IRS Advisory on Prepaying Property Taxes

The IRS issued an advisory that states prepaying 2018 property taxes in 2017 will only be deductible if the 2018 property taxes were assessed prior to 2018. Thus a prepayment of anticipated property taxes that have not been assessed prior to 2018 are not deductible in 2017. State and local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.

For more information and examples see the IRS news article IRS Advisory: Prepaid Real Property Taxes May Be Deductible in 2017 if Assessed and Paid in 2017 on the IRS website.

Reminder of the Federal Refund Delay for Upcoming 2018 Filing Season

This is a reminder that refunds will not be released again this coming filing season until February 15 for federal returns that claim the Earned Income Tax Credit (EITC) or the Additional Child Tax credit.

The IRS will begin to release the refunds on these returns starting February 15. However the IRS is cautioning everyone that these refunds most likely will not begin to be deposited until February 27, 2018.  This is due to several factors, including banking and financial systems requiring time to process the deposits.

Therefore any return claiming one of these credits that is prepared in January or early February will not be deposited in the normal IRS refund timeframe.

See the IRS news release of November 7 - Get Ready for Taxes: Plan Ahead for 2018 Filing Season to Avoid Refund Delays for more information.

IRS e-Services Now Requires Users Be Registered Using Secure Access

This is to let everyone that has an IRS e-Services account know that they must register through the Secure Access two-factor authentication process in order to access their account.  This began on December 10, 2017.

If a user had already registered using the Get Transcript, View Your Tax Account or IP PIN online tools they should use that password and their e-Services user name.

See the e-Services – Online Tools for Tax Professionals and the Important Update about Your e-Services Account pages on the IRS website for more information.

For more information on what an individual needs to do to register for the Secure Access process see the Secure Access: How to Register for Certain Online Self –Help Tools page on the IRS website.

Preparer Due Diligence Requirement Expansion Reminder

This is a reminder that the preparer due diligence requirements were expanded by the PATH Act last year to include the child tax credit and the American Opportunity education credit as well as the earned income tax credit.  This means that under IRS Code section 6695(g) the IRS has the authority to penalize a tax preparer $510 for each return (and for each credit on that return) for which the preparer fails to comply with the due diligence requirements related to these three credits.

The Four Due Diligence Requirements can be summed up as follows:

• Complete and submit the Form 8867 (Paid Preparers Due Diligence Checklist) whenever the earned income tax credit, child tax credit and/or the American Opportunity Education credit is claimed on a federal return.
  
  
• Complete all necessary worksheets or similar documents showing how each credit was calculated.
  
  
• Knowledge – Know the tax law and ask questions until you have all the information you need to determine eligibility and the correct amount for each of the credits. This means the preparer when evaluating the information provided by the taxpayer should ask additional questions if that information seems incorrect, inconsistent or incomplete. Any additional questions, and the taxpayer’s answers, should be documented and kept with the taxpayer file at the time they are asked.
  
  
• Keep a copy of all of the above, along with a record of how and when you obtained the information to determine eligibility for, and the amount of, the credits. You must also keep a copy of all the documents you reviewed and used to determine eligibility for and the amount of the credits.

It is important to note that preparers need to pay particular attention to meeting the knowledge requirement and be sure that they are asking enough questions to ensure they have enough information to be sure each of these credits is correctly claimed.  Lack of meeting the knowledge requirement is the area where a due diligence penalty is assessed is most cases when the IRS performs a due diligence audit.

For more information, see the Refundable Credit Preparer Due Diligence Law page on the EITC Central website.

For more information on other aspects of due diligence and refundable credits see the following pages on the EITC Central website:

• Due Diligence Training Module 
• Other Refundable Credits Toolkit – Links and information related to child tax credit and the American Opportunity education credit 
• Refundable Credit Frequently Asked Questions 
• Child Related Tax Benefits Comparison 
• Common EITC Questions and Answers 
• What You Need to Know About CTC and ACTC – Information on Child Tax Credit and Additional Child Tax Credit 
• What You Need to Know About AOTC and LLC – Information on the American Opportunity Education Credit and the Lifetime Learning Education Credit 
• Avoiding Common American Opportunity Education credit Errors 
• Preparer Compliance Program – How IRS determines which preparers to conduct a due diligence audit on.

