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  • 01/10/2018 3:53 PM | Anonymous

    IRS Message to the Tax Professional Community:

    The IRS continues to review its procedures to better protect sensitive taxpayer data. As part of this effort, the IRS will request additional information from tax professionals who contact us through the Practitioner Priority Service or any toll-free IRS telephone number.

    This procedural change will require tax practitioners to provide personal information so that our customer service representatives may confirm their identities. This additional information may include data such as your Social Security number and your date of birth. This personal information, in addition to the CAF number, is necessary to verify the identities of the person to whom we are releasing taxpayer information.

    We’ve also made an update to Form 2848, Power of Attorney, and Form 8821, Tax Information Authorization, that will require you to inform your client if you are using an Intermediate Service Provider to access client transcripts via the Transcript Delivery System. A box must be checked if you are using a third party. We define Intermediate Service Providers as privately owned companies that offer subscriptions to their software and/or services that the taxpayer’s authorized representative can use to retrieve, store, and display tax return data (personal or business) instead of obtaining tax information directly from the IRS. The IRS must know who is using our tools; and taxpayers must know when a party other than their authorized representative is involved in accessing their sensitive data.

    We realize there have been a number of changes for tax professionals in recent weeks. But each change is intended to enhance protections for you and your clients. Unfortunately, business as usual is no longer an option. Cybercriminals are well-funded, persistent and adept at stealing data from outside the IRS and using it to eventually file fraudulent tax returns. As cybercriminals evolve, so must we.

    As part of our efforts, we also have strengthened protections for IRS e-Services. If you are an e-Services account holder, we urge you to immediately upgrade your account through our new two-factor identity verification process. Some of you may need to complete this process by mail which could add 10 days or more to the process. Please, do not wait until the start of filing season or until you have an urgent need for one of the e-Services tools before updating your account.

    In the future, we will be asking each e-Service user to sign a new user agreement intended to ensure that all tax professionals understand their security obligations. We will share this information with you in advance.

    Protecting you and your clients from identity theft is a paramount issue for us. But we can’t do it alone. We need your help and your understanding as we continue to review and enhance our procedures.

    Thank you.  

  • 01/03/2018 8:53 AM | Anonymous

    Yesterday, the IRS issued a statement regarding potential deductibility of pre-paid 2018 property taxes.  Click here to read the full article.

  • 01/02/2018 11:36 AM | Anonymous

    Busy season 2018 is upon us and this season will bring lots of changes.  A new federal tax bill has been passed for 2018.  The State of Minnesota also passed the 2017 Minnesota Omnibus Tax Bill on May 30, 2017.

    A few of the individual benefits of the Minnesota tax bill which are effective for 2017 are as follows:

    • A new subtraction, up to $4,500 for married filing joint or $3,500 for single, may be used to offset social security and tier 1 railroad retirement income.  The subtraction is subject to phase out limits.
    • Contributions to a 529 collage savings plan may now qualify for either a subtraction or a credit, but not both. 
    • A subtraction, up to $3,000 for married filing joint or $1,500 for all others, may be used for 529 plan contributions.
    • A tax credit may be claimed equal to the lesser of $500 or 50% of net contributions.  The credit will be phased out with adjusted gross income in excess of $75,000.
    • Minnesota residents may claim a nonrefundable credit up to $500 for student loan payments.
    • Minnesota teachers obtaining a master’s degree may be eligible for a tax credit up to $2,500.
    • A refundable credit may be claimed for taxes paid to Wisconsin.
    • Minnesota nonresidents may need to accelerate installment sales for Minnesota assets or businesses if election is not made and future Minnesota returns are not filed.
    • Minnesota estate exemption will increase $300,000 per year until reaching $3,000,000 in 2020.
    • From 2018 thru 2023 taxpayers may be eligible for a credit for transactions with beginning farmers.
    • Creation of first-time home buyer’s accounts and potential subtraction.

    Partnership returns will follow the Federal due date of the 15th day of the third month after year end.

  • 12/22/2017 11:28 AM | Anonymous

    Recently, both houses of Congress passed a tax reform bill titled “To provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” also known as the Tax Cuts and Jobs Act. The legislation is now bound for the President’s desk. After a Senate and House conference committee reviewed the preexisting bills from both houses, a number of changes and consolidations were made to create the final bill. 

