1. IRS Issues Chapter 3 pp
2018 National Income
Tax Workbook™

2. p. 59 IRS Issues Data Security and Tax Scams IRS Online Tools
Form 2848, Power of Attorney
Passport Revocations and Denials
Voluntary Certification Program for Professional Employer Organizations
Current Status of IRS
Implementing the TCJA

3. Issue 1: Data Security and Tax Scams p. 60
Practitioners have a duty to safeguard taxpayer data
Taxpayer data: any information obtained or used in preparation of a tax return

4. Safeguard Data p. 60
Designate employee(s) to coordinate an information security system
Identify internal and external risks
Design and implement information safeguards
Oversee service providers
Evaluate and adjust information security program as needed

5. Security Summit p. 61
Private + public-sector partnership to combat identity theft
2017 Results
Fewer reports of identity theft
Fewer fraudulent returns processed
Backlog of identity theft reports were reduced 372,000 to 34,000

6. Security Summit pp. 61-62 2018 Initiatives Form W-2 verification box
Add’l data for authentication
Name/ SSN of signor
Payment/filing history
Parent company information

7. Information Sharing p. 62 Information Sharing and Analysis Center
Facilitate information exchange
Provide a forum for taxpayer discussion
Promote data analysis

8. Tax Scams p. 62 Cyberthieves continue to target tax practitioners
IRS recommends practitioners
Use security software
Watch out for scams
Protect personal data

9. Tax Scams Cont. pp. 63-64 Hotmail user scam – fake Microsoft sign-in
W-2 scam – tricks payroll personnel
IRS refunds scam – fake page with malware
IRS TAC scam – IRS TAC on caller ID
Professional association scam – fake s
Ghost preparers – steal refunds
IRS-impersonation phone scam– fake ID #

10. Issue 1 p. 65 Data Security and Tax Scams
Recent scams cont.,
Dirty Dozen scams
Phishing
Phone scams
Identity theft
Return preparer fraud
Fake charities
Inflated refund claims
Excessive claims for business credits

11. Dirty Dozen p. 65 Fake emails/websites Threatening phone calls
Identity theft
Dishonest preparers
Fake charities
Inflated Refund Claims

12. Dirty Dozen Cont. pp. 65-66 Claiming fuel tax/research credits
Inflated deductions
Fake income
Tax protester arguments
Abusive tax shelters
Hiding $ offshore

13. Sample Letter p. 66 Figure 3.1 Alerts clients to potential scams
Gives tips for protection
Offers assistance

14. Figure 3.2 p. 67 How to Report Fraud, failure to pay, crime, etc.
Identity theft
Abusive tax schemes
Preparer misbehavior
Abusive tax promoter
Fake IRS s or websites
Etc.

15. Issue 2 pp. 68-71 IRS Online Tools
E-Services Registration
After December 10, 2017, all users must revalidate identities using Secure Access
IRS FAQs
Common Errors
IE 11 and higher – no other browsers
Don’t use old bookmarks
Multiple attempts to login → lockout

16. IRS Online Accounts p. 71 IRS.gov/account View amounts owed
Pay online/payment plan
Access records, payment history, and recent return

17. Issue 3 p. 72 Form 2848, POA Qualifying student
Authorized representatives
Attorneys, CPAs, EAs, etc.
Form revisions
Intermediate service providers
Partnership representatives
Qualifying student

18. Authentication Alert p. 73
PPS now verifying identity of agent
SSN
DOB

19. Issue 4 pp. 74 Passport Revocations and Denials
Taxpayers with seriously delinquent tax debt
IRS certifies debt to the State Department for action
Passports may not be issued
Previously issued passports may be revoked or limited
First certifications sent in February 2018

20. p. 74 Passport Revocations and Denials
Seriously Delinquent Tax Debt
Debt has been assessed
Debt is more than $51,000
Administrative remedies exhausted

21. Passport Revocations p. 74
Doesn’t include:
Timely payment under IA or OIC
Pending CDP hearing to contest levy
Innocent spouse relief

22. Passport Revocations p. 74
Also doesn’t include:
Bankruptcy
Tax-related identity theft
Federal disaster
Pending IA or OIC
Accepted adjustment

23. p. 74 Passport Revocations and Denials
Postpone certification if in designated combat zone
90 day hold before denial so TP can
Resolve errors
Make payment
Enter into a payment arrangement

