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  • Friday, August 11, 2017 10:42 AM | NCSA Website Admin (Administrator)

    In This Issue of NSAlert:

    FASB Proposes Change For Contributions Accounting

    The Financial Accounting Standards Board on August 3 issued a proposed Accounting Standard Update (ASU) intended to clarify and improve the scope and the accounting guidance for contributions received and made, primarily by not-for-profits. FASB requested comments on the proposed ASU by November 1, 2017.

    According to FASB, the proposed ASU is intended to help organizations decide if transactions should be accounted for as a contribution or an exchange. Organizations would accomplish this by using clarifying guidance to evaluate whether a resource provider is receiving value in return for the resources transferred.  The proposed ASU also helps organizations evaluate such arrangements by using an improved framework to determine whether a contribution is conditional or unconditional, and better distinguish a donor-imposed condition from a donor-imposed restriction.

    "Stakeholders indicated that there is difficulty and diversity in practice among not-for-profits with characterizing grants as exchanges or contributions, and in distinguishing between conditional and unconditional contributions" said FASB Chairman Russell G. Golden. "The proposed ASU provides not-for-profits with a more robust framework to evaluate and determine if a transaction should be accounted for as a contribution or an exchange."

    Accounting for contributions is an issue primarily for not-for-profit organizations because contributions are a significant source of revenue. However, FASB stressed that the amendments in this proposed ASU would apply to all organizations that receive or make contributions of cash and other assets, including business enterprises.

    The proposed standard follows the same effective dates as FASB's recent Revenue Recognition standard:

    • A public company or a not-for-profit organization that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market would apply the new standard to annual reporting periods beginning after December 15, 2017, including interim periods within that annual period.
    • Other organizations would apply the standard to annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

    Early adoption of the amendments in this proposed ASU would be permitted irrespective of the early adoption of the amendments in the Revenue Recognition standard.

    A copy of the proposed ASU is available here.


    Republicans Aim For Fast Tax Deal This Fall

    Even though many senators bemoaned the partisan nature of the health-care debate, Republicans plan to use the same reconciliation procedure to rewrite the tax code.  The plan was confirmed by Senate leader Mitch McConnell, who acknowledged this would also require all but two Republicans to vote for the plan or risk defeat.

    White House Legislative Affairs Director, Marc Short said at a press conference that he expects the House to pass tax legislation in October and the Senate to do so in November. Short also said he expects the House and Senate to pass budget resolutions by October, which are likely to include instructions to use the reconciliation procedure.

    The timing of a tax reform bill raises concerns about the time necessary for the IRS to prepare for filing season.  When asked if the legislation could pass by November, Sen. Charles E. Grassley (R-Iowa), the second-ranking Republican on the Finance Committee, responded, "It'd better be.  It's almost got to be signed by the president by that time because IRS has to have that much time so you can file taxes in January."  But Rep. Peter Roskam (R-Ill.), chairman of the House Ways and Means Tax Policy Subcommittee, said on the same day that tax reform could still happen even if it stretches into 2018.

    Nevertheless, Rep. Kevin Brady, Chair of the Ways and Means Committee, discussed tax reform with NSA Executive Vice President John Ams on August 3 and stated that a tax reform proposal is under discussion and would likely be unveiled in September, with hearings and a House vote soon to follow.  Brady said any decision on tax rates, or the elimination of deductions or other details is still unclear because of the need to satisfy reconciliation rules, which require any tax proposal to be revenue neutral during the ten year budget window following enactment. 


    Passwords Of Tax Professionals New Scam Target


    The IRS Security Summit warns tax professionals to be alert to a new phishing email scam in which criminals impersonate tax software providers and attempt to steal usernames and passwords.

    According to the IRS, this latest scam email variation comes with a subject line of "Software Support Update" and highlights an "Important Software System Upgrade." It thanks recipients for continuing to trust the software provider to serve their tax preparation needs and mimics the software providers' email templates.

    The e-mail informs the recipients that due to a recent software upgrade, the preparer must revalidate their login credentials. It provides a link to a fictitious website that mirrors the software provider's actual login page.

    Instead of upgrading software, however, the tax professionals are providing their information to cybercriminals who use the stolen credentials to access the preparers' accounts and to steal client information.

    The Security Summit reminds tax professionals that software providers do not embed links into emails asking them to validate passwords. Also, tax professionals and taxpayers should never open a link or an attachment from a suspicious email. Tax professionals who receive emails purportedly from their tax software providers seeking login credentials should send those scam emails to their tax software provider. 

    This new scam is yet another reason why tax professionals need to take strong security measures to protect their clients and protect their business.


    IRS Planned E-Services Outage

    There will be a planned outage of all e-Services tools from 6 p.m. Thursday, August 17 through 6 a.m. Monday, August 21. During this period, users will be unable to access the Transcript Delivery System (TDS) and Secure Object Repository (SOR), Registration and TIN Matching. All applications will also be offline until August 22.

    Affordable Care Act Information Return (AIR) filers may resume submission of applications for Transmitter Control Codes starting on August 22. The application process for AIR users has been offline since July because of the e-Services platform transition.

    Also on August 21, a redesigned landing page for e-Services will launch with a new look and feel.

    The scheduled outage will complete the transition of e-Services to a new platform that will improve the look and feel of applications and complete a multi-year technological upgrade. The IRS will also perform testing during that four-day period.



    Some ITINs Expire By End of 2017 – Renew Now


    The IRS has begun mailing notices to more than 1 million taxpayers with expiring Individual Taxpayer ?Identification Numbers (ITINs) to inform them their ITIN is expiring, and urging them to renew as quickly as possible to avoid tax refund and processing delays.


    ITINs with middle digits 70, 71, 72 or 80 are set to expire at the end of 2017. The notice being mailed explains the steps taxpayers need to take to renew their ITIN if it will be included on a U.S. tax return filed in 2018.


    The IRS said notices will be issued over a five-week period beggining early August. Taxpayers who receive the notice but have already acted to renew their ITIN do not need to take further steps unless another family member is affected.


    Under the Protecting Americans from Tax Hikes (PATH) Act, ITINs that have not been used on a federal tax return at least once in the last three consecutive years will expire Dec. 31, 2017, and as mentioned above, ITINs with middle digits 70, 71, 72 or 80 will also expire at the end of the year. 

  • Friday, July 28, 2017 9:23 AM | NCSA Website Admin (Administrator)

    In This Issue of NSAlert:

    White House and Key Republicans Issue Tax Reform Guidelines; No Border Tax

    Key lawmakers and Administration officials on July 27 issued a joint statement on tax reform that outlines several broad policy goals and specifically ends further consideration of the contentious border adjustment tax (BAT). As proposed in the House GOP tax reform blueprint, the BAT sought to impose a 20 percent tax on all imports and exempt all exports. 

    "While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform," the statement says. It explains, "We are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base."

     Under Senate budget reconciliation rules, the vehicle the GOP leadership has said will drive home tax reform, legislation must be revenue neutral over a 10-year budget period. Eliminating the BAT means finding a new source of funding proposed tax cuts.  Those sources may include restrictions on, or the elimination of, a number of provisions that directly affect NSA members or their clients.

    More broadly, the statement says that the policy goal remains, "a plan that reduces tax rates as much as possible, allows unprecedented capital expensing, places a priority on permanence, and creates a system that encourages American companies to bring back jobs and profits trapped overseas."

    The statement was jointly issued by Treasury Secretary Steve Mnuchin, National Economic Policy Council Director Gary Cohn, Senate Majority Leader Mitch McConnell (R-KY), House Speaker Paul Ryan (R-WI), Senate Finance Committee Chairman Orrin Hatch (R-UT) and House Ways and Means Committee Chairman Kevin Brady (R-TX). All six have been working for months to negotiate an agreement on the parameters of a tax reform plan.

    Although the talks between GOP leaders and White House officials will continue, the six officials say in today's statement that "the time has arrived for the two tax-writing committees to develop and draft legislation."

    A more-detailed plan, if not draft legislative language, is expected to emerge in September, followed by action in the tax committees. The statement said that, "Our expectation is for this legislation to move through the committees this fall, under regular order, followed by consideration on the House and Senate floors. As the committees work toward this end, our hope is that our friends on the other side of the aisle will participate in this effort."

    The full text of the statement is available here


    ACA Payments Due Despite Executive Order, IRS Says


    Taxpayers remain liable for Affordable Care Act shared responsibility payments regardless of President Donald Trump's Jan. 20 executive order directing agencies to reduce potential burdens created by the law, the IRS said in multiple information letters.

    Letters released during the second quarter of 2017 responded to queries on taxation of employer-provided life insurance and nonqualified deferred compensation, retirement account rollovers when a financial institution fails, and other items.  Information letter INFO 2017-0010, furnished by the IRS national office, said that the Jan. 20 executive order to minimize economic burden of the Affordable Care Act doesn't change the law; it merely directs agencies to exercise their permitted authority to reduce potential burdens. The ACA legislative provisions, including imposition of the employer shared responsibility for failure to comply, remain in force until changed by Congress.

    INFO 2017-0010 is available here.


    IRS Updates Due Dates, Extensions for Tax and Information Returns

    The IRS has issued regulations updating the due dates and time extensions for filing certain tax returns and information returns to reflect recent laws.

    The changes are set out in final and temporary regulations (T.D. 9821) issued July 18 and will bring those dates into agreement with requirements in Section 2006 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 and Section 201 of the Protecting Americans from Tax Hikes Act of 2015.

