IRS Tax News

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  • 14 Mar 2024 3:05 PM | Anonymous

    WASHINGTON ― With the April 15 filing deadline approaching, the Internal Revenue Service encourages taxpayers who may find it difficult to gather the necessary documents they need to file or pay the taxes they owe to consider several options offered on IRS.gov to avoid late filing and interest penalties.

    This is the last in a four-part series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. As taxpayers approach the April 15 deadline, those who owe taxes can benefit from knowing their options.

    Eligible individuals and families who earned $79,000 or less in 2023 can use IRS Free File on IRS.gov, to electronically file their taxes. But all taxpayers, regardless of income, who need more time to file a return can use IRS Free File as an easy and quick way to electronically file for a six-month extension before April 15, 2024. An extension will help to avoid penalties and interest for failing to file on time, and gives taxpayers until Oct. 15, 2024, to file. However, they still must pay what they owe by the April 15 deadline.

    Except for eligible victims of recent natural disasters who have until Oct. 15 to make tax payments, taxpayers who can’t pay the full amount of taxes they owe by April 15 should file and pay what they can to reduce total penalties and interest.

    There are multiple ways to make electronic payments and there are options for a payment plan or an agreement with the IRS.

    IRS Online Account

    An IRS Online Account provides taxpayers access to important information when preparing to file a tax return, pay a balance or follow up on notices. Taxpayers can view their information online including:

    • Adjusted Gross Income.
    • Payment history and any scheduled or pending payments.
    • Payment plan details.
    • Digital copies of select notices from the IRS.

    Taxpayers can also use their Online Account to securely make a same-day payment for an outstanding 2023 tax balance, pay quarterly estimated taxes for the 2024 tax season or request an extension to file a 2023 return.

    Interest and a late payment penalty will apply to any payments made after April 15. Making a payment, even a partial payment, will help limit penalty and interest charges.

    Other electronic options

    Direct Pay, available at IRS.gov, is the fastest, easiest way to make a one-time payment without signing into an IRS Online Account.

    • Direct Pay: Direct Pay is free and allows taxpayers to securely pay their taxes directly from their checking or savings account without any fees or registration. Taxpayers can schedule payments up to 365 days in advance. After submitting a payment through Direct Pay, taxpayers will receive immediate confirmation.
    • IRS2Go mobile app: IRS2Go is the official mobile app of the IRS. Taxpayers can check their refund status, make a payment, find free tax preparation assistance, sign up for helpful tax tips and more. IRS2Go is available in both English and Spanish.
    • Electronic Funds Withdrawal (EFW): This option allows taxpayers to file and pay electronically from their bank account when using tax preparation software or a tax professional. This option is free and only available when electronically filing a tax return.
    • Electronic Federal Tax Payment System: This free service gives taxpayers a safe, convenient way to pay individual and business taxes by phone or online. To enroll and for more information, taxpayers can call 800-555-4477 or visit eftps.gov.
    • Debit or credit card and digital wallet: Individuals can pay online, by phone or with a mobile device through any of the authorized payment processors. Processors do charge a fee to use these services. The IRS doesn’t receive any fees for these payments. Authorized card processors and phone numbers are available at IRS.gov/payments.

    Other payment options

    • Cash: For taxpayers who prefer to pay in cash, the IRS offers a way to pay taxes at one of its many retail partners. The IRS urges taxpayers choosing this option to start early because it involves a four-step process. Details, including answers to frequently asked questions, are at IRS.gov/paywithcash.
    • Check or money order: Payments made by check or money order should be made payable to the “United States Treasury.” To make sure that the payment gets credited promptly, taxpayers should also enclose a 2023 Form 1040-V payment voucher and print the following on the front of the check or money order:
      • “2023 Form 1040”.
      • Name.
      • Address.
      • Daytime phone number.
      • Social Security number.

    Help for taxpayers who cannot pay in full

    The IRS encourages taxpayers who cannot pay in full to pay what they can and consider a variety of payment options available for the remaining balance including getting a loan to pay the amount due. In many cases, loan costs may be lower than the combination of interest and penalties that the IRS must charge under federal law. Taxpayers should act as quickly as possible and are urged not to wait to respond to a notice: Tax bills accumulate more interest and fees the longer they remain unpaid. For all payment options, visit IRS.gov/payments.

    Online self-service payment plans

    Most individual taxpayers qualify for a payment plan and can use Online Payment Agreement to set up a payment plan (including an installment agreement) to pay off an outstanding balance over time.

