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IR-2016-89, June 17, 2016

WASHINGTON ― The Internal Revenue Service today issued a consumer alert about possible fake charity scams emerging due to last weekend’s mass shooting in Orlando, Fla., and encouraged taxpayers to seek out recognized charitable groups.

When making donations to assist victims of last weekend’s terrible tragedy, there are simple steps taxpayers can take to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to quickly and easily check out the status of charitable organizations.

While there has been an enormous wave of support across the country for the victims and families of Orlando, it is common for scam artists to take advantage of this generosity by impersonating charities to get money or private information from well-meaning taxpayers. Such fraudulent schemes may involve contact by telephone, social media, e-mail or in-person solicitations.

The IRS cautions donors to follow these tips:

  • Be sure to donate to recognized charities. 
  • Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, through which people may find qualified charities; donations to these charities may be tax-deductible.
  • Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution. Scam artists may use this information to steal a donor’s identity and money.
  • Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.
  • Consult IRS Publication 526, Charitable Contributions, available on IRS.gov. This free booklet describes the tax rules that apply to making tax-deductible donations. Among other things, it also provides complete details on what records to keep.

Bogus websites may solicit funds for victims of this tragedy. These sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade people to send money or provide personal financial information that can be used to steal identities or financial resources.

Additionally, scammers often send emails that steer recipients to bogus websites that appear to be affiliated with legitimate charitable causes.

Taxpayers suspecting fraud by email should visit IRS.gov and search for the keywords “Report Phishing.”

More information about tax scams and schemes may be found at IRS.gov using the keywords “scams and schemes.”

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Page Last Reviewed or Updated: 17-Jun-2016


April 20, 2016

Written by Mark Castro, CPA - CrossLink Professional Tax Software

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As the main part of the 2016 filing season comes to a close, it is time to emphasize the coming important changes to the preparer due diligence requirements, refundable credits, and refunds for the 2017 filing season.

The December 2015 extender bill did more than just extend the expiring tax provisions. In the Protecting Americans from Tax Hikes (PATH) Act of 2015, Congress included a “program integrity” section that dealt with the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and American Opportunity Education Tax Credit (AOTC).

Below is a summary of what these changes are:

Refunds for Federal Returns that Claim EITC will not be Released Until February 15 Beginning with the 2017 Filing Season
The integrity provision of the PATH Act that will have the greatest impact on taxpayers that claim EITC is the one that requires the IRS to not release refunds for returns that claim EITC or the Additional Child Tax Credit until February 15 beginning with the 2017 filing season. Therefore, any return claiming the EITC or CTC credits that is prepared in the early part of the filing season will not be released for up to 4 weeks (depending on when the return is filed) instead of the standard 21 days or less timeframe.

Expansion of Preparer Due Diligence Requirements
The PATH Act expands the EITC due diligence requirements under Code Section 6695 (including the $500 penalty) to now include the Child Tax Credit and the American Opportunity Education Credit beginning with 2016 individual federal returns.

This means that the IRS will be making changes to Form 8867 (Paid Preparer’s Earned Income Tax Credit Checklist). The form will be renamed and additional due diligence related questions will be added for these two additional credits.

The IRS is in the process of modifying the due diligence regulations for the addition of the Child Tax Credit and the American Opportunity Education Credit. When the IRS releases these regulations, we will give you more details on what they contain and what changes will be made to the Tax Year 2016 Form 8867.

Earned Income Tax Credit (EITC) Changes 
The PATH Act made the following changes that will affect individuals who claim EITC on their returns beginning with Tax Year 2016 tax returns:

  • Individuals cannot file an amended return to claim EITC for prior years that a qualifying child did not have a Social Security Number. This provision went into effect on the date the PATH Act became law on December 18, 2015.
  • The IRS can bar an individual from claiming EITC for 10 years if the IRS finds they have fraudulently claimed the credit.
  • The EITC is now subject to the penalty for erroneous claim for refunds and credits.
  • Incorrectly claimed refundable credits will now be taken into account when determining the underpayment penalty.

Changes for Child Tax Credit and the American Opportunity Education Credit
The PATH Act made the following changes for returns that claim the child tax credit or the American Opportunity credit beginning with Tax Year 2016 tax returns:

  • If the IRS determines that an individual has intentionally disregarded the rules for claiming the Child Tax Credit and/or the American Opportunity Education Credit they can bar them for two years from claiming either or both of these credits.
  • Individuals cannot file an amended return to claim the Child Tax Credit or the American Opportunity Education Credit for prior years that a qualifying child did not have an ITIN or SSN.
  • The EIN of the educational institution will be required to be reported on Form 8863. If it is missing the IRS will reject the return.

For more information on these changes see the Joint Committee on Taxation’s Technical Explanation of the Protecting Americans from Tax Hikes Act of 2015 – the program integrity provisions begin on page 118.

We would like to thank CrossLink Professional Tax Software for this informative article. Click here to read the original article on Crosslink's website.

 

 

It’s important to know how many full-time employees you have because two provisions of the Affordable Care Act – employer shared responsibility and employer information reporting for offers of minimum essential coverage – apply only to applicable large employers. Employers average the number of their full-time employees, including full-time equivalents, for the months from the previous year to see whether they are considered an applicable large employer.

 

Whether your organization is an ALE for a particular calendar year depends on the size of your workforce in the preceding calendar year. To be an ALE, you must have had an average of at least 50 full-time employees – including full-time-equivalent employees – during the preceding calendar year. So, for example, you will use information about the size of your workforce during 2016 to determine if your organization is an ALE for 2017.

 

In general:

 

  • A full-time employee is an employee who is employed on average, per month, at least 30 hours of service per week, or at least 130 hours of service in a calendar month.

