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First Thursday Minutes – December 5, 2019

Stakeholder Liaisons
Doug Blade
Karen Brehmer
Neki Cox
Kathleen Fox

Stakeholder Liaison Manager
Kristen Hoiby, Area 6 manager

Departments of Revenue
MO       Laura Wallendorf
NE        Dawn Holtmeier

Tax Professionals
Rita Barnard
Darrel Beadle
Velma Bjorgum
Jacob Borash
Frank Carnahan
Brad J Decker
Kelly Golish
Jacen Gondringer
Doug Gross
Steven Heeley
Cindy Hockenberry
Terry Johnson
Bill Kelly
Rick Kollauf
Ken Larsen
Judy Lashinski
Terri Lillesand
Laura Merschman
Ruth Ann Michnay
Holly Muehl-Pett
Paul Osterberg
Jodee Paape
Kathy Reiniger
JoAnn Schoen
Barbara A Steponkus
Brad Voght
Jill Wrensch

Webinars

No webinars scheduled at this time. Please check Webinars for Tax Practitioners for upcoming webinars.

Discussion items
 
1)   2019 Form 1040 and schedules

2019 Form 1040. There are three schedules for 2019, compared to six in 2018.

2)   Virtual Currency

3)   Discussion: Form W-4 for 2020, federal and state rules

NEBRASKA:

For 2020, if an employee changes withholding, they must use the new IRS Form W-4.  In Nebraska, the employee MUST ALSO fill out a new W-4 for the state of NE.

MINNESOTA:

Mark Krause provided this information: Beginning January 1, 2020 when a new employee fills out a W-4 or an existing employee changes their W-4, a new 2020 W-4MN will need to be completed since withholding allowances will no longer be calculated on the federal W-4. The rules for submitting a W-4MN to Revenue have not changed.

WISCONSIN: Changes to Form WT-4

  • The Internal Revenue Service has redesigned Form W-4 for the year 2020. As explained in the DRAFT posted on the IRS website, federal allowances have been removed. Prior to this change, an employee could use Form W-4 for Wisconsin purposes if the employee’s federal allowances equaled his or her Wisconsin exemptions. Since federal allowances have been removed, the redesigned Form W-4 cannot be used for Wisconsin purposes.
  • The following applies for Wisconsin withholding tax purposes beginning in 2020:
    • All newly-hired employees must provide Form WT-4 to their employer.
    • Existing employees that change the number of their Wisconsin withholding exemptions must provide Form WT-4 to their employer.
    • Existing employees are not required to provide Form WT-4 to their employer (unless the employer requests it) if the employee wishes to maintain the same number of Wisconsin withholding exemptions used in 2019.

MISSOURI:

Laura Wallendorf will look into this issue.

4)   National Tax Security Awareness Week

  • IR-2019-192, National Tax Security Awareness Week begins; IRS and Security Summit partner offer Cyber Monday shopping tips to protect computers, mobile phones
  • IR-2019-195, National Tax Security Awareness Week, Day 2: Don’t take the bait: Recognize, avoid phishing scams from identity thieves
  • IR-2019-196, National Tax Security Awareness Week, Day 3: Creating strong passwords can protect taxpayers from identity theft
  • IR-2019-198, National Tax Security Awareness Week, Day 4: IRS, Security Summit warns business owners about being targets for identity thieves
  • IR-2019-200, National Tax Security Awareness Week, Day 5: Tax professionals need data protection plans; must guard against identity theft

5)   IRS reminds tax professionals of tasks to get ready for 2020

  • Update e-Services information
  • Renew PTINs
  • Update POA/third-party authorization records
  • Review security safeguards
  • Review Practitioner Priority Service options
  • Register for e-News for Tax Professionals and subscribe for quick alerts

State Departments of Revenue

 Minnesota – Mark Krause

  • Each day we are mailing approximately 3,000 tax year 2017 conformity-related adjustment letters. Our goal is to be completed with 2017 adjustments by the end of this year.
  • Any questions can be directed to outreach@state.mn.us.

Your issues and questions:

1) Taxpayer First Act

 There are three issues that commonly come up and have been an issue for many years. Please use the Taxpayer First Act email to share these concerns with the IRS.

1) Letters or payments “cross in the mail”. Example: The taxpayer pays a balance due on Form 1040 by check or by Electronic Funds Withdrawal on 10-15-2019.  The taxpayer gets a balance due notice in early November. The IRS system does not show the payment.

2) The taxpayer gets a paper refund check as a result of an adjustment after their return has been processed. They already received the original refund as shown on the return, or they paid the balance due.  Or they get a refund check that is different from what they were expecting. The taxpayer is supposed to get a letter to explain the refund. Sometimes they get a letter up to three weeks after the refund check, or they don’t get a letter at all.

3) Form 2848’s are not processed by the CAF unit in one week, as the IRS states. It often takes three weeks. Sometimes they are not processed at all, and often there is no correspondence to the taxpayer to explain if there was a problem.  POAs can’t wait three weeks to contact the IRS, so they call PPS and fax in Form 2848. This works, but it would be better to have an electronic system for submitting Form 2848 where it’s recorded in day or two.

