IRS News

Issue Number:  **SPECIAL EDITION**

Important Update for e-Services Users

One of the highest priorities at the IRS is to protect taxpayer and tax preparer data as well as our systems. Starting in October, the IRS will strengthen the protection for e-services. As part of that effort, all users must re-register and validate their identities, most using the Secure Access authentication process. Learn more about this new process at Important Update for Your e-Services Account.

Issue Number:  IR-2016-107

Inside This Issue

IRS Warns of Back-to-School Scams; Encourages Students, Parents, Schools to Stay Alert

WASHINGTON — The Internal Revenue Service today warned taxpayers against telephone scammers targeting students and parents during the back-to-school season and demanding payments for non-existent taxes, such as the “Federal Student Tax.”

People should be on the lookout for IRS impersonators calling students and demanding that they wire money immediately to pay a fake “federal student tax.” If the person does not comply, the scammer becomes aggressive and threatens to report the student to the police to be arrested. As schools around the nation prepare to re-open, it is important for taxpayers to be particularly aware of this scheme going after students and parents.    

“Although variations of the IRS impersonation scam continue year-round, they tend to peak when scammers find prime opportunities to strike”, said IRS Commissioner John Koskinen. “As students and parents enter the new school year, they should remain alert to bogus calls, including those demanding fake tax payments from students.”

The IRS encourages college and school communities to share this information so that students, parents and their families are aware of these scams.

Scammers are constantly identifying new tactics to carry out their crimes in new and unsuspecting ways. This year, the IRS has seen scammers use a variety of schemes to fool taxpayers into paying money or giving up personal information. Some of these include:

• Altering the caller ID on incoming phone calls in a “spoofing” attempt to make it seem like the IRS, the local police or another agency is calling
• Imitating software providers to trick tax professionals--IR-2016-103
• Demanding fake tax payments using iTunes gift cards--IR-2016-99
• Soliciting W-2 information from payroll and human resources professionals--IR-2016-34
• “Verifying” tax return information over the phone--IR-2016-40
• Pretending to be from the tax preparation industry--IR-2016-28

If you receive an unexpected call from someone claiming to be from the IRS, here are some of the telltale signs to help protect yourself.

The IRS Will Never:

• Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.
• Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
• Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
• Ask for credit or debit card numbers over the phone.

If you get a suspicious phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

• Do not give out any information. Hang up immediately.
• Search the web for telephone numbers scammers leave in your voicemail asking you to call back. Some of the phone numbers may be published online and linked to criminal activity.
• Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page or call 800-366-4484.
• Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.
• If you think you might owe taxes, call the IRS directly at 800-829-1040.

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Issue Number:  2016-32

Inside This Issue

1.     Tax Pros Are Target of New Phishing Scam

2.     Aug. 17 Webinar: Protect Your Clients, Protect Yourself from Data Theft

3.     Security Awareness Tax Tip: Monitor Your PTIN for Suspicious Activity

4.     For Most, Highway Use Tax Returns Are Due Aug. 31

5.     Technical Guidance

 

1.  Tax Pros Are Target of New Phishing Scam

Tax professionals: Be aware of a new phishing scam that uses email purporting to be from tax software providers to trick unwitting practitioners into downloading malware to their systems and revealing passwords and other sensitive information.

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2.  Aug. 17 Webinar: Protect Your Clients, Protect Yourself from Data Theft

Cybercriminals have their eyes on tax professionals. Next Wednesday, Aug. 17 at 1 p.m. ET, join IRS and industry experts for a free audio webinar on data theft. The “Protect Your Clients, Protect Yourself from Data Theft” webinar will provide an in-depth discussion on topics tax pros need to know about. Participants earn a free, one-hour CPE credit. Register today.

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3.  Security Awareness Tax Tip: Monitor Your PTIN for Suspicious Activity

Tax preparers and practitioners can protect their clients and their businesses from identity theft by checking their PTIN accounts to ensure the number of returns filed using their identification numbers match IRS records.

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4.  For Most, Highway Use Tax Returns Are Due Aug. 31

For truckers or owners of heavy highway vehicles, most federal highway use tax returns are due Aug. 31.

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5.  Technical Guidance

Revenue Procedure 2016-42 states a charitable remainder annuity trust (CRAT) containing the sample provision found in Rev. Proc. 2016-41 will not be subject to the probability of exhaustion test set forth in Rev. Rul. 70-452, 1970-2 C.B. 199, and applied in Rev. Rul. 77-374, 1977-2 C.B. 329.

