients affected by delayed IRS forms
By Jim Buttonow, CPA; CoFounder and VP New River Innovation - Thursday March 28, 2013From the IRS Inside blog. Because of last-minute tax changes this year, 31 IRS forms needed for filing were delayed. Some taxpayers who had to wait for these delayed forms may file an extension. When filing extensions, taxpayers are required to estimate and pay 90% of their tax liability (Treas. Reg. 301.6651-1(c)(3) and (4)). However, some taxpayers may not have had the benefit of the forms, including computations, to help them properly estimate their liabilities. When taxpayers incorrectly estimate and inadvertently underpay their tax liabilities with a filed extension, the IRS automatically imposes a failure to pay penalty. On March 20, the IRS announced that it will waive failure to pay penalties for taxpayers filing extensions... -
IRS expands eligibility for worker reclassification program
By Jim Buttonow, CPA; CoFounder and VP New River Innovation - Friday January 4, 2013
From Jim Buttonow's "IRS Inside" blog . On Dec. 18, the IRS announced a revision to its voluntary classification settlement program (VCSP) that provides partial relief from federal employment taxes for eligible taxpayers who agree to prospectively treat workers as employees. The original program, established in 2011, requires strict Form 1099 compliance, specific audit provisions, and assessment statute extensions, among other criteria. Recently announced changes to the original VCSP include the following temporary eligibility expansions: Taxpayers who are otherwise eligible for the original VCSP, but have not filed all required Forms 1099 for misclassified workers for the previous three years, are eligible for the expanded... -
It's here: Form 1099-K business income matching
By Jim Buttonow, CPA; CoFounder and VP New River Innovation - Monday November 26, 2012The IRS has always been able to match individual tax returns against information statements and propose underreporter adjustments that come in the form of CP2000 notices. ??But things are changing, and a new era at the IRS is upon us. ??Now, the IRS is using information statements to find underreporting on business returns. For practitioners across the country, this will add to the already increasing level of post-filing compliance activity they are seeing. ? More Interest in Business Income ?? In September, the IRS started its first information return-matching program for business return Forms 1120, 1120S and 1065. This program matched business return incomes to the total amounts reported on all information returns. ?? This year... -
Eight Small Business IRS Audit Areas to Watch Through 2013
By Jim Buttonow, CPA; CoFounder and VP New River Innovation - Monday September 10, 2012
The IRS continually analyzes compliance levels for entities, issues and industries by conducting hundreds of compliance projects and initiatives each year. Leading up to the start of the government’s fiscal year on Oct. 1, the IRS has announced emerging or significant areas that it will prioritize for the coming year. When it comes to compliance, the IRS has increasingly focused on small business underreporting, which is responsible for 84% of the $450 billion tax gap. At national and regional tax forums held this summer, the IRS projected small business areas where it will focus through 2013. Here are the highlights: Fringe benefits, especially personal use of company cars. The IRS is completing its third and final year of a... -
IRS announces a multi-year effort to increase audits in flow-through entities
By Jim Buttonow, CPA; CoFounder and VP New River Innovation - Thursday August 30, 2012
As tax season approaches, practitioners can expect the IRS to quickly expand its audit focus to flow-through entities, according to an IRS official. IRS Small Business/Self Employed operating division Commissioner Faris Fink, speaking at the IRS Tax Forum in Charlotte, NC, on Aug. 8, announced that the IRS would focus on partnerships and S corporations for audit for at least the next three years, starting in October. The IRS will use more of its audit resources for the 3.4 million partnership returns and 4.4 million S corporations filed annually. In 2011, the IRS audited very few of these entities - only 13,770 partnerships and 18,519 S corporations, representing 0.4% of total returns filed. Compared to the overall 0.9% audit coverage... -
IRS Alerts Tax Preparers to EITC Filing Errors
By Jim Buttonow, CPA; CoFounder and VP New River Innovation - Tuesday July 31, 2012Practitioners are receiving letters now, penalties later Tax practitioners are increasingly finding that tough economic times have qualified more of their clients for the Earned Income Tax Credit (EITC), a refundable credit for low-income taxpayers. Many practitioners are helping their clients claim this credit for the first time. For tax year 2010, the IRS received 142 million individual tax returns, 26.8 million of which claimed the EITC, a 14% increase since 2005. Traditionally, the IRS has seen high error rates among EITC claims. To maintain oversight on EITC errors and abuse, the IRS implemented new due diligence requirements for 2011 individual tax returns. The most significant requirement is to file Form 8867, Paid... -
Supreme Court Health Care Ruling and the IRS?
By Jim Buttonow, CPA; CoFounder and VP New River Innovation - Tuesday July 10, 2012The Supreme Court recently settled a divisive debate when it ruled that the Patient Protection and Affordable Care Act (PPACA) individual mandate is constitutional and that the "shared responsibility payment" is a tax. What does this mean for tax practitioners and their clients? Background Starting in 2014, the PPACA will require individuals, with few exceptions, to carry minimum health care coverage for themselves and their dependents, or pay a fee, referred to as a "shared responsibility payment." Prior to the Supreme Court decision, the original PPACA defined the shared responsibility payment as a "penalty" for individuals who decline to purchase health insurance under the required mandate. However, the Court concluded that... -
IRS Audit Compliance Initiative Projects for 2012 (Part 1)
By Jim Buttonow, CPA; CoFounder and VP New River Innovation - Tuesday March 6, 2012The IRS regularly conducts national, regional, and local compliance initiative projects (CIPs) to study perceived areas of noncompliance. The IRS uses the data from these projects to develop more comprehensive projects and allocate its audit resources in the areas showing significant noncompliance. Below is part one of a two-part series of IRS alerts detailing IRS audit projects for individual Form 1040 filers, scheduled to be completed before the end of the government’s fiscal year. Additional alerts will be provided during the next two months about CIPs for businesses and specialty taxes. Travel, Meals and Entertainment Taxpayers targeted: Schedule C filers with travel, meal and entertainment deductions.?Specifically...
