CSTC Newsletter

June 2019

In This Issue...

  1. From the President
  2. The 2019 Summer Symposium is This Week!
  3. June 2019 Chapter Events
  4. Welcome New CSTC Members
  5. Save the Date for the 2019 Fall Tax and Accounting Forum!
  6. News from the IRS
  7. Join CSTC

CSTC Member Benefits

CSTC members have access to benefits such as free payroll processing services for your tax practice, and the opportunity to earn new revenue through their flexible partnership options.

CSTC is pleased to include the VeriFyle ProTM premium secure online document and message sharing service at no cost to CSTC members!

Wolters Kluwer: Discounts on Tax, Accounting & Audit Resources, Software, Information & Services. 

 CSTC members receive the TaxBook WebLibrary at a special price

Other Member Benefits Include:

$ Savings on all Society Educational Events

$ Savings on Contact, Correspondence & Self Study Education

$ Savings with member specialty CSTC Connects (previouslyYellow Pages) list

$ Savings with E & O Insurance, plus specialty coverage relevant to your profession

$ Online CSTC Find-a-Tax Consultant search to help promote your business!

$ CSTC Member Listserv

Office Depot has partnered with us to provide exclusive savings in-store and online, plus fantastic additional benefits. This program is all about providing preferred pricing to our clubs, and the savings extend to almost every item.

Savings include 20% to 55% off item office supply core list, 20% to 55% off retail on cleaning  & break room items, 10% off branded; 20% off private brand  ink & toner core list, Average 10% off  retail on 200 technology core items, Free next-day shipping on orders of $50 or more, and SIGNIFICANT savings on copy & print. Become a CSTC member to sign up for our Office Depot Small Business Savings Program, administered by Excelerate America.

We are a professional full-service tax advisory firm in San Diego. Our goal is to provide a level of service for our clients that will exceed expectations in every possible way. We strive to offer a diverse level of services in order to meet the needs of the diverse community we have been working in for more than 30 years.

TaxMama's® EA Exam Course prepares tax professionals to do so much more than just pass the IRS' Special Enrollment Examination. This is in-depth course teaches tax law from the ground up. It explains how tax returns work, with examples of basic 1040s, Schedule Cs, 1065s, 1120s, and 1120Ss; you learn tax law, tax research, client representation for audits, appeals and collections. 


If you are interested in buying or selling a practice, contact us today! ATB is operated by Enrolled Agents ensuring a complete understanding of our profession. Please give us a call at (855) 428-2225 or visit us online at www.ATBCAL.com for more information and to view our current listings.
CA DRE 02002824


CSTC Mission

CSTC advances professionalism within the tax industry by:

  • Providing quality education
  • Creating networking opportunities
  • Advocating professional standards


From the President

How Will You Measure Your Life? 

In 2010, management scholar and innovation expert, Clayton Christensen, posed this question to the graduating class of Harvard Business School, then asked it in a Harvard Business Review article, and then wrote a book on the question. I pose this question to all of you, myself included – how will you measure your life? 

Reading Christensen’s book was life-changing for me. It made me look honestly at my life to see if I was really living up to my values. We work hard all our life to make things better for our family, for our friends, and for ourselves, but I wonder if we look back enough to recognize just how much we’ve done to make life great. Appreciation for what we have seems to be one of the greatest attribute one could attain. It is pretty common for people to want to be something that they are not - taller or shorter or thinner or younger or more muscular or faster or more successful or a myriad of other things. We could spend our whole life wanting to be something that we are not, but that would be a waste of time. The happiest people seem to be those who look around and realize that what they’ve got is pretty good and appreciate it.

Measuring your life’s success is part of the process of looking around to see how you are doing. How is it that you measure your life? After all is said and done what is truly most important to you? What are your deepest goals and desires? When you look back, what will be your measure of personal success? What will you be most proud of? No doubt, many of us would put family, relationships with spouses and children, faith, values, positive impact in the community, etc., as their measures of success. Now the question is, how well do you allocate your personal resources to reflect those measures of success? Do you feel like you are spending the appropriate amount of time in the areas that are most important to you? Are you spending enough time building the relationships that you feel are so important? 

