Virginia Society of Tax & Accounting Professionals IRS Tax News

Announcement 2026-07 : Anticipated Applicability Date for Future Final Regulations Relating to Required Minimum Distributions

Mon, 23 Feb 2026 21:06:53 GMT

Announcement 2026-07 provides that IRS and the Treasury Department anticipate that certain portions of future final regulations relating to required minimum distributions under section 401(a)(9) will apply for the distribution calendar year that begins no earlier than 6 months after the date that final regulations are issued in the Federal Register. In the interim, the Announcement states that taxpayers must apply a reasonable good-faith interpretation of the statutory provisions underlying the regulations.

Announcement 2026-07 will be in IRB: 2026-11, dated: March 9, 2026.

Issue Number: Tax Tip 2026-13 Common tax return mistakes to avoid

Sat, 21 Feb 2026 22:49:01 GMT

Mistakes and errors can happen, but most are easily avoidable when it comes to filing federal income tax returns. Taxpayers are encouraged to review their entire return before filing to make sure it is correct and complete. This is the case even if someone else prepared it, because ultimately, it’s the taxpayer’s responsibility to ensure the information on the return is accurate.

Here are just a few common errors that can be avoided:

Filing too soon: Most tax documents should have been received by now, but taxpayers need to be sure they have all their tax reporting documents before filing. The fastest and easiest way for taxpayers to view their tax records is by logging on to their IRS Online Account.
Incorrect filing status: Be sure to select only one filing status and make sure it is the correct one. What is my filing status? can help with the determination.
Inaccurate information: Taxpayers should carefully when entering any wages, dividends, bank interest and other income they receive to make sure they report the correct amounts.
Misspelled names or missing social security numbers: All names and taxpayer identification numbers must be provided for everyone listed on the return. Social security numbers and names should be entered exactly as they appear on each person’s Social Security card. If there have been any name changes, be sure to contact the Social Security Administration at SSA.gov or call them at 800-772-1213.
Credits and deductions: There are several new deductions and changes to certain credits for 2026. Taxpayers should make sure any deductions and credits are calculated correctly, and necessary documentation is provided.
Unsigned return: An unsigned return is considered invalid. If it’s a joint return, both must sign and date. However, exceptions may apply for members of the armed forces or other taxpayers who have a valid power of attorney.
Incorrect bank account information: Taxpayers who are owed a refund should choose direct deposit. This is the fastest way for them to get their money. However, taxpayers need to make sure they use the correct routing and account numbers on their tax return.

Submitting tax returns electronically ensures greater accuracy. The e-file system often detects common errors and rejects a tax return, sending it back to the taxpayer for correction. This could reduce or eliminate delays in processing a federal tax return. For information on filing, see File your tax return.

Notice 2026-07: Additional Interim Guidance Regarding the Application of the Corporate Alternative Minimum Tax

Sat, 21 Feb 2026 22:46:08 GMT

Notice 2026-7 provides interim guidance regarding the application of the corporate alternative minimum tax (CAMT) under §§ 55, 56A, and 59. Section 3 of this notice modifies the interim guidance provided in section 4 of Notice 2025-49 and addresses an adjustment to adjusted financial statement income (AFSI) for tax deductible repairs with respect to section 168 property. Section 4 of this notice modifies the interim guidance provided in section 9 of Notice 2025-49 and addresses an adjustment to AFSI for § 197 amortization attributable to certain intangibles. Section 5 of this notice addresses an adjustment to AFSI for amortization of domestic research or experimental expenditures. Section 6 of this notice addresses an adjustment to AFSI for certain production costs attributable to film, television, live theatrical, and sound recording productions. Section 7 of this notice addresses an adjustment to AFSI for certain low acquisition cost tangible property treated as materials and supplies. Section 8 of this notice clarifies and modifies the interim guidance for financially troubled companies provided in section 4 of Notice 2025-46. Section 9 of this notice modifies the anti-abuse rule in proposed § 1.56A-4 that would apply to certain covered asset transactions. Section 10 of this notice addresses certain CAMT consequences of transactions involving intangible property subject to § 367(d). Section 11 of this notice provides the applicability dates and requirements for reliance.

WILL BE IN IRB: 2026-11 DATED: March 9, 2026

Tax Tip 2026-12: New and enhanced deductions for individuals

Thu, 12 Feb 2026 18:22:48 GMT

There are several new tax deductions that have been introduced for the 2026 filing season. A deduction is an amount subtracted from the taxpayer’s income when filing. Deductions lower the taxable income resulting in lowering the federal income tax obligation.

New deductions for 2026 filing season

Seniors age 65 and older may be eligible to claim an additional $6,000 deduction
Tipped workers may be eligible to deduct up to $25,000 for qualified tips
Individuals may be eligible to deduct up to $12,500 ($25,000 for joint filers) for qualified overtime
Individuals may deduct up to $10,000 in qualified passenger vehicle loan interest

All new or enhanced deductions are available for both itemizing and non-itemizing taxpayers. Each of these deductions phase out based on income level for individual and joint filers and have specific eligibility requirements. This information can be found on the One, Big, Beautiful Bill provisions page for individuals and workers.

Standard deduction amounts for tax year 2025
The standard deduction is a flat amount based on federal income tax filing status (single, married filing separately, married filing jointly, head of household, or qualifying surviving spouse). The IRS adjusts the standard deduction annually for inflation.

$15,750 for single or married filing separately
$31,500 for married couples filing jointly or qualifying surviving spouse
$23,625 for head of household

Most people take the standard deduction. However, some may not be eligible to take it or if deductible expenses and losses are more than the standard deduction, taxpayers have the option to itemize deductions. Itemized deductions are subject to certain dollar limitations. They can include amounts paid during the taxable year for: state and local income or sales taxes, real property taxes, personal property taxes, mortgage interest, disaster losses, gifts to charities, certain gambling losses, and medical and dental expenses.

Taxpayers are reminded that they need documents to show expenses or losses they want to deduct. Tax software will calculate deductions and enter them in the right forms. Taxpayers who earned less than $89,000 in 2025 can use Free File guided tax software to prepare and electronically file their 2025 federal income tax returns for free. All taxpayers can use Free File Fillable Forms regardless of income level. The IRS Interactive Tax Assistant can help a person decide if they're eligible for many popular tax credits and deductions.

Treasury, IRS issue proposed regulations on the clean fuel production credit under the One, Big, Beautiful Bill

Tue, 03 Feb 2026 14:55:03 GMT

IR-2026-20, Feb. 3, 2026

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued proposed regulations for domestic producers of clean transportation fuel to determine their eligibility for and calculate the clean fuel production credit under the One, Big, Beautiful Bill. The new law made important changes to what is often referred to as the 45Z credit.

The clean fuel production credit provides businesses an income tax credit for clean transportation fuel produced domestically after Dec. 31, 2024, and sold by Dec. 31, 2029. To claim the credit, taxpayers must be registered with the IRS using Form 637, Application for Registration (For Certain Excise Tax Activities) at the time of production.

The proposed regulations provide guidance on the determination of clean fuel production credits, emissions rates, and certification and registration requirements. They provide further certainty and clarity for taxpayers and address key issues raised by stakeholders.

What’s new under the OBBB

Today’s guidance also proposes rules to implement certain OBBB changes to the clean fuel production credit. OBBB changed the clean fuel production credit to:

Extend the credit to Dec. 31, 2029;
Limit feedstocks to those grown or produced in the US, Mexico, or Canada;
Add prohibited foreign entity restrictions;
Broaden sale attribution for fuel sold through related intermediaries;
Eliminate the special rate for sustainable aviation fuel;
Add an anti-abuse provision to prevent double crediting;
Prohibit negative emissions rates except for fuels derived from animal manure;
Require feedstock-specific emissions rates for fuels derived from animal manure; and
Exclude indirect land use changes from emissions rates.

Treasury and IRS invite public comments

Treasury and IRS welcome comments and requests to speak at the public hearing on these proposed regulations. Commenters are encouraged to use the Federal e-Rulemaking portal to submit comments (indicate “IRS” and “REG-121244-23”). A public hearing has been scheduled as described in the “Comments and Public Hearing” section. Paper submissions should be sent to: CC:PA:01:PR (REG-121244-23), Room 5503, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

For more information, see One, Big, Beautiful Bill Provisions on IRS.gov.

IR-2026-19: IRS announces 2026 Tax Counseling for the Elderly and Volunteer Income Tax Assistance Program Grants

Fri, 30 Jan 2026 16:32:32 GMT

WASHINGTON — The Internal Revenue Service announced today the award of $53 million in Tax Counseling for the Elderly and Volunteer Income Tax Assistance grants to organizations that provide federal tax return preparation at no cost.

This year, the IRS awarded grants to 48 TCE and 315 VITA applicants. The IRS received 479 applications requesting over $79 million in funding.

“These grants ensure that VITA and elderly tax-counseling organizations have sufficient funding to provide assistance to individuals in need at local centers across the nation,” said Chief Executive Officer Frank J. Bisignano. “The IRS recognizes the important work these organizations do and salutes their efforts.”

The TCE program, established in 1978, provides no-cost tax counseling and federal return preparation to individuals who are age 60 or older. Volunteers receive training and technical assistance to help at community locations across the nation.

The VITA program, created in 1969, assists underserved communities, such as low- and moderate-income individuals and limited English proficient taxpayers. VITA grant recipients provide no-cost federal tax return preparation and electronic filing. The grant program helps to expand VITA services to underserved populations.

The IRS maintains partnerships with a wide variety of organizations across the country to develop VITA and TCE programs. Community partners include non-profit agencies, faith-based organizations, community centers and large employers. The IRS provides tax law training, certification and oversight to these organizations, assisting their efforts to prepare accurate returns.

For information on applying for the TCE or VITA programs visit Tax Counseling for the Elderly or IRS VITA Grant Program on IRS.gov. A current list of grant recipients will be available on these pages beginning January 31, 2026. For details on becoming a TCE or VITA volunteer, visit IRS Tax Volunteers.

IR-2026-13: IRS issues frequently asked questions about Executive Order 14247: Modernizing Payments To and From America’s Bank Account

Tue, 27 Jan 2026 19:25:07 GMT

IR-2026-13, Jan. 27, 2026

WASHINGTON — The Internal Revenue Service today issued frequently asked questions in Fact Sheet 2026-02 to help taxpayers, businesses, and other stakeholders understand the changes under Executive Order 14247: Modernizing Payment To and From America’s Bank Account.

“These FAQs support the Executive Order in its effort to reduce fraud, improve security, lower costs, and make payments to and from the IRS faster and more reliable," IRS Chief Executive Officer Frank J. Bisignano said.

Background

The U.S. Department of the Treasury, in collaboration with the IRS and other federal agencies, is transitioning federal payments to and from the government to electronic methods pursuant to Executive Order 14247, signed March 25, 2025.

These changes apply to:

Payments sent by the federal government, including tax refunds, benefits, grants, and vendor or contractor payments; and
Payments made to the federal government, including tax balances due, fees, penalties, and other payments from individuals, businesses, nonprofit organizations, and state or local partners.

Electronic payments are generally processed faster, cost less to handle, and reduce errors compared to paper payments. Limited exceptions to electronic payment requirements will be available in specific situations, such as those involving hardship and/or legal or procedural requirements.

Filing tax returns is not changing

The Executive Order does not change how taxpayers file their tax returns. Taxpayers will continue to file their returns in the same manner as they have in the past. The change affects how refunds are issued and how payments are made, not how returns are prepared or submitted, beginning with the 2026 filing season. For now, checks and money orders will still be accepted.

What taxpayers should do now

To prepare for these changes, the IRS encourages taxpayers to:

Use direct deposit for refunds by providing accurate bank or prepaid debit card information when filing.
Choose electronic payment options when paying taxes, such as IRS Direct Pay, Electronic Federal Tax Payment System, or other approved methods.
Review account information to ensure bank details are current and correct.
Visit IRS.gov to learn about electronic payment options and available resources for taxpayers without a bank account.

For more information about how the IRS is implementing the Executive Order, visit Modernizing Payments To and From America’s Bank Account on IRS.gov.

IRS Issue Number: Tax Tip 2026-06

Mon, 26 Jan 2026 23:15:14 GMT

One, Big, Beautiful Bill: How to take advantage of no tax on tips and overtime

The One, Big, Beautiful Bill has a significant effect on federal taxes, credits and deductions. Millions of taxpayers reported earning tips and overtime on their tax returns, many of them are veterans and people working in lower wage jobs. This relief will impact most of these taxpayers and they can start taking advantage of the deduction this filing season.

No tax on tips
Employees and self-employed individuals may deduct qualified tips received in certain qualified occupations, such as wait staff, bartenders, salon workers, personal trainers, gig economy workers, and many more who customarily and regularly receive tips might qualify.

Even better, tips earned on or before December 31, 2024, and are reported on a Form W-2, Form 1099, or other statement furnished to the individual or reported directly by the individual on Form 4137 can be deducted.

“Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing
Maximum annual deduction is $25,000; for self-employed, deduction may not exceed individual’s net income, without regard to this deduction, from the trade or business in which the tips were earned
The deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers)

To see examples of how “no tax on tips” is calculated, taxpayers should review this news release.

No Tax on Overtime
Individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay, generally, the “half” portion of “time-and-a-half” compensation, that’s required by the Fair Labor Standards Act and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.

Maximum annual deduction is $12,500 ($25,000 for joint filers)
Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers)
The deduction is available for both itemizing and non-itemizing taxpayers

IRS Newsletter Issue Number: 2025-48

Mon, 15 Dec 2025 16:39:12 GMT

Inside This Issue

1. New Tax Benefits for Health Savings Account Participants

The Department of the Treasury and the IRS issued Notice 2026-05 providing guidance on new tax benefits for Health Savings Account participants under the One, Big, Beautiful Bill (OBBB). These changes expand HSA eligibility, which allows more clients to save and to pay for healthcare costs through tax-free HSAs.

The OBBB expands access to HSAs by making the following changes:

Telehealth and Remote Care Services: The OBBB made permanent the ability to receive telehealth and other remote care services before meeting the high-deductible health plan (HDHP) deductible while remaining eligible to contribute to an HSA, effective for plan years beginning on or after Jan. 1, 2025.
Bronze and Catastrophic Plans Treated as HDHPs: As of Jan. 1, 2026, bronze and catastrophic plans available through an Exchange are considered HSA-compatible, regardless of whether the plans satisfy the general definition of an HDHP. This designation expands the ability of people enrolled in these plans to contribute to HSAs, which they generally have not been able to do in the past. Notice 2026-05 clarifies that bronze and catastrophic plans do not have to be purchased through an Exchange to qualify for the new relief.
Direct Primary Care Service Arrangements: Beginning Jan. 1, 2026, an otherwise eligible individual enrolled in certain direct primary care (DPC) service arrangements may contribute to an HSA. In addition, they may use their HSA funds tax-free to pay periodic DPC fees.

Notice 2026-05 addresses each of these changes. Treasury and the IRS invite comments on all aspects of this Notice by Mar. 6, 2026. Commentors are encouraged to use the Federal e-Rulemaking portal to submit comments online (indicate “IRS-2025-0335”). Paper submissions should be sent to: Internal Revenue Service, CC:PA:01:PR (Notice 2026-05), Room 5503, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

For more information, please see the One, Big, Beautiful Bill provisions page on IRS.gov.

2. 2025 Nationwide Tax Forum Online: Distributions from Retirement Plans and IRAs

Tax professionals may want to review the IRS Nationwide Tax Forum Online (NTFO) seminar Distributions from Retirement Plans and IRAs: A Crash Course before the end of the year. This seminar explains when clients may be required to take distributions from retirement plans and IRA accounts and when they are allowed to access retirement savings while still working. The seminar also covers exclusions, distribution codes, expanded contribution options for Roth accounts and more.

All NTFO self-study seminars cost $29 each. Tax pros can earn one continuing education credit for each NTFO self-study seminar or audit a presentation for free. For more information, visit irstaxforumonline.com.

3. New Contact Information for Collection Advisory Offices

Tax professionals can use Publication 4235, Collection Advisory Offices Contact Information, to determine which IRS office to contact with questions about certain collection-related topics, notices of federal tax lien and where to submit requests for lien-related certificates. Tax professionals and their clients generally should not send correspondence to their local office.

In addition to contact information for IRS offices, Publication 4235 also includes updated information about where to file certain applications and forms, along with IRS resources for a variety of topics. For example, it includes links to the understanding a federal tax lien webpage, online account where clients can check the total amount of their tax debt, frequently asked questions on estate taxes and more.

4. Technical Guidance

The IRS released draft versions of Form 8964-ELE, Section 987 Elections, and Form 8964-TRA, Section 987 Transition Information, as well as draft versions of the Instruction 8964-ELE and Instruction 8964-TRA.

On Dec. 11, 2024, Treasury and the IRS issued final regulations under section 987 of the Internal Revenue Code. The regulations generally apply to taxable years beginning after Dec. 31, 2024. The Treasury Department and the IRS are considering possible modifications to the 2024 final regulations in connection with deregulatory efforts.

Tax professionals and taxpayers can use the new Form 8964-ELE to make or revoke elections under the 2024 final regulations as required under Regulations section 1.987-1(g). Individuals can use the new Form 8964-TRA to report the section 987 transition information required under Regulations section 1.987-10(k).

The IRS is developing another new form, Form 8964, to report amounts computed under the 2024 final regulations. The IRS expects to release a draft version of Form 8964 for comments in the first half of 2026. The published form is expected to be applicable to tax year 2027. This timing provides taxpayers sufficient notice and opportunity to comment and allows time for consideration of modifications to the 2024 final regulations.

To minimize taxpayer burden, until tax year 2027, taxpayers should continue to report section 987 gain or loss amounts on Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities and Foreign Branches. Taxpayers should also complete the new Form 8964-ELE and Form 8964-TRA, as applicable.

The IRS expects to publish final versions of Form 8964-ELE, Form 8964-TRA and the related instructions in the first quarter of 2026.

Three recent IRS notices detail international tax law provisions under Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act:

Notice 2025-75 announces that the Department of the Treasury and the Internal Revenue Service intend to issue proposed regulations regarding the transition rule for dividends (the “transition rule”) in section 70354(c)(2). The transition rule modifies the application of section 951(a)(2)(B) of the Internal Revenue Code for certain taxable years of foreign corporations beginning before Jan. 1, 2026.
Notice 2025-77 describes proposed regulations Treasury and the IRS intend to issue under section 70312, providing guidance on the effective date and application of section 960(d)(4) of the Internal Revenue Code.
Notice 2025-78 announces that Treasury and the IRS intend to issue regulations regarding the new rules for calculating DEI. This notice primarily addresses the meanings of intangible property, “any other property of a type,” and sale or other disposition for section 250.

Notice 2025-75, Notice 2025-77 and Notice 2025-78 will be in Internal Revenue Bulletin 2025-52, dated Dec. 22, 2025.

IRS Issue IR-2025-121

Mon, 15 Dec 2025 16:37:48 GMT

Treasury, IRS allow States to make an Advance Election to participate in the new federal tax credit for individual contributions to Scholarship Granting Organizations under the One, Big, Beautiful Bill

IR-2025-121, Dec. 12, 2025

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued

Revenue Procedure 2026-6 allowing States, including the District of Columbia, to make an Advance Election to participate in a new tax credit for calendar year 2027. This new credit, established under the One, Big, Beautiful Bill, is for contributions to Scholarship Granting Organizations that serve elementary and secondary school students from low- and middle-income families.

Beginning Jan. 1, 2027, individual taxpayers may claim a nonrefundable federal tax credit for cash contributions to SGOs providing scholarships for elementary and secondary education expenses. The credit allowed to any taxpayer is limited to $1,700. However, for contributions to an SGO to be eligible for this credit, the SGO must be listed on a State list of one or more covered states for the applicable calendar year. A covered state is defined as one of the States, or the District of Columbia, that, for a calendar year, voluntarily elects to participate in the credit and identifies SGOs in the State.

Revenue Procedure 2026-6 provides that a State may choose to be a covered State for calendar year 2027 before it provides the IRS with a list of the SGOs located in the State, allowing SGOs additional time to prepare for the commencement of this new credit in 2027. To make this Advance Election, States must submit Form 15714, Advance Election to Participate Under Section 25F for 2027, on or after Jan. 1, 2026, and before the final date on which the State is permitted to submit the State SGO list. Form 15714 and its Instructions are now available on IRS.gov.

The deadline and procedure for perfecting the Advance Election by submitting the State SGO list will be provided in future guidance. Future guidance also will address how to make an election to participate in the new tax credit for calendar year 2027 at the same time the State submits the State SGO list, and how to make elections, including Advance Elections, to participate in the credit for subsequent calendar years.

Notice 2025-70 provides additional guidance and a request for comments regarding State SGO lists and certifications necessary for State elections.

For more information, please see the One, Big, Beautiful Bill provisions page on IRS.gov.

IRS Newsletter Issue Number: 2025-47

Mon, 08 Dec 2025 14:37:04 GMT

1. National Tax Security Awareness Week Recap

During the 10th National Tax Security Awareness Week, the Internal Revenue Service and the Security Summit partners raised awareness about tax-related identity theft and scams as the holidays and the upcoming tax season approach.

As the IRS and the Summit partners have strengthened their systems, identity thieves have increasingly turned their attention to stealing underlying tax and financial information from taxpayers, businesses, and tax professionals in hopes of slipping authentic-looking tax returns through the defenses. The IRS and Summit partners continue to focus on combating identity thieves and their increasingly sophisticated scams.

The IRS.gov/ntsaw webpage on IRS.gov includes tips and resources, including ready-to-use articles and e-posters tax professionals can share with clients. Tax professionals can also view a recorded IRS webinar: National Tax Security Awareness Week – Real-life Threats and Steps to Protect Your Business and Your Clients.

2. Treasury, IRS Issue Guidance on Trump Accounts Established Under the Working Families Tax Cuts; Notice Announces Upcoming Regulations

The Department of the Treasury and the Internal Revenue Service issued a notice announcing upcoming regulations and providing guidance regarding Trump Accounts, which are a new type of individual retirement account (IRA) for eligible children.

Notice 2025-68 provides a general overview of how Trump Accounts work and addresses certain initial questions about creating initial and rollover Trump Accounts, the $1,000 pilot program contribution, other contributions – including qualified general contributions and section 128 employer contributions – eligible investments, distributions, reporting, and coordination with the rules applicable to other types of IRAs.

The Working Families Tax Cuts Act provides for establishing a Trump Account on behalf of every eligible child for whom an election is made, generally by a parent or guardian, and who has not turned age 18 before the end of the calendar year in which the election is made. Taxpayers cannot make contributions to Trump Accounts before July 4, 2026.

Additionally, the federal government will make a one-time $1,000 pilot program contribution to the Trump Account of each eligible child for whom an election is made, who is a U.S. citizen and who is born on or after Jan. 1, 2025, through Dec. 31, 2028.

Certain governmental entities and charities may also make qualified general contributions to Trump Accounts, if given to a qualified class of account beneficiaries. Other persons are also able to make contributions up to an aggregate limit of $5,000 per year. Furthermore, an employer may contribute to a Trump Account of the employee or the employee’s dependent up to $2,500 per year (which counts against the $5,000 annual limit) under an employer’s Trump Account contribution program, and the contribution will not count toward the employee’s taxable income. The annual contribution limits are indexed to inflation and will adjust starting after 2027.

The funds in Trump Accounts must be invested in certain mutual funds or exchange-traded funds that track the S&P 500 or another index of primarily American equities.

Amounts generally cannot be withdrawn from Trump Accounts before Jan. 1 of the calendar year in which the child turns 18 years old. After that point, the account generally is treated as a traditional IRA and generally is subject to the same rules as other traditional IRAs.

The notice addresses certain areas of interest to prospective trustees of Trump Accounts and to those individuals, such as parents and guardians, who would like to establish and/or contribute to these accounts. The notice requests comments on numerous issues related to Trump Accounts.

The IRS is posting a draft version of Form 4547, Trump Account Election(s), to Draft tax forms. When final, the new form can be used to establish a Trump Account and to enroll in the pilot program.

The IRS continues to provide updates and additional information related to the tax benefits from the Working Families Tax Cuts Act at IRS.gov.

Please visit http://trumpaccounts.gov and IRS.gov/trumpaccounts for more information on Trump Accounts.

3. IRS Webinar: Professional Conduct in Tax Practice – A Circular 230 Overview

Register now for the Internal Revenue Service webinar on “Professional Conduct in Tax Practice: A Circular 230 Overview.”

The IRS is holding the webinar on Wednesday, Dec. 17, 2025, at 2 p.m. ET (1 p.m. CT, noon AZ and MT, 11 a.m. Pacific, 10 a.m. AK, 9 a.m. HI). The session will last 120 minutes, including a live Q&A.

