by Fresh Start Tax | Dec 5, 2013 | Tax Help
More than 122 million Returns e-Filed in 2013
The Internal Revenue Service announced a milestone for IRS e-file.
A Whooping 122 million returns were e-filed during 2013.
The statistics provided today contain complete e-file totals for 2013.
This year, the IRS received more than 45.2 million returns from those who prepared and e-filed their own returns on home computers, up from 43.2 million a year earlier, an increase of 4.6 percent.
E-filed returns from tax professionals increased slightly, totaling more than 77 million returns.
Whether they are self prepared or prepared by a tax return preparer, 91 percent of all tax returns filed by individuals are prepared on computers using tax preparation software, which improves the accuracy of those returns.
Other highlights from the new filing season statistics show:
- During 2013, the IRS issued more than 109 million refunds worth almost $300 billion.
- Almost 77 percent of refund recipients chose to receive their refunds through direct deposit.
- More people are using IRS.gov to get answers, file their returns and resolve issues.
- So far in 2013, the IRS web site has been accessed more than 430 million times, up almost 24 percent compared to the same time last year.
EFile Tax Returns – Over 122 Million Filed – Tax Preparation By Former IRS
by Fresh Start Tax | Dec 5, 2013 | Tax Help
Foreign Account Tax Compliance – Improvement on Controls being Made
Improvements Are Needed to Strengthen Systems Development Controls for the Foreign Financial Institution Registration System.
The Internal Revenue Service has taken steps to improve management controls for an information technology system that will help it implement the Foreign Account Tax Compliance Act (FATCA) to improve U.S. tax compliance involving foreign financial assets and offshore accounts.
Additional improvements are needed to strengthen system development controls for the new international information technology system, including the Foreign Financial Institution Registration System.
That is the principal conclusion of a report released publicly today by the Treasury Inspector General for Tax Administration (TIGTA).
The development of the Foreign Financial Institution Registration System is underway to enable the IRS to meet its goals and requirements established by the FATCA.
The expected benefits of this information technology project include the ability to:
1) effectively register Foreign Financial Institutions;
2) increase annual enforcement revenue; and
3) support the IRS’s new overall information reporting system for the FATCA. The successful development, deployment, and implementation of the Foreign Financial Institution Registration System should significantly improve taxpayer compliance internationally and thus enhance IRS tax administration.
The overall objective of TIGTA’s
The overall objective of TIGTA’s review was to determine whether the IRS’s systems development approach for the Foreign Financial Institution Registration System is mitigating risks through the application of information technology management controls aimed at successful development and delivery of requirements and capabilities in support of FATCA requirements, milestones, and goals.
TIGTA evaluated the IRS’s established management controls and processes over information technology program management, security control processes, testing documentation, requirements management, and fraud prevention controls.
Foreign Financial Institution Registration System
The IRS is developing the Foreign Financial Institution Registration System within its new Enterprise Life Cycle Iterative Path systems development and testing process.
The initial system release was substantially developed and nearing deployment when the IRS terminated the effort in November 2012.
Following new Department of the Treasury regulations, changes with Intergovernmental Agreements, and new processes needed to implement the FATCA, the IRS was unable to fully utilize the initial system.
The IRS modified and expanded the scope of the system requirements. The major redesign and initiation of a new development effort was necessary because the IRS did not sufficiently develop requirements for the initial Foreign Financial Institution Registration System as needed for new system development.
by Fresh Start Tax | Dec 5, 2013 | Tax Help
TIGTA: IRS Must Do More To Reduce Fraud Involving Employee Identification Numbers
While the Internal Revenue Service has developed processes to authenticate individuals applying for an Employer Identification Number (EIN), it needs to do more to prevent fraud committed using stolen EINs, according to a new report publicly released by the Treasury Inspector General for Tax Administration (TIGTA).
The IRS issues EINs to identify taxpayers’ business accounts. Individuals attempting to commit tax refund fraud steal or falsely obtain an EIN to file tax returns that report false income and withholding.
TIGTA’s report found that such fraud could top $11.4 billion in potentially fraudulent refunds over a five-year period.
The overall objective of TIGTA’s review was to assess the IRS’s processes for issuing EINs and identifying stolen or falsely obtained EINs used to report income and withholding.
