by Ameritax | Oct 28, 2021 | Tax Tips and News
The Internet is filled with cybersecurity threats that can jeopardize family finances. Just one of many scams, identity theft tax refund fraud (ITTRF) is big business for criminals, and it can cause big headaches for victims.
The IRS, state departments of revenue, and private members of the tax industry established the Security Summit in 2015 to help combat the rising incidence of tax-related scams. One of the primary ways the group works toward this goal is by spreading awareness of new scams, common phishing tactics, and basic data security strategies.
4 tips for safely using the Internet from the Security Summit
For National Cybersecurity Awareness Month, the Security Summit is providing four tips that “children, teens, and other vulnerable groups” can follow to avoid scams and malware when online:
- Teach them to recognize and avoid scams. Phishing emails, threatening phone calls and texts from thieves posing as the IRS or legitimate organizations pose ongoing risks. Do not click on links or download attachments from unknown or suspicious emails.
- Remind them why security is important. Be careful not to reveal too much personal information. Keeping data secure and only providing what is necessary minimizes online exposure to scammers and criminals. Birthdates, addresses, age, financial information such as bank account and Social Security numbers are among things that should not be shared freely.
- Teach them about public Wi-Fi networks. Connection to Wi-Fi in a mall or coffee shop is convenient but it may not be safe. Hackers and cybercriminals can easily intercept personal information. Always use a virtual private network when connecting to public Wi-Fi.
- Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and can automatically update. Remember, to encrypt sensitive files such as tax records stored on computers. Be sure all family members have comprehensive protection especially if devices are being shared. Use strong, unique passwords for each account.
Finally, the Summit closes the press release by reminding that the IRS “does not use text messages or social media to discuss personal tax issues, such as those involving tax refunds, stimulus payments, or tax bills.” Instead, the agency will first reach out to taxpayers in an official letter or notice before following up with other methods of communication.
Want to learn more about data security?
Check out the following links from the IRS to learn more about data security issues:
Need help creating or updating a written tax office security plan?
Download the Drake Software Tax Office Security Plan.
Source: IR-2021-209
– Story provided by TaxingSubjects.com
by Ameritax | Oct 26, 2021 | Tax Tips and News
There’s not much doubt that the COVID-19 pandemic has taken a strong labor market and turned it on its ear, producing a shortage of available workers.
To help employers navigate these uncertain waters, the Internal Revenue Service is reassuring them that businesses rehiring retirees or keeping employees after they reach retirement age won’t put them crossways with their pension plans.
Many employers, including governmental agencies—public school districts, for example—have had to resort to these measures in order to keep key positions filled. Previously, hiring back workers who retired or retaining those older than the normal retirement age while paying them retirement benefits may have jeopardized the status of their pension plans.
The IRS, however, has posted two new sets of frequently asked questions (FAQs) giving guidance to public and private employers who have pension plans for their employees. These new instructions are aimed helping employers meet their staffing needs while still managing to comply with their pension plan’s qualification rules.
The FAQs explain an employer can usually deal with unexpected hiring needs by rehiring former employees—even if they have already retired and started receiving pension benefits. If the plan permits, these rehired employees can even continue getting pension benefits after they are rehired.
Giving employers another tool to retain older employees, the FAQs also allow employers to make retirement distributions available to existing workers who reach age 59 1/2—or whatever the normal retirement age of their plan may be.
The IRS is also hosting two webinars in October on school labor shortages. Webinar 1 deals with teacher and substitute teacher shortages, while Webinar 2 targets staff shortages, such as bus drivers and food service workers. Follow the links to preregister.
Source: IR-2021-208
– Story provided by TaxingSubjects.com
by Ameritax | Oct 22, 2021 | Tax Tips and News
It’s that time again: time for federal tax return preparers to renew their Preparer Tax Identification Numbers (PTINs) for the coming year. It’s no time to procrastinate, since 2021 PTINs will expire on Dec. 31.
