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TAX FAST FACTS

Bob Parrish CPA

  PE06923_.WMF (20168 bytes) (Cheat Sheets for Tax) paperload-ma00285d_lg1.gif (52260 bytes) See the alternate Fast Facts Sheet

 

Pension Plan Dates; Rollover Facts - Personal Exemptions - Standard Deduction - Itemized Deductions - Social Security -

Mileage Allowance - Minimum Wage - Per Diem - Individual Tax Rates - Corporate Tax Rates - Trust Tax Rates

Estate Tax Rates - Retirement Plans - AGI Limits - EITC Maximums - Special Tax Rates - Penalty Rates -

FL Intangible Tax - Electronic Filing  - Depletion

 

 

Pension Plan Dates

SIMPLE - must be set up by October 1 of the calendar year

SEP - Must be setup by and funded by : A SEP can be established after the end of the taxable year, as long as it is established before the due date, including extensions, of the employer's return. Code Section 404(h)(1)(B) ; Prop. Reg. 1.408-7(b).

IRA - Must be setup by 4/15 and funded by 4/15

401K -----------

Pens Plan ------------

HR10 - Must be setup before end of tax and year and must be funded BEFORE filing the tax return

ROLLOVERS

(a) IN GENERAL

Rollovers are a flexible device used to transfer funds from one eligible retirement plan to another. A is a tax-deferred transaction in which cash or other property is distributed by a plan or an IRA, followed (or preceded) by contributions to another plan or IRA.  The generally must be made within 60 days of receipt of the property distributed, and, if the distribution is made from a qualified plan, must be made in the form of a direct transfer to avoid withholding.  See for discussion of the rules on and the taxation of rollovers and direct transfers.

For distributions after December 31, 2001, the IRS may waive the 60-day period if the failure to waive that requirement would be against equity or good conscience, including cases of casualty, disaster, or other events beyond the individual's reasonable control. Code Section 408(d)(3)(I). or example, the IRS may issue guidance that includes objective standards for waiving the 60-day period, such as waiving the rule due to military service in a combat zone or during a presidentially declared disaster, or for a period during which the participant has received payment in the form of a check but has not cashed the check, or for errors committed by a financial institution, or in cases of inability to complete a due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country, or postal error. H. Conf. Rep. 107-84, 107th Cong., 1st Sess. (2001). For distributions before January 1, 2002, the IRS does not have authority to waive or extend the 60-day period, and has refused to do so even when taxpayers took all necessary actions in a timely manner, did not know that the distribution could be rolled over, or did not know that another party had acted against their instructions.

Rollovers can be made:

(1) from qualified plans to qualified plans 

(2) from qualified plans to eligible governmental Code Section 457(b) plans, for distributions after December 31, 2001 

(3) from qualified plans to Code Section 403(b) tax-sheltered annuities, for distributions after December 31, 2001 

(4) from qualified plans to IRAs 

(5) from IRAs to IRAs 

(6) from IRAs to qualified plans 

(7) from IRAs to Code Section 403(b) tax-sheltered annuities, for distributions after December 31, 2001 

(8) from IRAs to eligible governmental Code Section 457(b) plans, for distributions after December 31, 2001 

(9) from eligible governmental Code Section 457(b) plans to eligible governmental Code Section 457(b) plans, for distributions after December 31, 2001,

(10) from eligible governmental Code Section 457(b) plans to qualified plans, for distributions after December 31, 2001,

(11) from eligible governmental Code Section 457(b) plans to Code Section 403(b) tax-sheltered annuities, for distributions after December 31, 2001,

(12) from eligible governmental Code Section 457(b) plans to IRAs, for distributions after December 31, 2001 

(13) from Code Section 403(b) tax-sheltered annuities to Code Section 403(b) tax-sheltered annuities, for distributions after December 31, 2001 

(14) from Code Section 403(b) tax-sheltered annuities to qualified plans, for distributions after December 31, 2001 

(15) from Code Section 403(b) tax-sheltered annuities to eligible governmental Code Section 457(b) plans, for distributions after December 31, 2001, and

(16) from Code Section 403(b) tax-sheltered annuities to IRAs, for distributions after December 31, 2001 

 

 

1999

2000

Personal exemption 2,750 2,800
 
Reduced by 2% of AGI in excess of:
   
Married filing joint

189,950

193,400
Single 126,600 128,950
 Head of Household 158,300 161,150
Married Filing Separate 94,975 96,700

 

 

Standard Deduction

1999

2000

Married Filing Joint 7,200 7,350
Single
4,300 4,400
Head of Household

6,350

6,450
Additional for over 65 or for those that are legally blind:    

Married

850 850

Unmarried

1,050 1,100

 

Dependents of Another 1999 2000
Allowed Std. Deduction 700 700

 

Max unearned income without kiddie tax 1400  
     

 

Itemized Deductions

1999

2000

Deductions reduced by 3% of the adjusted gross income if it exceeds:    

Married Filing Joint

126,600 128,950

Single

126,600 128,950
 Married Filing Separate 63,300 64,475
     
     

 

 

Social Security

1999

2000

Maximum earnings subject to the social security or self-employment tax 72,600 76,200
Maximum yearly earnings before reduction in benefits:    

Under 65 - reduced $1 for every $2 in excess:

9,600 ($800 per month) 10,800 (900 per month)

Age 65-69 reduced $1 for every $3 in excess:

15,500 (1,292/mo) 17,000 (1,417/mo)

FICA - OASDI rate

6.20% 6.20%

FICA - HI rate

1.45% 1.45%

SE Tax Rate

15.30%

15.30%

     
 

 

 

 

Meals and Entertainment Limitations

50%

   50%

Section 179 Expensing Election

20,000

   19,000

Self-employed health insurance 60% 60%
Section 179 19000 20000
401k 10000 10500
   

 

Student Loan Interest Deductions

2,000

1,500

Student Loan Interest Phase-Out

   

  (Modified AGI)

   
  • Married Filing Jointly

60,000 to 75,000

60,000 to 75,000

  • Others

40,000 to 55,000

40,000 to 55,000

Hope Credit Per Student - Greater of 100% of $1,000 Tuition/Fees and 50% of Next $1,000 Tuition/Fees

$1,500

$1,500

Lifetime Learning Credit After 06/30/98 and Before 2003

   
  • 20% of $5,000 Tuition/Fees

1,000

1,000

Educational Credits Phase-Out (Modified AGT)

   
  • Married Filing Jointly

80,000 to 100,000

80,000 to 100,000

  • Others

40,000 to 50,000

40,000 to 50,000

Child Tax Credit - Child Under Age 17

500

500

Child Tax Credit Threshold Amounts

   

    Phase-Out

   
  • Married Filing Jointly

110,000

110,000

  • Single or Head of Household

75,000

75,000

* .325 (01/01/99 through 04/01/99
** Bill Pending

   

The information presented above is subject to change and is not offered as specific advice. Please consult with your tax advisor.

 

 

1999

2000

Employer provided passes $65/ Mo $65/Mo
Qualified parking permit $175/Mo $175/Mo
Excise Tax Starts $36000/6% $38000/5%
     

 

The IRS periodically adjusts the mileage rate to reflect automobile operating costs.

Individuals who use their cars for business travel usually have the option of deducting actual expenses or claiming the IRS mileage allowance, plus parking and tolls.

Mileage Allowance - cents per mile

YEAR

RATE (all are 'cents per mile')

 

 

Business

Mail Carrier

Charity

Medical

Moving Household

 

 

 

 

 

 

 

2002

 

36.5

 

 

13

13

2001

 

34.5

 

 

12

12

2000

 

32.5

 

14

10

10

1999 after 3/31

 

31

 

14

10

10

1999 until 3/31

 

32.5

 

14

10

10

1998

 

32.5

 

14

10

10

1997

 

31.5

 

12

10

10

1996

 

31

 

12

10

10

The change in the business mileage rate will primarily benefit self-employed individuals who use the IRS mileage rate, in lieu of actual expenses, to compute their car-expense deductions. The change will also affect some employees who are reimbursed by their employer for job-related use of their personal car. Employees who are reimbursed for car expenses.

The IRS mileage allowance serves as an important benchmark in private industry. Many corporations use the IRS mileage rate to gauge how much to reimburse employees for job-related use of their personal cars.

Additional Expenses

PARKING FEES, TOLLS AND LOAN INTEREST ON THE VEHICLE: In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses.)

CHOOSING THE STANDARD MILEAGE RATE. If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then in later years, you can choose to use either the standard mileage rate or actual expenses. If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. For leases that began on or before December 31, 1997, the standard mileage rate must be used for the entire portion of the lease period (including renewals) that is after that date.

 

 

 

Federal Minimum Wage $5.15 per hour

Personal Service Corporations

 

Depletion

The following percentages are for taxable years beginning in:

1991

 15 percent

1992

 18 percent

1993

 19 percent

1994

 20 percent

1995

 21 percent

1996

 20 percent

1997

 16 percent

1998

 17 percent

1999

 24 percent

2000  xx percent

 

 

Estate and Gift Tax Facts

2000

  1999

Annual Gift Tax Exclusion Per Donee

$10,000

  $10,000

Lifetime Exemption

675,000

  650,000

Maximum Tax Rate

55%

  55%

Pension Facts

   

Elective Deferrals 410(k) Limitation

10,500

  10,000

Pension/SEP Maximum Compensation

170,000

160,000

Pension/SEP Maximum Contribution

30,000

30,000

Education IRA Per Beneficiary

500

  500

Education IRA Phase-Out (Modified AGT)

 

 

  • Married Filing Jointly

150,000 to 160,000

  150,000 to 160,000

  • Others

95,000 to 110,000

  95,000 to 110,000

Roth IRA

2,000

  2,000

Roth IRA Phase-Out

   
  • Married Filing Jointly

150,000 to 160,000

  150,000 to 160,000

  • Single

95,000 to 110,000

  95,000 to 110,000

Roth IRA, Rollover, or Conversion AGI Limit

100,000

  100,000

Capital Gains Tax Rates

   

Sales

   
  • Held Greater than 12 Months

20%

  20%

  • 15% Tax Bracket Filers

10%

  10%

Capital Gain Exclusion (Sale of Residence After 05/06/97)

   
  • Married Filing Jointly

500,000

  500,000

  • Single

250,000

  250,000

The information presented above is subject to change and is not offered as specific advice. Please consult with your tax advisor.