Notice 2016-47 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. In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under section 431(c)(6)(E)(ii)(I).

 Notice 2016-49 provides interim guidance on certain requirements for persons seeking certification as Certified Professional Employer Organizations (CPEOs), as defined in section 301.7705-1T(b)(1). 

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Issue Number:    IR-2016-104

Inside This Issue 

The National Taxpayer Advocate Wants to Hear from You:  Olson to Hold Public Forum on Taxpayer Service Needs in Portland, Ore., on Aug. 18

WASHINGTON —  National Taxpayer Advocate Nina E. Olson will hold a public forum in Portland, Ore., on Thursday, Aug. 18, to discuss what taxpayers want and need from the IRS to comply with their tax obligations.  The forum is being held in Portland at the invitation of Sen. Ron Wyden, Ranking Member of the Senate Committee on Finance.

The public forum will take place at the Hollywood Senior Center at 5:30 p.m. local time. 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 the IRS. 

In the National Taxpayer Advocate’s 2015 Annual Report to Congress, Olson expressed concerns about whether the IRS’s “Future State” plan adequately addresses taxpayer needs.  She recommended the IRS solicit comments from taxpayers and tax professionals regarding the “Future State” plan, including their thoughts on the extent to which taxpayers will continue to need telephone and in-person assistance.  To further public awareness and dialogue, she announced plans to hold a series of public forums around the country. The objective of the public forums is to ensure the “Future State” plan will better reflect the needs and preferences of U.S. taxpayers as they seek to comply with the tax code.

In the National Taxpayer Advocate’s FY 2017 Objectives Report to Congress, . Olson highlighted notable observations and suggestions shared by panelists at public forums held earlier this year.  She wrote:  “Although the National Taxpayer Advocate has been charged by Congress to be the voice of the taxpayer inside the IRS, what we heard at the Public Forums around the country were the voices of real taxpayers and their real representatives. They are compelling, articulate, and clear about what they need in order to comply with the tax laws."

The Aug. 18 public forum will feature an invited panel of representatives from the small business and local taxpayer communities, including the following:

Sarah Adams, Executive Director CASH Oregon | Portland, Ore.

Susan Gallagher-Smith, Enrolled Agent, Board Chair Oregon Board of Tax Practitioners | Eugene, Ore.

Michael L. Such, Research Assistant, Lewis & Clark Low Income Taxpayer Clinic Lewis & Clark Law School | Portland, Ore.

llene Waterman, VITA volunteer Native American Youth and Family Center | Portland, Ore.

Members of the public will also have an opportunity to speak.

Local Taxpayer Advocate Service (TAS) staff will be available to talk with attendees about unresolved tax issues and help determine if their situation qualifies for TAS assistance. TAS generally is unable to assist taxpayers with return preparation questions, but can provide assistance to taxpayers who have already filed their returns with the IRS for the current or past years and are experiencing problems that meet its case-acceptance criteria.

The public forum will take place at 5:30 p.m. at the Hollywood Senior Center, 1820 NE 40th Avenue, Portland, OR  97212.

For information about the forum, go to TaxpayerAdvocate.irs.gov/public-forums. 

About the Taxpayer Advocate Service

The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service (IRS) that helps taxpayers and protects taxpayer rights.  Your local advocate’s number is in your local directory and at taxpayeradvocate.irs.gov.  You can also call TAS toll-free at 1–877–777–4778.  TAS can help if you need assistance resolving an IRS problem, if your problem is causing financial difficulty, or if you believe an IRS system or procedure isn’t working as it should.  And our service is free.  For more information about TAS and your rights under the Taxpayer Bill of Rights, go to taxpayeradvocate.irs.gov. You can get updates on tax topics at facebook.com/YourVoiceAtIRS, Twitter.com/YourVoiceatIRS, and YouTube.com/TASNTA.

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Issue Number:    IR-2016-103

Inside This Issue 

New Phishing Scheme Mimics Software Providers; Targets Tax Professionals

WASHINGTON — The Internal Revenue Service today alerted tax professionals to an emerging phishing email scam that pretends to be from tax software providers and tries to trick recipients into clicking on a bogus link.

The email scheme is the latest in a series of attempts by fraudsters to use the IRS or other tax issues as a cover to trick people into giving up sensitive information such as passwords, Social Security numbers or credit card numbers or to make unnecessary payments.

In the new scheme identified as part of the IRS Security Summit process, tax professionals are receiving emails pretending to be from tax software companies. The email scheme requests the recipient to download and install an important software update via a link included in the e-mail. 

