e-News for Tax Professionals 2020-07

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Issue Number:  Issue 2020-07

Inside This Issue

1. IRS urges tax pros to protect software accounts with multi-factor authentication
2. IRS hiring seasonal phone assistors in 18 cities
3. Include Form 8867, Paid Preparer’s Due Diligence Checklist, with returns
4. Feb. 20 webinar: Understanding the Gig Economy
5. IRS, Treasury issue proposed regulations updating income tax withholding rules
6. News from the Justice Department’s Tax Division
7. Technical Guidance

The IRS and its Security Summit partners today called on tax professionals to use the free, multi-factor authentication feature being offered on tax preparation software products.

Multi-factor authentication means returning users must enter their username/password credentials plus another data point that only they know, such as a security code sent to their mobile phone. For example, thieves may steal passwords but will be unable to access the software accounts without the mobile phones to receive the security codes.

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The IRS is adding up to 1,000 seasonal employees at 18 collection call sites to help staff phone lines. These employees will work with taxpayers who are behind on their tax payments and have received a balance due notice. The contact representative positions, which are at the government’s GS-5 level in the IRS Small Business/Self-Employed division, are open now for a brief period.

Interested applicants can review the current job openings by accessing the IRS Careers page on the USAjobs.gov website.

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The IRS is sending letters to tax preparers who completed six or more 2019 paper returns claiming refundable tax credits without attaching Form 8867, Paid Preparer’s Due Diligence Checklist. As the filing season continues, tax preparers should remember that due diligence requirements include the:

• Head of Household filing status,
• Earned Income Tax Credit,
• Child Tax Credit/Additional Child Tax Credit,
• American Opportunity Tax Credit, and
• Credit for Other Dependents

One of four due diligence requirements is to properly complete and submit Form 8867 to certify paid tax preparers confirmed their clients’ eligibility for each of the credits. Failure to complete and submit Form 8867 may result in a penalty of $530 per failure, with a maximum penalty of $2,120 per return.

Form 8867 and instructions includes information about these refundable credits. For more information on due diligence requirements, go to the Tax Preparer Toolkit on EITC Central.

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The IRS will present the webinar, Understanding the Gig Economy, at 2 p.m. ET on Feb. 20.

This free 60-minute webinar will explain what the Gig Economy is, how gig workers determine if they are employees or self-employed and tax payment options for gig workers. Tax pros can earn one education credit for participating.

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The U.S. Department of the Treasury and the IRS issued proposed regulations updating the federal income tax withholding rules to reflect changes made by the Tax Cuts and Jobs Act (TCJA) and other legislation.

Treasury and IRS welcome public comment on these proposed regulations. See the proposed regulations for details. For updates on TCJA implementation, visit the Tax Reform page of IRS.gov.

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The United States filed a civil injunction suit seeking to bar Wesley Adam Kroll from owning or operating a tax return preparation business and preparing tax returns for others. The complaint alleges that Kroll has operated three tax return preparation stores in Albany and Moultrie, Ga., under the names United Tax Service, American Tax Service, American Tax, and Tax South. Kroll allegedly prepared tax returns claiming fabricated businesses and business-related profits or losses, and various false tax deductions and credits, including education, childcare, and earned income tax credits. The complaint estimates the lost tax revenue from federal tax returns prepared by Kroll and his employees exceeds $1.9 million.

A federal grand jury in Salt Lake City, Utah, returned an indictment charging Sergio Sosa, and his adult children, Alissa and David Sosa, with conspiracy to defraud the United States. Sergio Sosa was also charged with one count of tax evasion, and he and his children were also each charged with one count of corruptly endeavoring to obstruct the administration of the internal revenue laws. According to the indictment, Sosa owned and operated Sergio Central Latino (SCL), a tax return preparation business in Orem, Utah, where both Alissa and David worked. From 2003 through 2017, Sosa allegedly did not timely file his personal tax returns and after multiple audits, the Internal Revenue Service (IRS) determined that he owed more than $750,000 in unpaid taxes. When the IRS began collection efforts, Sosa and his children allegedly agreed to obstruct IRS collection of the outstanding taxes by hiding Sosa’s personal assets, residential properties, and by titling SCL in the children’s names.

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Revenue Ruling 2020-05 modifies Rev. Rul. 2009-13 and Rev. Rul. 2009-14 to reflect section 1016(a)(1)(B) of the Internal Revenue Code, which was added by section 13521 of the 2017 Tax Cuts and Jobs Act.

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