Next Call

The next call will be on January 2, 2020.
We’ll send out the WebEx link closer to that date
Meetings are one hour long. Come when you can, leave when you must.
Thank you to everyone who attended. We appreciate your time and input!

First Thursday Minutes – November 7, 2019

Stakeholder Liaisons
Doug Blade
Kathleen Fox
Cathye Mason
Mike Mudroncik
Sherry Saucerman

Stakeholder Liaison Manager
Kristen Hoiby, Area 6

Departments of Revenue
IL          Maribeth Oliver
MN       Mark Krause

Tax Professionals
Gail Bates
Darrel Beadle
Ron Berman
Jacob Borash
Velma Bjorgum
Barbara Brown
Leslie Chambers
Carrie Christensen
Tracy Danzer
Laura Dawson
Brad Decker
Susan Du
Jodi Eckhout
Jessica Gatzke
Kelly Golish
Jacen Gondringer
Joel Guthmann
Steven Heeley
Cindy Hockenberry
Kelly Jaskowiak
Lourdes Jimenez
Terry Johnson
Mercean Lam
Judy Lashinski
Laura
Brian Murphy
Jodee Paape
Darian Panasuk
Kathy Reiniger
Jo Ann Schoen
Joan Scholl
Barbara Steponkus
Will Wallace
Jill Wrensch

 

Webinars

Currently, there are no webinars scheduled.  Information about future IRS webinars for tax professionals can be found at https://www.irs.gov/businesses/small-businesses-self-employed/webinars-for-tax-practitioners.

Discussion items
1)  Virtual Currency:  IRS Issues Additional Guidance & Reminds Taxpayers of Reporting Obligations
2)   IRS Urges Taxpayers to Get Ready to File their 2019 Taxes
3)   Online Option for Tax Pros to Earn CE Credits
4)   Tax Pros Need to Renew their PTINs
5)   Final and Proposed Regulations:  Additional First Year Depreciation Deduction
6)   Treasury Decision 9878 – Rules and Procedures for Electing Disaster Loss Claims
7)   New Payment Option Available to Taxpayers in Private Debt Collection Program

State Departments of Revenue Minnesota – Mark Krause

    • Based on feedback, we have updated the POA forms and mail appointees can receive. We separated Form REV184, Power of Attorney, and Form REV185, Authorization to Release Tax Information, into forms for individuals and businesses.
    • We will still accept Form REV184 with a revision date of 12/2014 or 01/2017. Customers will be able to remove a POA appointee using the new Form REV184r, Revocation of Power of Attorney.
    • Revenue will now send refund checks and correspondence about refunds directly to customers. We will send all other correspondence to the POA appointee if selected.  For more detailed information, see our POA web page.

Illinois – Maribeth Oliver
 

  • The Illinois Tax Delinquency Amnesty Act provides the opportunity for taxpayers to pay outstanding eligible tax liabilities and to have eligible penalties and interest forgiven on taxes paid in full during the amnesty period. Eligible liabilities are taxes due from periods ending after June 30, 2011, and prior to July 1, 2018.
  • If you have an existing tax liability, make full payments of your eligible tax liability between October 1, 2019, and November 15, 2019. If you failed to file a tax return or incorrectly reported the liability due on a previously filed return for these tax periods, now is the time to file returns, make corrections, and pay the tax. You must file an original return for non-filed periods or file an amended return to make corrections

Your issues and questions:

1) When will the IRS issue drafts of the 2019 Forms 1120?
Response: Drafts of the forms associated with the 2019 Form 1120 can be found at www.irs.gov/draftforms  and then using the search box by typing in Form 1120 (please see screenshot below).  The draft of the Form 1120 itself was published on August 21st.


2) Based upon the meeting’s discussion of Treasury Decision 9878 (Rules and Procedures for Electing Disaster Loss Claims), there was a question regarding the correct due date when a taxpayer files for an extension, resides in an area declared a federal disaster area and the IRS postpones filing and payment obligations for taxpayers in that area to a date beyond the original extension date?  The Q & A’s documented below can be found at https://www.irs.gov/businesses/small-businesses-self-employed/faqs-for-disaster-victims-extensions-of-time-to-file

Question: A taxpayer whose individual income tax return (Form 1040) is due to be filed on or before April 15, 2013, timely files an extension of time to file the return under section 6081 thereby extending the due date to October 15, 2013.  If the county in which the taxpayer resides is declared a federally declared disaster area and, pursuant to section 7508A of the Internal Revenue Code, the IRS postpones filing and payment obligations for the period September 1, through November 4, 2013, when is the taxpayer’s Form 1040 now due?

Answer:  The due date for filing the individual income tax return is the later of the end of the postponement period or the extended due date.  Here, the postponement period ends on November 4, 2013, which is later than the extended due date (October 15, 2013).  Therefore, the taxpayer’s individual income tax return is due November 4, 2013.

