Come on!  You’ve made it this far.  There’s only one more after today’s blog!

Today, we’ll discuss the changes that the IRS has made in collecting overdue taxes, how we’ll be able (or not) to request (and be granted) extended payment plans, and the changes in the filing dates for some taxes.

Payments Due
The IRS has been starved to death for years by Congress. Partly because one party was angry that the IRS was not automatically granting those “social welfare” organizations (read as political collections and donation farms) tax exemptions without scrutiny. Partly because the IRS is responsible for collecting the penalties for those who don’t comply with Obamacare. (They were hoping that this lack of funds would make it harder for them to do so.)

But, in my (not so) humble opinion, the solution Congress came up with sucks. The IRS has now been authorized to hire the bottom feeders- the outside collection agents, that harass and subject folks to all sorts of intimidation. The logic behind this choice? After all, folks who owe the IRS must be the scum of the earth. (Of course, no one ever considers the fact that the IRS makes mistakes, chooses random numbers to assess non-filing taxpayers who may actually owe nothing, etc.)

Many clients fall short of having sufficient funds to pay their taxes when due. This means the taxpayer should submit a Form 9465 (Installment Agreement Request). These requests must be automatically approved if the taxpayer [individual] owes (or will owe) the IRS $ 50,000 or less, with the submission of this request- and all tax forms have been timely submitted. (Businesses are limited to a $ 25,000 maximum, with the same other provisos.) However, the fees involved to request such an IRS process are now increased to $ 120, unless the taxpayer agrees to have the IRS zap their bank account automatically each month. Then, the fees are reduced to $ 52. (The IRS has way too many taxpayers “forgetting” to make timely payments. This is a way to incur fewer manpower issues for the service.) However, no matter how the payment is to be processed by the IRS, all low-income taxpayers (for example, a family of 4, with $60K or less in income) won’t have to pay more than $ 43 to institute a payment plan.

The biggest change to this process? Any taxpayer who is not in compliance with IRS code, who has no installment agreement in place, and owes $ 50,000 in taxes, penalties, and interest can find his passport revoked IMMEDIATELY. (If one is not yet issued, don’t expect the Department of State to issue one, either.)

Filing Dates

     Individuals
There has been no change in the due date for 1040 filing, in that it is still due on 15 April (or the next business day, should the 15th fall on a weekend or legal holiday). Unless you can prove you were out of the country on 15 April- then you have the right to a 15 June filing date. Or, you may have filed an extension request- that gives you until 15 October (with the same proviso for when it falls on a weekend or legal holiday).

    Businesses
Here’s where the big changes arrive. And, it is about time. Because too many pass-through entities have been screwing over their partners or their stockholders by delaying the filing of their returns. Oh, sure, those companies may pay a penalty, but that doesn’t help the multitudes who can’t file their taxes in a timely fashion due to the lassitude of these entities.

(A pass-through entity means that profits and losses are subject to the partner’s or stockholder’s own taxes.  That means they need the results from the company to file a timely tax return; these results are found on a K-1, which is like a W-2, but instead of salary results, the profits and losses from the business are included.)

So, from now on, all pass through entities- those are partnerships, LLCs, and S entities must now file their tax returns by the 15th day of the 3rd month after the end of their tax year. (Recognize that the IRS allows companies that have “good” reasons to not use a natural year (i.e., 1 January to 31 December) to chose another month to end their tax year.) But, for most entities, the due date will now be 15 March. Which gives the partners or the stockholders a month to finish their own tax returns. (Firms that operate on the US Government year, which ends 30 September, for example, must file their taxes by 15 November.)

Regular Corporations (C entities) no longer have to file by the 15th day of the 3rd month, but now have until the 4th month. So, for those companies operating on a natural year basis, the due date has been extended (permanently) from 15 March to 15 April. (A similar 15th day of the 4th month after year-end applies for those not operating on a natural year basis.)

Tomorrow, we’ll discuss the changes in extensions that the IRS grants and some big changes in the penalties for late filing.