e-News for Tax Professionals Issue 2017-41

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Issue Number:  2017-41

Inside This Issue

1. Cyber Thieves Use Fake Insurance Tax Form Scam to Steal Data from Tax Pros
2. Don’t Take the Bait: Tax Scams Continue Across the Nation
3. Tax Relief for Victims of California Wildfires: Extension Filers Have Until Jan. 31 to File
4. Reminder: Oct. 24 Is Important Deadline for Foreign Financial Institutions
5. Payment Reminder
6. Refundable Credit Educational Compliance Letters 5025, 5025-A, 5025-B, 5025-E, 5025-H
7. Technical Guidance

Tax professionals and their clients should be aware of a fake insurance tax form scam that is being used to access annuity and life insurance accounts. Cybercriminals currently are combining several tactics to create a complex scheme through which both tax professionals and taxpayers have been victimized.

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2.  Don’t Take the Bait: Tax Scams Continue Across the Nation

The Internal Revenue Service warns taxpayers to remain vigilant to scams as they continue to be reported around the country. Phishing, phone scams and identity theft top the list of items normally reported. However, following hurricanes and other disasters, the IRS urged taxpayers to be on the lookout for schemes stemming from these recent events. See Protect Your Clients, Protect Yourself and Don’t Take the Bait for more.

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Victims of wildfires ravaging parts of California now have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments. This includes an additional filing extension for taxpayers with valid extensions that run out this coming Monday, Oct. 16.

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The IRS today urged foreign financial institutions to renew their Foreign Financial Institution (FFI) agreements, if required. If an FFI is required to renew its agreement and fails to do so by Oct. 24, the group will be removed from the November FFI list and will be subject to a 30 percent withholding tax on certain U.S. source payments. 

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With the Oct. 16 filing deadline looming, now is the time to remind your clients of the options available to pay their taxes electronically. Payments can be made online, by phone, or through a mobile device using the IRS2Go app. Please share this payment flyer with your clients or have them visit IRS.gov/payments to find fast and secure ways to pay.

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IRS is sending due diligence letters to paid tax preparers who may be noncompliant in meeting their due diligence requirements.

These letters are sent to raise awareness of questionable returns and assist paid preparers in meeting their due diligence requirements. However, IRS will continue to monitor the refundable credit returns prepared in the upcoming filing season to see if the quality of the preparers’ returns improves.

Return Preparers who completed highly questionable refundable credit claims may receive one of the following letters:   

• Letter 5025, You may not have met your EITC due diligence requirements on returns with questionable qualifying children and self-employment income

• Letter 5025-A, You may not have met your due diligence requirement on returns claiming the American Opportunity Tax Credit

• Letter 5025-B, You may not have met your due diligence requirements on returns claiming Child Tax Credit and Additional Child Tax Credit

• Letter 5025-E, You may not have met your EITC due diligence requirements on a high number of returns claiming EITC

• Letter 5025-H – You may not have met your EITC due diligence requirements on returns reporting income received as a household employee

For more information on the due diligence requirements, visit the Tax Preparer Toolkit on IRS.gov.

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Notice 2017-61 provides the adjusted applicable dollar amount to be multiplied by the average number of covered lives for purposes of the fee imposed by Section 4375 and 4376 of the Internal Revenue Code for policy years and plan years that end on or after October 1, 2017, and before October 1, 2018.

Notice 2017-62 provides guidance for income and employment tax purposes on the treatment of cash payments made by employers under leave-based donation programs for the relief of victims of Hurricane and Tropical Storm Maria.

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