Recent Posts

The Internal Revenue Service successfully implemented a congressionally mandated program involving private debt collectors in collecting unpaid taxes, but they haven’t yielded very much in terms of revenue – and the program may end up being harmful to taxpayers, according to a recent report.

The report, from the Treasury Inspector general for Tax Administration, looked into the private tax debt collection, or PDC, program that was created by the 2015 FAST Act, which required the IRS to enlist private collection agencies in collecting certain kinds of tax delinquencies (despite the failure of two similar efforts previously). Read More

The Internal Revenue Service needs to improve its procedures to prevent the fraudulent use of third-party authorization forms, such as power of attorney filings, to obtain taxpayer information, according to a new report.

The report, from the Treasury Inspector General for Tax Administration, evaluated the IRS’s controls when authenticating requests from individuals who try to represent taxpayers and access taxpayer information, such as CPAs and enrolled agents, by filing a Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Taxpayer Information Authorization.

Read More

The Internal Revenue Service issued guidance today on new tax law changes that allow small business taxpayers with average annual gross receipts of $25 million or less in the prior three-year period to use the cash method of accounting. 

The Revenue Procedure outlines the process that eligible small business taxpayers may use to obtain automatic consent to change accounting methods that are now permitted under the Tax Cuts and Jobs Act, or TCJA. Read More

The Internal Revenue Service and the Security Summit partners outlined critical steps for tax professionals to protect their computers and email as well as safeguarding sensitive taxpayer data.

The “Security Six” protections fall into several major security categories. The Security Summit partnership urges tax professionals across the nation to avoid overlooking these basic security details as identity thieves increasingly target practitioners in search of valuable taxpayer data. Here are the 6 steps in brief:

1: Antivirus software

Although details may vary between packages, anti-virus software scans files or computer’s memory for certain patterns that may indicate the presence of malicious software (i.e., malware). Anti-virus software (sometimes more broadly referred to as anti-malware software) looks for patterns based on the signatures or definitions of known malware. Anti-virus vendors find new and updated malware daily, so it is important that users have the latest updates installed on their computer, according to the U.S. Computer Emergency Readiness Team (US-CERT), a division of the Department of Homeland Security.

2: Firewalls

Firewalls provide protection against outside attackers by shielding your computer or network from malicious or unnecessary network traffic and preventing malicious software from accessing the network. Firewalls can be configured to block data from certain locations or applications while allowing relevant and necessary data through, according to US-CERT.

3: Two-factor authentication

Many email providers now offer customers two-factor authentication protections to access email accounts. Tax professionals should always use this option to prevent their accounts from being taken over by cybercriminals and putting their clients and colleagues at risk.

Two-factor authentication helps by adding an extra layer of protection. Often two-factor authentication means the returning user must enter credentials (username and password) plus another step such as entering a security code sent via text to a mobile phone. The idea is a thief may be able to steal the username and password but it’s highly unlikely they also would have a user’s mobile phone to receive a security code and complete the process.

4: Backup software/services

Critical files on computers should routinely be backed up to external sources. This means a copy of the file is made and stored either online as part of a cloud storage service or similar product. Or, a copy of the file is made to an external disk, such as an external hard drive that now comes with multiple terabytes of storage capacity. Tax professionals should ensure that taxpayer data that is backed up also is encrypted.

5: Drive encryption

Given the sensitive client data maintained on tax practitioners’ computers, users should consider drive encryption software for full-disk encryption. Drive encryption, or disk encryption, transforms data on the computer into unreadable files for the unauthorized person accessing the computer. Drive encryption may come as a stand-alone security software product. It may also include encryption for removable media, such as a thumb drive and its data.

6: Data security plan

The Security Summit also reminds tax professionals of several other important steps. All professional tax return preparers must have a written data security plan as required by the Federal Trade Commission and its Safeguards Rule. Tax professionals also can get help with security recommendations and creating a data security plan by reviewing the recently revised IRS Publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security: the Fundamentals by the National Institute of Standards and Technology.

Read The detailed article here: https://www.irs.gov/newsroom/tax-security-101-security-summit-outlines-security-six-basic-safeguards-for-tax-professionals-computers-and-email

The Internal Revenue Service and its Security Summit partners today kicked off a summertime security awareness campaign for tax professionals with a new, expanded guide providing critical steps to protect client data and highlighting available resources.

The new effort by the IRS, state tax agencies and the nation's private-sector tax industry follows continued security threats to tax and financial data held by tax professionals. Data thefts at tax practitioners’ offices continue to rise and result in fraudulent tax returns that can be especially difficult for the IRS and states to detect.

"The IRS and the Security Summit partners urge all tax professionals to take stronger security steps to protect themselves and their clients," said Acting IRS Commissioner David Kautter. "With the help of the Summit partnership, the IRS has made major progress protecting taxpayers in the battle against tax-related identity theft. But the threat remains, and we need the help of tax professionals to take basic steps to safeguard their systems and taxpayer data."

This marks the first in a series called "Protect Your Clients; Protect Yourself: Tax Security 101." The Security Summit awareness campaign is intended to provide tax professionals with the basic information they need to better protect taxpayer data and to help prevent the filing of fraudulent tax returns. Read More

The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning July 1, 2018, as they were in the quarter that began on April 1. The rates will be:

• 5 percent for overpayments, 4 percent in the case of a corporation;
• 2.5 percent for the portion of a corporate overpayment exceeding $10,000;
• 5 percent for underpayments; and
• 7 percent for large corporate underpayments. 

The rate of interest is decided on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus 0.5 of a percentage point. Read More

The Internal Revenue Service (IRS) announced that it will waive certain late-payment penalties relating to the section 965 transition tax, and provided additional information for individuals subject to the section 965 transition tax regarding the due date for relevant elections.

The IRS explained the relief in three new FAQs, posted today on the agency’s tax reform page. These supplement 14 existing questions and answers that provide detailed guidance to taxpayers on reporting and paying the tax.

Section 965 of the Internal Revenue Code, enacted in December 2017, imposes a transition tax on untaxed foreign earnings of foreign corporations owned by U.S. shareholders by deeming those earnings to be repatriated. Foreign earnings held in the form of cash and cash equivalents are taxed at a 15.5 percent rate, and the remaining earnings are taxed at an 8 percent rate. The transition tax generally may be paid in installments over an eight-year period when a taxpayer files a timely election under section 965(h). Read More.

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The Internal Revenue Service today announced that the application period for Low Income Taxpayer Clinic (LITC) grants for calendar year 2019 will run from May 16, 2018, to June 27, 2018.

The LITC program is a federal grant program administered by the Office of the Taxpayer Advocate at the IRS, led by the National Taxpayer Advocate, Nina E. Olson. Under the program, the IRS awards matching grants of up to $100,000 per year to qualifying organizations to develop, expand or maintain an LITC.  An LITC must provide services for free or for no more than a nominal fee.

For calendar year 2018, the IRS awarded just over $11.8 million in matching grants to 134 organizations across the country for the development, expansion or continuation of LITCs. A listing of the 2018 LITC grant recipients is available on IRS.gov.

The mission of LITCs is to ensure the fairness and integrity of the tax system for taxpayers who are low income or speak English as a second language:

• By providing pro bono representation on their behalf in tax disputes with the IRS;
• By educating them about their rights and responsibilities as taxpayers; and
• By identifying and advocating for issues that impact low income taxpayers.

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The Internal Revenue Services announced that it is providing one more day to taxpayers for filing and paying their taxes following system issues that surfaced early on the April 17 tax deadline. Individuals and businesses with a filing or payment due date of April 17 will now have until midnight on Wednesday, April 18. Taxpayers do not need to do anything to receive this extra time.

The System Issue surfaced on Tuesday morning. Although taxpayers were still able to file their tax returns electronically through their software providers and Free File.

Source: www.irs.gov

The IRS continues to expand its efforts to detect tax refund fraud. As of February 24, 2018, the IRS reported that it identified 9,557 tax returns with approximately $46 million claimed in fraudulent refunds and prevented the issuance of $22.2 million (48.3 percent) in fraudulent refunds. In addition, the IRS reports that it prevented approximately 7,376 fraudulent electronically filed tax returns as of February 28, 2018, and 1,442 paper-filed tax returns as of March 15, 2018, from being accepted into the processing system. Also, the IRS identified and confirmed 2,204 fraudulent tax returns involving identity theft as of February 28, 2018, and identified 13,964 prisoner tax returns for screening as of February 24, 2018.

There is also a decrease in the number of fraudulent tax refunds the IRS detects and stops which is attributable to the IRS’s efforts to expand processes to prevent fraudulent tax returns from ever entering the tax processing system, i.e., rejecting e-filed tax returns and preventing paper-filed tax returns from posting. For example, as of February 21, 2018, the IRS had locked approximately 35.7 million taxpayer accounts of deceased individuals.