    It is expected that President Trump will shortly sign the Tax Cuts and Jobs Act into law, giving the country the first fundamental tax reform since 1986. Once signed, it’s likely some time will be needed to work through implementation, including the production of new IRS forms and guidance to accommodate the many changes involved.

    Among the provisions of the final bill, which the Joint Committee on Taxation estimates will cost $1.4-trillion over 10 years, are: lowering of the corporate tax rate to 21 percent, seven individual tax brackets (10%, 12%, 22%, 24%, 32%, 35% and 37%) and an increase in the standard deduction to $12,000 for single filers and $24,000 for married couples, and repeal of personal exemptions and miscellaneous itemized deductions.

    Most of the legislation’s tax cuts for individuals would become effective in January 2018 and expire in 2025 (and revert to the rules prior to this legislation) to comply with Senate budget rules. However, the reduction in the corporate rate would become effective in January 2018 and be permanent.

    In a statement issued after passage of the tax package, AICPA President and CEO Barry C. Melancon, CPA, CGMA, said the legislation contains several provisions that should be welcomed by CPAs and their clients. He expressed disappointment, however, over lawmakers’ decision to exclude CPAs from the measure’s treatment of pass-through entities. “Congress should have provided parity for pass-throughs, regardless of their line of business, in order to achieve a fairer, simpler, and more competitive tax code,” he said. “The AICPA pointedly and repeatedly made the case that all professional service firms – including accounting firms – should have received the new deduction.”

    The CPA profession’s advocacy led to the inclusion of several beneficial provisions in the final tax package. Specifically, Congress expanded the number of taxpayers who may use the cash method of accounting without further restricting its use. Lawmakers also decided to adopt many AICPA supported provisions, including:

    • Retained the business interest expense deduction for small businesses (under $25 million)
    • Preserved the current tax treatment of nonqualified deferred compensation
    • Simplified the kiddie tax
    • Simplified the inventory rules for small businesses
    • Expanded the exception for small businesses from the uniform capitalization rules
    • Removed computer or peripheral equipment from the definition of listed property
    • Provided consideration of an inflation index
    • Allowed nonresident aliens as qualifying beneficiaries of an electing small business trust
    • Repealed the PEASE phase-out of itemized deductions
    • Repealed the technical terminations rule for partnerships
    • Repealed the corporate Alternative Minimum Tax

    “In anticipation of implementation of these and other changes to the tax code, the AICPA is prepared to guide our members through the legislation’s intricacies and impact,” Melancon said in the statement. “The nation’s CPAs can count on us during this time of transition – and beyond.”

    To learn more about the CPA profession’s views on tax reform, visit the AICPA’s Tax Reform Resource Center.

  • 12/20/2017 3:38 PM | Anonymous

    NDSU has a scholarship fund in the name of Terry Knoepfle, CPA.

    Terry was a past president of the North Dakota CPA Society.

    For more information about the fund, contact 701-400-2681 or cody

  • 12/13/2017 3:45 PM | Anonymous

    Senate Passes Tax Reform Bill, But It Isn’t Over Yet

    On Saturday, December 2, in the early morning hours, the Senate voted to pass the “Tax Cuts and Jobs Act,” after vigorous debate and a number of amendments. The bill, which needed only 50 votes to pass (with Vice President Pence as a tiebreaker) under reconciliation rules, passed in a 51-49 vote, eliminating the need for Vice President Pence to break a tie.

    Previously expected to pass November 30, efforts to push the bill through stalled. The reason was a trigger mechanism that had been contemplated to quell deficit fears by increasing taxes if economic growth didn’t meet or exceed projections. The trigger was found to violate budget rules that would shield the vote from a filibuster. As a result, the trigger was not added, calling key Republican votes into question. Then, the Joint Committee on Taxation projected an additional $1 trillion in deficit impacts over the next ten years, even taking expected economic growth into account. Debate and deal-making continued through Friday, December 1.

    “Senate passage of a tax package paves the way for a conference, which will attempt to reconcile differences between the Senate and House bills,” said Edward Karl, CPA, CGMA and Vice President of Taxation for the AICPA. “The AICPA’s Advocacy Team remains fully engaged in the process and will continue to keep members informed as the debate continues.”

    The final version of the bill features some changes from the initial version.

