IRS Commissioner John Koskinen held a public media conference on January
5, 2017 and officially launched the tax-filing season. Koskinen emphasized,
"This tax season, it is more important than ever to plan ahead."
He highlighted a number of changes that will affect the anticipated 153
million taxpayers who file tax returns. The IRS expects 80% of those returns
to be filed electronically. He also mentioned the 111 million tax refunds
last year. About 73% of returns requested a refund, with an average IRS
payment of $2,857.
Koskinen discussed major changes in seven specific tax-filing areas.
1. Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC)
– The EITC or ACTC may delay refunds. Congress requires the IRS
to hold these tax returns until at least February 15. These tax refunds
will be available the week of February 27. You may use the "Where's
My Refund" tool on the IRS website to check your status.
2. Where's My Refund
website will show the best information on your refund status. The IRS
telephone support group, CPAs and other tax professionals will all have
the same information that you do using Where's My Refund.
3. Speed Up Refunds
– The best way to receive a prompt refund is to file electronically
and request direct deposit to your bank account. Over 80% of refund filers
used direct deposit last year. A paper check may delay the refund by several weeks.
4. Individual Taxpayer Identification Numbers (ITINs)
– Some individuals have a specific ITIN which is used rather than
a Social Security Number on a tax return. However, if you have not used
your ITIN in the past three years or there are middle digits of 78 or
79, it will not be valid and you will need to renew.
5. Tax Software
– If you are using tax software to prepare your return and have
changed to a new software vendor, you may be asked to enter the adjusted
gross income from your 2015 tax return.
6. Filing Date
– Koskinen reminded everyone the filing date this year gives three
extra days. Because April 15 is on a Saturday and Emancipation Day is
a legal holiday in the District of Columbia, tax returns are due on Tuesday,
April 18, 2017.
7. Tax Help
. The quickest and most comprehensive way to obtain tax help is through
use of the IRS website. Many taxpayers and tax professionals take advantage
of the wide array of tools and resources on the site.
Commissioner Koskinen hopes for better taxpayer service this year. The
IRS has hired 1,000 new phone support staff to answer taxpayer questions.
The phone support improved from 37% of calls being answered in 2015 to
72% in 2016. Koskinen believes the IRS will have even better taxpayer
service in 2017. Some taxpayers may see modest refund delays because the
IRS continues to implement new security systems. Because hackers are always
creating "unique or new ways" to attack
, the Service is continually upgrading various internal strategies and defenses.
IRS Publishes 2017 Tax-Filing Tips
As 153 million American taxpayers start the filing season, the Service
published tax filing tips in
. While the IRS opens up filing on January 23, you may prepare your electronic
returns before then. Your tax software company will submit the return
on January 23.
There are several specific IRS tips that will help you during the filing season.
1. Free File and eFile
– Over 80% of the filings with the IRS will be electronic. About
the same percentage of refunds will also be completed through direct deposit
to your bank. The eFile system is the safest and quickest. If you are
in the 70% of taxpayers with income of $64,000 or less, you may use IRS
Free File. Go to
after January 13 and you may use the Free File program. All taxpayers
with any income level may use the IRS "Fillable Forms" option on
2. Refund Fraud
– The IRS Security Summit regularly identifies new protection strategies.
Since the IRS initiated the Security Summit, there has been a 50% decline
in stolen identities. The various IRS efforts to create new safeguards
are designed to ensure that the taxpayer who is filing is the correct
person. Private companies also are increasing safeguards. Tax software
companies may require you to enter your 2015 adjusted gross income as
a method of authenticating your right to file this tax return.
3. Health Care
– You must meet all of the obligations under the Affordable Care
Act. You may have qualifying insurance; if so, check that box. Alternatively,
you may be required to make the Individual Shared Responsibility payment.
– Over 90% of taxpayers now file using tax preparation software.
You should start by gathering your IRS Forms W-2 from any employers and
Forms 1099 from banks and other payers. If you received a medical premium
tax credit, Form 1095-A is available from the healthcare Marketplace.
5. Delayed Refunds
– If you are claiming the Earned Income Tax Credit (EITC) or the
Additional Child Tax Credit (ACTC), your refund will be delayed until
the week of February 27 or later. Use the "Where's My Refund" tool on
to check your status.
6. Individual Taxpayer Identification Number (ITIN)
– This will expire if not used within three years or the middle
digits are 78 or 79. It may take up to 11 weeks to renew your ITIN. Some
taxpayers use an ITIN rather than a Social Security Number to file their
7. Filing Help
– The Volunteer Income Taxpayer Assistance (VITA) program or the
Tax Counseling for the Elderly (TCE) program may provide free assistance. Go to
and search for "free tax prep."
Speaker Ryan Promotes Tax Reform
Speaker of the House Paul Ryan (R-WI) was interviewed on January 4th on
a national media station. The interviewer covered both potential tariffs
and tax reform.
The White House transition team has been emphasizing the power of tariff
threats to encourage companies to retain U.S. jobs. Recently, both the
Carrier Corporation and Ford Motor Co. announced plans to maintain manufacturing
jobs in the U.S.
When asked about tariffs Ryan responded, "No, we are not going to
be raising tariffs." Rather, he plans to focus on tax, regulatory
and healthcare reform.
Ryan has created a very busy schedule for the first 200 days of 2017.
His stated goals include the following:
- Comprehensive Tax Reform
- Reductions in Regulations
- Review of Entitlements
- Healthcare Reform
- Rebuild the Military
- Improve Infrastructure
It is interesting to see Speaker Ryan's order of priorities. It will
be a massive legislative project to do everything on this agenda. Speaker
Ryan plans to focus initially on tax reform and reducing regulations.
Several of the other priorities could be moved to late 2017 or even 2018.
Applicable Federal Rate of 2.4% for January -- Rev. Rul. 2017-2; 2017-3
IRB 1 (19 Dec 2016)
The IRS has announced the Applicable Federal Rate (AFR) for January of
2017. The AFR under Section 7520 for the month of January will be 2.4%.
The rates for December of 1.8% or November of 1.6% also may be used. The
highest AFR is beneficial for charitable deductions of remainder interests.
The lowest AFR is best for lead trusts and life estate reserved agreements.
With a gift annuity, if the annuitant desires greater tax-free payments
the lowest AFR is preferable. During 2016, pooled income funds in existence
less than three tax years must use a 1.2% deemed rate of return. Federal
rates are available by