IRS Security Awareness Week

The IRS, state tax agencies and the tax community are declaring this week (Nov 27 – Dec 1) as “National Tax Security Awareness Week”. 

The IRS will be releasing a series of reminders to taxpayers and tax professionals on steps they can take to better protect themselves from cybercriminals.

Each day will focus on the following topics:

• Online Security
• Recognize Phishing Scams
• Data Breaches
• W-2 Email Scam
• Small Businesses

See the Security Summit webpage on the IRS website for detailed information on the above topics and how you can better protect yourself from becoming a victim of identity thieves.

Last Day to E-File Returns in 2017

This is a reminder that the last day to file a 2016 return electronically will be Saturday, November 18.
  

The IRS is shutting down their Modernized e-file system after November 18 so the agency can perform annual maintenance and to enable the IRS to reprogram the system for the upcoming 2018 tax-filing season.

Any individual that files a 2016 return after November 18 must file it on paper. This includes any individual that qualified for an extension of time to file their 2016 federal return until January 31, 2018 because they lived in federally declared disaster area and file their 2016 federal return after November 18.

For more information see IRS News Release IR-2017-183 (dated Oct. 31, 2017) on the IRS website.

PTIN Renewal

The IRS has begun to accept renewals for existing PTIN holders or applications for new PTINs for 2018.

The US District Court did uphold the IRS’s authority to require preparers to obtain a PTIN therefore anyone who prepares or helps prepare any federal tax return for compensation must have a valid PTIN and existing PTIN holders must renew their PTIN each year.

The big difference for renewals this year is that the IRS is no longer charging a fee to renew or obtain a PTIN. The same US District Court of Columbia enjoined the IRS from charging a user fee for the issuance and renewal of PTINs on June 1, 2017.

For more information see the 2018 PTIN Renewal Period Underway for Tax Professionals news release on the IRS website. 

Final Day to File 2016 Federal and State Individual Income Tax Returns

This is a reminder that the last day to file an individual federal or state individual income tax return is this Monday, October 16.

Those taxpayers affected by Hurricanes Harvey, Irma or Maria have until January 31, 2018 to file their federal return. Also, taxpayers in disaster areas in Michigan (October 31) and West Virginia (November 30) have additional time to file their federal returns as well. See the disaster relief page on the IRS website for more details on which taxpayers are eligible for the additional time to file.

See IRS News Release 2017-169 (dated October 5, 2017) for more detailed information.

Important Upcoming IRS Update to e-Services Accounts

The IRS has announced that they are planning on updating the platform and security for e-Services later this fall.  These changes will affect everyone who has an e-Services account.

The IRS will be doing the following:

• Moving e-Services to a new platform and landing page
  This will require that e-Services will unavailable at various times during September and October.
• Implementing Secure Access Authentication
  Starting in late October, all e-Services users will be required to go through the Secure Access authentication registration process in order to access their account.
  To prepare for the Secure Access registration and authentication process e-Services users can go to the following pages on the IRS website:
  • Secure Access: How to Register for Certain Online Self-Help Tools
  • Tips for Successfully Authenticating Your Identity through Secure Access
  • Frequently Asked Questions for e-Services Users Moving to Secure Access
• E-Services users can complete the Secure Access process right now by accessing Your Tax Account or the Get Transcript Online tools on the IRS website. By completing the process before late October you will be able to access your e-Services account immediately after this new process is implemented.
• Establishing a new e-Services user agreement
  In late October all e-Services users will be asked to review and accept the terms of a new user agreement. It is important to read the new user agreement because tax professionals will have additional requirements that they must meet.

See the Important Update about Your e-Services Account on the IRS website for more information about these changes.