After completing this session, participants will be able to:

Identify key statutory and regulatory authorities underlying Circular 230 and enforcement by the IRS Office of Professional Responsibility (OPR);
Describe OPR’s mission, structure, and investigatory process;
Explain the scope and structure of Circular 230 as it governs “practice” before the IRS by “practitioners”;
Identify the key provisions of Circular 230 relating to standards of competency and due diligence expected of practitioners, and;
Locate reliable IRS and OPR resources and contact information to support continued ethical practice.

Tax professionals can earn 2 CE credits by participating in this live webinar. The category is Ethics.

This webinar will be recorded as an archival video.

The webinar is offered with closed captioning. Closed captioning displays the words that describe the audio portion of the program for viewers who are deaf or hard of hearing. Captions are available in English only.

IRS webinars can be viewed the day they air on smartphones and tablets.

Send any questions in advance of the program to cl.sl.web.conference.team@irs.gov.

4. 2025 Nationwide Tax Forum Online: New Features for Tax Pros – Do Business Faster and Easier with IRS Online

One highlight of the IRS Nationwide Tax Forum Online (NTFO) is the seminar, New Features for Tax Pros: Do Business Faster and Easier with IRS Online. This session explains new features in IRS online accounts that help transform the digital experience with the IRS. Tax professionals will learn about the Tax Pro Account to view their clients’ tax information, manage and submit authorizations, and make payments or create payment plans on behalf of individual clients.

5. Technical Guidance

Notice 2025-60 sets forth the 2025 Required Amendments List (2025 RA List). The 2025 RA List applies to individually designed plans qualified under section 401(a) of the Internal Revenue Code and individually designed plans that satisfy the requirements of section 403(b). The 2025 RA List also applies to pre-approved plans with respect to interim amendments.

Notice 2025-60 will be in Internal Revenue Bulletin 2025-52, dated Dec. 22, 2025.

The IRS recently issued certifications for Rounds 1 & 2 of the Qualifying Advanced Energy Project Credit Allocation Program. Announcement 2025-22 provides the initial disclosure of each taxpayer that has been allocated a § 48C credit under Round 1 of the § 48C(e) program. Announcement 2025-23 provides the initial disclosure of each taxpayer that has been allocated a § 48C credit under Round 2 of the program. Both announcements include the amount of such credits allocated to each taxpayer, as required by § 48C(e)(7). Notice 2023-18 established the § 48C(e) program, which considers and awards certifications for qualified investments eligible for § 48C credits to qualifying advanced energy project sponsors and provided two allocation rounds. For Round 1, the IRS allocated approximately $4 billion. The IRS issued Round 1 allocation notification letters on March 29, 2024. For Round 2, the IRS allocated approximately $6 billion and issued notification letters on Jan. 10, 2025. Announcement 2025-22 is for projects certified during the period beginning on March 29, 2024, and September 30, 2025. Announcement 2025-23 is for projects certified during the period beginning on Jan. 10, 2025, and Sept. 30, 2025. The announcements also provide that the IRS will publish additional such announcements annually for certifications issued during each successive 12-month period beginning on Oct. 1, 2025.

IRS Issue Number: IR-2025-118

Wed, 03 Dec 2025 15:23:38 GMT

IRS and Security Summit partners announce 10th Annual National Tax Security Awareness Week

IR-2025-118, Dec. 3, 2025

WASHINGTON —The Internal Revenue Service working with the Security Summit partners today announced that the 10th National Tax Security Awareness Week began this week to raise awareness about tax-related identity theft and scams as the holidays and the upcoming tax season approach.

The Security Summit is coalition of the IRS, state tax administrators, tax software companies, the tax professional community and others in the larger tax community, organized to combat tax-related identity theft through a public-private sector partnership that strengthened internal protections and raised awareness about security threats.

“With the holiday shopping season underway and tax season quickly approaching, we are urging taxpayers and tax professionals to take extra steps to protect their financial and tax information,” said IRS CEO Frank Bisignano. “During this holiday season, people face the heightened risk of identity theft as criminals ramp up efforts to trick people into sharing sensitive personal information: identity thieves might use this information to try filing false tax returns and stealing refunds.”

The work of the Security Summit to strengthen internal systems and share information across the tax system about fraudsters continues to show results. Since its inception, the work of the Security Summit has helped protect millions of taxpayers against identity theft and prevented billions of dollars from being wrongly paid out to fraudsters.

The IRS and Summit partners continue to focus on combating identity thieves and their increasingly sophisticated scams. Identity thieves often impersonate the IRS and others in the tax community using fake emails, texts and online scams. These schemes frequently use recent tragedies or imitate charitable groups to coax people into sharing sensitive financial data, which can lead to tax-related identity theft.

There has been an increase of these activities on social media, including inaccurate tax advice that continues to mislead taxpayers. To help counter this, many of the Security Summit partners have joined together to form the Coalition Against Scam and Scheme Threats. This group will be increasingly active during the upcoming tax season.

A key tool in identifying and defending against these identity theft scams is the Identity Theft Information Sharing and Analysis Center, which was developed by the IRS and Security Summit partners to better identify and coordinate against fraudsters. As the group has strengthened defenses inside the tax system to spot emerging scams, identity thieves continue to look for new ways to obtain sensitive personal financial information to file fraudulent tax returns, making tax professionals and the sensitive tax information of their clients a target for scam artists.

Focus Areas

The IRS and Security Summit partners want taxpayers, tax professionals and businesses to be extra aware during the upcoming holiday season for the threats listed below.

Social media scams: Bad tax advice on social media can mislead taxpayers about their credit or refund eligibility. Influencers may convince taxpayers to lie on tax forms or suggest the IRS is keeping a tax credit secret from them. Social media posts may put taxpayers in touch with scammers.
Phishing and smishing: The IRS frequently warns against phishing emails and smishing texts, which are common tactics used by criminals to steal personal and financial information. The impersonator wants taxpayers to send them money. Opening links and attachments may harm their computer.
Protection for seniors: Scammers target people over age 65 or nearing retirement for personal or financial information or money. Often, once seniors give them money, they ask for more. When scammers trick them to withdraw from their retirement account, it could affect their taxes.
Protections for businesses and tax professionals: The IRS reminds tax professionals of their legal obligation to have a Written Information Security Plan and to use multi-factor authentication. Businesses are also advised to update their security measures and remain vigilant against cyberattacks.
Identity Protection PIN: An identity protection PIN is a six-digit number that prevents someone else from filing a tax return using a taxpayers Social Security number or individual taxpayer identification number. If taxpayers don't already have an IP PIN, they may get an IP PIN as a proactive step to protect themselves from tax-related identity theft. Anyone with an SSN or an ITIN can get an IP PIN including individuals living abroad.

More resources

For more information on preventing tax information theft, visit Security Summit.

Victims of identity theft can visit Identity Theft Central.

Find additional information at Tax Scams.

IRS Issue Number: IR-2025-117

Wed, 03 Dec 2025 15:08:06 GMT

Treasury, IRS issue guidance on Trump Accounts established under the Working Families Tax Cuts; notice announces upcoming regulations

IR-2025-117, Dec. 2, 2025

WASHINGTON – The Department of the Treasury and the Internal Revenue Service today issued a notice announcing upcoming regulations and providing guidance regarding Trump Accounts, which are a new type of individual retirement account (IRA) for eligible children.

The Working Families Tax Cuts provides for establishing a Trump Account on behalf of every eligible child for whom an election is made, generally by a parent or guardian, and who has not turned age 18 before the end of the calendar year in which the election is made. Contributions to Trump Accounts cannot be made before July 4, 2026.

The funds in Trump Accounts must be invested in certain mutual funds or exchange-traded funds that track the S&P 500 or another index of primarily American equities.

Amounts generally cannot be withdrawn from Trump Accounts before January 1^st of the calendar year in which the child turns 18 years old. After that point, the account generally is treated as a traditional IRA and generally is subject to the same rules as other traditional IRAs.

Today’s notice addresses certain areas of interest to prospective trustees of Trump Accounts and to those individuals, such as parents and guardians, who would like to establish and/or contribute to these accounts. The notice requests comments on numerous issues related to Trump Accounts.

The IRS is posting a draft version of Form 4547, Trump Account Election(s) to Draft tax forms. When final, the new form can be used to establish a Trump Account and to enroll in the pilot program.

The IRS continues to provide updates and additional information related to the tax benefits from the Working Families Tax Cuts at IRS.gov.

Please visit http://trumpaccounts.gov for more information on Trump Accounts.

Tax Speaker Newsletter: Tips and Overtime

Tue, 25 Nov 2025 17:10:21 GMT

On Friday, the IRS issued Notice 2025-69 which substantially relaxed employee requirements for taking the new tip and overtime deductions only for 2025. 2026 will still require reporting on the newly designed W-2, but this year’s deduction may rely on other methods and calculations.

Tip Deduction
For employees that do not have the tip amount reported correctly or completely, they may use the amounts on Box 7 of the W-2 or Form 4137 if employees, or their own tip logs if non-employees. Remember the tips need to have been reported as income to get the deduction, so if using a tip log make sure that the tip income was reported.

Although the occupation of an employee receiving tips may not appear on the Form W-2 furnished to the employee in 2025, the employee is still responsible for determining whether the tips received by the employee were received in an occupation that customarily and regularly received tips on or before December 31, 2024. The Notice also provides transition treatment for the specified service trade or business rule, treating 2025 tips as eligible if the occupation customarily received them before 12/31/24.

Employers are not required to separately account to the IRS for cash tips on the written W-2, 1099, or other statements furnished to individuals for 2025.

Overtime Deduction
Because of the confusion regarding overtime reporting and potential employer inability to report the amounts, an employee that has not had qualified tips reported to them may use any reasonable method to estimate the tips, with the most common method being to use 1/3 of the amount reported on check stubs or other employer forms as overtime pay if the employer has not provided the qualified overtime amount.

Employers are not required to separately account to the IRS for overtime on the written W-2 or other statements furnished to individuals for 2025. As we previously noted in last week’s special newsletter, employer reporting of qualified overtime is the best approach to avoid employee issues.

Example 1:
Bob’s last pay stub for 2025 shows “overtime premium” of $10,000 paid in 2025 (which is
Bob’s overtime premium paid at a rate of two times the individual’s regular rate). For purposes of determining the amount of qualified overtime compensation received in tax year 2025, Bob may include $5,000 ($10,000 divided by 2).

Example 2:
Charlie works in law enforcement and is paid $15,000 of total annual overtime pay on a “work period” basis of 14 days. For purposes of determining the amount of qualified overtime compensation received in tax year 2025, Charlie may include $5,000 ($15,000 divided by 3).

Notice 2025-73

Tue, 25 Nov 2025 00:21:15 GMT

Notice 2025-73 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for September 2025 used under § 417(e)(3)(D), the 24-month average segment rates applicable for October 2025, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

Notice 2025-73 will be in IRB: 2025-51, dated: December 15, 2025

IRS Issue Number: IR-2025-114

Fri, 21 Nov 2025 15:40:24 GMT

Treasury, IRS provide guidance for individuals who received tips or overtime during tax year 2025

IR-2025-114, Nov. 21, 2025

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued guidance for workers eligible to claim the deduction for tips and for overtime compensation for tax year 2025.

Notice 2025-69 clarifies for workers how to determine the amount of their deduction without receiving a separate accounting from their employer for cash tips or qualified overtime on information returns such as Form W-2 or Form 1099, as those forms remain unchanged for the current tax year. It also provides transition relief to workers who receive tips in the course of a specified service trade or business.

The IRS is in the process of updating income tax forms and instructions for taxpayers to use this filing season that will assist them in claiming these deductions.

No Tax on Tips

Under the One, Big, Beautiful Bill, workers may be eligible for new deductions for tax years 2025 through 2028 if they received qualified tips. For tipped workers, the maximum annual deduction is $25,000, which phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

It is estimated that there are about 6 million workers who report tipped wages.

Examples of how the rules work for tipped employees

Today’s guidance provides examples to illustrate various situations tipped employees might encounter; below are abridged versions of some of those examples.

Waiter with reported tips in box 7, Form W-2

Ann is a restaurant server whose 2025 Form W-2, box 7 reports $18,000 of social security tips. Ann did not report any additional tips on Form 4137. Ann may use $18,000 in determining the amount of her qualified tips for tax year 2025.

Bartender with additional reported tips on Form 4137

Bob is a bartender who reports $20,000 in tips to his employer during the 2025 tax year on Forms 4070 and reports $4,000 of unreported tips on Form 4137, line 4. Bob’s 2025 Form W-2 reports $200,000 in box 1 and $15,000 in box 7. Bob may use either the $15,000 in box 7 of the Form W-2, or the $20,000 of tips reported to Bob’s employer on Forms 4070 in determining the amount of qualified tips for tax year 2025. Regardless of the option chosen, Bob may also include the $4,000 of unreported tips from Form 4137, line 4 in determining the amount of qualified tips.

Self-employed travel guide

Doug is a self-employed travel guide who operates as a sole proprietor. In 2025, Doug receives $7,000 in tips from customers paid through a third-party settlement organization (TPSO). For tax year 2025, Doug receives a Form 1099-K from the TPSO showing $55,000 of total payments. The Form 1099-K does not separately identify the tips. However, Doug keeps a log of each tour that shows the date, customer, and tip amount received. Because Doug has daily tip logs substantiating the $7,000 tip amount, he may use the $7,000 tip amount in determining qualified tips for tax year 2025.

No Tax on Overtime

For tax years 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay (generally, the “half” portion of “time-and-a-half” compensation) that is required by the Fair Labor Standards Act and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.

Maximum annual deduction is $12,500 ($25,000 for joint filers).
Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

The deduction is available for both itemizing and non-itemizing taxpayers.

Certain employees are exempt from the rules on overtime

Generally, the FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half their regular rate of pay for all hours worked over 40 in a workweek. However, the law provides for certain exemptions.

Today’s guidance provides a series of examples illustrating situations that workers who receive qualified overtime might encounter. Today’s guidance does not affect any rights or responsibilities regarding tips or overtime compensation under the FLSA. Below are abridged versions of some of those examples.

Overtime examples

Andrew works overtime during 2025, and he receives a payroll statement from his employer that shows $5,000 as the “overtime premium” that he was paid during 2025. Andrew may include $5,000 (the FLSA overtime premium) to determine the amount of qualified overtime compensation received in tax year 2025.

Assume the same facts as in the first example except that Andrew’s payroll statement shows a total “overtime” amount of $15,000, which is the total amount Andrew was paid for working overtime (the FLSA overtime premium combined with the portion of his regular wages). Andrew may include the $5,000 FLSA overtime premium, computed by dividing $15,000 by 3 in determining the amount of qualified overtime compensation for 2025.

Brad’s employer has a practice of paying overtime at a rate of two times an employee’s regular rate of pay, and Brad was paid $20,000 in overtime pay during 2025. Brad’s last pay stub for 2025 shows “overtime” of $20,000 paid in 2025. For purposes of determining the amount of qualified overtime compensation received in tax year 2025, Brad may include $5,000 ($20,000 divided by 4).

Carol is a covered, nonexempt employee under the FLSA and works in law enforcement and is paid $15,000 of overtime pay on a “work period” basis of 14 days that complies with the FLSA. See Fact Sheet #8: Law Enforcement and Fire Protection Employees Under the Fair Labor Standards Act (FLSA) | U.S. Department of Labor. For purposes of determining the amount of qualified overtime compensation received in tax year 2025, Carol may include $5,000 ($15,000 divided by 3).

Diane works for a State or local government agency that gives compensatory time at a rate of one and one-half hours for each overtime hour worked. In 2025, Diane was paid wages of $4,500 for compensatory time off based on that overtime. To determine the amount of qualified overtime compensation received in tax year 2025, Diane may include $1,500, one-third of these wages, for purposes of determining the qualified overtime compensation deduction.

Guidewire Notice 2025-69

Fri, 21 Nov 2025 15:38:54 GMT

Notice 2025-69 provides guidance to individual taxpayers who are eligible for the federal income tax deductions for qualified tips or qualified overtime compensation for tax year 2025. These new deductions were added by Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA). As part of the phased implementation of the OBBBA, there will be no changes to the 2025 Form W-2, Form 1099-NEC, Form 1099-MISC, or Form 1099-K to account for the new reporting requirements in the OBBBA. As a result, employers and other payors will not be required to separately account for cash tips or qualified overtime compensation on those forms furnished to individuals for 2025. In the absence of this information reporting, this Notice provides guidance for individual taxpayers on how to satisfy the requirements for the deductions, including how to determine the amount of the qualified tips or qualified overtime compensation, for tax year 2025. This Notice also provides transition relief for taxpayers regarding the requirement that qualified tips must not be received in the course of a trade or business that is a specified service trade or business. This Notice does not affect any rights or responsibilities regarding tips or overtime compensation under the Fair Labor Standards Act of 1938, as amended.

IRS Notice

Thu, 20 Nov 2025 17:43:32 GMT

Notice 2025-71 provides interim rules under section 139L to clarify the partial exclusion from gross income of interest received by qualified lenders on loans secured by rural or agricultural property. The interim guidance defines key terms in section 139L and establishes standards for determining whether a loan is secured by rural or agricultural property. The interim guidance includes a safe harbor, which allows qualified lenders to treat a loan as secured by rural or agricultural property if certain parameters are met. The interim guidance also provides rules regarding refinancings.

Notice 2025-71 will be in IRB: 2025-50, dated: December 8, 2025

IRS Issue #IR-2025-113

Thu, 20 Nov 2025 17:42:34 GMT

Treasury, IRS issue guidance on tax benefit for lenders on loans secured by farm or rural property under the One, Big, Beautiful Bill

IR-2025-113, Nov. 20, 2025

WASHINGTON – The Department of the Treasury and the Internal Revenue Service today issued guidance for a new tax benefit for certain lenders that make loans secured by rural or agricultural real property. Notice 2025-71 provides interim guidance that taxpayers may rely on until the Treasury Department and the IRS issue forthcoming proposed regulations.

OBBB added section 139L to the Internal Revenue Code, which allows certain lenders to exclude from gross income 25% of the interest they receive from loans secured by rural or agricultural real property. The interim guidance provided today defines key terms from section 139L, establishes standards for determining whether a loan is secured by rural or agricultural property, and provides rules regarding refinancings.

Interested parties are requested to submit comments about the notice to assist in the drafting of the forthcoming proposed regulations. Comments may be submitted through www.regulations.gov (type IRS-2025-0400 in the search field) or by mail, to Internal Revenue Service, CC:PA:01:PR (Notice 2025-71) Room 5503, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

For more information, please see the One, Big, Beautiful Bill provisions page on IRS.gov.

IRS News Issue # 2025-44

Mon, 17 Nov 2025 15:36:50 GMT

Inside This Issue

1. Reminder: Data Breach – You Might Be Next! What to Look For & How to Protect Yourself

IRS representatives continue hosting sessions to help educate tax professionals about warning signs and steps to take to prevent data breaches.

Sessions will be held on:

Wednesday, November 19, 2025
Tuesday, November 25, 2025

Join either day at one of the times listed below:

Noon ET (11 a.m. CT, 10 a.m. MT, 9 a.m. PT) or
3 p.m. ET (2 p.m. CT, 1 p.m. MT, noon PT)

All sessions are 30 minutes long.

There’s no need to register for the briefings. Just join by clicking the link for the Microsoft Teams Meeting. All sessions use the same link.

IRS Speakers:

Glenn Gizzi, senior tax analyst, Data Breach
Mark Henderson, information technology specialist, Cybersecurity

Topics include:

Practitioner Scams: IRS Cybersecurity will describe the most prolific scams for which practitioners should watch. See sample scam emails and learn about different ways scammers attempt to steal your clients’ information.
Data Breaches: The IRS Data Breach program lead will describe what happens when you experience a data breach; the next steps involved; and the resources available to you, such as the Written Information Security Plan (WISP).
Identity Protection PIN: Learn how you can help yourself and your clients protect federal tax return information.
How This Affects You: Learn how your local area is affected by scams and data breaches.

Participants will receive helpful links to help themselves and their clients.

Please note: CE/CPE will not be granted for these sessions.

If you have a data breach/scam question, please email StakeholderLiaison@irs.gov in advance of the program.

2. Continuing Education Seminars Available on IRS Nationwide Tax Forum Online

The IRS encourages tax professionals to register for the IRS Nationwide Tax Forum Online to get access to 15 seminars recorded at the 2025 IRS Nationwide Tax Forum. The Nationwide Tax Forum Online offers tax professionals a convenient way to stay informed about current legislation, IRS procedures and key topics for the upcoming tax season.

Each seminar features a 50-minute interactive video presentation with synchronized slides, downloadable materials and complete transcripts. Courses can be taken for continuing education (CE) credit for a fee of $29 per credit, or they can be reviewed for free (no CE credit).

3. 401(k) and IRA Contribution Limits Increased for 2026

The IRS announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2026. Tax professionals can share these limits with their clients to assist with retirement planning.

The amount individuals can contribute to their 401(k) plans in 2026 increases to $24,500, up from $23,500 for 2025. This annual contribution limit also applies to employees who participate in 403(b) plans, governmental 457 plans and the federal government’s Thrift Savings Plan.

The limit on annual contributions to an IRA increases to $7,500 from $7,000. The SECURE 2.0 Act of 2022 amended the IRA catch-up contribution limit for individuals aged 50 and over to include an annual cost-of-living adjustment increase to $1,100, up from $1,000 for 2025.

Also, the income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2026.

All cost-of-living adjustments affecting dollar limitations – including phase-out limitations – for pension plans and other retirement-related items for tax year 2026 appear in Notice 2025-67.

4. Educate Yourself about Education Tax Benefits

Tax professionals can refresh their knowledge about tax benefits for education by visiting the information center on IRS.gov. It includes overviews of scholarships, education credits, deductions, savings plans and more.

To prepare for the upcoming filing season, tax professionals may want to educate their clients with student dependents about these topics.

5. Technical Guidance

Interest rates will remain the same for the calendar quarter beginning Jan. 1, 2026.

The rates are:

7% for overpayments (payments made in excess of the amount owed), 6% for corporations
4.5% for the portion of a corporate overpayment exceeding $10,000
7% for underpayments (taxes owed but not fully paid)
9% for large corporate underpayments

The rates are compounded daily.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rates are 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 above are computed from the federal short-term rate determined during October 2025.

See Revenue Ruling 2025-22 for details. The revenue ruling will appear in Internal Revenue Bulletin 2025-48, dated Nov. 24, 2025.

IRS Newsletter: Issue # IR-2025-112

Fri, 14 Nov 2025 15:13:33 GMT

CORRECTED version of IR-2025-112: Yesterday's newswire incorrectly stated the interest rate for corporate overpayments exceeding $10,000; the correct interest rate is 4.5%.

Interest rates remain the same for the first quarter of 2026

IR-2025-112, Nov. 13, 2025

WASHINGTON — The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning Jan. 1, 2026.

For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily.

The rates are as follows:

7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
4.5% for the portion of a corporate overpayment exceeding $10,000.
7% for underpayments (taxes owed but not fully paid).
9% for large corporate underpayments.

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 October 2025. See the revenue ruling for details.

Revenue Ruling 2025-22 announcing the rates of interest will appear in Internal Revenue Bulletin 2025-48, dated Nov. 24, 2025.

IRS Newsletter: Issue Number 2025-43

Mon, 10 Nov 2025 13:31:52 GMT

Inside This Issue

1. Nationwide Tax Forum Online Launches with New Continuing Education Content

The IRS launched the 2025 Nationwide Tax Forum Online, providing tax professionals access to seminars recorded at this year's IRS Nationwide Tax Forum.

The Nationwide Tax Forum Online provides information to tax professionals on current tax law, IRS procedures and essential topics for the upcoming tax season. Each seminar features a 50-minute interactive video presentation synchronized with PowerPoint slides, downloadable resources and full transcripts.

Tax professionals can earn continuing education credit for a fee of $29.00 per credit. Courses can also be reviewed for free.

To access the seminars, a tax professional needs to either have or create an account on the IRS Nationwide Tax Forum Online website. Instructions can be found on the FAQs tab on the website.

