IRS Press Release: Law change affects moving, mileage and travel expenses

IR-2018-127, May 25, 2018

WASHINGTON –  The Internal Revenue Service today provided information to taxpayers and employers about changes from the Tax Cuts and Jobs Act that affect:

• Move related vehicle expenses
• Un-reimbursed employee expenses
• Vehicle expensing

Changes to the deduction for move-related vehicle expenses

The Tax Cuts and Jobs Act suspends the deduction for moving expenses for tax years beginning after Dec. 31, 2017, and goes through Jan. 1, 2026. Thus, during the suspension no deduction is allowed for use of an automobile as part of a move using the mileage rate listed in Notice 2018-03. This suspension does not apply to members of the Armed Forces of the United States on active duty who move pursuant to a military order related to a permanent change of station.

Changes to the deduction for un-reimbursed employee expenses

The Tax Cuts and Jobs Act also suspends all miscellaneous itemized deductions that are subject to the 2 percent of adjusted gross income floor. This change affects un-reimbursed employee expenses such as uniforms, union dues and the deduction for business-related meals, entertainment and travel.

Thus, the business standard mileage rate listed in Notice 2018-03, which was issued before the Tax Cuts and Jobs Act passed, cannot be used to claim an itemized deduction for un-reimbursed employee travel expenses in taxable years beginning after Dec. 31, 2017, and before Jan. 1, 2026. The IRS issued revised guidance today in Notice 2018-42.

Standard mileage rates for 2018

As mentioned in Notice 2018-03, the standard mileage rates for the use of a car, van, pickup or panel truck for 2018 remain:

• 54.5 cents for every mile of business travel driven, a 1 cent increase from 2017.
• 18 cents per mile driven for medical purposes, a 1 cent increase from 2017.
• 14 cents per mile driven in service of charitable organizations, which is set by statute and remains unchanged.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
Increased depreciation limits

The Tax Cuts and Jobs Act increases the depreciation limitations for passenger automobiles placed in service after Dec. 31, 2017, for purposes of computing the allowance under a fixed and variable rate plan. The maximum standard automobile cost may not exceed $50,000 for passenger automobiles, trucks and vans placed in service after Dec. 31, 2017. Previously, the maximum standard automobile cost was $27,300 for passenger automobiles and $31,000 for trucks and vans.

More information

Notice 2018-42 is posted on IRS.gov and contains information about the update to the standard mileage rates, including the details about the suspension of the deduction for operating a vehicle for moving purposes.

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View the original IRS press release here: www.irs.gov/newsroom/law-change-affects-moving-mileage-and-travel-expenses

IRS Press Release: New law gives individuals and businesses more time to challenge a wrongful IRS levy; newly-revised publication can help

IRS Press Release
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IR-2018-126, May 25, 2018

WASHINGTON — Individuals and businesses have additional time to file an administrative claim or to bring a civil action for wrongful levy or seizure, according to the Internal Revenue Service.

An IRS levy permits the legal seizure and sale of property including wages, money in bank or other financial accounts, vehicles, real estate and other personal assets to satisfy a tax debt.

The Tax Cuts and Jobs Act of 2017, the tax reform law enacted in December, extended the time limit for filing an administrative claim and for bringing a suit for wrongful levy from nine months to two years. If an administrative claim for return of the property is made within the two-year period, the two-year period for bringing suit is extended for 12 months from the date of filing of the claim or for six months from the disallowance of the claim, whichever is shorter. The change in law applies to levies made after Dec. 22, 2017, and on or before that date, if the previous nine-month period hadn’t yet expired.

The timeframes apply when the IRS has already sold the property it levied. As under prior law, there is no time limit for the administrative claim if the IRS still has the property it levied. Also, as under prior law, taxpayers may not file a wrongful levy claim or bring a wrongful levy suit as the law only applies to those other than the taxpayer. Usually, wrongful levy claims involve situations where an individual or business believes that either the property belongs to them, or they have a superior claim to the property that the IRS is not recognizing.

Anyone who receives an IRS bill titled, Final Notice of Intent to Levy and Notice of Your Right to A Hearing, should immediately contact the IRS. By doing so, a taxpayer may be able to make arrangements to pay the liability, instead of having the IRS proceed with the levy.

It’s also important that those who receive a levy for their employees, vendors, customers or other third parties comply with the levy. Failure to do so may subject the party receiving the levy to personal liability. For more information, see the What is a Levy?page on IRS.gov.

