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| || LEGISLATIVE & TAX ADMINISTRATION NEWS|
We are combining the above sections in this week's E@lert due to the ongoing government shutdown, now the longest in U.S. history (28 days and counting). Unfortunately, we saw no progress this week breaking the impasse between the White House and Congress (unless you count the Pelosi-Trump tit-for-tat). The country is in uncharted territory and filing season starts in a little over a week.
A Perfect Storm
A major overhaul of the tax code, a government shutdown at the start of filing season, and an unprecedented commitment to process refunds regardless, required the IRS to issue a revised contingency plan on January 15. The updated contingency plan recalls approximately 46,000 employees to work without pay. These employees will primarily process refunds for both paper and electronic returns. A close reading of the new plan, however, has raised new questions for enrolled agents.
ACS without CAF/PPS - Potentially, the most worrisome issue is the recall of nearly 2,000 collection representatives without a commensurate recall to staff either Centralized Authorization File (CAF) or Practitioner Priority Service (PPS). While Congressional staff tell NAEA that the IRS expects recalled employees will focus on processing notices sent prior to the partial government shutdown in December, we remain concerned the failure to recall CAF and PPS personnel could create a serious taxpayer rights problem, should those taxpayers require representation. NAEA suggested to Congressional staff this problem could be mitigated if collections representatives are instructed to honor powers of attorney faxed to them during the shutdown period. Staff passed our concerns along to IRS executives in a bipartisan briefing for both the House and Senate tax-writing committees yesterday afternoon.
Tax transcripts – Two outstanding issues NAEA was working with IRS executives to address before the shutdown were the ability to obtain redacted transcripts in the same manner as un-redacted tax transcripts, and ensuring a mechanism for employees of EA firms to retrieve tax transcripts on behalf of taxpayers. While IRS executives had expressed a high likelihood these issues could be resolved before February 4, 2019, when the IRS was expected to discontinue the faxing of all transcripts, the shutdown has halted all progress. To ensure the smooth implementation of the new IRS policy, we request the IRS extend the February 4 deadline until after the filing season.
Some Good News
Despite the chaos caused by the shutdown, some progress has been made on issues of concern to EAs.
• The proposed §199A regulations were cleared by OIRA (OMB's Office of Information and Regulatory Affairs) yesterday, moving them one step closer to finalization. Once approved by Treasury, these regulations will hopefully clarify issues created by Publication 535 and provide clear guidance for taxpayers on the new deduction for pass-through entities.
• The IRS announced on Wednesday it will waive penalties for taxpayers whose withholding or estimated tax payments fell short due to the changes created by the TCJA. Specifically, the penalty will be waived for most taxpayers who paid at least 85 percent (down from 90 percent) of their total tax liability. Ed Zollars has practical advice on how to take advantage of this modest penalty relief.
We're providing resources that range from revenue procedures to IRM sections to forms and instructions to fact sheets. Obviously, not all of what you see below is authority, yet all of it should help you better understand various tax issues.
• What do nonresident aliens need to file now that the TCJA repealed the personal exemptions? The draft instructions for Form 1040NR, which the IRS released in December, will help with the answer.
• IRS, Security Summit Partners sound the alarm about tax security, scams, and what taxpayers should do to protect themselves.
• IRS issues a form and instructions for the paid family and medical leave credit enacted in the TCJA.
• Notice 2008-76 clarifies most business meals are still 50 percent deductible.
• Interest Rates for Q1 2019 are on the rise. IRS up to 6 percent, New Jersey at 8.25 percent, and New York at 8.5 percent.
• Explanation of Form W8BEN regarding tax withholding on payments to non-U.S. persons providing services to U.S. taxpayers.
• IRS Fact Sheet
released to update farmers on what to expect this tax year.
• IRS offers interim guidance on nonprofit executive pay rules.
This week's state news includes tips from the Departments of Revenue (DoR) (or equivalent) in New York, Iowa, Pennsylvania, and Michigan, as well as news from California's Tax Education Council, and odds and ends from local media.
• NEW YORK
o New York State DoR shares tips on tax security.
o OUCH. Sprint to pay $300 million to settle tax dispute with NYS.
o IDR has released updated guidance on state tax reform.
o Governor Gavin Newsom will try again to impose a tax on drinking water to pay for access to safe drinking water.
o On a positive note, California is giving up on the idea of taxing text messages.
o The Tax Education Council has created an anonymous reporting system to address concerns with "Ghost Tax Preparers."
o Jackson Hewitt Tax Service Inc. to refund taxpayers and the Commonwealth $187,000 for misleading and deceptive ads.
o Better late than never: here's the October/November PA Tax News alert.
o PA DoR also released a bulletin on claiming educational tax credits under the TJCA.
o Michigan Treasury Department released Taxpayer News for 2018 tax year.
o Louisiana DoR released
a draft bulletin on post-Wayfair
| || EVERYTHING BUT THE KITCHEN SINK|
First Prince, now this…the Queen of Soul, Aretha Franklin, owes millions in back taxes, according to IRS.
Ever wonder how the U.S. stacks up globally – the OECD has released its Corporate Tax Comparison Report. The slide in corporate tax revenue continues.
For a little light reading…the Joint Committee on Taxation has issued the blue book for the TJCA.
"Listen--are you breathing just a little, and calling it a life?"
| || |
NAEA E@lert | Volume 1: Issue 10
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