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The Scoop
Kristy Maitre – Tax SpecialistCenter for Agricultural Law and TaxationJuly 6, 2016
Agenda
• Get A Transcript• ACA Return stats for 2014• House Committee Testimony on Agents Training• IP Pin Breach againnnnnnnnnn!• Updated seizure policy/letters• Disregarded entity EIN requirement• Refund Holds in 2017 Until Feb 15 • Borrowing SSN Victims• New Partnership Audit Provisions• Amish• Correspondence• NIIT Issue• Centers for Medicare and Medicaid Services• Shared Responsibility Payment• Disable online account• Iowa Issue
Get A Transcript
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Get A Transcript
General Instructions
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Information Needed
Financial Account
Mobile Phone – In the Taxpayer’s Name
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Verification of Identity
Verification of Identity
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My Phone is Under Son’s Contract
Unable to Verify Identity
Gave Information on How to Obtain a Transcript
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First ACA Returns Stats
• 2014 First Year
• Difficulties included:– Calculation of the Premium Tax Credit
– Calculation of the advanced portion for which taxpayers qualified
– Over $ 500 million repaid in advance PTC
– Income qualification was the chief reason
– Taxpayers are failing to account for income as the year moves forward or are not understanding the income calculation to start the process
– Data Preliminary based on a sample of 260,591 returns
Testimony on IRS Agents Training
• House Small Business subcommittee hearing
– Inconsistent quality in IRS personnel
– Some auditors lack knowledge of tax law (just basic)
– Older agents have better understand if law
– Some agents ignore or deny protocols in the IRM including “audit reconsideration” procedures
IP PIN Tool BreachJune 23, 2017
• The IP PIN tool is unavailable until further notice
• The Internal Revenue Service is reviewing this tool and looking at further strengthening its security features
• Taxpayers who have been issued an IP PIN through a CP01A Notice should continue to file their tax returns with an IP PIN as they normally would
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IP PIN Tool Breach
• Increased attempts to access the IP PIN program
• Investigation underway to determine if any IP PIN’s were accessed
• The tool was used by about 20 million taxpayer annually
Other Security Information
• 48% drop in Form 14039 ID Theft Affidavit filings
• Expand the test of W‐2 verification codes to about 50 million in 2017
• New data elements will be used by the states and IRS to assist in identifying a fraudulent tax return
• GAO report estimated the IRS in 2014 paid out $ 3.1 billion in fraudulent returns
IRS Updates Seizure Policies
• Special procedure for requesting the return of property or funds whose assets were forfeited because they were involved in legal structuring of regular cash transactions below the $10,000 threshold est. by the Bank Secrecy Act
• October 2014 changes in policy concerning “structuring cases”
• Letters will be mailed to property owners identified, cases date back to October 1, 2009
• All cash transactions fell below the $10,000 figure
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Disregarded Entity IssuePossible Future Requirement
• Can the IRS under existing regulations change tax return forms and instructions to require a sole owner of a disregarded entity to provide the disregarded entities Employer Identification Number (EIN) on the owner’s tax return?