    The final and temporary rules:

    • Amend Treasury regulations to account for the due dates for the income tax returns of C corporations specified by Section 2006(a) of the Surface Transportation Act.
    • Amend Treasury regulations to implement Section 2006(b)(2) of the Surface Transportation Act and provide consistency for automatic extensions for non-bankruptcy estates and trusts filing Form 1041, U.S. Income Tax Return for Estates and Trusts.
    • Amend Treasury regulations to implement Section 2006(b)(4) through (b)(8) of the Surface Transportation Act and provide consistency for automatic extensions for tax-exempt organizations filing specified returns.
    • Make conforming amendments to reflect that the due date for forms—Form W-2, Wage and Tax Statement, and others in that series; Form W-3, Transmittal of Wage and Tax Statements; and Form 1099-MISC, Miscellaneous Income—that report non-employee compensation is Jan. 31 of the calendar year following the calendar year for which the information is being reported, as enacted by Section 201 of the PATH Act.

    The IRS also issued proposed rules (REG-128483-15) that cross-reference the temporary regulations.

    The final and temporary rules are available here.



    IRS Finalizes Plan to Increase EA Exam Fee


    The IRS will charge $81 for each part of the enrolled agent exam next year, after the agency finalized its proposal for the higher fee, which the IRS said covers its cost of providing the service. The IRS also said the third-party contractor that administers the exam would raise its service charge for each section of the three-part test called the special enrollment examination: $100.94 for the May 2017 to February 2019 testing periods and $103.97 for May 2019 to February 2020. The price was $98 for each part of the exam during the May 2016 to February 2017 period.

    The new price is to take effect March 1, 2018.

    The final rules are available from the Federal Register here


    IRS Pilot Program Offering Virtual Appeals Conferences

    Taxpayers and their representatives can use virtual technology to remotely attend IRS Appeals conferences beginning August 1. 

    The IRS Office of Appeals announced the virtual conference pilot program in a July 24 news release (IR-2017-122). The agency said the program will use a secure, web-based screen-sharing platform to connect with taxpayers and provide an alternative to those who prefer face-to-face interaction over a phone call. "Taxpayers who choose the web-based option will be able to get face-to-face service remotely," IRS Chief of Appeals Donna Hansberry said in the July 24 news release. "In the future, the technology may give taxpayers greater options in engaging with Appeals and could allow us the flexibility to serve taxpayers virtually from any location using mobile devices or computers."

    Readers may recall that the IRS last fall revised the Internal Revenue Manual to instruct Appeals officers to conduct all conferences by phone unless a taxpayer requests a face-to-face meeting and the case meets certain criteria.  Practitioners have complained that the revision has made it more difficult for taxpayers to get an in-person conference, even when requested.

    The IRS told Bloomberg BNA in a July 24 email that the virtual conferencing pilot isn't a replacement for in-person conferences. "Appeals continues to make in-person conferences available in appropriate cases."

    The IRS plans to assess the pilot program after it begins August 1. This assessment will evaluate taxpayer satisfaction with the technology, the agency said.  The Office of Appeals is testing the pilot with a limited number of employees. Only employees who are part of the pilot will have the ability to offer the web-based virtual conferencing option, the agency said.

    The IRS News Release is available here.


    IRS Asks Court To Allow PTIN Fee During Appeal of Case

    The Department of Justice asked a federal district court July 24 to let the IRS resume charging a fee for tax preparer identification numbers as the agency decides whether to appeal an order that barred it from collecting payment.  The motion was filed regarding the decision in Steele v. United States, D.D.C., No. 1:14-cv-01523.

    The court filing said that, if the IRS appeals and wins its case, the public "will be irreparably harmed" because the agency would not have collected the fee for any PTINs issued during the appeals process.  Unless the court granted restitution to the government, there would be "no after-the-fact recourse to recover the likely tens of millions of dollars of fees that would be uncollected from PTIN holders," the DOJ filing said.  Additionally, "funds appropriated for other programs would have to be re-directed and thus would be unavailable to provide other taxpayer services," the motion said.

    NSAlert readers will recall that in the Steele case, the court decided the IRS did not have the authority to charge the PTIN fee and further directed that all such fees should be refunded. The motion came weeks after the IRS reopened the PTIN program without a mechanism to collect payment. The agency temporarily shut down the program to make the changes in response to the June 1 order.


    IRS to Boost ID Security for Business, Trust, Estate Filers; Individual ID Thefts Down

    IRS Commissioner John Koskinen announced on July 25 that, so far for 2017, individuals reporting identity theft have declined sharply compared to the same time in 2016 and 2015. In the first five months of 2017, about 107,000 taxpayers reported being victims of identity theft, compared to the same period in 2016, when 204,000 filed victim reports. That's about 97,000 fewer victims – representing a drop of 47 percent. For comparison, there were nearly 297,000 identity theft victims during the first five months of 2015. Koskinen attributed the drop to safeguards put in place due to the efforts of the IRS and its Security Summit partners. The information was also announced in an agency press release, IR-2017-123.

    Koskinen cautioned that the IRS has seen an increase in identity theft involving business-related tax returns. So far for 2017, the IRS has identified approximately 10,000 business returns as potential identity theft through June 1, compared to about 4,000 for calendar year 2016, and 350 for calendar year 2015. As a result, the IRS is instituting additional measures designed to reduce business-related tax return fraud.

    Payment history, parent company information, and tax filing history are among the new documentation materials the IRS may request from practitioners when they file business, trust, or estate returns for the 2018 tax season. The IRS will also ask for the name and Social Security number of the individual who signs the tax documents and additional information based on deductions claimed, the agency said in the news release.

    The affected returns include: Form 1120, U.S. Corporation Income Tax Return; Form 1120S, U.S. Income Tax Return for an S Corporation; Form 1041, U.S. Income Tax Return for Estates and Trusts; and Schedule K-1, Partner's Share of Income, Deductions, Credits, etc., according to the release.

    "This shows that identity thieves are constantly working to come up with new ways to get around the barriers we've put up. That's why we're working to put more taxpayer protections in place for the 2018 filing season coming up. We'll be sharing more of those details at a press conference later this fall," Koskinen said.

    IR-2017-123 is available at here
  • Friday, July 14, 2017 9:31 AM | NCSA Website Admin (Administrator)

    In This Issue of NSAlert:

    Security Summit Launches Education Campaign Aimed at Tax Pros

    The IRS has cautioned all tax professionals to increase their computer security and be aware of email scams that identify themselves as a friend, customer or company.

    As part of the Security Summit effort, the IRS, state tax agencies and the tax industry have also launched another series in the Protect Your Clients, Protect Yourself campaign called "Don't Take the Bait." It's critical that tax professionals remember they have not just an obligation but a legal requirement under federal law to protect taxpayer information.

    The IRS points out that the number one goal of phishing thieves is to monetize their stolen information. Even as the IRS, states and the tax industry have made their systems more secure against tax-related identity theft, the need for criminals to have even more information to better impersonate taxpayers has increased. This is why tax professionals, who hold sensitive financial data, are critical targets.

     "We continue to see new and evolving threats involving data breaches, intrusions and various takeovers that put people's personal information at risk," said John Koskinen, IRS Commissioner. "These efforts are increasingly targeting tax professionals and businesses with tax information. Too many still overlook basic security steps needed to protect their data. As part of this, we urge the tax professional community: Beware of your inbox. Don't take the bait from these phishing scams."

    Phishing scams use bait or lures to trick preparers into opening an infected link or attachment, or disclosing usernames and passwords to critical accounts. Falling for the phishing bait means exposing taxpayer data to theft. Thieves also are interested in stealing preparers' e-Services passwords, Electronic Filing Identification Numbers (EFINs), Centralized Authorization File (CAF) numbers and Preparer Tax Identification Numbers (PTINs.)

    From January through May, there were 177 tax professionals or firms who reported data thefts involving client information involving thousands of people. The IRS currently is receiving three to five data theft reports a week from tax practitioners.  "We've been warning tax professionals that they are increasingly the targets of national and international cybercriminal rings. These syndicates are well-funded, knowledgeable and creative. It's going to take all of us working together to combat these identity thieves," Koskinen said. "But doing nothing or making a minimal effort is no longer an option. Anyone who handles taxpayer information has a legal responsibility to protect it."

    The Security Summit will focus the "Don't Take the Bait" series on security awareness, emphasizing the various types of phishing scams - a common and successful tactic used in data breaches. The 10-week series of news releases, which began earlier this week, also focuses on what steps tax professionals can take to protect their clients and their business from these attacks.

    The new series follows up on a recommendation made to the IRS last month by the Electronic Tax Administration Advisory Committee to raise awareness about the steps a tax professional can take to better protect their confidential data.

    FASB Discusses Accounting Clarity for Cloud Setup Fees

    The Financial Accounting Standards Board has begun discussions about the propper accounting treatment for the implementation and set up fees associated with the use of cloud systems to store data.

    Rapid technological changes have caused many companies to switch to cloud systems despite substantial set-up fees.  However, there have been substantial and noticeable differences in the accounting for those fees, according to July 11 discussions among the Financial Accounting Standards Board and its Private Company Council.  FASB members were told that a cloud arrangement allows more flexibility to adapt as new technology changes, whereas a purchased hardware/software system must be replaced if it cannot accommodate the implementation of a necessary technology advancement. 

    Cloud computing can be costly. Some companies can incur millions of dollars in upfront fees to set up cloud computing services. These costs are generated from additional steps companies must take to ensure their system can communicate with a cloud arrangement. These upfront costs are separate and substantially higher than the hosting fee, which is a continuing charge paid to a cloud company for housing and maintaining data.

    Currently there are no specific accounting rules for how to account for the upfront set up fees. Companies therefore differ in how to account for them. Some book them as an expense whereas others capitalize them.  FASB's Emerging Issues Task Force unit will address the topic at its meeting on July 20, with the intention of beginning the process of recommending a proposed accounting rule for FASB consideration.

    Trump Tax Plan Could Reduce Federal Revenue By Trillions?

    President Donald Trump's proposed tax cuts would lower federal revenue by $7.8 trillion over a decade and mostly benefit the highest earners, according to a new study released July 12 by the nonpartisan Tax Policy Center (the TPC).  A copy of the study is available here.

