Manuel DaRosa, CPA
Accounting and Tax firm with offices in Taunton, Falmouth and Mansfield, MA
NEWSLETTERS

The agency will start accepting returns on Feb. 12, about two weeks later than usual. But you still have to file by April 15.

The start of tax filing season is postponed by a couple of weeks this year, but the government says it expects to pay most refunds reasonably quickly.

Typically, the Internal Revenue Service begins accepting and processing individual income tax returns in late January. But the agency has pushed back the start of filing to Feb. 12 for returns for the tax year 2020.

The shift was needed, the I.R.S. said, to allow the agency to update and test its systems to reflect late-year tax changes approved by Congress, including a second round of economic stimulus payments.

“This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible,” the I.R.S. commissioner, Charles P. Rettig, said in prepared remarks.

This is shaping up to be another challenging tax season for the I.R.S., which has struggled in recent years with reduced budgets that have forced it to make do with fewer workers and outdated computer systems. During the pandemic, it has also had the extra work of distributing stimulus checks.

Because of the coronavirus, the I.R.S. was delayed in processing some returns, particularly those filed on paper, according to the Taxpayer Advocate Service, the arm of the I.R.S. that speaks for filers. Though most people file returns electronically, about 16 million paper returns were filed last year. As of Dec. 25, there were still nearly seven million unprocessed individual returns from tax year 2019, according to the I.R.S. website.

Even so, the I.R.S. said, most taxpayers due a refund for the 2020 tax year will get it within three weeks if they file electronically and have the money deposited directly into their bank account. The average refund in recent years has been more than $2,500. Many families use refunds to pay bills or use it as a kind of forced savings plan.

The change in the start of filing season raised concerns about recipients of antipoverty tax credits, like the earned-income tax credit and the child tax credit, who typically have lower incomes and file early to get refunds quickly. But people claiming the credit can expect to receive their refunds beginning in early March, which is typical, as long as there are no issues with their tax returns, the I.R.S. said.

“This would be the same experience for taxpayers if the filing season opened in late January,” the agency said. By law, the agency cannot issue refunds to people claiming the credit until after mid-February, as part of anti-fraud efforts.

Tax Alerts
April 21, 2021
Tax Briefing(s)

COVID-19 GRANTS FOR MASSACHUSETTS SMALL BUSINESSES

Grants Overview

The Commonwealth of Massachusetts has made $50.8 million in grants available to support small businesses, microenterprises, and their employees, families and communities. Massachusetts Growth Capital Corporation (MGCC) will be administering these funds to businesses experiencing economic hardship and a loss of income due to the COVID-19 pandemic.

These funds were appropriated through the Commonwealth’s Supplemental Budget for Fiscal Year 2021 (FY21) as well as the CARES Act of 2020 and are divided into two programs. 

Grant funding is intended to help businesses adversely impacted by the pandemic. Preference will be given to small businesses whose owners are women, minorities, veterans, members of other underrepresented groups, who are focused on serving the Gateway Cities of Massachusetts, and those most negatively impacted by the COVID-19 pandemic. Preference will also be given to applicants that have not been able to receive aid from other federal programs related to COVID-19.

 

Timeline: Application will be open for 3 weeks

10/22/2020 at 12:00 PM – Application opens.

11/12/2020 at 12:00 PM – Application closes.

 

Applicant Eligibility:

Each program encompasses its own eligibility criteria, set forth below. Applicants must review the information to determine which program to proceed with applying.


The IRS and the Treasury Department have automatically extended the federal income tax filing due date for individuals for the 2020 tax year, from April 15, 2021, to May 17, 2021. Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed.


On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021. Some of the tax-related provisions include the following:


The IRS needs to issue new rules and guidance to implement the American Rescue Plan, experts said on March 11 as President Joe Biden signed his COVID-19 relief measure.


Strengthening tax breaks to promote manufacturing received strong bipartisan support at a Senate Finance Committee hearing on March 16.


IRS Commissioner Charles "Chuck" Rettig told Congress on February 23 that the backlog of 20 million unopened pieces of mail is gone.


The Tax Court ruled that rewards dollars that a married couple acquired for using their American Express credit cards to purchase debit cards and money orders—but not to purchase gift cards—were included in the taxpayers’ income. The court stated that its holdings were based on the unique circumstances of the case.


The IRS Office of Chief Counsel has embarked on its most far-reaching Settlement Days program by declaring the month of March 2021 as National Settlement Month. This program builds upon the success achieved from last year's many settlement day events while being shifted to virtual format due to the pandemic. Virtual Settlement Day (VSD) events will be conducted across the country and will serve taxpayers in all 50 states and the District of Colombia.


An individual who owned a limited liability company (LLC) with her former spouse was not entitled to relief from joint and several liability under Code Sec. 6015(b). The taxpayer argued that she did not know or have reason to know of the understated tax when she signed and filed the joint return for the tax year at issue. Further, she claimed to be an unsophisticated taxpayer who could not have understood the extent to which receipts, expenses, depreciation, capital items, earnings and profits, deemed or actual dividend distributions, and the proper treatment of the LLC resulted in tax deficiencies. The taxpayer also asserted that she did not meaningfully participate in the functioning of the LLC other than to provide some bookkeeping and office work.


A married couple’s civil fraud penalty was not timely approved by the supervisor of an IRS Revenue Agent (RA) as required under Code Sec. 6751(b)(1). The taxpayers’ joint return was examined by the IRS, after which the RA had sent them a summons requiring their attendance at an in-person closing conference. The RA provided the taxpayers with a completed, signed Form 4549, Income Tax Examination Changes, reflecting a Code Sec. 6663(a) civil fraud penalty. The taxpayers declined to consent to the assessment of the civil fraud penalty or sign Form 872, Consent to Extend the Time to Assess Tax, to extend the limitations period.


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