Update 3/16/2021:  We are receiving many emails on how to handle these changes in the software.  Please understand that even though the IRS made a post of how to handle this on the 1040, we are still waiting for the IRS to issue instruction changes for the purposes of calculating the changes in the software and for electronic filing.  If you are more comfortable waiting to file these returns, we recommend you create a return tag.  As of today, we do not know how the IRS is going to handle previously filed returns with Unemployment or how they are going to handle returns filed between the passing of the Act and their implementation plans.

Now that the Act is signed, the IRS will interpret the Act and issue instructions on how it should be handled on new returns and on returns already electronically filed.

Once we get guidance, we do not believe it will take long to make changes to the software.  We are already being proactive and creating some reports that will allow sites to identify returns that have a 1099G in case they need to revisit them.  The excess payments for PTC is already on the Site Production Detail report in the event those returns need to be revisited.  We strongly recommend you wait until we receive clarification and guidance from the IRS before making any changes to existing returns or changing how you prepare new returns.

We, as a software vendor, have already had calls with the IRS.  They are committed to working closely with all vendors to get the appropriate messaging and instructions out as soon as they know them.

The National Association of Tax Professionals (NATP) has published an excellent summary of the American Rescue Act.   Click here to view their summary.

IRS Statement regarding the American Rescue Act.  Click here to view statement

IRS Coronavirus page.  Click here to view latest Coronavirus information

March 12, 2021

The IRS is reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021. Additional information about a new round of Economic Impact Payments, the expanded Child Tax Credit, including advance payments of the Child Tax Credit, and other tax provisions will be made available as soon as possible on IRS.gov. The IRS strongly urges taxpayers to not file amended returns related to the new legislative provisions or take other unnecessary steps at this time.

The IRS will provide taxpayers with additional guidance on those provisions that could affect their 2020 tax return, including the retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable. For those who haven’t filed yet, the IRS will provide a worksheet for paper filers and work with software industry to update current tax software so that taxpayers can determine how to report their unemployment income on their 2020 tax return. For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance.

IRS begins delivering third round of Economic Impact Payments to Americans

WASHINGTON – The Internal Revenue Service announced today that the third round of Economic Impact Payments will begin reaching Americans over the next week.

Following approval of the American Rescue Plan Act, the first batch of payments will be sent by direct deposit, which some recipients will start receiving as early as this weekend, and with more receiving this coming week.

Additional batches of payments will be sent in the coming weeks by direct deposit and through the mail as a check or debit card. The vast majority of these payments will be by direct deposit.

No action is needed by most taxpayers; the payments will be automatic and, in many cases, similar to how people received the first and second round of Economic Impact Payments in 2020. People can check the “Get My Payment” tool on IRS.gov on Monday to see the payment status of the third stimulus payment.

“Even though the tax season is in full swing, IRS employees again worked around the clock to quickly deliver help to millions of Americans struggling to cope with this historic pandemic,” said IRS Commissioner Chuck Rettig. “The payments will be delivered automatically to taxpayers even as the IRS continues delivering regular tax refunds. We urge people to visit IRS.gov for the latest details on the stimulus payments, other new tax law provisions and tax season updates.”

Highlights of the third round of Economic Impact Payments; IRS will automatically calculate amounts

In general, most people will get $1,400 for themselves and $1,400 for each of their qualifying dependents claimed on their tax return. As with the first two Economic Impact Payments in 2020, most Americans will receive their money without having to take any action. Some Americans may see the direct deposit payments as pending or as provisional payments in their accounts before the official payment date of March 17.

Because these payments are automatic for most eligible people, contacting either financial institutions or the IRS on payment timing will not speed up their arrival. Social Security and other federal beneficiaries will generally receive this third payment the same way as their regular benefits. A payment date for this group will be announced shortly.

The third round of Economic Impact Payments (EIP3) will be based on the taxpayer’s latest processed tax return from either 2020 or 2019. This includes anyone who successfully registered online at IRS.gov using the agency’s Non-Filers tool last year, or alternatively, submitted a special simplified tax return to the IRS. If the IRS has received and processed a taxpayer’s 2020 return, the agency will instead make the calculation based on that return.

In addition, the IRS will automatically send EIP3 to people who didn’t file a return but receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) or Veterans Affairs benefits. This is similar to the first and second rounds of Economic Impact Payments, often referred to as EIP1 and EIP2.

For those who received EIP1 or EIP2 but don’t receive a payment via direct deposit, they will generally receive a check or, in some instances, a prepaid debit card (referred to as an “EIP Card). A payment will not be added to an existing EIP card mailed for the first or second round of stimulus payments.

Under the new law, an EIP3 cannot be offset to pay various past-due federal debts or back taxes.

The IRS reminds taxpayers that the income levels in this new round of stimulus payments have changed. This means that some people won’t be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit. Payments will begin to be reduced for individuals making $75,000 or above in Adjusted Gross Income ($150,000 for married filing jointly.) The reduced payments end at $80,000 for individuals ($160,000); people above these levels are ineligible for a payment. More information is available on IRS.gov.

New payments differ from earlier Economic Impact Payments

The third round of stimulus payments, those authorized by the 2021 American Rescue Plan Act, differs from the earlier payments in several respects:

• The third stimulus payment will be larger for most people. Most families will get $1,400 per person, including all dependents claimed on their tax return. Typically, this means a single person with no dependents will get $1,400, while a family of four (married couple with two dependents) will get $5,600.
• Unlike the first two payments, the third stimulus payment is not restricted to children under 17. Eligible families will get a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents.

