Ray Clark, CPA, MBA | Clark & Clark PC | 203 East 800 South | Salt Lake City, UT 84111 | 801-521-4538 | staff@clarkaccountingcpa.com

       

 


 

 

 


 

 

Tax-filing Extension Expires Oct. 15th + US Begins Automatic Exchange of Tax Info + ACA: Understanding Minimum Essential Coverage


 

The 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

While 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.


Quick 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 accrue.

Fresh 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.

 


 

U.S. Begins Reciprocal Automatic Exchange of Tax Information Under Intergovernmental Agreements

 

The 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) implementing FATCA.

"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 accounts.

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 data confidentiality;
> 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 announced.
 



Health Coverage Providers: Understanding Minimum Essential Coverage


The 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 individuals.

These reporting requirements affect:

Health insurance issuers or carriers
 

The executive department or agency of a governmental unit that provides coverage under a government-sponsored program
 

Plan sponsors of self-insured group health plan coverage
 

Sponsors 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 employer-sponsored plan.

Minimum essential coverage does not include fixed indemnity coverage, life insurance or dental or vision coverage.

Minimum essential coverage does include:

-- Government-sponsored programs

Medicare part A, most Medicaid programs, CHIP, most TRICARE, most VA programs, Peace Corps, DOD Non-appropriated Fund Program

-- Employer sponsored coverage

In 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 MEC

-- Individual market coverage

Includes qualified health plans enrolled in through the federally facilitated and state-based marketplaces and most health insurance purchased individually and directly from an insurance company

-- Grandfathered plans

Generally, any plan that existed before the ACA became effective and has not changed

-- Miscellaneous MEC

Other 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

 


Ray Clark, CPA, MBA | Clark & Clark PC | 203 East 800 South | Salt Lake City, UT 84111 | 801-521-4538 | staff@clarkaccountingcpa.com

 

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