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Archive for IRS

Tax Security 2.0 – Taxes-Security-Together Checklist – Step 1

IRS On Security

Using a new “Taxes-Security-Together” Checklist, the Internal Revenue Service and the Security Summit partners urged tax professionals to review critical security steps to ensure they are fully protecting their computers and email as well as safeguarding sensitive taxpayer data.

The Security Summit partners – the IRS, states and tax industry – urge tax professionals to take time this summer to give their data safeguards a thorough review. To help the tax community, the Summit created a “Taxes-Security-Together” Checklist as a starting point for analyzing office data security.

In the first of a five-part weekly series, the initial step on the checklist involves the “Security Six” protections. These steps fall into several major security categories.

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IRS Issues Guidance On The Tax On The Net Investment Income Of Certain Private Colleges And Universities

IRS

The Internal Revenue Service today issued proposed regulations for the new 1.4 percent excise tax on the net investment income of certain private colleges and universities.

The proposed regulations define several of the terms necessary for educational institutions to determine whether the section 4968 excise tax applies to them.

The tax applies to any private college or university that has at least 500 full-time tuition-paying students (more than half of whom are located in the U.S.) and that has assets other than those used in its charitable activities worth at least $500,000 per student. An estimated 40 or fewer institutions are affected.

For affected institutions, the guidance clarifies how to determine net investment income, including how to include the net investment income of related organizations and how to determine an institution’s basis in property.

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List Of Designated Qualified Opportunity Zones Under Internal Revenue Code § 1400Z-2

IRS Opportunity Zones

This IRS notice lists the population census tracts the Secretary of the Treasury (Secretary) designates as qualified opportunity zones (Zones).

BACKGROUND

Section 13823 of “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for the fiscal year 2018,” P.L. 115-97, which was enacted December 22, 2017, amended the Internal Revenue Code (Code) by adding §§ 1400Z-1 and 1400Z-2.

Section 1400Z–1(b)(1)(A) of the Code allows the Chief Executive Officer (CEO) of each State to nominate a limited number of population census tracts to be designated as Zones for purposes of §§ 1400Z-1 and 1400Z-2. Revenue Procedure 2018-16, 2018-9 I.R.B. 383, provided guidance to State CEOs on the procedure for making these nominations. Section 1400Z-1(b)(1)(B) of the Code provides that after the Secretary receives notice of the nominations, the Secretary may certify the nominations and designate the nominated tracts as Zones.

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IRS Wants To Hear From Large Corporate Taxpayers Interested In Applying For The Compliance Assurance Process

IRS Compliance

The Internal Revenue Service is asking publicly-traded corporate taxpayers interested in applying to the Compliance Assurance Process (CAP) in 2020 to provide a statement of interest.

Launched in 2005, CAP improves federal tax compliance by resolving issues prior to the filing of a tax return through open, cooperative and transparent interactions between the IRS and taxpayers. New applicants to CAP have not been accepted since 2015.

The statement of interest is a precursor to the formal application process that takes place in the fall of 2019. The IRS will use the information provided in the statements of interest by potential applicants to help determine the approach for expanding CAP in 2020.

For details on CAP eligibility, criteria and instructions, please refer to the statement of interest web page

 

 

Members Of The Armed Forces Are Entitled To Certain Tax Benefits

IRS LOGO on Military

Members of the military and their families often qualify for special tax benefits. For example, members of the armed forces don’t have to pay taxes on some types of income. In addition, special rules could lower the tax they owe or allow them more time to file and pay their federal taxes.

Here are some of these special tax benefits:

  • Combat pay exclusion. If someone serves in a combat zone, part or all of their combat pay is tax-free. This also applies to people working in an area outside a combat zone when the Department of Defense certifies that area is in direct support of military operations in a combat zone. There are limits to this exclusion for commissioned officers.
  • Deadline extensions. Some members of the military – such as those who serve overseas – can postpone most tax deadlines. Those who qualify can get automatic extensions of time to file and pay their taxes.
  • Earned income tax credit. Military members who get nontaxable combat pay may choose to include it in their taxable income. One reason they might do this is to increase the amount of their earned income tax credit. People who qualify for this credit could owe less tax or even get a larger refund.

