First Thursday Minutes – April 4, 2019

First Thursday Minutes

April 4, 2019


Check out the webinars on Tax Reform on the IRS Video Portal.

Discussion items

  • EIN Application update

IRS revises EIN application process; seeks to enhance security

  • Estimated Tax Penalty

IRS expands penalty waiver for those whose tax withholding and estimated tax payments fell short in 2018; key threshold lowered to 80 percent

  • Refund Inquiries

Refund Inquiries

This page is somewhat difficult to find. Consider saving it as a favorite: What should I do if I entered an incorrect routing or account number for direct deposit of my refund?

See additional handout: “All About Refunds”

  • Military resources

IRS has resources to help military personnel and veterans understand taxes

Tax Information for Members of the Military

Your issues and questions:

  • Question: The new 1040 does not have a place for the tax pro to enter the date it was signed. Does anyone else have concerns about this?
  • Karen commented that we tried to get an official answer as to why the tax pro signature date was removed. No official answer provided. We presume it was to save space.
  • Ruth Ann said she adds a signature just for her records and to mitigate risk.
  • Gail said they look at it as a risk issue for the tax pro that there’s no date.
  • Todd commented about the new 1040 design. He says it doesn’t go far enough. It should be like Form 706. One line for income with a schedule attached. One line for deductions with a schedule attached, etc.
  • Jodee commented: Any chance we will go back to the old 1040 design? Our software does a “mock up” of the old way – we don’t even look at the new one!
  • Ruth Ann said she has not been able to e-file 1099DIV through her software (ATX from CCH). Have others had issues?
  1. No tax pros said they had issues with 1099DIV.
  2. One tax pro said she used FIRE successfully.
  3. Alan Gregerson researched the issue after the call. The IRS has not heard of widespread problems with e-filing 1099DIV through tax software.
  • QBI deduction for Schedule C taxpayers. There’s a difference between the proposed regs and the final regs. The proposed regs give a better number than the final regs. What are we to follow?

FYI, the proposed regs were published in the federal register on 8-16-2018. The final regs were announced by the IRS on 1-18-2019 and published in the federal register on 2-8-2019.

Karen’s comment (with my apologies to Shakespeare): “What’s in a name? That which we call a rose by any other name would smell as sweet.” The proposed regs refer to deductions. Many of us think of “adjustments to income” as being different than “deductions”. But the IRS says that adjustments to income are deductions.

This question was addressed in IMRS:

“The proposed regulation 1.199A-1(b)(4) defined qualified business income (QBI) as the net amount of qualified items of income, gain, deduction, and loss with respect to any trade or business as determined under the rules of §1.199A-3(b).

The above-the-line adjustments for self-employment tax, self-employed health insurance deduction, and the self-employed retirement deduction are examples of such deductions. There is no inconsistency between the proposed and final regulations on this issue.”

See the 1040 instructions, which were revised on 1-24-2019, after the final regs came out.

See “Determining Your Qualified Business Income” on page 34:

“Your qualified business income includes items of income, gain, deduction, and loss from your trades or businesses that are effectively connected with the conduct of a trade or business within the United States. This includes income from partnerships (other than PTPs), S corporations, sole proprietorships, and certain trusts that are included or allowed in determining your taxable income for the year. It also includes other deductions attributable to the trade or business including, but not limited to, deductible tax on self-employment income, self-employed health insurance, and contributions to qualified retirement plans.”

The consensus of this group of SLs is that it would be good to have a Tax Tip to highlight this clarification. We have asked for a Tax Tip, News Release, etc.

State Departments of Revenue

Lorie Bowker – ND

  • North Dakota tax department will mirror the IRS waiver of estimated tax penalty for farmers if return is filed and tax paid by 4/15/19.
  • A Still Birth Exemption of $4,150 (which was previously tied to the IRS exemption), once signed by Governor Burgum, will be available to take and will be retroactive for 2018.
  • Waiting for Governor Burgum to sign – a required E-filing threshold of 10 or more information returns (includes W-2 and 1099s)

John Fuller – IA

  • Iowa will honor the IRS extension and waiver of penalty for farmers and fisherman as long as the return and payment is received by 4/15/19.

Vicki Gibbons – WI

  • Individual income tax filing down about 8% compared to this time last year. Expecting backlogs as we approach April 15.
  • Processing is going a little better than last year as we didn’t have as many software errors to address. We are now looking at software provider suspension rates daily and if above the normal rate, we are getting to them immediately to fix errors.
  • Individual income tax returns selected for review are backlogged about 4-5 weeks.
  • New Schedule 5S-ET draft form and instructions posted for subchapter S corporations electing to pay tax at the entity level. Do not file yet. DOR can’t process. Systems are in process of being developed and then there will be a testing period all of which will take several months yet. We will notify through practitioner list serv of when available to file.
  • Finally figured out error why secret questions in My Tax Account are not working. Developers are currently fixing. In near future, we will be asking for new secret questions when first log on to MTA.
  • Farmers and fisherman extension granted same as IRS.
  • Unclaimed property auto matches mailed last week. If property under $2,000, we automatically send a check. Those $2,000 and over are sent a letter asking them to file a claim.
  • We sent 6,000 notices to withholding accounts who have an amount due on their annual reconciliation but did not file the required revised deposit report (WT-6).

Mark Krause – MN

  • Minnesota will honor the IRS extension and waiver of penalty for farmers and fisherman as long as the return and payment is received by 4/15/19.

Next Call

The next call will be on May 2, 2019. We’ll send out the WebEx link closer to that date.

Meetings are one hour long. Come when you can, leave when you must.

Thank you to everyone who attended. We appreciate your time and input!