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Monday October 18, 2021

Washington News

Washington Hotline

New Non-Filers Online Tool for Advance Child Tax Credits

Code for America Labs, Inc. (Code for America) is a California nonprofit that is developing a "permanent, multi–lingual, and mobile–friendly sign-up tool" to help Americans receive the advance child tax credit (ACTC). The new online tool may help an estimated four million families who qualify for the ACTC but are not currently receiving payments.

The nonprofit is working with the Department of Treasury to create the new online non-filer tool. David Newville is the Code for America Senior Program Director for Tax Benefits. He indicates that the new tool is designed to work equally well on computers, tablets and smartphones.

The new tool is part of a government effort to reach eligible families who generally do not file tax returns but have eligible dependent children. Newville noted, "We are doing an all–out effort . . . to reach all families." The tool has been developed with the assistance of many computer experts who have donated their time.

The new non-filers online tool will be located at GetCTC.org. The tool will not be a smartphone app on the Apple App Store or Google Play but can easily be accessed using the browser on smartphones or tablets.

Newville commented, "The biggest thing we are focused on now is managing the rejected applications." Many qualifying individuals have not filed tax returns. Some have been victims of identity theft or other issues and are uncertain if they qualify for the ACTC.

One organization has conducted searches of individuals experiencing homelessness and identified many who are eligible for payments. These individuals need assistance from a bank or a nonprofit to receive payments electronically or through the mail.

Newville concluded, "You really do need that human touch if you are going to convert non-filers to filers. We are not going to reach all four million families this year."

The Department of the Treasury supports the new software program. Deputy Treasury Secretary Wally Adeyemo stated, "We want every eligible family to have access to the Advance Child Tax Credit, which is why we will continue our outreach efforts to drive enrollment as children return to school."

The second batch of ACTC payments was sent on August 15. About 36 million families received payments that totaled $15 billion. The payments are $300 per month for children under age 6 and $250 per month for children ages 6 through 17.

If a family did not receive payments during July, the remaining payments will be made over five months. These families will receive checks for $360 per month for children under age 6 and $300 per month for children ages 6 through 17.

Senator Maggie Hassan (D–NH) sent a letter to the Internal Revenue Service urging the Department to be on the lookout for fraudsters who are taking child tax credits away from families. She asked the IRS to raise awareness about scams and take action to stop the scammers.

Senator Hassan stated, "We have already seen criminals try to impersonate IRS officials by sending unsolicited emails or calls urging families to sign up to receive their child tax credit. These types of phishing attacks allow scammers to gain identifying information about an individual and their family members."

Ten Signs of Client Identity Theft


In IR–2021–170, published on August 17, 2021, the IRS highlighted ten signs that help tax professionals determine fraudsters are attempting to steal data from clients.

IRS Commissioner Chuck Rettig stated, "There are tell–tale signs of identity theft that tax pros can easily miss. Identity thieves continue to look for ways to slip into the systems of tax pros to steal data. We urge practitioners to take simple steps and remain on the lookout for signs of data and identity theft."

The IRS Security Summit highlighted 10 signs that could indicate fraudsters are attempting to steal client identities.
  1. E-filed Returns Rejected — A client's Social Security Number has been previously used on a return and the current return is rejected.
  2. Multiple e-file Acknowledgments — The tax pro files multiple returns, but the IRS reports more returns received than were filed.
  3. Unexpected Client Responses — Clients send emails to the tax pro, even though the tax pro did not send an email to the client. The client is replying to an email from a scammer.
  4. Slow Computer Response — The computer or network used by the tax professional takes longer than usual to process returns. The computer cursor moves without action by the tax pro. Numbers change without action or the tax pro is locked out of a network or computer. All of these are signs that the system has been hacked by a fraudster.
  5. Client Reports IRS Letters — Some clients have reported to their tax pro that they have received letters from the IRS, even though they have not filed a tax return.
  6. Unexpected Refunds — The client reports that he or she has not yet filed but has already received a refund.
  7. Unexpected Tax Transcripts — The client did not request a tax transcript from the IRS, but one was received. It is probable that the fraudster has requested the tax return.
  8. Unexpected Calls or Emails — The client reports that he or she has received calls or emails from someone claiming to be the tax pro. These calls and emails were made by the fraudster.
  9. IRS Online Account Notice — The client explains that he or she did not initiate an online account, but the IRS has notified him or her that an online account was created.
  10. Unexpected Notice — The client receives a notice from the IRS that an individual has accessed their online account or the account has been disabled.
If a tax pro believes that he or she has had contact with a scammer or fraudster, this should be reported to the local IRS Stakeholder Liaison. It is essential to report any fraud as quickly as possible, so the IRS can block processing of fraudulent returns. The tax pro can also email the Federation of Tax Administrators at Statealert@taxadmin.org.

The IRS has revised and updated IRS Publication 4557, Safeguarding Taxpayer Data. This publication and "Small Business Information Security: The Fundamentals," by the National Institute of Standards and Technology are invaluable for all tax pros.

Senators Ask TIGTA to Review IRS Exemption Procedures


On August 16, 2021, 13 senators wrote to Russell George, the Treasury Inspector General for Tax Administration (TIGTA). The Senators asked for a review of IRS procedures with respect to granting tax–exempt status.

The senators were concerned that the IRS was not following appropriate exemption procedures, particularly for religious organizations. Staff from the senators' offices had recently engaged in a discussion with IRS officials to discuss exemption processes and procedures. The meeting was the result of an initial denial of exemption for a religious organization. The senators stated "that the quality control measures on which our staff were briefed have failed."

The IRS exempt status procedures include multiple steps. There is an initial review of the application, engagement with the organization, approval or denial of tax–exempt status, an opportunity to protest the proposed denial, a final approval or disapproval of exempt status and an appeal process.

The letter notes that "Agents are trained to process applications in a neutral fashion, void of politics or agents' personal beliefs, and with adherence to the law and the facts of each application."

The senators expressed concern that there was "perceived hostility" toward the religious nonprofit. They stated, "An organization's particular religious character, affiliation, or exercise should have no bearing on the IRS's determination of such organization's qualification for tax–exempt status. It is not the role of the IRS or any other government agency to deny an otherwise available public benefit to an organization on account of its religious status."

The senators asked TIGTA to review the IRS Exempt Organizations policies, the training of personnel, the IRS conduct of the review process and the methods to avoid "inappropriate and offensive normative and political commentary."

Editor's Note: Your editor takes no specific position on this letter. This information is offered as a service to our readers because it outlines many of the basic steps involved for an organization to obtain exempt status.

Applicable Federal Rate of 1.0% for September -- Rev. Rul. 2021-16; 2021-36 IRB 1 (15 Aug 2021)


The IRS has announced the Applicable Federal Rate (AFR) for September of 2021. The AFR under Section 7520 for the month of September is 1.0%. The rates for August of 1.2% or July of 1.2% 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 2021, pooled income funds in existence less than three tax years must use a 2.2% deemed rate of return.

Published August 20, 2021
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