When you analyze the success of a company, you don’t look at it in terms of its intentions, you look at it in terms of how it actually spends it’s time, money, and physical and human capital. Is it investing in new products, markets, technology or talent? Or is it just chugging along without much current investment in hopes of finding another organization to purchase?

Now what about you? As you look back on today, how did you spend your resources like time, energy, and money? Did your actions today align with your deepest goals and desires? If not, it’s never too late to make adjustments to move in the direction you really want to.

Deciding how you want your life to be measured may be the most important decision you ever make! 

The profession you chose reflects your values. Tax professionals have the great opportunity to help individuals and families stay compliant with tax laws, organize their finances, take care of things they don’t want to take care of, suggest strategies to minimize taxes, and more often than not, serve their clients as a family advisor. I am constantly amazed at how much you do for your clients and how involved you are in their lives. Seeing, visiting with or talking with them every year is an opportunity to develop a wonderful relationship of trust and caring.

If you want your life measured in part by how you deal with and help others, you’ve chosen the right profession.

Your friend,
Gary Quackenbush, CSTC President

2019 Summer Symposium
June 9-12 2019
Westgate Las Vegas Resort & Casino

Registration is Open for the 2019 Summer Symposium! 



Sunday, June 9, 2019

3pm Registration Opens; Exhibitor Set-up
5:20pm-6pm Welcome Reception for First Time Attendees
6pm-9pm Welcome Dinner
This event is family friendly.
(Included with full registration. Guest registration is $40)

Monday, June 10, 2019

6:30am-5pm Registration and Exhibits
7:30am-9:00am Session 1: IRS Keynote Presentation and Breakfast
Scott Irick Deputy Director, Examination, Small Business/Self-Employed
9:15am-10:05am Breakout Sessions (all sessions will continue after the break):
  Session 2: 199A - Qualified Business Income Deduction
Claudia Stanley, CPA, EA
  Session 3: 1031 Exchanges and Their New Counterpart - Opportunity Zones
Ruth Godfrey, EA
  Session 4: Reporting K-1's for Tax
Jane Ryder, EA, CPA
  Session 5: Toilets, Tenants & Trash: Capital Gains Tax Reduction Strategies
Frank Acuña, Attorney at Law
10:05am-10:20am   Break with Exhibitors
10:20am-12:00pm Breakout Sessions (continued from before the break):
  Session 2 Continued: 199A - Qualified Business Income Deduction
Claudia Stanley, CPA, EA
  Session 3 Continued: 1031 Exchanges and Their New Counterpart - Opportunity Zones
Ruth Godfrey, EA
  Session 4 Continued: Reporting K-1's for Tax
Jane Ryder, EA, CPA
  Session 5 Continued: Toilets, Tenants & Trash: Capital Gains Tax Reduction Strategies
Frank Acuña, Attorney at Law
12:00pm-1:20pm Lunch on own
1:20pm-3:00pm  Breakout Sessions:
  Session 6: California Old School Differences
Eugene Ostermiller, EA, NTPI Fellow
  Session 7: Advanced Schedule C Audits
LG Brooks, EA, CTRS
  Session 8: The Sharing Economy
Karen Joyner, EA
  Session 9: How to Serve Immigrant Mixed-Status Families
Antonio Martinez, EA
3:00pm-3:20pm Break with Exhibitors
3:20pm-5:00pm Session 10: Cryptocurrency, the IRS, and You
John Miller, EA
  Session 11: Marijuana Taxation in California
William Rogers, MBA, CFP, EA
  Session 12: Dependency in Depth
Shannon Hall, EA
  Session 13: Tax Issues for US Citizens Abroad
Monica Haven, EA, JD, LLM
5:00pm-6:00pm Reception with Exhibitors
6:00pm Evening on Own

