Cybercriminals are stepping up their attacks on tax professionals. Because of this, the IRS urges tax preparers to take steps to protect client data and their computer networks from these threats.
Thieves search for client data so they can create a fraudulent tax return that looks legit and might bypass IRS filters. They also impersonate tax professionals, using stolen Electronic Filing Identification Numbers, Preparer Tax Identification Numbers, and Centralized Authorization File numbers.
Here are some basic security steps that tax preparers can take to protect themselves and their clients. Tax preparers should:
Learn to recognize phishing emails. They can be on the lookout for emails from thieves pretending to be from the IRS, e-Services, a tax software provider, or cloud storage provider.
Never open a link or any attachment from a suspicious email. Remember: The IRS never initiates initial contact with a tax pro via email.
Install anti-malware/anti-virus security software on all devices. This includes laptops, desktops, routers, tablets and phones. They should also consider keeping their software set to automatically update.
Create passwords of at least eight characters.
Use different passwords for each account.
Password protect wireless devices and consider a password manager program.
Encrypt all sensitive files and emails.
Back up sensitive data to a safe and secure external source not connected fulltime to a network.
Wipe clean or destroy old computer hard drives and printers that contain sensitive data.
Limit access to taxpayer data to individuals who need to know.
Check IRS e-Services account weekly for number of returns filed with EFIN.
Qualified Opportunity Zones were created by the 2017 Tax Cuts and Jobs Act. These zones are designed to spur economic development and job creation in distressed communities throughout the country and U.S. possessions by providing tax benefits to investors who invest eligible capital into these communities. Taxpayers may defer tax on eligible capital gains by making an appropriate investment in a Qualified Opportunity Fund and meeting other requirements.
In the case of an eligible capital gain realized by a partnership, the rules allow either a partnership or its partners to elect deferral. Similar rules apply to other pass-through entities, such as S corporations and its shareholders, as well as estates and trusts and its beneficiaries.
To qualify for deferral:
Capital gains must be invested in a QOF within 180 days.
Taxpayer elects deferral on Form 8949 and files with its tax return.
Investment in the QOF must be an equity interest, not a debt interest.
If a taxpayer holds its QOF investment at least five years, the taxpayer may exclude 10 percent of the original deferred gain. If a taxpayer holds its QOF investment for at least seven years, the taxpayer may exclude an additional five percent of the original deferred gain for a total exclusion of 15 percent of the original deferred gain. The original deferred gain – less the amount excluded due to the five and seven year holding periods – is recognized on the earlier of sale or exchange of the investment, or December 31, 2026. If the taxpayer holds the investment in the QOF for at least 10 years, the taxpayer may elect to increase its basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged. This may eliminate all or a substantial amount of gain due to appreciation on the QOF investment.
For businesses that have employees, there are changes to fringe benefits that can affect a business’s bottom line and their employee’s tax liabilities. One of these changes is to qualified moving expenses.
Under previous law, payment or reimbursement of an employee’s qualified moving expenses were not subject to income or employment taxes.
Under last year’s tax reform legislation, employers must include all moving expenses, in employees’ wages, subject to income and employment taxes.
Generally, members of the U.S. Armed Forces can still exclude qualified moving expense reimbursements from their income if:
They are on active duty
They move pursuant to a military order and incident to a permanent change of station
The moving expenses would qualify as a deduction if the employee didn’t get a reimbursement
There is a transition rule under the new law. Under this rule, certain payments or reimbursements aren’t subject to federal income or employment taxes. This includes amounts that:
An employer pays a third party in 2018 for qualified moving services provided to an employee prior to 2018.
An employer reimburses an employee in 2018 for qualified moving expenses incurred prior to 2018.
To qualify for the transition rule, the payments or reimbursements must be for qualified expenses which would have been deductible by the employee if the employee had directly paid them before Jan. 1, 2018. The employee must not have deducted them in 2017.
Employers who have included amounts covered by the exception or the transition rule in individuals’ wages or compensation can take steps to correct taxable wages and employment taxes.
Taxpayers can now get tax tips and helpful news from the IRS on Instagram. The agency just debuted it’s official Instagram account, IRSNews, which users can access at www.instagram.com/irsnews or on their smartphone using the Instagram app.
The IRS will use its new Instagram account it to:
Provide the latest tax scam information to help taxpayers keep their personal data secure.
Better serve young adults, the majority of whom use Instagram.
Share information in Spanish and other languages.
Reinforce messages the IRS promotes on its other social accounts.
The IRS will use Instagram along with several other social media tools to communicate with taxpayers:
Twitter: Taxpayers can follow @IRSnews for tax-related announcements and tips. @IRStaxpros tweets news and guidance for tax professionals. Tweets from @IRSenEspanol have and the latest tax information in Spanish. @IRSTaxSecurity tweets tax scam alerts.
LinkedIn. The IRS shares agency updates and job opportunities.
The IRS also has their own app, IRS2Go. Taxpayers can use this free mobile app to check their refund status, pay taxes, find free tax help, watch IRS YouTube videos and get IRS Tax Tips by email. Like Instagram, the IRS2Go app is available from the Google Play Store for Android devices, or from the Apple App Store for Apple devices. IRS2Go is available in both English and Spanish.
Business may find they have questions about how 2017’s tax reform legislation affects their organization and their bottom line. IRS.gov is a great place to find answers. Here are several pages on the IRS website that address tax reform. Businesses can bookmark these pages and check back often, as the IRS regularly updates them with new information.
This is the main page for businesses. Users can link from this page out to more resources with additional information, which is organized in sections by topic. These sections include a plain language description and links to news releases, notices and other technical guidance. Here are a few of the main tax topics on this page and the subtopics highlighted in each section:
Income: taxation of foreign income, carried interest, and like-kind exchanges
Deductions and depreciation: fringe benefits, moving expenses, standard mileage rates, deduction for passthrough businesses, and business interest expenses
Credits: employer credit for paid family and medical leave, and the rehabilitation tax credit
Taxes: blended federal income tax and withholding
Accounting method changes
This page also includes information for specific industries, such as farming, insurance companies, and aircraft management services.
From this page, people can link to helpful products including news releases, tax reform tax tips, revenue procedures, fact sheets, FAQs and drop-in articles. Organizations can share these materials including the drop-in articles with employees, customers and volunteers to help them better understand tax reform.
This side-by-side comparison can help businesses understand the changes the new law made to previous law. It will help businesses then make decisions and plan accordingly. It covers changes to deductions, depreciation, expensing, tax credits, and other tax items that affect businesses.