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June 29, 2018
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Last Call for #NatCon Early Bird Prices  
Hurry! Today is the last day to save $150 on registration fees for the 2018 NAEA National Conference. This premiere tax education event has something for everyone - from newer tax practitioners to those who have grown up in the business. Programs include the stellar representation education of the National Tax Practice Instituteā„¢, Tax Preparation Issues including 6 hours dedicated to the Tax Cuts and Jobs Act and the Graduate Level in Representation tracks, plus the option to Choose Your Own Adventure and build a custom education track. Registration must be submitted online or postmarked today to take advantage of the Early Bird discount.
 
TAX ADMINISTRATION NEWS taxadministrationnews
IRS Grapples with Post-TCJA Forms
The New York Times earlier this week published a leaked version of a revamped Form 1040 (in an article, tellingly, entitled "The New Tax Form Is Postcard-Size, but More Complicated Than Ever"). During debate on the Tax Cut and Jobs Act, policymakers touted that taxes would be able to be filed on a postcard. The new Form 1040, a two-sided half-page form-purportedly accomplishes this goal. And in fact, the new individual tax form appears to eliminate nearly half of the 78 lines of the former form. 
 
Sharp-eyed EAs have already started asking important questions. Does the new form really make preparing a tax return easier? What does this new form mean for states, which largely align their tax form with federal forms? Will the changes disrupt tax agency programming for the upcoming filing season? Where are alimony, business income, capital gains, student loan interest, teacher supply costs, and other income, expenses and credits reported?  The answer to the last question, of course, is worksheets - many, many worksheets. 
 
The larger question, of course, remains what's it all about? The new form completes a political promise: a Form 1040 that is at least theoretically postcard-sized (though no one is dropping the form into the mail sans envelope). Yet when a Wall Street Journal reporter asked what the new form means for taxpayers, our EVP suggested that for the 80 to 90 percent of Americans who use paid professionals or use over-the-counter software, the Form 1040 is an output, not an input. By and large, taxpayers don't really care about the size of the form. And is it easier? Well, the answer is the same as the answer to all the other tax questions: it depends, but probably not.
 
While the new Form 1040 may be a splashy triumph of form over substance, the new draft Form W-4 is not getting the attention we believe it deserves. IRS in its new iteration of an old standard seems to be none-too-subtly sending taxpaying employees to the Internet. Gone is any semblance of the time-honored technique of counting noses in your family and using that as the first stab at proper withholding. The draft Form W-4 raises a number of potential privacy concerns about second jobs and spousal income. It also requires employees sitting in their employers' offices to take a wild guess at filing status, outside income, spouse's income and, one of our favorites, "tax credits." Help is at hand, though. Within the 11-page instructions hapless employees are referred to as many as 12 IRS publications or forms. What could possibly go wrong?
 
IRS-rather blithely in our opinion-suggests these issues may be resolved by using its own Form W4 calculator . Enrolled agents using this route, however, report that the calculator is equally complex and often results in under withholding.  
 
Note: As we went to press, IRS released a formal pre-early release draft copy of Form 1040, Schedules 1-6, and an accompanying news release. The agency is framing the new Form 1040 as a "building block" approach and suggested in a conference call earlier this afternoon:
  • The new Form 1040
    • incorporates the most commonly used lines on the current Form 1040
    • takes the place of Form 1040A and Form 1040EZ
    • does not eliminate the current Form 1040 Schedules
    • does not eliminate the current Form 1040NR.
  • Taxpayers will find all the lines on the current Form 1040 on the new Form 1040 and accompanying new attachments.
  • IRS estimates some 30% of all taxpayers will be able to file on the new Form 1040 without any schedules and some 65% will be able to file on the new Form 1040 plus one attachment.
Bottom line: NAEA intends to provide formal comments on Form 1040, the new schedules and  Form W-4. We welcome your thoughts by July 8. 
 
Rettig Takes Likely First Step Toward Senate Confirmation
On Thursday, the Senate Finance Committee got to take its best shot at Internal Revenue Commissioner nominee, Charles Rettig. If you missed the hearing, C-SPAN  provides gavel-to-gavel coverage. 
 
