etrent17/irs-articles huggingface dataset:
IR-2021-226, November 16, 2021
WASHINGTON – The Internal Revenue Service today announced that, effective Nov. 15, 2021, tax professionals are able to order up to 30 Transcript Delivery System (TDS) transcripts per client through the Practitioner Priority Service® line. This is an increase from the previous 10 transcripts per client limit.
"Increasing the number of transcripts a caller can receive addresses the concerns the IRS has received from PPS callers. This is another example of addressing concerns from our partners and stakeholders," said Ken Corbin, the Wage and Investment Commissioner and the IRS Taxpayer Experience Officer.
Through PPS, tax professionals can order a variety of transcripts. Practitioners can receive transcripts for up to five clients per call. There's no change to the number of clients.
Transcripts available under this newly-expanded limit include the:
Tax Return Transcript,
Tax Account Transcript,
Wage and Income Transcript,
Record of Account and
Verification of Non-Filing Letter.
Transcripts not listed above continue to be limited to 10 per client and count toward the total of 30 transcripts per client.
Tax professionals will continue to receive TDS transcripts in their e-Services Secure Object Repository mailboxes. The change also applies to other IRS toll-free lines.
Ordering transcripts online
Tax practitioners can continue to order TDS transcripts using the Transcript Delivery System application on IRS.gov. Individual taxpayers can request their own TDS transcripts using Get Transcript. These tools remain the fastest way to receive transcripts.
More information is available at Transcript Types and Ways to Order Them on IRS.gov.
IR-2021-225, November 16, 2021
WASHINGTON — The Internal Revenue Service today issued Notice 2021-63PDF to make clear how the temporary 100% business deduction for food or beverages from restaurants applies to taxpayers properly applying the rules of Revenue Procedure 2019-48PDF for using per diem rates.
Previously, the IRS issued Notice 2021-25PDF providing guidance under the Taxpayer Certainty and Disaster Relief Act of 2020, which added a temporary exception to the 50% limit on the amount that businesses may deduct for food or beverages. The temporary exception allows a 100% deduction for food or beverages from restaurants, as long as the expense is paid or incurred in 2021 or 2022.
For a taxpayer properly applying the rules of Revenue Procedure 2019-48, Notice 2021-63 provides a special rule that allows the taxpayer to treat the full meal portion of a per diem rate or allowance as being attributable to food or beverages from a restaurant beginning January 1, 2021, through December 31, 2022.
Taxpayers should refer to section 6.05 of Revenue Procedure 2019-48 to determine the meal portion of a per diem rate or allowance paid or incurred.
More information for businesses seeking coronavirus-related tax relief can be found at IRS.gov.
IR-2021-223, November 15, 2021
WASHINGTON – The Internal Revenue Service today launched a new online tool designed to help U.S. withholding agents comply with their reporting and withholding responsibilities with respect to IRS Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding.
The tool performs a quality review of data before submission to the IRS. Use of the tool does not change a withholding agent's obligations to file Forms 1042-S with the IRS and furnish a copy of the Form 1042-S to the payee.
"U.S. withholding agents play an important role in helping the IRS administer the tax code so we are delighted to be able to provide this tool free of charge to assist agents in meeting their filing requirement," said Nikole Flax, IRS Large Business and International division commissioner.
About the tool
In general, withholding agents, such as banks, insurance companies, universities, entertainment venues and resorts, or other financial institutions must file an information return on Form 1042-S to report amounts paid from U.S. sources to foreign persons. The definition of a withholding agent includes any person, U.S. or foreign, that has control, receipt or custody of amounts that are subject to the rules under Internal Revenue Code Chapter 3 (Withholding of Tax on Nonresident Aliens and Foreign Corporations) or Chapter 4 (Taxes to Enforce Reporting on Certain Foreign Accounts, i.e. FATCA or the Foreign Account Tax Compliance Act).
The tool is designed to accept Form 1042-S data in common file formats that can be generated by most withholding agents' back office systems. After uploading the data, the user will receive a report indicating errors and potential errors. A tutorial on how to use the tool can be viewed online or downloaded.
Even though the tool identifies data errors, the withholding agent remains responsible for making changes to the data on the agent's system of record before submission to the IRS. The list of resources below will help agents understand and correct errors before submitting the Forms 1042-S.
The tool can be used as many times as necessary on new or revised data. The IRS has no access to the users' data. Use of the tool is voluntary, but the IRS will take into account a withholding agent's use of the tool when making enforcement and penalty determinations.
Help spread the word
The IRS urges information reporting and withholding industry experts and withholding agents to share this critical information with any withholding agents that may benefit from using this tool.