Complete report: https://www.treasury.gov/tigta/auditreports/2018reports/201840028fr.pdf

According to new guidelines released by IRS this Thursday extra tax filling relief will be offered to certain partnerships, real estate mortgage investment conduits (REMICs), and other entities that did not file the required returns by the new due date for tax years beginning in 2016. The Surface Transportation  Act changed the date by which a partnership, REMIC, or other entity must file its annual return from April 15 to March 15.There was a notice (Notice 2017-47) issued earlier this year which relieved partnerships and REMICs from the penalty who filed by the date that would have been timely prior to amendment by the Surface Transportation Act.The New notice (Notice 2017-71) amplifies, clarifies, and supersedes Notice 2017-47 by providing that additional acts, such as the making of various elections, of partnerships, REMICs, and certain other entities made by the date that would have been timely prior to amendment by the Surface Transportation Act will be treated as timely.  An earlier release of Notice 2017-71 provided this relief only to taxpayers whose taxable years began and ended in 2016, but today’s revised guidance also applies to fiscal-year filers whose taxable years began in 2016 but did not end until 2017.Source: www.irs.gov

Taxpayers can expect many of their cherished deductions for charitable contributions, family members, and state and local taxes to go away under the Senate tax reform legislation. Gary DuBoff, a principal in the Tax and Accounting Department at MBAF, a Top 100 Firm, recommends charitable contributions should be made before the end of the year, particularly when they involve gifts of stock. “Hidden in the Senate bill was an elimination of the adequate identification rules,” he said. “Adequate identification basically says that if you sell a security, and you’ve got two tranches, a low-basis, and a high-basis tranche, you can pick the one that you want to sell. That also applies to charitable donations. If you want to gift your low-basis shares to avoid paying the tax on the gain, you can choose to gift your low-basis shares and keep your high-basis shares. In 2018 you’re not going to have that option. In 2018, it’s going to come out of your low-basis shares first, which is OK for charitable giving, but not a good result for investments.” Read More  

Preparer Tax Identification Number renewal season has begun, the IRS announced.  Anyone who charges for preparing or assisting in the preparation of federal tax returns must have a valid 2018 PTIN beforehand. All Enrolled Agents must also have a valid PTIN. All PTINs expire on Dec. 31 and must be renewed for the 2018 filing season. There is no fee for a 2018 PTIN. Applying for or renewing a PTIN takes about 15 minutes online, according to the IRS. Paper applications, Form W-12, take four to six weeks to process. Read More  

Updated power of attorney form 1832 of South Dakota Department of Revenue, form 33 for Nebraska,  form 500 of State of New Jersey Division of Taxation, form DP-2848 for New Hampshire, in IRSLogics.

The Internal Revenue Service has proposed regulations allowing truncated Taxpayer Identification Numbers on the Form W-2 to help protect people’s Social Security Numbers from identity theft. The proposed regulations enable employers to voluntarily truncate their employees’ SSNs on copies of the Form W-2, Wage and Tax Statement, given to employees so the truncated SSNs appear in the form of IRS truncated taxpayer identification numbers, or TTINs. Read More

The Internal Revenue Service’s Computer Security Incident Response Center is preventing some cybersecurity violations, but could use some improvements, according to a new report. The report, from the Treasury Inspector General for Tax Administration, noted that the CSIRC is responsible for preventing, detecting, reporting, and responding to cybersecurity incidents, such as computer related threats and attacks targeting the IRS’s technology assets. As the IRS holds tax information on all taxpayers, the agency presents an attractive target for hackers. But weaknesses in the CSIRC program could prevent the timely detection, prevention, or reporting of unauthorized access and disclosure of taxpayer data. In general, according to the report, the CSIRC prevented, detected, reported and responded to a number of cybersecurity incidents. TIGTA took a sampling of 100 incidents out of a total population of 368 incidents during fiscal years 2015 and 2016, through April 30, 2016. It found the CSIRC properly identified and documented the type, nature and scope of all 100 incidents, including the systems and applications affected, the source of the incident, and the specific kind of lost equipment. However, TIGTA found several areas in which the CSIRC could improve its operations. Read More  

White House chief strategist Steve Bannon appears to be running against the grain of President Donald Trump's tax-cut push, as the former Breitbart News executive reportedly is hoping for a top income tax bracket with a "4 in front of it." Axios reports Bannon is angling for a tax hike on America's wealthiest citizens, who currently face a 39.6 percent federal tax burden. The idea broadly fits into the populist ideology Bannon is said to embrace, as it reportedly would be used to offset tax cuts for middle- and working-class Americans. But it doesn't mesh particularly well with the strategy thus far pushed by Trump, Treasury Secretary Steven Mnuchin and senior Republican lawmakers. Read More

Tax professionals wishing to attend the IRS Nationwide Tax Forum in Orlando, Fla., can save $115 by registering soon, according to the Internal Revenue Service. The Orlando IRS Nationwide Tax Forum will take place July 11 to 13. Enrolled agents, certified public accountants, certified financial planners, Annual Filing Season Program (AFSP) participants and other tax professionals can register at the standard rate of $255 through Tuesday, June 27. Attendees registering after that date or on-site will pay $370. Seminars and Workshops Tax professionals attending a 2017 Tax Forum can earn up to 18 continuing professional education credits. They will get the latest information on federal and state tax issues presented by experts from the IRS and partner organizations in a wide variety of seminars and workshops. Seminar topics range from data security and identity theft prevention to future IRS digital services, the gig economy, working with private collection firms and much more. Read More  

The American Institute of CPAs is appealing a court decision that upheld the Internal Revenue Service’s voluntary program for tax preparer education and testing. The IRS introduced the Annual Filing Season Program in 2014 after the federal courts invalidated a mandatory program it had instituted requiring all tax preparers to be tested and undergo continuing education. The AICPA filed suit to challenge the voluntary program, but the lawsuit was dismissed later that year by the same federal judge, James Boasberg, who had invalidated the IRS’s earlier Registered Tax Return Preparer program in 2013 in the case of Loving v. IRS. He said the AICPA lacked standing to challenge the newer program (see Judge Dismisses AICPA Lawsuit against the IRS). Earlier this month, Boasberg again ruled against the AICPA. Read More  

The American Institute of CPAs has sent comments to the Internal Revenue Service and the Treasury Department on proposed regulations for estate tax basis reporting.

The proposed regulations implement changes to section 1014 of the Internal Revenue Code mandated by Congress last year under the Surface Transportation and Veterans Health Care Choice Improvement Act to require consistency between the basis of property in the hands of an estate beneficiary and the value reported on the federal estate tax return.  Read More

The Internal Revenue Service still doesn't have the authority from Congress to correct billions of dollars in erroneous claims for the Earned Income Tax Credit despite recent legislation, according to a new report.

The report, from the Treasury Inspector General for Tax Administration, noted that the Consolidated Appropriations Act of 2016 provides the IRS with additional tools to reduce EITC improper payments. However, the law did not expand the IRS’s authority to systemically correct the erroneous claims it identifies.

The Office of Management and Budget has declared the Earned Income Tax Credit Program to be the only IRS revenue program fund at high risk for improper payments. The IRS estimates that 23.8 percent ($15.6 billion) of EITC payments were issued improperly in fiscal year 2015.

Without the authority to systemically correct erroneous claims, the IRS continues to be unable to address the majority of potentially erroneous EITC claims it identifies, according to TIGTA. The number of potentially erroneous EITC claims the IRS can audit is limited by resources. As a result, billions of dollars in potentially erroneous EITC claims go unaddressed each year. Read More

The IRS will now return newly filed Offer in Compromise applications if the taxpayer has not filed all required returns. Any fees included with the OIC will also be returned. This new policy does not apply to current year tax returns if there is a valid extension on file. To confirm your client is eligible and get an estimated offer amount, use the OIC Pre-Qualifier Tool. Read More  

The Internal Revenue Service is changing its procedures for resolving issues with corporate taxpayers through pre-filing agreements while also increasing the fees.

Revenue Procedure 2016-30 revises Rev. Proc. 2009-14, which outlines the procedures to resolve issues through a pre-filing agreement, or PFA. The revenue procedure expands the scope of a PFA to include issues relating to changes in methods of accounting requested pursuant to the automatic consent procedures and also reflects the new structure of the IRS’s Large Business and International Division.

The Rev. Proc. also clarifies or updates procedures for filling PFA requests; and increases the user fee for PFAs from $50,000 to $134,300 for requests submitted on or after the date that is 30 days after the Rev. Proc. is released, to $218,600 for requests submitted on or after Jan. 1, 2017. Read More

The Internal Revenue Service reported that the average annual tax gap has increased to $458 billion for tax years 2008-2010, compared to $450 billion for tax year 2006.

The voluntary compliance rate was 81.7 percent for tax years 2008-2010, compared to 83.1 percent in tax year 2006. The IRS periodically estimates the tax gap, which provides a broad view of compliance with federal tax laws. The report found there has been no significant change in the amount of the tax gap or the rate of compliance since the last report was issued for tax year 2006.