The 15 new 2025 seminars available now are:

Building a Sustainable Practice Through Ethics.
Distributions from Retirement Plans and IRA's: A Crash Course.
How to Help Taxpayers Avoid Abusive Tax Promotions and Abusive Return Preparers.
Introduction to OPR and Circular 230.
Law and Audit – The Due Diligence Process.
New Features for Tax Pros: Do Business Faster and Easier with IRS Online.
Plenary Session: Tax Law Changes for Tax Year 2025.
Retirement Plans Basics 101 for the Practitioner.
Stand Out as a Trusted Tax Professional: A Guide to Prepare Accurate Refundable Tax Credit Returns for Your Clients.
Taxable Digital Asset Transactions: The Impact of the 1099-DA on Tax Year 2025.
Using IRS Digital Tools and Communications Options for Practitioners.
Partnerships and Non-resident Alien Withholding: Sections 1446(a) and 1446(f).
How to Avoid Processing Delays and Streamline Return Filing.
Getting Taxpayers Back on Track: Quickly Resolving Unpaid Tax Debts While Preventing New Ones from Occurring.
Disaster Reporting Best Practices – Maximizing Resources from A to Z.

The IRS Nationwide Tax Forum Online is a continuing education provider certified by the National Association of State Boards of Accountancy and the IRS Return Preparer Office.

2. Learn about Protecting Your Practice from Data Breaches

IRS representatives are hosting a series of sessions to help educate tax professionals about warning signs and steps to take to prevent data breaches. The IRS is seeing an increase in the number of reported data breaches affecting tax professionals.

Tax professionals interested in joining can choose a session on three different dates.

Data Breach – You Might Be Next! What to Look Out for & How to Protect Yourself

Thursday, November 13, 2025
Wednesday, November 19, 2025
Tuesday, November 25, 2025

Join any day at either of the times listed below:

Noon ET (11 a.m. CT, 10 a.m. MT, 9 a.m. PT) or
3 p.m. ET (2 p.m. CT, 1 p.m. MT, noon PT)

All sessions are 30 minutes long.

There’s no need to register for the briefings. Just join by clicking the link for the Microsoft Teams Meeting. All sessions use the same link.

IRS Speakers:

Glenn Gizzi, senior tax analyst, Data Breach
Mark Henderson, information technology specialist, Cybersecurity

Topics include:

Practitioner Scams: IRS Cybersecurity will describe the most prolific scams that practitioners should watch out for. See sample scams emails and learn about different ways scammers attempt to steal your clients’ information.
Data Breaches: The IRS Data Breach program lead will describe what happens when you experience a data breach, the next steps involved and the resources available to you such as the Written Information Security Plan (WISP).
Identity Protection PIN: Learn how you can help yourself and your clients protect federal tax return information.
How This Affects You: Learn how your local area is affected by scams and data breaches.

Participants will receive helpful links to help themselves and their clients.

Please note: CE/CPE will not be granted for these sessions.

If you have a data breach/scam question, please email StakeholderLiaison@irs.gov in advance of the program.

3. Penalty relief for information reporting on tips and overtime under the One, Big, Beautiful Bill

The Department of the Treasury and the Internal Revenue Service issued guidance providing penalty relief to employers and other payors for taxable year 2025 regarding new information reporting requirements for cash tips and qualified overtime compensation under the One, Big, Beautiful Bill.

Tax professionals should be aware of this guidance since it could impact business clients with employees as well as individual clients who receive tips or overtime compensation.

Notice 2025-62 provides penalty relief from the new information reporting requirements for cash tips and qualified overtime compensation under the OBBB to employers and other payors for not filing correct information returns and not providing correct payee statements to employees and other payees.

Specifically, employers and other payors will not face penalties for failing to provide a separate accounting of any amounts reasonably designated as cash tips or the occupation of the person receiving such tips. In addition, employers and other payors will also not face penalties for failing to separately provide the total amount of qualified overtime compensation. The relief is limited to returns and statements filed and provided for taxable year 2025 and applies only to the extent that the person required to make the return or statement otherwise files and provides a complete and correct return or statement.

Employers and other payors may not currently have the information required to be reported under the OBBB, or they may not have the systems or procedures in place to be able to correctly file the additional information with the IRS, or SSA in the case of a Form W-2, and provide it to employees and other payees. Also, the IRS has announced that they will not update Forms W-2 and 1099 for tax year 2025 to account for the OBBB-related changes. Therefore, the IRS is treating tax year 2025 as a transition period for enforcement and administration of the new information reporting requirements for cash tips and qualified overtime compensation under the OBBB.

While not a requirement to receive the penalty relief provided in Notice 2025-62, the IRS encourages employers and other payors to provide employees and payees, particularly those in a tipped occupation, with the occupation codes and separate accountings of cash tips, so the employee or payee can claim the deduction for qualified tips for taxable year 2025. Likewise, the IRS encourages employers and payors to provide employees and payees with separate accountings of overtime compensation, so the employee or payee has readily available the information necessary to claim the deduction for qualified overtime compensation for taxable year 2025. Employers and payors can make the information available to their employees and payees through an online portal, additional written statements provided to the employees or payees, other secure methods, or in the case of qualified overtime compensation in Box 14 of the employee’s Form W-2.

The new reporting requirements under the OBBB include:

No tax on tips: Certain employees and self-employed individuals who receive qualified tips may deduct qualified tips reported on a Form W-2, Form 1099, or reported directly by the individual on Form 4137. Employers and other payors must file information returns with the IRS, or SSA in the case of Form W-2, and provide statements to taxpayers showing certain cash tips received during the year and the occupation of the tip recipient.
No tax on overtime: Certain individuals who receive qualified overtime compensation may deduct the qualified overtime compensation reported on a Form W-2 or Form 1099. Employers and other payors must file information returns with the IRS, or SSA in the case of Form W-2, and provide statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.

Notice 2025-62 will be in Internal Revenue Bulletin 2025-48, dated November 24, 2025. Tax professionals should be on the lookout for forthcoming guidance for individual taxpayers that addresses how they can claim the deductions for qualified tips and qualified overtime compensation when they file their taxable year 2025 returns.

For more information, refer to the One, Big, Beautiful Bill provisions page on IRS.gov.

4. Tax Relief for Taxpayers Affected by Disaster Situations in Parts of Alaska, North Dakota and South Dakota

Certain taxpayers in Alaska, North Dakota and South Dakota were granted tax relief by the IRS.

For Alaska, this includes individuals and businesses in the Lower Kuskokwim Regional Educational Attendance Area, Lower Yukon Regional Educational Attendance Area, and Northwest Arctic Borough affected by severe storms, flooding and remnants of Typhoon Halong that began on Oct. 8, 2025. These taxpayers now have until May 1, 2026, to file various federal individual and business tax returns and make tax payments.

For North Dakota and South Dakota, this includes individuals and businesses in the Sisseton-Wahpeton Oyate Tribal Nation affected by severe storms and flooding that began on June 12, 2025. These taxpayers now have until Feb.2, 2026, to file various federal individual and business tax returns and make tax payments.

Tax relief in disaster situations includes additional details for taxpayers affected by these and other disaster situations.

The IRS encourages tax professionals to help spread the word about this tax relief. Please share this information with other tax professionals and taxpayers who are located near the areas impacted by these disasters.

5. IRS Operations During the Lapse in Appropriations

During the current lapse in appropriations, tax professionals and their clients can use tools on IRS.gov including Tax Pro Account, online account for individuals and Business Tax Account.

Tax professionals can use these resources to set up their own IRS online accounts and encourage clients to begin using the accounts, too:

IRS Newsletter: Issue Number: IR-2025-110

Thu, 06 Nov 2025 15:22:53 GMT

Treasury, IRS provide penalty relief for tax year 2025 for information reporting on tips and overtime under the One, Big, Beautiful Bill

IR-2025-110, Nov. 5, 2025

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued guidance providing penalty relief to employers and other payors for tax year 2025 regarding new information reporting requirements for cash tips and qualified overtime compensation under the One, Big, Beautiful Bill.

Transition penalty relief for tax year 2025

Specifically, employers and other payors will not face penalties for failing to provide a separate accounting of any amounts reasonably designated as cash tips or the occupation of the person receiving such tips. In addition, employers and other payors will also not face penalties for failing to separately provide the total amount of qualified overtime compensation. The relief is limited to returns and statements filed and provided for tax year 2025 and applies only to the extent that the person required to make the return or statement otherwise files and provides a complete and correct return or statement.

Treasury and IRS are aware that employers and other payors may not currently have the information required to be reported under the OBBB, or the systems or procedures in place to be able to correctly file the additional information with the IRS, or SSA in the case of a Form W-2 and provide it to employees and other payees. Moreover, the IRS has announced that Forms W-2 and 1099 for tax year 2025 will not be updated to account for the OBBB-related changes. Therefore, tax year 2025 will be treated as a transition period for IRS enforcement and administration of the new information reporting requirements for cash tips and qualified overtime compensation under the OBBB.

While not a requirement to receive the penalty relief provided in Notice 2025-62, employers and other payors are encouraged to provide employees and payees, particularly those in a tipped occupation, with the occupation codes and separate accountings of cash tips, so the employee or payee can claim the deduction for qualified tips for tax year 2025. Likewise, employers and payors are encouraged to provide employees and payees with separate accountings of overtime compensation, so the employee or payee has readily available the information necessary to claim the deduction for qualified overtime compensation for tax year 2025. Employers and payors can make the information available to their employees and payees through an online portal, additional written statements provided to the employees or payees, other secure methods, or in the case of qualified overtime compensation in Box 14 of the employee’s Form W-2.

New reporting requirements under the OBBB

No tax on tips: Certain employees and self-employed individuals who receive qualified tips may deduct qualified tips that are reported on a Form W-2, Form 1099, or reported directly by the individual on Form 4137. Employers and other payors must file information returns with the IRS, or SSA in the case of Form W-2, and provide statements to taxpayers showing certain cash tips received during the year and the occupation of the tip recipient.

No tax on overtime: Certain individuals who receive qualified overtime compensation may deduct the qualified overtime compensation that is reported on a Form W-2 or Form 1099. Employers and other payors are required to file information returns with the IRS, or SSA in the case of Form W-2, and provide statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.

Additional guidance for individual taxpayers that addresses how they can claim the deductions for qualified tips and qualified overtime compensation when they file their tax year 2025 returns is forthcoming.

For more information, please see the One, Big, Beautiful Bill provisions page on IRS.gov.

IRS Newsletter Issue Number: IR-2025-109

Tue, 04 Nov 2025 16:11:27 GMT

Nationwide Tax Forum Online launches with new continuing education content

IR-2025-109, Nov. 4, 2025

WASHINGTON —The Internal Revenue Service today announced the launch of the 2025 Nationwide Tax Forum Online, providing tax professionals access to seminars recorded at this year's IRS Nationwide Tax Forum.

Tax professionals can earn continuing education credit for a fee of $29.00 per credit. Courses can also be reviewed for free.

To access the seminars, a tax professional needs to either have or create an account on the IRS Nationwide Tax Forum Online website. Instructions can be found on the FAQs tab on the website.

New 2025 seminars available online now

The 15 new 2025 seminars available now are:

Building a Sustainable Practice Through Ethics.
Distributions from Retirement Plans and IRA's: A Crash Course.
How to Help Taxpayers Avoid Abusive Tax Promotions and Abusive Return Preparers.
Introduction to OPR and Circular 230.
Law and Audit – The Due Diligence Process.
New Features for Tax Pros: Do Business Faster and Easier with IRS Online.
Plenary Session: Tax Law Changes for Tax Year 2025.
Retirement Plans Basics 101 for the Practitioner.
Stand Out as a Trusted Tax Professional: A Guide to Prepare Accurate Refundable Tax Credit Returns for Your Clients.
Taxable Digital Asset Transactions: The Impact of the 1099-DA on Tax Year 2025.
Using IRS Digital Tools and Communications Options for Practitioners.
Partnerships and Non-resident Alien Withholding: Sections 1446(a) and 1446(f).
How to Avoid Processing Delays and Streamline Return Filing.
Getting Taxpayers Back on Track: Quickly Resolving Unpaid Tax Debts While Preventing New Ones from Occurring.
Disaster Reporting Best Practices – Maximizing Resources from A to Z.

The IRS Nationwide Tax Forum Online is a continuing education provider certified by the National Association of State Boards of Accountancy and the IRS Return Preparer Office.

IRS Issue Number: IR-2025-108

Mon, 27 Oct 2025 19:23:15 GMT

IRS reminds tax pros to renew PTINs for the 2026 tax season

IR-2025-108, Oct. 27, 2025

WASHINGTON — The Internal Revenue Service today reminds the more than 800,000 paid tax preparers that preparer tax identification numbers must be renewed annually, and the 2026 renewal period is now open.

Anyone who prepares or assists in preparing federal tax returns or claims for refunds for compensation must have a valid PTIN and include it on all returns and claims filed with the IRS. Also, all enrolled agents, regardless of whether they prepare tax returns, must renew their PTINs annually to maintain their active status. PTINs expire on Dec. 31 of the calendar year for which they are issued. All 2025 PTINs will expire on Dec. 31, 2025.

The fee to renew or obtain a PTIN is $18.75 for 2026. The PTIN fee is non-refundable.

How to renew

The IRS encourages tax pros to renew online, which takes less than 15 minutes to complete. A paper option is available, using Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal, however, it can take 6 weeks for processing.

To renew online:

Start at IRS.gov/taxpros.
Select the "Renew or Register" button.
Select "Log in" and enter the user ID and password to access the online PTIN system.
Select the "Renew my PTIN" button from the main menu.

Once completed, applicants will receive confirmation of their PTIN renewal.

Tax pros can also use the online PTIN system to:

Check their completed continuing education.
View the number of 1040 returns filed using their PTIN.
Review communications from the IRS Return Preparer Office.
Track their progress for participation in the IRS Annual Filing Season Program.

What’s new for 2026: ID.me sign-in

The IRS Tax Professional PTIN System now uses a new, secure sign-in option: ID.me. ID.me is a trusted technology provider of identity verification and sign-in services, for taxpayers to securely access IRS tools. For tax preparers with a Social Security number, they will be automatically routed to ID.me for identity verification and login. Tax preparers that do not have an ID.me will need to create one to access the IRS Tax Professional PTIN System. Tax preparers that do not have an SSN will continue to use their current sign in process.

IRS Issue Number: IR-2025-107

Thu, 23 Oct 2025 19:24:15 GMT

IRS issues FAQs on Form 1099-K threshold under the One, Big, Beautiful Bill; dollar limit reverts to $20,000

IR-2025-107, Oct. 23, 2025

WASHINGTON – The Internal Revenue Service today issued frequently asked questions in Fact Sheet 2025-08 regarding the dollar threshold for filing Form 1099-K under the One, Big, Beautiful Bill.

The OBBB retroactively reinstated the reporting threshold in effect prior to the passage of the American Rescue Plan Act of 2021 (ARPA) so that third party settlement organizations are not required to file Forms 1099-K unless the gross amount of reportable payment transactions to a payee exceeds $20,000 and the number of transactions exceeds 200.

Form 1099-K is an IRS information return used to report certain payments to improve voluntary tax compliance. The requirement to file a Form 1099-K can be triggered when payments are received for goods or services through a payment settlement entity.

More information about reliance is available on IRS.gov.

Issue Number: IR-2025-102

Tue, 07 Oct 2025 18:32:39 GMT

Treasury, IRS provide penalty relief for remittance transfer providers who fail to deposit excise tax under the One, Big, Beautiful Bill

IR-2025-102, Oct. 7, 2025

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued guidance providing deposit penalty relief for the first three quarters of 2026 to remittance transfer providers. Notice 2025-55 provides relief in connection with the new excise tax imposed on certain remittance transfers under the One, Big, Beautiful Bill.

Penalty relief available for the first three quarters of 2026

Treasury and the IRS understand there might be challenges implementing the new law and have determined it is in the interest of sound tax administration to provide limited penalty relief related to remittance transfer tax deposits.

Notice 2025-55 provides limited penalty relief for remittance transfer providers who fail to deposit the correct amount of remittance transfer tax as required during the first three quarters of 2026. Specifically, these providers may avoid deposit penalties if they:

Make timely deposits, even if they are incorrectly calculated, and
Ultimately pay the full amount of any underpayment by the due date of Form 720, Quarterly Federal Excise Tax Return, for the quarter.

Additionally, under today’s guidance, remittance transfer providers may use the deposit safe harbor rules under the Excise Tax Procedural Regulations even if there was an underpayment of required deposits of the remittance transfer tax for the first three quarters of 2026. However, providers must satisfy the reasonable cause standard for deposit penalties.

Remittance transfer tax under the OBBB

Beginning Jan. 1, 2026, remittance transfer providers are required to collect the remittance transfer tax from certain senders, make semimonthly deposits and file quarterly returns with the IRS. The first semimonthly deposit is due Jan. 29, 2026. The 1% remittance tax will apply to certain remittances when the sender makes the transaction with cash, a money order, a cashier’s check or a similar physical instrument.

For more information, refer to One, Big, Beautiful Bill provisions on IRS.gov.

Issue Number: IR-2025-96

Wed, 01 Oct 2025 13:43:25 GMT

Treasury, IRS provide guidance for Opportunity Zone investments in rural areas under the One, Big, Beautiful Bill

IR-2025-96, Sept. 30, 2025

WASHINGTON— The Department of the Treasury and the Internal Revenue Service today issued guidance on Qualified Opportunity Zone investments in rural areas as provided for under the One, Big, Beautiful Bill.

In 2018, certain economically distressed census tracts in the United States and its territories were designated as Qualified Opportunity Zones by the Treasury Department. Taxpayers who invest in QOZs receive certain tax benefits for their investments as an incentive to improve economic growth and job creation in these underserved communities.

What’s new under the OBBB

Notice 2025-50 provides clarification on two important One, Big, Beautiful Bill provisions: the definition of “rural area” and the application of the substantial improvement threshold for certain improvements to property located in a QOZ that is comprised entirely of a rural area.

Under the new law, a rural area means any area other than a city or town with a population greater than 50,000, and any urbanized area contiguous and adjacent to a city or town with a population greater than 50,000. This definition applies to States, the District of Columbia and U.S. territories.

The OBBB modified the substantial improvement threshold for improvements to property located in a QOZ that is comprised entirely of a rural area. As of July 4, 2025, the substantial improvement threshold for required additions to the basis for property located in these QOZs was reduced from 100 percent to 50 percent.

These changes are intended to offer enhanced QOZ tax incentives for investing in underserved rural areas and to address the unique challenges of rural development. There are currently 8,764 QOZs in the United States, many of which have experienced a lack of investment for decades. The notice released today by the Treasury Department and the IRS identifies 3,309 of those QOZs as comprised entirely of a rural area. A list of all current, designated QOZs is found in Notice 2018-48.

More information

Notice 2025-50 applies to all tangible property located in a QOZ that is comprised entirely of a rural area on or after July 4, 2025, and that has been, or is in the process of being, substantially improved. The Treasury Department and the IRS intend to issue future guidance on the forthcoming round of opportunity zones authorized by the OBBB, including the nomination and designation procedures.

For more information, refer to the One, Big, Beautiful Bill provisions page on IRS.gov.

Issue Number: Notice-2025-53

Wed, 01 Oct 2025 13:41:07 GMT

Notice 2025-53 postpones various time-sensitive deadlines for taxpayers affected by the terrorist attacks in Israel throughout 2024 and 2025. The notice defines the covered area, identifies categories of “affected taxpayers,” and provides a list of the acts postponed. The postponement period is September 30, 2025, to September 30, 2026. The effect of the separate determination of terroristic action and grant of relief in this notice is to further postpone acts that were postponed by Notice 2024-72 until September 30, 2026.

Notice 2025-97 will be in IRB: 2025-43, dated: October 20, 2025.

Issue Number: Notice-2025-49

Tue, 30 Sep 2025 13:40:15 GMT

Notice 2025-49 provides interim guidance regarding the application of the corporate alternative minimum tax (CAMT). Proposed regulations addressing the application of the CAMT and technical corrections to those regulations (together, the CAMT Proposed Regulations) were published in the Federal Register on September 13, 2024, and December 26, 2024, respectively. Sections 3-10 of Notice 2025-49 provide rules for certain adjustments to adjusted financial statement income (AFSI) and rules for proposed applicability dates and reliance on the CAMT Proposed Regulations.

Notice 2025-49 will be in IRB: 2025-44, dated October 27, 2025

Issue Number: RR-2025-19

Thu, 18 Sep 2025 17:55:08 GMT

Revenue Ruling 2025-19 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 Ruing 2025-19 will be in IRB: 2025-41, dated: October 6, 2025.

Treasury, IRS issue final regulations on new Roth catch-up rule, other SECURE 2.0 Act provisions

Mon, 15 Sep 2025 17:30:47 GMT

IR-2025-91, Sept. 15, 2025

WASHINGTON —The Department of the Treasury and the Internal Revenue Service today issued final regulations addressing several SECURE 2.0 Act provisions relating to catch-up contributions. (Catch-up contributions are additional contributions under a 401(k) or similar workplace retirement plan for employees who are age 50 or older.) The final regulations include final rules related to a SECURE 2.0 Act provision requiring that catch-up contributions made by certain higher-income participants be designated as after-tax Roth contributions.

The final regulations provide guidance for plan administrators to implement and comply with the new Roth catch-up rule and reflect comments received in response to the proposed regulations issued in January.

The final regulations also provide guidance relating to increased catch-up contribution limits under the SECURE 2.0 Act for certain retirement plan participants, in particular employees between the ages of 60-63 and employees in newly established SIMPLE plans.

Final regulations differ from the proposed regulations

While the final regulations generally follow the proposed regulations, changes were made in response to comments received on the proposed regulations. For example, the final regulations permit a plan administrator to aggregate wages received by a participant in the prior year from certain separate common law employers in determining whether the participant is subject to the Roth catch-up requirement.

In addition, the final regulations include changes to certain provisions in the proposed regulations, including those relating to:

correction of a failure to comply with the Roth catch-up requirement,
implementation of a deemed Roth election, and
plans that cover participants in Puerto Rico.

Final regulations generally apply in 2027

The provisions in the final regulations relating to the Roth catch-up requirement generally apply to contributions in taxable years beginning after Dec. 31, 2026. However, the final regulations provide a later applicability date for certain governmental plans and plans maintained under a collective bargaining agreement. The final regulations also permit plans to implement the Roth catch-up requirement for taxable years beginning before 2027 using a reasonable, good faith interpretation of statutory provisions. The final regulations do not extend or modify the administrative transition period provided under Notice 2023-62, which generally ends on Dec. 31, 2025.

Emergency Preparedness Month

Fri, 12 Sep 2025 17:32:54 GMT

Greetings,

September is National Preparedness Month, National Preparedness Month. IRS has prepared a news release and social media content urging individuals and businesses to create or update their emergency preparedness plans and providing additional disaster assistance resources from IRS and other federal government organizations.

I have attached copies of news release IR-2025-89 IRS urges emergency preparedness ahead of peak disaster season in English, Spanish and Chinese. I have also attached the social media content. Below you will find suggest captions for the social media post.

Additionally, we have prepared Tax Tip 2025-61 Ways to help and what to look out for when donating after a disaster. The article provides tips for making donations and things to watch out for from scammers.

Please share this information amongst your network for colleagues, members and clients. Also consider sharing the information on your website, social media pages, or newsletters. If you have any questions, feel free to reach out to me.

Suggested Social Media Captions

Peak disaster season is upon us. Stay prepared, protect your documents, make digital backups, and learn about tax relief options. Get additional details from the #IRS: https://ow.ly/l1c850WRnBF

Prepare for a disaster by keeping your important documents safe. Store key files in waterproof and fireproof containers, create digital copies, even consider keeping copies with a trusted friend or relative. Explore more helpful #IRS tips: https://ow.ly/QaAh50WRnJa

When disasters strike, the #IRS is here to help. After a federal disaster is declared, the IRS often offers filing and payment extensions. Learn more: https://ow.ly/QaAh50WRnJa

DYK property damage not covered by insurance after a disaster may be deducted on a tax return? See #IRS requirements: https://ow.ly/QaAh50WRnJa

Lost important documents in a disaster? Follow these simple steps to reconstruct your #IRS records: https://ow.ly/QaAh50WRnJa

#Smallbiz owners: Create an emergency preparedness plan for you and your employees. #IRS has details: https://ow.ly/QaAh50WRnJa

#IRS urges emergency preparedness ahead of peak disaster season. https://ow.ly/QaAh50WRnJa

#NationalPreparednessMonth reminder: The #IRS advises individuals and businesses to create or update their emergency preparedness plans. https://ow.ly/QaAh50WRnJa

Employers: Review your payroll protections this #NationalPreparednessMonth. #IRS has details on how: https://ow.ly/QaAh50WRnJa

Regards,

IRS Issue Number: 2025-37

Fri, 12 Sep 2025 17:31:44 GMT

Inside This Issue

Applying for an Employer Identification Number (EIN) just got easier
Sept. 17 Webinar: Tax Obligations of U.S. Individuals Living and Working Abroad
News from the Justice Department’s Tax Division

1. Applying for an Employer Identification Number (EIN) just got easier

On Aug. 18, 2025, the IRS updated the Apply for an Employer Identification Number (EIN) online application as part of ongoing modernization efforts to improve taxpayer service. The modernized application features a new look and web experience. Federal, state and local government entities can now use the application to receive an EIN. Although the application has a new look, the overall functionality remains the same.

