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March 29, 2019

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Issue Number:  2019-09

Inside This Issue

1.     IRS Clarifies Tax Treatment of State and Local Tax Refunds

2.     Earn 18 Continuing Education Credits at the Nationwide Tax Forums

3.     Security Message from IRS Return Preparer Office

4.     Tax Relief for Iowa and Nebraska Disaster Victims

5.     April 4 Webinar: Filing Is the Thing to Do, Even If You Have a Balance Due

6.     Technical Guidance


1.  IRS Clarifies Tax Treatment of State and Local Tax Refunds


The IRS clarified today the tax treatment of state and local tax refunds arising from any year in which the new limit on the state and local tax (SALT) deduction is in effect. In Revenue Ruling 2019-11, the IRS provided four examples illustrating how the long-standing tax benefit rule interacts with the new SALT limit to determine the portion of any state or local tax refund that must be included on the taxpayer’s federal income tax return. The Revenue Ruling has no impact on state or local tax refunds received in 2018 and reportable on 2018 returns taxpayers are filing this season.

For information, including worksheets for reporting these refunds, see the 2018 Instructions for Form 1040, U.S. Individual Income Tax Return, and Publication 525, Taxable and Nontaxable Income.


2.  Earn 18 Continuing Education Credits at the Nationwide Tax Forums


If you need continuing education (CE) credit, consider attending the IRS Nationwide Tax Forums this summer. Attendees can earn up to 18 credit hours. The IRS Tax Forums offer CE credits for enrolled agents, certified public accountants, Annual Filing Season Program participants, California Tax Education Council (CTEC) participants and Certified Financial Planners (CFP). To learn more and register, visit www.irstaxforum.com.


3.  Security Message from IRS Return Preparer Office


The following message was recently sent to holders of Professional Tax Identification Numbers (PTINs):

Increasingly, there has been a lot of discussion and messaging around the importance of data and information security. It’s because tax professionals are the prime targets for identity thieves and data breaches continue to affect tax professionals at an alarming rate. Cybercriminals use sophisticated and ever evolving techniques to gain access to your systems. These criminals steal sensitive taxpayer data, file fraudulent tax returns and create financial havoc for you and your clients. Data security is a necessity for every tax professional; protecting taxpayer data is your legal responsibility.
 
While there are many steps you can take to reduce the risk of becoming a victim of cybercriminals, creating and maintaining a data security plan tops the list. The Federal Trade Commission requires all financial institutions (yes, tax return preparers are included in the definition of financial institutions) to have a data security plan. Your plan should be designed to protect all the sensitive taxpayer data entrusted to you as a tax professional. A data security plan is an essential step in protecting your business against data loss and tax related identity theft. A security plan does not guarantee that your business will not be targeted, but it will help you identify what aspects of your business may be vulnerable and how to improve your security posture related to that weakness.
 
Getting started on a security plan is a challenge for some. Many tax professionals seek the help of a cybersecurity professional to customize a data security plan for their business. Because every business is unique, cybersecurity pros can address your individual business needs and craft a security plan that safeguards both your business and your clients’ data. There is a big market for cybersecurity professionals, but before hiring a cyber pro:

  • Ask for recommendations – talk to other tax professionals and business owners for references
  • Be selective – hire a professional that you feel comfortable with and trust discussing the safety and security of your business and your clients
  • Do interviews – ask about their level of experience sin data and systems protection, available options for backing up data, experience developing security plans for similar sized businesses, and the scope of monitoring for current and emerging security threats.
  • Make it official – secure an agreement or engagement letter that details the terms of each service provided.

Our hope is that you never become the victim of a security breach; however, no computer or business is immune to compromise. Being prepared goes a long way in helping to protect your clients and yourself. Remember, protecting taxpayer information is not only good for your clients and your business - it’s the law.
 
For more tips on protecting your clients and your business, review Data Theft Information for Tax Professionals.


4.  Tax Relief for Iowa and Nebraska Disaster Victims


Victims of severe winter storms, straight-line winds and flooding that occurred in parts of Nebraska on March 9 and parts of Iowa on March 12 may be eligible for tax relief from the IRS. Visit the IRS disaster relief page for updates on tax relief for disaster victims.


5.  April 4 Webinar: Filing Is the Thing to Do, Even If You Have a Balance Due


The webinar Filing Is the Thing to Do, Even If You Have a Balance Due will be presented on Thursday, April 4, at 2p.m. Eastern Time. The 60-minute webinar will provide an overview on why your clients should file and pay taxes timely, available payment options, and how to apply for more time to pay. One continuing education credit is available for this webinar.

Even if your client cannot immediately pay his 2018 tax bill in full, he should still file. Individuals who do not file their returns timely and make no effort to pay the amount owed can see their tax debt grow by more than 30 percent due to late filing and late payment penalties and interest as required under the tax code. The IRS website offers the following tax filing and payment options:


6.  Technical Guidance


Revenue Procedure 2019-15 provides a waiver for the time requirements for individuals electing to exclude their foreign earned income who must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Rev. Proc. 2019-15 adds the Democratic Republic of the Congo, Cuba, Iraq, and Nicaragua to the list of waiver countries for tax year 2018 for which the minimum time requirements are waived.

Notice 2019-22 announces the credit phase-out schedule for new qualified plug-in electric drive motor vehicles sold by General Motors, LLC. General Motors, LLC has submitted quarterly reports that indicate that its cumulative sales of qualified plug-in electric drive motor vehicles reached the 200,000-vehicle limit during the calendar quarter ending December 31, 2018. Accordingly, the credit for all new qualified plug-in electric drive motor vehicles sold by General Motors, LLC will begin to phase out on April 1, 2019.

Notice 2019-24 provides for adjustments to the limitation on housing expenses for purposed of section 911 of the Internal Revenue Code.  

Announcement 2019-03 is issued under section 521(b) of Pub. L. 106-170, the Ticket to Work and Work Incentives Improvement Act of 1999, which requires the Secretary of the Treasury to report annually to the public concerning advance pricing agreements and the Advance Pricing and Mutual Agreement Program, formerly known as the Advance Pricing Agreement Program.