e-News for Tax Professionals Issue 2018-39

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e-News for Tax Professionals September 28, 2018

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Issue Number:  2018-39

Inside This Issue

  1. Understanding the New Tax Transcript
  2. Refundable Credit Educational Compliance Letter 5025
  3. New Employer Tax Credit for Paid Family and Medical Leave Available for 2018 and 2019
  4. Tax Relief for Victims of Hurricane Florence in North and South Carolina
  5. How to Create a Data Security Plan
  6. YouTube: The W-2 Scam
  7. Web Conferences on Virtual Currency and the Dark Web
  8. New Members for the Electronic Tax Administration Advisory Committee
  9. Technical Guidance

1.  Understanding the New Tax Transcript

To protect taxpayer data from cybercriminals, the IRS recently began to partially mask certain personally identifiable information on tax transcripts. To learn more, review this fact sheet and the FAQs on IRS.gov.

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2.  Refundable Credit Educational Compliance Letter 5025

Tax preparers who have submitted returns with questionable claims for the Earned Income Tax Credit (EITC), the Child Tax Credit Tax Credit/Additional Child Tax Credit (CTC/ACTC) and the American Opportunity Tax Credit will soon begin receiving Letter 5025. The intent of the letter is to raise awareness around questionable tax returns and assist preparers in meeting their due diligence requirements.

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

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3.  New Employer Tax Credit for Paid Family and Medical Leave Available for 2018 and 2019

Eligible employers who provide paid family and medical leave to their employees may qualify for a new business credit for tax years 2018 and 2019. Additionally, eligible employers who set up qualifying paid family leave programs or amend existing programs by Dec. 31, 2018, will be eligible to claim the employer credit for paid family and medical leave, retroactive to the beginning of the employer’s 2018 tax year, for qualifying leave already provided.

More information is available in Notice 2018-71.

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4.  Tax Relief for Victims of Hurricane Florence in North and South Carolina

The President has declared that a major disaster exists in the states of North Carolina and South Carolina. Individuals who reside or have a business in Chesterfield, Dillon, Georgetown, Horry, Marion and Marlboro counties in South Carolina may qualify for tax relief. Additionally, individuals who reside or have a business in Beaufort, Bladen, Brunswick, Carteret, Columbus, Craven, Cumberland, Duplin, Harnett, Hoke, Hyde, Johnson, Lee, Lenoir, Jones, Moore, New Hanover, Onslow, Pamlico, Pender, Pitt, Richmond, Robeson, Sampson, Scotland, Wayne and Wilson counties of North Carolina may qualify for tax relief.

For more information on tax relief for victims of Hurricane Florence, visit irs.gov/disaster.

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5.  How to Create a Data Security Plan

As a tax professional, you are required by law to protect taxpayer information. The Federal Trade Commission’s Safeguards Rule requires that tax preparers create and enact security plans.

IRS issued a Tax Tip this week that explains how to create a security plan.

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6.  YouTube: The W-2 Scam

This new IRS YouTube video explains how identity thieves are using email to impersonate company executives to steal employee W-2 forms.

For more tax-related videos, visit the IRS YouTube Channel.

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7.  Web Conferences on Virtual Currency and the Dark Web

The IRS web conferences, "Understanding the Basics of Virtual Currency" and "Understanding the Basics of the Dark Web" are now available on the IRS Video Portal.

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8.  New Members for the Electronic Tax Administration Advisory Committee

The IRS has selected two new members for the Electronic Tax Administration Advisory Committee (ETAAC), a public forum to discuss issues in electronic tax administration. ETAAC’s aim is to prevent identity theft and refund fraud in support of paperless filing of tax and information returns and its members work closely with the Security Summit to fight identity theft and refund fraud.

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9.  Technical Guidance

Notice 2018-75 provides that reimbursements an employer pays to an employee in 2018 for qualified moving expenses incurred in a prior year are not subject to federal income or employment taxes. The same is true if the employer pays a moving company in 2018 for qualified moving services provided to an employee prior to 2018.

Notice 2018-77 announces the special per diem rates effective October 1, 2018, which taxpayers may use to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home. This notice provides the special transportation industry rate, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method.

Notice 2018-79, provides guidance on an extension of the replacement period under section 1033(e) of the Internal Revenue Code for livestock sold on account of drought in specified counties.

Notice 2018-80 announces that the Treasury Department and the IRS intend to issue proposed regulations providing that market discount is not includible in income under section 451(b) of the Internal Revenue Code, as added by section 13221 of the TCJA. Section 451(b) provides that the all events test is met with respect to an item of gross income no later than when the taxpayer takes that item of gross income into account as revenue for financial accounting purposes in an "applicable financial statement."

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