“The figure of $458 billion doesn’t account for the revenue brought in through enforcement activities, such as audits and document matching,” IRS Commissioner John Koskinen said during a conference call with reporters Thursday. “After factoring in those activities, the average net tax gap for this period is estimated to be $406 billion per year. This continues to show that both solid taxpayer service and effective enforcement are needed for top-notch tax administration.” Read More

The Internal Revenue Service’s expanded use of controls this tax season to identify fraudulent refund claims before accepting them into its processing system has allowed the IRS to identify approximately 35,000 fraudulent e-filed tax returns and 741 paper tax returns as of Feb. 29, 2016, according to a new government report.

The report, from the Treasury Inspector General for Tax Administration, said the IRS also identified and confirmed 31,578 fraudulent tax returns involving identity theft as of Feb. 29, 2016, and identified 20,224 prisoner tax returns for screening as of March 5, 2016.

TIGTA released its annual interim report Thursday on the IRS’s performance during tax-filing season, defined as the period from January 1 through mid-April. TIGTA plans to issue the final results of its analysis of the 2016 filing season in September. Read More

Reports by the public of suspected underreporting of taxes or other tax violations can help the IRS detect millions of dollars in taxes that would otherwise go uncollected, the report pointed out. Productive referrals can help address the net $385 billion tax gap—the difference between the amount of taxes paid voluntarily on time and the amount owed.

The report noted that the IRS has incomplete documentation of the procedures for the information referral process, increasing the risk of delays and added costs in routing the information for further action. One-quarter of the information referrals in fiscal year 2015 were sent for destruction after screening, even though the IRS has no documented procedures for supervisory review of those referrals prior to destruction....  read more

In a March 4 letter, the AICPA urged the U.S. Department of the Treasury and the IRS to delay the estate basis reporting due date from March 31, 2016 until May 31 due to proposed regulations covering the new reporting requirements not issued until March 2, 2016. The AICPA’s letter states that the 29 days between the release of the proposed regulations and the March 31 due date is “not sufficient time” for taxpayers and practitioners to be aware of the proposed regulations and to review, analyze, and implement them during tax season. Read More

The IRS urged tax professionals in an email to verify their Electronic Filing Identification Number activity to safeguard against tax fraud.

The IRS noted that tax preparers need to protect both their EFIN and ETIN (Electronic Transmitter Identification Number), as well as passwords, from unauthorized use. A preparer’s EFIN is not transferable and cannot be shared with others outside their firm or sold, the IRS noted. “Even if you transfer your business by sale, gift or other disposition, you may not transfer your EFIN,’ said the IRS. Read More

The Internal Revenue Service said Tuesday evening that it recently identified and halted an automated attack upon its Electronic Filing PIN application on IRS.gov.

Using personal data stolen elsewhere outside the IRS, identity thieves used malware in an attempt to generate E-file PINs for stolen Social Security Numbers, according to the IRS. The E-file PIN is used in some instances to electronically file a tax return.

Based on its review, the IRS identified unauthorized attempts involving approximately 464,000 unique SSNs, of which 101,000 SSNs were used to successfully access an E-file PIN. Read More

A large number of important tax changes go into effect this year. Many were ushered in by the Protecting Americans from Tax Hikes (PATH) Act of 2015, although legislation enacted earlier in 2015 and in 2014 also contributed a fair share. Still other changes are the result of various administrative pronouncements by the IRS. The recent legislation responsible for the lion's share of the changed rules for 2016 consists of the Protecting Americans from Tax Hikes (PATH) Act of 2015, the Fixing America's Surface Transportation (FAST) Act, the Bipartisan Budget Act of 2015, the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, the Trade Preference Extension Act of 2015; and the Achieving a Better Life Experience Act of 2014 (ABLE Act), part of the Tax Increase Prevention Act of 2014. Read More      

The Internal Revenue Service needs to do more work to refine its latest fraud detection system to catch the new schemes that its older system managed to detect, according to a government report.

The report, from the Treasury Inspector General for Tax Administration, found that a pilot program of the IRS’s replacement fraud detection system successfully identified tax returns involving identity theft that other IRS fraud detection systems did not identify. However, the other existing fraud detection systems identified tax returns involving identity theft that the replacement system did not select.

For example, the other IRS fraud detection systems identified 54,175 confirmed identity theft tax returns with refunds totaling more than $313 million not identified by the replacement system. Read More

The Internal Revenue Service is getting set for the opening of the 2016 individual income tax-filing season on January 19, promising improved taxpayer service and security, and a functioning Practitioner Priority Line, thanks to a funding boost from Congress.

“The increase in our budget is an important development for the IRS and for taxpayers, and is the first time in six years that we received any significant additional funding,” said IRS Commissioner John Koskinen during a conference call with reporters Thursday. “While this is very good news for the IRS and its employees, it’s important to put this funding in perspective. The $290 million will help us address three areas of high priority for us: taxpayer service, identity theft and cybersecurity.”

Although the extra funding is still below the IRS’s budget request of $700 million, and the IRS remains funded at a level that remains $900 million below where it was six years ago, Koskinen said the additional funding would allow the agency to improve service to taxpayers.

“We will be able to hire up to 1,000 additional customer service representatives to answer our toll-free help lines this filing season,” he said. Read More

The Internal Revenue Service said Tuesday that taxpayers are receiving letters with the wrong date listed for their Identity Protection Personal Identification Numbers, which are generally issued to victims of tax-related identity theft.

“Due to an error, taxpayers are receiving Identity Protection PIN letters with an incorrect year listed,” the IRS said in a statement. “Taxpayers and tax professionals should be advised the IP PIN listed on the CP 01A Notice dated January 4, 2016 is valid for use on all individual tax returns filed in 2016. The notice incorrectly indicates the IP PIN issued is to be used for filing the 2014 tax return when the number is actually to be used for the 2015 tax return. The IRS emphasizes the IP PIN listed on the CP 01A notice is valid for the 2015 returns. Taxpayers and their tax professionals should use this PIN number for 2015 tax returns, which the IRS will begin accepting from taxpayers starting Jan. 19, 2016. The IRS apologizes for the confusion and any inconvenience.” Read More

The US Internal Revenue Service (IRS) has disclosed that it has sent letters to those taxpayers who may not be entitled to some or all of the earned income tax credit (EITC) claimed on their 2014 tax returns.

Tax preparers have been informed that, if one of their clients receives a letter, he or she will be requested to review their 2014 tax return for accuracy and, if needed, to file an amended tax return to make corrections.

Taxpayers who have filed questionable EITC claims may receive Letter 5621, which asks a taxpayer to review his/her tax return to determine if the children claimed each met all the qualifying child rules for the credit.  Read More

The Internal Revenue Service has not established a service-wide approach to managing effective authentication processes and procedures for individual taxpayers’ identities, according to the Treasury Inspector General for Tax Administration.

“The increasing number of data breaches in the private and public sectors means more personal information than ever before is available to unscrupulous individuals,” TIGTA said in the report. “Much of these data are detailed enough to enable circumvention of most authentication processes.”

“The IRS recognizes the need to establish a service-wide approach to managing its authentication needs and has established two groups that focus on taxpayer authentication. Read More

The Internal Revenue Service will begin accepting individual tax returns on Tuesday, Jan. 19, 2016.

The announcement followed the passage on Friday of the tax extenders legislation last Friday, January 19 is one day earlier than the start of tax season in 2015, and the filing deadline for 2016 will be Monday, April 18, 2016, rather than the customary April 15, due to the celebration of Emancipation Day in Washington, D.C. Taxpayers in Maine and Massachusetts will have until Tuesday, April 19, due to the Patriots Day holiday.

“We look forward to opening the 2016 tax season on time,” IRS Commissioner John Koskinen said in a statement. “Our employees have been working hard throughout this year to make this happen. We also appreciate the help from the nation’s tax professionals and the software community, who are critical to helping taxpayers during the filing season.”

Koskinen noted the new legislation makes permanent many tax provisions and extends many others for several years. "This provides certainty for planning purposes, which will help taxpayers and the tax community as well as the IRS," he said.

The IRS expects to receive more than 150 million individual returns in 2016, with more than four out of five being prepared using tax return preparation software and e-filed.

