The IRS wants to help the small business and self-employed communities determine whether an unsolicited contact is truly from an IRS employee.

The IRS initiates most contacts through regular mail delivered by the U.S. Postal Service. However, there are special circumstances in which the IRS will call or come to a business, such as when a taxpayer has an overdue tax bill, to secure a delinquent tax return or a delinquent employment tax payment, or to tour the business as part of an audit.

See: How to know it’s really the IRS calling or knocking on your door for more information.

WASHINGTON –  The Internal Revenue Service today provided information to taxpayers and employers about changes from the Tax Cuts and Jobs Act that affect:

• Move related vehicle expenses
• Un-reimbursed employee expenses
• Vehicle expensing

Changes to the deduction for move-related vehicle expenses

The Tax Cuts and Jobs Act suspends the deduction for moving expenses for tax years beginning after Dec. 31, 2017, and goes through Jan. 1, 2026. Thus, during the suspension no deduction is allowed for use of an automobile as part of a move using the mileage rate listed in Notice 2018-03.  This suspension does not apply to members of the Armed Forces of the United States on active duty who move pursuant to a military order related to a permanent change of station.

Changes to the deduction for un-reimbursed employee expenses

The Tax Cuts and Jobs Act also suspends all miscellaneous itemized deductions that are subject to the 2 percent of adjusted gross income floor. This change affects un-reimbursed employee expenses such as uniforms, union dues and the deduction for business-related meals, entertainment and travel.

Thus, the business standard mileage rate listed in Notice 2018-03, which was issued before the Tax Cuts and Jobs Act passed, cannot be used to claim an itemized deduction for un-reimbursed employee travel expenses in taxable years beginning after Dec. 31, 2017, and before Jan. 1, 2026. The IRS issued revised guidance today in Notice 2018-42.

Standard mileage rates for 2018

As mentioned in Notice 2018-03, the standard mileage rates for the use of a car, van, pickup or panel truck for 2018 remain:

• 54.5 cents for every mile of business travel driven, a 1 cent increase from 2017.
• 18 cents per mile driven for medical purposes, a 1 cent increase from 2017.
• 14 cents per mile driven in service of charitable organizations, which is set by statute and remains unchanged.

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

Increased depreciation limits

The Tax Cuts and Jobs Act increases the depreciation limitations for passenger automobiles placed in service after Dec. 31, 2017, for purposes of computing the allowance under a fixed and variable rate plan. The maximum standard automobile cost may not exceed $50,000 for passenger automobiles, trucks and vans placed in service after Dec. 31, 2017. Previously, the maximum standard automobile cost was $27,300 for passenger automobiles and $31,000 for trucks and vans.

More information

Notice 2018-42 is posted on IRS.gov and contains information about the update to the standard mileage rates, including the details about the suspension of the deduction for operating a vehicle for moving purposes.

IRS YouTube Videos:

• Phishing/Malware -- English
• Why Tax Professionals Need a Security Plan -- English
• How to Maintain, Monitor and Protect Your EFIN -- English

WASHINGTON – The IRS and its state and industry Security Summit partners today warned tax practitioners to beware of phishing emails posing as state accounting and professional associations.

This week, the IRS received reports from tax professionals who received fake emails that were trying to trick them into disclosing their email usernames and passwords.

Cybercriminals specifically targeted tax professionals in Iowa, Illinois, New Jersey and North Carolina. The IRS also received reports about a Canadian accounting association.

The awkwardly worded phishing email states: “We kindly request that you follow this link HERE and sign in with your email to view this information from (name of accounting association) to all active members. This announcement has been updated for your kind information through our secure information sharing portal which is linked to your email server.”

Tax practitioners nationwide should be on guard because cybercriminals can easily change their tactics, using other association names or making other adjustments in their scam attempts.

Tax practitioners who are members of professional associations should go directly to those associations’ websites rather than open any links or attachments. Tax practitioners who receive suspicious emails related to taxes or the IRS, or phishing attempts to gain access to practitioner databases, should forward those emails to phishing@irs.gov.

This scam serves as a reminder to all tax professionals that cybercriminals are targeting their offices in an attempt to steal client data.

