WASHINGTON — The Internal Revenue Service today announced that interest rates will increase for the calendar quarter beginning Oct. 1, 2022.

For individuals, the rate for overpayments and underpayments will be 6% per year, compounded daily, up from 5% for the quarter that began on July 1. Here is a complete list of the new rates:

• 6% for overpayments [5% for corporations]. (payments made in excess of the amount owed)
• 3.5% for the portion of a corporate overpayment exceeding $10,000.

• 6% for underpayments. (taxes owed but not fully paid)
• 8% for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, for a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points, and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during July 2022. See the revenue ruling for details.

Revenue Ruling 2022-15, https://www.irs.gov/pub/irs-drop/rr-22-15.pdf, 

announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2022-35, dated Aug. 29, 2022.

Revenue Ruling 2022-15 provides interest rates, underpayments and overpayments, for the quarter beginning Oct. 1, 2022. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning October 1, 2022, will be 6 percent for overpayments (5 percent in the case of a corporation), 6 percent for underpayments, and 8 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 3.5 percent.

 

Revenue Ruling 2022-15 will be published in Internal Revenue Bulletin 2022-35 on Aug. 29, 2022.

Beginning August 2022, smaller charities that are eligible and choose to file Form 990-N, Electronic Notice for Tax-Exempt Organizations (e-Postcard), must sign into the IRS modernized authentication platform using either their active IRS username or create an account with ID.me, the current IRS credential service provider.

When accessing the Form 990-N submission page, Form 990-N filers have three options:

1. Sign in with their active IRS username: Users with an active IRS username have the option to access the Form 990-N submission page using their existing IRS credentials or they can choose to create a new account with ID.me.
2. Sign in with their existing ID.me account: Users that have an ID.me account to access other IRS online services or from a state or federal agency can sign in using their existing ID.me account.
3. Create a new ID.me account: Users that don’t have an active IRS username credential must register and sign in with ID.me.

ID.me account creation requires an email address and multifactor authentication. Form 990-N filers who have an existing IRS username and register for an ID.me account must use the same email address.

For Form 990-N filing instructions, see Publication 5248, Form 990-N Electronic Filing System User Guide (PDF).

The filing process has not changed for organizations that file Form 990, Return of Organization Exempt from Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.

Free Online Training for Small to Mid-Sized Section 501(c)(3) Charities

The IRS provides interactive online training to help officers, board members and volunteers maintain your organization's Section 501(c)(3) tax-exempt status - including a course on filing Form 990-series annual returns. The Virtual Small to Mid-Sized Tax-Exempt Workshop at StayExempt.irs.gov is an important resource for all charities, old and new. 

WASHINGTON — Storm victims in parts of Missouri now have until Nov. 15, 2022, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. Currently, individuals and households that reside or have a business in the Independent City of St. Louis, as well as St. Charles, Montgomery and St. Louis counties in Missouri, qualify for tax relief. The same relief will be available to any other locality added later by FEMA. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on July 25, 2022. As a result, affected individuals and businesses will have until Nov. 15, 2022, to file returns and pay any taxes that were originally due during this period.

This means individuals who had a valid extension to file their 2021 return due to run out on Oct. 17, 2022, will now have until Nov. 15, 2022, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments are not eligible for this relief. 

The Nov. 15, 2022 deadline also applies to quarterly estimated income tax payments due on Sept. 15, 2022, and the quarterly payroll and excise tax returns normally due on Aug. 1 and Oct. 31, 2022. Businesses with an original or extended due date also have the additional time including, among others, calendar-year partnerships and S corporations whose 2021 extensions run out on Sept. 15, 2022 and calendar-year corporations whose 2021 extensions run out on Oct. 17, 2022.    

In addition, penalties on payroll and excise tax deposits due on or after July 25, 2022 and before Aug. 9, 2022, will be abated as long as the deposits were made by Aug. 9, 2022.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or the return for the prior year (2021). Be sure to write the FEMA declaration number – DR-4665-MO − on any return claiming a loss. See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

WASHINGTON – As the new school year begins, the Internal Revenue Service reminds teachers and other educators that they’ll be able to deduct up to $300 of out-of-pocket classroom expenses for 2022 when they file their federal income tax return next year.

This is the first time the annual limit has increased since the special educator expense deduction was enacted in 2002. For tax years 2002 through 2021, the limit was $250 per year. The limit will rise in $50 increments in future years based on inflation adjustments.

For 2022, an eligible educator can deduct up to $300 of qualifying expenses. If they’re married and file a joint return with another eligible educator, the limit rises to $600. But in this situation, not more than $300 for each spouse.