• Yes, per § 6011(a) and Treas. Reg. § 6011‐1(a)
Refund Holds in 2017 Until Feb 15
• Earned Income Tax Credit
• Additional Child Tax Credit
• Entire refund will be held, PATH does not allow a partial refund release
Borrowing SSN Victims
• Beginning in 2017 IRS will notify taxpayers whose SSN has been used fro employment purposes
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New Partnership Audit Provisions
• IRS is developing a new schedule to enable it to verify the tax paid
• Gap in time between the reviewed year and the adjustment year
• Want to make sure the adjustment is picked up on a future return if tax is to be paid at the partner level
• No word yet on form number or structure
AMISH
• The IRS continues to send letters to the AMISH about SE tax, just keep responding with a copy of the Form 4029
• This is an IRS systemic that they have refused to fix
• Sorry, but it has been elevated many times in the past, and IRS has stated that the number of individuals effected is not large enough to fix, so it will be handled by correspondence
• The Letter is a 12C
CORRESPONDENCE
• Notices and letters are crossing in the mail• It appears that IRS continues to be behind with
working correspondence• Continue to respond accordingly• But remember, that IRS can print notices 2‐3
weeks in advance and then mail them out even though correspondence has been received
• It does not hurt to respond again, maybe this time someone will note the account that correspondence has been received
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Great Southern Bank – Sent out previously
• I had a client that received a CP‐2000 notice regarding an underreporting of a distribution from an IRA for the 2014 tax year from Great Southern Bank
• In reviewing the notice and the tax return and contacting the bank it was determined that the bank issued correct 1099‐R’s to the recipients of the distributions in 2014 but when they uploaded their information the up load included 2013 and 2014 distributions
• The bank is working with IRS to resolve and are going to correct the info with IRS thru another upload but that does not appear it will stop the notices from going out
• According to the CD/IRA Department they have drafted a letter that IRS has approved and customers that are affected can get this letter from the bank to submit in response to the CP‐2000 notice
NIIT Tax and Possible Issue –Unconfirmed but Letting You Know
• Practitioner had a meeting with a Revenue Agent to discuss a 4883C letter a client received indicating that their identity had to be verified
• Strangely enough, both the taxpayer and spouse received PIN numbers due to identity theft issues for the same tax year
• The Agent indicated that he met with a number of taxpayers who received the same letter and noticed that many filed a Form 8959 "Additional Medicare Tax” which calculated a total additional Medicare tax withholding on line 24
• In this case, the taxpayer’s employer withheld additional Medicare tax because his wages exceeded $200,000, when Form 8959 was prepared the additional Medicare tax withheld was credit back to the taxpayer on Form 1040, line 64, because the couples total wages did not exceed $250,000
• This ended up being a computer issue, and not an identity theft issue
Centers for Medicare and Medicaid Services
• This is a legitimate government website that sends out a verification letter Data Match
• Here is the site in case you get the letter• https://www.cms.gov/Medicare/Coordination‐of‐Benefits‐and‐
Recovery/EmployerServices/IRS‐SSA‐CMS‐Data‐Match.html• A practitioner received a letter requesting a data match• The website address did not appear to be correct• But, I cannot confirm• Also when I tried to access the website it continued to timeout• This may be a new scam• If you get this kind of request you can call the number under Contacts at the
bottom of the website noted above, to confirm it is a legitimate request• Benefits Coordination & Recovery Center (BCRC)• BCRC Customer Service Representatives are available to assist you Monday
through Friday, from 8:00 a.m. to 8:00 p.m., Eastern Time, except holidays, at toll‐free lines: 1‐855‐798‐2627 (TTY/TDD: 1‐855‐797‐2627 for the hearing and speech impaired)
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IRS‐SSA‐CMS Data Match
• Congress enacted a law (Section 6202 of the Omnibus Budget Reconciliation Act of 1989) to provide CMS with better information about Medicare beneficiaries' group health plan (GHP) coverage
