Thursday, December 14, 2017

Standard Mileage Rates for 2018 Up from Rates for 2017

The Internal Revenue Service today issued the 2018 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2018, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
  • 54.5 cents for every mile of business travel driven, up 1 cent from the rate for 2017.
  • 18 cents per mile driven for medical or moving purposes, up 1 cent from the rate for 2017.
  • 14 cents per mile driven in service of charitable organizations.
The business mileage rate and the medical and moving expense rates each increased 1 cent per mile from the rates for 2017. The charitable rate is set by statute and remains unchanged.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.  These and other requirements are described in Rev. Proc. 2010-51.


Notice 2018-03, posted today on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan. 

Wednesday, December 13, 2017

Consumer Alert: IRS Warns Taxpayers, Tax Pros of New Email Scam Targeting Hotmail Users

The Internal Revenue Service today warned taxpayers and tax professionals of a new email scam targeting Hotmail users that is being used to steal personal and financial information.

The phishing email subject line reads: “Internal Revenue Service Email No. XXXX | We’re processing your request soon | TXXXXXX-XXXXXXXX”. The email leads taxpayers to sign in to a fake Microsoft page and then asks for personal and financial information.

The IRS has received over 900 complaints about this new phishing scheme that seems to exclusively target Hotmail users. The suspect websites associated with this scam have been shut down, but taxpayers should be on the lookout for similar schemes.

Individuals who receive unsolicited emails claiming to be from the IRS should forward it to phishing@irs.gov and then delete it. It is important to keep in mind the IRS generally does not initiate contact with taxpayers by email to request personal or financial information. For more information, visit the “Tax Scams and Consumer Alerts” page on IRS.gov.

The IRS reminds tax professionals to be aware of phishing emails, free offers and other common tricks by scammers. Tax professionals who have data breaches should contact the IRS immediately through their Stakeholder Liaison. See Data Theft Information for Tax Professionals

IRS Provides Safe Harbors to Help Taxpayers Suffering Property Losses, Including Losses from Hurricanes

As part of a wider effort to help victims of natural disasters, the Internal Revenue Service today issued guidance providing safe harbor methods that individuals may use in determining the amount of their casualty and theft losses for their homes and personal belongings, including losses from recent hurricanes.

Revenue Procedure 2018-08 provides safe harbor methods that individual taxpayers may use in determining the amount of their casualty and theft losses for their homes and personal belongings.  Four of the safe harbor methods may be used for any qualifying casualty or theft loss, and three are specifically applicable only to losses occurring as a result of a Federally declared disaster. 

For instance, one of the safe harbor methods allows a homeowner to determine the amount of loss, up to $20,000, by obtaining a contractor estimate of repair costs.  Another safe harbor method allows a homeowner to determine the amount of loss resulting from a Federally declared disaster using the repair costs on a signed contract prepared by a licensed contractor.  The guidance also provides a handy table for determining the value of personal belongings damaged, destroyed or stolen as a result of a Federally declared disaster.

Revenue Procedure 2018-09 provides a safe harbor method under which individuals may use one or more cost indexes to determine the amount of loss to their homes as a result of Hurricane and Tropical Storm Harvey, Hurricane Irma and Hurricane Maria (2017 Hurricanes).  The cost indexes provide tables with cost per square foot for Texas, Louisiana, Florida, Georgia, South Carolina, Puerto Rico and the U.S. Virgin Islands (2017 Disaster Area).

The safe harbor methods detailed in Revenue Procedure 2018-08 are effective on Dec. 13, 2017; the safe harbor method detailed in Revenue Procedure 2018-09 is effective for losses that are attributable to the 2017 Hurricanes and that arose in the 2017 Disaster Area after August 22, 2017. IRS Publication 547 provides more information on casualty and theft losses. If people want to explore claiming these losses by filing an original or amended return for Tax Year 2016, the IRS has also issued a new revision of the 2016 Form 4684 and 2016 Instructions for Form 4684. The 2017 revision of Form 4684, its instructions and any additional information will be available before the start of the filing season at IRS.gov/Form4684.


To help taxpayers navigate casualty loss issues, the IRS has created a special web page: Tax Law Provisions for Disaster Areas, with additional information for disaster victims. 

Resources on IRS.gov Help Taxpayers Get Ready to File Taxes

With the tax filing season right around the corner, the IRS encourages taxpayers to visit IRS.gov for tax tools and resources. Taxpayers can resolve nearly every tax issue on the IRS website.

IRS.gov provides many self-service tools and features, including these six:

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Tuesday, December 12, 2017

Get Ready for Taxes: What to Do Before the Tax Year Ends Dec. 31

This is the sixth in a series of reminders to help taxpayers prepare for the upcoming tax filing season.