    The study evaluated the one-page outline released by the White House on April 26.  Trump's outline would create a 15 percent tax rate for businesses of all stripes—down from current rates that can top 35 percent. It would also consolidate the existing seven individual tax rates to just three—cutting the top rate to 35 percent from the current 39.6 percent. The plan would also eliminate a 3.8 percent tax on investment income for high earners that was enacted as part of Obamacare.

    The study provides a glimpse of the difficulties Congress will face in enacting meaningful tax reform.  It shows that even if it achieves all the revenue-raisers it calls for, it would still add trillions to the deficit—and face criticism as a gift to the top one percent of income earners.  About 40 percent of the tax cut would go to the top 1 percent of earners, who would see an average after-tax gain of 17.8 percent. By contrast, the middle one-fifth of Americans would see an average gain of 3.3 percent, the study said.

    When accounting for suggested revenue-raisers like ending most itemized deductions and personal exemptions, the 10-year revenue loss under the Trump tax plan would be $3.5 trillion, the study found. And the top 1 percent's gains would be 11.5 percent, while middle-income gains would be 1.3 percent, the report said.

    The TPC noted that the White House plan lacked sufficient detail for detailed revenue scoring, so the TPC analysis filled in some blanks using proposals from Trump's presidential campaign. At the same time, some proposals, such as repealing the alternative minimum tax and the estate tax, were relatively easy to score, according to TPC officials.

    Trump administration officials have repeatedly promoted the President's tax plan as a benefit for middle-class taxpayers, but some elements in it would be of particular benefit for wealthier people, according to the TPC report, which cited the estate tax as an example.  The estate tax, which the plan would repeal, currently applies only to estates worth more than $5.49 million for individuals or $10.98 million married couples.  "If you're serious about not cutting taxes for higher income people you probably wouldn't repeal the estate tax," TPC Director Mark Mazur said.  Overall under the plan, "The benefits largely flow to the top."

    The study also shows the procedural struggle awaiting the plan in Congress. Under the budget reconciliation plan legislative rules that Senate Republican leaders plan to use to avoid Democrats' opposition, any tax changes that add to the deficit after a decade must automatically expire. The cost of the tax cuts alone in the second decade would be $13.1 trillion.  "There's a fairly substantial revenue hole to fill," Mazur said.

    When TPC applied a "dynamic" scoring method, which accounts for economic growth, the revenue cost of Trump's tax cuts decreased slightly to $7.7 trillion; when factoring in the revenue-raisers on a dynamic basis it is $3.4 trillion.  Dynamic scoring can vary depending on which model is applied, making it somewhat controversial among economists since it relies on assumed economic growth rates.  The rosier the assumptions, the less the budget shortfall.

    Overall, the TPC study found if all the cuts and revenue raisers contemplated by Trump's one-page outline were applied, 70 percent of U.S. households would enjoy a tax cut, while 20 percent would see a net tax increase under the plan.

    Congressional Tax Bills That May Affect You And Your Clients

    It is anybody's guess whether Congress will be able to enact a tax reform bill or any tax-related bill this year. However, there are various measures percolating at various stages of the legislative process, so it is wise to keep informed.  Below is a chart that summarizes the status of key tax policy legislation currently pending in either the House or Senate.



    Legislative Purpose

    Bill Status


    Tax Reform

    Corporate, Individual and International Taxation




    (To be introduced) Congressional tax-writers want a revamp of the tax code.

    House: House GOP tax reform blueprint released in June 2016 calls for a 20 percent corporate tax rate; a shift to territorial taxes on overseas income under destination-based taxes; a border adjustability provision that would tax imported goods but exempt exports; three tax brackets at 12 percent, 25 percent, and 33 percent for individuals; a 25 percent tax rate for passthroughs; and a repeal of the estate tax and alternative minimum tax.

    Senate: Finance Committee Chairman Orrin G. Hatch (R-Utah) had been working on a dividends paid corporate integration idea as a way to eliminate double taxes on corporate income. However, he has not released the plan and has said he is now focused on a broader tax reform effort.

    House: Ways and Means Committee Chairman Kevin Brady (R-Texas) and his staff are working on turning the blueprint into legislation and plans to hold hearings in the coming weeks. He has said he will wait to mark up a bill in his committee until seeing more details from the White House plan, which he says is about 80 percent in alignment with what the House wants. The border adjustment tax is facing opposition from big retailers and some members in the House and Senate over concerns it could raise costs for consumers.

    Senate: Republican tax counsels in the Senate are looking at previously introduced tax reform plans for ideas. Many of them include ideas to broaden the tax base to lower tax rates. Sen. Hatch has said that his staff is working on a tax plan, but that it was too early to get into details.

    White House: The administration released a one-page outline April 26 that would cut the corporate rate to 20 percent. The document doesn't mention the border adjustment provision of the House plan, a signal that the administration is still working through the issue. The administration is expected to release a more detailed document in June.

    Health Care

    Affordable Care Act




    (Better Care Reconciliation Act) Unlike the House-passed bill (H.R. 1628), the Senate's version retains the 3.8 percent net investment income tax and the 0.9 percent Medicare surtax on wages, railroad retirement compensation, and self-employment income above a certain threshold—both of which would apply to individuals earning more than $200,000 and couples filing jointly who earn more than $250,000. The Senate bill also would retain the ACA's $500,000 limit on how much of health insurance executives' pay is tax deductible and would allow individuals to pay premiums with money from tax-favorable health savings accounts.


    Senate: The Senate version was released July 13. It's not clear if the measure has the support to pass.


    (American Health Care Act) House Republicans on March 6 released legislation that would replace the Affordable Care Act. H.R. 1628 would repeal many of the ACA's related taxes and retroactively roll back penalties for employers that fail to provide coverage and individuals who fail to obtain it. The bill also includes an advanceable, refundable, age-adjusted tax credit capped at individual income of $75,000 and for joint filers at $150,000.

    House: House Republicans passed the bill 217-213 on May 4. Its passage was the end of a contentious few months, which included House leadership pulling the bill from the floor before a March 24 floor vote. Last-minute amendments, including $8 billion to help individuals with pre-existing conditions pay premiums, helped get reticent members' support for the bill.

    Senate: Republican senators have split into two working groups to begin working through the bill, and some say they plan to craft new legislation entirely. Republicans plan to adjust the tax credits in the bill to make them more generous for individuals who are older or who are low-income. Sen. Rob Portman (R-Ohio) said he is considering creating a new tax credit for individuals who lose Medicaid coverage and need to purchase insurance on the marketplace. Republicans can only lose two votes and still pass the bill through the chamber.

    White House: The White House is expected to take a bit of a back seat now that the bill is in the Senate in order to give lawmakers the time needed to pass it. Trump celebrated with House members at the White House May 4 immediately following the bill's passage.

    Health Care

    Tax Credits




    (VETERAN Act) H.R. 2372, introduced May 4 by Rep. Sam Johnson (R-Texas), says a veteran isn't eligible for health coverage under a Department of Veterans Affairs program unless enrolled. The bill is in response to criticism from Democrats that the American Health Care Act could bar veterans from using tax credits to pay for health insurance if they are eligible but not enrolled in VA coverage.

    House: The bill passed by voice vote on June 15.



    (Verify First Act) Rep. Lou Barletta (R-Pa.) on May 22 introduced H.R. 2581 to require a Social Security number before an individual can receive a health care tax credit. The bill is part of an effort to address concerns with the American Health Care Act.

    House: The bill passed 238-184 on June 13.



    (Broader Options for Americans Act) H.R. 2579 would allow some individuals to qualify for premium tax credits if they continue group health plans under the Consolidated Omnibus Budget Reconciliation Act (COBRA). Rep. Pat Tiberi (R-Ohio) introduced the measure May 19. The bill is part of an effort to address concerns with the American Health Care Act.

    House: The bill passed 267-144 on June 15.


    Corporate Inversions





    (H.J. Res. 54) The legislation disapproves of the final Section 385 debt-equity rules released in October 2016. It also would use the Congressional Review Act to revoke them.

    House: The bill, introduced Jan. 31 by Rep. Todd Rokita (R-Ind.), has been referred to the Ways and Means Committee. A floor vote hasn't been scheduled.

    House: Democrats released a letter Feb. 8 criticizing the bill.

    Senate: No companion legislation has been introduced.

    Estate and Gift Taxes

    Estate Tax Repeal




    (H.R. 451, H.R. 198, H.R. 30, H.R. 631, S. 205) Several bills have been introduced in both chambers to repeal the estate tax.

    House, Senate: Senate Finance Committee member John Thune (R-S.D.) and House Ways and Means Committee member Kristi Noem (R-S.D.) are the lead sponsors on companion repeal legislation, H.R. 631 and S. 205.

    House: The House GOP tax reform blueprint includes a repeal of the estate tax.

    White House: President Trump called for a repeal during his election campaign, replacing it with a capital gains tax for assets held until death.

  • Friday, June 30, 2017 9:35 AM | NCSA Website Admin (Administrator)

    In This Issue of NSAlert

    NSA Opposes NASBA Draft Rules For CPE

    NSA today filed a letter with NASBA opposing proposed rules that would allow the AICPA and state CPA societies to offer continuing education without registering as CPE program sponsors with the NASBA Registry of CPE Sponsors. A copy of the proposed rules is available here.

    NSA's letter pointed out that, "NSA has long encouraged its members to earn professional credentials, including the CPA credential. Moreover, NSA requires all members to earn, at minimum, 72 hours of continuing professional education during each three year reporting cycle. We take education seriously."

    Because of our emphasis on education, NSA's letter expressed particular concern that the AICPA and state CPA societies would be concerned qualified CPE program sponsors in the absence of any demonstration of having met any of the CPE education standards that all other program sponsors must meet. The letter stated that it is NSA's belief that any CPE recognized by a state Board of Accountancy should be judged on the quality of the education itself, not by the name of the program sponsor or whether the sponsor has "CPA" in its name.

