Federal Direct would like to wish everyone a safe and happy Memorial Day weekend.  Our offices will be closed Monday, May 27th in observance of Memorial Day.  We will resume normal (off season) business hours of 9am to 5pm Eastern on Tuesday May 28th.

It is estimated that the IRS erroneously paid out 11 to 13 BILLION dollars in EITC.  The IRS thought forcing preparers to send in the 8867 Due Diligence worksheets would put “a dent” in the fraud. The number of fraudulent/erroneous EITC payments has gone down 2-3 billion compared to last year’s numbers.

Have your own tax suggestions? taxreform.gov

It’s here. You can stop waiting now. The age where the online socio-political arena is just as important (and way more volatile) as real life has finally come. Of course, there are benefits and drawbacks. Everyone knows the internet makes it easier for a person to say what he or she really thinks which leads to childish squabbles within comment streams (even on political sites). So, that’s a drawback. We see how childish we are, but from those spats real ideas can emerge. Not all commentators just want to call out another. The online political arena has seen so much success in regards to more active participation. The online petition site (https://petitions.whitehouse.gov/) had to up the number signatures required for presidential response from 25 thousand to 100 thousand. Still a threshold that can be reached, but it certainly makes it much harder to get a petition passed.

Now, more of your ideas can be heard and shared online. Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) have launched https://taxreform.gov/, a website dedicated to comprehensive tax reform. This website provides the public an opportunity to provide ideas regarding tax reform. I already gave them my two cents (in addition to all my withholding). Now, it’s your turn. Have any great ideas? For the sake of your kids and your kids’ kids, take a minute to tell congress what’s on your mind relating to tax reform.

There has finally been some information released regarding refunds for RTRP Exam fees.

Requests for refunds can only be made by phone to Prometric directly at the 855.477.3926.  You must speak with to a customer service representative, and they can complete & initiate a refund request.  The refund review process can take up to 60 days.

• Refunds cannot be requested via Prometric’s website.
• Refunds cannot be initiated by contacting the IRS directly.
• Refunds cannot be requested via the preparer’s online PTIN account.

The IRS has a program called the First Time Abate which allows for a taxpayer to have the late filing penalties waived. This only applies if the taxpayer has been compliant for the past three years. This means paying on time, filing on time, etc. This also includes the penalty for late payroll tax deposits.

To find out more about abatement, its inclusions, exclusions and instructions, check out Form 843 Claim for Refund and Request for Abatement.

Form 843 can be used for the following:

• A refund of tax, other than a tax for which a different form must be used.
• An abatement of tax, other than income, estate, or gift tax. Employers cannot use Form 843 to request an abatement of FICA tax, RRTA tax, or income tax withholding.
• A refund to an employee of excess social security or RRTA tax withheld by any one employer, but only if your employer will not adjust the overcollection.
• A refund to an employee of social security or Medicare taxes that were withheld in error, but only if your employer will not adjust the overcollection.
• A refund of excess tier 2 RRTA tax when you had more than one railroad employer for the year and your total tier 2 RRTA tax withheld or paid for the year was more than the tier 2 limit.
• A refund or abatement of interest, penalties, or additions to tax, caused by certain IRS errors or delays, or certain erroneous written advice from the IRS.
• A refund or abatement of a penalty or addition to tax due to reasonable cause or other reason (other than erroneous written advice provided by the IRS) allowed under the law.
• A refund of the penalty imposed under section 6715 for misuse of dyed fuel.
• A refund or abatement of tier 1 RRTA tax for an employee representative.
• A refund of a branded prescription drug fee.

Over the past few years we’ve seen the number of cases of fraud go from an occurrence that happened to “someone we know” to something that you can’t avoid reading or hearing about. It’s happening to hundreds of thousands of people in many different forms, but one of the most common forms in the tax world is Preparer Fraud.  Having unregulated and uneducated people preparing tax returns willy nilly doesn’t sound like a very wise idea, but there is always an unsuspecting person ready to be duped.  There will always be a trusting person who relies on the “knowledge” of another, who in turn exploits that trust and benefits financially for having hurt this person.  Not just that one year does this trusting individual make himself vulnerable. Once that unscrupulous preparer have your tax information, they have it always. Your social security number, those numbers of your kids. Some preparers sell that information, while others just hang on to it for future use. Rolodexes of fictitious people ready to be slapped onto a return for a few hundred dollars, but what’s a few hundred when we’re talking about an extra one or two thousand? This is why it’s so important to stop these individual, and so, I urge you, we all urge you, to sign this petition to protect taxpayers and prevent tax preparer fraud.

https://www.change.org/petitions/u-s-house-ways-and-means-committee-office-pass-the-taxpayer-protection-and-preparer-fraud-prevention-act-of-2013#

Due to budget cuts and sequestration, the IRS will be closing down all of its operations for 5 days, one at a time, from now to August. This will include all operations, including the call centers. The goal is to save money on utilities and man-power on slower days. Keep in mind that the IRS is a business of sorts, but can not control its inflow of funds.

Fortunately, the IRS was able to prolong the furloughs until after the end of tax season. The furlough dates are: May 24th, June 14th, July 5th, July 22nd, and August 30th. There could be as may as two more furlough dates needed in August and September.

Just a reminder that tomorrow, 4/20/2013 is the last day to timely file returns that were previously rejected.

Also, be sure not to cause undue alarm to your clients that are getting refunds; there is no late filing penalty for filing a return after 4/15 if you are claiming a refund!