Tax-filing Extension Expires Oct. 15th
+ US Begins Automatic Exchange
of Tax Info + ACA:
Understanding Minimum Essential Coverage
Internal Revenue Service is urging taxpayers whose tax-filing extension runs
out on Oct. 15 to double check their returns for often-overlooked tax
benefits and then file their returns electronically using IRS e-file or
the Free File system.
About a quarter of the 13 million taxpayers who requested an automatic
six-month extension this year have yet to file.
Although Oct. 15 is the last
day for most people, some still have more time, including members of the
military and others serving in combat zone localities who typically have
until at least 180 days after they leave the combat zone to both file
returns and pay any taxes due.
"If you still need to file, don't forget that you can still file
electronically through October 15," said IRS Commissioner John Koskinen.
Even if you're filing in the final days, filing electronically remains easy,
safe and the most accurate way to file your taxes."
Check Out Tax Benefits
Before filing, the IRS encourages taxpayers to take a moment to see if they
qualify for these and other often-overlooked credits and deductions:
Benefits for low-and moderate-income workers and families, especially the
Earned Income Tax Credit. The special EITC Assistant can help taxpayers see
if they're eligible.
Savers credit, claimed on Form 8880, for low-and moderate-income workers who
contributed to a retirement plan, such as an IRA or 401(k).
American Opportunity Tax Credit, claimed on Form 8863, and other education
tax benefits for parents and college students.
Health Care Tax Reporting
most taxpayers will simply need to check a box on their tax return to
indicate they had health coverage for all of 2014, there are also new lines
on Forms 1040, 1040A and 1040EZ related to the health care law. Visit
IRS.gov/aca for details on how the Affordable Care Act affects the 2014
return. This includes:
Reporting health insurance coverage.
Claiming an exemption from the coverage requirement.
Making an individual shared responsibility payment.
Claiming the premium tax credit.
Reconciling advance payments of the premium tax credit. Properly doing so
can help maintain continued eligibility for premium assistance in 2016.
The Interactive Tax Assistant tool can also help determine if a taxpayer
qualifies for an exemption, needs to make a payment or is eligible for the
premium tax credit.
Taxpayers who intend to claim the Health Coverage Tax Credit for 2014 must
first file an original 2014 tax return without claiming the HCTC, even if
they have no other filing requirement . They can then file an amended return
when the IRS issues further HCTC guidance. Visit irs.gov/hctc for updates.
and Easy Payment Options
The IRS Direct Pay system offers taxpayers the fastest
and easiest way to pay what they owe. Available through the
Pay Your Tax Bill icon on IRS.gov, this free online system
allows individuals to securely pay their tax bills or make
quarterly estimated tax payments directly from checking or
savings accounts without any fees or pre-registration. So far
this year, more than 4.1 million tax payments totaling over
$15 billion have been received from individual taxpayers
through Direct Pay.
Taxpayers can also pay by debit or credit card. While
the IRS does not charge a fee for this service, the payment
processor will. Other e-pay options include the Electronic
Federal Tax Payment System (pre-registration is required) and
Electronic Funds Withdrawal which is available when e-Filing.
Taxpayers can even e-pay what they owe using, IRS2Go , the
agency's popular mobile phone app. All of the electronic
payment options are quick, easy and secure and much faster
than mailing in a check or money order. Those choosing to pay
by check or money order should make the payment out to the
"United States Treasury."
Taxpayers with extensions should file their returns by Oct.
15, even if they can't pay the full amount due. By doing so,
taxpayers will avoid the late-filing penalty, normally five
percent per month, that would otherwise apply to any unpaid
balance after Oct. 15. However, interest, currently at the
rate of 3 percent per year compounded daily, and late-payment
penalties, normally 0.5 percent per month, will continue to
Start for Struggling Taxpayers
In many cases, those struggling to pay taxes qualify for one
of several relief programs. Most people can set up a payment
agreement with the IRS on line in a matter of minutes. Those
who owe $50,000 or less in combined tax, penalties and
interest can use the Online Payment Agreement to set up a
monthly payment agreement for up to 72 months or request a
short-term payment plan. Taxpayers can choose this option even
if they have not yet received a bill or notice from the IRS.
Taxpayers can also request a payment agreement by filing Form
9465. This form can be downloaded from IRS.gov and mailed
along with a tax return, bill or notice.
Alternatively, some struggling taxpayers qualify for an
Offer-in-Compromise. This is an agreement between a taxpayer
and the IRS that settles the taxpayer's tax liabilities for
less than the full amount owed. Generally, an offer will not
be accepted if the IRS believes the liability can be paid in
full as a lump sum or through a payment agreement. The IRS
looks at the taxpayer's income and assets to make a
determination regarding the taxpayer's ability to pay. To help
determine eligibility, use the Offer in Compromise
Pre-Qualifier, a free online tool available on IRS.gov.
Details on all filing and payment options are on IRS.gov.
Reciprocal Automatic Exchange of Tax Information Under
Internal Revenue Service just announced the exchange of
financial account information with certain foreign tax
administrations, meeting a key Sept. 30 milestone related to
FATCA, the Foreign Account Tax Compliance Act.