Who qualifies?
Educators can claim this deduction, even if they take the standard deduction. Eligible educators include anyone who is a kindergarten through grade 12 teacher, instructor, counselor, principal or aide in a school for at least 900 hours during the school year. Both public and private school educators qualify.

What's deductible?
Educators can deduct the unreimbursed cost of:

Qualified expenses don’t include the cost of home schooling or for nonathletic supplies for courses in health or physical education. As with all deductions and credits, the IRS reminds educators to keep good records, including receipts, cancelled checks and other documentation.

Reminder for 2021 tax returns being filed now: Deduction limit is $250
For those who received a tax filing extension or still need to file a 2021 tax return, the IRS reminds any educator still working on their 2021 return that the deduction limit is $250. If they are married and file a joint return with another eligible educator, the limit rises to $500. But in this situation, not more than $250 for each spouse.

File electronically when ready. Tax-filing software uses a question-and-answer format that makes doing taxes easier. Whether a return is self-prepared or prepared with the assistance of a tax professional or trained community volunteer, the IRS urges everyone to file electronically and choose direct deposit for refunds. For details, visit IRS.gov/efile.

In addition, the IRS urges anyone who owes taxes to choose the speed and convenience of paying electronically, such as with IRS Direct Pay, a free service available only on IRS.gov. For information about this and other payment options, visit IRS.gov/Payments.

Taxpayers who requested more time to file an accurate return have until Oct. 17, 2022. Those who have what they need to file, however, should file as soon as possible to avoid delays in processing their return. Taxpayer are urged to file electronically when they are ready and avoid the last-minute rush to file at the deadline.

WASHINGTON – The Security Summit partners today unveiled a special new sample security plan designed to help tax professionals, especially those with smaller practices, protect their data and information.

The special plan, called a Written Information Security Plan or WISP, is outlined in a 29-page document that’s been worked on by members of the Security Summit, including tax professionals, software and industry partners, representatives from state tax groups and the IRS.

Federal law requires all professional tax preparers to create and implement a data security plan. The Security Summit group – a public-private partnership between the IRS, states and the nation’s tax industry – has noticed that some tax professionals continue to struggle with developing a written security plan.

In response to this need, the Summit – led by the Tax Professionals Working Group – has spent months developing a special sample document that allows tax professionals to quickly set their focus in developing their own written security plans.

“Tax professionals play a critical role in our nation’s tax system,” said Carol Campbell, director of the IRS Return Preparer Office and co-lead of the Summit tax professional group. “But for many tax professionals, it is difficult to know where to start when developing a security plan. The Summit members worked together on this guide to walk tax pros through the many considerations needed to create a Written Information Security Plan to protect their businesses and their clients, as well as comply with federal law.”

Each year, the Security Summit partners highlight a “Protect Your Clients; Protect Yourself” summer campaign aimed at tax professionals. This is the fourth in a series of five tips for this year’s effort. These are issued each Tuesday to coincide with the Nationwide Tax Forums, which help educate tax professionals on security and other important topics.

There are many aspects to running a successful business in the tax preparation industry, including reviewing tax law changes, learning software updates and managing and training staff. One often overlooked but critical component is creating a WISP.

“There’s no way around it for anyone running a tax business. Having a written security plan is a sound business practice – and it’s required by law,” said Jared Ballew of Drake Software, co-lead for the Summit tax professional team and incoming chair of the Electronic Tax Administration Advisory Committee (ETAAC). “The sample provides a starting point for developing your plan, addresses risk considerations for inclusion in an effective plan and provides a blueprint of applicable actions in the event of a security incident, data losses and theft.”

Security issues for a tax professional can be daunting. The Summit team worked to make this document as easy to use as possible, including special sections to help tax professionals get to the information they need.

“We have tried to stay away from complex jargon and phrases so that the document can have meaning to a larger section of the tax professional community,” said Campbell. “It is not intended to be the final word in Written Information Security Plans, but it is intended to give tax professionals a place to start in understanding and attempting to draft a plan for their business.”
 
A security plan should be appropriate to the company’s size, scope of activities, complexity and the sensitivity of the customer data it handles. There is no one-size-fits-all WISP. For example, a sole practitioner can use a more abbreviated and simplified plan than a 10-partner accounting firm, which is reflected in the new sample WISP from the Security Summit group.

Once completed, tax professionals should keep their WISP in a format that others can easily read, such as PDF or Word. Making the WISP available to employees for training purposes is encouraged. Storing a copy offsite or in the cloud is a recommended best practice in the event of a natural disaster.