Source: www.accountingtoday.com

Congressional leaders are pushing to reach a deal on a must-pass U.S. government spending bill as a Friday deadline nears to avoid a federal shutdown, even as they concede that lawmakers may have to work into the weekend and beyond. Complicating talks are simultaneous negotiations over extending a package of tax breaks that expired at the end of 2014. Late Monday, House Ways and Means Chairman Kevin Brady of Texas filed a plan to extend most tax breaks that expired in 2014 to continue through 2016. The measure also would revise rules for real estate investment trusts. AshLee Strong, a spokeswoman for House Speaker Paul Ryan, said in an e-mail Tuesday, “We are still hopeful for a larger agreement that includes permanent tax relief for families and small businesses, but this is another option.” Second-ranking Senate Republican John Cornyn of Texas said Monday that Congress may leave town for the holidays with such a two-year extension of tax breaks, instead of coming up with a new plan to make some of them permanent as he and many members said they want to do. Congress has passed a series of short-term extensions of the tax breaks, including those for research and development and small-business investments. Another extension would have to be passed soon to give the Internal Revenue Service time to print forms for the 2015 filing season. Source: www.arcamax.com

A pair of Republican lawmakers have introduced legislation to require professional tax preparers to undergo examinations, take annual continuing education classes and submit to a background check. The Internal Revenue Service tried to require continuing education and competency examinations for tax preparers in its Registered Tax Return Preparer program, but a federal court in 2013 invalidated the program, ruling in the case of Loving v. IRS that the IRS had exceeded its statutory authority. A federal appeals court later upheld the ruling. Since then, the IRS has introduced a voluntary program for tax preparer education, known as the Annual Filing Season Program. CPAs, Enrolled Agents and tax attorneys already are subject to examination and continuing professional education requirements in order to practice before the IRS. In January, a pair of Democrats in the Senate, Sen. Ron Wyden, D-Ore., and Benjamin Cardin, D-Md., introduced a bill to give the IRS the authority to regulate all tax preparers (see Senators Unveil Bill to Regulate Tax Preparers).On Tuesday, Cardin teamed up with another Democrat, Rep. Xavier Becerra, D-Calif., to introduce a bill known as the Taxpayer Rights Act of 2015, which also includes a provision giving the IRS the ability to regulate tax preparers (see Lawmakers Introduce Bill to Protect Taxpayer Rights). Black and Meehan’s bill aims to assure a minimum level of competency for preparers and prevent tax fraud. It would also authorize the Treasury Department to set up a public database of tax preparers, which the IRS has already set up for its Annual Filing Season Program. The IRS’s Directory of Federal Tax Return Preparers with Credentials and Select Qualifications includes the name, city, state, zip code, and credentials of all attorneys, CPAs, enrolled agents, enrolled retirement plan agents and enrolled actuaries with a valid Preparer Tax Identification Number, or PTIN, as well as all Annual Filing Season Program – Record of Completion holders. Source: www.accountingtoday.com

The Internal Revenue Service is simplifying the paperwork and record-keeping requirements for small businesses by raising the safe harbor threshold for deducting certain capital items from $500 to $2,500.

The change affects businesses that do not maintain an applicable financial statement such as an audited financial statement. It applies to amounts spent to acquire, produce or improve tangible property that would normally qualify as a capital item.

The new $2,500 threshold applies to any such item that is substantiated by an invoice. As a result, small businesses will be able to immediately deduct many expenditures that would otherwise need to be spread over a period of years through annual depreciation deductions.

“We received many thoughtful comments from taxpayers, their representatives and the professional tax community, said IRS Commissioner John Koskinen in a statement. “This important step simplifies taxes for small businesses, easing the record-keeping and paperwork burden on small business owners and their tax preparers.“

Responding to a February comment request, the IRS said it received more than 150 letters from businesses and their representatives suggesting an increase in the threshold. Commenters noted that the existing $500 threshold was too low to effectively reduce administrative burden on small business. In addition, the cost of many commonly expensed items such as tablet computers, smart phones, and machinery and equipment parts typically exceed the $500 threshold.

Source: www.accountingtoday.com

The Internal Revenue Service has improved its audits of high-income taxpayers but needs to re-evaluate whether the threshold of $200,000 for auditing wealthy taxpayers efficiently uses the agency’s examination resources, according to a new report.

The report, from the Treasury Inspector General for Tax Administration, evaluated the IRS’s efforts to ensure the tax compliance of high-income taxpayers. The IRS identifies high-income taxpayers as those who reported total positive income of at least $200,000 on Form 1040. Because the IRS is devoting more audit resources to these taxpayers, TIGTA said it is important to know at what level of income or wealth taxpayers tend to begin establishing complex financial holdings that are at greater risk for noncompliance with the tax laws.

The IRS has taken a number of actions to help to ensure tax compliance of high-income taxpayers, the report acknowledged. The agency adopted a High-Income and High-Wealth strategy to audit more tax returns related to these individuals, and the resulting audit coverage of high-income taxpayers has indeed improved. However, the IRS’s High-Income and High-Wealth strategy devotes nearly 50 percent of the agency’s high-income audits to taxpayers earning $200,000 to $399,999, whose tax returns potentially present the least productivity of all high-income taxpayers.

The IRS Large Business and International Division established the Global High Wealth Industry, which takes a comprehensive approach to auditing high-income taxpayers by extending the audits beyond the individual income tax return and examines the entities that these taxpayers control. However, GHW is not yet a stand-alone industry capable of conducting all of its own examinations, the report noted. The IRS is using resources from three other LB&I industries to assist with auditing GHW cases, but has not evaluated the impact of that decision on those other industries. In addition, the IRS cannot quantify its GHW audit performance because of the limitations of IRS audit information systems. GHW has not implemented a quality review process for its audits.

Source: www.accountingtoday.com

For filing season 2016, the Internal Revenue Service will test a capability to verify the authenticity of W-2 data as part of a series of steps to combat tax-related ID theft and refund fraud. The IRS has partnered with certain payroll service providers to include a 16-digit code and a new verification code field on a limited number of W-2 copies provided to employees. The code will be displayed in four groups of four alphanumeric characters, separated by hyphens. The verification code will appear on some versions of payroll firms' W-2 Copies B and C, in a separate, labeled box (Copy B is "To be filed with employee's federal tax return" and Copy C is "For employee's records.") The form will include these instructions to taxpayer and tax preparers: "Verification Code. If this field is populated, enter this code when it is requested by your tax return preparation software. It is possible your software or preparer will not request the code. The code is not entered on paper-filed returns." Some W-2 employees receive will have a "verification code" box that is blank. These taxpayers do not need to enter any code data into their tax software product. For the purposes of the test, omitted and incorrect W-2 verification codes will not delay the processing of a return. The IRS will analyze this pilot data to see if it is useful in evaluating the integrity of W-2 information. The code will not be included in W-2s or W-2 data submitted by the payroll service providers to the Social Security Administration or any state or local departments of revenue, nor will this pilot affect state and local income tax returns or paper federal returns. Source: www.accountingtoday.com

Internal Revenue Service commissioner John Koskinen told a group of tax practitioners that budget cuts at the agency are harming not only taxpayers, but tax practitioners as well, and warned that unless Congress acts on tax extenders legislation, tax season might need to be delayed next year. At the same conference, National Taxpayer Advocate Nina Olson complained of declining taxpayer service levels by the IRS and obstructions to the work of her office on behalf of taxpayers. “The IRS is now at its lowest level of funding since 2008,” Koskinen said during a speech Tuesday at the American Institute of CPAs’ National Tax Conference in Washington, D.C. “But if you adjust for inflation, our budget is now comparable to where we were in 1998.” He admitted that the level of service the IRS was able to provide, both on the phone and in person, was far worse than anyone would want. “Taxpayers who called the IRS had long wait times on the phones,” said Koskinen. “On bad days, fewer than 40 percent of calls were able to reach a live assistor, and that was after a 30-minute wait or longer. And taxpayers who needed in–person help at IRS Taxpayer Assistance Centers often waited in very long lines just to get in the door.” Koskinen acknowledged the problems did not end with the tax-filing season. Callers have continued to experience long wait times on the phones, and the IRS is still getting reports of long lines at Taxpayer Assistance Centers in some locations. The problems have also been experienced by tax practitioners trying to help their clients comply with their tax obligations. “This unacceptable level of service is a problem for practitioners as well, especially as it relates to the Practitioner Priority Line,” said Koskinen. “The waits for practitioners on this line have rivaled those for the regular taxpayer help lines. Of course, this is unacceptable to all of us. Tax practitioners interact with the IRS every day, and you need our assistance and expertise to properly represent your clients and help them fulfill their tax obligations.” Source: www.accountingtoday.com

The Internal Revenue Service said Thursday that federal tax preparers will soon pay less for a preparer tax identification number, or PTIN, and reminded non-credentialed tax preparers of major upcoming changes regarding which preparers can represent clients in matters before the IRS, starting next year. Effective Nov. 1, 2015, the annual fee for 2016 PTINs will be $50 for both new applications and renewals. The IRS will collect $33 as a user fee to support program costs and a third-party vendor will receive $17 to operate the online system and provide customer support. In preparation for the fee change, PTIN open season, which normally begins in mid-October, will begin in early November. PTIN open season is when the IRS begins accepting renewals and new registrations for the upcoming year. Federal agencies are required to review user fees every other year and make adjustments as appropriate. The current PTIN fee is $64.25 for a new registration and $63 for renewal. Source: www.accountingtoday.com

