Richard G. Furlong, Jr. Senior Stakeholder Liaison Communications & Liaison Division

1. IRS Updates Richard G. Furlong, Jr.Senior Stakeholder LiaisonCommunications & Liaison Division June 19, 2019 CPA Continuing Education Society of PA

2. Draft 2020 Form W-4 www.irs.gov/draftforms

3. Software systems for new W-4s Two software systems for old and new W-4 is not necessary Same set of withholding tables used for both forms Apply these tables separately to systems for new and old forms Additional guidance will be provided on the payroll calculations needed based on data fields on the new and old forms

4. Use of new W-4 • New employees who fail to submit a Form W-4 after 2019 treated as single filer with no other adjustments • Beginning in 2020, all new employees must used the redesigned form

5. No requirement to request new W-4s • Employees hired before 2020 are not required to submit a new Form W-4 • Withholding will continue based on a valid form previously submitted • Do not treat employees as failing to furnish Forms W-4 if they don’t provide a new Form W-4

6. Adjustment for nonresident aliens Pub 15-T will provide instructions on the additional amounts to add to wages to determine withholding for nonresident aliens Nonresident alien employees should continue to follow special instruction in Notice 1392 when completing their Forms W-4

7. 2020 Publication 15-T Draft of Publication 15-T, Federal Income Tax Withholding Methods, for use in 2020 issued June 7 Comments must be submitted by July 8, 2019 to be timely IRS will post a new draft this summer to show final computation of withholding Can’t provide updated withholding tables for 2020 until the final Pub 15-T is released in December

8. Why a Paycheck Checkup? Some law changes in the Tax Cuts and Jobs Act may affect your withholding Protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year Avoid too much withholding; you can receive more in your paychecks

9. IRS.gov/withholding

10. What do I need? Most recent pay stubs Most recent income tax return

11. Results

12. Your recap

13. What If I Have Too Much Withheld? File a new Form W-4 to: • Avoid having too much withheld • Put more in your regular paycheck

14. Resources: www.irs.gov/withholding Publication 505, Tax Withholding and Estimated Tax Form W-4, Employee’s Withholding Allowance Certificate Form 1040-ES, Estimated Tax for Individuals

15. W-2 scam • Poses as company executive, asks payroll employee for list of all employees W-2s • Targets: businesses, public schools, universities, tribes • Employer/victims should email dataloss@irs.gov and provide POC • Victims/non-victims should forward any suspicious W-2 emails (including full headers) to Phishing@irs.gov and use subject line: W2 Scam

16. W-2 spoof

17. Emerging employment tax issue Wellness Benefits • Many employers, health insurers and unions provide employees with wellness plans or programs that are designed to promote the health of the employees • Employer wellness programs often provide employees with rewards for taking certain actions intended to promote health

18. Emerging employment tax issue If the rewards are limited to section 213 medical expenses then usually they would not be wages subject to employment taxes An example is where the employer places a limitation on a gift card such that it may only be used for a section 213 medical expense, e.g., prescription medications

19. Emerging employment tax issue Some employers offer a wellness arrangement where they require the employee to pay a pre-tax premium (similar to a health plan premium through a cafeteria plan) and then, within the same pay period, reimburse the employee for almost the entire pre-tax premium Under existing law in IRC § 105 and 106, the amount of the reimbursement in this arrangement is wages subject to employment taxes

20. E-News for Payroll Professionals Subscribe to monthly editions of e-News for Payroll Professionals Get information specifically affecting federal payroll tax returns and the payroll community www.IRS.gov and search: e-News

21. Richard G. Furlong, Jr.Senior Stakeholder LiaisonCommunications & Liaison Division Employer Identification Number (EIN)Application Changes June 19, 2019 CPA Continuing Education Society of PA

22. EIN Application Lines 7a and 7b • Bullet (28 pt.) • Bullet (28 pt.) • Bullet (28 pt.)

23. Responsible Party with SSN • Bullet (28 pt.) • Bullet (28 pt.) • Bullet (28 pt.)

24. Definition of Responsible Party The “responsible party” is the individual who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. The individual identified as the responsible party should have a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets.

25. Foreign Entity Responsible Party • Bullet (28 pt.) • Bullet (28 pt.) • Bullet (28 pt.)

26. Entities Commonly Using EINs • Single Member Limited Liability Companies (SMLLC) • Estates and trusts • Parent companies forming subsidiaries • Employer retirement plans • Tax Lien participants – some states have tax lien auctions where an EIN is used as part of a lottery process.

27. Updating the Responsible Party

28. Richard G. Furlong, Jr.Senior Stakeholder LiaisonCommunications & Liaison Division Identity Theft Presentation for Tax Professionals June 19, 2019 CPA Continuing Education Society of PA

29. Today’s Presentation • IDT progress snapshot • Data security requirements for tax pros • Protect your business • Data theft signs for tax pros • What to do in case of a data loss • How to help client/victims • What’s new for 2019 and beyond

30. Security Summit Progress Report Between 2015 and 2018: • Number of taxpayers reporting they were IDT victims (Form 14039) fell 71 percent; • Number of confirmed IDT returns stopped by IRS fell by 54 percent; • The IRS protected a combined $24 billion in fraudulent refunds; • Financial industry partners recovered an additional $1.4 billion in fraudulent refunds.

