Federal Economic Impact Payments – Frequently Asked Questions

In response to the COVID-19 pandemic, Congress recently passed legislation authorizing stimulus payments to most Americans. These payments, called Economic Impact Payments, are being processed by the Internal Revenue Service (IRS) at the current time. Many people have questions about these payments, so this FAQ has been assembled to help you find answers.

Is the Economic Impact Payment considered to be taxable income?

No, this payment is not considered “income” by the IRS and you will not need to pay income tax on it. This payment will not effect your refund, or increase the amount you owe when you file your 2020 tax return in 2021. This stimulus payment will also have no impact on your eligibility for other federal assistance programs that use income to determine eligibility.

How can people who receive a Form SSA-1099 or RRB-1099 check their payment status?

Taxpayers can use the IRS Get My Payment tool to check on the status of their stimulus payment. This will require you to verify your identity by answering a set of security questions.

If my bank account information has changed since the last time I filed a tax return, how do I update my direct deposit information?

The Get My Payment tool at irs.gov does not allow you to change your direct deposit information. This is a security precaution to prevent these payments from being stolen by changing this information.

If the IRS sends your payment using the bank direct deposit information from your most recent tax return and the bank account information is now invalid, the bank will notify the IRS and reject the electronic transfer. The IRS will then mail you a check as soon as they are able, to your last known address. The Get My Payment tool will then be updated to reflect the date on which this check was mailed. Please note that the IRS says it may take up to 14 days to receive the payment after it’s been mailed.

Where can I get more information?

If you are required to file a tax return, you are encouraged to file electronically. You can find a tax professional in your area by searching our directory of tax firms.

If you are not required to file a tax return, you may use the Non-Filers: Enter Payment Info Here tool and submit your information to the IRS to receive an Economic Impact Payment. This online tool should only be … Continue reading

What your tax resolution clients need to know about Economic Injury Disaster Loans

With the implementation of a significant IT upgrade two weeks ago, the Small Business Administration (SBA) has suddenly gone from processing just 900 disaster loan applications per day, to over 10,000 per day. Given the fact that millions of small businesses have applied for these loans and are desperately in need of these funds in order to simply stay in existence during the COVID-19 recession, this will be welcome news for these small businesses.

However, these loans come with a LOT of strings attached. As their professional advisor, it behooves you to have an understanding of these loan conditions, some of which are quite draconian. This will help you to help your clients make a wise decision about accepting this loan or not, and if they do, how to properly utilize the funds.

This should probably be a CPE webinar, but due to other projects I’m working on this week, this blog post will need to suffice.

There are three main things that I want you, as a tax professional, to be aware of on behalf of your clients in relation to the Economic Injury Disaster Loans:

  1. The terms of the loan agreement.
  2. Restrictions on use of proceeds.
  3. The realization that this may be a once in a lifetime opportunity to “refinance” IRS tax debt into a 30 year, fixed rate loan at 3.75%.

Let’s briefly address each of these items.

 

EIDL Loan Terms and Conditions

SBA Form 1391 is the loan agreement for an Economic Injury Disaster Loan, and spells out the terms and conditions of the loan. Their are two very important things to understand about this loan agreement.

First, on loans in excess of $25,000, the SBA will secure their loan position with a general lien against all the business’ assets. This collateral for the loan is secured by use of a UCC-1, which will be filed in the county in which the business is located. The SBA deducts a $100 fee from the loan proceeds in order to cover the preparation and filing of the UCC-1. When I say that this lien covers all assets, I do mean all. It operates very similarly to a federal tax lien, and covers all property, rights to property, and property that may be acquired in the future. Heck, it even includes intangible intellectual property that the business may create in the future. It’s a very broad lien.

This may make it very difficult … Continue reading

IRS People First Initiative

Webinar Replay: IRS People First Initiative – Collections Response to COVID-19 Pandemic (Plus 2-hour Q&A)

This 50-minute webinar, which turned into three hours after the unintended 2-hour Q&A, covers information that CPAs, Enrolled Agents, and tax attorneys need to know in regard to IRS Collections Division actions during the coronavirus situation. This webinar includes technical guidance, marketing suggestions, and tasteless jokes for your entertainment.

Recorded: March 27, 2020. Information was accurate as of the date of recording, but may be grossly outdated by the time you actually watch this. Replay not eligible for CPE.

To learn more about growing your taxpayer representation practice and working IRS Collections cases, visit https://TaxResolutionAcademy.com.

March 27, 2020

Current Status of IRS customer service phone lines

As of 8:00am PDT, May 11, 2020

Practitioner Priority Service (866-860-4259): OPEN
Individual ACS (800-829-7650): OPEN
Business ACS (800-829-3903): OPEN
Main taxpayer assistance line (800-829-1040): CLOSED
Business/Specialty Tax Line (800-829-4933): CLOSED
Tax Exempt/Government Entities hotline (877-829-5500): CLOSED
e-Services Help Desk (866-255-0654): OPEN
Centralized Lien Unit (800-913-6050): OPEN

CAF Units are still closed.

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March 26, 2020

Full text of the IRS People First Initiative News Release

Reposted for archival and informational purposes. Original news release at irs.gov.

IR-2020-59, March 25, 2020

WASHINGTON — To help people facing the challenges of COVID-19 issues, the Internal Revenue Service announced today a sweeping series of steps to assist taxpayers by providing relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions.

“The IRS is taking extraordinary steps to help the people of our country,” said IRS Commissioner Chuck Rettig. “In addition to extending tax deadlines and working on new legislation, the IRS is pursuing unprecedented actions to ease the burden on people facing tax issues. During this difficult time, we want people working together, focused on their well-being, helping each other and others less fortunate.”

“The new IRS People First Initiative provides immediate relief to help people facing uncertainty over taxes,” Rettig added “We are temporarily adjusting our processes to help people and businesses during these uncertain times. We are facing this together, and we want to be part of the solution

… Continue reading