    • A provision providing up to $10,000 in deductions for state and local property taxes paid.
    • Owners of pass-through businesses, who would have received a 17.4% deduction of their business income under the original plan, saw their deduction rise to 23%.
    • The bill initially called for a repeal of the alternative minimum tax (AMT) on both individuals and corporations. In the final bill, the AMT is retained for corporations, and trimmed for individuals.
    • A five-year limit was imposed on businesses looking to write off the full value of new capital investments immediately, with a four-year phase-out beginning in year six. The bill in its first draft completely ended the write-off benefit after year five.

    Most of the bill’s tax cuts for individuals would expire in 2025 to comply with Senate budget rules. The reduction in corporate rates to a flat 20%, however, would be permanent.

    The House has already passed its own version also termed the “Tax Cuts and Jobs Act.” Though a high hurdle has been cleared, the process is far from over. Any bill must be approved by both houses of Congress and signed by the President. With two different bills on the table, Congress will need to reconcile differences into a single unified bill, which would then require Congressional approval. 

  • 11/22/2017 4:39 PM | Anonymous

    For the second year, the Internal Revenue Service, state tax agencies and the tax industry will host National Tax Security Awareness Week to encourage both individual and business taxpayers to take additional steps to protect their tax data and identities in advance of the 2018 filing season.

    IRS, State Tax Agencies and Tax Industry Announce National Tax Security Awareness Week, Nov. 27-Dec. 1

    Security Summit

    The IRS has joined with representatives of the software industry, tax preparation firms, payroll and tax financial product processors and state tax administrators to combat identity theft refund fraud to protect the nation's taxpayers.

  • 11/20/2017 12:46 PM | Anonymous

    Senate Tax Reform vs. House Proposal

    Tax reform is developing. On November 2, the House Ways & Means Committee released HR1, the “Tax Cuts and Jobs Act.”— its version of tax reform. The bill has already seen amendments, and the contents have been a topic of great discussion in the profession and the news. On Thursday, November 9, the Senate Finance Committee released a conceptual description of its version, also termed the “Tax Cuts and Jobs Act.”

    The House proposal outlines new personal and corporate income tax brackets and rates, repeal of AMT, an increased standard deduction and the elimination of the deduction for personal exemptions among the many changes. The plan would result in a $1.41 trillion loss in revenue over 10 years, according to the Joint Committee on Taxation (JCT). The Senate bill started its markup process in the Finance Committee on November 13 with a vote expected by the end of the week.

    While some of the provisions of the Senate bill mirror the House bill, some key differences exist.

    In the Senate approach, the current code’s seven individual income tax brackets would remain, but the rates would change to 10%, 12%, 22%, 24%, 32%, 35% and a top rate of 38.5%. Single taxpayers with income greater than $500,000 (and marrieds filing jointly with income greater than $1M) would apply the 38.5% rate, which is lower than the top rate in the House bill. The standard deductions would increase to $12K for single taxpayers, $24K for married couples filing jointly, both slightly less than the House bill provides for.

    Again, in the Senate approach, individuals with pass-through investments would see a 17.4% deduction for “domestic qualified business income,” which would not apply to specified service businesses unless the individual’s taxable income does not exceed $250,000 ($500,000 for married filing jointly). The deduction is phased out above those limitations.

    Under the Senate plan, the child tax credit increases to $2K, more than the House bill. The credit would be modified to allow a $500 nonrefundable credit for qualified dependents other than qualifying children, and sets the threshold phase out to $500K for married taxpayers filing jointly.

    Deductions for mortgage interest would be retained at the current level of $1 million of acquisition indebtedness; however, the deduction for home equity interest would be repealed. Estate taxes would remain, with the exemption being doubled from its current amount.  The House doubles the exemption but eliminates the estate tax after 6 years.

    Alimony rules and the deductibility of medical expenses exceeding 10% of a taxpayer’s AGI would be retained, unlike the House bill. The Senate markup calls for a reduction of the individual shared responsibility payment under the ACA to zero.

    The Corporate rate under the Senate’s Tax Cuts and Jobs Act falls to 20%, but that rate change would be delayed until 2019.

    The Senate Finance Committee language under consideration is 253 pages (about half the length of the House bill) with suggested changes released November 14 available here at 103 pages. A two-page highlight summary is also available. Both the House and Senate bills are in active consideration, with reconciliation of the two, should the bills be approved by their respective bodies, expected in the very near future.

    To stay on top of developments see AICPA’s Tax Reform Center --  

    Source: AICPA, with deletions and editing

  • 10/03/2017 4:05 PM | Anonymous

    Disaster planning and recovery is on everyone’s minds these days, whether it’s due to wildfires or hurricanes, or any other life-disrupting events. 

