IRS Hot Issues - PSTAP6/15/2015 11 Direct Pay – Step 3 Your Payment Information • Amount of payment • Payment date (within 30-days) • Bank routing & account number • Account

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IRS Hot Issues

May 20, 2015

Eastern PA Working Together Conference

Online Payment Agreements

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• Simplicity and convenience

• Fewer defaults

• Fewer posting errors

• Reduced Cost

OPA Goals

Benefits to Taxpayers

• Fully automated

• Interactive

• Streamlined

• Immediate approval notification

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Benefits to Taxpayer

• No direct personal contact

• Taxpayer or Rep self-qualifies and applies

• Education

• Lower costs

Payment Options

• Full pay in 10 days

• Full pay in 11 – 120 days

• Monthly payments

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Who Can Use OPA

• Individuals

• Businesses

• Their Representatives

Criteria – Individual Taxpayers

• Any type of tax

• Owe $50,000 or less

• All required returns filed

• Minimum payment amount

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Additional RequirementIndividuals

• If – Aggregate balance $25,001 - $50,000

• Then – Direct Debit agreement required

Criteria – Business Taxpayers

• Owe $25,000 or less

• All required returns filed

• Full pay within 24 months

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Additional RequirementBusinesses

• If – $10,001 - $25,000 owed

• Then – Payments must be by Direct Debit

Finding the Online Application

At IRS.gov

• Tools – Online Payment Agreement Application

• Payments tab – Apply for an Online Payment Agreement

• Key word OPA

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Additional OPA Features

• Regular installment agreement changes–

– Due date

– Amount

– Switch to direct debit or payroll deduction

• Change short term agreement to monthly payment plan

Feedback - Questions

• Have you tried OPA? Problems?

Impressions? Questions?

• Your feedback will be captured and used to

improve the online application

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IRS Direct Pay

Date

Presenter’s name

IRS.gov/DirectPay

Welcome to Direct Pay

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Direct Pay Is …

• e-Pay option for individual taxpayers

• Free

• Secure

• Available 24X7

Direct Pay – Step 1

Reason for payment?

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Select “Tax Year For Payment”


Verify Identity

• Select a tax year for verification

• Enter filing status for selected year

• Enter name – SSN – DOB – address for

selected year

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Your Payment Information

• Amount of payment

• Payment date (within 30-days)

• Bank routing & account number

• Account type – checking or savings

Direct Pay – Steps 4 & 5

• Step 4 – Review and sign

• Step 5 – Print or record confirmation number

• Use confirmation number to

–Check status of payments

–Edit or cancel payments

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Direct Pay Benefits

• Ability to

–Check payment status

–Cancel payments

Direct Pay Benefits

• Available 24X7

• Saves time, money & effort

–No waiting for a PIN to be mailed

–No trips to post office

–No postage

–No money order or debit/credit card fees

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Direct Pay Benefits

• Flexible payment scheduling

• Immediate online confirmation

• Accounts credited same day

• Fewer payment posting errors

IRS.gov/DirectPay

Click “Pay Now” to Get Started

And Follow the 5 Easy Steps

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Third Party Payer

Payroll Service Providers (PSPs)

Many employers outsource their payroll and related tax duties, the 3rd party payers will:

• Administer payroll and employment taxes

• Provide assistance in meeting filing deadlines and deposit requirements

• Streamline business operations

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Common third party arrangements include:

– Payroll Service Providers (PSPs)

– Reporting Agents

– Section 3504 Agents

– Professional Employer Organizations (PEOs)

Reminder: Employers are ultimately responsible for the payment of income tax withheld (employer and employee portions of social security and Medicare taxes). See Fact Sheet 2013-9 Tips for Employers Who Outsource Payroll Duties

Types of Third Party Payers

Electronic Federal Tax Payment System

The EFTPS is:

• Mandatory

• Secure, accurate and easy to use

• Available to be viewed online after enrollment

• Accessible by an Inquiry PIN

The system:

• Provides immediate confirmation for each transaction

• Maintains a history for 16 months

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The Voluntary Classification Settlement

Program (VCSP)

Presenter:

What is VCSP?

