Tax Justice Warriors

The child tax credit is again in the news because of potential increases by Congress. On this episode, I look at the history and the requirements.

I also look at how the credit is both nonrefundable and refundable. That means that the nonrefundable portion takes care of the tax liability before the refundable portion is available. The refundable portion is called the additional child tax credit. Currently, the additional child tax credit is calculated as 15% of the taxpayer’s AGI in excess of $2,500, with the refund value capped at $1,400.

From current news on the proposed child tax credit changes:

The Democrats’ new proposal would increase the credit amount by $1,000 ($1,600 for those with children under 6) and allow taxpayers to receive the full amount as a refund. Additionally, the plan would make the credit payable in monthly installments of $250 and $300, respectively, rather than just once a year. The payments would start to phase out for individuals earning more than $75,000 a year or $150,000 for those married filing jointly.

If passed, the Treasury Department could issue advance payments of up to half the 2021 child tax credit starting in July based on families’ 2019 or 2020 tax return information. If there is any overpayment of the credit, individuals making less than $40,000 ($60,000 for couples filing jointly) will not need to repay the amount, nor will it be garnished from wages.

This episode focuses on the current state of affairs in working with IRS Collections and Enforcement. The issues with the IRS customer service are making it difficult to represent clients. As I focused on last episode, there are delays in CAF Unit processing of Form 2848 power of attorney forms. There are still long delays with speaking with someone over the phone at the IRS to resolve issues. Additionally, the Taxpayer Advocate Service has high workloads that make it difficult to find assistance there.

The IRS does not seem to have received the memo with regard to those issues because clients are still receiving notices from the IRS about balances due with threats of levies or liens. Unfortunately, practitioners and taxpayers have trouble communicating with the IRS about those notices.

To be positive, the IRS reports they are back to normal processing time for receiving mail. There are no communication problems with IRS Counsel and Tax Court so several of my cases came to resolution. The IRS is also taking good steps with their new IRS University and new Chief Taxpayer Experience Officer Ken Corbin toward improving customer service.

Referenced it today’s episode:

https://taxrepllc.com/tax-rep-network-podcast-episode-91-irs-enforcement-in-2021-a-conversation-with-darren-guillot/

https://www.irs.gov/newsroom/irs-creates-new-chief-taxpayer-experience-officer-position-ken-corbin-to-lead-new-focus-to-improve-service-to-taxpayers

While I identified on a previous episode changes that the IRS is making for submissions of power of attorney forms, that still does not change how the IRS processes those forms. There were delays last year for processing of Form 2848 and other forms within the IRS. I talk in this episode about delays at the CAF (Central Authorization File) Unit. This is an issue because the IRS moves forward with collecting through liens or levies yet the representative is unable to communicate with the IRS on a client’s behalf. That cuts down on getting transcripts to learn about the status of the case and beginning any negotiations to fix the situation and help out all parties involved.

The tax season now starts February 12!

In looking at a crash course in taxes, I decided the easiest way to talk with someone about several concepts was to review the form 1040. In part two, I go through the second page of form 1040. It introduces the concepts of the tax due after finding taxable income, nonrefundable credits, other taxes (including self-employment tax), withholding, estimated tax payments, refundable credits and other total payments, leading to the refund or amount owed.

Going through this series of concepts is a great way to introduce several basic topics that are easily expanded upon to talk about for tax controversy case work. For students or others who are new to tax, digging into Form 1040 and moving next to Publication 17 are great places to explore.

In looking at a crash course in taxes, I decided the easiest way to talk with someone about several concepts was to review the form 1040. In part one, I will go through the first page of form 1040. It introduces the concepts of filing status, dependents, income, adjustments to income (which results in adjusted gross income), deductions – the choice of standard or itemized deductions, and taxable income.

Going through this series of concepts is a great way to introduce several basic topics that are easily expanded upon to talk about for tax controversy case work. For students or others who are new to tax, digging into Form 1040 and moving next to Publication 17 are great places to explore.

I am sure many of you have benefited from the economic impact payments (also called stimulus payments). In past episodes, I discussed different people who should have received those payments in 2020. Now, we are looking at another round of the economic impact payments in 2021.

For those who should have received payments but did not, there is a method for reconciling the payments on the 2020 tax return. It is called the recovery rebate credit.

I talk through some of the procedure for the recovery rebate credit and how it will affect people with their economic impact payments. For example, the credit is treated as a non-refundable credit and then converts to a refundable credit. You should have a copy of Notice 1444 when preparing your taxes and considering the recovery rebate credit. These tips and more are in this episode.

Well, 2020 was a wild year. What will 2021 bring? I am not going to try to predict the coming year. After all, who could have predicted the pandemic for 2020? I am going to talk a bit broadly about the coming year, but also I am going to talk through some personal career goals regarding taxes for the next year. A shorter episode as we move into the new year!

Merry Christmas!

This is a recap of the 2021 Annual LITC Grantee Conference, which was entirely virtual for the first time in December 2020. The first week focused on a tax bootcamp and training for financial reporting. The second week was the advanced training and other plenary sessions. Several prominent speakers from the IRS and the U.S. Tax Court gave updates on their programs for this point in the pandemic.

For the last two episodes, I went into more depth on my two presentations during the conference. I hope you have happy holidays as we turn to 2021.

2020 – the year in review. Not much happened this year, right?

Seriously – quite a bit happened inside the tax world and beyond based on the pandemic. For the Low Income Taxpayer Clinic Grantee Conference, I am on a panel discussing the year in review for taxes. The others are talking about the statutory changes and specific cases that affected the tax world. I will be discussing administrative changes from the IRS and the Tax Court.

This episode will go over that panel, but I also discuss what I personally worked on this year. I review my goals for 2020. On my first episode of next year, I will discuss what goals I have regarding 2021. Hopefully this pandemic business will not affect us quite so much.

I hope you are having happy holidays and staying safe!

In the 2021 LITC Grantee Conference, I am giving a presentation on Collections (Part 1). This presentation is part of a series of tax bootcamp presentations for LITC practitioners new to the tax field.

On this episode, I give a summary of items I discuss – the main focus is liens, levies and collection due process. Along the way, I give an update on progress for the Collection Due Process Summit Initiative and give a schedule for the next few episodes.

Next week – 2020 Year in Review!