• The law requires the Internal Revenue Service (IRS), the Social Security Administration (SSA), and CMS to share information that each agency has about whether Medicare beneficiaries or their spouses are working
• The process for sharing this information is called the IRS‐SSA‐CMS Data Match• The purpose of the Data Match is to identify situations where another payer may
be primary to Medicare• Employers are required to complete a questionnaire that requests GHP
information on identified workers who are either entitled to Medicare or married to a Medicare beneficiary
• This information is used to identify the primary and secondary payers for medical services provided to a Medicare beneficiary
• This process helps Medicare identify claims on an ongoing basis for which Medicare should not be the primary payer
• The Data Match Project has saved the Medicare Trust Funds more than 3.5 billion dollars to date
Notices on the Individual Shared Responsibility Penalty – Heads up
• I have a client that just received a notice that they owe over $2,100 in shared responsibility payment, even though they have 1095‐C showing coverage
• I'm just wondering how many of these I'm going to have to deal with
• If your client gets the notice respond with proof of insurance
• Remember the matching process has not been perfected, so we will have to reply to get any penalty removed
POWER of ATTORNEY Needed to Assist Client with “Disable Online Account”
• Scenario:
• Your client receives a letter concerning opening an IRS online account or they go into their account and can see the last date accessed and they never accessed
• You can assist with the termination of the online account using a POA that states “ "disable online account"
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Iowa Continuing Audit Program
• Something that IOWA is doing starting this week is mailing out letters to just about anyone who had large health insurance deductions on page 1 of their 2013 returns
• And IOWA has specific documentation that they want, all of which takes time to pull together and respond
Iowa Form 100 Team
• The new Iowa Form 100 team is working hard to improve the form and instructions for the 2016 tax year
• A fist draft has been issued to the team with the IDR changes for their review
• As we move forward I will try to keep you up to date on what we know
• Thanks to all who are taking the time to generate input
New Publication
• IRS has updated Publication 3402 on the Taxation of Limited Liability Companies
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H.R 3209Recovering Missing Children Act
• Signed into law
• IRS is allowed to disclose tax return information to state and local law enforcement who have court orders and are working with Federal agencies to recover missing children
• Will have an impact on children abducted by parents and families
IRS Funding Bill
• Scheduled for the week of July 4
• Reduce funding by $ 286 million from current level
Proposed Legislation
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H. R. 5447
• Small Business Care Relief Act of 2016
• Health Reimbursement Arrangements
• Still in Committee ‐ 6/23/2016 Read the second time
• Placed on Senate Legislative Calendar under General Orders
• Calendar No. 526
Update on H. R. 4934
• Wine Excise Tax Modernization Act of 2016
• Still in Committee
H. R. 5335
• Facilitating Farmers Access to Resources and Machinery Act
– Expand exceptions to the private activity bond rules for first‐time farmers and other purposes
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H. R. 5381
• College Preparation Tax Act of 2016
– Tax Credit for certain expenses related to preparing for college
– Limited to three taxable years
– Maximum Credit $500
S. 3025
• Graduate Student Savings Act of 2016
– Permit fellowship and stipend compensation to be saved in an IRA
H. R. 5382
• Student Loan Employment Benefits Act of 2016
– Exclude from gross income amounts employer’s pay on employee’s student loans
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H. R. 5383
• Middle Class College Tuition Tax Credit Expansion Act of 2016
– Expand American Opportunity Tax Credit
– Inflationary adjustments
– Lifetime dollar limitations
H.R. 5374
• Bring Small Business Back Tax Reform Act of 2016– Lower rate of tax on a portion of pass‐through business income
– 10% on the first $150,000
– 20% on remaining
– Qualified business 1 million of less
