IRS NEWS FOR TAX PROFESSIONALS – October 2018

IRS NEWS FOR TAX PROFESSIONALS

October 2018

 ►UPCOMING WEB CONFERENCES

 IRS Web Conference – Understanding the Basics of Virtual Currency – is Now Available on Demand.

 IRS Web Conference – Understanding the Basics of the Dark Web – is Now Available on Demand.

 Please check Webinars for Tax Practitioners for upcoming webinars.

►TAX REFORM

New Tax Reform Changes Website Explains What Is Changing and What Is Not

  • The mobile-friendly Tax Reform Changes website created by the Taxpayer Advocate shows how the new Tax Cuts and Jobs Act law may change future tax filings and helps everyone plan for these changes.
  • It even includes line by line explanations and scenarios to describe how the new changes (that took effect for 2018) will be reflected on individual tax returns filed in early 2019. Plus, it’s designed so everyone can also easily see what items have and have not been changed.
  • Sign up for notifications, using the purple subscribe button. You will then receive email alerts when any new information is added to be sure you stay up-to-date.
  • gov remains the official Tax Reform Guidance authority, however TAS’s site has accurate descriptions in plain language for basic understanding of what has and has not changed under the law.

IRS statement on Form W-4

  • Following feedback from the payroll and tax communities, the Treasury Department and the IRS will incorporate important changes into a new version of the Form W-4, Employee’s Withholding Allowance Certificate, for 2020. The 2019 version of the Form W-4 will be similar to the current 2018 version. A new draft version of the W-4 for 2019 will be available in the coming weeks.
  • The IRS will continue working closely with the payroll and the tax community as it makes additional changes to the Form W-4 for use in 2020. The new version will help employees improve withholding accuracy, and fully reflect changes included in the Tax Cuts and Jobs Act.

Tax reform affects ABLE accounts, saver’s credit, 529 rollovers

  • The Tax Cuts and Jobs Act made several changes to ABLE accounts. ABLE accounts were created by The Achieving a Better Life Experience Act of 2014. They are authorized tax-advantaged section 529A accounts to help disabled people pay for qualified disability-related expenses.

2018 employer reimbursements for employees’ 2017 moves are generally tax-free

  • Employer payments or reimbursements in 2018 for employees’ moving expenses incurred prior to 2018 are excluded from the employee’s wages for income and employment tax purposes.
  • 2017 Tax Cuts and Jobs Act (TCJA) suspended the exclusion from income for moving expenses reimbursed or paid by an employer for most employees starting in 2018, making these amounts taxable, except for amounts for active-duty members of the U.S. Armed Forces whose moves relate to a military-ordered permanent change of station.
  • Under Notice 2018-75, reimbursements an employer pays to an employee in 2018 for qualified moving expenses incurred in a prior year are not subject to federal income or employment taxes. The same is true if the employer pays a moving company in 2018 for qualified moving services provided to an employee prior to 2018.

Qualifying relative for the new $500 credit for dependents

  • Notice 2018-70, informs individual taxpayers that Treasury and the IRS intend to issue proposed regulations clarifying who is a qualifying relative for the new $500 credit for dependents and head of household filing status for years in which the exemption amount is zero – taxable years 2018-2025.

IRS issues proposed regulations on global intangible low-taxed income for U.S. shareholders

  • The IRS issued proposed regulations concerning global intangible low-taxed income under section 951A and related sections of the Internal Revenue Code.
  • The Tax Cuts and Jobs Act (TCJA), passed in December 2017, made major changes to the tax law, including adding new rules requiring the inclusion of global intangible low-taxed income generated by controlled foreign corporations (CFCs).
  • Under the TCJA, a U.S. person that owns at least 10 percent of the value or voting rights in one or more CFCs will be required to include its global intangible low-taxed income as currently taxable income, regardless of whether any amount is distributed to the shareholder. A U.S. person includes U.S. individuals, domestic corporations, partnerships, trusts and estates.

►OTHER NEWS

Coming soon: A new tax transcript to better protect taxpayer data

  • The IRS is making these changes to better protect taxpayer data from cybercriminals. As the IRS and its Security Summit partners continue to make inroads against tax-related identity theft, thieves have sought real data – such as transcripts – to better impersonate taxpayers as well as tax preparers.

Facts to help taxpayers understand Individual Retirement Arrangements

  • Individual Retirement Arrangements – better known simply as IRAs – are accounts into which someone can deposit money to provide financial security when they retire.
  • The article explains some terms and definitions related to IRAs to help people learn more about how the arrangements work.

IRS urges taxpayers to prepare for natural disasters

  • Because a natural disaster can strike any time, the IRS is reminding individuals and businesses to take time now and create or update their emergency preparedness plan.
  • Individuals, families and businesses begin getting ready for a disaster with a preparedness plan that includes key documents, lists of belongings and property.
  • Copies of key documents
  • Document valuables and equipment
  • Check on fiduciary bonds
  • Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

IRS warns of scams related to natural disasters

  • In the wake of Hurricane Florence, the IRS is reminding taxpayers that criminals and scammers try to take advantage of the generosity of taxpayers who want to help victims of major disasters.

►YOUR PRACTICE

e-Services

 Are you registered for Secure Access?

