1 Down, 5 To Go
January 31st is finally gone! The following items were due on January 31st:
W-2′s
1099′s
941′s, plus payments for those less than $2,500 in payroll taxes for the quarter. You have until Feb. 10th to actually file the 941 if you made your deposits on time. The payment, however, is due by Jan. 31st.
940′s, plus payments. You have until Feb. 10th for this as well, if you made the payments on time. If you owe more than $500, chances are you should have made a deposit during the year. The payment is due by Jan. 31st.
State Unemployment Taxes
There are six primary days a year that cause stress for tax and accounting professionals.
They are:
January 31st
February 28th
March 15th
April 15th
September 15th
October 15th
There are others as well. But, those are my six.
Now we can move on to bigger and better things. Like preparing tax returns!
IRS Direct Deposit Refunds Will Be Getting Faster
Image by 401K via Flickr
The IRS is working toward a real-time filing system. They announced today that they are hosting a Second Real-Time Tax System Meeting. This real-time system will allow instant matching on returns which should result in 24 hour refunds.
In my opinion this is long overdue, at least the refund part. Under the current system you can receive your refund in 5-10 business days. This is without any type of document matching. Employers don’t have to file W-3′s and W-2′s with the IRS and SSA until Feb. 28th so any matching that is done is way after-the-fact. In fact, the IRS admits that “It is not uncommon for a taxpayer to receive a notice 12 to 18 months after a tax return is filed. This after-the-fact compliance approach can create problems and frustrations for both taxpayers and the IRS.” So, my question to the IRS now is, what happens in the 5-10 business days that people currently have to wait? Why is there even a wait time at all if there is currently no matching done?
When I e-file a client’s return I get an almost immediate response from the IRS that the return has been accepted. In a matter of minutes their computers have matched up the taxpayer’s name, SS#, spouses name, SS#, all W-2 company names with Tax ID#’s and some other various information. Of course, they cannot match up any W-2 payroll information because they either haven’t received the information from the employer or they have and it hasn’t been processed (it will be 12-18 months later). Then, they wait 5-10 business days before they directly deposit the money? Why? What happens in that 5-10 days? It appears, nothing. There should already be 24 hour refunds. They don’t need a perfect matching system in order to implement that.
This real-time system should be done in two phases:
1) Start refunding taxpayers money immediately upon them filing. This would be simple to implement under the current system. Anything larger than $15,000 should require additional approval (or matching) to prevent extremely large fraudulent refunds.
2) Start improving the matching system.
A real-time system is great, but, the big question for me is, how much “matching” is going to be done up front? All of it? And, will it cause even greater delays for many taxpayers in getting their refunds? Employers aren’t perfect either. Many times the information that they file with the IRS is inaccurate. Under the current system taxpayers receive letters 12-18 months later. Then they have to either agree with the changes to the return or disagree and state the reasons why they disagree. Sometimes it turns out the the employers filed inaccurate information.
I’m for a real-time system. But, in what form? I think it would be great if the IRS would match things up faster so that taxpayers aren’t accruing interest and penalties for 12-18 months before they find out that their return is wrong. But, the IRS already receives the info by Feb. 28th, 30 days after the taxpayer’s receive their tax documents. Why does it take so long to match things up? If they can’t match things up within a few weeks after receiving the info how are they going to operate a “real-time” system?