    Once the online application is complete, the taxpayer receives immediate notification of whether their payment plan has been approved. Taxpayers can setup a plan using the Online Payment Agreement in a matter of minutes. There’s no paperwork and no need to call, write or visit the IRS. Setup fees may apply for some types of plans.

    Online payment plan options for individual taxpayers include:

    • Short-term payment plan – The total balance owed is less than $100,000 in combined tax, penalties and interest. Additional time of up to 180 days to pay the balance in full.
    • Long-term payment plan (installment agreement) – The total balance owed is less than $50,000 in combined tax, penalties and interest. Pay in monthly payments for up to 72 months. Payments may be set up using direct debit (automatic bank withdraw) which eliminates the need to send in a payment each month, saving postage costs and reducing the chance of default. For balances between $25,000 and $50,000, direct debit is required.

    Qualified taxpayers with existing payment plans may be able to use the Online Payment Agreement to make changes including revising payment dates, payment amounts or bank information for payments made by direct debit. Go to Online Payment Agreementfor more information.

    Though interest and late-payment penalties continue to accrue on any unpaid taxes after April 15, the failure to pay tax penalty rate is cut in half while an installment agreement is in effect. Find more information about the costs of payment plans on the IRS’ Additional Information on Payment Plans webpage.

    Other payment options

    Taxpayers struggling to meet their tax obligation may also consider these additional payment options:

    • Offer in Compromise – Certain taxpayers qualify to settle their tax liabilities for less than the total amount they owe by submitting an Offer in Compromise. To help determine their eligibility, they can use the Offer in Compromise Pre-Qualifier tool.
    • Temporary delay of collection – Taxpayers can contact the IRS to request a temporary delay of the collection process. If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer’s financial condition improves. Penalties and interest continue to accrue until the full amount is paid.
    • Other payment plan options – Taxpayers who do not qualify for online self-service should contact the IRS using the phone number or address on their most recent notice for other payment plan options. For individuals and out-of-business sole proprietors who are already working with IRS Campus Collection and who owe $250,000 or less, one available option is to propose a monthly payment that will pay the balance over the length of the Collection Statute (usually 10 years). These payment plans don’t require a financial statement, but they do require a determination for the filing of a Notice of Federal Tax Lien.

    For more information about payments, see Topic No. 202, Tax Payment Options, on IRS.gov.

    Taxpayer rights

    The IRS reminds taxpayers that they have rights and protections throughout the collection process. For details, see Taxpayer Bill of Rights and Publication 1, Your Rights as a Taxpayer.

    Taxpayers should know before they owe. The IRS encourages all taxpayers to check their withholdings with the IRS Tax Withholding Estimator.

    This information is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional help is available in Publication 17, Your Federal Income Tax.


  • 14 Mar 2024 1:02 PM | Anonymous

    WASHINGTON – The Joint Board for the Enrollment of Actuaries is retroactively extending the temporary waiver of its physical presence requirement for continuing professional education (CPE) programs and is proposing regulations to eliminate this in-person requirement altogether.

    Adopted as a pandemic-related safety measure, the original temporary waiver, announced on Aug. 10, 2020, applied to any formal CPE program conducted from Jan. 1, 2020, through Dec. 31, 2022. Without this waiver, an enrolled actuary earning credit hours for a formal program would need to do so while being in the same physical location with at least two other participants engaged in substantive pension service.

    The Joint Board has issued proposed regulations eliminating the physical presence requirement altogether. Therefore, the Joint Board is extending the temporary waiver until the date the proposed regulations are finalized. Accordingly, the extended waiver applies to CPE credits earned for programs held during the period from Jan. 1, 2023, through the date that is 30 days after the publication of the Treasury decision finalizing these proposed regulations.

    Like the original waiver, the extended waiver applies to all enrolled actuaries, whether they are in active or inactive status, and all other CPE requirements remain unchanged. Enrolled actuaries are still required to earn the same number of credit hours under formal programs that would otherwise be required. The other requirements for a formal program continue to apply, including all requirements for a qualifying program under the Joint Board regulations, attendance by at least three participants engaged in substantive pension service and an opportunity for participants to interact with the instructor during the program. In addition, the certificate of completion or instruction issued by a qualifying sponsor of the program must indicate that the program is a formal program.

    An enrolled actuary is anyone who meets the requirements established by the Joint Board and is approved to perform actuarial services under the Employee Retirement Income Security Act (ERISA) of 1974. The Joint Board’s most recent roster of enrolled actuaries, posted on IRS.gov, lists more than 3,300 individuals. More information about the Joint Board and enrolled actuaries can be found on the Enrolled Actuaries page on IRS.gov.