(06/09) Question:  What is the effect of filing an extension of time to file under section 6081, if, prior to the March 15, 2013, due date for filing a U.S. Return of Partnership Income (Form 1065), an event in the state and county in which the partnership was formed, results in the area being declared a federally declared disaster area and, pursuant to section 7508A of the Internal Revenue Code, the IRS postpones filing and payment obligations for the period March 1, 2013, through April 30, 2013?

 Answer: The due date for filing the partnership return is the later of the extended due date or the end of the postponement period.  If the partnership, which is an affected taxpayer with respect to the federally declared disaster, filed an extension of time to file prior to the end of the postponement period (April 30, 2013), the extension would relate back to the original due date, March 15, 2013.  The extension would run from March 15, 2013, to September 16, 2013.  Because the extended due date (September 16, 2013) is later than the end of the postponement period (April 30, 2013), the partnership’s Form 1065 is timely if filed on or before September 16, 2013.

(06/09) Question:  A corporate taxpayer whose U.S. Corporation Income Tax Return (Form 1120) is due to be filed on or before March 15, 2013, files an extension of time to file under section 6081 prior to the due date for filing the return thereby extending the due date to September 16, 2013.  If, as a result of a disaster, the county in which the corporate taxpayer’s principal place of business is located is declared a federally declared disaster, and pursuant to section 7508A of the Internal Revenue Code, the IRS postpones filing and payment obligations for the period July 1, 2013, through August 30, 2013, when is the corporate taxpayer’s Form 1120 now due?

 Answer: The postponement period under section 7508A runs concurrently with any extensions of time to file and pay under other sections of the Internal Revenue Code.  The return is due the later of the extended due date or the end of the postponement period.  If the extended due date occurs prior to the end of the postponement period, the return is due to be filed at the end of the postponement period.  If however, the postponement period ends prior to the extended due date, the return is due to be filed on the extended due date.  Here, the extended due date (September 16, 2013) is later than the end of the postponement period (August 30, 2013), therefore, the corporate taxpayer’s Form 1120 is due September 16, 2013.  Unless the corporate taxpayer also filed an extension of time to pay pursuant to section 6161, the corporate taxpayer’s payment would be due on August 30, 2013, the last day of the postponement period.

Next Call

The next call will be on December 5. We’ll send out the WebEx link closer to that date

Meetings are one hour long. Come when you can, leave when you must.

Thank you to everyone who attended. We appreciate your time and input!

First Thursday Minutes – October 3, 2019

Discussion items

 1)   Tax Withholding Estimator – new and improved!

Tax Withholding Estimator

Tax Withholding Estimator helps retirees; figures tax on Social Security benefits

New IRS Tax Withholding Estimator helps workers with self-employment income

2)   Tax-Exempt Organization Update

Treasury and IRS issue proposed regulations and provide relief for certain tax-exempt organizations

3)   Tax Security 2.0

Here’s what tax pros can do so they aren’t taken on a phishing trip

It’s important for tax pros to know the signs they are a cyberthief’s victim

4)   National Work and Family Month

 The IRS is participating in National Work and Family Month by issuing a series of informative tips on work-life balance throughout the month of October. The agency plans a series of news releases, fact sheets and tax tips. Topics covered include family-owned businesses, family tax credits, military tax benefits and scams and security issues.

5)   Data security message to PTIN holders

Email sent to tax pros from the Return Preparer Office on September 24, 2019.

“When completing your PTIN renewal, a checkbox will be available to confirm your awareness of these data security responsibilities.”

Email was sent via “Gov Delivery” from irs@service.govdelivery.com.

FOIA Awareness for PTIN Holders” reminder:

Legitimate IRS emails regarding PTIN issues are sent from two email addresses: irs@service.govdelivery.com and Taxpros@ptin.irs.gov.

6)   QBI and rental real estate

IRS finalizes safe harbor to allow rental real estate to qualify as a business for qualified business income deduction

State Departments of Revenue Minnesota – Mark Krause

  • We updated the withholding tax tables effective 9/4/19. The new tables are included in the Withholding Tax Instructions on our website.
  • Final drafts of 2019 forms and instructions have been posted to the Software Providers page on our website. 2019 Instructions for the M1 and M1PR will be posted later this year.

Your issues and questions:

1) Comments on the Tax Withholding Estimator and Form W-4

 Comment:  The “results page” should show the date it was prepared.

Response: It does. 😊  See the green box below.

Comment:  Tax pros made a request for changes to Form W-4 and W-4P for 2019. They said it would be better to allow taxpayers to state a percentage of income they want withheld from each paycheck, or a dollar amount they want withheld from each paycheck.

Response:  We put that suggestion in IMRS. The draft Form W-4 for 2020 changes how withholding is calculated. The time period for making comments on the draft closed on September 9th, so it seems doubtful that the IRS will be able to accommodate your request for changes to the 2020 Form W-4.

However, IRS is constantly seeking feedback from the tax community. Comments regarding forms and publication can be provided to IRS at https://www.irs.gov/forms-pubs/comment-on-tax-forms-and-publications .