    NSA's letter concluded that all CPE program sponsors should have the opportunity to compete in the CPA education market on the same terms and conditions as others similarly situated and, if NASBA moved forward with the proposed rule, then NSA and its affiliated state societies should also be granted an exemption from registering with the NASBA Registry of CPE Sponsors.

    A copy of NSA's letter is available here.


    House Panel Approves Bill Slashing $149M From Current IRS Budget

    A House panel on June 29 approved a bill calling for an additional $149 million cut to the IRS budget. The proposal would also limit the agency's oversight of conservation easements, tax-exempt organizations, and estate taxes.

    The bill protects "the rights and privacy of taxpayers" and "ensures that the IRS is using its funds appropriately," Rep. Rodney Frelinghuysen (R-N.J.), chairman of the House Appropriations Committee, said at the Financial Services and General Government Subcommittee markup.

    The subcommittee approved the bill by a voice vote. The full appropriations panel is expected to take up the legislation when Congress returns from its July 4th break

    Under the bill, the Internal Revenue Service would receive $11.1 billion for fiscal year 2018, which is $111 million above the Trump administration's budget request, but still below current levels. It also calls for an increase in funds to strengthen cybersecurity and information technology, while requiring the agency to provide extensive reporting of its spending and information technology.

    The spending bill would prohibit the use of funds to finalize, implement, or enforce amendments to the controversial estate tax rules under tax code Section 2704, "or any substantially similar amendments to such regulations." The rules (REG-163113-02), proposed last August, would change the valuation of interests in family-owned businesses for estate, gift, and generation-skipping transfer tax purposes. The regulation's opponents say the regulations are too broad and prevent family businesses from applying discounts to transferred assets for legitimate purposes such as lack of marketability and lack of control.

    One new item in the appropriations bill would add specific restrictions on the ability of the IRS to curb political activity by churches. Any IRS action to enforce the longstanding legal prohibition against a church or other religious institution spending money to influence elections would have to be reviewed by the IRS commissioner and reported to congressional tax-writing committees under the bill.

    The bill would continue to restrict the agency's rulemaking on 501(c)(4) organizations' political activities because such regulation "could jeopardize the tax-exempt status of many nonprofit organizations and inhibit citizens from exercising their right to freedom of speech," according to a committee statement.


    Companies Urged To Begin Preparing For New Revenue Recognition Standard

    FASB has urged companies to update their internal controls to prepare for potential risks caused by landmark changes to revenue recognition rules. The rules, Revenue from Contracts with Customers: Accounting Standards Codification 606, were adopted by the Financial Accounting Standards Board in 2014. They go into effect for public companies in Jan. 2018, and private companies a year later.

    FASB noted that the SEC's staff accounting bulletin 74 requires a company to evaluate whether the change to the revenue rule will have a material impact on their financial statements.

    The current guidance allows that if companies aren't yet able to deduce materiality, then they aren't required to estimate the rules' effect. This grace period is likely to end once the new revenue rule goes into effect for public companies in 2018.


    Electronic Tax Administration Advisory Committee Issues 2017 Annual Report

    The Electronic Tax Administration Advisory Committee (ETAAC) on June 28 issued its annual report to the IRS and the Congress, including numerous recommendations on improving electronic security in the tax system and fighting tax fraud related to identity theft.

    The IRS said that the report marks the first year during which the ETAAC has turned its attention to efforts undertaken by the Security Summit -- an unprecedented undertaking by the IRS and its partners in state tax administration and the private sector.

    NSA Executive Vice President John Ams, who served as chair of the ETAAC Outreach Subgroup, complimented the IRS on its efforts to quickly make tax professionals aware of phishing scams and other attempts by criminals to steal client information. He said, "These IRS actions served to alert tax professionals to the need for data protection. That effort should be supplemented with efforts to provide information about minimum security standards and how best to secure confidential data." Accordingly, the ETAAC report recommends that IRS review and update the key IRS publications for the IRS e-file Program and provide simple, clear and actionable guidance on how to implement a security program.

    A copy of the report is available on the IRS website here.


    FASB To Consider Consolidation Accounting Proposal

    The FASB Board on June 21 voted to propose restructuring consolidation guidance—currently in ASC 810—to a new codification number, ASC 812.

    FASB's proposal, though focused only on wording and structural changes, might cause some companies' consolidation conclusions to change, the board's discussions indicated. FASB will therefore provide transition requirements so that companies won't have a "correction of an error".

    "We've been unsuccessful in some areas where we've tried to make things easier to follow and understand because they say 'you change a single word you change meaning'," said FASB Vice Chairman James Kroeker. "So if you change a word, you change the meaning, a conclusion could change and therefore there's been resistance to these types of efforts because we haven't provided transition," he said.

    Consolidation accounting is generally known as one of the most complex areas in financial reporting and is used to combine the financial information of a parent company and its subsidiaries, when the parent holds more than 20 percent in the subsidiary. A company's consolidation analysis can affect its leverage ratios, results, and cash flows.


    IRS Offers Early Taxpayer ID Renewal

    Taxpayers with expiring individual taxpayer identification numbers can start renewing their information this month instead of in October, according to Ken Corbin, commissioner for the IRS Wage and Investment Division. Corbin said that, "We wanted to ensure ITIN holders were able to get the assistance they need, and we've taken measures to sufficiently increase the number of employees available to process these renewal applications,"

    The IRS issues a nine-digit tax-processing number for individuals who are required to file a federal tax return but aren't eligible for a Social Security number. Such taxpayers include foreign nationals and resident aliens. The agency is in the second year of the renewal program after changes called for under the Protecting Americans from Tax Hikes (PATH) Act enacted by Congress in December 2015.

    Corbin said the IRS will launch an information campaign about the changes for the benefit of the public, outreach groups, stakeholders, and partners in the tax community, updating material "about the renewal process on our special ITIN page on"

    Taxpayers with middle digits 70, 71, 72, or 80 in their ITINs must renew their numbers and have the opportunity to renew their family members' information as well, according to an IRS news release (IR-2017-109). "For example: 9NN-70-NNNN; NNN-71-NNNN; 9NN-72-NNNN; 9NN-80-NNNN) need to be renewed," the release said.

    Another group that will be affected includes taxpayers who haven't used their ITINs "on a federal tax return at least once in the last three consecutive years," the release said. Their numbers will expire Dec. 31.

    The IRS also reminded taxpayers that ITINs with middle digits 78 and 79 already expired last year. Taxpayers with these numbers can renew at any time.



    Former Tax Court Judge Sentenced to 34 Months for Conspiracy

    Former U.S. Tax Court Judge Diane Kroupa was sentenced to 34 months in prison and ordered to pay $457,000 in restitution for conspiracy to defraud the U.S. government. The U.S. District Court for the District of Minnesota also sentenced Kroupa to three years of supervised release.

    Kroupa and her husband, Robert Fackler—who took part in the criminal conduct—owe the restitution jointly (United States v. Kroupa, D. Minn., No. 0:16-cr-00084, sentencing 6/22/17). The government originally indicted Kroupa on six charges, including conspiracy to defraud the U.S. government, tax evasion, filing false tax returns, and obstruction of an IRS audit. Kroupa pleaded guilty to the conspiracy charge in a plea agreement, and the government dropped the remaining five charges. Fackler, a former political consultant who was indicted on the same six charges as Kroupa, was sentenced to 24 months in prison and one year of supervised release for obstruction of an IRS audit.

    The couple, who began divorce proceedings shortly after their indictments, admitted to mischaracterizing their personal expenses as business deductions from 2004 to 2010, and understating their taxable income by approximately $1 million. Kroupa had proposed a 20-month sentence based on her mental health issues, the need for continuing treatment, and the unlikelihood of repeating the offense.
  • Friday, May 19, 2017 2:45 PM | NCSA Website Admin (Administrator)

    In This Issue of NSAlert:



    Registration Now Open for the 2017 IRS Nationwide Tax Forums

    Tax professionals can earn up to 18 Continuing Professional Education credits this summer at the IRS Nationwide Tax Forums. Nearly 40 seminars and workshops are available to enrolled agents, certified public accountants, certified financial planners, Annual Filing Season Program (AFSP) participants and other tax professionals.

    Each of the five IRS Nationwide Tax Forums is a three-day event providing tax professionals with the latest information on federal and state tax issues presented by experts from the IRS and partner organizations.

    Tax professionals who pre-register by May 31, 2017, will receive an Early-Bird rate of $235 per person. The Standard Rate of $255 is available starting June 1 and ends two weeks prior to the start of each forum. Attendees registering on-site or after the deadlines below will pay $370. 


    Forum Dates

    Standard Registration Deadline

    Orlando, FL

    July 11 - 13

    June 27

    Dallas, TX

    July 25 - 27

    July 11

    National Harbor, MD
    (Washington, D.C.)

    August  22 - 24

    August 8

    Las Vegas, NV

    August 29 - 31

    August 15

    San Diego, CA

    Sept. 12 - 14

    August 29


    Members of NSA qualify for a discount of $10 off the Early Bird Rate, but only if you register by May 31 and use the NSA member code 2017$NSA on 

    Please note that Forum attendees with unresolved client cases have the opportunity to meet face to face with IRS representatives in the Case Resolution Program. Since 2011, case resolution staff have worked nearly 4,500 cases with a resolution rate of more than 97 percent. A Forum attendee must bring a valid power of attorney for any case he or she wishes to work with the IRS. Tax businesses are requested to bring only one client case per Forum to the Case Resolution Program.

    IRS Begins Debt Collection Program

    The IRS has begun assigning cases of individual tax debts to four private debt collection agencies, and will add cases involving unfiled returns next year, the IRS's collection policy director said during remarks at the spring meeting of the American Bar Association Tax Section.          

