e-News for Tax Professionals Issue 2018-5

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Issue Number:  2018-5

Inside This Issue

1. Tax Pros Urged to Step Up Security as Filing Scheme Emerges, Reminded to Report Data Thefts
2. Filing Season Is Open; 155 Million Tax Returns Projected
3. Renew Your E-Services Account Now
4. EITC Due Diligence Letters Coming Soon
5. Understanding Data Compromise Schemes and IRS Responses to Them: Feb. 7- 8 Web Conferences
6. Tax Issues for Alaska Native American Corporations and Alaska Native Settlement Trusts
7. Technical Guidance

Seeing the emergence of a new filing season scam, the Internal Revenue Service today urged tax professionals to step up security and beware of phishing emails that can secretly download malicious software that can help cybercriminals steal client data.

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Marking the beginning of the nation’s tax season this week, the IRS successfully started processing 2017 federal individual income tax returns. The IRS expects taxpayers to file more than 155 million returns this year.

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Reminder: If you are an e-Services account holder, please re-register now through the more rigorous Secure Access authentication process. Additional toll-free personnel currently helping e-Services users soon will return to their primary jobs of assisting taxpayers.

E-Services users who wait until they need immediate access to their account may encounter unexpected delays.  So far, 65,000 e-Services account holders already have successfully registered through Secure Access.

To get started, first review Secure Access: How to Register for Certain Online Self-Help Tools to determine what you need to be successful and FAQs about e-Services and Secure Access, including common errors.

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Tax preparers who filed returns claiming the Earned Income Tax Credit but who may not have met their due diligence requirements will soon receive IRS Letter 4858, Alert to Return Preparers Related to EITC Claims(English, Spanish). The letters are intended to remind preparers to ensure their EITC returns are complete and correct. Disregarding these requirements could result in penalties and other consequences.

The Tax Preparer Toolkit on IRS.gov has more information on due diligence requirements.

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Register for either the Wednesday, Feb. 7, or the Thursday, Feb. 8, web conferences, which will cover: 

• Attack vectors focusing on email
• Examples of email scams and how to report scams to the IRS
• How fraudulent sites are constructed
• Common IRS- and tax-themed phishing scams that preparers are likely to encounter
• Different ways to verify an IRS document
• Size and scope of tax-related identity theft in the preparer population
• How criminals compromise preparer data
• Filing Season 2017 Identity Verification and Filing Season 2018 process improvements
• Live question and answer session

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Alaska Native Corporations and Alaska Native Settlement Trusts may be able to take advantage of certain benefits in the recently enacted tax reform legislation. The new law also requires that taxpayers report certain contributions made by Native Corporations to Settlement Trusts in 2017 to the Settlement Trusts by Jan. 31, 2018. 

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Notice 2018-14 provides guidance on withholding rules and:

• Extends the effective period of Forms W-4 furnished to claim exemption from income tax withholding under section 3402(n) for 2017 until Feb. 28, 2018 and temporarily permits employees to claim exemption from withholding under section 3402(n) for 2018 by using 2017 Form W-4
• Suspends the requirement that employees must furnish their employers new Forms W-4 within 10 days of changes of status resulting in fewer withholding allowances
• Provides that the optional withholding rate on supplemental wage payments is 22 percent for taxable years 2018 through 2025, and (4) provides that, for 2018, withholding on annuities or similar periodic payments where no withholding certificate is in effect is based on treating the payee as a married individual claiming three withholding allowances under section 3405(a)(4).

Notice 2018-15 provides guidance on new clean renewable energy bonds and states the IRS shall not process applications for, or issue allocations of, the remaining unused authority to issue new clean renewable energy bonds under section 54C of the Internal Revenue Code (the Code) under Notice 2015-12, 2015-10 Internal Revenue Bulletin (IRB) 700, and Notice 2017-66, 2017-45 IRB 487.  Section 54C of the Code was repealed by section 13404 of Public Law No. 115-97, 131 Stat 2138 (2017), effective for bonds issued after December 31, 2017.

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