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    P.O. Box 5
    127 West Main Street
    Knoxville, PA 16928
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    814-326-4730
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    Office@PennYorkTax.com

Greetings from the Tax Office:

Merry Christmas and Happy New Year!

2021 is a year that none of us will ever forget. Especially those of us in the Tax Preparation World!

We are again in a position that it appears possible that Congress will change 2021 Tax Laws either this year or again during the 2022 spring and make those changes retroactive. Last year, changes in March changed about 60% of the 600 returns that we had already E-Filed in February. We still have about 40 of 2019 returns and 100 returns for 2020 that have not been corrected by IRS, and then subsequent amended returns for the corrections that IRS did not correct, or incorrectly corrected.

At this time, IRS is at 60% employment, answering 3-5% of the phone calls, and at least 6 months behind in answering the mail. It is no wonder that 40% of IRS personnel that were near retirement age did retire, and we are finding that applies to Tax Professionals as well. In short, last year was very challenging for all of us.

The good thing, is that we are more prepared for 2022 and anticipate a good year. Here are some highlights that we are aware of at this point.

IRS/FBI have given us a number of new requirements for Privacy Handling of Paperwork and tax returns. NOTHING, ABSOLUTELY NOTHING with bank numbers, SS Numbers, or any privacy protected data, may be exchanged by email, Facebook message, or text. All of this material must be uploaded to our Secure Portal. Don’t even ask, it is a $100,000.00 penalty for us per occurrence. Our instant message will be disabled, and cell phones will be rarely checked. We are required to put in a new computer system that will encrypt our entire drives. THIS DOMAIN SERVER WILL REJECT ALL EMAILS WITH ATTACHMENTS THAT COME FROM AN UNSECURED EMAIL SERVICE. ie. Yahoo, Gmail, Aol, and such. This is now required by IRS/FBI for all accounting offices. We can no longer email returns to banks or insurance companies. We have been using CCH iFirm and Verifyle portals for several years now and will be exclusively using both for E-Signatures and paperwork transfer to us.

Other Items of Note:

  • Last year we were able to use the 2019 Earned Income for qualification and calculation of Earned Income Credit and Child Tax Credit. This was helpful for those with children who had mostly Unemployment Income for 2020. This look-back to 2019 is also available for tax calculations for 2021 Tax Return.
  • If you had UNEMPLOYMENT, you need to bring your benefit statement, the 1099-G, which is usually accessible through the unemployment account you created on your state’s DOL website. Those receiving New York unemployment will not receive a 1099-G in the mail. You will have to get this off the website.
    • The exemption of the first $10,200 (The Federal $600.00 x 52 weeks) from income tax did not carry over to 2021 (So Far). Remember this was a change on March 17, 2021 which caused so many problems in processing
  • If you had HEALTHCARE through the MARKETPLACE, you need to bring in your 1095-A. This will come in the mail. Your return will end up in the Kansas City Errors Unit if this is not on the original return correctly. We still have 100 returns there from past years that are not yet processed.
  • EARNED INCOME CREDIT is based on the actual income you made from working. Although we can use the 2019 Income for a look-back, if the Unemployment is fully taxed it will reduce the amount of Earned Income Credit and Child Tax Credit you will be entitled to.
  • If you made a COVID-19 retirement withdrawal in 2020, you had the option of taxing that over 3 years. Please remember if you did so, the withholding was only in year 1. The next 2 years have 1/3 that is taxable with no withholding. This is going to impact the 2021 and 2022 returns. Also if you did pay the withdrawal back into the qualified pension plan, we need that information to amend your 2020 return.
  • At the present time, we plan to allow face-to-face appointments as normal. This can change at any time, of course. We are subject to Pennsylvania Covid restrictions.
  • ZOOM appointments will be offered for those who have the technology and desire. For this to work:
    • Your information must be dropped off or uploaded to our secure portal.
    • We anticipate that it will take TWO Zoom appointments to complete your return. One for the input and questions, and second to finalize any missing material and to go over the return with you.
    • Then, we will post your completed return on the portal for your review. After your approvals and payment arrangements are made with Denise, signature forms will be made available via Verifyle for e-signature. If married, we will need email addresses for EACH taxpayer. Paper copies will be available if requested and mailed to you with a $15.00 postage and handling fee.
  • Please have your PAPERWORK filled out when you arrive. You can download the forms from our website, we can email them to you, or call the office if you do not have internet access.
  • If you are DROPPING OFF, we ask that you put your materials in the NEW DROP SLOT in the front door. We are following IRS security measures as well. (Please remember to include your completed paperwork.)
  • We can also MAIL your completed tax return to you for a $15.00 charge IF all signatures and payment of invoice are completed.
  • IRS MONITORING IS INCLUDED IN YOUR TAX RETURN FEES – Our representation software monitors your IRS transcript bi-weekly. We are notified of any changes in your IRS status. An audit is posted on your IRS transcript up to 6 months before it is assigned to an agent. Monitoring notifies us well in advance so we can review your Wage and Income items to see if there are missing items that might require an amended return. If the issue goes to audit, the penalty is 25% of under reported income. An amended return will help you avoid this penalty. In our efforts to best serve and protect our clients, our increased preparation fee will automatically include IRS transcript monitoring.