In addition, the draft 2020 Form W-4 (Employee’s Withholding Certificate), Form W-4V (Voluntary Withholding Request (For unemployment compensation and certain Federal Government and other payments) and Form W-4P (Withholding Certificate for Pension or Annuity Payments) will and do offer the opportunity for a taxpayer to request specific dollar amounts or a percentage of each payment they want withheld as a federal income tax payment.

The draft 2020 Form W-4 includes Step 4(c) – Extra Withholding. The draft instructions state that the step can be used to enter “any additional tax you want withheld from your pay each pay period.”

The 2019 Form W-4V instructions identify that for any social security benefit received the filer of the form may choose to have the SSA withhold federal income tax of 7%, 10%, 12% or 22% from each payment, but no other percentage or amount.

The 2019 Form W-4P includes line 3 which allows the taxpayer to identify an additional amount they want withheld from each pension or annuity payment.  The IRS is scheduled to release a draft 2020 Form W-4P sometime this fall.

Please see:

2) Error in Tax Calculation in Schedule D Tax Worksheet

This page on IRS.gov says that some taxpayers will be receiving refunds. Tax pros state that some clients are receiving refunds. However, there are two problems:

1) The taxpayer gets a refund check but no letter of explanation. Tax pros state that the IRS should always send a letter at the same time as the refund. A refund check with no letter causes concern for the taxpayer, and they often believe their tax preparer must have made a mistake.

2) In some cases, the refund is not calculated correctly. The IRS is not calculating Section 1250 and the QBI Deduction correctly.

RESPONSE:  We entered this in IMRS and will keep you posted.

3) An issue with an amended return

What happened:

  • A dependent filed his tax return and stated that he cannot be claimed as a dependent.
  • He CAN be claimed as a dependent and he amended his return to say so.
  • The IRS has processed his amended return.
  • The parents are filing now and trying to claim him as a dependent.
  • They can’t e-file with him as a dependent. Why not?

RESPONSE: The IRS computer system is reporting how the dependent originally filed, claiming that he is not a dependent on someone else’s return. The computer system doesn’t get updated from his amended return which would allow the parents to e-file. The parents will have to paper file to claim their son as a dependent.

4) PTIN question

The Return Preparer Office told tax pros: “When completing your PTIN renewal, a checkbox will be available to confirm your awareness of these data security responsibilities.”

Question:  Will all PTIN holders be required to answer the question? Including supervised employees?

 Response: Yes, all PTIN holders will have to answer this question.

5) How do we get in touch with Wisconsin Department of Revenue to get a taxpayer in “uncollectable status”?

RESPONSE:

6) How do we get in touch with Illinois Department of Revenue for collection issues?

RESPONSE:

  • Illinois tax information can be found on https://mytax.illinois.gov.
  • Look for “Contact” at the top of the page.
  • Select “Contact IDOR”.
  • There are offices throughout the state where answers can be obtained from a DOR agent either in person or over the phone.
  • See also Payment Plan.

Next Call

The next call will be on November 7. We’ll send out the WebEx link closer to that date

Meetings are one hour long. Come when you can, leave when you must.

Thank you to everyone who attended. We appreciate your time and input!

December 6 – FRIDAY – Message for Tax Pros

Tax Practitioners Must Draft Written Data Protection Plans

The IRS, state tax agencies and the nation’s tax industry today reminded tax professionals that federal law requires them to create and use a written information security plan to protect their clients’ data.

The reminder came as the IRS and its Security Summit partners completed the fourth annual National Tax Security Awareness Week. The special week’s purpose is to encourage individuals, businesses and tax professionals to take steps to protect sensitive financial and tax data that can be used by identity thieves.

To get started on an information security plan, tax professionals can review IRS Publication 4557, Safeguarding Taxpayer Data (PDF). It details critical security measures that all tax professionals should take. The publication also includes information on how to comply with the Federal Trade Commission (FTC) Safeguard Rule.

Regardless of size, each tax firm, as part of its plan, must:

  • designate one or more employees to coordinate its information security program;
  • identify and assess the risks to customer information in each relevant area of the company’s operation and evaluate the effectiveness of the current safeguards for controlling these risks;
  • design and implement a safeguards program and regularly monitor and test it.
  • select service providers that can maintain appropriate safeguards, make sure the contract requires them to maintain safeguards and oversee their handling of customer information; and
  • evaluate and adjust the program in light of relevant circumstances, including changes in the firm’s business or operations, or the results of security testing and monitoring.

EArlier this year, the Security Summit partners offered tax professionals a Taxes-Security-Together Checklist to consider. The Summit partners renewed their call for tax professionals to stop and review the safeguards prior to the start of the 2020 filing season and to take appropriate steps to protect their clients – and themselves.

 IRS Videos

Partners or media are free to download and share any IRS YouTube videos.