– Partnership, S Corporation
– Expand the availability of cash accounting for certain small business
CALT Website
http://www.calt.iastate.edu/
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Tour of the CALT Website
Changes to the Iowa Farm and Urban Tax Schools
• It has been a season of change – this is good
• Our Fall and Winter Tax Schools are changing – this is good
• September 9, 2016 – Farm Tax Seminar
• All Farm issues All day
• For the winter tax schools, farm issues may come up but we will center on other issues important to your practice, including ethics for early bird attendees at some sessions
Please WelcomePhil Harris
• Professor, Agricultural and Applied Economics –University of Wisconsin‐Madison– J.D., University of Chicago, 1977– M.A., Economics, University of Chicago, 1975– B.S., Economics, Iowa State University, 1973
• His research program focuses on business and tax planning for agricultural producers
• The program includes information on the choice of entity for organizing a farm business and for transferring a farm business to the next generation
• Income, estate and gift tax consequences as well as non‐tax issues
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Phil Harris
Phil Harris CALT Speaker
• September 9, 2016 Farm Tax Seminar
• The session will also be available via webinar
• Instructor – Farm and Urban Tax School
• November 21 – 22 –Waterloo
• December 12 – 13 ‐ Ames
Fall Tax Schools
• Though they are named the Farm and Urban Tax Schools the schools cover more than farm issues
• Common return issues for all kinds of returns are covered• All kinds of business entities• Problematic issues• Sometimes we even get into to issues that you many
encounter only once or twice a year or tax season• The Tax Schools are a blend of diverse topics of interest to
all tax professionals• This year: New instructors with diverse backgrounds• Your adventure awaits at Iowa State’s Center for
Agricultural Law and Taxation
Farm and Urban Tax Schools 2016
• November 2, 2016 to December 13, 2016 • 8 Locations in Iowa and Online Webinar• Save the Date for the 2016 Annual Farm and Urban Income Tax
Schools• The program is intended for tax professionals and is designed to
provide up‐to‐date training on current tax law and regulations– November 2‐3: Maquoketa– November 7‐8: Red Oak– November 9‐10: Sheldon– November 14‐15: Mason City– November 17‐18: Ottumwa– November 21‐22: Waterloo– December 5‐6: Denison– December 12‐13: Ames and Live Webinar
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September Farm Tax SchoolNavigating Changing Times
• September 8, 2016 to September 9, 2016, Ames, Iowa and Online• Attend any one day or both days, either in‐person or online! Company
discount for 3 or more individuals from the same employer!• Ag Law Seminar, September 8• Our Thursday seminar will offer practical, interesting information you can
immediately apply in your practice or ag‐related business. You’ll leave with forms and other tools to help you more efficiently serve your ag clients.
• Farm Tax Workshop, September 9• Our Friday seminar will be a comprehensive one‐day farm tax workshop
designed to equip tax practitioners with the tools they need to prepare farm income tax returns, from the simple to the complex.
• Online Registration: https://goo.gl/pdJTK5
Registration Fees
• Early Rate ‐ Registered on/by August 31– Attend in person or watch from your computer– Any one day: $200– Both days: $350– Company Discount: $10 discount per individual if 3 or more are
registered from the same employer ‐ this is available for either on‐site or online attendance
• Late Rate ‐ Registered after August 31– Attend in person or watch from your computer– Any one day: $220– Both days: $370– Company Discount: $10 discount per individual if 3 or more are
registered from the same employer ‐ this is available for either on‐site or online attendance
Continuing Education
• Ag Law Seminar (September 8)– Continuing Legal Education (CLEs) ‐ 7 hours (including one hour of ethics)
– Others Professional Education (CPEs) ‐ 7‐8 hours (including one hour of ethics)
• Farm Tax Workshop (September 9)– Continuing Legal Education (CLEs) ‐ 7 hours (including one hour of ethics)
– Others Professional Education (CPEs) ‐ 7‐8 hours (including one hour of ethics)
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Speakers
• Ag Law Seminar– Shannon Ferrell, Associate Professor, Agricultural Economics, Oklahoma State
