Definitions — Statistics and Acronyms

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So what’s new with the IRS?

You’ve probably heard about the updated IRS web site, with its enhanced search features, and Notice 2017-47, which provides penalty relief to partnerships that missed the new March filing deadline. If the partnership didn’t file a return or request an extension by March 15, but did either by April 17, the partnership can get penalty relief (and not first-time abatement).

The Treasury Inspector General (TIGTA) released a report recently too, with information about IRS activities. The report is here.

One of the IRS activities TIGTA follows involves IRS compliance with the Currency and Foreign Transactions Reporting Act of 1970. You know this law as the Bank Secrecy Act. Can you name one reporting requirement banks must meet under the act?

 

TIGTA also reports on the integrity of IRS employees. In one case, an employee used access to the IRS database that contains remittance processing data and images, such as the front and back of a cancelled check from a taxpayer. Do you know what that IRS database is called?

 

The TIGTA report also says that between October 2013 and March 31, 2017, TIGTA logged more than 1.9 million contacts from taxpayers who reported that they had received telephone calls from individuals who claimed to be IRS employees. These impersonators want to obtain “PII” from taxpayers. Do you know what “PII” is?

 

 

The IRS released the 2017 update to Publication 6961 this week. Publication 6961 provides calendar year projections of information and withholding documents. For example, Publication 6961 reports that the grand total number of information and withholding documents filed in calendar year 2016 was 2.9 billion. After 2016, the grand total number of information and withholding documents filed is projected to grow at an average annual rate of 2%. At that rate, can you estimate how many returns are projected to be filed by calendar year 2025?

 

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Note: Taxing Lessons provides a summarized version of sometimes lengthy court decisions. The full case may include facts and issues not presented here. Please use the link provided in the post to read the entire case.

This information should not be considered legal, investment, or tax advice. Taxing Lessons and Top Drawer Ink Corp. do not provide legal, investment, or tax advice. Always consult your legal, investment, and/or tax advisor regarding your personal situation.

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The Currency and Foreign Transactions Reporting Act of 1970, also referred to as the Bank Secrecy Act, requires U.S. financial institutions to file reports of currency transactions exceeding $10,000.

Section 5324(a) of the Bank Secrecy Act states that no person shall, for the purpose of evading the reporting requirements, cause or attempt to cause a U.S. financial institution to fail to file a report required or structure. Whoever violates the structuring law can be fined, imprisoned, or both.

Any property involved in violation of this law may be seized and forfeited.

The Remittance Transaction Research (RTR) system. According to the Internal Revenue Manual, the RTR system provides access to remittance processing data and images, which generally include the front and back of a cancelled check or money order from a taxpayer, and a voucher if submitted with the payment.

The employee obtained RTR printouts of cancelled checks made payable to the U.S. Treasury Department and other personal information submitted by taxpayers to the IRS.

He disclosed the information to his co-conspirator, providing the co-conspirator with the printouts and social security numbers of at least three taxpayers for use in fraudulent activities. The co-conspirator used the illegally obtained information to breach taxpayers’ bank accounts, obtain money, and commit other financial fraud against the taxpayers and the IRS. The employee received a portion of the proceeds from the co-conspirator.

The employee was sentenced to two months in prison, followed by two years of supervised release. His supervised release will include two months of home detention, and he will participate in Moral Reconation Therapy.

Moral reconation therapy is a type of cognitive behavioral therapy used to decrease recidivism among criminal offenders by increasing moral reasoning.

Personally identifiable information.

PII is taxpayer information or any combination of information that can be used to uniquely identify, contact, or locate a person. Laws require that the IRS protect PII, tax returns, and return information for different reasons, most notably the protection of privacy. Moreover, the loss, theft, or unauthorized disclosure of taxpayer PII or tax return information places individuals at serious risk of identity theft.

Examples of PII include, but are not limited to:
Names
Home addresses
Social Security numbers
Date of birth
Home telephone numbers
Biometric data (height, weight, eye color, fingerprints, etc.)
Other numbers or information that alone or in combination with other data can identify an individual.

Failure to protect PII could result in disciplinary action for employees and managers.

After 2016, the grand total number of information and withholding documents filed is projected to grow at an average annual rate of 2%, reaching 3.6 billion by 2025.

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