 

 

Per Diem rates   1999     2000  
  Lodging Meals & incidentals Total Lodging Meals & incidentals Total
High-Low Method            
High locality $143 $42 $185 $159 $42 $201
Other localities $81 $32 $113 $90 $34 $124
             
Trucking Industry Out of Pocket $38        
             
Standard CONUS Rate $50 $30 $80      
             

 

Note: Major changes in the coverage of per diem rates effective in this amendment are:

Lodging rates do not include any taxes. They are now room rates only. Actual costs paid for lodging taxes may be reimbursed to the traveler as a miscellaneous expense (see 301-11). Additional seasons (up to four) have been added where appropriate. There may be more than one rate within a county now. Please read the tables carefully. Many previously combined locations are now shown separately with different rates (i.e., Alexandria, Arlington, Montgomery County, Prince Georges County, Fairfax County, and Loudoun County, are now listed separately from Washington, DC). There is one new M&IE tier: $46

Note: Trucking Industry Rates:

A standard daily per diem for meals an incidentals of $38 can be used for those in the trucking industry.  The lodging must be determined by actual out of pocket expenses.   There must be proof of the number of nights away from home.  A recent Private Letter Ruling from the IRS indicated the standard lodging rate will not be accepted to prove a deduction - can be used for reimbursing employees only. 

 

Citation: Chief Counsel Advice 199917059 LETTER RULING

However, the revenue procedure does not provide a method whereby the federal lodging rate may be used to substantiate deductions for lodging expenses. In fact, the regulations do not authorize the Service to provide such a substantiation method. Rather, as noted, section 1.274-5T(c)(2)(iii)(A) requires that taxpayers provide documentary evidence, such as receipts, paid bills, or similar evidence sufficient to support an expenditure for lodging while traveling away from home.

Accordingly, if a taxpayer wishes to deduct unreimbursed lodging expenses, the taxpayer must substantiate the expenses as required under section 1.274-5T. The taxpayer may not treat the expenses as substantiated by relying on the federal lodging rate.

 

There is a DANGER:  If the taxpayer desires to use the standard CONUS rate for lodging, then the trucker cannot use  the $38 rate, but must use the $30.   WE ARE CURRENTLY GATHERING INFORMATION FROM AUTHORITATIVE LITERATURE TO ASCERTAIN THE PROPER COURSE OF ACTION.

FEDERAL PER DIEM RATES

The federal per diem rate is equal to the sum of the federal lodging expense rate and the federal meal and incidental expense (M&IE) rate for the locality of travel.

Note that although per diem rates may be used to substantiate deductions for lodging, meals, and incidental expenses, or for meal expenses only, they may not be used to substantiate deductions for lodging expenses only. Chief Counsel Advice 199917059.

Incidental expenses include, but are not limited to, expenses for laundry, cleaning and pressing of clothes, and fees and tips for services, such as waiters and baggage handlers. Incidental expenses do not include taxicab fares or the cost of telegrams or telephone calls and thus may be accounted for and reimbursed separately.

ATTENTION

 

 

50%Limit

In general, you can deduct only 50% of your business-related meal and entertainment ex-penses.  (If you are subject to the Department of Transportation's "hours of service" limits, you can deduct a higher percentage. See In-dividuals subject to "hours of service" limits, later.) The 50% limit applies to employees or their employers, and to self-employed per-sons (including independent contractors) or their clients, depending on whether the ex-penses are reimbursed. Figure A summarizes the general rules explained in this section. 

Exceptions to the 50%Limit

Generally, business-related meal and enter-tainment expenses are subject to the 50% limit. Figure A can help you determine if the 50% limit applies to you.  Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions.

1 – Employee's reimbursed expenses.

If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an account-able plan. Accountable plans are discussed in chapter 6.

2 – Self-employed. If you are self-employed, your deductible meal and enter-tainment expenses are not subject to the 50% limit if all three of the following requirements are met.

1) You have these expenses as an inde-pendent contractor.

2) Your customer or client reimburses you or gives you an allowance for these ex-penses in connection with services you perform.

3) You provide adequate records of these expenses to your customer or client. (See chapter 5.) In this case, your client or customer is subject to the 50% limit on the expenses.

Example. You are a self-employed attor-ney who adequately accounts for meal and ntertainment expenses to a client who reim-burses you for these expenses. You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. If the client can deduct the expenses, the client is subject to the 50% limit.   If you (the contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the   client for those expenses, you are subject to  the directly-related or associated test and to  the 50% limit.

3 – Advertising expenses. You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. For ex-ample, the expense of sponsoring a television or radio show is deductible, as is the expense of distributing free food and beverages to the general public.

4 – Sale of meals or entertainment. You are not subject to the 50% limit if you actually sell meals, entertainment, goods and ser-vices, or use of facilities to the public. For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is a busi-ness expense.

5 – Charitable sports event. You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qual-ified charitable sports event. For the condi-tions the sports event must meet, see Ex-ception for events that benefit charitable organizations under Entertainment tickets, earlier.

Individuals subject to "hours of service " limits. You can deduct a higher percentage of your meal expenses if the meals take place during or incident to any period subject to the Department of Transportation's "hours of service" limits. The percentage is 55% for 999, and it gradually increases to 80% by the year 2008.   individuals subject to the Department of Transportation's "hours of service" limits in-clude the following persons.

1) Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations.

2) Interstate truck operators and bus drivers who are under Department of Transportation regulations.

3) Certain railroad employees (such as en-gineers, conductors, train crews, dispatchers, and control operations per-sonnel) who are under Federal Railroad Administration regulations.

4) Certain merchant mariners who are under Coast Guard regulations.

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Individual Tax Rate Schedules

1999

2000

...

Rate (%)

Taxable Income ($)

1999 Brackets*

...

Rate (%)

Taxable Income ($)

2000 Brackets*

Married Filing Jointly

15

28

31

36

39.6

$0 - 43,050

43,051 - 104,050

104,051 - 158,550

158,551 - 283,150

Over 283,150

Married Filing Jointly

15

28

31

36

39.6

$0 - 43,850

43,851 - 105,950

105,951 - 161,450

161,451 - 288,350

Over 288,350

Head of Household

15

28

31

36

39.6

$0 - 34,550

34,551 - 89,150

89,151 - 144,400

144,401 - 283,150

Over - 283,150

Head of Household

15

28

31

36

39.6

$0 - 35,150

35,151 - 90,800

90,801 - 147,050

147,051 - 288,350

Over - 288,350

Single

15

28

31

36

39.6

$0 - 25,750

25,751 - 62,450

62,451 - 130,250

130,251 - 283,150

Over - 283,150

Single

15

28

31

36

39.6

$0 - 26,250

26,251 - 63,550

63,551 - 132,600

132,601 - 288,350

Over - 288,350

Married Filing Separately

15

28

31

36

39.6

$0 - 21,525

21,526 - 52,025

52,026 - 79,275

79,276 - 141,575

Over - 141,575

Married Filing Separately

15

28

31

36

39.6

$0 - 21,925

21,926 - 52,975

52,976 - 80,725

80,726 - 144,175

Over - 144,175

 

Corporate Tax Rates

...

Trust Tax Rates

Rate (%)

1998, 1999 & 2000

.

Rate (%)

1999

2000

15

25

34

39

34

35

38

35

$0 - 50,000

50,001 - 75,000

75,001 - 100,000

100,001 - 335,000

334,001 - 10,000,000

10,000,001 - 15,000,000

15,000,001 - $18,333,333

over - 18,333,333

.

15

28

31

36

39.6

 

 

 

$0 - 1,750

1,751 - 4,050

4,051 - 6,200

6,201 - 8,450

Over - 8,450

$0 - 1,750

1,751 - 4,150

4,151 - 6,300

6,301 - 8,650

Over - 8,650

 

 

Estate Tax Rates & Exemption

Estate Tax Exclusion

1999

2000

.

$650,000

$675,000

 

 

Rates (%)

Taxable Estate

37

39

41

43

45

49

53

55

$625,000 - 750,000

750,000 - 1,000,000

1,000,001 - 1,250,000

1,250,001 - 1,500,000

1,500,001 - 2,000,000

2,000,001 - 2,500,000

2,500,001 - 3,000,000

Over - 3,000,000

 

 

Transportation  
Fringe Benefit - employer provided passes and vehicles  
Fringe Benefit - personal use of car amount per trip  
Fringe Benefit - Qualified parking permits  
Luxury Auto Tax Base Amount  
Business mileage through 4/1  
Business mileage after 4/1  
Charity use of car  
Medical & Moving use of car  
Rural mail carrier rate  
Depreciation component of std mileage rate  
High cost per diem travel rate  
Low cost per diem travel rate  
   
   

 

Retirement Pension Plans  
Max Annual benefit for Defined Benefit Plan  
Max annual contribution Defined Contribution Plan  
Threshold for excess distribution penalty  
Highly compensated employee (in general) 100,000
Annual compensation limit 160,000
SEP DeMinimis compensation amount 400
SEP Non-discrimination amount 150,000
401k max compensation 160,000
401k max exclusion  
IRA deduction limit 2000
   
   
   

 

 

Adjusted Gross Income Limits  
Casualty Loss 10%
Medical deduction 7.5%
Misc itemized deductions 2%
   
   
   
   
   
   
   
   
   
   

 

 

Earned Income Credit Maximums Income Credit
1 child    
2 or more children    
No children    
     
     
     
     
     
     
     
     
     
     

 

 

Special Tax Rates  
Max personal income tax rate 39.6%???
Max Corp income tax rate  
Max Personal tax rate on long term cap gain  
   
Max Corp tax rate on LT cap gain  
   
Supplemental wage withholding rate  
Backup tax rate  
   
   
   
   
   

 

 

Key Penalty Rates  
Failure to file (filing tax return stops penalty) 5% per month, max of 25%
Failure to pay (installment agreement reduces penalty) 1/2 of 1% per month
Substantial understatement 20%
Frivolous tax return $500
Failure to supply a social security number $50 for each omitted nbr.
Failure to file 1099  
Failure to sign return  
Failure to place address on sig portion  
Failure to place employer id on sig portion  
Failure to place preparer nbr on sig portion  
   
   
   

Florida Intangible Tax

What is Intangible Personal Property Tax?

Florida's intangible personal property tax is an annual tax based on the current market value, as of January 1, of intangible personal property owned, managed, or controlled by Florida residents or persons doing business in Florida.

What is Taxable?

The tax applies to intangible assets such as:

  • stocks
  • mutual funds
  • bonds
  • loans
  • money market funds
  • notes
  • accounts receivable
  • interest in limited partnerships registered with the Securities and Exchange Commission.

Who Files and How?

