2015
Tax Law & IRS
Updates
Richard G. Furlong, Jr.
Senior Stakeholder Liaison
Main Line Association for Continuing Education
Penn State Great Valley Conference Center
October 22, 2015
Overview of Topics
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ABLE
ACA provisions
Information return penalties
Changes in due dates
Expired provisions
Web resources
IRS Updates
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ABLE Act
Achieving a Better Life Experience
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The ABLE Act adds IRC Section 529A ‒ Creates
tax-free savings accounts for individuals with
disabilities
A qualified ABLE program is established and
maintained by a state, or agency or
instrumentality thereof
An individual must have qualified disability prior
to age 26 or a disability certification to qualify for
ABLE account
Qualified expenses: education, housing,
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transportation, employment training, etc.
ACA - Reporting Coverage
 Check box and leave entry space blank if
everyone on the return had coverage for the
full year
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Information Statements
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Marketplace ‒ Form 1095-A,
Health Insurance Marketplace Statement
Insurers ‒ Form 1095-B, Health Coverage
Large employers – Form 1095-C, EmployerProvided Health Insurance Coverage and
Offer
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Return Preparer Interview
Best Practices
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Use Form 1095-A, B or C to
– Verify coverage months and
– Who is covered
Determine eligibility for exemption
– Marketplace Exemption Certificate Number
– Income below return filing threshold or
– IRS coverage exemptions
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Common Errors
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Eligible for coverage exemption but did not
claim
– Income below filing threshold
– Not lawfully present
– Coverage gaps
Miscalculated Shared Responsibility Payment
Shared Responsibility Payment on
dependent returns
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2015: What You Need to Know
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Forms 1095-A, B and C
Apply for Marketplace exemptions early
ISRP amounts increase
2016 Marketplace enrollment
– Nov 1, 2015 to January 31, 2016
– Special enrollment periods
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Increased Information Return
Penalties
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Revised penalty structure for information returns
Penalties imposed for:
– Failure to file information returns
– Failure to furnish information returns
– Filing incomplete information returns
– Filing returns with incorrect information
Effective for returns and statements required to
be filed/furnished after 12/31/2015
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IRC 6721 & 6722
Increased Penalties
The penalty for failure to file correct information
returns and provide payee statements is $250
(total not to exceed $3 million)
• If corrected in 30 days penalty is $50 (total not
to exceed $500,000)
• If corrected after 30 days but before August 1,
penalty is $100 (total not to exceed $1.5
million)
IRC 6721
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Form 1065 and 1120-S Due Dates
Form 1065 and Form 1120-S Due Dates:
• Fifteenth day of third month following close of
tax year (March 15th for calendar year filers)
• Beginning tax years after 12-31-2015 (2016
tax years)
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IRC 6072(b)
Form 1120 Due Date
Form 1120 Due Dates:
• Fifteenth day of fourth month following close of
tax year (April 15th for calendar year filers)
• Beginning tax years after 12-31-2015 (2016
tax years)
• Special rule for years ending on June 30th – no
change until after 12-31-2025
IRC 6072(b)
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Form 114 (FBAR) Due Date
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The due date of FinCEN Report 114 (relating
to Report of Foreign Bank and Financial
Accounts) shall be April 15
There is a maximum extension for a 6-month
period ending on October 15
For taxable years beginning after December
31, 2015
PL 114-41 Section 2006(b)(11)
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Refundable Child Tax Credit /
Foreign Earned Income Exclusion
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The Child Tax Credit is not refundable for
taxpayers electing to exclude foreign earned
income from gross income
This law applies to taxable years beginning
after December 31, 2014
IRC 24(d)(5)
