IRS Working to Improve Required Minimum Distribution Requirements

Friday, August 28, 2015

The IRS is currently working on new procedures aimed at notifying and educating taxpayers about tax code provisions that would require them to take minimum Individual Retirement Arrangements (IRA) distributions when they turn a certain age. In general, individuals can start withdrawing a minimum amount of money from specific IRAs once they are 70½ years old.  If they don’t withdraw funds, then they face a loss of tax revenue.  There have been recommendations for the IRS to change this retirement provision noncompliance.  Congress is also interested in providing individuals with education about IRA provisions and penalties associated. Congress is trying to discard penalties for what they deem are innocent mistakes.

The IRS is being held accountable to provide taxpayers with information to help them comply with provisions for taking required minimum distributions from their IRAs. Currently, the IRS uses a method to educate the public about IRA rules.  The IRS also notifies any taxpayers that are noncompliant with their minimum distribution requirement.  The IRS has received recommendations to take steps to improve this method. These recommendations include 1) taking action to communicate with taxpayers who need to take a distribution by providing them with the distribution rules and 2) changing the process that minimum distribution notices identify noncompliant taxpayers.

Since the IRS is facing staff and budget limitations, the IRS cannot comply with some of these recommendations to make quick changes to their notification process. However, the IRS will try to contact individuals who are 70½ years to increase compliance rates, but this may be difficult due to the decreasing IRS budget.

We are the Strategic Tax Lawyers, LLP and we can assist you with any of your tax-related issues with the IRS.  We are professional business tax lawyers with years of experience in tax-related and IRS issues.  Call the Strategic Tax Lawyers at (800) 669-4775 for a free consultation to assist you with your tax-related matters.