Why “Get My Payment” Doesn’t Work for 2018 Filers who Owed Tax and Haven’t Filed 2019 Returns

April 16th, 2020

UPDATE: The IRS updated the app; as of April 24th, the app now works for most 2018 filers. See my new post.

So let’s say your income was low enough in 2018 so you qualify for a Recovery Rebate/Economic Impact (aka stimulus) payment. You go to the IRS’s “Get My Payment” app, enter the information, and see the message:

According to information that we have on file, we cannot determine your eligibility for a payment at this time.

You want to enter your banking information to get a direct deposit. It turns out that you have two options: Receive a paper check during the next few weeks (to months), or file your 2019 tax return. The IRS added the following message regarding 2018 filers:

2018 Filers: If you need to change your account information or mailing address, file your 2019 taxes electronically as soon as possible. That is the only way to let us know your new information. [emphasis added]

So if you are an individual who will qualify based on 2018 or 2019, file 2019. If you’re an individual who will not qualify based on 2019 but do qualify based on 2018, you cannot enter banking information in the “Get My Payment” app. You’re stuck receiving a paper check sometime (unless the IRS updates the app).

Additionally, if you moved you should contact the IRS when they reopen to provide your new mailing address. I would suggest a phone call given that it will take weeks to months for the IRS to process paper change-of-address forms. I also strongly suggest maintaining a forwarding order with the Postal Service.

I would hope the IRS would change their app so that individuals like me who cannot file for months (I’m waiting on a K-1 that usually shows up in late July or early August) could enter their banking information. Unfortunately, it looks like I’ll get a paper check this summer.

“Get My Payment” Is Up, But…

April 15th, 2020

The IRS’s new app, “Get My Payment,” is now active. In theory, if you use this app you can update your banking information and check to see when your Recovery Rebate payment will be made. If you need to add or correct direct deposit information, this is where to do so.

But the app had no information for me. I filed my 2018 return timely (I have not yet filed 2019 as I’m waiting on a K-1), and the app returned, “According to information that we have on file, we cannot determine your eligibility for a payment at this time.” That doesn’t make sense as we qualify based on 2018.

I suspect the issue is that the IRS is, for now, just going through 2019 returns that have been filed and have not yet looked at 2018 returns. This means that those individuals who filed 2018 but not 2019 are looking at having to go back to this website multiple times and/or waiting on IRS guidance on this issue. (The app did work for someone in our office who filed his 2019 return.)

UPDATE #1: The app doesn’t work for some 2019 filers who filed early. It does work for a few who have filed 2018 but not 2019. There appears to be no rhyme or reason for the errors, nor is there an FAQ on this. Basically, the app is great for those who can use it, but it’s causing more questions than answers.

The IRS needs to explain ASAP who can use the app and get information, or when the app will be complete. A bad app is worse than no app.

April 15th Deadlines

April 14th, 2020

Yes, the tax deadline for the IRS (and federal estimated payments for the first two quarters) is July 15th. However, not all states conformed to this–especially for estimated payments. The following states all have first quarter estimated payments for individuals that are due tomorrow, April 15th:

  • Arkansas
  • District of Columbia
  • Hawaii (due April 20th)
  • Illinois
  • Iowa (due April 30th)
  • Kentucky
  • Michigan
  • Minnesota
  • New Hampshire
  • New Jersey
  • North Carolina
  • Oregon

So if you need to make estimated payments for 2020 for one of these states, do so. If you are mailing your payment, use certified mail (but not return receipt requested–there’s a possiblity no one is there to pick up the mail).

IRS: “Don’t Call Us. Don’t Expect Us to Read Your Mail for a While.”

April 13th, 2020

In May, 2019 clients amended their 2016-2018 returns. They had forgotten to tell me about a spousal nondeductible IRA contribution. We amended, included Form 5329 for each year, and expected to receive letters noting that the IRS made the changes. It wasn’t a big deal, and there was no rush in the IRS processing the amended returns. The IRS sent back letters noting 2016 and 2018 were processed (with no change to the taxpayers’ income). However, the IRS made an error when they processed 2017. Somehow a $5,500 nondeductible IRA contribution caused my clients to owe $198,500 in tax!

Now, we knew it was an error made by the IRS. So we sent a letter to the IRS pointing this out (it was sent on August 13, 2019). We also had to call the IRS up twice to stop collection activity on the ‘balance’ that was created by the misprocessing. The IRS finally resolved the situation last month (March 2020), seven months after we wrote them. (The IRS even said in the letter, “We apologize for the error.”) That’s a long time to get an initial response from the IRS.

