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Thursday March 22, 2018

Washington News

Washington Hotline

Securing Your Personal Data

In IR-2018-51, the Service offered tips for data security. Because all taxpayers and professional advisors have data stored on personal and network computers, it is important to understand basic steps to protect data. These steps also reduce the risk of identity theft by making it more difficult for a tax thief to acquire your tax and financial information.
  1. Personal Information - You should protect your Social Security Number, credit card numbers, bank numbers and other financial information. Provide this information only as needed and be careful to limit the information provided when possible. Save your passwords in a secure location or use a password software program with encryption to record your passwords. If you use a password software program, you also should give your software account password to your personal representative or executor.
  2. Phishing Scams - Scammers are using emails, phone calls and texts to ask for financial information. They have tricked victims into releasing their Social Security Numbers, bank account numbers, credit card information and personal passwords. Do not click on email links or attachments if you do not personally know the sender. On commercial websites, be careful when clicking on ads or offers. Even when you are on a familiar news or finance site, commercial ads may lead to sites with much lower security standards.
  3. Strong Passwords - Do not use "admin" or "password" or your name as your password. Use a 10 to 12 character password and create different passwords for your various logins. Mix upper and lower case letters with numbers. Some passwords require the use of a special character such as an asterisk or exclamation point. The large number of different accounts and passwords required for a typical person is another reason to use an encrypted password program to record all of your user accounts and passwords.
  4. Security Software - You should have security software on all desktop and notebook computers. Security software is usually updated each day when you connect to the internet. It should be set to automatically update. Your security software can protect you from viruses, spyware, adware and ransomware.
  5. Backup Files - All of your important data should be regularly backed up. This includes your tax records, financial documents, estate planning documents and other key information. You may use a USB flash drive to back up files. It should be stored in a secure location. Another option is to use a secure internet service.

IRS Warnings and Watch List

Each year during the tax filing season, the IRS publishes warnings for taxpayers. These warning are useful guides to protect taxpayers from the latest scams. This week, the Service shared five specific warnings.
  1. Big Refund Promise - IR-2018-48 cautions taxpayers to avoid preparers who promise large federal tax refunds. These preparers use "flyers, advertisements, phony storefronts or word of mouth to attract victims. They may even make presentations through community groups or churches." An honest preparer will not claim zero wages or file phony IRS Forms. Check the "IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications" to review the background and qualifications of your tax preparer.
  2. False Income to Claim Tax Credits - IR-2018-55 warns against increasing your income to claim a larger Earned Income Tax Credit (EITC). Some tax preparers "provide fraudulent Forms 1099-MISC that appear to be issued by a large bank, loan service and/or mortgage company with which the taxpayer may have had a prior relationship." You can protect yourself from tax preparers making these false claims by researching them on www.IRS.gov/ChooseaTaxPro.
  3. Improper Business Credits - IR-2018-49 cautions taxpayers not to take false research credits or fuel tax credits. The research credit is available if you have a "process of experimentation using science with a goal of improving a product or process." It excludes "research after commercial production, adaptation of an existing business product or process, foreign research and research funded by the customer." The fuel tax credit is available for off-highway or farm vehicles. Most taxpayers do not qualify for either credit.
  4. Padding Deductions - IR-2018-54 warns taxpayers not to inflate itemized deductions. These may include business expenses, disaster losses or charitable deductions. While all of these may be qualified deductions, overstating the amounts can lead to additional tax and penalties. Using a qualified preparer or tax software will help protect you and ensure the correct deduction amounts are reported.
  5. Fake Charity - IR-2017-47 cautions donors about gifts to scammers who pretend to be a qualified charity. Some scammers will use names similar to qualified and respected charities. A qualified charity will make available its Employer Identification Number (EIN). This number may be used on the "Exempt Organization Select Check" section of www.IRS.gov.

"Grain Glitch" Solution in Sight

On March 13, House and Senate lawmakers announced a solution for the "Grain Glitch" error in drafting Sec. 199 of the Tax Cuts and Jobs Act (TCJA). In one of the final drafts of the TCJA, a provision was inserted intending to enable farmers to benefit if they sold grain to a farm cooperative.

