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Issue Number:  2019-09

Inside This Issue

1. Facts about the new Tax Withholding Estimator
2. IRS and the Security Summit partners’ five steps to protect sensitive data and computer systems
3. Security Summit warns of new IRS impersonation email scam; reminds taxpayers the IRS does not send unsolicited emails
4. Truncation of Social Security numbers on Forms W-2 and W-2c now allowed
5. Technical guidance
6. Draft forms on IRS.gov

Taxpayers can now use the new mobile-friendly Tax Withholding Estimator to make sure they’re paying the right amount of tax as they earn it throughout the year.

It’s a user-friendly step-by-step tool to help taxpayers effectively estimate the amount of income tax they should have withheld from wages and pension payments.

Some facts about the new tool, it:

• Allows taxpayers to separately enter pensions and other sources of income
• Makes doing a Paycheck Checkup easier for anyone who had an unexpected tax bill or a penalty when they filed this year
• Allows taxpayers and their spouses to easily enter wages and withholding for each job they hold
• Makes specific withholding recommendations for each job taxpayers and their spouses hold – clearly explains what they should do next

Also, those most likely to owe tax because they’ve had too little tax withheld include:

• Taxpayers who itemized in the past but now take the increased standard deduction
• Two-wage-earner households
• Employees with nonwage sources of income
• Taxpayers with complex tax situations

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The IRS and its Summit partners urge the payroll community to review these basic security steps this summer. Some payroll professionals may overlook these checklist items and others need to regularly revisit them. The steps are not only important for professionals, but for taxpayers as well. Everyone has a responsibility to protect sensitive data.

Five steps to better security:

1. Deploy the “Security Six” measures
2. Create a data security plan
3. Educate yourself about key email scams – including ransomware
4. Learn to recognize the signs of client data theft and how to report it
5. Draft a data theft recovery plan

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This week, the IRS detected this new scam about unsolicited emails from IRS imposters. The email subject line may vary, but recent examples use the phrase "Automatic Income Tax Reminder" or "Electronic Tax Return Reminder."

The emails have links that show an IRS.gov-like website with details pretending to be about the taxpayer's refund, electronic return or tax account.

The emails contain a "temporary password" or "one-time password" to "access" the files to submit the refund. But when taxpayers try to access these, they infect their computers with malware. The imposters may then gain control of the taxpayer's computer or secretly download software that tracks every keystroke, eventually giving them passwords to sensitive accounts, such as financial accounts.

Remember, The IRS doesn't initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.

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On July 9, 2019, the IRS finalized regulations regarding truncation of Social Security numbers (SSNs) on Forms W-2, Wage and Tax Statement and Forms W-2c, Corrected Wage and Tax Statement in efforts to prevent identity theft.

The new rules allow employers to voluntarily truncate employees' Social Security numbers on copies of these forms that they give to their employees (Copies B, C and 2).

This voluntary truncation is allowed on Forms W-2 and W-2c issued to employees after December 31, 2020.

It’s important to note, that truncation of SSNs is not allowed on the information filed on paper or electronically with the Social Security Administration.

A truncated SSN shows asterisks or Xs for the first five digits and shows the actual last four digits of the SSN. (***-**-1234 or XXX-XX-1234) The regulations also call these Truncated Taxpayer Identification Numbers (TTINs).

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Revenue Procedure 2019-29 – Examination of returns and claims for refund, credit or abatement; determination of correct tax liability

This RP provides indexing adjustments required by statute for certain provisions under section 36B. It updates the applicable percentage table in § 36B(b)(3)(A)(i) (Applicable Percentage Table) to provide the Applicable Percentage Table for calendar year 2020.

This table is used to calculate an individual’s premium tax credit. This revenue procedure also updates the required contribution percentage in § 36B(c)(2)(C)(i)(II) for plan years beginning after calendar year 2019 (Section 36B Required Contribution Percentage). This percentage is used to determine whether an individual is eligible for affordable employer-sponsored minimum essential coverage under § 36B.

This revenue procedure uses the methodology described in Section 4 of Rev. Proc. 2014-37, 2014-2 C.B. 363, and the Department of Health and Human Services (HHS) Notice of Benefit and Payment Parameters for 2020.

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Forms:

• Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return
• Form 940 (PR), Planilla Para La Declaracion Federal Anual Del Patrono de la Contribcion Federal Para El Desempleo (FUTA)
• Form 940 (PR) (Schedule A), Multi-State Employer and Credit Reduction Information (Puerto Rican Version)
• Form 940 (Schedule A), Multi-State Employer and Credit Reduction Information
• Form 1099-NEC, Nonemployee Compensation

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