IRS Tax News

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  • 09 Jan 2019 11:35 AM | Anonymous

    WASHINGTON ― Despite the government shutdown, the Internal Revenue Service today confirmed that it will process tax returns beginning January 28, 2019 and provide refunds to taxpayers as scheduled.
     
    “We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown. I appreciate the hard work of the employees and their commitment to the taxpayers during this period,” said IRS Commissioner Chuck Rettig.
     
    Congress directed the payment of all tax refunds through a permanent, indefinite appropriation (31 U.S.C. 1324), and the IRS has consistently been of the view that it has authority to pay refunds despite a lapse in annual appropriations. Although in 2011 the Office of Management and Budget (OMB) directed the IRS not to pay refunds during a lapse, OMB has reviewed the relevant law at Treasury’s request and concluded that IRS may pay tax refunds during a lapse.

    The IRS will be recalling a significant portion of its workforce, currently furloughed as part of the government shutdown, to work. Additional details for the IRS filing season will be included in an updated FY2019 Lapsed Appropriations Contingency Plan to be released publicly in the coming days.
     
    “IRS employees have been hard at work over the past year to implement the biggest tax law changes the nation has seen in more than 30 years,” said Rettig.
     
    As in past years, the IRS will begin accepting and processing individual tax returns once the filing season begins. For taxpayers who usually file early in the year and have all of the needed documentation, there is no need to wait to file. They should file when they are ready to submit a complete and accurate tax return.
     
    The filing deadline to submit 2018 tax returns is Monday, April 15, 2019 for most taxpayers.  Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17, 2019 to file their returns.
     
    Software companies and tax professionals will be accepting and preparing tax returns before Jan. 28 and then will submit the returns when the IRS systems open later this month. The IRS strongly encourages people to file their tax returns electronically to minimize errors and for faster refunds.


  • 20 Dec 2018 9:42 AM | Anonymous

    WASHINGTON – After working with the tax preparation community, the Internal Revenue Service today announced it would stop its tax transcript faxing service as of Feb. 4, 2019, and offer a more secure alternative to taxpayers and tax professionals.

    The IRS worked with the tax preparation community to reach agreement on an alternative that will meet tax practitioners’ needs in e-filing individual tax returns while also enhancing safeguards for taxpayer data.

    The IRS continues to look for way to better protect taxpayer information and tax transcripts, which are summaries of individuals’ tax returns. Cybercriminals who obtain tax transcripts use them to file fraudulent returns that are difficult to detect because they closely mirror a legitimate tax return.

    The halt to faxing transcripts is another step taken by the IRS to protect taxpayer data. In September 2018, the IRS began to mask personally identifiable information for every individual and entity listed on the transcript. See New Tax Transcript and Customer File Number.

    All financial entries on the transcript remain visible. However, tax practitioners who work to bring taxpayers into compliance by filing prior-year tax returns may need access to employer information that taxpayers no longer have. In those cases, tax practitioners may request an unmasked Wage and Income Transcript. The Wage and Income Transcript can be used for current year tax preparation but it generally is not available until mid-year. 

    Alternatives for taxpayers for return preparation
    The IRS has multiple ways taxpayers can obtain a copy of their tax transcript other than faxing. Individuals may still call the IRS to obtain a masked tax account transcript and one will be mailed to the last address of record.

    For faster service, taxpayers may go to IRS.gov for Get Transcript Online, verify their identities and create a account. They can then view or download a copy of their tax transcript immediately. Or they can go to IRS.gov for Get Transcript by Mail and request a transcript be mailed to their last address of record. Taxpayers also may call 800-908-9946 for automated service to order a transcript by mail.

    Alternatives for tax professionals for return preparation
    Starting Jan. 7, 2019, tax professionals who contact the Practitioner Priority Service number may, with proper authorization, have an unmasked Wage and Income Transcript deposited in their e-Services secure mailbox.

    Tax practitioners must meet certain requirements in order to use the secure mailbox option. Those requirements are outlined in Fact Sheet 2018-20, Steps for Tax Professionals to Obtain Wage and Income Transcripts Needed for Tax Preparation. Practitioners also should review Fact Sheet 2018-21, IRS Offers Tips to Tax Professionals to Reduce CAF Number Errors, Better Protect Data from Cyberthieves.

    The Wage and Income Transcript provides information limited to the Forms W-2, 1099 and other income documents sent to the IRS. It does not include general tax transcript information. The Wage and Income Transcript will give tax practitioners the employer information needed to file tax returns electronically.

    Tax professionals also may request that an unmasked Wage and Income Transcript be sent to the client’s address of record. Alternatively, taxpayers may request an unmasked transcript for tax preparation, and it will be mailed to their address of record.
     
