IRS Tax News

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  • 03 Dec 2020 2:42 PM | Anonymous

    The latest IRS executive column, “A Closer Look,” features information about how the IRS continues to focus on ensuring integrity and fairness in our nation’s voluntary tax system despite the challenges  of COVID-19. “Taxpayers who exercise their best efforts to file their tax returns and pay their taxes, or enter into agreements to pay their taxes, deserve to know that the IRS is pursuing others who have failed to satisfy their filing and payment obligations,” explains Eric Hylton, Commissioner, Small Business Self-Employed. Continue reading here. It’s also available in Spanish 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.

  • 03 Dec 2020 2:17 PM | Anonymous

    Revenue Ruling 2020-28 provides the interest rates for the first quarter of 2021. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning January 1, 2021, will be 3 percent for overpayments (2 percent in the case of a corporation), 3 percent for underpayments, and 5 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 0.5 percent.

    Revenue Ruling 2020-28 will be in IRB: 2020-52, dated December 21, 2020.


  • 03 Dec 2020 2:17 PM | Anonymous

    WASHINGTON – The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning Jan. 1, 2021.  The rates will be: 

    • three (3) percent for overpayments [two (2) percent in the case of a corporation];
    • one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000;
    • three (3) percent for underpayments; and
    • five (5) percent 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, in the case of 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 Oct. 2020 to take effect Nov. 1, 2020, based on daily compounding.

    Revenue Ruling 2020-28, announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2020-52, dated Dec. 21, 2020.

  • 03 Dec 2020 12:32 PM | Anonymous

    WASHINGTON — The Internal Revenue Service today reminded employers that they must file Form W-2 and other wage statements by Feb. 1, 2021, to avoid penalties and help the IRS prevent fraud.

    A 2015 law made it a permanent requirement that employers file copies of their Form W-2, Wage and Tax Statements, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by Jan. 31. That is also the date the Forms W-2 are due to workers. This upcoming tax season, however, Jan. 31 falls on a Sunday, pushing the due dates to the next business day, which is Monday, Feb. 1.

    Certain Forms 1099-MISC, Miscellaneous Income and Forms 1099-NEC, Nonemployee Compensation, are also normally due to taxpayers on Jan. 31, but this tax season they too will be due on the next business day, Feb. 1, 2021. Various other due dates related to Form 1099-MISC, including dates dues to the IRS, can be found in the instructions on IRS.gov.

    Helping fraud detection

    The normal January filing date for wage statements means that the IRS can more easily detect refund fraud by verifying income that individuals report on their tax returns. Employers can help support that process, and avoid penalties, by filing the forms on time and without errors. The IRS recommends e-file as the quickest, most accurate and convenient way to file these forms.

    Start early

    Good preparation now can help businesses avoid problems later. For instance, employers can get an early start verifying or updating employee information like names, addresses and Social Security numbers or Individual Taxpayer Identification Numbers. They should also ensure their company’s account information is current and active with the Social Security Administration before January. Businesses should also order paper Forms W-2 early if needed. 

    Automatic extensions of time to file Forms W-2 are not available. The IRS will only grant extensions for very specific reasons. Details can be found on the instructions for Form 8809, Application for Time to File Information Returns.

    For more information, read the instructions for Forms W-2 & W-3 and the Information Return Penalties page at IRS.gov.

  • 03 Dec 2020 10:35 AM | Anonymous

    IRS YouTube Video:
    New Security Measures Help Protect Against Tax-Related Identity Theft  English

    WASHINGTON – The Internal Revenue Service, state tax agencies and the tax industry urged businesses to be on guard as thieves try to use their stolen names and data to file fraudulent tax returns.

    The partners, operating cooperatively as the Security Summit to fight identity theft, marked the fourth day of National Tax Security Awareness Week with a warning to businesses to enact the strongest measures possible to protect their data and systems. The IRS also is planning additional steps to help businesses combat cybercriminals trying to steal their data.

    “As the IRS and our partners have strengthened our security standards, identity thieves have looked for new ways to find sources of information, and businesses need to stay alert,” said IRS Commissioner Charles Rettig. “Businesses, just like individuals, can be victims of identity theft. Thieves may steal enough information to file a business tax return for refund or use other scams using the company’s identity.” 