Every Florida resident who (on January 1) owns, manages, or controls intangible personal property must file an Intangible Tax Return for Individual and Joint Filers  (Form DR-601I).   Florida residents whose intangible assets are held by security dealers and/or stock brokers are also required to file. You are considered a Florida resident when your true, fixed or permanent home and/or principal establishment is in Florida.  You can establish Florida residency by filing a declaration of domicile, qualifying for homestead exemption, or registering to vote.  Other actions, such as obtaining a Florida driver's license, can indicate an intent to establish residency. Although everyone owning intangible personal property is subject to the tax, only those persons whose tax obligation is $60 or more must file a return and pay the tax.

What is Exempt?

  • Money (including cash-on-hand and in checking or savings accounts), certificates of deposit (CDs), annuities, and cash values of insurance policies;
  • All intangible property held in an individual retirement account (IRA) qualified under section 408, U.S.I.R.C., as amended;
  • All intangible property held in an employee retirement plan qualified under section 401, of the U.S. Internal Revenue Code, (I.R.C.) as amended;
  • Deferred compensation plans offered to government employees when qualified under section 457 of the Internal Revenue Code;
  • Bonds, notes, and other obligations issued by Florida or its municipalities, counties, and other taxing districts, or the U. S. government and its agencies, territories, and possessions (if these investments are held in a fund they may be taxable);
  • Interest in a limited partnership not registered with the Securities and Exchange Commission;
  • Interest in a general partnership;
  • Franchises;
  • Notes and other obligations for payment, except bonds, to the extent secured by liens on real property;  and
  • One-third of accounts receivable arising out of trade or business.

How Tax is Calculated

Individual Filers

The first $20,000 of taxable assets are exempt.  Taxable assets valued between $20,000 and $100,000 are taxed at $1 per thousand dollars of value. Taxable assets valued at more than $100,000 are taxed at $1.50 per thousand dollars of value.

Joint Filers

The first $40,000 of taxable assets are exempt. Taxable assets valued between $40,000 and $200,000 are taxed at $1 per thousand dollars of value. Taxable assets valued at more than $200,000 are taxed at $1.50 per thousand dollars of value.

Discounts

If you file between January and the end of May, you qualify for a discount.  The earlier you file, the greater the discount.

When Tax is Due

Intangible tax returns may be filed as early as January 1 and are late if postmarked after June 30.  If June 30 falls on a Saturday, Sunday, or legal state or federal holiday, the return must be postmarked (or delivered to the Department) on the next working day to be considered timely.  Late returns are subject to penalties and interest. You cannot file your return prior to January 1, because intangible personal property is taxed at its just valuation as of January 1.

Penalty and Interest

Returns or payments postmarked after June 30 are subject to the following penalties:

  • A delinquency penalty of 10 percent per month or portion of a month, not to exceed 50 percent of the tax due.
  • A specific late-filing penalty of 10 percent per month or portion of a month, not to exceed 50 percent of the tax due. The combined total of the delinquency and specific late-filing penalties cannot exceed 50 percent of the tax due. Interest on the amount of tax not paid by the due date accrues at the rate of 12 percent per year from July 1 of the tax year to the date the tax is paid.

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INDIVIDUAL FILERS

 
BRACKET TAX RATE
$0 - $20,000 0.0000
More than $20,000 $100,000 0.0010
More than $100,000 0.0015
   
   
   
   
   
   
   
   
   

 

JOINT FILERS

 
BRACKET TAX RATE
$0 - $40,000 0.0000
More than $40,000 $200,000 0.0010
More than $200,000 0.0015
   
   
   
   
   
   
   
   
   
   
   
   

 

 

   
   
   
   
   
   
   
   
   
   
   
   
   
   

 

 

   
   
   
   
   
   
   
   
   
   
   
   
   
   

Electronic Filing

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IRS - Fed Return CT - CO - IL - MD - MIMN - MO - NC - NY - OR - PAVA - WI - 1999 Pub 1345A

What cannot be filed electronically? Disallowed Forms Qualifications

IRS PREPARER REQUIREMENTS

IRS- Can I file my Federal Tax Return Electronically?

The following returns cannot be filed electronically:

Prior year returns

Tax returns with fiscal year time periods

Tax returns with foreign addresses (APO and FPO are not considered foreign addresses)

Amended tax returns

Tax returns for decedents

Married filing separate returns in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin)   Exception: Married Filing Separate returns with Military indicators for stateside addresses may be filed form community property states

Tax returns with Tax Identification Numbers within the range of 900-00-000 through 999-99-999 except ATINS and ITINS which have the following characteristics:

The fourth and fifth digits of valid ATINs are 93
The fourth and fifth digits of valid ITINs are 70 through 80

Tax returns sent after 10/15/99

Tax returns that use a schedule or form not listed below not listed below (disallowed forms):



  • 1040
  • 1040A
  • 1040EZ
  • Schedule A
  • Schedule B
  • Schedule 1
  • Schedule C (5 or less)
  • Schedule C-EZ (1 per taxpayer)
  • Schedule D
  • Schedule E (15 Rental Prop. per sched., 5 or less sched.
  • Schedule EIC
  • Schedule F (2)
  • Schedule H (1 per taxpayer)
  • Schedule J
  • Schedule R
  • Schedule 3
  • Schedule SE
  • Form W-2 (20)
  • Form W-2G (30)
  • Form 1099-R (10)
  • Form 1116 (8)
  • Form 2106 (1 per taxpayer)
  • Form 2119 (2) (OLD FORM FOR SALE OF HOUSE)
  • Form 2210
  • Form 2210F
  • 2441
  • 2555
  • 255ez
  • 3903
  • 4136
  • 4137
  • 4255
  • 4562
  • 4684
  • 4797
  • 4835
  • 4868
  • 4952
  • 4970
  • 4972
  • 5329
  • 6198
  • 6251
  • 6252
  • 6781
  • 8271
  • 8283
  • 8396
  • 8582
  • 8582-CR
  • 8586
  • 8606
  • 8615
  • 8812
  • 8814
  • 8815
  • 8828
  • 8829
  • 8839
  • 8853
  • 8862
  • 8863
  • 9465

Summary of Qualifications for the EITC:

A qualifying child must meet three tests — relationship, residency and age. The specific details of these three tests can be found in Publication 596 and in the Schedule EIC instructions.

Person with a qualifying child:

• Modified Adjusted Gross Income must be less than $30,580 with two or more qualifying children or $26,928 with one qualifying child.

• Child must live with you in the United States for more than half the year (a whole year for an eligible foster child).

• Taxpayer must submit proof of earned income. Earned income and adjusted gross income must not exceed certain limits.

• Return must cover 12 months.

• Filing status cannot be married filing separately.

• A qualifying child cannot be the qualifying child of another taxpayer.

• Qualifying child cannot be the qualifying child of another taxpayer whose adjusted gross income is more than yours.

• If you claim a child who is married as a qualifying child on your return, you usually must also claim that child as a dependent.

• Must not file Form 2555 EZ, Foreign Earned Income Exclusion.

• Must provide valid and correct SSN for qualifying child or children.

Person without a qualifying child:

• Must have earned income that is $10,200 or less.

• Earned income and adjusted gross income must not exceed certain limits.

• Return must cover 12 months.

• Filing status cannot be married filing separately.

• Cannot be the qualifying child of another taxpayer.

• The taxpayer (or spouse, if filing jointly) must be at least 25 but under 65 years old before the close of the tax year.

• Cannot be eligible to be claimed as a dependent on anyone else’s return.

• Main home must be in the United States for more than half the year.

• Must not file Form 2555, Foreign Earned Income, or Form 2555 EZ, Foreign Earned Income Exclusion.

Beware: False EIC claims could prohibit the taxpayer from getting the credit for up to 10 years.




Connecticut-Can I file electronically?

1.The following types of returns cannot be filed electronically:

a.Form CT-1040X ,Amended Connecticut Return
b.Prior year returns
c.State returns after the federal return has been accepted electronically
d.Non-calendar year returns
e.Form CT-1040 NR/PY, Non-resident or Part-year Resident Income Tax Return
f.Returns on which the filing status on the state return does not match the filing status on the federal return
g.Returns on which the federal Adjusted Gross Income reported on te state return does not match the AGI reported on the federal return
h.Taxpayers subject to federal alternative minimum tax (Federal Form 6251)
i.Returns accompanied by Form CT-8379, Nonobligated Spouse Claim

New York- Can I file electronically?

1.The following types of returns cannot be filed electronically:

a.Returns for years other than tax period 1/1/98 to 12/31/98.
b.Returns containing an Employment of persons with disabilities credit, Form IT-251
c.Returns containing an Investment Credit for the Financial Services Industry, Form IT-252
d.Returns containing an Alternative Fuels Credit, Form IT-253
e.Returns containing a Claim of Right Credit, Form IT-257
f.Returns claiming city of New York Accumulation Distribution Credit
g.Returns filed for a decedent, including joint returns filed by the surviving spouse
h.Returns with a power of attorney currently in effect in which the refund is sent to a third party (e.g. returns filed by a power of attorney on behalf of a taxpayer
who was determined to be legally incompetent)
i.Returns with any correspondence requesting special consideration or procedures
j.Returns reporting or claiming information for an individual without a social security number
k.Returns representing taxpayers that are required to file other forms, including Forms DTF-601, DTF-601.1, DTF-602 and/or DTF-603.

Missouri- Can I file electronically?

1.The following types of returns cannot be filed electronically:

a.Non-residents and Part-year residents filing form MO-NRI.
b.Amended returns.
c.Form MO-PTC.
d.Form MO-1040 with MO-PTC attached
e.Form MO-1040 with MO-TC, Miscellaneous credits.
f.Form MO-1040 with an Enterprise Zone income modification (Line 29).
g.Form MO-1040 with anything on Lump Sum Distribution (Form 4972) and/or Recapture of Low Income Housing Credit (Form 8611).
h.Returns that have a deceased tax payer.
i.Form MO-CR, Credit for Income Taxes Paid to Other States, with more than one state per taxpayer.

1.If you submit a return between 1/15/99 and 10/15/99.



Illinois- Can I file electronically?

