Friday, January 20, 2017

Individual Shared Responsibility Payment Hardship Exemption that May Be Claimed on a Federal Income Tax


Notice 2017-14 provides that the hardship exemption from the individual shared responsibility payment under § 5000A, described by the Department of Health and Human Services, for an individual who is not enrolled in health insurance coverage that qualifies for the health coverage tax credit (HCTC) allowed by § 35 for one more months between July 2016 and December 2016, but who would have been eligible for the HCTC under § 35 if enrolled, may be claimed on a Federal income tax return without obtaining a hardship exemption certification from the Marketplace.

Notice 2017-14 will appear in IRB 2017-06 dated.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Thursday, January 19, 2017

Taxpayer Bill of Rights


Taxpayers have fundamental rights under the law. The “Taxpayer Bill of Rights” presents these rights in 10 categories. This helps taxpayers when they interact with the IRS.

Publication 1, Your Rights as a Taxpayer, highlights a list of taxpayer rights and the agency’s obligations to protect them. Here is a wrap-up of the Taxpayer Bill of Rights:

1. The Right to Be Informed.
2. The Right to Quality Service.
3. The Right to Pay No More than the Correct Amount of Tax.
4. The Right to Challenge the IRS’s Position and Be Heard.
5. The Right to Appeal an IRS Decision in an Independent Forum.
6. The Right to Finality.
7. The Right to Privacy.
8. The Right to Confidentiality.
9. The Right to Retain Representation.
10. The Right to a Fair and Just Tax System.

All taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-9222

Tuesday, January 17, 2017

Who Will Prepare Your Tax Return?


As the start of tax filing season approaches, the Internal Revenue Service is reminding taxpayers to start thinking about who will prepare their 2016 federal tax return. The IRS will begin processing tax returns on Monday, January 23. Many software companies and tax professionals will accept and submit tax returns before the IRS systems open on January 23.

In 2016, more than 131 million individual and family tax returns were e-filed, the most accurate, safest and easiest way to file. The rest of the returns received by the IRS, numbering over 19 million, were either prepared on a computer and printed or prepared by hand then mailed.

The IRS stresses that no matter who prepares it, by signing the return, the taxpayer becomes legally responsible for the accuracy of all information included.

Free Tax Preparation

Each year, millions of tax returns are prepared for free by taxpayers using IRS Free File or by volunteers at community organization sites nationwide.

IRS Free File lets taxpayers who earned less than $64,000 prepare and e-file a return for free. Go to IRS.gov and click on the ‘Filing’ tab for options on using commercial tax software. Those who earned more than $64,000 are still eligible for Free File Fillable Forms, the electronic version of IRS paper forms. This more basic Free File option is best for people who are comfortable preparing their own tax returns.

IRS trained and certified volunteers at thousands of Volunteer Income Tax Assistance and Tax Counseling for the Elderly (VITA and TCE) sites nationwide offer free tax preparation and e-filing. VITA offers free tax return preparation to taxpayers who earn $54,000 or less. The TCE program is mainly for people age 60 or older and focuses on tax issues unique to seniors. AARP participates in the TCE program and helps taxpayers with low to moderate incomes.

To find the closest VITA site, visit IRS.gov and search the word “VITA.” Or  download the IRS2Go app on a smart phone. Site information is also available by calling the IRS at 800-906-9887.
To locate the nearest AARP Tax-Aide site, visit aarp.org, or call 888-227-7669. There are also VITA and TCE sites that provide bilingual help for taxpayers who have limited English skills.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 501-896-2999

Thursday, January 12, 2017

New Two-Stage E-mail Scheme


The Internal Revenue Service, state tax agencies and tax industry leaders today warned tax professionals to be alert to an email scam from cybercriminals posing as clients soliciting their services.

A new variation of this phishing scheme is targeting accounting and tax preparation firms nationwide. The scheme's objective is to collect sensitive information that will allow fraudsters to prepare fraudulent tax returns.

These latest phishing emails come in typically two stages. The first email is the solicitation, which asks tax professionals questions such as "I need a preparer to file my taxes." If the tax professional responds, the cybercriminal sends a second email. This second email typically has either an embedded web address or contains a PDF attachment that has an embedded web address.

In some cases, the phishing emails may appear to come from a legitimate sender or organization (perhaps even a friend or colleague) because they also have been victimized. Fraudsters have taken over their accounts to send phishing emails.