Hurricane Irma Update

As many of you know, CrossLink has offices located in Orlando, Florida.  As a staff, our prayers are with all those in the path of Hurricane Irma including our employees, customers, and their families.  The safety of our staff in the Orlando office is a priority for CrossLink and as a result we have proactively closed our Florida offices beginning today so that staff may make necessary preparations and travel plans.  The Orlando office will remain closed until it is safe for our CrossLink Team Members to return. 

West Coast Office Open

CrossLink is unique in our industry as we have fully staffed support centers located on both the East and West Coast.  What this means is that CrossLink is always available and, despite the challenges Hurricane Irma presents for Florida, our California Customer Care, Sales, Technical Support, and overall operations will be 100% available during our normal East and West Coast hours.  While you may not be able to reach a specific individual out of our Florida office over the next few days, we would like to assure you that you can reach CrossLink Team Members prepared to assist you with your support, sales, and overall ERO needs while they are unavailable.  Please see below for ways to reach your CrossLink Staff at all times.

CrossLink Sales:  sales@CrossLinkTax.com
CrossLink Technical Support: support@petzent.com
Bank Enrollment: customerservice@petzent.com
All Departments:  800.345.4337

We are also available via our social media pages at:

Facebook:  www.Facebook.com/CrossLinkTax
Twitter:  www.twitter.com/CrossLinkTax
Blog: www.CrossLinkTax.blogspot.com

Thank you,

Your CrossLink Team

Tax and Financial Relief Options for Flood Victims

Natural disasters and emergencies affect many families and businesses every year.  With the current weather-related issues in Texas and surrounding states, we want to take a moment to inform you of the options that victims have that can help them financially.

Tax Relief

Victims of the latest hurricane may qualify for tax relief.  From a casualty loss deduction on a tax return to assistance payments, here are some of the tax breaks the IRS will give to relieve people affected:

Special Casualty Loss Deduction on Federal Tax Return                  

Special casualty loss rules apply in a federally declared disaster area.  You can amend your previous year’s Federal return to report current losses instead of waiting until next year to report losses.  This gives you a quick refund (generally within 45 days).  Be aware that you cannot deduct losses that are covered by insurance or emergency aid assistance.  Use IRS Form 4684 to itemize these losses on a tax return.

In general, losses are deductible if they total more than $100 and more than 10 percent of your adjusted gross income.  Also, keep documentation to prove that a loss took place due to a disaster.  Include the dollar amount of loss, documentation on who owns or is liable for the property, and appraisals or photographs of loss.  Getting an estimate for damages from an appraiser, county tax assessor, or another reliable resource is a good idea.  For more information about how to report a casualty deduction on a tax return, visit the IRS web site at www.irs.gov.

Extension to file a return

Affected taxpayers may be eligible to postpone the filing of returns, paying taxes, and performing other time-sensitive acts.  Due dates vary, depending on location, and details are posted on the “Tax Relief in Disaster Situations” page on www.irs.gov website.  Taxpayers not in the covered disaster area, but whose books, records, or tax professionals’ offices are in the covered disaster area, may be entitled to relief.

For instance, certain deadlines falling on or after August 23, 2017 and before January 31, 2018, are granted additional time to file through January 31, 2018.  This includes taxpayers who had a valid extension to file their 2016 that are due on October 16, 2017.  It also includes the quarterly estimated income tax payments originally due September 15, 2017 and January 16, 2018.  The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief.  However, affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this relief.

  

Tax-free assistance

Disaster victims in a presidentially declared disaster area generally do not have to pay taxes on assistance payments they receive.  This exclusion from income applies to expenses compensated by assistance programs (such as Red Cross or FEMA) that are not otherwise reimbursed by insurance or other sources.

