Latest news with #U.S.IndividualIncomeTaxReturn
Forbes
14-05-2025
- Business
- Forbes
House Tax Plan Would Kill Direct File And Rescue Controversial Contingency Fees
NORTH HALEDON, NJ - APRIL 15: In this photo illustration, a 1040 U.S. Individual Income Tax Return document is seen on a desk on April 15, 2024 in North Haledon, New Jersey. (Photo illustration by) If you were expecting the budget reconciliation process to be easy, you haven't been paying attention. Several committees are working on language related to the bill, including Agriculture, Energy and Commerce, and Ways and Means. Each of those committees will also consider amendments, proposals, and markups. That means there are several working parts and, in some cases, different priorities. Add-ons like plans to nix IRS Direct File may not have been included in early drafts, but appear as the process churns on. Even as the Energy and Commerce Committee considered significant changes to Medicaid, including work requirements, most of the tax-specific language will come from the Ways and Means Committee. The committee released a draft version of the bill over the weekend, and a substitute amendment was made public on Monday—you can read a summary of some of the early highlights here. Included in the substitute amendment were a few IRS-specific provisions that did not appear in the original draft. At the top of the list? Eliminating IRS Direct File. The language in the amendment requires the Treasury to ensure that the IRS Direct File program has been "terminated" no later than 30 days after the enactment of this Act. That isn't all. The bill would then require creating a task force to "design a better public-private partnership between the IRS and private sector tax preparation services" to replace Free File and Direct File. Under the amendment, the task force is directed to report on "1) the cost of a new public-private partnership to provide for free tax filing for up to 70 percent of all taxpayers calculated by adjusted gross income to replace free file and any IRS- run direct file programs; (2) taxpayer opinions and preferences regarding a taxpayer-funded, government-run service or a free service provided by the private sector; (3) assessment of the feasibility of a new approach, how to make the options consistent and simple for taxpayers across all participating providers, how to provide features to address taxpayer needs, and how much money should be appropriated to advertise the new option.' The amount of money earmarked is $15,000,000. If you're feeling a bit of deja vu, you're not wrong. The Inflation Reduction Act of 2021 also created a task force to design a direct file tax return system. The task force was required to explore the "(I) the cost (including options for differential coverage based on taxpayer adjusted gross income and return complexity) of developing and running a free direct efile tax return system, including costs to build and administer each release, with a focus on multi-lingual and mobile-friendly features and safeguards for taxpayer data; (II) taxpayer opinions, expectations, and level of trust, based on surveys, for such a free direct efile system; and (III) the opinions of an independent third-party on the overall feasibility, approach, schedule, cost, organizational design, and Internal Revenue Service capacity to deliver such a direct efile tax return system." The cost? Also $15,000,000. (Apparently, it was such a good idea that the House wants to gut it and do it all over again.) The result of the IRA was a limited-scope pilot of Direct File, which debuted in 2024. The pilot, the IRS claimed, was a success. The tax agency said that Direct File users reported a high degree of satisfaction and quick answers to their filing questions. After the first year, the Treasury Department declared that Direct File would be a permanent, free tax filing option. The IRS also expanded the program in 2025 to include more states and the ability to handle more kinds of income, credits, and deductions. Following the 2024 election, Musk and Vivek Ramaswamy, at that time leaders of the Department of Government Efficiency (DOGE), reportedly discussed creating a mobile app for Americans to file their taxes for free with the IRS. That program already existed—Direct File. In 2025, the program found itself in DOGE crosshairs when Musk posted on X (formerly Twitter) that he had "deleted" 18F, the group responsible for creating the technology behind Direct File. Critics of Direct File point to Free File, an existing program offered as part of a public-private partnership between the IRS and Free File Inc., formerly the Free File Alliance. Through this partnership, tax preparation and filing software providers make their online products available to eligible taxpayers (as compared to Direct File, an IRS program). Free File debuted in 2003 and was occasionally marred by allegations that participating tax software companies, including TurboTax and H&R Block, hid free options to get taxpayers to pay for services. The allegations created quite a stir—and resulted in litigation. Today, tax preparation software companies are prohibited from hiding free filing services from Google or other search results pages. Following the changes, Intuit and H&R Block opted out of the program. While Free File remains on the books, the current administration has already signaled that it will eliminate Direct File. A Congressional move would make it