News

In the last few months, the IRS Criminal Investigation division (CI) has seen a variety of Economic Impact Payment (EIP) scams and other financial schemes looking to take advantage of unsuspecting taxpayers. CI continues to work with law enforcement agencies domestically and abroad to educate taxpayers about these scams and investigate the criminals perpetrating them during this challenging time.

Criminals are continuing to use the COVID-19 Economic Impact Payments as cover for schemes to steal personal information and money. Scams related to COVID-19 are not limited to stealing EIPs from taxpayers, however. CI has already seen scams related to the organized selling of fake at-home test kits, offers to sell fake cures, vaccines, pills and advice on unproven treatments for COVID-19. Other scams purport to sell large quantities of medical supplies through the creation of fake shops, websites, social media accounts and email addresses where the criminal fails to deliver promised supplies after receiving funds. Click here to learn more about these schemes.

Four million prepaid debit cards were mailed to taxpayers who did not get paper checks or direct deposit stimulus payments. Lost and stolen debit cards may be reported at EIPCard.COM. The debit card program is administered by MetaBank. The IRS EIP FAQ page hosts over two dozen FAQ's that are updated regularly. Most recent updates provide background about the "need more Information" messaging and provide a process of how to proceed with misplaced or never received checks.

The US Treasury has issued four million prepaid debit cards instead of paper checks for stimulus payments. It has been reported to us from clients who have received the debit cards, that they arrive in a #10 standard white envelope with first-class postage (not bulk mail). The return address is from Money Network Cardholder Services, Omaha, NE. Inside is a blue Visa debit card with white stars on it. 

There is a small sheet of paper that includes the blue and gold Treasury seal with Department of Treasury. The sheet of paper reads: "This pre-paid debit card is being sent to you on behalf of the US Dept. of the Treasury in place of a paper check. This card contains the money you are receiving as result of the Corona Aid Relief and Economic Security Act (CARES Act). For additional information on Economic Impact Payments visit irs.gov/eip. This is safe, convenient, and secure."

How to get your balance: Call Customer Service at 1-800-240-8100. Taxpayers must register as a new user. Click here for more information.

To avoid tax penalties, June 1st was the extended payment deadline for VA income tax. NH Dept. of Revenue Administration issued a press release to remind businesses of the June 15th deadline. Some MA trustee taxes are due June 20th; among them are Sales, Use, Meals and Room Occupancy, but not Gasoline, Cigarette and Withholding taxes.  For more information about MA COVID related waivers and extensions, check out the MA DOR COVID Update Webpage  or the MA DOR Hot Topics page.

As part of a nationwide unemployment benefits fraud scheme, criminal enterprises are using stolen personal information to try to fraudulently file unemployment claims. Criminal enterprises in possession of stolen personal information from earlier national data breaches have been attempting to file large amounts of illegitimate unemployment claims through the Massachusetts Department of Unemployment Assistance (DUA) system. If you believe someone is using your clients identity to falsely claim unemployment benefits, learn how to report the fraud and what to do to protect yourself. Report unemployment benefits fraud.

IRS News Release 2020-107 announced an electronic filing option for amended 1040 and 1040-SR filers beginning with the 2019 tax season. The most recent 1040-X form and 1040-X instructions with a revision date of January 2020 make no mention of e-filing an amended 2019 return and the news release makes no commitment about when the e-filing option becomes available. Once the IRS is ready, we still need our software to support it. In the meantime, anyone paper filing an amended return for any year can call the Amended Return Update line at 866-464-2050.

If anyone is interested in nominating a fellow colleague for either of the 9 Annual NAEA Awards please contact marilyn@brodeurtax.com. The Deadline is June 30, 2020 as of right now but may be extended since the National Conference has been changed. Updated applications are being revised and will be available soon. Click here to see a list of the available awards.

IRS Form 1099-NEC compensation is now exempt from paid family and medical leave [PFML] contributions, according to a recent email from the Massachusetts Department of Revenue. You can view all of the information below. 

As you may know, the IRS now requires non-employee compensation paid to individuals on or after January 1, 2020 to be reported on IRS Form 1099-NEC. Previously, non-employee compensation was reported on Form 1099-MISC, box 7.
 
PFML contributions are required with respect to certain payments to individuals reported on IRS Form 1099-MISC. The Department of Family and Medical Leave [DFML] has determined that employers who employ individuals whose compensation as of January 1, 2020 will now be reported on IRS Form 1099-NEC are no longer required to make contributions on behalf of these individuals. While contributions are not required, the individuals may choose to opt in to the PFML program.
 
Refunds of contributions already made with respect to IRS Form 1099-NEC compensation
Employers who made contributions on behalf of individuals whose compensation as of January 1, 2020 will be reported on IRS Form 1099-NEC, should now file amendments to the original PFML returns reporting such contributions. An amended return should be filed excluding any contributions that were made with respect to IRS Form 1099-NEC compensation. The amended filing will automatically trigger an overpayment and result in a refund to the filer of the return. Please note that contributions made between October 1, 2019 and December 31, 2019 on behalf of individuals whose compensation was reported on Form 1099-MISC are not eligible to be refunded.
 
How to amend your filings to exclude contributions made for IRS Form 1099-NEC compensation from January 1, 2020 through MassTaxConnect. You have two choices.
 
Amend your return by importing an Excel file:

1. Log in to your MassTaxConnect account
2. Choose your Paid Family Medical Leave account
3. Choose the  period to be amended
4. Under the I  Want To section choose File or amend a return
5. Under the I Want To section choose Amend Return
6. Choose Import From Excel 
7. Choose Import
8. Choose File from the Select a file to import window and choose the file to import.
9. Once the file is has downloaded, choose Ok and provide a reason for amending the return
10. Choose Next then Submit on the bottom right of the page where you will receive a Return Confirmation Number for your submission
11. At the bottom of the confirmation page, you will have an option to make a payment if necessary or to print the confirmation page.

Manually entering data (No excel file):

1. Log in to your MassTaxConnect account
2. Find your Paid Family Medical Leave Account
3. Choose the period to be amended
4. Under the I  Want To section Choose File or amend a return
5. Under the I Want To section Choose Amend Return 
6. Enter the information to be corrected then Choose Next and provide a reason for amending the return on the following page
7. Choose Next
8. Confirm that the information is correct from the Return Summary page then chooseSubmit on the bottom right of the page where you will receive a Return Confirmation Number for your submission
9. At the bottom of the confirmation page, you will have an option to make a payment, if necessary, or to print the confirmation page.

Under M.G.L. c. 62, § 5A(a), income of a non-resident derived from a trade or business, including any employment, carried on in the commonwealth is sourced to Massachusetts. Pursuant to this rule, all compensation received for personal services performed by a non-resident who, immediately prior to the Massachusetts COVID-19 state of emergency, was an employee engaged in performing such services in Massachusetts, and who during such emergency is performing such services from a location outside Massachusetts due solely to the Massachusetts COVID-19 state of emergency, will continue to be treated as Massachusetts source income subject to personal income tax under M.G.L. c. 62, § 5A and personal income tax withholding pursuant to M.G.L. c. 62B, § 2.

New MA DOR Commissioner Geoff Snyder released the PFML, workforce development and MA income tax consequences of COVID home based employees. MA DOR TIR 20-5 details the tax treatment of working from home as a MA resident for an out of state company and working at home as a MA non-resident for a MA based company. Basically, everything continues as it was before the COVID outbreak.