News

WASHINGTON, D.C. — The IRS is introducing a major update for the 2025 tax filing season that will allow duplicate dependent tax returns to be filed electronically, provided they include an Identity Protection Personal Identification Number (IP PIN). This change is designed to help families and taxpayers avoid refund delays caused by disputes over dependent claims.

Previously, duplicate dependent returns often required time-intensive manual processing, leading to significant delays for taxpayers. Starting with the upcoming filing season, both duplicate claims for the same dependent can now be processed electronically if an IP PIN is included. This six-digit code, unique to each taxpayer, ensures secure verification and expedites return processing.

Key Highlights of the New System:

• Duplicate Dependent Returns Accepted: Both returns claiming the same dependent can now be e-filed, provided each includes the required IP PINs.
• Simplified Dispute Resolution: The IRS will process both returns but flag them for review to determine eligibility, reducing long delays for refunds.
• Enhanced Security: IP PINs protect taxpayers from fraud by verifying identity on tax returns.

How to Obtain an IP PIN:
Taxpayers, including dependents, must complete identity verification through the IRS Online Account at IRS.gov. IP PINs for the 2025 tax year can be requested until November 23, 2024, before the system undergoes maintenance until January 2025.

This update underscores the IRS’s commitment to improving filing accuracy and security. Tax professionals are encouraged to inform clients of the benefits of obtaining IP PINs, particularly for households where duplicate dependent claims may arise.

For more details, visit the IRS IP PIN webpage.

The IRS has announced that 1040 MeF production shutdown for Form 1040 will commence  on Saturday, November 30, 2024, at 11:59 p.m. Eastern time, in order to prepare the system for the upcoming Tax Year 2024 Filing Season.

Modernized e-File (MeF) provides electronic filing and payment options for filers of Corporation, Employment Tax, Estates and Trusts, Excise Tax, Exempt Organization, Individual, and Partnership Tax Returns.

In its announcement, the IRS stated:

Important Note:  Only "Send Submissions" for 1040 (both State and Federal) will be affected by this shutdown, all other services such as "Get Acks" and all state services will not be affected by the shutdown and users should be able to continue to use those services.  Business (BMF) returns are not impacted by this IMF Production Shutdown schedule.

The renewal cycle for Enrolled Agent renewals opened on November 1, 2024, and will remain open until January 31, 2025.  The current renewal cycle is for all Enrolled Agents with Social Security Numbers ending in 0, 1, 2, or 3.

Enrolled Agents (EAs) must actively maintain their status through timely renewals and fulfilling continuing education requirements.  The renewal cycle operates on a triennial basis tied to the last digit of the EA’s Social Security Number, requiring 72 hours of IRS-approved continuing education during each cycle, with at least 16 hours completed annually.  This coursework includes two hours of ethics per year.

To ensure uninterrupted practice, EAs should renew promptly during the designated enrollment period (November 1 to January 31).  Failure to renew on time leads to lapsed status, barring EAs from representing taxpayers.  The IRS also highlights the importance of keeping personal contact details current to receive timely renewal reminders and updates.

EAs should monitor the IRS’s guidance for any changes or updates in renewal procedures to remain compliant.  Ensuring a proactive approach toward education credits and renewal submissions helps agents maintain their ability to represent clients effectively. For comprehensive details, EAs can visit the IRS's Enrolled Agent Renewal page and the IRS's Enrolled Agent Renewal Reminders List page.

The IRS reminds tax professionals to renew their Preparer Tax Identification Numbers (PTINs) for the 2025 tax season. Current PTINs expire on December 31, 2024, and the renewal fee is $19.75. The renewal process can be completed online in about 15 minutes, or by using a paper form, which may take up to six weeks. First-time applicants can also apply online. All tax professionals who prepare most types of tax returns, as well as all active Enrolled Agents, are required to renew their PTIN on an annual basis.   For more details, visit the IRS website.

