IRS Tax News

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  • 16 Sep 2019 8:32 AM | Maureen Gelwicks (Administrator)

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

    The regulations released today on IRS.gov have been submitted to the Federal Register and may vary slightly from the published documents due to minor editorial changes. The documents published in the Federal Register will be the official documents.

    The final regulations finalize the proposed regulations issued in August 2018 which implement several provisions included in the Tax Cuts and Jobs Act (TCJA). The proposed regulations contain new provisions not addressed previously.

    The 100% additional first year depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.

    The deduction applies to qualifying property acquired and placed in service after Sept. 27, 2017. The final regulations provide clarifying guidance on the requirements that must be met for property to qualify for the deduction, including used property. The final regulations also provide rules for qualified film, television and live theatrical productions.

    Additionally, in the proposed regulations, the Treasury Department and IRS propose rules regarding (i) certain property not eligible for the additional first year depreciation deduction, (ii) a de minimis use rule for determining whether a taxpayer previously used property; (iii) components acquired after Sept. 27, 2017, of larger property for which construction began before Sept. 28, 2017; and (iv) other aspects not dealt with in the previous August 2018 proposed regulations. The proposed regulations also withdraw and repropose rules regarding application of the used property acquisition requirements (i) to consolidated groups, and (ii) to a series of related transactions. 

    For details on claiming the deduction or electing out of claiming it, see the final regulations or the instructions to Form 4562, Depreciation and Amortization (Including Information on Listed Property). For tax years that include Sept. 28, 2017, see Rev. Proc. 2019-33 for further information about making a late election or revoking an election.

    Taxpayers who elect out of the 100% depreciation deduction must do so on a timely-filed return. Those who have already timely filed their 2018 return and did not elect out but still wish to do so have six months from the original deadline, without an extension, to file an amended return. 

    For more information about this and other TCJA provisions, visit IRS.gov/taxreform.


  • 06 Sep 2019 3:09 PM | Maureen Gelwicks (Administrator)

    WASHINGTON — The Internal Revenue Service today issued proposed regulations clarifying the reporting requirements generally applicable to tax-exempt organizations. 

    The proposed regulations reflect statutory amendments and certain grants of reporting relief announced by the Treasury Department and the IRS in prior guidance to help many tax-exempt organizations generally find the reporting requirements in one place.

    Among other provisions, the proposed regulations incorporate the existing exception from having to file an annual return for certain organizations that normally have gross receipts of $50,000 or less, which is found in Revenue Procedure 2011-15. The regulations also incorporate relief from requirements to report contributor names and addresses on annual returns filed by certain tax-exempt organizations, previously provided in Revenue Procedure 2018-38.  A recent court decision held that the Treasury Department and the IRS should have followed notice and comment procedures in 2018 when announcing this relief with respect to providing contributor names and addresses, and these regulations provide the opportunity for notice and comment on that relief as well as on other proposed updates to existing regulations.

    Under the proposed regulations, filing requirements for Section 501(c)(3) organizations and Section 527 political organizations remain unchanged, and all organizations are required to keep the contributor information and make it available to the IRS upon request.
     
    Treasury and IRS welcome public comments on all aspects of these proposed regulations. For details on submitting comments, see the proposed regulations. The regulations propose to allow tax-exempt organizations to elect to apply the regulations to returns filed after Sept. 6, 2019.
     
    Additionally, the IRS issued Notice 2019-47 providing penalty relief for certain exempt organizations that, consistent with the 2018 guidance from the IRS, do not report the names and addresses of contributors on annual returns for tax years ending on or after Dec. 31, 2018, but on or before July 30, 2019. 


  • 06 Sep 2019 3:03 PM | Maureen Gelwicks (Administrator)

    WASHINGTON – The Internal Revenue Service today announced new procedures that will enable certain individuals who relinquished their U.S. citizenship to come into compliance with their U.S. tax and filing obligations and receive relief for back taxes.

    The Relief Procedures for Certain Former Citizens apply only to individuals who have not filed U.S. tax returns as U.S. citizens or residents, owe a limited amount of back taxes to the United States and have net assets of less than $2 million. Only taxpayers whose past compliance failures were non-willful can take advantage of these new procedures. Many in this group may have lived outside the United States most of their lives and may have not been aware that they had U.S. tax obligations.