  • All e-Services users must register and create new accounts using a two-factor authentication process called Secure Access. To complete this process, select the e-Services application or product in which you are trying to access and select either Sign Up or Log In. Please see this important update for additional details or visit our FAQ page for e-Services and Secure Access.
  • Help with Registration
  • If you cannot register online and need assistance:
  • Secure Access Registration 888-841-4648
  • e-Services 866-255-0654
  • Contact e-help Desk AND MORE

Tips for tax preparers on how to create a data security plan

  • The IRS reminds tax preparers that protecting taxpayer information isn’t just good for their clients and good for business – it’s also the law. The Federal Trade Commission’s Safeguards Rule requires that tax preparers create and enact security plans.
  • The article describes some things tax preparers should know about putting together such a plan.

Protect Your Clients; Protect Yourself: Tax Security 101

    Messages 9 and 10:

  • IR-2018-177, Tax Security 101: IRS, Summit Partners detail warning signs of client data theft; urge tax professionals to remain alert
  • IR-2018-185, Tax Security 101: Security Summit outlines data theft reporting process for tax professionals; speed helps protect taxpayers

►IDENTITY THEFT / DATA THEFT / SCAM ALERTS

►EMPLOYERS AND BUSINESS OWNERS:

Filing extensions for Forms W-2 and 1099-MISC are not automatically approved

  • Treasury Decision 9838, Extension of Time to File Certain Information Returns (found in Internal Revenue Bulletin 2018-34), is the final ruling and clarifies that extension requests for Forms W-2 and 1099-MISC will not be automatically approved.
  • Requests for extensions must meet specified criteria and be requested on Form 8809, Application for Extension of Time to File Information Returns, before the January 31 deadline to file. This will deter identity theft and refund fraud. Requests for extensions of the filing deadline have no effect on the deadline to furnish forms to recipients.
  • The IRS will create a revised Form 8809 for the 2019 filing season that will provide checkboxes for employers to show the reasons they’re asking for an extension.
  • Stay tuned to e-News for Payroll Professionals for an announcement of the revised Form 8809 expected sometime in late fall of 2018.

New employer tax credit for paid family and medical leave available for 2018 and 2019

  • Eligible employers who provide paid family and medical leave to their employees may qualify for a new business credit for tax years 2018 and 2019.
  • In addition, eligible employers who set up qualifying paid family leave programs or amend existing programs by Dec. 31, 2018, will be eligible to claim the employer credit for paid family and medical leave, retroactive to the beginning of the employer’s 2018 tax year, for qualifying leave already provided.
  • In Notice 2018-71 the IRS provided detailed guidance on the new credit in a question and answer format. The credit was enacted by the 2017 Tax Cuts and Jobs Act (TCJA).

Clarification for business taxpayers: Payments under state or local tax credit programs may be deductible as business expenses

  • Business taxpayers who make business-related payments to charities or government entities for which the taxpayers receive state or local tax credits can generally deduct the payments as business expenses.
  • Responding to taxpayer inquiries, the IRS clarified that this general deductibility rule is unaffected by the recent notice of proposed rulemaking concerning the availability of a charitable contribution deduction for contributions pursuant to such programs.

Large employers can now e-file their employment tax returns

 Employers who meet the definition of “large employers” now have the option to e-file their employment tax returns (e.g., Forms 940, 941) without the need for a third party.

  • Simply use Form 8453-EMP, Employment Tax Declaration for an IRS E-file Return, for the signature, and electronically attach it to the employment tax return. Then e-file it using the same software used to electronically file other tax returns.
  • Find more information and the definition of a large employers in section 5 of Pub 4163, Modernized e-File (MeF) Information for Authorized IRS e-File Providers for Business Returns.

►THE BEST OF IRS.GOV

IRS Online Services Identity Verification

►TAX EXEMPT ORGANIZATIONS

Three steps charities applying for tax-exempt status need to take

  • Before applying for tax-exempt status, a charitable organization must determine whether it is a trust, corporation or association. After that, there are three additional steps to take:
  • Gather organization documents
  • Determine state’s registration requirements
  • Get an employer ID number for the new organization
  • Applying for tax-exempt status? You’ve come to the right place. Click here for a few IRS tools to get your organization moving in the right direction.

►SUBSCRIPTIONS

Subscribe to e-News for Tax Professionals

  • 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 Centers for Medicare and Medicaid Services (CMS.gov)

New Medicare Card – Progress Updates

  • As of August 31, we mailed nearly 35 million cards and continue to mail more every day. We are processing claims and eligibility requests with the Medicare Beneficiary Identifier (MBI), showing that providers are successfully using the new number.
  • We started mailing new cards to people with Medicare who live in Wave 6 states this week and finished mailing cards to people who live in Waves 1, 2, 3 and 4 states. Because card mailing is progressing so well, we updated the mailing schedule to include an approximate start date for the last wave, and we are on track to finish mailing new cards to all people with Medicare before April 2019.

From the SBA: How Long Does It Take to Start a Franchise?

  • Purchasing a franchise involves many steps — and a lot of time and effort. But, if you’re organized, and you’ve taken the time to learn all you can about franchising, you’ll be able to speed up the process.