I bring this up not because of the error but because of the current Covid situation. All IRS phone lines have been shut down. The IRS CAF unit is shut down, so tax professionals can’t send Powers of Attorney or Tax Information Authorizations. Mail is not being picked up by the IRS.

Remember the government shutdown of late 2018 to early 2019? Estimates were that it would take the IRS up to a year to recover from that. This shutdown will likely last two months (perhaps longer), and I suspect it will take many months for the IRS to recover. I have many authorizations to send to the IRS. (The CAF unit was taking weeks before the shutdown; I expect we’re now looking at months for processing. This will increase the call volume at the Practitioner Priority Service (PPS), the unit tax professionals call when dealing with the IRS.) Add in the extra thousands (at least tens of thousands) of calls dealing with the stimulus checks. Phone lines will be very backed up when the IRS reopens.

The problem is that IRS deadlines have deadlines on responses, and there are statutory deadlines. I have a client who has a 2017 correspondence audit. We sent the reply in late March. The reply, sent certified mail (but not return receipt requested), is waiting for the IRS to pick it up in Holtsville, New York. Let’s say that service center reopens in mid-May. Who knows when someone will actually read the response?

So let’s assume the IRS reads it, and denies our response, and sends us a notice around Thanksgiving (which isn’t that unreasonable). We send another response, received around Christmas…and not read until late March 2021. We now hit another deadline–the statutory deadline of April 15, 2021. So it’s likely the IRS would simply issue a Notice of Deficiency.

(For the actual correspondence audit, I don’t expect this as the matter is straightforward, and we included all the required documentation.)

Unfortunately, there are numerous matters with the IRS that can only be responded to by mail. I have another response I sent in August 2019 that has yet to be responded to.

There’s no blame to the IRS here, of course (everyone’s health is paramount). That said, we will all need patience. Representation is going to be very challenging for the rest of 2020.

Normally, we tell clients to use certified mail, return receipt requested. For now, do not use return receipt for mail you send to the IRS. (Do continue to use certified mail, though.) There’s no one to sign for your paperwork, so your correspondence could be returned to you if you use return receipt.

The rest of 2020 will not be fun when we’re dealing with the IRS.

On Stimulus Payments and Tax Deadlines

April 13th, 2020

One of my clients emailed me this morning that they received (via direct deposit) their “Recovery Rebate” (aka stimulus) payment. So the IRS is distributing those. The IRS promises a tool on Friday to check your payment and for individuals who do not have direct deposit to input your banking information. Kudos to the IRS for moving this fast.

I have updated my return deadline information for individuals. The excel version is here; the pdf is here. This update includes the change to federal second quarter estimated payments (now due on July 15th). I also noted that Virginia did not extend its deadline (it remains May 1st); they only extended the deadline to pay (to June 1st).

IRS Extends More Deadlines

April 9th, 2020

The IRS released Notice 2020-23 this afternoon, formally extending lots more tax deadlines. I’m going to copy the language as it matters:

The Secretary of the Treasury has determined that any person (as defined in section 7701(a)(1) of the Code) with a Federal tax payment obligation specified in this section III.A (Specified Payment), or a Federal tax return or other form filing obligation specified in this section III.A (Specified Form), which is due to be performed (originally or pursuant to a valid extension) on or after April 1, 2020, and before July 15, 2020,is affected by the COVID-19 emergency for purposes of the relief described in this section III (Affected Taxpayer).

The IRS extends various deadlines/payment dates to July 15th:

  • Form 1040 Series
  • Forms 1040-ES (and other estimated taxes) [1]
  • Forms 1120 Series (including Form 1120-S) [2]
  • Form 1065 [2]
  • Form 1041 Series
  • Form 706
  • Form 709
  • Form 990-T
  • Form 990-PF
  • Form 3520

However, some tax forms were not included: Form 990, Form 990N, and Form 990-EZ. I’m not sure what the reason was for excluding the forms that most nonprofits have to file.

A couple of notes:

  1. The language in this notice appears to extend all estimated payments due between April 1st and July 15th to July 15th. That means that second quarter estimated payments that were due on June 15th are now due on July 15th.
  2. The notice states that relief is granted to: “Calendar year or fiscal year corporate income tax payments and return filings on…[Form] 1120-S…[and] Calendar year or fiscal year partnership return filings on Form 1065, U.S. Return of Partnership Income….” This means that the March 15th deadline for S-Corporations and Partnership returns has been retroactively extended to July 15th–at least, that’s how I read the notice. That’s big news as I have some new clients who just submitted their partnership information, so they’ll be considered timely filed.
  3. The IRS specifically granted relief for anyone who has to file items such as Forms 3520, 5471, 5472, 8921, 8858, 8865, and 8938 with their tax returns. They can either file by July 15th or with a timely (by July 15th) extension.