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Six Year Statute of Limitations:
Basis
Six year statute of limitations for 25 percent
omissions of income on tax assessments
expanded to include:
• Understatement of gross income by reason of
an overstatement of unrecovered cost or
other basis is an omission from gross income;
– Tax may be assessed at any time within six
years after the return was filed
• Effective for returns filed after 7/31/15
IRC 6501(e)(1)
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Form 1098 Reporting
Requirements
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Information to be included on Form 1098:
– Amount of outstanding principal on the
mortgage as of the beginning of such
calendar year
– Date of the origination of the mortgage
– Address (or other description in the case
of property without an address) of the
property which secures the mortgage
For statements required to be furnished, after
December 31, 2016
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IRC 6050H(b)(2)
Identity Protection Services
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Post-data breach protection services
excluded from recipient’s gross income
Does not include cash in lieu of identity
protection services
Proceeds received under an identity theft
insurance policy are includable income
Identity protection services for reasons other
than a data breach are includable in income
IRS Announcement 2015-22
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Extenders
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Individual provisions
Business provisions
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Resources
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IRS.gov/for-Tax-Pros
IRS.gov/DraftForms
IRS.gov/ACA
HealthCare.gov
IRS.gov/Form8965 (for info and links to Form
8965 and its instructions)
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Issue 1: Dirty Dozen Tax Scams
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Compiled annually
List of common scams / schemes
2015 “Dirty Dozen”
– Press releases over 12 consecutive days
– Began on January 22
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2015 Dirty Dozen
1. Phone Scams (IR-2015-5)
• Criminals impersonating IRS agents
2. Phishing (IR-2015-6)
• Fake emails / websites
3. ID Theft (IR-2015-7)
• Fraudulent returns filed using someone
else’s SSN
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2015 Dirty Dozen
4. Return Preparer Fraud (IR-2015-8)
• Unscrupulous return preparers
5. Offshore Tax Avoidance (IR-2015-9)
• Hiding money and income offshore
6. Inflated Refund Claims (IR-2015-12)
• Promise of inflated refunds
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2015 Dirty Dozen
7. Fake Charities (IR-2015-16)
• Groups masquerading as charities
8. Hiding Income With Fake Documents
(IR-2015-18)
• Falsifying documents to reduce tax or
inflate refunds
9. Abusive Tax Shelters (IR-2015-1)
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2015 Dirty Dozen
10. Falsifying Income to Claim Credits
(IR-2015-20)
11. Excessive Claims for Fuel Tax Credits
(IR2015-21)
12. Frivolous Tax Arguments
(IR-2015-23)
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Issue 2: Offshore Compliance
Options
Options:
1. Offshore Voluntary Disclosure Program
2. Streamlined filing compliance procedures
3. Delinquent FBAR submission procedures
4. Delinquent international information
return submission procedures
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FBAR Filing Requirements
• Any United States person who:
– Has financial interest in, or signature
authority over financial accounts in a foreign
country
• If aggregate value of accounts exceeds
$10,000 at any time during calendar year
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Offshore Voluntary Disclosure
Program
• Counterpart to criminal investigations
voluntary disclosure practice
• Enables noncompliant taxpayers to:
– Resolve their tax liabilities
– Avoid substantial civil penalties, and
– Generally eliminate the risk of criminal
prosecution for all issues relating to tax
noncompliance and failing to file FBARs
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Streamlined Filing Compliance
Procedures
Available to taxpayers certifying that their failure
to report foreign financial assets and pay all tax
due with respect to those assets did not result
from willful conduct on their part; provides:
• Streamlined procedure for filing amended
or delinquent returns
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Terms for resolving their tax and penalty
obligations
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OVDP or SFCP?