Other Financial Relief

When disaster hits, there are many agencies and non-profit organizations that are willing to extend a helping hand.  Knowledge of these programs can help you financially after a disaster hits.  Many of these benefits are tax-free.  The following is a list of some key agencies and a description of their functions:

           

Federal Emergency Management Agency (FEMA)

FEMA is a federal disaster aid program that provides aid to citizens affected by major disasters.    They provide disaster assistance in the form of money or direct assistance.  It is meant to help you with critical expenses that cannot be covered in other ways such as insurance.  This assistance is not intended to restore your damaged property to its condition before the disaster.  Here are some of the services available by FEMA:

*Temporary Housing—They can help you find a place to live for a limited

time. Money is available to rent a different place, or a government provided housing unit when rental properties are not available;

            *Disaster-related medical and dental costs;

*Disaster-related funeral and burial costs;

            *Clothing; household items, and tools required for your job;

*Necessary educational materials (computers, school books, etc...);

*Clean-up items (such as a wet/dry vacuum, dehumidifier);

*Moving and Storage—This includes expenses related to the disaster or to     

  prevent additional damage while repairs are being made to home.

For more information on FEMA, visit their website at www.fema.gov, or call them at 1-800-621-FEMA (3362).

American Red Cross

The Red Cross focuses on meeting people’s immediate emergency disaster-related needs.  They provide temporary shelter, food, and health and mental health services to assist individuals and families affected by a disaster.  The Red Cross also handles inquires from concerned family members outside the disaster area, provides blood and blood related products, and perform many other services to help people resume their normal daily activities independently.  For more information, visit their website at www.redcross.org.

Small Business Administration (SBA)

SBA is responsible for providing affordable, timely, and accessible financial assistance to homeowners, renters, and businesses of all sizes located in a declared disaster area.  Financial assistance is available in the form of low-interest, long-term loans for losses that are not fully covered by insurance or other resources.  For more information on SBA, visit their website at www.SBA.gov, or call them at 1-800-659-2955.

By:  Vincent  Mangiapane, EA

Federal Analyst

CrossLink Professional Tax Software

WARNING TO TAX PREPARERS OF NEW PHISHING SCAM

The IRS, state tax agencies and the tax industry (acting as the Security Summit) issued a warning on August 4 for tax preparers to be alert for a new phishing email scam that impersonates tax software providers in an attempt to steal usernames and passwords.

This latest phishing email scam includes a subject line of “Software Support Update” and highlights an “Important Software System Upgrade”. The email informs the preparer that due to a recent software upgrade, the preparer must re-validate their login credentials. It provides a link to a fictitious website that mirrors the software provider’s actual login page. It also mimics the software providers’ email template.

The Security Summit reminds tax preparers that software providers do not embed links into emails asking them to validate passwords. Also, tax preparers should never open a link or an attachment from a suspicious email.

This type of phishing scam is the reason the IRS launched the ten-week “Don’t Take the Bait” education campaign that is currently underway. This awareness effort highlights the many tactics that cybercriminals are using to target preparers in order to help them commit tax identity theft.

For more information on this latest scam and information on how you can protect yourself see the following on the IRS website:

• IRS news release of August 4 – Security Summit Alert: Tax Pros Warned of New Scam to Steal Passwords
• Protect Your Clients, Protect Yourself
• Taxes.Security.Together
• IRS Security Awareness Tax Tips

IRS Announces Which ITINs Will Be Expiring at End of 2017 and That They Are Now Accepting Renewal Applications

The IRS recently announced that as of June 21, 2017 they will accept renewal applications for Individual Taxpayer Identification Numbers (ITINs) that will expire at the end of this year (2017).

As a reminder the Protecting Americans from Tax Hikes (PATH) Act stated that all ITINs issued before 2013 would expire over a four year period beginning on January 1, 2017 and that any ITIN that was not used for three consecutive years would also expire.

Who Must Renew for the Upcoming Filing Season (Filing Season 2018)

At the end of 2017 the following ITINs will expire and must be renewed if an individual wants to use it on a 2017 federal return:

• ITINs with middle digits of 70, 71, 72 or 80.
  The IRS will begin sending the CP-48 Notice (You must renew your ITIN to file your US tax return) to the affected taxpayers later this summer.

• ITINs that have not been used at least once in the last three consecutive years.

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:

·         Fact Sheet – Expiring ITINs

·         ITIN Expiration – Frequently Asked Questions

·         Form W-7 Instructions

·         IRS News Release of June 21, 2017 – IRS Now Accepting Renewal Applications for ITINs set to Expire by End of 2017

IRS Resumes PTIN Registrations and Renewals

As of June 21, the IRS resumed PTIN registration and renewals. They will do this at no charge.