To file an administrative wrongful levy claim, send a letter to the IRS Advisory Group for the area where the levy was made. For a list of Advisory Group offices, see Publication 4235, Collection Advisory Group Numbers and Addresses, available on IRS.gov. For more information on wrongful levy claims, including details on what information to include in the letter, see newly-revised Publication 4528, Making an Administrative Wrongful Levy Claim Under Internal Revenue Code Section 6343(b), also available on IRS.gov.

If, following a claim, the IRS determines it has wrongfully levied property, it will return one of the following:

• the property,
• an amount of money equal to the amount of money levied upon, or
• an amount of money equal to the money received from the sale of the property.

Anyone whose wrongful levy claim is denied by the IRS has the right to appeal through the agency’s Collection Appeals Program. For more information about these appeal rights, see Publication 1660, Collection Appeal Rights.
The right to appeal an IRS decision in an independent forum is one of many rights taxpayers have when dealing with the IRS. These rights have been grouped into 10 broad categories as the Taxpayer Bill of Rights. For more information, see Publication 1, Your Rights as a Taxpayer, available on IRS.gov.

For information on wrongful levy claims and other tax-reform-related issues, visit IRS.gov/newsroom/tax-reform.

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View the original IRS press release here: www.irs.gov/newsroom/new-law-gives-individuals-and-businesses-more-time-to-challenge-a-wrongful-irs-levy-newly-revised-publication-can-help

IRS PRESS RELEASE: IRS warns tax pros of new scam posing as professional associations

IRS PRESS RELEASE
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IR-2018-125, May 24, 2018

WASHINGTON — The IRS and its state and industry Security Summit partners today warned tax practitioners to beware of phishing emails posing as state accounting and professional associations.

This week, the IRS received reports from tax professionals who received fake emails that were trying to trick them into disclosing their email usernames and passwords.

Cybercriminals specifically targeted tax professionals in Iowa, Illinois, New Jersey and North Carolina. The IRS also received reports about a Canadian accounting association.

The awkwardly worded phishing email states: “We kindly request that you follow this link HERE and sign in with your email to view this information from (name of accounting association) to all active members. This announcement has been updated for your kind information through our secure information sharing portal which is linked to your email server.”

Tax practitioners nationwide should be on guard because cybercriminals can easily change their tactics, using other association names or making other adjustments in their scam attempts.

Tax practitioners who are members of professional associations should go directly to those associations’ websites rather than open any links or attachments. Tax practitioners who receive suspicious emails related to taxes or the IRS, or phishing attempts to gain access to practitioner databases, should forward those emails to phishing@irs.gov.

This scam serves as a reminder to all tax professionals that cybercriminals are targeting their offices in an attempt to steal client data.

To assist tax professionals with safeguards, the Security Summit partners urge practitioners to follow these minimal security steps:

• Learn to recognize phishing emails, especially those pretending to be from the IRS, e-Services, a tax software provider or cloud storage provider. Never open a link or any attachment from a suspicious email. Remember: The IRS never initiates initial contact with a tax pro via email.
• Create a data security plan using IRS Publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security – The Fundamentals, by the National Institute of Standards and Technology.
• Review internal controls:
  • Install anti-malware/anti-virus security software on all devices (laptops, desktops, routers, tablets and phones) and keep software set to automatically update.
  • Create passwords of at least eight characters; longer is better. Use different passwords for each account, use special and alphanumeric characters and phrases. Password protect wireless devices and consider a password manager program.
  • Encrypt all sensitive files/emails and use strong password protections.
  • Back up sensitive data to a safe and secure external source not connected fulltime to a network.
  • Wipe clean or destroy old computer hard drives and printers that contain sensitive data.
  • Limit access to taxpayer data to individuals who need to know.
  • Check IRS e-Services account weekly for number of returns filed with EFIN.
• Report any data theft or data loss to the appropriate IRS Stakeholder Liaison.
• Stay connected to the IRS through subscriptions to e-News for Tax Professionals, Quick Alerts and Social Media.

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Click here to view the original IRS press release: www.irs.gov/newsroom/irs-warns-tax-pros-of-new-scam-posing-as-professional-associations

MEMORIAL DAY WEEK

Your CrossLink Team would like to take a moment to thank and celebrate all of our Veterans and their families as we prepare for the upcoming Memorial Day weekend.

We would also like to remind you that the CrossLink Team traditionally takes the Memorial Day week off to recharge after a busy tax season. This means that most of your CrossLink Team will be unavailable next week – we will all return on Monday, June 4th rested and ready to start working on next tax season!

Please note that while much of the CrossLink staff will be unavailable, CrossLink Technical Support will still be available to address any support issues you may have.

Thank you!