Publications/Web links

  • IRS Publication 4524, Security Awareness for Taxpayers
  • IRS Publication 4557, Safeguarding Taxpayer Data
  • IRS Publication 5293, Data Security Resource Guide for Tax Professionals
  • IRS Identity Protection, Detection and Victim Assistance – IRS.gov/identitytheft
  • Small Business Information Security – the Fundamentals
  • Start with Security: A Guide for Business – Federal Trade Commission

Sharable Social Media

To supplement the awareness campaign, there are social media posts available for sharing throughout the week or the 2020 filing season, including posts in multiple languages. Please follow the hashtag #TaxSecurity on the IRS social media accounts.

  • Twitter: @IRSnews, @IRStaxpros, @IRSenEspanol, @IRStaxsecurity, @IRSsmallbiz
  • Facebook: IRS and IRS en Español
  • LinkedIn: Internal Revenue Service
  • Instagram: @IRSnews

Sidenote from tech@mnsea.org:  https://www.irs.gov/pub/irs-pdf/p5293.pdf

December 5 – THURSDAY – Message for Businesses

Cyberthieves Target Businesses of All Sizes

Employers large and small must be alert to the growing threat of business identity theft and take additional steps step up cybersecurity protections.

Awareness about business identity theft is one in a series of tips offered by the Internal Revenue Service, state tax agencies and tax industry, which work together as the Security Summit to protect taxpayers. The Security Summit is marking its fourth National Tax Security Awareness Week by reminding employers that they too can be victims of identity theft.

As with fraudulent individual returns, there are certain warning signs that may indicate identity theft. Business, partnerships and estate and trust filers should be alert to potential identity theft and contact the IRS if they experience any of these issues:

Extension to file requests are rejected because a return with the Employer Identification Number (EIN) or Social Security Number (SSN) is already on file;

An e-filed return is rejected because of a duplicate EIN/SSN is already on file with the IRS;

An unexpected receipt of a tax transcript or an IRS notice or letter that doesn’t correspond to anything submitted by the filer;

Failure to receive expected and routine correspondence from the IRS because the identity thief has changed the address.

 

The IRS also asks those tax professionals preparing business-related returns to step up the “know your customer” procedures. Tax preparation software for business-related returns asks a series of questions. Answering those questions also will help identify suspicious returns.

December 4 – Wednesday – Message for Taxpayers

How to Create Strong Password

A commonly overlooked step to protecting your personal tax and financial data is using strong passwords to protect online accounts and digital devices from data theft.

The Internal Revenue Service, state tax agencies and tax industry remind taxpayers that using strong passwords and keeping them secure are critical steps to preventing thieves from stealing identities or money. This is just one of a series of tips offered this week as part of the National Tax Security Awareness Week.

In recent years, cybersecurity experts’ recommendations on what constitutes a strong password has changed. They now suggest that people use word phrases that are easy to remember rather than random letters, characters and numbers that cannot be easily recalled. A new example: SomethingYouCanRemember@30.

Protecting access to digital devices is so critical that some are now using fingerprint or facial recognition technology. But if you are still using password protections, consider these tips to protect devices or online accounts.

• Use a minimum of eight characters; longer is better.

• Use a combination of letters, numbers and symbols, i.e., XYZ, 567, !@#.

• Avoid personal information or common passwords; opt for phrases.

• Change default/temporary passwords that come with accounts or devices.

• Do not reuse passwords, e.g., changing Bgood!17 to Bgood!18 is not good enough; use unique usernames and passwords for accounts and devices.

• Do not use email addresses as usernames, if that is an option.

• Store any password list in a secure location, such as a safe or locked file cabinet.

• Do not disclose passwords to anyone for any reason.

• Use a password manager program to track passwords if you have numerous accounts.

 Whenever it is an option for a password-protected account, users also should opt for a multi-factor authentication process. Many email providers, financial institutions and social media sties now offer customers two-factor authentication protections, which adds an extra layer of protection for your accounts.

December 3 – TUESDAY – Message for Taxpayers

Don’t take the bait: Recognize and Avoid Phishing Scams

This holiday season don’t let the cyber grinches steal your money or your identity.

The Internal Revenue Service, state tax agencies and the nation’s tax industry are working together to protect taxpayers from stolen identity refund fraud. All this week, the Security Summit partners will be sharing tips as part of the National Tax Security Awareness Week. But the partners need your help.

Here’s what you need to know to protect yourself from phishing scams:

First, the most common way thieves steal your identity is simply by asking for it. Their favorite tactic is a phishing email. Phishing emails bait you into opening them. They pose as a trusted company – maybe your bank, a favorite retailer or your tax provider.

Second, learn to recognize and avoid them. The scams tell an urgent story – i.e. there’s a problem with your account – and instructs the receiver to open an embedded link or download an attachment.

Third, don’t take the bait. The link may send you to a familiar website to login, but your username and password goes to the thieves. Or, the scam suggests you open an attachment, which secretly downloads malicious software. Either are bad news. Just hit delete.

And no, that’s not the IRS calling with demands of payment and threats of jail or a lawsuit. The IRS does not make angry, threatening phone calls. Nor does the IRS request payment via gift cards or debit cards, like iTunes cards. Always make your payment to the U.S. Treasury.