Nonresident alien withholding resources
Form 1042-S, instructions in PDF or HTML and any recent updates
Form 1042, instructions in PDF or HTML and any recent updates
Publication 1187, Specifications for Electronic Filing of Form 1042-S, Foreign Person's U.S. Source Income Subject to WithholdingPDF
Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
IR-2021-221, November 12, 2021
WASHINGTON — The Internal Revenue Service today updated its frequently-asked-questions (FAQs) on 2020 Unemployment Compensation Exclusion.
These updated FAQs (FS-2021-14)PDF are:
Question 2, Topic D: Amended Return (Form 1040-X) 
Questions 8 & 9, Topic G: Receiving a Refund, Letter, or Notice 
Question 3, Topic I: Post Unemployment Compensation Exclusion Adjustment.
These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.
More information about reliance is available.
IRS-FAQ
IR-2021-220, November 10, 2021
WASHINGTON — The Internal Revenue Service published its Financial Report on IRS.gov today. This new report provides the American people with a comprehensive view of the IRS's financial activities as well as the accomplishments of its finance management community.
In fiscal year 2021, the IRS managed more than $4.1 trillion in tax revenue, $1.1 trillion in refunds and $658 billion in unpaid assessments, as well as the resources that support its mission. In addition, Congress and both Administrations entrusted the IRS with $2.4 billion in supplemental funding to support the nation's recovery from the COVID-19 pandemic.
"The IRS disbursed an unprecedented $1.1 trillion to Americans in fiscal year 2021," said Teresa Hunter, IRS Chief Financial Officer. "To implement legislative requirements resulting in the expedient roll out of Economic Impact Payments, COBRA, Premium Tax Credit changes and the advanced Child Tax Credits, we overcame significant barriers. I'm proud of the finance management community's hard work and dedication," she said. "We strive for excellence in reporting and will continue to ensure taxpayer dollars are managed with integrity and accuracy."
For more information see Publication 5456, IRS FY 2021 Financial ReportPDF.
IR-2021-218, November 9, 2021
WASHINGTON — The Internal Revenue Service today updated frequently-asked-questions (FAQs) for the 2021 Child Tax Credit and Advance Child Tax Credit Payments to describe how taxpayers can now provide the IRS an estimate of your 2021 income using the Child Tax Credit Update Portal (CTC UP).
These FAQs updatePDF the Advance Child Tax Credit Topic A FAQs by adding a new question, question 17 and Topic F FAQs by adding new questions, questions 2 through 6.
These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.
More information about reliance is available.
Additional Advance Child Tax Credit information
The IRS has created a special Advance Child Tax Credit Payments in 2021 page designed to provide the most up-to-date information about the credit and the advance payments. It's at IRS.gov/childtaxcredit2021.
The IRS encourages partners and community groups to share information and use available online tools and toolkits to help non-filers, low-income families and other underserved groups sign up. People can check their eligibility by using the Advance Child Tax Credit Eligibility Assistant.
The webpage features a set of frequently asked questions. It also provides direct links to the portal, as well as two other online tools – the Non-filer Sign up Tool and the Child Tax Credit Eligibility Assistant – and other useful resources.
IRS-FAQ
IR-2021-215, November 3, 2021
WASHINGTON — The Internal Revenue Service today posted detailed reporting directions for certain passthrough entities and taxpayers reporting of partnership interests held in connection with the performance of services, often referred to as "carried interests," in the form of frequently asked questions (FAQs).
The FAQs contain sample worksheets that certain passthrough entities and taxpayers may be required to use in reporting "carried interests," partnership interests held in connection with the performance of services for tax returns, filed after December 31, 2021 in which a passthrough entity applies the final regulations.
In addition, the FAQs contain additional instructions for certain passthrough entities and taxpayers who though not required to file the sample worksheets must provide similar information and must disclose whether the information was determined under the proposed regulations or another method for tax returns filed after December 31, 2021 for a taxable year beginning before January 19, 2021.
A 2017 tax law change recharacterized certain net long-term capital gains of a partnership that holds one or more applicable partnership interest (APIs) as short-term capital gains. The provision generally requires that a capital asset be held for more than three years for capital gains allocated with respect to any API to be treated as a long-term capital gain.
The purpose of the FAQs is to provide guidance relating to both Passthrough Entity filing and reporting requirements and Owner Taxpayer filing requirements in accordance with Department of the Treasury regulations revised in TD 9945PDF.
This updated reporting guidance will also be added to the next revision of Publication 541, PartnershipsPDF, which will be released in 2022.
IR-2021-212, November 1, 2021
WASHINGTON — The Internal Revenue Service recently sent approximately 430,000 refunds totaling more than $510 million to taxpayers who paid taxes on unemployment compensation excluded from income for tax year 2020.