    Eligible individuals wishing to use these relief procedures are required to file outstanding U.S. tax returns, including all required schedules and information returns, for the five years preceding and their year of expatriation. Provided that the taxpayer’s tax liability does not exceed a total of $25,000 for the six years in question, the taxpayer is relieved from paying U.S. taxes. The purpose of these procedures is to provide relief for certain former citizens. Individuals who qualify for these procedures will not be assessed penalties and interest.  

    The IRS is offering these procedures without a specific termination date. The IRS will announce a closing date prior to ending the procedures. Individuals who relinquished their U.S. citizenship any time after March 18, 2010, are eligible so long as they satisfy the other criteria of the procedures.

    These procedures are only available to individuals. Estates, trusts, corporations, partnerships and other entities may not use these procedures.

    The IRS will host an on-line webinar in the near future providing additional information and practical tips for making a submission to the Relief Procedures for Certain Former Citizens.

    Relinquishing U.S. citizenship and the tax consequences that follow are serious matters that involve irrevocable decisions. Taxpayers who relinquish citizenship without complying with their U.S. tax obligations are subject to the significant tax consequences of the U.S. expatriation tax regime. Taxpayers interested in these procedures should read all the materials carefully, including the FAQs, and consider consulting legal counsel before making any decisions.


  • 04 Sep 2019 3:08 PM | Maureen Gelwicks (Administrator)

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

    The estimator is an expanded, mobile-friendly online tool that replaced the Withholding Calculator, which since 2001 had offered workers an online method for checking their withholding. The old calculator lacked features geared to self-employed individuals; the new estimator made changes to address this important group.

    The new tool offers self-employed individuals, workers, retirees and other taxpayers a more dynamic and user-friendly way to calculate the amount of income tax they want to have withheld from either wages or pension payments. With only a third of the year remaining, the IRS encourages these taxpayers – and others – to use the estimator to take a Paycheck Checkup as soon as possible to make sure they are having the right amount of tax withheld and avoid a surprise when they file next year.

    Among other things, the estimator allows a user to enter any self-employment income, including income from side gigs or the sharing economy, in addition to wages or pensions. The user is then alerted that they may qualify for several special tax benefits, including the self-employment health insurance deduction or the deduction for contributions to a Simplified Employee Pension (SEP), Savings Incentive Match Plans for Employees (SIMPLE) or other qualified retirement plan. The estimator automatically calculates the self-employment tax and the self-employment tax deduction and incorporates these into its overall tax liability estimate.

    The enhancement for self-employed people is just one of many new features offered by the Tax Withholding Estimator. Others include:

    • Plain language throughout to improve taxpayer understanding.
    • The ability to target either a tax due amount close to zero or a refund amount.
    • A new progress tracker to help a user know how much more information they need to enter.
    • The ability to go back and forth through the steps, correct previous entries and skip questions that don’t apply.
    • Tips and links to help the user quickly determine if they qualify for various tax credits and deductions.
    • Automatic calculation of the taxable portion of any Social Security benefits.

    The new estimator also makes it easier to enter wages and withholding for each job held as well as jobs held by a spouse. Users can separately enter pensions and other sources of income. At the end of the process, the tool makes specific withholding recommendations for each job and spouse’s job, including incorporating any self-employment income entered into the estimator.

    The estimator then automatically links to the appropriate withholding form. For employees, the link goes to Form W-4,  Employee's Withholding Allowance Certificate (PDF) , which they can then fill out and submit to their employer. Similarly, for pension recipients, the link is to Form W-4P, Withholding Certificate for Pension or Annuity Payments, which is submitted to the pension payor. Remember, don’t send these forms to the IRS.

    The new tool can help anyone, including self-employed people, doing tax planning for the last few months of the year. The IRS urges everyone to do a Paycheck Checkup and review their withholding for 2019. This is especially important for anyone who faced an unexpected tax bill or a penalty when they filed earlier this year. It’s also a critical step for those who made withholding adjustments in 2018 or had a major life change, such as marriage, childbirth, adoption or buying a home.

    Those most at risk of having too little tax withheld include those who itemized in the past but now take the increased standard deduction, as well as two wage earner households, employees with non-wage sources of income and those with complex tax situations.

    Anyone who changes their withholding in the middle or latter part of this year should do another Paycheck Checkup in January of 2020. That will help ensure that they have the right amount of tax withheld, on a full-year basis, for all of 2020.