DECEMBER 2 – MONDAY – Message for Taxpayers

Cyber Monday Tips for Secure Shopping

As Cyber Monday kicks off the holiday shopping season, the Internal Revenue Service and its partners urged the public to shop safely by securing their computers and mobile phones.

The IRS, state tax agencies and the tax industry mark the fourth annual National Tax Security Awareness Week with tips on basic safeguards everyone should take, but especially for those shopping online via computer or mobile phone during the holiday season.

These basic protective steps include:

  • Shop at sites where the web address begins “https” – the “s” is for secure communications.
  • Don’t shop on unsecured public wi-fi, thieves can eavesdrop; secure you home wi-fi with a password.
  • Use security software for computers and mobile phones; keep it updated.
  • Protect your personal information; don’t hand it out to just anyone.
  • Use strong and unique passwords for your accounts.
  • Use two-factor authentication whenever possible.
  • Back up your files on computers and mobile phones.

Note the recommendations include security measures for mobile phones. Thieves have become more adept at compromising mobile phones. You should protect your mobile phones as you do your computers.

IRS NEWS FOR TAX PROFESSIONALS

October 2019
►UPCOMING WEBINARS

  • Oct 10: Relief Procedures for Certain Former Citizens
  • Oct 17:
    • An Overview of the Foreign Tax Credit
    • Tax Obligations of U.S. Individuals Living and Working Abroad
  • Oct 22: Understanding the 2020 Form W-4 and How to Use it to Compute Withholding
  • Oct 24: Tax Security 2.0 – A “Taxes – Security – Together” Checklist

To register, see Webinars for Tax Practitioners.

►IRS VIDEO PORTAL

Recently posted to the IRS Video Portal

  • IRS Civil Enforcement – Field Collection Enforcement and Employment Tax Compliance
    • Common causes of businesses accruing employment/payroll taxes
    • Mitigating risks when using a 3rd party to handle your employment/payroll tax
    • Tools the employer can use to monitor their own compliance and limit risks
    • Options offered by the IRS for a delinquent business to repay employment/payroll back taxes – without enforcement.
    • The IRS Revenue Officer’s enforcement authority (Liens, Levies, Summonses, Seizures, TFRP, Suits, and Criminal referrals)
  • The full transcript is provided and the PowerPoint is posted for downloading under the “Slides PDF” link.

►NEWS

Early reporting replaces Form W-2 Verification Code; IRS thanks all participants  

  • Because of new wage and income reporting requirements, the IRS announced it would discontinue the Form W-2 Verification Code pilot for the 2019 tax year. Federal law now requires employers to submit Forms W-2 by January 31 each year, which helps the IRS combat fraud and identity theft and superseded the need for a verification code.

Per Diem Rates Effective October 1, 2019

  • Notice 2019-55 announces the special per diem rates effective October 1, 2019, which taxpayers may use to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home.

IRS announces new procedures to enable certain expatriated individuals a way to come into compliance with their U.S. tax and filing obligations

  • The IRS announced new procedures that will enable certain individuals who relinquished their U.S. citizenship to come into compliance with their U.S. tax and filing obligations and receive relief for back taxes.

Changes in accounting periods and in methods of accounting

  • See Revenue Procedure 2019-37, by which a taxpayer may obtain the automatic consent of the Commissioner of Internal Revenue under § 446 and § 1.446-1(e) of the Income Tax Regulations to change a method of accounting to comply with § 451 and the proposed regulations under §§ 1.451-3 and 1.451-8.

Treasury, IRS release final and proposed regulations on new 100% depreciation

  • The Treasury Department and the IRS released final regulations (PDF) and additional proposed regulations (PDF) under section 168(k) of the Internal Revenue Code on the new 100% additional first year depreciation deduction that allows businesses to write off most depreciable business assets in the year they are placed in service by the business.

IRS releases new Tax Gap estimates; compliance rates remain substantially unchanged from prior study

  • The IRS released a new set of tax gap estimates on tax years 2011, 2012 and 2013. The results show the nation’s tax compliance rate is substantially unchanged from prior years. The gross tax gap is the difference between true tax liability for a given period and the amount of tax that is paid on time.

►TAX TIPS to share with your clients

Taxpayers can go to IRS.gov for answers to questions about payments and penalties

  • Questions about tax payments and penalties come up all year long. Taxpayers can find most answers to these questions on IRS.gov. They can head over to the Let Us Help You page, which features links that take users to information and resources on a wide range of topics related to penalties and payments.

Two education credits help taxpayers with college costs

  • With school back in session, parents and students should look into tax credits that can help with the cost of higher education. They do this by reducing the amount of tax someone owes on their tax return. If the credit reduces tax to less than zero, the taxpayer may get a refund.

Here are disaster resources taxpayers can check out now to help them later

  • Natural disasters can – and do – happen at any time. Whether it’s a hurricane, fire, flood, earthquake or tornado, there are things people can do to prepare in advance of a disaster.