1.The following types of returns cannot be filed electronically:

a. Returns requiring forms or schedules besides the Schedule NR, 1099-R, US

Schedule B or Schedule 1 Interest and Dividend Income.

b. Returns that include IRS or Illinois forms 4852 or any other substitute wage and

tax statement used to verify withholding.

c. Returns that require attachments other than IRS Form 1040 or 1040A, Page 1 to

verify IL-1040 subtractions for federally taxed retirement and Social Security.

d. Returns that require attachments other than IRS Schedule B or Schedule 1 to verify

IL-1040 subtractions for US government obligations.

f.Decedent returns including joint returns filed by surviving spouses.
g.Fiscal year returns
h.Amended or corrected returns.
i.Returns with dollar and cents entries. Only whole dollar amounts will be accepted.
j.Returns containing more than :

1.1 Schedule NR.
2.20 W-2s
3.30 W-2Gs
4.10 1099-Rs
5.30 statements.

f.Returns filed after August 16, 1999.



Wisconsin- Can I file electronically?

1.The following types of returns cannot be filed electronically:

a.Form 1NPR, return for part-year or non-residents of Wisconsin.
b.Form 1X, amended return.
c.Returns requiring one or more of the following schedules:

Schedule H-, Homestead Credit
Schedule FC, Farmland Preservation Credit
Schedule T, Transitional Adjustments
Form I-804, Claim for Decedent’s Refund

a.Returns with entries for the following credits:

income tax paid to other states
development zone
historic rehabilitation

e. Returns with more more than four entries on the untitled lines of Form 1, Schedules

1 or 2 (addition and subtraction modifications)

a.Short period returns
b.Form 2, Fiduciary Income Tax return
c.Returns with substitute W-2’s.



Virginia- Can I file electronically?

1.The following types of returns cannot be filed electronically:

a.Balance due returns.
b.Amended returns.
c.Prior year returns.
d.Nonresident returns (From 763)
e.Part-year resident returns (Form 760PY)
f.Fiduciary returns (Form 770)
g.Extension requests (Form760E)
h.Returns containing Form 4852, Substitute W2
i.Returns which contain Form 760C/760F
j.Decedent returns including joint returns filed by spouses.
k.Returns received by October 15, 19999.

Oregon- Can I file electronically?

1. The following returns cannot be filed electronically:

a.Forms 40P and 40N- Part-year/nonresident returns.
b.Form 40X- Amended individual income tax return.
c.Form 90R- Oregon Elderly Rental assistance.
d.Prior year returns.
e.Noncalendar year returns.
f.Returns for deceased taxpayers or spouses.
g.Full-year returns which claim a subtraction for deferral of reinvested gain on Form 40, line 17.

NC - North Carolina- Can I file electronically?

1.The following returns cannot be filed electronically:

a.Form D-400X, Amended North Carolina Income Tax Return.
b.Returns for a deceased taxpayer or spouse.
c.Prior year returns.
d.Non-calendar year filers.
e.Returns where the number of exemptions claimed on the State return does not equal the filing status on the federal return.
f.Returns on which the filing status on the State return does equal the filing status on the federal return.
g.Returns requiring more that one Form D-400TC.
h.Form D-400TC with credit claimed for tax paid to more than one state or country.
i.Form D-400EZ.



Minnesota- Can I file electronically?

The following forms can be filed electronically:

M-1 Minnesota Income Tax return and Rebate Schedule
M-1CD Minnesota Child and Dependent Care credit
M-1CR Credit for Income Tax Paid to another State or Province.
M-1ED Education Tax Credit
M-1H Health Insurance Subtraction for Self- Employment.
M-1LS Tax on lump Sum Distribution form Qualified Retirement Plan
M-1M Minnesota Additions and Subtractions
M1-MT Alternative Minimum Tax
M-1NR Nonresidents and Part-year Residents
M-1R Subtractions for Persons Age 65 or Over or for Permanently and Totally Disabled
M-1SP Recreational Property Tax Refund Return
CRP Certificate of Rent Paid
M-1SP Seasonal Residential Property Credit
PROPST Property Tax Statement
CORRE Statement/Explanation Free Form

Maryland- Can I file electronically?

1.The following forms cannot be filed electronically:

a.Decedent returns, including joint returns filed by the surviving spouses.
b.Returns with Power of Attorney currently in effect for the refund to be sent to a third party.
c.Amended or corrected returns (even if the original return was filed electronically). Only one valid tax return can be filed electronically by any taxpayer.
d.Returns requiring Maryland forms besides Form 502 and Form 123 (short form in 502 format)
e.Returns for tax years other than 1998.
f.Returns with cents entries.
g.Returns containing more than :

- 20 Form W-2

- 30 Form W-2G

- 10 Form 1099/R/G

- 7 Addenda

h.Nonresident form 505 and 515 returns
i.Filings which are a duplicate to a filed paper return.
j.Fiscal year returns.

Colorado- Can I file electronically?

1.Those taxpayers filing forms 104, 104PN, 104CR, and Withholding Schedules: W2, W2G, and 1099R can file their taxes electronically.

Michigan- Can I file electronically?

1.The following types of returns cannot be filed electronically:

a.MI-1040 if one or more of the following conditions exist:

Nonresident or part-year resident
Non-calendar year filers
Deceased taxpayer or spouse
Prior year returns
Amended or corrected returns

a.MI-1040CR-5 Farmland Preservation Tax Credit Claim
b.MI-1040CR-9 Senior Citizen Prescription Drug Credit Claim
c.MI-1040EZ Michigan Income Tax Easy Return
d.MI-1040D Adjustment of Capitol gains and losses
e.MI-1040H Schedule of Apportionment
f.MI-1040X Amended Michigan Income Tax return
g.MI-1045 Application for Net Operating Loss
h.MI-1310 Claim for Refund Due to Deceased Taxpayer
i.MI-2210 Underpayment of Estimated Tax
j.MI-4797 Adjustments of Gains and Losses From Sales of Business Property
k.C-4129 Employee Complaint Form W-2 Irregularities
l.C-4267 Application for Extension of Time to File Michigan Tax Returns
m.Returns transmitted by 10/15/99.

Pennsylvania- Can I file electronically?

1.The following returns cannot be filed electronically:

a.Prior year returns
b.Fiscal year returns
c.Form PA-40NRC Nonresident Consolidated Income Tax Returns
d.Form PA-40T Income Tax Returns
e.Form PA-41 Fiduciary Income tax returns
f.Form PA-65 partnership Information Returns
g.Multiple year returns
h.Returns containing federal schedules Returns containing more than the allowable amounts of schedules, W-2s, or 1099Rs.
i.Returns having PA Schedule J Income
j.Returns having PA Schedule G Out-of-State Credit
k.Returns having PA Schedule W Employment Incentive Payments (EIP) Credit (line 25, PA-40)
l.Returns having PA Schedule RK-1s having entries on resident credit or EIP credit
m.Returns having PA Schedule D where the gross sale price is equal to zero
n.PA Schedule NRK-1 Income
o.Form W-2G (Gambling Winnings)
p.Entries for Total Credit for Taxes Paid to Other States or countries (line 23, PA-40)
q.Entries for Job Creation tax Credit (line 25, PA-40)
r.Entries for the Waste Tire Recycling Investment tax Credit (line 26, PA-40)
s.Entries for Research and Development tax Credit (line 27, PA-40)
t.Returns transmitted by 10/15/99

 

   
   
   
   
   
   
   
   
   
   
   
   
   
   

 

Tax Interview/Checkup Checklist
This form is intended for your benefit.  It is NOT NECESSARY to prepare your tax return.  We will not use this specific form to prepare your return.   It is suggested you print this page and check each item as you complete the task. Use it to help gather your information or as a checklist to prepare questions you have.

New or changed Items (Bob Parrish CPA PC will assist with the financial, tax and issues to set up the documents)

Children

Other dependents

Investments

Qualified personal residence trust?

Charitable Remainder trust

Credit Shelter - ByPasss Trust

Corporation - C or S Corporation

Retirement plans

IRA

Family Limited Partnership

Family Trust

Off-Shore trust

Minor's Trust (Education or Healthcare Trust)

Medical Savings Account

Start-up business or business Acquisition

_______

Past due taxes or tax returns - Other Taxpayer Advocacy you would like assistance with

Business Consulting, Tax Consulting, Investment Consulting, Cost Containment, Tax Reduction, Asset Protection, or other techniques, methodologies or strategic planning

Personal Data

Social Security Numbers (including spouse and children)
Child care provider tax I.D. or Social Security Number

Total # of dependents ________

Employment & Income Data

W-2 forms for this year

Total nbr of Forms included ____

Homeowner/Renter Data

Residential address(es) for this year
Mortgage interest: Form 1098; Nbr of forms incl.____
Sale of your home or other real estate: Form 1099-S; Nbr of forms inclu. _______
Second mortgage interest paid
Real estate taxes paid: Form 1099-S; Nbr of forms inclu. _______
Rent paid during tax year: Form 1099-S; Nbr of forms inclu. _______
Moving expenses

Financial Assets

Interest income statements: Form 1099-INT & 1099-OID: Form 1099-S; Nbr of forms inclu. _______
Dividend income statements: Form 1099-DN: Form 1099-S; Nbr of forms inclu. _______
Proceeds from broker transactions: Form 1099-B: Form 1099-S; Nbr of forms inclu. _______
Tax Refunds & unemployment compensation: Form 1099-G: Form 1099-S; Nbr of forms inclu. _______
Miscellaneous income including rent: Form 1099-MISC
Retirement plan distribution: Form 1099-R
: Form 1099-S; Nbr of forms inclu. _______

Copy of year end broker's statement - required for states with intangible tax : Form 1099-S; Nbr of forms inclu. _______

Copy of K1 from trusts, estates, Limited partnerships, etc. : Form 1099-S; Nbr of forms inclu. _______

Financial Liabilities

Auto loans and leases (account numbers and car value) if vehicle used for business
Student loan interest paid

Automobiles

Personal property tax information

Expenses

Gifts to charity (receipts for any single donations of $250 or more)
Unreimbursed expenses related to volunteer work
Unreimbursed expenses related to your job (travel expenses, uniforms, union dues, subscriptions)
Investment expenses
Job-hunting expenses
Education expenses
Child care expenses

Self-employment Data

K-1's on all partnerships: Form 1099-S; Nbr of forms inclu. _______

K-1's on S Corporations: Form 1099-S; Nbr of forms inclu. _______

Other _____: Form 1099-S; Nbr of forms inclu. _______
Receipts or documentation for business-related expenses

Deduction Documents

State & local income tax: your 1997 & 1998 estimated tax vouchers
IRA contributions: Form 1099-S; Nbr of forms inclu. _______
Medical expenses: Form 1099-S; Nbr of forms inclu. _______
Casualty or theft losses: Form 1099-S; Nbr of forms inclu. _______
Other miscellaneous deductions
: Form 1099-S; Nbr of forms inclu. _______

IRS PREPARER REQUIREMENTS

Responsibilities of Preparer - 5

Penalties - 6

Form 8453 - 7

FURNISH TO THE TAXPAYER - 8

DIRECT DEPOSIT OF REFUNDS - 9

REFUND ANTICIPATION LOANS

BALANCE DUE RETURNS - 11

ADVERTISING STANDARDS -12

MONITORING AND SUSPENSION

SECTION 5. RESPONSIBILITIES OF AN AUTHORIZED IRS e-file PROVIDER

.01 To ensure that complete returns are accurately and efficiently filed, an Authorized IRS e-file Provider must comply with all publications and notices of the Service relating to the Form 1040 IRS e-file Program.

