IRS Issues PTIN Renewal Reminder

IRS Issues PTIN Renewal Reminder

It’s that time again: time for federal tax return preparers to renew their Preparer Tax Identification Numbers (PTINs) for the coming year. It’s no time to procrastinate, since 2021 PTINs will expire on Dec. 31.

A valid PTIN is required for anyone who prepares—or assists in preparing—a federal tax return for a fee. This requirement includes Enrolled Agents, whether or not EAs actually prepare returns.

A PTIN must be valid before the tax pro prepares any returns for the year, and should show up on filed returns as part of the identifying number.

“Taxpayers are relying on your expertise to help them meet their tax obligations and for some to complete their largest financial transaction for the year. Make sure you’re ready by renewing your PTIN now,” said Carol A. Campbell, director, Return Preparer Office.

The cost for a 2022 PTIN is $35.95, which is non-refundable. Whether the tax professional is renewing a PTIN or applying for the first time, the entire amount must be paid before the PTIN process will complete.

It’s faster online

In the case of renewing a PTIN, the Internal Revenue Service recommends using its online renewal process. It takes about 15 minutes to complete.

Renewing online is easy, and you get confirmation after completion:

  • Start at gov/taxpros.
  • Select the “Renew or Register” button.
  • Enter the user ID and password to login to the online PTIN account.
  • Follow the prompts to verify information and answer a few questions.

Besides renewing their PTINs, tax pros can use the online system to bring up a summary of the number of filed returns linked to their PTIN in the current year, and to get communications from the IRS Return Preparer Office through a secure mailbox.

First-time applicants can also get a PTIN online, using the same system, with prompts tailored to their process:

  • Start at gov/taxpros.
  • Select the “Renew or Register” button and select “Create Account” in the New User box.
  • First-time users are issued a temporary password and will be prompted to change their password upon logging in.
  • Once logged in, select the appropriate “PTIN Sign Up” option.
  • Follow the prompts to obtain a PTIN online.

There is a paper option which uses Form W-12 and its instructions, usable for both applications and renewals, but this option can take up to six weeks to process. Depending on when the paper form is submitted, tax pros choosing this option might find themselves in danger of being without a valid PTIN at the start of tax season.

Non-credentialed tax preparers have professional education opportunities

A voluntary IRS offering, the Annual Filing Season Program, seeks to encourage non-credentialed tax pros to get the credentials they need through continuing education courses. this increases their knowledge and boosts their filing season readiness at the same time.

Program participants have to renew their PTIN, finish 18 hours of continuing education from IRS-approved CE providers and agree to follow the specific obligations set out in Circular 230, all by Dec. 31, 2021. An IRS video shows how to sign the Circular 230 consent form and how to print the Record of Completion.

A preparer successfully completing the program gets an Annual Filing Season Program Record of Completion from the IRS, and is listed in a public IRS directory of return preparers with credentials and other qualifications.

The directory can be used by taxpayers to find tax pros in their area who have completed the program or hold other IRS-recognized credentials.

IRS suggests tax pros get the Enrolled Agent credential

The IRS issues its elite Enrolled Agent certification to tax pros who have shown special competence in in a number of areas, including federal tax planning, individual and business tax return preparation, and representation. Enrolled Agents have the ability to represent any client before the IRS on any tax matter.

The IRS encourages non-credentialed preparers to consider becoming Enrolled Agents to push their careers to a higher level.

Continuing education opportunities are available from DrakeCPE

Tax professionals who need to complete continuing education requirements can sign up for courses at DrakeCPE.com.

Source: IR-2021-207

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IRS Highlights Charity Fraud Awareness Week

IRS Highlights Charity Fraud Awareness Week

Criminals pushing phishing scams impersonate a wide range of people and organizations to trick victims out of their private information and money. The seemingly endless flood of charity scams perhaps best demonstrates that there truly is no honor among thieves. Luckily, we don’t have to face identity thieves alone.

The Internal Revenue Service announced that they are taking part in Charity Fraud Awareness Week to help spread the word about this persistent threat to individuals and charitable organizations. The agency says they are “joining international organizations and other regulators in highlighting Charity Fraud Awareness Week,” which runs from October 18 to October 22 this year.

What is Charity Fraud Awareness Week?

