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Tax news: September ’15

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in Small Business Tax

Make the grade. The IRS is tightening the rules for higher education. For any higher education credit or deduction available in 2016, the tax filer must have Form 1098-T, Tuition Statement, from the educational institution in hand. This new requirement won’t take effect until next year.

New business filing deadlines. As part of a new highway spending law, Congress has approved changes in the filing deadlines for businesses. Notably, the tax return due date of April 15 for calendar-year partnerships moves up to March 15, while fiscal-year partnerships will have until the third month following the end of the tax year. Also, partnerships will be entitled to an automatic filing extension of six months. Conversely, the filing deadline for C corporations moves back from March 15 to April 15, with these corporations also benefiting from an automatic six-month extension. The changes on due dates are effective for 2015 returns, but transitional rules on extensions apply to 2026.  

Roadblock for Uber. In a new case, the California Labor Commission treated an Uber driver as an employee, not an independent contractor, because the firm controls and screens its drivers and cars. The decision, which only applies to this particular driver, is being appealed and will be watched by other employers and states.

IRS lax on services. According to the midyear report delivered by National Taxpayer Advocate (NTA) Nina E. Olson, the IRS still needs to improve its “customer service.” For example:

  • The IRS answered only 37% of taxpayer calls overall with an average hold time of 23 minutes.
  • It answered only 39% of calls on its toll-free hotline with an average hold time of 19 minutes.
  • The IRS answered only 45% of calls from tax practitioners with an average hold time of 45 minutes.
  • Courtesy disconnects of taxpayers soared from about 544,000 in 2014 to about 8.8 million.

The NTA noted that these figures could further erode public trust in the IRS.

Claim ACA penalty refund. The NTA says that more than 300,000 taxpayers overpaid the Affordable Care Act (ACA) penalty on their 2014 returns with an average overpayment of $110. Someone who overpaid his or her liability can claim a refund by filing an amended return (Form 1040X) for 2014. Enter the revised amount on the line specifically created for this purpose on Form 1040X (Line 9).

Note that overpayments could be an even greater problem during the 2015 tax filing season when the penalty for noncompliance increases.

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