After an early kerfuffle over Mr. Rettig's Hawaiian condo being managed by a Trump branded company, the hearing settled mostly into the usual exhortations over improving taxpayer service and fixing the Lincoln era computer systems. Though the nominee bobbed and weaved like Muhammad Ali in his early years, we think you'll find the following of interest:
  • Chairman Hatch's pithy take on the Hawaiian condo issue (at the 6:02 minute mark)
  • Rettig's conversation with Senator Bob Menendez regarding the Garden State's moves to fix its SALT deduction problems (at the 38:49 minute mark).
NAEA's Government Relations team attended and noted with pleasure that multiple Senators clearly used ideas and proposals from NAEA's IRS Reform white paper, which May Fly-in participants helped spread all over Capitol Hill. Issues gaining traction include regulation of unenrolled preparers, IRS Oversight Board reforms, extending critical hiring authority for the IRS, instituting training reforms and, of course, adequate funding. Clearly, all the hard work is paying off. 
 
What happens next? Shortly after the hearing, Committee Chairman Orrin Hatch announced his intent to move the nomination quickly and expects to see Mr. Rettig at 1111 Constitution Avenue within the month. 
STATE NEWS statenews
Statehouse Roundup
In this week's state tax news, we cover newly-enacted legislation from Ohio defining state residency in Ohio for income tax purposes and a new sales tax reduction act from Louisiana.
  • On June 14, Ohio Gov. John Kasich (R) signed into law a bill that outlines provisions for establishing Ohio residency for individual income tax purposes. HB 292 clarifies that a taxpayer's claim of Ohio non-residency is "irrebuttable" if the taxpayer files an affidavit with the tax commissioner stating the that during the tax year:
    • the taxpayer has no more than 212 contact periods with the state of Ohio;
    • the taxpayer had at least one place of residence outside of Ohio for which the taxpayer did not claim a federal depreciation deduction;
    • the taxpayer did not hold a valid Ohio driver's license or ID card;
    • the taxpayer did not claim a homestead exemption for an Ohio residence; and
    • any tuition charged or incurred from an Ohio state institution was not based on a place of residence in Ohio.
HB 292 extends the deadline for taxpayers to file the affidavit on or before October 15 following the close of the taxable year, and also reinstates the direct right of appeal from the Board of Tax Appeals to the Ohio Supreme Court for most Ohio tax cases.
  • On June 24, Louisiana Gov. John Bel Edwards (D) signed into law a bill that reduces the state's five percent sales tax to 4.45 percent, effective July 1, 2018, through June 30, 2025. HB 10 also imposes a two percent tax on business utilities (e.g., water and electricity).
PUBLIC AWARENESS publicawareness
EAs in the News
The Wall Street Journal quoted NAEA Executive Vice President Robert Kerr, EA, on the subject of the new Form 1040. Kerr is identified as " executive vice president of the National Association of Enrolled Agents, tax experts licensed to practice before the Internal Revenue Service." Read   IRS Changes 1040 Tax Form, Even as Taxpayers Switch to Digital Filing.  

Politico quoted Jean Nelsen, EA, on the subject of the impending postcard-sized 1040 Form. Read Here we go again.  

Laurie Ziegler, EA, shared her take on the postcard-sized Form 1040 in an interview with Tax Notes Today. Read New Draft Form 1040 Debuts to Mixed Reviews.

Jerry Gaddis, EA, also examines the new "simplified" tax form in an interview with the "Taxing Subjects" blog. Read Postcard-Sized Form 1040 Rumored to Replace 1040A and 1040EZ.
 
An article published by MSN Money includes thoughts from Crystal Stranger, EA, on the 16 Most Important Assets That Will Increase Your Net Worth.

David McKeegan, EA, was interviewed for a CNBC story that explains why   U.S. expat business owners have a new tax to worry about.

Craig Smalley, EA, writes about   Why I Don't Read PLRs or Chief Council Advice in a new column for AccountingWeb.

Edward Loughrey, EA, examines changes to the tax treatment of ABLE accounts, which enable someone who has disabilities to put money into a tax-deferred savings account to be used for medical and living expenses. Read Achieving a Better Life Experience accounts.

Bary Lisak, EA, offers Mid-Year Tax Tips to Start Planning for 2018, in his column for the Chief-Leader newspaper.

David Mayes, EA, says TCJA "may have opened up an opportunity for retirement savers to reduce their lifetime tax burden through the tactful use of various Roth conversion strategies." Read David's latest column, Tax cut spotlights mega backdoor Roth IRA, in SeacoastOnline.