According to the IRS, Charity Fraud Awareness Week is a campaign “run by a partnership of charities, regulators, law enforcers, and other not-for-profit stakeholders from across the world … [that] raise awareness of fraud and cybercrime affecting organizations and to create a safe space for charities and their supporters to talk about fraud and share good practice.”

How is the IRS participating in Charity Fraud Awareness Week?

The IRS is highlighting helpful resources that have been created by organizations participating in Charity Fraud Awareness Week. Specifically, the press release includes a link to a UK-based website designed to aggregate helpful information related to the campaign: PreventCharityFraud.org.uk.  

According to the IRS, this site is designed to help “[Charity Fraud Awareness Week] partners, charities, and other tax-exempt organizations and non-profits find” the following information:

  • Details about the awareness week
  • Free resources
  • A fraud pledge for organizations
  • A listing of webinars and other events held as part of the week

Data-security-awareness campaigns aren’t new to the IRS. As part of the Security Summit, the agency works year round to provide taxpayers the resources they need to avoid falling victim to myriad phishing scams. Part of that effort includes publishing their annual Dirty Dozen list of tax scams and providing online resources, like the Tax Exempt Organization Search tool.

The Tax Exempt Organization Search tool is useful in avoiding fake charity scams listing legitimate charities that are currently eligible “to receive tax-deductible charitable contributions.” The tool’s page on IRS.gov notes the types of information that can be searched for any given charity:

  • Form 990 Series Returns
  • Form 990-N (e-Postcard)
  • Pub. 78 Data
  • Automatic Revocation of Exemption List
  • Determination Letters

As for avoiding scams impersonating legitimate charities, taxpayers should stay up to date on the latest phishing scams highlighted by the IRS, Security Summit, and Charity Fraud Awareness Week partners.

Sources: IR-2021-205; “Tax Exempt Organization Search,” IRS.gov

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What Info is Needed for the Research Credit?

What Info is Needed for the Research Credit?

Businesses and individuals looking to recoup part of their capital spent on research and experimentation of products and processes now have a clearer roadmap on how to do that.

The Internal Revenue Service has unveiled the Chief Counsel memorandum, laying out just what information the IRS requires to validate a research credit claim. The memorandum aims to spell out instructions in plain language, thereby facilitating valid claims by taxpayers while reducing the number of claim-related disputes.

Researching a better way

It’s important that taxpayers understand just what’s expected from them when making a claim for the research and experimentation (R&E) credit. The IRS gets thousands of R&E claims every year totaling hundreds of millions of dollars from businesses, corporations and individuals.

Administering the credit, the IRS says, consumes a lot of the agency’s resources. A substantial number of A&E credit claims have to be audited to ensure they meet the requirements of IRC Section 41, taking time and money.

The IRS hopes to streamline the process through the use of the Chief Counsel’s memorandum, giving those who claim the credit clear instructions on what information is needed. If that’s done, the IRS says it can quickly and more efficiently determine if the R&E claim for a refund is valid—or if more examination is needed.

Here’s how the new process works: The Chief Counsel memorandum specifies that for a Section 41 research credit claim for refund to be considered, the taxpayer has to provide certain specific information when the claim is filed.

This can be viewed as a three-step process:

STEP 1: Identify all the business components that the Section 41 research credit claim applies to for that year.

STEP 2: For each business component, identify all research activities performed and name the individuals who performed each research activity, as well as the information each individual sought to discover.

STEP 3: Provide the total qualified employee wage expenses, total qualified supply expenses, and total qualified contract research expenses for the claim year. Use Form 6765, Credit for Increasing Research Activities.

Grace period provided

Taxpayers are being eased into the new procedure with a grace period until Jan. 10, 2022. After that date, a one-year transition period starts, where taxpayers who don’t comply with the new instructions get a 30-day reprieve to perfect their claim for the R&E credit.

The IRS says it will have more details on this new process later, but taxpayers can start sending the new required information now. Also, look for the agency to do more research of its own with stakeholders on research credit issues.

Send comments to irs.feedback.recredit.claims@irs.gov.

Source: IR-2021-203

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Families Can Still Get the Advance Child Tax Credit

Families Can Still Get the Advance Child Tax Credit

Millions of American families have been taking advantage of the advance payments of the Child Tax Credit, but the Internal Revenue Service stresses there’s still time left to sign up for the remaining payments.