    The IRS sponsors a free two-hour webinar on the Tax Withholding Estimator. The webinar will take place on Thursday, Sept. 19 at 2 p.m. Eastern time. To sign up, visit the webinars page on IRS.gov. 


  • 28 Aug 2019 8:27 PM | Maureen Gelwicks (Administrator)

    WASHINGTON – The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning Oct. 1, 2019, as they were in the prior quarter. 

    The rates will be: 

    • five (5) percent for overpayments [four (4) percent in the case of a corporation];
    • two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000;
    • five (5) percent for underpayments; and
    • seven (7) percent for large corporate underpayments. 

    Under the Internal Revenue Code, the rate of interest is determined 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 one-half (0.5) of a percentage point.

    The interest rates announced today are computed from the federal short-term rate determined during July 2019 to take effect Aug. 1, 2019, based on daily compounding.

    Revenue Ruling 2019-21, announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2019-38, dated Sept. 16, 2019.


  • 15 Aug 2019 8:36 AM | Maureen Gelwicks (Administrator)

    WASHINGTON — The Internal Revenue Service is automatically waiving the estimated tax penalty for the more than 400,000 eligible taxpayers who already filed their 2018 federal income tax returns but did not claim the waiver.

    The IRS will apply this waiver to tax accounts of all eligible taxpayers, so there is no need to contact the IRS to apply for or request the waiver.

    Earlier this year, the IRS lowered the usual 90% penalty threshold to 80% to help taxpayers whose withholding and estimated tax payments fell short of their total 2018 tax liability. The agency also removed the requirement that estimated tax payments be made in four equal installments, as long as they were all made by Jan. 15, 2019. The 90% threshold was initially lowered to 85% on Jan 16 and further lowered to 80% on March 22.

    The automatic waiver applies to any individual taxpayer who paid at least 80% of their total tax liability through federal income tax withholding or quarterly estimated tax payments but did not claim the special waiver available to them when they filed their 2018 return earlier this year.

    “The IRS is taking this step to help affected taxpayers,” said IRS Commissioner Chuck Rettig. “This waiver is designed to provide relief to any person who filed too early to take advantage of the waiver or was unaware of it when they filed.”

    Refunds planned for eligible taxpayers who paid penalty
    Over the next few months, the IRS will mail copies of notices CP 21 granting this relief to affected taxpayers. Any eligible taxpayer who already paid the penalty will also receive a refund check about three weeks after their CP21 notice regardless if they requested penalty relief. The agency emphasized that eligible taxpayers who have already filed a 2018 return do not need to request penalty relief, contact the IRS or take any other action to receive this relief.

    For those yet to file, the IRS urges every eligible taxpayer to claim the waiver on their return. This includes those with tax-filing extensions due to run out on Oct. 15, 2019. The quickest and easiest way is to file electronically and take advantage of the waiver computation built into their tax software package. Those who choose to file on paper can fill out Form 2210 and attach it to their 2018 return. See the instructions to Form 2210 for details.

    Because the U.S. tax system is pay-as-you-go, taxpayers are required by law to pay most of their tax obligation during the year, rather than at the end of the year. This can be done by having tax withheld from paychecks, pension payments or Social Security benefits, making estimated tax payments or a combination of these methods.
               
    Like last year, the IRS urges everyone to do a “Paycheck Checkup” and review their withholding for 2019. This is especially important for anyone who faced an unexpected tax bill or a penalty when they filed this year. It’s also an important step for those who made withholding adjustments in 2018 or had a major life change. Those most at risk of having too little tax withheld include those who itemized in the past but now take the increased standard deduction, as well as two wage earner households, employees with nonwage sources of income and those with complex tax situations.

    To get started, check out the new Tax Withholding Estimator, available on IRS.gov. More information about tax withholding and estimated tax can be found on the agency’s Pay As You Go web page, as well as in Publication 505.


  • 13 Aug 2019 12:27 PM | Maureen Gelwicks (Administrator)

    Tax professionals urged to report thefts immediately; create recovery plan

    WASHINGTON — The Internal Revenue Service and its Security Summit partners today reminded tax professionals that they should report data theft immediately to the IRS and follow an established process for helping the IRS protect their clients.

    If notified promptly, the IRS can help stop fraudulent tax returns from being filed in clients’ names, thereby avoiding refund delays and other problems for the affected tax professional. But this action requires the cooperation of the tax professional with the IRS.