A valid PTIN is required for anyone who prepares—or assists in preparing—a federal tax return for a fee. This requirement includes Enrolled Agents, whether or not EAs actually prepare returns.
A PTIN must be valid before the tax pro prepares any returns for the year, and should show up on filed returns as part of the identifying number.
“Taxpayers are relying on your expertise to help them meet their tax obligations and for some to complete their largest financial transaction for the year. Make sure you’re ready by renewing your PTIN now,” said Carol A. Campbell, director, Return Preparer Office.
The cost for a 2022 PTIN is $35.95, which is non-refundable. Whether the tax professional is renewing a PTIN or applying for the first time, the entire amount must be paid before the PTIN process will complete.
It’s faster online
In the case of renewing a PTIN, the Internal Revenue Service recommends using its online renewal process. It takes about 15 minutes to complete.
Renewing online is easy, and you get confirmation after completion:
- Start at gov/taxpros.
- Select the “Renew or Register” button.
- Enter the user ID and password to login to the online PTIN account.
- Follow the prompts to verify information and answer a few questions.
Besides renewing their PTINs, tax pros can use the online system to bring up a summary of the number of filed returns linked to their PTIN in the current year, and to get communications from the IRS Return Preparer Office through a secure mailbox.
First-time applicants can also get a PTIN online, using the same system, with prompts tailored to their process:
- Start at gov/taxpros.
- Select the “Renew or Register” button and select “Create Account” in the New User box.
- First-time users are issued a temporary password and will be prompted to change their password upon logging in.
- Once logged in, select the appropriate “PTIN Sign Up” option.
- Follow the prompts to obtain a PTIN online.
There is a paper option which uses Form W-12 and its instructions, usable for both applications and renewals, but this option can take up to six weeks to process. Depending on when the paper form is submitted, tax pros choosing this option might find themselves in danger of being without a valid PTIN at the start of tax season.
Non-credentialed tax preparers have professional education opportunities
A voluntary IRS offering, the Annual Filing Season Program, seeks to encourage non-credentialed tax pros to get the credentials they need through continuing education courses. this increases their knowledge and boosts their filing season readiness at the same time.
Program participants have to renew their PTIN, finish 18 hours of continuing education from IRS-approved CE providers and agree to follow the specific obligations set out in Circular 230, all by Dec. 31, 2021. An IRS video shows how to sign the Circular 230 consent form and how to print the Record of Completion.
A preparer successfully completing the program gets an Annual Filing Season Program Record of Completion from the IRS, and is listed in a public IRS directory of return preparers with credentials and other qualifications.
The directory can be used by taxpayers to find tax pros in their area who have completed the program or hold other IRS-recognized credentials.
IRS suggests tax pros get the Enrolled Agent credential
The IRS issues its elite Enrolled Agent certification to tax pros who have shown special competence in in a number of areas, including federal tax planning, individual and business tax return preparation, and representation. Enrolled Agents have the ability to represent any client before the IRS on any tax matter.
The IRS encourages non-credentialed preparers to consider becoming Enrolled Agents to push their careers to a higher level.
Continuing education opportunities are available from DrakeCPE
Tax professionals who need to complete continuing education requirements can sign up for courses at DrakeCPE.com.
Source: IR-2021-207
– Story provided by TaxingSubjects.com
by Ameritax | Oct 21, 2021 | Tax Tips and News
Criminals pushing phishing scams impersonate a wide range of people and organizations to trick victims out of their private information and money. The seemingly endless flood of charity scams perhaps best demonstrates that there truly is no honor among thieves. Luckily, we don’t have to face identity thieves alone.
The Internal Revenue Service announced that they are taking part in Charity Fraud Awareness Week to help spread the word about this persistent threat to individuals and charitable organizations. The agency says they are “joining international organizations and other regulators in highlighting Charity Fraud Awareness Week,” which runs from October 18 to October 22 this year.
What is Charity Fraud Awareness Week?
