Imperial Financial Services

Unclaimed income tax refunds worth more than $1.3 billion await an estimated 1.3 million taxpayers who did not file a 2017 Form 1040 federal income tax return, according to the Internal Revenue Service. The IRS wants to help taxpayers who are due refunds but haven’t filed their 2017 tax returns yet, said IRS Commissioner Chuck Rettig. Time is quickly running out for these taxpayers. There’s only a three-year window to claim these refunds, and the window closes on May 17. W...e want to help people get these refunds, but they will need to quickly file a 2017 tax return. The IRS estimates the midpoint for the potential refunds for 2017 to be $865 that is, half of the refunds are more than $865 and half are less. In cases where a federal income tax return was not filed, the law provides most taxpayers with a three-year window of opportunity to claim a tax refund. If they do not file a tax return within three years, the money becomes the property of the U.S. Treasury. For 2017 tax returns, the window closes May 17, 2021, for most taxpayers. The law requires taxpayers to properly address, mail and ensure the tax return is postmarked by that date. The IRS reminds taxpayers seeking a 2017 tax refund that their checks may be held if they have not filed tax returns for 2018 and 2019. In addition, the refund will be applied to any amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or past due federal debts, such as student loans. By failing to file a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2017. Many low- and moderate-income workers may be eligible for the Earned Income Tax Credit (EITC). For 2017, the credit was worth as much as $6,318. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2017 were: $48,340 ($53,930 if married filing jointly) for those with three or more qualifying children; $45,007 ($50,597 if married fi

To help taxpayers, the Internal Revenue Service announced today that it will take steps to automatically refund money this spring and summer to people who filed their tax return reporting unemployment compensation before the recent changes made by the American Rescue Plan. The legislation, signed on March 11, allows taxpayers who earned less than $150,000 in modified adjusted gross income to exclude unemployment compensation up to $20,400 if married filing jointly and $10,200... for all other eligible taxpayers. The legislation excludes only 2020 unemployment benefits from taxes. Because the change occurred after some people filed their taxes, the IRS will take steps in the spring and summer to make the appropriate change to their return, which may result in a refund. The first refunds are expected to be made in May and will continue into the summer.

President Biden on Tuesday signed legislation extending a loan program designed to help small businesses adversely impacted by the coronavirus pandemic. The bill, passed in overwhelming bipartisan votes in the House and Senate earlier this month, extends the deadline for businesses to apply for assistance through the Paycheck Protection Program (PPP) by two months, from March 31 to May 31. In addition to extending the window in which businesses can apply for the loans, the bill signed by Biden on Tuesday also gives the Small Business Administration (SBA) until June 30 to process loan applications.

2017 unclaimed refunds deadline extended to May 17 For tax year 2017 Federal income tax returns, the normal April 15 deadline to claim a refund has also been extended to May 17, 2021. The law provides a three-year window of opportunity to claim a refund. If taxpayers do not file a return within three years, the money becomes property of the U.S. Treasury. The law requires taxpayers to properly address, mail and ensure the tax return is postmarked by the May 17, 2021, date.

As work continues on issuing millions of Economic Impact Payments to Americans, the Internal Revenue Service and Treasury Department announced today that they anticipate payments will begin to be issued this weekend to Social Security recipients and other federal beneficiaries who do not normally file a tax return, with the projection that the majority of these payments would be sent electronically and received on April 7.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allows qualifying small business owners to receive Paycheck Protection Program (PPP) loans in order to stay in business and pay their employees during the Coronavirus epidemic. Recipients of these loans are eligible for forgiveness of all or a portion of these loans if the loan proceeds are used in accordance with the CARES Act. Announcement 2020-12 notifies lenders who make PPP loans (that are later forgiven under the CARES Act) should not file information returns or furnish payee statements to report the forgiveness.

The IRS is processing a backlog of mail due to COVID-19, and paper checks mailed to the IRS, either with or without a tax return, may still be unopened. Taxpayers in this situation should not cancel their checks and should make sure funds remain available so the IRS can process them to avoid potential penalties and interest. The IRS credits payments using the postmarked date on mail rather than the date they opened and processed them so they will not be late if postmarked... timely. The IRS will provide relief to taxpayers for bad check penalties for dishonored checks the agency received between March 1 and July 15, 2020, due to delays in IRS mail processing.