  • 14 Mar 2024 12:59 PM | Anonymous

    WASHINGTON – The Internal Revenue Service announced today that Guy Ficco will become the new IRS Criminal Investigation chief effective on April 1.

    Ficco, the current Deputy Chief and a 29-year agency veteran, will succeed James Lee, who announced last month that he will retire at the end of March. In his new role, Ficco will oversee a worldwide staff of more than 3,200 Criminal Investigation (CI) employees, including 2,200 special agents who investigate crimes involving tax, money laundering, public corruption, human trafficking, drug trafficking, cybercrime and terrorism-financing.

    “Guy has enjoyed a remarkable career as a CI special agent and leader who brings a wealth of experience to this job,” said IRS Commissioner Danny Werfel. “He is highly respected in the IRS and has spent his career building strong relationships with law enforcement agencies around the country. Guy’s leadership is important during a pivotal period where the IRS is focusing on ensuring fairness in the tax system and renewing our enforcement work in key areas.”

    In addition to serving as CI’s deputy chief, Ficco has served in leadership positions across the agency, ranging from supervisory special agent in the Washington, D.C. Field Office to executive director of Global Operations, Policy and Support at CI headquarters. He is also a certified fraud examiner.

    “I’m thrilled to become CI’s next chief and look forward to expanding the agency’s successes,” Ficco said. “Our CI team is uniquely positioned to combat not only tax crimes, but also the illicit movement of funds tied to drug and human trafficking, sanctions evasion and cybercrime. We are here to protect U.S. taxpayers from criminals who hold no regard for the victims or government coffers they drain.”

    Ficco holds a bachelor’s degree in business administration with a concentration in accounting from Dominican University in New York.

    CI is the law enforcement arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, human and narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. CI plays an important and unique role in the federal law enforcement community. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a nearly 90% federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.


  • 14 Mar 2024 12:44 PM | Anonymous

     IRS Direct File pilot is a new choice for eligible taxpayers to file their 2023 federal tax return online for free, directly with IRS.

    Direct File is easy to use and helps them:

    • File a 2023 federal tax return – for free – in English or Spanish
    • Add their tax information with step-by-step guidance
    • Connect with real-time online support from IRS customer service representatives
    • Access it from smartphones, laptops, tablets and desktop computers

    Check your eligibility
    Direct File is available to you if you live in one of the 12 participating states and report certain types of income, deductions and credits. Check your eligibility at the Direct File website to determine if Direct File is the right option for you.

    The participating pilot states are, Arizona, California, Florida, Massachusetts. Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington state and Wyoming. No additional states will be added to the pilot.

    If you’re eligible, use the below information to help you prepare to file your return with Direct File.

    Gather your personal information

    Organize your tax records
    You may be eligible to join the pilot if you report these income types:

    Direct File is not an option if you have other types of income such as retirement income, gig economy or business income.

    If you aren’t claiming any credits or deductions, you can use Direct File if you’re eligible and take the standard deduction.

    If you’re eligible, you can claim the limited number of credits and deductions below if you use Direct File and you must take the standard deduction.

    Prepare to claim credits
    Direct File allows you to claim the following credits:

    Direct File is not an option if you claim other tax credits like the Child and Dependent Care Credit, Saver's Credit or the Premium Tax Credit if you had Marketplace health insurance coverage.

    Prepare to take tax deductions
    Direct File allows you to claim the following deductions.

    Direct File is not an option if you itemize or claim other tax deductions.

    Sign-in to Direct File securely
    To use Direct File, you need an IRS account with ID.me. If you are an existing ID.me member, do not create another account. You can use your existing account to access Direct File.

    If you’ve never created an ID.me account and are 18 years of age or older, create an account using your personal email and then verify your identity to access Direct File. You only need to verify your identity once — then you can use your ID.me account to access Direct File and other IRS online services.

    Verifying your identity is quick and can be done using self-service or on a video call with an ID.me agent. Learn more about the sign-up process for an IRS ID.me account.

    Signing your Direct File tax return electronically

    When self-preparing your taxes and filing electronically, you must sign and validate your electronic tax return by entering your prior-year Adjusted Gross Income (AGI) or your prior-year Self-Select PIN.

    Since you are using Direct File for the first time, you must enter the information yourself.