Tuesday, June 11, 2019

6:30am-5pm  Registration and Exhibits
7:30am-9:00am Session 14: California Keynote Presentation and Breakfast
Susan Maples, CPA, California Tax Payer Rights Advocate
9:00am-9:15am Break
9:15am-10:05am   Breakout Sessions (all sessions will continue after the break):
  Session 15: Appealing Decisions - Audit, OIC, Tax Court, Bankruptcy Court, Federal District Court
Gary Quackenbush, Esq
  Session 16: Everything S-Corp!
Jane Ryder, EA, CPA
  Session 17: Baby, Oh Baby!
Karen Joyner, EA
  Session 18: Engagement Letters
LG Brooks, EA, CTRS
10:05am-10:20am Break with Exhibitors
10:20am-12:00pm Breakout Sessions (continued from before the break):
  Session 15 Continued: Appealing Decisions - Audit, OIC, Tax Court, Bankruptcy Court, Federal District Court
Gary Quackenbush, Esq
  Session 16 Continued: Everything S-Corp!
Jane Ryder, EA, CPA
  Session 17 Continued: Baby, Oh Baby!
Karen Joyner, EA
  Session 18 Continued: Engagement Letters
LG Brooks, EA, CTRS
12:00pm-1:20 pm Lunch on own
1:20pm-3:00 pm Breakout Sessions:
  Session 19: Passive Activity Loss Limitations
Eugene Ostermiller, EA, NTPI Fellow
  Session 20: What's my Character?
Claudia Stanley, CPA, EA
  Session 21: Domestic Tax Issues for Non-Resident Aliens
Monica Haven, EA, JD, LLM
  Session 22: The Art and Science of Divorce Taxation in 2019
Armand D'Alo, EA, CFP, CDFA and Robbin D'Alo, EA, CLA, CDFA
3:00pm-3:20pm Break with Exhibitors
3:20pm-5:00pm Session 23: California: Do You see What I CA?
Shannon Hall, EA
  Session 24: Correcting Depreciation - Form 3115 Line-by-Line
Karen Joyner, EA
  Session 25: Residents/Non-Residents
Antonio Martinez, EA
  Session 26: Choice Of Entity. LLC, INC, LP, GP, SP - How To Choose?
Gary Quackenbush, Esq

Navigating the IRS and Managing the Aftermath of a Data Breach
Marc Zine, Senior Stakeholder Liaison and Katie Williams, Senior Stakeholder Liaison


Wednesday, June 12, 2019

6:30am-5pm Registration and Exhibits
7:30am-9:00am  Session 27: Best Practices - Compliance and Documentation Presentation and Breakfast
Monica Haven, EA, JD, LLM
Class to continue after the break
9:00am-9:15am  Break
9:15am-10:05am Session 27 Continued: Best Practices - Compliance and Documentation Presentation and Breakfast
Monica Haven, EA, JD, LLM
10:05am-10:20am Break with Exhibitors
10:20am-12:00pm Breakout Sessions:
  Session 28: Compensatory Stock & LLC Benefits (Options RSU's, ESPP, Etc)
Jane Ryder, EA, CPA
  Session 29: Fresh Starts - Installment Agreement, OIC, Tax Lien Relief, Bankruptcy, Innocent Spouse, Injured Spouse
Gary Quackenbush, Esq
  Session 30: How to Read a Trust
Frank Acuña, Attorney at Law
  Session 31: Tax Penalties & Abatement
LG Brooks, EA, CTRS
12:00pm-1:20pm Lunch on Own
1:20pm-3:00pm Session 32: Stump the Tax Experts
3:00pm-3:20pm Break
3:20pm-5:00pm Session 33: Ethics - What Would You Do?
Claudia Stanley, CPA, EA
5:15pm Grand Prize Drawing


 Registration Fees

Category After May 1, 2019
Members $575
Staff of Members $600
Non-Members $675
Sunday Social Event Guest Tickets $40

Click here
 to visit the 2019 Summer Symposium page to learn about our topics, speakers, and more!

