In a bill for highway funding extension some provisions in the bill were what you would not expect, they were tax provision that changed due dates and additional requirements. The bill was signed into law by President Barack Obama on July 31, 2015. While the tax provisions are divided between new tax return due dates and clarification of previous tax laws. It is clear to see that legislators are starting to listen to the profession. As these changes are what the AICPA and other accounting societies have been trying to suggest would make it easier for preparers.
Changes to Form 1098 Mortgage Interest Statements
New information will start showing on Forms 1098, which many of you will recognize as the form that you turn in to your accountant. The form has information about your mortgage interest. These forms will require to provide more information such as the outstanding principal on the mortgage at the beginning of the year, the date the mortgage started and the address of the property that the information relates to. Certain companies have already started to add this information but does not become mandatory until 2017.
Consistent Reporting For Estate
Estate reporting will now require executor to furnish informational returns to the IRS and to any person receiving interest in property from the estate. Additionally it now adds a new law that requires inherited property cannot have a higher basis than what is reported by the estate. This is meant to curtail any confusion in basis as it has happened before. This change is effective for any estate tax return filed past the date of the new law.
6 Year Statute Of Limitations In Cases Of Overstatement Of Basis.
After the IRS lost in court back in 2012 due to the vague writing of a law in the case of U.S. v. Home Concrete & Supply, LLC. The Supreme court held that the IRS could not extend the statute of limitations to six years when it applied to matters of capital gains and overstatement of basis. Resulting in the taxpayer keeping the three year statute of limitation. The IRS decided to correct this mistake by making it clear that an overstatement in basis will be considered an omission from gross income and therefore they will be able to extend the statute of limitations to six years. This change applied to any returns that are filed after this new law becomes effective and also for any other returns that are still within the statute of limitations.
Modification to Tax Return Due Dates
- Partnership Tax Return will now be due March 15 previously these were due April 15, For fiscal year partnership they are due on the 15th day of the third month after their closing.
- C Corporations their new due date is 15th day of the fourth month after their closing. currently they are due on the third month
- FinCEN Report 114 is now due April 15 much earlier than previous deadline which was June 30. an Extension is now available.
- Corporations will be allowed a six month extension with different starting dates depending on if you are calendar or fiscal year corporation.
- Foreign trust reporting Form 3520-A Annual Information Return of a Foreign Trust with a United states Owner has been changed to the 15th day of the third month after closing.
- Form 3520 Annual Return to Report transactions with Foreign Trust with Receipt Of Certain Foreign Gifts has been changed to April 15.
- Due dates apply to taxable years beginning after December 31, 2015 with one exception C corporation with fiscal years have an extra ten years to make the change.
Modification to Extensions
- Form 1065: 6 Month Extension ending on September 15 for Calendar year taxpayers.
- Form 1041: 5 ½ Month period ending on September 30 dor calendar year taxpayer.
- Form 5500: Automatic 3 ½ month period ending on November 15 for calendar year plans
- Form 990: Automatic 6 month period ending on November 15 for calendar year
- Form 4720: Automatic 6 month period beginning on the due date for filing the return.
- Form 5227: Automatic 6 month period beginning on the due date for filing the return.
- Form 6069: Automatic 6 month period beginning on the due date for filing the return.
- Form 8870: Automatic 6 month period beginning on the due date for filing the return.
- Form 3520-A: 6 Month Extension
- Form 3520: 6 Month Extension
- FinCEN Report 114: 6 month period ending on October 15
Many of you know that it is important to find a tax preparer that knows what they’re doing because in the end it affects you. This year was the start of a new program by the IRS called the Annual Filing Season Program. What this program aims to do is make sure that the people that are preparing tax returns for compensation are competent and know what they are doing. Recently the IRS has stated that 44,000 preparers completed the program for the first year. This is a good sign for people that are looking for help when it comes to preparing and filing their taxes.