TIGTA found that the IRS has developed processes to both authenticate individuals applying for an EIN and ensure that there is a valid business reason to obtain an EIN. However, TIGTA identified 767,071 Tax Year 2011 electronically filed individual tax returns with refunds based on falsely reported income and withholding.
Of the 285,670 EINs used on these tax returns:
277,624 were stolen EINs used to report false income and withholding on 752,656 tax returns with potentially fraudulent refunds issued totaling more than $2.2 billion.
8,046 were falsely obtained EINs used to report false income and withholding on 14,415 tax returns with potentially fraudulent refunds issued totaling more than $50 million.
Unbelievable numbers.
The IRS has developed a number of processes to prevent fraudulent refunds claimed using stolen and falsely obtained EINs.
However, the IRS does not have the third-party Form W-2 information needed to make significant improvements in its detection efforts. Nonetheless, the IRS does maintain data that could increase its ability to detect tax returns with false income and withholding associated with stolen or falsely obtained EINs.
“With an estimated Tax Gap in excess of $450 billion, it is imperative that the IRS use all available data to increase its ability to detect tax returns with false income and withholding associated with stolen or falsely obtained EINs,” said J. Russell George, Treasury Inspector General for Tax Administration.
TIGTA recommended that the IRS update fraud filters to identify potentially fraudulent tax returns.
IRS – Fraud Involving Employee ID Numbers
by Fresh Start Tax | Dec 5, 2013 | Income Tax Preparation, Tax Help
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by Fresh Start Tax | Dec 5, 2013 | Tax Help
IRS Savers Credit – Tax Credit Help
Low- and moderate-income workers can take steps now to save for retirement and earn a special tax credit in 2013 and the years ahead, according to the Internal Revenue Service.
The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs.
Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.
Eligible workers still have time to make qualifying retirement contributions and get the saver’s credit on their 2013 tax return. People have until April 15, 2014, to set up a new individual retirement arrangement or add money to an existing IRA for 2013.
However, elective deferrals (contributions) must be made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, and the Thrift Savings Plan for federal employees.
Employees who are unable to set aside money for this year may want to schedule their 2014 contributions soon so their employer can begin withholding them in January.
The saver’s credit can be claimed by:
- Married couples filing jointly with incomes up to $59,000 in 2013 or $60,000 in 2014;
- Heads of Household with incomes up to $44,250 in 2013 or $45,000 in 2014; and
- Married individuals filing separately and singles with incomes up to $29,500 in 2013 or $30,000 in 2014.
Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed.
Though the maximum saver’s credit is $1,000, $2,000 for married couples, the IRS cautioned that it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers.
A taxpayer’s credit amount is based on his or her filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs.
Use Form 8880
Form 8880 is used to claim the saver’s credit, and its instructions have details on figuring the credit correctly.
In tax-year 2011, the most recent year for which complete figures are available, saver’s credits totaling just over $1.1 billion were claimed on nearly 6.4 million individual income tax returns. Saver’s credits claimed on these returns averaged $215 for joint filers, $166 for heads of household and $128 for single filers.
The saver’s credit supplements other tax benefits available to people who set money aside for retirement.
For example, most workers may deduct their contributions to a traditional IRA. Though Roth IRA contributions are not deductible, qualifying withdrawals, usually after retirement, are tax-free. Normally, contributions to 401(k) and similar workplace plans are not taxed until withdrawn.
Other special rules that apply to the saver’s credit include the following:
- Eligible taxpayers must be at least 18 years of age.
- Anyone claimed as a dependent on someone else’s return cannot take the credit.
- A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.
Certain retirement plan distributions reduce the contribution amount used to figure the credit. For 2013, this rule applies to distributions received after 2010 and before the due date, including extensions, of the 2013 return. Form 8880 and its instructions have details on making this computation.
Begun in 2002 as a temporary provision, the saver’s credit was made a permanent part of the tax code in legislation enacted in 2006.
To help preserve the value of the credit, income limits are now adjusted annually to keep pace with inflation.
IRS Savers Credit – Tax Credit Help – Tax Preparation by Former IRS Agents
