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Issue Number:  2019-02

Inside This Issue

1. IRS conducts national payroll education and compliance campaign
2. Revised EIN application process to enhance security begins May 13
3. Estimated tax basics
4. IRS, Security Summit mark significant progress against identity theft
5. Technical guidance
6. New instructions and publications on IRS.gov

During a two-week period between March 25 and April 5, IRS Field Collection and Criminal Investigation (CI) undertook a special campaign to shore up payroll tax noncompliance.

Results of this education and enforcement campaign to combat employment tax crimes featured visits to nearly 100 businesses showing signs of potential serious noncompliance and taking several dozen legal actions against suspected criminals.

Payroll taxes withheld by employers account for nearly 72 percent of all revenue collected by the IRS. Noncompliance and cheating in this area one of the biggest problems for the nation’s tax system.

"Enforcement is never our first resort but protecting this significant source of revenue to the nation deserves our best efforts, including reaching out to help businesses help themselves," said Darren Guillot, Director of IRS Field Collection Operations.

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As part of an ongoing IRS security review, only individuals with tax identification numbers may request an Employer Identification Number (EIN) as the “responsible party” on the application. This goes into effect May 13, 2019. The change will prohibit entities from using their own EINs to obtain additional EINs.

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The IRS has seen an increasing number of taxpayers subject to estimated tax penalties, which apply when someone underpays their taxes. The number of people who paid this penalty jumped from 7.2 million in 2010 to 10 million in 2017, an increase of nearly 40 percent.

The Tax Cuts and Jobs Act, enacted in December 2017, changed the way tax is calculated for most taxpayers, including those with substantial income not subject to withholding. As a result, many taxpayers may need to adjust the amount of tax they pay each quarter through the estimated tax system.

Please share our Basics of estimated tax for individuals fact sheet with your clients that need to make ES payments. It contains many tips and links to more information about this topic.

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The IRS and the Security Summit announced new results from 2018 showing major progress in the fight against tax-related identity theft. These efforts added protection for thousands of taxpayers and billions of dollars.

Since forming the Security Summit in 2015, the IRS, state tax agencies and the private-sector tax industry enacted joint initiatives, many that are invisible to taxpayers, to decrease fraud and identity theft.

Here’s a few key, calendar-year 2018 indicators and how they compare to the 2015 base year:

• Taxpayers reporting they were identity theft victims fell 71 percent
• Confirmed identity theft tax returns stopped by the IRS declined by 54 percent
• The IRS protected a combined $24 billion in fraudulent refunds by stopping the confirmed identity theft returns
• Financial industry partners recovered an additional $1.4 billion in fraudulent refunds

“The IRS and the Security Summit continue to make tremendous inroads in the battle against identity theft,” said IRS Commissioner Chuck Rettig.

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Notice 2019-25 modifies and supersedes the guidance in Notice 2019-11, which provided for the waiver of the addition to tax under section 6654 of the Internal Revenue Code (Code) for the underpayment of estimated income tax for certain individuals who would otherwise be required to make tax year 2018 estimated income tax payments on or before January 15, 2019.

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Instructions:

• Inst 2210, Instructions for Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts

Publications:

• Pub 505, Tax Withholding and Estimated Tax
• Pub 5187, Affordable Care Act: What you and Your Family Need to Know
• Pub 5303, Paycheck Checkup
• Pub 5303 (SP), Paycheck Checkup (Spanish Version)

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