official. Access to taxpayer data is tightly restricted by law—a protection that's been in the news recently because of demands by DOGE to access that data. In 2024, a former IRS contractor was sentenced to five years in prison for disclosing thousands of tax returns, including Donald Trump's tax returns, without authorization. That contractor, Charles Littlejohn, pleaded guilty to unauthorized disclosure of tax return and return information—a violation of section 7213(a)(1) of the tax code, the most serious offense for leaking tax information. Littlejohn had faced—and was sentenced to—the maximum penalty of five years in prison. That was true even though Littlejohn leaked information for multiple taxpayers. The substitute amendment would increase the penalties for violating section 7213(a) from "$5,000, or imprisonment of not more than 5 years" to "$250,000, or imprisonment of not more than 10 years." The language in the bill would also expand the punishment. Currently, a leak is generally considered a single violation. Under the language in the amendment, when there are multiple disclosures, as in the case of Littlejohn, the disclosure of information for each affected taxpayer would be considered a separate violation. Language in the amendment would also put the brakes on efforts to "regulate, prohibit, or restrict the use of a contingent fee" in connection with tax returns or claims for refund. Contingent fees typically represent a percentage of an amount received—in the context of lawsuits, you tend to see them as a percentage of the total award. When it comes to tax returns, they may be a percentage of the expected refund or a percentage of tax "savings"—however that is defined. Earlier this year, Treasury and the IRS released proposed regulations to update the rules for certain tax professionals, including attorneys, certified public accountants (CPAs), and enrolled agents (EAs) who can practice before the IRS. These rules have long been found in Treasury Department Circular 230. Rules published in 2007 prohibited tax professionals from charging contingent fees for original returns but permitted practitioners to charge a contingent fee for certain services rendered in connection with an audit or challenge to an original tax return, amended returns, or claims for refund or credit. Treasury and the IRS subsequently clarified the 2007 amendments in 2008 and proposed modifications in 2009. The 2009 proposed regulations were never finalized. The IRS has continued to bump up against contingent fees. The section of Circular 230 that prohibits practitioners from entering into contingent fee arrangements for services rendered in connection with a "matter before the IRS" would be removed under the proposed regulations. However, the term "disreputable conduct" would include charging contingent fees for preparing an original or amended tax return or claim for refund or credit, as well as charging fees that are unconscionable under the facts and circumstances. The American Institute for Certified Public Accountants (AICPA) Code of Professional Conduct prohibits CPAs from charging contingent fees for preparing original returns, amended returns, and ordinary refund claims because of the risk that these arrangements would allow a CPA to improperly benefit from the transaction. Many state accountancy board rules also ban contingent fee arrangements for preparing an original or amended return or claim for refund or credit. Here's why the IRS doesn't like these fees. A contingent fee based on getting a big refund may encourage evasion or abuse of tax laws by incentivizing practitioners to take unduly aggressive tax positions. That gives the practitioner "a direct, financial interest in the tax benefits of a client." And that, says the IRS, is "incompatible with ethical practice" before the Treasury Department or the IRS under Circular 230. Contingent fees have recently gotten a second look because of employee retention credits (ERC). Those assisting companies with ERC applications often took a contingent fee—typically, a percentage of the refund due the taxpayer. The IRS encouraged taxpayers to be wary of promoters who charged a contingent fee because of concerns that the economic driver could push promoters to suggest ineligible people file a claim for the credit and that they might not inform taxpayers that they must reduce the wage deductions they claimed on their federal income tax return by the amount of the credit. Especially in cases where the contingent fee is collected upfront, the IRS has warned that in the case of an ERC denial (or audit), the taxpayer may be stuck with a reduced credit or penalty—and out the contingent fee. The ERC contingency fees were also in the news because it has been widely reported that some tax firms paid Trump's nominee for IRS Commissioner, Billy Long, on a contingency basis. Expect that issue to come up again while contingent fees are still considered controversial. Green-lighting contingency fees by banning regulations or restrictions would change the conversation. Long's confirmation hearing is scheduled for May 20, 2025. You can see the original draft version of the bill before the markup here. The Smith amendment version is here. The bill is still working its way through the House where Republicans hold a slim majority. Even it's approved, the House bill must conform with the Senate version to be signed into law. Keep checking our coverage for more details.