The IRS efforts to correct unemployment compensation overpayments will help most of the affected taxpayers avoid filing an amended tax return. So far, the IRS has identified over 16 million taxpayers who may be eligible for the adjustment. Some will receive refunds, while others will have the overpayment applied to taxes due or other debts.
The American Rescue Plan Act (ARPA) of 2021, enacted in March, excluded the first $10,200 in unemployment compensation per taxpayer paid in 2020. The $10,200 is the amount excluded when calculating one's adjusted gross income (AGI); it is not the amount of refund. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.
Earlier this year, the IRS began its review of tax returns filed prior to the enactment of ARPA to identify the excludible unemployment compensation. To date, the IRS has issued over 11.7 million refunds totaling $14.4 billion. This latest batch of corrections affected over 519,000 returns, with 430,000 taxpayers receiving refunds averaging about $1,189.
The review of returns and processing corrections is nearly complete as the IRS already reviewed the simplest returns and is now concentrating on more complex returns. The IRS plans to issue another batch of corrections before the end of the year.
Impacted taxpayers will generally receive letters from the IRS within 30 days of the adjustment, informing them of what kind of adjustment was made (refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.
The IRS also is making corrections for Earned Income Tax Credit, Additional Child Tax Credit, American Opportunity Credit, Premium Tax Credit and Recovery Rebate Credit amounts affected by the exclusion. Most taxpayers need not take any action and there is no need to call the IRS.
The IRS will be sending notices in November and December to individuals who did not claim the Earned Income Tax Credit or the Additional Child Tax Credit but may now be eligible for them.
These notices are not confirmation that they are eligible for these credits and will require a response from the taxpayer if eligible rather than filing an amended return. For taxpayers who become eligible for other credits and/or deductions after the exclusion is calculated but not claimed on their original return, they must file a Form 1040-X, Amended U.S. Individual Income Tax Return, to claim any new benefits.
See the 2020 Unemployment Compensation Exclusion FAQs for more information, including details on filing an amended return.
IR-2021-256, December 27, 2021
WASHINGTON — The Internal Revenue Service today reminded employers and self-employed individuals that chose to defer paying part of their 2020 Social Security tax obligation that a payment is due on January 3, 2022.
Most affected employers and self-employed individuals received reminder billing notices from the IRS. The agency noted, however, that those affected are still required to make the payment on time, even if they did not receive a bill.
As part of the COVID relief provided during 2020, employers and self-employed people could choose to put off paying the employer's share of their eligible Social Security tax liability, normally 6.2% of wages. Half of that deferral is now due on January 3, 2022, and the other half on January 3, 2023.
Under separate COVID relief, employers could choose to forgo withholding Social Security taxes from eligible employees, and instead withhold tax this year and then pay those amounts to the IRS. For details, visit What employers need to know about repayment of deferred payroll taxes on IRS.gov.
How to repay the deferred taxes
Employers and individuals can make the deferral payments through the Electronic Federal Tax Payment System or by credit or debit card, money order or with a check. To be sure these payments are credited properly, they must be made separately from other tax payments.
EFTPS has an option to make a deferral payment. On the Tax Type Selection screen, choose Deferred Social Security Tax and then change the date to the applicable tax period (typically, the calendar quarter in 2020 for which tax was deferred). Visit EFTPS.gov, or call 800-555-4477 or 800-733-4829 for details.
Individual taxpayers can also use Direct Pay, available only on IRS.gov. Select the "balance due" reason for payment. If paying with a debit or credit card, select "installment agreement." Apply the payment to the 2020 tax year where the payment was deferred.
IR-2021-253, December 21, 2021
WASHINGTON — The competent authorities of the United States and Malta signed a competent authority arrangement (CAA) confirming their understanding of the meaning of pension fund for purposes of the United States–Malta income tax treaty (Treaty). The competent authorities have entered into this agreement after becoming aware that U.S. taxpayers with no connection to Malta were misconstruing the pension provisions of the Treaty to avoid income tax on the earnings of, and distributions from, personal retirement schemes established in Malta.
The CAAPDF confirms the U.S. and Malta competent authorities' understanding that (except in the case of a qualified rollover from a pension fund in the same country) a fund, scheme or arrangement is not operated principally to provide pension or retirement benefits if it allows participants to contribute property other than cash, or does not limit contributions by reference to income earned from employment and self-employment activities. Because Maltese personal retirement schemes contain these features, they are not properly treated as a pension fund for Treaty purposes and distributions from these schemes are not pensions or other similar remuneration.