The Internal Revenue Service met with a group of state tax administrators and tax industry leaders Tuesday to discuss additional steps they are taking for next tax season to strengthen safeguards against identity theft and tax refund fraud.The public-private sector partnership announced success in identifying and testing more than 20 new data elements on tax return submissions that will be shared with the IRS and the states to help detect and prevent identity-theft related filings. In addition, the software industry is putting in place enhanced identity requirements and validation procedures for their customers to protect accounts from identity thieves.“We’re here to give you an update on the protections we are putting in place for the upcoming filing season to better safeguard taxpayers and the tax system against stolen identity refund fraud,” said IRS Commissioner John Koskinen during a press conference. “As I said before, this is not a battle the IRS can fight alone. Joining me today are representatives of the electronic tax industry, the software industry and the states. These members of our Security Summit group have collaborated with the IRS since day one. We began mapping out a strategy in March and together we have made significant progress in just a few months.”He noted that the collaborative group has added more members. “We now have 20 major players in the tax and financial industry working with us on this effort,” said Koskinen. “This is significant because the Security Summit now covers virtually the entire population of taxpayers who e-file their tax returns.”Koskinen pointed out that 34 states have now signed a memorandum of understanding with the IRS, with even more planning to sign on in the weeks ahead. “It’s significant because 32 of the 42 states that have an income tax have already signed on,” he said. “It’s critical for us to continue making progress on this area because refund fraud related to identity theft has become a more complicated and serious threat to the nation’s tax system.”Koskinen acknowledged that over the last few years the IRS has seen an increase in identity theft crimes being perpetrated by organized crime syndicates around the world. “These criminals have been able to gather enormous amounts of personal data from sources outside the IRS,” he said. “This makes protecting taxpayers more challenging and difficult, so I’m delighted to report that for next year’s tax-filing season we are on track to fulfill our goal of having new safeguards in place for taxpayers when they file their return.”He promised that most of the new protections would be invisible to taxpayers. “But behind the scenes we’re putting in place a multilayered, multifaceted approach,” he said. “The states, the federal government, and private sector companies in the tax business—the people you see around the table—will all have strong new safeguards collectively in place for the 2016 tax-filing season. Our defenses are strong and our systems remain secure, but this year—to put it in sports terms—we’re going on offense like never before. We will have new data coming in to help identify fake returns and prevent fraudulent returns from going out the door. We’re working together to build a strong reinforced system that lets the taxpayers in and keeps criminals out and we will continue to prosecute identity thieves who steal refunds.”Source: www.accountingtoday.com

The Internal Revenue Service said Friday it has collected more than $8 billion from its Offshore Voluntary Disclosure Programs as more than 54,000 taxpayers have come forward to tell the IRS about previously hidden foreign assets. The Offshore Voluntary Disclosure Program, or OVDP, and the streamlined procedures both enable taxpayers to correct prior omissions and meet their federal tax obligations while mitigating the potential penalties of continued non-compliance. There are also separate procedures for those who have paid their income taxes but omitted certain other information returns. “The groundbreaking effort around automatic reporting of foreign accounts has given us a much stronger hand in fighting tax evasion,” said IRS Commissioner John Koskinen in a statement. “People with undisclosed foreign accounts should carefully consider their options and use available avenues, including the offshore program and streamlined procedures, to come back into full compliance with their tax obligations.” The IRS noted that under the Foreign Account Tax Compliance Act, or FATCA for short, and the network of intergovernmental agreements, or IGAs, between the U.S. and partner jurisdictions, automatic third-party account reporting began this year, making it less likely that offshore financial accounts will go unnoticed by the IRS. In addition to FATCA and reporting through IGAs, the Department of Justice’s Swiss Bank Program continues to reach non-prosecution agreements with Swiss financial institutions that facilitated past non-compliance. As part of these agreements, banks provide information on potential non-compliance by U.S. taxpayers. Potential civil penalties increase substantially if U.S. taxpayers associated with participating banks wait to apply to OVDP to resolve their tax obligations. The OVDP offers taxpayers with undisclosed income from offshore accounts an opportunity to get current with their tax returns and information reporting obligations. The program encourages taxpayers to voluntarily disclose foreign accounts now rather than risk detection by the IRS at a later date and face more severe penalties and possible criminal prosecution. Since the OVDP began in 2009, there have been more than 54,000 disclosures, and the IRS has collected more than $8 billion from this initiative. The streamlined procedures, initiated in 2012, were developed to accommodate a wider group of U.S. taxpayers who have unreported foreign financial accounts but whose circumstances substantially differed from those taxpayers for whom the OVDP requirements were designed. More than 30,000 taxpayers have used streamlined procedures to come back into compliance with U.S. tax laws. Two-thirds of these have used the procedures since the IRS expanded the eligibility criteria in June 2014. Separately, based on information obtained from investigations and under the terms of settlements with foreign financial institutions, the IRS said it has conducted thousands of offshore-related civil audits that have produced tens of millions of dollars. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions. The IRS stressed that it remains committed to stopping offshore tax evasion wherever it occurs, and even though the agency has faced several years of budget reductions, the IRS continues to pursue cases throughout the world. Source: www.accountingtoday.com

The Internal Revenue Service has not been revoking the Preparer Tax Identification Numbers of thousands of tax preparers who fail to comply with IRS rules and their own tax-filing and payment obligations, according to a new report. The report, from the Treasury Inspector General for Tax Administration, pointed out the IRS has a Return Preparer Office, or RPO, that oversees tax preparers and has established processes and procedures to ensure they meet the requirements to obtain and renew a PTIN. In January 2015, the RPO identified 19,496 preparers with PTINs who were potentially noncompliant with their tax-filing and payment obligations. These preparers had over $367 million in taxes due as of Jan. 26, 2015. In addition, the RPO identified 3,055 preparers who failed to file required tax returns for one or more tax years and eight tax return preparers who failed to file required tax returns for five years. TIGTA’s review of PTIN holders as of Sept. 30, 2014, identified 3,001 preparers who self-reported a felony conviction on their application, while 87 reported a crime related to federal tax matters. TIGTA found, however, that processes do not ensure that PTINs assigned to prisoners or individuals barred from preparing tax returns are revoked. Specifically, the RPO did not revoke the PTINs assigned to 65 of 445 confirmed prisoners and 15 of 87 individuals who the IRS identified as barred from preparing tax returns. Effective September 2010, the IRS issued regulations requiring preparers to register for a PTIN to be used to sign all tax returns prepared. As of April 1, 2015, more than 696,000 individuals were assigned an active PTIN for calendar year 2015. The Return Preparer Office has established processes and procedures to ensure that individuals assigned a PTIN were at least 18 years of age, were not using identifying information associated with a deceased individual, and correctly reported professional credentials. In addition, the RPO ensured that individuals participating in the new Annual Filing Season Program met educational requirements and consented to be subject to the duties and restrictions of practicing before the IRS under Treasury Department Circular 230. The voluntary program was initiated in an effort to ensure that unlicensed tax return preparers have a basic competency level and adhere to professional standards. The IRS introduced the voluntary program after a federal court ruled the agency exceeded its statutory authority when it tried to impose a requirement for competency testing and continuing education for tax preparers. TIGTA recommended the IRS complete tax compliance checks by issuing inquiry letters to preparers on a timely basis after identifying noncompliance with federal tax laws and take appropriate actions to revoke PTINs when warranted. The IRS should also assess all self-reported felony convictions and revoke PTINs when warranted, ensure that review processes are followed to revoke PTINs for incarcerated and enjoined tax return preparers, and complete the prisoner check quarterly and revoke prisoners’ PTINs as warranted, the report suggested. The IRS agreed with three recommendations and partially agreed with another. In response to the second recommendation, the IRS said it plans to continue assessing self-reported felony convictions of enrolled agents and Annual Filing Season Program applicants. TIGTA said it believes the IRS should assess the self-reported felony convictions of all tax return preparers who disclose this information on their PTIN applications and revoke PTINs when warranted. Source: www.accountingtoday.com

The Internal Revenue Service is testing a new Return Review Program to help identify instances of tax return fraud, but the security of the system needs improvement, according to a new government report. The report, publicly released Tuesday by the Treasury Inspector General for Tax Administration, said the IRS chartered the initiation of the Return Review Program, or RRP, in 2009 to replace the Electronic Fraud Detection System, also known as the EFDS. The IRS paused the development of the RRP in January of last year to allow more time to evaluate the performance and design of the parallel-processing database in the system and to revisit the IRS’s strategic business fraud detection goals. TIGTA found that during an IRS pilot test, the RRP models flagged potential identity theft fraud not detected by the EFDS models. During a 32-day test, the RRP Identity Theft Model identified 51,946 returns as potential identity theft cases. The IRS confirmed that 41,311 of those returns involved identity theft. Read More  

