Security Summit Recommends Multi-Factor Authentication

Security Summit Recommends Multi-Factor Authentication

Security Summit Recommends Multi-Factor Authentication

The Security Summit’s “Working Virtually: Protecting Tax Data at Home” campaign will stretch over five weeks, providing remote-work data security recommendations for tax professionals. Whether you are a work-from-home veteran or were forced to convert the dining room table into a makeshift office, these tips can help protect client data from identity thieves.

The second week of “Working Virtually” focuses on multi-factor authentication (MFA). While included in the “Security Six” protections highlighted last week, the Summit is specifically namechecking MFA for one simple reason: It works.

What is multi-factor authentication?

Multi-factor authentication protects online accounts by requiring additional user-provided information during the login process. In some cases, that means entering a code sent to your email address, mobile phone, or third-party authentication application—which are the most secure of the three options.

Finding a suitable authentication app will largely depend on the account or software you’re trying to protect. Most platforms that support MFA will list the authentication methods they support, but the IRS says you may need to “use a search engine for ‘Authentication apps’ to learn more.”

Once you find the authentication app you need, it’s just a matter of downloading the program to your smartphone and following the setup instructions.

Why is multi-factor authentication effective against identity thieves?

MFA prevents identity-theft attacks by requiring a code that scammers can’t easily steal with phishing scams. Outside of tricking victims into providing login credentials, identity thieves like to hide malware in email attachments and links that is designed to steal victims’ passwords.

“However, with multi-factor authentication, it’s unlikely the thief will have stolen the practitioner’s cell phone so he would not receive the necessary security code to access the account,” the IRS explains. “This protects the tax pro’s account information.”

Will my tax preparation software offer multi-factor authentication?

The IRS says “all tax software providers will be required to offer multi-factor authentication options on their products that meet higher standards [in 2021].” Despite generally being optional for users, it’s a good idea to enable MFA in your tax software—especially if you’re working remotely.

Source: IR-2020-170

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IRS Issues Guidance on Recapturing Excess Employment Tax Credits

IRS Issues Guidance on Recapturing Excess Employment Tax Credits

IRS Issues Guidance on Recapturing Excess Employment Tax Credits

The Internal Revenue Service has issued new guidance to reconcile advance payments of refundable employment tax credits and recapture the benefit of those credits when needed.

The guidance is provided in a temporary regulation and a proposed regulation.

The regulations authorize the IRS to assess erroneous refunds of the credits paid under both the Families First Coronavirus Response Act (known as the Families First Act) and the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act.

In general, the Families First Act requires employers with fewer than 500 employees to provide paid sick leave for up to 80 hours and paid family leave for up to 10 weeks if an employee is unable to work – or telework – due to COVID-19. Eligible employers are entitled to fully refundable tax credits to cover the cost of the leave to be paid.

The CARES Act provides additional relief, allowing an additional credit for employers who experience economic hardship due to COVID-19. Eligible employers who pay qualified wages to their employees are entitled to a credit for employee retention.

The IRS is revising employment tax credit forms.

The IRS is in the process of revising Form 941, Form 943, Form 944, and Form CT-1. The changes will allow employers to use the returns to claim paid sick and family leave and the employee retention credits.

The agency is also creating a new form, Form 7200, Advance Payment of Employer Credits due to COVID-19, that can be used by employers to request an advance of the credits. If the request is granted, the qualified employer can get advance payment of the credits up to the total allowable amounts.

Employers are required to reconcile any advance payments claimed on Form 7200 with the total credits claimed and total taxes due on their employment tax returns.

An erroneous refund is defined by the IRS as “any refund of these credits paid to a taxpayer that exceeds the amount the taxpayer is allowed.” The IRS says it must seek repayment in those cases.

For more information on employer credits, check out Employer Tax Credits on IRS.gov.

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IRS Commissioner Praises Tax Pros for Handling “Challenging” Tax Season

IRS Commissioner Praises Tax Pros for Handling “Challenging” Tax Season

IRS Commissioner Praises Tax Pros for Handling “Challenging” Tax Season

Internal Revenue Service Commissioner Chuck Rettig had high praise for the nation’s tax professionals this week, as he addressed the IRS Nationwide Tax Forum.

The event, usually held in various cities around the U.S., was forced online this year by the pandemic.

In their coverage of the event, Accounting Today’s Editor-in-Chief, Michael Cohn reports Rettig thanked tax practitioners for their cooperation during the extended tax season. He said while many tax professionals had a challenging tax season, for many, it’s not over yet. Until the October 15 deadline passes, Rettig added, there are still returns to be filed.

Kindred Spirit

Rettig was a tax practitioner himself before taking the reins of the IRS some two years ago, and his remarks show he hasn’t forgotten his roots.

“I think it’s important at the outset to thank all of you for the critical support you provided this filing season, and every year,” Rettig said. “As tax professionals, you play an essential role in the tax system by helping your clients fulfill their filing obligations. We should never forget how important your efforts are to tax administration, and to our country.”