To assist tax professionals with safeguards, the Security Summit partners urge practitioners to follow these minimal security steps:

• Learn to recognize phishing emails, especially those pretending to be from the IRS, e-Services, a tax software provider or cloud storage provider. Never open a link or any attachment from a suspicious email. Remember: The IRS never initiates initial contact with a tax pro via email.
• Create a data security plan using IRS Publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security – The Fundamentals, by the National Institute of Standards and Technology.
• Review internal controls: 
• • Install anti-malware/anti-virus security software on all devices (laptops, desktops, routers, tablets and phones) and keep software set to automatically update.
  • Create passwords of at least eight characters; longer is better. Use different passwords for each account, use special and alphanumeric characters and phrases. Password protect wireless devices and consider a password manager program.
  • Encrypt all sensitive files/emails and use strong password protections.
  • Back up sensitive data to a safe and secure external source not connected fulltime to a network.
  • Wipe clean or destroy old computer hard drives and printers that contain sensitive data.
  • Limit access to taxpayer data to individuals who need to know.
  • Check IRS e-Services account weekly for number of returns filed with EFIN.
• Report any data theft or data loss to the appropriate IRS Stakeholder Liaison.
• Stay connected to the IRS through subscriptions to e-News for Tax Professionals, Quick Alerts and Social Media.

Additional resources:

• Identity Protection: Prevention, Detection and Victim Assistance
• Data Theft Information for Tax Professionals
• Protect Client Data; Learn Signs of Identity Theft
• Protect Your Clients; Protect Yourself
• Security Summit

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service issued a notice today stating that proposed regulations will be issued addressing the deductibility of state and local tax payments for federal income tax purposes. Notice 2018-54 also informs taxpayers that federal law controls the characterization of the payments for federal income tax purposes regardless of the characterization of the payments under state law.

The Tax Cuts and Jobs Act (TCJA) limited the amount of state and local taxes an individual can deduct in a calendar year to $10,000. In response to this new limitation, some state legislatures have adopted or are considering legislative proposals allowing taxpayers to make payments to specified entities in exchange for a tax credit against state and local taxes owed.

The upcoming proposed regulations, to be issued in the near future, will help taxpayers understand the relationship between federal charitable contribution deductions and the new statutory limitation on the deduction of state and local taxes.

Taxpayers should also be aware the U.S. Department of the Treasury and the Internal Revenue Service are continuing to monitor other legislative proposals being considered to ensure that federal law controls the characterization of deductions for federal income tax filings.

The limitation imposed by the TCJA applies to taxable years beginning after Dec. 31, 2017 and before Jan. 1, 2026.

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.

Washington – The Internal Revenue Service today warned of a new twist tied to an old scam aimed at international taxpayers and non-resident aliens. In this scam, criminals use a fake IRS Form W-8BEN to solicit detailed personal identification and bank account information from victims.

Here’s how the scam works. Criminals mail or fax a letter indicating that although individuals are exempt from withholding and reporting income tax, they need to authenticate their information by filling out a phony version of Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting. Recipients are requested to fax the information back.

The Form W-8BEN is a legitimate U.S. tax exemption document, however, it can only be submitted through a withholding agent. In the past, fraudsters have targeted non-residents of the U.S. using the form as a lure to get personal details such as passport numbers and PIN codes. The legitimate IRS Form W-8BEN does not ask for any of that information. The phony letter or fax also refers to a Form W9095, which does not exist. Furthermore, the IRS doesn’t require a recertification of foreign status.

Scam variations

Be alert to bogus letters, emails and letters that appear to come from the IRS or your tax professional requesting information. Scam letters, forms and e-mails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. These phishing schemes may seek personal information, including mother’s maiden name, passport and account information in order steal the victim’s identity and their assets.