    The debt collection program, which began in April, will ramp up over the next two years, Kristen E. Bailey said May 12. In 2018, the agency plans to begin assigning cases where an individual owes taxes and also has at least one unfiled return. In 2019, the agency will start sending business cases to the collection agencies, she said. 

    So far, the agency has sent out cases of tax debt that is between two and four years past due, with an average liability of less than $50,000, she said. The agency has assigned about 100 cases to each of the collection agencies, she said and cautioned that the private debt collectors don't have enforcement powers such as issuing liens or levies. 

    Bailey also addressed the concerns of Americans living overseas and confirmed that they don't have to worry that U.S.-based private debt collectors will be trying to find them. She pointed to an IRS statements, which stated that "The companies participating in the private debt collection program are only licensed to operate in U.S. states and territories. As a result, the IRS is excluding taxpayers who live outside the U.S. from the private debt collection effort." Bailey stressed that to ensure they qualify for the exclusion, taxpayers must make sure the agency has their correct foreign address.

    States Eye New York Whistle-Blower Law as Tax Fraud Tool

    State lawmakers and tax administrators are taking a closer look at enacting whistle-blower statutes as a strategy for prosecuting big-ticket incidents of tax fraud and scooping revenue into state coffers.

    At least four jurisdictions—Arkansas, Michigan, Pennsylvania and the District of Columbia—are considering legislation that would add tax code violations to the list of actionable frauds to come under the umbrella of their false claims acts (FCAs). In addition, Illinois is considering revisions to its law as it pertains to tax violations. 

    If the efforts are successful—some officials and tax attorneys hope they aren't—the jurisdictions would join nine states that permit whistle-blowers to prosecute tax code frauds on behalf of the state. 

    State FCAs, typically modeled after the federal law, allow whistle-blowers to step into the shoes of the government to sue persons who knowingly perpetrate frauds against the state. The classic whistle-blower is an insider holding specific knowledge of misconduct. FCAs typically incentivize whistle-blowers to come forward, permitting them to share in any proceeds coming to the state. Whistle-blowers are also entitled to litigation costs and reasonable attorney fees.

    IRS Considering Scope of Earned Income Tax Credit Rules

    The Internal Revenue Service is considering the extent to which individuals can qualify for the childless earned income credit, according to Chrissy Glendening, senior counsel in Branch 5 of the IRS Office of Chief Counsel (Income Tax and Accounting). 

    Glendening noted that the IRS has historically held that if both parents want to claim the same child for tax benefits, the parent with the higher adjusted gross income is allowed to claim the child—meaning the other loses out on tax credits. The IRS changed its stance in proposed rules issued in January (REG-137604-07), saying that a taxpayer who did not claim the child may claim the earned income tax credit for childless taxpayers. 

    The agency is considering "how far to extend this provision and this taxpayer-favorable treatment," Glendening said May 12 at the American Bar Association tax section meeting. The IRS is still reviewing how a White House executive order to cut down on regulations will impact the release of final rules.          

    The proposed rules also updated definitions of terms such as "head of household" and defined when an adopted child can qualify as a tax dependent. 

    Brady Wants Revenue Neutral Tax Reform Bill

    House Ways and Means Chairman Kevin Brady insists that he will be able to craft a revenue neutral tax reform bill this year, even though President Donald Trump has said he's willing to accept a bill that adds to the deficit in the short term. 

    Brady said May 15 it is essential to offset tax cuts with revenue raisers so they do not add to the deficit and can generate the maximum amount of growth over the longest period of time. He pointed to Senate budget rules that would require a tax bill to be revenue neutral to be permanent if the bill were to be passed without Democratic support. 

    "We think the greatest growth for the greatest number of years is when tax reform is bold, when it's balanced within the budget counting on economic growth and it's permanent," Brady said. "History shows the most growth for the greatest number of years comes when tax reform is permanent, when businesses can count on this rate." 

    "Without revenue neutrality, I don't see a way lawmakers can make tax changes last longer than 10 years," said Kyle Pomerleau, director of federal tax projects at the conservative Tax Foundation. "And without permanence, it is unlikely President Trump would get anywhere near the economic growth he wants from tax reform." 

    Last week, Trump told the Economist magazine in a joint interview with Treasury Secretary Steven Mnuchin that "it is OK" if a tax bill increases the deficit in the short-term in order to "prime the pump" for growth. Trump and his economic advisers have said the tax-cut plan they released April 26 will pay for itself by eliminating deductions and loopholes, and by helping to create annual economic growth of 3 percent. A subsequent survey of tax economists, however, revealed that no economist agrees that the Trump plan would be revenue neutral and would, in fact, substantially increase budget deficits.

  • Friday, May 05, 2017 10:10 AM | NCSA Website Admin (Administrator)

    In This Issue of NSAlert:

    Treasury Close To Choosing New IRS Chief?

    The Treasury Department is "very close" to reaching a decision on who will replace John Koskinen as head of the IRS, according to Treasury Secretary Steven Mnuchin. "We're looking forward to having a seamless transition. This is one of the most important positions we will be appointing. We're close to making a final decision on it, and the president and I have discussed it,"


    Koskinen's term ends in November, and he has said on numerous occasions that Treasury and the White House should focus on picking a replacement sooner rather than later to ensure there's enough time to transition. Mnuchin did not address any timeline for the selection of a nominee for the IRS post or an announcement, so stay tuned. o resign before his term ends, or when a replacement would be announced.



    IRS Technology Improvements And the IRS Budget

    The House Ways and Means Oversight Subcommittee held an April 26 hearing to discuss the 2016 filing season, but the discussion at the hearing quickly turned to the technology gap at the IRS and what to do about it.


    Deputy Commissioner for Services and Enforcement Kirsten Wielobob represented the agency at the hearing and confirmed that IRS's aging computer systems, some of which date back to former President John F. Kennedy's administration, often lag and don't interact with one another.


    "If this happened in the private sector, heads would roll. You couldn't continue on this way," Rep. George Holding (R-N.C.), a subcommittee member, said during the hearing. It is too bade that no one informed Rep. Holding that the private sector does not require Congress to provide funding or that the Congress of which he is a member has significantly reduced IRS funding for the last five years.



    IRS Rebuts AICPA Challenge To Annual Filing Season Program

    Yes, the IRS and the AICPA are still in court, arguing about the agency's statutory authority to implement its Annual Filing Season Program.


    The AICPA challenged the Internal Revenue Service program, several years ago. The IRS won at the District Court level and the matter is currently on appeal at the U.S. Court of Appeals for the District of Columbia. The IRS, in an April 26 brief, said the program helps return preparers obtain additional training and that the lower court correctly ruled that the AICPA has no cause of action.


    As readers are aware, preparers in the voluntary Program must complete 15 hours of continuing education training annually and pass a written examination. The IRS lists those who pass the exam and receive a "Record of Completion" in its online "Directory of Federal Tax Law Return Preparers."


    The AICPA position is that the Administrative Procedure Act prohibits the IRS from acting without statutory authority, and that the program would allow competitors to peddle misleading credentials to win business.


    The IRS said in its brief that 31 U.S.C. Section 330 is a taxpayer-protection statute giving the Treasury secretary explicit authority to regulate the conditions under which persons may represent taxpayers before the IRS. "The competitive interest of the Institute's members are directly contrary to the purpose of the statute; their interest in reducing the qualified competition harms taxpayers," the IRS said. AICPA obviously disagrees.


    Oral arguments have yet to be scheduled in the case.



    IRS Funding At 2016 Levels In Continuing Budget Resolution

    The congressional continuing budget resolution expected to be signed into law sometime today funds the IRS at its fiscal year 2016 level of $11.2 billion through September.


    Agreement on the continuing resolution means lawmakers have avoided a government shutdown for the time being, but it sets up a fall budget battle when lawmakers will grapple with President Donald Trump's fiscal year 2018 budget proposal, which includes cuts to agencies and calls for funding to build a border wall. Under Trump's proposal, the Internal Revenue Service's budget would be cut by about 2 percent.


    The bill maintains $2.1 billion in funding for taxpayer service, including the $290 million lawmakers allocated in 2016 for cybersecurity and fraud prevention. The bill includes several restrictions on the agency that have become common in recent years, including bans on issuing regulations related to tax code Section 501(c)(4) organizations and on giving bonuses to employees who are behind on tax payments, according to a bill summary.
  • Friday, April 21, 2017 10:07 AM | NCSA Website Admin (Administrator)

    In this Issue:


    IRS To Revamp Website; Relaunch Expected in August


    The IRS has announced it will be revamp its website,, to make it more customer-centered and provide more findable, usable and understandable online content and services. The relaunch, expected sometime this summer, will provide a new look, navigation enhancements and a better customer experience for mobile users, according to the IRS.


    Among the webpages that will be modified is the webpage, "For Tax Pros." The initial modification, a screenshot of which is available here, was developed based on research conducted by the IRS at the 2016 IRS Tax Forums. NSA has pointed out that attendees at the Forums are not necessarily representative of the tax professional community as a whole and that the website needs of practitioners may vary depending on their practice and their credentials. A screen shot of a prototype "For Tax Pros" webpage is below.




    We need your help in ensuring that the IRS website serves the needs of the tax professional community.


    The IRS will be conducting a telephone surveys of interested practitioners in the near future. If you would like us to submit your name to the IRS to be considered for this survey, please email us at


    The IRS will also be conducting prototype presentations of the new site and upcoming online tools for practitioners at this summer's IRS Tax Forums. In addition, Forum attendees will have the opportunity to participate in user interviews and to provide specific feedback on how well the new website prototype meets their needs. If you will be at one of the Forums and have an interest, be sure to look for the IRS booth in the Forum Exhibit Hall.



    IRS Online Services


    The IRS continues to work on improving its online services for taxpayers and tax professionals and will continue to roll out new capabilities in the near future.


