The IRS agenda for the end of 2019
The Internal Revenue Service is planning an extensive cyber awareness campaign beginning immediately after Thanksgiving, according to Stephen Mankowski, national tax chair of the National Conference of CPA Practitioners: “The campaign will emphasize to practitioners and taxpayers the potential dangers they face during the holiday shopping season and the filing season ahead.”
“National Tax Security Awareness Week 2019 is slated to begin on Cyber Monday and run from Dec. 2 through Dec. 6,” he explained. “This is the heaviest period of time when people are online and when phishing is most common. The IRS is planning a kickoff to coincide with Cyber Monday. YouTube videos will be updated. Practitioner groups are encouraged to help get the message out to members and taxpayers. In particular, taxpayers are urged to buy only from known vendors, and to check their bank statements.”
Mankowski recently met with government officials in Washington, D.C., to assess the latest thinking on issues affecting tax practitioners.
“During the recent Tax Forums, the IRS noted that a lot of people still are not aware of the basics of data security,” he said. “The IRS has been making some headway, but much more is needed.”
Mankowski also spoke to officials about the Taxpayer First Act of 2019.
“The act was designed to expand and strengthen taxpayer rights, as well as focus on cybersecurity and identity theft,” he said. “There is significant latitude on the reorganization addressed by the act, and people at the IRS are looking forward to the changes.’
“The IRS is planning listening sessions and town hall meetings with IRS employees as well as practitioners to learn what is needed and how to achieve their goals," Mankowski added. "Customer service, training, and reorganization are areas of the bill for which the [Taxpayer First Act Office] is responsible.”
“Overall, there are 45 provisions, with an implementation timeline that is aggressive, but attainable,” he said. “The TFAO will ultimately be responsible for the entire bill.”
There will also be funding issues that affect the timing of the implementation, according to Mankowski. “The TFAO will be focusing on low-income areas where English is a second language. And the IRS is reaching out to other taxing authorities for comments and feedback on what they are experiencing.”
Form 1040-SR, the U.S. Tax Return for Seniors, has been formulated with a larger, easier-to-read font, Mankowski observed. “It includes a standard deduction chart on its face without the need to access instructions, although Schedule A is still available.”
Taxpayers 65 and older have the option to use this form, which uses the same building block approach as Form 1040. Retirement is not a requirement to use the form.
The IRS also posted a second early-release draft of Forms 1040, 1040-SR and Schedule 1, Mankowski noted: “If the taxpayer is not required to file Schedule 1and had no virtual currency, then Schedule 1 is not required. Schedule 1 asks the taxpayer to answer whether at any time during 2019, did they receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency.”
“For Form 1040, the IRS has engaged stakeholders, reviewed studies and received much input that it implemented into draft 1040,” noted Mankowski. Some of the changes include:
- Elimination of health coverage check box;
- Movement of the signature box to page 2 to eliminate changes to second pages, while adding telephone numbers and email;
- Separating IRS and pension distributions on Line 4; and
- Adding line for capital gains without Schedule 1 on Line 6.
“Several lines and several schedules were combined, and Schedule 6 was eliminated,” he said.
In putting together audit guides on virtual currency, the IRS is reaching out to industry experts and practitioner groups, Mankowski said. “One of the first questions to be aware of is what was the intent of the taxpayer: Did they buy it as an investment or receive it as payment for a service? If I receive 100 Bitcoin for preparing a return, I need to make sure it gets recorded as income on Schedule C or on my corporate tax return,” he said. “But if a financial advisor tells me to buy it as an investment, it’s not income at that time.”