Our review of last year’s tax season determined that tax returns are taking at least 90% more prepare and review time than 2019 returns. This is completely due to Congress/IRS changes in compliance requirements. A 1040 return was always 2 pages up thru 2019. For 2021, the 1040 return is currently 2 pages, 3 schedules, and 4 worksheets, each with its own criteria of tax preparation compliance. Even a simple return for a client with children needs at least 4 additional pages of compliance. For instance we need to certify:

  1. Who had placement custody?
  2. Are you are entitled to the tax dependent?
  3. How much stimulus money did you get?
  4. Do you have child care costs?

If we put a child on your return that is incorrect, we are charge a penalty of $500.00. We have to certify that we asked all the questions and we have no reason to suspect it is incorrect.

As a result, we are unfortunately in a position that our prices do have to significantly increase to cover our payroll costs. Please see our updated fee schedule for your tax preparation fee estimates. We pride ourselves on exceptional training that is necessary to have the current tax law knowledge. We also have a reputation for taking the time necessary to complete your return, and do a 100% review of all returns by a secondary person to give you accurate results. Our staff is fully trained, and we do exhaustive Tax Update Classes to make sure we are knowledgeable about the new tax laws. I spend time with my coffee in the morning reading the updates in IRS emails and several Tax Research Services that are on the cutting edge of tax law. This keeps us on top of every bit of latest news.

Each of us has taken substantial training this year.

I (Vicki Willis) have studied for 2 years to take the United State Tax Court Practitioners exam in November. The USTCP credential will allow me a lot more leverage in appeals and the ability to get a case into Tax Court Appeal and/or US Tax Court Without hiring a Tax Attorney. I will know in April if I passed the Test. It is 4 parts: a. Internal Revenue Law b. Tax Court Rules c. American Bar Association Rules of Ethics, and d. American Bar Association rules of Evidence.
I have to get 70% correct in each part to pass the test. This will enable me to be admitted to the Tax Court Bar with the same rights as an attorney in Tax Court.

Ann Farkas is currently on Study Leave thru January 10 for the CPA Exam. We hope she gets all 5 parts of the test completed during 2022. January Test is the Financial Reporting part of the test. Once she passes all 5 parts, she will need to leave us for a year to get her Certification. Ann currently does all of our Not-for-Profit Returns, a lot of the business returns, and is very experienced with Amish returns. It helps that one of her 3 language proficiency is German!

Katrina Jefferds has completed the Annual Tax Refresher Exam with the IRS. She is going to study for the Enrolled Agents Exam later in 2022. Katrina had taken over the payroll part of our business. We are currently at 50 weekly and bi-weekly payrolls. She will still find time to prepare taxes, though!

Nicole Vracarich joined us last January. She has a BS Degree in Accounting from Millersville University. She has passed the Annual Tax Refresher Exam this year. She has taken over all of our basic Accounting and Bookkeeping Clients. It is refreshing to get up to date account data that is not on my desk waiting for me to “Get To”. She is also going to study for the Enrolled Agents Exam later in 2022.

Kathy Christ has done all of our 1099’s for several years and will be at your service again this year. She has also passed the Annual Tax Refresher Exam.

Everyone loves Denise Hoyt. Our front office runs like clockwork. We couldn’t function without the order she brings to phone calls and files.

Erin Hoyt is being promoted from file clerk to our PA DOT License Plates Processor. We are in the process of getting our office accepted with a PA DOT Contract. She will also still file, and keep order to the mountains of paperwork that we seem to acquire and scan for file storage.

David Potter is keeping our physical building in tip top shape. We are in construction mode for the next 2 weeks as we move offices, and get the building up to code for PA DOT and the IRS/FBI new criteria. After this construction, we will have a full door Security System, Camera System, and all computers on Windows Enterprise that will encrypt every drive to IRS encryption standards. Erin will move into my office that has been upgraded to Double Locks. I will move to a new office across the hall.

Please check out our website www.pennyorktax.com. We will be putting updates on this and our Facebook page. Please make your appointment early.

Thank you again for your faith in our services.

WE LOOK FORWARD TO WORKING WITH EACH OF YOU THIS YEAR!

VICKI WILLIS & THE PENN-YORK TEAM