In an article published by The Wall Street Journal on October 4, 2024, Ashlea Ebeling reports on the growing issue of tax refund check theft, with millions of dollars in refund checks being stolen from the mail. According to the IRS, nearly 10 million taxpayers received paper refund checks last year, making them a target for fraud. Even replacement checks are being stolen, leaving taxpayers in a cycle of requesting new ones.

Rep. Nicole Malliotakis (R., N.Y.) has handled 218 cases of stolen refund checks in her district, totaling $3.8 million. One taxpayer, Bennett Grimm, has had multiple checks stolen and is still awaiting his $96,000 refund after the sale of his medical practice.

The IRS is working on a technological fix that will allow taxpayers to switch from paper checks to direct deposit, but it is still years away. IRS Commissioner Danny Werfel urges taxpayers to opt for direct deposit, which he says is faster and safer. Meanwhile, the Treasury Department continues to deal with the rise in mail theft-related check fraud and has prosecuted several individuals involved in these schemes.

The IRS is also modernizing its system to address this issue, but for now, those affected must go through a lengthy refund trace process. Despite efforts, the thefts persist, putting pressure on the IRS and Treasury to find more immediate solutions.

(Source:  Ashlea Ebeling, "Millions of Dollars in Tax Refund Checks Are Getting Stolen," The Wall Street Journal, October 4, 2024)

Christopher J. Frizzell, EA, President of the Oklahoma Society of Enrolled Agents, has issued the call for the Annual Meeting of the Members of the Oklahoma Society of Enrolled Agents, to take place on Tuesday, October 29, 2024, at 12:10 p.m., at Francis Tuttle Technology Center, Room D1750, 12777 North Rockwell Avenue, Oklahoma City, Oklahoma 73142.

The Bylaws Committee of the Society has proposed revised bylaws and made a motion to the OSEA Board of Directors to submit the proposed revised bylaws to a vote of the membership with a recommendation that the members pass the motion and adopt the revised bylaws. The Board of Directors approved the motion and set the vote of the members to be held at the Annual Meeting. The proposed revised bylaws may be accessed here. The report of the Bylaws Committee may be accessed here.

Nominations will be received and elections for officers and directors will also be held at the Annual Meeting. The following positions are open and will be filled by election:

• Vice President (who also serves as President-Elect).
• Directors at Large Positions # 2 and #4. These Directors will serve from January 1, 2025, through December 31, 2026.

On September 27, 2024, the Oklahoma Society of Enrolled Agents (OSEA) officially adopted a comprehensive Code of Conduct and Ethical Rules, reinforcing the organization’s commitment to maintaining the highest professional standards among its members. This new framework aims to provide clear guidance for ethical behavior and professional practice, aligning with Treasury Department Circular 230 and the organization's own professional conduct standards.

Key Provisions of the New Rules:

1. Confidentiality: Members and Associates must maintain a confidential relationship with their clients, disclosing information only when authorized or legally obligated. They must also ensure that employees understand and uphold these confidentiality standards.

2. Conflicts of Interest: The rules emphasize avoiding conflicts of interest, requiring full disclosure and consent from all parties before representing conflicting interests. Members and Associates are also required to disclose any related business interests that may affect their representation.

3. Professional Representation: Only Members may identify themselves as “Members of the Oklahoma Society of Enrolled Agents,” and Associates may use the title “Associates of the Oklahoma Society of Enrolled Agents.” The use of these titles is restricted to individuals and may not be used by firms or organizations.

4. Advertising and Public Communication: Members and Associates may engage in public communications and advertising, provided they conform to the professional and dignified standards set forth by Circular 230. Misleading or deceptive solicitation practices are strictly prohibited.

5. Competence and Care: Members and Associates are required to undertake only those tax matters that they can complete with professional competence and to exercise due care in all engagements. This includes obtaining sufficient relevant data to provide a reasonable basis for conclusions or recommendations.

