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IRS To Increase Visits to High Income Earners

As part of a larger effort to ensure compliance and fairness, the Internal Revenue Service announced that it will step up efforts to visit high-income taxpayers who in prior years have failed to timely file one or more of their tax returns.

Following the recent and ongoing hiring of additional enforcement personnel, IRS revenue officers across the country will increase face-to-face visits with high-income taxpayers who haven’t filed tax returns in 2018 or previous years. These visits are primarily aimed at informing these taxpayers of their tax filing and paying obligations and bringing these taxpayers into compliance.

“The IRS is committed to fairness in the tax system, and we want to remind people across all income categories that they need to file their taxes,” said Paul Mamo, Director of Collection Operations, Small Business/Self Employed Division. “These visits focusing on high-income taxpayers will be taking place across the country. We want to ensure taxpayers know their options to get right with their taxes and avoid bigger issues later.”

For the current tax season, the IRS reminds taxpayers that everyone should file their 2019 tax return by the April 15 filing deadline regardless of whether they can pay in full. Six-month filing extensions are also available, although that does not extend the April deadline for paying any taxes owed.

“Taxpayers having delinquent filing or payment obligations should consult a competent tax advisor before waiting to be contacted by an IRS revenue officer, Mamo said. “It is always worthwhile to take advantage of various methods of getting back into filing or payment compliance before being personally contacted by the IRS.”

For the new visits taking place, high-income non-filers taxpayers are those who generally received income in excess of $100,000 during a tax year and did not file a tax return with the IRS. Taxpayers who exercise their best efforts in filing their tax returns and paying or entering into agreements to pay their taxes deserve to know that the IRS is aggressively pursuing others who have failed to satisfy their filing and payment obligations.

During the visits, IRS revenue officers will share information and work with the taxpayer to hopefully resolve the tax issue.

Understanding the New W-4

If you have employees in your business you may know the Internal Revenue Service has revised Form W-4 and is offering answers and guidance online.

New W-4 Form and explanations offered online

If you do your own payroll inhouse the Income Tax Withholding Assistant for Employers can help guide you around the new changes. The redesigned withholding system (no longer based on withholding allowances) went into effect on Jan. 1.
There is even a webinar, Understanding the 2020 Form W-4 and How to Use it to Calculate Withholding posted on the site.
And a new and improved Tax Withholding Estimator that incorporates the changes from the redesigned Form W-4, Employee’s Withholding Certificate, that you can direct your employees to for guidance on how to fill out the new form.

While the IRS does not require a new W-4 Form for all current employees, (employers can continue to use the latest W-4 on file for their workers) it may help employees to understand their withholdings better.

2019 A Banner Year for Colorado

Colorado’s Colorado Department of Revenue data reported that cannabis shops notched sales of nearly $1.75 billion during 2019, setting a new annual sales record for the state home to the nation’s longest-established recreational cannabis industry.

Colorado legal cannabis is a multi-billion dollar industry in the state

The 2019 figures showcase a surprising surge in growth from a market that a year ago appeared to be flattening out. The profusion of edibles, beverages, vapes and concentrates resulted in a smaller market share for the familiar flower. Separately, people are growing comfortable with buying cannabis products and integrating those purchases into their shopping patterns, he said, noting recent BDS studies that showed increases in the number of adults who reported consuming cannabis in the prior six month period.

Colorado has the longest standing legal cannabis for recreational use record. Even with a relatively high tax rate (15% sales, 15% excise) recreational use is the bulk of consumption in Colorado.

Premium Tax Credits

If you purchase health insurance on the Health Insurance Marketplace, you must file Form 8962

If you got help paying for your health insurance premiums you may need to file this form

If you have purchased your health insurance on the Health Insurance Marketplace and got a reduction in payments then you got a Premium Tax Payment. And that must be accounted for on your tax return. Failing to file Form 8962, Premium Tax Credit, to reconcile 2019 advance payments of the premium tax credit may affect return processing, and delay the taxpayer’s refund. You may also not be eligible for advance payments of the premium tax credit in the future if you fail to file the form with your return.

What is the premium tax credit?

The premium tax credit helps pay for health insurance coverage bought from the Health Insurance Marketplace. When the taxpayer or their family member applies for coverage, the marketplace estimates the amount of the premium tax credit they may be able to claim. This estimate is based on information the taxpayer provides about family size and projected household income. The taxpayer can then decide if they want to have all, some, or none of the credit paid directly to their insurance company. This option will lower their monthly payments.

Who is required to file Form 8962 to reconcile advance payments?

Taxpayers who have advance credit payments made on their behalf, are required to file Form 8962 with their income tax return. This will reconcile the amount of advance payments with the premium tax credit they may claim based on their actual household income and family size.

How do taxpayers know they received advance credit payments?

Taxpayers or members of their family who enrolled in health insurance coverage for 2019 through the marketplace should receive Form 1095-A, Health Insurance Marketplace Statement. This form shows the months of coverage and any APTC paid to the taxpayer’s insurance company.

This form also provides information to complete Form 8962. Taxpayers who have questions about the information on Form 1095-A, or about receiving it, should contact their marketplace directly. The IRS can’t answer questions about information on Form 1095-A or about missing or lost forms.

How does a taxpayer reconcile advance credit payments?

Filing electronically is the easiest way to file a complete and accurate tax return. Taxpayers who received advance credit payments must file a tax return to reconcile even if they otherwise don’t have to file.

American Bar Association endorses SAFE Act

The American Bar Association (ABA) recently released resolutions showing support for the SAFE Banking Act now hovering in limbo in the Senate.

ABA advocates protection for attorneys working with cannabis clients

The SAFE Banking Act passed in the House last year and progressed to the Senate, awaiting the scheduling of a vote. But it has stalled, even as Banking Committee chair Sen. Mike Crapo (R-ID) is receiving pressure from stakeholders to advance the legislation, and pressure from some fellow lawmakers opposed to anything that smacks of Federal legalization of marijuana.

The ABA advocates for their own constituency’s protection against prosecution or negative effects, such as the shutting down of attorney bank accounts, for working with clients who are part of legal cannabis companies and related companies.

IRS To Increase Visits to High Income Earners

Understanding the New W-4

2019 A Banner Year for Colorado

Premium Tax Credits

American Bar Association endorses SAFE Act

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