The latest batch of the monthly advance payments is now making its way into the bank accounts of some 36 million families. This wave of payments totals around $15 billion and the vast majority of families are getting their payments by direct deposit.

The advance payments of the Child Tax Credit (CTC) were made possible by the American Rescue Plan, passed earlier this year. It allowed qualifying families to get their CTC payments in advance installments, rather than just a refund when they file their income taxes.

Families can qualify for payments of up to $300 per month for every child under the age of 6, and up to $250 per month for each child between the ages of 6 and 17. Advance payments will total half of the overall tax credit due the taxpayer; the balance is paid out as a refund when the taxpayer files.

The IRS offers these details on the payments:

  • Families will see the direct deposit payments in their accounts starting October 15. Like the prior payments, the vast majority of families will receive them by direct deposit.
  • For those receiving payments by paper check, be sure to allow extra time, through the end of October, for delivery by mail. Those wishing to receive future payments by direct deposit can make this change using the Child Tax Credit Update Portal, available only on IRS.gov. To access the portal or to get a new step-by-step guide for using it, visit gov/childtaxcredit2021.
  • Payments went to eligible families who filed a 2019 or 2020 income tax return. Returns processed by October 4 are reflected in these payments. This includes people who don’t typically file a return but during 2020 successfully registered for Economic Impact Payments using the IRS Non-Filers tool on IRS.gov or in 2021 successfully used the Non-filer Sign-up Tool for advance CTC, also available only on IRS.gov.
  • Payments are automatic. Aside from filing a tax return, including a simplified return from the Non-filer Sign-up Tool, families don’t have to do anything if they are eligible to receive monthly payments.
  • Families who did not get a July, August or September payment and are getting their first monthly payment in October will still receive their total advance payment for the year. This means that the total payment will be spread over three months, rather than six, making each monthly payment larger.

Some American families may get a letter from the IRS, letting them know it’s not too late to sign up for advance CTC payments. The letter spotlights those who haven’t filed a 2020 income tax return with emphasis on those who aren’t normally required to file because their annual incomes are below filing thresholds.

Even these non-filing families may be eligible for the Child Tax Credit advance payments. The IRS says they should visit IRS.gov online for information on how to file a return and get their CTC credit.

September Advance Child Tax Credit payments hit a snag

The Internal Revenue Service says a technical issue led to about 2% of the qualified CTC recipients not getting their monthly advance credit amounts on time in September. The IRS has since sent out the payment to everyone affected.

Those affected included taxpayers who recently updated their bank account or address information using the IRS Child Tax Credit Update Portal.

The glitch mainly affected payments to married taxpayers filing jointly where only one spouse made a bank account or address change; this usually means payments are split into two – between the existing account or address and the new one.

Some recipients saw their payments delayed. Some saw a larger payment amount than normal, which led the IRS to adjust their three remaining monthly payments down by $10-$13 per child to compensate.

The IRS says it will send letters to all the taxpayers affected by the glitch and appreciates the patience of everyone.

For more information, check out the IRS website. Links to online tools, a guide to the Non-filer Sign-up Tool, answers to frequently asked questions and other resources are all available at IRS.gov/childtaxcredit2021, the IRS’ special advance CTC page.

Source: IR-2021-201

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Tax Forum Seminars Available Online

Tax Forum Seminars Available Online

Tax professionals looking for a source of continuing education that satisfies the IRS requirements don’t have far to look.

The Internal Revenue Service has posted 18 new seminars online, recorded during the 2021 Nationwide Tax Forum, on their site, IRS Nationwide Tax Forums Online.

The new self-study offerings use interactive video, PowerPoint slides and audio transcripts to convey vital information and join other sessions recorded previously at prior Nationwide Tax Forums.

All the recorded seminars are available on the site at $29 each.