The IRS continues to work with the Department of Justice on how they will proceed on the US District Court ruling that enjoined the IRS from charging a user fee for the issuance and renewal of PTINs and refunding previous fees paid.

The IRS emphasizes that a PTIN remains a requirement for any individual who prepares federal returns for compensation.  See the IRS Reopening PTIN System page on their webpage for answers to questions regarding PTIN registration.

IRS Suspends PTIN Registration and Renewals

As of June 5, 2017, the IRS has temporarily suspended PTIN registration and renewals. They have done this because the United States District Court for the District of Columbia enjoined the IRS on June 1, 2017 from charging a user fee for the issuance or renewal of PTINs.

The IRS is presently determining how they will proceed and as additional information becomes available they will let everyone know.

See the IRS PTIN System Down announcement of June 5, 2017 for further information.

For more information on the court case and ruling see the following:

• US District Court Steele vs United States – Memorandum Opinion 

• Steele vs United States Class Action Website

Reminder that this Year’s Filing Deadline is April 18

Remember, the federal filing deadline for individual returns is Tuesday, April 18, 2017.

It is April 18 instead of Monday April 17 because of the Emancipation Day holiday in the District of Columbia.

For returns that are rejected on April 18, the return will be considered timely filed if it is re-transmitted and accepted by April 23.

The first federal individual 2017 estimated payment is also due by April 18.

April 18 is also the deadline for the following:

• To file an automatic six month extension (Form 4868) for individual federal returns
• Remember the six month extension is for filing the return only. Any tax due must be paid by April 18 to avoid any penalty and interest.
• Making a contribution to an IRA for tax year 2016
• Filing 2016 calendar year federal corporate tax returns (Form 1120)
• Filing 2016 estate or trust income tax returns (Form 1041)
• Filing an FBAR (FinCen Form 114) for individuals that have foreign financial accounts over $10,000 at any time during 2016

The filing deadline is automatically extended (without having to file a Form 4868) for the following taxpayers:

• U.S. citizens and resident aliens who live and work abroad, as well as members of the military on duty outside the U.S. have until June 15 to file and pay any tax due, although interest will be charged from April 18 on any tax that is paid on June 15.
• Members of the military and others serving in a combat zone localities receive an automatic extension of the due date until at least 180 days after they leave the combat zone to file returns and pay any taxes due. For more details see Extensions of Deadlines on page 29 of Publication 3 (Armed Forces’ Tax Guide).

                                                          

Reminder of Change in Federal Corporate and Partnership Filing Deadlines

This is a reminder that the filing deadline for calendar year 2016 federal partnership returns (Form 1065) has changed to March 15, 2017.

For those federal partnerships that need additional time to file the Form 7004 (Application for Automatic Extension of Time to File Certain Business Income Tax, Information and Other Returns) must be filed by Wednesday, March 15, 2017.

Also remember that the deadline for federal Corporate (Form 1120) returns was changed to April 15 which means 2016 calendar year federal corporate returns will be due on Tuesday, April 18, 2017.

March 15 is also the deadline for federal Subchapter S corporate returns (Form 1120S).

                                                          

IRS Warns: Dangerous W-2 Phishing Scam Evolving; Targeting Schools, Restaurants, Hospitals, Tribal Groups and Others

IR-2017-20, Feb. 2, 2017

WASHINGTON — The Internal Revenue Service, state tax agencies and the tax industry issued an urgent alert today to all employers that the Form W-2 email phishing scam has evolved beyond the corporate world and is spreading to other sectors, including school districts, tribal organizations and nonprofits.

In a related development, the W-2 scammers are coupling their efforts to steal employee W-2 information with an older scheme on wire transfers that is victimizing some organizations twice.

“This is one of the most dangerous email phishing scams we’ve seen in a long time. It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme,’’ said IRS Commissioner John Koskinen.

