Internal Revenue Service

Tax Industry and IRS “Team Up” to Fight Identity Theft Fraud

Under a new agreement called “a sweeping new collaborative effort”, tax software vendors and the IRS will team up to fight identity theft refund fraud.  This agreement will have the IRS, tax preparation and software firms, payroll and tax financial product processors, and state tax administrators collaborate to identify new steps to validate taxpayer and tax return information at the time of filing. It was found that the ability to answer knowledge-based authentication questions about taxpayers financial dealings, such as car or mortgage payments, was the reason cyber-criminals successfully breached the “Get Transcript” application system.  For more information please read the complete Journal of Accountancy article.

International Data Sharing with the IRS

In a recent news release, the IRS announced the opening of a new International Data Exchange Service (IDES) for financial institutions and foreign countries to securely provide information on financial accounts held by U.S. persons. More than 145,000 financial institutions have registered and more than 110 countries have agreed to provide this information to the IRS.

This announcement marks another step in the IRS’ attempts to tax previously “hidden” offshore accounts. (U.S. taxpayers with over $10,000 in foreign accounts are required to file an annual foreign bank account report (FBAR) and report worldwide income.)

The IRS currently has in place an offshore voluntary disclosure initiative (OVDI), which provides incentives for U.S. taxpayers with unreported foreign income to disclose.  The OVDI offers reduced penalties — […]

Tax Return Transcripts Available to Individual Taxpayers *Updated*

The IRS’ “Get Transcript” application has been temporarily disabled.  Recently, criminals used taxpayer-specific data acquired from non-IRS sources to gain unauthorized access to information through the IRS’ “Get Transcript” application.  The application will remain disabled until security modifications are made.

The information gained allowed the criminals to clear the multi-step authentication process, including several personal verification questions that typically are only known by the taxpayer.

The IRS will be sending letters to all of the approximately 200,000 taxpayers whose accounts had attempted unauthorized accesses.  They will also be providing free credit monitoring services for the approximately 100,000 taxpayers whose accounts were accessed.  The letters received by taxpayers will address details of the unauthorized access and instructions for obtaining the free credit monitoring services.

The IRS […]

By |June 18th, 2015|Categories: Individual Tax, IRS|Tags: , , , , , |Comments Off on Tax Return Transcripts Available to Individual Taxpayers *Updated*

IRS Updates Private Delivery Services

The IRS has updated their list of private delivery services for the first time in over ten years. The update has added three FedEx and one UPS service to the list and removed five discontinued services that were previously acceptable for the timely mailing equals timely filing/paying rule (Sec. 7502).

There are only 15 delivery services that taxpayers can use (outside of the post office) that will satisfy the mailbox rule. These services are provided by FedEx and UPS only, the complete list can be found here. This change is effective as of May 6, 2015.

By |June 9th, 2015|Categories: Business Tax, Individual Tax, IRS|Tags: , , , , , , , , |Comments Off on IRS Updates Private Delivery Services

A Mortgage Broker is not Engaged in a Real Property Trade or Business

In a recent Chief Counsel Advice memorandum (CCA 201504010), the IRS concluded that mortgage brokers are not engaged in a real property trade or business for the purpose of qualifying as real estate professionals.  Real property trades or businesses are defined in the Internal Revenue Code to be “real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental operation, management leasing, or brokerage trade or business.” (I.R.C. § 469(c)(7)(C))

Taxpayers who qualify as real estate professionals are given an exception to the general rule that all rental activities are passive activities (and thus subject to passive loss limitations.)  A real estate professional is one who (1) performs more than half of his/her personal services in real property trade or businesses in which he/she materially participate, […]

By |May 25th, 2015|Categories: Announcements, Business Operations, IRS, Real Estate|Tags: , , , , , , , |Comments Off on A Mortgage Broker is not Engaged in a Real Property Trade or Business