The Internal Revenue Service’s Automated Collection System lacks key controls for selecting which delinquent tax cases to pursue, according to a new report by the Government Accountability Office. The IRS's ACS is one of the main means for pursuing taxpayers who have failed to fully pay their taxes or file their tax return in a timely manner, the GAO noted. However, the collections staff has fallen victim to budget cuts. From fiscal years 2012 through 2014, ACS staff has declined 20 percent while the number of unresolved collection cases at year-end has increased 21 percent. Given those trends, the GAO noted, the IRS needs to make informed decisions about the collection cases it pursues to ensure the program is meeting its objectives and mission. The ACS has a multistep, automated process to prioritise and select cases of unpaid taxes and unfilled tax returns to pursue. It assesses cases to determine the order to work on cases based on the IRS's collection program priorities, the Read More

The Internal Revenue Service’s total tax debt inventory has increased 23 percent since 2009 to $380 billion, according to a new government report, while the agency’s collection staff has declined 23 percent after years of budget cuts. The report, from the Government Accountability Office, found the IRS lacks adequate internal controls over its largely automated tax collection processes. The processes automatically categorize and route unpaid tax or unfiled tax return cases for potential selection. The automated Inventory Delivery System, or IDS, categorizes and routes cases based on many factors, such as type of tax and amount owed. Outside of IDS, collection managers set goals for closing cases in priority areas, such as delinquent employer payroll taxes and cases involving certain high-wealth taxpayers. If the goals are at risk of not being met, officials are able to take action to select additional priority cases. In recent fiscal years, the collection program has exceeded nearly all case closure goals for priority cases. However, because the IRS has not Read More

The Internal Revenue Service has been scaling back its activities and using some of its budgeting flexibility to absorb funding cuts, according to a new government report.  The report, from the Government Accountability Office, pointed out that the IRS’s budget shrunk from $12.1 billion in fiscal year 2010 to $11.3 billion in fiscal year 2014, a reduction of approximately 7 percent. The IRS's budget declined by an additional $346 million from fiscal year 2014 to fiscal year 2015. The IRS used some of its budgeting flexibility to absorb the budget reductions by allocating user fee revenue, which made up 3.4 percent of its budget, or $416 million, in fiscal year 2014. In addition, to increase agency-wide coordination of budget decisions, the IRS formed a new office and committee to inform budget formulation and execution decisions. To absorb the budget cuts, the IRS’s Human Capital Office, Office of Chief Counsel, and Small Business/Self-Employed Division each reduced their staff by 16 to 30 Read More.  

  IRS Commissioner John Koskinen has confirmed to Congress that illegal immigrants granted amnesty under President Obama’s new programs could claim back refunds even when they never filed returns to pay their taxes in the first place. Sen. Chuck Grassley, who had pressed Mr. Koskinen over the issue, released written responses Wednesday in which the commissioner admitted he’d botched the question earlier and, in fact, illegal immigrants granted the amnesty will now be Read More  

Normally student loan borrowers send their loan servicer payments to keep up with their debt. Come next month, it'll be the other way around for nearly 78,000 military veterans who will start receiving refund checks from Navient, the student loan servicing company that used to belong to Sallie Mae. The Department of Justice announced Thursday that the $60 million in settlement funds that it secured from Navient last year will be mailed to veterans on June 12. Federal prosecutors alleged that the company cheated troops, and overcharged them interest during their military service, in violation of the Service members Civil Relief Act (SCRA). The law sets a 6 percent cap on interest rates for debt that troops took on before their active duty begins. The compensation checks will average about $771, but the individual payment amounts will range from $10 to over $100,000, the Justice Department said. The announcement comes the same week the Department of Education cleared Navient, and three other major student loan servicers, in its own investigation of possible SCRA violations. The Education Department said that the companies complied with the law "in the vast majority of cases" between 2009 and 2014, and incorrectly denied troops the interest rate cap in only 1 percent of cases. Source: http://www.accountingtoday.com/

The Internal Revenue Service today reminded businesses in U.S. territories that they must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, when they engage in cash transactions in excess of $10,000. The form must be filed within 15 days of the transaction.   Businesses, including individuals who are sole proprietors that receive more than $10,000 cash in a transaction or in two or more related transactions in any U.S. possession or territory must file Form 8300 with the IRS. Possessions and territories include American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico and the U.S. Virgin Islands. This requirement is in addition to any filing obligation the business may also have with U.S. territory tax authorities under similar territory rules, including under a U.S. territorial mirror income tax code.   Examples of businesses that may have to file Form 8300 include those that sell jewelry, furniture, boats, aircraft, or automobiles, as well as those that are pawnbrokers, attorneys, real estate brokers, insurance companies and travel agencies.   Cash includes the coins and currency of the United States as well as foreign currency, cashier’s checks, bank drafts, traveler’s checks and money orders. The law also requires that businesses report related transactions occurring within a 24-hour period. If the same payer makes two or more transactions totaling more than $10,000 in a 24-hour period, the business must treat the transactions as one transaction and report the payments. Source: www.irs.gov

A Bill that would makes individuals with tax debts ineligible for federal employment has been marked up by the US House of Representatives Oversight and Government Reform Committee. The Bill was marked up following the publication of the IRS's tax delinquency report, which identifies the total number of federal civilian employees who are tax-delinquent and the total amount owed. In 2014, 113,805 civilian federal employees owed a total of $ 1.14bn in taxes (compared with $ 1.07bn in 2013). In 2004, those tax debts amounted to only $ 600m. "The fact that our federal workforce owes more than one billion dollars in back taxes is a very serious problem," said the Committee's Chairman Jason Chaffetz (R – Utah). "As tax day approaches, and Americans across the country work to fulfill their civic responsibility to pay their taxes on time, federal workers should not be exempt." "Steps must be taken to ensure that those who are delinquent satisfy their tax obligations," he added. "If they refuse to do so, they should be held accountable." Consequently, Chaffetz sponsored the Federal Employee Tax Accountability Act of 2015, and the Committee approved its markup by voice vote on March 25. The Act provides that individuals with "seriously delinquent tax debts" would be ineligible for federal employment. Not only would any individual who has such a tax debt be ineligible to be appointed, they could also be fired from their role as a federal employee. However, an employee may continue to serve, in a situation involving financial hardship, if his or her continued service "is in the best interests of the US, as determined on a case-by-case basis." The Contracting and Tax Accountability Act of 2015 was also marked up by voice vote at the same time. That Act would prohibit the award of contracts or grants to corporations or individuals that have seriously delinquent federal tax debt. Source: www.tax-news.com  

During an April 22 hearing of the US House of Representatives Ways and Means Subcommittee on Oversight, Republican lawmakers raised concerns at issues arising during the 2015 tax filing season and the service offered by the Internal Revenue Service. On the day of the hearing, the Republican-led Ways and Means Committee released a new report on the IRS's "exceedingly poor customer service" during the 2015 tax-filing season. Despite the IRS's claim that its lackluster performance was due to budget cuts, the Committee said it had found extensive evidence that "the IRS deliberately cut funding for customer service that was fully under its control." "The findings are deeply troubling," said Committee Ways and Means Chairman Paul Ryan (R – Wisconsin). "At all times, but especially during tax season, the IRS should put the taxpayer first. But instead, the agency cut funding for the very customer service that taxpayers rely on." Oversight Subcommittee Chairman Peter Roskam (R – Illinois) added: "The IRS has blamed the decline in customer service on budget cuts. The amount of money Congress appropriated to the IRS for taxpayer assistance was the same this year as last year, but the level of service has decreased drastically. So what happened? The IRS made the decision to move money away from taxpayer assistance." At the same hearing, the IRS Commissioner John Koskinen said the filing season had gone "relatively smoothly." However, he said he was "disappointed that, because of budget cuts, taxpayers did not get the customer service experience they deserve." He said "opening the 2015 filing season on schedule was a major accomplishment," given the additional preparation related particularly to the Affordable Care Act (ACA) and the Foreign Account Tax Compliance Act. He stated that the IRS's "low service levels were the result of the budget cuts we have had to absorb. Funding for the agency has been reduced by USD1.2bn over the last five years, [and] is now at its lowest level since 2008."He told the hearing that, as a direct result, the agency's "phone level of service at the start of the filing season was 54 percent, and dipped below 40 percent toward the end of filing season." Its target is 80 percent. With regard to the ACA, he confirmed that "early indications are that most taxpayers affected by its tax-related provisions – the premium tax credit and the individual shared responsibility payment – have been able to fulfill their filing obligations." He added that the IRS has made every effort to communicate with taxpayers and tax preparers about the ACA-related tax changes, beginning last year and continuing through the 2015 filing season, and had also worked on the necessary updates to tax software products to ensure that any taxpayers affected by the ACA tax changes would be able to prepare their returns as quickly and easily as possible.Source: www.tax-news.com