  • A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.

  • An aggregated group is commonly owned or otherwise related or affiliated employers, which must combine their employees to determine their workforce size.

There are many additional rules on determining who is a full-time employee, including what counts as hours of service. 

 

For more information, see the Information Reporting by Applicable Large Employers and the Employer Shared Responsibility Provisions pages on IRS.gov/aca


 

As the nation celebrates Small Business Week May 1-7, the IRS will host four free webinars. The webinars will help small business owners with their taxes. The IRS also highlights popular products and services available on IRS.gov.

 

Here are some details about the free webinars:

 

1. Tax Tips for Your New Business, May 2. Small business owners and tax professionals with small business clients who may be starting new endeavors are the focus of this webinar.

Topics include:

  • Deciding if it’s a business or hobby
  • Selecting a business structure.
  • Understanding business taxes.
  • Recordkeeping requirements.
  • Choosing a tax preparer.
  • Finding out where to go for IRS help.
  •  

2. Staying Afloat: Planning for Emergencies Before they Happen, May 3. Small business owners, tax professionals and payroll organizations learn about emergency preparedness in this broadcast.

Topics include:

  • Business continuity planning.
  • How to create an emergency plan.
  • Employee preparedness.
  • Payroll continuity and supply chain protection.
  • Protecting your records and data.
  • What happens after a disaster is declared.
  • IRS resources to help you plan.
  •  

3. Worker Classification: Employee or Independent Contractor? May 4. This webinar is in Spanish. It teaches Spanish-speaking small business owners, tax professionals and payroll organizations how to classifying workers.

Topics include:

  • Differences between employees and independent contractors.
  • Common law rules.
  • Form SS-8.
  • Employment tax obligations.
  • Voluntary classification settlement program.
  •  

4. Tip Reporting and Tips vs. Service Charges, May 5. This webinar provides small business owners, employers, tax professionals and payroll organizations with details on tips and reporting.

 Topics include:

  • Recordkeeping and reporting responsibilities.
  • Understanding the difference between tips and service charges.
  • Filing Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips.

     

All four webinars are an hour long and start at 2 p.m. (ET). Live Q&A sessions with IRS experts will be available. To register and to find out more visit the Webinars for Small Businesses page on IRS.gov.

 

Many other IRS products and services provide small business owners with the help they need. Here are three pages that you can check out anytime:

 

  • The Small Business and Self-Employed Tax Center is your complete tax resource. For example, you can link to a list of free workshops and events offered in your area. Or visit the IRS Video Portal to watch videos on a wide range of topics, including prior live webinars.

  • The Self-Employed Individuals Tax Center is for sole proprietors and others who are in business for themselves. This site has many useful tips and references to the tax rules that a self-employed person may need to know.

  • The Online Learning and Educational Products page has tools that can help you learn about taxes on your own time, and at your own pace. For example, the IRS Tax Calendar for Businesses and Self-Employed has important tax dates for your business.

Visit IRS.gov to get small business forms and publications. You can also call 800-TAX-FORM (800-829-3676) to get them by mail.

 

Follow the IRS on Twitter. The IRS has three key accounts: @IRSnews, @IRStaxpros and @IRSenEspanol. For all the IRS Small Business Week information, keep an eye on these IRS Twitter accounts and the key hashtags: #IRSsbw16 and #DreamSmallBiz.



 

In advance of the tax deadline, the Internal Revenue Service today warned tax professionals of a new emerging scam in which cybercriminals obtain remote control of preparers’ computer systems, complete and file client tax returns and redirect refunds to thieves’ accounts.    

Although the IRS knows of a handful of cases to date, this scam has potential to impact the filing of fraudulent returns in advance of the April tax deadline and is yet another example of tax professionals being targeted by identity theft criminals.  

The IRS urges all tax preparers to take the following steps:

·         Run a security “deep scan” to search for viruses and malware

·         Strengthen passwords for both computer access and software access; make sure your password is a minimum of 8 digits (more is better) with a mix of numbers, letters and special characters

·         Be alert for phishing scams: Do not click on links or open attachments from unknown senders

·         Educate all staff members about the dangers of phishing scams in the form of emails, texts and calls

 

Review any software that your employees use to remotely access your network and/or your IT support vendor uses to remotely troubleshoot technical problems and support your systems. Remote access software is a potential target for bad actors to gain entry and take control of a machine. Tax professionals should review Publication 4557, Safeguarding Taxpayer Data, A Guide for Your Business, which provides a checklist to help safeguard taxpayer information and enhance office security.

Issue Number:    IRS Tax Tip 2016-40 

 

You don’t need to be a tax expert to run a business, but knowing the basics about taxes can help you run it better. You’ll find the basics and much more on the IRS.gov Small Business and Self-Employed Tax Center. You can apply for an Employer Identification Number, download a form or learn about employment taxes. The Tax Center also includes the following resources:

 

 

  • IRS Video Portal. Watch helpful videos and webinars on many tax topics. Find out about filing and paying business taxes. Check out how an IRS audit works. Look for the “Small Biz Workshop” under the “Businesses” tab to learn the basics about small business taxes.

 

  • Online Tools and Educational Products. The list of small business products includes the Tax Calendar for Businesses and Self-Employed. You can view key tax dates and actions for each month with this tool. Install the IRS Calendar Connector tool on your computer to get important tax dates and tips, even when you’re offline.

 

  • Small Business Events. The IRS holds small business workshops, meetings and seminars at many locations throughout the country. Find out what the IRS has planned in your state by clicking “Small Business Events.”

 

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

 

 

IRS YouTube Videos:

 

IRS Podcasts: