Issue Number: 2019-41
Inside This Issue
- Get Ready for Taxes: Tax Credits
- Nationwide Tax Forums Online: EFIN Security Responsibilities
- Enrolled Agent Renewal Notice
- Future Enrolled Agents: Schedule Your Remaining Special Enrollment Exam Sections Now
- TCJA Provisions for Eligible Terminated S Corporations
- Feedback Requested on Taxpayer Advocate Website
- News from the Justice Department’s Tax Division
- Technical Guidance
1. Get Ready for Taxes: Tax Credits
With the Get Ready for Taxes campaign, the IRS helps you get your clients ready for the upcoming tax filing season. The campaign focuses on common filing issues, including eligibility for important tax credits.
Visit the newly updated Steps to Take Now to Get a Jump on Next Year’s Taxes for more.
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2. Nationwide Tax Forums Online: EFIN Security Responsibilities
Make protecting your EFIN (e-File Identification Number) part of your cybersecurity routine with the Nationwide Tax Forums Online. The new seminar EFIN Security Responsibilities, recorded last summer at the IRS Tax Forums, defines secure access authentication, explains the difference between an EFIN and a PTIN, identifies indicators of EFIN compromise and shows tax pros how to report suspicious EFIN activity. This seminar qualifies for continuing education credit.
For more from the 2019 Nationwide Tax Forums, visit IRS Nationwide Tax Forums Online.
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3. Enrolled Agent Renewal Notice
Enrolled Agents need to renew their credential every three years. For Enrolled Agents (EAs) with SSNs ending in 4, 5 and 6, renewal season began Nov. 1. EAs must renew by Jan. 31 to ensure they receive their new enrollment cards before current enrollments expire on March 31.
The following email was sent to affected EAs this week:
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4. Future Enrolled Agents: Schedule Your Remaining Special Enrollment Exam Sections Now
Have you passed one or two parts of the three-part Special Enrollment Examination within the past two years? If so, schedule your remaining exam(s) now. The current testing window ends on Feb. 29, 2020. Review test preparation resources and schedule your test appointments at https://www.prometric.com/test-takers/search/irs.
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5. TCJA Provisions for Eligible Terminated S Corporations
The Treasury Department and the IRS issued proposed regulations defining an eligible terminated S Corporation, and how cash distributions will be treated following the post-termination transition period. Once a corporation revokes its S status, generally the Post Termination Transition Period (“PTTP”) rules apply to give special treatment to cash distributions with respect to that corporation’s stock for a certain period.
After the PTTP ends, if the corporation qualifies as an ETSC, section 1371(f) applies. Section 1371(f) also provides special treatment to cash distributions, which takes places in the form of a ratio of the corporation’s accumulated adjustment account and accumulated earnings and profits.
Updates on this and other TCJA provisions can be found on the Tax Reform page of IRS.gov.
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6. Feedback Requested on Taxpayer Advocate Website
The Taxpayer Advocate Service website will be revamped in 2020. The website, known as TAS Tax Toolkit, provides information and resources to tax practitioners and other audiences. The Taxpayer Advocate requests feedback on the current website from tax professionals. Please visit the website and provide your feedback by completing this questionnaire by Nov. 13.
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7. News from the Justice Department’s Tax Division
The U.S. Department of Justice Tax Division this week reported:
A federal jury in Fort Lauderdale, Fla., convicted Paul Senat of aiding and assisting in the preparation of false tax returns and theft of government funds. According to the evidence presented at trial, from at least 2012 to 2016, Senat was the owner and operator of multiple tax return preparation businesses in Palm Beach and surrounding areas. Through the businesses, Senat falsified his clients’ returns by reporting fictitious business losses and false education credits in order to fraudulently inflate their refunds. Following the jury verdict, Senat was taken into custody. Senat faces a statutory maximum sentence of 10 years in prison for theft of government funds and three years for each count of aiding and assisting in the preparation of false returns. He also faces a period of supervised release, restitution, forfeiture and monetary penalties.
A fugitive and former Hillsboro, Ore., tax fraud promoter, who had been on the run since he was supposed to start serving a 10 year prison sentence, was apprehended in Arizona on Nov. 1, by the U.S. Marshals Service. Winston Shrout, 70, was convicted by a jury in April 2017 of submitting fraudulent financial instruments to banks and the U.S. Treasury, and failing to file income tax returns. According to the evidence presented at his trial and sentencing, from approximately 2008 through 2015, Shrout created and submitted more than 300 such fraudulent instruments. He also held seminars and private meetings to promote and market the instruments to pay off debts, including federal taxes. Shrout sold recordings of his seminars, templates for fraudulent financial instruments and other materials through his website. In addition, Shrout did not file his 2009 through 2014 tax returns despite earning substantial income from seminars, licensing fees associated with the sale of his products, and annual pension payments.
Shrout admitted during trial that he had not paid income tax for at least 20 years. Shrout was sentenced to 10 years in prison, five years of supervised release, and payment of restitution to the IRS.
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8. Technical Guidance
#Notice 2019-59 announced that employees in 401(k) plans will be able to contribute up to $19,500 next year. This guidance provides cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2020.
Revenue Procedure 2019-44 provides details on tax year 2020 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes.
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