Between the coronavirus pandemic (and the response to it) and regular changes and glitches, there have been a number of updates from the IRS over the past weeks and months. Read on for our overview of some of the most notable developments.
Debit cards being issued for Economic Impact Payments
One of the most far-reaching provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, was the issuance of Economic Impact Payments, often referred to as stimulus payments. These payments are generally $1,200 to individuals and $2,400 to married couples, with $500 additional amounts for dependent children under age 17. The payments are based on 2018 or 2019 adjusted gross income (AGI), phased out over the following AGI ranges.
- Single and married separate: $75,001-$99,000
- Head of household: $112,501-$136,500
- Married joint: $150,001-$198,000
First, the IRS issued these payments via direct deposit to taxpayers who had bank account information entered on either their 2018 or 2019 Form 1040 for direct deposit of refunds claimed. Next the IRS began issuing checks based on ascending income where bank account information was not provided. The IRS said this week that after two months it has issued more than 159 million payments totaling nearly $267 billion.
In late May, the IRS began issuing some payments on prepaid debit cards. The IRS announced that the payment cards are sent in plain envelopes from Money Network Cardholder Services, with Visa appearing on the front of the card and MetaBank, the issuing bank, on the back. The card comes with instructions on how to activate and use it; users can transfer funds to a personal bank account, make purchases online and at any retail location where Visa is accepted, and get cash from in-network ATMs without incurring any fees.
Delays in 2019 refunds being processed
It has come to our attention that the IRS is experiencing delays in issuing 2019 refunds requested by Form 1040 filers on electronically filed income tax returns. This has been caused both by the displacement of IRS employees from their normal work locations due to the pandemic and by a processing glitch encountered in March. Paper returns have also been delayed due to staffing issues and decontamination efforts. There is nothing that taxpayers can do but be patient.
Electronic filing of amended tax returns
The IRS recently announced that it expects sometime this summer to be able to receive 2019 amended personal income tax returns, Form 1040-X, electronically. Form 1040-X has always needed to be paper-filed. In a typical year, the IRS receives a few million amended individual income tax returns. The IRS stated policy is to expect a refund requested on Form 1040-X to take up to 16 weeks to be issued. Hopefully, electronic filing will lead to a more rapid turnaround time.
Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
Coronavirus Resource Center
InsightTreasury and Taxpayer Advocate warn of difficult tax season: What to know and do nowTim MorrisonAfter a year of delays and other difficulties, taxpayers should file electronically and accurately to minimize frustration with 2021 returns. Read more.
InsightForm 1099 filing for 2021 tax yearJimit Mehta, Susan CooperAs you prepare for the 1099 filing season, there are no major changes in the filing requirements. Please review this alert for important information and deadlines.
InsightIRS issues guidance for employers that reduced tax deposits and/or claimed advances on now-unavailable Q4 2021 ERCsDana Fried, Tim MorrisonNotice 2021-65 outlines how and when to repay advances for Q4 2021 Employee Retention Credits, or pay previously undeposited Q4 employment taxes. Read more.
InsightInfrastructure bill eliminates 2021 Q4 Employee Retention Credit (ERC) for most employersDana FriedWith the exception of recovery startup businesses, employers are no longer able to claim an Employee Retention Credit for Q4 2021. Read more.