The tax professional may think they are downloading a potential client's tax information or accessing a site with the potential client's tax information. In reality, the cybercriminals are collecting the preparer's email address and password and possibly other information.

The IRS urges tax professionals and tax preparation firms to consider creating internal policies or obtain security experts' recommendations on how to address unsolicited emails seeking their services.

Courtesy of IRS

For more information contact Neikirk Mahoney and Smith at 502-896-2999

Wednesday, January 11, 2017

e-Services Users Validating Identities Online


Recently, the IRS mailed letters to certain e-Services users asking them to revalidate their identities within 30 days. The filing season is approaching, and it is important that users complete this process within the established time frame.

There are two ways e-Services users can accomplish the revalidation:

 Complete the Get Transcript online process as a first time user or;
 Call the e-help desk with the Unique Security Code found on letter 5903
Here’s what users need to know about the online option:

The Get Transcript process is an online option to verify your identity, and is back online after a maintenance outage.
You must complete the entire Get Transcript registration process, including establishing a Get Transcript user name and password.
Go to https://www.irs.gov/transcript and select Get Transcript Online. Then under "First Time Users," select "Get Started.”
If you are new to this system, start the Get Transcript registration process as a First Time User.
You can create a new user name and password or use your e-Services user name and password.
Your user name and password for e-Services will remain unchanged, regardless of the user name and password you use to complete the Get Transcript Online registration.
The Unique Security Code contained in Letter 5903 is for revalidating your identity over the telephone only and cannot be used as a replacement for the Get Transcript Confirmation Code sent to you via e-mail, the Security Code sent to you via text or the Activation Code by mail.
Here’s what users need to know about the phone option:

If you complete the online option successfully you do not need to contact the e-Services Help Desk.
Callers need the Letter 5903 and the Unique Security Code found on the letter.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Tuesday, January 10, 2017

2017 Tax Season


The Internal Revenue Service and partners from the states and tax industry today reminded taxpayers that the nation’s 2017 individual income tax filing season opens Jan. 23.

The IRS expects more than 153 million tax returns to be filed this year and taxpayers have until Tuesday, April 18, 2017, to file their 2016 tax returns and pay any tax due. The deadline is extended because the Emancipation Day, a holiday in Washington, D.C., will be observed on Monday, April 17, pushing the nation’s filing deadline to April 18.

"There are a number of important changes this year involving refunds and tax law changes that we encourage people to keep in mind," said IRS Commissioner John Koskinen. “We encourage taxpayers to plan ahead and take a few minutes to review these changes. As we enter the filing season, taxpayers should know that the dedicated workforce of the IRS and the nation's tax community stand ready to help."

Taxpayers that are e-filing can still submit returns to their software provider before Jan. 23. They will hold the return and transmit it to the IRS when the systems open. The IRS also reminds taxpayers that they don’t have to wait until Jan. 23 to contact their tax professional.

In 2016, the IRS issued 111 million individual tax refunds and expects more than 70 percent of taxpayers to receive a refund in 2017. Also, the IRS reminds taxpayers that a new law requires the IRS to hold refunds claiming the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) until Feb. 15. "We encourage taxpayers to file as they normally would, including returns claiming the EITC or ACTC” Koskinen said. “The IRS and the nation's tax community are committed to making this another smooth filing season."

Courtesy of IRS

For more information contact Niekirk, Mahoney and Smith at 502-896-2999

Monday, January 9, 2017

Secure Your Office


Tax professionals can help protect taxpayer data by looking around their own offices. It’s more important than ever that tax professionals take aggressive steps to protect taxpayer information. Securing office space is as important as securing computers.

In assessing how secure your office is, consider these questions:

Are all the places where taxpayer information is located protected from unauthorized access and potential danger such as theft, flood and tornado?
Do you have written procedures that prevent unauthorized access and unauthorized processes?
Do you leave taxpayer information, including data on hardware and media, unsecured? Check on desks, photocopiers, mailboxes, vehicles and trashcans. What about in rooms in the office or at home where unauthorized access could occur?
Who authorizes and/or controls delivery and removal of taxpayer information, including data on hardware and media?
Are the doors to file rooms and/or computer rooms locked?
Do you provide secure disposal of taxpayer information? Do you use items such as shredders, burn boxes or secure temporary file areas for information until it can be properly disposed?
The answers can be very important to protecting your clients and your business. To learn more about how to protect both, review Publication 4557, Safeguarding Taxpayer Data.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999