June 2019 Chapter Events

June 4, 2019
Topic: Comprehending LLC's - Setting-up, Preparing and Dissolving
East County San Diego Chapter Meeting
1 Federal Tax Law Hour
1 California Hour 

Topic: We Care to Share - Advance
East County San Diego Chapter Meeting
1 Federal Tax Law Hour

June 5, 2019
Topic: Understanding 1031 Exchanges
Temecula Valley Chapter Meeting
2 Federal Tax Law Hours

Topic: The Power of Simplicity - Worker's Classifications
San Francisco Bay Chapter Seminar
2 Federal Tax Law Hours

June 6, 2019
Topic: Estate Planning Strategies
San Gabriel Valley Chapter Meeting
2 Federal Tax Law Hours

June 13, 2019
Topic: To 1099 or not to 1099: Worker Classification before the IRS and EDD
North County San Diego Chapter Meeting
1 Federal Tax Law Hour
1 California Hour

June 19, 2019
Topic: After Tax Season Breakfast
Temecula Valley Chapter Meeting
Hours TBA

Topic: The Tax Cuts & Jobs Act and Its Impact On Real Estate & Cost Segregation
Inland Empire Chapter Meeting
1 Federal Tax Law Hour
1 Federal Update Hour

Topic: Ethics & Update on the Department of Labor Fiduciary Rule
San Jose Chapter Meeting
2 Ethic Hours

Topic: TBA
Orange County Chapter Meeting
Hours TBA

June 20, 2019
Topic: Top Ten Misconceptions that Get Employers Sued
San Diego Chapter Meeting
2 California Hours

June 26, 2019
Topic: Boy is California Different
Greater Long Beach Chapter Meeting
5 California Hour
1 Federal Update Hour

May 28, 2019
Topic: Marijuana Taxation in California
Orange County - South Chapter Meeting
1 Federal Law Hour
1 California Hour

Click here to view the CSTC calendar.

 Welcome New CSTC Members!

Please help us in joining our newest CSTC Members!

Joan Brashear
Inland Empire Chapter

Carolyn Caslin
Orange County Chapter

Lee Denis
Los Angeles Chapter

Leighanne Lafrenz Nickle
Inland Empire Chapter

Julie Morandi
Sacramento Chapter

Selina Young
San Jose Chapter

Save the Date for the 2019 Fall Tax and Accounting Forum in Sacramento!

The California Society of Tax Consultants (CSTC) provides quality tax education for tax professionals, including CTEC-registered preparers, Enrolled Agents, CPAs and attorneys. CSTC's 2019 Fall Forum will be held September 20-21, 2019 at the Courtyard by Marriott Sacramento Cal Expo in Sacramento, CA. It will focus on tax and accounting for non-profit organizations.

Schedule coming soon!


 IR-2019-98, May 31, 2019 

WASHINGTON – Today the Internal Revenue Service issued a draft of the 2020 Form W-4, Employee's Withholding Allowance Certificate (PDF), that will make accurate withholding easier for employees starting next year.

The revised form implements changes made following the 2017 Tax Cuts and Jobs Act, which made major revisions affecting taxpayer withholding. The redesigned Form W-4 no longer uses the concept of withholding allowances, which was previously tied to the amount of the personal exemption. Due to changes in the law, personal exemptions are currently not a central feature of the tax code.

“The new draft Form W-4 reflects important feedback from the payroll community and others in the tax community,” said IRS Commissioner Chuck Rettig. “The primary goals of the new design are to provide simplicity, accuracy and privacy for employees while minimizing burden for employers and payroll processors.” 

The IRS and Treasury collected extensive feedback over the past year while working closely with the payroll and tax community to develop a redesign that best serves taxpayers.

The IRS expects to release a near-final draft of the 2020 Form W-4 in mid-to-late July to give employers and payroll processors the tools they need to update systems before the final version of the form is released in November. To make additional improvements to this initial draft for 2020, the IRS is now accepting comments for 30 days.  To facilitate review of this form, IRS is also releasing FAQs about the new design.

The IRS anticipates the related instructions for employers will be released in the next few weeks for comment as well. 