    The IRS, state tax agencies and the private-sector tax industry are calling on all tax professionals to pause this summer and review their security measures and make appropriate changes. Acting as the Security Summit, the partners created a special “Taxes-Security-Together” checklist to help tax professionals with this review. Fraudulent returns using stolen tax data are harder to detect.

    “Our objective is to get every tax professional to stop and think about client data security. The ‘Taxes-Security-Together’ Checklist is intended as a starting point, spelling out the basic steps necessary to start a security review,” said Chuck Rettig, IRS Commissioner. “Practitioners are the first line of defense against organized criminal syndicates running these identity theft scams. Despite our progress, this is no time to let down our guard in the tax community. We need your help.”

    Creating a data theft recovery plan is the fifth and final action item in this summer’s Security Summit series. Previous checklist topics included: deploying the “Security Six” safeguards, creating a written data security plan, educating yourself on phishing scams and recognizing the signs of data theft.

    Checklist Item 5: Create a data theft recovery plan

    Rather than wait for an emergency, tax professionals should consider creating a data theft recovery plan in advance and make calling the IRS an immediate action item. Having an action plan can save valuable time and protect your clients and yourself. Should a tax professional experience a data compromise – whether by cybercriminals, theft or just an accident – there are certain basic steps to take.  These include:

    Contacting the IRS and law enforcement:

    • Internal Revenue Service. Report client data theft to local IRS Stakeholder Liaisons, who will notify IRS Criminal Investigation and others within the agency on the tax professional’s behalf. Speed is critical. If reported quickly, the IRS can take steps to block fraudulent returns in clients’ names, helping your firm and your clients.
    • Federal Bureau of Investigation, local office (if directed).
    • Secret Service, local office (if directed).

    Contacting states in which the tax professional prepares state returns:

    • State revenue agencies. Any breach of personal information could have an effect on the victim’s tax accounts with the state revenue agencies as well as the IRS. To help tax professionals find where to report data security incidents at the state level, the Federation of Tax Administrators has created a special email address as a contact point: StateAlert@taxadmin.org.
    • State Attorneys General for each state in which the tax professional prepares returns.  Most states require that the attorney general be notified of data breaches, so this notification process may involve multiple offices in some locations.

    Contacting experts:

    • Security expert. They can help determine the cause and scope of the breach as well as stop the breach and prevent further breaches from occurring.
    • Insurance company. Not only to report the breach, but to check if the insurance policy covers data breach mitigation expenses.

    Contacting clients and other services:

    • Federal Trade Commission for guidance for businesses. For more individualized guidance, contact the FTC at idt-brt@ftc.gov.
    • Credit / identity theft protection agency. Certain states require offering credit monitoring and identity theft protection to victims of identity theft.
    • Credit bureaus. Notifying them if there is a compromise and your clients may seek their services.
    • Clients. At a minimum, send an individual letter to all victims to inform them of the breach but work with law enforcement on timing. Clients should complete IRS Form 14039, Identity Theft Affidavit, but only if their e-filed return is rejected because of a duplicate Social Security number or they are instructed to do so.
    • Remember: IRS toll-free assisters cannot accept third-party notification of tax-related identity theft. Again, preparers should use their local IRS Stakeholder Liaison to report data loss.

    The objective of the “Taxes-Security-Together” Checklist is to ensure all tax professionals, whether a one-person shop or a major firm, understand the risk posed by national and international criminal syndicates, take the appropriate steps to protect their clients and business and understand the laws around their obligation to secure that data.

    “The number of tax professionals reporting data thefts to the IRS remains too high, and it puts tens of thousands of taxpayers at risk for identity theft,” Rettig said. “We hope tax professionals will use the Summit checklist as a starting point, not an end point, to protect their client’s data — and themselves. It’s not only a good business practice, it’s the law.”

    Reporting schemes helps everyone

    The IRS, states and tax industry share information about scams and schemes through their Identity Theft Tax Refund Fraud Information Sharing and Analysis Center, which allows the partners to rapidly respond to emerging threats. When tax professionals report data thefts to the IRS, it enables the partners to identify new schemes.

    The ability to share information about emerging threats is critical to the ability to combat identity theft and refund fraud. Thieves are constantly creating new scams to trick tax professionals and taxpayers into divulging sensitive information.

    Additional Resources

    The Security Summit reminds all tax professionals that they must have a written data security plan as required by the Federal Trade Commission and its Safeguards Rule. Get help with security recommendations 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.

