WASHINGTON – The Internal Revenue Service today said that it is ready to process tax year 2017 returns claiming three popular tax benefits recently renewed retroactively into law.

The Bipartisan Budget Act, enacted on Feb. 9, renewed for tax year 2017 a wide range of individual and business tax benefits that had expired at the end of 2016. The IRS has now reprogrammed its processing systems to handle the three benefits most likely to be claimed on returns filed early in the tax season.

As a result, taxpayers can now file returns claiming:

• Exclusion from gross income of discharge of qualified principal residence indebtedness (often, foreclosure-related debt forgiveness), claimed on Form 982,
• Mortgage insurance premiums treated as qualified residence interest, generally claimed by low- and middle-income filers on Schedule A, and
• Deduction for qualified tuition and related expenses claimed on Form 8917.

The IRS is working closely with tax professionals and the tax-preparation industry to ensure that their available software processes can now accommodate these new provisions. As always, filing electronically and choosing direct deposit is the fastest, most accurate and most convenient way to receive a tax refund. Last year, nearly 87 percent of individual returns were filed electronically and nearly 80 percent of refunds were direct deposited.

The IRS is continuing to update its systems to handle returns claiming the other tax benefits extended by the new law, enacted on Feb. 9. In general, these benefits affect a smaller number of taxpayers. Taxpayers eligible for these benefits can avoid delays or possibly needing to file an amended return later, by filing after IRS systems have been updated to reflect these changes. Check IRS.gov/Extenders for future updates.

Taxpayers who have already filed their 2017 federal tax return and now wish to claim one of these renewed tax benefits can do so by filing an amended return on Form 1040X. Amended returns cannot be filed electronically and can take up to 16 weeks to process. Visit IRS.gov for details.  

If your client has an expired Individual Taxpayer Identification Number (ITIN), he or she should renew it as soon as possible. Tax returns with expired ITINs will face processing delays, and affected taxpayers may lose eligibility for key tax benefits until they renew the ITIN.

IRS Publication 2043, IRS Refund Information Guidelines for the Tax Preparation Community, is now available for 2018. The publication provides the latest refund information and guidelines including specific information for your clients claiming the Earned Income Tax Credit or Advance Child Tax Credit.

Please note, although the IRS issues most refunds in less than 21 days, it is possible some tax returns may require additional review resulting in delayed refunds.

With the surge of tax returns expected during the upcoming Presidents’ Day weekend, the IRS has several tips and various time-saving resources for tax pros to obtain help quickly and easily.

Following is an IRS statement issued today, Feb. 9:

“The IRS is reviewing the legislation signed Feb. 9 that retroactively extended and modified numerous tax provisions covering 2017. We are assessing these significant changes in the tax law and beginning to determine next steps. The IRS will provide additional information as quickly as possible for affected taxpayers and the tax community.”

To help the tax community track information related to the Tax Cuts and Jobs Act (TCJA), the IRS has created a special page on IRS.gov to highlight provisions of the new law. The frequently updated page will include a "one-stop" listing of new legal guidance, news releases, Frequently Asked Questions, and other information related to TCJA.

Tax professionals should bookmark the page and check it regularly for the latest information as the IRS works to implement changes.

WASHINGTON – Seeing the emergence of a new filing season scam, the Internal Revenue Service today urged tax professionals to step up security and beware of phishing emails that can secretly download malicious software that can help cybercriminals steal client data.

Only a few days into the filing season, the IRS has already identified a new scam that began with cybercriminals stealing data from several tax practitioners’ computers and filing fraudulent tax returns.

In a new twist, the fraudulent returns in a few cases used the taxpayers' real bank accounts for the deposit. A woman posing as a debt collection agency official then contacted the taxpayers to say a refund was deposited in error and asked the taxpayers to forward the money to her.

This scheme is likely just the first of many that will be identified this year as the IRS, state tax agencies and tax industry continue to fight back against tax-related identity thieves. Because the Security Summit partners have made inroads against identity theft, cybercriminals have evolved their tactics to focus on tax professionals where they can steal client data.