31. Cyberthieves Target Tax Pros • Five to seven data theft reports weekly in 2018 • Hundreds of tax pros • Tens of thousands of clients • Spear phishing emails – posing as potential customers, tax software, cloud storage providers or IRS • Unprotected accounts, computer systems, wireless access

32. Protect Your Business • See Publication 4557, Safeguarding Taxpayer Data • Review your security measures • Anti-virus software and firewall • Two-factor authentication (coupled with strong passwords) • Backup software/services and drive encryption • Secure Virtual Private Networks • Create a data security plan • Federal law requires all “professional tax preparers” to create and maintain an information security plan for client data • Follow “Safeguards Rule” • Designate a responsible person

33. Protect Your Business • Create Data Security Plan (continued) • Identify/assess risks • Design and implement safeguards • Use providers who maintain security • Evaluate and adjust as needed • Protect your EFIN, PTIN and CAF number • Contact IRS Stakeholder Liaisons; states at StateAlert@taxadmin.org • Sign up for e-News for Tax Professionals, Quick Alerts and/or IRS Social Media

34. Data Theft Signs • Clients that haven’t filed get refunds, authentication letters, tax transcripts • Client returns reject – returns already filed • Number of returns filed exceeds your number of clients • Computers impacted: • Running slow • Cursor moving on its own • Network computers locking up

35. Responding to a Data Theft • Create a data theft response plan • Contact IRS Stakeholder Liaisons • Contact states at StateAlert@taxadmin.org • Contact cybersecurity expert/insurance carrier • Review FTC site: IdentityTheft.gov • Review IRS Publication 5293, Data Security Resource Guide for Tax Professionals

36. Victim Assistance • Taxpayer Protection Program letters • 4883C – requests taxpayers call the IRS within 30 days to confirm filing the return • 5071C – requests taxpayers use an online identity verification tool to confirm filing the return • 5747C – requests taxpayers make an appointment at IRS office; for data breach victims • 5447C – requests taxpayers with foreign addresses call the IRS • 6042C – requests more information from suspected business victims

37. Victim Assistance Identity Theft Victim Assistance Program • Form 14039 – Identity Theft Affidavit • File only if unable to e-file; instructed to do so by IRS • Do not file if client receives a TPP letter • Complete Box 1, mail with paper tax return • Identity Protect PIN issued after case is resolved

38. Identity Protection PIN • 6-digit number helps prevent thief from filing fraudulent return in your client’s name • Issued automatically to confirmed identity theft victims • Online opt-in program – California, Delaware, D.C., Florida, Georgia, Illinois, Maryland, Michigan, Nevada and Rhode Island • Expansion – roll out to other states in the future; must use online tool

39. The Future – 2019/2020 • Faxing of individual and business transcripts to end - TBD • Third-party mailings from Forms 4506, 4506-T and T-EZ to end - TBD • Unmasked wage transcripts are available • EIN applicants must be individuals • Data security awareness efforts continue; Tax Security 2.0: Taxes-Security-Together Checklist

40. Richard G. Furlong, Jr.Senior Stakeholder LiaisonCommunications & Liaison Division Monitor Your EFIN, PTIN and CAF Numbers June 19, 2019 CPA Continuing Education Society of PA

41. Stolen EFINs, PTINs and CAFs • Thieves impersonate tax pros to: • File fraudulent returns • Submit Power of Attorney forms • Call Practitioner Priority Service line • Attempt to access client accounts • Attempt to access e-Services • IRS responses include: • 2-factor authentication for e-Services accounts • Authorization requirements for PPS callers • Redacted tax transcripts

42. Maintain Your EFIN Application • Only the IRS can issue EFINs • Review periodically for accuracy and updates • Update change in business operations within 30 days • Changes in address, phone numbers or personnel • Add or remove authorized users (responsible officials, principal consent, delegated users, etc.) • Know when a new EFIN is needed • New ownership of a firm (EFIN not transferable) • New location that transmits e-File returns

43. Monitor Your EFIN • For EFIN weekly totals: • Go to e-Services • Access e-File Application • Search by name • Select “EFIN Status”

44. Report Suspected EFIN Abuse • Bullet (28 pt.) • Bullet (28 pt.) • Bullet (28 pt.) • Too many returns filed with your EFIN? Contact e-Help Desk (866) 255-0654

45. Monitor Your PTIN • Monitor “Returns Filed per PTIN” • Information available via online PTIN system for tax preparers who meet both of the following criteria: • Have a professional credential or are an Annual Filing Season Program participant, and • Have at least 50 Form 1040 series tax returns processed in the current year

46. How to Access PTIN Information To access “Returns Filed Per PTIN” information, follow these steps: • Log into your PTIN account • From the Main Menu, find “Additional Activities” • Under Additional Activities, select “Summary of Returns Fied.”

47. Summary of Returns Filed Chart • Bullet (28 pt.) • Bullet (28 pt.) • Bullet (28 pt.)

48. Report Misuse of your PTIN

49. Maintain Your POA Files • A CAF number is assigned the first time you file a third-party authorization with IRS.  • Review your Power of Attorney submissions annually • Withdraw your POA for clients you no longer represent by mailing or faxing the existing POA to the IRS using the “Where to File” chart. Write “Withdraw” at the top.

50. Monitor Your CAF Number • Using stolen CAF numbers to try to obtain tax transcripts is the latest ID theft trend. • Receiving unexpected tax transcripts is a sign of identity theft. • Contact the IRS if there is suspected abuse of your CAF number. • Review Publication 4557, Safeguarding Taxpayer Data, for additional security steps