IRS Tax News

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  • 16 May 2022 2:10 PM | Anonymous

    Revenue Ruling 2022-10 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274. 

    The rates are published monthly for purposes of sections 42, 382, 412, 642, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

    Revenue Ruling 2022-10 will be in IRB:  2022-23, dated June 6, 2022.


  • 16 May 2022 7:37 AM | Anonymous

    Notice 2022-27 provides a 6 month extension of the temporary relief from the physical presence requirement in § 1.401(a) 21(d)(6)(i) for a participant election required to be witnessed by a plan representative or a notary public if the participant election is witnessed by a notary public or by a plan representative, using an electronic system that satisfies the applicable requirements specified in section III.A and B, respectively, of Notice 2021-03.

    Notice 2022-27 will be in IRB: 2022-22, dated May 31, 2022.


  • 11 May 2022 10:56 AM | Anonymous

    Today, the IRS published the latest executive column, “A Closer Look,” which features Ken Corbin, IRS Taxpayer Experience Officer, discussing how the IRS is working to serve residents of Puerto Rico. This year marks the first time in history that many families with children in Puerto Rico will be eligible to claim the Child Tax Credit, which has been expanded to provide up to $3,600 per child. “We know we must start from the ground up to reach out to Puerto Rico residents who may have little or no experience filing a federal tax return or receiving the credit,” said Corbin. “Not only do we want them to know about the credit, but we also want them to know there is help – some of it free - for getting it.” 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.


  • 10 May 2022 11:44 AM | Anonymous

    WASHINGTON — Although filing season has come and gone, the Internal Revenue Service recognizes taxpayers still need assistance. To help taxpayers, the IRS today announced many Taxpayer Assistance Centers (TACs) around the country, including Puerto Rico, will be open and offering face-to-face help on Saturday, May 14.

    This special Saturday help is available from 9 a.m. to 4 p.m., and without an appointment. Normally, TACs are open by appointment only on weekdays.

    “We’re offering Saturday office hours so people can get the help they need,” said Taxpayer Experience Officer and IRS Wage & Investment Division Commissioner Ken Corbin. “We recognize and understand not everyone can get to an appointment during normal business hours.”

    The IRS.gov webpage, Contact your local office, lists all TAC services offered during the event and regular office hours. Many have used a Saturday visit to ask about IRS identity protection services, or to request Individual Taxpayer Identification Numbers (ITINs), refunds and payment options. Taxpayers can make payments by check or money order. The IRS will not accept cash during these events.

    People can also ask about using the IRS’s Tax Withholding Estimator, reconciling the advance Child Tax Credit or third-round of Economic Impact Payments. They can inquire about a tax bill, an IRS audit or a TAC’s other available services. If assistance is not available from IRS employees specializing in these services, individuals will receive a referral for them. Taxpayer Advocate Service employees may also be available to assist with issues that meet certain criteria.

    Foreign language interpreters will be available. IRS staff will schedule appointments for a later date for deaf or hard-of-hearing individuals who need sign language interpreter services.

    Before going to a TAC, Corbin encouraged everyone to visit IRS.gov where they’ll find many online resources that are safe, secure, convenient and explain how to prepare for a visit. This information is available in both English and Spanish.

    “We’d like to help everyone get the most out of their time with us,” he said. “Because appointments aren’t necessary for these special Saturday hours, wait times can be longer than usual, so plan accordingly and come prepared.”

    Come prepared with paperwork
    To arrive prepared, individuals should bring the following information:

    • Current government-issued photo identification,
    • Social Security cards for members of their household, including spouse and dependents (if applicable),
    • Any IRS letters or notices received and related documents, and
    • Those who plan to request identity verification services must bring two forms of identification and a copy of the tax return filed for the year in question, if they filed a return.

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

    • A current mailing address, and
    • Bank account information to receive payments or refunds by Direct Deposit.

    The IRS follows Centers for Disease Control social distancing guidelines for COVID-19, and availability may change without notice. When required by CDC guidance, such as in high transmission counties, it's mandatory for people to wear face masks and social distance at these events.

    Free tax return services provided at Puerto Rico TAC
    IRS Volunteer Income Tax Assistance (VITA) community partners will be available at the Guaynabo, Puerto Rico, TAC providing free tax preparation. Additional tax preparation assistance can be found in Puerto Rico by using the VITA/TCE Locator Tool. Puerto Rico residents can enter 00638 in the zip code field, and search in a 100-mile radius to get a list of open sites.

    Tax return preparation will not be available at any of the other event locations. However, some community partners are still providing free tax preparation services even though the filing season ended April 18. The VITA Locator Tool lists community partners that are still open.