Yahoo
17-04-2025
- Business
- Yahoo
Running Late On Your Return? How To Secure A No-Penalty Tax Extension
Scrambling to submit your taxes even after the April 15 deadline? Filing for an extension can be a lifesaver if you're juggling personal obligations or wrestling with intricate returns. Rather than rushing, you can secure six extra months to organize your finances and file without penalty. Not everyone can meet the IRS's recommendation to file early. Unexpected life events, delayed documents, or a complicated tax situation might slow you down. An extension buys you breathing room until October 15, letting you gather all your paperwork without incurring a "failure to file" penalty. Certain exceptions already exist according to the IRS website. If you're on active military duty in a combat zone, you get 180 days after leaving that area to file. Americans living abroad or stationed overseas also receive an automatic two-month extension. Meanwhile, residents in states affected by natural disasters can receive extra filing time, sometimes until November 3. See also: To request an extension, use the IRS's online payment system: Simply check the box indicating you need extra time. Alternatively, you can e-file Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return), which just asks for your basic personal information. Both options give you a quick, digital route to notification-free breathing space. An extension shifts your paperwork deadline, not your tax bill due date. If you owe money, estimate the total, then pay by April 15 to dodge the "failure to pay" penalty. Missing the payment deadline could saddle you with monthly fees, ultimately capping at 25% of your unpaid taxes. If you're short on cash, the IRS offers both short-term and long-term payment plans. You can apply online, and if you can show "reasonable cause" for late or partial payments, you might avoid some penalties. The main thing is to communicate with the IRS early, so you stay in good standing. Read next: Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Running Late On Your Return? How To Secure A No-Penalty Tax Extension originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
Yahoo
15-04-2025
- Business
- Yahoo
When is the tax deadline in Wisconsin? Here's what happens if you file late
Millions of Americans are expected to file their federal and state tax returns by the April 15 deadline, according to the IRS. However, if you're running late, you can still file an extension to avoid late fees from the federal government. Here's what you need to know about filing your taxes in Wisconsin, plus how to check the status of your refund. The deadline to file your state and federal income tax return is April 15, 2025. If you're unable to file your tax return by the April 15 deadline, you can apply for an extension. Here's how to file an extension, according to the IRS: You can electronically request an automatic tax-filling extension through IRS Free File by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Make an electronic payment using Direct Pay, debit card, credit card or digital wallet and specify the payment is for an extension. Mail Form 4868 by the tax deadline. If you don't file your tax return by the due date, including extensions, you will receive a penalty from the IRS, according to its website. The IRS will send you a notice or letter if you owe the penalty. The amount depends of the type of tax return you file. For individuals and most business tax returns, the penalty is 5% of the tax due for each month or partial month the return is late. The penalty accrues up to a maximum of 25%. You have several options to file your state return, some of which won't cost you. WisTax is the state's free software for filing state income taxes. It uses your My Tax Account profile. If you opt for the IRS' Direct File program, federal form information will transfer into WisTax. You also won't need to attach forms like W-2s, 1099s or your federal return to state taxes. The Department of Revenue recommends waiting until your federal return is accepted before beginning your Wisconsin return. If your federal return gets rejected, you might have to update your state return, which can't be done through WisTax. In this case, you'd need to use third-party software, a paper form or find a tax professional. Those who don't qualify for Direct File might still be eligible to use WisTax. You can view eligibility information on its website. If you filed state taxes electronically in Wisconsin, then you should receive your refund in less than three weeks, according to the Wisconsin Department of Revenue. Paper tax returns, meanwhile, can take longer to process. The DOR says its safeguards against fraud and errors could delay paper refunds for up to 12 weeks. You can check the status of your Wisconsin state tax refund online on the state's portal. RELATED: Where's my tax refund? Is my deposit delayed? How to check federal, state refund status in Wisconsin Hope Karnopp contributed to this report. This article originally appeared on Milwaukee Journal Sentinel: What time are taxes due on April 15? What happens if you file late?
