Below are some of the headlines and stories out of the IRS that have been in the news recently.
Refunds Delayed as the IRS Continues to Fight Against Fraud
The IRS is barred from issuing refunds before February 15 on any returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit. Congress mandated this delay to give the IRS more time to review the returns. Their hope is to catch any fraudulent ones before the refund is paid out. These refunds may not be issued until the week of February 27th because of weekends and President’s Day. The IRS Commissioner John Koskinen said, “For this tax season, it’s more important than ever for taxpayers to plan ahead.”
Along with this delay in refunds, below are a few changes the IRS has made in regards to filing taxes.
The personal exemption has been increased to $4,050. This is phased out for taxpayers at higher income levels. The Alternative Minimum Tax is still around, however, the exemption has increased to $53,900 for single taxpayers, $83,000 for married taxpayers filing jointly, and $41,900 for married filing separately.
Individual Taxpayer Identification Numbers
Those with Individual Taxpayer Identification Numbers (ITIN’s) instead of SSN’s may have to renew it before filing 2016 tax returns. Current ITIN’s are no longer valid if they weren’t used at least once in the last three years. Numbers issued before 2013 also won’t be valid.
For those that didn’t have health insurance in 2016, the penalty for each adult is $695 and $347.50 for children under 18, with a maximum penalty of $2,085. Some exemptions that may help avoid this penalty are a financial hardship, living overseas, or having a membership in a federally recognized tribe or religious group with objections to insurance.
Protection Against Identity Theft and Fraud
The IRS has said, “Taxpayers who are changing tax software products this filing season will need their AGI from their 2015 tax return to file electronically. The electronic filing PIN is no longer an option.”
Another step to this is the IRS is pushing up the deadline for employers to submit wage data. This will enable the IRS to build a database sooner to crosscheck returns on those W-2 forms. Previously, wage forms were sent to taxpayers by January 31st and to the Social Security Administration later. “That meant the filing season was over by the time the IRS got the most fundamental data.”
The IRS says that by working with states and the tax industry, identity thefts were cut in half last year.
Earned Income Tax Credit
The IRS describes this credit as a “benefit for working people with low to moderate income.”
Eligibility is based on marital status, income, and the number of qualifying children in the household. The maximum credit for the 2016 tax year ranges from $6,269 for those with three or more children to $506 for those with no children.
The IRS estimates that as many as 26 percent of EITC claims may be paid in error. “Some of the errors are unintentional, caused by the complexity of the law, but some are an intentional disregard of the law. Anytime you have refundable money, it brings out the creeps, the criminals, the bad folks.”
Like the Additional Child Tax Credit, the EITC is refundable, meaning you can receive a refund even if you have no tax liability.
IRS Employees Sent Encrypted Emails
A report from the Treasury Inspector General for Tax Administration (TIGTA) found that IRS employees sent unencrypted emails containing 8,031 different taxpayers personally identifiable information, totally 326 emails. Of those 326 emails, 275 were sent internally within the IRS while 51 were sent outside of the agency to non-IRS email accounts. Of the emails sent externally, 20 were sent to 6 IRS employees personal email accounts.
Unencrypted emails sent within the agency were at a lower security risk because they remained behind the agency’s security system. Per IRS policy, no office or employee may use a personal email account to conduct official business.
TIGTA had this to say about their findings:
“Based on our sample results, we estimate that 11,416 SB/SE Division employees sent 95,369 unencrypted emails with taxpayer PII/tax return information for 2.4 million taxpayers during the four-week period of our sample. If this four-week period is typical, we estimate that more than 1.1 million unencrypted emails with taxpayer PII/tax return information of 28.2 million taxpayers could be sent annually.”
They recommend the IRS consider implementing a systemic solution to ensure that PII/tax return information remains encrypted. They also recommend that appropriate disciplinary action is taken against employees when email violations occur.
House Wants to Impeach IRS Commissioner
IRS Commissioner John Koskinen was accused of obstructing congressional investigations into the IRS mistreatment of tea party groups. Some conservatives charged him with obstructing justice by allowing subpoenaed documents to be destroyed. Then, waiting 4 months to correct his testimony to Congress that all relevant documents were being preserved.
House Freedom Caucus Chairman Jim Jordan said, “The right to pursue impeachment is an indispensable power that Congress has for holding government officials accountable to the American people. Under his watch, with subpoenas and preservation orders in place, John Koskinen not only allowed 422 backup tapes containing as many as 24,000 Lois Lerner emails to be destroyed—he also then failed to tell Congress about it in a timely manner.”
By a vote of 342-72, lawmakers referred the impeachment resolution to the House Judiciary Committee Judiciary Panel Chairman Bob Goodlatte (R-VA). He declined to endorse the impeachment effort saying the actions of Koskinen did not merit removal. If the impeachment had succeeded, he would’ve been the first executive branch official to meet that fate in 140 years.
Koskinen’s term is up November 2017 and he said he would step down if asked to by President Trump. “He’d be wise to tender his resignation no, he doesn’t fit in with an open, transparent Trump administration. Clearly, we need a fresh start at the IRS. Koskinen has no credibility left as commissioner because of his actions, behavior, and conduct so far. I certainly don’t have confidence in him.” Said House Ways and Means Chairman Kevin Brady (R-TX).
The Constitution lists “treason, bribery, or other high crimes and misdemeanors” as impeachable offenses. However, the definition of these is often debated.