    There are several ways to find your prior-year AGI:

    • On your 2022 tax return, your AGI is on line 11 of the Form 1040.
    • Use your online account to immediately view your AGI on the Tax Records tab.
    • Use Get Transcript by Mail. You can also request a transcript by mail by calling our automated phone transcript service at 800-908-9946. Please allow 5 to 10 days for delivery.

    If you have an Identity Protection (IP) PIN (via a CP01A or the Get an IP PIN Tool), you must enter it when prompted by Direct File. It will serve to verify your identity instead of your prior-year AGI or prior-year Self Select PIN.

    Find out more about Direct File


  • 14 Mar 2024 12:41 PM | Anonymous

    Taxpayers encouraged to try innovative new option before April 15 deadline

    WASHINGTON ̶ The Internal Revenue Service announced today the full-scale launch of the innovative Direct File pilot and encouraged eligible taxpayers in 12 states to try the new service to file their tax returns online for free directly with the IRS.

    The pilot effort has been in testing mode for several weeks, allowing early users to file their 2023 federal tax returns online for free and directly with the IRS. Thousands of taxpayers have successfully used the system, and early users are giving the new option positive reviews.

    Following the initial Direct File success, the IRS is moving the pilot out of the test phase, allowing all eligible taxpayers in the 12 states – representing 19 million taxpayers – to use the system at any time. Taxpayers can log in to Direct File to start their return and complete it any time before the April filing deadline.

    “The early results from Direct File have shown taxpayers like the ease and convenience of the tool, and moving into the full-scale launch of the pilot will give more taxpayers the chance to use this free option,” said IRS Commissioner Danny Werfel. “Expanding Direct File as the tax deadline approaches will provide more taxpayers a way to file directly with the IRS for free, and it will give us more valuable information to assess this pilot. For those who haven’t filed their taxes in these 12 states, we encourage them to visit IRS.gov and see if Direct File is the right option for them.”

    Direct File is one of many options that taxpayers have to file their taxes, including tax software and tax professionals. For the pilot, the IRS worked on a streamlined way for people with simpler tax situations to file directly with the agency.

    “A team of experts from across government built and tested the Direct File pilot to give taxpayers an easy, accurate free way to file their taxes online directly with the IRS,” Werfel added. “Our goal with the Direct File pilot is to help people meet their tax obligations as easily and quickly as possible. We developed Direct File from the beginning with taxpayers’ help, and we’ll continue to talk to taxpayers about their experience to learn more about what taxpayers want for future digital services.”

    Direct File walks the taxpayer through the complexities of the nation’s tax code to complete their filing easily with an accurate calculation of their refund or tax owed. Direct File is designed to be easy for taxpayers to use. At every step, it shows the work behind the calculations, so users can be confident that the tax return is complete and accurate. Once taxpayers start their return on the Direct File site, they can pause and then securely sign in to finish any time before the April filing deadline.

    Users can also get support from special IRS customer service representatives through Direct File’s live chat feature. Direct File, like other electronic filing options, allows taxpayers to typically get their refund in less than 21 days when the direct deposit is chosen.

    “We’ve gotten great initial feedback from the thousands of taxpayers who used it during testing,” Werfel said. “Many taxpayers we’ve heard from filed their taxes in less than 30 minutes using Direct File and praised it as an easy, no cost tax filing experience.”

    Who’s eligible?
    Taxpayers in 12 pilot states who meet certain requirements can use Direct File through the April tax deadline. Pilot states include:

    • Arizona
    • California
    • Florida
    • Massachusetts
    • Nevada
    • New Hampshire
    • New York
    • South Dakota
    • Tennessee
    • Texas
    • Washington State
    • Wyoming

    After completing their federal returns, taxpayers in the states with a state-income tax – Arizona, California, Massachusetts and New York -- will be guided to a state-sponsored tool to complete their state tax return.

    The IRS designed the pilot to follow the best practices for launching a new technology platform by starting small, making sure it works and then building from there. The pilot is purposefully limited to cover relatively straightforward tax situations.

    The Direct File pilot is an option for taxpayers who fall into these categories:

    • Report income earned from jobs that generate a Form W-2; including taxpayers with more than one job with W-2 wages;
    • Claim Earned Income Tax Credit, Child Tax Credit and the Credit for Other Dependents;
    • Claim the standard deduction and deductions for educator expenses and student loan interest;
    • Lived in the same state for the entire calendar year 2023.

    Interested taxpayers can go to directfile.irs.gov, where they can determine if they are eligible. Using Direct File requires identity verification through ID.me. Once their identity is verified and they’ve signed in securely to Direct File, they will be providing the tax information directly to the IRS, not a third party.

