IRS Updates, July 16

Data Security and Tax Professionals

The IRS and Security Summit partners have issued a checklist to help tax professionals stay ahead of scams and fraud risks. Cybercriminals continue to evolve tactics, but reported identity theft is down significantly since 2015. Tax professionals are urged to deploy the “Security Six” measures (anti-virus software, firewall, two-factor authentication, backup services, drive encryption, and VPNs), create a data security plan, be aware of the latest email phishing scams, recognize the signs of client data theft, and create a data recovery plan. More resources are available.

EITC Report and “Subway Map” Released

National Taxpayer Advocate Nina E. Olson has released a special report on the Earned Income Tax Credit (EITC), which makes recommendations aimed at increasing the participation rate of eligible taxpayers and reduce overclaims by ineligible taxpayers. Additionally, the Taxpayer Advocate Service (TAS) has published a subway map that illustrates a taxpayer’s “journey” through the tax system to help individuals better understand the tax process. Among the EITC recommendations is that the IRS acknowledge its role as an administrator of benefits programs, and that Congress hold regular oversight hearings of the IRS. 

Summertime Tax Tips

Many common summertime activities can have an impact on next year’s taxes or deductions. Getting married? That has tax implications. Summer day camp (not overnight camp) can often qualify for the Child and Dependent Care Credit. Part time and seasonal workers should use the Withholding Calculator to make sure their withholding is appropriate. If you plan to itemize deductions next year, buying or refinancing a home, donating cash or time, and paying state and local taxes are things to keep track of to make filing easier. A tax professional can help you be ready for tax season.

Refunds For Combat-Injured Veterans

Time is running out for some combat-injured veterans to claim a tax refund. Those who received disability severance payments after 1991 and claimed it as income may be eligible for a refund of up to $3200. Eligible veterans should have received a mailed notice from the Department of Defense in July of 2018 explaining how to claim their tax refunds. The IRS has instructions for claiming the refund, or what to do if you are eligible for the refund but received no mailed notice.