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IRS Advises on Virtual Currency, Delayed Refunds and Identity Theft

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Tax filing season is officially underway!

On January 27, just a few days before the Super Bowl, the IRS announced in a press release that it had started to accept and process 2019 tax returns, as scheduled (IR-2020-20, 1/2720). The deadline for filing a 2019 tax return and paying any tax that is due remains April 15, 2020.

It’s expected that more than 150 million individual tax returns for the 2019 tax year with be filed. Most of these will arrive before the April 15th deadline.

“The IRS workforce has worked for nearly a year to prepare for the opening of tax season,” said IRS Commissioner Chuck Rettig in the press release. “Our dedicated employees are committed to help taxpayers, process tax returns and serve the nation − not just through the April 15 tax deadline but throughout the year.”

Besides signaling the successful start of tax filing season, the IRS covered various other issues in its press release, including the following three aspects:

1. Virtual currency: Using feedback from taxpayers and the tax professional community, the IRS has revised Form 1040 and consolidated six schedules into three numbered schedules. Taxpayers who engaged in a transaction involving virtual currency must file Schedule 1, Additional Income and Adjustments To Income.

Both the tax code and related regulations require taxpayers to maintain records  supporting the information provided on tax returns. For example, taxpayers should keep records documenting receipts, sales, exchanges or other dispositions of virtual currency and the fair market value of the virtual currency.

2. Delayed refunds: The IRS is mindful that taxpayers are eager to get their refunds, especially when they read or hear about others receiving refunds on social media. But each return is unique and different factors may affect the timing of a refund.

For instance, although  the IRS issues most refunds in less than 21 days, some tax returns require additional review and take longer to process than others. This may be necessary when a return has errors, is incomplete or is affected by identity theft or fraud. The IRS will contact taxpayers by mail when more information is needed to process a return.

The IRS is also reminding taxpayers that, by law, it can’t issue refunds claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) before mid-February. This applies to the entire refund—even the portion not associated with the EITC or ACTC. The IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by the first week of March if the taxpayer chooses direct deposit and there are no other issues with the return.

Refund information is generally available within 24 hours after the IRS acknowledges receipt of an electronically filed return on the Where’s My Refund? ‎tool on IRS.gov and the IRS2Go phone app.

3. Identity theft program. The IRS launched Identity Theft Central to improve online access to information on identity theft or data security protection for taxpayers, tax professionals and businesses. Tax-related identity theft occurs when someone steals personal information to commit tax fraud.

An increasing number of taxpayers in selected locations will be eligible for a new online-only Identity Protection PIN Opt-In Program. The IP PIN is a six-digit number that adds an extra layer of protection for a taxpayer’s Social Security number (SSN) and helps guard against tax-related identity theft.

Taxpayers will be eligible for this voluntary program if they filed a federal tax return last year as a resident from Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Illinois, Maryland, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Texas or Washington.

Finally, the IRS has created a new publication, Publication 5367, Identity Protection PIN Opt-In Program for Taxpayers (PDF), to help taxpayers understand the required steps. Alternatively, taxpayers can find more details at the Get an IP PIN page. Those  opting into this program must use the Get an IP PIN tool; an IP PIN can’t be issued via a phone call to the IRS.

To read the entire IRS announcement on the start of tax filing season, visit https://www.irs.gov/newsroom/irs-kicks-off-2020-tax-filing-season-with-returns-due-april-15-help-available-on-irsgov-for-fastest-service.