    To help CPAs as they work on behalf of their clients, the AICPA is making valuable disaster relief resources available to ALL members (and the public), in addition to Tax Section members.

    The AICPA Tax Section has unlocked important disaster-related content on in an effort to help tax practitioners prepare their clients and communities for the aftermath of Hurricanes Harvey and Irma.

    Casualty Loss Practice Guide
    The primary purpose of the Casualty Loss Practice Guide is to assist practitioners in dealing with certain tax problems that arise when a client is affected by a natural disaster. The guide discusses rules for casualty losses and deductions for involuntary conversions and provides information on relevant Internal Revenue Service (IRS) publications, as well as other useful material. 

    Disasters and Taxes – Understanding Tax Relief for Disaster Victims Webcast
    This in-depth webcast features Jerry Schreiber, CPA, discussing tax relief for individuals and businesses affected by a disaster. 

    The AICPA Tax Section is the home for CPA tax professionals seeking the edge they need to achieve success for themselves and their clients. Members find exclusive support in practice tools, timely news, and guidance in implementing best practices. Tax Section membership keeps CPA tax practitioners ahead of trends in tax, and is a strategic advantage in demonstrating their value as the most trusted providers of professional tax services.

  • 09/27/2017 9:23 AM | Anonymous


    September 2017


    How Does the IRS Contact Taxpayers?

    When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service. The IRS doesn't normally initiate contact with taxpayers by email, nor does it send text messages or contact through social media channels. 

    Depending on the situation, IRS employees may first call or visit with a taxpayer. In some instances, advance notice is provided in writing via a letter or notice, but not always.

    IRS Phone Calls

    ·         IRS revenue officers work directly with taxpayers to educate them about their options to resolve delinquencies and to collect delinquent taxes and tax returns, while protecting taxpayers' rights.

    ·         IRS revenue agents or tax compliance officers may call a taxpayer or tax professional after mailing a notice to confirm an appointment or to discuss items for a scheduled audit.

    ·         Private debt collectors can call taxpayers for the collection of certain outstanding inactive tax liabilities but only after the taxpayer and their representative has received written notice. Private debt collectors for the IRS must respect taxpayers' rights and abide by the consumer protection provisions of the Fair Debt Collection Practices Act.

    IRS Visits

    ·         IRS revenue officers routinely make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed, delinquent tax returns or a business falling behind on payroll tax deposits. IRS revenue officers will request payment of taxes owed by the taxpayer; however, payment will never be requested to a source other than the US Treasury.

    ·         IRS revenue agents usually visit taxpayers or tax professionals to conduct the audit after either mailing a notice and/or agreeing on the day and time. IRS revenue agents will sometimes make unannounced visits to a taxpayer’s home or place of business to discuss a tax matter.

    ·         IRS criminal investigators are federal law enforcement agents who may visit a taxpayer’s home or place of business unannounced while conducting an investigation. They will not demand any sort of payment.

    Ask For Credentials

    IRS representatives can always provide two forms of official credentials: a pocket commission and a Personal Identity Verification Credential (PIV). Pocket commissions describe the specific authority and responsibilities of the authorized holder. The PIV is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. Criminal investigators also have a badge and law enforcement credentials.

    Paying Taxes

    All tax payments are to the U.S. Treasury. Taxpayers should never use a preloaded debit card or wire transfer to make a payment. The IRS provides specific guidelines on how to make a tax payment at

    IRS Office of Appeals Pilots Virtual Service

    ·         The IRS is piloting a new web-based virtual conference option for taxpayers and their representatives. This virtual face-to-face option will provide an additional option for taxpayer conferences. The IRS expects it to be especially useful for taxpayers located far from an IRS Appeals office.

    ·         Each year, the Office of Appeals hears appeals of more than 100,000 taxpayers attempting to resolve their tax disputes without going to court. Currently, taxpayers involved in the appeals process can meet with an Appeals Officer by phone, in person or virtually through videoconference technology available only at a limited number of IRS offices.

    ·         While a phone call works well for most taxpayers, others prefer face-to-face interaction. Appeals’ pilot program will use a secure, web-based screen-sharing platform to connect with taxpayers face-to-face from anywhere they have internet access. Similar to popular screen-sharing programs used on phones and home computers, this technology may also be a way for the IRS to provide greater access, efficiency and flexibility to taxpayers.