    For taxpayers who visit Direct File but aren’t eligible for the pilot, they will be directed to Free File on IRS.gov. Now in its 22nd filing season, taxpayers across the nation can access free software products provided by IRS Free File trusted partners. Through this public-private partnership, tax preparation and filing software providers make their online products available to eligible taxpayers. Eight private-sector Free File partners provide online guided tax software products this year to any taxpayer with an Adjusted Gross Income (AGI) of $79,000 or less in 2023. Free access to online products is available by starting from IRS Free File.

    Direct File Pilot for Filing Season 2024
    The IRS launched the Direct File pilot for the 2024 filing season. The Inflation Reduction Act mandated that the IRS study interest in and feasibility of creating a direct e-filing tool taxpayers could use to prepare and file their federal income tax return. The IRS commissioned an independent study, which indicated broad interest in such a system, which the IRS detailed in a Direct File Report to Congress in May 2023.

    Shortly after that report, as directed by the Treasury Department, the IRS assembled a team of tax experts, technologists, engineers and strategists from across government to build the Direct File system. The IRS worked closely with the U.S. Digital Service and the General Services Administration’s technology office 18F to build and test Direct File.

    Initial testing began in early February 2024 with a handful of federal and state government employees, followed by short open availability windows for more taxpayers to start their returns. On March 4, the IRS announced that Direct File would enter final testing, which included an allotment of available spaces with more spaces added every day. Direct File is now open to all eligible taxpayers in pilot states to decide if it is the right option for them to file their 2023 federal tax return online for free, directly with IRS.

     


  • 07 Mar 2024 6:34 PM | Anonymous

    WASHINGTON – The Internal Revenue Service will open 70 Taxpayer Assistance Centers (TACs) on Saturday, March 16, from 9 a.m. to 4 p.m., to provide in-person help across the nation. These special Saturday hours are part of the agency’s continuing transformation efforts to improve taxpayer service.

    This marks the second of four special Saturday hours to help taxpayers. The IRS also plans special Saturday openings for April 13 and May 18 and also has expanded hours at many locations on Tuesdays and Thursdays to help taxpayers.

    At TACs, people meet face-to-face with IRS employees to get help with tax account issues. During these special weekend events, people can visit offices in 70 cities and communities, including the District of Columbia and Puerto Rico.

    During the events, people can make payments by check or money order, get help with identity authentication and ask about account adjustments, to name a few available services. The IRS can’t accept cash payments during the special Saturday openings. Tax return preparation services are also not available.

    Before travelling to an office, the IRS encourages everyone to visit the event page on IRS.gov, Saturday hours, to get current information.

    “While taxpayers are on our site, it’s important they also check other IRS.gov pages because the website offers plenty of information and tools, and they might find an online resource that will meet their needs,” said IRS Wage & Investment Commissioner Ken Corbin.

    He added that Online Account and “Where’s My Refund?” are good examples of tools taxpayers can use to get account information without going to an office.

    Normally, TACs are open Monday through Friday, 8:30 a.m. to 4:30 p.m., and provide service by appointment. To make an appointment during regular hours, taxpayers can call 844-545-5640.

    Services provided
    The IRS’s Contact Your Local Office site lists all services provided at specific TACs. Tax return preparation is not a service offered at IRS TACs during these events or normal operating hours. During each event, visitors can get information on free local tax preparation resources. Additionally, File your return, on IRS.gov, gives step-by-step information on how to file individual tax returns.

    If someone has questions about a tax bill or IRS audit or they need help resolving a tax problem, they’ll receive assistance from IRS employees specializing in those services. If these employees aren’t available, the individual will receive a referral for these services. IRS Taxpayer Advocate Service employees may also be available to help with some issues.

    Professional foreign language interpretation will be available in many languages through an over-the-phone translation service. For deaf or hard of hearing individuals who need sign language interpreter services, IRS staff will schedule appointments for a later date. Alternatively, these individuals can call TTY/TDD 800-829-4059 to make an appointment.

    Please come prepared
    Individuals should bring the following documents when they visit these offices:

    • Current government-issued photo identification,
    • Social Security or Individual Taxpayer Identification Numbers for themselves and all members of their household, including their spouse and dependents (if applicable),
    • Any IRS letters or notices received and related documents,
    • For identity verification services, taxpayers will need two forms of identification and, if filed, a copy of the tax return for the year in question.

    During the visit, IRS staff may also request the following information:

    • A current mailing address,
    • Proof of financial account information included on a tax return to receive payments or refunds by direct deposit.

