132001 TAX HINTS

Practitioner�s Guide to Filing Season

As digital communication becomesmore and more a part of ourlives, the IRS continues to come

up with new and improved ways to usenew technology to make life easier fortaxpayers and tax preparers.

The Tax Professional�s Corner(www.irs.gov/bus_info/tax_pro/index.html) is designed to help practitio-ners find what they need on the IRS Website. The site has fill-in-the-blank formsas well as forms to download and print.There is also a W-4 calculator to helptaxpayers determine the number ofexemptions to take.

IRS Local News NetThe latest communications tool from

the IRS is the Local News Net � anoffshoot of the very successful DigitalDispatch, which delivers IRS news ofnational importance directly to e-mailsubscribers. The Local News Net is anelectronic news system designed toprovide its subscribers with up-to-the-minute local news. Each IRS office,Submission Processing, CustomerService and Accounts Management centerhas personalized it�s own Local NewsNet and has its own subscription list. Thecenters issue periodic alerts to theirsubscribers about filing processes,changes in tax law and updates to phonenumbers, addresses, etc.

All you need is Internet access and ane-mail address to subscribe. Click onwww.irs.gov/bus_info/tax_pro/where_list/index.html and click on thestate you want information from.

To subscribe to the Digital Dispatchfor national news, visit the IRS Web siteat www.irs.gov/help/newmail/maillist.html.

We strongly urge you to subscribe toboth of these services.

Tax forms on CD-ROMPublication 1796, Federal Tax Prod-

ucts CD-ROM, contains fill-in-the-blank

tax forms, portions of the InternalRevenue Manual, market segment guidesand tools for the tax professional.

Pub. 1796 can be purchased from theNational Technical Information Service(NTIS) for $21 through the IRS Website at www.irs.gov/cdorders or bycalling 1.877.233.6767 for $21 (plus $5handling fee).

Order your Package Xon-line

Tax professionals can electronicallyupdate their order for Package X,Reference Copies of Federal Tax Formsand Instructions, at the Tax Profession-als Corner at www.irs.gov/bus_info/tax_pro/index.html.

Only current participants can use thismethod by using their account numbershown on the mailing label of Pub. 1045.If you have an address change or are anew participant in the program, youmust submit a paper Form 3975, TaxProfessionals Annual Mailing ListApplication and Order Blank, to thenearest IRS Area Distribution Center aslisted on the form. Form 3975 can befound in Publication 1045.

Electronic paymentoptions for individuals

Electronic payment options �direct debit (electronic with-drawal from checking or savings

account) or credit card � are conve-nient, safe and secure methods forpaying individual income taxes and givetaxpayers an alternative to paying taxesby check or money order.

Taxpayers may file Form 1040 seriesbalance due returns or Forms 4868,Application for Automatic Extension ofTime to File U.S. Individual Income TaxReturn, electronically and simulta-neously pay by direct debit or credit cardvia tax preparation software or a tax

IRS electronicinformation services

The Interactive Organi-zational Directory isa tool that gives

taxpayers and practitionersthe ability to obtain tele-phone contact informationabout the IRS executive whois best positioned to givethem assistance. For ex-ample, to contact the SB/SEterritory manager in Mil-waukee, practitioners andtaxpayers can now just lookthem up through the IRS�Web page. Information onboth headquarters and fieldcontacts is now immediatelyavailable through thedirectory, located on the TaxProfessionals Corner in theIRS� Digital Daily atwww.irs.gov/prod/bus_info/tax_pro/iod.

In the near future, thisdirectory will become amuch more prominentfeature in the IRS� overallInternet strategy. It will belinked to IRS� main em-ployee, stakeholder andorganization databaseswhere it will give taxpayersaccess to real time informa-tion on IRS employees andcontacts. The new systemwill be completely auto-mated and will thereforeadjust to changes in tele-phone numbers and organi-zation structure as it evolves.