Yahoo
12-04-2025
- Business
- Yahoo
When Is the 2025 Tax Deadline, How Can You Get an Extension?
The IRS' Form 4868, "Application for Extension of Time to File U.S. Individual Income Tax Return," is seen here. Credit - Robert D. Barnes—Getty Images The last day to file your taxes is fast approaching. As such, you may find yourself curious as to if you're eligible for a tax extension and how you would go about obtaining one. A January news release from the Internal Revenue Service (IRS) said that 'more than half of all tax returns are expected to be filed this year with the help of a tax professional.' The IRS also urged people once more to use a 'trusted tax pro to avoid potential scams and schemes.' For those who have yet to file their taxes, here is what you need to know about the 2025 tax deadline and how to apply for an extension. Per usual, the tax deadline for this year is April 15—the U.S. tax day, which falls on a Tuesday in 2025. Though the deadline is April 15, the IRS predicted in January that more than 140 million individual tax returns for the tax year 2024 would be filed ahead of the deadline. As of April 4, the IRS had already received 101,422,000 individual income tax returns for the 2025 tax filing season. Read More: Here's When You Can Expect Your IRS Tax Refund and How You Can Track It Natural disasters have affected U.S. citizens around the country this past year—from the wildfires in Los Angeles, to hurricanes in Florida and North Carolina, to floods in New York. Disaster victims in twelve states have automatic extensions to file and pay their 2024 taxes. Though some of these extensions only apply to certain populations within said states. For California wildfire victims, per the IRS, "these taxpayers now have until Oct. 15, 2025, to file various federal individual and business tax returns and make tax payments. For victims of Hurricane Helene and Hurricane Milton in various states including West Virginia, Alabama, Florida, Georgia, North Carolina, and South Carolina—and parts of Tennessee and Virginia—the deadlines have been extended to May 1, 2025 to file for the 2024 fiscal year. Other areas that qualify for a May 1 extension due to disaster relief include Juneau in Alaska and Chaves County in New Mexico, while those affected by severe weather in Kentucky now have until Nov. 3 "to file various federal individual and business tax returns and make tax payments." If you are unsure whether you qualify for a state's extension, the IRS has a page specifically dedicated to news in each state, where taxpayers can toggle into the state, or states, they will be filing taxes in, to see if there is a delayed deadline. The IRS also has a 'Frequently Asked Questions' page for disaster victims, as well as a help line for general questions about individual tax filing at 1-800-829-1040 and for business tax filing at 1-800-829-4933. A standard federal tax return extension gives taxpayers six more months to file their taxes after the April 15 deadline. It's important to note, however, that according to the IRS, this extension is only for 'filing' your returns. "An extension of time to file is not an extension of time to pay," the IRS instructs. You can file for a tax extension in three different ways. Taxpayers can use IRS Free File to electronically request an automatic tax-filing extension. Alternatively, when paying taxes using an online payment option—including a wire transfer or a credit card— via the IRS website, taxpayers can check the box that says they are paying as part of filing for an extension. Lastly, those filing personal tax returns can file Form 4868, also known as the 'Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.' (Businesses can apply for an extension using Form 7004.) Form 4868 can be filed by mail, online with an IRS e-filing partner, or through a tax professional. Applicants will need to include the taxpayer's name, address, Social Security number, and several payment estimations for the 2025 tax filing season. Though those who file for an extension still need to pay their taxes, filing Form 4868 itself does not incur a fee. The deadline to file for an extension is the same as tax day itself—Tuesday, April 15. Contact us at letters@ Sign in to access your portfolio
Yahoo
12-04-2025
- Business
- Yahoo
When Is the 2025 Tax Deadline, How Can You Get an Extension?
