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Tax News: June ’17

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in Small Business Tax

Focus on tax pros. The Feds are going after cheating tax return preparers. The Department of Justice, working with the IRS, announced on April 10 it hopes to shut down tax pros who assist in fraudulent tax returns or perpetrate other tax scams. The DOJ will pursue criminal sanctions against the worst offenders. Victims are encouraged to file Form 14157, Complaint: Tax Return Preparer, with the IRS.

Replacements needed. In a speech to the National Press Club on April 5, IRS Commissioner John Koskinen again referenced dwindling resources. Notably, he pointed out that experienced personnel are retiring or leaving for private-sector jobs. While more than 30% of the IRS workforce is nearing retirement, just 122 staffers of about 77,000 employees are under age 26.

Small business audits. Owners of pass-through entities like S corporations and partnerships are currently faring better in audits than individual taxpayers. According to statistics from the IRS, 31% of the S corp and 46% of partnership field audits that were conducted last year resulted in no changes. In comparison, the no-change rate for individuals was only 8%.

Better late than never. According to statistics for the week ending April 21—three days after the due date for 2016 returns—the IRS reports that it received more than 17 million tax returns (of which 13.6 million were e-filed). For the entire 2017 tax filing season, the IRS received 135.6 million tax returns through April 21. Thanks to the late filings, the number of refunds issued this year grew to 97 million, for a value of $268.3 billion. The average refund was $2,763, up slightly from last year’s average of $2,711. (IRS Internal News Release IR-2017-89, 4/25/17)

Keeping track of hackers. The IRS continues to be plagued by hackers. In April, it temporarily shut down its Data Retrieval Tool, an application that allows taxpayers to automatically retrieve and enter tax return data needed for college financial aid forms. The IRS said that hackers gained unauthorized access to information, and as many as 100,000 individuals may have been victimized. It is notifying those taxpayers and has volunteered to pay for credit monitoring. In addition, the agency has identified at least 50,000 suspicious tax return filings relating to the breach. We will keep you updated.

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