6. Integrity and Objectivity: The OSEA Code of Ethics underscores the importance of integrity and objectivity in all professional dealings. Enrolled Agents are encouraged to continuously strive to improve their competence and to promote the reputation and welfare of the profession.

The adoption of these rules marks a significant step for OSEA in reinforcing its dedication to ethical practice and professional excellence. Members and Associates are expected to adhere to these standards, ensuring that they continue to serve the public with the highest level of integrity and professionalism.

For more details on the complete set of rules, please refer to the official document released by OSEA.

Retired fire, EMS, and police personnel can reduce their taxable earnings by up to $3,000 for medical insurance premiums paid during a calendar year under the HELPS Retiree Act. ​

Prior to 2023, there was a requirement that the premium had to be deducted from the retiree’s pension check to qualify for the HELPS tax reduction. This is no longer the case following the adoption of the Federal Secure 2.0 retirement law.

• Premiums paid directly for health, accident, or long-term care insurance qualify for the tax credit.
• The reduction is claimed on the retiree's personal 1040 tax form on Line 5B or a similar adjustment. ​
• Married couples where both parties are retired Police/Fire/EMS may take a reduction of up to $6,000. ​
• The tax break is not available to surviving spouses.

Our member Pam Redinger has offered to embroider with the OSEA logo any shirt a society member wishes to submit to her.  She is presently asking for $12 per shirt to recover her costs, and if the shirts need to be mailed back to the member she would want those additional costs recovered as well.  

She can be reached to discuss details directly via email (pam@fandfaccounting.com).

Thank you Pam for making this offer available to our members!

The IRS recently issued a reminder to taxpayers regarding the tax implications of crowdfunding contributions and distributions, a timely notice as the popularity of online crowdfunding continues to grow. Whether funds are raised for personal causes, charitable endeavors, or business ventures, taxpayers and their Enrolled Agents should be aware of the associated tax responsibilities.

Understanding Crowdfunding Income

Crowdfunding involves raising small amounts of money from a large number of people, typically via online platforms. The IRS emphasizes that, depending on the circumstances, funds received through crowdfunding may be considered taxable income. Taxpayers must report the income unless it falls under certain exceptions, such as qualifying gifts.

When Crowdfunding is Taxable

Taxpayers must include crowdfunding proceeds in their gross income if:

• The funds are used for business purposes.
• The contributors receive something of value in return.
• The taxpayer does not demonstrate that the funds are gifts.

Funds used for a business or those that provide contributors with rewards or perks are almost always taxable. On the other hand, if the funds are given freely and without expectation of return, they may qualify as non-taxable gifts.

Reporting Requirements

Crowdfunding platforms and payment processors might issue Form 1099-K if the total payments exceed certain thresholds, typically $600. Taxpayers and their Enrolled Agents should ensure that they report this income correctly, even if they do not receive a Form 1099-K. Failure to report income accurately could result in penalties, additional taxes, or other sanctions.

Gifts vs. Income

A key consideration for taxpayers is distinguishing between gifts and income. A gift, as defined by the IRS, is money transferred to another person without the donor expecting something in return. If the funds raised meet the IRS criteria for a gift, they may not be taxable. However, the donor’s intent and the specific facts and circumstances surrounding the transaction are crucial in making this determination.

Documenting Contributions

Proper documentation is essential for both taxpayers and those who contribute to crowdfunding campaigns. Taxpayers should keep detailed records of all funds received and spent, including the purpose of the crowdfunding campaign and the intent behind the contributions. This documentation is critical if the IRS questions the nature of the funds during an examination.

Action Steps for Enrolled Agents

As trusted advisors, Enrolled Agents should educate their clients on the tax implications of crowdfunding. Advising clients to maintain accurate records, understand the distinction between gifts and income, and comply with reporting requirements can prevent future tax issues.

For more detailed guidance, Enrolled agents can refer their clients to the IRS’s Fact Sheet on this topic and other resources available on the IRS website.