2. Sept. 17 Webinar: Tax Obligations of U.S. Individuals Living and Working Abroad

Join the IRS for an upcoming webinar, Tax Obligations of U.S. Individuals Living and Working Abroad, scheduled for Wednesday, Sept. 17, from 2 – 4:00 p.m. ET. IRS presenters from the Large Business & International division will:

Specify the U.S. income tax obligations of U.S. citizens and residents abroad
List the requirements for claiming the foreign earned income exclusion
Summarize the U.S. employment tax obligations of U.S. citizens and residents abroad
Answer questions from the audience

Tax professionals can earn up to two Continuing Education (CE) credits. To see a complete list of webinars, visit the Upcoming Webinars page on IRS.gov.

3. News from the Justice Department’s Tax Division

A Nevada tax return preparer, Michael J. Moore, of Las Vegas, pleaded guilty to advising clients to commit tax evasion. According to court documents and statements made in court, Moore operated a tax and accounting business known as X Tax Pros. From 2015 through April 2025, Moore promoted a fraudulent tax avoidance scheme called the “Special Tax Shelter Strategy,” promising clients if they paid him certain “fees,” he could prepare a tax return that eliminated the clients’ taxes owed to the IRS and, in most cases, create a large tax refund. Moore charged the clients tens of thousands of dollars in fees, which the clients paid from the refunds they received from the IRS.

In total, Moore caused a tax loss to the United States of more than $3.5 million. Moore is scheduled to be sentenced on Dec. 8 and faces a maximum penalty of five years in prison.

IRS urges emergency preparedness ahead of peak disaster season

Thu, 04 Sep 2025 15:55:49 GMT

Issue Number: IR-2025-89

IRS urges emergency preparedness ahead of peak disaster season

IR-2025-89, Sept. 4, 2025

WASHINGTON — As hurricane season peaks and wildfire risks remain high, the IRS urges individuals and businesses to create or update their emergency preparedness plans as part of National Preparedness Month.

Disaster readiness starts with safeguarding critical documents, recording valuables and knowing how to access IRS support. Keeping updated records can speed up recovery and make it easier to apply for disaster assistance and emergency relief if a disaster strikes.

Safeguard important records

Store essential documents like tax returns, birth certificates, Social Security cards, insurance policies, and property titles in waterproof, fireproof containers. Create digital backups and consider keeping copies with a trusted contact outside the disaster-prone area.

Inventory property and assets

Maintain a detailed list of personal and business property. Photos, videos and written descriptions (including make, model and year) can support insurance and tax claims. IRS disaster loss workbooks can help individuals and businesses catalog possessions and business equipment.

Reconstruct records if needed

If original documents are lost, banks and other institutions usually can provide electronic copies.

The IRS offers resources to help reconstruct records.

Employers: Review payroll protections

Employers should confirm their payroll service providers have a fiduciary bond for added protection. Any business can create an Electronic Federal Tax Payment System (EFTPS) account to make secure, trackable online or phone payments, vital if displaced during a disaster. Visit EFTPS.gov to enroll.

IRS disaster relief is available

When a federal disaster is declared, the IRS often delays filing and payment deadlines. Relief is automatically applied based on the IRS address of record. Taxpayers outside affected areas, including relief workers or those with impacted tax records, may request assistance by calling 866-562-5227.

Uninsured disaster losses can be deducted on the tax return for the year of the loss or the prior year. See Publication 547, Casualties, Disasters, and Thefts for details.

Learn more

Issue Number: IR-2025-87: Interest rates remain the same for the fourth quarter of 2025

Tue, 26 Aug 2025 13:33:05 GMT

IR-2025-87, Aug. 25, 2025

WASHINGTON — The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning Oct. 1, 2025.

For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily. Here is a complete list of the rates:

7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
5% for the portion of a corporate overpayment exceeding $10,000.
7% for underpayments (taxes owed but not fully paid).
9% 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.

The interest rates announced today are computed from the federal short-term rate determined during July 2025. See the revenue ruling for details.

Revenue Ruling 2025-18 announcing the rates of interest will appear in Internal Revenue Bulletin 2025-37, dated Sept. 8, 2025.

FAQs for Energy Credit Termination

Mon, 25 Aug 2025 14:23:56 GMT

The IRS this week issued frequently asked questions regarding the modification of sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D under the One, Big, Beautiful Bill (OBBB). The FAQs provide guidance on several energy credits and deductions that are expiring under OBBB and their termination dates.

IRS asks for public input on free tax filing options to inform congressional report

Mon, 25 Aug 2025 14:23:12 GMT

IR-2025-85, Aug. 21, 2025

WASHINGTON – The IRS invites the public to participate in an anonymous feedback survey on tax preparation and filing options, which will run through Sept. 2, 2025.

The survey is being conducted as part of the Department of Treasury and the IRS’s efforts to fulfill a reporting requirement to Congress under the One, Big, Beautiful Bill Act. The law directs Treasury to deliver a report to Congress by Oct. 2, 2025, on several key issues related to free tax filing options for the public.

Treasury and the IRS encourage taxpayers to share their perspectives and help inform this important congressional report.

To participate, visit the Free Online Tax Preparation Feedback Survey or the IRS.gov landing page. Participation is anonymous.

Free Resource about the Big Beautiful Bill

Wed, 20 Aug 2025 15:07:26 GMT

eBook: The OBBB Just Passed

Download today to The One Big Beautiful Bill Act: A Tax Planning Revolution for Accounting Firms

Inside, You’ll Discover:

✓ How 100% permanent bonus depreciation creates immediate six-figure savings opportunities for your business clients
✓ The new QBI deduction thresholds that make pass-through entities more attractive than ever (and how to maximize the benefits)
✓ Why the temporary SALT cap increase to $40,000 creates a 5-year planning window you can't afford to miss
✓ The retroactive R&D expense deduction that could generate massive refunds for qualifying businesses back to 2022
✓ How to leverage Section 1202 QSBS modifications for clients considering business exits
✓ The exact ROI Method™ to price your tax planning services at $4,800+ (instead of $218 for tax prep)
✓ Real examples of how combining OBBA strategies creates exponential tax savings for clients

Mailing Address Communication from IRS

Wed, 20 Aug 2025 13:12:32 GMT

The IRS recently updated the mailing addresses where certain tax forms for certain states should be filed. Please ask your SLs and STAs to inform their tax pro stakeholders and other stakeholders as appropriate.

Some mailing addresses for the following forms were updated:

• 1040

• 1040-SR

• 1040-ES

• 4868

• 940

• 941

• 943

• 944

• 945

Most pages on IRS.gov now seem to reflect the correct addresses, but the latest revision of Publication 3891 has not yet been posted. Therefore, please share the attached version of the Publication 3891 rather than linking to the version on IRS.gov for now.

Please share as appropriate, especially on your website

IRS also appreciate any feedback, concerns, or issues that will help us improve our services….

Treasury Issues Request for Comment

Mon, 18 Aug 2025 18:04:11 GMT

Treasury Issues Request for Comment Related to the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act

The U.S. Department of the Treasury issued a Request for Comment required by the GENIUS Act, which furthers the Administration’s policy of supporting the responsible growth and use of digital assets, as outlined in Executive Order (E.O.) 14178 on “Strengthening American Leadership in Digital Financial Technology.” This request for comment offers the opportunity for interested individuals and organizations to provide feedback on innovative or novel methods, techniques, or strategies that regulated financial institutions use, or could potentially use, to detect illicit activity involving digital assets. In particular, Treasury asks commenters about application program interfaces, artificial intelligence, digital identity verification, and use of blockchain technology and monitoring. As required by the GENIUS Act, Treasury will use public comments to inform research on the effectiveness, costs, privacy and cybersecurity risks, and other considerations related to these tools.

Treasury News Release: https://home.treasury.gov/news/press-releases/sb0228

Federal Register Notice: https://www.federalregister.gov/documents/2025/08/18/2025-15697/request-for-comment-on-innovative-methods-to-detect-illicit-activity-involving-digital-assets

IRS Issue Number: 2025-33

Mon, 18 Aug 2025 17:57:33 GMT

1. IRS Nationwide Tax Forum: Designed for the Tax Pro

Time is running out to register for the largest and longest-running IRS education and outreach program designed specifically for tax professionals -- the IRS Nationwide Tax Forum. The Tax Forum provides an unparalleled opportunity to learn from experts, connect with IRS officials and gain valuable insights into the world of tax.

Our expert-led seminars, workshops and networking events are tailored to the needs of tax professionals at all levels of expertise, ensuring you have the knowledge and tools you need to excel in your career.

Attendees can also meet dozens of exhibitors in the Tax Forum Expo Hall, attend a Monday evening Practice Management session and network with colleagues.

Registration is still available for Orlando (Aug. 26 – 28) and Baltimore (Sept. 9-11). To register, visit IRS Nationwide Tax Forum today.

Security Summit: Protect against tax identity theft with multi-factor IDs, Identity Protection PINs, IRS Online Accounts

Tue, 12 Aug 2025 17:30:40 GMT

IR-2025-83, Aug. 12, 2025

WASHINGTON —In the fourth installment of a special summer series, the Security Summit partners today remind tax professionals and taxpayers about the IRS Identity Protection PIN and the IRS Online Accounts that can help protect against tax-related identity theft. The IRS and Security Summit also remind tax professionals that using multi-factor authentication is a best practice and a federal requirement to protect clients’ sensitive information.

The IRS Identity Protection PINs, also referred to as IP PINs, are a critical defense tool against identity thieves. The IRS encourages all tax pros and taxpayers to establish an IRS Online Account that allows secure access to IRS account information online. This account also guards against fraudsters from attempting to create accounts on their behalf.

What Tax Pros should know about MFA

A key part of tax professional security now focuses on MFA, which strengthens account security by requiring more than just a username and password to confirm an identity when accessing any system, application or device. Key points include:

All tax professionals are required to use MFA to protect clients’ sensitive information under the Federal Trade Commission’s (FTC) safeguards rule.
Authentication factors include something only a user knows, like a username and password; something they have, like a token or random number sequence sent to their cell phone; or something unique, like biometric information.
These factors assure that a tax professional’s client, not an impostor, is gaining access.
MFA helps protect against phishing, social engineering and other technology attacks that exploit weak or stolen passwords.
MFA best implementation practices include:

Implement MFA across all their services and data access points.
Evaluate current MFA methods, standards and new technologies.
Offer a variety of authentication factors to suit the needs of different users.
Enable MFA within tax software products and cloud storage services containing sensitive client data.
Never share usernames.

In addition, MFA should be used to secure client information on a tax pro’s computer or network and to access client information stored within their tax preparation software. MFA is required by law for all companies – not just tax professionals. The size of the company does not matter. Failure to use MFA in tax prep software violates the FTC safeguards rules.

IP PIN facts and how to get one

Here are a few key things taxpayers and tax professionals should know about the IP PIN:

It’s a six-digit number known only to the taxpayer and the IRS.
The opt-in program is voluntary, though strongly encouraged.
The IP PIN is valid for one calendar year; a new IP PIN is generated yearly.
Only taxpayers who can verify their identities may obtain an IP PIN.
IP PIN users should never share their number with anyone but the IRS and their trusted tax preparation provider. The IRS will never call, email or text a request for the IP PIN.
Tax professionals cannot obtain an IP PIN on behalf of clients; taxpayers must obtain their own.
To obtain an IP PIN, visit the IRS Get an IP PIN page.
The IP PIN process for confirmed victims of identity theft remains unchanged, and victims will automatically receive an IP PIN each year.

IRS Online Account and Tax Pro Account

In addition to enrolling in the IP PIN program, the IRS encourages taxpayers to establish an IRS Online Account and tax professionals to create their Tax Pro Account.

IRS Online Account

Provides secure online access to IRS account information.
Helps prevent fraudsters from creating a false account.
Allows taxpayers to share information with a trusted tax professional.

Tax Pro Account

Offers secure management of active client authorizations.
Enables submission of authorization requests directly to a taxpayer’s IRS Online Account.
Allows requests for power of attorney or tax information authorization from clients.

These tools help protect against the threat of tax-related identity theft for taxpayers and tax professionals alike. Learn more at Tax Pro Account.

Security Summit and the Nationwide Tax Forums

The “Protect Your Clients, Protect Yourself" summer series is part of an annual education effort by the Security Summit. This group includes tax professionals, industry partners, state tax agencies and the IRS. The public-private partnership has worked since 2015 to protect the tax system against tax-related identity theft and fraud.

Security is a key focus of the Nationwide Tax Forum, which is being held in five cities this summer throughout the U.S. In addition to the series of five news releases, tax professional security will be featured at the forums, which are three-day continuing education events. The remaining forums are Aug. 26 in Orlando, Sept. 9 in Baltimore and Sept. 16 in San Diego.

The IRS reminds tax pros that registration deadlines are quickly approaching for several forums, which can sell out.

Tax professionals should also stay connected to the IRS through subscriptions to e-News for tax professionals and IRS social media sites.

Changes to the IRS Commissioner

Mon, 11 Aug 2025 17:30:15 GMT

Washington, D.C.—On August 8, 2025, President Trump removed Billy Long, the former auctioneer and congressman, from his position as IRS Commissioner. Mr. Long’s tenure as IRS Commissioner ended just two months after he was confirmed for the post. Treasury Secretary Scott Bessent, the seventh individual to lead IRS, will serve as acting commissioner until the administration finds and confirms a new commissioner. While Mr. Long had previously told tax practitioners last month that the IRS tax filing season for 2025 returns would start late next year, he then retracted this statement in a subsequent post.
Mr. Long’s departure increases the IRS management turmoil that has rocked the agency since Danny Werfel, former President Biden’s IRS commissioner, left office in January 2025. The IRS, faced with writing the rules for and providing information about the new tax law changes, has lost more than 25,000 people since President Trump took office.

Letter from Tax Speaker about the Big Beautiful Bill

Tue, 05 Aug 2025 15:32:59 GMT

Dear Client,

On July 4, 2025 the President signed the new 2025 Tax Bill, known as the One Big Beautiful Bill Act or OBBB. There are tons of rumors going around about what changes and what doesn’t, but here is the correct information that will affect you and most Americans.

Deductions, Brackets and Rates
Tax rates did not increase or decrease from 2025. I know what you have read, but they are the same in 2025 that they were in 2024, and that includes capital gains rates.

Tax brackets increased slightly, meaning that you can make a bit more money this year without going into a new bracket.

There are two types of deductions: the standard deduction (which did increase by about $3,000 for a married couple from 2024); and itemized deductions. All Americans are allowed the standard deduction, which for 2025 is $15,750 if single and $31,500 if married. If you are able to come up with more than that from a short list of itemized deductions, you are allowed to deduct more than the standard deduction. There are five main categories of allowable itemized deductions:

1. Medical deductions which did not change from 2024, and need to be pretty large in order to deduct them;

2. Taxes, which increased to a maximum deduction of $$40,000 in 2025 vs. $10,000 in 2024. This category includes property tax and state and local income tax paid;

3. Interest paid on your home mortgage, which is unchanged from 2024;

4. Charitable contributions, which are unchanged from 2024

5. Miscellaneous itemized deductions, which are also unchanged from 2024, the only significant one is gambling losses.
There is a new deduction for seniors which allows an additional deduction of $6,000 for each filer that has reached age 65 by December 31, 2025 ($12,000 if both 65), in addition to the normal small additional senior deduction. The bad news is that Social Security is still taxable if the deduction is not enough to offset it, and the deduction phases out for seniors making more than $75,000 for a single filer or $150,000 for a joint filer.

Car Loan Interest Deduction
There is also a new deduction this year for car loan interest if you bought a new (not used) car in 2025 (and 2026-2028) if it was assembled in the US. This deduction phases out starting at $100,000 of income if single, and $200,000 if filing jointly. This amount is deductible in addition to the standard deduction, so you don’t need to itemize.

Tip Deduction
For those folks whose W-2 reflects tip income, or who self-report tip income, they can deduct the lesser of the tip income from their W-2’s or $25,000. This deduction phases out starting at $150,000 of income if single, and $300,000 if filing jointly. This amount is deductible in addition to the standard deduction, so you don’t need to itemize.

Overtime Deduction
For those folks whose W-2 reflects overtime pay income they can deduct the lesser of the overtime income from their individual W-2’s or $12,500 each. This deduction phases out starting at $150,000 of income if single, and $300,000 if filing jointly. This amount is deductible in addition to the standard deduction, so you don’t need to itemize.

Tax Credits
The credit for children reported as dependents on your returns increases from $2,000 to $2,200.

The credit for an electric car ends on September 30, 2025, and the credits for insulation, storm windows, doors, furnaces, water heaters, solar power, geothermal energy and wind energy systems end on December 31, 2025.

There are a number of individual changes that go into effect in 2026, but this short summary addresses 2025 individual tax changes. We are able to help you plan for any major tax events such as these law changes, retirement, home sales or inheritances if you would give us a call for an appointment.

Sincerely,

Tax Professional

IRS Issue Number: Notice 2025-28

Thu, 31 Jul 2025 17:32:55 GMT

Notice 2025-28 informs taxpayers of the intention of the Department of the Treasury and the Internal Revenue Service to partially withdraw proposed regulations and issue revised proposed regulations regarding the application of the Corporate Alternative Minimum Tax (CAMT) to applicable corporations with financial statement income (FSI) attributable to investments in partnerships. In addition, the notice provides interim guidance primarily on simplified methods to determine an applicable corporation’s adjusted financial statement income (AFSI) with respect to an investment in a partnership, reporting by partnerships of information needed to compute ASFI, and rules for partnership contributions and distributions.

Notice 2025-28 will be in IRB 2025-34, dated Aug. 18, 2025.

UPDATED IRS Notice: Number FS-2025-03

Fri, 25 Jul 2025 18:39:17 GMT

Issue Number: FS-2025-03

Inside This Issue

One Big Beautiful Bill Act: Tax deductions for working Americans and seniors

Note: This Fact Sheet has been updated July 25 by adding to the section on “No Tax on Car Loan Interest” new language describing the requirement for “Final assembly in the United States.”

Below are descriptions of new provisions from the One Big Beautiful Bill Act, signed into law on July 4, 2025, as Public Law 119-21, that go into effect for 2025.

“No Tax on Tips”

New deduction: Effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tips received in occupations that are listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099, or other specified statement furnished to the individual or reported directly by the individual on Form 4137.
- “Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing.
- Maximum annual deduction is $25,000; for self-employed, deduction may not exceed individual’s net income (without regard to this deduction) from the trade or business in which the tips were earned.
- Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
- Self-employed individuals in a Specified Service Trade or Business (SSTB) under section 199A are not eligible. Employees whose employer is in an SSTB also are not eligible.
- Taxpayers must:
- - include their Social Security Number on the return and
  - file jointly if married, to claim the deduction.
Reporting: Employers and other payors must file information returns with the IRS (or SSA) and furnish statements to taxpayers showing certain cash tips received and the occupation of the tip recipient.
Guidance: By October 2, 2025, the IRS must publish a list of occupations that “customarily and regularly” received tips on or before December 31, 2024.
- The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and payors subject to the new reporting requirements.

“No Tax on Overtime”

New deduction: Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay – such as the “half” portion of “time-and-a-half” compensation -- that is required by the Fair Labor Standards Act (FLSA) and that is reported on a
- Form W-2, Form 1099, or other specified statement furnished to the individual.
- Maximum annual deduction is $12,500 ($25,000 for joint filers).
- Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
- Taxpayers must:
- - include their Social Security Number on the return and
  - file jointly if married, to claim the deduction.
Reporting: Employers and other payors are required to file information returns with the IRS (or SSA) and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.
Guidance: The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and other payors subject to the new reporting requirements.

“No Tax on Car Loan Interest”

New deduction: Effective for 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria. (Lease payments do not qualify.)
- Maximum annual deduction is $10,000.
- Deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).
Qualified interest: To qualify for the deduction, the interest must be paid on a loan that is:
- originated after December 31, 2024,
- used to purchase a vehicle, the original use of which starts with the taxpayer (used vehicles do not qualify),
- for a personal use vehicle (not for business or commercial use) and
- secured by a lien on the vehicle.

If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction.

Qualified vehicle: A qualified vehicle is a car, minivan, van, SUV, pick-up truck or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds, and that has undergone final assembly in the United States.
Final assembly in the United States: The location of final assembly will be listed on the vehicle information label attached to each vehicle on a dealer's premises. Alternatively, taxpayers may rely on the vehicle’s plant of manufacture as reported in the vehicle identification number (VIN) to determine whether a vehicle has undergone final assembly in the United States.
- The VIN Decoder website for the National Highway Traffic Safety Administration (NHTSA) provides plant of manufacture information. Taxpayers can follow the instructions on that website to determine if the vehicle’s plant of manufacture was located in the United States.
Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
- The taxpayer must include the Vehicle Identification Number (VIN) of the qualified vehicle on the tax return for any year in which the deduction is claimed.
Reporting: Lenders or other recipients of qualified interest must file information returns with the IRS and furnish statements to taxpayers showing the total amount of interest received during the taxable year.
Guidance: The IRS will provide transition relief for tax year 2025 for interest recipients subject to the new reporting requirements.

Deduction for Seniors

New deduction: Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000. This new deduction is in addition to the current additional standard deduction for seniors under existing law.
- The $6,000 senior deduction is per eligible individual (i.e., $12,000 total for a married couple where both spouses qualify).
- Deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).
Qualifying taxpayers: To qualify for the additional deduction, a taxpayer must attain age 65 on or before the last day of the taxable year.
Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.
- Taxpayers must:
- - include the Social Security Number of the qualifying individual(s) on the return, and
  - file jointly if married, to claim the deduction.

Business Tax Account Deadline Approaching

Wed, 23 Jul 2025 20:24:13 GMT

Designated Officials must revalidate their Business Tax Account by July 29 or risk losing access

FS-2025-04, July 23, 2025

The Internal Revenue Service reminds Business Tax Account (BTA) users that Designated Officials must revalidate their accounts by the July 29 deadline in order to maintain access.

Designated Officials who do not revalidate their accounts by July 29, 2025, will need to request access to the account again, either as a Designated Official or other user type.

Revalidation requires a W-2 for the most recent tax filing year or proof that they can legally bind an entity for tax purposes.

To revalidate, Designated Officials must log in to their BTA account.

What features will be added to BTA in the future?

When fully developed, BTA will be a robust online self-service tool allowing many types of business taxpayers and other entities to check their tax history, make payments, view notices, authorize powers of attorney and conduct other business with the IRS.

For more information visit Business Tax Account, view the Business Tax Account Overview video or review Publication 5904, Access Your Business Tax Account

Tax Speaker Newsletter: New Tax Bill Issues Reviewed

Tue, 22 Jul 2025 17:58:17 GMT

Background
Under the tax code prior to the Tax Reform Act of 1986, taxpayers could deduct most personal interest expenses, including interest paid on auto loans, as itemized deductions. This changed with the Tax Reform Act of 1986 which eliminated the deduction of personal interest under IRC Sec. 163(h), including auto loan interest, credit card interest, and other non-business borrowing. Since 1987, auto loan interest has been classified strictly as non‑deductible personal interest and the 2017 TCJA did not modify the 1986 rules.

BBB Change
Section 70203 of the bill allows a temporary 4-year (2025-2028) deduction for interest paid on auto loans for personal vehicles by amending IRC Sec. 163(h)(4)and (5). This deduction is available even for non-itemizers, meaning it's an above-the-line deduction before AGI. The deduction is only available for loans incurred after 12/31/2024.

Effective for tax years 2025 through 2028, the deduction is limited to the lesser of qualified interest paid or $10,000 annually. To qualify for the deduction, the interest must be paid on a loan that is originated after December 31, 2024 and used to purchase a new vehicle, (used vehicles do not qualify), for a personal use vehicle (not for business or commercial use) and secured by a lien on the vehicle.

If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction according to IRS FS 2025-03. Interest paid to related parties does not qualify for the new deduction.

The deduction phases out beginning at $100,000 AGI for single filers ($200,000 for joint) at a rate of $200 for each $1,000 of AGI above the threshold. AGI needs to be increased by any foreign income exclusion taken. The phaseout will apply against the actual qualifying deductible amount, which may be less than the $10,000 limit.

