Issue Number: 2019-46
Inside This Issue
- Updated FAQs on the 2020 Form W-4
- Tax Preparers: Create, Review Your Data Security Plan
- IRS Now Issuing Educational Compliance Letters
- New Members for IRS Advisory Council
- Mailing Forms, Payments or Correspondence to the IRS
- IRS, Alcohol and Tobacco Tax and Trade Bureau Formalize Whistleblower Claim Processing
- News from the Justice Department’s Tax Division
- Technical Guidance
1. Updated FAQs on the 2020 Form W-4
The IRS has updated Frequently Asked Questions (FAQs) regarding the 2020 Form W-4 to help clarify certain issues.
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2. Tax Preparers: Create, Review Your Data Security Plan
With the tax filing season just weeks away, tax professionals who have a data security plan should review and update it, if necessary. Tax pros without one should create one and use the information below to get started, because having a written data security plan is required by federal law. Identity thieves target tax professionals because of the client data they have on hand and use stolen data from tax preparers to create fake returns that can be harder for the IRS to detect.
To get started on a data security plan, review the following:
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3. IRS Now Issuing Educational Compliance Letter
Tax preparers who have submitted returns with questionable claims for the Earned Income Tax Credit, the Child Tax Credit Tax Credit/Additional Child Tax Credit, American Opportunity Tax Credit and Head of Household will soon receive 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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4. New Members for IRS Advisory Council
The IRS announced the appointment of 12 new members to the Internal Revenue Service Advisory Council (IRSAC). The IRSAC provides the IRS commissioner with relevant feedback, observations and recommendations.
Visit the Facts page on IRS.gov for more information about IRSAC and the 12 new members who will serve three-year appointments on the council beginning in 2020.
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5. Mailing Forms, Payments or Correspondence to the IRS
In preparation for the upcoming tax season, tax preparers should know where to file paper Form 941, Employer’s Quarterly Federal Tax Returns, for business clients and where to file paper tax returns for individual taxpayers. If using pre-printed envelopes to mail your client’s tax forms, payments and correspondence, ensure the correct address is used. This will help eliminate delays.
When available, the IRS encourages electronic filing and payment for individuals and business.
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6. IRS, Alcohol and Tobacco Tax and Trade Bureau Formalize Whistleblower Claim Processing
The IRS announced a formalized process with the Alcohol and Tobacco Tax and Trade Bureau (TTB) that puts in place procedures between the IRS and TTB to process claims for whistleblower awards under internal revenue laws that are administered and enforced by TTB. The new procedures enable a partnership with TTB to provide a consistent approach for claims for a whistleblower award administered under Internal Revenue laws.
For more on the Whistleblower Office, go to IRS.gov.
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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 court has permanently barred Jackelin Brooks, a Bolingbrook, Il., tax return preparer, from preparing federal tax returns for others. According to the government’s complaint, Brooks prepared returns that reported false income and expenses from Schedule C businesses and improperly claimed the American Opportunity Tax Credit and the Residential Energy Credit, resulting in refunds to which her customers were not entitled. The complaint alleges that the falsified tax returns cost the United States tens of thousands of dollars in tax revenue. The injunction was entered against Brooks by default because she failed to defend against the government’s allegations.
The United States filed a civil injunction suit seeking to bar Gregory C. Diedrich and Saginaw Financial from owning or operating a tax return preparation business and preparing tax returns for others. The complaint, filed in the U.S. District Court in Las Vegas, Nevada, alleges that the defendants prepare and file tax returns that overstate their customers’ refunds, and that they fail to conduct the required due diligence, including taking reasonable steps to ensure that information provided by customers is accurate. The complaint also alleges that the defendants engaged in misconduct, including fabricating business income and claiming false deductions, such as for charitable contributions and phony business expenses. The complaint seeks an order permanently barring Diedrich and Saginaw Financial from preparing federal tax returns for others and requiring Diedrich and Saginaw Financial to send a notice of the injunction to all customers who have retained them since 2016.
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8. Technical Guidance
Notice 2019-66 provides that the requirement to report partners’ shares of partnership capital on the tax basis method will not be effective for 2019 (for partnership taxable years beginning in calendar 2019) but will be effective beginning in 2020 (for partnership taxable years that begin on or after Jan. 1, 2020).
Notice 2019-67 sets forth: (1) the mortality improvement rates and static mortality tables that are required to determine minimum funding requirements under section 430(h)(3)(A) for valuation dates occurring during 2021, and (2) the mortality table that is used for purposes of determining minimum present value under section 417(e)(3) for distributions with annuity starting dates that occur during stability periods beginning in the 2021 calendar year.
Notice 2020-01 provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under section 417(e)(3), and the 24-month average segment rates under section 430(h)(2) of the Internal Revenue Code.
Revenue Procedure 2020-09 clarifies which amendments are treated as integral to a plan provision that fails to satisfy the qualification requirements of the Internal Revenue Code by reason of a change to those requirements made by the recently published regulations under sections 401(k) and 401(m) relating to hardship distributions of elective deferrals.
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