    Publication 5293, Data Security Resource Guide for Tax Professionals, provides a compilation of data theft information available on IRS.gov. Also, tax pros should stay connected to the IRS through subscriptions to e-News for Tax Professionals and Social Media.

    Reminder: The Taxes-Security-Together Checklist

    During this special Security Summit series, the checklist highlighted these key areas:


  • 07 Aug 2019 9:28 AM | Maureen Gelwicks (Administrator)

    IRS, states and industry offer tips to tax professionals on spotting signs of client data theft

    WASHINGTON — The Internal Revenue Service and its Security Summit partners today urged tax professionals to learn the tell-tale signs that their office may have experienced a data theft that resulted in fraudulent tax returns being filed in their clients’ names.

    The IRS, state tax agencies and the private-sector tax industry, working together as the Security Summit, warned practitioners that global criminal syndicates remain active, and they are well financed, high skilled and tax savvy in their attempts to gain sensitive tax data.

    The reminder came as the IRS and the Summit partners encouraged tax professionals to take time this summer to review their data security protection. To help the tax community, the Summit partners offered a new “Taxes-Security-Together” Checklist as a starting point.

    “Learning the signs of identity theft is critical for anyone handling taxpayer data,” said IRS Commissioner Chuck Rettig. “It can be as subtle as an unusually slow computer system or as obvious as multiple clients unexpectedly receiving the same IRS notice. Paying attention to these details is critical, and fast action alerting the IRS and calling in a security expert can help protect taxpayers and your business.”

    Recognizing the signs of data theft is the fourth item on the “Taxes-Security-Together” Checklist. Previous checklist items include: deploying the “Security Six” basic steps, creating a written data security plan and educating yourself on email phishing scams.

    Although the Security Summit -- a partnership between the IRS, states and the private-sector tax community started in 2015 -- is making major progress against tax-related identity theft, cybercriminals continue to quickly evolve, and data thefts at tax professionals’ offices remain a major attack point. Thieves use stolen data from tax practitioners to create fraudulent returns that are harder for Summit partners to detect.

    Recognize the signs of client data theft

    The IRS and Summit partners have created a list of warning signs that a tax professional or their office may have experienced a data theft:

    • Client e-filed returns begin to be rejected by the IRS or state tax agencies because returns with their Social Security numbers were already filed;
    • Clients who haven’t filed tax returns begin to receive taxpayer authentication letters (5071C, 4883C, 5747C) from the IRS to confirm their identity for a submitted tax return.
    • Clients who haven’t filed tax returns receive refunds;
    • Clients receive tax transcripts that they did not request;
    • Clients who created an IRS Online Services account receive an IRS notice that their account was accessed or IRS emails stating their account has been disabled. Another variation: Clients unexpectedly receive an IRS notice that an IRS online account was created in their names;
    • The number of returns filed with the tax professional’s Electronic Filing Identification Number (EFIN) exceeds the number of clients;
    • Tax professionals or clients responding to emails that the firm did not send;
    • Network computers running slower than normal;
    • Computer cursors moving or changing numbers without touching the keyboard;
    • Network computers locking out employees.

    “Tax professionals should be on the lookout for these scary scenarios that have hit firms across the country, jeopardizing data of the company and their clients,” Rettig said.

    Because IRS and state tax systems will only accept one unique Social Security number, taxpayers often discover they are a victim when they attempt to e-file and their tax return is rejected because a return with their SSN already is in the system. Or, more commonly, the IRS identifies a return that could be an identity theft return and sends a letter to the taxpayer asking them to contact the agency to let the IRS know if they filed the return.

    Identity thieves sometimes try to leverage the stolen data by using taxpayer information to access the IRS Get Transcript system. Taxpayers who receive transcripts by mail but did not order them are sometimes victims of this approach. Get Transcript Online is protected by a robust, two-factor authentication process. But crooks may still try to use stolen identities to try to create Get Transcript accounts, which results in the IRS disabling the account and sending the taxpayer a letter.

    During the tax filing season, tax professionals should make a weekly review of returns filed with the office’s Electronic Filing Identification Number, or EFIN. A report is updated weekly. Tax preparers can access their e-File applications and select “check EFIN status” to see a count. If the numbers are inflated, practitioners should contact the IRS e-Help Desk.