According to the IRS, Charity Fraud Awareness Week is a campaign “run by a partnership of charities, regulators, law enforcers, and other not-for-profit stakeholders from across the world … [that] raise awareness of fraud and cybercrime affecting organizations and to create a safe space for charities and their supporters to talk about fraud and share good practice.”
How is the IRS participating in Charity Fraud Awareness Week?
The IRS is highlighting helpful resources that have been created by organizations participating in Charity Fraud Awareness Week. Specifically, the press release includes a link to a UK-based website designed to aggregate helpful information related to the campaign: PreventCharityFraud.org.uk.
According to the IRS, this site is designed to help “[Charity Fraud Awareness Week] partners, charities, and other tax-exempt organizations and non-profits find” the following information:
- Details about the awareness week
- Free resources
- A fraud pledge for organizations
- A listing of webinars and other events held as part of the week
Data-security-awareness campaigns aren’t new to the IRS. As part of the Security Summit, the agency works year round to provide taxpayers the resources they need to avoid falling victim to myriad phishing scams. Part of that effort includes publishing their annual Dirty Dozen list of tax scams and providing online resources, like the Tax Exempt Organization Search tool.
The Tax Exempt Organization Search tool is useful in avoiding fake charity scams listing legitimate charities that are currently eligible “to receive tax-deductible charitable contributions.” The tool’s page on IRS.gov notes the types of information that can be searched for any given charity:
- Form 990 Series Returns
- Form 990-N (e-Postcard)
- Pub. 78 Data
- Automatic Revocation of Exemption List
- Determination Letters
As for avoiding scams impersonating legitimate charities, taxpayers should stay up to date on the latest phishing scams highlighted by the IRS, Security Summit, and Charity Fraud Awareness Week partners.
Sources: IR-2021-205; “Tax Exempt Organization Search,” IRS.gov
– Story provided by TaxingSubjects.com
by Ameritax | Oct 20, 2021 | Tax Tips and News
Businesses and individuals looking to recoup part of their capital spent on research and experimentation of products and processes now have a clearer roadmap on how to do that.
The Internal Revenue Service has unveiled the Chief Counsel memorandum, laying out just what information the IRS requires to validate a research credit claim. The memorandum aims to spell out instructions in plain language, thereby facilitating valid claims by taxpayers while reducing the number of claim-related disputes.
Researching a better way
It’s important that taxpayers understand just what’s expected from them when making a claim for the research and experimentation (R&E) credit. The IRS gets thousands of R&E claims every year totaling hundreds of millions of dollars from businesses, corporations and individuals.
Administering the credit, the IRS says, consumes a lot of the agency’s resources. A substantial number of A&E credit claims have to be audited to ensure they meet the requirements of IRC Section 41, taking time and money.
The IRS hopes to streamline the process through the use of the Chief Counsel’s memorandum, giving those who claim the credit clear instructions on what information is needed. If that’s done, the IRS says it can quickly and more efficiently determine if the R&E claim for a refund is valid—or if more examination is needed.
Here’s how the new process works: The Chief Counsel memorandum specifies that for a Section 41 research credit claim for refund to be considered, the taxpayer has to provide certain specific information when the claim is filed.
This can be viewed as a three-step process:
STEP 1: Identify all the business components that the Section 41 research credit claim applies to for that year.
STEP 2: For each business component, identify all research activities performed and name the individuals who performed each research activity, as well as the information each individual sought to discover.
STEP 3: Provide the total qualified employee wage expenses, total qualified supply expenses, and total qualified contract research expenses for the claim year. Use Form 6765, Credit for Increasing Research Activities.
Grace period provided
Taxpayers are being eased into the new procedure with a grace period until Jan. 10, 2022. After that date, a one-year transition period starts, where taxpayers who don’t comply with the new instructions get a 30-day reprieve to perfect their claim for the R&E credit.
The IRS says it will have more details on this new process later, but taxpayers can start sending the new required information now. Also, look for the agency to do more research of its own with stakeholders on research credit issues.
Send comments to [email protected].
Source: IR-2021-203
– Story provided by TaxingSubjects.com
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