IRS opens ITIN Acceptance Agent application process

Individual Taxpayer Identification Number (ITIN) Acceptance Agents can assist individuals in obtaining ITINs from the IRS. Certifying Acceptance Agents review foreign status and identification documents and certify they are authentic, complete, and accurate. This means that applicants do not need to send their original documents (birth certificates, etc.) to the IRS. 

Many Low-Income Tax Clinics (LITCs) and some VITA programs have become ITIN Acceptance Agents to better serve immigrants in their community.  However, for over a year, the application process for becoming an ITIN Acceptance Agent was closed.

The IRS has now reopened this process [see Revenue Procedure (Rev Proc 2006-10)], so if you wish, you can apply to become an ITIN Acceptance Agent.

Highlights of the new application program:

1)  To apply, use the new Form 13551 available from the IRS website. It is a one-page form that is not overly complicated. IRS estimates it will take 3 hours to complete this application AND collect needed documentation.

2)  If applicable, applicants may undergo a suitability background check to ensure compliance with all IRS filings and payments. Also a credit history and FBI background check may be performed. Any individual who is authorized to practice under Circular 230 (Enrolled Agents, CPAs, and attorneys), financial institutions, colleges, universities, casinos and Electronic Return Originators are exempt from the suitability background check.

3) Acceptance Agents must reapply on Dec. 31st of the 4th year after the year in which their agreement goes into effect.

4) Existing Acceptance Agent agreements are in effect until 12/31/06. IRS recommends reapplying by 6/30/06 to ensure continuity.

5) Rev Proc 2006-10 supercedes Rev Proc 96-52.

Other notes about being an ITIN Acceptance Agent:

• You can become a certifying or noncertifying agent. Certifying Agents have to keep copies of all documentation of clients on file. The IRS sends the ITIN to the Acceptance Agent, not the client, so you need to then pass the ITIN to the client. 
• To apply for ITIN a client must submit a tax return or another document (e.g. interest-bearing bank account) showing a need for a Taxpayer Identification Number. That’s why it’s important for ITIN clients to apply for an ITIN during the tax season with their tax return.

 

Changes to IRS quality reviews

The IRS has dropped their "secret shopper" reviews of VITA sites, and the American Institute of Certified Public Accountants now will focus on assistance to hurricane survivors rather than the "secret shopper" reviews. This season, the IRS will carry out only traditional site reviews and the new return reviews, in which the IRS will review tax returns after volunteers complete them. The Coalition has opposed the "secret shopper" reviews. The Treasury Inspector General for Tax Administration (TIGTA), however, will continue "secret shopper" reviews.

A more detailed outline of what VITA sites should expect from quality reviews is available on the Coalition website.

 

Brookings interactive EITC website back online

The Brookings interactive EITC website, after a 3-month hiatus, is back in operation. You can access it by clicking on "Create EITC tables." [Note that you must have port 89 enabled on your computer network to access the site.] In the coming months, Brookings will be upgrading the site with TY 2003 data and an expanded set of information on low-income tax filers.

 

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IRS Move Said to Hurt the Poor

Tax refunds sought by 1.6 million poor Americans over the last five years were secretly frozen and their returns labeled fraudulent, although the vast majority appear to have done nothing wrong, the Internal Revenue Service's Taxpayer Advocate told Congress recently. Read the full story by David Cay Johnston, keynote speaker at our September 2005 conference, in the New York Times.

The National Taxpayer Advocate's office will hold a conference call for Coalition affiliates on the report and its implications for low-income taxpayers soon.

The Taxpayer Advocate's report also cited concerns in the areas of:

• Problem #1:  Fewer resources to taxpayer services, and reductions in face-to-face services.
• Problem #2:  Refund Freezes
• Problem #4:  Private Debt Collection
• Problem #8:  Refund Anticipation Loans

EITC taxpayers constituted three-fourths of those whose refunds were frozen, with an average income of just over $13,000.

The National Community Tax Coalition has advocated since its inception against the highly disproportionate targeting of EITC taxpayers for audits, exams and freezes. EITC error accounts for a tiny fraction of the 300-billion-plus dollar tax gap, yet EITC taxpayers are the targets of 48 percent of audits, despite constituting only 17 percent of taxpayers.

If you wish to join a new administrative advocacy mailing group, please email Don Wedd.

Click here for a press release about the report, here for the Executive Summary, and here for the full report  (warning: 522 pages!)

 

Heads up: the budget is coming

Even though Congress has not yet finalized its FY06 budget, the President will release his proposed FY07 at the end of January, and Congress will begin its budgeting work in February.

The Coalition will keep you fully updated on the impact of the budget on the EITC and other tax credits. We are also seeking an appropriation of funding for free tax preparation programs — you!

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United Way of King County serves as lead agency for the King County EITC Campaign. Last year the free tax preparation campaign expanded its reach and turned into a countywide effort. The Campaign did over 4,500 returns in 2005, nearly tripling the number from the preceding year. Clients received six million dollars in refunds, two million of which were Earned Income Tax Credit (EITC). Read the full story.

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Coalition in the media on IRS freezing EITC refunds

Several major media outlets ran stories recently about the IRS National Taxpayer Advocate report revealing that refunds owed to taxpayers, the vast majority of them working poor, are secretly delayed and denied without any notification.

This Chicago Tribune and Los Angeles Times article of 1/10/06 quoted Julie Kruse, C-Coordinator of the National Community Tax Coalition and Director of Advocacy and Strategic Partnerships for the Center for Economic Progress: "This is the biggest check of the year for these families. It creates a significant hardship when 25% of your income is withheld."

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These materials have been posted to the Coalition website since the beginning of December 2005.

Site Management

Client Intake Form - English and Spanish [PDF, 260K,Spanish version posted 1/11/06]
This form is designed to collect vital information and to determine if the taxpayer meets the eligibility requirements to receive free tax preparation services and other complimentary services offered at the tax site. Provided by the Center for Economic Progress.

Volunteer Training

Sample W-2 Form [DOC,40 KB, posted 12/15/05]
Reconstruction of IRS Form W-2 for reporting wages, which can be modified and used for training volunteer tax preparers. Provided by Community Action Project of Tulsa County.

Sample Form 1098-T [DOC, 40KB, posted 12/15/05]
Reconstruction of IRS Form 1098-T for reporting tuition, which can be modified and used for training volunteer tax preparers. Provided by Community Action Project of Tulsa County.

Sample Form 1098 [DOC, 40KB, posted 12/15/05]
Reconstruction of IRS Form 1098 for reporting mortgage interest, which can be modified and used for training volunteer tax preparers. Provided by Community Action Project of Tulsa County.

Sample Form 1099-DIV [DOC,40 KB, posted 12/15/05]
Reconstruction of IRS Form 1099-DIV for reporting dividends and distribution, which can be modified and used for training volunteer tax preparers. Provided by Community Action Project of Tulsa County.

Sample Form 1099-G [DOC, 40KB, posted 12/15/05]
Reconstruction of IRS Form 1099-G for reporting state tuition program payments, which can be modified and used for training volunteer tax preparers. Provided by Community Action Project of Tulsa County.

Sample Form 1099-INT [DOC, 40KB, posted 12/15/05]
Reconstruction of IRS Form 1099-INT for reporting interest income, which can be modified and used for training volunteer tax preparers. Provided by Community Action Project of Tulsa County.

Sample Form 1099-R [DOC,50KB, posted 12/15/05]
Reconstruction of IRS Form 1099-R for reporting retirement distributions, which can be modified and used for training volunteer tax preparers. Provided by Community Action Project of Tulsa County

Sample Form 1099-MISC [DOC,40 KB, posted 12/15/05]
Reconstruction of IRS Form 1099-MISC for reporting miscellaneous income, which can be modified and used for training volunteer tax preparers. Provided by Community Action Project of Tulsa County.

Sample Form W-2G [DOC,40 KB, posted 12/15/05]
Reconstruction of IRS Form W-2G for reporting gambling winnings, which can be modified and used for training volunteer tax preparers. Provided by Community Action Project of Tulsa County.

Sample Form SSA-1099 [DOC,40KB, posted 12/15/05]
Reconstruction of IRS Form SSA-1099 for reporting social security benefits, which can be modified and used for training volunteer tax preparers. Provided by Community Action Project of Tulsa County.

Financial Education, Asset-Building

The Truth About Credit Reports & Credit Repair Companies [PDF, posted 1/3/06]
Two page brochure of questions and answers about credit reports, including how to access free credit reports. Useful for financial education at tax preparation sites. Provided by the National Consumer Law Center

What You Should Know About Your Credit Report [PDF, posted 1/3/06]
A Consumer Factsheet for Older Americans from the National Consumer Law Center. Explains how to obtain a free credit report. Useful for financial education at tax preparation sites.

Understanding Credit Scores [PDF, posted 1/3/06]
A Consumer Factsheet for Older Americans from the National Consumer Law Center. Explains how to improve credit scores, how to obtain a copy of your credit scores. Useful for financial education at tax preparation sites.

EITC and Microentrepreneurs [PDF, 350KB, posted 12/20/05]
Linking tax preparation services to microentrepreneurs, who are often low-income taxpayers. Provided by the Aspen Institute.

Asset Building Workshop addressed models for linking tax preparation clients with credit reports [posted 12/15/05].

Materials from the IRS, Hurricane-related

Obtaining Your W-2s Flyer[PDF, 82KB, posted 1/03/06]
Flyer from the IRS directed to survivors of Hurricane Katrina.

Obtaining Your Forms W-2 [DOC, 60KB, posted 1/3/06]
Modified version of the IRS flyer directed at survivors of Hurricane Katrina. Provided by the National Community Tax Coalition.

Katrina Casualty Losses Flyer PDF, 100KB, posted 1/03/06]
A list of questions used to determine if a Hurricane Katrina survivor has a deductible loss of property, and list of documentation needed to calculate the loss. Provided by the IRS.

Obtaining Prior Year Transcripts Flyer [PDF, 100KB, posted 1/03/06]
Tips to help Hurricane Katrina survivors obtain copies of prior year returns, tax return transcripts, and social security numbers. Provided by the IRS.

Obtaining Social Security Numbers and Prior Year Tax Return Information [DOC, 50KB, posted 1/3/06]
Modified version of IRS flyers with tips to help Hurricane Katrina survivors obtain copies of prior year returns, tax return transcripts, and social security numbers. Provided by the National Community Tax Coalition.

Visiting a Volunteer Return Preparation Program Site Flyer [PDF, 100KB, posted 1/03/06]
Flyer promoting VITA and TCE programs which notes they cannot help with casualty loss deductions. Provided by the IRS.

Hurricane Katrina Emergency Relief Act [PPT, 450KB, posted 12/15/05]

Other materials from the IRS

Publication 596 Earned Income Credit [posted 12/15/05]
Used to determine eligibility for the EITC for tax year 2005.

Form 13715 SPEC Volunteer Site Information Sheet [PDF, 82KB, posted 12/14/05]
Sent to the IRS with details of your site.

Form 6729 Volunteer Return Preparation Program Site Review [PDF, 150KB, posted 12/14/05]
Checklist used by IRS staff to determine if a VITA site is using IRS standard operating procedures.

Form 6729C Volunteer Return Preparation Program Return Review [PDF, 87KB, posted 12/14/05]
Checklist used by IRS staff to determine accuracy of return preparation.

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