    Many TACs extend office hours on Tuesdays and Thursdays
    Another option for people to get face-to-face help outside of a TAC’s normal operating hours is to visit before or after regular operating hours on Tuesdays and Thursdays. Many TACs around the country have extended their office hours on these days until April 16. To see if a nearby TAC is offering the added hours, view its listing at IRS.gov/taclocator.

    Tax return preparation options
    While tax return preparation is not a service offered at IRS TACs, information will be shared about available local free tax preparation options. Help is also available using the following services:

    • Eligible individuals or families can get free help preparing their tax return at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites. To find the closest free tax return preparation help, use the VITA Locator Tool or call 800-906-9887.
    • To find an AARP Tax-Aide site, use the AARP Site Locator Tool or call 888-227-7669.
    • Any individual or family whose adjusted gross income (AGI) was $79,000 or less in 2023 can use IRS Free File’s Guided Tax Softwareat no cost. There are products in English and Spanish.
    • Free File Fillable Formsare electronic federal tax forms, equivalent to a paper 1040 form. Taxpayers should know how to prepare their own tax return using form instructions and IRS publications, if needed. Anyone, regardless of income, can use the forms. They are a free option for those whose AGI is greater than $79,000.
    • MilTax, a Department of Defense program, offers free return preparation software and electronic filing for federal tax returns and up to three state income tax returns. It’s available for all military members, and some veterans, with no income limit.
    • The Direct File pilot gives eligible taxpayers a new choice to file their 2023 federal tax returns online, for free, directly with the IRS. It will be rolled out in phases and is expected to be widely available in mid-March. Visit Direct File to learn about eligibility, scope and the 12 participating states.

    Help available 24/7 at IRS.gov
    The fastest and easiest way for people to get the help they need is through IRS.gov. Go to IRS.gov for more information. Available resources include:

    For additional information on available services, see IRS Publication 5136, IRS Services Guide.


  • 07 Mar 2024 6:34 PM | Anonymous

    WASHINGTON — The Internal Revenue Service, in response to disruptions to the supply of fuel for diesel powered highway vehicles resulting from wildfires, will not impose a penalty when dyed diesel fuel with a sulfur content that does not exceed 15 parts-per-million is sold for use or used by diesel-powered vehicles on the highway in certain counties in Texas.

    This penalty relief begins on February 23, 2024, and will remain in effect through March 22, 2024, and applies to the following counties in the state of Texas; Archer, Armstrong, Bailey, Baylor, Briscoe, Carson, Castro, Childress, Cochran, Collingsworth, Cottle, Crosby, Dallam, Deaf Smith, Dickens, Donley, Fannin, Floyd, Foard, Garza, Gray, Gregg, Hale, Hall, Hansford, Hardeman, Harrison, Hartley, Haskell, Hemphill, Hockley, Hutchinson, Kent, King, Knox, Lamb, Lipscomb, Lubbock, Lynn, Moore, Motley, Nacogdoches, Newton, Ochiltree, Oldham, Parmer, Potter, Randall, Roberts, Sherman, Stonewall, Swisher, Terry, Throckmorton, Upshur, Wheeler, Wichita, Wilbarger, Yoakum and Young counties.

    The penalty relief is available to any person that sells or uses dyed diesel fuel in vehicles suitable for highway use. In the case of the operator of the highway vehicle in which the dyed diesel fuel is used, the relief is available only if the operator or the person selling such fuel pays the tax of 24.4 cents per gallon that is normally applied to un-dyed diesel fuel for highway use.

    The IRS will not impose penalties for failure to make semimonthly deposits of tax for dyed diesel fuel sold for use or used in diesel powered vehicles on the highway in the listed counties above in the state of Texas during the relief period. IRS Publication 510, Excise Taxes, has information on the proper method for reporting and paying the tax.

    Ordinarily, dyed diesel fuel is not taxed, because it is sold for uses exempt from excise tax, such as to farmers for farming purposes, for home heating use and to local governments.

    The IRS is closely monitoring the situation and will provide additional relief as needed.


  • 07 Mar 2024 9:03 AM | Anonymous

    WASHINGTON – Amid concerns about people being misled, the Internal Revenue Service today reminded taxpayers and heath spending plan administrators that personal expenses for general health and wellness are not considered medical expenses under the tax law.

    This means personal expenses are not deductible or reimbursable under health flexible spending arrangements, health savings accounts, health reimbursement arrangements or medical savings accounts (FSAs, HSAs, HRAs and MSAs).

