The 2016 tax filing season officially opened on Jan. 23, 2017, with a warning from the IRS that taxpayers should be prepared to wait longer than usual to receive expected refunds. The processing delays are due to enhanced efforts by the agency to catch potential fraud and identify theft. As a result, the IRS advises taxpayers to choose to receive refunds via direct deposit. Following are just five reasons why.
- It’s Fast. The quickest ways for taxpayers to receive a refund is to electronically file their federal tax returns (e-file) and elect direct deposit, even when returns are filed on paper.
- It’s Secure. Refunds are transferred directly into the bank accounts that taxpayers identify as their own. Conversely, taxpayers may receive paper checks via postal mail, which increases the likelihood that refunds may get lost in the mail or stolen from an individual’s mailbox.
- It’s Convenient. Taxpayers will not need to wait for a refund check to be delivered to their mailboxes or make extra trips to the bank to deposit the money into financial accounts.
- It’s Easy. After choosing direct deposit, all taxpayers need to do is enter their correct bank account and routing numbers or provide those details to their tax accountants.
- It’s Flexible. Direct deposit allows taxpayers to “split refunds” and allocate dollar amounts into different financial accounts, including bank checking and savings accounts, college savings accounts, health savings accounts and certain retirement accounts. The only caveat is that the IRS limits direct deposit refunds to no more than three into a single financial account during a tax year.
Whether taxpayers choose to file their annual federal returns or receive refunds on paper or electronically, it is important that they keep and maintain copies for a minimum of seven years.
About the Author: Dustin Grizzle is a senior manager in Berkowitz Pollack Brant’s Tax Services practice, where he provides tax planning and compliance services to businesses and high-net-worth individuals. He can be reached at the CPA firm’s Boca Raton, Fla., office at (561) 361-2000 or via email at firstname.lastname@example.org.
A notice from the IRS rarely results in a taxpayer feeling joy or relief. However, U.S. tax laws are complex and constantly evolving, making it difficult for individuals to understand their responsibilities and liabilities under the tax code. In response, the IRS issued a Taxpayer Bill of Rights that details the protections and privileges afforded to taxpayers when dealing with the agency.
The Right to Be Informed. Taxpayers have a right to receive clear, easy-to-understand explanations about IRS procedures, laws and notices as well as how IRS decisions will affect their tax accounts.
The Right to Quality Service. Taxpayers have a right to receive prompt, courteous and professional assistance when dealings with the IRS and the freedom to speak to a supervisor when they consider service to be below par.
The Right to Pay No More than the Correct Amount of Tax. Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties. They should also expect the IRS to apply all tax payments properly.
The Right to Challenge the IRS’s Position and Be Heard. Taxpayers have the right to object to formal IRS actions or proposed actions and provide justification with additional documentation. They should expect that the IRS will consider their timely objections and documentation promptly and fairly and provide them with a timely response.
The Right to Appeal an IRS Decision in an Independent Forum. Taxpayers are entitled to appeal IRS decisions and receive a written response. They also have the right to take their cases to a court of law.
The Right to Finality. Taxpayers have the right to know the maximum amount of time they have to challenge an IRS position and the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. They also have a right to know when the IRS concludes an audit.
The Right to Privacy. Taxpayers have the right to expect that any IRS inquiry, examination or enforcement action will comply with privacy laws and be no more intrusive than necessary. They should also expect due process rights, including search and seizure protections.
The Right to Confidentiality. Taxpayers have the right to expect that the IRS will keep their tax information confidential and take appropriate action should the IRS disclose any information.
The Right to Retain Representation. Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS.
The Right to a Fair and Just Tax System. Taxpayers have the right to expect fairness from the tax system, including consideration of all facts and circumstances that might affect their underlying liabilities, ability to pay or ability to provide information timely. Taxpayers experiencing financial difficulty or having challenges resolving tax issues in a timely manner and through proper channels have the right to receive assistance from the Taxpayer Advocate Service.
The advisors and accountants with Berkowitz Pollack Brant help individuals and business comply with relevant domestic and international tax laws and have extensive experience representing then before taxing authorities.
About the Author: Edward N. Cooper, CPA, is director-in-charge of Tax Services with Berkowitz Pollack Brant, where he provides business- and tax-consulting services to real estate entities, multi-national companies, investment funds and high-net-worth individuals. He can be reached at the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000 or via email at email@example.com.