    Tips to Keep in Mind for Taxpayers Traveling for Charity

    ·         During the summer, some taxpayers may travel because of their involvement with a qualified charity. These traveling taxpayers may be able to lower their taxes.

    ·         Read the article for details on:

    o    Qualified Charities

    o    Out-of-Pocket Expenses

    o    Genuine and Substantial Duty

    o    Value of Time or Service

    o    Travel Expenses a Taxpayer Can Deduct

    o    Travel Expenses a Taxpayer Can’t Deduct

    Helpful Tips to Know About Gambling Winnings and Losses

    ·         Taxpayers must report all gambling winnings as income. They must be able to itemize deductions to claim any gambling losses on their tax return.

    ·         Read the article for details on:

    o    Gambling income

    o    Payer tax form, Form W-2G Certain Gambling Winnings

    o    How to report winnings

    o    How to deduct losses

    o    Keep gambling receipts

    ►Your Practice

    Security Summit Alert: Tax Pros Warned of New Scam to Steal Their Passwords

    ·         The IRS is warning tax professionals to be alert to a new phishing email scam impersonating tax software providers and attempting to steal usernames and passwords.

    ·         This latest scam email variation comes with a subject line of “Software Support Update” and highlights an “Important Software System Upgrade.” It thanks recipients for continuing to trust the software provider to serve their tax preparation needs and mimics the software providers’ email templates.

    ·         The e-mail informs the recipients that due to a recent software upgrade, the preparer must revalidate their login credentials. It provides a link to a fictitious website that mirrors the software provider’s actual login page.

    ·         Instead of upgrading software, the tax professionals are providing their information to cybercriminals who use the stolen credentials to access the preparers’ accounts and to steal client information.

     “Don’t Take the Bait” campaign continues

    ·         This series is part of the Protect Your Clients, Protect Yourself campaign, focused on raising awareness of the critical need for tax professionals to increase their computer security and be cautious when reviewing their inbox – specifically the successful email scams dubbed spear phishing that identify themselves as a friend, customer or company.

    ·         Tax professionals must remember that they have not just an obligation but a legal requirement under federal law to protect taxpayer information.

    ·         The 10-week series of news releases will focus on what steps tax professionals can take to protect their clients and their business from these attacks.

    • IR-2017-123, Don’t Take the Bait, Step 3: Security Summit Safeguards Help Protect Individuals; Renew Focus on Curbing Data Breaches and Business Identity Theft
    • IR-2017-125, Don’t Take the Bait, Step 4: Defend against Ransomware
    • IR-2017-127, Don’t Take the Bait, Step 5: Prevent Remote Access Takeover Attacks
    • IR-2017-130, Don’t Take the Bait, Step 6: Watch Out for the W-2 Email Scam

    TAXES. SECURITY. TOGETHER. (Identity Theft)

    IRS introduces email option for Direct Pay and the Electronic Federal Tax Payment System

    ·         Your clients can now sign up for email notifications when using IRS Direct Pay or EFTPS to pay their taxes. This new email feature allows taxpayers to receive notifications about their payments in their personal email accounts.

    ·         Your clients who use EFTPS can opt in to receive email notifications when they enroll or update their enrollments. Business clients making payments through a payroll service provider can also opt in to receive email notifications. If they opt in, they’ll receive email notifications for all payments made through EFTPS, including those made by their payroll service provider.

    ·         Your clients who use Direct Pay can opt in to receive email notifications each time they make a payment.

    ·         To protect taxpayers, there are no web links within the email notifications. To avoid phishing scams, if taxpayers see links in an email appearing to be from the IRS about payments, they shouldn't click on those links.

    ·         Please share this information with clients who use these IRS payment options.


    5 Mid-Year Tax Planning Strategies, By Barbara Weltman, SBA Guest Blogger

    For many small business owners, thinking about taxes occurs only twice a year … when returns are being prepared and perhaps at the end of the year. This is a mistake. With half of 2017 over, now is a great time to assess where you stand and to take action that will be helpful to your 2017 tax bill.

    1. Meet with your tax advisor

    2. Assess your profitability

    3. Expand your R&D

    4. Issue stock

    5. Review your income tax payments


    View Your Account Information

    Small Business and Self-Employed Tax Center

    Understanding Your IRS Notice or Letter

    Basic Tools for Tax Professionals

    Recent Tax Scams and Consumer Alerts

    Identity Protection: Prevention, Detection and Victim Assistance

    Federal Trade Commission:

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