The IRS' Form 4868, "Application for Extension of Time to File U.S. Individual Income Tax Return," is seen here. Credit - Robert D. Barnes—Getty Images The last day to file your taxes is fast approaching. As such, you may find yourself curious as to if you're eligible for a tax extension and how you would go about obtaining one. A January news release from the Internal Revenue Service (IRS) said that 'more than half of all tax returns are expected to be filed this year with the help of a tax professional.' The IRS also urged people once more to use a 'trusted tax pro to avoid potential scams and schemes.' For those who have yet to file their taxes, here is what you need to know about the 2025 tax deadline and how to apply for an extension. Per usual, the tax deadline for this year is April 15—the U.S. tax day, which falls on a Tuesday in 2025. Though the deadline is April 15, the IRS predicted in January that more than 140 million individual tax returns for the tax year 2024 would be filed ahead of the deadline. As of April 4, the IRS had already received 101,422,000 individual income tax returns for the 2025 tax filing season. Read More: Here's When You Can Expect Your IRS Tax Refund and How You Can Track It Natural disasters have affected U.S. citizens around the country this past year—from the wildfires in Los Angeles, to hurricanes in Florida and North Carolina, to floods in New York. Twelve states have delayed their tax deadlines due to these disasters—though some of these extensions only apply to certain populations within said states. For California wildfire victims, per the IRS, "these taxpayers now have until Oct. 15, 2025, to file various federal individual and business tax returns and make tax payments. For victims of Hurricane Helene and Hurricane Milton in various states including West Virginia, Alabama, Florida, Georgia, North Carolina, and South Carolina—and parts of Tennessee and Virginia—the deadlines have been extended to May 1, 2025 to file for the 2024 fiscal year. Other areas that qualify for a May 1 extension due to disaster relief include Juneau in Alaska and Chaves County in New Mexico, while those affected by severe weather in Kentucky now have until Nov. 3 "to file various federal individual and business tax returns and make tax payments." If you are unsure whether you qualify for a state's extension, the IRS has a page specifically dedicated to news in each state, where taxpayers can toggle into the state, or states, they will be filing taxes in, to see if there is a delayed deadline. The IRS also has a 'Frequently Asked Questions' page for disaster victims, as well as a help line for general questions about individual tax filing at 1-800-829-1040 and for business tax filing at 1-800-829-4933. A standard federal tax return extension gives taxpayers six more months to file their taxes after the April 15 deadline. It's important to note, however, that according to the IRS, this extension is only for 'filing' your returns. "An extension of time to file is not an extension of time to pay," the IRS instructs. You can file for a tax extension in three different ways. Taxpayers can use IRS Free File to electronically request an automatic tax-filing extension. Alternatively, when paying taxes using an online payment option—including a wire transfer or a credit card— via the IRS website, taxpayers can check the box that says they are paying as part of filing for an extension. Lastly, those filing personal tax returns can file Form 4868, also known as the 'Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.' (Businesses can apply for an extension using Form 7004.) Form 4868 can be filed by mail, online with an IRS e-filing partner, or through a tax professional. Applicants will need to include the taxpayer's name, address, Social Security number, and several payment estimations for the 2025 tax filing season. Though those who file for an extension still need to pay their taxes, filing Form 4868 itself does not incur a fee. The deadline to file for an extension is the same as tax day itself—Tuesday, April 15. Contact us at letters@