Here’s what happens after a disaster that leads to relief for affected taxpayers

  • Disasters can strike without warning, causing damage and destruction. Before the IRS can authorize tax relief, the president must declare a federal disaster. Here’s a rundown of tax-related things that usually happen after a disaster.

New IRS Tax Withholding Estimator helps workers with self-employment income

  • The new Tax Withholding Estimator tool includes a feature designed to make it easier for employees who also receive self-employment income to accurately estimate the right amount of tax to have taken out of their pay.

Tax Withholding Estimator helps retirees; figures tax on Social Security benefits

  • The new tool offers retirees, as well as employees and self-employed individuals, a more user-friendly way to check their withholding. Whether they receive wages or pension payments, it helps taxpayers estimate if the right amount is being withheld from their income to cover their tax liability

Taxpayers can use 2018 tax return to estimate 2019 withholding amount

  • Millions of people have filed their 2018 tax return, making this a prime time to consider whether their tax situation came out as expected. If not, taxpayers can use their finished 2018 return and the Tax Withholding Estimator to do a Paycheck Checkup ASAP and, if needed, adjust their withholding. Having their 2018 return handy can make it easier for taxpayers to estimate deductions, credits and other amounts for 2019.

►TAX REFORM

IRS finalizes safe harbor to allow rental real estate to qualify as a business for qualified business income deduction

  • The IRS issued Revenue Procedure 2019-38 that has a safe harbor allowing certain interests in rental real estate, including interests in mixed-use property, to be treated as a trade or business for purposes of the qualified business income deduction under section 199A of the Internal Revenue Code (section 199A deduction).

EMPLOYERS AND BUSINESS OWNERS

Employers: Keep employees informed about tax scams and how to report them

►THE BEST OF IRS.GOV

Help Your Clients Understand IRS Notices

  • Did your client receive a letter or notice from the IRS? The Understanding Your IRS Notice or Letter web page on IRS.gov explains in detail what certain IRS notices mean and how to respond. Key in the notice or letter number in the “Notices and Letters” search box to obtain a clear explanation of the notice or letter and obtain answers to common questions.

IDENTITY THEFT / DATA THEFT / SCAM ALERTS

Taxpayers should beware of property lien scam

  • With scam artists hard at work all year, taxpayers should watch for new versions of tax-related scams. One such scam involves fake property liens. It threatens taxpayers with a tax bill from a fictional government agency. Here are some details about the property lien scam that will help taxpayers recognize it.

►YOUR PRACTICE

MeF Production Shutdown and Cutover for Individual and Business

  • The Individual and Business shutdown dates for 2019 have not been announced yet.  In general, the Individual shutdown is mid-November, and the Business shutdown is late December. Sign up for Quick Alerts (IRS e-file Service Center Messages) to get the latest news.

Here’s what tax pros can do so they aren’t taken on a phishing trip

  • Tax professionals should remember to educate everyone who works for them to be on the lookout for phishing emails. Sending scam emails is still the most common tactic used by cybercriminals to steal sensitive data. Learn more about:
  • Spear phishing
  • Keylogging
  • Pretending to be a client
  • Sending links
  • Ransomware

Tax preparers can follow these simple steps to protect client data

  • Tax professionals and their employees can take steps to help prevent thieves from stealing sensitive data. Cybercriminals use phishing emails and malware to gain control of computer systems or to steal usernames and passwords.
  • All tax professionals should remember they must have a written data security plan. This is required by the Federal Trade Commission and its Safeguards Rule.

TAX EXEMPT ORGANIZATIONS

Treasury and IRS issue proposed regulations and provide relief for certain tax-exempt organizations

  • The IRS issued proposed regulations clarifying the reporting requirements generally applicable to tax-exempt organizations.
  • Additionally, the IRS issued Notice 2019-47, providing penalty relief for certain exempt organizations that, consistent with the 2018 guidance from the IRS, do not report the names and addresses of contributors on annual returns for tax years ending on or after December 31, 2018, but on or before July 30, 2019.

►NEWS FROM OTHER AGENCIES

From the U.S. Department of Labor

►e-NEWS SUBSCRIPTIONS and SOCIAL MEDIA

e-News Subscriptions

  • The IRS offers several e-News subscriptions on a variety of tax topics. Click above for information about subscribing.

IRS Social Media

  • The IRS uses social media tools to share the latest information on tax changes, scam alerts, initiatives, products and services. Connect with the IRS through social media tools.

HOW TO SHARE IRS INFO ON SOCIAL MEDIA

When you find an article you want to share, click on the “Share” link. Like so:

  • Scroll to the bottom of any page on IRS.gov. Look for “Share / Print”
  • Click on Share
  • You can share on Facebook, Twitter, or Linkedin.