    IRS officials told NSA that the initial release plan focused on four capabilities: Balance Due, Make a Payment, See Payments, and Tax Records. The most recent upgrade, See Payments, was made available in March. The payments that can be seen are limited to those made within the last 18 months, but is expected to be expanded in the future. A screen shot of a prototype page is below.




    The next upgrade, Tax Records, will be made in May. This upgrade will also provide a direct link to the Get Transcript online tool.


    IRS officials cautioned that future enhancements and upgrades to online services are "resource dependent," meaning that they can only provide what IRS funding will allow.



    Tax Fraud: IRS Stops 95 Percent of Bogus Refunds


    The Internal Revenue Service spotted $961 million in fraudulent refund claims on tax returns through early March, according to the Treasury Inspector General for Tax Administration in a report released April 7. The report provides interim results of the 2017 tax filing season and is available here.


    "This period is critical for the IRS, because during this time, most individuals file their income tax returns and contact the IRS if they have questions about specific laws or filing procedures," TIGTA said.


    The IRS confirmed identity theft cases involving 14,068 fraudulent tax returns as of March 2. Overall, the agency has received fewer returns at this point in the 2017 filing season than it did in 2016 because of fewer processing days, TIGTA said.



    IRS Customer Service: 75% telephone response rate in this filing season


    IRS telephone assistors were able to answer more than 75% of telephone calls during the recently-concluded filing season, according to an IRS official.


    Readers will recall that the IRS received an additional appropriation of $290 million for during the fiscal year that ended on October 31, 2016. Because the IRS and other government agencies are operating under a continuing budget resolution during the current fiscal year, this additional appropriation also continued to be available, resulting in better customer service.



    Tax Reform: Making Progress Slowly


    Office of Management and Budget Director Mick Mulvaney said in a CNBC interview April 12 that the administration is still working on a tax plan that will be promoted on Capitol Hill, but it is unclear whether the Administration proposal will resemble in any respects the blueprint announced by House Republicans last year.


    In any event, the timing of an Administration proposal depends very much on who is doing the talking: President Trump has said he does not want to set a deadline and is therefore not committing to an August deadline to pass a tax reform bill even as Treasury Secretary Steven Mnuchin, said in recent interviews that the Administration is shooting for the enactment of a tax reform plan by August.


    Meanwhile, the House Ways and Means Committee is preparing to begin a series of tax reform hearings even though the linchpin of their tax reform blueprint, the so-called border tax would tax imports at 20 percent and exempt exports, continues to be under attack from business groups and retailers and is widely considered dead on arrival in the Senate.



    Companies Confused About Accounting For Cloud Services


    The Financial Accounting Standards Board is considering whether to provide explicit guidance on how public and private companies should account for upfront implementation costs they incur when setting up cloud computing service contracts.


    Confusion and broad differences in practice currently exist because there are no specific accounting rules about how to book those costs, according to recent discussions at FASB and its private company advisory body, the Private Company Council.


    Implementation fees arise from the additional steps a company must take to build connectors so its system can interact with a cloud arrangement. The costs are separate—and most often substantially higher—than the monthly hosting fee paid to the cloud company. Some companies have booked millions of dollars of implementation fees as expenses in their income statements. Others book them as a prepaid asset and amortize the payment over the implementation period—typically nine months for a three-year contract.


    Both financial statement preparers and users are seeking clarity about the accounting rules. Some of the challenges stem from differences in how preparers view the topic. Some of FASB's private company advisers told the board that in-house—meaning on premise—software licenses are virtually the same as cloud computing arrangements that are off-premise—meaning in the cloud. They therefore question why the accounting would be different. Others argue, however, that the differences stem from who has control. With an on-premise software license, the company has control of the license. If it is with a cloud computing vendor, and the cloud vendor goes out of business, the company no longer has the license.


    The issue might be resolved if there were guidelines around how to parse the fees, the discussions implied. FASB could clarify what part of the implementation fee could be booked as a prepaid asset, what part should be expensed as incurred and what part should be booked as an intangible asset.

  • Friday, April 07, 2017 10:05 AM | NCSA Website Admin (Administrator)

    In this Issue:


    NSA, Other Groups Join to Recommend IRS Service Improvements


    NSA and other tax professional groups today wrote to members of Congress today urging a comprehensive set of recommendations designed to improve services provided by the IRS to taxpayers and tax practitioners. The groups called for an improved governance and oversight structure for the IRS and proposed a new unit within the IRS that would centralize the agency's services to tax practitioners. A copy of the group's report is available here. Also available are the group's letter to congressional tax writers and NSA's press release accompanying the publication of the group report.


    The recommendations were developed by the groups over several months and are endorsed by NSA and the following organizations: AlliantGroup, AICPAs, Crowe Horwath, LLP, NAEA, NATP, NSTP, National Conference of CPA Practitioners, and Padget Business Services. NSA's endorsement follows approval by NSA's Federal Taxation Committee and by the NSA Executive Committee.


    "The current degradation of the IRS taxpayer services is unacceptable," the groups stated in their framework, Ensuring a Modern-Functioning IRS for the 21st Century, As an example of how poor the service has become, the paper cited figures from the National Taxpayer Advocate's 2016 Annual Report to Congress that reported the percentage of taxpayer calls answered by the IRS between 2004 and 2016 has dropped from 87 percent to 53 percent.


    "As tax practitioners, we advise millions of taxpayers on tax matters, assist them with compliance responsibilities, and represent them before the IRS," the groups wrote. "We understand what is working and not working with tax administration from both taxpayer and practitioner perspectives. As one of the IRS's most significant stakeholders, we are both poised and committed to being part of the solution."


    The groups noted as "striking" the similarities between the condition of the IRS today and the circumstances that motivated creation of the National Commission on Restructuring the Internal Revenue Service more than 20 years ago. Therefore, the groups recommended that any effort to modernize the IRS and its technology infrastructure should build on the foundation established by the Restructuring Commission and the report issued by the Commission in June 1997.


    The recommendations are generally based, consequently, on the vision statement in the Restructuring Commission's report. Among the governance and oversight recommendations are:

    • Setting and maintaining consistent priorities and strategic direction;
    • Re-establishing the annual joint hearing review by the Joint Committee on Taxation;
    • Requiring the Joint Committee on Taxation to provide a bi-annual report;
    • Requiring a Government Accountability Office review of the IRS Oversight Board;
    • Enabling the hiring of qualified and experienced professionals at the IRS;
    • Determining the appropriate level of service and compliance they want the IRS accountable to provide and dedicating appropriate resources for the agency to meet those goals; and
    • Gauging performance with customer satisfaction surveys.

    Also recommended is a new dedicated "executive-level" practitioner services unit within the IRS that would centralize and modernize the IRS's approach to all practitioners. The groups explained that over time, the IRS has established a number of functional departments. As a result, IRS employees are dispersed across the IRS and are not coordinated in a way that enables practitioners to timely access critical information (such as their clients' account status or the availability of dispute resolution opportunities). Nor do the current IRS teams or processes systematically solicit, gather or evaluate practitioner feedback, they charged.


    "Enhancing the relationship between the IRS and practitioners would benefit both the IRS and the millions of taxpayers served by the practitioner community," according to the group. "We are committed to a service-oriented, modernized tax administration system that earns the respect and appreciation of all taxpayers and stakeholders," they concluded.

    The IRS has issued the following statement about the group report:

    "These professional groups play a critical role in the nation's tax system, and the IRS values their insights and observations. We will be reviewing their recommendations and look forward to continuing the dialogue on these and other issues of mutual importance. In general, the IRS agrees with the thrust of the paper and the goals they highlight, ranging from the importance of improving taxpayer service to the need to attract and retain skilled, experienced employees. Although some of these involve issues that are ultimately within Congressional and Administration domains, we appreciate our partners' initiative in offering ways for us all to better serve the compliance needs of the taxpaying public."

    The stakeholder groups intend to work together during the deliberation of any tax reform bill to ensure consideration of the group recommendations.



    No Change in 2017 to First-Year Vehicle Depreciation Limits

    The first-year depreciation deduction limits for owners of vehicles placed in service this year will remain $11,160 for passenger automobiles and $11,560 for trucks and vans, the Internal Revenue Service said.

    The first-year depreciation levels announced March 24 in Revenue Procedure 2017-29 reflect provisions of the 2015 Protecting Americans from Tax Hikes Act, which raised the first-year depreciation by $8,000.

    The limitation for vehicles for which the bonus depreciation deduction doesn't apply remains at $3,160 for passenger vehicles and $3,560 for trucks and vans, the IRS said.

    The guidance also provides lessee inclusion amounts for automobiles, vans and trucks placed in service or leased in 2017. Rev. Proc. 2017-29 is scheduled for publication April 3 in Internal Revenue Bulletin 2017-14.



    Private Debt Collection of IRS Debts Set To Begin

    The IRS's private debt collection program is set to begin this week, with four private companies trying to collect overdue taxes on the government's behalf.

    The IRS debt collection program is a new version of a program established in 2006 that was shut down in 2009 because it wasn't profitable. The new program was mandated by Congress in the 2015 Fixing America's Surface Transportation (FAST) Act, and the agency is under pressure to make it work this time around.

    According to National Taxpayer Advocate Nina E. Olson, the IRS has significantly reduced oversight in order to bring down costs. In addition, she said that the rollout of the new program will be deliberately small to allow the IRS to identify any issues that might result, such as a data breach. This type of methodical process doesn't only help the IRS, Olson said. One would think the private debt collectors "wouldn't want a bad experience right out the gate either," she said.

    Bill Banowsky, the IRS's private debt collection program leader, said the agency learned several lessons from the first iteration of the program. The IRS needs to ensure that taxpayers are confident they are actually speaking to a private debt collector, not an impersonator, and the agency has taken steps to address this issue, Banowsky said.

    "We also learned that it's important for us to share enough information with private collection agencies so that they can work the case to completion," Banowsky said. One of the main roadblocks to the success of the first program was the constant back-and-forth with the private collectors so that they could get approval to access certain information, he said. The agency is now able to share those details to expedite the resolution of a taxpayer's account, he said.

