Issue Number: 2019-45
Inside This Issue
- Final 2020 Form W-4 Now Available
- IRS Criminal Investigation Releases Fiscal Year 2019 Annual Report
- National Tax Security Awareness Week: Raising Awareness about Identity Theft
- Final Regulations on the Foreign Tax Credit
- Consolidated Advisory Group Handling All Lien Certificates and Non-Judicial Foreclosure Notices
- News from the Justice Department’s Tax Division
-
Technical Guidance
1. Final 2020 Form W-4 Now Available
The 2020 Form W-4, Employee’s Withholding Certificate, is now available on IRS.gov. The new W-4 form better incorporates the changes ushered in by the Tax Cuts and Jobs Act allowing employees to more accurately estimate the amount of tax they ask their employers to withhold from their paychecks beginning in 2020. In addition, the goal of the new design is to balance simplicity, accuracy and privacy for employees while minimizing burden for employers and payroll processors.
A few of the visual changes that were made in the last draft shared include:
- It is now a full page
- There are no withholding allowances (which is why the title of the form changed to “Employee’s Withholding Certificate”)
- Steps 1 through 5 to guide employees through the form
- Instructions, worksheets, and tables follow the first page
Changes since the last draft include minor edits to verbiage, but more notably, on page 2, under “Your Privacy,” more language was added to help the taxpayer understand exactly what checking the box in step 2(c) may do to withholdings.
The IRS encourages all tax professionals to become familiar with the new form now so that they can help taxpayers with proper withholding in 2020.
The new Publication 15-T, Federal Income Tax Withholding Methods, to be released in mid-December for use with the new 2020 Form W-4, will provide the employer steps to figure federal withholding. For more information, visit About Form W-4 on IRS.gov.
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2. IRS Criminal Investigation Releases Fiscal Year 2019 Annual Report
The IRS this week released the Criminal Investigation (CI) Division's annual report. The report highlights significant successes and criminal enforcement actions taken in fiscal year 2019. The report also commemorates CI's 100th year anniversary as a law enforcement agency.
"CI is critical to the overall enforcement efforts of the IRS in pursuing its Mission in a fair, impartial, diligent and, where appropriate, tenacious manner," IRS Commissioner Chuck Rettig said. "The Fiscal Year 2019 Annual Report summarizes various CI activities throughout the year but vastly understates the importance of CI to the overall IRS mission. CI supports the efforts of compliant taxpayers by visibly demonstrating the risks of noncompliance thereby helping otherwise honest taxpayers stay honest and compliant."
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3. National Tax Security Awareness Week: Raising Awareness about Identity Theft
The IRS and its Security Summit partners opened the fourth annual National Tax Security Awareness Week on Dec. 2 with tips on basic safeguards everyone should take during the holiday season. The week started with a warning for holiday shoppers on Cyber Monday and included a series of special educational efforts held at more than 25 partner events across the country to raise awareness about protecting taxpayers and tax professionals from identity theft. The week also included special social media efforts on platforms including Twitter and Instagram, including a special Twitter chat on @IRSnews and #TaxSecurity on Thursday.
"The holidays may mean the shopping season to consumers, but it's the hunting season for online thieves," said IRS Commissioner Chuck Rettig. "Identity thieves are looking for your information to help them file fraudulent tax returns. A few simple steps can help protect you and your valuable information during the holiday season and at tax time."
For an overview of all the week’s news releases and social media materials, visit National Tax Security Awareness Week 2019 on IRS.gov.
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4. Final Regulations on the Foreign Tax Credit
The IRS issued final regulations this week on the Foreign Tax Credit. The Tax Cuts and Jobs Act (TCJA) made changes to several Foreign Tax Credit provisions, including repeal of section 902, which allowed deemed-paid credits in connection with dividend distributions based on foreign subsidiaries’ cumulative pools of earnings and foreign taxes. TCJA also added two separate limitation categories for foreign branch income and amounts includible under the Global Intangible Low-Taxed Income (GILTI) provisions.
The IRS also issued Proposed Regulations relating to the allocation and apportionment of deductions and creditable foreign taxes, foreign tax redeterminations, availability of Foreign Tax Credits under the Transition Tax, and the application of the Foreign Tax Credit limitation to consolidated groups. Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.