A qualified vehicle is a car, minivan, van, SUV, pick-up truck or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds, and that has undergone final assembly in the United States. Note that this rule eliminates the deduction for campers, trailers and motor homes. The deduction is available for both itemizing and non-itemizing taxpayers. The taxpayer must include the Vehicle Identification Number (VIN) of the qualified vehicle on the tax return for any year in which the deduction is claimed.

Used or salvage-title vehicles and leased vehicles do not qualify, nor do vehicles bought for resale, parts, or scrap.

Reporting: Lenders or other recipients of qualified interest must file information returns with the IRS and furnish statements to taxpayers showing the total amount of interest received during the taxable year.

Discussion and Planning
Kiplinger says that about 80% of new car buyers obtained a car loan, and that the average interest rate was 8.64% on an average car costing just under $50,000. Taxpayers with AGI higher than $150,000 single or $250,000 joint will totally phase out from any deduction.

The IRS is expected to create a resource listing qualifying vehicles and models, similar to existing resources for electric vehicle tax credits, to clarify which vehicles meet the final assembly requirement, and several popular imports will not qualify. We assume that the IRS will release a new tax form to report and the interest and provide VIN information.

IRS News: One Big Beautiful Bill Act: Tax deductions for working Americans and seniors

Mon, 14 Jul 2025 18:00:22 GMT

Below are descriptions of new provisions from the One Big Beautiful Bill Act, signed into law on July 4, 2025, as Public Law 119-21, that go into effect for 2025.

“No Tax on Tips”

New deduction: Effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tips received in occupations that are listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a Form W-2, Form 1099, or other specified statement furnished to the individual or reported directly by the individual on Form 4137.

o “Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing.

o Maximum annual deduction is $25,000; for self-employed, deduction may not exceed individual’s net income (without regard to this deduction) from the trade or business in which the tips were earned.

o Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.

o Self-employed individuals in a Specified Service Trade or Business (SSTB) under section 199A are not eligible. Employees whose employer is in an SSTB also are not eligible.

o Taxpayers must:

§ include their Social Security Number on the return and

§ file jointly if married, to claim the deduction.

Reporting: Employers and other payors must file information returns with the IRS (or SSA) and furnish statements to taxpayers showing certain cash tips received and the occupation of the tip recipient.
Guidance: By October 2, 2025, the IRS must publish a list of occupations that “customarily and regularly” received tips on or before December 31, 2024.

§ The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and payors subject to the new reporting requirements.

“No Tax on Overtime”

New deduction: Effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay – such as the “half” portion of “time-and-a-half” compensation -- that is required by the Fair Labor Standards Act (FLSA) and that is reported on a

Form W-2, Form 1099, or other specified statement furnished to the individual.

· Maximum annual deduction is $12,500 ($25,000 for joint filers).

· Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).

Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.

· Taxpayers must:

o include their Social Security Number on the return and

o file jointly if married, to claim the deduction.

Reporting: Employers and other payors are required to file information returns with the IRS (or SSA) and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.
Guidance: The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and other payors subject to the new reporting requirements.

“No Tax on Car Loan Interest”

New deduction: Effective for 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria. (Lease payments do not qualify.)

o Maximum annual deduction is $10,000.

o Deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).

Qualified interest: To qualify for the deduction, the interest must be paid on a loan that is:

o originated after December 31, 2024,

o used to purchase a vehicle, the original use of which starts with the taxpayer (used vehicles do not qualify),

o for a personal use vehicle (not for business or commercial use) and

o secured by a lien on the vehicle.

If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction.

Qualified vehicle: A qualified vehicle is a car, minivan, van, SUV, pick-up truck or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds, and that has undergone final assembly in the United States.
Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.

o The taxpayer must include the Vehicle Identification Number (VIN) of the qualified vehicle on the tax return for any year in which the deduction is claimed.

Reporting: Lenders or other recipients of qualified interest must file information returns with the IRS and furnish statements to taxpayers showing the total amount of interest received during the taxable year.
Guidance: The IRS will provide transition relief for tax year 2025 for interest recipients subject to the new reporting requirements.

Deduction for Seniors

New deduction: Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000. This new deduction is in addition to the current additional standard deduction for seniors under existing law.

o The $6,000 senior deduction is per eligible individual (i.e., $12,000 total for a married couple where both spouses qualify).

o Deduction phases out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers).

Qualifying taxpayers: To qualify for the additional deduction, a taxpayer must attain age 65 on or before the last day of the taxable year.
Taxpayer eligibility: Deduction is available for both itemizing and non-itemizing taxpayers.

o Taxpayers must:

§ include the Social Security Number of the qualifying individual(s) on the return, and

file jointly if married, to claim the deduction

IRS Issue Number IR-2025-74

Thu, 10 Jul 2025 15:26:11 GMT

IRS urges extension filers to use IRS Free File this summer

IR-2025-74, July 10, 2025

WASHINGTON — The Internal Revenue Service encourages taxpayers who requested an extension to file their returns now rather than wait until the Oct. 15 deadline. IRS Free File makes it easy.

IRS Free File is available 24/7 and offers free guided tax preparation for those with an adjusted income of $84,000 or less. Taxpayers can prepare and e-file federal returns securely with trusted partners at no cost. Free File Fillable Forms is available to all taxpayers who choose to prepare their own tax returns.

Filing over the summer helps avoid the fall rush and gives taxpayers more time to resolve issues or arrange payments, if needed.

Visit IRS Free File: Do your taxes for free to get started today. It’s fast, free and available now.

National Taxpayer Advocate issues mid-year report to Congress

Thu, 26 Jun 2025 12:37:54 GMT

Issue Number: IR-2025-71

Highlights a successful 2025 filing season and challenges for 2026

WASHINGTON — National Taxpayer Advocate Erin M. Collins today released her Fiscal Year 2026 Objectives Report to Congress, highlighting a largely successful 2025 filing season while raising concerns about persistent refund delays for victims of identity theft, delays in processing Employee Retention Credit claims, and critical challenges facing taxpayers and the IRS as the agency prepares for the 2026 filing season. The report also outlines the Advocate’s priority recommendations as the IRS continues to modernize its technology systems.

“The 2025 filing season was one of the most successful filing seasons in recent memory,” Collins said in releasing the report. “But with the IRS workforce reduced by 26% and significant tax law changes on the horizon, there are risks to next year’s filing season. It is critical that the IRS begin to take steps now to prepare.”

The 2025 filing season generally ran smoothly

The IRS received nearly 141 million individual income tax returns and processed about 138 million. Over 95% of processed returns were filed electronically, and about 62% resulted in refunds. Figure 1 shows key filing season statistics.

Figure 1

Individual Tax Return Statistics for the 2025 Filing Season

The IRS processed most returns without issues. However, the IRS “suspended” over 13 million returns during processing pending additional review, and these processing delays generally translated into refund delays for the affected taxpayers.

Refund delays for identity theft victims remain a serious concern

One longstanding filing season challenge that remains unresolved is lengthy delays in resolving identity theft cases. There are two categories of identity theft cases. One involves returns that IRS return processing filters flag as potential identity theft; the IRS flagged about 2.1 million such returns. In these cases, the IRS sent a letter to taxpayers notifying them they had to authenticate their identities before receiving their refunds. The IRS typically takes several months to resolve these cases.

In the second category of identity theft cases, a thief has stolen a taxpayer’s identity and filed a tax return using the taxpayer’s name and Social Security number. These taxpayers are victims and may also be experiencing the effects of identity theft beyond the context of their tax returns. Their cases are referred to the IRS’s Identity Theft Victim Assistance (IDTVA) unit for resolution.

As of the end of the filing season, the IRS had about:

387,000 IDTVA cases in inventory, and
the cases were taking an average of about 20 months to resolve.

“These delays disproportionately affect vulnerable populations dependent on their refunds to meet basic living expenses,” the report says. In fiscal year (FY) 2023, 69% of affected taxpayers had adjusted gross incomes at or below 250% of the Federal Poverty Level.

“IRS leadership has repeatedly assured TAS that reducing cycle time for IDTVA cases is a top priority, yet the cycle time remains unacceptably long,” Collins wrote. “I continue to urge the agency to focus on dramatically shortening the time it takes to resolve IDTVA cases, so it does not force victims, particularly those dependent on their tax refunds, to wait nearly 2 years to receive their money.” The report recommends that the IRS reduce the average case resolution time to 4 months.

Operational risks remain a concern as the 2026 filing season approaches

Collins warned that without improved technology in place, IRS staffing cuts could jeopardize the success of next year’s filing season. To deliver a successful filing season, the IRS needs a sufficient number of trained employees to program its processing systems, develop and disseminate timely and clear guidance on tax law changes, answer telephone calls and process correspondence, among other things. See Figure 2 for staffing reductions by business unit.

Between the start of the 2025 filing season and June, the IRS workforce decreased from about 102,000 employees to fewer than 76,000, a drop of about 26% (after taking into account employees who accepted an early resignation offer but will remain on rolls through September 30).

Figure 2

IRS Personnel Losses by Business Unit (as of June 4, 2025)

The report notes that the IRS’s Information Technology (IT) and Taxpayer Services business units play critical roles in delivering a successful filing season. IT personnel must reprogram IRS processing systems to reflect changes in law, while Taxpayer Services personnel are responsible for processing tax returns, answering telephone calls, and processing correspondence.

As of this month, as Figure 2 shows, IT staffing has been reduced by 27%, and Taxpayer Services staffing has been reduced by about 22%, or by more than 9,000 employees. The Administration’s FY 2026 budget proposal calls for keeping Taxpayer Services staffing at about FY 2025 levels (taking into account both appropriated funds and Inflation Reduction Act funds). Thus, the IRS will need to rapidly hire and train thousands of new Taxpayer Services employees before the 2026 filing season to process returns and deliver timely refunds.

“With the 2026 filing season on the horizon amid potential legislation changes and continued staffing constraints,” Collins wrote, “early preparation is essential to ensure the IRS can deliver both effective taxpayer service and secure operations.”

IRS should prioritize three taxpayer-focused IT projects

The report applauds recent progress in IRS technology modernization but urges the agency to stay focused on taxpayer-facing improvements. Collins highlights the IRS’s longstanding challenges in managing antiquated technology systems and recent efforts to modernize its systems. In collaboration with the Treasury Department and the Department of Government Efficiency, the IRS established nine distinct modernization “verticals” (i.e., technology projects designed to meet specific needs). Among them are a unified application programming interface, digitalization of paper returns and correspondence, and improved system interoperability among the agency’s roughly 60 stand-alone case management systems.

“For several decades, the holy grail of tax administration has been developing and deploying technology systems that automate key IRS functions in a way that improves taxpayer service and compliance and reduces the need for a large workforce,” the report says. “The IRS has made notable strides during the last couple of years, and the Treasury Department’s leadership has committed to continue accelerating the IRS’s IT progress.”

Citing the adage, “If everything is a priority, nothing is a priority,” the report recommends that the IRS “focus its efforts on a manageable number of projects that provide the greatest value to taxpayers, employees, and the tax system while ensuring that taxpayers are not harmed during the transition period.”

The report recommends that the IRS adopt a “digital first” approach to taxpayer service and prioritize three projects:

Creating fully functional online accounts. Collins said the IRS’s number one priority should be to enhance online accounts so taxpayers and tax professionals can view all relevant information and conduct all transactions with the IRS through their accounts.

“The IRS should continue to prioritize providing online functionality that mirrors the robust functionality offered by banks and other financial institutions,” the report says. “For at least two decades, most of us have been able to conduct almost all our financial activity using online accounts. At banks, that includes making deposits, paying bills, transferring funds between accounts, and even applying for mortgages and home equity lines of credit. At brokerages, it includes buying and selling stocks and securities. With our credit card companies, it includes paying bills, monitoring charges, disputing charges, and paying off balances.”

By contrast, the functionality of IRS online accounts is limited. Taxpayers generally cannot file tax returns, view most notices, or respond to notices through their online accounts. Until recently, they could not make payments. As a result, only about 10% of taxpayers have taken the time to establish online accounts.

“The IRS must do more,” Collins wrote. “I believe the IRS’s top technology priority should be to allow taxpayers to conduct all transactions with the IRS from the ‘one-stop shop’ of an online account, just as they can with other financial institutions.”

Digitizing the processing of paper-filed tax returns, correspondence, and other documents. The IRS estimates it will receive about 43 million paper tax returns and 19 million paper information returns in 2025, as well as millions of responses to the roughly 170 million paper notices it sends to individual taxpayers each year.

IRS employees manually transcribe data from paper-filed tax returns, digit by digit, into IRS systems. The IRS has allowed taxpayers to upload their responses to IRS notices through a digital “Document Upload Tool,” but it does not have a way to process responses using automation. As a result, it generally must print taxpayer responses and route them to IRS employees for processing as if they had been submitted on paper.

“True modernization would provide an IT solution from the time the paper arrives at the IRS through the backend processing of the return or correspondence.” Collins wrote.

Integrating about 60 case management systems. The report says the IRS currently stores taxpayer data on about 60 distinct case management systems that generally cannot communicate with each other. As a result, a taxpayer who calls the IRS to discuss an account issue may find the customer service representative (CSR) who answers lacks access to the relevant account information or must open multiple case management systems on different screens and toggle among them to answer questions.

“[A] call to a CSR can take much longer than it should,” the report says. “The CSR may have to put the taxpayer on hold multiple times to launch different systems and ultimately may still not be able to access the system relevant to the taxpayer’s issue, requiring a transfer or a call to a different IRS function. This fragmentation contributes to poor customer service and taxpayer frustration.”

Under an initiative known as Taxpayer 360, the IRS addressed these limitations by creating an integrated case management system that consolidates all relevant information a CSR may need to help taxpayers in a single database. “Given that the IRS handles approximately 100 million telephone calls each year, giving CSRs faster and more complete access to taxpayer data would go a long way toward improving the timeliness and effectiveness of telephone service,” the report says. It recommends the IRS continue to prioritize this initiative.

Taxpayer Advocate Service advocacy objectives for FY 2026

The report identifies TAS’s key advocacy objectives for the upcoming fiscal year as law requires. The report sets out nine such objectives:

Improve automation and metrics to enhance the taxpayer experience;
Expand IRS online account functionality;
Reduce Identity Theft Victim Assistance resolution time from nearly 2 years to 4 months;
Strengthen IRS oversight of unethical tax return preparers;
Expedite the resolution of Centralized Authorization File number suspensions to protect tax professionals and taxpayers;
Complete processing of all Employee Retention Credit claims and ensure taxpayer rights are protected;
Improve responses to Freedom of Information Act requests;
Strengthen Appeals’ independence and operational efficiency; and
Improve the IRS’s criminal voluntary disclosure practice.

The IRS agrees to implement most of the proposed administrative recommendations

The National Taxpayer Advocate is required by law to submit a year-end report to Congress that, among other things, makes administrative recommendations to resolve taxpayer problems. Internal Revenue Code § 7803(c)(3) authorizes the National Taxpayer Advocate to submit the administrative recommendations to the Commissioner and requires the IRS to respond within 3 months.

The National Taxpayer Advocate made 77 administrative recommendations in her 2024 year-end report and then submitted them to the Commissioner for response. The IRS has agreed to implement 42 (or 55%) of the recommendations in full or in part.

Read the IRS responses in the 2024 Annual Report to Congress Report Card (PDF).

The National Taxpayer Advocate is required by statute to submit two annual reports to the House Committee on Ways and Means and the Senate Committee on Finance. The statute requires the reports to be submitted directly to the Committees without any prior review or comment from the Commissioner of Internal Revenue, the Secretary of the Treasury, the IRS Oversight Board, any other officer or employee of the Department of the Treasury or the Office of Management and Budget. The first report must identify the objectives of the Office of the Taxpayer Advocate for the fiscal year beginning in that calendar year. The second report must include a discussion of the 10 most serious problems encountered by taxpayers, identify the 10 tax issues most frequently litigated in the courts and make administrative and legislative recommendations to resolve taxpayer problems.

The National Taxpayer Advocate blogs about key issues in tax administration. Individuals may subscribe to the blog and read past posts.

Long sworn in as the 51st IRS Commissioner

Mon, 23 Jun 2025 18:17:23 GMT

IR-2025-70, June 23, 2025

WASHINGTON – Billy Long was sworn in as the 51st Commissioner of the Internal Revenue Service on June 16. Long was confirmed by the Senate on June 12.

In a message to all employees, Long said he plans to develop a more taxpayer-friendly agency by transforming the culture at the IRS during his tenure. “In my first 90 days I plan to ask you, my employee partners, to help me develop a new culture here. I’m big on culture, and I’m anxious to develop one that makes your lives and the taxpayers’ lives better,” Long wrote.

Long served as a U.S. representative for Missouri’s 7th Congressional district from 2011 to 2023. Prior to his time in Congress, he was a real estate broker for 32 years and an auctioneer for 31 years who was inducted into the National Auctioneers’ Association Hall of Fame, and also was a radio talk show host from 1999-2006.

Long's term will run through Nov. 12, 2027.

FATF Identifies Jurisdictions with Anti-Money Laundering, Countering the Financing of Terrorism, and Counter-Proliferation Finance Deficiencies

Mon, 23 Jun 2025 17:26:02 GMT

FATF Identifies Jurisdictions with Anti-Money Laundering, Countering the Financing of Terrorism, and Counter-Proliferation Finance Deficiencies

The Financial Crimes Enforcement Network (FinCEN) is informing U.S. financial institutions that the Financial Action Task Force (FATF), an intergovernmental body that establishes international standards for anti-money laundering, countering the financing of terrorism, and countering the financing of proliferation of weapons of mass destruction (AML/CFT/CPF), updated its lists of jurisdictions with strategic AML/CFT/CPF deficiencies at the conclusion of its plenary meeting this month. U.S. financial institutions should consider the FATF’s stance toward these jurisdictions when reviewing their obligations and risk-based policies, procedures, and practices. On June 13, 2025, the FATF added the British Virgin Islands and Bolivia to its list of Jurisdictions Under Increased Monitoring and removed Croatia, Mali, and Tanzania from that list.

The FATF’s list of High-Risk Jurisdictions Subject to a Call for Action remains the same, with Iran, the Democratic People’s Republic of Korea (DPRK), and Burma subject to calls for action. Specifically, the FATF continues to call on jurisdictions to apply countermeasures on Iran and DPRK. Burma remains subject to the application of enhanced due diligence, but not countermeasures.

News Release: https://www.fincen.gov/news/news-releases/financial-action-task-force-identifies-jurisdictions-anti-money-laundering-3

Guidewire Issue Notice 2025-31

Fri, 20 Jun 2025 17:24:49 GMT

Notice 2025-31 publishes information that taxpayers may use to determine whether they meet certain requirements under the Statistical Area Category or the Coal Closure Category as described in sections 3.03 and 3.04 of Notice 2023-29 for purposes of qualifying for energy community bonus credit amounts or rates under §§ 45, 45Y, 48, and 48E of the Internal Revenue Code. This information is provided in Appendices 1, 2, 3, 4, and 5 of this notice. Appendices 1, 2, and 3 of this notice address the Statistical Area Category, and Appendices 4 and 5 of this notice address the Coal Closure Category. This notice does not provide information addressing the Brownfield Category as described in section 3.02 of Notice 2023-29. None of the appendices provided for purposes of energy community bonus credit amounts or rates are applicable for purposes of the qualifying advanced energy project credit determined under § 48C.

Notice 2025-31 will be in IRB: 2025-28, dated: 07/07/2025

IRS News Issue Number: IR-2025-67

Thu, 12 Jun 2025 18:49:05 GMT

IRS provides additional transition relief for brokers who are required to file information returns and backup withhold on certain digital asset sales

IR-2025-67, June 12, 2025

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service today issued Notice 2025-33 extending and modifying the transition relief provided in Notice 2024-56 for brokers who are required to file Form 1099-DA, Digital Asset Proceeds From Broker Transactions to report certain digital asset sale and exchange transactions by customers.

Transition relief for brokers required to file Forms 1099-DA

In 2024, Treasury and IRS announced final regulations requiring brokers to report digital asset sale and exchange transactions on Form 1099-DA, furnish payee statements, and backup withhold on certain transactions beginning January 1, 2025. At the same time, the IRS announced in Notice 2024-56 transition relief from penalties related to information reporting and backup withholding tax liability required by these final regulations for transactions effected during 2025. Additionally, Notice 2024-56 also provided limited transition relief from backup withholding tax liability for transactions effected in 2026.

The IRS received and carefully considered comments from the public about the transition relief provided in Notice 2024-56 indicating that brokers needed more time to comply with the reporting requirements; today’s notice addresses those comments.

Additional transition relief

Notice 2025-33 extends the transition relief from backup withholding tax liability and associated penalties for any broker that fails to withhold and pay the backup withholding tax for any digital asset sale or exchange transaction effected during calendar year 2026.

The notice also extends the limited transition relief from backup withholding tax liability for an additional year. Specifically, brokers will not be required to backup withhold for any digital asset sale or exchange transactions effected in 2027 for a customer (payee), if the broker submits that payee’s name and tax identification number (TIN) to the IRS’s TIN Matching Program and receives a response that the name and TIN combination matches IRS records. Additionally, relief is provided to brokers that fail to withhold and pay the full backup withholding tax due, if the failure is due to a decrease in the value of withheld digital assets in a sale of digital assets in return for different digital assets in 2027, and the broker immediately liquidates the withheld digital assets for cash.

This notice also provides additional transition relief for brokers for sales of digital assets effected during calendar year 2027 for certain customers that have not been previously classified by the broker as U.S. persons.

Nationwide Tax Forum

Thu, 05 Jun 2025 14:28:14 GMT

IRS Nationwide Tax Forum early bird registration expires June 10

IR-2025-64, June 5, 2025

WASHINGTON — The Internal Revenue Service today reminded tax pros the early bird registration rate for the 2025 IRS Nationwide Tax Forum expires on Tuesday, June 10.

Attendees who act by the June 10 early bird deadline can take advantage of the lowest registration rate of $265 per person. Standard pricing of $319 begins after June 10 and ends two weeks before the start of each forum. On-site registration is also available at a cost of $399.

Members of the following partner associations can save an additional $10 on the early bird rate:

American Bar Association (ABA)
American Institute of Certified Public Accountants (AICPA)
National Association of Enrolled Agents (NAEA)
National Association of Tax Professionals (NATP)
National Society of Accountants (NSA)
National Society of Tax Professionals (NSTP)

Members should contact their association directly for an IRS Nationwide Tax Forum discount code.

Locations and registration details

The following is the 2025 IRS Nationwide Tax Forum lineup:

Location	Forum dates	Standard rate pre-registration deadline
Chicago, IL	July 1-3	June 17
New Orleans, LA	Aug. 5-7	July 22
Orlando, FL	Aug. 26-28	Aug. 12
Baltimore, MD	Sept. 9-11	Aug. 26
San Diego, CA	Sept. 16-18	Sept. 2

About the 2025 IRS Nationwide Tax Forum

The 2025 IRS Nationwide Tax Forum is the agency’s largest annual outreach event designed and produced for the tax professional community. This year’s curriculum features required continuing education sessions on tax law and ethics, and hot topics like changes to the tax code, common scams and schemes, online tools, digital assets and disaster reporting.

Enrolled agents, certified public accountants, Annual Filing Season Program (AFSP) participants and other tax professionals can earn up to 18 continuing education (CE) credits.

For more information and to register online, visit IRS Nationwide Tax Forum.

Treasury News Release: IRS Requests Public Comment

Wed, 04 Jun 2025 17:55:09 GMT

Many of you are familiar with the President’s Executive Order 14247 “Modernizing Payments To and From America’s Bank Account,” which transitions federal disbursements to electronic payments. Well, now the U.S. Department of the Treasury (Treasury) recently released a request for information.

As described in the Treasury news release:

Beginning September 30, 2025, all federal payments that are currently made by paper check—including Social Security benefits, tax refunds, and vendor payments—will be made electronically.
Paper checks are increasingly the front door for fraud. Treasury is committed to raising awareness of the growing fraud risks associated with paper checks and providing Americans with the knowledge and tools to fight financial fraud and make informed financial decisions.
The Request for Information offers the opportunity for interested individuals and organizations to provide feedback on Treasury’s implementation of the Executive Order and make recommendations to increase public awareness to help consumers, including unbanked and underbanked populations, transition to digital payments.

Written comments and information are requested on or before June 30, 2025. Please use this link to find instructions for submitting your comments, along with specific questions related to the proposed implementation.

Thank you in advance for making your opinion and voice heard.

IRS also appreciate any feedback, concerns, or issues that will help us improve our services….

