Additional State Requests/Actions and the IRS IP PIN for the 2016 Filing Season

As the January 19 start date for the 2016 filing season draws near, here are some of the new actions that States are instituting to help fight tax identity theft and refund fraud, as well as an update on the IRS Identity Protection PIN.

Request by States for Driver’s License for the Upcoming Filing Season
As part of their continuing effort to combat tax identity theft and fraud, States will be requesting additional information be included with the tax return to help them confirm that the return they are receiving is truly the taxpayer’s. Providing the requested information will help ensure that the taxpayer’s tax refund will go to them and not to an identity thief.

One piece of information that nearly all States will be requesting is information from the taxpayer’s and spouse’s driver’s license or state-issued identification card. Although a return will not be rejected if the requested information from the driver’s license or state identification card is not present in the taxpayer’s return, not providing this information may delay the processing of the return and cause a delay in receiving any refund associated with the return.

Other State Actions to help Prevent Identity Theft and Tax Fraud
Below are some examples of new processes put in place by Illinois, Alabama, and Virginia that begin in the 2016 filing season:

• Illinois will not be sending out refunds on returns filed in January and February until mid-March. For those returns filed after March 1, 2016, the refunds will be sent out within two to three weeks from the date the Illinois return is accepted.
  See the Illinois Refund Alert on the Illinois Revenue website for more information.
• Virginia has begun to issue 7 alphanumeric Personal Identification Numbers (PINs) to Virginia taxpayers who have been identified as victims of identity theft. If a Virginia taxpayer is issued a PIN they must enter it on their Virginia individual income tax return to ensure that it is processed in a timely manner.
  See the Tax Related Identity Theft Prevention page on the Virginia Department of Taxation website for more information.
• Alabama will delay issuing refunds this year on returns for which the state has not received the W-2(s) from a taxpayer’s employer(s). This means that early Alabama filers will not receive their refunds as quickly as they have in prior years.

IRS Identity Protection PIN (IP PIN)
Beginning with the 2016 filing season, the IRS requires that an identity protection PIN (IP PIN) be entered on the 2015 tax return if an individual that is claimed as a dependent on a tax return has received an IP PIN from the IRS. Otherwise, the IRS will reject the tax return.

As a reminder, the IRS issues IP PINs to individuals who have had an identity theft indicator applied to their IRS tax account. These individuals will receive the IP PIN via IRS notice CPO1A this month (January).

Important Note: Due to an error, the IRS is emphasizing that all IP PINs that are contained in the CP01A notices that an individual receives this month (January) are for filing the 2015 tax return even though the notices incorrectly state they are for filing the 2014 tax return.

Other things to know about the Identity Protection PIN:

• If an individual loses their IP PIN, the original can be retrieved via the online IRS Get an Identity Protection PIN tool on the IRS website.
• Individuals who had an IP PIN in 2015 (for Tax Year 2014) should have received a new 6 digit IP PIN from the IRS this month (January) via IRS notice CP01A.
• When the taxpayer’s, spouse’s and/or dependent’s IP PIN is entered in the CrossLink program, they will be transmitted to the IRS as part of the Form 1040. The taxpayer’s IP PIN will print on Form 1040 in the area designated in the signature area. The Spouse’s and Dependent’s IP PIN will not print on the Form 1040 because the IRS has not included a place for them on the printed Form 1040.
• The IRS may also invite an individual to get an IP PIN by sending them a letter because their account met specific criteria that made them eligible to receive an IP PIN.

See the Identity Protection PIN page and the IP PIN FAQ page on the IRS website for more information.

Affordable Care Act – New Information Forms and How the ACA Relates to the Federal Tax Return

Below is an overview of the Affordable Care Act (ACA) related forms and the new information forms that all individuals who had health insurance in 2015 will receive during this coming filing season.

New Information Forms for the Upcoming 2016 Filing Season
There will be two new ACA related information forms that all taxpayers who had health insurance during 2015 will be receiving towards the end of March or early April of this coming filing season.

Since these two new information forms will be received late in the filing season, it is important to emphasize that they are for informational purposes only and are not needed to complete an individual’s 2015 federal tax return. Their purpose is to show individuals that they had health insurance during 2015, who was covered by their policy, and how many months they had coverage. They are essentially their proof that they had coverage during the year.

Form 1095-B (Health Coverage)
All individuals who had health insurance during 2015 will receive a Form 1095-B (Health Coverage) around the end of March 2016 from the insurance company that provided them coverage.

The Form 1095-B will give the individual policy holder the following information:

• The name, address, and SSN of each person covered by the policy
• The number of months each person was covered during the year
• The name of the health insurance issuer
• Name of Employer (if it is employer sponsored coverage)

Form 1095-C (Employer Provided Health Insurance Offer and Coverage)
All individuals that received health insurance from a company that had 50 or more full-time employees will receive a Form 1095-C (Employer Provided Health Insurance Offer and Coverage) around the end of March 2016.

The Form 1095-C will inform the employee of the following information:

• Name, address, and SSN of the employee
• Name and SSN of the employee’s dependents that were covered and for which months they were covered during 2015
• Name, address, and EIN of Employer
• For those who elected not to receive coverage, information on the coverage offered

It is also important to remember that none of the information on these two information returns is entered on the 2015 federal tax return. Therefore, it is not necessary for individuals to have received either of these two information forms in order to complete and file their 2015 federal tax return.

This is especially true for taxpayers who file in the early part of the filing season. Since they will not have received either the Form 1095-B or 1095-C, it is important to reiterate that the taxpayer may still file their 2015 federal tax return.

See the Questions and Answers about Health Care Information Forms for Individuals (Forms 1095-A, 1095-B, and 1095-C) on the IRS website for more information about the Forms 1095-B and 1095-C.

Affordable Care Act Related Forms
Below are the 2015 federal individual forms that are related to the Affordable Care Act:

• Form 1095-A (Health Insurance Marketplace Statement)
  This information return will be received by all individuals who purchased their health insurance from a Marketplace as follows:
  • Federal Marketplace – By end of this month (January). A copy will also be available via the individual’s account on healthcare.gov.
  • State Marketplace – No later than early February.
  
  
  The information included on Form 1095-A (Health Insurance Marketplace Statement) is needed to complete the Form 8962 for both the calculation of the Premium Tax Credit and to do the reconciliation of the credit with the Advance Premium Tax Credit (subsidy).
  See the Questions and Answers about Health Care Information Forms for Individuals (Forms 1095-A, 1095-B, and 1095-C) on the IRS website for more information on the Form 1095-A.

• Form 8962 (Premium Tax Credit)
  This form is completed by taxpayers who purchased their health insurance through a Marketplace and whose income is between 100% and 400% of the federal poverty line and are claiming a Premium Tax Credit.
  For individuals who received an Advance Premium Tax Credit (subsidy), this form must be completed in order to complete the reconciliation of the calculated Premium Tax Credit and the subsidy. If it is not included with the original return, the IRS will not complete the processing of the return until they receive a completed Form 8962, which will delay any refund shown on the return.
  The result of the calculation of the Premium Tax Credit and the reconciliation will be either a refundable credit or an additional tax.
  See the 2015 Form 8962 and the related instructions for more information.

• Form 8965 (Health Coverage Exemptions)
  Any individual who qualifies for an exemption from the requirement to have health insurance for all or part of 2015 will complete this form.
  For an explanation of what types of exemptions there are and how to apply for them, see the Exemptions section of the Affordable Care Act for Individuals page of the CrossLink Tax Resource Center.
  See the 2015 Form 8965 and the related instructions for additional information.