The Service will from time to time update such publications and notices to reflect changes to the program. It is the responsibility of the Authorized IRS e-file Provider to ensure that it complies with the latest version of all publications and notices. The publications and notices governing the

Form 1040 IRS e-file Program include:

(1) Publication 1345, Handbook for Electronic Return Originators of Individual Income Tax Returns, and Publication 1345A;

(2) Publication 1346;

(3) Publication 1436, Test Package for Electronic Filing of Individual Income Tax Returns; and

(4) Postings to the Electronic Filing System Bulletin Board (EFS Bulletin Board) and the IRS "Digital Daily" web site at: http://www.irs.ustreas.gov on the Internet;

 

.02 An Authorized IRS e-file Provider must maintain a high degree of integrity, compliance, and accuracy.

.03 An Authorized IRS e-file Provider may accept returns for the Form 1040 IRS e-file Program only from the taxpayer filing the return, Drop-Off Collection Points as listed on the ERO's Form 8633 (see section 4.18 of this revenue procedure), or from another Authorized IRS e-file Provider.

.04 If the taxpayer's address on a Form W-2, Wage and Tax Statement, Form W-2G, Statement for Recipients of Certain Gambling Winnings, Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., Form 1040, Schedule

C, Profit or Loss From Business (Sole Proprietorship), or Form 1040, Schedule C-EZ, Profit or Loss From Business -- Short Version, or any other tax form is different than the taxpayer's address in the entity section of the electronic portion of the taxpayer's Form 1040, the ERO or the Service Bureau must input for transmission to the Service those addresses that differ from the taxpayer's address on the electronic portion of the taxpayer's Form 1040.

.05 If an Authorized IRS e-file Provider charges a fee for the transmission of the electronic portion of a tax return, the fee may not be based on a percentage of the refund amount or any other amount from the tax return. An Authorized IRS e-file Provider may not charge a separate fee for Direct Deposit. See section 9 of this revenue procedure.

.06 An Authorized IRS e-file Provider must submit a revised Form 8633 (or a letter as provided in section 4.04 of this revenue procedure) to the Application Processing Center within 30 days of when any of the conditions or changes described in section 4.03 or 4.04 of this revenue procedure occur. See section 4.06 of this revenue procedure.

.07 An Authorized IRS e-file Provider must notify the Application Processing Center (at the address listed in the instructions for Form 8633) within 30 days of discontinuing its participation in the Form 1040 IRS e-file Program. This does not preclude reapplication in the future.

.08 An Authorized IRS e-file Provider must ensure that it promptly processes returns submitted to it for electronic filing. See sections

5.14, 5.15, 5.16, and 7.01 of this revenue procedure. However, an Authorized IRS e-file Provider that receives a return for electronic filing on or before the due date of the return must ensure that the electronic portion of the return is transmitted on or before that due date (including extensions). An electronically filed return is not considered filed until the electronic portion of the tax return has been acknowledged by the Service as accepted for processing and a completed and signed Form 8453 has been received by the Service. However, if the electronic portion of a return is successfully transmitted on or shortly before the due date and the Authorized IRS e-file Provider complies with section 7.01 of this revenue procedure, the return will be deemed timely filed. If the electronic portion of a return is transmitted on or shortly before the due date and is ultimately rejected, but the Authorized IRS e-file Provider and the taxpayer comply with section 5.13 of this revenue procedure, the return will be deemed timely filed. For a balance due return, see section

11 of this revenue procedure for instructions on how to make a timely payment of tax.

==========

.09 An Authorized IRS e-file Provider that functions as an ERO must:

(1) comply with the procedures for completing and securing Forms 8453 described in section 7 of this revenue procedure;

(2) comply with the procedures described in section 11 of this revenue procedure for handling a balance due return;

(3) while returns are being filed by the ERO, retain and make available to the Service upon request the following material at the business address from which a return was accepted for electronic filing:

(a) a copy of the signed Form 8453 and paper copies of Forms W-2, W-2G, and 1099-R;

(b) a complete copy of the electronic portion of the return (which may be retained on magnetic media) that can be readily and accurately converted into an electronic transmission that the Service can process; and

(c) the acknowledgement file (stating that the Service accepts the electronic portion of the taxpayer's return for processing) received from the Service or from a third party Transmitter; and

 (4) retain until the end of the calendar year in which a return was filed, and make available to the Service upon request the materials described in section 5.09(3) of this revenue procedure at either the business address from which a return was electronically filed or from the contact representative named on Form 8633.

 .10 An ERO who is the paid preparer of an electronic tax return must also retain for the prescribed amount of time the materials described in section 1.6107-1(b) that are required to be kept by an income tax return preparer.

.11 An ERO must identify the paid preparer (if any) in the appropriate field of the electronic portion of the return and ensure that the paid preparer signed Form 8453. If Form 8453 is not signed by the paid preparer, the ERO must attach to Form 8453 a copy of pages 1 and 2 of the Form 1040EZ, Form 1040A, or Form 1040 signed by the paid preparer. These copies must be marked "COPY-DO NOT PROCESS" to prevent duplicate filings.

.12 An ERO must ensure against the unauthorized use of its EFIN and, if applicable, the CPIN(s) issued to its Drop-Off Collection Point(s). An ERO must not transfer its EFIN or the CPIN(s) of its Drop-Off Collection Point(s) by sale, merger, loan, gift, or otherwise to another entity.

.13 If the Service rejects the electronic portion of a taxpayer's return (the Service states that it rejects the electronic portion of a taxpayer's return for processing in the acknowledgment file), and the reason for the rejection cannot be rectified by the actions described in section 6.02(3) of this revenue procedure, the ERO, within 24 hours of receiving the rejection, must take reasonable steps to inform the taxpayer that the taxpayer's return has not been filed. When the ERO advises the taxpayer that the taxpayer's return has not been filed, the ERO must provide the taxpayer with the reject code(s), an explanation of the reject code(s), and the sequence number of each reject code(s) (see Publication 1345A). If the taxpayer chooses not to have the electronic portion of the return corrected and transmitted to the Service, or if the electronic portion of the return cannot be accepted for processing by the Service, the taxpayer must file a paper return by the later of:

(1) the due date of the return; or

(2) ten calendar days after the date the Service gives notification that the electronic portion of the return is rejected or that the electronic portion of the return cannot be accepted for processing.  The paper return should include an explanation of why the return is being filed after the due date.

.14 An ERO is responsible for ensuring that stockpiling does not occur at its office(s) or Drop-Off Collection Point(s). Stockpiling means collecting returns from taxpayers or from another Authorized IRS e-file Provider prior to official acceptance into the Form 1040 IRS e-file Program, or, after official acceptance into the Form 1040 IRS e-file Program, waiting more than three calendar days to send a return to the Service after receiving the information necessary for transmission of the electronic portion of a tax return.

.15 An Authorized IRS e-file Provider that participates as a Service Bureau must:

(1) deliver all electronic returns to a Transmitter or to the ERO who gave the electronic returns to the Service Bureau within three calendar days of receipt;

(2) retrieve the acknowledgement file from the Transmitter within one calendar day of receipt by the Transmitter;

(3) send the acknowledgement file to the ERO (whether related or not) within one work day of retrieving the acknowledgement file;

(4) if the Service Bureau processes Forms 8453, send back to the ERO any return and Form 8453 that needs correction, unless the correction is described in section 6.02(3) of this revenue procedure;

(5) accept tax return information only from Authorized IRS e-file Providers;

(6) include its SBIN and the ERO's EFIN with all return information the Service Bureau forwards to a Transmitter or sends back to an ERO;

(7) retain each acknowledgement file received from a Transmitter until the end of the calendar year in which the electronic return was filed;

(8) if requested, serve as a contact point between its client EROs and the Service;

(9) if requested, provide the Service with a list of each client ERO; and

(10) ensure against the unauthorized use of its SBIN. A Service Bureau must not transfer its SBIN by sale, merger, loan, gift, or otherwise to another entity.

 

 .16 An Authorized IRS e-file Provider that participates as a transmitter must:

(1) send to the Service all electronic portions of returns within three calendar days of receipt;

(2) retrieve the acknowledgement file within two work days of transmission;

(3) match the acknowledgement file to the original transmission file and send the acknowledgement file to the ERO or the Service Bureau (whether or not the ERO or the Service Bureau are related to the Transmitter) within two work days of retrieving the acknowledgement file;

(4) retain an acknowledgement file received from the Service until the end of the calendar year in which the electronic return was filed;

(5) immediately contact the appropriate service center for further instructions if an acknowledgement of acceptance for processing has not been received by the Transmitter within two work days of transmission or if a Transmitter receives an acknowledgement for a return that was not transmitted on the designated transmission;

(6) promptly correct any transmission error that causes an electronic transmission to be rejected;

(7) contact the service center that rejected the electronic portion of the return for assistance if that portion of the return has been rejected after three transmission attempts;

(8) ensure the security of all transmitted data;

(9) ensure against the unauthorized use of its EFIN or ETIN. A Transmitter must not transfer its EFIN or ETIN by sale, merger, loan, gift, or otherwise to another entity; and

(10) not use software that has a Service assigned production password built into the software.

 .17 A Transmitter must accept electronic returns for transmission to the Service only from Authorized IRS e-file Providers. A Transmitter must include the ERO's EFIN and if applicable, the CPIN on each return that the Transmitter accepts from an ERO. In addition, a Transmitter must also include a Service Bureau's SBIN if a Service Bureau formats the return information.