ON-LINEDIRECTORY

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professional. A taxpayer also may e-file a tax return and pay by creditcard via phone or the Internetthrough a service provider.

Taxpayers may e-file their Form1040 and Form 1040-ES, EstimatedTax for Individuals, and simulta-neously pay by direct debit via taxpreparation software or a taxprofessional. They may also make aForm 1040-ES payment by creditcard via phone or the Internetthrough a service provider.

Making a payment electronicallyeliminates the need to send in thepaper Form 1040-V, Form 4868 orForm 1040-ES. Payments must be atleast $1. Payments for prior taxyears are not accepted at this time.

When canelectronic paymentsbe made?� Form 1040 series � including

Forms 1040A, 1040EZ, 1040 andTeleFile users � payment optionsbegin Jan. 12, 2001 and end Oct.15, 2001.

� Form 4868 payment options,except TeleFile, begin Jan. 12,2001 and end April 16, 2001.

� The TeleFile direct debit paymentoption begins April 1, 2001 andends April 16, 2001. Form 4868payments made through TeleFilewill be effective on April 16,2001.

� Form 1040-ES direct debitpayment option begins January12, 2001. Taxpayers can chooseone of the following paymenteffective dates: April 16, June 15or Sept. 17, 2001. The credit cardpayment option begins March 1,2001 and ends Jan. 23, 2002.

� Payments can be made 24 hours aday, seven days a week.

If a taxpayerchooses to payusing direct debit� The taxpayer authorizes the U.S.

Department of the Treasury(through a Treasury FinancialAgent) to transfer money fromtheir bank account to the Treasuryaccount.

� Funds are automatically with-drawn on the payment dateselected. However, if a weekendor bank holiday is designated, thepayment will not be withdrawnuntil the next business day.

� Direct debit payments will bewithdrawn in a single transaction,not installments.

Cancellations, errorsand questions� Taxpayers can call the Treasury

Financial Agent at1.888.353.4537 toll free to cancela payment or to report problemssuch as bank closures, lost orstolen bank account numbers,closed bank accounts or unautho-rized transactions.

� Once the IRS e-file return isaccepted, the scheduled paymentdate cannot be changed. If thedate needs to be changed, the onlyoption is to cancel the paymenttransaction and choose anotherpayment method (credit card,check or money order).

� Scheduled payments can becancelled up to 8:00 p.m. EasternTime two business days before thescheduled payment date.

� The cancellation must be autho-rized by the taxpayer or by aperson with access to thetaxpayer's Social Security Num-ber, payment amount and bankaccount number.

� Taxpayers can also call the abovenumber to inquire about paymentsthrough Oct. 17, 2001. Taxpayersshould wait at least five days afterthe e-file return is accepted before

making inquiries.� Taxpayers will be notified if a

payment is returned by thefinancial institution due to insuffi-cient funds, incorrect accountinformation, closed accounts, etc.If this occurs, the IRS will send anotification letter to the address onthe tax return explaining why thepayment could not be processed.The letter will include instructionsfor sending a check to a uniqueaddress that has been establishedfor this initiative.

� In the event the financial institu-tion is unable to process thetransaction, the taxpayer will beresponsible for the tax paymentand for any penalties and interest.

� Contact the IRS immediately at1.800.829.1040 if there is an errorin the amount withdrawn.

� In the event Treasury causes anincorrect amount of funds to bewithdrawn from the bank account,Treasury is responsible forreturning any improperly trans-ferred funds.

How to make acredit card payment� The e-file and credit card option is

available through a number of taxpreparation software packagesand through tax professionals. Formore information about e-filingand paying all at once (includingconvenience fees and acceptedcredit cards), taxpayers can referto tax preparation software or atax professional.

� Pay-by-phone and Internet optionsare available through credit cardpayment service providers.

� When paying by phone, a re-corded script will guide taxpayersthrough the call.

� When paying by Internet, taxpay-ers will be prompted to fill in thenecessary entry fields.

