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Saturday January 18, 2020

Washington News

Washington Hotline

Summertime IRS Tax Tips

In IR-2019-124, the Service offers helpful tax tips for the summer. During this season, many Americans will get married, buy a home, take a summer job or volunteer and make gifts to a favorite charity. With all these summertime events, you may benefit from understanding the potential tax planning options.
  1. Just Married - When you marry, you may take a new name or address. You should contact the Social Security Administration to change your name and ensure proper credit for future retirement benefits. Your address change should be reported to the U.S. Post Office, your employer and the IRS.
  2. Children in Day Camp - While overnight camps do not qualify for the Child and Dependent Care Credit, IRS Publication 503, Child and Dependent Care Expenses, may show you how to qualify for the credit for your children's day camp expenses.
  3. Summer Jobs - Many Americans of all ages will earn extra income from a summer job. Even if you do not earn enough to pay federal income tax, your employer will withhold Social Security and Medicare taxes. If you are employed, your employer will send you a W-2, Wage and Tax Statement, by January 31 of the next year. If you are self-employed, you will need to file and pay the self employment, Social Security and Medicare taxes.
  4. Itemized Deductions - With the large standard deductions for 2019 ($12,200 for individuals and $24,400 for married couples), only about 10% of taxpayers are likely to itemize deductions. However, if you do plan to itemize, you will benefit from an understanding of the itemized deduction rules. State and local tax deductions are limited to $10,000. Mortgage interest on new loans up to $750,000 ($1 million on loans created before December 15, 2017) is deductible on a primary or second home.
Charitable deductions may include gifts of cash, stock, land or other property. The Interactive Tax Assistant on IRS.gov can help you determine if your gifts are deductible. Cash gifts are generally deductible, although you need a receipt or contemporaneous written acknowledgment for gifts over $250. Property gifts of land, stock, household goods or vehicles have specific rules. Some of the higher value gifts may require an appraisal to be deductible. The IRS.gov website has extensive resources and information for you to be certain you will receive full benefits from your gifts of property.

Tax Security for Tax Professionals

In response to increased cyber attacks on CPAs, enrolled agents and other tax preparers, the IRS Security Summit published guidelines on safeguarding your data. These guidelines are designed to thwart the steadily-more-sophisticated attacks by cyber thieves on tax professionals.

The IRS Security Summit reports significant success in reducing consumer identity theft, following increased focus on publishing warnings to consumers and taking internal actions to reduce tax refund fraud. The IRS reports a decline in confirmed identity theft from 1.4 million returns in 2015 to 649,000 returns in 2018.

However, as cyberthieves are thwarted in their efforts to steal consumer identities, many scammers have decided to target tax professionals. If the cyberthief can obtain access to files of a tax professional, he or she can file large numbers of fraudulent tax returns with the stolen identities.

To assist tax professionals in protecting client data, the IRS published a five part plan for data security. The initial letter (IR-2019-122) includes a checklist called "Taxes-Security-Together."
  1. Basic Security Fundamentals - All tax professionals should use anti-virus software, maintain a server firewall, select two-factor authentication when available, back up client records daily, encrypt local and network hard drives and use virtual private networks for remote access.
  2. Data Security Plans - Tax-professionals are required by federal law to maintain a client record security plan. The plan should cover employee training, detecting any security breach and taking steps to correct a breach that has been discovered.
  3. Preventing Email Scams - Because email scams continue to become more sophisticated each year, keep current on the latest spear phishing methods and ransomware attacks.
  4. Recognize Client Data Theft - Watch for client reports of suspicious tax return filings or excessive numbers of returns filed with your Electronic Filing Identification Number.
  5. Data Theft Recovery Plan - If you have a client data theft, contact the IRS Stakeholder Liaison and obtain assistance from a cybersecurity consultant to safeguard your network.

Daines Bill to Stop $6.6 Billion in Excessive Conservation Easement Deductions

On July 11, Sen. Steve Daines (R-MT) reported that his bill, the Charitable Conservation Easement Program Integrity Act of 2019 (CCEPIA), had been scored by the Joint Committee on Taxation (JCT). The JCT "scores" tax legislation by estimating the revenue or expenditure impact. Daines reported the JCT score for CCEPIA is a revenue increase of $6.6 billion.