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Certain Taxpayers Might Get A Letter From The IRS This Year – Here Is What They Should Know

IRS CP2000 Notice

Certain taxpayers might get a letter from the IRS this year. It’s called an IRS Notice CP 2000. It gives detailed information about issues the IRS identified. The IRS sends this notice when information from a third party doesn’t match the information the taxpayer reported on their tax return. The notice also provides steps taxpayers should take to resolve those issues.

Here is some information about these notices to help taxpayers understand why they got one and what to do when it arrives:

  • The IRS sends a notice to the taxpayer when a tax return’s information doesn’t match data reported to the IRS by banks and other third parties. Read more

IRS States Income From Abroad Is Taxable

IRS On Income Abroad

Many United States (U.S.) citizens and resident aliens receive income from foreign sources. There have been recent reports about the interest of the Internal Revenue Service (IRS) in taxpayers with accounts in Liechtenstein. The interest of the IRS, however, extends beyond accounts in Liechtenstein to accounts anywhere in the world. Consequently, the IRS reminds you to report your worldwide income on your U.S. tax return.

If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement,  a Form 1099 (Information Return) or the foreign equivalents.  See Publication 525, Taxable and Nontaxable Income, for more information.

Additionally, if you are a U.S. citizen or resident alien, the rules for filing income, estate and gift tax returns and for paying estimated tax are generally the same whether you are living in the U.S. or abroad.

Hiding Income Offshore

Not reporting income from foreign sources may be a crime.  The IRS and its international partners are pursuing those who hide income or assets offshore to evade taxes. Specially trained IRS examiners focus on aggressive international tax planning, including the abusive use of entities and structures established in foreign jurisdictions.  The goal is to ensure U.S. citizens and residents are accurately reporting their income and paying the correct tax.

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What Is An S Corporation?

IRS - S Corporations

According to the IRS, S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.

Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.

To qualify for S corporation status, the corporation must meet the following requirements:

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Take A Look: Internal Revenue Service Data Book

IRS Data Report

The Internal Revenue Service (IRS) Data Book is published annually by the IRS and contains statistical tables and organizational information on a fiscal year basis. The report provides data on collecting the revenue, issuing refunds, enforcing the law, assisting the taxpayer, and the budget and workforce.

You can view selected summary graphs, key statistics, and descriptions of the tables and the IRS functions they cover. To download data tables on IRS and taxpayer statistics, visit the relevant section page listed on the left-side navigation column.

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Summary of FATCA Reporting For U.S. Taxpayers

IRS Logo 123

The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other financial assets offshore. The Treasury Department and the IRS continue to develop guidance concerning FATCA. For current and more in-depth information, please visit FATCA.

Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. There are serious penalties for not reporting these financial assets (as described below). This FATCA requirement is in addition to the long-standing requirement to report foreign financial accounts on FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) (formerly TD F 90-22.1).

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Here’s What Historic Building Owners Should Know About The Rehabilitation Tax Credit

IRS Tax Tip

Organizations around the country continue to promote historic buildings and other important heritage sites as May is National Historic Preservation Month. As part of this month, anyone who owns a historic building should remember that the rehabilitation tax credit offers an incentive to renovate and restore old or historic buildings. Tax reform legislation passed in December 2017 changed when the credit is claimed and provides a transition rule.

Here are some things that building owners should know about this credit:

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IRS Releases Data Book For 2018 Showing Range Of Tax Data Including Audits, Collection Actions And Taxpayer Service

IRS Logo - Notices

The Internal Revenue Service today released the 2018 IRS Data Book, a snapshot of agency activities for the fiscal year.

The 2018 IRS Data Book describes activities conducted by the IRS from Oct. 1, 2017, to Sept. 30, 2018, and includes information about tax returns, refunds, examinations and appeals. The annual publication is illustrated with charts showing changes in IRS enforcement activities, taxpayer assistance levels, tax-exempt activities, legal support workload and IRS budget and workforce levels when compared to fiscal year 2017 and prior years. Included this year is a section on taxpayer attitudes from a long-running opinion survey.

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