House of Representatives Ways and Means Committee Chairman Paul Ryan (R – Wisconsin) and Senate Finance Chairman Orrin Hatch (R – Utah) have sent a letter to a coalition of small businesses asking for ideas on how to cut the effective tax rate for US pass-through businesses, which pay tax at individual income tax rates. In their April 13 letter to the Coalition for Fair Effective Tax Rates (CFETR), which joins a large number of American small business associations, Ryan and Hatch were looking for input on how the effective tax rate for pass-through businesses could be reduced, while not cutting statutory individual tax rates. Those ideas could be important if only corporate tax reform is able to be progressed in Congress in the foreseeable future. President Barack Obama has so far insisted on this, given that he is against any reduction in the top rate of individual income tax. In that case, a reduction in effective tax rates on pass-through businesses would be necessary to maintain their competitiveness in the face of reduced statutory corporate tax rates. While both Ryan and Hatch have indicated that their preference is for comprehensive tax reform, involving both individual and corporate tax codes, their letter adds that, if "the reality is that the statutory tax rates for pass-through businesses will have to wait until the next President, there are reforms we can enact now that will lower their effective tax rate." CFETR members have been requested to send their comments by May 31, 2015. Source: www.tax-news.com

There is a scam going around for the public to beware of, with the scammers calling individuals and claiming to work for the government. This IRS scam has cost victims $15 million or more, reports CNN. The reason the calls have conned so many folks out of money is because of some of the high-tech tools the scammers are using to sound legitimate when they call. Those techniques include “spoofing” the caller ID number displayed to make it appears as if the calls are coming from the IRS, or even mimicking the background noises heard in call centers to fake as though the caller is in a room with a bunch of other IRS agents talking to others on their own phone calls. The IRS scammers may use phone numbers that appear to originate from Washington, D.C., and even have information about your financial history. The scam phone calls became so prevalent that the IRS issued a report about how to spot them and what to do if you’ve received one. Read More

Dear Logics Users,

Good News!

Logics is now integrated with a Short Message Service (SMS) system, which can be activated for you upon your request. Sending a quick SMS sometimes seems to be the most convenient way of getting in touch with your customer.

If you have a Standard or a Premium account,  open a ticket telling us how many of your users need SMS access, and what area code you want your SMS numbers to be from. Once the service is activated, users will be able to send text messages (upto 160 characters) to your clients directly from the cases in Logics.  There will also be a SMS log displaying for all SMS transactions, both outgoing and incoming.

The Treasury Department announced  that taxpayers do not have to file amended returns if they already filed their 2014 tax returns relying on forms sent by the government that contained incorrect information about their health coverage and any advance premium tax credit they received. The IRS said it will not pursue any additional taxes owed due to the mistake.However, the IRS also noted that some taxpayers may be owed a refund when the correct information is reported and that they would want to file an amended return. A tax filer is likely to benefit from amending if the 2015 monthly premium for his or her second lowest cost Silver plan (or “benchmark” plan) is less than the 2014 premium. As an example of a mistaken amount on a form for which a taxpayer Read More.

Following the end of the Affordable Care Act's (ACA's) open enrollment period for 2015 on February 15, Democrat lawmakers have urged the US Administration to grant a special enrollment period for individuals paying a shared responsibility payment – or tax penalty – for 2014.  The ACA's provisions give tax incentives to individuals to offset health care expenses, but they also impose penalties, administered through the tax code on their tax returns each year, on individuals who do not obtain "minimum essential" health care coverage for themselves or their families. Read More

The Internal Revenue Service (IRS) has released revised versions of its Tax Guide for Aliens, providing guidance for resident and nonresident aliens for use in preparing their 2014 tax returns, and of its Tax Guide for Individuals Receiving Income from the United States Possessions – American Samoa, Puerto Rico, the US Virgin Islands, Guam, and the Northern Mariana Islands. The Tax Guide For Aliens provides guidance for resident and nonresident aliens to help them prepare their 2014 tax returns. It points out that, for tax purposes, an alien is any individual who is not a US citizen, but resident aliens are generally taxed on their worldwide income – the same as US citizens – while nonresident aliens are taxed only on their income from sources within the US and on certain income connected with the conduct of a trade or business in the US. Information in the publication is therefore not as comprehensive for resident aliens as it is for nonresident aliens. Read More  

The Internal Revenue Service and the Free File Alliance on January 16 th 2015 announced the launch of Free File, which makes brand-name tax software products and electronic filing available to most taxpayers for free. Free File software can help taxpayers with tax preparation, including the health care law that will affect almost everyone. People can use Free File software immediately but e-filed returns will not be transmitted to the IRS until Tuesday, January 20, when the filing season officially begins Read more  

The 2015 tax-filing season is almost upon us. The Internal Revenue Service (IRS) announced at the end of December that it will begin accepting tax returns for the 2014 fiscal year starting Jan. 20. But the 2015 tax season could see some major hang ups for taxpayers. It’s the first time taxpayers will have to include information in their tax returns to meet the requirements of the Affordable Care Act. On top of the newly complicated tax code, Congress cut the IRS’ budget and the agency is operating with fewer personnel. IRS Opens 2015 Tax Season With Fewer Resources: IRS is operating on less money and manpower, reports CNN Money. The IRS’ budget for 2015 is 10 percent lower than it was in 2010, even though costs for the agency have increased since. IRS staffing is down 8 percent, while money allocated for staff training was cut by more than 85 percent. Affordable Care Act Complicates 2014 Tax Code: Cuts to the IRS’ budget might have been less worrisome, save for the new rules introduced by the Affordable Care Act (ACA) and other legislation. As tax filers deal with new forms and rules for the first time, it’s expected to be a particularly confusing and frustrating tax year for many filers; but the IRS will have less manpower and resources to offer support. The 2015 tax season marks the first return that taxpayers will fill out following the enactment of the Affordable Care Act, which includes many provisions that relate directly to taxes. Taxpayers will be required to provide proof of 2014 insurance coverage, as well as indicate whether they received tax credits to help cover insurance costs. “The ACA is going to result in more confusion for existing clients and many taxpayers may well be very disappointed by getting less money and possibly even owing money,” said Charles McCabe, president of Peoples Income Tax and the Income Tax School, to The Wall Street Journal. Source: http://www.gobankingrates.com

The United States Internal Revenue Service (IRS) is required by law to take action in federal programs identified as being at high risk of improper payments, and it needs to classify the Additional Child Tax Credit (ACTC) as such a program, according to a recent report by the Treasury Inspector General for Tax Administration (TIGTA).Under the Improper Payments Elimination and Recovery Act of 2010, a program is defined as having significant improper payments when they exceed both 2.5 percent of program outlays and USD10m of all program payments made during the fiscal year. However, while the IRS has developed processes to identify improper Earned Income Tax Credit (EITC) payments and their root causes, estimating that 24 percent of all EITC payments made in the 2013 fiscal year, or USD14.5bn, were paid in error, it has not classified the ACTC as at high risk, even though TIGTA has estimated the potential ACTC improper payment rate for 2013 was up to 30.5 percent. Potential ACTC improper payments could then have totaled up to USD7.1bn.TIGTA pointed out that the EITC and ACTC are both refundable credits designed to help low-income individuals reduce their tax burden, and IRS enforcement data show that the root causes of improper ACTC payments are similar to those of the EITC. The overall objective of TIGTA's review was to assess the IRS's efforts to identify and address the root causes of erroneous EITC and ACTC payments and it found that significant changes in IRS compliance processes would still be necessary to make any significant reduction in improper payments. Source: www.tax-news.com

The United States House of Representatives has passed, by a bipartisan vote of 378-46, a Bill that approves a one-year renewal for the "tax extenders." Following the failure of other more selective and longer-term proposals, the Tax Increase Prevention Act of 2014 takes in all of the 50-plus tax provisions for individuals and businesses that expired at the end of 2013 and extends them until the end of this year. They will therefore need to be revisited by the next Republican-led Congress sometime in 2015. Renewal of the measures will, however, mean greater certainty for those individual and business taxpayers who are affected by the expired provisions, and also reduce operational and compliance risks that could have delayed the tax filing season and the processing of taxpayer refunds. Source: www.tax-news.com

The United States Internal Revenue Service (IRS) has recently released revenue procedures, final regulations and a notice on the application of certain health care provisions within the Affordable Care Act (ACA), including the premium tax credit and the individual employee mandate.

The revenue procedures issued by the IRS, effective for tax years beginning after December 31, 2015, include the indexing adjustments used to update the applicable percentage tables for determining a taxpayer's premium tax credit, which are worth USD5,000 per year on average and are designed to defray the cost of purchasing health insurance for lower income households.The IRS also provided final regulations relating to the ACA's requirement for individuals to maintain "minimum essential" health insurance coverage. Those individuals who do not comply this individual "employee mandate" will have to make "shared responsibility" payments, or tax penalties, to the IRS... Read More.