As tax filing season approaches, the Internal Revenue Service reminds taxpayers there are things they should do now to get ready for filing season.

For most taxpayers, Dec. 31 is the last day to take actions that will impact their 2017 tax returns. For example, charitable contributions are deductible in the year made. Donations charged to a credit card before the end of 2017 count for the 2017 tax year, even if the bill isn’t paid until 2018. Checks to a charity count for 2017 as long as they are mailed by the last day of the year.

Taxpayers who are over age 70 ½ are generally required to receive payments from their individual retirement accounts and workplace retirement plans by the end of 2017, though a special rule allows those who reached 70 ½ in 2017 to wait until April 1, 2018, to receive them.

Most workplace retirement account contributions should be made by the end of the year, but taxpayers can make 2017 IRA contributions until April 18, 2018. For 2018, the limit for a 401(k) is $18,500. For traditional and Roth IRAs, the limit is $6,500 if age 50 or older and up to $15,500 for a Simple IRA for age 50 or older. Check IRS.gov for more information about cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2018.

Taxpayers should be careful not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations. Taxpayers can take steps now to make sure the IRS can process their return next year.

Taxpayers who have moved should tell the US Postal Service, employers and the IRS. To notify the IRS, mail IRS Form 8822, Change of Address, to the address listed on the form’s instructions. For taxpayers who purchase health insurance through the Health Insurance Marketplace, they should also notify the Marketplace when they move out of the area covered by their current Marketplace plan.

For name changes due to marriage or divorce, notify the Social Security Administration so the new name will match IRS and SSA records. Also notify the SSA if a dependent’s name changed.  A mismatch between the name shown on your tax return and the SSA records can cause problems in the processing of a return and may even delay a refund.

Some refunds cannot be issued before mid-February. By law, the IRS cannot issue refunds before mid-February for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards starting on Feb 27, 2018, if they chose direct deposit and there are no other issues with the tax return.

Some Individual Taxpayer Identification Numbers must be renewed. Any Individual Taxpayer Identification Number not used on a tax return at least once in the past three years will expire on December 31, 2017. Additionally, all ITINs issued before 2013 with middle digits of 70, 71, 72 or 80 (Example: 9XX-70-XXXX) will also expire at the end of the year. As a reminder, ITINs with middle digits 78 and 79 that expired in 2016 can also be renewed. Only taxpayers who need to file a U.S. federal tax return or are claiming a refund in 2018 must renew their expired ITINs. Affected ITIN holders can avoid delays by starting the renewal process now.

Those who fail to renew before filing a return could face a delayed refund and may be ineligible for some important tax credits. More information, including answers to frequently asked questions is available on IRS.gov/ITIN.

Keeping copies of tax returns is important. Taxpayers may need a copy of their 2016 tax return to make it easier to fill out a 2017 tax return. Some taxpayers using a software product for the first time may need to provide their 2016 Adjusted Gross Income, or AGI, to e-file their 2017 tax return.

Taxpayers who do not have a copy of their 2016 return and are existing users can log in to IRS.gov/account if they need their AGI. Otherwise the IRS will mail a Tax Return Transcript if requested online or by calling 800-908-9946. Plan ahead. Allow five to 10 days for delivery. Learn more about identification verification and electronically signing tax returns.


The IRS has a special page on IRS.gov with steps to take now for the 2018 tax filing season.

Monday, December 11, 2017

Taxpayers Should Protect Data All Year Round

With the online holiday shopping season in full swing, it’s the perfect time for all taxpayers to take steps to protect their identities and personal data. This year, the IRS kicked off this annual event with National Tax Security Awareness Week. The IRS partnered with state tax agencies, the tax industry and other groups across the country to encourage all taxpayers to think about data protection.

While the week is over, information on these five topics remains relevant year-round:


Anyone with an online presence can do a few simple things to protect their identity and personal information. Following these eight steps can also help taxpayers protect their tax return and refund in 2018:
  • Shop at familiar online retailers.
  • Avoid unprotected Wi-Fi.
  • Learn to recognize and avoid phishing emails that pose as a trusted source.
  • Keep a secure machine.
  • Use passwords that are strong, long and unique.
  • Use multi-factor authentication when available.
  • Sign up for account alerts.
  • Encrypt sensitive data and protect it with a password.

The IRS reminds people to be on the lookout for new, sophisticated email phishing scams. These scams not only endanger someone’s personal information, but they can also affect a taxpayer’s refund in 2018. Even if an email is from a known source, people should use caution because cybercrooks are very good at mimicking trusted businesses, friends and family.