    More than 70% of cyberattacks are aimed at businesses with 100 or fewer employees. Thieves may be targeting credit card information, the business identity information or employee identity information.

    Business are encouraged to follow best practices from the Federal Trade Commission include:

    • Set your security software to update automatically
    • Back up important files
    • Require strong passwords for all devices
    • Encrypt devices
    • Use multi-factor authentication

    More information is available at FTC’s Cybersecurity for Small Businesses.

    Businesses should especially be alert to any COVID-19 or tax-related phishing email scams that attempt to trick employees into opening embedded links or attachments. IRS related scams may be sent to phishing@irs.gov.

    Starting Dec. 13, 2020, the IRS will begin masking sensitive information from business tax transcripts, the summary of corporate tax returns, to help prevent thieves from obtaining identifiable information that would allow them to file fake business tax returns.

    Only financial entries will be fully visible. All other information will have varying masking rules. For example, only the first four letters of each first and last name – of individuals and businesses – will display. Only the last four digits of the Employer Identification Number will be visible.

    The IRS also has publicly launched the Form 14039-B, Business Identity Theft Affidavit, that will allow companies to proactively report possible identity theft to the IRS when, for example, the e-filed tax return is rejected.

    Businesses should file the Form 14039-B if it receives a:

    • Rejection notice for an electronically filed return because a return already is on file for that same period.
    • Notice about a tax return that the entity didn't file.
    • Notice about Forms W-2 filed with the Social Security Administration that the entity didn't file.
    • Notice of a balance due that is not owed.

    This form will enable the IRS to respond to the business much faster than in the past and work to resolve issues created by a fraudulent tax return. Businesses should not use the form if they experience a data breach but see no tax-related impact. For more information, see Identity Theft Central’s Business section.

    Although the tax scams can come and go, all employers should remain alert to Form W-2 theft schemes. In the most common version, a thief poses as a high-ranking company executive who emails payroll employees and asks for a list of employees and their W-2s. Businesses often don’t know they’ve been scammed until a fraudulent return shows up in employees’ names.

    There is a special reporting procedure for employers who experience the W-2 scam. It also may be found at Identity Theft Central’s Business section.

    Finally, Security Summit partners urge businesses to keep their EIN application information current. Changes of address or responsible party may be reported using Form 8822-B. Reminder: Changes in the responsible party must be reported to the IRS within 60 days. Current information can help the IRS find a point of contact to resolve identity theft and other issues.

    The IRS, state tax agencies, the private sector tax industry, including tax professionals, work in partnership as the Security Summit to help protect taxpayers from identity theft and refund fraud. This is the third in a week-long series of tips to raise awareness about identity theft. See IRS.gov/securitysummit for more details.

  • 02 Dec 2020 10:18 AM | Anonymous

    IRS YouTube Video:
    New Security Measures Help Protect Against Tax-Related Identity Theft  English

    WASHINGTON – As part of the Security Summit effort, the Internal Revenue Service announced today that starting in January the Identity Protection PIN Opt-In Program will be expanded to all taxpayers who can properly verify their identities.

    The Summit partners, including state tax agencies, the nation’s tax industry and the IRS, marked the third day of the National Tax Security Awareness Week by urging taxpayers who want the proactive protection against identity theft to opt into the Identity Protection PIN program in 2021.

    The IP PIN is a six-digit number assigned to eligible taxpayers to help prevent the misuse of their Social Security number on fraudulent federal income tax returns. An IP PIN helps the IRS verify a taxpayer’s identity and accept their electronic or paper tax return. The online Get An IP PIN tool at IRS.gov/IPPIN immediately displays the taxpayer’s IP PIN.

    “When you have this special code, it prevents someone else from filing a tax return with your Social Security number,” said IRS Commissioner Chuck Rettig. “The fastest way to get an Identity Protection PIN is to use our online tool but remember you must pass a rigorous authentication process. We must know that the person asking for the IP PIN is the legitimate taxpayer.”

    The online tool uses Secure Access authentication which uses several different ways to verify a person’s identity. Before using the “Get an IP PIN” tool, the IRS encourages taxpayers to review the requirements at IRS.gov/SecureAccess.

    For those who cannot pass Secure Access authentication, there are alternatives. Taxpayers with incomes of $72,000 or less and with access to a telephone should complete Form 15227 and mail or fax it to the IRS. An IRS assistor will call the taxpayer to verify their identity with a series of questions. For additional security reasons, taxpayers who pass authentication will receive an IP PIN the following tax year.

