Ebola Virus Outbreak Designated as a Qualified Disaster For Federal Tax Purposes

NSTPInternal Revenue Service (IRS)

The IRS has issued two items of guidance in response to the need for charitable and other relief due to the Ebola outbreak in Guinea, Liberia and Sierra Leone. One piece of guidance provides special relief intended to support leave-based donation programs to aid victims who have suffered from the Ebola virus outbreak in those countries. The other designates the Ebola outbreak in those countries as a qualified disaster for federal tax purposes. Under the leave-based donation guidance, employees may donate their vacation, sick or personal leave in exchange for employer cash payments made to qualified tax-exempt organizations providing relief for the victims of the Ebola outbreak in Guinea, Liberia or Sierra Leone. Employees can forgo leave in exchange for employer cash payments made before January 1, 2016. Under this special relief, the donated leave will not be included in the income or wages of the employees. Employers will be permitted to deduct the amount of the cash payment. The IRS has alerted employers and other taxpayers that, because the Ebola outbreak is designated as a qualified disaster for federal tax purposes, qualified disaster relief payments made to individuals by their employers or any person can be excluded from those … Read More

Five Easy Ways To Spot A Scam Phone Call

NSTPHackers, Online Scams, Phishing, Security

  I know we keep including this announcement but these telephone scams continue to plague taxpayers. The operators of these scams are stepping up the frequency and intensity of the telephone calls. The IRS continues to warn the public to be alert for telephone scams and offers five tell-tale warning signs to tip you off if you get such a call. The callers claim to be with the IRS. The scammers often demand money to pay taxes. Some may try to con you by saying that you’re due a refund. The refund is a fake lure so you’ll give them your banking or other private financial information. These con artists can sound convincing when they call. They may even know a lot about you. They may alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS badge numbers. If you don’t answer, they often leave an “urgent” callback request. The IRS respects taxpayer rights when working out payment of your taxes. So, it’s pretty easy to tell when a supposed IRS caller is a fake. Here are five things the scammers often do but the IRS will not do. Any … Read More

EITC Due Diligence Warning Letters To Be Sent By IRS

NSTPInternal Revenue Service (IRS)

Starting in October, the IRS will be sending warning letters to tax practitioners who appear not to be in compliance with the EITC due diligence requirements. The IRS estimates that 22 to 26 percent of all EITC claims have some type of mistake. These errors cost the government between $13.3 and $15.6 billion in 2013. Some errors are caused by misinterpreting the law; some because the preparer accepted client-provided information at face value and others are out-and-out fraud. As part of the tax preparation community, practitioners are crucial in stemming these errors because paid preparers produce the majority of EITC claims. About 60 percent of EITC errors fall into three key categories: Claiming a child who does not meet the age, relationship, joint return, or residency tests; Filing as single or head of household when legally married; and Over-or under-reporting income or business expenses to maximize the credit. Preparers must fulfill four due-diligence requirements. Generally, if you prepare EITC claims, you must not only ask all the questions to get the information required on Form 8867, Paid Preparers’ Earned Income Credit Checklist, but also additional questions when the information your client gives you seems incorrect, inconsistent or incomplete.

ARE YOU READY FOR THE ANNUAL FILING SEASON PROGRAM (AFSP)?

NSTPAnnual Filing Season Program (AFSP), Clients, Internal Revenue Service (IRS), NSTP Education, Special Topics Workshop, Tax Professionals, Voluntary Program

Effective July 1, 2014, the IRS has instituted a new, voluntary system which aims to recognize the efforts of non-credentialed return preparers who aspire to a higher level of professionalism. Meet the requirements by obtaining 18 hours of continuing education, including a six hour federal tax law refresher course with test, and you will receive an Annual Filing Season Program – Record of Completion from the IRS. The continuing education requirement has been prorated for 2014 since the program started in the middle of the year. Note that all tax practitioners are required to renew their PTINs in order to be eligible to prepare tax returns. Participation in the AFSP is not required in order to be eligible to prepare tax returns. What are the benefits of this voluntary program? AFSP participants will be included in a public database of return preparers scheduled to launch on the IRS website in January 2015. The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications will include the name, city, state, zip code, and credentials of all attorneys, CPAs, enrolled agents, enrolled retirement plan agents and enrolled actuaries with a valid PTIN, as well as all AFSP – Record of Completion … Read More

IRA Required Minimum Distribution Rules:

NSTPIndividual Retirement Accounts (IRAs), Internal Revenue Service (IRS), Tax Professionals

Are your clients aware of the IRA Required Minimum Distribution (RMD) rules when they reach age 70 ½? A good planning opportunity is to reach out to those clients who are subject to the RMD. Learn the rules of IRA Required Minimum Distributions If a taxpayer will be age 70 1/2 or older by the end of 2014, they must withdraw a minimum amount — a Required Minimum Distribution — from their non-Roth IRAs for 2014. Withdrawals are not required from Roth IRAs until after the owner’s death. Required Minimum Distribution deadline The 2014 RMD must be taken by Dec. 31, 2014. If the taxpayer reaches the age of 70 1/2 in 2014, they can delay taking the 2014 RMD until April 1, 2015. They must also take the 2015 RMD before December 31, 2015 so delay will cause two distributions to be issued in the same year. Required Minimum Distribution amount The 2014 RMD is the account balance as of the end of 2013 divided by a distribution period from the IRS’s “Uniform Lifetime Table.” A separate table is used if your spouse is the sole beneficiary and is 10 or more years younger. These worksheets can be used to … Read More

IRS Commissioner, John Koskinen, Says To Contact Congress:

NSTPAnnual Filing Season Program (AFSP), Internal Revenue Service (IRS)

In a recent speech before a group of tax practitioners Koskinen told tax preparers and others who are frustrated with long wait times on the service’s phone lines to call their member of Congress. Koskinen said, “Congress needs to hear and understand the impact of the funding cuts. As I tell people on Capitol Hill, we are the only agency still operating at the post-sequester level.” The IRS budget was cut 7 percent in Fiscal Year 2014, even as the agency took on the burden of administering the tax provisions of the Affordable Care Act. This is “the biggest challenge facing the IRS,” according to Koskinen. “Congress is starving our revenue-generating operation,” he explained. “If voluntary compliance with the Tax Code drops by 1 percent, it costs the U.S. government $30 billion per year. The IRS annual budget is only $11 billion per year.” While IRS budget cuts may have been driven partially by outrage over the tax scandal involving targeting of conservative groups last year, Koskinen emphasized that “this was a mistake that should never happen again. My job is to make sure the public knows that.” Koskinen also spoke about the IRS voluntary education program the agency plans … Read More