People who are the victim of a data breach should consider these five steps to help protect their sensitive information that can be used on a tax return:
  • Determine what information the thieves compromised.
  • Consider taking advantage of credit monitoring services offered to victims.
  • Place a freeze on credit accounts to prevent access to credit records.
  • Reset passwords on online accounts.
  • Use multi-factor authentication when available.

The IRS warns the nation’s business, payroll and human resource communities about a growing W-2 email scam. Criminals use this scheme to gain access to W-2 and other sensitive tax information that employers have about their employees. The IRS recommends that all employers educate employees about this scheme, especially those in human resources and payroll departments.


Business filers should be alert for signs of identity theft. They should contact the IRS if they experience any of these issues:
  • The IRS rejects an e-filed return saying it already has one with that identification number.
  • The IRS rejects an extension to file request saying it already has a return with that identification number.
  • The filer receives an unexpected tax transcript.
  • The filer receives an IRS notice that doesn’t relate to anything they submitted.
  • The filer doesn’t receive expected or routine mailings from the IRS.
More information

Wednesday, December 6, 2017

Get to Know the Taxpayer Bill of Rights – Part 1

This is the first tip in a two-part summary of the rights granted to all taxpayers.

Every taxpayer has rights. The Taxpayer Bill of Rights takes these rights from the tax code and groups them into 10 categories. Taxpayers interacting with the IRS should know their rights, which are highlighted in Publication 1, Your Rights as a Taxpayer.

The Right to Be Informed. Taxpayers have the right to know how to comply with tax laws. They are entitled to clear explanations of the laws and IRS procedures. Taxpayers have the right to know about IRS decisions affecting their accounts with clear explanations of the outcomes.

The Right to Quality Service. Taxpayers have the right to receive prompt, courteous and professional assistance when dealing with the IRS. They also have the right to speak with a supervisor about inadequate service. Communications from the IRS should be clear and easy to understand.

The Right to Pay No More Than the Correct Amount of Tax. Taxpayers must pay only the amount of tax legally due. This includes interest and penalties. The IRS must apply all tax payments properly.

The Right to Challenge the IRS’s Position and Be Heard. Taxpayers have the right to object to formal IRS actions or proposed actions. They can also provide justification with additional documentation. Taxpayers can expect the IRS to consider timely objections and documentation promptly and fairly. Taxpayers can expect a response when the IRS disagrees with the taxpayer’s position.

The Right to Appeal an IRS Decision in an Independent Forum. Taxpayers are entitled to a fair and impartial appeal of most IRS decisions. This includes appealing certain penalties. Taxpayers have the right to receive a written response regarding a decision from the IRS. Taxpayers generally have the right to take their case to court.

The IRS will include Publication 1 when sending a notice on a range of issues, such as an audit or collection matter. Publication 1 is available in English and Spanish. All IRS facilities publicly display the rights for taxpayers.

More Information:

Tuesday, December 5, 2017

Get Ready for Taxes: Plan Ahead to Avoid Refund Delays

Taxpayers can take steps to ensure smooth processing of their 2017 tax return next year. Here are three things taxpayers should know about the tax returns they will file next year.

1) It’s important to gather documents

The IRS urges all taxpayers to file a complete and accurate tax return by making sure they have all the needed documents before they file. This includes:
  • Forms W-2 from employers.
  • Forms 1099 from banks and other payers.
  • Forms 1095-A from the Marketplace for those claiming the Premium Tax Credit.
Typically, these forms start arriving by mail in January. Taxpayers should check them over carefully, and if any of the information shown is wrong, contact the payer right away for a correction.

2) Taxpayers with expiring ITINs should renew promptly

Some people with an Individual Taxpayer Identification Number may need to renew it before the end of the year to avoid a refund delay and possible loss of key tax benefits. These ITINs expire Dec. 31, 2017:
  • ITINs not used on a tax return in the past three years.
  • ITINs with middle digits 70, 71, 72 or 80.
Anyone who needs to renew an ITIN should submit a completed Form W-7, Application for IRS Individual Taxpayer Identification Number. They should mail the Form W-7, along with original identification documents or copies certified by the issuing agency. Once an individual files a completed form, it typically takes about seven weeks to receive an ITIN assignment letter from the IRS.

3) Choose e-file and direct deposit for a faster refund

Electronically filing a tax return is the most accurate way to prepare and file. Errors delay refunds and the easiest way to avoid them is to e-file. Combining direct deposit with electronic filing is the fastest way for a taxpayer to get their refund. With direct deposit, a refund goes directly into a taxpayer’s bank account.