    Taxpayers who cannot verify their identities remotely or who are ineligible to file a Form 15227 may make an appointment, visit a Taxpayer Assistance Center and bring two forms of picture identification. Because this is an in-person identity verification, an IP PIN will be mailed to the taxpayer within three weeks.

    Taxpayers who obtain an IP PIN should never share their code with anyone but their trusted tax provider. The IRS will never call to request the taxpayer’s IP PIN, and taxpayers must be alert to potential IP PIN scams.

    Here’s what taxpayers need to know about the IP PIN before applying:

    • The Get an IP PIN tool will be available in mid-January. This is the preferred method of obtaining an IP PIN and the only one that immediately reveals the PIN to the taxpayer.
    • Taxpayers who want to voluntarily opt into the IP PIN program do not need to file a Form 14039, Identity Theft Affidavit.
    • The IP PIN is valid for one year. Each January, the taxpayer must obtain a newly generated IP PIN.
    • The IP PIN must be properly entered on electronic and paper tax returns to avoid rejections and delays.
    • Taxpayers with either a Social Security number or Individual Tax Identification Number who can verify their identities are eligible for the opt-in program.
    • Any primary taxpayer (listed first on the return), secondary taxpayer (listed second on the return) or dependent may obtain an IP PIN if they can pass the identity proofing requirements.
    • The IRS plans to offer an opt out feature to the IP PIN program in 2022 if taxpayers find it is not right for them.

    There is no change in the IP PIN program for confirmed victims of tax-related identity theft. Those taxpayers should still file a Form 14039 if their e-filed tax return rejects because of a duplicate SSN filing. The IRS will investigate their case and once the fraudulent tax return is removed from their account, confirmed victims automatically will receive an IP PIN via postal mail at the start of the next calendar year.

    IP PINs will be mailed annually to confirmed victims only and participants enrolled prior to 2019. Because of security risks, confirmed identity theft victims cannot opt out of the IP PIN program. Confirmed victims also can use the Get an IP PIN tool to retrieve lost IP PINs assigned to them.

    The IRS, state tax agencies, the private sector tax industry, including tax professionals, work in partnership as the Security Summit to help protect taxpayers from identity theft and refund fraud. This is the third in a week-long series of tips to raise awareness about identity theft. See IRS.gov/securitysummit for more details.

  • 01 Dec 2020 4:33 PM | Anonymous

    On this Giving Tuesday, taxpayers are reminded there’s a special tax deduction available through Dec. 31, 2020 for the many people who give cash donations up to $300 to qualifying charities. Continue reading here or for Spanish 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.

  • 01 Dec 2020 12:09 PM | Anonymous

    IRS YouTube Video:
    New Security Measures Help Protect Against Tax-Related Identity Theft  English

    WASHINGTON – The Internal Revenue Service, state tax agencies and the tax industry today marked the second day of National Tax Security Awareness Week by announcing an improved feature that will be available on all 2021 online tax preparation products.

    Designed to protect both taxpayers and tax professionals, multi-factor authentication means the returning user must enter two pieces of data to securely access an account or application. For example, taxpayers must enter their credentials (username and password) plus a numerical code sent as a text to their mobile phone.

    The agreement to add the multi-factor authentication feature is just one publicly visible example of the ongoing collaboration by the IRS, state tax agencies and the tax industry, which work together as the Security Summit. 2020 marks the fifth year of the Security Summit and of National Tax Security Awareness Week.

    “Multi-factor authentication option is an easy, free way to really step up protection of your data whether you’re a taxpayer or a tax professional,” said Chuck Rettig, IRS Commissioner. “This is an important step being taken by the tax software industry. This is just one example of the many actions taken by the Summit partners over the past five years that have dramatically improved our ability to combat identity thieves and to protect taxpayers.”

    Some online products previously offered multi-factor authentication. However, for 2021 all providers agreed to make it a standard feature and all agreed that it would meet requirements set by the National Institute of Standards and Technology. Multi-factor authentication may not be available on over-the-counter hard disk tax products.

