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Main Street Practitioner Blog Community Blog

The Senate Finance Committee on Wednesday, April 20, approved two bills that would require the IRS to increase security measures and enforce new policies, but rejected a provision to regulate tax return preparers. The so-called Prevent Identity Theft and Tax Refund Fraud Act would reinstate the Internal Revenue Service's streamlined critical pay authority, which allows the agency to hire cybersecurity employees at a higher pay grade and on expedited timetables. IRS Commissioner John Koskinen has said this is one of his top requests of lawmakers. Among other things, the Act would also: Expand the identity protection personal identification number (IP-PIN) system to all taxpayers. Make it a felony for a person to use a stolen identity to file a return or other document. Increase reporting from the IRS to oversight groups about ID theft. Require the IRS to notify a taxpayer when someone else has filed a return using his or...
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The percentage of callers with a tax issue who will receive live assistance is expected to increase to 47 percent for fiscal year 2016, from 38 percent in FY 2015, the Government Accountability Office said in a new report. Furthermore, during the current tax filing season, the IRS predicts the level of service will be 65 percent for those calling with questions. The GAO Report, "Internal Revenue Service: Preliminary Observations on the Fiscal Year 2017 Budget Request and 2016 Filing Season Performance," was released April 7. Unsurprisingly, the report states that the service-level improvements are due, in part, to additional funding. The agency's FY 2016 appropriation was $11.2 billion, an increase of $290 million from the FY 2015 level, but still $900 million lower than in FY 2011. The GAO noted in the report that the IRS directed the additional funding to taxpayer services, enforcement and operations support. Text of GAO's report is here .
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IRS Scam Alert

In advance of the tax deadline, the Internal Revenue Service today warned tax professionals of a new emerging scam in which cybercriminals obtain remote control of preparers’ computer systems, complete and file client tax returns and redirect refunds to thieves’ accounts. Although the IRS knows of a handful of cases to date, this scam has potential to impact the filing of fraudulent returns in advance of the April tax deadline and is yet another example of tax professionals being targeted by identity theft criminals. The IRS urges all tax preparers to take the following steps: Run a security “deep scan” to search for viruses and malware; Strengthen passwords for both computer access and software access; make sure your password is a minimum of 8 digits (more is better) with a mix of numbers, letters and special characters; Be alert for phishing scams: do not click on links or open attachments from unknown senders; Educate all staff members about the...
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All agreed at the Senate Finance Committee’s (SFC’s) cybersecurity hearing on April 12 that taxpayers are becoming more vulnerable to increasingly sophisticated criminal tactics designed to steal personal identity information. "Taxpayers have been failed by the agencies, the companies, and the policymakers here in Congress they rely on to protect them," ranking member Ron Wyden, D-Ore., stated in his remarks aimed at sharing blame among all stakeholders. Nevertheless, the majority of testimony focused on IRS shortcomings. IRS Commissioner John Koskinen's testimony revealed that securing taxpayer data is a top priority at the IRS, but that the Service faces challenges in dealing with a type of criminal activity that is consistently evolving. Koskinen pointed to the efforts made by the IRS in increasing cybersecurity, singling out the formation of the Security Summit group. That group has been operating as a partnership with the IRS, state tax officials and the electronic tax and...
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The Internal Revenue Service released the 2015 IRS Data Book today, a snapshot of agency activities for the fiscal year. The 2015 Data Book describes activities conducted by the IRS from Oct. 1, 2014, to Sept. 30, 2015 and includes information about returns filed, taxes collected, enforcement, taxpayer assistance and the IRS budget and workforce, among others. This edition also contains charts that show trends, such as the decline in the number of audits and the reduction in telephone and in-person tax assistance, but increases in the use of online resources and volunteer tax assistance. During fiscal year 2015, the IRS collected more than $3.3 trillion, processed more than 243 million tax returns and other forms, and issued more than $403 billion in tax refunds. The agency’s website continued to get heavy use with more than 493 million visits to IRS.gov in FY 2015, and one of its most popular online tools, Where’s My Refund, handled a record-breaking 234 million inquiries, a...
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As part of the continued crackdown on refund fraud and identity theft, the Internal Revenue Service today released the Top 10 Identity Theft Prosecutions for Fiscal Year 2015. These prosecutions are part of the wide-ranging strategy to combat refund fraud and assist taxpayers through detection, prevention and resolving identity theft cases in a timely manner. "The IRS continues fighting identity theft on several fronts, including the Security Summit initiative where we have joined with the states and the nation’s tax industry to beef up prevention and detection of fraudulent returns," said IRS Commissioner John Koskinen. "These efforts go hand-in-hand with our important Criminal Investigation work, where our agents continue working to bring identity thieves to justice across the nation." In addition, the IRS continues to promote its “ Taxes. Security. Together ” campaign, a joint effort between the IRS, states and the private-sector tax industry. The collaboration is designed...
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The Internal Revenue Service announced that interest rates will remain the same for the calendar quarter beginning April 1, 2016. The rates will be: three (3) percent for overpayments [two (2) percent in the case of a corporation]; one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000. three (3) percent for underpayments; and five (5) percent for large corporate underpayments. Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion...