    Tax professionals may also notice IRS acknowledgements for returns they did not e-file. Acknowledgements are sent soon after a return is transmitted.

    Tax professionals who fall victim to spear phishing email scams, a common way cybercriminals access office computer, may suddenly see responses to emails they never sent. If a practitioner mistakenly provides username and password information to the thief, the thief often harvests the practitioner’s contact list, stealing names and email addresses of colleagues and clients and enabling the crooks to use the tax firm to expand their spear phishing scam.

    Always be alert to phishing scams, even if the emails appear to come from a colleague or client. If the language sounds a bit off or if the request seems unusual, contact the “sender” by phone to verify rather than opening a link or attachment.

    Finally, there are several signs that office computer systems may be under attack or may be under remote control, such as the cursor moving with no one at the keyboard. The IRS is aware of many examples in which cybercriminals gained access to practitioners’ office computers, complete the pending Form 1040s, change electronic deposit information to their own accounts and then e-filed the returns – all performed remotely.

    Tax professionals who notice any signs of identity theft should contact their state’s IRS Stakeholder Liaison immediately. The process for reporting data theft to the IRS is outlined in Data Theft Information for Tax Professionals.

    In some states, data thefts must be reported to various authorities. To help tax professionals find where to report data security incidents at the state level, the Federation of Tax Administrators has created a special page with state-by-state listings.

    Additional Resources

    The Security Summit reminds all professional tax preparers to have a written data security plan as required by the Federal Trade Commission and its Safeguards Rule. They can also get help with security recommendations by reviewing IRS Publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security: the Fundamentals by the National Institute of Standards and Technology.

    Publication 5293, Data Security Resource Guide for Tax Professionals, provides a compilation of data theft information available on IRS.gov. Also, tax pros should stay connected to the IRS through subscriptions to e-News for Tax Professionals and Social Media.

    The Taxes-Security-Together Checklist

    During this special Security Summit series, the checklist will highlight these key areas for tax professionals:


  • 06 Aug 2019 12:01 PM | Maureen Gelwicks (Administrator)

    WASHINGTON — The Internal Revenue Service today launched the new Tax Withholding Estimator, an expanded, mobile-friendly online tool designed to make it easier for everyone to have the right amount of tax withheld during the year.

    The Tax Withholding Estimator replaces the Withholding Calculator, which offered workers a convenient online method for checking their withholding. The new Tax Withholding Estimator offers workers, as well as retirees, self-employed individuals and other taxpayers, a more user-friendly step-by-step tool for effectively tailoring the amount of income tax they have withheld from wages and pension payments.

    “The new estimator takes a new approach and makes it easier for taxpayers to review their withholding,” said IRS Commissioner Chuck Rettig. “This is part of an ongoing effort by the IRS to improve quality services as we continue to pursue modernization and enhancements of our taxpayer relationships.”

    The IRS took the feedback and concerns of taxpayers and tax professionals to develop the Tax Withholding Estimator, which offers a variety of new user-friendly features including:

    • Plain language throughout the tool to improve comprehension.
    • The ability to more effectively target at the time of filing either a tax due amount close to zero or a refund amount.
    • A new progress tracker to help users see how much more information they need to input.
    • The ability to move back and forth through the steps, correct previous entries and skip questions that don’t apply.
    • Enhanced tips and links to help the user quickly determine if they qualify for various tax credits and deductions.
    • Self-employment tax for a user who has self-employment income in addition to wages or pensions.
    • Automatic calculation of the taxable portion of any Social Security benefits.
    • A mobile-friendly design.

    In addition, the new Tax Withholding Estimator makes it easier to enter wages and withholding for each job held by the taxpayer and their spouse, as well as separately entering pensions and other sources of income. At the end of the process, the tool makes specific withholding recommendations for each job and each spouse and clearly explains what the taxpayer should do next.

    The new Tax Withholding Estimator will help anyone doing tax planning for the last few months of 2019. Like last year, the IRS urges everyone to do a Paycheck Checkup and review their withholding for 2019. This is especially important for anyone who faced an unexpected tax bill or a penalty when they filed this year. It’s also an important step for those who made withholding adjustments in 2018 or had a major life change.

    Those most at risk of having too little tax withheld include those who itemized in the past but now take the increased standard deduction, as well as two-wage-earner households, employees with nonwage sources of income and those with complex tax situations.

    To get started, check out the Tax Withholding Estimator on IRS.gov.


