The IRS revealed that it discovered and stopped an automated cyberattack on its e-filing personal identification number (PIN) system last month.

Source: IRS suffers another data breach

A new requirement for the 2015 tax year is that health insurance companies now need to issue Form 1095-B to those insured, confirming that they have minimum essential health insurance coverage.  Similarly, large employers providing insurance must issue Form 1095-C to their employees stating the coverage and their share of its cost.  The forms are due to be postmarked by the end of January 2016.

But it turns out that many of these folks weren’t ready for this unexpected deadline.  (Sarcasm: this deadline has been in the plan for years — ever since the ACA passed.)  So the IRS, with Notice 2016-04, issued an extension until March 31st.  Quick summary here.

So why do we care?  We’re not health insurance companies or large employers.  Well, the issue is that on individual returns, tax preparers need to indicate whether the taxpayer had minimum essential coverage or not, as well as calculate whether the taxpayer qualifies for any premium assistance credit.  Without these forms, we won’t necessarily have that information — unless the taxpayer is getting health insurance directly through the Marketplace: their Form 1095-A is still slated to arrive by the end of January, as was originally the deadline for the other forms.

As a result of these extensions, individuals might not receive a Form 1095-B or Form 1095-C by the time they file their 2015 tax returns. The IRS is allowing us to depend on other information from insurance providers and employers that would give us the same answer, so as not to file extensions for all these taxpayers.  But this could be hard to come by… if these companies weren’t ready to send out these forms, they may not have anything else that has similar information on which we can rely.  Expect this to be a tax season challenge.

Questions?  The IRS has a great chart on how these forms matter to taxpayers on their returns, what they should expect to receive, and what they should do when they receive it: https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/Health-Care-Law-and-Your-Tax-Return

As a side note, the IRS isn’t requiring these companies to file the IRS copies of the same forms until June 30th, so I think it’s safe to bet we won’t see a matching program in place this season, and with the IRS so woefully understaffed, audits of coverage and credits will be far down the line, if they happen at all for this filing year.

Accountants everywhere, rejoice!  For the first time in years, tax season will open on time!

From the National Assocation of Tax Practitioners:

The IRS states in IR-2015-139 that despite the recent passing of the tax extenders legislation, the IRS will begin accepting individual electronic returns as scheduled on January 19. The IRS will also begin processing paper tax returns at the same time. The IRS states there is no advantage to filing paper returns in early January instead of waiting for e-file to begin.

Although the IRS begins accepting returns on January 19, many tax software companies will begin accepting tax returns earlier in January and submitting them to the IRS when processing systems open.

Take note: the due date for the 2015 Form 1040 is April 18, 2016, due to Washington, D.C.’s observance of Emancipation Day.

I prepare tax returns in the order I receive completed packets, which usually means waiting until the second week of February, at which point most folks will have received their 1099s and W-2s, and businesses will have closed out and reconciled their books.  But it’s nice to know that simple returns can be filed early, and that our software company will already have weeded out any filing issues by the time we begin e-filing.

Source: 2016 Tax Season Opens Jan. 19 for Nation’s Taxpayers

Every year it’s the same… I pay a bunch of money to travel to a seminar on annual tax updates, and the instructor starts each topic with, “now, we don’t know whether Congress will extend this or not…”  It’s gotten so bad that I finally started skipping all the November and December classes and signing up for tax updates in January.  That’s right, for the tax laws of the *prior* year.  This helps a great deal in year-end tax planning.  (Sarcasm.)

Congress’ delayed action gets my goat for many reasons, not just my wasted time in seminars.  The main frustration I have is that so many of these tax provisions are meant to be incentives for businesses or individuals to act a particular way — to take the plunge and buy that big piece of equipment, invest in R&D, or take on that big construction project.  If they don’t know whether or not there is a tax incentive to do it — or that “maybe” Congress will renew a tax break — then how on earth does that serve as an incentive?

Well, thankfully, some of these frustrations are going away.  This year, Congress actually made some of the “extenders” permanent, meaning they won’t have to vote year-after-year to extend them — they’ll be written into the IRS tax code.

The best summary of the changes I’ve read so far is by the incomparable Tony Nitti of Forbes, one of the best tax writers out there:
Tax Deal Makes Permanent R&D Credit, Generous Child And College Breaks – Forbes

And the best list of the items extended, made permanent and/or modified in the extender bill I’ve found is by Vern Hoven of Western CPE.  (A complete list is included in the text of H. R. 2029, the “Protecting Americans from Tax Hikes Act of 2015.”)

© 2015 Sharon Kreider and Vern Hoven