    In terms of other changes under the new program, Olson said that taxpayers who have open cases with the Taxpayer Advocate Service have been taken off of the private debt collection list. The taxpayer advocate handles all aspects of those cases, including debt collection, she said. Those services are free for the IRS, whereas the agency has to pay for private companies to do the same job, she said.

    Under the private debt collection program, the IRS is able to retain 25 percent of the amount collected by the private collection agencies to pay for the cost of the program. That doesn't include what the companies are paid because they get their own 25 percent slice. The IRS also keeps another 25 percent for personnel hiring and training related to tax compliance.

    The National Treasury Employees Union isn't optimistic about the program's potential. "Every time this has been tried before, it has failed," said NTEU National President Tony Reardon in an April 4 statement. "But once again Congress has forced this policy on the IRS, and we expect the results to be the same: collection agents getting paid to harass taxpayers, many of whom need assistance, not threats."

    The 2006 program was projected to bring in $2.2 billion in new revenue, but data from the IRS showed that the program resulted in a net loss of almost $4.5 million to the federal government, after subtracting $86.2 million in program administration costs and more than $16 million in commissions to the private collection companies, according to NTEU.



    IRS Student Loan Tool Hacked, Taken Off-Line

    The personal information of more than 100,000 taxpayers may have been compromised in a criminal breach of the IRS's student loan data retrieval tool, Commissioner John Koskinen said April 6. He said the IRS paid out about $30 million in fraudulent refunds requested on 8,000 returns before the breach was detected and the tool taken down.

    The tool lets students and families access information they need to file the Free Application for Federal Student Aid (FAFSA). The tool will be down until October when improvements will be ready, but students can still file the FAFSA and enter information by hand in the meantime, Koskinen said.

  • Friday, January 27, 2017 4:19 PM | NCSA Website Admin (Administrator)

    In this Issue 


    Driver License Info in Tax Software May Not Be Required after All
    Tax software used by tax professionals asks for client driver license numbers even though only two states – New York and Alabama – currently have state laws requiring such information to be provided on state tax returns. No federal law requires this information to be provided on federal tax returns.
    When NSA made inquired how this information came to be included in this year's version of the software, we were told it was included at the behest of the Federation of Tax Administrators, the trade group for the state tax administrators. It seems that FTA wanted the information so its members could use the drive license numbers as one indication of a valid return, even while making the argument it was just too difficult to enact state laws requiring such information to be provided.
    During a meeting with other members of the Security Summit, we pointed out that most tax software packages ask for the driver license number and, if it is not provided, asks the preparer to check a box indicating that there is no driver license.  We made the point that our members do not want to sign a sign stating there is no driver license if the client does have one. We also stated there should not be a requirement to provide a license number merely because it is on the FTA wish list.
    Apparently, the tax software is written so that the return will be processed even if the driver license information box is left blank. Check with your software provider to make sure. And, if you are preparing a New York or Alabama return, this does not apply to you.


    Form W-2 Scam again Targeting Payroll, Human Resource Departments 
    The IRS, state tax agencies and the tax industry this week renewed their warning about an email scam that uses a corporate officer's name to request employee Forms W-2 from company payroll or human resources departments.
    This email scam is making its way across the nation for a second time. The W-2 scam first appeared last year and aims to trick payroll and human resource officials into disclosing employee names, SSNs and income information. The thieves then attempted to file fraudulent tax returns for tax refunds.
    This phishing variation is known as a "spoofing" e-mail. It will contain, for example, the actual name of the company chief executive officer. In this variation, the "CEO" sends an email to a company payroll office or human resource employee and requests a list of employees and information including SSNs.
    The following are some of the details that may be contained in the emails:

    • Kindly send me the individual 2016 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review.
    • Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary)?
    • I want you to send me the list of W-2 copy of employees wage and tax statement for 2016, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me ASAP.

    IRS PTIN and EA List to be Available at No Cost 
    In compliance with Freedom of Information Act (FOIA) laws, the IRS makes available a list of PTIN holders and a list of enrolled agents to interested parties. The lists are currently provided via CD-ROM to those who submit a request and pay a $35 fee to cover IRS costs.
    This process will soon change as a result of the FOIA Improvement Act of 2016 signed by the President on June 30, which requires agencies to "make available for public inspection in electronic format...copies of all records...that have been requested 3 or more times."  The PTIN list has been requested more than 1,200 times, well over the limit. 
    The IRS is working to implement downloadable versions of the two lists in the Electronic Reading Room on, which will be updated twice per year and available at no cost.


    AICPA Proposal Seeks to Counter Pressure to Prepare Misleading Financial Statements
    The American Institute of CPAs has proposed an update to its ethics standards that seeks to identify and counter attempts to knowingly produce misleading statements.  A copy of the proposal is available here.
    According to the proposal, AICPA members are urged to discuss "the matter with the individual who is exerting the pressure to seek to resolve it and escalating the matter to higher levels of management, internal or external auditors, or those charged with governance."  It goes on to say that, "The member might also consider reporting the matter to an internal or external confidential ethics hotline, when such is available."
    In cases where these efforts don't thwart pressure to commit unethical acts, the member should refuse to perform them and consider leaving the organization that perpetrates them, the proposal says.
    A copy of the proposal is available The AICPA's Professional Ethics Division is asking for comments on the proposal by April 17, presumably from accountants who do not prepare tax returns.


    IRS Extends Deadline for Health Coverage Tax Credit Claims

    The IRS has extended the deadline to claim the health coverage tax credit for those who lost their jobs because of free trade agreements.
    Taxpayers eligible for the credit from "taxable years beginning on or after June 29, 2015, and before January 1, 2017," have three years to claim it, the IRS said Jan. 19 in Notice 2017-16. The credit provides a 72.5 percent tax break for the cost of qualified health care plans under tax code Section 35.  For example, a taxpayer who files a 2016 income tax return by April 18, 2017, has until April 15, 2020, to file Form 8885, Health Coverage Tax Credit. The form must be submitted with the taxpayer's returns.
    This guidance is unlikely to apply to a large group of taxpayers. Most receive the credit through advanced payments under Section 7527, the IRS said.
    Notice 2017-16 is scheduled to publish Feb. 13 in Internal Revenue Bulletin 2017-7 and is also available at


    Mnuchin Favors IRS Funding Increase

    Treasury secretary nominee Steven Mnuchin said one of his priorities if confirmed would be to increase staff and modernize technology at the Internal Revenue Service.   "I would use my expertise to bring the IRS up to date," Mnuchin, a former Goldman Sachs Group Inc. executive, said during his confirmation hearing before the Senate Finance Committee Jan. 19.  Mnuchin highlighted how IRS staff has plunged 30 percent over the past several years, and how the agency lacks internal technology experts to update its systems.
    "Cybersecurity is such a big issue," and the IRS needs to protect American taxpayers' information, he said.
    The IRS has suffered from years of budget slashing in part because of House Republicans who made the agency a target after gaining power in 2010. The number of employees at the agency dropped 16 percent from 2010 to 2015, according to the IRS. The agency's budget is determined by Congress through appropriations legislation. It had its first budget increase in fiscal 2016, but was still about $900 million less than its budget for fiscal year 2011, according to a report last year from the Government Accountability Office.

    House Republicans don't seem likely to support an expanded agency. A tax blueprint released in June 2016 by House Speaker Paul D. Ryan calls for "a streamlined structure" for the IRS that focuses on customer service for families, individuals and businesses, while also setting up an independent "small claims court" unit to resolve disputes entities have with the agency. Conservative Republicans have more pointedly attacked the IRS. 
    Nevertheless, Mnuchin said modernizing the IRS could receive bipartisan support.  Senate Finance Committee Chairman Orrin G. Hatch said in a statement that he looked forward to working with the administration on restoring the IRS and overhauling tax laws.  "A simplified tax code will allow for a more streamlined IRS, and will require a reassessment of the agency's budgetary and personnel needs," Hatch said.
    Mnuchin also said he would be able to easily convince President-elect Donald Trump that the IRS needs more employees.  "I can assure you that the president-elect understands the concept of 'we add people, we make money,"' Mnuchin said. "That's a very quick conversation with Donald Trump."


    IRS Plans to Update Circular 230

    The IRS has begun a long-delayed effort to overhaul Circular 230, which contains the statute and regulations under which tax professionals practice before the IRS, but which still contains references to registered tax return preparers and other outdated material.
    "There are provisions in Circular 230 that are outdated, inconsistent, incomplete," according to Steve Whitlock, director of the IRS Office of Professional Responsibility. Speaking at an IRS National Public Liaison meeting on January 26, Whitlock said he has begun informal discussions with practitioners and industry groups to get their recommendations and noted that he has often met with NSA Executive Vice President John Ams.
    One suggestion the office has received is to review the Circular 230 rules on contingent fee arrangements. A contingent fee is a fee a tax professional agrees to accept as a fixed percentage of the amount finally paid to the client. There are abuse issues with those arrangements that the Service is concerned about, Whitlock said, but it would be interesting "as we go through a process like this to understand what it is about the current rule that's not working."
    Another issue Whitlock is considering is the obligation of a practitioner to protect a client's information, specifically against threats such as cyber attacks, he said. The OPR is trying to determine whether that area needs to be addressed in the "tax context," he said, especially whether a tax professional should be required to make a "good faith effort" to protect his or her client's data.

    The final issue mentioned by Whitlock is a practitioner's responsibility to have a written plan in place for the disposition of client records in the event the practitioner is incapacitated or passes away.  Whitlock said this is particularly an issue with a sole practitioner, since a landlord or spouse may not be aware of the restrictions against unauthorized disclosure of taxpayer data.