Note that the IRS does not:

• Demand that people use a specific payment method, such as a prepaid debit card, gift card or wire transfer. The IRS will not ask for debit or credit card numbers over the phone. For people who owe taxes, make payments to the United States Treasury or review IRS.gov/payments for IRS online options.  
• Demand immediate tax payment. Normal correspondence is a letter in the mail and taxpayers can appeal or question what they owe. All taxpayers are advised to know their rights as a taxpayer.
• Threaten to bring in local police, immigration officers or other law enforcement to arrest people for not paying. The IRS also cannot revoke a license or immigration status. Threats like these are common tactics scam artists use to trick victims into believing their schemes.

Taxpayers who receive the IRS phone scam or any IRS impersonation scam should report it to the Treasury Inspector General for Tax Administration at its IRS Impersonation Scam Reporting site and to the IRS by emailing phishing@irs.gov with the subject line “IRS Impersonation Scam.” 

Seminar topics for the 2018 IRS Nationwide Tax Forums are now available. You can choose from multiple sessions on tax reform, cyber-security and much more. Seminars are available for practitioners at all levels, and tax professionals earn continuing education credits for attending. Visit www.irstaxforum.com for more information and to register.

With National Small Business Week approaching later this month, the IRS is preparing a special series of presentations to help people navigate difficult tax issues

Sign up now for the following National Small Business Week Webcasts:

April 30: Can I Deduct This?
May 1: Employee versus Independent Contractor
May 2: Pay Now? Pay Later? Can’t Pay?
May 3: Small Business Resources
May 4: PayCheck Check-Up

Two 30-minute sessions are available each day, Session 1 at 11 a.m. and Session 2 at 1 p.m. ET.

To register, click on the links below:

April 30     Session 1    -    Session 2
May 1        Session 1    -    Session 2 
May 2        Session 1    -    Session 2
May 3        Session 1    -    Session 2
May 4        Session 1     -   Session 2     

Closed Captioning will be available for Session 2 only. Continuing education credits will not be offered. For questions, email: SBSE.SL.Web.Conference.Team@irs.gov

The Tax Cuts and Jobs Act, signed Dec. 22, 2017, changed some laws regarding depreciation deductions. For example, the new law increases the maximum deduction for a section 179 property deduction from $500,000 to $1 million. It also increases the phase-out threshold from $2 million to $2.5 million. Read the depreciation and expensing fact sheet for more.

As a tax professional, you know how important it is to keep good records. Did you know that includes records of electronic and telephone contacts with the IRS? If questions later arise, having a complete record of all documents and contacts may speed up resolution of your issue.

If you need to contact the IRS by telephone, note key information from the conversation, such as:

• The date and time of the call

• The name and employee identification number of the contact representative

• Any resolution or information you received from the representative. 

Before you call, also check IRS.gov for the topics and information people ask about most. You may find the information you are looking for without having to call the IRS.

Cross References
- IRS Letter to NAEA Dated March 15, 2018

The IRS has informed the National Association of Enrolled Agents (NAEA) that Enrolled Agents (EAs) are no longer allowed to use the previously IRS approved EA logo.

The IRS did create the logo for the EA program and supported its use. Unfortunately, the logo created legal concerns. The EA logo included a likeness or imitation of a government insignia or seal (the IRS eagle). Use of such insignia, seals or emblems are prescribed for the use of officers and employees of departments and agencies of the United States. Use of such likenesses and imitations without specific statutory authorization or regulation authorized by law may be criminally actionable if found to be in violation of 18 USC section 333, if it is interpreted or construed as conveying the false impression that an advertisement, solicitation, business activity, or product is approved, authorized by, or associated with the Department of Treasury. EAs are not employees of the IRS or Department of Treasury. They are simply licensed by the IRS and any advertisement or solicitation that could infer more than licensure is not consistent with the advertising and solicitation provisions of section 10.30(a) of Circular 230, and may also be in violation of 18 USC section 333.

For these reasons, use of the prior logo must cease. The IRS Return Preparer Office and the Office of Professional Responsibility have not yet taken any action against EAs using the prior approved logo. However, continued use of the logo by an EA could be subject to a cease and desist action. EAs must take action within six months of the release of a new IRS approved logo to delete the prior logo from advertising, websites, business cards, and other communications with clients or prospective clients.

NAEA will inform its members when the new IRS approved logo is ready for use.