Tax News: May ’18
Slippery tax slope. How did the U.S. medal winners at the Winter Olympics fare tax-wise? Due to a recent tax law change, the value of their medals and cash prizes received by skiers, skaters and other Winter Olympics athletes are tax free, except for those with more than $1 million of adjusted gross income (AGI). Note: This doesn’t affect the tax treatment of income from endorsements. It’s still taxable.
Media message. In a new case, a taxpayer’s personal information was revealed on Howard Stern’s radio show when she was speaking to an IRS agent about personal matters. Without the knowledge of the agent, who was on another line with the Stern show, part of the conversation aired. The taxpayer sued both Stern and the IRS for improperly disclosing information. Now the case against Stern, but not the IRS, has been dismissed. (Barrigas, Case No. 17-cv-10232-ADB, DC-MA, 3/9/18)
Phishing bait for tax pros. Taxpayers aren’t the only ones who have to watch out for tax scams. The Summit Security partners—comprised of the IRS, state tax authorities and tax industry stakeholders—recently warned tax pros to remain on high alert for client identity theft. (IRS Internal News Release IR-2018-68, 3/22/18) Notably, towards the end of tax-filing season, the “New Client” scam re-emerged, signaling ongoing attempts by cybercriminals to target tax professionals with spear phishing schemes. Essentially, a “new client” emails the tax pro about a tax issue, attaching documents purportedly from the IRS or tax information for a prior year. The documents actually contain malware that, if opened, enable the thieves to steal taxpayer information.
No more mercy. The IRS has announced it is ending a once-popular amnesty program for U.S. taxpayers with assets in foreign bank accounts. (IRS News Release IR-2018-52, 3/13/18) Under the Offshore Voluntary Disclosure Program (OVDP), taxpayers with unreported accounts abroad can turn themselves in and avoid criminal prosecution. The catch? You must pay any back taxes owed plus the requisite penalties. Since the OVDP’s inception, the IRS has collected more than $11 billion, but participation has been dwindling in recent years. Citing rising costs, the IRS says it is shutting down the OVDP on September 28, although the current plan allows a streamlined disclosure program to remain in place. This option is only available to taxpayers certifying that their failure to report foreign bank accounts wasn’t willful.