Later this month, the Internal Revenue Service will start mailing letters to roughly 9 million Americans who typically don’t file federal income tax returns who may be eligible for, but have not registered to claim, an Economic Impact Payment. The letters will urge recipients to register at IRS.gov by Oct. 15 in order to receive their payment by the end of the year. Individuals can receive up to $1,200, and married couples can receive up to $2,400. People with qualifying chi...ldren under age 17 at the end of 2019 can get up to an additional $500 for each qualifying child. The letters are being sent to people who haven’t filed a return for either 2018 or 2019. Based on an internal analysis, these are people who don’t typically have a tax return filing requirement because they appear to have very low incomes, based on Forms W-2, 1099s and other third-party statements available to the IRS. But many in this group are still eligible to receive an Economic Impact Payment. See more

This week the Treasury Department and the Internal Revenue Service will send interest payments to about 13.9 million individual taxpayers who timely filed their 2019 federal income tax returns and are receiving refunds. The interest payments, averaging about $18, will be made to individual taxpayers who filed a 2019 return by this year’s July 15 deadline and either received a refund in the past three months or will receive a refund. Most interest payments will be issued separately from tax refunds. In most cases, taxpayers who received their refund by direct deposit will have their interest payment direct deposited in the same account. About 12 million of these payments will be direct deposited

If a taxpayer mailed a check with or without a tax return, it may be unopened in the backlog of mail the IRS is processing due to COVID-19. Any payments will be posted as the date the IRS received them rather than the date the agency processed them. To avoid penalties and interest, taxpayers should not cancel their checks and should ensure funds continue to be available so the IRS can process them. To provide fair and equitable treatment, the IRS is providing relief from bad check penalties for dishonored checks the agency received between March 1 and July 15 due to delays in this IRS processing. However, interest and penalties may still apply. See www.irs.gov/payments for options to make payments other than by mail.

Today, the U.S. Small Business Administration announced the conclusion and success of the Economic Injury Disaster Loan (EIDL) Advance program, which provided U.S. small businesses, non-profits and agricultural businesses a total of $20 billion in emergency funding. In order to assist the greatest number of small businesses, the EIDL Advance provided $1,000 per employee up to a maximum of $10,000. Recipients did not have to be approved for a loan to receive the Advance, and t...he Advance provided an interim but vital source of funds while applicants awaited a decision on their loan application. Following the enactment of COVID-19 emergency legislation, the SBA provided nearly six million small businesses employing 30.5 million people with $20 billion through the unprecedented EIDL Advance program, Administrator Jovita Carranza said. This program, built from the ground up in less than two weeks, assisted millions of small businesses, including non-profit organizations, sole proprietors and independent contractors, from a wide array of industries and business sectors. Having allocated the full $20 billion that was appropriated by Congress, SBA will discontinue making EIDL Advances to new applicants. By law, the SBA is not permitted to issue new EIDL Advances once all program funding has been obligated. EIDL loan applications will still be processed even though the Advance is no longer available. As a reminder, the loan portion of the EIDL program continues to have funds available at very affordable terms, including a 3.75% interest rate for small businesses and 2.75% for non-profit organizations, a 30-year maturity, and an automatic deferment of one year before monthly payments begin. Every eligible small business and non-profit is encouraged to apply to get the resources they need.

The IRS today reminds taxpayers who took advantage of the People First Initiative tax relief and did not make previously owed tax payments between March 25 to July 15 that they need to restart their payments. As the IRS continues to reopen its operations across the country, taxpayers who were in payment agreements and skipped any payments from March 25 and July 15 should start paying again to avoid penalties and possible default on their agreements.

Interest on individual 2019 refunds reflected on returns filed by July 15, 2020 will generally be paid from April 15, 2020 until the date of the refund. Interest payments may be received separately from the refund. By law, the interest rate on both overpayment and underpayment of tax is adjusted quarterly. The interest rate for the second quarter, ending on June 30, 2020, is 5% per year, compounded daily. The interest rate for the third quarter, ending September 30, 2020, is 3% per year, compounded daily.

The IRS mails the notice, Notice 1444, Your Economic Impact Payment, to your client’s address of record within a few weeks after the Payment was issued. Individuals should keep the letter for their tax records. The Economic Impact Payment is considered an advance credit against 2020 tax. Taxpayers will not include the payment in taxable income on their 2020 tax return or pay income tax on the payment. It will not reduce a taxpayer’s refund or increase the amount of tax a taxp...ayer owes when the taxpayer files a 2020 Federal income tax return next year. When a taxpayer files a 2020 tax return next year, the taxpayer may claim any additional credit for which the taxpayer is eligible. The IRS is not able to correct or issue an additional payment at this time and will provide further details on IRS.gov on the action individuals may need to take in the future. See more

In COVID Tax Tip 2020-62 the IRS describes a situation in which unmarried parents receive the additional $500 EIP for the same child. This could happen, for instance, if one parent claimed the child in 2018 and has not yet filed in 2019 while the other parent filed in 2019 and claimed the child. The tax tip states that the law doesn’t require either parent to return the EIP. Each parent should retain Notice 1444, Your Economic Impact Payment, which was sent to the parents’ last known addresses within 15 days of the EIP.

The IRS sent a reminder to taxpayers this week confirming that some Economic Impact Payments are being sent via prepaid debit card instead of paper check. The debit cards arrive in a plain envelope from "Money Network Cardholder Services." Nearly 4 million people are being sent their Economic Impact Payment by prepaid debit card. The prepaid cards provide consumer protections available to traditional bank account owners, including protection against fraud, loss and other errors.