� For more information about

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Practitioner�s Guide to Filing Season

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paying by phone or Internet and/orto make a payment, taxpayers cancontact the following serviceproviders:� Official Payments Corporation

1.800.2PAY.TAX®(1.800.272.9829)1.877.754.4413 (CustomerService)www.officialpayments.com

� PhoneCharge, Inc.1.888.ALL.TAXX(1.888.255.8299)1.877.851.9964 (CustomerService)www.About1888ALLTAXX.com

� Taxpayers can pay by phone orthe Internet using a Discover®Card, American Express® Cardor MasterCard®.

� To make a payment of$100,000 or greater through theOfficial Payments Corporation,taxpayers can call thecompany�s Special ServicesUnit at 1.877.754.4420.

Credit cardconvenience fees� There is a convenience fee

charged by the service providers.� Fees are based on the amount of

the tax payment and may vary byservice provider.

� The IRS does not receive orcharge any fees for payments.

� Taxpayers will be informed of theconvenience fee amount before thepayment is authorized. This fee isin addition to any charges, such asinterest, that may be assessed bythe credit card issuer.

If a taxpayerchooses to payusing a credit card� Payments must be made electroni-

cally through tax preparationsoftware, a tax professional or acredit card payment serviceprovider (via phone or the

Internet). Credit cards should notbe sent to the IRS with the returnnor should credit card accountnumbers be written on the return.

� The processors will forward theappropriate tax payment informa-tion to the IRS.

� The payment date will be the datethe charge is authorized.

� Partial payments can be made byphone or Internet. A maximum oftwo payments per tax type (or perquarter if making estimatedpayments) can be made by phoneor Internet.

� Some tax preparation softwaremay not allow taxpayers to makepartial payments.

� Taxpayers who e-file and payshould re-file rejected returnspromptly in order to ensure timelypayment. Otherwise, the paymentmay have to be reauthorized.

Cancellations,errors andquestions� Generally, credit card payments

cannot be cancelled.� Taxpayers can call the credit card

issuer or credit card paymentservice provider�s customerservice number to report problems

such as unauthorized charges orconcerns about payment errors.

� Taxpayers can contact the IRS at1.800.829.1040 to report prob-lems with the amount of tax owedor any other matter concerning thetax return.

� Taxpayers may also write to theIRS office where the return wouldbe mailed regarding income taxpayment concerns. The taxpayer�sSocial Security Number, paymenttax year and payment methodshould be included.

� In the event the service providerfails to forward the tax paymentto the Treasury, the taxpayer willbe responsible for the tax paymentand for any penalties and interest.

� Voluntary or estimated payments,such as Form 4868 and Form1040ES payments, which result inan overpayment will be resolvedthrough normal administrativeprocedures.

� In most instances, Treasury willrefund an overpayment to taxpay-ers once the return is received andprocessed. An overpayment maybe used to settle or offset anexisting debt on the taxpayer�saccount.

IRS e-file is a way for taxprofessionals to electronicallyfile a client�s tax return directly

to IRS computers. It�s the perfectway toincreasebusinessandprovideadditionalcustomerservice to an existing client base.This year, the IRS will once againprovide all tax professionals whobecome Authorized IRS e-fileProviders with an IRS e-file Market-ing Tool Kit containing materials

that will be helpful in promoting IRSe-file services.

All tax professionals who becomeproviders automatically become a

part oftheAutho-rized IRSe-fileProvider

Database, an on-line application thatallows taxpayers and tax profession-als to search for providers via zipcode. If you want to go a step furtherand electronically file federal and

e-file ensures high quality

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Practitioner�s Guide to Filing Season

Continued from page 15ElectronicFederal Tax

PaymentSystem

EFTPS is the easiestway for businesses tomake their federal tax

payments. EFTPS was createdby the Department of theTreasury in 1995 to modernizetax payments � movingfederal tax payments from apaper-based to an electronicsystem.

