If you happen to be one of the many who had to file an extension, here are some recent tax items you want to keep in mind – as you prepare to file your taxes. On the other hand, those who are anticipating what the rest of the tax year is going to be like, these pointers may apply to you as well.
What is Happening to the Credit for Plug-in Electric Vehicles?
The tax credit available for purchasers of new General Motors plug-in electric vehicles began phasing out on April 1, 2019. The phaseout was triggered because General Motors, LLC has sold more than 200,000 vehicles eligible for the plug-in electric drive motor vehicle credit during the fourth quarter of 2018.
Qualifying vehicles by the manufacturer, which include Chevrolet Spark EV (2014-2016), Chevrolet Volt (2011-2019), Chevrolet Bolt (2017-2019), Cadillac CT6 Plug-In (2017-2018), and Cadillac ELR (2014, 2016) are eligible for a $7,500 credit if acquired before April 1, 2019. Since April 1, 2019, however, the credit has been reduced to $3,750 for General Motors’ eligible vehicles. Beginning on October 1, 2019, the credit will be reduced even further to $1,875. After March 31, 2020, no credit will be available.
The plug-in electric drive motor vehicle credit was enacted in the Energy Improvement and Extension Act of 2008 and subsequently modified. The law enables owners of eligible passenger vehicles and light trucks to take the credit. By law, five quarters after reaching the sales threshold, the credit ends for the manufacturer. General Motors vehicles were eligible for some portion of the credit until April 1, 2020.
How Do Delinquent Tax Debts Affect Passport Renewal?
As a reminder, individuals with “seriously delinquent tax debts” are subject to a new set of provisions courtesy of the Fixing America’s Surface Transportation (FAST) Act, signed into law in December 2015. These provisions went into effect in February 2018.
The FAST Act requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt and also requires the State Department to deny their passport application or deny renewal of their passport. In certain instances, the State Department may revoke their passport.
Taxpayers affected by this law are those with a seriously delinquent tax debt, generally, an individual who owes the IRS more than $51,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired, or the IRS has issued a levy.
You, the Taxpayer Can Avoid the IRS Notifying the State Department by the following:
- Paying the tax debt in full
- Paying the tax debt timely under an approved installment agreement,
- Paying the tax debt timely under an accepted offer in compromise,
- Paying the tax debt timely under the terms of a settlement agreement with the
- Department of Justice,
- Having requested or have a pending collection due process appeal with a levy, or
- Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.
Your Passport Won’t Be at Risk Under this Program, if You Can:
- Is in bankruptcy
- Is identified by the IRS as a victim of tax-related identity theft
- Has an account that the IRS has determined is currently not collectible due to hardship
- Is located within a federally declared disaster area
- Has a request pending with the IRS for an installment agreement
- Has a pending offer in compromise with the IRS
- Has an IRS accepted adjustment that will satisfy the debt in full
For taxpayers serving in a combat zone, and who also owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.
Taxpayers who are behind on their tax obligations should come forward and pay what they owe or enter into a payment plan with the IRS and may qualify for one of several relief programs, including the following:
- Taxpayers can request a payment agreement with the IRS by filing Form 9465, Installment Agreement Request. Taxpayers can download this form from IRS.gov and mail it along with a tax return, bill or notice. Some taxpayers may be eligible to use the online payment agreement to set up a monthly payment agreement for up to 72 months.
- Financially distressed taxpayers may qualify for an offer in compromise, an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to determine the taxpayer’s ability to pay.
How Does the EIN application Process Revision Enhance Security?
Since May 13, 2019, only individuals with tax identification numbers can request an Employer Identification Number (EIN) as the “responsible party” on the application. An EIN is a nine-digit tax identification number assigned to sole proprietors, corporations, partnerships, estates, trusts, employee retirement plans and other entities for tax filing and reporting purposes.
The change prohibits entities from using their own EINs to obtain additional EINs. Individuals named as the responsible party must have either a Social Security number (SSN) or an individual taxpayer identification number (ITIN). The requirement applies to both the paper Form SS-4, Application for Employer Identification Number, and the online EIN application.
A detailed explanation of who should be the responsible party for various types of entities is provided on the Form SS-4 Instructions, but generally, the responsible party is the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. In cases where more than one person meets that definition, the entity may decide which individual should be the responsible party.
Certain Entities Exempt
Governmental entities (federal, state, local and tribal) are exempt from the responsible party requirement as well as the military, including state national guards.
No Change for Tax Professionals
There is no change for tax professionals who may act as third-party designees for entities and complete the paper or online applications on behalf of clients.
The new requirement will provide greater security to the EIN process by requiring an individual to be the responsible party and improve transparency. If there are changes to the responsible party, the entity can change the responsible official designation by completing Form 8822-B, Change of Address or Responsible Party. A Form 8822-B must be filed within 60 days of a change.
If you are in the boat of filing for tax year 2018, we are here for you. If you have any questions, or concerns, we are only a phone call away!