Below are bullet points from our opening presentation of the All Partner Call before opening up for Q&A from the field. Q&A notes are at the bottom of this post.
The American Rescue Act was signed into law late afternoon Thursday, March 11, 2021. One of its many provisions was the exclusion of up to the first $10,200 of unemployment compensation. Friday, March 12, 2021 the IRS released the Unemployment Compensation Exclusion Worksheet. On Tuesday, March 16, 2021 the IRS instructed software vendors to use the UCE Worksheet for the tax calculation. On Friday, March 19, TaxSlayer had updated the software to adhere to this IRS guidance. On March 23, 2021 IRS released updated guidance to software vendors that there were certain items that the UEC was not be taken into consideration when calculating the Modified AGI for those items. By Wednesday TaxSlayer had updated the software to calculate UCE in accordance with the IRS new guidelines.
The IRS has not provided guidance on what to do with returns that might have been affected by the updated guidelines, suggest your site review tax returns with Form 1099-G filed between Friday and Monday to see if any had additional changes and create a return tag so you can easily find them, once the IRS provides guidance.
Also, any returns containing Unemployment filed before the IRS directed software changes require no action for the Federal adjustments, the IRS announced they will make the adjustments, no need to file a Federal Amended tax return and there is no timeframe on how long this will take or what taxpayers are expected to see (letter/notice). Please work with your RM to determine what process your State wants followed.
One other provision of the American Rescue Plan is not requiring any Repayment of the Premium Tax Credit. To date the IRS has not provided any guidance to software vendors on how to handle the change. The IRS has not announced how returns already filed will be handled. More to come.
With all these mid-season changes and season extension, the IRS is playing catch up with updating the Modernized EFile (MeF) system. There are 2 common items that will cause a return to reject, withholding greater than income, this can occur when all the UC was removed and there was withholding, or when a direct debit date is entered after 4/15. The IRS continues to update the MeF system.
Finally, rejects are from the IRS, if you are trying to understand why a return rejected please reach out to your RM for some guidance, if the explanation provided from the IRS is not sufficient.
Status of Issue 5502 – Fees not appearing on the invoice?
- Issue 5502 has been committed by development to resolve, however, we do not have an ETA at this time.
For NY, can we decouple these returns from the Federal so we can send them in mass later once NY has updated related to Federal UCE?
- Currently, the only way to not file a state return at the same time as of the Federal is to access the returns individually and mark the state return as “Paper”.
Can we e-file Federal direct debits for 5/17/21 now?
- The IRS has not adjusted their business rules to support direct debits past 4/15/21.
Has the issue been corrected where you can’t print the accepted return from Client Status?
- We expect this to be resolved by next week (week of 3/28/21)
How to clear a rejected return that the TP now doesn’t want to file electronically?
- To clear the “rejected” status, go into the return and mark it as a paper return.
How come the adjustment for PTC repayment is not reflecting in TaxSlayer yet?
- The IRS, to date, has not issued guidance to software vendors on how to handle the PTC provision.
Do we need to amend Federal returns for UCE?
- No, the IRS has stated for returns already filed prior to the UCE implementation that they will automatically adjust these returns on their end.
Where can we find what preparer e-filed a return?
- Go to Client Status for that return. The Return History will show the username for the preparer that transmitted the return.