Tax

Starting in February 2018, individuals with “seriously delinquent tax debts” will be subject to a new set of provisions courtesy of the Fixing America’s Surface Transportation (FAST) Act, signed into law in December 2015.

The FAST Act requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt and also requires the State Department to deny their passport application or deny renewal of their passport. In certain instances, the State Department may revoke their passport.

Taxpayers affected by this law are those with a seriously delinquent tax debt, generally, an individual who owes the IRS more than $51,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired, or the IRS has issued a levy.

Taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt by doing the following:

• Paying the tax debt in full
• Paying the tax debt timely under an approved installment agreement,
• Paying the tax debt timely under an accepted offer in compromise,
• Paying the tax debt timely under the terms of a settlement agreement with the
• Department of Justice,
• Having requested or have a pending collection due process appeal with a levy, or
• Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

However, a taxpayer’s passport won’t be at risk under this program if an individual:

• Is in bankruptcy
• Is identified by the IRS as a victim of tax-related identity theft
• Has an account that the IRS has determined is currently not collectible due to hardship
• Is located within a federally declared disaster area
• Has a request pending with the IRS for an installment agreement
• Has a pending offer in compromise with the IRS
• Has an IRS accepted adjustment that will satisfy the debt in full

For taxpayers serving in a combat zone, and who also owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.

Taxpayers who are behind on their tax obligations should come forward and pay what they owe or enter into a payment plan with the IRS and may qualify for one of several relief programs, including the following:

• Taxpayers can request a payment agreement with the IRS by filing Form 9465, Installment Agreement Request. Taxpayers can download this form from IRS.gov and mail it along with a tax return, bill or notice. Some taxpayers may be eligible to use the online payment agreement to set up a monthly payment agreement for up to 72 months.
• Financially distressed taxpayers may qualify for an offer in compromise, an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to determine the taxpayer’s ability to pay.

If you owe back taxes and are worried your passport could be revoked because of unpaid taxes, please contact the office.

• By Leon Clinton
• February 26, 2018

The Form W-2 scam has emerged as one of the most dangerous phishing emails in the tax community. During the last two tax seasons, cybercriminals tricked payroll personnel or people with access to payroll information into disclosing sensitive information for entire workforces.

Last year, more than 200 employers were victimized, resulting in hundreds of thousands of employees with compromised identities. The scam affected all types of employers, from small and large businesses to public schools and universities, hospitals, tribal governments, and charities.

What is a Form W-2?

Employers engaged in a trade or business who pay remuneration for services performed by an employee must file a Form W-2 for each employee from whom:

• Income, social security, or Medicare tax was withheld.
• Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee’s Withholding Allowance Certificate.

Additionally, employers must issue W-2s to any employee (including an employee who is related to the employer) who had the following:

• Non-cash payments of $600 or more for the year
• Non-cash payments of any amount if any income, social security, or Medicare tax was withheld

The Form W-2 contains the employee’s name, address, Social Security number, income, and withholdings. Criminals use that information to file fraudulent tax returns, or they post it for sale on the DarkNet.

How the Form W-2 Phishing Scam Works

Cybercriminals do their homework, identifying chief operating officers, school executives or others in positions of authority. Using a technique known as business email compromise (BEC) or business email spoofing (BES), fraudsters posing as executives send emails to payroll personnel requesting copies of Forms W-2 for all employees.

In many cases, the email starts off as a friendly exchange before the fraudster asks for all Form W-2 information. In several reported cases, after the fraudsters acquired the workforce information, they immediately followed that up with a request for a wire transfer.

What to do

Employers should be aware that cyber criminals’ scams constantly evolve. Finance and payroll personnel should be alert to any unusual requests for employee data.

If your businesses or organization falls victim to the scam or receives a suspect email but does not fall victim to the scam send the full email headers to phishing@irs.gov and use “W2 Scam” in the subject line.

• By Leon Clinton
• February 24, 2018

Updated income-tax withholding tables have been released for 2018 reflecting changes made by the tax reform legislation enacted last month.

The updated withholding information, available on IRS.gov, shows the new rates for employers to use during 2018. Employers should begin using the 2018 withholding tables as soon as possible, but not later than February 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.

Many employees will begin to see increases in their paychecks to reflect the new law in February. The time it will take for employees to see the changes in their paychecks will vary depending on how quickly the new tables are implemented by their employers and how often they are paid, generally weekly, biweekly or monthly.

To minimize the burden on taxpayers and employers, the new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. Employees do not have to do anything at this time.

Under the new law there are a number of changes for 2018 that affect individual taxpayers. The new withholding tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets.

For people with more simple tax situations, the new tables are designed to produce the correct amount of tax withholding. The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible.

To help people determine their withholding (and adjust as needed), the IRS is revising the withholding tax calculator on IRS.gov and should be available by the end of February.

Don’t hesitate to call if you need help figuring out your withholding in 2018.

• By Leon Clinton
• February 22, 2018