IRS Accepting Renewal Applications for ITINs Expiring at End of 2018

In this the third year of the Individual Taxpayer Identification Number (ITIN) renewal program, as many of 2.7 million taxpayers will have their ITINs expire at the end of this year.

Under the Protecting Americans from Tax Hikes (PATH) Act all ITINs issued before 2013 expire over a four year period that began at the end of 2016. Also, any ITIN that has not been used for three consecutive years expire each year.

Therefore any affected taxpayer must submit a renewal application if they plan on using an ITIN that expires at the end of 2018 if they wish to use it on a 2018 return that will be filed during the 2019 filing season. The IRS is urging taxpayers to submit their renewal applications as soon as possible in order to beat the rush and avoid refund delays in the upcoming filing season.

Who Must Renew for the Upcoming Filing Season (Filing Season 2019)

At the end of this year the following ITINs will expire and must be renewed if an individual needs to use it on a 2018 federal return:

• ITINs with middle digits of 73, 74, 75, 76, 77, 81 or 82.
• The IRS will begin sending a CP-48 Notice (You must renew your ITIN to file your US tax return) to these affected taxpayers in the near future.
• ITINs that have not been used at least once in the last three consecutive years (2015, 2016, or 2017).

How to Renew an ITIN

To renew an expiring ITIN an individual must complete a Form W-7 (Application for IRS Individual Taxpayer Identification Number), making sure to check the “Renew an Existing ITIN” checkbox, and submit it to the IRS in one of the following ways:

• Mail the completed Form W-7 - along with the original identification documents or certified copies by the agency that issued them – to the IRS address listed on the form.
• Use one of the many IRS authorized Certified Acceptance Agents or Acceptance Agents around the country
• In advance, call and make an appointment at an IRS Taxpayer Assistance Center in lieu of mailing original identification documents to the IRS.

For renewals, the IRS does not require a tax return to be attached to the submitted Form W-7.

For more information see the following on the IRS website:

• IRS News Release of June 14 – More than 2 million ITINs to expire this year; Renew soon to avoid refund delays
• Fact Sheet – Expiring ITINs
• ITIN Expiration – Frequently Asked Questions
• Form W-7 Instructions
• IRS YouTube Video - Individual Taxpayer Identification Number (ITIN)

IRS Tax Security 101 Campaign for Preparers

The IRS has kicked off a 10 week awareness campaign for tax professionals. This new effort by the IRS, State tax agencies and the private sector tax industry is aimed at making tax preparers aware of the continued threat to tax and financial data that is held by them.

This new campaign called “Protect Your Clients; Protect Yourself: Security 101” is intended to provide tax professionals with the basic information that they need to better protect taxpayer data and to help prevent the filing of fraudulent tax returns that is based on stolen taxpayer data taken from the preparer’s computer system. It will run for ten weeks and will focus each week on topics such as security, passwords, recognizing spear phishing, monitoring and protecting your EFIN, signs of data theft and a tax preparer’s legal obligation to protect taxpayer data.

It is important to understand that this time of year is when the cybercriminals ramp up their efforts in targeting tax preparers in an effort to obtain their clients tax return information. So it is important for tax preparers to remain vigilant and take the necessary steps to protect their computers and thus protect their customer’s information throughout the year.

For more details on this campaign see IRS News Release Tax Security 101 on the IRS website.

With this in mind here are a few recent IRS videos that can help tax preparers protect themselves against breaches of their computer systems and what to do if they are compromised:

• Why Tax Professionals need a Security Plan
• How to Maintain, Monitor, and Protect Your EFIN
• What to Do After a Tax Professional Data Compromise

Also, there are publications that tax return preparers will find useful as to what steps they need to take to protect themselves:

• Newly Revised IRS Publication 4557 (Safeguarding Taxpayer Data)
• New Publication 5293 (Data Security Resource Guide for Tax Professionals)
• Small Business Information Security: The Fundamentals published by the National Institute of Standards and Technology

And here are some helpful IRS webpages on security for tax return preparers:

• Basic Security Steps/Signs of Data Loss
• Protect Your Clients; Protect Yourself – main page
• Protect Your Clients; Protect Yourself: Tax Security 101 – New information will be posted weekly for the next ten weeks
• Tax Practitioner Guide to Business Identity Theft
• Don’t Take the Bait – 2017 Awareness campaign
• 2017 National Tax Security Awareness Week Tips

Visit the CrossLink Tax Resource Center to learn more.

Form 1040 Redesign

The 2018 Form 1040 has been streamlined to only include the five most common types of income, federal withholding, EITC, Additional Child Tax Credit and the Education Credit. The detail for all other types of income, adjustments to income, nonrefundable, refundable credits, other payments and other taxes that exist on the current Form 1040 have been moved to one of six new schedules:

• Schedule 1 (Additional Income and Adjustments to Income)
• Includes the remaining income types such as from Schedule C, D, E and F, unemployment compensation, etc. that were shown on the current Form 1040.
• All adjustments to income such as Educator expenses, IRA contributions, student loan interest, etc.
• Schedule 2 (Tax) – Includes all lines that are used to calculate total tax such as the regular tax, tax on child’s unearned income, alternative minimum tax, etc.
• Schedule 3 (Nonrefundable Credits) – Includes all nonrefundable credits such as credit for child and dependent care expenses, education credits, child tax credit and the new credit for other dependents, etc.
• Schedule 4  (Other Taxes) – Includes all other taxes such as self-employment tax, household employment tax, etc.
• Schedule 5 (Other Payments and Refundable Credits) – Includes the lines for other payments and refundable credits such as extension payment, credit for federal tax on fuels, etc.
• Schedule 6 (Foreign Address and Third Party Designee) - Where foreign address and third party designee information is shown if they are applicable.

The IRS has explained that the version of the newly redesigned form released on June 29 is a pre-release draft and the IRS will be working with the tax community to finalize the Form 1040 over the summer. The final version of the form will be released towards the end of this year.

The draft of the 2018 Form 1040 also includes changes that are a result of the Tax Cuts and Jobs Act such as:

• Removal of exemption amount boxes and the total exemptions line.
• Addition of check box for the new credit for other dependents for each dependent.
• New line 9 for the new qualified business income deduction (20% deduction for pass-through business income – Sec 199A).

For additional information on the redesign of the Form 1040 see IRS news release -– IRS Working on a New Form 1040 for 2019 Tax Season.

Learn More at the CrossLink Tax Resource Center: www.crosslinktax.com/customer-resources/Tax-Resource-Center.asp