The IRS put taxpayers on notice earlier this year that it was reviewing the use of Maltese personal retirement schemes. The IRS is actively examining taxpayers who have set up these arrangements and recognizes that other taxpayers may have filed tax returns claiming Treaty benefits as a result of their participation in these arrangements. These taxpayers should consult an independent tax advisor prior to filing their 2021 tax returns and take appropriate corrective actions on prior filings.
The IRS also cautions taxpayers against entering into any substantially similar arrangements that would seek to misconstrue the provisions of a bilateral income tax treaty of the United States to avoid income tax. IRS enforcement, both the civil and criminal divisions, is committed to pursuing abuse and those who market and participate in abusive transactions.
The CAAPDF is available on IRS.gov and will be published in the Internal Revenue Bulletin.
IR-2021-251, December 17, 2021
WASHINGTON — The Internal Revenue Service today issued the 2022 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on January 1, 2022, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
58.5 cents per mile driven for business use, up 2.5 cents from the rate for 2021,
18 cents per mile driven for medical, or moving purposes for qualified active-duty members of the Armed Forces, up 2 cents from the rate for 2021 and
14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2021.
The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Moving Expenses for Members of the Armed Forces.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Taxpayers can use the standard mileage rate but must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.
Notice 22-03PDF, contains the optional 2022 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2022 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.
IR-2021-250, December 16, 2021
WASHINGTON – The Internal Revenue Service announced today that the publicly available data it provides on electronically filed Forms 990 in a machine-readable format will be available solely on the Tax Exempt Organization Search webpage.
Beginning December 31, 2021, the IRS will no longer update the Form 990 Series data on Amazon Web Services. This change is to provide access to public data for organizations with tax-exempt status in one location on IRS.gov on the Charities and Nonprofits webpage.
The Tax Exempt Organization Search Bulk Data Downloads webpage has multiple data sets of information about organizations' tax-exempt status and filings with instruction on how to download.
The Form 990 series data set includes XML and individual PDF files of Form 990, Return of Organization Exempt from Income Tax; Form 990-EZ, Short Form Return of Organization Exempt from Income Tax; and Form 990-PF, Return of Private Foundation and related schedules. The IRS redacts personally identifiable tax-identification numbers to prevent the data's misuse.
The Form 990 series returns are the primary tool for IRS to gather information about tax-exempt organizations and promote compliance with tax-law requirements. Organizations also use the Form 990 to share information with the public about their programs. Additionally, most states rely on the Form 990 to perform charitable and other regulatory oversight and to satisfy state income tax filing requirements for organizations claiming exemption from state income tax.
A tax-exempt organization must file an annual information return or notice with the IRS unless an exception applies. Annual information returns include Form 990, Form 990-EZ and Form 990-PF. Form 990-N (e-Postcard) is an annual notice.
For updates on TEOS and other issues related to charities and nonprofits, please subscribe to the Exempt Organization Update newsletter.
IR-2021-246, December 10, 2021
WASHINGTON – The Internal Revenue Service today updated frequently asked questions (FAQs) regarding the 2020 Recovery Rebate CreditPDF (FS-2021-17). Individuals who didn't get the full first and second Economic Impact Payments may be eligible to claim the 2020 Recovery Rebate Credit.
The first and second rounds of Economic Impact Payments were issued in 2020 and early 2021. The first two rounds of Economic Impact Payments were advance payments of the 2020 Recovery Rebate Credit claimed on a 2020 tax return.
Individuals who are missing the first or second stimulus payments should review the revised answers to determine their eligibility and whether they need to claim a Recovery Rebate Credit for tax year 2020. If they're eligible to claim the Recovery Rebate Credit, they will need to file a 2020 tax return if they have not filed yet or amend their 2020 tax return if it's already been processed.
These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible
More information about reliance is available.
More information on the Recovery Rebate Credit is available on IRS.gov.
IRS-FAQ
IR-2021-245, December 8, 2021
WASHINGTON — The Internal Revenue Service today reminded retirement plan participants and individual retirement account owners that payments, called required minimum distributions, must usually be taken by December 31.
Required minimum distributions (RMDs) generally are minimum amounts that retirement plan account owners must withdraw annually starting with the year they reach 72 or, if later, the year they retire. However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder is age 72, even if they're still working. RMD amounts not timely withdrawn from accounts may be subject to penalties.
Individuals who reached 70 ½ in 2019, (70th birthday was June 30, 2019 or earlier) did not have an RMD due for 2020, but will have to take one by December 31, 2021.
Individuals who reach 72 in 2021 (and their 70th birthday was July 1, 2019 or later) have their first RMD due by April 1, 2022.