    Anyone who still needs to file a 2021 federal tax return can use these free, safe and convenient resources:

    1. Any individual or family earning $73,000 or less in 2021 can use tax software from providers who make their online products available through IRS Free File at no cost. There are products in English and Spanish. Note: Form 1040-PR, U.S. Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico), is not available through IRS Free File. Individuals filing Form 1040-PR can use myfreetaxes.com instead.
    2. Free help preparing tax returns is available at any open Volunteer Income Tax Assistance Center  or Tax Counseling for the Elderly location site. The income limit for VITA assistance is $58,000. To find the closest free tax return preparation help, use the VITA Locator Tool or call 800-906-9887.

    More information:


  • 06 May 2022 4:54 PM | Anonymous

    Revenue Procedure 2022-22 provides simplified procedures for certain bona fide residents of the Commonwealth of Puerto Rico (Puerto Rico) to claim the child tax credit under § 24.   The Department of the Treasury and the Internal Revenue Service (IRS) have provided these procedures to make it easier for certain bona fide residents of Puerto Rico to file taxable year 2021 Federal tax returns to claim the child tax credit.

    Revenue Procedure 2022-22 will be in IRB:  2022-21, dated 05/23/2022.


  • 06 May 2022 4:52 PM | Anonymous

    WASHINGTON — The Internal Revenue Service today issued guidance for certain individuals in Puerto Rico on how to file and claim the Child Tax Credit payments that they are entitled to receive under the American Rescue Plan Act.

    "It's important for residents of Puerto Rico to know that starting with Tax Year 2021, having only one child qualifies you for the Child Tax Credit," said IRS Commissioner Chuck Rettig. "We want everyone in Puerto Rico who's entitled to this benefit to file to receive the Child Tax Credit."

    Residents of Puerto Rico must file a federal tax return with the IRS to claim the Child Tax Credit. The credit can be claimed on Form 1040-PR, Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia, Form 1040-SS, U.S. Self-Employment Tax Return, Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors. Form 1040-PR is a Spanish-language form. Form 1040 and Form 1040-SR have Spanish-language versions. One of these tax returns can be filed to claim the Child Tax Credit even after last month's filing deadline. In fact, families who don't owe taxes to the IRS can file their 2021 tax return and claim the Child Tax Credit for the 2021 tax year at any point until April 15, 2025, without any penalty.

    Revenue Procedure 2022-22PDF provides details for bona fide residents of Puerto Rico who have children but do not have a 2021 federal tax filing requirement, providing them with a simplified way to file one of these tax returns with the IRS to claim the Child Tax Credit. They may follow one of the simplified procedures announced today if:

    • Their income for taxable year 2021 is completely exempt from taxation because it is from sources within Puerto Rico,
    • Their modified adjusted gross income for purposes of the Child Tax Credit is less than or equal to (i) $150,000, if married and filing jointly or filing as a surviving spouse; (ii) $112,500, if filing as head of household; and (iii) $75,000, if the filer is a single filer or is married and filing a separate return,
    • They are eligible to claim the Child Tax Credit in an amount greater than zero,
    • They are a U.S. citizen or resident alien (or are treated as a United States resident),
    • They are not required to file a Form 1040-PR, Form 1040-SS, Form 1040, or Form 1040-SR for taxable year 2021, such as to report tax on self-employment income, and
    • They have not already filed a paper or electronic Form 1040-PR, Form 1040-SS, Form 1040, or Form 1040-SR for taxable year 2021.

    The simplified filing procedures direct eligible Form 1040-PR and Form 1040-SS filers to follow the instructions for those forms except that they are not required to report their modified adjusted gross income on line 1 of Part I of the tax return. Eligible Form 1040 and Form 1040-SR filers are directed to follow the instructions for those forms except that they are not required to report their modified adjusted gross income on lines 1 through 3 of Schedule 8812 (Form 1040), Credits for Qualifying Children and Other Dependents.

    For 2021, the American Rescue Plan increased the Child Tax Credit from $2,000 per qualifying child to:

    • $3,600 for children ages 5 and under at the end of 2021; and
    • $3,000 for children ages 6 through 17 at the end of 2021.

    The American Rescue Plan also made the credit fully refundable. This means that bona fide residents of Puerto Rico can claim the full amount of the credit for taxable year 2021 even if they had no income and paid no U.S. Social Security taxes.

    All filers may file a Schedule LEP (Form 1040), Request for Change in Language Preference (also available as Anexo LEP Formulario 1040(SP), Solicitud para Cambiar la Preferencia de Idioma), with their tax return to request a change in language preference for further communications from the IRS.

    For more information, please visit IRS.gov. To search for forms and instructions in Spanish, see Forms, Instructions & Publications.


