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December 2016

Understanding Your Letter CP 5747C—Taxpayer’s Requirement to Authenticate Identity in Person

During a recent conference call that included representatives from TSCPA’s Relations with IRS Committee, the local IRS stakeholder liaison addressed Letter CP 5747C and discussed that a number of tax preparers’ clients are receiving this new letter requiring them to physically go to a Taxpayer Assistance Center (TAC) to authenticate their identity. Some preparers have questioned the legitimacy of the letter and why, with a Power of Attorney on file, they could not conduct the validation on behalf of their clients.

The CP 5747C is a legitimate IRS letter issued as part of the Taxpayer Protection Program. Because these taxpayer returns have already been flagged for potential identity theft, enhanced authentication procedures are necessary to avoid inadvertent unauthorized disclosure of personal data.

Clients receiving a CP 5747C should call 844-545-5640 to make an appointment at their local TAC. (All TACs now operate by appointment only.) The taxpayer should indicate to the customer service representative if any special circumstances need to be considered when making the appointment.

The stakeholder liaison has elevated the issue, requesting that the letter be posted to IRS.gov on the “Understanding Your Notices” webpage. She also has forwarded practitioners’ suggestion that Certified Acceptance Agents be allowed to conduct the validation process.


Tax Preparers’ New Due Diligence Requirements

The IRS has issued temporary and proposed regulations (T.D. 9799, REG-102952-16) that modify the existing rules on the tax return preparer due diligence penalty under Section 6695(g). The temporary regulations implement changes made in the Protecting Americans from Tax Hikes Act of 2015 that expanded the scope of the due diligence requirements. Prior requirements and penalties were related to the earned income credit. Now, the due diligence requirements also apply to tax returns that claim a child tax credit, additional child tax credit or the American opportunity tax credit.

The new rules apply to returns or claims for refund prepared on or after Dec. 5, 2016, for tax years beginning after Dec. 31, 2015. The revised Form 8867, Paid Preparer’s Due Diligence Checklist, is a single checklist for all of these applicable credits.

The tax return preparer must not know or have reason to know that any information used to determine the taxpayer’s eligibility for, or the amount of, any applicable credit or claim is incorrect. A $500 penalty applies to each due diligence failure, adjusted for inflation, so 2016 is $510.

The IRS is accepting comments on proposed regulations REG-102952-16 until March 6, 2017.

https://www.federalregister.gov/documents/2016/12/05/2016-28993/tax-return-preparer-due-diligence-penalty-under-section-6695g

https://www.eitc.irs.gov/Tax-Preparer-Toolkit/dd/lawandregs

https://www.irs.gov/pub/irs-pdf/f8867.pdf?_ga=1.131616011.564867426.1480601755


IRS Announces Start of e-Services Re-registration and Alert of e-Services Email Scam

After a brief delay, the e-Services re-registration process is moving forward. The IRS will send letters through the end of December to those e-Services users who can access the transcript delivery service and who have been active on the account within the past year. Follow instructions to validate your identity. If you successfully registered for Get Transcript Online after May 2016, you do not need to re-register now. If you do not take action within 30 days of the letter, you will be locked out of your account.

http://www.journalofaccountancy.com/news/2016/nov/irs-starts-e-services-re-registration-201615608.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=01Dec2016

 

Also, do not fall victim to an e-Services phishing email directing users to a fake website to update your account.

https://www.irs.gov/uac/newsroom/irs-warns-tax-professionals-of-new-eservices-email-scam