Kudos to the IRS for this relief–especially the July 15th second quarter estimated tax deadline. Clients were already very confused regarding the idea that the second quarter estimated payment was due before the first quarter payment.

Can a Professional Gambler Apply for a PPP or EIDL Loan?

April 7th, 2020

The CARE Act added Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) for businesses to recover from the COVID-19 pandemic. A question many of our clients have asked is, “I’m a professional gambler. Can I apply for one of these loans?” The answer is no.

It’s not as if a professional gambler can gamble in most locations today (casinos are closed everywhere, though those residing in states with online gambling can partake), so professional gamblers are being impacted. The problem is a regulation adopted in 1996. From 13 CFR § 120.110 (What businesses are inelgible for SBA business loans?). 13 CFR § 120.110(g) states:

Businesses deriving more than one-third of gross annual revenue from legal gambling activities.

(All illegal activities are ineligible per 13 CFR § 120.110(h).)

The American Gaming Association wants this changed; it also prevents small casinos, such as those in South Dakota, from applying for these loans. But changing a federal regulation takes time. The change must be published in the Federal Register, comments must be taken, etc. It’s a near certainty that the COVID-19 emergency will be long past when the regulation is changed (and that assumes the SBA decides to make a change).

Is this fair? No. But it’s reality.

Individual Return Deadlines (Probably Final)

April 2nd, 2020

We prepare tax returns for individuals throughout the United States, so we have to keep track of the deadlines–and that’s a task right now. So we created a spreadsheet with the information so we can see this at a glance (there’s also a pdf version).

This corrects my error. I was provided the “final” version of the CARES Act that wasn’t. Only the first quarter federal estimated payment was extended to July 15th; the second quarter estimated payment is due on June 15th, the third quarter is due on September 15th, and the fourth quarter is due on January 15, 2021. Mea culpa.

Additionally, with all states now having extended the deadlines, we’re unlikely to see any additional changes. So I think these will end up being the final versions.

Seniors Won’t Have to File Tax Returns, SBA Loan Update, and New Jersey

April 2nd, 2020

Earlier this week the IRS posted that to obtain the Recovery Rebate that seniors and others would have to file a tax return. When news of that got out–especially given that the law that was passed says otherwise–organizations representing seniors and tax professionals were not amused.

Late yesterday, the Department of the Treasury issued a press release titled, “Social Security Recipients Will Automatically Receive Economic Impact Payments.” Treasury Secretary Steven Mnuchin stated,

Social Security recipients who are not typically required to file a tax return do not need to take an action, and will receive their payment directly to their bank account.

The IRS website has also been updated with this information.

Next, small businesses and sole proprietorships impacted by the virus can apply for loans under the federal Paycheck Protection Program starting Friday, April 3rd. From the Journal of Accountancy:

The application can be found here on the Treasury site, along with details for borrowers and lenders. Treasury urged those in need of funding to apply quickly, noting that the program has a cap and demand is likely to be high.

Independent contractors and the self-employed can apply beginning April 10th. The program has a cap of $349 billion.

Finally, New Jersey has extended their tax deadline to July 15th. It’s unclear if New Jersey has extended estimated tax payments (as best as I can tell, they haven’t). This extension is for both individual and corporate tax which was due on April 15th.

A Catch-22 On SBA Loans

March 31st, 2020

catch-22 (noun): A dilemma or difficult circumstance from which there is no escape because of mutually conflicting or dependent conditions.

The CARES Act allows for all sorts of SBA (Small Business Administration) loans to help with the virus pandemic. Sounds good, right? There’s just one catch: You must submit a Form 4506-T with your loan application. The SBA wants to look at your tax returns (which makes sense).

There’s a problem here: The IRS system used to process Form 4506-T’s is closed because of the virus situation. These forms go through the IVES system (Income Verification Express Service). That system is currently offline. In my most recent “Update on Practitioner Services” sent by the IRS last Friday:

The IRS is temporarily suspending acceptance of new Income Verification Express Services (IVES) requests at this time and is experiencing delays with existing IVES processing ….

Hopefully, IVES will come back on line quickly or those speedy SBA loans won’t be speedy at all.