There are several e-file options:
Taxpayers should note that the IRS cannot by law issue refunds for people claiming the Earned Income Tax Credit or Additional Child Tax Credit before mid-February. This law helps make sure that taxpayers receive the refund they’re due by giving the IRS more time to detect and prevent fraud.

The IRS expects the earliest refunds related to EITC and ACTC to be available in taxpayer bank accounts or debit cards starting on Feb. 27, 2018, if the taxpayer uses direct deposit and there are no other issues with their tax return. This additional period is due to several factors, including the Presidents Day holiday and banking and financial systems needing time to process deposits.

More Information:

Get Ready for Taxes: Taxpayers with Expiring ITINs Should Submit Renewal Applications by Dec. 31

The Internal Revenue Service reminds taxpayers with expiring Individual Taxpayer Identification Numbers (ITINs) to submit their renewal applications as soon as possible. Failing to renew them by the end of the year will cause refund and processing delays in 2018.

The IRS mailed letters over the summer to more than 1 million taxpayers  whose ITINs are set to expire at the end of the year – those with middle digits 70, 71, 72 or 80. In addition, any ITIN that has not been used on a federal tax return at least once in the last three consecutive years will also expire at the end of the year. Affected taxpayers who expect to file a tax return in 2018 must submit a renewal application by the deadline.

Who Should Renew an ITIN?

Taxpayers with ITINs set to expire at the end of the year and who need to file a tax return in 2018 must submit a renewal application. Others do not need to take any action.
  • ITINs with middle digits 70, 71, 72, or 80 (For example: 9NN-70-NNNN) need to be renewed if the taxpayer will have a filing requirement in 2018.
  • Taxpayers whose ITINs expired due to lack of use should only renew their ITIN if they will have a filing requirement in 2018.
  • Taxpayers who are eligible for, or who have, an SSN should not renew their ITIN, but should notify IRS both of their SSN and previous ITIN, so that their accounts can be merged.
  • Taxpayers whose ITINs have middle digits 78 or 79 that had already expired and were never renewed should renew their ITIN if they will have a filing requirement in 2018.
How to Renew an ITIN

To renew an ITIN, taxpayers must complete a Form W-7 and submit all required documentation. Although a Form W-7 is usually attached to the tax return, a taxpayer is not required to attach a federal tax return to their ITIN renewal application.

There are three ways to submit the W-7 application package:
  1. Mail the Form W-7, along with original identification documents or copies certified by the issuing agency, to the IRS address listed on the Form W-7 instructions. The IRS will review the identification documents and return them within 60 days.
  2. Taxpayers have the option to work with Certified Acceptance Agents (CAAs) authorized by the IRS to help them apply for an ITIN. CAAs can certify all identification documents for primary and secondary taxpayers and certify that an ITIN application is correct before submitting it to the IRS for processing. A CAA can also certify passports and birth certificates for dependents. This saves taxpayers from mailing original documents to the IRS.
  3. In advance, taxpayers can call and make an appointment at a designated IRS Taxpayer Assistance Center instead of mailing original identification documents to the IRS. When making an appointment, be sure to indicate that this involves an ITIN renewal application.
The ITIN renewal requirement is part of a series of provisions established by the Protecting Americans from Tax Hikes (PATH) Act enacted by Congress in December 2015. These provisions are outlined in IRS Notice 2016-48.

The IRS has a special page on IRS.gov with steps to take now for the 2018 tax filing season.

Five Signs of Small Business Identity Theft, New Protection Methods

Small business identity theft is a big business. Just like individuals, businesses can be victims too. Thieves use a business’s information to file fake tax returns or get credit cards.

Identity thieves are more sophisticated than they used to be. They know the tax code and filing practices and how to get valuable data. The IRS has seen a sharp increase in fraudulent business tax forms. These include Forms 1120, 1120S and 1041, as well as Schedule K-1. These affect business, partnership, estate and trust filers.

Signs of Identity Theft

Business filers should be alert for signs of identity theft. They should contact the IRS if they experience any of these issues:
  • The IRS rejects an e-filed return saying it already has one with that identification number.
  • The IRS rejects an extension to file request saying it already has a return with that identification number.
  • The filer receives an unexpected tax transcript.
  • The filer receives an IRS notice that doesn’t relate to anything they submitted.
  • The filer doesn’t receive expected or routine mailings from the IRS.
New Procedures to Protect Businesses in 2018

The IRS, state tax agencies and software providers have ways to detect suspicious returns. However, some new measures can help validate returns in advance. The IRS and states are asking businesses and tax professionals to help verify if a tax return is legitimate. These procedures are new for 2018. Software for business tax returns will ask questions related to:
  • The person authorized to sign the return
  • Payment history
  • Parent company information
  • Past deductions
  • Filing history
More information