Taxpayers whose failure to report income, pay
tax and submit information returns was due to
willful conduct should consider OVDP
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An OVDP submission disqualifies a person
from participating in SFCP
An SFCP submission disqualifies a person
from participating in OVDP
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Delinquent FBAR Submission
Procedures
Eligible taxpayers:
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Do not need to use OVDP or SCFP
Have not filed a required FBAR (FinCEN
Report 114)
Not under civil exam or criminal investigation
Not contacted by IRS about the delinquent
FBARs
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Delinquent International Information
Return Submission Procedures
Eligible taxpayers:
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Do not need to use OVDP or SFCP
Have not filed required international
information returns
Reasonable cause for not filing
Not under civil examination or criminal
investigation
Not been contacted by IRS
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Issue 3: Trust Fund Recovery
Penalty
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Trust Fund Taxes
– Withheld income and employment taxes;
including social security taxes, railroad
retirement taxes or collected excise taxes
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Trust Fund Penalty
– If a business uses those funds for another
purpose, § 6672(a) authorizes a penalty
equal to 100 percent of the collected tax
on any responsible person
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Trust Fund Recovery Penalty
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TFRP may be assessed against any person
– Responsible for collecting or paying withheld
income and employment taxes, and
– Who willfully fails to collect or pay them
For willfulness to exist, responsible person
– Must have (or should have) been aware of
outstanding taxes and
– Intentionally disregarded the law
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Trust Fund Recovery Penalty
(Assessment)
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FTD Alerts sent to IRS Collections
Case assigned to a revenue officer
RO contacts the employer to schedule an
interview(s)
Letter 1153 sent to responsible parties
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Trust Fund Recovery Penalty
(Appeal)
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Small Case Request - total amount of the
proposed assessment for each tax period is
$25,000 or less
Formal Written Protest - total amount of the
proposed assessment for any one tax period is
greater than $25,000
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Issue 4: New Form 1023-EZ
Streamlined Application for Recognition of
Exemption Under Section 501(c)(3) of the
Internal Revenue Code (Form 1023-EZ)
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Three pages (standard version 26 pages)
Filed electronically
User fee = $400
Most small organizations qualify
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Form 1023-EZ (Qualifications)
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Organization must be operated exclusively
for certain listed purposes
Gross receipts of < $50,000 and assets
< $250,000
Form instructions identify 26 instances which
render an organization ineligible to file Form
1023-EZ
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Form 1023-EZ (When to File)
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Generally, within 27 months after end of the
month the organization was legally formed
If accepted, the legal date of the formation is
the effective date of exempt status
If not filed within 27 months, the effective
date of exempt status is the date of filing
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Issue 5: Online Tools for Tax
Professionals
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Tools for Tax Pros (Categories)
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Information You Need to File Returns for Your Clients
Confirming Payment/Credits On Tax Account
Tax Payment Alternatives
Your Responsibilities As A Tax Professional
Campus Responsibilities and Operations
Reference Materials
Representing Your Client Before the IRS After Returns Have Been Filed
IRS Collection Tools and Your Clients’ Rights
o Tools
o Rights
o Rules on Representation And Disclosure
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Requesting Transcripts and Other IRS Information on Clients
Criminal Investigation Division and Enforcement Initiatives
Treasury Inspector General for Tax Administration (TIGTA)
Frequently Used Telephone Numbers for Practitioners
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Keeping Current
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Preparer Guidelines
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Other Tax Pro Links
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Issue 6: Directory of Federal Tax
Return Preparers
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Launched Feb. 5, 2015
Searchable / sortable listing
featuring preparers name, city, state, and zip
code
Contains attorneys, CPAs, enrolled agents
and those who have completed the
requirements for the voluntary IRS Annual
Filing Season Program
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Searching the Directory
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Issue 7: W-2 Verification Code Pilot
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One in a series of steps to combat ID theft and
tax fraud
Pilot will test capability to verify authenticity of
W-2 data filed with federal tax returns in 2016
IRS will soon name Payroll Service Providers
PSPs will reach out to some clients
Algorithm generates alphanumeric codes from
selected data fields of the W-2
Verification codes appear on employees’ W-2s
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W-2 Verification Code Pilot
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Taxpayers enter verification codes on their efiled federal tax returns
When processing returns, IRS recalculates
codes
Matching codes = genuine W-2s
Verification codes not included in W-2 data
submitted to SSA, states or local departments
of revenue
Won’t affect state or local tax returns
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W-2 Verification Code Pilot
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We stress:
– Omitting or using incorrect W-2 verification
codes will not delay the processing of
taxpayers federal tax returns
“test-and-learn” review after pilot
If integrity of W-2 information submitted by
taxpayers increases, verification codes will
remain an element of W-2s in the future
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Contact Information
Richard Furlong, Jr.
267-941-6343
richard.g.furlong@irs.gov
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