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Tax News: October ’17

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in Small Business Tax

ID theft trends. The IRS has good news and bad news about ID theft. Good news: The number of individuals reporting identity theft in the first half of 2017 dropped significantly when compared to the prior two years. Bad news: At the same time, business ID theft is on the rise. To help combat problems, the IRS is urging tax pros to use updated software, in addition to requesting taxpayers to stay vigilant. (IRS Fact Sheet 2017-123, 7/25/17)

Virtual IRS contact. On Aug. 1, the IRS launched a new web-based virtual conference option for taxpayers and their representatives. (IRS News Release IR-2017-122, 7/24/17) As with screen-sharing programs on phones and computers, this technology offers greater access, efficiency and flexibility to taxpayers. The agency expects it to be especially beneficial to taxpayers located far from an IRS Appeals office.

Tax repairs. Taxable compensation takes on many forms. It isn’t limited strictly to wages. In a new case, a handyman agreed to take an offset in his monthly rent payment in exchange for doing maintenance work for the landlord. The offset was equal to the value of the services that he provided. But this bartering arrangement still resulted in taxable compensation to the handyman equal to the amount of the rent reduction. (Welemin, TC Summary Opinion 2017-54, 7/18/17)

Renew your ITIN. In August, the IRS began mailing out letters to more than 1 million taxpayers, warning them that they need to renew their Individual Taxpayer Identification Number (ITIN) before the end of the year. Who is on the IRS’ mailing list? ITINs are used by individuals who have tax filing and reporting responsibilities, but aren’t eligible for a Social Security number (SSN). Unless action is taken, ITINs that have not been used on a federal tax return at least once in the last three years will expire on Dec. 31, 2017, as will ITINs with the middle digits of 70, 71, 72 or 80. Affected taxpayers who expect to file a tax return in 2018 should submit a renewal application to the IRS as soon as possible.

Tax “thriller” awaits. Both tax pros and entertainers, as well as interested taxpayers, are eagerly waiting for the decision in a highly-contested case involving the estate of Michael Jackson, the “King of Pop” who released acclaimed albums like “Thriller” over the course of his long career. The stakes are enormous: The estate claimed a value of a mere $2,105 at the date of death in 2009, but the IRS figures it was worth closer to $430 million! Part of the dispute stems from the commercial rebirth of Jackson after his death due to astute management of the estate’s executors. The ruling, which is expected next year, could provide insights into estate valuations of other recently deceased stars like Prince and Robin Williams.

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