Cohn writes that the commissioner also thanked tax pros for the input the IRS has gotten from them on a number of issues. He stressed that the IRS does indeed pay attention – whether or not the agency follows the recommendations.

“There are reasons why the IRS may not fully change into something that you might think would be obvious. It’s a big operation, a federal agency with a lot of different responsibilities, but that doesn’t mean that we don’t listen and pay attention to suggestions that people have,” Rettig said. “So your efforts to try to help us are well received and will never be lost on us.”

When he was a tax professional, Rettig remembered, he thought that tax administration doesn’t belong to anyone. He still thinks that, he said, but the real answer is wider now. “It belongs to everyone, so the IRS has been laboring more on trying to get it right. I think that as tax professionals we all have a piece of that responsibility.”

Entering the Virtual World

The commissioner is “excited” about the IRS’ future, Accounting Today reports. Cohn writes that Rettig points with pride to the agency’s swivel to telework during the early weeks of the pandemic, when some 56,000 workers were working from home, out of a total workforce of about 80,000.

Furthermore, Rettig said, the IRS developed two additional online tools during the pandemic that   more fully use virtual access to personal tax information. The Non-Filers tool allows people who normally do not have an obligation to file taxes the ability to enter basic information so they could get their Economic Impact Payments (EIPs) more quickly. The Get My Payment tool lets many taxpayers check the status of their payments.

Rettig conceded that many people still have yet to get their EIP – a common complaint probably heard by many tax pros as well. While some may point to instances when the system broke down, Rettig said, the employees of the agency did a great job to get payments to the right people in millions of cases.

“We are working hard to get to the people that we have not gotten to yet in terms of payment,” Commissioner Rettig said. “There are some scenarios that did not come together as we would have hoped they would have come together, but I think it’s disrespectful to say to the employees of the Internal Revenue Service, considering the effort that they put forth from March to try to get this right.”

Next up on the agenda, Cohn reports, is a new round of stimulus legislation and the commissioner expects the IRS to repeat its distribution role. “And we will. We will do it as successfully as we can, and we will put everything back into place,” Rettig said. “To be on board during this period of time has been spectacular to watch it happen.”

Our thanks to Michael Cohn and Accounting Today for their original article. 

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IRS: e-File is Available for Form 8300

IRS: e-File is Available for Form 8300

IRS: e-File is Available for Form 8300

Many taxpayers may have collectively breathed a sigh of relief on July 16, but anyone selling big-ticket items between now and the end of 2020 will still need to report large cash transactions. The Internal Revenue Service says these reports can be batch e-filed, which should make life a little easier for the car dealerships and real estate agents who are likely to be affected by the requirement.

“Although businesses have the option of filing Form 8300, Report of Cash Payments Over $10,000, on paper, many have already found the free and secure e-filing system is a more convenient and cost-effective way to meet the reporting deadline,” the IRS says. “The form is due 15 days after a transaction, and there’s no charge for the e-file option.”

The IRS notes that those who previously relied on paper forms will first need to create an account with the FinCEN BSA E-Filing System before being able to e-file Form 8300, highlighting available support lines in the announcement:  

  • Phone: 866-346-9478 (Monday-Friday, 8:00 a.m. – 6:00 p.m. EST)
  • Email: bsaefilinghelp@fincen.gov

In addition to the added convenience, the IRS explains that reporting these cash transactions helps combat financial crimes, like tax evasion and money laundering.

How does the IRS define cash transactions for the purposes of Form 8300?

In FS-2020-11, the IRS defines cash as “coins and currency of the United States or any foreign country” and “cash equivalents that include cashier’s checks (sometimes called a treasurer’s check or bank check), bank drafts, traveler’s checks, or money orders.”

When a payment is made with multiple forms of cash, transaction will still need to be reported if the sum reaches the $10,000 threshold, is made within a 24-hour period, and is “part of a single transaction or two or more related transactions within a 12-month period.”  

Here are some of the transactions specifically listed:

  • Automobiles
  • Jewelry
  • Mobile homes
  • Furniture
  • Collectibles

The IRS says you should file a Form 8300 if you “[know] the person is trying to avoid the reporting requirement.”

Source: IR-2020-168; FS-2020-11

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Working Virtually Campaign Highlights “Security Six”

Working Virtually Campaign Highlights “Security Six”

Working Virtually Campaign Highlights "Security Six"

The IRS this week published the first installment of the Security Summit’s annual data security outreach campaign: “Working Virtually: Protect Tax Data at Home and at Work.” Taking place over five weeks, this year’s event—as the title suggests—focuses on how to keeping data safe when working from home. Focusing on remote work is particularly timely given the resumption of more stringent social-distancing policies across the country.

Remember, identity thieves have been trying to crowbar their way into tax professionals’ client databases for years. After all, paid tax return preparers handle sensitive financial information—the larger the office, the riper the target. (If that wasn’t bad enough, criminals use stolen preparer credentials to fraudulently file tax returns.)

What is the Security Summit?

In 2015, the IRS, state departments of revenue, and private members of the tax industry established the Security Summit. Their goal was to develop best practices for teaching tax professionals and taxpayers to avoid identity theft tax refund fraud.