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National Taxpayer Advocate Nina E. Olson and Rep. Jose Serrano, ranking member of the House Appropriations Subcommittee on Financial Services and General Government, will hold a public forum to discuss what taxpayers want and need from the IRS to comply with their tax obligations. The public forum will be held Friday, March 18, at 3:00 pm in Room C391 at the Hostos Community College in The Bronx, N.Y. Members of the public and the media are invited to attend. Building on initiatives already implemented, the IRS for the past two years has been developing a “Future State” plan that envisions how it will operate in five years and beyond. It is continuing to develop a path for how it gets from its “Current State” to the “Future State,” including refinements to the vision along the way. A central component of the plan is the creation of online taxpayer accounts as a convenient but non-exclusive channel through which taxpayers will be able to obtain information from and interact with...
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The Internal Revenue Service today announced it recommended and the Department of the Treasury has approved the selection of 32 new members to serve on the nationwide Taxpayer Advocacy Panel (TAP). The TAP is a federal advisory committee charged with providing taxpayer suggestions to improve IRS customer service. The new TAP members will join 41 returning members to round out the panel of 73 volunteers for 2016. The new members were selected from more than 1,000 interested individuals who applied during an open recruitment period last spring and the pool of alternate members who applied in prior years. The TAP listens to taxpayers, identifies issues, and makes suggestions for improving IRS service and customer satisfaction. Oversight and program support for the TAP are provided by the Taxpayer Advocate Service, an independent organization within the IRS that helps resolve taxpayer problems and makes administrative and legislative recommendations to mitigate systemic problems. ...
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Following an incident involving the IRS’s “Get Transcript” application discovered last May, the Treasury Inspector General for Tax Administration conducted a nine-month long investigation looking back to the launch of the application in January 2014 for additional suspicious activity. This expanded review has identified additional suspicious attempts to access taxpayer accounts using sensitive information already in the hands of criminals. The IRS is moving immediately to notify and help protect these taxpayers, including through free identity theft protection services as well as Identity Protection PINs. This further review found potential access of approximately 390,000 additional taxpayer accounts during the period from January 2014 through May 2015. In addition, 295,000 taxpayer transcripts were targeted but access was not successful. Mailings to these taxpayers will start February 29. The “Get Transcript” web application has been offline since this incident was discovered in...
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Low Income Taxpayer Clinic Program Reports on Activities The Internal Revenue Service’s Low Income Taxpayer Clinic (LITC) Program Office has issued its fourth annual program report. The new report describes how LITCs across the nation have assisted low income taxpayers and individuals who speak English as a second language (ESL) with free or low-cost representation in disputes with the IRS. During 2014, LITCs represented 19,882 taxpayers in disputes with the IRS and provided consultation or advice to an additional 18,810 taxpayers. LITCs helped taxpayers secure more than $4.3 million in tax refunds and eliminate over $62 million in tax liabilities, penalties and interest. Through outreach and education activities, LITCs also ensured individuals understood their rights as U.S. taxpayers. LITCs conducted 3,046 educational activities attended by 75,706 persons. Overall, almost 1,800 volunteers contributed to the success of the LITCs. Here is one example of how LITCs can...
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National Taxpayer Advocate Nina E. Olson will convene the first in a series of public forums on taxpayer service on Tuesday, February 23, at 10:00 AM at the IRS Headquarters Building in Washington D.C. Members of the public and the media may attend by following the procedures described below. During the last two years, the IRS has been developing a “Future State” plan that envisions how it will operate in five years and beyond. It is continuing to develop a path for how it gets from the “Current State” to the “Future State,” including refinements to the vision along the way. A central component of the plan is the creation of online taxpayer accounts as a convenient but non-exclusive channel through which taxpayers will be able to obtain information from and interact with the IRS. In the National Taxpayer Advocate’s 2015 Annual Report to Congress, Ms. Olson recommended the IRS solicit comments from taxpayers and tax professionals, including their thoughts on the extent to which...
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The IRS issued Revenue Procedure 2016-14, which provides inflation adjustments for certain items for 2016, including the section 179 expensing limits. These amounts were modified late last year by enactment of the Consolidated Appropriations Act (P.L. 114-113). "For taxable years beginning in 2016, under section 179(b)(1) the aggregate cost of any section 179 property that a taxpayer elects to treat as an expense cannot exceed $500,000," the IRS says. "Under section 179(b)(2)(C), the $500,000 limitation is reduced (but not below zero) by the amount the cost of section 179 property placed in service during the 2016 taxable year exceeds $2,010,000. Revenue Procedure 2016-14 also provides updated amounts for excluding qualified transportation fringe benefits and deducting certain expenses of elementary and secondary school teachers. The text of Revenue Procedure 2016-14 is available here .