The IRS reminds taxpayers that this draft Form W-4 is not for current use, but is a draft of the form to be used starting in 2020. Employees who have submitted a Form W-4 in any year before 2020 will not be required to submit a new form merely because of the redesign. Employers can continue to compute withholding based on the information from the employee’s most recently submitted Form W-4. 

For 2019, taxpayers should continue using the current Form W-4 (PDF). The IRS also continues to encourage people to do a Paycheck Checkup as soon as possible to see if they are withholding the right amount of tax from their paychecks, particularly if they had too much or too little tax withheld when they filed their 2018 taxes earlier this year. People with major life changes, such as a marriage or a new child, should also check their withholding.

The IRS cannot respond individually to those who submit comments, but the agency does appreciate the feedback and will consider all comments received.

IR-2019-96, May 20, 2019

WASHINGTON — The Internal Revenue Service today released the 2018 IRS Data Book, a snapshot of agency activities for the fiscal year.

The 2018 IRS Data Book describes activities conducted by the IRS from Oct. 1, 2017, to Sept. 30, 2018, and includes information about tax returns, refunds, examinations and appeals. The annual publication is illustrated with charts showing changes in IRS enforcement activities, taxpayer assistance levels, tax-exempt activities, legal support workload and IRS budget and workforce levels when compared to fiscal year 2017 and prior years. Included this year is a section on taxpayer attitudes from a long-running opinion survey.

“Underlying the numbers in this year’s edition of the Data Book is the hard work of IRS employees,” said IRS Commissioner Chuck Rettig. “Our employees are the backbone of this agency, delivering our mission efficiently and effectively. They work hard to help taxpayers, and the numbers outlined in the Data Book reflect their commitment.”

Revenue collection, returns processing, taxpayer service and enforcement actions

During fiscal year 2018, the IRS collected nearly $3.5 trillion, processed more than 250 million tax returns and other forms, and issued over 120 million individual income tax refunds totaling almost $395 billion.

The IRS received and processed more of every major type of form during FY 2018 than during the prior year, with the exception of estate tax returns; those filings were down slightly less than 1 percent compared to the prior year. However, filings by pass-through entities were up in FY 2018; partnerships filed almost 5 percent more forms with the IRS in FY 2018 than in the prior year, S-corporation filings were up almost 6 percent in the same timeframe.

The IRS provided taxpayer assistance through more than a half-billion visits to IRS.gov and helped more than 64.8 million taxpayers through different service channels, such as correspondence, toll-free telephone helplines or at Taxpayer Assistance Centers. There were also more than 309 million inquiries to the “Where’s My Refund?” application, up 11 percent compared to the prior year. 

Net revenue from delinquent collection activities rose to just over $40 billion, an increase of 1.6 percent compared to the prior year. IRS levies were up 8.3 percent compared to the prior year, but the agency filed about 8 percent fewer liens than in fiscal year 2017.

Compared to the prior year, there were fewer audits during fiscal year 2018. The IRS audited more than 892,000 individual income tax returns during the fiscal year, down slightly from the prior year.

Comprehensive Taxpayer Attitude Survey 

The IRS Data Book contains the results of the 2018 Comprehensive Taxpayer Attitude Survey (CTAS) which drew from feedback from 2,000 taxpayers through cell phone, landline phone or online surveys. Their opinions continue to inform IRS’ efforts to improve taxpayer service. Some of the results of the survey for 2018 show the following results:

  • Most taxpayers continued to agree that it is not at all acceptable to cheat on their income taxes. This attitude has remained within a four-point range since 2009.
  • Most taxpayers are still satisfied with their personal interactions with the IRS.
  • Almost half of the taxpayers who responded in 2018 agreed that service and enforcement are properly balanced. 

The IRS Data Book’s online format makes navigating data on taxpayer assistance, enforcement, and IRS operations easier. The publication contains depictions of key areas and quick links to the underlying data.

An electronic version of the 2018 IRS Data Book can be found on the Tax Stats page of IRS.gov. Printed copies of the 2018 IRS Data Book, Publication 55-B, will be available June 2019 from the U.S. Government Printing Office. To obtain a copy, write to the Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954, or call 202-512-1800 for voicemail or fax a request to 202-512-2250.