Additional resources
Tax professionals also can get help with security recommendations by reviewing IRS Publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security: The Fundamentals by the National Institute of Standards and Technology. The IRS Identity Theft Central pages for tax pros, individuals and businesses have important details as well.

Publication 5293, Data Security Resource Guide for Tax Professionals, provides a compilation of data theft information available on IRS.gov. Also, tax professionals should stay connected to the IRS through subscriptions to e-News for Tax Professionals and social media.

The IRS also recommends tax professionals create a data theft response plan, which includes contacting the IRS Stakeholder Liaisons to report a theft.

WASHINGTON — The Internal Revenue Service today is reminding those who have registered, or are required to register, large trucks and buses that it’s time to file Form 2290, Heavy Highway Vehicle Use Tax Return. The IRS strongly encourages using e-file and filing before the payment deadline of Aug. 31, 2022, for vehicles first used in July 2022.

Truckers that have a highway motor vehicle with a taxable gross weight of 55,000 pounds or more registered in their name must file Form 2290 and pay the tax. However, on vehicles they expect to use for 5,000 miles or less (7,500 for farm vehicles), they’re required to file a return, but pay no tax. If the vehicle exceeds the mileage use limit during the tax period, the tax becomes due.

The filing deadline is not tied to the vehicle registration date. Taxpayers must file Form 2290 by the last day of the month following the month in which the taxpayer first used the vehicle on a public highway during the taxable period, regardless of the vehicle’s registration renewal date.

Vehicles first used on a public highway during the month of July 2022 must file Form 2290 and pay the appropriate tax between July 1 and August 31. Any additional taxable vehicles placed on the road during any month other than July should be prorated for the months during which it was in service. IRS.gov has a table to help determine the filing deadline.

File and pay the easy way

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More information:

Today, the IRS published the latest executive column, “A Closer Look,” which features Doug O’Donnell, IRS Deputy Commissioner, Services & Enforcement, encouraging taxpayers not to wait to file their tax returns. “Every year, millions of people need more time to file their taxes and many focus their attention on the mid-October filing extension deadline,” said O’Donnell. “This year, there are special factors at play that make it even more important for people to make sure they don’t wait to file until the last minute before the Oct. 17 deadline and that, to the extent possible, they file electronically,” Read more here. Read the Spanish version here.

“A Closer Look” is a column from IRS executives that covers a variety of timely issues of interest to taxpayers and the tax community. It also provides a detailed look at key issues affecting everything from IRS operations and employees to issues involving taxpayers and tax professionals.

Check here for prior posts and new updates.

Notice 2022-33 extends the deadlines for amending a retirement plan or individual retirement arrangement to reflect certain provisions of Division O of the Further Consolidated Appropriations Act, 2020, Pub. L. 116-94, 133 Stat. 2534 (2019), known as the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), and section 104 of Division M of the Further Consolidated Appropriations Act, 2020, known as the Bipartisan American Miners Act of 2019 (Miners Act), by modifying Notice 2020-68, 2020-38 IRB 567, and Notice 2020-86, 2020-53 IRB 1786. In addition, this notice extends the deadline for amending a retirement plan to reflect the provisions of section 2203 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L. 116-136, 134 Stat. 281 (2020).

Notice 2022-33 will be in IRB:  2022-34, dated August 22, 2022.

WASHINGTON — Storm victims in parts of Kentucky now have until Nov. 15, 2022, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. Currently, individuals and households that reside or have a business in Breathitt, Clay, Floyd, Johnson, Knott, Leslie, Letcher, Magoffin, Martin, Owsley, Perry, Pike and Wolfe counties in Kentucky qualify for tax relief. The same relief will be available to any other locality added later by FEMA. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on July 26, 2022. As a result, affected individuals and businesses will have until Nov. 15, 2022, to file returns and pay any taxes that were originally due during this period.

This means individuals who had a valid extension to file their 2021 return due to run out on Oct. 17, 2022, will now have until Nov. 15, 2022, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments are not eligible for this relief. 

The Nov. 15, 2022 deadline also applies to quarterly estimated income tax payments due on Sept. 15, 2022, and the quarterly payroll and excise tax returns normally due on Aug. 1 and Oct. 31, 2022. Businesses with an original or extended due date also have the additional time including, among others, calendar-year partnerships and S corporations whose 2021 extensions run out on Sept. 15, 2022 and calendar-year corporations whose 2021 extensions run out on Oct. 17, 2022.    

In addition, penalties on payroll and excise tax deposits due on or after July 26 and before Aug. 10, will be abated as long as the deposits are made by Aug. 10, 2022.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or the return for the prior year (2021). Be sure to write the FEMA declaration number – DR-4663-KY − on any return claiming a loss. See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.