First Thursday Minutes – July 11, 2019

 

Tax Professional Attendees

Darrel Beadle
Velma Bjorgum
Jacob Borash
Barbara Brown
Michael Calabrese
Carrie Christensen
Tracy Danzer
Jodi Eckhout
Pam Geiger
Craig Hanson
Cindy Hockenberry
James Hockenberry
Kelly Jaskowiak
Terry Johnson
Richard Kollauf
Ken Larsen
Judy Lashinski
Lief Mattila
Ruth Ann Michnay
Dan Ogard
Darian Panasuk
Michael Ringwelski
Wayne Salgren
Jo Ann Schoen
Paul Senger
Angela Siener
Scott Stuckmann
Carmen Van Der Leest
Will Wallace

Stakeholder Liaisons
Karen Brehmer
Kathleen Fox
Alan Gregerson
Mike Mudroncik

Departments of Revenue

IA John Fuller
IL Maribeth Oliver
MN Mark Krause
MO Norma Dearixon
WI Nate Weber

Webinars

July 18, 2019:  Understanding an Offer in Compromise

 Register here:  https://www.webcaster4.com/Webcast/Page/1148/30848 

Check Webinars for Tax Practitioners regularly for upcoming webinars.

Videos recently added to the IRS Video Portal:

Foreign Earned Income Exclusion   This webinar provides an overview of and answers the questions: What is the Foreign Earned Incomer? Explain the concept of tax home and the foreign earned income exclusion and more.

Discussion items

  • Two new scams

 Taxpayers should be on the lookout for new versions of these two scams

  • IRS notices

Karen reported that some tax pros are saying that the IRS routinely sends out a collection notice before the IRS has responded to correspondence sent in by the taxpayer or representative. Have you seen this, too?

 Your comments:  Yes, this happens frequently.

Tax pros who are experienced representatives said:

  • They tell their clients that they will probably get one or two collection notices even though correspondence has been sent in. This reduces the client’s anxiety about getting an IRS collection notice.
  • They call PPS to ask for a collection hold. Sometimes they do this when the correspondence has been mailed. Sometimes they do this after the first or second collection notice.
  • Some tax pros have had success in calling PPS to get matters resolved so that they don’t have to send in correspondence.

Karen explained that the IRS does not stop collection notices until the correspondence has reached the correct department, and is being worked by someone.  Correspondence is worked “first in, first out”, so it may be 5 or more weeks before a person looks at it and will then stop future collection notices.

3)   Electronic Tax Administration Advisory Committee

Electronic Tax Administration Advisory Committee issues 2019 Annual Report; Recommendations target identity theft, refund fraud

ETAAC Annual Report to Congress – June 2019

4)   Tax professional retiring

IRS.gov has an article on this topic:  Frequently Asked Questions: Deceased Tax Professionals

Tax pros have asked the IRS to create a page for a tax pro who is retiring. It would include what to do with your PTIN, CAF, EFIN, EIN. Would that be helpful to you?

The response was overwhelmingly in favor. In addition, a request was made for a page for tax pros who are just getting started in the business. We have shared your comments and have asked that this information be added to IRS.gov.

5)   Comments on the re-designed Form 1040

 Send your comments to the IRS using this link:

 https://www.irs.gov/forms-pubs/comment-on-tax-forms-and-publications

 Your issues and questions:

  • Transcript process when the taxpayer has a new address.

 Transcripts will be mailed to the taxpayer at their address of record. What if their address has changed?

The taxpayer should complete Form 8822, Change of Address. Wait 6 weeks, then request the transcript and it will be mailed to their new address.

Use Form 8822-B, Change of Address or Responsible Party for a Business.

Even if the tax professional gets the transcript from e-Services TDS, the taxpayer’s address should be updated.

Tax professionals who are attorneys, Certified Public Accountants or Enrolled Agents (i.e., Circular 230 practitioners) and do not have an e-Services account may create one and, with proper authorization from clients, can access the e-Services’ Transcript Delivery System. Unenrolled tax practitioners must have an e-File application on file and be listed as delegated users to access TDS.

2)   DPAD and Social Security

Jodi Eckhout asked: We received two notices for farmers that are receiving social security – the IRS notice indicated we had incorrectly calculated the taxable SS. However, the notice was wrong – the IRS allowed DPAD as a reduction (according to the instructions, this is not allowed as a deduction). This resulted in the IRS sending refunds (a few hundred dollars each) Has anyone else run into this situation? Does the IRS know about this error — will they be sending new notices asking for the refund back?

We will work this issue and provide an update when we can.

State Departments of Revenue

 John Fuller – IA

  • The Department had noticed a decline in fraudulent activity, but now we are seeing an increase due to practitioner computer breaches.

Mark Krause – MN

  • On 7/9 we updated FAQs and near final forms posted for 2017 & 2018 due to conformity. Do not file 2018 returns on extension unless you need to. Updated software and final forms should be available late August/early Sept and we will then start accepting these returns. If you send in now, we will adjust.
  • HSA accounts DO get added into household income. When responding to letters regarding line 5 of M1PR, only input the amount of pre-tax medical and dental insurance premiums that were included in line 5, if any. If the total amount of pre-tax premiums is zero, no response is necessary.

Next Call

The next call will be on August 1.  We’ll send out the WebEx link closer to that date.

Meetings are one hour long. Come when you can, leave when you must.

Thank you to everyone who attended. We appreciate your time and input!