    PTIN Updates

    IRS Return Preparer Office Director Carol Campbell said at an IRS Liaison meeting that there are currently 646,000 active PTINs.  That number includes 50,283 EAs, 205,078 CPAs, 42,883 AFSP participants, 28,937 attorneys and 633 Retirement Plan Agents, among others.  She also stated that 56% of PTIN holders do not hold an EA, CPA, AFSP, ERPA or attorney license. 
    With the start of the tax filing season, Ms. Campbell also said the IRS has sent PTIN expiration notices to approximately 160,000 PTIN holders who did not renew their PTIN.  The email notice explains to recipients that they can still renew their PTIN at any time, but until they do, their status is expired and they should not be preparing returns.  The email also details the various ways the PTIN can be renewed. 


    IRS Updates Instructions for AMT Forms

    The IRS announced on its website on January 19 that the instructions for various 2016 AMT forms will be amended.  The affected instructions are for 2016 Form 6251, Alternative Minimum Tax – Individuals, Form 4626, Alternative Minimum Tax – Corporations, and Form 1041, Schedule I, Alternative Minimum Tax – Estates and Trusts.  The revisions primarily updated the instructions to provide that property for which a taxpayer elects out of bonus depreciation is not subject to an AMT depreciation adjustment, effective for property placed in service after 2015. This change, according to the IRS, was made by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) (P.L. 114-113).

    The IRS explained in is announcement that a technical correction made by section 143(b) of the PATH Act provides that the AMT adjustment does not apply to "qualified property" as defined in Code Sec. 168(k)(2) (Code Sec. 168(k)(2)(G), as amended by the PATH Act). However, if the election out is made for a class of property, Code Sec. 168(k)(7) simply provides that the bonus depreciation deduction allowed under Code Sec. 168(k)(1) does not apply. Therefore, the status of the property for which an election out is made technically remains "qualified property" under Code Sec. 168(k)(2) and exemption from the AMT adjustment applies. Prior to amendment by the PATH Act, the AMT adjustment was only waived for property for which bonus depreciation was claimed

  • Friday, January 13, 2017 4:07 PM | NCSA Website Admin (Administrator)

    In This Issue of NSAlert:


    Is Your Tax Software Logging You Out "For Your Convenience"?


    Numerous tax professionals have complained that the new security features of their tax software logs them out even when they are busy working at their computer.  Are you having this issue?

    Tax professionals typically login to their tax software at the beginning of the day and logout when they leave the office at night.  However, they may also be working on a number of other applications during the day - spreadsheet, file folders, etc., IRS website, etc.   The tax software will logout automatically if the preparer has not been making entries into the software application for 30 minutes even though the computer has been actively used in the other applications.

    Making matters worse, the new security features in most tax software packages also have an "I am not a robot" step in the login process.  This step, for example, requires the user to tell the software which of nine, or twelve, pictures have a particular feature – flowers, numbers, buildings, houses, etc.  This feature, when used as a once per day, in the morning, login may be more manageable for tax professionals than a step that must be successfully navigated multiple times per day because the tax software has performed the 30 minute automatic logout.

    NSA will be contacting the IRS Security Summit participants to determine whether this security feature can be modified to more closely conform to the actual working environment where the tax software is used.  Specifically, can the tax software be modified to limit the automatic logout, including instances where the computer is actively being used in other applications.  It may be that technical considerations will be an issue or privacy matters need to be assessed, but we will ask and will keep you informed on our progress.


    New Accounting Guidance Clarifies Definition Of A "Business"

    The Financial Accounting Standards Board (FASB) on January 5 issued Accounting Standards Update 2017-01 that clarifies the definition of a business. The FASB said that the ASU affects all companies and other reporting organizations that must determine whether they have acquired or sold a business.

    FASB noted that the definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The new standard is intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

    Companies and auditors have voiced concern that the definition of a business "is applied too broadly and that many transactions recorded as business acquisitions are, in fact, more akin to asset acquisitions," FASB Chairman Russell Golden said in a prepared statement.  "The new standard addresses this by clarifying the definition of a business while reducing the cost and complexity of analyzing these transactions," he said.

    Public companies will have to apply the standard for their reporting covering annual periods starting after Dec. 15, 2017, and interim periods within their fiscal years. The effective date is Jan. 1, 2018, for public companies on a calendar-year reporting schedule.  For all other companies and organizations, the accounting standard update is effective for annual periods starting after Dec. 15, 2018, and interim periods within annual periods beginning after Dec. 15, 2019.

    A copy of ASU 2017-01 is available here.


    IRS Verification Code to Appear on 47.8 Million Forms W-2

    About 20 percent of Forms W-2, Wage and Tax Statement issued for tax year 2016 will include a verification code used in a pilot program to fight tax fraud and identity theft, IRS officials have announced.

    The code will appear on nearly 47.8 million Forms W-2 for tax year 2016, up from 1.7 million for tax year 2015, according to Scott Mezistrano, representative for industry stakeholder engagement and outreach.  The program uses a 16-character alphanumeric code to verify W-2 data on Form 1040, U.S. Individual Income Tax Return. The code will appear on copies B and C of affected forms, he said. Payroll service providers Automatic Data Processing LLC, Ceridian LLC, Intuit Inc., Paychex Inc., Payroll People Inc., PrimePay Inc. and Ultimate Software Group Inc. are among those participating in the pilot, he said.

    The code should be entered on the 1040 when using tax-preparation software, so be looking for it.


    FASB Proposes New Way To Classify Balance Sheet Debt

    The Financial Accounting Standards Board proposed January 11 what it believes a less costly, simpler way for companies to determine whether to classify debt as being due in the near term—meaning current—or long term—noncurrent—in a classified balance sheet.

    FASB said that the proposed Accounting Standards Update could result in a shift in the classification of certain debt arrangements between noncurrent liabilities and current liabilities as compared with current balance sheets in the following ways:

    • Short-term debt that is refinanced on a long-term basis after the balance sheet date would no longer be classified as a noncurrent liability.
    • Companies with debt that contains subjective acceleration clauses would no longer be required to assess the likelihood of acceleration of the due date when determining whether the debt is a noncurrent or current liability.

    The proposal would also replace existing, rules-based guidance with an overriding classification principle. The principle would be based on legal terms of the debt agreement and the company's contractual rights as of the balance sheet date. The proposal also includes guidance about the "prominence" with which information about waivers of debt covenant violations should be displayed in financial statements.

    Comments on the proposal are due by May 5.  A copy of the proposed Accounting Standards Update is available here.


    IRS Reminds Tax Professionals To Revalidate Identity For IRS E-Services

    The IRS has issued a reminder to tax professionals to recipients of Letter 5903 that time is running out to revalidate your identity in order to continue accessing your IRS e-Services account.

    If you received a Letter 5903 from the IRS you MUST revalidate to access your account. Failure to take any action will result in the suspension of your e-Services Registration Account.

    You may revalidate your account either online or by telephone. To validate online, you will use Get Transcript Online's Secure Access authentication process. Select "first-time user" and complete the authentication process. To validate by telephone, call the e-Services Help Desk and provide the Unique Security Code from your letter 5903. The IRS has additional personnel staffing the Help Desk. That number is: 866-255-0654.

    Help Desk Hours: The e-help Desk will provide extended hours of service only for e-Services users who have received Letter 5903, asking them to validate their identities. Extended hours for the e-Help Desk are:

    • Monday thru Friday: 6:30 a.m.- 8:00 p.m. Central Time
    • Saturday: 9:00 a.m.- 3:00 p.m. Central Time 
    • Jan. 16, 2017 Martin Luther King Holiday 9:00am -3:00 p.m. Central Time.

    IRS Updates ACA Questions and Answers

    Although the incoming Trump Administration has said it will move swiftly to repeal some or all of the Affordable Care Act, it is unclear what effect this may have on the current tax provisions.  In any event, tax professionals need to be concerned with current filing requirements for 2016 returns.

    To assist in that effort, The IRS has updated three sets of Questions and Answers related to information reporting requirements and shared responsibility provisions for employers. They are now posted on the Affordable Care Act Tax Provisions Questions and Answers page on

    • Information Reporting by Employers on Form 1094-C and Form 1095-C - These Q&As provide additional information about completing Form 1094-C and Form 1095-C for calendar year 2016 that are to be filed in 2017. The Q&As may be used in conjunction with the Instructions for Forms 1094-C and 1095-C, which provide detailed information about completing the forms. 
    • Reporting of Offers of Health Insurance Coverage by Employers - Certain employers are required to report to the IRS information about whether they offered health coverage to their employees and if so, information about the coverage offered. This information also must be provided to employees. These Q&As address these reporting requirements. 
    • Employer Shared Responsibility Provisions Under the Affordable Care Act - The Affordable Care Act added the employer shared responsibility provisions under section 4980H of the Internal Revenue Code. These updated Q&As provide information about the employer shared responsibility provisions.


    Security Summit Alert: New Two-Stage E-mail Scheme Targets Tax Professionals

    The Internal Revenue Service, state tax agencies and tax industry leaders have 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.


    Massachusetts Fails to Adopt New Federal Filing Deadline For Corporations

    Corporate taxpayers in Massachusetts will have to deal with different state and federal filing deadlines after a bill to align the two failed to pass in the Massachusetts Legislature.

    The new federal filing deadlines are March 15 for partnerships and S corporations, and April 15 for individual and C corporation returns.  When the federal government announced in 2015 that it would change to these new filing deadlines, most states quickly adjusted their deadlines to match them, but Massachusetts and a handful of other states did not do so.  Massachusetts corporate interests backed a bill to require the state to align its deadlines with the feds, but lawmakers failed to take up the bill Jan. 3, the final day of the legislative session.

    That means corporate filers in Massachusetts will have to comply with two deadlines when filing their 2016 taxes. Massachusetts requires S corporations and C corporations to file on March 15, which will force some companies to use estimated figures and then amend their returns after they receive actual figures, according to tax professionals.  As a result, they expect many companies to seek filing extensions.

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