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No more line 61?


grmy2h

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I originally posted this in the Drake section but it will affect everyone, sooner or later.

Drake update;

1040 Program Updates
Release Date: 02-09-2017 15:28:03

1040 Program Updates
- On February 3, IRS disabled business rules IND 069 and IND 070 and 
will now accept an e-filed return that does not indicate either 
full-year coverage or an individual shared responsibility payment or 
does not include an exemption on Form 8965, as required by IRS 
instructions, Form 1040, line 61. In accordance with these changes, 
this update allows taxpayers to elect to file a return with no 
response to line 61 of Form 1040.

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More info in the Drake KB entry 14579: IMPORTANT: Make sure the taxpayer understands that by selecting either of these check boxes, he or she could receive communication from the IRS, experience delayed refunds, and face subsequent collection activity to recoup the individual shared responsibility payment, if the payment applies to the taxpayer's filing scenario.

The box referred to gives the taxpayer the option to file without computing the SRP.

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This is an interesting development.  I assume ATX and other software vendors won't be too far behind the curve on this change (or maybe they've already done it)  In any event, it causes me to ask some interesting questions.  Does The tax preparer have an obligation to tell the client about this change?  Or are some tax preparers going to relish their role as unofficial collection agents for ACA and just withhold the information from the client? 

My take on it is that this is the first shot across the bow on an ACA version of "Don't ask, Don't tell".  Any anyone who fails to advise their client of this option may be costing the client money - in some cases a lot of money.  Then if the client later finds out about it but can't get the penalty back, they might have a valid issue with the preparer who didn't fully inform them of their options at the outset.

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36 minutes ago, JohnH said:

This is an interesting development.  I assume ATX and other software vendors won't be too far behind the curve on this change (or maybe they've already done it)  In any event, it causes me to ask some interesting questions.  Does The tax preparer have an obligation to tell the client about this change?  Or are some tax preparers going to relish their role as unofficial collection agents for ACA and just withhold the information from the client? 

My take on it is that this is the first shot across the bow on an ACA version of "Don't ask, Don't tell".  Any anyone who fails to advise their client of this option may be costing the client money - in some cases a lot of money.  Then if the client later finds out about it but can't get the penalty back, they might have a valid issue with the preparer who didn't fully inform them of their options at the outset.

So, once again, assuming ATX jumps on board and we have the option to ignore line 61, we spend an inordinate amount of time explaining and hand holding, and you know they will ask us what they should do.  And we will go through every scenario and say, "It's up to you," and they will say, "Blah, blah, blah," and we will go thru every scenario again, and no, we in the poor South cannot charge for all this time talking, or we will lose these clients.  And, yes, I need them.  I have done 70 returns and nine had the penalty.  Those nine had small penalties, and frankly, they don't care because they have refundable credits, and the tax return is a big lottery to them.  I do have two here that are waiting.  They are actual tax "payers" and owe big penalties, and care a lot. 

My clients get more sophisticated and willing to pay me from here on out, but they have insurance.  We don't have to talk.

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36 minutes ago, Jack from Ohio said:

ATX has already jumped on board with this.  By allowing returns to be filed with the box not checked and no 8965 attached, the IRS is complying with the mandate.

Has there been an update?  I am still getting a red error when I try to create an e-file without line 61 checked and no 8965.

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3 minutes ago, RitaB said:

Has there been an update?  I am still getting a red error when I try to create an e-file without line 61 checked and no 8965.

Must have.  I have had 5 go all the way to the IRS and be approved, with the box not checked and no 8965.  In your preferences, turn on "update program on startup" for both the program and forms.  You will never miss another program or form update.

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32 minutes ago, Jack from Ohio said:

Must have.  I have had 5 go all the way to the IRS and be approved, with the box not checked and no 8965.  In your preferences, turn on "update program on startup" for both the program and forms.  You will never miss another program or form update.

I have always had the preference to update on startup selected.  If I am missing updates, that's not the issue.

 

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48 minutes ago, Jack from Ohio said:

Must have.  I have had 5 go all the way to the IRS and be approved, with the box not checked and no 8965.  In your preferences, turn on "update program on startup" for both the program and forms.  You will never miss another program or form update.