More than 2 million busi-ness taxpayers are enrolled inEFTPS. They know the realvalue of paying their taxeselectronically. If you haven�texperienced the many benefitsof EFTPS, now�s the time.You will find that EFTPS is:� Easy to use from any-

where � with a phone orPC and modem or througha program offered by yourfinancial institution.

� Convenient � schedulepayments 24 hours a day,seven days a week.

� Accurate � you verify allthe information you input toensure accuracy.

� Fast and economical � ittakes less than four min-utes, and you�ll have nomore last-minute trips tothe bank or to the store forstamps or envelopes.

Anyone may participate inEFTPS, but they must enrollin the program. For enrollmentforms or more information,call 1.800.945.8400 or1.800.555.4477 or check theWeb site: www.irs.gov/elec_svs/eftps.html. Enroll-ment forms are not availableat IRS offices or banks.

state returns simultaneously, Federal/State e-file may be the perfect additionto your portfolio of business services.

Ready to apply? See Publication3112, IRS e-file Application Package(on-line at www.irs.gov/elec_svs/efile-app.html) or call or e-mail your localIRS e-file contact for assistance.

IRS e-file � the fastest, most accu-rate way to file your taxes!

What�s new for 2001The new Revenue Procedure, 2000-

31, informs Authorized IRS e-fileproviders of their obligations whenparticipating in IRS e-file of individualincome tax returns. It includes substan-tive changes to the rules for participa-tion and the definitions of participants.Many of the rules previously prescribedin Revenue Procedures 98-50 and 98-51have been moved to Publications 1345and 3112, which also have been revised.Participants should become familiarwith the rules for participation byreading the new Revenue Procedure andthe related IRS e-file technical publica-tions.

For the 2001 filing season, there is anew feature, Self-Select PIN for e-file,which is a direct product of both thePractitioner PIN Pilot and the e-fileCustomer Number (ECN) pilot. TheSelf-Select PIN for e-file will be avail-able for most taxpayers who file elec-tronically using tax preparation softwareeither by filing through an on-line filingcompany or by filing through a taxprofessional.

Direct DebitThe direct debit payment option has

been expanded. Your client can e-file areturn and authorize a direct debitpayment for the balance due on theirreturn. Whether there is a balance due ornot, an estimated payment (Form 1040-ES) can be initiated when the return ise-filed. Your clients can also make apayment by direct debit when Form4868 is filed electronically or throughTeleFile.

Also, there are now two pay-by-phone credit card payment serviceproviders. Your client can also pay byInternet using a credit card throughthese service providers.

If your client is unable to pay thetotal tax owed by April 16, 2001, youcan electronically file Form 9465,Installment Agreement Request. Anapproved installment agreement allowsyour client to make a predeterminedseries of partial payments after April16, 2001. However, any unpaid taxowed after April 16, 2001, is subject topenalties and interest.

What is the Self-Select PIN for e-file?

The Self-Select PIN for e-file is newfor filing season 2001. It allowstaxpayers to electronically sign their e-filed return by selecting a five-digitPersonal Identification Number (PIN).It eliminates the requirement for Form8453 in most cases, making e-filingreturns truly paperless for mosttaxpayers.

Who can use the Self-Select PIN for e-file?

Self-Select PIN for e-file is availablefor most taxpayers. The followingtaxpayers are eligible to use the Self-Select PIN for e-file:

� Taxpayers who filed Form 1040,1040A or 1040EZ for tax year 1999.

� Taxpayers who did not file for taxyear 1999, but have filed previously.

� Taxpayers who are 16 or older on orbefore Dec. 31, 2000, who havenever filed a tax return.

� Military personnel residing overseaswith APO/FPO addresses.

� Taxpayers residing in the Americanpossessions of the Virgin Islands,Puerto Rico, American Samoa,Guam and Northern Marianas orwith foreign country addresses.