University– Eldon McAfee, Shareholder, Brick Gentry P.C.– Erin Herbold‐Swalwell, Shareholder, Brick Gentry P.C.– Julia Vyskocil, Shareholder, Brick Gentry P.C.– Pat Dillon, Dillon Law P.C.– Professor Neil Hamilton, Director of Drake Law School Agricultural Law Center– John Baker, Iowa State’s Beginning Farmer Center Administrator– Jennifer Zwagerman, Associate Director of Drake Law School Agricultural Law
Center– Kristine Tidgren, Assistant Director for the Center for Agricultural Law &
Taxation
• Farm Tax Workshop– Philip E. Harris, JD, University of Wisconsin professor– Kristy Maitre, Tax Specialist with the Center for Agricultural Law & Taxation
Farm Tax Seminar Topics• Legislative Update: The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) and the Consolidated
Appropriations Act, 2016 (CAA of 2016)
• Income Issues
• Constructive Receipt
• Installment Sales of Livestock
• Hedging and Other Marketing Transactions
• Farm Income Averaging
• Farm vs. Nonfarm Income
• Easements
• Sale vs. Lease of Equipment by a Retiring Farmer
• Conservation Reserve Program Payments
• Income in Respect of a Decedent
• Reporting Property as Self‐rental on Schedule E (Form 1040)
• Deduction Issues
• Tangible Property Regulations
• Lease vs. Purchase of Farm Equipment
• Segregating Fertilizer Costs
• Domestic Production Activity Deduction
• Start Up Expenses
Farm Tax Seminar Topics
• Entity Issues• Partnership Formation and Contributed Assets with Debt in Excess of
Tax Basis• Guaranteed Payments• Qualified Joint Ventures• Issues for Farmers with Multiple Entities• Miscellaneous Farm Issues• Material Participation• Capitalization of Preproduction Expenses• Farm Inventory• Hobby Losses• Gift of Commodities• Valuation of growing crops• Cases and Rulings: A summary of rulings and cases from the past year
that affect farmers
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Accommodations
• Quality Inn & Suites Starlite Village Conference Center
• 2601 East 13th Street, Ames, Iowa
• Discounted overnight rooms are available for $89.00 per night (for the dates of September 7, 8 and 9)
• Call the hotel at 515‐232‐9260 and mention you are attending the Iowa State University September Seminars
Summer Webinars
• Preparing for a Gambling Audit
• Your Client Dies, What’s Next?
• Innocent Spouse
• Above the Line Deductions
• Roth IRA’s
• Net Operating Losses
• The Portability Election
• IRS Return Preparer Penalties Overview
• Miscellaneous Income
• New Developments
Summer Webinars
• Tax Research with Limited Resources
• Injured Spouse
• IRS Representation
• Inventory Issues
• Preparing for an IRS Audit
• Appeals – How to Write Your Appeals Request
• Start Up Costs
• Hobby Losses
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Beginning Tax PreparersClass
• CALT is working on offering a basic class for NEW tax preparers this fall in October
• The week long webinar will cover the basics an individual needs to know such as:– Requirement to file– Dependents– Filing Status– Itemized deductions– Education Credits
• Other issues a first or second year preparer needs to know as well as a refresher for others who need to brush up on issues
• The class will be a week long or more and will be offered at a special rate
The Scoop
• Throughout the filing season two Scoops will be held on Scoop Dates– 8:00 – 8:30 am Central time– 12:00 – 12:30 Central time
• This assists with accommodating our west coast practitioners
• The same information will be shared at both sessions• You have the option of registering for whatever
session suits your schedule• https://www.calt.iastate.edu/calendar‐node‐field‐
seminar‐date/month
Future Scoop Dates
• July 6, 2016• July 20, 2016• August 24, 2016• September 7, 2016• October 5, 2016• October 19, 2016• November 16, 2016• December 14, 2016• http://www.calt.iastate.edu/calendar‐node‐field‐
seminar‐date/month
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The CALT Staff
John D. Lawrence Interim DirectorAssociate Dean, College of Agriculture & Life Sciences Extension Programs and OutreachDirector, Agriculture & Natural Resources Extension132 Curtiss HallIowa State UniversityAmes, Iowa 50011‐1050
Kristine A. Tidgren
Assistant Director
E‐mail: [email protected]
Phone: (515) 294‐6365
Fax: (515) 294‐0700
The CALT Staff
Kristy S. MaitreTax SpecialistE‐mail: [email protected]: (515) 296‐3810Fax: (515) 294‐0700
Tiffany L. KayserProgram AdministratorE‐mail: [email protected]: (515) 294‐5217Fax: (515) 294‐0700