.18 An Authorized IRS e-file Provider that participates as a Software Developer must:

(1) promptly correct any software error which causes the electronic portion of a return to be rejected;

(2) promptly distribute any software correction;

(3) ensure that any software package that will be used to transmit electronic portions of returns from multiple Authorized IRS e-file roviders has the capability of combining returns from these Authorized IRS e-file Providers into one Service transmission file taking into account the sorting requirements of the Declaration Control Number (DCN);

(4) ensure that no other entity uses the Software Developer's EFIN or ETIN. A Software Developer must not transfer by sale, merger, loan, gift, or otherwise its EFIN or ETIN to another entity; and

(5) not incorporate into its software a Service assigned production password.

.19 An ERO with a Drop-Off Collection Point must clearly display its name at each Drop-Off Collection Point. The Service will hold the ERO responsible for any violation of the advertising standards  described in section 12 or any other violation of this revenue procedure that occurs at a Drop-Off Collection Point listed on the ERO's Form 8633. The ERO must also serve as the contact point between the Service and the Drop-Off Collection Point for all correspondence including problem resolution and report evaluation.

.20 In addition to the specific responsibilities described in this section, an Authorized IRS e-file Provider must meet all the requirements in this revenue procedure to retain the privilege of participating in the Form 1040 IRS e-file Program.

SECTION 6. PENALTIES

.01 Penalties for Disclosure or Use of Information.

(1) An Authorized IRS e-file Provider, except a Software Developer, is a tax return preparer (Preparer) under the definition of section 301.7216-1(b) of the Regulations on Procedure and Administration. A Preparer is subject to a criminal penalty for unauthorized disclosure or use of tax return information. See section 7216 of the Internal Revenue Code and section 301.7216-1(a). In addition, section 6713 establishes civil penalties for unauthorized disclosure or use of tax return information.

(2) Under section 301.7216-2(h), disclosure of tax return information among Authorized IRS e-file Providers for the purpose of preparing a return is permissible. For example, an ERO may pass on tax return information to a Service Bureau and/or a Transmitter for the purpose of having an electronic return formatted and transmitted to the Service. However, if the tax return information is disclosed or used in any other way, a Service Bureau and/or a Transmitter may be subject to the penalties described in section 6.01(1) of this revenue procedure.

.02 Other Preparer Penalties.

(1) Preparer penalties may be asserted against an individual or firm meeting the definition of an income tax return preparer under section 7701(a)(36) and section 301.7701-15. Preparer penalties that may be asserted under appropriate circumstances include, but are not limited to, those set forth in sections 6694, 6695, and 6713.

(2) Under section 301.7701-15(d), Electronic Return Collectors, Service Bureaus, Transmitters, and Software Developers are not income tax return preparers for the purpose of assessing most preparer penalties as long as their services are limited to "typing, reproduction, or other mechanical assistance in the preparation of a return or claim for refund."

(3) If an Electronic Return Collector, Service Bureau, Transmitter, or the product of a Software Developer alters the return information in a nonsubstantive way, this alteration will be considered to come under the "mechanical assistance" exception described in section 301.7701-15(d)(1).  A nonsubstantive change is a correction or change limited to a transposition error, misplaced entry, spelling error, or arithmetic correction that falls within the following tolerances:

(a) the amount of "Total tax", "Federal income tax withheld", "Refund", or "Amount you owe" on Form 8453 differs from the corresponding amount on the electronic portion of the tax return by no more than $7;

(b) the amount of "Total income" on Form 8453 differs from the corresponding amount on the electronic portion of the tax return by no more than $25; or

(c) dropping cents and rounding to whole dollars.

(4) If an Electronic Return Collector, Service Bureau, or Transmitter alters the return information in a substantive way, rather than having the taxpayer alter the return, the Electronic Return Collector, Service Bureau, or Transmitter will be considered to be an income tax return preparer for purposes of section 7701(a)(36).

(5) If an Electronic Return Collector, Service Bureau, or Transmitter, or the product of a Software Developer, goes beyond mechanical assistance, any of these parties may be held liable for income tax return preparer penalties. See Rev. Rul. 85-189, 1985-2 C.B. 341 (which describes a situation where a Software Developer was determined to be an income tax return preparer and subject to certain preparer penalties).

 .03 Other Penalties. In addition to the above specified provisions, the Service reserves the right to assert all appropriate penalties against an Authorized IRS e-file Provider as warranted under the circumstances.

 SECTION 7. FORM 8453, U.S. INDIVIDUAL INCOME TAX DECLARATION FOR AN IRS e-file RETURN

.01 Procedures for Completing Form 8453.

(1) Form 8453 must be completed in accordance with the instructions for that form.

(2) The taxpayer(s)'s name, address, social security number(s), and tax return information in the electronic transmission must be identical to the information on the Form 8453 that the taxpayer(s) signed and provided for submission to the Service.

(3) An Authorized IRS e-file Provider, a financial institution, or any other entity associated with the electronic filing of a taxpayer's return must not put its address in the section reserved for the taxpayer's address on Form 8453 or anywhere in the electronic portion of a return.

(4) Before the electronic portion of the return is transmitted, the taxpayer must verify the information on the electronic portion of the return and on Form 8453, and must sign Form 8453. Both spouses' signatures are required on the Form 8453 prior to the electronic transmission of a joint tax return. The taxpayer may verify the information on the electronic portion of the return by viewing this information on a computer display terminal. A taxpayer need not verify the electronic portion of the return prior to its transmission if the taxpayer provided a completed paper return for filing and the information on the electronic portion is identical to the information provided by the taxpayer.

(5) An Authorized IRS e-file Provider must submit the taxpayer's Form 8453 to the service center that acknowledged acceptance of the electronic portion of the return within one work day after the Authorized IRS e-file Provider receives the acknowledgment file.

(6) An Authorized IRS e-file Provider functioning as an ERO must sign the "Declaration of ERO" on Form 8453.

(7) If the ERO is also the paid preparer, the ERO must check the "Paid Preparer" box and sign the "Declaration of ERO" on Form 8453.

 .02 Corrections to Form 8453.

(1) A new Form 8453 is not required for a nonsubstantive change. A nonsubstantive change is limited to a correction that does not exceed the tolerances described in section 7.02(2) of this revenue procedure for arithmetic errors, a transposition error, a misplaced entry, or a spelling error. The incorrect nonsubstantive information must be neatly lined through on the Form 8453 and the correct data entered next to the lined-through entry. Also, the individual making the correction must initial the correction.

(2) The tolerances for section 7.02(1) of this revenue procedure are:

(a) the amount of "Total income" does not differ from the amount on the electronic portion of the tax return by more than $25; or

(b) the amount of "Total tax", "Federal income tax withheld", "Refund", or "Amount you owe" does not differ from the amount on the electronic portion of the tax return by more than $7.

 (3) If the ERO makes a substantive change to the electronic portion of the return after Form 8453 has been signed by the taxpayer, but before it is transmitted, the ERO must have all the necessary parties described above sign a new Form 8453 that reflects the corrections before the electronic portion of the return is transmitted.

(4) Dropping cents or rounding to whole dollars does not constitute a substantive change or alteration to the return unless the amount differs by more than the above tolerances. All rounding should be accomplished in accordance with the instructions in the Form 1040 tax package.

 .03 Missing Form 8453. If the Service determines that a Form 8453 is missing, the ERO must provide the Service with a replacement. The ERO must lso provide a copy of the Form(s) W-2, W-2G, 1099R, and all other attachments to Form 8453.

.04 Substitute Form 8453. If a substitute Form 8453 is used, it must be approved by the Service prior to use.

 SECTION 8. INFORMATION AN AUTHORIZED IRS e-file PROVIDER MUST FURNISH TO THE TAXPAYER

.01 The ERO must furnish the taxpayer with a complete paper copy of the taxpayer's return. However, the copy need not contain the social security umber of the paid preparer. See Rev. Rul. 78-317, 1978-2 C.B. 335. A complete copy of a taxpayer's return includes:

(1) Form 8453 and other paper documents that cannot be electronically transmitted; and

(2) a printout of the electronic portion of the return.

 See section 2.02 of this revenue procedure. The electronic portion of the return can be contained on a replica of an official form or on an unofficial form. However, on an unofficial form, data entries must be referenced to the line numbers on an official form. Also, a printout of the electronic portion of the return does not have to be provided to the taxpayer if the taxpayer provided a completed paper return for electronic filing and the information on the electronic portion of the return is identical to the information provided by the taxpayer.

.02 The ERO must advise the taxpayer to retain a complete copy of the return and any supporting material.

.03 The ERO must advise the tax payer that an amended return, if needed, must be filed as a paper return and mailed to the service center that would handle the taxpayer's paper return.

.04 The ERO must, upon request, provide the taxpayer with the DCN and the date the Service acknowledged that the electronic portion of the taxpayer's return was accepted for processing.

.05 The ERO must advise taxpayers of the appropriate IRS TeleTax number to inquire about the status of their tax refund. The ERO should also advise taxpayers to wait at least three weeks from the date the Service acknowledged that the electronic portion of the taxpayer's return was accepted for processing before calling the TeleTax number.

.06 If a taxpayer chooses to use an address other than his or her home address on the return, the ERO must inform the taxpayer that the address on the electronic portion of the return, once processed by the Service, will be used to update the taxpayer's address of record. The Service uses the taxpayer's address of record for various notices that are required to be sent to a taxpayer's "last known address" under the Internal Revenue Code, and for refunds of overpayments of tax (unless otherwise specifically directed by the taxpayer, such as by Direct Deposit).

SECTION 9. DIRECT DEPOSIT OF REFUNDS

.01 The Service will ordinarily process a request for Direct Deposit but reserves the right to issue a paper refund check.

.02 The Service does not guarantee a specific date by which a refund will be directly deposited into the taxpayer's financial institution account.

.03 Neither the Service nor Financial Management Service (FMS) is responsible for the misapplication of a Direct Deposit that is caused by error, negligence, or malfeasance on the part of the taxpayer, Authorized IRS e-file Provider, financial institution, or any of their agents.

.04 An ERO must:

(1) advise taxpayers of the option to receive their refund by paper check or direct deposit;

(2) not charge a separate fee for a Direct Deposit;

(3) accept any Direct Deposit election to any eligible financial institution designated by the taxpayer;

(4) ensure that the taxpayer is eligible to choose Direct Deposit;

(5) caution the taxpayer that once the electronic portion of the return has been accepted for processing by the Service:

(a) the Direct Deposit election cannot be rescinded;

(b) the routing number of the financial institution cannot be changed; and

(c) the taxpayer's account number cannot be changed; and

(6) advise the taxpayer that refund information is available by calling the appropriate IRS TeleTax number. See section 8.05 of this revenue procedure.