Once recipients click on the embedded link, they are directed to a website prompting them to download a file appearing to be an update of their software package.  The file has a naming convention that uses the actual name of their software followed by an “.exe extension.”

Upon completion, tax professionals believe they have downloaded a software update when in fact they have loaded a program designed to track the tax professional’s key strokes, which is a common tactic used by cyber thieves to steal login information, passwords and other sensitive data. 

Although the IRS knows of only a handful of cases to date, tax professionals are encouraged to be on the lookout for these scams and never to click on unexpected links in emails. Similar email schemes using tax software names have targeted individual taxpayers.

The IRS recently launched a new campaign to raise awareness among tax professionals about security threats posed by identity theft issues targeting their industry. The Protect Your Clients; Protect Yourself campaign features an ongoing effort to urge tax professionals to step up their security protections and be aware they increasingly are targets of cybercriminals.

The IRS urges all tax preparers to take the following steps:

• Be alert for phishing scams: do not click on links or open attachments contained in e-mails and always utilize a software provider’s main webpage for connecting to them.
• 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 long (more is better) with a mix of numbers, letters and special characters;
• Educate all staff members about the dangers of phishing scams in the form of emails, texts and calls;
• Review any software that your employees use to remotely access your network and/or your IT support vendor uses to remotely troubleshoot technical problems and support your systems. Remote access software is a potential target for bad actors to gain entry and take control of a machine.

Tax professionals should review Publication 4557, Safeguarding Taxpayer Data, A Guide for Your Business, which provides a checklist to help safeguard taxpayer information and enhance office security.

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Issue Number:  2016-31

Inside This Issue

1.     Help for Taxpayers Affected by ITIN Changes; Renewals Begin in October

2.     Scams: IRS Warns of Summer Surge in Automated Phone Scam Calls, Requests for Fake Tax Payments Using iTunes Gift Cards

3.     National Taxpayer Advocate to Hold Public Forum on Taxpayer Service Needs in Ohio on Aug. 16

4.     Memorial Day Failure-to-Deposit Penalty Error

 

1.  Help for Taxpayers Affected by ITIN Changes; Renewals Begin in October

The IRS this week announced important changes to help taxpayers comply with revisions to the Individual Taxpayer Identification Number (ITIN) program, which result from enactment of the Protecting Americans from Tax Hikes Act of 2015. The changes require some taxpayers to renew their ITINs beginning in October.

Notice 2016-48 explains how IRS will implement the ITIN program changes.

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2.  Scams: IRS Warns of Summer Surge in Automated Phone Scam Calls, Requests for Fake Tax Payments Using iTunes Gift Cards

The IRS warns tax professionals and taxpayers to stay vigilant against an increase in IRS impersonation scams. The scams come in the form of automated calls and demands for tax payments on iTunes and other gift cards.

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3.  National Taxpayer Advocate to Hold Public Forum on Taxpayer Service Needs in Ohio on Aug. 16

National Taxpayer Advocate Nina Olson and U.S. Rep. Jim Renacci, a member of the House Ways & Means Committee, 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 Tuesday Aug. 16 at 5:30 p.m. at the Parma Branch of the Cuyahoga County Public Library in Parma, Ohio.

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4.  Memorial Day Failure-to-Deposit Penalty Error

Many taxpayers who made next-day employment tax deposits on Tuesday May 31 or semi-weekly employment tax deposits on Thursday June 2 were incorrectly sent notices that the deposits were late.

The IRS apologizes for the error. No taxpayer action is required. IRS systems have been corrected and taxpayer accounts will be updated.

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Issue Number:    IR-2016-100

Inside This Issue

IRS Works to Help Taxpayers Affected by ITIN Changes; Renewals Begin in October

WASHINGTON — The Internal Revenue Service today announced important changes to help taxpayers comply with revisions to the Individual Taxpayer Identification Number (ITIN) program made under a new law. The changes require some taxpayers to renew their ITINs beginning in October.

The new law will mean ITINs that have not been used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return unless renewed by the taxpayer. In addition, ITINs issued prior to 2013 that have been used on a federal tax return in the last three years will need to be renewed starting this fall, and the IRS is putting in place a rolling renewal schedule, described below, to assist taxpayers.

If taxpayers have an expired ITIN and don’t renew before filing a tax return next year, they could face a refund delay and may be ineligible for certain tax credits, such as the Child Tax Credit and the American Opportunity Tax Credit, until the ITIN is renewed.