The required distribution rules apply to:
Owners of traditional Individual Retirement Arrangements (IRAs)
Owners of traditional Simplified Employee Pension (SEP) IRAs
Owners of Savings Incentive Match Plans for Employees (SIMPLE) IRAs
Participants in various workplace retirement plans, including 401(k), Roth 401(k), 403(b) and 457(b) plans
Roth IRAs do not require distributions while the original owner is alive.
An IRA trustee, or plan administrator, must report the amount of the RMD to the IRA owner. An IRA owner, or trustee, must calculate the RMD separately for each IRA owned. However, they can choose to withdraw the total amount from one or more of the IRAs. In contrast, RMDs required from workplace retirement plans must be taken separately from each plan. Not taking a required distribution, or not withdrawing enough, could mean a 50% excise tax on the amount not distributed.
The RMD is based on the taxpayer's life expectancy and their account balance. Often, a trustee will use Form 5498, IRA Contribution Information, to report the RMD to the recipient. For most taxpayers, life expectancy used to calculate the RMD is based on Uniform Lifetime Table III in Publication 590-B, Distributions from IRAs. Individuals can use online worksheets on IRS.gov to figure the RMD.
2020 RMDs
An IRA owner or beneficiary who received an RMD in 2020 had the option of returning it to their account or other qualified plan to avoid paying taxes on that distribution. A 2020 RMD that qualified as a coronavirus-related distribution may be repaid over a 3-year period or have the taxes due on the distribution spread over three years. A 2020 withdrawal from an inherited IRA could not be repaid to the inherited IRA but may be spread over three years for income inclusion.
IRS online tools and publications can help
Taxpayers can find frequently asked questions, forms and instructions and easy-to-use tools at IRS.gov.
FAQs regarding Required Minimum Distributions
Individual Retirement Arrangements (IRAs)
Coronavirus Relief for Retirement Plans and IRAs
IR-2021-244, December 8, 2021
WASHINGTON — The Internal Revenue Service is seeking qualified applicants for nomination to the Electronic Tax Administration Advisory Committee (ETAAC).
The ETAAC is an organized public forum for discussion of issues in electronic tax administration, such as prevention of identity theft and refund fraud. The committee supports the overriding goal that paperless filing should be the preferred and most convenient method of filing tax and information returns. ETAAC members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and private-sector tax partners to fight electronic fraud.
The IRS is looking for up to 10 qualified individuals who will serve three-year terms beginning in September 2022. Applicants should have experience in such areas as state tax administration, cybersecurity and information security, tax software development, tax preparation, payroll and tax financial product processing, systems management and improvement, and implementation of customer service initiatives. The IRS also strongly encourages applications from people representing the viewpoints of average taxpayers, including consumer advocates and others with an interest in tax issues.
Applications will be accepted through January 31, 2022.
Nominations of qualified individuals may be made by letter and received from organizations or the individuals themselves. Applicants should complete the ETAAC application PDFand include a short statement of interest and a resume. Applicants should describe and document their qualifications, past and current affiliations, and dealings with cybersecurity and electronic tax administration.
Applicants must complete and submit a tax check waiver form and undergo an IRS practitioner background check and an FBI background check. Information on the tax check waiver and FBI background check will be provided upon receipt of application. More information can be found at: Apply for Membership on the Electronic Tax Administration Advisory Committee (ETAAC).
ETAAC is a Federal Advisory Committee established by the Internal Revenue Service Restructuring and Reform Act of 1998.
Questions about the ETAAC and the application process can be e-mailed to publicliaison@irs.gov.
IR-2021-242, December 6, 2021
WASHINGTON – The Internal Revenue Service today issued guidance for employers regarding the retroactive termination of the Employee Retention Credit. The Infrastructure Investment and Jobs Act, which was enacted on November 15, 2021, amended the law so that the Employee Retention Credit applies only to wages paid before October 1, 2021, unless the employer is a recovery startup business.
Notice 2021-65PDF applies to employers that paid wages after September 30, 2021 and received an advance payment of the Employee Retention Credit for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of 2021 but are now ineligible for the credit due to the change in the law. The notice also provides guidance regarding how the rules apply to recovery startup businesses during the fourth quarter of 2021.
Employers who Received Advance Payments
Generally, employers that are not recovery startup businesses and received advance payments for fourth quarter wages of 2021 will avoid failure to pay penalties if they repay those amounts by the due date of their applicable employment tax returns.