 SECTION 10. REFUND ANTICIPATION LOANS

.01 A Refund Anticipation Loan (RAL) is money borrowed by a taxpayer that is based on a taxpayer's anticipated income tax refund. The Service has no involvement in RALs. A RAL is a contract between the taxpayer and the lender.

.02 Any entity that is involved in the Form 1040 IRS e-file Program, including a financial institution that accepts direct deposits of income tax refunds, has an obligation to every taxpayer who applies for a RAL to clearly explain to the taxpayer that a RAL is in fact a loan, and not a substitute for, or a quicker way of, receiving an income tax refund. An Authorized IRS e-file Provider must advise the taxpayer that if a Direct Deposit is not timely, the taxpayer may be liable to the lender for additional interest on the RAL.

.03 An Authorized IRS e-file Provider may assist a taxpayer in applying for a RAL.

.04 An Authorized IRS e-file Provider may charge a flat fee to assist a taxpayer in applying for a RAL. The fee must be identical for all of the Authorized IRS e-file Provider's customers and must not be related to the amount of the refund or a RAL. The Authorized IRS e-file Provider must not accept a fee from a financial institution for any service connected with a RAL that is contingent upon the amount of the refund or a RAL.

.05 The Service has no responsibility for the payment of any fees associated with the preparation of a return, the transmission of the electronic portion of a return, or a RAL.

.06 An Authorized IRS e-file Provider may disclose tax information to the lending financial institution in connection with an application for a RAL only with the taxpayer's written consent as specified in section 301.7216-3(b).

.07 An Authorized IRS e-file Provider that is also the return preparer, and the financial institution or other lender that makes an RAL, may not be related taxpayers within the meaning of section 267 or section 707.

.08 Section 6695(f) imposes a $500 penalty on a return preparer who endorses or negotiates a refund check issued to any taxpayer other than the return preparer. However, a bank, as defined in section 581, may accept the full amount of a refund check as a deposit in the taxpayer's account for the benefit of the taxpayer. Section 1.6695-1(f) clarifies section 6695(f) by explaining that the prohibition on a return preparer negotiating a refund check is limited to a refund check for a return that the return preparer prepared. A preparer that is also a financial institution, but has not made a loan to the taxpayer on the basis of the taxpayer's anticipated refund, may (1) cash a refund check and remit all of the cash to the taxpayer or accept a refund check for deposit in full to a taxpayer's account, provided the bank does not initially endorse or negotiate the check; or (2) endorse a refund check for deposit in full to a taxpayer's account pursuant to a written authorization of the taxpayer.

A preparer bank may also subsequently endorse or negotiate a refund check as part of the check-clearing process through the financial system after initial endorsement. Any income tax return preparer that violates this provision may be suspended from the Form 1040 IRS e-file Program.

 SECTION 11. BALANCE DUE RETURNS

.01 All service centers that accept electronically filed returns will accept electronically filed balance due returns.

.02 Taxpayers who file balance due returns under the Form 1040 IRS e-file Program for any taxable year are responsible for making full and timely payment of any tax that is due. Failure to make full payment on or before the due date of the return (determined without regard to extensions) will result in the imposition of interest and may result in the imposition of penalties.

.03 Taxpayers have several options for paying balances due, including the following:

(1) DIRECT DEBIT. Taxpayers may authorize the Service to debit their checking or savings account for the amount of the balance due;

(2) PAY BY CHECK. Taxpayers may pay any balance due by sending a check, along with Form 1040-V, payment Voucher, to the Service. The Authorized IRS e-file Provider must furnish Form 1040-V to any taxpayer paying a balance due by check; and

(3) INSTALLMENT AGREEMENT. Taxpayers who cannot pay the balance due with the return may request an installment payment arrangement by filing Form 9465, Installment Agreement Request, with their return.

 SECTION 12. ADVERTISING STANDARDS FOR AUTHORIZED IRS e-file PROVIDERS AND FINANCIAL INSTITUTIONS

.01 An Authorized IRS e-file Provider must comply with the advertising and solicitation provisions of 31 C.F.R. Part 10 (Treasury Department Circular No. 230). This circular prohibits the use or participation in the use of any Form of public communication containing a false, fraudulent, misleading, deceptive, unduly influencing, coercive, or unfair statement or claim. Any claims concerning faster refunds by virtue of electronic filing must be consistent with the language in official Service publications.

.02 An Authorized IRS e-file Provider must adhere to all relevant federal, state, and local consumer protection laws that relate to advertising and soliciting.

.03 An Authorized IRS e-file Provider must not use the Service's name, "Internal Revenue Service" or "IRS", within a firm's name. However, once accepted into the Form 1040 IRS e-file Program, a participant may represent itself as an "Authorized IRS e-file Provider."

.04 An Authorized IRS e-file Provider must not use improper or misleading advertising in relation to the Form 1040 IRS e-file Program (including the time frames for refunds and RALs).

.05 An Authorized IRS e-file Provider using promotional materials or logos provided by the Service must comply with all Service instructions pertaining to the promotional materials or logos.

.06 An Authorized IRS e-file Provider using the Direct Deposit name and logo must comply with the following:

(1) The name "Direct Deposit" will be used with initial capital letters or all capital letters;

(2) The logo/graphic for Direct Deposit will be used whenever feasible in advertising copy; and

(3) The color or size of the Direct Deposit logo/graphic may be changed when used in advertising pieces.

 .07 Advertising materials must not carry the FMS, IRS, or other Treasury Seats.

.08 Advertising for a cooperative electronic return filing project (public/private sector) must clearly state the names of all cooperating parties.

.09 In advertising the availability of a RAL, an Authorized IRS e-file Provider and a financial institution must clearly (and, if applicable, in easily readable print) refer to or describe the funds being advanced as a loan, not a refund; that is, it must be made clear in the advertising that the taxpayer is borrowing against the anticipated refund and not obtaining the refund itself from the financial institution. 

.10 If an Authorized IRS e-file Provider uses radio or television broadcasting to advertise, the broadcast must be pre-recorded. The Authorized IRS e-file Provider must keep a copy of the pre-recorded advertisement for a period of at least 36 months from the date of the last transmission or use.

.11 If an Authorized IRS e-file Provider uses direct mail or fax communications to advertise, the Authorized IRS e-file Provider must retain a copy of the actual mailing or fax, along with a list or other description of the firms, organizations, or individuals to whom the communication was mailed, faxed, or otherwise distributed for a period of at least 36 months from the date of the last mailing, fax, or distribution.

.12 Acceptance to participate in the Form 1040 IRS e-file Program does not imply endorsement by the Service, FMS, or the Treasury Department of the software or quality of services provided.

 SECTION 13. MONITORING AND SUSPENSION OF AN AUTHORIZED IRS e-file PROVIDER

.01 The Service will monitor an Authorized IRS e-file Provider for conformity with this revenue procedure. Before suspending an Authorized IRS e-file Provider, the Service may issue a warning letter that describes specific corrective action for deviations from this revenue procedure.  However, the Service can immediately suspend, without notice, an Authorized IRS e-file Provider from the Form 1040 IRS e-file Program. In most circumstances, a suspension from participation in the Form 1040 IRS e-file Program is effective as of the date of the letter informing the Authorized IRS e-file Provider of the suspension.

.02 If a Principal or Responsible Official is suspended from the Form 1040 IRS e-file Program, every entity that listed the suspended Principal or Responsible Official on its Form 8633 may also be suspended.

.03 The Service will monitor the Authorized e-file Provider's compliance with the provisions of section 6695(g) (relating to the due diligence requirements for returns claiming the earned income credit).

.04 The Service will monitor the timely receipt of Forms 8453, as well as their overall legibility.

.05 The Service will monitor the quality of an Authorized IRS e-file Provider's transmissions throughout the filing season. The Service will also monitor the electronic portion of returns and tabulate rejections, errors, and other defects. If quality deteriorates, the Authorized IRS e-file Provider will receive a warning from the Service.

.06 The Service will monitor Drop-Off Collection Points and advise a parent of any Form 1040 IRS e-file Program violations the Service has encountered with a parent's Drop-Off Collection Point. If a parent fails to correct a Drop-Off Collection Point problem, the parent will be required to eliminate that Drop-Off Collection Point. Failure to take corrective action or eliminate a Drop-Off Collection Point may cause the Service to suspend the parent from participating in the Form 1040 IRS e-file Program.

.07 The Service will monitor complaints about an Authorized IRS e-file Provider and issue a warning or suspension letter as appropriate.

.08 The Service reserves the right to suspend an Authorized IRS e-file

Provider from participation in the Form 1040 IRS e-file Program for violating any provision of this revenue procedure. Generally, the Service will advise a suspended Authorized IRS e-file Provider concerning the requirements for reacceptance into the Form 1040 IRS e-file Program. The following reasons may lead to a warning letter and/or suspension of an Authorized IRS e-file Provider from the Form 1040 IRS e-file Program (this list is not all-inclusive):

(1) the reasons listed in section 4.19 of this revenue procedure;

(2) deterioration in the format of individual transmissions;

(3) unacceptable cumulative error or rejection rate;

(4) untimely received, illegible, incomplete, missing, or unappoved substitute Forms 8453;

(5) stockpiling returns at any time while participating in the Form 1040 IRS e-file Program;

(6) failure on the part of a Transmitter to retrieve acknowledgement files within two work days of transmission by the Service;

(7) failure on the part of a Transmitter to provide an ERO or Service Bureau with acknowledgement files within two work days after receipt from the Service;

(8) significant complaints about an Authorized IRS e-file Provider's performance in the Form 1040 IRS e-file Program;

(9) failure on the part of an Authorized IRS e-file Provider to ensure against the unauthorized use of its EFIN and/or ETIN;

(10) having more than one EFIN for the same business entity at the same location (the business entity is generally the entity that reports on its return the income derived from electronic filing), unless the Service has issued more than one EFIN to a business entity at the same location. For example, the Service may issue more than one EFIN to accommodate high volumes of returns;

(11) failure on the part of a Transmitter to include a Service Bureau's SBIN in the transmission of a return submitted by a Service Bureau;

(12) failure on the part of an ERO to include a Drop-Off Collection Point's CPIN as part of a return collected from a Drop-Off Collection Point;

(13) failure on the part of an Authorized IRS e-file Provider to cooperate with the Service's efforts to monitor Authorized IRS e-file Providers and investigate electronic filing abuse;

(14) failure on the part of an Authorized IRS e-file Provider to properly use the standard/non-standard W-2 indicator;

(15) failure on the part of an Authorized IRS e-file Provider to properly use the refund anticipation loan (RAL) indicator;

(16) failure on the part of a Service Bureau or a Transmitter to include the ERO's EFIN as part of a return that the ERO submits to the Service Bureau or the Transmitter;

(17) violation of the advertising standards described in section 12 of this revenue procedure;

(18) failure to maintain and make available records as described in section 5.09(4) of this revenue procedure;

(19) accepting a tax return for filing through the Form 1040 IRS e-file Program either directly or indirectly from a firm, organization, or individual (other than the taxpayer who is submitting his or her return) that is not an Authorized IRS e-file Provider;

(20) submitting the electronic portion of a return with information that is not identical to the information on Form 8453;

(21) failure to timely submit a revised Form 8633 (or a letter containing the same information contained in a revised Form 8633) notifying the Service of changes described in section 4.03 or 4.04 of this revenue procedure; or

(22) failure to comply with a provision of an implementing document for any pilot program in which the Authorized IRS e-file Provider is a participant (see section 18 of this revenue procedure).