Additional information is available on IRS.gov.

3/15/2021:  This has been resolved

3/12/2021

The fix for this is scheduled to deploy the morning of Monday, March 15th. 1040-NR returns should continue to be held until this blog post is updated giving the all clear.

Scenario:

You are trying to create and submit an e-file for a 1040NR and receiving a message that you cannot efile because it contains form 1040NR

Workaround:

Hold the return

Solution:  We are  having our development team look into this to turn 1040NR e-file back on.

Today, the IRS published the latest executive column, “A Closer Look,” which features Frank Nolden, Stakeholder Partnership, Education and Communications Director, discussing the benefits and history of  volunteer tax preparation sites. “The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs…help millions of low-to-moderate income taxpayers accurately prepare and file their tax returns for free with help from IRS-certified volunteers,” said Nolden. Read more here. Read the Spanish version here

“A Closer Look” is a column from IRS executives that covers a variety of timely issues of interest to taxpayers and the tax community. It also provides a detailed look at key issues affecting everything from IRS operations and employees to issues involving taxpayers and tax professionals.

A fix to Business Rule MO1040-0022 will go into production Saturday evening.  Please let me know if there any continued issues after that time.

We are also working on an update to Business Rule MO1040-0012.  We expect to have this in production by mid-week next week.

Once MO has these changes in their system, you will be able to resend any of your state returns rejected for these reasons.

Note:  You can resend MO1040-0022 beginning Sunday

We will notify you when you can resend MO1040-0012

Message for Volunteers and Partners

Due to travel restrictions in 2021, SPEC developed alternative plans to perform virtual Quality
Oversight Reviews on VITA/TCE sites. During Filing Season 2021, the SPEC Quality Program Office
(QPO) will conduct virtual reviews. Using electronic means, QPO reviewers will schedule quality
oversight reviews that include a remote site review and reviews of a limited sample of tax returns.

QPO reviewers will only review tax returns where taxpayers have given their consent. Taxpayers will
give consent using Form 14446, Virtual VITA/TCE Taxpayer Consent, by completing the section on
page three entitled “Request to Review your Tax Return for Accuracy” and checking the box “Yes.”

The virtual quality oversight review will include:
■ A site review conducted via conference call using Form 6729
■ Two virtual return reviews using Form 6729-R

QPO will notify territory managers of the sites selected for these oversight reviews prior to contacting
partners to ensure the partner is aware the remote review request is valid.

SPEC Relationship Managers and Remote Site Reviews

These same travel restrictions also mean there will be no travel by SPEC relationship managers.
Relationship managers will not be doing face-to-face Field Site Visits but will schedule and conduct
Remote Site Reviews.

If you have any questions about reviews conducted this filing season, please contact your relationship
manager.

Thank you for your continued commitment to quality and support of the VITA/TCE program

VITA/TCE Volunteer Tax Alert

VTA-2021-08, Identity Theft Involving

Unemployment Benefits

Purpose:

To alert VITA/TCE volunteers about the appropriate actions to take when assisting a taxpayer who
received a Form 1099-G, Certain Government Payments, for unemployment benefits they did not
receive.

Background:

During 2020, millions of taxpayers were impacted by the COVID-19 pandemic through job loss or
reduced work hours. Some taxpayers who faced unemployment or reduced work hours applied for and
received unemployment compensation from their state. Under federal law, unemployment benefits are
taxable income.

Scammers also took advantage of the pandemic by filing fraudulent claims for unemployment
compensation using stolen personal information of individuals who had not filed claims. Payments
made as a result of these fraudulent claims went to the identity thieves, and the individuals whose
names and personal information were taken did not receive any of the payments.

States issue Forms 1099-G to taxpayers and to the IRS to report taxable income, such as refunds or
unemployment benefits, they paid. Some taxpayers received Forms 1099-G for unemployment
benefits they did not actually get because of identity theft.

Message to Volunteers:
■ Instruct taxpayers who received a Form 1099-G for unemployment benefits they did not receive to
contact the issuing state agency. They should request a revised Form 1099-G showing they did not
receive these benefits. A corrected Form 1099-G showing zero unemployment benefits in cases of
identity theft will help taxpayers avoid being hit with an unexpected federal tax bill for unreported
income.

■ If taxpayers are unable to obtain a timely, corrected form from states, volunteers should assist them
in filing an accurate tax return reporting only the income they received.

■ Taxpayers do not need to file a Form 14039, Identity Theft Affidavit, with the IRS regarding an
incorrect Form 1099-G. The identity theft affidavit should be filed only if the taxpayer’s e-filed return is
rejected because a return using the same Social Security number already has been filed.

■ If taxpayers are concerned that their personal information has been stolen and they want to protect
their identity when filing their federal tax return, they can request an Identity Protection Pin (IP
PIN) from the IRS.

Resources:
■ Publication 525, Taxable and Nontaxable Income
■ Identity Theft Central
■ IRS News Release 2021-24, IRS offers guidance to taxpayers on identity theft involving
unemployment benefits
■ Identity theft guidance regarding unemployment compensation reporting

For additional questions, please talk to your site coordinator, partner or IRS SPEC relationship manager.

Thank you for volunteering and your dedication to top QUALITY service