Employers who Reduced Employment Tax Deposits
Employers that reduced deposits on or before December 20, 2021, for wages paid during the fourth calendar quarter of 2021 in anticipation of the Employee Retention Credit and that are not recovery startup businesses will not be subject to a failure to deposit penalty with respect to the retained deposits if—
The employer reduced deposits in anticipation of the Employee Retention Credit, consistent with the rules in Notice 2021-24PDF,
The employer deposits the amounts initially retained in anticipation of the Employee Retention Credit on or before the relevant due date for wages paid on December 31, 2021 (regardless of whether the employer actually pays wages on that date). Deposit due dates will vary based on the deposit schedule of the employer, and
The employer reports the tax liability resulting from the termination of the employer's Employee Retention Credit on the applicable employment tax return or schedule that includes the period from October 1, 2021, through December 31, 2021. Employers should refer to the instructions to the applicable employment tax return or schedule for additional information on how to report the tax liability.
Due to the termination of the Employee Retention Credit for wages paid in the fourth quarter of 2021 for employers that are not recovery startup businesses, failure to deposit penalties are not waived for these employers if they reduce deposits after December 20, 2021.
If an employer does not qualify for relief under this Notice, it may reply to a notice about a penalty with an explanation and the IRS will consider reasonable cause relief.
More information for businesses seeking coronavirus-related tax relief can be found at IRS.gov.
IR-2020-26, January 31, 2020
WASHINGTON — The Internal Revenue Service announced today the overwhelming acceptance of a time-limited settlement offer made to certain taxpayers under audit who participated in abusive micro-captive insurance transactions.
Nearly 80% of taxpayers who received offer letters elected to accept the settlement terms. In addition, the IRS is establishing 12 new examination teams that are expected to open audits related to thousands of taxpayers in coming months.
"The overwhelming acceptance rate of the private settlement offer is a reflection of the success of the government's work to stop this abuse," said IRS Commissioner Chuck Rettig. "Taxpayers who elected to accept the IRS' terms have done the right thing by coming into compliance with their federal tax obligations and putting this behind them. Putting an end to abusive schemes is a high priority for the IRS."
Abusive micro-captives have been a threat to tax administration and a concern to the IRS for several years. The transaction has appeared on the IRS "Dirty Dozen" list of tax scams since 2014. In 2016, the Department of the Treasury and IRS issued Notice 2016-66PDF, which identified certain micro-captive transactions as having the potential for tax avoidance and evasion.
The settlement offer followed three U.S. Tax Court decisions confirming that certain micro-captive arrangements are not eligible for federal tax benefits. The terms of the settlement required substantial concession of the income tax benefits claimed by the taxpayer together with appropriate penalties.
The IRS will continue to vigorously pursue those involved in these and other similar abusive transactions going forward. Enforcement activity in this area is being significantly increased. To that end, the IRS is deploying additional resources, which includes standing up 12 new examination teams comprised of employees from the IRS Large Business and International and Small Business/Self-Employed divisions that will be working to address these abusive transactions and open additional exams. These teams will use all available enforcement tools, including summonses, to obtain necessary information.
Examinations impacting micro-captive insurance transactions of several thousand taxpayers will be opened by these teams in the coming months. Potential civil outcomes can include full disallowance of claimed captive insurance deductions, inclusion of income by the captive entity and imposition of all applicable penalties.
The IRS reminds taxpayers and advisors that disclosure of participation in micro-captive insurance transactions is required with the IRS Office of Tax Shelter Analysis under Notice 2016-66. Failure to properly disclose can result in significant civil penalties. Taxpayers involved in these abusive transactions should immediately consult with independent, competent tax advisors on the proper treatment for past and future tax years to consider best available options.
IR-2020-25, January 31, 2020
WASHINGTON — As part of an ongoing effort to improve service for the tax-exempt community, the Internal Revenue Service has revised Form 1023 to allow electronic filing for the first time starting later this month.
To help charities apply for Section 501(c)(3) tax-exempt status, the IRS has revised Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and its instructions.
"Filing electronically reduces errors, and we believe this will help provide a smoother application process for those seeking tax exemption," said Tammy Ripperda, Commissioner of the IRS Tax Exempt and Government Entities division. "As we've seen with the 1023-EZ, we believe this change will help with application processing time and help with our wider efforts to improve our work with the tax-exempt community."
The IRS expects the electronic Form 1023 benefits to mirror those realized when Form 1023-EZ went online in 2014. IRS statistics show the 1023-EZ improved application processing time for both the Form 1023 and 1023-EZ while maintaining similar approval and rejection rates between the two forms.
Beginning January 31, 2020, applications for recognition of exemption on Form 1023 must be submitted electronically online at Pay.gov. The IRS will provide a 90-day grace period during which it will continue to accept paper versions of Form 1023 (Rev. 12-2017).
The required user fee for Form 1023 will remain $600 for 2020. Applicants must pay the fee through Pay.gov when submitting the form. Payment can be made directly from a bank account or by credit or debit card.