• Voluntary Classification Settlement Program

• Similar to CSP offered in exams

• Allows taxpayers to voluntarily reclassify workers as employees for future tax periods

• Provides partial relief from federal employment taxes

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Eligible taxpayers:

• Must be currently treating workers as nonemployees

• Must have consistently treated workers as nonemployees, including having filed 1099s for past 3 years

• Cannot be under an IRS employment tax audit or worker classification audit by DOL or state agency

VCSP Eligibility

VCSP Application Process

• Complete Form 8952, Application for Voluntary Classification Settlement Program

• File 60 days prior to treating workers as employees

• IRS reviews application to verify eligibility and contacts the taxpayer to complete the process

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VCSP Acceptance

• IRS prepares and sends a closing agreement for taxpayer signature

• Taxpayer sends full payment with signed closing agreement to IRS

• IRS sends the finalized closing agreement for taxpayer records

VCSP Advantages

• The application and process are simple • Taxpayers pay a reduced rate (Section

3509(a)) with no interest and no penalties on this amount

• Results in just over 1% of amounts paid to workers for the past completed year

• Audit protection for past years on workers being reclassified

• Program provides certainty for Federal Employment Tax purposes

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Resources

• Form 8952 and instructions

• VCSP pages of IRS.gov, including FAQs

• Announcement 2012-45

Home Office Deduction Simplified Option

Date

Presenter’s name

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• Beginning with tax year 2013 (returns filed in 2014), taxpayers will have the option to use a simplified method for claiming the deduction for business use of their home.

Simplified Option –What’s changing

Highlights of Simplified Option

• Standard deduction of $5 per square foot of home used for business (maximum of 300 square feet)

• Allowable home-related itemized deductions claimed in full on Schedule A (for example: mortgage interest, real estate taxes)

• No home depreciation deduction or later recapture of depreciation for the years the simplified option is used

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Comparison of Methods

Simplified Option Regular Method

Deduction for home office use of a portion of a residence allowed only if that portion is exclusively

used on a regular basis for business purposes

Same

Allowable square footage of home use for business (not to

exceed 300 square feet)

Percentage of home used for business

Standard $5 per square foot used to determine home business

deduction

Actual expenses determined and records maintained



Home-related itemized deductions claimed in full on

Schedule A

Home-related itemized deductions apportioned between Schedule A and business schedule (Sch. C or

Sch. F)

No depreciation deductionDepreciation deduction for portion

of home used for business

No recapture of depreciation upon sale of home

Recapture of depreciation on gain upon sale of home

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Deduction cannot exceed gross income from business use of

home less business expensesSame

Amount in excess of gross income limitation may not be

carried over

Amount in excess of gross income limitation may be carried over

Loss carryover from use of regular method in prior year

may not be claimed

Loss carryover from use of regular method in prior year may be claimed if gross income test is met in current

year

What taxpayers need to know

• They have the option of using whichever method is more advantageous.

• This simplified method, is claimed on Form 1040, Schedule C, line 30.

• If claiming the deduction using the “Regular Method,” Form 8829 is required.

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Additional Information

• IRS.gov Home Office Deduction

• Full details on the new option can be found in Revenue Procedure 2013-13.

Virtual Currency

May 20, 2015

Eastern PA Working Together Conference

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What is a Virtual Currency?

• Digital representation of value

• Is not legal tender

Tax consequences

• IRS Notice 2014-21

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• IRS.gov key word Virtual Currency

• Publication 525, Taxable and Nontaxable Income

• Notice 2014-21

Virtual CurrencyInformation on IRS.gov

@IRSnews – IRS news and guidance for the public, the press and practitioners:

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http://twitter.com/irstaxpros

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Follow IRS on Twitter

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Richard Furlong, Jr.

IRS Senior Stakeholder Liaison

267-941-6343

[email protected]

Contact Information

IRS Hot Issues - PSTAP6/15/2015 11 Direct Pay – Step 3 Your Payment Information • Amount of payment • Payment date (within 30-days) • Bank routing & account number • Account

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