Monthly News: April 2019

The due date for filing individual tax returns is April 15.  The IRS recommends that taxpayers file an extension if they need one.  Mistakes can happen when people are hurrying to file a tax return by the due date.  If you’re not ready, you can get a 6-month extension.

Congress appears to be on the verge of passing legislation that will modernize the IRS.  The proposed legislation should make the IRS more taxpayer friendly.  Some of the proposed changes include an independent office of appeals within the IRS, better customer support by making IRS’s Free File program permanent.  There will be reasonable enforcement and collection provisions added as well.  The IRS will be required to develop a customer service strategy.  Many more returns will have to be electronically filed through this legislation.  This is to help prevent fraudulent refunds and tax identity theft.  The penalty for failing to file a timely return will increase also.

The premium tax credit remains to helps people buy health insurance who have household incomes between 100% and 400% of the federal poverty level.

The IRS has given more relief for underpayment penalty for 2018 returns.  It had been lowered to 85% of the 2018 tax due from 90%.  Due to pressure from Congress and accounting groups it has been further reduced to 80%.  You must request a waiver on Form 2210.  Fill out part 1 and check box A in part 2 and write “80% waiver” next to the box.  If you already filed your 1040 and paid the penalty you can ask for a refund of the penalty by filing Form 843 and writing on line 7 “80% waiver of estimated tax penalty”.

IRS enforcement activities have been hit hard by funding cuts over the last 8 years according to the nonpartisan Government Accountability Office.  The IRS has lost 27% of the enforcement staff.  This includes a 40% decline in revenue officers.  Due to this individual audits are down 40% and investigations of nonfilers were down to 1.2 million in 2018.

The IRS will be hiring Auditors and Revenue Officers to help restore the staff.  However, the amount of hiring won’t restore it to the previous staff level.