    This reminder is important because some companies are misrepresenting the circumstances under which food and wellness expenses can be paid or reimbursed under FSAs and other health spending plans.

    “Legitimate medical expenses have an important place in the tax law that allows for reimbursements,” said IRS Commissioner Danny Werfel. “But taxpayers should be careful to follow the rules amid some aggressive marketing that suggests personal expenditures on things like food for weight loss qualify for reimbursement when they don’t qualify as medical expenses.”

    Some companies mistakenly claim that notes from doctors based merely on self-reported health information can convert non-medical food, wellness and exercise expenses into medical expenses, but this documentation actually doesn’t. Such a note would not establish that an otherwise personal expense satisfies the requirement that it be related to a targeted diagnosis-specific activity or treatment; these types of personal expenses do not qualify as medical expenses.

    For example: A diabetic, in his attempts to control his blood sugar, decides to eat foods that are lower in carbohydrates. He sees an advertisement from a company stating that he can use pre-tax dollars from his FSA to purchase healthy food if he contacts that company. He contacts the company, who tells him that for a fee, the company will provide him with a ‘doctor’s note’ that he can submit to his FSA to be reimbursed for the cost of food purchased in his attempt to eat healthier. However, when he submits the expense with the 'doctor's note', the claim is denied because food is not a medical expense and plan administrators are wary of claims that could invalidate their plans.

    FSAs and other health spending plans that pay for, or reimburse, non-medical expenses are not qualified plans. If the plan is not qualified, all payments made to taxpayers under the plan, even reimbursements for actual medical expenses, are includible in income.

    The IRS encourages taxpayers with questions to review the frequently asked questions on medical expenses related to nutrition, wellness and general health to determine whether a food or wellness expense is a medical expense.

    IRS.gov provides more information regarding details and requirements for deductibility of medical expenses; taxpayers can also review Can I Deduct My Medical and Dental Expenses? and Publication 502, Medical and Dental Expenses.


  • 07 Mar 2024 9:01 AM | Anonymous

    Dear IVES Participants,

     
    Thank you for your input and sharing your concern on a critical area of tax administration. We acknowledge the concerns raised and are assessing our ability to provide return information when necessary while keeping taxpayer information confidential and protected from disclosure. Although IRS announced the policy change on January 2, 2024, we are suspending that change as we seek input from you and other stakeholders on possible changes and impacts to the program.


  • 06 Mar 2024 2:16 PM | Anonymous

    WASHINGTON — The Internal Revenue Service reminds taxpayers they’re generally required to report all earned income on their tax return, including income earned from digital asset transactions, the gig economy and service industry as well as income from foreign sources.

    Reporting requirements for these sources of income and others are outlined in the Instructions for Form 1040 and Form 1040-SR. The information is also available on IRS.gov.

    This release is the third in a four-part series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional guidance is available in Publication 17, Your Federal Income Tax (For Individuals).

    Digital assets, including cryptocurrency
    A digital asset is a digital representation of value that is recorded on a cryptographically secured, distributed ledger. Common digital assets include:

    • Convertible virtual currency and cryptocurrency.
    • Stablecoins.
    • Non-fungible tokens (NFTs).

    Everyone must answer the question
    Everyone who files Forms 1040, 1040-SR, 1040-NR, 1041, 1065, 1120 and 1120S must check one box answering either "Yes" or "No" to the digital asset question. The question must be answered by all taxpayers, not just by those who engaged in a transaction involving digital assets in 2023.

    Checking “Yes”: Normally, a taxpayer must check the "Yes" box if they:

    • Received digital assets as payment for property or services provided;
    • Transferred digital assets for free (without receiving any consideration) as a bona fide gift;
    • Received digital assets resulting from a reward or award;
    • Received new digital assets resulting from mining, staking and similar activities;
    • Received digital assets resulting from a hard fork (a branching of a cryptocurrency's blockchain that splits a single cryptocurrency into two);
    • Disposed of digital assets in exchange for property or services;
    • Disposed of a digital asset in exchange or trade for another digital asset;
    • Sold a digital asset; or
    • Otherwise disposed of any other financial interest in a digital asset.

    In addition to checking the "Yes" box, taxpayers must report all income related to their digital asset transactions. For example, an investor who held a digital asset as a capital asset and sold, exchanged or transferred it during 2023 must use Form 8949, Sales and other Dispositions of Capital Assets, to figure their capital gain or loss on the transaction and then report it on Schedule D (Form 1040), Capital Gains and Losses. A taxpayer who disposed of any digital asset by gift may be required to file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

    If an employee was paid with digital assets, they must report the value of the digital assets received as wages. Similarly, if they worked as an independent contractor and were paid with digital assets, they must report that income on Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship). Schedule C is also used by anyone who sold, exchanged or transferred digital assets to customers in connection with a trade or business and who did not operate the business through an entity other than a sole proprietorship.

