Will The IRS Have Access To Personal Health Records After 2013

News reports have stated that individuals are concerned the IRS could have access to personal health records due to the requirement to obtain health insurance or suffer penalties after 2013.

We have received information that insurance companies will send a report of coverage to the IRS and taxpayers, listing the names, addresses and tax ID numbers of all individuals with coverage.  If an employer self-insures, the employer will make the report.  No medical history will be listed.

The Service will then check to make sure that uncovered individuals have paid the penalty, which is capped at $95 a person for 2014.  IRS can enforce the penalty only by docking tax refunds as it cannot use liens or levies.

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2013 Retirement Plan Contribution Limitations

Below is the cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2013.

– The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,000 to $17,500.

-The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $5,500.

-The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $59,000 and $69,000, up from $58,000 and $68,000 in 2012. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $95,000 to $115,000, up from $92,000 to $112,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $178,000 and $188,000, up from $173,000 and $183,000.

-The AGI phase-out range for taxpayers making contributions to a Roth IRA is $178,000 to $188,000 for married couples filing jointly, up from $173,000 to $183,000 in 2012. For singles and heads of household, the income phase-out range is $112,000 to $127,000, up from $110,000 to $125,000. For a married individual filing a seperate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000.

-The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low and moderate income workers is $59,000 for married couples filing jointly, up from $57,500 in 2012; $44,250 for heads of household, up from $43,125; and $29,500 for married individuals filing seperately and for singles, up from $28,750.

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Where’s My Amended Return?

The IRS website has recently added a tool that allows the ability to check the status of an amended tax return. All you will need is your social security number, date of birth, and zip code. The “Where’s My Amended Return” tool gives the status of a Form 1040X filed for the current year and up to three prior years. Processing of an amended return is estimated to take up to 12 weeks.

You may access this tool by clicking here.

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IRS Releases 2013 Standard Mileage Rates

The IRS recently released the 2013 standard mileage rates below:

-56.5 cents per mile for business miles driven
-24 cents per mile driven for medical or moving purposes
-14 cents per mile driven in service of charitable organizations

-EAE

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First Time Abate Waiver

It is common for the IRS to waive Failure to File (FTF) and Failure to Pay (FTP) penalties for taxpayers who have demonstrated full compliance over the prior three years. This waiver, called a First-Time Abate (FTA) is to reward past tax compliance and promote future tax compliance. A report by the Treasury Inspector General for Tax Administration (TIGTA) found that most taxpayers with compliant tax histories are not offered and do not receive the FTA waiver. For the 2010 tax year, approximately 250,000 taxpayers with FTF penalties and 1.2 million taxpayers with FTP penalties did not receive penalty relief even though they qualified for the FTA waiver. In addition, taxpayer requests for penalty abatements were not always processed accurately.

The unabated penalties for over 1.4 million taxpayers were estimated to equal $181,000,000.

Please contact us today if you think you might qualify for the tax penalty relief described above and we can make sure you did not pay more than the required amount.

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IRS Releases Standard Mileage Rates for 2012

The IRS recently released the 2012 standard mileage rates below:

-55.5 cents per mile for business miles driven
-23 cents per mile driven for medical or moving purposes
-14 cents per mile driven in service of charitable organizations

-EAE

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IRS Has $153.3 Million in Undelivered Tax Refunds

This Wednesday the IRS said it has $153.3 million in undelivered tax refund checks waiting to be sent to over 99,000 taxpayers across the country.  The IRS stated that mailing address errors were the main problem with the undelivered refunds.

If your refund has not been delivered please contact us today and we can help you find out how to correct the error with the IRS and have your money sent back out to you.  Also another alternative is to try the IRS’s Where’s My Refund page to try and locate the missing check.

-EAE

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IRS Issues New Voluntary Compliance Initiative for Worker Reclassification

The IRS recently launched a new voluntary compliance program that allows employers to prospectively reclassify—as employees—those workers they have treated as independent contractors incorrectly. The program contains generous settlement terms and provides audit relief for previous years.  The IRS determined that it would be beneficial for all involved to create a program that allows for voluntary reclassification of workers as employees outside of the examination arena.

Am I Eligible?

The voluntary classification settlement program (VCSP) is available to taxpayers who are currently treating their workers (or a class / group of workers) as independent contractors or other non-employees and want to treat the workers as employees going forward. The program is open to businesses, tax-exempt organizations, and government entities.

In Order To Be Eligible:

– The taxpayer must have consistently treated the workers as non-employees for as long as the workers have been providing services to the taxpayer;

– The taxpayer must have filed all required Forms 1099 for the workers for the previous three calender years ending before the date the Form 8952 (the application for entry into the program) is filed.

– The taxpayer cannot currently be under audit by the IRS, the Department of Labor (DOL) concerning the classification of the workers, or by a state government agency.

What Are The Settlement Terms?

A taxpayer who applies for and is accepted into the VCSP will agree to prospectively treat the class of workers as employees for future tax periods and in exchange:

– Will pay 10% of the employment tax liability that may have been due on compensation paid to the workers for the most recent tax year;

– Will not be liable for any interest and penalties on the liability;

– Will not be subject to an employment tax audit for the worker classification of the workers for prior years; and

– Will agree to extend the period of limitations on assessment of employment taxes for three years for the first, second and third calendar years beginning after the date on which the taxpayer has agreed under the VCSP closing agreement to begin treating the workers as employees.

How Do I Apply?

Taxpayers will have to apply on Form 8952 for participation in the program, and provide the name of a contact or an authorized representative with a valid Power of Attorney (Form 2848). The Instructions to Form 8952 provide that the form can be filed at any time but should be filed at least 60 days before the date a service recipient wants to begin treating the class or classes of workers as employees. The IRS will then contact the taxpayer or authorized representative to complete the process once it has reviewed the application and verified the taxpayer’s eligibility.

Please note the IRS retains discretion as to whether to accept a VCSP application.

Accepted applicants will enter into a closing agreement with the IRS to finalize the terms of the VCSP and will simultaneously make full and complete payment of any amount due under the closing agreement.

Please contact us today if this might be a program that can help your business.

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CIRCULAR 230 DISCLAIMER: ADVICE, ARTICLES AND COMMENTARY INCLUDED HEREIN DO NOT CONSTITUTE AN OPINION AND ARE NOT INTENDED OR WRITTEN TO BE USED, AND THEY CANNOT BE USED, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER.