Tax Security 2.0 –A “Taxes-Security-Together”

Checklist

November 13, 2019

Ley Mills, IRS-C&L-SL/Field

Key Points“Taxes-Security-Together” Checklist

• Step 1: “Security Six” protection measures: –Activate anti-virus software.–Use a firewall.–Use two-factor authentication –Use backup software/services.–Use Drive encryption.–Create and secure Virtual Private

Networks.

Key Points“Taxes-Security-Together” Checklist (cont.)

• Step 2: Create a data security plan: –Federal law requires all “professional tax

preparers” to create and maintain an information security plan for client data.

–The security plan requirement is flexible enough to fit any size firm

–Businesses are asked to focus on key risk areas

Key Points“Taxes-Security-Together” Checklist (cont.)

• Step 3: Educate yourself and be alert to key email scams, a frequent risk area involving: –Learn about spear phishing emails.–Beware ransomware.

Key Points“Taxes-Security-Together” Checklist (cont.)

• Step 4: Recognize the signs of client data theft: –Clients receive IRS letters about

suspicious tax returns in their name.–More tax returns filed with a

practitioner’s Electronic Filing Identification Number than submitted.

–Clients receive tax transcripts they did not request.

Key Points“Taxes-Security-Together” Checklist (cont.)

• Step 5: Create a data theft recovery plan including: –Contact the local IRS Stakeholder

Liaison immediately.–Assist the IRS in protecting clients’

accounts.–Contract with a cybersecurity expert to

help prevent and stop thefts.

Reporting data loss: W-2 scam

• The IRS can help protect employees from tax-related ID theft if notified quickly about the loss

• Email: dataloss@irs.gov –Subject line: W2 Data Loss

• The IRS does not initiate contact with taxpayers by email, text messages or social media

Reporting data loss: W-2 scam

• Data breaches could affect victims’ state tax accounts

• Email Federation of Tax Administrators–StateAlert@taxadmin.org

• File a complaint with the FBI’s Internet Crime Complaint Center (IC3)

• File a report with local law enforcement agencies

Reporting W-2 phishing email

• Email: phishing@irs.gov–Subject line: W2 Scam

• Email headers in plain ASCII text format• Attach phishing email to one you’re

sending to the IRS• Do not include PII such as SSNs or

W-2s• File a complaint with the FBI’s IC3

Preventing BECs

• Confirm requests for W-2s and wire transfers verbally using known phone numbers

• Verify requests for change in vendor payments – require a second sign-off

• Educate employees with access to sensitive data about BECs

• Consult with IT; follow FBI safeguards:–Create intrusion detection system and

email flag rules–Color code internal and external emails

Resource - IRS YouTube Video

Resources

• Publication 4557, Safeguarding Taxpayer Data

• Publication 5293, Data Security Resource Guide for Tax Professionals

• Small Business Information Security – The Fundamentals at NIST.gov

Resources (cont.)

• IRS.gov websites:–www.IRS.gov/securitysummit–www.IRS.gov/ProtectYourClients–www.IRS.gov/IdentityTheft

Form W-2 Verification Code Pilot ends for tax year 2019

• Verification code “test and learn” pilot successful

• Federal law requires employers to submit Forms W-2 to Social Security Administration by January 31

• New W-2 submission date superseded the need for verification codes

• Thank you payroll service providers!

Draft 2020 Form W-4

• IRS.gov/draftforms • IRS.gov/W4

Software systems for new W-4s

• Two software systems for old and new W-4 is not necessary

• Same set of withholding tables used for both forms

• Apply these tables separately to systems for new and old forms

• Additional guidance is coming on the payroll calculations needed based on data fields on the new and old forms

Use of new W-4

• New employees who fail to submit a Form W-4 after 2019 – treated as single filer with no other adjustments

• Beginning in 2020, all new employees must use the redesigned form

• Employees hired before 2020 not required to submit new Form W-4–Continue withholding based on a

previously submitted valid form

Exemption from withholding

• To claim exemption from withholding for 2020, these two conditions must be met:

1. No federal tax owed for 20192. No expectation to owe federal tax in

2020• Certify both conditions are met by writing

“Exempt” on Form W-4 in the space below Step 4(c) and complete Steps 1 and 5

• Submit a new W-4 by Feb. 16, 2021 to continue claiming exemption from withholding

Adjustment for nonresident aliens

• Pub 15-T will provide instructions on the additional amounts to add to wages to determine withholding for nonresident aliens

• Nonresident alien employees should continue to follow special instruction in Notice 1392 when completing their Forms W-4