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IRS Resumes Processing Tax Returns The IRS announced it resumed processing individual and business tax returns at approximately 5 p.m. Thursday following resolution of its system outage. Many of the tools and applications came up earlier on Thursday morning, including “Where’s My Refund” on IRS.gov. “IRS teams worked throughout the night and around the clock on this system outage,” IRS Commissioner John Koskinen said. “Our processing systems are back in business. Taxpayers should see little, if any, impact on their tax returns or refunds. We apologize for the inconvenience this caused, and we appreciate the support and patience from taxpayers as well as our partners in the tax community and state revenue departments.” The IRS emphasized that taxpayers do not need to take any additional steps or action due to the outage, including people who filed just before or during the outage. Throughout this period, taxpayers were able to continue to send their tax returns to their e-file...
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New Update IRS teams continued working throughout the night and this morning on the system outage, and many of our tools and applications came back up this morning, including “Where’s My Refund” on IRS.gov. We are continuing our work and analysis of our return processing system; we hope to have that back up again running at some point today. We will provide a further update later today. While the e-file system for individual and business returns remains unavailable, the IRS reminds taxpayers they can still prepare and file tax returns as they normally would. Taxpayers can continue to send their tax returns to their e-file provider; these companies will hold the tax returns until the IRS resumes accepting electronic tax returns. Taxpayers who have already filed their tax returns do not need to take any additional action. In addition, we continue to expect that 9 out of 10 taxpayers will receive their refunds within 21 days. The IRS Experienced a Hardware Failure This...
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Identity Theft is an Ongoing Concern and on the IRS Annual “Dirty Dozen” List of Tax Scams to Avoid The Internal Revenue Service today issued a filing season alert warning taxpayers to watch out for identity theft at tax time and highlighted the crime as the first scam in the agency’s “Dirty Dozen” series. Over the course of the past year, as part of the Security Summit initiative, the IRS partnered with states and the tax industry to enhance coordination and create a more secure system for taxpayers. Security Summit participants, including the IRS, will regularly share details of fraudulent schemes detected this season so industry and government have the same information and can adjust accordingly to provide increased protection. Many changes will be invisible to the taxpayer, but the more than 20 shared data elements are critical to making sure the IRS, states and industry can better verify the taxpayer and the legitimacy of the tax return. “Our collaborative efforts...
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Tax Preparers: Perform a Deep Security Scan of Your Computer Drives The Internal Revenue Service urges all tax return preparers to get off to a clean start this January and perform a security deep scan of their computer drives and devices. Already in 2016, the IRS is seeing multiple email phishing scams – some posing as the IRS – targeting tax preparers. These scams are designed to steal sensitive information – either the preparers’ passwords for IRS accounts or sensitive taxpayer data stored on computers. The IRS has teamed up with state revenue departments and the tax industry to make sure you understand the dangers to your personal and financial data. Taxes. Security. Together. We all have a role to play. The IRS recommends all tax return preparers take the following steps immediately: Ensure that you and your employees have robust security software that helps block malware and viruses and that it remains turn on and active at all times. Use the “deep...
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IRS, States and Tax Industry Deploy New Safeguards for 2016 Because of improved protections in recent years, the Internal Revenue Service stops the vast majority of fraudulent tax returns using stolen identities. But identity thieves and criminal syndicates continue to persist and evolve. As the threat has changed, so has the IRS. In a new era of cooperation, the IRS, the states and the entire tax industry came together to identify what additional steps could be taken to better fight identity theft and better protect the taxpayers. Starting in January 2016, this renewed effort will make for a safer, more secure filing season for taxpayers. Many changes will be invisible, but they are critical to making sure the IRS can verify the taxpayer and the legitimacy of the tax return before it ever enters into the tax processing system. More than 20 shared data elements will help the software industry and the IRS stop fraudulent returns at the door. For example, the IRS will receive...
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IRS Tax Filing Deadline Extended And Customer Service Improvement Today, IRS Commissioner John Koskinen said the Service will hire up to 1,000 additional customer service representatives to help answer the toll-free help lines this filing season. The likely result? Koskinen says he expects that at least 60 percent of taxpayers will be able to reach a representative. This compares with the 37% rate taxpayers experienced in 2015. "We expect the level of service on the phone will be better than last year," the Commissioner said, and acknowledged that "the level of service last year was so bad that anything would be better." On average, callers were kept on hold for twenty-three minutes by IRS customer service representatives. For the 2016 tax season, he believes "Our goal would clearly be to have them under 20 minutes." The Commissioner also confirmed that the filing deadline for the 2015 tax year has been extended from the 15 th of April to the 18 th . Commissioner Koskinen...
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Annual Filing Season Program Update As of today, over 44,000 non-credentialed tax return preparers have elected to participate in the IRS Annual Filing Season Program and received a Record of Completion, which already exceeds last year’s 41,000+ participants. The deadline to complete the required continuing education was Dec. 31, but for those who obtained the CE but still haven’t gotten a Record of Completion, it’s not too late! They only need to renew their PTIN (if they haven’t already) and sign the online Circular 230 consent. More than 40,000 other tax return preparers fall into this category and can still get a Record of Completion. We have sent them multiple emails, but would appreciate stakeholder groups encouraging members/employees to understand the steps. We created a video tutorial to demonstrate how to sign the C230 consent. Watch it here: https://www.youtube.com/watch?v=aBhJ9PTkG-0 After the filing season is over (April 18), they will no longer be able...
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