    Because the multi-factor authentication option is voluntary, Summit partners urged both taxpayers and tax professionals to use it. Multi-factor authentication can reduce the likelihood of identity theft by making it difficult for thieves to get access to sensitive accounts.

    Users should check the security section in their online tax product account to make the change. It may be labeled as two-factor authentication or two-step verification or similar names.

    Use of multi-factor authentication is especially important for tax professionals who continue to be prime targets of identity thieves. Of the numerous data thefts reported to the IRS from tax professional offices this year, most could have been avoided had the practitioner used multi-factor authentication to protect tax software accounts.

    Thieves use a variety of scams – but most commonly by a phishing email – to download malicious software, such as keystroke software. This malware will eventually enable them to steal all passwords from a tax pro. Once the thief has accessed the practitioner's networks and tax software account, they will complete pending taxpayer returns, alter refund information and use the practitioner's own e-filing and preparer numbers to file the fraudulent return – a dangerous combination.

    However, with multi-factor authentication, it's unlikely the thief will have stolen the practitioner's cell phone — blocking the ability to receive the necessary security code to access the account. This protects the tax pro's account information.

    There are multiple options for multi-factor authentication. For example, taxpayers and tax practitioners can download an authentication app to their mobile device. These apps are readily available through Google Play or Apple’s App Store. Once properly configured, these apps will generate a temporary, single-use security code, which the user must enter into their tax software to complete authentication. Use a search engine for "Authentication apps" to learn more.

    Other options include codes that may be sent to practitioner's email or mobile phone via text but those are not as secure as an authentication app.

    While no product is fool-proof, multi-factor authentication does dramatically reduce the likelihood that taxpayers or tax practitioners will become victims. Multi-factor authentication should be used wherever it is offered. For example, financial accounts, social media accounts, cloud storage accounts and popular email providers all offer multi-factor authentication options.

    The IRS, state tax agencies, the private sector tax industry, including tax professionals, work in partnership as the Security Summit to help protect taxpayers from identity theft and refund fraud. This is the second in a week-long series of tips to raise awareness about identity theft. See IRS.gov/securitysummit for more details.

  • 30 Nov 2020 10:49 AM | Anonymous

    IRS YouTube Video:
    New Security Measures Help Protect Against Tax-Related Identity Theft  English

    WASHINGTON — The Internal Revenue Service and the Security Summit partners today issued warnings to all taxpayers and tax professionals to beware of scams and identity theft schemes by criminals taking advantage of the combination of holiday shopping, the approaching tax season and coronavirus concerns.

    The IRS, state tax agencies and the tax industry opened the National Tax Security Awareness Week to coincide with Cyber Monday, the traditional start of the online holiday shopping season. But the holiday shopping season combined with the impending tax season and an increased trend toward working remotely make online security an absolute necessity.

    “This is generally the hunting season for online thieves, but this year there’s a dangerous combination of factors at play that should make people more alert,” said IRS Commissioner Chuck Rettig. “The combination of online holiday shopping, the approaching filing season and more of us are working remotely puts people more at risk.  People can help avoid becoming victims of scams or identity thefts, by taking a few simple steps to help protect sensitive tax and financial information.”

    The IRS, state tax agencies and the nation's tax industry – working together as the Security Summit – mark the start of the 5th annual National Tax Security Awareness Week with tips on basic safeguards everyone should take.

    The special week includes special informational graphics and social media efforts on platforms including Twitter and Instagram.

    Here are a few basic steps everyone should remember during the holidays and as the 2021 tax season approaches:

    • Don't forget to use security software for computers and mobile phones – and keep it updated.
    • Make sure purchased anti-virus software has a feature to stop malware, and there is a firewall that can prevent intrusions.
    • Phishing scams – like imposter emails, calls and texts -- are the No. 1 way thieves steal personal data. Don't open links or attachments on suspicious emails. This year, fraud scams related to COVID-19 and the Economic Impact Payment are common.
    • Use strong and unique passwords for online accounts. Use a phrase or series of words that can be easily remembered or use a password manager.
    • Use multi-factor authentication whenever possible. Many email providers and social media sites offer this feature. It helps prevents thieves from easily hacking accounts.
    • Shop at sites where the web address begins with "https" – the "s" is for secure communications over the computer network. Also, look for the “padlock” icon in the browser window.
    • Don't shop on unsecured public Wi-Fi in places like a mall. Remember, thieves can eavesdrop.
    • At home, secure home Wi-Fis with a password. With more homes connected to the web, secured systems become more important, from wireless printers, wireless door locks to wireless thermometers. These can be access points for identity thieves.
    • Back up files on computers and mobile phones. A cloud service or an external hard drive can be used to copy information from computers or phones – providing an important place to recover financial or tax data.
    • Working from home? Consider creating a virtual private network (VPN) to securely connect to your workplace.