IR-2019-92, May 9, 2019

WASHINGTON — During Small Business Week, the Internal Revenue Service is highlighting tax reform changes that impact depreciation and expensing for nearly every business. In some cases, these changes allow small business owners and the self-employed to write off the cost of machinery, equipment and other property more quickly.

This year, National Small Business Week is May 5-11. For more than 50 years, the week has recognized the important contributions of America’s entrepreneurs and small business owners. The IRS is reminding small businesses and self-employed individuals about tax benefits and reporting rules.

Here is some key information to keep in mind.

100 percent, first-year ‘bonus’ depreciation

The bonus depreciation percentage is now 100 percent for qualified property acquired and placed in service after September 27, 2017, and before January 1, 2023. This means that businesses can often write off the full cost of most depreciable property in the first year they use it in their business. Depreciable business assets with a recovery period of 20 years or less and certain other property usually qualify. This means that machinery, equipment, computers, appliances and furniture generally qualify. Special rules apply for longer production period property and certain aircraft.

In addition, qualified film, television and live theatrical productions are among the types of property that may qualify for 100 percent bonus depreciation.

Businesses can immediately expense more 

Businesses may elect to expense all or part of the cost of what is often referred to as Section 179 property and deduct it in the year they place the property in service. The maximum deduction is increased to $1,000,000, and the phase-out threshold  is increased to $2,500,000. These amounts, adjusted annually for inflation, apply to property placed in service in tax-year 2019. 

Section 179 property includes business equipment and machinery, office equipment, livestock and, if elected, qualified real property. Taxpayers can elect to include certain improvements made to nonresidential real property. See New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act for more information.

Depreciation limitations on luxury automobiles

The Tax Cuts and Jobs Act (TCJA) changed depreciation limits for passenger vehicles placed in service starting in tax-year 2018. If a business doesn’t claim bonus depreciation, the greatest allowable depreciation deduction is:

  • $10,000 for the first year,
  • $16,000 for the second year,
  • $9,600 for the third year, and
  • $5,760 for each later taxable year in the recovery period.

If 100 percent bonus depreciation is claimed, the greatest allowable depreciation deduction is:

  • $18,000 for the first year,
  • $16,000 for the second year,
  • $9,600 for the third year, and
  • $5,760 for each later taxable year in the recovery period.

These amounts apply to property placed in service starting in 2018.

Applicable recovery period for real property

The general recovery period for residential rental property is 27.5 years. TCJA changed the alternative depreciation system recovery period for residential rental property from 40 years to 30 years. Under the new law, a real property trade or business electing out of the interest deduction limit must use the alternative depreciation system to depreciate any of its residential rental property. These changes apply starting in tax-year 2018. 

Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.  Business owners can refer to the Tax Reform Provisions that Affect Businesses page for updates. 

More resources: 

IR-2019-90, May 7, 2019

WASHINGTON — The Internal Revenue Service reminded certain tax-exempt organizations that Wednesday, May 15, 2019, is the filing deadline for Form 990-series information returns.

These types of information returns are normally due on the 15th day of the fifth month after the end of an organization’s accounting period. For organizations operating on a calendar year, the deadline is May 15, 2019.  

No Social Security numbers on Forms 990 

The IRS generally does not ask organizations for Social Security numbers (SSNs) and cautions filers against providing them on the form. By law, the IRS and most tax-exempt organizations are required to publicly disclose most parts of Form 990 filings, including schedules and attachments. Public release of SSNs and other personally identifiable information about donors, clients or benefactors could give rise to identity theft. More information on this can be found in the “general instructions” section of the Instructions for Form 990, Return of Organization Exempt from Income Tax (PDF).

The IRS also urges tax-exempt organizations to file forms electronically, noting the error rate for electronically-filed returns is only 1 percent. Electronic filing also provides acknowledgement that the IRS has received the return and reduces normal processing time, making compliance with reporting and disclosure requirements easier.

