New IRS Form for PAC. There is a new IRS Form for a PAC, which stands for Political Action Committee. See IRS Code Section 501(c)(4).
Congress enacted legislation at the end of 2015. Congress added section 506 to the Internal Revenue Code. Section 506 requires an organization to notify the IRS of its intent to operate as a section 501(c)(4) organization.
501(c)(4) & 501(c)(3)
A 501(c)(4) organization may be known as a political action committee or a PAC. In Florida, they may be known as ECOs or electioneering communication organizations. Contributions to PACs are generally exempt from taxation to the PAC. However, many taxpayers believe that PACs and charitable organizations organized under section 501(c)(3) are exempt from tax. This is not the case because they may be subject to income tax on their earnings if they sell products, or the Net Investment Income tax if they have passive income from stocks, bonds or investments. Furthermore, charitable organizations may be subject to state sales taxes if they sell products.
FEC & Florida Elections Commission
The federal elections commission and the Florida elections commission are the entities that make rules regarding elections and campaigning in Florida and at the federal level. Depending on the campaign, a PAC or ECO could be subject to the rules of one or both. One notable rule is that a PAC cannot accept contributions from a non-US person.
IRS Form 8976.
The IRS has developed a brand new form – Form 8976 – that political organizations and political action committees should use to provide this notification. Form 8976 may only be submitted electronically. The Form 8976 – Electronic Registration System allows organizations to complete the notification process, keeps account information current and enables organizations to receive secure, digital communications from the IRS. A user fee of $50 must be submitted to Pay.gov to complete your organization’s notification.
Get an IRS Notice?
First, the IRS normally sends correspondence in the mail. Second, it sends millions of letters to taxpayers every year. As a result, keep these important points in mind if you get a letter or notice:
- Don’t Ignore It. You can respond to most IRS notices quickly and easily.
- Follow Instructions. Read the notice carefully. It will tell you if you need to take any action. In addition, be sure to follow the instructions. The letter will also have contact information if you have questions.
- Focus on the Issue. IRS notices often deal with a specific issue about your tax return or tax account. Your notice or letter will explain the reason for the contact and give you instructions on how to handle the issue.
- Correction Notice. If the IRS corrected your tax return, you should review the information provided and compare it to your tax return.
If you agree, you don’t need to reply unless a payment is due.
If you don’t agree, it’s important that you respond. Follow the instructions on the notice for the best way to respond. You may be able to call us to resolve the issue. Have a copy of your tax return and the notice with you when you call. Alternatively, if you choose to write, be sure to include information and any documents you want considered. Also, write your taxpayer identification number (Social Security number, employer identification number or individual taxpayer identification number) on each page of the letter you send. Mail your reply to the address shown on the notice. Allow at least 45 -60 days for a response.
If you don’t get the result you’re looking for, you may need professional assistance.
- Respond to Requests about the Premium Tax Credit. The IRS may send you a letter asking you to clarify or verify your premium tax credit information. You should follow the instructions on the letter. For more information about these letters, see the Understanding Your Letter 0012C page on IRS.gov/aca.
- You Don’t Need to Visit the IRS. You can handle most notices without visiting the IRS. If you have questions, call the phone number in the upper right corner of the notice. Have a copy of your tax return and the notice when you call.
- Keep the Notice. Keep a copy of the IRS notice with your tax records.
- Watch Out for Scams. Don’t fall for phone and phishing email scams that use the IRS as a lure. The IRS will contact you about unpaid taxes by mail first – not by phone. Be aware that the IRS does not initiate contact with taxpayers by email, text or social media.
Additional IRS Resources:
IRS YouTube Videos:
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Tax Pro Identity Theft. Beware of identity theft Targeting tax professionals. Cyber-criminals have a new scam. First, they control your computer remotely to file false tax returns. Second, they steal tax refunds. Furthermore, the criminals steal sensitive client information.
This scam is a big deal to the IRS. Therefore, these crimes pose a significant threat to tax professionals. What’s good for the goose…
As a result, tax pros should consider the following steps to prevent Tax Pro Identity Theft.
- Run a virus scan to search for viruses and malware.
- Strengthen passwords.
- Chose a password with at least least 8 characters.
- The password can have a mix of numbers, letters and special characters.
- Be alert for phishing scams.
- Do not click on links or open attachments from unknown senders.
- Educate staff members about the dangers of phishing scams, emails, texts and calls.
Furthermore, review software that your employees use to remotely access your network. Review the practices of your IT support vendors. Review the practices of any vendor that remotely troubleshoots your systems. Remote access software is a potential target for bad actors to gain entry and take control of a machine.
In addition, review IRS Publication 4557 Safeguarding Taxpayer Data, A Guide for Your Business. The guide provides a checklist to help safeguard taxpayer information and enhance office security.
In conclusion, Our firm represents tax return preparers in these cases. We have helped Preparers accused by the IRS of stealing client refunds. We helped establish the theft was the result of cyber-criminals.
We’ve learned that the IRS may have difficulty in tracing the IP addresses of the criminals. Furthermore, the IRS may believe that the fraud originated from the tax preparer’s office. In fact, the criminals may have accessed the office computers remotely. This is hard to trace.
Also, the refunds can’t be traced in many cases. For example, criminals may send the refunds to a temporary address in the form of pre-paid debit cards.
The IRS could shut down the preparer’s EFIN account. The IRS may also send revenue agents to investigate and impose preparer and promoter penalties.