The Annual Filing Season Program was started in the hopes that all tax return preparers will maintain a level of knowledge that will help their clients. In order to complete this program a person must complete a certain amount of continuing education. The total needed is 18 hours which consists of 6 hours of “refresher courses”, 10 hours on federal tax laws, and 2 hours of ethics. On top of these requirements those that participate in this program must agree to specific obligations set by the IRS which will make them accountable for their actions.
This program is completely voluntary but can negatively affect the preparer and the taxpayer if they choose to not participate. After December 31, 2015 those who do not participate in the Annual Filing Season Program will not be able to represent their clients before the IRS for tax returns and claims for refunds. This means that if your return is selected for additional review, your tax preparer may not be able to help you with the review. Attorneys, CPA, and Enrolled Agents will have full representation rights for clients but are usually expensive to keep. Those who are part of the Annual Filing Season Program will have limited representation rights, but will still be able to represent clients they have prepared a return for.
We at Cloud Accounting Professionals are proud to say that all our tax preparers have earned the Annual Filing Season Program Record of Completion. This means that we have put time into keeping up with changing tax laws and made sure we can help our clients when needed. The IRS shows that as of the start of the 2015 filing season there were more than 666,000 tax return preparers with active PTINs. This means that only 6% of those tax return preparers volunteered to take and finished the program.
Many people do not make the commitment to sign the taxes they prepare and to stand by their work. We are proud of helping others to prepare and file their returns and will continue to show it. When you come to Cloud Accounting Professionals to help prepare your taxes, you can rest assured that you are in good hands.
Identity theft as defined by the IRS occurs when someone uses your personal information such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes.
“Identity theft continues to top the Federal Trade Commission’s national ranking of consumer complaints, and American consumers reported losing over $1.6 billion to fraud overall in 2013, according to the FTC’s annual report on consumer complaints released today.”
Information Valuable to Identity thieves:
- Name, address
- Date of birth
- Medicare card number
- Driver’s license number
- Social Security number
How does Identity theft happen?
- Data breaches
- Phony emails from imposters
- Social networking
- Stolen wallets
- Corrupt tax preparation services
- Unusual delay in getting a refund
- IRS notifications:
o Duplicate tax return filing
o Unreported income
o Duplicate dependents
Although there are many ways someone may try to steal your identity there are many ways to reduce the risk of theft.
- Minimize personal information kept in your purse, wallet and smartphone.
- Shred documents with any personal information.
- Do not give out personal information.
- Do not click on links sent from strange emails.
- Use complex passwords
- Check your annual credit reports, one CRA every quarter.
In previous posts we have said how it is important to trust your tax preparer as you have voluntarily given them the information needed to steal your identity. According to a Treasury Department report, in 2012 there were more than 1.8 million cases of stolen returns from taxpayer identity theft. This crime costs taxpayers billions of dollars every year and the statistics show that is it growing. Which state is currently leading the country in the number of cases, none other than our very own sunshine state Florida.
It seems lawmakers have taken notice of the increasing number of cases and are doing something about it. Last month leaders of the the Senate Finance Committee introduced a bill to improve the protection taxpayers have against fraudulent refunds that were claimed with stolen identities. This month the House passed a bill that was introduced by Debbie Wasserman Schultz. D-Fla, with co-sponsors Lamar Smith, R-Texas, and Bob Goodlatte, R-Va, that would make tougher penalties for people that would try to steal tax returns through identity theft.
The intent of the bill is to make stealing the identity of someone less appealing. The bill would increase the maximum penalties for someone caught stealing an identity. It would also add to the definition of identity theft the use of a business or charitable organization to gain sensitive information from people, also known as “phishing”. Another point of the bill would be to have local law enforcement working in better coordination with Justice Department.
It is good to see that lawmakers are trying to put a stop to a growing problem with fraudulent returns and identity theft. As this crime is prevalent here in south Florida it is important to remember that as of right now this bill is not a law, so take care of your sensitive information and make sure to take it to a reputable person if you need help preparing and filing your taxes.