The Senate’s top tax writers have released the first round of bipartisan task force reports examining over 40 expired and soon to be expired tax breaks known as tax extenders. Congress is expected to address these particular tax breaks, as well as temporary tax policy in general, when lawmakers return to Washington, D.C. in September.

The Senate’s top tax writers have released the first round of bipartisan task force reports examining over 40 expired and soon to be expired tax breaks known as tax extenders. Congress is expected to address these particular tax breaks, as well as temporary tax policy in general, when lawmakers return to Washington, D.C. in September.

Tax Extenders Task Forces
Senate Finance Committee (SFC) Chairman Chuck Grassley, R-Iowa, and Ranking Member Ron Wyden, D-Ore., on August 13 released three of six reports detailing the work of bipartisan task forces that were created to examine certain tax breaks, which expired or will expire between December 31, 2017, and December 31, 2019. The three remaining tax extenders task force reports are expected to be released soon.

The reports released by Grassley and Wyden on August 13 were from the following task forces:

• Energy;
• Cost Recovery; and
• Individual, Excise and Other Temporary Tax Policy.

Next Steps
Wyden also highlighted the importance of moving away from the notion of temporary tax provisions in general, which Democrats and Republicans alike largely agree is not good tax policy. "Tax policy should not be set a year or two at a time. We need to find permanent solutions that provide certainty to families and businesses," Wyden said in an August 13 press release.

Grassley and Wyden introduced their bipartisan tax extenders bill earlier this year. However, Grassley reiterated on August 13 that movement of all tax legislation must be initiated in the House. Although House Ways and Means Committee Chairman Richard Neal, D-Mass., has also introduced his own tax extenders proposal, the bill is unlikely to garner enough support from Senate Republicans.

"The next step will be to put together a legislative package based on the proposals that the taskforces received, the areas of consensus among the taskforce members and continued bipartisan discussions," Grassley said in an August 13 press release. "Taxpayers deserve predictability and clarity, and they haven’t received either for far too long on temporary tax policy."

How can an EA help me?

Enrolled agents advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements. The expertise of EAs in the continuously changing field of taxation enables them to effectively represent taxpayers audited by the IRS.

Privilege and the Enrolled Agent

The IRS Restructuring and Reform Act of 1998 allow federally authorized practitioners (those bound by U.S. Department of the Treasury Circular 230 regulations) a limited client privilege. This privilege allows confidentiality between the taxpayer and the enrolled agent under certain conditions. The privilege applies to situations in which the taxpayer is being represented in cases involving audits and collection matters. It is not applicable to the preparation and filing of a tax return. This privilege does not apply to state tax matters, although a number of states have an accountant-client privilege.

Are enrolled agents required to take continuing professional education?

In addition to the stringent testing and application process, the IRS requires enrolled agents to complete 72 hours of continuing professional education, reported every three years, to maintain their EA status. NAEA members are obligated to complete 90 hours per three-year reporting period. Because of the knowledge necessary to become an EA and the requirements to maintain the license, there are only about 40,000 practicing EAs.

What are the differences between enrolled agents and other tax professionals?

Only EAs are required to demonstrate to the IRS their competence in matters of taxation before they may represent a taxpayer before the IRS. Unlike attorneys and CPAs, who may or may not choose to specialize in taxes, all EAs specialize in taxation. EAs are the only taxpayer representatives who receive their right to practice from the U.S. government (CPAs and attorneys are licensed by the states).

Are enrolled agents bound by standards?

Enrolled agents are required to abide by the provisions of U.S. Department of the Treasury Circular 230, which provides the regulations governing the practice of EAs before the IRS. National Association of Enrolled Agents (NAEA) members also are bound by the NAEA Code of Ethics and Rules of Professional Conduct.

Why should I choose an enrolled agent who is a member of the National Association of Enrolled Agents?

The principal mission of the National Association of Enrolled Agents and its members is qualified, accurate, and ethical representation of the financial positions of taxpayers before governmental agencies. Members of NAEA must fulfill continuing professional education requirements that exceed the IRS required minimum. NAEA members comprise a strong network of experienced, well-trained tax professionals who effectively represent their clients and work to make the tax code fair and reasonably enforced.

How can I hire an enrolled agent?