Thieves know it is more difficult to identify and halt fraudulent tax returns when they are using real client data such as income, dependents, credits and deductions. Generally, criminals find alternative ways to get the fraudulent refunds delivered to themselves rather than the real taxpayers.

Tax professionals are reminded that there is a procedure for them to report data thefts to the IRS. They need only contact their state’s IRS Stakeholder Liaison, who will notify appropriate IRS officials and serve as a point of contact. All practitioners should review Data Theft Information for Tax Professionals for details about the process and the additional steps they should take.

When notified immediately IRS can take steps to help protect taxpayers from tax-related identity theft. 

IRS Criminal Investigation agents are still reviewing this latest data theft scam. However, the vast majority of data thefts occur because the tax preparer or someone in the office opened a phishing email and clicked on a link or attachment that contained malware. There are various forms of malware but some download secretly into computers and allow thieves to see each keystroke or give thieves remote access to computers. Both versions allow thieves to steal data stored on the computers.

Tax professionals should review the Security Summit’s Don’t Take the Bait campaign, which outlined the various scams used by criminals to trick practitioners.

Tax professionals are urged to seek cybersecurity experts to help better secure their data. Here’s a reminder of some basic steps tax professionals can take:

• Educate all employees about phishing in general and spear phishing in particular.
• Use strong, unique passwords. Better yet, use a phrase instead of a word. Use different passwords for each account. Use a mix of letters, numbers and special characters.
• Never take an email from a familiar source at face value; example: an email from “IRS e-Services.” If it asks you to open a link or attachment, or includes a threat to close your account, think twice. Visit the e-Services website for confirmation.
• If an email contains a link, hover your cursor over the link to see the web address (URL) destination. If it’s not a URL you recognize or if it’s an abbreviated URL, don’t open it.
• Consider a verbal confirmation by phone if you receive an email from a new client sending you tax information or a client requesting last-minute changes to their refund destination.
• Use security software to help defend against malware, viruses and known phishing sites and update the software automatically.
• Use the security options that come with your tax preparation software.
• Send suspicious tax-related phishing emails to phishing@irs.gov.

This newest scam also serves as a reminder to taxpayers that they should be alert to any unusual activity such as receiving a tax transcript or tax refund they did not request. Please review the Taxpayer Guide to Identity Theft for appropriate actions. 

Taxpayers who receive a direct deposit refund that they did not request should take the following steps:

1. Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS.
2. Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.
3. Keep in mind interest may accrue on the erroneous refund.

There is more information at Topic Number: 161 - Returning an Erroneous Refund.

As indicated in the IRS News Release #IR-2018-17, seeing the emergence of a new filing season scam, the Internal Revenue Service today urged tax professionals to step up security and beware of phishing emails that can secretly download malicious software that can help cyber-criminals steal client data. Only a few days into the filing season, the IRS has already identified a new scam that began with cyber-criminals stealing data from several tax practitioners’ computers and filing fraudulent tax returns. Please take a look for additional information.

Reminder: If you are an e-Services account holder, please re-register now through the more rigorous Secure Access authentication process. Additional toll-free personnel currently helping e-Services users soon will return to their primary jobs of assisting taxpayers.

E-Services users who wait until they need immediate access to their account may encounter unexpected delays.  So far, 65,000 e-Services account holders already have successfully registered through Secure Access.

To get started, first review Secure Access: How to Register for Certain Online Self-Help Tools to determine what you need to be successful and FAQs about e-Services and Secure Access, including common errors.

This is a reminder that wage statements and independent contractor forms must be filed with the government by January 31. This date applies to both electronic and paper filers.

The Section 201(a) of the Protecting Americans from Tax Hikes (PATH) Act includes a requirement for employers to file their copies of Form W-2 and Form W-3 with the Social Security Administration by the end of January.

This deadline also applies to certain Forms 1099-MISC filed with the IRS to report non-employee compensation payments in box 7.

Early filing makes it easier for the IRS to verify income that individuals report on their tax returns and helps prevent fraud. Failure to file these forms correctly and timely may result in penalties.