Again, Thank you and please Be Safe

Alfred (Al) Page, Jr

Sr. Stakeholder Liaison

IRS – Communication & Liaison

Issue #N-2025-27m IRS Guidewire

Mon, 02 Jun 2025 17:58:10 GMT

Notice 2025-27provides interim guidance regarding the application of the corporate alternative minimum tax, as added to title 26 of the United States Code (Internal Revenue Code) by the Inflation Reduction Act of 2022. Specifically, this notice provides an optional simplified method for determining applicable corporation status under § 59(k) of the Internal Revenue Code. This notice also waives certain additions to tax under § 6655 with respect to a corporation’s CAMT liability under § 55.

Notice 2025-27 will be in IRB: 2025-26, dated 06/23/25.

IRS Date Book Released for Latest Fiscal Year

Thu, 29 May 2025 18:02:25 GMT

WASHINGTON — The Internal Revenue Service today issued its annual Data Book detailing the agency's activities during fiscal year 2024 (Oct. 1, 2023 – Sept. 30, 2024). This year’s edition marks the publication’s 30-year anniversary; the first Data Book covered fiscal years 1993 and 1994 and was available in 1995. Prior to 1993, the IRS published annual reports, which date back to 1863. The Data Book provides a fiscal year statistical overview of the agency’s operations including returns received, revenue collected, taxpayer services provided, tax returns examined (audits), efforts to collect unpaid taxes and other details about the work of the IRS.

Read it here.

Issue Number: Notice 2025-29

Fri, 16 May 2025 13:24:56 GMT

Inside This Issue

Notice 2025-29 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for April 2025 used under § 417(e)(3)(D), the 24-month average segment rates applicable for May 2025, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

WILL BE IN IRB: 2025-23 DATED: June 2, 2025

Thank you for subscribing to IRS GuideWire, an IRS e-mail service. If you are a Tax Professional and have a specific concern about your tax situation, call the IRS Practitioner Priority Service 1-866-860-4259.

Issue Number: RR-2025-11

Tue, 13 May 2025 12:51:13 GMT

Inside This Issue

Revenue Ruling 2025-11 provides interest rates for the third quarter 2025, including rates for underpayments and overpayments. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning July 1, 2025, will be 7 percent for overpayments (6 percent in the case of a corporation), 7 percent for underpayments, and 9 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 4.5 percent.

Revenue Ruling 2025-11 will be in IRB 2025-23, dated June 2, 2025

Issue Number: IR-2025-59

Tue, 13 May 2025 12:46:19 GMT

Inside This Issue

Interest rates remain the same for second quarter of 2025

WASHINGTON — The Internal Revenue Service announces that interest rates will remain the same for the calendar quarter beginning July 1, 2025.

For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily. Here is a complete list of the interest rates:

7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
4.5% for the portion of a corporate overpayment exceeding $10,000.
7% for underpayments (taxes owed but not fully paid).
9% 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 rates are equal to the federal short-term rate plus three percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five 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.

These interest rates are computed from the federal short-term rate determined during April 2025.

Revenue Ruling 2025-11 announcing the rates of interest will appear in Internal Revenue Bulletin 2025-23, dated June 2, 2025.

IRS reminder: Protect important records in case a natural disater strikes

Wed, 30 Apr 2025 17:25:06 GMT

Issue Number: IR-2025-55

Inside This Issue

IRS reminder: Protect important records in case a natural disaster strikes

WASHINGTON — The Internal Revenue Service reminds taxpayers that disaster preparation season kicks off soon with National Wildfire Awareness Month in May and National Hurricane Preparedness Week, May 4-10.

With tax season over and peak periods for disasters approaching, now is a good time for taxpayers to think about protecting important tax and financial information as part of a disaster emergency plan.

Disasters can have an immediate and lasting impact on individuals, organizations and businesses. Year-round preparation is important, and observing Hurricane Preparedness Week and Wildfire Awareness Month provides an opportunity for an annual assessment of readiness.

So far in 2025, the Federal Emergency Management Agency (FEMA) has issued 12 major disaster declarations in nine states impacted by winter storms, flooding, tornadoes, wildfires, landslides and mudslides. For current disaster declarations and information on how declarations are made, see FEMA’s Current Disasters page.

The IRS offers tips to help taxpayers protect personal financial and tax information when disaster hits.

Protect and make copies of important documents

Original documents such as tax returns, Social Security cards, marriage certificates, birth certificates and land ownership documents need to be secured in a waterproof container in a safe space. Taxpayers are also encouraged to make copies of these important documents and store them in a secondary location such as a safe deposit box or with a trusted person who lives in a different area. In addition, scanned documents can be stored on a flash drive for easy portability.

Keep a record of valuables

Taxpayers should use cell phones or other mobile devices to make a record of high-value items. A simple list with current photos or videos can help support claims for insurance or tax benefits after a disaster. The IRS disaster loss workbooks in Publication 584, Casualty, Disaster and Theft Loss Workbook (Personal-Use Property), and Publication 584-B, Business Casualty, Disaster and Theft Loss Workbook, can help individuals and businesses make lists of belongings or business equipment.

Rebuilding records

Reconstructing or replacing records after a disaster may be required for tax purposes, claiming federal assistance or insurance reimbursement. Accurate loss estimates could mean more loan and grant money may be available. Taxpayers who have lost some or all their records during a disaster should visit IRS’s Reconstructing Records webpage as a first step.

Employers should check fiduciary bonds

Disasters can impact a business’ ability to make timely federal tax deposits. Employers using payroll service providers should check if the provider has a fiduciary bond in place that can protect the employer in the event of default by the payroll service provider. The IRS reminds employers to choose their payroll service providers carefully.

IRS can provide tax relief after a disaster

After FEMA issues a major disaster or emergency measures declaration, the IRS may postpone certain tax filing and payment deadlines for taxpayers who reside or have a business in certain counties affected by the disaster. The IRS provides details on states and counties that have been issued relief on the IRS Disaster Relief page.

Taxpayers in the affected areas do not need to call 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 can contact the IRS Disaster Hotline at 866-562-5227 to ask their tax-related questions of an IRS specialist trained to handle disaster-related issues.

Taxpayers who do not reside or have a business 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.

More disaster information

Taxpayers are encouraged to review publications and websites that may offer further assistance in advance preparation for disasters:

· IRS.gov: Preparing for a disaster

· IRS Publication 547, Casualties, Disasters, and Thefts

· IRS Publication 583, Starting a Business and Keeping Records

· FEMA.gov

· Disasterassistance.gov

· Ready.gov

e-News for Tax Professionals 2025-17

Mon, 28 Apr 2025 15:19:05 GMT

Issue Number: 2025-17

Inside This Issue

Register now for the 2025 IRS Nationwide Tax Forum
May 15 tax exempt filing deadline approaching
Upcoming webinar for tax professionals

1. Register now for the 2025 IRS Nationwide Tax Forum

Tax professionals are invited to register for the upcoming IRS Nationwide Tax Forum. Each of the 2025 forums is a three-day event with seminars, workshops and networking opportunities. Attendees can maximize their time by participating in additional pre-forum events including the annual filing season refresher course and practice management session. Register today to ensure your space this summer in one of the five following cities:

Chicago: July 1 – 3
New Orleans: Aug. 5 – 7
Orlando: Aug. 26 – 28
Baltimore: Sep 9 – 11
San Diego: Sep. 16 – 18

Visit IRS Nationwide Tax Forum for information and to take advantage of the Early Bird rate, which is available until June 10.

2. May 15 tax exempt filing deadline approaching

To promote successful and timely tax exempt return filing, the IRS is highlighting key forms and topics as the May 15 deadline for tax-exempt organizations draws near. The yearly filing due date for certain returns filed by tax-exempt organizations is the fifteenth day of the fifth month after the end of an organization's accounting period. Those operating on a calendar year basis must file a return by May 15. Returns due include:

Form 990-series annual information returns (Forms 990, 990-EZ, 990-PF)
Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or Form 990-EZ
Form 990-T, Exempt Organization Business Income Tax Return (other than certain trusts)
Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code

The IRS also offers online workshops to help tax-exempt organizations comply with filing requirements. They also explain the benefits, limitations and expectations of exempt organizations.

3. Upcoming webinar for tax professionals

The IRS is presenting the webinar “Small Business, Big Tools: Resources from the IRS that will lead to Success” on May 8 at 2 p.m. ET. No continuing education is offered for this webinar.

For more information or to register for the webinar, click here.

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If you have a specific concern about your client's tax situation, call the IRS Practitioner Priority Service 1-866-860-4259.

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IRS highlights key forms, topics for tax-exempt organizations ahead of May 15 filing deadline

Fri, 25 Apr 2025 16:05:14 GMT

WASHINGTON — As the May 15 filing deadline approaches for tax-exempt organizations, the Internal Revenue Service highlights important forms and topics to ensure successful and timely filing.

The annual filing due date for certain returns filed by tax-exempt organizations is the 15th day of the 5th month after the end of an organization's accounting period. Those operating on a calendar year basis must file a return by May 15. Returns due include:

Form 990-series annual information returns (Forms 990, 990-EZ, 990-PF).
Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or Form 990-EZ.
Form 990-T, Exempt Organization Business Income Tax Return (other than certain trusts).
Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code.

Electronic filing

Electronic filing ensures acknowledgement that the IRS has received the return and reduces processing time, making it easy to comply with reporting requirements. Organizations should remember the following when e-filing:

Organizations filing a Form 990, 990-EZ, 990-PF or 990-T for calendar year 2023 must file their returns electronically.
Private foundations filing a Form 4720 for calendar year 2023 must file the form electronically.
Charities and other tax exempt organizations can file these forms electronically through an IRS Authorized e-File Provider.
Organizations eligible to submit a Form 990-N must do so electronically and can submit it through Form 990-N (e-Postcard) on IRS.gov.

Common errors

The IRS encourages organizations to thoroughly review their forms to avoid common errors such as missing or incomplete schedules. If an organization’s return is incomplete or is the wrong return for the organization, the return will be rejected.

Extension requests

Tax-exempt organizations may request a six-month automatic extension by filing a Form 8868, Application for Extension of Time to File an Exempt Organization Return. In situations where tax is due, extending the time for filing a return does not extend the time for paying tax.

Online workshops

The IRS provides online workshops to help tax-exempt organizations comply with filing requirements. These workshops are designed to help organizational leadership understand the benefits, limitations and expectations of exempt organizations.

Information Returns Intake System (IRIS) Schema and Business Rules are Available

Fri, 25 Apr 2025 16:04:12 GMT

Attention: Software Developers and Information Return Transmitters

Tax Year 2024 IRIS schema and business rules v1.1 are available through the SOR mailbox. There are no changes to schema or business rules.

Tax Year 2023 IRIS Schema and Business Rules are available. There are no changes to TY2023 Schema v1.0 or Business Rules in v1.2.

Software Developers and State organizations may download IRIS schemas and Business Rules from their e-Services mailbox. To access these files, you must have:

An active e-Services account
An IRIS TCC application with the status “Completed”
An IRIS TCC status of “Active”
An IRIS role of “Software Developer” or business structure of “State Government Agency”, “Local Government Agency”, or “Federal Government Agency”

You may have several messages in your account. Please open all of them to find the set you would like to download. After 60 days the messages are purged.

Please visit the IRIS Schemas and Business Rules page on IRS.gov for more information about IRIS Schemas and Business Rules.

IRS Whistleblower Office releases operating plan outlining integrated approach to advance program

Fri, 18 Apr 2025 14:11:50 GMT

WASHINGTON — The Internal Revenue Service Whistleblower Office released its first-ever multi-year operating plan outlining guiding principles, strategic priorities, recent achievements and current initiatives to advance the IRS Whistleblower Program.

The IRS Whistleblower Office administers claims from whistleblowers that identify taxpayers who may not be complying with tax laws or other laws the IRS administers, enforces or investigates.

“The IRS Whistleblower Office Operating Plan incorporates extensive feedback received from whistleblowers, whistleblower practitioners, IRS employees, oversight bodies and other program stakeholders,” said IRS Whistleblower Office Director John Hinman. “Whistleblower information that the IRS can act on is an important component of effective tax administration as it bolsters the fair, efficient and effective enforcement of our nation’s tax laws, the success of our voluntary tax system and our efforts to reduce the tax gap.”

The plan reflects a multi-year approach to improving processes and operations, expanding collaboration and outreach and integrating valuable stakeholder feedback.

The operating plan is framed around six strategic priorities:

Enhance the claim submission process to promote greater efficiency.
Use high-value whistleblower information effectively.
Award whistleblowers fairly and as soon as possible.
Keep whistleblowers informed of the status of their claims and the basis for IRS decisions on claims.
Safeguard whistleblower and taxpayer information.
Ensure that our workforce is supported with effective tools, technology, training and other resources.

Within these six strategic priorities, there are 38 initiatives addressing short-term and long-term focus areas to advance the program. Some of the initiatives will require completion of detailed, specific activities while other initiatives are broad. The plan identifies areas of significant importance while allowing flexibility to address other concerns that may arise.

The IRS is committed to continuous improvement of the Whistleblower Program through ongoing collaboration with program stakeholders.

Assistance from whistleblowers

The IRS appreciates the valuable assistance it receives from whistleblowers and the whistleblower practitioner community. An effective whistleblower program provides an invaluable deterrence against non-compliance with tax laws, and whistleblower information significantly boosts revenues while improving tax fairness.

Since the inception of the IRS Whistleblower Office in 2007, the Whistleblower Office has made awards of over $1.3 billion based on the collection of more than $7 billion attributable to whistleblower information. In fiscal year 2024, the IRS paid awards totaling $123.5 million based on tax and other amounts collected of $474.7 million attributable to whistleblower information. The total dollar amount of awards paid in fiscal year 2024 was the third highest in the program’s history. The awards paid to whistleblowers generally range between 15% and 30% of the proceeds collected and attributable to their information.

Individuals with specific, timely, credible, relevant and significant information regarding non-compliance with any laws the IRS is authorized to administer, enforce or investigate are encouraged to consider filing a Form 211, Application for Award for Original Information, to be considered for an award.

Applicable Federal Rates

Wed, 16 Apr 2025 15:10:45 GMT

Revenue Ruling 2025-10 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 2025-10 will be in IRB: 2025-19, dated 05/05/2025.

Missed the April tax-filing due date? File promptly to minimize interest and penalties

Wed, 16 Apr 2025 14:36:41 GMT

IR-2025-51, April 16, 2025

WASHINGTON — The Internal Revenue Service encourages taxpayers who missed the filing deadline to submit their tax return as soon as possible. Those who missed the deadline to file but owe taxes should file timely to avoid additional penalties and interest.

Taxpayers should keep in mind that requesting an extension allows for additional time to file but not to pay taxes owed. Individuals who owe taxes should file their tax return and pay as soon as they can. Interest and penalties will continue to accrue on the owed taxes until the balance is paid in full.

File and pay to limit penalties and interest

Even if a taxpayer cannot afford to immediately pay the full amount of taxes owed, they should still file a tax return and pay as much as possible. The IRS offers options for taxpayers who need help paying their tax bill. For more information, visit the Penalties page on IRS.gov.

Taxpayers may qualify for penalty relief if they have filed and paid timely for the past three years and meet other important requirements. For more information, see the Administrative Penalty Relief page on IRS.gov.

Online payment options

Individuals can pay taxes owed securely through IRS Online Account, IRS Direct Pay, The Electronic Federal Tax Payment System (EFTPS), debit or credit card or digital wallet. Taxpayers may also apply online for a payment plan (including installment agreements).

Those who pay electronically get immediate confirmation after submitting payment. Direct Pay and the EFTPS allow taxpayers to receive payment email notifications. Find additional payment information at Make a Payment on IRS.gov.

Due for a refund? Don’t overlook filing a tax return

There's no penalty for filing after the April 15 deadline if a refund is due. Every year, the IRS estimates nearly a million taxpayers who failed to file prior year tax returns are potentially due refund money.

Taxpayers who choose not to file a return because they don't earn enough to meet the filing requirement may miss out on receiving a refund due to potential refundable tax credits. Examples include the Earned Income Tax Credit and Child Tax Credit. Taxpayers sometimes fail to file a tax return and claim a refund for these credits and others for which they may be eligible.

Taxpayers can track their refund using the Where's My Refund? tool on IRS.gov, on the IRS2Go mobile app or by calling the automated refund hotline at 800-829-1954. To use the Where's My Refund? tool, taxpayers need the primary Social Security number on the tax return, the filing status and the expected refund amount. The refund status information updates once daily.

Taxpayers who still need to file for the 2024 tax year are encouraged to take advantage of electronic filing options such as IRS Free File, which is available on IRS.gov through Oct. 20, or IRS Direct File, available to qualified taxpayers in 25 states.

Choose a trusted tax professional

Taxpayers who have yet to file a return might consider seeking assistance from a tax preparer. The IRS provides resources if they need someone to prepare a tax return. The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help taxpayers find tax return preparers with professional certifications recognized by the IRS or who have completed the IRS requirements for the Annual Filing Season Program.

Taxpayer Bill of Rights

Taxpayers have fundamental rights under the law that protect them when interacting with the IRS. The Taxpayer Bill of Rights divides them into 10 categories. IRS Publication 1, Your Rights as a Taxpayer, reiterates these rights along with the agency's obligation to protect them.

IRS marks 70th anniversary of April 15 tax filing deadline

Tue, 15 Apr 2025 16:02:04 GMT

WASHINGTON – On this Tax Day, the Internal Revenue Service marks a major milestone: the 70^th Anniversary of the April 15 federal income tax filing deadline. Since 1955, April 15 has served as a consistent annual deadline for millions of Americans to file their federal income tax returns, becoming a fixture in the nation’s financial calendar.

The deadline was moved to April 15 from March 15 in 1955 to give taxpayers and the IRS more time to prepare and process increasingly complex returns. Since then, innovations in technology and customer service have transformed the tax filing experience from hand-prepared paper forms to modern e-filing and online tools that make the process faster, more secure and more accessible. In 2024, more than 144 million individual tax returns were filed with more than 96% submitted electronically.

Despite the changes, one thing has remained the same: the importance of meeting the annual filing deadline. Most taxpayers must file by midnight tonight. Those who need more time can still request an extension until Oct. 15 – though any taxes owed must be paid by April 15 to avoid penalties and interest.

For more information on filing options, taxpayer assistance, available credits and deductions, visit IRS.gov.

IRS reminder to U.S. taxpayers living, working abroad: File 2024 tax return by June 16

Wed, 02 Apr 2025 17:11:27 GMT

WASHINGTON – The Internal Revenue Service today reminded taxpayers living and working abroad that they have until Monday, June 16, 2025, to file their 2024 federal income tax return and pay any tax due. This deadline applies to both U.S. citizens and resident aliens abroad, including those with dual citizenship.

In general, on the regular due date of their return, a U.S. citizen or resident alien residing overseas or in the military on duty outside the U.S. is allowed a two-month extension to file without needing to ask for it. If they use a calendar year to file their return, as virtually all individual taxpayers do, the regular due date of their 2024 return is April 15, 2025. The automatic extended due date is June 16, 2025, pushed back from the usual June 15 because that date falls on a Sunday this year.

Even with the tax-filing extension, interest will apply to any 2024 tax payments received after April 15. This means that unpaid tax-year 2024 tax balances will begin accruing interest, currently at the rate of 7% per year, compounded daily, after April 15, 2025.

Who Qualifies?

A taxpayer qualifies for the June 16 extension if they are a U.S. citizen or resident alien and, on the regular due date of their return:

They are living outside the United States and Puerto Rico and their main place of business or post of duty is outside the United States and Puerto Rico, or
They are in military or naval service on duty outside the United States and Puerto Rico.

Qualifying taxpayers should attach a statement to the return indicating which of these two situations applies.

Extensions beyond June 16

Taxpayers who can’t meet the June 16 due date can request an automatic extension to Oct. 15, 2025. This is an extension of time to file, not an extension to pay.

The fastest and easiest way to get an extension is to request it electronically. Several electronic filing options are available. Visit Get an Extension to File Your Tax Return for details. Taxpayers may also use IRS Free File to file an extension electronically.

Taxpayers who cannot request an extension electronically can complete and mail Form 4868 to the IRS. See About Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return for more information.

Taxpayers can also get an extension when paying a tax bill electronically. There is no need to file Form 4868 when selecting an extension when paying electronically.

Businesses that need more time must file Form 7004 to request an automatic 6-month extension. Visit About Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information and Other Returns.

Combat zone extensions

Members of the military in a combat zone during tax filing season may qualify for an additional extension of at least 180 days to file and pay taxes. More information, like who qualifies, can be found at Extension of Deadlines – Combat Zone Service Q&As.

Spouses of individuals who serve in a combat zone or contingency operation are generally entitled to the same deadline extensions with some exceptions. Extension details and tax information for members of the military are available in IRS Publication 3, Armed Forces’ Tax Guide.

Special relief for terrorist attacks in Israel

Taxpayers who live or have a business in Israel, Gaza or the West Bank and certain other taxpayers affected by the terrorist attacks in the State of Israel have until Sept. 30, 2025, to file and pay. This includes most returns and taxes due from Oct. 7, 2023, through Sept. 30, 2025, including Form 1040 and 1120 series returns.

Filing required to get tax benefits

Many taxpayers living outside the U.S. qualify for tax benefits such as the Foreign Earned Income Exclusion and the Foreign Tax Credit, but these benefits are available only if a U.S. return is filed. Other deductions and tax credits may also be available. For details, see Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, available on IRS.gov.

Reporting required for foreign accounts and assets

Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B, Interest and Ordinary Dividends, to their Form 1040 series 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, many taxpayers may also need to complete and attach to their return Form 8938, Statement of Specified 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. For details, see the instructions for this form.

Reporting foreign financial accounts to Treasury

Foreign financial accounts, such as bank accounts or brokerage accounts, must be reported to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) by electronically filing Form 114, Report of Foreign Bank and Financial Accounts (FBAR ). The FBAR requirement applies to anyone with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2024.

The IRS urges taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is available only through the Bank Secrecy Act E-Filing System. The deadline for filing the annual FBAR is April 15, 2025. However, FinCEN grants those who missed the April deadline an automatic extension until Oct. 15, 2025. There’s no need to request this extension. See FinCEN’s website for further information.

Report in U.S. dollars

Any income received or deductible expenses paid in foreign currency must be reported on a U.S. tax return in U.S. dollars. Likewise, any tax payments must be made in U.S. dollars.

Both FINCEN Form 114 and IRS Form 8938 require the use of a Dec. 31 exchange rate for all transactions, regardless of the actual exchange rate on the date of the transaction. Generally, the IRS accepts any posted exchange rate that is used consistently. For more information on exchange rates, see Foreign Currency and Currency Exchange Rates.

Making tax payments

To ensure tax payments are credited promptly, the IRS urges taxpayers to consider the speed and convenience of paying their U.S. tax obligation electronically. The fastest and easiest way to do that is via their IRS Online Account, IRS Direct Pay and the Electronic Federal Tax Payment System (EFTPS). Options to pay with debit or with credit card and digital wallets are available as well. Service providers charge a fee for this option. For details on these and other electronic payment options, visit IRS.gov/Payments.

Reporting for expatriates

Taxpayers who relinquished their U.S. citizenship or ceased to be lawful permanent residents of the U.S. during 2024 must file a dual-status alien tax return and attach Form 8854, Initial and Annual Expatriation Statement. A copy of Form 8854 must also be filed with the IRS by the due date of the tax return (including extensions). See the instructions for this form and Notice 2009-85, Guidance for Expatriates Under Section 877A, for further details.

Other resources:

e-News for Tax Professionals 2025-13

Fri, 28 Mar 2025 19:19:34 GMT

Inside This Issue

See what’s happening at the 2025 IRS Nationwide Tax Forum
IRS shares FAQs to help businesses with Employee Retention Credit and income tax returns
Tips to expedite refunds, prevent errors
Technical Guidance

1. See what’s happening at the 2025 IRS Nationwide Tax Forum

Chicago: July 1 – 3
New Orleans: Aug. 5 – 7
Orlando: Aug. 26-28
Baltimore: Sep 9-11
San Diego: Sep. 16 – 18

Visit IRS Nationwide Tax Forum for information and to take advantage of the Early Bird rate, which is available until June 17.

2. IRS shares FAQs to help businesses with Employee Retention Credit and income tax returns

The IRS shared a new set of frequently asked questions on the Employee Retention Credit (ERC). The information explains how a business can resolve issues with its income tax return if the business:

Did not reduce its wage expense and its ERC claim was allowed, or
Reduced its wage expense and its ERC claim was disallowed.

3. Tips to expedite refunds, prevent errors

A series of IRS guidelines and reminders can expedite tax refunds as the April 15 filing deadline nears. The IRS encourages tax professionals to:

Collect all tax-related paperwork.
Ensure filing status, names, birthdates and Social Security numbers are correct.
Use electronic filing.
Report all taxable income.
Answer the digital assets question.
Ensure bank routing and account numbers are correct.
Sign and date the return.
Make a payment by April 15.
Request an extension if needed.
Keep a copy of the tax return.