    In addition, the Summit partners note these security measures include mobile phones – an area that people sometimes can overlook. Thieves have become more adept at compromising mobile phones. Phone users also are more prone to open a scam email from their phone than from their computer.

    Taxpayers can check out security recommendations for their specific mobile phone by reviewing the Federal Communications Commission's Smartphone Security Checker. Since phones are used for shopping and even for doing taxes, remember to make sure phones and tablets are just as secure as computers.

    The IRS will not call, text or email about your Economic Impact Payment or your tax refund. Nor will the IRS call with threats of jail or lawsuits over unpaid taxes. Those are scams.

    The Federal Bureau of Investigation issued warnings earlier about fraud and scams related to the pandemic. It specifically warned of COVID-19 schemes related to taxes, anti-body testing, healthcare fraud, cryptocurrency fraud and others. COVID-related fraud complaints can be filed at the National Center for Disaster Fraud.

    The Federal Trade Commission also has issued alerts about fraudulent emails claiming to be from the Centers for Disease Control or the World Health Organization. Consumers can keep atop the latest scam information and report COVID-related scams at www.FTC.gov/coronavirus.

    The IRS, state tax agencies, the private sector tax industry, including tax professionals, work in partnership as the Security Summit to help protect taxpayers from identity theft and refund fraud. This is the first in a week-long series of tips to raise awareness about identity theft. See IRS.gov/securitysummit for more details.

  • 30 Nov 2020 8:23 AM | Anonymous

    WASHINGTON – The Internal Revenue Service today reminded taxpayers of a special new provision that will allow more people to easily deduct up to $300 in donations to qualifying charities this year.

    Following special tax law changes made earlier this year, cash donations of up to $300 made before Dec. 31, 2020, are now deductible when people file their taxes in 2021.

    “Our nation’s charities are struggling to help those suffering from COVID-19, and many deserving organizations can use all the help they can get,” said IRS Commissioner Chuck Rettig. “The IRS reminds people there’s a new provision that allows for up to $300 in cash donations to qualifying organizations to be deducted from income. We encourage people to explore this option to help deserving tax-exempt organizations – and the people and causes they serve.”

    The Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted last spring, includes several temporary tax changes helping charities, including the special $300 deduction designed especially for people who choose to take the standard deduction, rather than itemizing their deductions.

    Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify for this new tax deduction. In tax-year 2018, the most recent year for which complete figures are available, more than 134 million taxpayers claimed the standard deduction, just over 87% of all filers.

    Under this new change, individual taxpayers can claim an “above-the-line” deduction of up to $300 for cash donations made to charity during 2020. This means the deduction lowers both adjusted gross income and taxable income – translating into tax savings for those making donations to qualifying tax-exempt organizations.

    Before making a donation, the IRS reminds people they can check the special Tax Exempt Organization Search tool on IRS.gov to make sure the organization is eligible for tax-deductible donations.

    Cash donations include those made by check, credit card or debit card. They don’t include securities, household items or other property. Though cash contributions to most charitable organizations qualify, some do not. Check Publication 526, Charitable Contributions, and the TEOS for more information.

    Though cash contributions to most charitable organizations qualify, those made to supporting organizations and donor-advised funds do not.

    The IRS reminds everyone giving to charity to be sure to keep good records. By law, special recordkeeping rules apply to any taxpayer claiming a charitable contribution deduction. Usually, this includes obtaining a receipt or acknowledgement letter from the charity, before filing a return, and retaining a cancelled check or credit card receipt. For details on these recordkeeping rules, see Publication 526, available on IRS.gov.

    In addition, the CARES Act includes other temporary provisions designed to help charities. These include higher charitable contribution limits for corporations, individuals who itemize their deductions and businesses that give food inventory to food banks and other eligible charities. For more information about these and other Coronavirus-related tax relief provisions, visit IRS.gov/Coronavirus.

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