Updates about Form 1023 can be obtained by subscribing to Exempt Organizations Update, a free e-Newsletter from the IRS Exempt Organizations' office. EO Update provides information on tax policy, services and information that's important to tax-exempt organizations including:
News releases from the IRS related to exempt organizations
New forms, guidance and other publications
Changes and additions to the IRS Charities and Nonprofits webpage
Upcoming IRS training and outreach events
Additional information on how to apply for IRS recognition of tax-exempt status is available:
Applying for Tax-Exempt Status on IRS.gov
Form 1023 Electronic Filing Overview presentation on StayExempt.irs.gov
Applying for 501(c)(3) Status course on StayExempt.irs.gov
IR-2020-24, January 30, 2020
WASHINGTON ― The Internal Revenue Service wants seniors to know about the availability of a new tax form, Form 1040-SR, featuring larger print and a standard deduction chart with a goal of making it easier for older Americans to read and use.
The Bipartisan Budget Act of 2018 required the IRS to create a tax form for seniors. Taxpayers age 65 or older now have the option to use Form 1040-SR, U.S. Tax Return for Seniors. Form 1040-SR, when printed, features larger font and better readability.
Taxpayers who electronically file Form 1040-SR may notice the change when they print their return. More than 90% of taxpayers now use tax software to prepare and file their tax return.
Taxpayers born before January 2, 1955, have the option to file Form 1040-SR whether they are working, not working or retired. The form allows income reporting from other sources common to seniors such as investment income, Social Security and distributions from qualified retirement plans, annuities or similar deferred-payment arrangements.
Seniors can use Form 1040-SR to file their 2019 federal income tax return, which is due April 15, 2020. All lines and checkboxes on Form 1040-SR mirror the Form 1040, and both forms use all the same attached schedules and forms. The revised 2019 Instructions cover both Forms 1040 and 1040-SR.
Eligible taxpayers can use Form 1040-SR whether they plan to itemize or take the standard deduction. Taxpayers who itemize deductions can file Form 1040-SR with a Schedule A, Itemized Deductions, when filing their return. For those taking the standard deduction, Form 1040-SR includes a chart listing the standard deduction amounts, making it easier to calculate. It also ensures seniors are aware of the increased standard deduction for taxpayers age 65 and older.
Married people filing a joint return can use the Form 1040-SR regardless of whether one or both spouses are age 65 or older or retired.
Both the 1040 and the 1040-SR use the same "building block" approach introduced last year that can be supplemented with additional Schedules 1, 2 and 3 as needed. Many taxpayers with basic tax situations can file Form 1040 or 1040-SR with no additional schedules.
IR-2020-23, January 28, 2020
WASHINGTON – The Internal Revenue Service wants tax-exempt organizations to know about recent tax law changes that might affect them. The Taxpayer Certainty and Disaster Tax Relief Act, passed on December 20, 2019, includes several provisions that may apply to tax-exempt organizations' current and previous tax years.
Repeal of "parking lot tax" on exempt employers
This legislation retroactively repealed the increase in unrelated business taxable income by amounts paid or incurred for certain fringe benefits for which a deduction is not allowed, most notably qualified transportation fringes such as employer-provided parking. Previously, Congress had enacted this provision as part of the Tax Cuts and Jobs Act, effective for amounts paid or incurred after December 31, 2017.
Tax-exempt organizations that paid unrelated business income tax on expenses for qualified transportation fringe benefits, including employee parking, may claim a refund. To do so, they should file an amended Form 990-T within the time allowed for refunds. More information on this process can be found at IRS.gov.
Tax simplification for private foundations
The legislation reduced the 2% excise tax on net investment income of private foundations to 1.39%. At the same time, the legislation repealed the 1% special rate that applied if the private foundation met certain distribution requirements.
The changes are effective for taxable years beginning after December 20, 2019.
Exclusion of certain government grants by exempt utility co-ops
Generally, a section 501(c)(12) organization must receive 85% or more of its income from members to maintain exemption.
Under changes enacted as part of the Tax Cuts and Jobs Act, government grants are usually considered income and would otherwise be treated as non-member income for telephone and electric cooperatives. Under prior law, government grants were generally not treated as income, but as contributions to capital.
The 2019 legislation provided that certain government grants made to tax-exempt 501(c)(12) telephone or electric cooperatives for purposes of disaster relief, or for utility facilities or services, are not considered when applying the 85%-member income test. Since these government grants are excluded from the income test, exempt telephone or electric co-ops may accept these grants without the grant impacting their tax-exemption.
This legislation is retroactive to taxable years beginning after 2017.