Additional information can be found on the File your tax return page on IRS.gov.

4. Technical Guidance

Announcement 2025-08: The competent authorities of the United States and the Swiss Confederation have entered a Competent Authority Arrangement under paragraph 3 of Article 25 (Mutual Agreement Procedure) of the Convention Between the United States of America and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income.

Announcement 2025-13: is issued pursuant to section 521(b) of Pub. L. 106-170, the Ticket to Work and Work Incentives Improvement Act of 1999, which requires the Secretary of the Treasury to report annually to the public concerning advance pricing agreements and the Advance Pricing and Mutual Agreement Program, formerly known as the Advance Pricing Agreement Program.

Earned Income Tax Credit celebrates 50 years of helping working families

Fri, 28 Mar 2025 13:48:12 GMT

WASHINGTON - The Earned Income Tax Credit (EITC) has played a crucial role in helping millions of low-to-moderate income workers out of poverty. Saturday, March 29, 2025, marks the 50^th anniversary of this important credit.

A component of the Tax Reduction Act, EITC was signed into law by President Gerald Ford on March 29, 1975. What began as a modest means to provide financial help to working families has evolved through a series of legislative changes into one of the federal government’s largest anti-poverty programs.

Over the past 50 years, the EITC has had a significant impact in the lives of eligible taxpayers claiming the credit. As of Dec. 2024, approximately 23 million workers and families received about $64 billion from EITC.

In 1975, the maximum credit amount for EITC was $400. For tax year 2024, the EITC can be up to $7,830. Today, the EITC continues to provide financial assistance to low-to-moderate income working families and individuals, with or without children, by helping them cover essentials, save for the future and build financial stability.

Taxpayers can use the EITC Assistant to determine their eligibility. Those that are eligible can learn how to claim the credit on IRS.gov.

e-News for Tax Professionals 2025-11

Fri, 14 Mar 2025 22:06:50 GMT

Inside This Issue

2025 IRS Nationwide Tax Forum Opens for Registration
Retirees: April 1 is last day to begin obligatory withdrawals from IRAs and 401(k)s
April 15 deadline reminder for tax year 2021 returns
Tax Time Guide: Avoid penalties and interest; use IRS electronic payment methods for quick, secure service
Technical Guidance

1. 2025 IRS Nationwide Tax Forum Opens for Registration

Tax Pros: Registration is now open for the 2025 IRS Nationwide Tax Forum. Register today to ensure your space this summer in one of the five following cities:

Chicago: July 1 – 3
New Orleans: Aug. 5 – 7
Orlando: Aug. 26-28
Baltimore: Sep 9-11
San Diego: Sep. 16 – 18

The IRS Nationwide Tax Forum offers continuing education and networking opportunities to Enrolled Agents, Certified Public Accountants, IRS Annual Filing Season Program participants and other tax professionals. Each forum offers more than 40 seminars and workshops on a wide variety of federal and state tax issues presented by experts from the IRS and its partner associations. Attendees may earn up to 18 continuing education credits.

Visit IRS Nationwide Tax Forum for information on the program, including accommodations and registration.

2. Retirees: April 1 is last day to begin obligatory withdrawals from IRAs and 401(k)s

The IRS reminded retirees that in most cases those who turned 73 in 2024 must start receiving payments from Individual Retirement Arrangements (IRAs), 401(k)s and similar workplace retirement plans by Tuesday, April 1. Usually, Required minimum distributions (RMDs) are paid by the end of the year. Those who reached 73 in 2024, however, were permitted to postpone their first RMD until April 1. This special rule applies to IRA owners and participants born after Dec. 31, 1950.

For more information on RMDs and other changes impacting retirees and retirement plan participants, visit Tax information for seniors & retirees on IRS.gov.

3. April 15 deadline reminder for tax year 2021 returns

Taxpayers have until April 15 to file their 2021 tax returns to claim a refund. The IRS estimates that more than $1 billion in refunds remain unclaimed. Taxpayers typically have three years to file and claim their tax refunds. If they don’t file within three years, the money becomes the property of the U.S. Treasury. After the expiration of the three-year period, the refund statute generally prevents the issuance of a refund check and the application of any credits, including overpayment of estimated taxes or withholding amounts, to other tax years that are underpaid.

Forms and instructions for both current and previous years (including Forms 1040 and 1040-SR for the tax year 2021) can be found on the IRS.gov Forms and Instructions page or by calling toll-free 800-TAX-FORM (800-829-3676).

4. Tax Time Guide: Avoid penalties and interest; use IRS electronic payment methods for quick, secure service

In an effort to provide more resources for taxpayers during this filing season, the IRS encouraged filers to use electronic options on IRS.gov. These online resources can assist filers avoid interest and late filing fees:

Direct Pay allows taxpayers to securely pay their taxes directly from a checking or savings account without any fees or registration.
IRS2Go mobile app 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 tax tips and more.
Electronic funds withdrawal (EFW) allows taxpayers to file and pay electronically from a bank account when using tax preparation software or a tax professional.
Electronic Federal Tax Payment System gives taxpayers a safe, convenient way to pay individual and business taxes by phone or online. To enroll and for more information, call 800-555-4477 or visit eftps.gov.
Debit or credit card and digital wallet lets individuals pay online, by phone or with a mobile device through any IRS authorized payment processor.

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

5. Technical Guidance

Notice 2025-17 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for February 2025 used under section 417(e)(3)(D), the 24-month average segment rates applicable for March 2025, and the 30-year Treasury rates, as reflected by the application of section 430(h)(2)(C)(iv).

West Virginia storm victims qualify for tax relief; various deadlines postponed to Nov. 3

Fri, 14 Mar 2025 18:57:19 GMT

WASHINGTON — The Internal Revenue Service announced today tax relief for individuals and businesses in parts of West Virginia affected by severe storms, straight-line winds, flooding, landslides and mudslides that began on Feb. 15, 2025.

These taxpayers now have until Nov. 3, 2025, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, individuals and households that reside or have a business in Logan, McDowell, Mercer, Mingo, Wayne and Wyoming counties qualify for tax relief.

The same relief will be available to any other counties added later to the disaster area. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred from Feb. 15, 2025, through Nov. 3, 2025 (postponement period). As a result, affected individuals and businesses will have until Nov. 3, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Nov. 3, 2025, deadline will now apply to:

Individual income tax returns and payments normally due on April 15, 2025.
2024 contributions to IRAs and health savings accounts for eligible taxpayers.
Quarterly estimated tax payments normally due on April 15, June 16 and Sept. 15, 2025.
Quarterly payroll and excise tax returns normally due on April 30, July 31 and Oct. 31, 2025.
Calendar-year partnership and S corporation returns normally due on March 17, 2025.
Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2025.
Calendar-year tax-exempt organization returns normally due on May 15, 2025.

In addition, penalties for failing to make payroll and excise tax deposits due on or after Feb. 15, 2025, and before March 3, 2025, will be abated as long as the deposits were made by March 3, 2025.

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the IRS Special Services toll-free number at 866-562-5227 to update their address and request disaster tax relief.

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 Special Services toll-free number at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov.

Additional tax relief

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 2025 return normally filed next year), or the return for the prior year (2024). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2026. Be sure to write the FEMA declaration number – 4861-DR − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The IRS may provide additional disaster relief in the future.

Taxpayers who do not qualify for disaster tax relief may qualify for reasonable cause penalty abatement. See Penalty Relief for Reasonable Cause for additional information.

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.

Reminder about tax return preparation options

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 help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
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 $84,000 or less in 2024 can use IRS Free File’s Guided Tax Software at no cost. There are products in English and Spanish.

Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040, and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.
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.

IRS reminds retirees: April 1 final day to begin required withdrawals from IRAs and 401(k)s

Fri, 14 Mar 2025 13:39:44 GMT

WASHINGTON - The Internal Revenue Service issued a reminder today that in most cases retirees who turned 73 in 2024 must begin receiving payments from Individual Retirement Arrangements (IRAs), 401(k)s and similar workplace retirement plans by Tuesday, April 1, 2025.

Required minimum distributions (RMDs) are payments typically made by year end. However, individuals who turned 73 in 2024 can delay their first RMD until April 1, 2025. This special rule applies to IRA owners and participants born after Dec. 31, 1950.

Two RMD payments are possible in the same year

The April 1 RMD deadline is for the first year only. For subsequent years, the distribution is due by December 31.

Taxpayers receiving their first required distribution for 2024 in 2025 (by April 1) must take their second RMD for 2025 by Dec. 31, 2025. The first distribution is taxable in 2025 and reported on the 2025 tax return, along with the regular 2025 distribution.

Retirement plans needing RMDs

RMD rules apply to owners of traditional, Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) IRAs while the original owner is alive, and to participants in 401(k), 403(b) and 457(b) plans. Roth IRAs are not subject to required minimum distributions.

An IRA trustee must inform the IRA owner of the RMD amount or, alternatively, offer to calculate the distribution amount. The RMD amount will typically appear on Form 5498, IRA Contribution Information, in Box 12b. For a 2024 distribution due by April 1, 2025, the amount is shown on the 2023 Form 5498, usually issued early in 2024.

Some individuals can defer RMDs

The April 1 deadline applies to all traditional IRA owners, as well as most workplace retirement plan participants. Some individuals with workplace plans, however, may be able to delay their RMD.

Most participants can wait until April 1 after retiring to receive distributions if their workplace plan allows it. This exception does not apply to 5% business owners or to participants in SEP and SIMPLE IRA plans. See Publication 575, Pension and Annuity Income, for information regarding the tax on excess accumulation.

Public school employees and certain tax-exempt organization staff with pre-1987 403(b) plan accruals should consult their employer, plan administrator or provider for guidance on handling these accruals.

IRS online tools and publications are available for assistance

Many answers to questions about RMDs can be found at Required Minimum Distribution FAQs on IRS.gov. To determine their distribution amount, most taxpayers can use Table III (Uniform Lifetime) on that page, while Table II should be used by married taxpayers whose spouse is more than 10 years younger and is their sole beneficiary.

For a 2024 required minimum distribution (due April 1, 2025), refer to the life expectancy tables in Appendix B of Publication 590_‑B, Distributions from Individual Retirement Arrangements (IRAs). Table III shows that the RMD for an individual who is 73 years old in 2024 is typically based on a distribution period of 26.5 years. The Dec. 31, 2023, balance should be divided by 26.5 to calculate the RMD for 2024.

IRS Publication 590-B, Distributions from Individual Retirement Arrangements, also includes worksheets, examples, and additional information that can assist anyone in determining their RMD. Publication 590 provides additional RMD information and resources for use in preparing 2024 federal tax returns.

For further details on RMDs and other changes impacting retirees and retirement plan participants, visit Tax information for seniors & retirees on IRS.gov.

Outreach Connection FY25-05

Tue, 11 Mar 2025 13:10:21 GMT

Filing season reminders, tax credits and tax scams awareness

Find tax records with the IRS Individual Online Account
Tax Time Guide provides updates that may affect 2024 tax returns
Prevent common errors when filing a tax return
Check eligibility for these credits
Learn about the IRS Dirty Dozen
More information

Find tax records with the IRS Individual Online Account

The IRS has made it easier for taxpayers to file their taxes by adding information return documents to their IRS Individual Online Account. Now taxpayers can find important tax records in one digital location.

IRS enhances services and convenience for taxpayers

Tax Time Guide provides updates that may affect 2024 tax returns

IRS provides updated information to help taxpayers file an accurate federal tax return with the Tax Time Guide series.

IRS Tax Time Guide helps taxpayers when filing a return

Prevent common errors when filing a tax return

Knowing what common errors to look out for can help taxpayers be better prepared when they file their federal tax return.

Errors taxpayers should watch out for

Check eligibility for these credits

Earned Income Tax Credit: Workers can use the credit to reduce their taxes or increase their refund.

Child Tax Credit: Families with qualifying children get a tax break.

Saver's Credit: Those who make eligible contributions to an IRA or employer-sponsored retirement plan may qualify for this credit.

Education credits, deductions and savings plans: These can help taxpayers with their expenses for higher education..

Energy Efficient Home Improvement Credit: Homeowners may qualify if they made qualified energy-efficient improvements.

Learn about the IRS Dirty Dozen

Each year, the IRS Dirty Dozen lists common scams that taxpayers may encounter anytime but many schemes peak during tax season as people prepare their returns or hire someone to help with their taxes.

The Dirty Dozen represents the worst of the worst tax scams

More information

IRS provides help for taxpayers online and on social media.

Get Ready shares steps to make it easier to file a tax return.
Let Us Help you has information and resources on a wide range of topics.
File Your Tax Return has information on how and when to file a tax return.
Volunteer Income Tax Assistance and Counseling for the Elderly programs offer free basic tax return preparation to qualified taxpayers; IRS-certified volunteers help taxpayers prepare their returns.
Interactive Tax Assistant guides taxpayers to answers to their tax questions.

IRS Social Media has links to the official IRS accounts on X, Facebook, Instagram, LinkedIn and YouTube.

Don’t overlook free options for preparing and filing taxes in 2025; Direct File available in 25 states

Tue, 11 Mar 2025 11:24:57 GMT

WASHINGTON — The Internal Revenue Service encouraged taxpayers who have yet to prepare and file their tax returns to consider taking advantage of the many free options available – including Direct File, a free, fast and easy way to file directly with the IRS, now available in 25 states.

In addition to Direct File, IRS Free File also offers free tax preparation software through its partners on IRS.gov. Also, the IRS offers free, in-person, help through its Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs.

Direct File

IRS Direct File, the latest filing option for taxpayers, is a web-based service that allows taxpayers to file directly with the IRS for free. It works on mobile phones, laptops, tablets or desktop computers. The system leads taxpayers step-by-step through a series of questions to prepare their federal tax return. Once taxpayers have completed their federal tax return, the Direct File system automatically guides them to complete their state tax filings if they have a state tax obligation.

Direct File began as a pilot program last year and, after receiving overwhelmingly positive reviews from taxpayers, is now available in 25 states.

Direct File features a data import tool that allows taxpayers to automatically import data from their IRS account, including personal information, the taxpayer’s Identity Protection PIN and some information from the taxpayer’s W-2. Live chat is available, and users can opt into additional authentication and verification, which allows customer service representatives to provide more information. In addition, there is a chat bot to help guide users through the eligibility checker.

Taxpayers can use Direct File if they have certain types of income, outlined in more detail in the Direct File fact sheet. Starting this month, taxpayers reporting retirement income, contributions or rollovers can also use Direct File.

Last year Direct File supported taxpayers claiming the Earned Income Tax Credit, the Child Tax Credit and the Credit for Other Dependents.

This year, Direct File will also cover taxpayers claiming the:

Child and Dependent Care Credit
Premium Tax Credit
Credit for the Elderly and Disabled
Retirement Savings Contribution Credits
Health Savings Accounts deductions

The Treasury Department estimates that more than 30 million taxpayers are now eligible to use Direct File across the following 25 states: Alaska, Arizona, California, Connecticut, Florida, Idaho, Illinois, Kansas, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington state, Wisconsin and Wyoming.

IRS Free File

Most taxpayers can file electronically for free by using IRS Free File, available only on IRS.gov.

Currently in its 23rd year, IRS Free File offers free tax preparation software from eight companies in the public-private partnership with the IRS. As part of this partnership, tax preparation and filing software partners offer their online products to eligible taxpayers for free.

This year IRS Free File guided tax software products are available to taxpayers with a 2024 adjusted gross income (AGI) of $84,000 or less. IRS Free File also provides fillable forms for use by any taxpayer, regardless of income, who is comfortable preparing their own return. To access these free tools, taxpayers must start from the IRS Free File page on IRS.gov.

Other free options to file tax returns

In addition to Direct File and IRS Free File, the IRS reminds taxpayers that there are other free programs available to help:

Volunteer Income Tax Assistance/Tax Counseling for the Elderly. Taxpayers can find organizations in their community with IRS certified volunteers that provide free tax help for eligible taxpayers including working families, the elderly, the disabled and people who speak limited English.
MilTax. A Department of Defense program, MilTax generally offers free return preparation and electronic filing software for federal income tax returns and up to three state income tax returns for all military members, and some veterans, with no income limit.

Beware of scams

Criminals often impersonate IRS employees and sound very convincing when calling taxpayers in aggressive and sophisticated ways. Taxpayers should stay vigilant and be alert to scams when dealing with taxes.

The IRS usually contacts taxpayers with a letter in the mail explaining what they owe and how to question or appeal what they owe. The IRS will not call, text or contact anyone via social media, specifically, to demand immediate tax payment.

If taxpayers are unsure whether they owe money to the IRS, they can view their tax information using their Online Account on IRS.gov.

IRS Direct File – A free, easy and secure way to prepare and file 2024 taxes online

Tue, 11 Mar 2025 11:24:21 GMT

More taxpayers in more states will be able to file their 2024 federal taxes directly with the IRS for free. This filing season, Direct File includes new features to make filing taxes quicker and easier.

With IRS Direct File, eligible taxpayers can:

Prepare and file a 2024 federal tax return online – for free – in English or Spanish
Import data from their IRS account, including personal information, their IP PIN and some information from their W-2, if it’s available
Add their tax information with step-by-step guidance
Connect with their state filing tool to file for free
Get help in English and Spanish in real-time live chat with IRS customer support specialists for Direct File
Use smartphones, laptops, tablets and desktop computers to file online

Participating states where Direct File is available
This year, Direct File is open to eligible taxpayers in 25 participating states to file their taxes directly with the IRS for free: 12 states that were part of the pilot last year, plus 13 new states where Direct File is available in 2025.
Alaska, Arizona, California, Connecticut, Florida, Idaho, Illinois, Kansas, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Washington state, Wisconsin and Wyoming.

Eligibility
Taxpayers who lived and worked in one of the 25 participating states for all of 2024 can use Direct File if they report:

W-2 wage income
SSA-1099 Social Security income
1099-G unemployment compensation
1099-INT interest income
1099-MISC for Alaska residents reporting the Alaska Permanent Fund Dividend

Starting March 5, 2025, taxpayers can use Direct File to report:

1099-R retirement income
Contributions to and most distributions from employer-sponsored retirement plans, like a 401(k), pension, annuity, 403(b), or governmental 457(b)
Direct rollovers from one employer-sponsored retirement plan to another, or to an IRA

Taxpayers can't use Direct File if they had other types of income, such as gig economy, rental income or business income.

Credits
Taxpayers can use Direct File to claim these credits:

Earned Income Tax Credit
Child Tax Credit
Credit for Other Dependents
Child and Dependent Care Credit
Premium Tax Credit for Marketplace Health insurance coverage
Credit for the Elderly or the Disabled
Retirement Savings Contributions Credit

Taxpayers who live in Washington state will be guided to the state’s website to apply for the Working Families Tax Credit.

Deductions
Taxpayers can use Direct File to claim these deductions:

Standard deduction
Student loan interest
Educator expenses
Health Savings Account contributions

Taxpayers can't use Direct File if they itemize deductions or claim other tax deductions.

How to file using IRS Direct File

Go to directfile.irs.gov to check your eligibility and see if Direct File is a good fit for you. If you’re not eligible, we’ll connect you to alternative filing options.
Eligible taxpayers who have a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN), may sign in or create an account to verify their identity to access Direct File. The IRS lets you access most tax tools with one account using the same login and password. If you already have an IRS online account, you can use the same sign-in for Direct File.
Complete your return – Direct File will guide you through a series of questions to help you file quickly and easily. You can get support from dedicated IRS customer support specialists through a live chat feature if you need help.
Review your return, input your payment or refund information, and submit your federal return! Direct File will email you once your return has been accepted by the IRS.
File your state return. If you need to file a state return, Direct File will connect you with your state’s online free filing tool to help you get started. In many cases, Direct File users can even import their federal return data directly to their state tool.

Save time importing tax information directly from the IRS
Direct File saves taxpayers time by allowing them to import certain data from their IRS account. Taxpayers can review and edit the information before the return is submitted to the IRS.

Direct File can import the following information:

Employment and federal wage information from your Form W-2, if it’s available
Identity Protection PIN (IP PIN), if you use one
Your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN)
Your name, date of birth, mailing address, email address and phone number

Income limits for Direct File
While there are no income limits for Direct File, additional limitations apply to taxpayers with household wages exceeding $125,000. Currently, Direct File does not support all tax situations for all taxpayers.

You can’t use Direct File if:

Your wages exceed $200,000 ($168,600 if you had more than one employer)
You file as Married Filing Jointly, and your spouse’s wages are more than $200,000 ($168,600 if your spouse had more than one employer)
You file as Married Filing Jointly, and you and your spouse's wages are more than $250,000
You file as Married Filing Separately, and your wages are more than $125,000

Get help with Direct File
Taxpayers can get help with technical support or basic tax law questions from IRS customer service representatives through live chat in English and Spanish.

You can chat live or request a callback from an IRS Direct File customer support specialist when you’re logged in.

New this year: You can opt into additional authentication and verification, which will allow customer support specialists to provide more detailed support.

Questions or issues unrelated to Direct File are routed to other IRS support staff.

Find out more about Direct File

Learn more about how Direct File works
Sign up for the Direct File newsletter
Publication 5916, File for fee with IRS Direct File
Publication 5917, IRS Direct File- What you need to know
Publication 5949, Helpful tips to prepare you for IRS Direct File
Publication 5952, Are you ready to file with IRS Direct File?

Explore other free filing options

IRS: Don’t overlook free options for preparing and filing taxes in 2025; Direct File available in 25 states

Tue, 11 Mar 2025 11:22:45 GMT

IR-2025-30, March 10, 2025

Direct File

Direct File began as a pilot program last year and, after receiving overwhelmingly positive reviews from taxpayers, is now available in 25 states.

Last year Direct File supported taxpayers claiming the Earned Income Tax Credit, the Child Tax Credit and the Credit for Other Dependents.

This year, Direct File will also cover taxpayers claiming the:

Child and Dependent Care Credit
Premium Tax Credit
Credit for the Elderly and Disabled
Retirement Savings Contribution Credits
Health Savings Accounts deductions

IRS Free File

Most taxpayers can file electronically for free by using IRS Free File, available only on IRS.gov.

Other free options to file tax returns

In addition to Direct File and IRS Free File, the IRS reminds taxpayers that there are other free programs available to help:

Volunteer Income Tax Assistance/Tax Counseling for the Elderly. Taxpayers can find organizations in their community with IRS certified volunteers that provide free tax help for eligible taxpayers including working families, the elderly, the disabled and people who speak limited English.
MilTax. A Department of Defense program, MilTax generally offers free return preparation and electronic filing software for federal income tax returns and up to three state income tax returns for all military members, and some veterans, with no income limit.

Beware of scams

If taxpayers are unsure whether they owe money to the IRS, they can view their tax information using their Online Account on IRS.gov.

e-News for Tax Professionals 2025-10

Fri, 07 Mar 2025 20:17:08 GMT

1. Second quarter interest rates unchanged

The IRS announced no change in interest rates beginning April 1. The interest rates are computed from the federal short-term rate determined during January 2024. See Revenue Ruling 2025-07 for details.

2. Technical Guidance

Notice 2025-16 provides for adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code for the 2025 tax year. These adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States.

Revenue Procedure 2025-17 adds Ukraine, Iraq, Haiti, and Bangladesh to the list of waiver countries for tax year 2024 for which the minimum time requirements are waived. Generally, U.S. citizens or resident aliens living and working abroad are taxed on their worldwide income.

Provides the second quarter interest rates for 2025

Fri, 07 Mar 2025 13:09:16 GMT

Revenue Ruling 2025-07 provides the second quarter interest rates for 2025, including the rates for underpayments and overpayments. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning April 1, 2025, will be 7 percent for overpayments (6 percent in the case of a corporation), 7 percent for underpayments, and 9 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 4.5 percent.

Interest rates remain the same for the second quarter of 2025

Fri, 07 Mar 2025 13:08:29 GMT

WASHINGTON — The Internal Revenue Service today announced interest rates will remain the same for the calendar quarter beginning April 1, 2025.

For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily. Here is a complete list of the new rates:

· 7% for overpayments (payments made in excess of the amount owed), 6% for corporations.

· 4.5% for the portion of a corporate overpayment exceeding $10,000.

· 7% for underpayments (taxes owed but not fully paid).

· 9% for large corporate underpayments.

The interest rates announced today are computed from the federal short-term rate determined during January 2025. See the revenue ruling for details.

Revenue Ruling 2025-7 announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2025-13, dated March 24, 2025.