The newest courses include:

  • Advocating for Taxpayers in Order to Avoid Abusive Tax Schemes
  • Be Tax Ready – Understanding Rules for Due Diligence and the Child Tax Credit and Earned Income Tax Credit Under the American Rescue Plan Act of 2021
  • Charities & Tax-Exempt Organizations Update
  • Closer Look at the IRS Independent Office of Appeals
  • Collection Flexibilities During Difficult Economic Times
  • Common Issues Presented to OPR and Best Practices to Address Them
  • Determining an Individual’s Tax Residency Status
  • e-Services and You
  • Gig Economy
  • Helping You and Your Clients Steer Clear of Fraud and Scams
  • Key Enforcement Issues
  • Keynote Address
  • Keys to Mastering Due Diligence Requirements and What to Expect During a Due Diligence Audit
  • Overview of Taxpayer Civil Rights
  • Professional Responsibility Obligations when Practicing before the IRS: OPR and Circular 230
  • Retirement Plans – IRS Compliance Initiatives
  • Tax Law Changes from a Forms Perspective
  • Virtual Currency

IRS Nationwide Tax Forums Online is a registered, qualified sponsor of continuing education, offering tax professionals—including CPAs, enrolled agents and Annual Filing Season Program participants—the option of screening recorded seminars for a fee to get their continuing education credits.

Earning the credits is easy. Users first create an online account; they’ll have to answer some review questions during the recorded seminar to validate their attendance and pass a short test at the end of the seminar.

All the seminars may be audited for free. However, audited seminars don’t include either the review questions or the final test, so they don’t qualify for credit.

For more information on this option for continuing education credits, check out the IRS Nationwide Tax Forum Information site online.

Source: IRS Tax Tip 2021-151

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Advance Child Tax Credit for “Non-Traditional Families”

Advance Child Tax Credit for "Non-Traditional Families"

The Internal Revenue Service this week told “non-traditional families” that they could also qualify for advance payments of the Child Tax Credit.

Family representatives, the IRS urges, should check their eligibility, whether they are parents, grandparents, foster parents or someone who’s caring for siblings or other relatives.

The initial effort to get taxpayers signed up for the Child Tax Credit payments started early in the year, but the IRS says there’s still time to get advance payments in the last months of 2021.

Why claim the Child Tax Credit?

Families that claim the credit for tax year 2021 get up to $3,000 for every qualified child between 6 and 17 years old at the end of 2021. That benefit is $3,600 per child if they are under age 6 at the end of the year.

The advance 2021 payments will total up to half of the taxpayer’s total Child Tax Credit. The remainder is paid out with the refund when the taxpayer files their 2021 return.

Qualifying children can be the taxpayer’s child. But a qualified child can also be a stepchild, an eligible foster child, a sibling (including step-siblings or half-siblings), or even a descendent of these relations—such as a grandchild, niece, or nephew. 

How do taxpayers qualify for the Advance Child Tax Credit?

In most cases, a family must have a qualifying child to be eligible for the Advance Child Tax Credit payments. The taxpayer—or the taxpayer’s spouse, if filing jointly—must have their main home in one of the 50 U.S. states or the District of Columbia and has to live there for more than half the year.

There are also certain qualifications the child has to meet in order to qualify for the credit:

  1. For tax year 2021, a qualifying child is an individual who does not turn 18 before January 1, 2022 and the individual does not provide more than one-half of his or her own support during 2021.
  2. The individual lives with the taxpayer for more than one-half of tax year 2021. For exceptions to this requirement, see IRS Publication 972, Child Tax Credit and Credit for Other Dependents.
  3. The individual is properly claimed as the taxpayer’s dependent. For more information about how to properly claim an individual as a dependent, see IRS Publication 501, Dependents, Standard Deduction, and Filing Information.
  4. The individual does not file a joint return with the individual’s spouse for tax year 2021 or files it only to claim a refund of withheld income tax or estimated tax paid.
  5. The individual was a U.S. citizen, U.S. national, or U.S. resident alien. For more information on this condition, see IRS Publication 519, U.S. Tax Guide for Aliens.

How do taxpayers sign up for the Advance Child Tax Credit?

For many, the key to getting advance payments of the Child Tax Credit is the IRS’ Non-filer Sign-up Tool. This online tool helps those who don’t normally have to file a tax return qualify for advance child tax credit payments, the recovery rebate credit or Economic Impact Payments (EIPs). All it takes is completing a simplified tax return.

The Non-filer Sign-up Tool will be available through Oct. 15.

Even if a family misses the deadline for advance payments of the credit, they can still file a 2021 return during filing season to get the full amount of the credit as a refund.

Those taxpayers who are required to file a return should check the IRS website in coming weeks, as the Child Tax Credit Update Portal will be updated, allowing families to pass new information about the qualifying children they plan to claim on their 2021 tax return. This will allow the IRS to adjust their monthly Advance Child Tax Credit payments.

Source: COVID Tax Tip 2021-150

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