� Taxpayers filing a Form 2688(additional extension of time to file)or Form 2350 (certain U.S. citizensliving abroad).

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172001 TAX HINTS

Practitioner�s Guide to Filing Season

products to taxpayers entitled to indi-vidual income tax refunds. The agree-ments cover not only the firm thatsigned the agreement but also relatedproviders and financial institutions thatdo electronic filing business with thefirm. For example, if a transmittersigned an agreement, all ElectronicReturn Originators (EROs) who use thattransmitter are covered by the agree-ment. Providers that did not presentproposals to the original RFA or are notcovered under one of the announcedagreements may still apply to obtain theDI for the upcoming filing season underan amendment to the RFA.

In return for the DI, covered Autho-rized IRS e-file Providers and financialinstitutions agreed to screen returns andreturn information available to them inthe normal course of their business forpotential fraud and abuse and reporttheir findings to the IRS.

Other Authorized IRS e-file Providersand financial institutions that do elec-tronic filing business with any of theannounced firms may already qualify toobtain the DI for their taxpayers even ifthey did not submit a proposal. Theannounced firm�s agreement will coverthem as long as they commit to theterms of the agreement. Contact the firmfor more information.

A Memorandum of Agreement thatresults from the original RFA or theapplication process is covered bySection 18 of Revenue Procedure 98-50(IRS e-file) or Section 15 of RevenueProcedure 98-51 (On-Line Filing).

Returns for the following taxpayersare not eligible for using the Self-SelectPIN for e-file:� Decedents.� Legal or illegal aliens with Social

Security Numbers not valid foremployment.

Your clients must furnish the follow-ing information to secure their PIN:� The Adjusted Gross Income and

Total Tax from their 1999 return(prior to any adjustments).

� If your client did not file a return fortax year 1999, enter zero �0� as theamount for Adjusted Gross Incomeand Total Tax.

If your client isunable to return toyour office to inputtheir Self-Select PIN

Your client may authorize you toinput their Self-Selected PIN bycompleting an IRS e-file SignatureAuthorization. Provide the SignatureAuthorization to the taxpayer alongwith a copy of the completed tax return,either personally or by mail. Instructyour client to review the tax return foraccuracy and complete the SignatureAuthorization by providing the re-quested information (a self-selectedfive-digit PIN, pen and ink signatureand date). If your client is unable toreturn the signed document to youroffice, they may return it by mail orfax. It is not necessary for both taxpay-ers e-filing a joint return to select thisoption.

Importantannouncement aboutthe Debt Indicator

The IRS has negotiated agreementsto provide a Debt Indicator (DI) in the2001 filing season to Authorized IRS e-file Providers in response to proposalssubmitted under the Request for Agree-ments (RFA) process. The DI is impor-tant to Authorized IRS e-file Providersand financial institutions that offer bank

Find out how to contact yourlocal e-file coordinator atwww.irs.gov/elec_svs/eta-

coord.html

Contact your locale-file coordinator

� Submit Form 8633,Application to Participatein the Electronic FilingProgram.

� Apply early. It takes up to60 days to process appli-cations, which are ac-cepted only from Aug. 1through Dec. 1.

� Forms 8633 are processedat the Andover SubmissionProcessing Center. Formore information about e-file or the name and phonenumber of the e-filecoordinator in your area,call 1.800.691.1894.

For the latest information one-file, check out The DigitalDaily at www.irs.gov/elec_svs/elf-txpro.html.

APPLYING TOPARTICIPATE

IN E-FILE

FORMS 8453/8453OL

It is no longer necessaryto submit Forms W-2

and 1099R with Forms8453/8453OL, but Forms

8453/8453OL must besubmitted unless the

taxpayer qualifies to usethe Self-Select PIN.

If you are an e-filer,your software shouldinclude an electronic

version of Form 8867 orfacsimile.

You may keep informa-tion that is required tobe kept for three years

in electronic files.

NOTE:

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