    Checking “No”: Normally, a taxpayer who merely owned digital assets during 2022 can check the "No" box as long as they did not engage in any transactions involving digital assets during the year. They can also check the "No" box if their activities were limited to one or more of the following:

    • Holding digital assets in a wallet or account;
    • Transferring digital assets from one wallet or account they own or control to another wallet or account they own or control; or
    • Purchasing digital assets using U.S. or other real currency, including through electronic platforms such as PayPal and Venmo.

    For more information, see the list of frequently asked questions (FAQs) and other details, visit the Digital Assets page on IRS.gov.

    Gig economy earnings
    Typically, income earned from the gig economy is taxable and must be reported to the IRS on tax returns. Examples of gig work include providing on-demand labor, services or goods, or selling goods online. Transactions often occur through digital platforms such as an app or website.

    Taxpayers are required to report all income earned from the gig economy on a tax return, even if the income is:

    • From temporary, part-time or side work.
    • Paid through digital assets like cryptocurrency, as well as cash, goods or property.
    • Not reported on an information return form like a Form 1099-K, 1099-MISC, W-2 or other income statement.

    Taxpayers can visit the gig economy tax center for more information on the gig economy.

    Service industry tips
    Individuals who work in service industries such as restaurants, hotels and salons often receive tips from customers for their services. Generally, tips like cash or non-cash payments are taxable and should be reported.

    • All cash tips should be reported to the employer, who must include them on the employee’s Form W-2, Wage and Tax Statement. This includes direct cash tips from customer to employee, tips from one employee to another employee, electronically paid tips and other tip-sharing arrangements.
    • Noncash tips include value received in any medium other than cash, such as: passes, tickets, or other goods or commodities a customer gives the employee. Noncash tips aren't reported to the employer but must be reported on a tax return.
    • Any tips the employee didn't report to the employer must be reported separately on Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to include as additional income with their tax return. The employee must also pay the employee share of Social Security and Medicare tax owed on those tips.

    Service industry employees don't have to report tip amounts of less than $20 per month per employer. For larger amounts, employees must report tips to the employer by the 10th of the month following the month the tips were received.

    See Tip Recordkeeping and Reporting for more information on how to report tips.

    Foreign source income
    Generally, A U.S. citizen or resident alien’s worldwide income is subject to U.S. income tax, regardless of their residence. They're also subject to the same income tax filing requirements that apply to U.S. citizens or resident aliens living in the United States.

    U.S. citizens and resident aliens must report unearned income, such as interest, dividends and pensions, from sources outside the United States unless exempt by law or a tax treaty. They must also report earned income, such as wages and tips, from sources outside the United States.

    An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income Exclusion or the Foreign Tax Credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are available only if an eligible taxpayer files a U.S. income tax return.

    A taxpayer is allowed an automatic two-month extension to file a tax return to June 15 if both their tax home and abode are outside the United States and Puerto Rico. Even if allowed an extension, a taxpayer will have to pay interest on any tax not paid by the regular due date of April 15, 2024.

    Those serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return also qualify for the extension to June 15. The IRS recommends attaching a statement if one of these two situations applies. More information can be found in the Instructions for Form 1040 and Form 1040-SR, Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad and Publication 519, U.S. Tax Guide for Aliens.

    Foreign accounts and assets
    Federal law requires U.S. citizens and resident aliens to report their worldwide income, including income from foreign trusts and foreign bank and other financial accounts. In most cases, affected taxpayers need to complete and attach Schedule B (Form 1040), Interest and Ordinary Dividends, to their tax return. Part III of Schedule B asks about the existence of foreign accounts such as bank and securities accounts and usually requires U.S. citizens to report the country in which each account is located.

    In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.

    In addition, U.S. persons with an interest in or signature or other authority over foreign financial accounts where the aggregate value exceeded $10,000 at any time during 2023 must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Because of this threshold, the IRS encourages U.S. persons with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is available only through the BSA E-filing System website.

    The deadline for filing the annual Report of Foreign Bank and Financial Accounts (FBAR) is April 15, 2024. FinCEN grants U.S. persons who miss the original deadline an automatic extension until Oct. 15, 2024, to file the FBAR. There is no need to request this extension. See FinCEN’s website for further information.


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