  • 31 Jul 2019 1:56 PM | Maureen Gelwicks (Administrator)

    IRS, Security Summit partners alert tax professionals to the risks posed by phishing emails; education key to protecting taxpayer data

    WASHINGTON — The IRS, states and tax industry partners today warned tax professionals to beware of the continuing threat of phishing emails, which remain the most common tactic used by cybercriminals to steal sensitive data.

    The reminder came as the IRS and its Security Summit partners urged tax professionals to take time this summer to review their data security protections. To help this effort, the Summit partners prepared a special “Taxes-Security-Together” Checklist as a starting point.
     
    “You can take all the cybersecurity steps in the world, but tax professionals and others in the business world should remember you are only as safe as your least educated employee,” said Chuck Rettig, IRS Commissioner. “Cybercriminals use phishing emails and malware to gain control of computer systems or to steal usernames and passwords. These can provide a treasure trove of information that can lead to tax-related identity theft.”

    Educating personnel on the dangers of phishing emails is the third item on the “Taxes-Security-Together” Checklist. This summer awareness initiative also has covered deploying the “Security Six” basic steps to protect computers and email as well as creating a data security plan.
     
    Although the Security Summit -- a partnership between the IRS, states and the private-sector tax community -- is making major progress against tax-related identity theft, cybercriminals continue to evolve, and data thefts at tax professionals’ offices continue to be seen across the nation. Thieves use stolen data from tax practitioners to create fraudulent returns that are harder for the IRS and Summit partners to detect.
     
    Tax pros: Educate yourself on phishing emails

    More than 90% of all data thefts start with a phishing email. The employee may open a link that takes them to a fake site or open an attachment that is embedded with malware that secretly downloads onto their computers.
     
    The IRS often sees tax professionals victimized after being targeted with a tactic called spear phishing. The objective of a spear phishing email is to pose as a trusted source and “bait” the recipient into opening an embedded link or an attachment. The email may make an urgent plea to the tax pro to update an account immediately. A link may seem to go to another trusted website, for example a cloud storage or tax software provider login page, but it’s actually a website controlled by the thief.
     
    An attachment may contain malicious software called keylogging, which secretly infects computers and provides the thief with the ability to see every keystroke. Thieves can steal passwords to various accounts or even take remote control of computers, enabling them to steal taxpayer data.
     
    Common spear phishing scams seen by the IRS include thieves posing as prospective clients, sending unsolicited emails to tax professionals. After an exchange of emails, the thief sends an email with an attachment, claiming it contains the tax information needed to prepare a return. Instead, it contains spyware that allows thieves to track each keystroke.

    The IRS also sees thieves posing as tax software providers or data storage providers with emails containing links that go to web pages that mirror real sites. The thieves’ goal is to trick tax professionals into entering their usernames and passwords into these fake sites, which the crooks then steal.
     
    Another trick used by thieves is rather than stealing the data, they encrypt it, a practice known as ransomware. Once they encrypt the data, thieves demand a ransom in return for the code to unencrypt the data. The Federal Bureau of Investigation warns users not to pay the ransom because thieves often do not provide the code. The FBI has called ransomware attacks a growing threat to businesses and others. 
     
    Educated employees are the key to avoiding phishing scams, and office systems are only as safe as the least informed employee. These simple steps also can help protect against stolen data: 

    • Use separate personal and business email accounts; protect email accounts with strong passwords and two-factor authentication if available.
    • Install an anti-phishing tool bar to help identify known phishing sites. Anti-phishing tools may be included in security software products.
    • Use security software to help protect systems from malware and scan emails for viruses.
    • Never open or download attachments from unknown senders, including potential clients; make contact first by phone, for example.
    • Send only password-protected and encrypted documents if files must be shared with clients via email.
    • Do not respond to suspicious or unknown emails; if IRS-related, forward to phishing@irs.gov.

    Additional resources

    The Security Summit reminds all tax professionals that they must have a written data security plan as required by the Federal Trade Commission and its Safeguards Rule. Get help with security recommendations 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.

    Publication 5293, Data Security Resource Guide for Tax Professionals, provides a compilation of data theft information available on IRS.gov. Also, tax professionals should stay connected to the IRS through subscriptions to e-News for Tax Professionals and Social Media.

    The Taxes-Security-Together Checklist

    During this special Security Summit series, the checklist highlights these key areas for tax professionals:


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