In Notice 2018-38, the IRS has provided guidance on the changes made by the Tax Cuts and Jobs Act (TCJA) to corporate Federal Income Tax (FIT) and Alternative Minimum Tax (AMT) rates, and on the application of Code Sec. 15 for corporations with fiscal tax years that include but do not begin on 1/1/2018. A fiscal year corporation with a tax year that includes 1/1/2018 must apply Code Sec. 15(a) to determine the amount of FIT for that tax year. A tentative tax is computed by applying the tax rates prior to the TCJA’s change, and a second tentative tax is computed by using the 21% rate under the TCJA. The total tax for the tax year is the sum of the proportion of each tentative tax amount based on the number of days in the tax year when the different rates were in effect. The AMT for fiscal year corporations is determined similarly.
The IRS has released a fact sheet that highlights new depreciation and expensing rules from the Tax Cuts and Jobs Act (TCJA). Among other things, the maximum Section 179 deduction is increased from $500,000 to $1 million, and the phase-out threshold is increased from $2 million to $2.5 million for property placed in service in tax years beginning after 12/31/17. The definition of Section 179 property is also expanded. The TCJA also increases the bonus depreciation percentage from 50% to 100% for qualified property acquired and placed in service after 9/27/17 and before 1/1/23, however property acquired before 9/28/17 and placed in service before 1/1/18 remains at 50%. The definition of property eligible for bonus depreciation was expanded (notably to include most used property), but certain property is no longer eligible, including property used in providing certain electric, water and gas utilities, or floor-plan financed motor vehicle sales or leasing.
The IRS is testing the Taxpayer Digital Communications (TDC) Secure Messaging program to streamline correspondence audits. The TDC program focuses on audits involving Schedule A Itemized Deductions, the Child Care Credit and the Education Credit, which are processed by the IRS Philadelphia Campus. For approximately 19,000 of these audits, taxpayers and their tax professionals with valid powers of attorney (POA) can communicate with the IRS using secure messaging. This program is by invitation only. If your client is under audit with the Philadelphia Campus and the audit letter says the client can use secure messaging to reply to the IRS, encourage your client to sign up using the website provided in their letter. Once your client registers via IRS Secure Access, you will be able to register under your own SSN and complete the request access verification process. Before you can participate as a tax professional, your power of attorney must be filed on the IRS Centralized Authorization File (CAF) system. After you authenticate and the IRS verifies your power of attorney, you will have access to your own secure messaging mailbox. Additional Information regarding secure messaging and other options is available on IRS.gov at Alternatives to Secure Messaging.
The IRS is providing a new enrolled agent logo that EAs may use in marketing materials. The new logo replaces a logo IRS created in 2012. While use of the new logo is optional, use of the prior logo must cease. The prior logo contains a likeness of a government insignia, which by law limits its use to officers and employees of departments and agencies of the United States. We apologize for this error and any confusion that we may have caused. Enrolled agents have until October 31, 2018 to discontinue use of the logo containing the IRS eagle. The obsolete logo may not appear in any publications, advertising, websites, business cards, or other communications with clients or prospective clients. For further guidance on marketing materials, please refer to Circular 230, particularly § 10.30 regarding Solicitation. Active enrolled agents can obtain the logo by emailing a request to email@example.com with the subject line “EA logo.” An announcement about the logo has been posted to the EA News page on IRS.gov at: https://www.irs.gov/tax-professionals/enrolled-agent-news
In response to a request by a taxpayer, the IRS issued a memorandum regarding the treatment of tips received by volunteers. The memorandum does note that the advice cannot be used or cited as a precedent. In the specific case that was being asked about, a taxpayer engaged people to perform services on the taxpayer’s premises. The taxpayer treated them as volunteers and didn’t directly pay them any compensation or benefits for their services. However, the workers received cash from customers in nearby tip boxes. The taxpayer didn’t require customers to make cash contributions and customers have discretion on how much cash to give, or to give no tip at all. The amount of cash in the tip boxes was distributed at the end of each shift. The people who worked during a shift decided how to allocate the tips between all of the individuals who performed services during that shift. The taxpayer didn’t have a system in place for the workers to report the amount of cash they received, and there’s no evidence the taxpayer knew the specific amount of cash received by each individual. The taxpayer doesn’t issue Forms W-2 to the workers and didn’t include any wages … Read More
With the April 17 tax deadline approaching, the Internal Revenue Service and Security Summit partners urge taxpayers and tax professionals to be alert to identity theft scams, especially a new email version currently pretending to be from “IRS Refunds.” The “IRS Refunds” scam is a common tactic used by cybercriminals to trick people into opening a link or attachment associated with the email. This link takes people to a fake page where thieves try to steal personally identifiable information, such as Social Security numbers. Often these links or attachments also secretly download malware that can perform many functions, such as giving the thief control of the computer or tracking keystrokes to determine other sensitive passwords or critical data. The IRS does not randomly contact taxpayers or tax professionals via email, including asking people to confirm their tax refund information. The IRS initiates most contacts through regular mail delivered by the United States Postal Service. However, there are special circumstances in which the IRS will call or come to a home or 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 a business as part … Read More