During the past three years, there has been a substantial increase in the number of syndicated partnerships who acquire land, sell interests to investors, deed a conservation easement to a qualified nonprofit and pass through large charitable deductions to the partners.

For these syndicated conservation easement partnerships, CCEPIA would set a maximum tax deduction of a multiple of 2.5 of the investment amount for each partner. This deduction maximum is substantially lower than the deductions that have been claimed for a number of syndicated partnerships.

Daines supported the bill and noted, "My bipartisan bill will protect this critical conservation tool by stopping abuse from bad actors. The massive $6.6 billion revenue estimate shows that, despite previous IRS guidance, abuses have continued and it demonstrates the need to bring integrity back to this program so this can be used for years to come."

Several conservation organizations also support limits on syndicated partnership conservation easement deductions. Glenn Marx is Executive Director of the Montana Association of Land Trusts. He noted, "Clearly a small number of bad actors are abusing the concept of charitable donations and also abusing U.S. taxpayers, and clearly Congress needs to pass S. 170, The Charitable Conservation Easement Program Integrity Act."

Andrew Bowman is President and CEO of the Land Trust Alliance. He commented, "This revenue estimate uses the best available data to illustrate how dramatically taxpayers have been bilked by bad actors abusing a system our nation established to encourage charitable giving. The nearly $7 billion estimate represents the known amount of abuse since 2016. If even more abuse comes to light, that number will surely grow. While the IRS has made combating abusive deals and enforcement priority, Congressional action is urgently needed."

Applicable Federal Rate of 2.6% for July -- Rev. Rul. 2019-16; 2019-28 IRB 1 (18 June 2018)

The IRS has announced the Applicable Federal Rate (AFR) for July of 2019. The AFR under Section 7520 for the month of July is 2.6%. The rates for June of 2.8% or May 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 2019, pooled income funds in existence less than three tax years must use a 2.2% deemed rate of return.

Published July 12, 2019
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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."

Juliana E. Olsen-Valdez, 2018
Carroll Family Scholarship

"Lawrence University is a great place for students looking to embrace their multi-interested approach to learning. As a Geology major, I have spent many long hours in laboratories. But, I have also had the opportunity to organize and lead students on outdoor backpacking trips, help build a stronger community for International students, participate in dialogues on campus initiatives, attend dozens of musical events, and study abroad in a field-based geology program, all while taking classes in a variety of academic spheres on campus. Lawrence, as an institution and student body, creates a collective of learners, listeners, and leaders who are continuously evolving their understanding of the world around them. I am fortunate to have the support of the Carroll Family Scholarship, so that I can say I am a part of this exceptional community too!"

Weiqi "Vicky" Liang, 2019
Marian H. Cuff Endowed Scholarship

"Lawrence is a special institution with nice people around the campus. I better myself by trying out different things and using new ways to think critically. Even though I am a Philosophy major, I have successfully taken classes in Anthropology, Biology, Economics, and Government. In addition, I still find many great extracurricular opportunities to explore, such as singing with Viking Chorale, even though I am not a music major. While having the great experience of volunteering at the elderly center last year, I became an elder advocacy coordinator at the Volunteer Community Service Center. At Lawrence, I've learned to handle difficult academic problems while looking forward to exploring possible opportunities. I am very grateful to be awarded the Marian H. Cuff Endowed Scholarship for every year I have been here, and appreciate that the scholarship has provided this wonderful Lawrence experience to me."

Anthony Cardella, 2018
Ansorge Family Scholarship

"I am so excited that I am able to attend Lawrence University. I know that I will make great progress studying piano with Dr. Michael Mizrahi. Since being at Lawrence I've already made a lot of progress and I really love it here. I am so grateful for the Ansorge Family Scholarship that made it possible for me to come to Lawrence because without it, I might not have been able to afford the cost of attending a school that is a great fit for me and a place where I will learn so much and go so far."

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

Angela Small Fry Intia, 2019
Maurine Campbell Scholarship

"Thanks to the Maurine Campbell scholarship, I have been able to attend the amazing school that is Lawrence University. With the help from this scholarship, I have been able to pursue my dream career in chemistry working with the outstanding and extremely helpful faculty here. Even outside of chemistry I take the time for exploration into my interests and want to give back through my work as a resident life advisor, stock room assistant, and student supervisor at Bon Appetit. Everything I have learned here, academically or not has forever molded the person I am today."

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