To achieve this, the IRS successfully and timely developed the
information system infrastructure, procedures, and data use
and confidentiality safeguards to protect taxpayer data while
facilitating reciprocal automatic exchange of tax information
with certain foreign jurisdiction tax administrators as
specified under the intergovernmental agreements (IGAs)
"Meeting the Sept. 30 deadline is a major milestone in
IRS efforts to combat offshore tax evasion through FATCA and
the intergovernmental agreements," said IRS Commissioner John
Koskinen. "FATCA is an important tool against offshore tax
evasion, and this is a significant step in the process. The
IRS appreciates the assistance of our counterparts in other
jurisdictions who have helped to make this possible."
This information exchange is part of the IRS's overall
efforts to implement FATCA, enacted in 2010 by Congress to
target non-compliance by U.S. taxpayers using foreign accounts
or foreign entities. FATCA generally requires withholding
agents to withhold on certain payments made to foreign
financial institutions (FFIs) unless such FFIs agree to report
to the IRS information about financial accounts held by U.S.
taxpayers, or by foreign entities in which U.S. taxpayers hold
a substantial ownership interest.
In response to the enactment of FATCA and other
jurisdictions' interest in facilitating and participating in
the exchange of financial account information, the U.S.
government entered into a number of bilateral IGAs that set
the groundwork for cooperation between the jurisdictions in
this area. Certain IGAs not only enable the IRS to receive
this information from FFIs, but enable more efficient exchange
by allowing a foreign jurisdiction tax administration to
gather the specified information and provide it to the IRS.
And some IGAs also require the IRS to reciprocally exchange
certain information about accounts maintained by residents of
foreign jurisdictions in U.S. financial institutions with
their jurisdictions' tax authorities.
Under these reciprocal IGAs, the first exchange had to
take place by September 30, giving the IRS a deadline to put
in place a process to facilitate this data exchange.
The information now available provides the United
States and partner jurisdictions an improved means of
verifying the tax compliance of taxpayers using offshore
banking and investment facilities, and improves detection of
those who may attempt to evade reporting the existence of
offshore accounts and the income attributable to those
The IRS will only engage in reciprocal exchange with
foreign jurisdictions that, among other requirements, meet the
IRS's stringent safeguard, privacy, and technical standards.
Before exchanging with a particular jurisdiction, the United
States conducted detailed reviews of that jurisdiction's laws
and infrastructure concerning the use and protection of
taxpayer data, cyber-security capabilities, as well as
security practices and procedures.
“This groundbreaking effort has fundamentally altered
our relationship with tax authorities around the world, giving
us all a much stronger hand in fighting illegal tax avoidance
and leveling the playing field,” Koskinen said.
Meeting this deadline reflects a significant
international collaboration and partnership with dozens of
jurisdictions around the world. The capacity for reciprocal
automatic exchange builds on numerous accomplishments
including the following:
Development of a consistent data reporting format, or schema,
and the agreement to use this format by all jurisdictions;
Establishment of the details and procedures required to assure
Creation of a data transmission system to meet high standards
for encryption and security; and
Cooperation with foreign jurisdiction tax administrations to
achieve the timely implementation of this exchange.
Koskinen noted the risks of hiding money offshore are
growing and the potential rewards are shrinking.
Since 2009, tens of thousands of individuals have come
forward voluntarily to disclose their foreign financial
accounts, taking advantage of special opportunities to comply
with the U.S. tax system and resolve their tax obligations. At
the beginning of 2012, the IRS reopened the Offshore Voluntary
Disclosure Program (OVDP), which is open until otherwise
Coverage Providers: Understanding
Affordable Care Act requires any person or organization that
provides minimum essential coverage, including employers that
provide self-insured group health plans, to report this
coverage to the IRS and furnish statements to the covered
These reporting requirements affect:
insurance issuers or carriers
executive department or agency of a governmental unit that
provides coverage under a government-sponsored program
sponsors of self-insured group health plan coverage
of coverage that the Department of Health and Human Services
has designated as minimum essential coverage
For purposes of reporting by applicable large employers,
minimum essential coverage means coverage under an
Minimum essential coverage does not include fixed
indemnity coverage, life insurance or dental or vision
Minimum essential coverage does include:
part A, most Medicaid programs, CHIP, most TRICARE, most VA
programs, Peace Corps, DOD Non-appropriated Fund Program
Employer sponsored coverage
general, any plan that is a group health plan under ERISA,
which includes both insured and self-insured health plans.
Importantly, employer plans that cover solely excepted
benefits, such as stand-alone vision or dental plans, are not
Individual market coverage
qualified health plans enrolled in through the federally
facilitated and state-based marketplaces and most health
insurance purchased individually and directly from an
any plan that existed before the ACA became effective and has
health benefits coverage recognized by the Department of
Health and Human Services as MEC
For more information, see our Questions and Answers on
Information Reporting by Health Coverage Providers on IRS.gov/aca.
If you have comments or
questions on the information in these articles, as usual feel
free to call our offices at 801-521-4538.
Ray Clark, CPA, MBA