 

14 minutes ago, RitaB said:

I have always had the preference to update on startup selected.  If I am missing updates, that's not the issue.

 

I have Version 16.5.6229.31762    You find that under the "Support Tab" and click "About". 

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I have said from the beginning - the tax return and the health care insurance should have nothing to do with each other.  

Now - I have (accidentally) filed a return with out the box checked for my own minor daughter who is my dependent.  I see you get a message back with your acceptance.  

This to me is very sticky icky stuff and I am worried about possible ramifications.  Make sure that liability insurance is paid up!

 

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4 minutes ago, schirallicpa said:

 Now - I have (accidentally) filed a return with out the box checked......  

This to me is very sticky icky stuff and I am worried about possible ramifications.  Make sure that liability insurance is paid up!

 

Drake is still requiring that a box be checked to efile.  We now have a box that says Taxpayer does not want to compute SRP.

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18 minutes ago, schirallicpa said:

Now - I have (accidentally) filed a return with out the box checked for my own minor daughter who is my dependent. 

I think you're good and that is correct.  ATX yells at you (well me) if you DO check the box on Line 61 for a dependent.  You are in there like swim wear, friend. 

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Well, My take is that we do not have any official memo from IRS that we should stop ACA related calculation. I am worried about circular 230 problem. I will continue to follow the current rule at the time of filing. My ATX MAX does scream if box is not checked or 8965 or 8962 calculation.

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22 hours ago, Jack from Ohio said:

I have had 5 go all the way to the IRS and be approved, with the box not checked and no 8965.  

 

21 hours ago, RitaB said:

I have Version 16.5.6229.31762    You find that under the "Support Tab" and click "About". 

 

17 hours ago, Chris R said:

My program is up to date and I can not create an e-file without line 61 checked or the Form 8965.

 

17 hours ago, B. Jani said:

My ATX MAX does scream if box is not checked or 8965 or 8962 calculation.

Well, my version is still 16.5.6229.31762.  Is anyone besides Jack able to create an e-file for a non-dependent in ATX while ignoring the issue of health insurance?   If not, I'm keeping my trap shut to clients until something changes.  No need in getting them excited about a return I can't even e-file.

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I am just reading this thread for the first time right now.  I got the red error when checking the return this morning.  Did not try to efile without it because I just forgot to check the box on line 61.  Assume it would not have let me create the efile with that red error.  I update every time I open the software.

Tom
Newark, CA

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And keep in mind too, that we are preparing 2016 of which Trump was not the president and had no authority, therefore I do not see how an executive order signed the following year when he began his presidency would affect this filing year.  Perhaps 2017, but not 2016 unless he signs something else that will retro-active it back to 2016.

Just my 2 cents worth!

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So, the law has not changed, and people are supposed to pay a penalty for choosing to forgo paying five prices for health insurance that used to be affordable but isn't now.   Now we are in a position to say to them, "You'll get away with it if you don't pay".  Actually, we've kinda been in that position the whole time on this one. 

This is a really crappy position to be in, and I'm wondering if we're also supposed to be telling people who owe income and self-employment taxes that they can just not file for eight years and all will be well.  They still owe, the law didn't change, but they'll get away with not paying because IRS won't pursue collection.  I mean, if our people who file and pay get wind of this, are they going to sue us, too? 

And what if we advise people to lay low for eight years, and IRS changes their policy and says, "Nope, the law is the law, we will pursue collections forever"?  Do those folks sue us, too? 

Yes, I am being facetious.  A little.  But not all that much. 

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This isn't a penalty. Penalties can be waived or abated. 

The individual mandate was ruled by the Supreme Court to be a tax. If they had ruled it to be a penalty, we would not be having this discussion. 

The individual mandate is a tax, and it is in place as a law. The IRS is charged with enforcing the tax law. The President's duty is to uphold the law.  Only Congress has the authority to make or change the law. 

So, IMHO, we don't have the option of failing to properly report the individual mandate tax if we know or should have known it applies. 

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