 .09 The Service may list in the Internal Revenue Bulletin, district office listings, district office newsletters, and the EFS Bulletin Board the name and owner(s) of any entity suspended from the Form 1040 IRS e-file Program and the effective date of the suspension.

.10 A district director may warn Authorized IRS e-file Providers that are using the services of a rejected or a suspended Authorized IRS e-file Provider that sections 4.19(12) and (13) of this revenue procedure prohibit a business relationship with a rejected or a suspended Authorized IRS e-file Provider. However, in appropriate circumstances, the Service may immediately suspend the Authorized IRS e-file Provider without such warning.

.11 If an Authorized IRS e-file Provider is suspended from participating in the Form 1040 IRS e-file Program, the period of suspension includes the remainder of the calendar year in which the suspension occurs plus the next two calendar years. A suspended participant may submit a new application for the application period immediately preceding the end of the suspension.

 


To determine if you need to file a Federal Income Tax return for 2000 answer the following questions:

Occasionally, individuals have one-time or infrequent financial transactions that may require them to file a Federal Income Tax return. Do any of the following examples apply to you?

     

  • Did you have Federal taxes withheld from your pension and wages for this tax year and wish to get a refund back?

     

  • Are you entitled to the Earned Income Tax Credit or did you receive Advance Earned Income Credit for this tax year?

     

  • Were you self-employed with earnings of more than $400.00?

     

  • Did you sell your home?
  • Will you owe any special tax on a qualified retirement plan (including an individual retirement account (IRA) or medical savings account (MSA)? You may owe tax if you:
    • Received an early distribution from a qualified plan
    • Made excess contributions to your IRA or MSA
    • Were born before July 1, 1927, and you did not take the minimum required distribution from your qualified retirement plan.
    • Received a distribution in the excess of $160,000 from a qualified retirement plan.
  • Will you owe social security and Medicare tax on tips you did not report to your employer?
  • Will you owe uncollected social security and Medicare or Railroad retirement (RRTA) tax on tips you reported to your employer?
  • Will you be subject to Alternative minimum tax (AMT)? (The tax law gives special treatment to some kinds of income and allows special deductions and credit for some kinds of expenses.)
  • Will you owe recapture tax?
  • Are you a church employee with income in wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security or Medicare taxes?

If the answer to ANY questions is YES you will need to file a return - see the limits

Please Read The Chart

Interest on student loans.You may be able to claim a deduction for interest paid on a qualified student loan. The maximum de-duction for interest paid on a qualified student loan is in-creased to $2,000. You claim the deduction on line 24 of Form 1040 or line 17 of Form 1040A.  See Publication 970, Tax Bene-fits for Higher Education.

Individual retirement arrange-ments (IRAs).The following paragraphs highlight the changes that relate to IRAs. See chapter 18 for details.

Traditional IRA income lim-its.  Generally, if you have a tra-ditional IRA and are covered by an employer retirement plan, the amount of income you can have and not be affected by the de-duction phaseout is increased.

The amounts vary depending on filing status.

Returned contributions and recharacterizations. For IRA contributions made after 1999, a new method allows you to use the actual earnings and losses of the IRA during the time it held the contribution to calculate the net income that must be with-drawn or recharacterized. Under this method, net income may be a negative amount.

 

Capital gain distributions.  For 2000, you may be able to report a capital gain distribution on Form 1040A. However, if any distribution includes 28% rate gain, unrecaptured section 1250 gain, or section 1202 gain, you must use Form 1040.

 

Foreign earned income exclusion.The amount of foreign earned income that you can exclude increases to $76,000.  

Standard mileage rate.  The standard mileage rate for the cost of operating your car is 32 1 / 2 cents a mile for all business miles driven.

 

Meal expenses when subject to “hours of service limits ”.  If you are subject to the Depart-ment of Transportation's “hours of service” limits, the percentage of your business-related meal expenses that you can deduct  has increased. For 2000 and 2001, you can deduct 60% if the meals take place during or inci-dent to the period subject to those limits.  

Lump-sum distributions.  Be-ginning in 2000, the 5-year tax option for figuring the tax on a lump-sum distribution from a qualified retirement plan is re-pealed.  However, plan partic-ipants can continue to choose the 10-year tax option or capital gain treatment for a lump-sum distribution that qualifies for the special treatment.

Revocation of exemption from social security coverage.  If you are a minister, a member of a religious order not under a vow of poverty, or a Christian Science practitioner who previously elected exemption from social security coverage and self-employment tax, you can now revoke that exemption. How-ever, you have a limited time in which to do so.

Paid preparer authorization.  If you want to allow the IRS to discuss your 2000 tax return with the paid preparer who signed it, check the “Yes” box in the sig-nature area of the return. This authorization applies only to the individual whose signature ap-pears in the “Paid Preparer's Use Only” section of your return.

Eligible foster child.Beginning in 2000, a child is your eligible foster child for the child tax credit and the earned income credit if all the following apply.  1) The child is your brother, sister, stepbrother, or stepsister (or a descendant of such relative) or has been placed with you by an authorized placement agency. 2) You cared for that child as you would your own child.  3) The child lived with you for the whole year, except for temporary absences.  Previously the child only had to meet (2) and (3) to be an eli-gible foster child.

Limit on personal credits.  For 2000 and 2001, your nonrefundable personal credits for the year can offset both your regular tax (after reduction by the foreign tax credit) and your al-ternative minimum tax for that year.

Estimated tax safe harbor for higher income individuals.  For estimated tax payments for tax years beginning in 2001, the es-timated tax safe harbor for higher income individuals (other than farmers and fishermen) has been modified. If your 2000 adjusted gross income is more than $150,000 ($75,000 if you are married filing a separate return for 2001), you will have to pay the smaller of 90% of your expected tax for 2001 or 110% of the tax shown on your 2000 re-turn to avoid an estimated tax penalty.

Definition of noncapital assets expanded.  The definition of noncapital assets (assets that generally produce ordinary, rather than capital, gain or loss when sold) has been expanded to include three additional cate-gories of assets.

Certain amounts increased.  Some tax items that are indexed for inflation increased for 2000.

 Earned income credit.  The maximum amount of income you can earn and still get the earned income credit has increased.  You may be able to take the credit if you earned less than $31,152 ($10,380 if you do not have any qualifying children).  The maximum amount of invest-ment income you can have and still be eligible for the credit has increased to $2,400. See chapter 37.

 

Standard deduction. The standard deduction for taxpayers who do not itemize deductions on Schedule A (Form 1040) is higher in 2000 than it was in 1999. The amount depends on your filing status.

Exemption amount. You are allowed a $2,800 deduction for each exemption to which you are entitled. However, your ex-emption amount could be phased out if you have high in-come.

Limit on itemized de-ductions.  Some of your itemized deductions may be limited if your adjusted gross income is more than $128,950 ($64,475 if you  are married filing separately).  Social security and Medi-care taxes. The maximum wages subject to social security tax (6.2%) is increased to $76,200. All wages are subject to Medicare tax (1.45%).

 

Child tax credit.You may be able to claim a tax credit for each of your qualifying children under age 17. This credit can be as much as $500 for each qualifying child.

Tax from recapture of education credits.  You may owe this tax if you claimed an education credit in one year and in a later year you, your spouse if filing jointly, or your dependent re-ceived:

A refund of qualified tuition and related expenses, or

Tax-free educational assist-ance.

Advance earned income credit.  If a qualifying child lives with you and you expect to qualify for the earned income credit in 2001, you may be able to get part of the credit paid to you in advance throughout the year (by your employer) instead of waiting until you file your tax return.

Sale of your home.Generally, you will only need to report the sale of your home if your gain is more than $250,000 ($500,000 if married filing a joint return). 

Individual retirement arrangements (IRAs).The following paragraphs highlight important reminders that relate to IRAs. 

Individual retirement ar-rangement (IRA) for spouse.  A married couple filing a joint re-turn can contribute up to $2,000 each to their IRAs, even if one spouse had little or no income.

 

Spouse covered by plan. Even if your spouse is covered by an employer-sponsored re-tirement plan, you may be able to deduct contributions to your traditional IRA if you are not covered by an employer plan.

 

Roth IRA. You may be able to establish a Roth IRA. In this type of IRA, contributions are not deductible but earnings grow tax free and qualified withdrawals are not taxable. You may also be able to convert a traditional IRA to a Roth IRA, but you must  include all or part of the taxable converted amount in income.

 

Foreign source income.  If you are a U.S. citizen with income from sources outside the United States (foreign income), you must report all such income on your tax return unless it is ex-empt by U.S. law. This is true whether you reside inside or  outside the United States and whether or not you receive a Form W–2 or 1099 from the for-eign payer. This applies to earned income (such as wages and tips) as well as unearned income (such as interest, divi-dends, capital gains, pensions, rents and royalties).  If you reside outside the United States, you may be able to exclude part or all of your for-eign source earned income. For details, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

 

Joint return responsibility.  Generally, both spouses are re-sponsible for the tax and any in-terest or penalties on a joint tax return. In some cases, one spouse may be relieved of that responsibility for items of the other spouse that were incor-rectly reported on the joint return.

Payment of taxes.Make your check or money order payable to “United States Treasury.” You can pay your taxes by credit card.

Faster ways to file your return.  The IRS offers fast, accurate ways to file your tax return infor-mation without filing a paper tax return. You can use IRS e-file (electronic filing).

Private delivery services.  You may be able to use a designated private delivery service to mail your tax returns and payments. 

Refund on a late filed return.   If you were due a refund but you    did not file a return, you generally must file within 3 years from the date the return was originally due to get that refund. 

 

 

   

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