IRS NEWS FOR TAX PROFESSIONALS
Filing is the thing to do, even if you have a balance due
- Date: Thursday April 4, 2019
- Free, 60 minutes, 1 continuing education credit
- Register here: https://www.webcaster4.com/Webcast/Page/1148/29795
Check Webinars for Tax Practitioners for upcoming webinars.
►HOT OFF THE PRESS
- The IRS provided additional expanded penalty relief to taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.
- The IRS is lowering to 80 percent the threshold required to qualify for this relief. Under the relief originally announced Jan. 16, the threshold was 85 percent. The usual percentage threshold is 90 percent to avoid a penalty.
- “We heard the concerns from taxpayers and others in the tax community, and we made this adjustment in an effort to be responsive to a unique scenario this year,” said IRS Commissioner Chuck Rettig. “The expanded penalty waiver will help many taxpayers who didn’t have enough tax withheld. We continue to urge people to check their withholding again this year to make sure they are having the right amount of tax withheld for 2019.”
- This means that the IRS is now waiving the estimated tax penalty for any taxpayer who paid at least 80 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two.
- As part of its ongoing security review, the IRS announced that starting May 13, only individuals with tax identification numbers may request an Employer Identification Number (EIN) as the “responsible party” on the application.
- The change will prohibit entities from using their own EINs to obtain additional EINs. The requirement will apply to both the paper Form SS-4, Application for Employer Identification Number (PDF), and online EIN application.
- Individuals named as responsible party must have either a Social Security number (SSN) or an individual taxpayer identification number (ITIN). By making the announcement weeks in advance, entities and their representatives will have time to identify the proper responsible official and comply with the new policy.
- The Form SS-4 Instructions provide a detailed explanation of who should be the responsible party for various types of entities.
- The IRS reminds taxpayers who can’t pay the full amount of federal taxes they owe that they should file their tax return on time and pay as much as possible. This will help reduce penalties and interest. If they can’t pay it all, they have some other options.
- Check out this YouTube Video: Owe Taxes but Can’t Pay?
- Taxpayer Advocate website: I can’t pay my taxes
- The Achieving a Better Life Experience (ABLE) Act of 2014 allows states to create tax-advantaged savings programs for eligible people with disabilities (designated beneficiaries). Funds from these 529A ABLE accounts can help designated beneficiaries pay for qualified disability expenses. Distributions are tax-free if used for qualified disability expenses.
- The IRS provides Tax Information for Members of the Military to help them meet their unique tax obligations. Here are some topics that affect current and former military personnel, along with resources where they can go to find more information.
- Notice 2019-20 provides a waiver of penalties under sections 6722 and 6698 to certain partnerships that file Schedules K-1 that fail to report information about partners’ negative tax basis capital accounts for the partnerships’ 2018 tax year
►EMPLOYERS AND BUSINESS OWNERS
- Taxpayers who pay quarterly estimated tax payments may want to revisit the amount they pay. The Tax Cuts and Jobs Act changed the way most taxpayers calculate their tax. These taxpayers include those with substantial income not subject to withholding, such as small business owners and self-employed individuals.
- Alternatively, many taxpayers who receive income not subject to withholding, but who also receive income as an employee, may be able to avoid the requirement to make estimated tax payments by having more tax taken out of their pay. These taxpayers can use the Withholding Calculator on IRS.gov to perform a Paycheck Checkup. Doing so now will help avoid an unexpected year-end tax bill and possibly a penalty in the future.
►THE BEST OF IRS.GOV
Interactive Tax Assistant (ITA) (A helpful tool even if you’re a tax professional)
- The Interactive Tax Assistant (ITA) is a tool that provides answers to a number of tax law questions. It can determine if a type of income is taxable, if you’re eligible to claim certain credits, and if you can deduct expenses on your tax return. It also provides answers for general questions, such as determining your filing status, if you can claim dependents, if you have to file a tax return, etc.
►IDENTITY THEFT / DATA THEFT / SCAM ALERTS
- The IRS is warning the public about a new twist on the IRS impersonation phone scam whereby criminals fake calls from the Taxpayer Advocate Service (TAS), an independent organization within the IRS.
- Similar to other IRS impersonation scams, thieves make unsolicited phone calls to their intended victims fraudulently claiming to be from the IRS. In this most recent scam variation, callers “spoof” the telephone number of the IRS Taxpayer Advocate Service office in Houston or Brooklyn. Calls may be ‘robo-calls’ that request a call back. Once the taxpayer returns the call, the con artist requests personal information, including Social Security number or individual taxpayer identification number (ITIN).
- The IRS announced the results of a national two-week enforcement and education campaign to combat refund crimes and identity theft that resulted in numerous legal actions against suspected criminals and businesses committing these crimes.
- Working with the Department of Justice Tax Division and U.S. Attorneys around the nation, IRS Criminal Investigation (CI) made 11 arrests, indicted 15 individuals and saw five other individuals or businesses sentenced who perpetrated some type of refund fraud or identity theft scheme.
- Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. Don’t fall prey.
►TAX EXEMPT ORGANIZATIONS
- In general, exempt organizations are required to file annual returns, although there are exceptions. If an organization does not file a required return or files late, the IRS may assess penalties. In addition, if an organization does not file as required for three consecutive years, it automatically loses its tax-exempt status.
- Learn to recognize phishing emails, especially those pretending to be from the IRS, e-Services, a tax software provider or cloud storage provider. Never open a link or any attachment from a suspicious email. Remember: The IRS never initiates initial contact with a tax pro via email.
- You or your firm may be a victim and not even know it.
- Tax professionals who suffer a data theft or loss can assist their clients by immediately reporting the loss to the Internal Revenue Service.
- Preparers can register to get this electronic newsletter. It’s one of the best ways for tax professionals to get the latest national and local IRS news. (Editor’s note: most of the articles in this monthly newsletter come from e-News for Tax Professionals.)
►NEWS FROM OTHER AGENCIES
From the SBA:
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- If you want to grow your business, you probably need to hire employees to help you. Becoming an employer and expanding your staff entails many responsibilities, one of which is seeing to payroll taxes. Unfortunately, there are many myths about these taxes. Here is the reality.