IRS ISSUES GUIDANCE ON BUSINESS INTEREST EXPENSE LIMITATIONS

NSTPInternal Revenue Service (IRS)

The Treasury Department and the Internal Revenue Service (IRS) today issued Notice 2018-28, which provides guidance for computing the business interest expense limitation under recent tax legislation enacted on December. 22, 2017.  In general, newly amended section 163(j) of the Internal Revenue Code imposes a limitation on deductions for business interest incurred by certain large businesses.  For most large businesses, business interest expense is limited to any business interest income plus 30 percent of the business’ adjusted taxable income. The notice describes aspects of the regulations that the Treasury Department and the IRS intend to issue, including rules addressing the calculation of the business interest expense limitation at the level of a consolidated group of corporations and other rules to clarify certain aspects of the law as it applies to corporations.  It also clarifies the treatment of interest disallowed and carried forward under section 163(j) prior to enactment of the recent tax legislation.  Finally, the notice makes it clear that partners in partnerships and S corporation shareholders cannot interpret newly amended section 163(j) to inappropriately “double count” the business interest income of a partnership or S corporation.

SUMMIT PARTNERS WARN TAX PROS TO BE ON ALERT; STEP UP SECURITY MEASURES

NSTPInternal Revenue Service (IRS), Security

The IRS, state tax agencies and the tax industry continue to warn tax professionals to be alert to taxpayer data theft in the final weeks of the tax filing season. The Security Summit partners urged all tax professionals to enhance their data safeguards immediately. In recent days, the “New Client” scam has reemerged, signaling ongoing attempts by cybercriminals to target tax professionals with spear phishing schemes. In this scam, a “new client” emails the tax pro about a tax issue, attaching documents to their email that claim to be an IRS notice or prior-year tax information. The documents actually contain malware that, if opened, enable the criminals to steal taxpayer information. This filing season, the Internal Revenue Service has seen a steep upswing in the number of reported thefts of taxpayer data from tax practitioner offices. Seventy-five firms reported taxpayer data thefts in January and February, nearly a 60 percent increase from same time last year. Much of this increase follows one scam, the erroneous-refund scheme, that affected thousands of taxpayers and numerous practitioners earlier this filing season. January through April represents prime season for cybercriminals to attack tax practitioners, but data thefts can occur at any time. All tax … Read More

IRS 2017 DATA BOOK

NSTPInternal Revenue Service (IRS)

The IRS recently released the 2017 Data Book based on information collected during fiscal year 2017 (from 10/1/16 thru 9/30/17) based on information collected in the Comprehensive Taxpayer Attitude Survey (CTAS). The IRS uses this information to improve taxpayer service. The IRS Data Book’s online format makes navigating data on taxpayer assistance, enforcement and IRS operations easier. The publication contains depictions of key areas and quick links to the underlying data. The Comprehensive Taxpayer Attitude Survey (CTAS) More than 2,000 taxpayers provided the IRS feedback via cell phone, landline or online surveys. Their opinions will help inform IRS efforts to improve taxpayer service. Nearly all taxpayers (about 95 percent of respondents) said it is their civic duty to pay their fair share of taxes. Most taxpayers (79 percent of respondents) said that they were satisfied with their personal interactions with the IRS. The report covers such topics as: What is an acceptable amount to cheat on income taxes? It is every American’s civic duty to pay taxes. Satisfaction with personal interactions with the IRS. How valuable are the IRS website/IRS representatives? Lists of statistical tables including: Returns filed, taxes collected, and refund issued Enforcement: examinations; information reporting and verification; and collections, penalties, … Read More

TAX FILING DEADLINE POSTPONED UNTIL JUNE 29 FOR VICTIMS OF HURRICANE MARIA IN PUERTO RICO AND THE VIRGIN ISLANDS

NSTPInternal Revenue Service (IRS)

The IRS has extended tax deadlines for affected individuals and businesses until June 29, 2018, for the following localities: In the U.S. Virgin Islands (starting Sept. 16, 2017): Islands of St. Croix, St. John and St. Thomas. In Puerto Rico (starting Sept. 17, 2017): In any of the 78 municipalities. The disaster relief page on the IRS website has details on the returns, payments and tax-related actions qualifying for the additional time. Following the IRS extension, affected individuals and businesses will have until June 29, 2018, to file their 2017 tax returns and pay any taxes due on those returns. This relief also includes individual estimated tax payments, payroll and excise tax returns, corporate income tax returns originally due or on extension during the relief period and tax-exempt organizations required to file Form 990 series returns with an original deadline falling during this period. This relief also applies to taxpayers who had a valid extension to file their 2016 return that was due to run out on October 16, 2017, and which was already postponed until January 31, 2018. The IRS will abate any interest, late-payment or late-filing penalty that would otherwise apply for 2017 tax returns. The IRS automatically … Read More

UNDERSTANDING THE 5071C LETTER

NSTPInternal Revenue Service (IRS), Taxpayer

When the IRS receives a suspicious tax return, it sometimes sends Letter 5071C to the taxpayer and asks him or her to use an online identity verification process. Taxpayers always have the option of calling the IRS Identity Verification telephone number at 800-830-5084. Following is from the IRS website: We received a federal income tax return with your name and taxpayer identification number, but we must verify your identity to process it accurately. The contact information below is only for taxpayers who received Letter 5071C. What you need to do If you didn’t file Use our secure Identity Verification Service. It is quick and secure. You can opt-out of the Identity Verification Service at any time and call the toll-free number provided in the 5071C letter. If you answer a question incorrectly, you can call the toll-free number in the 5071C letter. If you did file Call the toll-free IRS Identity Verification telephone number at 800-830-5084. Have a copy of the 5071C letter you received, a copy of your prior year tax return (if you filed one) and your most recently filed tax return (if you filed one), as well as any supporting documentation for each year’s return (such as Forms W-2, … Read More

IRS TO END OFFSHORE VOLUNTARY DISCLOSURE PROGRAM

NSTPInternal Revenue Service (IRS)

The Internal Revenue Service will begin to ramp down the 2014 Offshore Voluntary Disclosure Program (OVDP) and close the program on September 28, 2018. By alerting taxpayers now, the IRS hopes that any U.S. taxpayers with undisclosed foreign financial assets will use the OVDP before the program closes. “Taxpayers have had several years to come into compliance with U.S. tax laws under this program,” said Acting IRS Commissioner David Kautter. “All along, we have been clear that we would close the program at the appropriate time, and we have reached that point. Those who still wish to come forward have time to do so.” Since the OVDP’s initial launch in 2009, more than 56,000 taxpayers have used one of the programs to comply voluntarily. All told, those taxpayers paid a total of $11.1 billion in back taxes, interest and penalties. The planned end of the current OVDP also reflects advances in third-party reporting and increased awareness of U.S. taxpayers of their offshore tax and reporting obligations. The number of taxpayer disclosures under the OVDP peaked in 2011, when about 18,000 people came forward. The number steadily declined through the years, falling to only 600 disclosures in 2017. The current OVDP … Read More