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IR-2020-21, January 28, 2020
WASHINGTON — With just a few days remaining until the deadline, the Internal Revenue Service reminds employers and other businesses that January 31 is the filing deadline for submitting wage statements and forms for independent contractors with the government.
Employers must file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31. The January 31 deadline also applies to certain Forms 1099-MISC, Miscellaneous Income, filed with the IRS to report non-employee compensation to independent contractors.
This deadline helps the IRS fight tax fraud by making it easier to verify income reported on individual tax returns. The IRS no longer grants an automatic extension of time to file Form W-2. Requests for more time to file must be submitted before the due date. Only certain reasons, such as a death or natural disaster are allowed. Details can be found on the instructions for Form 8809, Application for Extension of Time To File Information Returns.
Failure to file these forms correctly and timely may result in penalties. The IRS recommends employers and other businesses to e-file as the quickest, most accurate and convenient way to file these forms.
Taxpayers: Steps to take if no W-2
Most taxpayers get their Form W-2, Wage and Tax Statement, by the end of January. Taxpayers need their W-2s to file accurate tax returns, as the form shows an employee's income and taxes withheld for the year.
Taxpayers who haven't received their W-2 by the end of February should, as a first step, contact their employer. Taxpayers should ask their current or former employer for a copy of their W-2. Be sure the employer has the correct address. Additional information for taxpayers is available at IRS.gov.
IR-2020-19, January 27, 2020
WASHINGTON — The Internal Revenue Service has provided relief to financial institutions that were expected to provide required minimum distribution (RMD) statements to IRA owners by January 31, 2020.
Notice 2020-6PDF clarifies that if an RMD statement is provided for 2020 to an IRA owner who will turn age 70½ in 2020, the IRS will not consider the statement to be incorrect, but only if the financial institution notifies the IRA owner no later than April 15, 2020, that no RMD is due for 2020.
The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) changed the age for which an RMD is first required from age 70½ to 72. Under prior law, financial institutions would have needed to notify IRA owners who attained age 70½ in 2020 about their 2020 RMDs by January 31, 2020.
The IRS encourages all financial institutions, in communicating these RMD changes, to remind IRA owners who reached age 70½ in 2019, and have not yet taken their 2019 RMDs, that they are still required to take those distributions by April 1, 2020.
IR-2020-17, January 22, 2020
WASHINGTON — With the start of the 2020 tax filing season near, the Internal Revenue Service is reminding taxpayers to avoid unethical "ghost" tax return preparers.
According to the IRS, a ghost preparer does not sign a tax return they prepare. Unscrupulous ghost preparers will print the return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost will prepare but refuse to digitally sign as the paid preparer.
By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number, or PTIN. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a fast buck by promising a big refund or charging fees based on the size of the refund.
Ghost tax return preparers may also:
Require payment in cash only and not provide a receipt.
Invent income to qualify their clients for tax credits.
Claim fake deductions to boost the size of the refund.
Direct refunds into their bank account, not the taxpayer's account.
The IRS urges taxpayers to choose a tax return preparer wisely. The Choosing a Tax Professional page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help identify many preparers by type of credential or qualification.
Free basic income tax return preparation with e-file is available to qualified individuals from IRS-certified volunteers at Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites across the country. For more information and to find the closest visit Free Tax Return Preparation for Qualifying Taxpayers on IRS.gov
No matter who prepares the return, the IRS urges taxpayers to review it carefully and ask questions about anything not clear before signing. Taxpayers should verify both their routing and bank account number on the completed tax return for any direct deposit refund. And taxpayers should watch out for ghost preparers inserting their bank account information onto the returns.
Taxpayers can report preparer misconduct to the IRS using IRS Form 14157, Complaint: Tax Return PreparerPDF. If a taxpayer suspects a tax preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct AffidavitPDF.
IR-2020-16, January 17, 2020
WASHINGTON — The IRS announced today that the agency has become aware of limited circumstances in which it may be appropriate to provide relief from double taxation resulting from application of the repatriation tax under section 965, as amended by the Tax Cuts and Jobs Act (TCJA).
The IRS has determined that in unique circumstances, such as where a corporation paid an unusual dividend for business reasons, not because of the enactment of TCJA, it may be appropriate to provide relief from double taxation. When the same earnings and profits of foreign corporations are taxed both as dividends and under section 965, double taxation could result.
The IRS is open to considering relief from such double taxation where there is no significant reduction in the resulting tax by application of foreign tax credits, such that the taxpayer would be required to pay more tax than it would have if the dividend had not been paid.
Taxpayers who have fact patterns that may fit these limited circumstances may raise them with the IRS by contacting the Office of Associate Chief Counsel (International) at 202-317-3800.