The fastest way to locate an enrolled agent in your area is to visit www.naea.org. The ‘Find an EA’ function located on the home page will allow you to search instantly by locality or specialty. You also can reference your local phone book under the ‘Tax Preparation’ category and look for the phrase ‘Enrolled Agent,’ ‘Enrolled to Represent Taxpayers before the IRS,’ or the ‘EA’ credential following the name of the tax professional.

Rita Lewis will highlight issues that have been of concern to her clients.  Rita's Blog:  2019 Update on tax laws...  

BREAKING NEWS:

Well, they did it!! Read the separate articles to learn what the New Tax Act will mean to you over the next decade. A huge new tax law, revised tax forms AGAIN, and most IRS employees furloughed for weeks, means we are all waiting on final tax guidance and for the IRS to catch up on their backlog this year.

And, they did NOT do it. Now that the government/IRS is back to work, expect more new "clarifications" this year (probably later rather than earlier) as well as over the next few years, so check back here monthly to see the latest news for 2019 and for planning for the next few years. One topic alone is 247 pages long! And, more arrived at the end of February 2019 pertaining to 2018 tax returns.

The revised withholding tables mean more in your take-home pay. But, that means your balance due or refund for 2018 with your federal return filed in 2019 may be an unpleasant surprise. If you didn't like your 2018 results, change your 2019 withholding now.

Refunds are much, much slower as the IRS battles tax return fraud. And, even slower if you take Education, Child Tax, Earned Income Credits, or use Head of Household filing status. And, slower still if you file an amended return.

Also, expect your tax preparer to ask a LOT more due diligence questions if you want to take the American Opportunity, Child Tax, &/or Earned Income Credits, or use Head of Household filing status. EXPANDED questionaires are part of your tax return if claiming any of those credits or HoH filing status.

You NEED your Form 1098-T as well as a transcript from the bursar's office AND what YOU PAID to qualify for any Educational Credits or Deductions.

NEW: If you receive a Form K-1 for 2018 or future years, it will have additional information due to the new tax laws. And, it will take your tax return preparer more time to complete your returns.

Remember that the IRS and the Social Security Administration/Medicare and CT and most states contact you via US Mail and NOT electronically. There are a lot of very aggressive email and telephone scams out there, including some targeting Medicare recipients. Do NOT pay anyone who claims to be from the IRS or Medicare or any governmental unit without calling me first. Newer scams target employees in human resource departments and request W-2 information. And, a new official-looking MAILING targets LLCs in CT and other states. I'm starting to see fake "IRS" mailings now, too. Read carefully!

CONNECTICUT

Repeat: A new official-looking MAILING targets LLCs in CT and other states. CT did NOT change how you file and pay your annual report to the Secretary of the State for your business.

CT continues to reduce the value of the property tax credit, and has made many new 2018 tax law changes.

If you are part of a partnership or S-corporation, new CT laws are retroactive to 1 January 2018. Partnerships and S-corporations must pay estimated taxes to CT. Partners and shareholder/employees can make correspondingly lower payments to CT; they will get credit for a percentage of payments made by their pass-through companies to CT.

The CT Forms K-1 will have additional information due to CT's new tax law. And, it will take your tax return preparer more time to complete your returns.

CT also jumped on the problem of fraudulent tax returns, so don't be surprised if CT contacts you to prove your identity. This also means slower refunds.

And, the CT Department of Revenue Services frequently demands proof of eligibility for it's fairly new Earned Income Credit.

CT's Department of Labor is taking a hard look at Independent Contractor vs. Employee issues.

NEW TAX LAW

Expect Many, Many Interpretations of our New Tax Laws! Effective dates are 2018 and later. Sunset date is 2025.

The new tax laws and the revised tax forms AGAIN and the lack of clarification from Congress and the government shutdown and the furloughed IRS employees mean your tax preparer will spend more time on your tax returns this year and next year, too. And, ask you a lot of new questions.

As usual, Congress gives and it takes away. Before you rely on any new law to change your tax position, call Rita Lewis at 203-557-0909 to learn if the law was in the signed version, or was extended or modified or expired or clarified, or if income phase-outs reduce the law's application to your specific situation.

CAUTION: Any and all laws still could change during 2019 for 2018, yes 2018, and future tax returns.