“The ITIN program is critical to allow millions of people to meet their tax obligations,” said IRS Commissioner John Koskinen. “The IRS will be taking steps to help taxpayers with these changes, and we’re designing this effort to minimize the burden as much as possible. We will be working with partner groups on an outreach effort to share information about these changes to ensure people understand what they need to do in advance of next year’s tax season.”

The ITIN changes are required by the Protecting Americans from Tax Hikes (PATH) Act enacted by Congress in December 2015. These provisions, along with new procedures to help taxpayers navigate these changes, are outlined in IRS Notice 2016-48, which was released today.

Who Has to Renew an ITIN

The IRS emphasizes that no action is needed by ITIN holders if they don’t need to file a tax return next year. There are two key groups of ITIN holders who may need to renew an ITIN so it will be in effect for returns filed in 2017:

• Unused ITINs. ITINs not used on a federal income tax return in the last three years (covering 2013, 2014, or 2015) will no longer be valid to use on a tax return as of Jan. 1, 2017. ITIN holders in this group who need to file a tax return next year will need to renew their ITINs. The renewal period begins Oct. 1, 2016.
• Expiring ITINs. ITINs issued before 2013 will begin expiring this year, and taxpayers will need to renew them on a rolling basis. The first ITINs that will expire under this schedule are those with middle digits of 78 and 79 (Example: 9XX-78-XXXX). The renewal period for these ITINs begins Oct. 1, 2016. The IRS will mail letters to this group of taxpayers starting in August to inform them of the need to renew their ITINs if they need to file a tax return and explain steps they need to take. The schedule for expiration and renewal of ITINs that do not have middle digits of 78 and 79 will be announced at a future date.

How to Renew an ITIN

Only ITIN holders who need to file a tax return need to renew their ITINs. Others do not need to take any action.  

Starting Oct. 1, 2016, ITIN holders can begin renewing ITINs that are no longer in effect because of three years of nonuse or that have a middle digit of 78 or 79.  To renew an ITIN, taxpayers must complete a Form W-7, Application for IRS Individual Taxpayer Identification Number, follow the instructions and include all information and documentation required. To reduce burden on taxpayers, the IRS will not require individuals renewing an ITIN to attach a tax return when submitting their Form W-7. Taxpayers are reminded to use the newest version of the Form W-7 available at the time of renewal which will be posted in September (Use version “Rev. 9-2016”).

There are three methods taxpayers can use to submit their W-7 application package to renew their ITIN. They can:

• Mail their Form W-7 – along with the original identification documents or certified copies by the agency that issued them -- to the IRS address listed on the form (identification documents will be returned within 60 days),
• Use one of the many IRS authorized Certified Acceptance Agents or Acceptance Agents around the country, or  
• In advance, call and make an appointment at an IRS Taxpayer Assistance Center in lieu of mailing original identification documents to the IRS.

Other Steps to Help Taxpayers

To make this renewal effort easier and reduce paperwork, the IRS will be offering a family option for ITIN renewal. If any individual having an ITIN middle digit of 78 or 79 receives a renewal letter from the IRS, they can choose to renew the ITINs of all of their family members at the same time rather than doing them separately over several years. Family members include the tax filer, the spouse and any dependents claimed on their tax return.

The IRS is also working closely with a variety of partner and outreach groups to share information about the ITIN changes and help raise awareness about the new guidelines. The IRS will be providing additional information and material to share with these groups and taxpayers in the near future.

“We encourage people who need to renew their ITINs to plan ahead and take action this fall to avoid issues when they file tax returns in early 2017,” Koskinen said.

New requirement for dependents whose passports do not have a date of entry into the U.S.

Beginning Oct. 1, 2016, the IRS will no longer accept passports that do not have a date of entry into the U.S. as a stand-alone identification document for dependents from countries other than Canada or Mexico or dependents of military members overseas. Affected applicants will now be required to submit either U.S. medical records for dependents under age six or U.S. school records for dependents under age 18, along with the passport. Dependents aged 18 and over can submit a rental or bank statement or a utility bill listing the applicant’s name and U.S. address, along with their passport.  

Other information about ITINs

ITINs are for federal tax purposes only and are not intended to serve any other purpose. ITINs that are only used on information returns filed with the IRS by third parties do not need to be renewed. An ITIN does not authorize one to work in the United States or provide eligibility for Social Security benefits or the Earned Income Tax Credit. ITINs are not valid identification outside the tax system and do not establish immigration status.