Security Summit outreach campaigns have since helped substantially cut the number of tax-related identity theft scams. The IRS notes in the press release announcing this year’s topics that there has been a 80% drop in reported incidents in the intervening years—even more impressive considering there are more adults with access to the Internet than when the Summit’s work began.

What are the “Security Six” recommendations?

The first week of the “Working Virtually: Protect Tax Data at Home and at Work” campaign is dedicated to spreading awareness of the “Security Six,” a list of six proactive steps anyone can take to protect their data. You will probably recognize a few of the recommendations.

Antivirus software tops the list, and it’s probably the one that is familiar to most people. These programs certainly offer out-of-the-box protection against older malware, but the criminals writing computer viruses aren’t content to rest on their laurels. The IRS says that you need to need to regularly download updates for your antivirus and perform both automatic and manual scans to gain the full benefit of these programs.

Firewalls filter Internet traffic for your computer or network, and they come in two flavors: hardware and software. Hardware firewalls “are particularly useful for protecting multiple computers and control the network activity that attempts to pass them,” and software firewalls perform that function for individual devices. Generally, operating systems include a firewall, but third-party programs are available.   

Multi-factor authentication requires users to enter more than one security code to access the protected device. “Often [multi-factor] authentication means the returning user must enter credentials (username and password) plus another step, such as entering a security code sent via text to a mobile phone,” the IRS explains. “The idea is a thief may be able to steal the username and password but it’s highly unlikely they also would have a user’s mobile phone to receive a security code and complete the process.”

Backup software and services store a copy of your computer files in a separate location. This protection lets you restore all of the files that would otherwise be lost on a damaged or malware-compromised hard drive. Considering the rise in ransomware—criminal-created programs that lock access to infected computers—having a regularly updated backup is a very good idea. The IRS also recommends that you encrypt any taxpayer data that you back up.

Drive encryption makes life difficult for criminals by “[transforming] data on the computer into unreadable files for an unauthorized person accessing the computer to obtain data.” Anyone who has seen a documentary about encoded wartime messages is familiar with the basic concept. As with firewalls, the IRS says there are hardware- and software-based solutions.

Virtual Private Networks are the final “Security Six” recommendation, and the IRS says they’re the most important tool for anyone working from home. “A VPN provides a secure, encrypted tunnel to transmit data between a remote user via the Internet and the company network,” the IRS explains. “Search for “Best VPNs” to find a legitimate vendor; major technology sites often provide lists of top services.”

Source: IR-2020-167

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IRS Announces New Security Summit Remote-Work Campaign

IRS Announces New Security Summit Remote-Work Campaign

IRS Announces New Security Summit Remote-Work Campaign

Many states are rolling back reopening plans, and the looming flu season could present additional complications. That’s why the Internal Revenue Service and Security Summit partners are developing a five-week data security campaign that focuses on remote work.

“To help tax practitioners, the IRS, state tax agencies, and the nation’s tax industry, next week will begin a five-part summer awareness initiative called Working Virtually: Protecting Tax Data at Home and at Work,” the IRS explains in the press release from last Friday. “The initiative highlights security actions key to protecting tax professionals as they respond to COVID-19 while working remotely from their office and clients. Taxpayers can also benefit from some of the security tips.”

What are the Working Virtually: Protecting Tax Data at Home topics?

Tax professionals who closely follow the Security Summit will recognize the five Working Virtually: Protecting Tax Data at Home topics that are scheduled to drop on July 21, July 28, August 4, August 11, and August 18:

  • “The ‘Security Six’ − basic protections that all practitioners should take”
  • “Multi-Factor Authentication to protect accounts”
  • “Virtual Private Networks to protect remote sites”
  • “Phishing scams, including COVID-19 and Economic Impact Payments”
  • “Protect Yourself: The need for a security plan and data theft plan”

It might seem quaint that people would need to be reminded to install security software, but the IRS notes that the Security Summit’s campaigns have significantly helped taxpayers: “Between 2015 and 2019, the number of taxpayers reporting they were identity theft victims to the IRS fell 80%, and the number of confirmed identity theft returns stopped by the IRS declined by 68%. In 2019, there were 443,000 confirmed identity theft tax returns compared to 1.4 million in 2015.”

(Besides, I’m sure everyone knows at least one person who rarely updates their virus definitions—if they even have an antivirus program installed at all.)

Aside from learning about the benefits of additional security measures like multi-factor authentication and VPNs, the final week in the series promises to explain tax office security plans. For those who aren’t familiar, paid tax return preparers are covered by the Federal Trade Commission’s Safeguards Rule. It requires that you have a written security plan in place that outlines your office’s procedures for protecting client data and addressing security breaches if they occur.

The Virtual Nationwide Tax Forums will also highlight data security.

The IRS says the first Virtual Nationwide Tax Forums will be available from July 21 to August 20, and “tax professional security will be a special focus.” Registration costs $289 per person—don’t forget to visit the Drake Software virtual booth during the event!

Source: IR-2020-163

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