Tax-exempt forms that must be made public by the IRS are clearly marked “Open to Public Inspection” on the top right corner of the first page. These include Form 990, Form 990-EZ, Form 990-PF and others.

Forms to file

Small tax-exempt organizations with average annual gross receipts of $50,000 or less may file an electronic notice called a Form 990-N (e-Postcard). This form requires only a few basic pieces of information. Tax-exempt organizations with average annual gross receipts above $50,000 must file a Form 990 or 990-EZ, depending on their receipts and assets. Private foundations must file Form 990-PF. 

Organizations that need additional time to file a Form 990, 990-EZ or 990-PF may obtain an automatic six-month extension. Use Form 8868, Application for Extension of Time to File an Exempt Organization Return, to request an extension. The request must be filed by the due date of the return. Note that no extension is available for filing the Form 990-N (e-Postcard).

Many organizations risk loss of tax-exempt status

By law, organizations that fail to file annual reports for three consecutive years will see their federal tax exemptions automatically revoked as of the due date of the third year for which they are required to file. The Pension Protection Act of 2006 mandates that most tax-exempt organizations file annual Form 990-series information returns or notices with the IRS. The law, which went into effect at the beginning of 2007, also imposed a new annual filing requirement for small organizations. Churches and church-related organizations are not required to file annual reports.

Check tax-exempt status online 

The IRS publishes a list of organizations identified as having automatically lost tax-exempt status for failing to file information returns for three consecutive years. Organizations that have had their exemptions automatically revoked can apply for reinstatement of their tax-exempt status and pay the appropriate user fee.

The IRS now offers an enhanced, mobile friendly search tool, called Tax Exempt Organization Search (TEOS). TEOS provides easy access to publicly available information about exempt organizations. Users can find key information about the federal tax status and filings of certain tax-exempt organizations, including whether organizations have had their federal tax exemptions automatically revoked and if an organization is eligible to receive tax-deductible contributions.

IR-2019-89, May 7, 2019

WASHINGTON — During National Small Business Week, the Internal Revenue Service wants small business taxpayers and the self-employed to know that, starting May 13, an important change will affect the way it issues employer identification numbers, or EINs. 

With identity theft on the rise in the business community, the agency also offered business taxpayers tips and resources for protecting their data from theft.  

National Small Business Week is May 5-11. For more than 50 years, the week has recognized the important contributions of America’s entrepreneurs and small business owners.

EINs and responsible parties

Beginning May 13, only individuals with tax identification numbers – either a Social Security number (SSN) or an individual taxpayer identification number (ITIN) – may request an employer identification number. This new requirement, which was first announced by the IRS in March, will provide greater security to the EIN process by requiring an individual to be the responsible party and will also improve transparency.An EIN is a nine-digit tax identification number assigned to sole proprietors, corporations, partnerships, estates, trusts, employee retirement plans and other entities for tax-filing and reporting purposes.

The change prohibits entities from using their own EINs to obtain additional EINs. The new requirement applies to both the paper Form SS-4, Application for Employer Identification Number (PDF), and online EIN applications.

Data security

Individuals are not the only ones who need to protect their identities. Businesses and other organizations, especially trusts, estates and partnerships, can also be victims of identity theft. For example, criminals may file Forms 1120 (corporations), 1120S (S corporations) or Schedules K-1 in their names. Last year, 2,450 businesses reported that they were victims of tax-related identity theft, a 10-percent increase over 2017.

Businesses and other organizations can help combat identity theft by educating their employees, clients and customers. They can share Publication 4524, Taxes. Security. Together: Security Awareness for Taxpayers (PDF), or create their own messages urging employees, clients or customers to protect their data and beware of phishing emails, the most common tactic used by criminals to steal data. 

Businesses should also educate their payroll and human resources employees about a dangerous phishing scam. The Form W-2 scam tricks payroll and human resources employees into sharing employee wage and income information by posing as a company executive. See Form W-2/SSN Data Theft: Information for Businesses and Payroll Service Providers.

