Wednesday, August 28, 2013

Blog Will Have New Home In September

The primary Drake Software blog site will be moving in September.

The blog's new home will be located on (which will soon unveil a new look/new website).  In addition to the Drake Software blog, Taxing Subjects will provide content on Business Strategy, Industry News, Human Interest stories, and an occasional White Paper or Infographic.  The Taxing Subjects website is a service provided by Drake Software.  We are merging the blogs in order to centralize related content and provide one-stop-shopping (so-to-speak) for Tax Pros.

See you on the other side...I mean SITE!

Wednesday, July 24, 2013

Beware of Phishing Scam

Drake Customers,

It has been brought to our attention that a phishing e-mail, disguised as an official e-mail from Drake Software, has been received by some of our clients.  Please be aware that such phishing e-mails and scams are intended to steal your personal and business information.  In this particular case, the false e-mail promotes a 50% discount on software and redirects the recipient to a spoofed website that looks legitimate but is not affiliated with Drake.  The Web address it takes you to is, which you can see in the address field at the top of your browser.  The site appears to be a Drake Support customer login site, but it is not. It is a scam. Do not attempt to sign in on this site.

If you did enter your EFIN and password on this scam site, you must change your Drake password on the Drake Support site as soon as possible. To change your Drake password, go to, log in with your EFIN and current Drake password. Then, from the blue menu on the left, select My Account > Change Password.

Tips on identifying phishing scams:
  • Watch for misspelled company names, slightly modified Web addresses, and poor grammar.  For example, this latest e-mail showed the "From" address as: (Misspelled "software")
  • Be careful with links in e-mails.  To verify a link, rest your mouse on the link without clicking, and a pop-up will reveal the real Web address.  If the popup doesn't match the link, don't click.  If you aren't sure, go to your browser and type in the official Web address for the company rather than clicking the link.
  • Check for a secure connection. Legitimate sites use a secure connection (https://) on pages where sensitive information is collected.  You should see a lock icon in the browser address bar which also confirms it's a secure connection.
  • Be suspicious of any deal offered in an e-mail that sounds too good to be true.
  • Be suspicious of any e-mail that contains threats to close or suspend your account.
If Drake requests account or login information from you, it will always be on an official website with an address easily identifiable as being owned by Drake (,,, etc.).  Always check the address field at the top of your browser to confirm the site.  If you have any doubts, please contact Drake Support for assistance.

Wednesday, July 3, 2013

Delay in Major Provision of the Affordable Care Act

The Treasury Department announced on Tuesday, July 2, that a major provision of the ACA will be delayed.  Employers with 50 or more employees will now have until 2015 to comply with the mandate to offer health insurance.  The penalty for non-compliance will not be enforced until 2015.

Reports suggest that this change is primarily due to the concerns voiced by employers that the reporting requirements are too burdensome and must be simplified.

The individual mandate to obtain health insurance remains in effect for 2014, and the Health Insurance Marketplace is still scheduled to open in October 2013.

Monday, July 1, 2013

Scheduled Downtime for IRS e-File

IRS e-file will experience scheduled downtime this week due to both the Fourth of July holiday and the current budget situation.

  • 1040, 1120/20S, 1065, 990 (Modernized e-File): Thursday, July 4, at 10:00 p.m. Eastern Time through Saturday, July 6, at 10:00 a.m.
  • 1041, 94x (EMS): Wednesday, July 3, at 11:00 p.m. Eastern Time through Saturday, July 6, at midnight.
No tax returns will be transmitted and no acknowledgements will be posted during the downtime.  In addition, all IRS offices will be closed July 4-5.
Drake EROs can continue to transmit returns during this timeframe, and we will send them to IRS as soon as processing resumes.
The next tentatively scheduled downtime for IRS e-file will take place on July 22, 2013.

Wednesday, April 17, 2013

Audit Report from TIGTA's Review of the IRS and the 2013 Filing Season

As tax season draws to a close, it's time to reflect on the 2013 season, which was nothing short of eventful.  At the end of each tax season, TIGTA, Treasury Inspector General For Tax Administration, gives the IRS a full and detailed evaluation in order to report how effective it was overall with the returns filed.  This year, the main focuses were the last-minute changes required by the American Taxpayer Relief Act and the transition to 100% Modernized e-File (MeF) for all individual returns.

TIGTA's interim report can be found here.  The complete report, including recommendations, will be available September 2013. 

Here are some of the more interesting observations from the TIGTA report:

  • Taxpayers are e-filing more and more. By mid-March, an all time high of 91% of taxpayers had e-filed their returns this year, up nearly 2% from last year.
  • Through March 9, the IRS issued over $154 billion in refunds on 53,447,000 tax returns. 
  • The average refund was $2,894. In comparison, last year's average refund was $2,944.
Season Delays
  • The start of the 2013 tax season was postponed from January 22 to January 30, in order for the IRS to have more time to implement the changes from the ATRA of 2012. However, the IRS stated that several forms would take longer to update, and taxpayers using those forms waited until later in February to file their returns.
Software Errors
  • On March 12, 2013, the IRS announced that a limited number of software companies' products created further delays for some taxpayers who filed returns that contained Form 8863 between February 14 and February 22. This affected roughly 10 percent of returns that claimed the American Opportunity Tax Credit.
  • This article gives further details about the processing error that led to many tax refund delays and headaches.
MeF and CADE 2
  • The 2013 Filing Season marked the first time the IRS accepted and processed all e-filed tax returns using the MeF system. It received over 62 million returns through MeF as of March 9. It is continuing to monitor the use of MeF in order to improve the system for the next tax season.
  • The IRS first began processing tax returns via the CADE 2 for the 2012 Filing Season. It will result in a single database that houses all individual taxpayer accounts.
    • This database will replace the Master File and serve as a central source of individual tax return data, making reporting and retrieval of taxpayer account data faster and more efficient. However, the Master File was still used as the official repository of individual accounts for the 2013 Filing Season.
Misuse of Form 8888 by Tax Preparers
  • Form 8888 has instructions on how taxpayers can split their refund into multiple accounts, all of which must belong to the taxpayer. It specifically says that the split refund option is not to be used to deposit the refund into both the taxpayer's and the tax preparer's accounts in order to pay for services rendered by the preparer.
  • TIGTA notified the IRS of its concerns with the misuse of Form 8888 on February 8, 2013, and the IRS agreed to look further into the matter to prevent multiple deposits to one bank account.
Form 8867 Compliance Issues
  • As of March 7, 2013, TIGTA had identified 80,585 paid tax return preparers filing 612,622 tax returns claiming nearly $1.9 billion in EITC without the required Form 8867 attached to the tax return.  This equates to more than $306 million in penalties that can be assessed by the IRS.
  • The IRS indicated that it is accumulating information that identifies tax returns filed without a Form 8867 and will assess EITC penalties against paid tax return preparers at the completion of the filing season.
  • Tax return preparers may be assessed a $500 penalty for each tax return with earned income credit filed without Form 8867.
Education Credits
  • The IRS continues to issue potentially erroneous Education Credits to taxpayers.
  • As of March 7, 2013, TIGTA identified 10,659 taxpayers who filed tax returns claiming Education Credits totaling $20.6 million for individuals younger than 14, and 7,402 taxpayers claiming credits totaling $9.4 million for individuals older than 65.  Although the law does not limit the American Opportunity Tax Credit to individuals of specific ages, individuals of these ages are unlikely to be pursuing a four-year degree or vocational certification.
ID Theft/Fraud Prevention
  • As of March 9, 2013, the IRS reported that it identified 220,821 tax returns with $1.86 billion claimed in fraudulent refunds and prevented the issuance of $1.79 billion (96.2 percent) of those refunds.
  • The IRS continues to implement precautionary methods to prevent ID theft and fraud.
    • The filters imposed by the IRS include criteria based on characteristics of confirmed identity theft tax returns.  These characteristics include amounts claimed for income and withholding, filing requirements, prisoner status, taxpayer age, filing history, etc.
  • As of February 28, 2013, the IRS reported that it identified and confirmed 85,385 fraudulent tax returns and prevented the issuance of $489 million in fraudulent tax refunds as a result of the identity theft filters.
Customer Service
  • The IRS plans to assist six million taxpayers at Taxpayer Assistance Centers during Fiscal Year 2013, which were 11.8 percent fewer taxpayers than were assisted in Fiscal Year 2012. 
  • IRS assistors have answered 8.3 million calls and have achieved a 67.8 percent Level of Service with a 14.2 minute Average Speed of Answer. The Level of Service for 2012 was 66.8 percent.
  • The IRS is offering more self-assistance options that can be accessed 24/7. There have been more than 1.9 million downloads of the IRS2Go mobile application, over 1.5 million views of YouTube help videos, and a 31 percent increase in its Twitter followers.
  • The IRS public website,, had a 21.1 percent increase in the number of visits over the same period in the prior filing season.  It also reports a 41.7 percent increase in the number of taxpayers obtaining their refund information online via the "Where's My Refund" option found on

Wednesday, April 10, 2013

Time to File Extensions

The end of the filing season is almost here (Hooray!), which means it's "Extension Time."

Form 4868, Application for Extension of Time to File, must be filed by midnight on the normal due date of the return - in the case of a 1040 return, April 15. For any extension rejected by the IRS, you have a five-day grace period to correct and retransmit the extension. We recommend that you e-file extensions as early as possible before the deadline to ensure timely filing. Remember that an extension of time to file does not extend the time to pay tax due.

To e-file for an extension in Drake, take the following steps:
  1. Open the return and enter demographic information on screen 1.
  2. Open the EXT screen (available from the Other Forms tab) and from the drop list for the 4868 box, select X to produce Form 4868.  Enter all applicable information, including the amount being paid with the extension. If paying the entire amount owed with the extension, mark the Taxpayer is paying the entire amount of tax due.  Use available override fields as necessary. Close the EXT screen.
  3. Open the EF screen (from the General tab) and, in the Federal E-file Override section, mark the 4868 box. In State E-file Override, select Do NOT send any states (unless you intend to send a state extension, then select it from the drop list.). Close the EF screen.
  4. View the return to confirm that Form 4868 will be transmitted (EFSTATUS page) and to clear any errors on the ETD_MSG page. (If no errors are present, the ETD_MSG is not generated.)  Exit the return.
  5. From the Home window of Drake, go to EF > Select Returns for EF to open the EF Return Selector Screen.  Confirm that the 4868 alone is listed for the return in the EF Documents column.  If so, proceed through the usual steps to select and transmit.
For more details on extensions, deadlines, grace periods, and arranging payment, view the Drake Knowledge Base article 14533: "1040 - How to E-File an Individual Extension" and article 14633: "1040 Deadline and Grace Period - Perfecting a Rejected Timely Filing." To access the Knowledge Base, log in to Drake Support, go to Resources > Knowledge Bases, and search for the above article numbers.
Other resources include Screen Help on the EXT screen, and Chapter 5, "Return Preparation," of the 2012 Drake Software User's Manual.