More than 500 United States organizations, representing a wide range of individuals, businesses, and non-profit organizations, delivered a letter on November 18 to the House of Representatives urging lawmakers to work together during the current congressional lame-duck session to deal with the "tax extenders" package. The more than 50 provisions that expired at the end of 2013 include mortgage tax relief; the deduction for state and local sales taxes; and education tax deductions, for individuals. And for businesses, they include increased expensing under Section 179; 50 percent bonus depreciation; the work opportunity tax credit; the credit for research and development (R&D) expenses; and tax breaks promoting renewable energy. "These tax provisions are critically important to US jobs and the broader economy," the organizations wrote. "Failure to extend these provisions is a tax increase. It will inject instability and uncertainty into the economy and weaken confidence in the employment marketplace." "The expired provisions should be renewed as soon as possible this year to enable implementation in time for the normal tax filing season. A delay in the tax filing season will delay tax refund checks and spending decisions, resulting in an immediate negative impact on the economy." The organizations concluded by urging "all members of Congress to work together to extend, enhance, or make permanent these important tax provisions this year to provide a necessary bridge to comprehensive tax reform." Source: www.taxnews.com

The New Jersey Division of Taxation (Division) is trying to help taxpayers resolve unpaid tax liabilities for tax periods 2005 through 2013.  Through November 17, 2014, the Division is offering taxpayers to pay all tax and interest for the applicable periods a waiver of most penalties (but not penalties related to the 2009 amnesty) and any costs of collection or recovery fees.  Notably, this is not an amnesty like those conducted in 2002 and 2009.  It is not statutorily mandated and no penalties may be imposed for non‑participation.  Because the initiative is not statutorily mandated, the Division is not offering something it could not offer at any other time.  However, the Division’s offer to waive most penalties may be a good chance for many taxpayers to resolve issue and move on and is worth considering. Source: http://www.natlawreview.com/

We are happy and proud to introduce our in-house E-Signature module to our valued clients. E-Sign is fully integrated with IRSLogics platform and its beta version is now available to all clients for a limited period free trial. E-Sign gives you the capability of sending automatically filled IRS forms to your clients and have them electronically sign the forms. You can also generate your own custom forms and agreements and send those documents via email to your clients. Your clients will receive the documents and will be able to apply and submit their electronic signature through E-Sign's secure portal. You will immediately receive the signed documents back in your IRSLogics platform. Call our sales or support team to get your free trial period started.

Following the requests from our valued clients regarding integration with variety of merchant gateways, we are happy to announce that IRSLogics is now integrated with more than 100 merchant gateways. Call our sales team at +1(866)386-2444 for more details.

We have recently updated the IRS Forms 9465 and 433-B, as well the California Franchise Tax Board POA.

We recently made a few updates to the Invoice Types tab in the administration section.  You can now customize your own invoice types by clicking Add Invoice Type at the top of the page.  You will also see that there is now an option to remove an invoice type.  However, if the invoice type has been used, you will only be allowed to disable it (which means that nobody will be able to use that invoice type moving forward).

We are aware that the current versions of these forms in irsLogics need to be updated.  We are working on getting these forms updated as fast as we can, and you should see them shortly.  Thank you for your patience.

To have an even better experience with your iPad: Open your Safari browser. Log in to your irsLogics account. Tap on the icon next to the URL text-box. Select Add to Home Screen. This way the irsLogics icon will be added to your iPad home screen and you can simply tap on the icon to log in. Also when you use the icon to log in the irsLogics will be in full screen mode. Note: Not all the features are supported in iPad. However, most of the key features are supported. If you need a feature that is not supported please submit a help desk ticket and we will do our best to implement the feature.

Due to the high demand of integration with a 'tax resolution friendly' merchant processor, we have recently added full support of Millennium Merchant Services to irsLogics. For more information please contact Kent Stiritz with Millennium Merchant at 800.483.8815 ext.101 or go to: www.mbankcard.com/intellirose.html  

Pin to Top: Is there always this one activity that you and your colleagues are working on and every time you open the case you have to scroll all the way down to find it? Now with "Pin to Top" option, available on the activity window, you can pin any activity to the top of the activity list! So each time you or any of your colleagues open the case, the activity is just there pinned to the top of the activity list. Popup Window: Are there few things about every case that you wish to be able to remind yourself or your colleagues every time the case is being opened? Using "Popup Window" option, available on the activity window, you are able to do this. Just select this option for any activity and the next time that the case is opened, the activity will show up on a popup window in a way that nobody can miss it!

Administrators can define IP restriction for a particular user in the organization. This will restrict user from accessing irsLogics services outside the specified IP address(es). To do this: go to 'User Management/Users'. Open any user file. Go to tab 'Login Restrictions'. IRS Forms 12256 'Withdrawal of Request for Collection Due Process or Equivalent Hearing' and Form 12277 'Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien'  have been added to irsLogics.

Four years ago when we started irsLogics as a product, we promised our dear clients to keep up with the latest IRS changes and updates in forms, regulations and financial standards. Throughout these years with your help and support, we were able to develop a sophisticated crawler to read and manipulate the data from the IRS website. Today the same crawler was able to successfully update irsLogics database with the latest changes in the IRS financial standards only two days after they were released automatically and without any manual interaction (Of course! we did data sampling and quality assurances before releasing it to the production). Enjoy and please keep your feedback coming!.. And let us know if we could be of a better assistance

We recently added two new features to irsLogics: 1. Ability to send fax cover sheet. 2. Ability to export a task filter to excel.

The newly released IRS Form 2848 (Power of Attorney and Declaration of Representative) has been updated in irsLogics. In addition, the following federal forms were recently added to the system:  -Form 4868: Application for Automatic Extension of Time To File U.S. Individual Income Tax Return  -Form 656-PPV: Offer in Compromise - Periodic Payment Voucher  -Form 13711: Request for Appeal of Offer in Compromise

All IRS financial standards have been updated in irsLogics. Although these rate changes are minor, they can still impact the calculations in financial interview expense and summary screens.

The newly released IRS Form 2848 (Power of Attorney and Declaration of Representative) has been updated in irsLogics. We also recently updated the following forms with the latest rev. and changes: - IRS Form 2848 Rev. March 2012 Updated - IRS Form 433-D Rev. January 2012 Updated - IRS Form 8821 Rev. October 2011 Updated - MI POA - WA TIA - CA FCA EDD - CA FTB 3520 - CA POA FTB - 9465 - Installment: Agreement Request - 12153 - Request for a Collection Due Process Hearing

Get answer to your questions: -Use the search to find answer to your question -Watch video tutorials -Read Frequently Asked Questions -Or ask your question in Q&A site.   Get Support: -Submit a support request at any time. We reply to all requests within two business days. -Or call (714) 352-4040 during business hours (9 AM–5 PM Pacific Time, Monday to Friday). You also are able to report an issue or request for enhancement.

irsLogics is scheduled to be moved to a new facility in the following time frame. Services may be limited or unavailable during this period. Starting: Saturday August 21st @12PM PST Ending: Sunday August 22nd @6PM PST Please make sure to logout from the system prior to this maintenance. Thank you irsLogics Support Team

We are pleased to announce the release of Team/Affiliate version of irsLogics, adding new capabilities for back-end tax resolution service providers to manage and expand their business. Here are some highlights of the affiliate version: - User-friendly interface to add and manage teams/affiliates - Setup Sales Commissions at the branch or user levels - Reporting - Approval process for submitted cases by affiliates: Require approval by Case Manager in Main office

All IRS financial standards have been updated in irsLogics. IRS has recently published updated rates of national, local and regional standards for use in calculating repayment of delinquent taxes. These standards are effective March 1, 2011 for purposes of federal tax administration only. Although these rate changes are minor, they can still impact the calculations in financial interview expense and summary screens.

We are pleased to announce the release of irsLogics' Calendar and Event Management modules. The new features will enable you and your staff to: - Create and schedule events, set reminders, and add invitees to the event - View your Calendar of tasks and events by day, week, or month - Assign tasks and events to single or multiple users (Group assignments) - Never miss an important deadline again!

IRS Form 843 (Claim for Refund and Request for Abatement) has been added to irsLogics. You can find Form 843 in Case screen under the Forms section.

We are pleased to announce the release of 'IRS Resources' tools in irsLogics. Using this tool, users can access the latest news from IRS, view and read the Internal Revenue manual and other IRS publications and instruction. The system also offers an advanced search functionality for the Internal Revenue Manual.

IRS Forms 433-A (OIC) Collection Information Statement for Wage Earners and Self-Employed Individuals, and  433-B (OIC) Collection Information Statement for Businesses have been added to irsLogics. Fill out Form 433-A(OIC) if you are an individual wage earner and/or a self-employed individual. This will be used to calculate an appropriate offer amount based on your assets, income, expenses, and future earning potential. Complete Form 433-B(OIC) if your business is a Corporation, Partnership, Limited Liability Company (LLC) classified as a corporation, Other multi-owner/multi-member LLC, or Single member LLC