When employers report W-2 thefts immediately to the IRS, the agency can take steps to help protect employees from tax-related identity theft. The IRS, state tax agencies and the tax industry, working together as the Security Summit, have enacted numerous safeguards in 2016 and 2017 to identify fraudulent returns filed through scams like this. As the Summit partners make progress, cybercriminals need more data to mimic real tax returns.

Here’s how the scam works: Cybercriminals use various spoofing techniques to disguise an email to make it appear as if it is from an organization executive. The email is sent to an employee in the payroll or human resources departments, requesting a list of all employees and their Forms W-2.  This scam is sometimes referred to as business email compromise (BEC) or business email spoofing (BES).

The Security Summit partners urge all employers to be vigilant. The W-2 scam, which first appeared last year, is circulating earlier in the tax season and to a broader cross-section of organizations, including school districts, tribal casinos, chain restaurants, temporary staffing agencies, healthcare and shipping and freight. Those businesses that received the scam email last year also are reportedly receiving it again this year.

Security Summit partners warned of this scam’s reappearance last week but have seen an upswing in reports in recent days.

New Twist to W-2 Scam: Companies Also Being Asked to Wire Money
In the latest twist, the cybercriminal follows up with an “executive” email to the payroll or comptroller and asks that a wire transfer also be made to a certain account. Although not tax related, the wire transfer scam is being coupled with the W-2 scam email, and some companies have lost both employees’ W-2s and thousands of dollars due to wire transfers.

The IRS, states and tax industry urge all employers to share information with their payroll, finance and human resources employees about this W-2 and wire transfer scam. Employers should consider creating an internal policy, if one is lacking, on the distribution of employee W-2 information and conducting wire transfers.

Steps Employers Can Take If They See the W-2 Scam

Organizations receiving a W-2 scam email should forward it to phishing@irs.gov and place “W2 Scam” in the subject line. Organizations that receive the scams or fall victim to them should file a complaint with the Internet Crime Complaint Center (IC3,) operated by the Federal Bureau of Investigation.

Employees whose Forms W-2 have been stolen should review the recommended actions by the Federal Trade Commission at www.identitytheft.gov or the IRS at www.irs.gov/identitytheft.
Employees should file a Form 14039, Identity Theft Affidavit, if the employee’s own tax return rejects because of a duplicate Social Security number or if instructed to do so by the IRS.

The W-2 scam is just one of several new variations that have appeared in the past year that focus on the large-scale thefts of sensitive tax information from tax preparers, businesses and payroll companies. Individual taxpayers also can be targets of phishing scams, but cybercriminals seem to have evolved their tactics to focus on mass data thefts.

Be Safe Online

In addition to avoiding email scams during the tax season, taxpayers and tax preparers should be leery of using search engines to find technical help with taxes or tax software. Selecting the wrong “tech support” link could lead to a loss of data or an infected computer. Also, software “tech support” will not call users randomly. This is a scam.

Taxpayers searching for a paid tax professional for tax help can use the IRS Choosing a Tax Professional lookup tool or if taxpayers need free help can review the Free Tax Return Preparation Programs. Taxpayers searching for tax software can use Free File, which offers 12 brand-name products for free, at www.irs.gov/freefile. Taxpayer or tax preparers looking for tech support for their software products should go directly to the provider’s web page.

Tax professionals also should beware of ongoing scams related to IRS e-Services. Thieves are trying to use IRS efforts to make e-Services more secure to send emails asking e-Services users to update their accounts. Their objective is to steal e-Services users’ credentials to access these important services.

IRS Answers Common Early Tax Refund Questions

The IRS yesterday posted to their website a news release that addresses common questions that they have heard regarding this season’s delay in refunds for federal returns that are claiming the earned income tax credit and/or the additional child tax credit.

This release (IRS Answers Common Early Tax Season Refund Questions and Addresses Surrounding Myths) is a good resource for preparers who receive questions from their affected clients and includes the following:

•      3 YouTube videos (available in English and Spanish) explaining the delay and the IRS refund process
•      Common Myths about the delay in refunds
•      Information about “Where’s My Refund?”