However, the result of this benefit for farm cooperatives was that independent grain elevator operators would be quickly put out of business. Farmers could not receive the same tax benefit when selling to independent operators and, therefore, they would not sell grain to these business owners.

After extended negotiations involving both farm cooperatives and the independent operators, a compromise was announced by Sen. John Hoeven (R-ND) and Senate Finance Committee Chairman Orrin Hatch (R-UT). The compromise is designed to place the farm cooperative and the independent grain elevator operators on a level playing field. Sen. Hatch stated it would "restore balanced competition within the marketplace."

The compromise restores the Sec. 199 benefit rule for cooperatives with provisions "substantially similar" to prior law.

The National Council of Farmer Cooperatives (NCFC) and National Grain and Feed Association (NGFA) jointly approved the compromise. NCFC President Chuck Conner stated, "We would also like to recognize the tireless efforts of Sens. John Thune of South Dakota and John Hoeven of North Dakota to ensure fair treatment for farmer co-ops and their member owners. They have brought together both sides and fostered an atmosphere that has made today's proposal possible."

Editor's Note: This compromise may be attached to the budget bill that is expected to be passed during March. As the American Institute of CPAs (AICPA) noted in a nineteen-page letter to Congress, the TCJA needs many more technical corrections to fix problem provisions. The "Grain Glitch" compromise is likely to be followed with other corrective actions. Congress will attempt to pass a TCJA technical corrections bill in 2018.

Applicable Federal Rate of 3.2 for April -- Rev. Rul. 2018-9; 2018-13 IRB 1 (16 Mar 2018)

The IRS has announced the Applicable Federal Rate (AFR) for April of 2018. The AFR under Section 7520 for the month of April is 3.2%. The rates for March of 3.0% or February of 2.8% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2018, pooled income funds in existence less than three tax years must use a 1.4% deemed rate of return. Federal rates are available by clicking here.

Published March 16, 2018
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Shelby Harder, 2018
Dr. Irving Auld and Dorothy
Roher Auld Scholarship

"Many students take for granted what a university has to offer. However, I am thankful every single day for the opportunity to attend this prestigious school. At Lawrence, you have the ability to engage in Socratic debates about the world we live in at dinner, play recreational or NCAA sports, and talk one on one with brilliant professors. At Lawrence, you don't just 'learn' a subject, you are immersed in it. You dive into the liberal arts and these professors show you the beauty in it all, and how everything is tied together. I am a Biochemistry major with a soft spot for rocket science, philosophy, and evolution. Lawrence is my dream school, and it would have never been possible without the Dr. Irving Auld and Dorothy Roher Auld Scholarship. I am forever grateful for their generosity."

Max Loebl, 2017
Grace Gates Scholarship and Schade Family Scholarship

"Lawrence has been a life changing opportunity. My experience here is made possible by the Grace Gates Scholarship and the Schade Family Scholarship. I will always be grateful for the generosity that made my life at Lawrence a reality. I am incredibly thankful for the amazing education and lifelong connections I have made here. Beyond a doubt, my time at Lawrence has been a multifarious experience; playing varsity soccer, working in the Volunteer and Community Service Center, and now serving as the President of the Lawrence University Community Council. The times spent at Lawrence will be carried with me and cherished for the rest of my life."

Magdalen D'Alessio, 2017
Lillian Seybold Wells Memorial Scholarship

"Hello, my name is Magdalen D'Alessio, I'm majoring in Psychology and minoring in Education Studies and History. I am extremely thankful to be a recipient of the Lillian Seybold Wells Memorial Scholarship as I have been able to further my education and pursue my extracurricular interests, including Dance Team, and participating in the many International programs offered on campus. I'm really glad to be able to attend Lawrence and hope to expand my knowledge of the world even further! In the near future, I plan to conduct an independent study regarding the relationship between the government and school systems and the importance of parental involvement!"

Joe Johnson, 2017
Amy Aplin Larsen Scholarship

"The Amy Aplin Larsen Scholarship has allowed me to pursue tons of opportunities at Lawrence as part of a liberal arts education. I have been able to take classes from close to a dozen different academic departments, perform in ensembles and theatre productions, and take part in shaping the Lawrence community. Regardless of what field I may go into, the connections I have made here at Lawrence with staff, faculty, and friends have been invaluable. Thank you!"