  • 06 May 2022 12:09 PM | Anonymous

    WASHINGTON – With many businesses facing a tight job market, the Internal Revenue Service reminds employers to check out a valuable tax credit available for hiring long-term unemployment recipients and other groups of workers facing significant barriers to employment.

    During National Small Business Week, May 1 to 7, the IRS is highlighting tax benefits and resources tied to the theme for this year’s celebration: “Building a Better America through Entrepreneurship.” For any business now hiring, the Work Opportunity Tax Credit may help.
     
    What is the WOTC?
    This long-standing tax benefit encourages employers to hire workers certified as members of any of ten targeted groups facing barriers to employment. With millions of Americans out of work at one time or another since the pandemic began, the IRS notes that one of these targeted groups is long-term unemployment recipients who have been unemployed for at least 27 consecutive weeks and received state or federal unemployment benefits during part or all of that time. The WOTC is available for wages paid to certain individuals who begin work on or before Dec. 31, 2025.

    The other groups include certain veterans and recipients of various kinds of public assistance, among others. Specifically, the 10 groups are:

    • Temporary Assistance for Needy Families (TANF) recipients,
    • Unemployed veterans, including disabled veterans,
    • Formerly incarcerated individuals,
    • Designated community residents living in Empowerment Zones or Rural Renewal Counties,
    • Vocational rehabilitation referrals,
    • Summer youth employees living in Empowerment Zones,
    • Supplemental Nutrition Assistance Program (SNAP) recipients,
    • Supplemental Security Income (SSI) recipients,
    • Long-term family assistance recipients and
    • Long-term unemployment recipients.

    Qualifying for the credit
    To qualify for the credit, an employer must first request certification by submitting IRS Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, to their state workforce agency (SWA). It must be submitted to the SWA within 28 days after the eligible worker begins work. Employers should not submit Form 8850 to the IRS.

    Helping new hires
    Since many new hires may lack workplace experience, one way that employers can help these workers get off to a good start is to make sure they have the right amount of tax taken out of their pay. A great way to do that is to encourage them to use the Tax Withholding Estimator, a free online tool available on IRS.gov.

    By filling in a few key pieces of information, an employee can use the Tax Withholding Estimator to estimate the right amount of tax to have taken out of their pay. Among other things, this online tool can help them see how withholding affects their take-home pay, expected refund or tax due.

    The Tax Withholding Estimator will also help them correctly fill out Form W-4 , Employee’s Withholding Certificate. The employee gives this form to their employer, not the IRS.

    Once an employee has been on the payroll for a while, they can also use this tool to update their withholding to reflect important life changes, such as getting married, getting divorced or having a child.

    The Tax Withholding Estimator can also be a useful tool for existing employees by helping them avoid a year-end tax surprise. For more information, visit IRS.gov/Withholding.

    Claiming the credit
    Eligible businesses then claim the WOTC on their federal income tax return. It is generally based on wages paid to eligible workers during the first year of employment. This is a one-time credit for each new hire and an employer cannot claim the WOTC for employees who are rehired.

    The credit is first figured on Form 5884, Work Opportunity Credit, and then claimed on Form 3800, General Business Credit.

    Though the credit is not available to tax-exempt organizations for most groups of new hires, a special rule allows them to claim the WOTC for hiring qualified veterans. These organizations claim the credit against payroll taxes on Form 5884-C, Work Opportunity Credit for Qualified Tax Exempt Organizations Hiring Qualified Veterans .

    Additionally, see the LB&I and SB/SE Joint Directive on the WOTC the IRS issued to help certain employers affected by extended delays in the WOTC certification process.

    For more information about the Work Opportunity Tax Credit, visit IRS.gov/WOTC.


  • 05 May 2022 12:49 PM | Anonymous

    Today, the IRS published the latest executive column, “A Closer Look,” which features IRS Commissioner Chuck Rettig, discussing how to prepare for potential disasters from the aspect of safeguarding tax and financial records. “Whether you live in an area frequently impacted by disasters or not, being prepared for an event that could cause damage to your home, your personal property and important documents is critical,” said Rettig. “One of the most important things I tell family and friends to do is to safeguard their financial records.” 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.


  • 05 May 2022 12:08 PM | Anonymous

    WASHINGTON – The Internal Revenue Service today urged small businesses to take advantage of the accuracy, speed and convenience of filing their payroll tax returns and making tax payments electronically.

    During National Small Business Week, May 1 to 7, the IRS is highlighting tax benefits and resources tied to the theme for this year’s celebration: “Building a Better America through Entrepreneurship.” Filing and paying taxes electronically helps entrepreneurs leave more time for what they really want to do—build their businesses.

