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TIGTA: Business ID theft needs more attention

The IRS should more closely scrutinize business tax returns using employer identification numbers (EINs) it knows or suspects are associated with fictitious businesses, the Treasury Inspector General for Tax Administration (TIGTA) said (Rep't No. 2015-40-082). As it has done with respect to individual returns, the IRS has acted to better detect fraudulent returns using stolen business identities. However, 233 business returns were filed during 2014 using a "known suspicious EIN." Ninety-seven of these returns claimed refunds totaling more than $2.5 million. The IRS should develop processing filters to prevent issuance of refunds in such cases, TIGTA said. In addition, the Service's information-sharing agreements with state revenue agencies currently address identity theft only from individuals but should include businesses as well. (See also "Tax Practice Corner: Businesses and Tax ID Theft," JofA, Dec. 2015, page 70.)

FUTA higher in Calif., Conn., Ohio, and Virgin Islands

Because they have failed to repay an outstanding balance on federal unemployment insurance loans for multiple years, California, Connecticut, Ohio, and the U.S. Virgin Islands are subject to reduced maximum credits against FUTA (Federal Unemployment Tax Act) tax for 2015, the U.S. Department of Labor provided in a schedule (available at Thus, employers in the states and territory are subject to a higher minimum effective rate of FUTA tax than elsewhere. For employers in California, Ohio, and the Virgin Islands claiming the (reduced) maximum credit for amounts paid into state unemployment funds, the resulting rate is 2.1% of the first $7,000 of covered wages paid per employee during the calendar year (i.e., up to $147 per employee). For Connecticut employers, the corresponding rate is 2.7%, or up to $189 per employee. For employers in the rest of the nation—including those in several states that would have been subject to higher rates, except that those states repaid their loans before Nov. 10—the corresponding rate is 0.6%, or $42 per employee.

Mortgage assistance safe harbors are extended

In Notice 2015-77, the IRS extended through 2017 a safe harbor for deductions related to home mortgages for which payments are made under certain programs to or on behalf of financially distressed homeowners. The notice also extends a safe harbor and penalty relief for reporting of the assistance by mortgage servicers and state housing finance agencies (state HFAs). Notice 2011-14 provided the safe harbor for eligible taxpayers to deduct mortgage interest, real property taxes, and mortgage insurance premiums paid with respect to their principal residence during tax years 2010 through 2012, or, if less, the amount the homeowner actually paid during the tax year to the mortgage servicer or state HFA. The taxpayer must otherwise meet the requirements under Secs. 163 and 164 to deduct all of the mortgage interest and all real property taxes on the residence and must be participating in a state program whose payments can be applied to interest on the mortgage. Notice 2013-7 extended the safe harbors through 2015.


Get your clients ready for tax season

Upon its enactment in March, the American Rescue Plan Act (ARPA) introduced many new tax changes, some of which retroactively affected 2020 returns. Making the right moves now can help you mitigate any surprises heading into 2022.


Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.