BUDGET CUTS HAMPER IRS

Years of budget cuts are having a negative impact on the ability of the Internal Revenue Service to collect delinquent taxes, according to a new government report.

The IRS's Automated Collection System is responsible for answering incoming taxpayer calls and working the inventory of taxpayer delinquent accounts, the report from the Treasury Inspector General for Tax Administration noted. Since fiscal year 2010, the ACS workforce has declined by 39 percent due to attrition or re-assignment. Because those resources are needed to answer telephone calls, fewer resources are available to work on the inventory of past-due taxes.

This has contributed to unfavorable trends in several ACS business results, the report noted, including the amount of new inventory of cases of uncollected taxes outpacing closures of such cases; the inventory of delinquent tax cases taking longer to close; more cases being closed as uncollectible; fewer enforcement actions being taken; and more aged cases being transferred to a holding file queue that the IRS maintains of uncollected taxes.

In addition, the IRS has not established performance metrics to measure the effect that answering incoming calls has had on compliance business results, TIGTA pointed out.

TIGTA recommended that the IRS re-examine the ACS's role in the collection workflow process, and establish performance metrics for ACS call handling data to measure the impact that answering taxpayer calls has on compliance results.

 

TAX RATE AND DEDUCTION LEVELS ADJUSTED FOR 2015

Washington. D.C. -- The Internal Revenue Service announced the annual inflation adjustments for tax year 2015 for more than 40 tax provisions, including the tax rate schedules, and other tax changes.

Revenue Procedure 2014-61 provides details about these annual adjustments. The items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts:

  • The tax rate of 39.6 percent affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively.
  • The standard deduction rises to $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively, for tax year 2014. The standard deduction for heads of household rises to $9,250.
  • The limitation for itemized deductions to be claimed on tax year 2015 returns of individuals begins with incomes of $258,250 or more ($309,900 for married couples filing jointly).
  • The personal exemption for tax year 2015 rises to $4,000. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $258,250 ($309,900 for married couples filing jointly). It phases out completely at $380,750 ($432,400 for married couples filing jointly).
  • The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 ($83,400, for married couples filing jointly).
  • The 2015 maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have three or more qualifying children, up from a total of $6,143 for tax year 2014. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
  • Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000.
  • For 2015, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $147,000.
  • For 2015, the foreign earned income exclusion breaks the six-figure mark, rising to $100,800, up from $99,200 for 2014.

 
TAXPAYERS CAN INVEST UP TO $18,000 IN 401(K) PLANS IN 2015

Washington. D.C. -- The IRS posted the annual cost-of-living adjustments for pension plans and other retirement plans for 2015, allowing taxpayers to contribute up to $18,000 in their 401(k) plans in 2015.

Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger the adjustment.

Among them:

  • The elective deferral limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan has increased from $17,500 to $18,000.
  • The catch-up contribution limit for employees age 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased from $5,500 to $6,000.
  • The limit on annual contributions to an IRA remains unchanged at $5,500.
  • The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes between $61,000 and $71,000. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $98,000 to $118,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple's income is between $183,000 and $193,000.
  • The AGI phase-out range for taxpayers making contributions to a Roth IRA is $183,000 to $193,000 for married couples filing jointly. For singles and heads of household, the income phase-out range is $116,000 to $131,000.
  • The AGI limit for the saver's credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $61,000 for married couples filing jointly; $45,750 for heads of household; and $30,500 for married individuals filing separately and for singles.

 
ADVISORY COMMITTEE: EXPAND TIN MATCHING

Washington, D.C. -- The IRS Information Reporting Program Advisory Committee thinks the IRS should expand its TIN Matching Program, according to its recently released annual report.

IRPAC's annual report includes recommendations to the IRS on new and continuing tax administration issues. The committee comprises a cross-section of individuals drawn from the tax professional community, financial institutions, small and large businesses, and universities and colleges, as well as securities and payroll firms.

The report includes a discussion of the IRS Taxpayer Identification Number Matching Program and a recommendation that the IRS expand the program, permitting financial and other firms to use it to verify taxpayers' names and ID numbers on a greater variety of information returns.

The 2014 IRPAC Public Report is available at IRS.gov.

 

IRS TO PROPOSE REGS ON INSURANCE COVERAGE

Washington. D.C. -- The Internal Revenue Service has issued a notice warning that some employer-sponsored health plans will need to provide better coverage for in-patient hospitalization services to qualify as minimum coverage.

Notice 2014-69 advises employers and other taxpayers that employer-sponsored health plans that fail to provide substantial coverage for in-patient hospitalization services or for physician services do not provide minimum value within the meaning of Section 36B of the Tax Code and that the IRS, the Treasury Department, and the Department of Health and Human Services expect shortly to propose regulations to this effect.

The IRS notice said that it has become aware that certain group health plan benefit designs that do not provide coverage for in-patient hospitalization services are being promoted to employers.

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