    What are payroll taxes?
    Also known as employment taxes, payroll taxes include federal income tax withheld from employee wages, as well as both the employer and employee portions of Social Security and Medicare taxes. In addition, payroll taxes include the Federal Unemployment Tax, also known as FUTA, which most employers need to pay but is not withheld from employee wages.

    In some cases, backup withholding applies to payments made to nonemployees, usually because the recipient failed to provide their correct Taxpayer Identification Number (TIN), to the business making the payments. A TIN can be either a social security number, employer identification number or individual taxpayer identification number. For more information about backup withholding see Tax Topic No. 307.

    Why e-file?
    All of the returns reporting these taxes can either be filed electronically or on paper. Though the number of payroll tax returns e-filed has grown steadily in recent years—more than doubling in the last decade alone, more than 40% of them are still filed on paper.

    Paper filers are missing out on all the advantages of electronic filing. E-file saves time, and it’s secure and accurate. Plus, the IRS acknowledges receipt of an electronically filed return within 24 hours. That doesn’t happen with paper filing.

    It’s much easier to make a mistake on paper. With electronic filing, any mistake is often discovered and fixed quickly. With paper filing, it may take weeks or even months to discover and correct a mistake.

    How to e-file
    Employers have two options: Do it themselves or have a tax pro do it for them. Those choosing to do it themselves will need to purchase IRS-approved software. Alternatively, the Authorized IRS e-file Providers Locator Service, an online database, can help any employer find a suitable tax professional.

    For more information about both options, visit IRS.gov/employmentefile.

    Pay taxes electronically
    Though some employers, especially those with small payrolls, can choose to pay their taxes when they file their payroll tax returns, most need to deposit them regularly with the Treasury Department instead. Federal tax deposits must be made by electronic funds transfer (EFT).

    The fastest and easiest way to do that is through the Electronic Federal Tax Payments System (EFTPS), a free service available from the Treasury Department. Payments can be made either online or by phone. Any business or individual can also use EFTPS to pay other federal taxes, including quarterly estimated taxes.

    Enrollment is required. To enroll or for more information, visit EFTPS.gov or call 800-555-4477 or TDD: 800-733-4829.

    More information about the tax rules that apply to employers can be found in Publication 15, (Circular E), Employer’s Tax Guide, available on IRS.gov.


  • 05 May 2022 11:10 AM | Anonymous

    IRS YouTube Videos
    Preparing for DisastersEnglish |Spanish | ASL

    WASHINGTON —The Internal Revenue Service reminded taxpayers today that May includes National Hurricane Preparedness Week and is National Wildfire Awareness Month. This is a good time to create or review an emergency preparedness plan, including steps to protect important tax-related information.

    In 2021, the Federal Emergency Management Agency (FEMA) declared major disasters following hurricanes, tropical storms, tornados, severe storms, straight-line winds, flooding, landslides and mudslides, wildfires and winter storms. Given the impact these events can have on individuals, organizations and businesses, now is the time to make or update an emergency plan. The following tips are intended to help taxpayers prepare for a natural disaster.

    Secure key documents and make copies
    Taxpayers should place original documents such as tax returns, birth certificates, deeds, titles and insurance policies inside waterproof containers in a secure space. Duplicates of these documents should be kept with a trusted person outside the area of the taxpayer. Scanning them for backup storage on electronic media such as a flash drive is another option that provides security and portability.
     
    Document valuables and equipment
    Current photos or videos of a home or business’s contents can help support claims for insurance or tax benefits after a disaster. All property, especially expensive and high value items, should be recorded. The IRS disaster-loss workbooks in Publication 584 can help individuals and businesses compile lists of belongings or business equipment.
     
    Employers should check fiduciary bonds
    Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider. The IRS reminds employers to carefully choose their payroll service providers.
     
    Rebuilding documents
    Reconstructing records after a disaster may be required for tax purposes, getting federal assistance or insurance reimbursement. Those who have lost some or all their records during a disaster can visit IRS’s Reconstructing Records webpage as one of their first steps. 

    IRS stands ready to help
    After FEMA issues a disaster declaration, the IRS may postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. There is no need to call the IRS to request this relief. The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. Those impacted by a disaster with tax-related questions can contact the IRS at 866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues.

    Taxpayers who do not reside in a covered disaster area but suffered impact from a disaster should call 866-562-5227 to find out if they qualify for disaster tax relief and to discuss other available options.

    Find complete disaster assistance and emergency relief details for both individuals and businesses on our Around the Nation webpage on IRS.gov. The FEMA Prepare for Disasters webpage includes information to Build a Kit of emergency supplies.

    Related items:


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