    Faxing and business tax transcripts
    The Feb. 4, 2019, discontinuation of the faxing service also applies to business tax transcripts as well as individual tax transcripts. However, business tax transcripts are not masked. At the request of business taxpayers, the transcript will be mailed to the address of record. Tax professionals may obtain a business tax transcript through the e-Service Transcript Delivery System.


  • 20 Dec 2018 9:41 AM | Anonymous

    WASHINGTON — The Internal Revenue Service issued guidance on excess business loss limitations and net operating losses following law changes in the Tax Cuts and Jobs Act (TCJA).

    Excess business losses
    The TCJA modified existing tax law on excess business losses by limiting losses from all types of business for noncorporate taxpayers.

    An excess business loss is the amount by which the total deductions from all trades or businesses exceed a taxpayer’s total gross income and gains from those trades or businesses, plus $250,000, or $500,000 for a joint return.

    Excess business losses that are disallowed are treated as a net operating loss carryover to the following taxable year.

    See Form 461 and instructions, available soon, for details.

    Net Operating Losses
    TCJA also modified net operating loss (NOL) rules. Most taxpayers no longer have the option to carryback a NOL. For most taxpayers, NOLs arising in tax years ending after 2017 can only be carried forward. Exceptions apply to certain farming losses and NOLs of insurance companies other than a life insurance company.

    For losses arising in taxable years beginning after Dec. 31, 2017, the new law limits the NOL deduction to 80% of taxable income.

    Additional updates can be found on the Tax Reform Provisions that Affect Businesses page of IRS.gov.


  • 14 Dec 2018 3:53 PM | Anonymous

    Beginning on Jan. 1, 2019, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

    • 58 cents per mile driven for business use, up 3.5 cents from the rate for 2018,
    • 20 cents per mile driven for medical or moving purposes, up 2 cents from the rate for 2018, and
    • 14 cents per mile driven in service of charitable organizations.

    The business mileage rate increased 3.5 cents for business travel driven and 2 cents for medical and certain moving expense from the rates for 2018. The charitable rate is set by statute and remains unchanged.

    It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, except members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Notice-2019-02.

    The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

    Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

    A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. These and other limitations are described in section 4.05 of Rev. Proc. 2010-51.

    Notice 2018-02, posted today on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.


  • 06 Dec 2018 3:03 PM | Anonymous

    WASHINGTON – The Internal Revenue Service today announced that interest rates will increase for the calendar quarter beginning January 1, 2019.  The rates will be:  

    • six (6) percent for overpayments [five (5) percent in the case of a corporation];
    • three and one-half (3.5) percent for the portion of a corporate overpayment exceeding $10,000;
    • six (6) percent for underpayments; and
    • eight (8) 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 October 2018 to take effect November 1, 2018, based on daily compounding.

    Revenue Ruling 2018-32, announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2018-51, dated December 17, 2018.


  • 06 Dec 2018 12:35 PM | Anonymous

    WASHINGTON — The Internal Revenue Service today granted taxpayers an extra day, until Thursday, Dec. 6, 2018 to file any return or pay any tax originally due on Wednesday, Dec. 5.

    The IRS granted the extra time, following the Dec. 1 Executive Order closing all federal agencies on Dec. 5, as a mark of respect for George Herbert Walker Bush, the forty-first President of the United States

    The one-day extension applies to any return, required to be filed with the IRS, on Wednesday, Dec. 5, 2018. It also applies to any required federal tax payment, originally due on that day. In addition, it also applies to any federal income, payroll or excise tax deposit due on Dec. 5, including those required to be made through the Treasury Department’s Electronic Federal Tax Payment System (EFTPS).


  • 06 Dec 2018 12:34 PM | Anonymous

    WASHINGTON — As part of a larger mission of helping all taxpayers understand and meet their tax responsibilities, the Internal Revenue Service announced today its debut on Instagram, adding this platform to its social media portfolio.

    The IRSNews account (https://www.instagram.com/irsnews) will provide taxpayers the latest information on a variety of topics as taxpayers face numerous tax law changes for the upcoming 2019 filing season related to the Tax Cuts and Jobs Act. The IRS Instagram account will share taxpayer-friendly information to help people Get Ready for the upcoming tax season. And it will provide the latest tax scam information to help support the Security Summit initiative, a joint effort between the IRS, states and the nation’s tax industry to combat tax-related identity theft.
     
    “The addition of Instagram is another step for the IRS to share information more widely and reach additional taxpayers,” said IRS Commissioner Chuck Rettig. “This platform will help make people aware of important options they have during the upcoming filing season as well as other tax information they might not be aware. The IRS will continue to work with and help taxpayers in as many ways possible.”
     
    Research shows that more than 70 percent of U.S. young adults between 18 and 24 are active on Instagram. The IRS plans to use Instagram to better serve this segment of the population, sharing content on tax topics that affect all taxpayers.