GOVERNMENT RELATIONS NEWS govrelationsnews
Everything but the Kitchen Sink
Summer is moving in full swing and we're quickly approaching the celebration of our nation's Independence Day (recipes here --- including red, white, and blue food). In case you're short on reading materials, National Taxpayer Advocate Nina Olson just released her mid-year Objectives Report to Congress, in which the NTA presents:
  • a review of the 2018 filing season,
  • priority issues the Taxpayer Advocate Service will address in the upcoming fiscal year, and
  • IRS' responses to each of the 100 (yes, 100) administrative recommendations the Taxpayer Advocate made in her 2017 Annual Report to Congress.
One of the most significant challenges facing IRS (read "herculean task") will be issuing rules and updating forms and systems to conform to the Tax Cuts and Jobs Act.
 
Meanwhile, House Ways and Means Committee Chairman Kevin Brady (R-TX) indicated he expects to issue a draft of the second round of tax cuts to House Republicans following the July 4 recess, with a full legislative outline to be released by the beginning of August. Votes would occur in the fall. Brady further indicated that the legislative package would be separated into several bills rather than one single bill. Accounting Today has more details .
 
In other news:
  • The Nevada Society of Enrolled Agents has a court date next Friday in Carson City to continue its efforts to defend NvSEA members' rights to practice in the state of Nevada. Details coming to you soon in a separate all-member message.
  • A Washington Examiner editorial on whether you may need tax preparation service in a post-Tax Cuts and Jobs Act world.
  • Forbes' Tony Nitti covers the anticipated regulations that should be addressed under section 199A.
  • The Electronic Tax Administration Advisory Committee (ETAAC) issued its 2018 annual report, which reminds us, "Cybercriminals continue to threaten our nation-they are organized, smart, nimble, and well-funded."
  • The Senate Finance Committee voted unanimously to confirm the nominations of Elizabeth Ann Copeland and Patrick Urda to the U.S. Tax Court.
     
  • Sir Paul McCartney in an epic Carpool Karaoke.
Quote
"Those who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." 
- Benjamin Franklin (1706-1790) American statesman, scientist, and writer
ASSOCIATION NEWS associationnews
NAEA Washington, D.C. Office Closed on July 4
In observance of Independence Day, NAEA's Washington, D.C. office will be closed on July 4. We wish you all a safe holiday and hope everyone gets a chance to enjoy some warm weather on our nation's birthday.
 
Room Rate Deadline for 2018 NAEA National Conference Approaching
With the 2018 NAEA National Conference right around the corner, now is the time to reserve your room in the lovely Cosmopolitan Hotel. The discounted NAEA rate is $169 single/double, plus 12% tax. Rate is $159 plus mandatory $10 resort fee which covers the internet throughout the property and more. The r oom rate deadline is next Friday, July 6 or whenever the block sells out (which could be sooner!). To make a reservation, call (855) 435-0005 and use group code SNMNN8 or click here .
 
Quill Overturned Webinar: How the Wayfair Decision Could Transform Sales Taxes Nationwide - July 12, 11:00 AM ET
Our friends at Wolters Kluwer are offering a late-breaking webinar examining the impact of the recent SCOTUS ruling in South Dakota v. Wayfair, Inc. After more than 25 years, the U.S. Supreme Court has changed direction and ruled that businesses that sell to customers in other states must collect the sales taxes that would be due in that state. What does this decision mean? State and local tax practitioner Tim Noonan, Esq., will provide that answer and others in this one-hour overview webinar on Wayfair and its impact. Get details.
 
IRS Nationwide Tax Forums Are Nearly Here
NAEA members Frank Degen, EA, USTCP and Claudia Hill, EA, will be leading seminars titled "Your Client Owes the IRS - Now What," which reviews the ins-and-outs of the collection process, and "Home Sweet Tax Shelter," which examines home deductions in the light of the Tax Cuts and Jobs Act and recent tax court rulings. Don't forget to stop by the NAEA booth and talk with other tax professionals. Sharing your own NAEA experiences with prospective members could be the deciding factor in bringing a new EA into the fold. Also, don't forget: NAEA members can save $10 off registration for any of the five IRS Nationwide Tax Forum 2018 events taking place this summer. Use the discount 2018NAEA#$ when you register.
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