24. pp. 75-76 Passport Revocation - Notice
Notify TP at time of certification
Written notification (Notice CP598C)
Reversal of Certification
Debt is fully paid
Debt is no longer seriously delinquent
Certification of debt is erroneous
State Dept. notifies TP if denied or revoked

25. Issue 5 p. 77 Voluntary Certification Program
Established by the IRS
Certified professional employer organization (CPEO)
May be treated as employer and responsible for federal employment taxes

26. CPEOs p. 77
Performs some or all employment tax withholding, reporting, and payment
May also manage HR, employee benefits, worker’s comp claims, and UI claims

27. p. 77 CPEO Certification Certification requirements
Business entity (not disregarded)
Created or organized in US
One or more physical locations in US
History of tax compliance
Managed by experienced individuals
Audited financial statements
Bond and financial review requirements

28. p. 78 CPEO Certification Certification requirements cont.
Reporting requirements
Compute taxable income under accrual method
Verify continuing compliance
Notify IRS of any material changes affecting certification

29. pp. 78-79 CPEO Certification
Denial or revocation of certification
Failure to report and pay taxes
Misconduct
Sanctions
Lack of experience

30. p. 79 CPEO Certification Business location
CPEO must have one or more established business locations in the US
CPEO must be created or organized in US or under law of any state
Majority of CPEO applicants or responsible individuals must be US citizens or residents
CPEO must use only financial institutions subject to supervision and examination by state or federal authority

31. p. 79 CPEO Certification Financial statements Working capital
CPEO applicant must provide a copy of annual audited financial statements
Working capital
Opinion from CPA that it has positive working capital

32. p. 80 CPEO Certification Working capital exceptions:
CPEO has negative working capital for no more than 2 consecutive fiscal quarters of that fiscal year
CPEO gives an explanation for the failure
IRS determines that the failure does not present a material risk to the collection of employment taxes

33. p. 80 Voluntary Certification Program for Professional Employer Organizations
Bond requirement
Greater of 5% of the CPEO’s liability or $50,000 for periods beginning on April 1 of any calendar year
Reporting requirement
Quarterly attestations

34. CPEO Liability p. 80 Work site employee – CPEO treated as employer
EE covered by CPEO contract
Performs services for ER
At least 85% covered by CPEO contract

35. p. 81 CPEO Wage Base & Credits
For work site employee, CPEO is treated as successor or predecessor employer for FICA, FUTA, add’l Medicare
Work site credit applies to customer, not the CPEO

36. Issue 6 p. 81 Current Status of IRS
National Taxpayer Advocate (NTA) claims IRS needs more funding
IRS maintains technology is necessary to improve taxpayer services
Online transactions
Online accounts
Etc.

37. Current Status of IRS pp. 81-82
,500,000 returns
$3.4 trillion taxes collected
70.5% filed electronically
2,500,000 used free file

38. p. 82 Current Status of IRS Almost half billion visits to irs.gov
Taxpayer assistance to 53,000,000
In 2017, 934,000 individual return audits
.6% chance of audit

39. pp. 83-84 National Taxpayer Advocate
Report to Congress
Private debt collection undue burden
Online accounts, but TPs low participation
Unreal audits
EE training budget reduced

40. National Taxpayer Advocate p. 83
Purple Book recommendations:
Competency std. for preparers
More time for S election
Form 941 reports by EE
Mailbox rule for e-submissions
Levy on retirement only for flagrant conduct

41. p. 84 Taxpayer Feedback Comprehensive Taxpayer Attitude Survey
95% say it is civic duty to pay taxes
50% paid a professional to prepare and file their returns
79% were satisfied with IRS interaction

42. Issue 7 pp. 85-86 Implementing TCJA
To implement the TCJA:
Create or change forms and publications
Update processing systems
Retrain workers
Educate the public
TIGTA estimates IRS needs add’l $397 billion

43. p. 86 Implementing TCJA Implementation also includes:
Reprograming 140 interrelated systems
Creating and/or revising 450 tax forms, publications, and instructions
Publishing guidance, notices, FAQs
Preparing workers
Taxpayer assistance and outreach

44. p. 86 Implementing TCJA

45. p. 87 Implementing TCJA Tax practitioner and taxpayer education
IRS Communication and Liaison function taxpayer outreach initiative
Events and sessions across the country
Creating electronic materials for practitioners

46. p. 87 Implementing TCJA Guidance plan Identifies guidance projects
Tax Reform Implementation Office
Lead and coordinate implementation

47. Questions?