    The IRS Instagram account will also periodically share information in Spanish and other languages.
    @IRSnews will also work in conjunction with IRS.gov and other existing agency social media options.

    Other social media platforms offering official IRS information include:

    The IRS social media effort works closely with IRS2Go.Taxpayers can use this free mobile app to check their refund status, pay taxes, watch IRS YouTube videos and get IRS Tax Tips via email. Like Instagram, the IRS2Go app is available from the Google Play Store for Android devices, or from the Apple App Store for Apple devices. IRS2Go is available in both English and Spanish, based on the phone settings.

    The IRS also reminds taxpayers they can subscribe to a number of email subscription services for the latest tax information. Taxpayers can visit e-News subscriptions to sign up. 


  • 06 Dec 2018 12:33 PM | Anonymous

    WASHINGTON — The Internal Revenue Service recently announced that 401(k) plans and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Michael and Hurricane Florence and to members of their families.

    This relief was included in the preamble to proposed regulations, published Nov. 14 in the Federal Register, implementing several recent law changes that affect hardship withdrawals.

    As a result, participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may now be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.

    Retirement plans can provide this relief to employees and certain members of their families who live or work in disaster areas affected by Hurricane Michael or Florence and designated for individual assistance by FEMA. Currently, parts of Florida, Georgia, North Carolina and South Carolina are eligible. For a complete list of eligible localities, visit https://www.fema.gov/disasters. To qualify for this relief, hardship withdrawals must be made by March 15, 2019.

    The IRS is also relaxing procedural and administrative rules that normally apply to retirement plan loans and hardship distributions. As a result, eligible retirement plan participants will be able to access their money more quickly with a minimum of red tape. In addition, the six-month ban on 401(k) and 403(b) contributions that normally affects employees who take hardship distributions will not apply.

    This broad-based relief means that a retirement plan can allow a victim of Hurricane Michael or Florence to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan. It also means that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area.

    Plans will be allowed to make loans or hardship distributions before the plan is formally amended to provide for such features. In addition, the plan can ignore the reasons that normally apply to hardship distributions, thus allowing them, for example, to be used for food and shelter. If a plan requires certain documentation before a distribution is made, the plan can relax this requirement, as described in the preamble.

    The IRS emphasized that the tax treatment of loans and distributions remains unchanged. Ordinarily, retirement plan loan proceeds are tax-free if they are repaid over a period of five years or less. Under current law, hardship distributions are generally taxable and subject to a 10-percent early-withdrawal tax.

    More information about other tax relief related to Hurricane Michael and Hurricane Florence can be found on the IRS disaster relief page.

    The proposed regulations address a number of other issues related to hardship withdrawals. For details and to find out how to submit comments, see the proposed regulations.


  • 17 Sep 2018 11:15 AM | Brittany Walker (Administrator)

    WASHINGTON — Hurricane Florence victims in parts of North Carolina and elsewhere have until Jan. 31, 2019, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.

    The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance. Currently, this only includes parts of North Carolina, but taxpayers in localities added later to the disaster area, including those in other states, will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

    The tax relief postpones various tax filing and payment deadlines that occurred starting on Sept. 7, 2018 in North Carolina. As a result, affected individuals and businesses will have until Jan. 31, 2019, to file returns and pay any taxes that were originally due during this period.

    This includes quarterly estimated income tax payments due on Sept. 17, 2018, and the quarterly payroll and excise tax returns normally due on Sept. 30, 2018. Businesses with extensions also have the additional time including, among others, calendar-year partnerships whose 2017 extensions run out on Sept. 17, 2018. Taxpayers who had a valid extension to file their 2017 return due to run out on Oct. 15, 2018 will also have more time to file.

    In addition, penalties on payroll and excise tax deposits due on or after Sept. 7, 2018, and before Sept. 24, 2018, will be abated as long as the deposits are made by Sept. 24, 2018.

    The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

    The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

    In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

    Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2018 return normally filed next year), or the return for the prior year (2017). See Publication 547 for details.

    The tax relief is part of a coordinated federal response to the damage caused by severe storms and flooding and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

     

    Individual who reside or have a business in Beaufort, Brunswick, Carteret, Craven, New Hanover, Onslow, Pamlico and Pender counties may qualify for this relief. Additional counties may be added. The current list of eligible localities is always available on the disaster relief page on IRS.gov.


  • 17 Sep 2018 9:44 AM | Brittany Walker (Administrator)

    AUGUST 2018

    Senator Rob Portman (R-Ohio) has introduced a new bill in the Senate that would give the Internal Revenue Service the authority to regulate income tax return preparers. The bill is cosponsored by Senator Ben Cardin (D-Missouri). Read full article here

    www.CPAPracticeAdvisor.com



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