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Saturday January 24, 2015

Washington News

Washington Hotline

IRS Launches 2015 Filing Season

In IR-2015-3, the IRS announced that the 2015 filing season has now opened. Between January 15 and April 15, the IRS expects to receive over 150 million individual tax returns.

IRS Commissioner John Koskinen observed that the IRS Free File program opened on January 16. In addition, the IRS will accept and process all returns starting on Tuesday, January 20.

The Free File program is available to an estimated 100 million individuals or families with incomes of $60,000 or less. There are two basic options on First, taxpayers who are familiar with the IRS forms may fill them out electronically and submit them to the Service. Second, there are 14 commercial software companies who provide free online versions of their programs.

Commissioner Koskinen points out that filing electronically is the best way to receive a prompt refund. He stated, “If you haven’t already, you should consider filing electronically. It’s fast, accurate and the best way to get your refund quickly.”

The IRS refund target is to have 90% of taxpayer refunds sent within 21 days of receiving the return.

This is also the first year for filing under the Affordable Care Act (ACA). There will be three general categories of taxpayers. Many taxpayers have qualified ACA insurance, some will be exempt from the requirement to have health insurance and the balance of taxpayers will make an “Individual Shared Responsibility Payment (ISRP).” The ISRP is the applicable penalty payment for persons without qualified health insurance. For 2015, many individuals will have a penalty payment of $95.

1. Qualified Insurance – Individuals who have a healthcare plan that is compliant with the ACA requirements will check a box that they are in compliance. There is a chart on that will help determine if your insurance plan is qualified under ACA.

2. Exempt – Some individuals will be exempt from the ACA healthcare requirement. It will be necessary to file IRS Form 8965, Health Coverage Exemptions, with your tax return if you are exempt. Some exemptions are also obtained through the Healthcare Marketplace.

3. Individual Shared Responsibility Payments – If an individual does not have qualified insurance or an exemption for each month of the year, then the ISRP will be required. On, there is a “Calculating the Payment” page that may be helpful.

4. Premium Tax Credit – Most individuals who purchased ACA compliant insurance on the Marketplace will receive IRS Form 1095-A, Health Insurance Marketplace Statement. The statement should be received the first week of February from the Marketplace where the policy was acquired. Koskinen noted that individuals should not contact the IRS for this form, because only the Healthcare Marketplace or insurance provider has the available information.

Taxpayers who received a premium tax credit to help pay for their health insurance will need to complete IRS Form 8962, Premium Tax Credit. Depending upon the level of income and the amount of credit received, there may be an additional refund or an added payment to the IRS.

Most individuals will need to wait until they have received all W-2s from employers, the appropriate Forms 1099 from banks and financial institutions and Form 1095-A from their marketplace in order to file their income tax return.

IRS Plans to Reduce Service

At a press conference on January 15, IRS Commissioner John Koskinen discussed the planned reductions in IRS staff. Because of budget limits, there will be fewer IRS employees available to answer taxpayer questions by phone. Those taxpayers who call may expect long delays, perhaps 30 minutes or more before speaking with an IRS representative. Many taxpayers will not be able to reach an IRS representative and will not have their questions answered.

The IRS budget request for this year was reduced by $346 million to $10.9 billion. When asked whether or not the phone staff reductions were an intentional effort to reduce service and put pressure on Congress, Koskinen responded that the phone service staff reductions were simply the result of budget limits. He stated, “We are working very hard not to have a shutdown. I have been around town long enough, and I know enough about this agency, there are a lot of things that we could do that would be very visible and would be susceptible to a claim about that. We are actually working very carefully, because we have an organization dedicated to and concerned about taxpayer service.”

The IRS challenge is that there are fewer staff and greater responsibilities. The IRS is required to implement the Affordable Care Act and the Foreign Account Tax Compliance Act. However, between 2010 and 2015, the IRS reduced its staff by 17,000 employees.

Koskinen continued, “Seventy-two percent of our budget is people, so the only flexibility we have is in information technology, taxpayer service and tax enforcement. And we are making cuts in all of those areas.”

As a result of the staff reductions, there will be fewer audits and reviews. While approximately one million returns will be subject to some level of review, Koskinen anticipates fewer full-fledged audits of individual taxpayers.

Published January 16, 2015

Previous Articles

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IRS Filing Season Opens January 20

White House 2015 Tax Proposals

Tax Extenders Signed by President

IRA Rollover and Tax Extenders