Federal Tax News

Employers may receive “no match” letters soon. The Social Security Administration (SSA) announced it will be sending out the letters this spring. The notices will be sent to businesses and employers that submit W-2 forms containing name and Social Security number combinations that don’t match SSA records. The letters will inform employers about the mismatches and tell them that corrections are needed. The SSA won’t send letters to notify individual employees. For more information, including how to proceed if you have an employee with a mismatch: http://bit.ly/2MZnZh1

The trust fund recovery penalty is imposed in two cases. Employers must withhold Social Security and income taxes from their employees’ wages. Employers collect these taxes each pay period, and then remit them to the IRS on a quarterly basis. If an employer willfully fails to pay over collected taxes, the IRS can impose a “trust fund recovery penalty” from a responsible person. In a recent case, a U.S. District Court ruled that a business partner owed the penalty. Among the reasons: He had signature authority over bank accounts, hired and fired employees, and decided which creditors were paid. (Ireland, DC CA, 1/23/19)
In another recent case, a CFO was liable for his company’s trust fund recovery penalty of more than $4.3 million, a U.S. district court ruled. The court found that the CFO met most of the criteria for being a “responsible person.” He collected, but willfully failed to pay over, employee payroll taxes to the IRS. As CFO of a medical practice, he was responsible for collecting, accounting for and paying payroll taxes. He also made decisions to pay creditors, rather than pay the IRS the taxes owed. (McClendon, DC TX, 1/22/19)
If you filed your return, you may wonder: “Where’s my refund?” To find out, you can use the tools provided by the IRS. The best way to get information is to visit the IRS “Where’s My Refund?” site to access your refund status. You’ll need your Social Security number, filing status, and the exact dollar amount of your refund. Within 24 hours of the IRS accepting an e-filed return, it’s trackable, or within four weeks after mailing a paper return. The IRS issues most refunds in less than 21 calendar days, but some take longer. This can happen for a variety of reasons, including a return that has errors, is incomplete or appears to be affected by identity theft. Here’s the refund status tool: http://bit.ly/2cl5MZo

How did the recent government shutdown affect the IRS and taxpayers? The IRS faced and continues to experience challenges as a result of the shutdown, according to the National Taxpayer Advocate, Nina Olson. In a report to Congress, she said the shutdown affected IRS operations and taxpayer rights. It meant the IRS couldn’t release levies on taxpayer funds in extreme cases “to pay for basic living expenses or even a life-saving operation.”  Under the Anti-Deficiency Act, federal funds can’t be spent in the absence of an appropriation except where otherwise provided by law. The report recommends that Congress amend the Anti-Deficiency Act to ensure taxpayer protections remain available if and when the IRS takes enforcement action during (or just prior to) a shutdown. 

Olson said the shutdown “could not have come at a worse time for the IRS—facing its first filing season implementing a massive new tax law, with a completely restructured tax form. The IRS began the filing season “inundated with correspondence, phone calls, and inventories of unresolved prior year audits and identity theft cases,” she added Here’s the report: http://bit.ly/2DyuxPb
Categories: March 2019, Monthly Bulletins

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