IRS Press Release: IRS issues notice on state and local tax deductions

IR-2018-122, May 23, 2018

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service issued a notice today stating that proposed regulations will be issued addressing the deductibility of state and local tax payments for federal income tax purposes. Notice 2018-54 also informs taxpayers that federal law controls the characterization of the payments for federal income tax purposes regardless of the characterization of the payments under state law.

The Tax Cuts and Jobs Act (TCJA) limited the amount of state and local taxes an individual can deduct in a calendar year to $10,000. In response to this new limitation, some state legislatures have adopted or are considering legislative proposals allowing taxpayers to make payments to specified entities in exchange for a tax credit against state and local taxes owed. 

The upcoming proposed regulations, to be issued in the near future, will help taxpayers understand the relationship between federal charitable contribution deductions and the new statutory limitation on the deduction of state and local taxes. 

Taxpayers should also be aware the U.S. Department of the Treasury and the Internal Revenue Service are continuing to monitor other legislative proposals being considered to ensure that federal law controls the characterization of deductions for federal income tax filings. 

The limitation imposed by the TCJA applies to taxable years beginning after Dec. 31, 2017 and before Jan. 1, 2026. 

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov. 

View the original IRS Press Release here: www.irs.gov/newsroom/tax-reform

IRS Press Release: IRS urges small businesses: Protect IT systems from identity theft

IR-2018-111, May 3, 2018

WASHINGTON — The IRS, state tax agencies and the nation’s tax industry are warning small businesses to be on-guard against a growing wave of identity theft attempts against employers.

Small business identity theft is big business for identity thieves. When businesses and their employees have their identities stolen, their sensitive information can be used to open credit card accounts or file fraudulent tax returns for bogus refunds.

The Internal Revenue Service, state tax agencies and the private-sector tax community -- partners in the Security Summit -- are marking “Small Business Week” with a series of reminders to taxpayers and tax professionals. The week concludes with warnings about small business identity theft.

In the past two years, the Internal Revenue Service has noted a sharp increase in the number of fraudulent filings of Forms 1120, 1120S and 1041 as well as Schedule K-1. The fraudulent filings apply to partnerships as well as estate and trust forms.

Identity thieves are displaying a sophisticated knowledge of the tax code and tax industry filing practices as they attempt to obtain valuable data to help file fraudulent returns. To help counter this, Security Summit partners have expanded efforts to better protect business filers and identify suspected identity theft returns.

Identity thieves have long made use of stolen Employer Identification Numbers (EINs) to create fake Forms W-2 that they would file with fraudulent individual tax returns. Fraudsters also used EINs to open new lines of credit or obtain credit cards. Now they are using company names and EINs to file fraudulent returns.

As with fraudulent individual returns, there are certain signs that may indicate identity theft. Business, partnerships and estate and trust filers should be alert to potential identity theft and contact the IRS if they experience any of these issues:

• Extension to file requests are rejected because a return with the Employer Identification Number or Social Security number is already on file;
• An e-filed return is rejected because a duplicate EIN/SSN is already on file with the IRS;
• Received 5263C or 6042C Letters;
• An unexpected receipt of a tax transcript or IRS notice that doesn’t correspond to anything submitted by the filer;
• Failure to receive expected and routine correspondence from the IRS because the thief has changed the address.

Steps to protect businesses

The IRS, state tax agencies and software providers also share certain data points from tax returns, including business returns, that help identify a suspicious filing. The IRS and states ask that business and tax practitioners provide additional information that will help verify the legitimacy of the tax return.

Respond to the “know your customer” questions when prompted by software:

• Who signed the return – including name and SSN
• Tax payment history of the company
• Parent company information
• Additional information based on deductions claimed
• Tax filing history of the company

Sole proprietorships that file Schedule C and partnerships filing Schedule K-1 with Form 1040 also will be asked to provide additional information items, such as a driver’s license number. Providing this information will help the IRS and states identify suspicious business-related tax returns.

For small businesses looking to enhance their security, the National Institute of Standards and Technology (NIST) produced Small Business Information Security: The Fundamentals. NIST is the branch of the U.S. Commerce Department that sets information security frameworks followed by federal agencies.

The United States Computer Emergency Readiness Team (US-CERT) has Resources for Small and Midsize Businesses. Many secretaries of state also provide resources on business-related identity theft as well.

The IRS, state tax agencies and the tax industry continue to work together to fight against tax-related identity theft and to protect business and individual taxpayers. Everyone can help. Take steps recommended by cyber experts and visit the Identity Protection: Prevention, Detection and Victim Assistance for information about business-related identity theft.

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Click here to read the original IRS Press Release.