Businesses that retain sensitive financial data should review and update their security plan. Publication 4557, Safeguarding Taxpayer Data (PDF), provides a good starting point and includes helpful recommendations.

IR-2019-88, May 6, 2019

WASHINGTON — The Internal Revenue Service today reminded small businesses that recent tax reform legislation lowered the backup withholding tax rate to 24 percent and the withholding rate that usually applies to bonuses and other supplemental wages to 22 percent. The agency also urged employers to encourage their employees to check their withholding using the IRS Withholding Calculator.

This year, National Small Business Week is May 5-11. For more than 50 years, the week has recognized the important contributions of America’s entrepreneurs and small business owners.

Backup withholding

Under a key change made by the Tax Cuts and Jobs Act (TCJA) enacted in December 2017, the backup withholding tax rate dropped from 28 percent to 24 percent, effective January 1, 2018. Backup withholding applies in various situations, including when a taxpayer fails to supply their correct taxpayer identification number (TIN) to a payer. Usually, a TIN is a Social Security number (SSN), but in some instances, it can be an employer identification number (EIN), individual taxpayer identification number (ITIN) or adoption taxpayer identification number (ATIN). Backup withholding also applies, following notification by the IRS, where a taxpayer under-reported interest or dividend income on their federal income tax return.

Publication 1281, Backup Withholding for Missing and Incorrect Name/TINS (PDF), now available on IRS.gov, has information designed to help any payer required to impose backup withholding on their payees. Among other things, the publication features answers to 34 frequently asked questions.

When backup withholding applies, payers must backup withhold tax from payments not otherwise subject to withholding. This includes most payments reported on Form 1099, such as interest, dividends, payments to independent contractors and payment card and third-party network transactions.

Payees may be subject to backup withholding if they:

  • Fail to give a TIN,
  • Give an incorrect TIN,
  • Supply a TIN in an improper manner,
  • Under-report interest or dividends on their income tax return, or
  • Fail to certify that they’re not subject to backup withholding for under-reporting of interest and dividends.

To stop backup withholding, the payee must correct any issues that caused it. They may need to give the correct TIN to the payer, resolve the under-reported income and pay the amount owed, or file a missing return. The Backup Withholding pagePublication 505, Tax Withholding and Estimated Tax, and Publication 1335, Backup Withholding Questions and Answers (PDF), have more information.

Payers report any backup withholding on Form 945, Annual Return of Withheld Federal Income Tax. The 2019 form is due Jan. 31, 2020. For more information about depositing backup withholding taxes, see Publication 15, Employer’s Tax Guide. Payers also show any backup withholding on information returns, such as Forms 1099, that they furnish to their payees and file with the IRS.

Bonuses and other supplemental wages

TCJA also lowered the tax withholding rates that normally apply to bonuses, back wages, payments for accumulated leave and other supplemental wages. In most cases, the new rate is 22 percent, effective Jan. 1, 2018. For payments exceeding $1 million, the rate is 37 percent. See Publication 15 for details.

Paycheck Checkup

Small businesses can help their employees by encouraging them to do a Paycheck Checkup. In addition, any business owner, such as a corporate officer, who receives wages from their business should also consider checking their withholding. The same goes for anyone who has a sideline business but continues to receive wages from another employer.

Though a good idea any year, checking withholding is especially important this year given the number of changes brought about by the TCJA.

The easiest way to do a Paycheck Checkup is to use the Withholding Calculator on IRS.gov. Then, based on its recommendations, fill out and submit a new Form W-4. In many instances, this means claiming fewer withholding allowances or having an extra flat-dollar amount withheld from an employee’s pay.

Taxpayers who itemized in the past who now choose to take advantage of the increased standard deduction, as well as two-wage-earner households, employees with non-wage sources of income and those with complex tax situations, are at most risk of having too little tax withheld from their pay. Boosting tax withholding as early as possible in 2019 is the best way to head off another tax-time surprise next year. Anyone who had an important life change, such as getting married, getting divorced, buying a home or having a baby should also consider a Paycheck Checkup.

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