Daily Tax Report: International

All Hands On Deck: Helping Taxpayers Navigate Impact Payments

April 9, 2020, 8:45 AM

In any other year, many tax professionals would be watching the calendar tick down to April 15 with the understanding that smoother sailing was on the way. But this is far from a typical year. Covid-19 continues to impact the U.S., with more than 400,000 cases reported, and no date for when the curve might flatten. That uncertainty has rocked the markets and caused financial insecurity among individual taxpayers.

The federal government is taking action, including through the CARES Act (Public Law 116-136), under which economic impact payments, or EIPs—stimulus checks—will be going out to taxpayers. That’s good news for millions. Here’s how you can help.

1. Stay informed. Since you’re reading this article, it’s clear that you’re already interested in keeping on top of the latest tax news. But with so many moving parts, it’s tough to know what to prioritize. And for EIPs, there are always new developments—from who is entitled to receive checks via direct deposit (it’s a “yes” now for seniors who receive Social Security retirement benefits, as well as those folks who receive SSDI) to the timing of delivery. It’s best to rely on trusted sources and check often.

In addition to platforms like Bloomberg Tax, remember that the IRS uses social media. We may be used to waiting for official publications, but while physical offices are mostly shut down, and news needs to be distributed quickly, federal agencies are increasingly turning to channels like Twitter. Tax professionals can follow an industry-specific IRS account for up to the minute announcements and tips. And don’t forget Treasury: Secretary Steven Mnuchin broke the news about the extension of the tax filing season via Twitter.

The IRS also has an e-News Subscription service. With the IRS Newswire, you can receive news releases, including legal guidance, the day they are issued. And with the e-News for Tax Professionals, you can receive a weekly roundup of news releases and legal guidance targeted to the tax professional community.

2. Educate taxpayers. One of the reasons there is confusion about stimulus checks is that they are keyed off of specific provisions already in the tax code. This can be an excellent opportunity for you to review information with taxpayers so that they not only understand how much they might receive (and why) in their stimulus check, but what those provisions mean for future returns. For example, many taxpayers weren’t aware of the cutoff for the child tax credit, or CTC—it’s under age 17—and how that differs from the general definition of a dependent.

Since personal exemptions are gone through 2025 (thanks to the Tax Cuts and Jobs Act, or TCJA), this could be a great time to review with taxpayers whether it makes sense to claim college students or other adult children who are working in future years. And with alimony off the table for some taxpayers (again, thanks to the TCJA), it might be a good time to review divorce settlements and see whether custody and related agreements are still working.

Consider setting up teleconferences with key clients, sending out an informative newsletter, or updating your website or blog to direct taxpayers to useful information and resources (like you) if they have questions.

3. Help taxpayers avoid scams. The more you know, the easier it is for you to protect clients and other taxpayers from scams. Identity thieves are already capitalizing on confusion over the stimulus checks to convince potential victims to turn over personally identifying information. The Better Business Bureau has reported that government imposters are calling and texting about stimulus relief, suggesting that it’s necessary to verify personal details or pay a small “processing fee” to receive a check.

The IRS will deposit checks into the direct deposit accounts that taxpayers previously provided on tax returns. You can help by reminding taxpayers that no one will call or text to verify personal information or bank account details. Instead, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online so that people can receive payments immediately.

4. Support each other. One of the great things about the tax community is how willing we are to help each other. Nobody can be an expert on everything, and whether it’s the nuances of the Paycheck Protection Program or EIPs, the details matter. You’re not expected to know it all. But you should know where to look. Take advantage of professional groups and chat boards to ask questions. Many of your colleagues are offering free or low-cost webinars to get you up to speed. And if you’re not on #TaxTwitter, I’d encourage you to join in the conversation: Whether it’s figuring payroll costs or debating the intricacies of what constitutes support, you’re sure to learn something useful.

5. Lend a helping hand. It’s easy to feel overwhelmed and helpless in the middle of a pandemic. And while you might not be able to sew a mask or offer medical services, you can still make a real difference in the lives of others. Taxpayers are desperate for dependable information and help—and sometimes, simply a friendly voice in the void. I’ve received well over 1,000 emails in the past two days from taxpayers who are stuck inside looking for answers. You can help by providing reliable advice, and helping to counter misinformation, to clients and colleagues. And with tax clinics shut down, many taxpayers are worried about how they can file to receive a stimulus check: If you’re willing to assist low-income, disabled & homeless folks fill out simple returns to get stimulus check, shoot me a note or reach out on Twitter.

This is a weekly column from Kelly Phillips Erb, the TaxGirl. Erb offers commentary on the latest in tax news, tax law, and tax policy. Look for Erb’s column every week from Bloomberg Tax and follow her on Twitter at @taxgirl.

To contact the reporter on this story: Kelly Phillips Erb at kelly.erb@taxgirl.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com

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