Issue Number: 2018-11
Inside This Issue
- Tax Pros: Protect Your EFINs, PTINs and CAF Numbers
- IRS Accepting e-File Returns Including Four Tax Benefits Related to Incentives for Energy Production and Conservation
- Beware the Dirty Dozen
- Retirees Face April 1 Deadline to Take Required Retirement Plan Distributions
- Tax Reform: Information Now Available on Section 965, Transition Tax
- IRS to End Offshore Voluntary Disclosure Program; Taxpayers with Undisclosed Foreign Assets Urged to Come Forward Now
- Winter Storm Extension: Many Businesses Have Extra Time to Request a Six-Month Extension
- Ensure You Have Access to FIRE Before You Need It
- Foreign Trust Form 3520-A Filing Date Reminder and Associated Penalties
- Technical Guidance
1. Tax Pros: Protect Your EFINs, PTINs and CAF Numbers
The Security Summit -- a collaborative effort of the IRS, state tax agencies and business -- urges tax practitioners to maintain and monitor their Electronic Filing Identification Numbers (EFINs), Preparer Tax Identification Numbers (PTINs) and Centralized Authorization File (CAF) numbers to help safeguard taxpayer data. Cybercriminals frequently sell stolen EFINs, PTINs and CAF numbers on the Dark Web to identity thieves who use them to file fraudulent tax returns.
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2. IRS Accepting e-File Returns Including Four Tax Benefits Related to Incentives for Energy Production and Conservation
The Bipartisan Budget Act, enacted on Feb. 9, renewed for tax year 2017 a wide range of individual and business tax benefits that expired at the end of 2016. Following necessary system programming, the IRS is now able to accept returns claiming four energy-related tax incentives:
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Credit for nonbusiness energy property claimed on Form 5695
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Alternative motor vehicle credit claimed on Form 8910
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Credit for qualified plug-in electric drive motor vehicles claimed on Form 8936
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Credit for certain two-wheeled vehicles claimed on Form 8936
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3. Beware the Dirty Dozen
Compiled annually, the “Dirty Dozen” lists a variety of common scams that tax professionals and their clients may encounter at any time. Tax professionals should be cautious because many of these schemes peak during filing season.
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4. Retirees Face April 1 Deadline to Take Required Retirement Plan Distributions
Taxpayers who reached the age 70 and a half during 2017 must, in most cases, start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Sunday, April 1, 2018. The April 1 deadline applies to all employer-sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, 457(b) plans and traditional IRAs and IRA-based plans.
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5. Tax Reform: Information Now Available on Section 965, Transition Tax
The Tax Cuts and Jobs Act requires various taxpayers with untaxed foreign earnings and profits to pay a tax as if those earnings and profits had been repatriated to the United States. The new law outlines details on the tax rates, and certain taxpayers may elect to pay the transition tax over eight years.
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6. IRS to End Offshore Voluntary Disclosure Program; Taxpayers with Undisclosed Foreign Assets Urged to Come Forward Now
The IRS will close the Offshore Voluntary Disclosure Program (OVDP) on Sept. 28. U.S. taxpayers with undisclosed foreign financial assets can use the OVDP until the program closes.
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7. Winter Storm Extension: Many Businesses Have Extra Time to Request a Six-Month Extension
The IRS granted many businesses affected by recent severe winter storms additional time to request a six-month extension to file their 2017 federal income tax returns. This extension applies to victims and tax professionals affected by Winter Storm Quinn and Winter Storm Skylar that primarily hit portions of the Northeast and Mid-Atlantic regions of the United States.
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8. Ensure You Have Access to FIRE Before You Need It
If you plan to submit files through the Filing Information Returns Electronically (FIRE) system, check your login ahead of time to ensure you have access. A valid username, password, PIN, and secret phrase are required for a successful login.
If you encounter difficulties logging in or are locked out of your FIRE account, call Information Returns Customer Service at 866-455-7438 (International toll call at 304-263-8700) for assistance with resetting your password, PIN, or secret phrase. Before calling, have your business name, EIN and user ID handy. The IRS requests you do not revert to paper filing.
Plan ahead as callers may experience longer than normal wait times closer to this filing deadline. You can find more information on the FIRE landing page on IRS.gov.
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9. Foreign Trust Form 3520-A Filing Date Reminder and Associated Penalties
The due date for the foreign trust’s information reporting return, the Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner (Under section 6048(b)), is the fifteenth day of the third month following the end of the foreign trust’s taxable year – March 15 for many taxpayers. Individuals may request an extension of time to file Form 3520-A by filing Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns.
If the foreign trust that is treated as owned by a U.S. person under the grantor trust rules fails to file a Form 3520-A, the U.S. owner must file a substitute Form 3520-A by attaching a substitute Form 3520-A to the timely filed U.S. owner’s Form 3520. If the foreign trust fails to timely file a complete and accurate Form 3520-A, and its U.S. owner also fails to file a complete and accurate substitute Form 3520-A, the U.S. owner is subject to a separate penalty, equal to the greater of $10,000 or 5 percent of the gross value of the portion of the foreign trust's assets treated as owned by the U.S. owner under the grantor trust rules at the close of the taxable year. This penalty is in addition to any applicable penalty of the same amount for the U.S. owner’s failure to timely file a complete and accurate Part II of Form 3520. See IRC section 6677(a) through (c) and the Instructions for Form 3520 and Form 3520-A.
See more on Foreign Trust Reporting Requirements and the Foreign Trust Tax Map on IRS.gov.
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10. Technical Guidance
Notice 2018-22 provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under section 417(e)(3), and the 24-month average segment rates under section 430(h)(2) of the Internal Revenue Code.
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