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5. Consolidated Advisory Group Handling All Lien Certificates and Non-judicial Foreclosure Notices
The IRS has centralized where it receives all lien certificate applications and non-judicial foreclosure notices. Lien certificate applications include discharges, subordinations, withdrawals, and certificates of non-attachment. These applications are related to: selling, transferring, borrowing, refinancing, purchasing, clarifying who the lien is against, what it attaches and removing its effect from the public record.
Applications and notices to the new Advisory Consolidated Receipts group can be faxed to: 844-201-8382 or mailed to: Internal Revenue Service, Advisory Consolidated Receipts, 7940 Kentucky Drive, Stop 2850F, Florence, KY 41042. Please allow 14 days for the group to receive your request and to assign it to an advisor. The advisor will contact you if they need more information or have questions.
For more information, search “lien certificates” on IRS.gov or review the updated Publication 4235, Collection Advisory Group Numbers and Addresses.
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6. News from the Justice Department’s Tax Division
The U.S. Department of Justice Tax Division this week reported:
The Justice Department announced that it has filed a complaint with a U.S. District Court in Norfolk, Virginia, seeking entry of a court order requiring Franchise Group Intermediate L 1 LLC, (Liberty) the national franchisor and owner of Liberty Tax Service stores, to refrain from specific acts, enact enhanced internal compliance controls regarding the detection of false tax returns, and pay for an independent monitor to oversee Liberty’s compliance with the proposed court order. Separately, the United States and Liberty filed a joint motion and proposed order that, if adopted by the court, would resolve the matter.
Liberty, one of the largest tax preparation service providers in the United States, according to its public filings, filed approximately 1.3 to 1.9 million tax returns each year between 2015 and 2019 through its stores. For tax years 2012 to 2018, Liberty claimed over $28 billion in federal tax refunds on behalf of its customers, the complaint asserts. According to Liberty’s 2019 Annual Report filed with the SEC, and as reflected in the complaint, the Justice Department has been investigating Liberty’s policies, practices and procedures in connection with Liberty’s tax return preparation activities. Liberty has cooperated to resolve this matter.
A Waco, Texas, tax return preparer was sentenced to 27 months in prison this week for her role in a conspiracy to defraud the United States. According to the indictment and information provided to the court, Janell Lightner and her co-defendant Stacey Anderson conspired to defraud the United States by preparing false tax returns for clients of Anderson’s tax return preparation business, Anderson Professional Tax Services. Anderson operated the business out of her residence in Waco, but she and Lightner prepared tax returns for clients in Texas, Maryland, and the District of Columbia. From 2013 through 2014, Lightner assisted Anderson in preparing fraudulent returns that inflated deductions and claimed false education credits in order to increase client refunds. Lightner’s conduct caused a tax loss of more than $1.3 million to the Internal Revenue Service.
In addition to the term of imprisonment, Lightner was ordered to serve three years of supervised release and to pay $1,337,800.88 in restitution to the United States. Anderson was previously sentenced on Oct. 9, 2019, and ordered to serve 87 months in prison and to pay more than $8 million in restitution to the United States.
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7. Technical Guidance
Notice 2019-63 extends the due dates for certain 2019 information reporting requirements for insurers, self-insuring employers, and certain other providers of minimum essential coverage under section 6055 and for applicable large employers under section 6056.
Notice 2019-64 sets forth the 2019 Required Amendments List (2019 RA List). Beginning with the 2019 RA List, all Required Amendments Lists will apply to both individually designed plans qualified under section 401(a) and individually designed plans that satisfy the requirements of section 403(b).
Notice 2019-65 announces that the Treasury Department and the IRS intend to amend the regulations under section 987 to defer the applicability date of the final regulations under section 987, as well as certain related final and temporary regulations, by one additional year.
Revenue Ruling 2019-28 provides the interest rates for underpayments and overpayments. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning January 1, 2020, will be 5 percent for overpayments (4 percent in the case of a corporation), 5 percent for underpayments, and 7 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 2.5 percent.
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