Milwaukee-Downer Scholarships and Professorships

Some of the many recipients of Milwaukee-Downer scholarships gather for a photo with Carolyn King Stephens M-D'62 and Marlene Crupi-Widen M-D'55 in January 2014 at the annual scholarship luncheon.

Rosamund Victoria Bille Adler Scholarship
Dr. Charles E. Albright Scholarship
Helen Daniels Bader Scholarship
James G. and Ethel M. Barber Scholarship
Catharine Beecher Endowed Fund for Downer Women
Bessie A. Bell Scholarship
Berk Scholarship
Frederick C. Best Scholarship
Beta Study Club Scholarship
Lynde Bradley Scholarship
Lucia R. Briggs-Alumnae Scholarship
Edith Lange Brooks Scholarship
Anne Barman Caldwell Scholarship
Alice Miller Chester Scholarship
City of Milwaukee Student Funds Scholarship
Milwaukee-Downer Class of 1940 Fund
Milwaukee-Downer Class of 1942 Fund
College Endowment Association Scholarship
Janet Cope Crawford Scholarship
Jessie Mabbott Daniels Scholarship
F. T. Day Scholarship
Rufus Dodge Scholarship
Julia P. Ely and Hannah R. Vedder Memorial Scholarship
General Endowed Scholarship - M-D College
Dr. Alfred W. and Mrs. Ada F. Gray Scholarship
Berenice E. Hess Scholarship Endowment
Lucille Ray Hibbard Scholarship
Belle Austin Jacobs Scholarship
Helen McDermott Jurack and Ronald J. Mason Scholarship
Marjorie S. Logan Scholarship
Nellie Maxwell Scholarship
S. Annabelle & Paul McGuire Scholarship
Memorial Scholarship Fund - Milwaukee-Downer
Milwaukee-Downer Class of 1953 Scholarship
Milwaukee-Downer Class of 1955 Scholarship
Milwaukee-Downer Class of 1956 Scholarship
Milwaukee-Downer Class of 1957 Scholarship
Milwaukee-Downer Class of 1958 and 1959 50th Reunion Scholarship
Milwaukee-Downer Club Scholarship
Milwaukee-Downer/Lawrence College Consolidation 50th Anniversary Scholarship
Francis Evelyn Kelley Morgan Memorial Scholarship
O'Neill-Anderson Family Scholarship Endowment
Elizabeth A. Olson Scholarship
Gilbert Haven Peirce, Sr. and Emma Elizabeth Manor Peirce Milwaukee-Downer Scholarship
Aleida J. Pieters Scholarship
Matilda Siefert Puelicher Scholarship
Elizabeth Ann Richardson Scholarship
William M. Ross Memorial Scholarship
Elizabeth Rossberg Scholarship
Charles Frederic Sammond Scholarship
Mildred L. Schroeder Scholarship
Sivyer Educational Fund for Women
Marion Merrill Smith Scholarship
Dr. Elizabeth A. Steffen Scholarship
W. Mead and Elizabeth McKone Stillman Scholarship
Strzelczyk Family Scholarship
Clare Scherf Sweetman Scholarship
Raymond H. and Jane K. Taylor Scholarship
Jerline E. Walfoort Memorial Scholarship
Barbara E. Wehr Fund
Harmony Weissbach Scholarship
Martha and Frances Wheelock Scholarship
James G. and Ethel M. Barber Professorship of Theatre and Drama
T. A. Chapman Professorship in Music
Alice G. Chapman Professorship in Physics
Alice G. Chapman Librarianship
Milwaukee-Downer College and College Endowment Association Professorship

Kaitlin Yorde, 2017
Maurine Campbell Endowed Scholarship

"I am so thankful to be a recipient of the Maurine Campbell Scholarship. I am the first person in my family to attend a four-year college, and this would not be possible without the scholarships I receive. At Lawrence there are so many wonderful opportunities and learning experiences available. This summer I was able to participate in research in my field and have also been able to get involved with the Appleton community through ESL tutoring at the Fox Valley Literacy Council. I am sure that the Lawrence education I have received will continue to benefit me for the rest of my life!"

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