2020 Publication 15-T

• Second draft Pub 15-T issued in August 2019

• Final draft coming in December 2019

• Computations in pub allows withholdings to be figured on any Form W-4

• Find updates at: IRS.gov/Pub15T

Tax Withholding Estimator

IRS.gov/withholding

Tax Withholding Estimator

• Plain language used within the tool• Ability to effectively target tax due or refund• Progress tracker• Enhanced navigation within the tool• Tips and links to more information • Determines self-employment tax• Automatically calculates taxable portion of

Social Security benefits• Mobile-friendly design

Private Debt Collection

• Taxpayers working with a PCA have the same rights as taxpayers working with the IRS

• PCAs use a two-party authentication process to confirm that they are collecting taxes on behalf of the IRS

• Be on the lookout for (and report) suspected scam phone calls from anyone claiming to be collecting on behalf of the IRS

Web-Based Collection Services

• Payment Options• Online Payment Agreement• OIC Pre-Qualifier Tool• Text Chat

Taxpayer Digital Communications (TDC) –

Secure Messaging Correspondence

Examination Pilot Program

November 13, 2019

SB/SE TDC Pilot Program

• Correspondence Examinations–SB/SE Schedule A, Education Credit, and

Child Case Credit audits by mail–Philadelphia Correspondence Examination

Operation• Secure Messaging

–Interaction using secure online environment• Invitation only

–Taxpayers and POA clients receive TDC reply option in the audit letter

SB/SE TDC - Taxpayer Representative Participation

• Taxpayers signed up for Secure Messaging • Taxpayers and their representatives must

pass the IRS Secure Access –Representative already in the CAF

database–Representatives authenticate under their

SSN and have their own account

SB/SE TDC – Secure Messaging

• TDC Secure Messaging – Initial pilot launched FY 17 –Lasted a little over a year –9,150 taxpayer invites

• Over 1,000 successful sign-ups–Evaluating pilot results

• “Phase II” of the pilot is underway– ~19,000 invitations planned

Individual Taxpayer Identification Number (ITIN) - “Who, What, Where and How of ITINs”

Who Should Renew?

Taxpayers should renew their ITINs now if:

• They expect to file a U.S. federal tax return in 2020 – Middle digits “70” through “82” have expired– Middle digits “83,” “84,” “85,” “86,” and “87” will

expire December 31, 2019– Spouses and dependents residing inside the U.S.

should renew their ITINs if they’ll be included on a return in 2020

• They receive Notice CP-48, You must renew your Individual Taxpayer Identification Number (ITIN) to file your U.S. tax return

Who Should Not Renew?

Taxpayers should not renew their ITINs now if:

• They don’t expect to file, or be included on, a U.S. federal tax return in 2020

• Their ITINs are only used for the filing of information returns by third parties

• The middle digits of their ITINs aren’t “83,” “84,” “85,” “86,” or “87”

• They became a U.S. citizen or legal resident alien and have an SSN

Who Should Not Renew? (cont.)

• Spouses and dependents outside the U.S. who would’ve been claimed for a personal exemption should not to renew their ITINs this year, unless:–They are filing their own tax return, or–They qualify for an allowable tax

benefit, e.g. a dependent parent who qualifies the primary taxpayer to claim Head of Household (HOH) filing status (must attach a federal tax return to their W-7 renewal application)

How To Renew

• Complete Form W-7, Application for IRS Individual Taxpayer Identification Number– Attach original documents or certified copies

verifying identity and foreign status– A tax return isn’t required, unless the applicant

is a spouse or dependent outside of the U.S. who is claiming an allowable tax benefit

• Submit by mail to the IRS, through a Certifying Acceptance Agent (CAA) or by appointment at designated IRS Taxpayer Assistance Centers (TACs)

Common Errors that Cause Delays

• Reason for submitting Form W-7 box is not checked

• Reason for submitting Form W-7 box is incorrect • Not submitting the required original identification

documents or certified copies with Form• Not submitting the required documents for proof

of U.S. residency for dependents• Submitting a federal tax return with an expired

ITIN

Resource Information

• ITIN Homepage: https://www.irs.gov/ITIN

• ITIN Expiration Frequently Asked Questions (FAQs):

https://www.irs.gov/individuals/itin-expiration-faqs

• How to Become an Acceptance Agenthttps://www.irs.gov/itinagents

IRS social media

• Instagram – @IRSnews• Twitter:

–@IRSnews–@IRSenEspanol–@IRStaxsecurity

• YouTube: IRS Videos in English, Spanish and American Sign Language

• Facebook: IRS, IRS en Español, IRS Tax Pros

IRS Webinars

IRS.gov – Keyword: webinars

Contact Information

• Name – Ley Mills• Phone Number – 804-916-3892• e-Mail Address – herbert.mills@irs.gov