For more information, visit the ITIN information page on IRS.gov.

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Issue Number: IR-2016-99

Inside This Issue

IRS Warns Taxpayers of Summer Surge in Automated Phone Scam Calls; Requests for Fake Tax Payments Using iTunes Gift Cards

WASHINGTON — The Internal Revenue Service today warned taxpayers to stay vigilant against an increase of IRS impersonation scams in the form of automated calls and new tactics from scammers demanding tax payments on iTunes and other gift cards.

The IRS has seen an increase in “robo-calls” where scammers leave urgent callback requests through the phone telling taxpayers to call back to settle their “tax bill.” These fake calls generally claim to be the last warning before legal action is taken. Once the victim calls back, the scammers may threaten to arrest, deport or revoke the driver’s license of the victim if they don’t agree to pay.

“It used to be that most of these bogus calls would come from a live-person. Scammers are evolving and using more and more automated calls in an effort to reach the largest number of victims possible,” said IRS Commissioner John Koskinen. “Taxpayers should remain alert for this summer surge of phone scams, and watch for clear warning signs as these scammers change tactics.”

In the latest trend, IRS impersonators are demanding payments on iTunes and other gift cards. The IRS reminds taxpayers that any request to settle a tax bill by putting money on any form of gift card is a clear indication of a scam.

Some examples of the varied tactics seen this year are:

• Demanding payment for a “Federal Student Tax”--IR-2016-81
• Demanding immediate tax payment for taxes owed on an iTunes or other type of gift card
• Soliciting W-2 information from payroll and human resources professionals--IR-2016-34
• “Verifying” tax return information over the phone--IR-2016-40
• Pretending to be from the tax preparation industry--IR-2016-28

Since these bogus calls can take many forms and scammers are constantly changing their strategies, knowing the telltale signs is the best way to avoid becoming a victim.

The IRS Will Never:

• Call to demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.
• Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
• Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
• Require you to use a specific payment method for your taxes, such as a prepaid debit card, gift card or wire transfer.
• Ask for credit or debit card numbers over the phone.

If you get a phone call from someone claiming to be from the IRS and asking for money and you don’t owe taxes, here’s what you should do:

• Do not give out any information. Hang up immediately.
• Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page or call 800-366-4484.
• Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.
• If you think you might owe taxes, call the IRS directly at 800-829-1040.

Issue Number:  2016-30

Inside This Issue

1.     Aug. 17 Webinar: Protect your Clients, Protect Yourself from Data Theft

2.     Three 2016 IRS Nationwide Tax Forums Coming in August and September

3.     YouTube: Reminders for Extension Filers

 

1.  Aug. 17 Webinar: Protect your Clients, Protect Yourself from Data Theft

Leaders from the IRS, state tax agencies and the tax preparation community recently urged tax professionals to be proactive in the fight against identity theft and launched an expanded awareness campaign, Protect Your Clients; Protect Yourself, that will provide computer security tips and other information leading into the 2017 tax filing season.

As part of this effort, IRS invites tax professionals to participate in a free 1.5-hour webinar, Protect your Clients; Protect Yourself from Data Theft, on Aug. 17 at 1:00 p.m. Eastern.

You can register for the webinar now.

Topics include:

• Security Summit initiatives for FY 2017, including enhancing tax professional awareness of client data safeguards

• Legal requirements and best practices to better protect taxpayer information

• Emerging scams, as outlined by our Criminal Investigation expert

• Steps tax professionals should take if they suffer a loss of taxpayer data

• Opening remarks from IRS Commissioner John Koskinen and a live Q&A with IRS subject matter experts

Earn one continuing education credit in the category of federal tax.

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2.  Three 2016 IRS Nationwide Tax Forums Coming in August and September

Tax professionals have three more opportunities to take part in the 2016 IRS Nationwide Tax Forums this summer. The Tax Forums offer three full days of seminars with the latest word from IRS leadership and experts in the fields of tax law, compliance and ethics. Attendees can earn up to 19 continuing professional education credits.

Tax professionals can register for these three remaining forums:

 

WASHINGTON, DC	Gaylord National Hotel and Convention Center	August 23 - 25
ORLANDO, FL	Hyatt Regency Orlando	August 30 - September 1
SAN DIEGO, CA	Town & Country Resort and Convention Center	September 13 - 15

 

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3.  YouTube: Reminders for Extension Filers

A new IRS YouTube video has a few things to keep in mind, if your client is an extension filer.

Watch this and other videos on the IRS YouTube Channel

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