RP-2025-17: Adds Certain Countries to the list of Waiver Countries for Tax Year 2024

Wed, 05 Mar 2025 19:59:23 GMT

Revenue Procedure 2025-17 adds Ukraine, Iraq, Haiti, and Bangladesh to the list of waiver countries for tax year 2024 for which the minimum time requirements are waived. Generally, U.S. citizens or resident aliens living and working abroad are taxed on their worldwide income. However, if their tax home is in a foreign country and they meet either the bona fide residence test or the physical presence test, they can choose to exclude from their income a limited amount of their foreign earned income (up to $126,500 for 2024). Both the bona fide residence test and the physical presence test contain minimum time requirements. Rev. Proc. 2025-17 provides a waiver under section 911(d)(4) for the time requirements for individuals electing to exclude their foreign earned income who must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country.

WILL BE IN IRB: 2025-13 DATED: March 24, 2025

Determination of Housing Cost Amounts Eligible for Exclusion or Deduction for 2025

Wed, 05 Mar 2025 19:58:42 GMT

Notice 2025-16 provides for adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code for the 2025 tax year. These adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States. If the limitation on housing expenses is higher for the 2025 tax year than the adjusted limitations on housing expenses provided in Notice 2024-31, qualified taxpayers may apply the adjusted limitations in this notice for the 2025 tax year to their 2024 tax year.

WILL BE IN IRB: 2025-13 DATED: March 24, 2025

e-News for Tax Professionals 2025-09

Mon, 03 Mar 2025 15:21:37 GMT

Inside This Issue

O’Donnell retires after notable career; Krause to serve as acting IRS Commissioner
March 3 is deadline for many farmers and fishers; disaster areas have additional time
IRS Individual Online Account tool adds tax documents, improves services and convenience for taxpayers
Dirty Dozen tax scams for 2025: IRS warns filers to watch out for dangerous threats
Tax Time Guide: Track refund status using the Where’s My Refund? tool

1. O’Donnell retires after notable career; Krause to serve as acting IRS Commissioner

The Department of Treasury announced that IRS Chief Operating Officer Melanie Krause will become acting IRS Commissioner following the retirement announcement of Doug O’Donnell. O’Donnell, the IRS deputy Commissioner who has been acting as the agency’s Commissioner since January, will retire on Friday, Feb. 28. Krause will become the nation’s acting Commissioner and assume the position of deputy Commissioner.

“The IRS has been my professional home for 38 years,” O’Donnell added. “I care deeply about the institution and its people, and am confident that Melanie will be an outstanding steward of the Service until a new Commissioner is confirmed.”

Krause began her IRS career in October 2021 as the Chief Data & Analytics Officer. Krause spent 12 years in the federal oversight community, including the Government Accountability Office and the Department of Veterans Affairs Office of Inspector General prior to joining the IRS.

2. March 3 is deadline for many farmers and fishers; disaster areas have additional time

Tax pros: Your farmer and fisher clients who chose to forego making estimated tax payments by Jan. 15 must file their 2024 federal income tax return and pay all taxes due by March 3. Because the customary March 1 deadline falls on Saturday this year, the deadline is extended by two days. The deadline allows farmers and fishers to avoid any estimated tax penalties. Those who made a qualifying payment by Jan. 15, 2025, can wait until April 15 to file and still avoid estimated tax penalties. For details, see Publication 505, Tax Withholding and Estimated Tax.

Disaster-area taxpayers, including farmers and fishers, have more time to file and pay. Taxpayers in the entire states of Alabama, Florida, Georgia, North Carolina and South Carolina, and parts of Alaska, New Mexico, Tennessee, Virginia and West Virginia have until May 1.

3. IRS Individual Online Account tool adds tax documents, improves services and convenience for taxpayers

The IRS is simplifying the tax filing process for taxpayers by integrating information return documents into their IRS Individual Online Account. This will centralize tax records in a single digital location. The first information returns to be added are Form W-2, Wage and Tax Statement and Form 1095-A, Health Insurance Marketplace Statement. These forms will be accessible for tax years 2023 and 2024 under the Records and Status tab in the taxpayer’s Online Account.

4. Dirty Dozen tax scams for 2025: IRS warns filers to watch out for dangerous threats

The IRS kicked off the annual Dirty Dozen list of tax scams with a warning for taxpayers, businesses and tax professionals to be aware of evolving schemes designed to steal sensitive taxpayer information. The IRS's annual Dirty Dozen campaign lists 12 scams and schemes that threaten taxpayers. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education campaign aims to raise awareness and safeguard taxpayers and tax pros from common tax scams and schemes.

5. Tax Time Guide: Track refund status using the Where’s My Refund? tool

Tax pros: Encourage your clients to use the Where’s My Refund? tool on IRS.gov to verify receipt and monitor refund status of their 2024 tax returns. The Where’s My Refund? tool allows taxpayers who file electronically to check status within 24 hours of filing. The tool is accessible around-the-clock and provides taxpayers with a quick and simple method of obtaining information without having to contact the IRS. Additionally, taxpayers can use the tool to view data regarding returns from 2022 through 2024. Through the IRS2Go mobile app users can access the mobile-friendly tool, find free tax help and make payments.

Dirty Dozen tax scams for 2025: IRS warns taxpayers to watch out for dangerous threats

Thu, 27 Feb 2025 17:37:35 GMT

WASHINGTON — The Internal Revenue Service today announced its annual Dirty Dozen list of tax scams for 2025 with a warning for taxpayers, businesses and tax professionals to watch out for common schemes that threaten their tax and financial information.

Ranging from email schemes to misleading tax credits, many of the Dirty Dozen items peak during filing season as people prepare their tax returns. In reality, these scams can occur throughout the year as fraudsters look for ways to steal money, personal information and data.

The IRS' annual Dirty Dozen campaign lists 12 scams and schemes that threaten taxpayers. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes.

“Scammers are relentless, and they use the guise of tax season to try tricking taxpayers into falling into a variety of traps. These red flags can lead to everything from identity theft to being misled into claiming tax credits for which they’re not entitled,” said Terry Lemons, IRS communications senior adviser. “For more than two decades, the IRS has highlighted the Dirty Dozen through far-reaching communications and education campaigns as part of a wider effort by the agency to protect taxpayers from being scammed.”

Under Lemons’ leadership, the IRS created the Dirty Dozen campaign in 2002 to counter emerging scams being seen across the country. Combined with related efforts by the Security Summit, the IRS has worked for a decade with state tax agencies and the nation’s tax software and financial industry as well as tax professionals to educate taxpayers about scams and fraudulent schemes.

The Dirty Dozen list often has cautioned taxpayers about tax-related identity theft, in support of the Security Summit’s ongoing efforts in this area, that have led to protecting millions of taxpayers and billions of dollars from refund fraud.

Last year, the tax community launched a related effort called the Coalition Against Scam and Scheme Threats (CASST) following a surge in social media-fueled scams.

As part of these continuing efforts to protect taxpayers against constantly evolving scams, the 2025 IRS Dirty Dozen list highlights the following 12 pervasive threats:

Email phishing scams: The IRS continues to see a barrage of email and text scams targeting taxpayers and others. Taxpayers and tax professionals should be alert to fake communications from entities posing as legitimate organizations in the tax and financial community, including the IRS, state tax agencies and tax software companies. These messages arrive in the form of unsolicited texts or emails to lure unsuspecting victims into providing valuable personal and financial information that can lead to identity theft. There are two main types:

Phishing: An email sent by fraudsters claiming to come from the IRS. The email lures the victims into the scam with a variety of ruses such as enticing victims with a phony tax refund or threatening them with false legal or criminal charges for tax fraud.

Smishing: A text or smartphone SMS message where scammers often use alarming language such as, "Your account has now been put on hold," or "Unusual Activity Report," with a bogus "Solutions" link to restore the recipient's account. The promise of unexpected tax refunds is another potential tactic used by scam artists.

As a reminder, never click on any unsolicited communication claiming to be from the IRS as it may surreptitiously load malware. This may also be a way for malicious hackers to load ransomware that keeps the legitimate user from accessing their system and files.

The IRS has special information available to help people understand and report email scams.

Bad social media advice: Another growing concern in 2025 continues to involve incorrect tax information on social media that can mislead honest taxpayers with bad advice, potentially leading to identity theft and tax problems. Social media platforms routinely circulate inaccurate or misleading tax information, including on TikTok where people share wildly inaccurate tax advice. Some involve urging people to misuse common tax documents like Form W-2.

The IRS and CASST warn people not to fall for these scams, and urge them to follow trusted social media advice from the IRS, tax professionals and other reputable sources. The IRS reminds taxpayers who knowingly file fraudulent tax returns that they could potentially face significant civil and criminal penalties.

IRS Individual Online Account help from scammers: Swindlers can pose as a "helpful" third party and offer to help create a taxpayer's IRS Individual Online Account at IRS.gov. In reality, no help is needed, and the agency offers tips on how to sign up and avoid scams. The IRS Individual Online Account provides taxpayers with valuable personal tax information. But watch out: Third parties making these offers will try to steal a taxpayer's personal information and try to submit fraudulent tax returns in the victim's name to get a big refund.

Fake charities: Bogus charities are a perennial problem that can intensify whenever a crisis or natural disaster strikes. Scammers set up these fake organizations to take advantage of the public's generosity. They seek money and personal information, which can be used to further exploit victims through identity theft.

Taxpayers who give money or goods to a charity might be able to claim a deduction on their federal tax return if they itemize deductions, but charitable donations only count if they go to a qualified tax-exempt organization recognized by the IRS.

False Fuel Tax Credit claims: A major concern during the past year involved taxpayers who were misled into believing they were eligible for the Fuel Tax Credit. The credit is meant for off-highway business and farming use and is not available to most taxpayers. However, unscrupulous tax return preparers and promoters, including people on social media, continue enticing taxpayers into inflating their refunds by erroneously claiming the credit. The IRS has seen an increase in the promotion of filing certain refundable credits using Form 4136, Credit for Federal Tax Paid on Fuels. The IRS urges people to get more information and ensure they are properly claiming this credit.

Credits for Sick Leave and Family Leave: This specialized credit is available for self-employed individuals for 2020 and 2021 during the pandemic; the credit is not available for later tax years. The IRS is seeing repeated instances where taxpayers are using Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to incorrectly claim a credit based on income earned as an employee and not as a self-employed individual.

Bogus self-employment tax credit: Social media advice continues to circulate about a non-existent “Self-Employment Tax Credit” that’s misleading taxpayers into filing false claims. Promoters market it as a way for self-employed people and gig workers to get big payments for the COVID-19 pandemic period. Similar to misleading marketing around the Employee Retention Credit, there is inaccurate information being circulated that suggests many people qualify for the tax credit and payments of up to $32,000 when they actually do not.

In reality, the underlying credit being referred to in social media is not called the “Self-Employment Tax Credit,” it’s a much more limited and technical credit called the Credits for Sick Leave and Family Leave. Many people simply do not qualify for these credits, and the IRS is closely reviewing claims coming in under this provision, so taxpayers filing claims do so at their own risk.

Improper household employment taxes: Taxpayers “invent” fictional household employees and then file Schedule H (Form 1040), Household Employment Taxes, to claim a refund based on false sick and family medical leave wages they never paid.

The overstated withholding scam: This is a recent scheme circulating on social media encouraging people to fill out Form W-2, Wage and Tax Statement, or other forms like Form 1099-NEC and other 1099s with false income and withholding information.

In this overstated withholding scheme, scam artists suggest people make up large income and withholding amounts as well as the fictional employer supplying those amounts. Scam artists then instruct people to file the bogus tax return electronically in hopes of getting a substantial refund due to the large amount of fraudulent withholding.

If the IRS cannot verify the wages, income or withholding credits entered on the tax return, the tax refund will be held pending further review. Taxpayers should always file a complete and accurate tax return. They should only use legitimate information returns, such as an employer issued Form W-2, to complete returns correctly.

There are multiple variations of the overstated withholding credit scheme, including those involving Forms W-2 and W-2G; Forms 1099-R, 1099-NEC, 1099-DIV, 1099-OID and 1099-B; as well as the Alaskan Dividend Fund, Schedule K-1 with Withholding Reported, and Unspecified Source of Withholding Credit Claimed.

Misleading Offers in Compromise: The Offers in Compromise (OIC) program is an important program that helps people settle their federal tax debts when they are unable to pay in full. But "mills" can aggressively promote Offers in Compromise in misleading ways to people who clearly don't meet the qualifications, frequently costing taxpayers thousands of dollars. A taxpayer can check their eligibility for free using the IRS Offer in Compromise Pre-Qualifier tool.

Ghost tax return preparers: Most tax preparers provide outstanding and professional service. However, people should be careful of shady tax professionals and watch for common warning signs, including charging a fee based on the size of the refund. A major red flag or bad sign is when the tax preparer is unwilling to sign the return. Avoid these "ghost" preparers, who will prepare a tax return but refuse to sign or include their IRS Preparer Tax Identification Number (PTIN) as required by law. Taxpayers should never sign a blank or incomplete return. Instead, the IRS reminds taxpayers to turn to a trusted tax professional for help.

New client scams and spear phishing: In 2025, the IRS continues to see the "new client" scam, which involves spear phishing attempts that target tax pros. Cybercriminals impersonate new, potential clients to trick tax professionals and other businesses into responding to their emails. Once the tax pro responds, the scammer sends a malicious attachment or URL that can compromise the preparer's computer systems and allow the attacker to access sensitive client information.

Phishing is a term given to emails or text messages designed to get users to provide personal information, and spear phishing is a phishing attempt tailored to a specific organization or business. Tax professionals frequently find themselves a target of this type of scam. Spear phishing holds greater potential for harm because a successful spear phishing attack can ultimately steal client data and the tax pro’s identity, allowing the thief to file fraudulent returns using the stolen information.

Businesses and individuals, including tax pros, should always be cautious and look out for any suspicious requests or unusual behavior before sharing any sensitive information or responding to an email. Warning signs include poorly constructed sentences and unusual word choices. Be aware that by gaining access to a hacked email account, scammers can locate a genuine email from a previous victim's email account sent to their tax professional.

Baker’s Dozen: Watch out for other abusive schemes

The IRS also reminds taxpayers that beyond the Dirty Dozen, there are a wide array of other abusive schemes and bogus tax avoidance strategies that can mislead well-intentioned taxpayers. These can involve different types of trusts, offshore schemes and even individual retirement arrangements. More information on past schemes is available on the special Dirty Dozen section on IRS.gov.

While the Dirty Dozen list is not a legal document or a formal listing of agency enforcement priorities, it is intended to alert taxpayers and the tax professional community about various scams and schemes.

Report abusive tax schemes and tax return preparers

In support of the Dirty Dozen awareness effort, the IRS also encourages people to report individuals who promote improper and abusive tax schemes as well as tax return preparers who deliberately prepare improper returns.

To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242 – Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed Form 14242 and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center

Stop MS5040 24000 Avila Road

Laguna Niguel, CA 92677-3405

Fax: 877-477-9135

Taxpayers and tax practitioners may also send the information to the IRS Whistleblower Office for a possible monetary award.

Many farmers and fishers face March 3 tax deadline; disaster areas have more time

Thu, 27 Feb 2025 17:35:59 GMT

WASHINGTON — The Internal Revenue Service today reminded farmers and fishers who chose to forgo making estimated tax payments by January that they must generally file their 2024 federal income tax return and pay all taxes due by March 3, 2025. Because it’s on Saturday this year, the usual March 1 deadline is pushed back two days to Monday, March 3.

The special March 3 deadline allows farmers and fishers to avoid any estimated tax penalties. Though several tax-payment options are available, the IRS urges farmers and fishers to consider the quick, easy and free option of paying taxes electronically from their bank account using either their IRS Online Account or IRS Direct Pay. IRS Online Account and IRS Direct Pay are available only on IRS.gov.

The special March 3, 2025, deadline applies to anyone who qualifies as a farmer or fisher and did not make a 2024 estimated tax payment by Jan. 15, 2025. Those who made a qualifying payment by that date can wait until the regular April 15, 2025, deadline to file and pay and still avoid estimated tax penalties. See Publication 505, Tax Withholding and Estimated Tax, for details.

For this purpose, a farmer or fisher is anyone who received at least two-thirds of their gross income from farming or fishing during either 2023 or 2024.

Special rules for disaster areas

Disaster-area taxpayers, including farmers and fishers, have more time to file and pay. This extension is automatic; taxpayers don’t need to file any paperwork or call the IRS to get it.

Currently, taxpayers in the entire states of Alabama, Florida, Georgia, North Carolina and South Carolina, and parts of Alaska, New Mexico, Tennessee, Virginia and West Virginia have until May 1, 2025, to file and pay.

Like other taxpayers, these disaster-area taxpayers who need more time to file, beyond May 1, can get it by requesting an extension to Oct. 15, 2025. But because this extension request only gives them more time to file, any tax payments are still due by May 1.

Electronically-filed extension requests must be made by April 15. Between April 15 and May 1, the request can only be filed on paper. To learn how, visit IRS.gov/extensions.

In addition, California wildfire victims have until Oct. 15, 2025, to file and pay. Likewise, taxpayers throughout Kentucky have until Nov. 3, 2025, to file and pay. No extension beyond these dates is available.

Paying online is safe, fast and easy

IRS Online Account allows individual taxpayers to make same-day payments from a checking or savings account. Taxpayers can also see their payment history, balance and payment plan information, and digital copies of many notices sent from the IRS.

Alternatively, taxpayers can use IRS Direct Pay to make or schedule a payment from their bank account with no registration or login required. Those who need to pay business taxes through the Electronic Federal Tax Payment System (EFTPS) can also choose to use this system to make their individual income tax payments.

For more information about these and other payment options, visit IRS.gov/payments.

Forms and publications to use

Farmers

Use Schedule F (Form 1040), Profit or Loss From Farming, to report income and expenses.
Use Schedule SE (Form 1040), Self-Employment Tax, to figure self-employment tax if net earnings from farming are $400 or more.
See Topic No. 554, Self-Employment Tax, Publication 225, Farmer's Tax Guide, and Agriculture Tax Center for more information.

Fishers

Use Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship), to report income and expenses.
Use Schedule SE (Form 1040), Self-Employment Tax, to figure self-employment tax if net earnings from fishing are $400 or more.
See Publication 334, Tax Guide for Small Business, for commercial fishers who file Schedule C.

Related items

For farmers and fishers operating as a partnership or corporation see Publication 541, Partnerships, or Publication 542, Corporations.
For information on estimated tax, see Publication 505, Tax Withholding and Estimated Tax, and Topic No. 416, Farming and Fishing Income.
Publication 5034, Need to Make a Payment?, (English and Spanish).

Tax Time Guide: Use ‘Where’s My Refund?’ tool to track refund status

Wed, 26 Feb 2025 19:19:11 GMT

WASHINGTON — As millions of people file their 2024 tax returns, the Internal Revenue Service today reminded taxpayers to use the “Where’s My Refund?" tool on IRS.gov to confirm receipt of their return and track a refund.

Taxpayers who file electronically can typically use the “Where’s My Refund?” tool to check the status of a tax refund within 24 hours of filing. It takes about four weeks for the same information to be available for those filing paper returns.

The tool is available 24/7, and is a fast, easy way for taxpayers to get information about a refund without needing to call the IRS. The tool also allows taxpayers to access information about returns from tax years 2024, 2023 and 2022.

The online tool is mobile-friendly and can be accessed through the IRS2Go mobile app, where users also can find free tax help and make payments.

Information needed to use ‘Where’s My Refund?’

The IRS updates the “Where’s My Refund?” tool once daily – usually overnight – so there’s no need to check refund status multiple times a day. To check refund status, taxpayers will need:

Social Security or individual taxpayer ID number (ITIN)
Filing status
Exact refund amount

Refund delivery

Most refunds are issued in less than 21 calendar days. The fastest way to get a refund is by filing electronically and choosing direct deposit as the delivery method. Taxpayers who do this typically get their refund in less than 21 days. Taxpayers who don't have a bank account can find out how to open one at a FDIC-insured bank or the National Credit Union Locator Tool.

Several factors may affect the timing of a refund delivery, including:

Filing an incomplete or inaccurate return
Corrections to the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC)
Bank processing and posting times

The IRS will contact taxpayers by mail if more information is needed to process a return. IRS representatives reached by phone or by walking into a Taxpayer Assistance Center can only research the status of a refund if:

21 days or more have passed since the return was e-filed
Six weeks or more have passed since the return was mailed
“Where’s My Refund?” tells the taxpayer to contact the IRS

Changes made by the IRS may sometimes affect the amount of an expected refund. These changes include corrections to the Child Tax Credit or EITC amounts, or an offset to pay past-due tax or debts. More information about reduced refunds is available at IRS.gov.

Filing season reminders

The deadline for most taxpayers to file a return, pay taxes due or request an extension is April 15.

Taxpayers with questions should make IRS.gov their first stop. It’s available 24/7 and contains information on a variety of topics, including:

Choosing a tax professional
Using IRS Free File
Seeking answers to tax questions using an Interactive Tax Assistant
Finding tips on filing a return
Recognizing tax scams

For information on amended returns, use the “Where’s My Amended Return?” tool.

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

More resources

Krause to serve as Acting IRS Commissioner; O’Donnell retires after distinguished career

Wed, 26 Feb 2025 15:27:33 GMT

WASHINGTON – Secretary of the Treasury Scott Bessent announced today that IRS Chief Operating Officer Melanie Krause will become acting IRS Commissioner following the retirement announcement of Doug O’Donnell.

O’Donnell, the IRS Deputy Commissioner who has been serving as the agency’s acting Commissioner since January, plans to retire on Friday. Krause will move into the deputy Commissioner role and serve as the acting Commissioner of the nation’s tax agency.

“On behalf of the Treasury Department, I want to thank Doug O’Donnell for his decades of public service and dedication to the nation’s taxpayers,” Secretary Bessent said. “He has been a remarkable public servant, and I wish him the best in retirement. At the same time, Melanie Krause and the agency’s leadership team are well positioned to serve during this critical period for the nation in advance of the April tax deadline.”

“The IRS has been my professional home for 38 years,” O’Donnell added. “I care deeply about the institution and its people and am confident that Melanie will be an outstanding steward of the Service until a new Commissioner is confirmed.”

Krause will become the acting IRS Commissioner. She has served as the IRS chief operating officer since April 2024 after acting as deputy Commissioner of operations support since January of the same year. As chief operating officer, Krause oversees the operations including the Chief Financial Officer; Chief Risk Office; Facilities Management and Security Services; Human Capital Office; Office of Chief Procurement; Privacy, Governmental Liaison and Disclosure; Research, Applied Analytics and Statistics (RAAS).

Krause began her IRS career in October 2021 as the Chief Data & Analytics Officer. In this role, in addition to leading the RAAS team, Krause also coordinated research activities including using AI and other advanced analytics. Krause also served as Acting Deputy Commissioner for Services and Enforcement from November 2022 to March 2023.

Prior to joining the IRS, Krause spent 12 years in the federal oversight community, including the Government Accountability Office and the Department of Veterans Affairs Office of Inspector General. Krause also maintains an active license as a registered nurse. She holds bachelor, master and doctoral degrees from the University of Wisconsin-Madison.

O’Donnell spent more than 38 years at the IRS in a variety of roles. In addition to his current duties as Acting Commissioner, he also served in the role from November 2022 through March 2023.

e-News for Tax Professionals 2025-08

Mon, 24 Feb 2025 15:22:00 GMT

Inside This Issue

Tax Time Guide 2025: Essentials needed for filing a 2024 tax return
News from the Justice Department’s Tax Division
Technical Guidance

1. Tax Time Guide 2025: Essentials needed for filing a 2024 tax return

With the 2025 tax filing season underway, the IRS advises taxpayers to make necessary preparations and be informed of important changes that could impact their 2024 tax returns. The Tax Time Guide series officially launches with this announcement. The IRS uses this guide as a source of current information to assist taxpayers and tax professionals in filing accurate returns. A special free help page and a wealth of tools and resources are also available on IRS.gov.

2. News from the Justice Department’s Tax Division

The U.S. District Court for the Southern District of Florida issued a permanent injunction against Miami tax return preparer Dieuseul Jean-Louis. The injunction prohibits Jean-Louis from preparing or assisting in the preparation of federal income tax returns, working for or owning any business that prepares taxes, helping others start their own tax preparation businesses, and transferring or assigning customer lists to any other person or entity. The complaint also asserted that Jean-Louis furnished to his clients copies of returns that were different from the returns filed with the IRS, where the return filed with the IRS claimed a higher refund, which allowed Jean-Louis to retain the additional amount for himself without the customers’ knowledge. Additionally, Jean-Louis was ordered by the court to disgorge $245,275 in ill-gotten gains from his return preparation business. Jean-Louis agreed to both the injunction and ordered disgorgement.

The Justice Department filed a civil injunction suit against a group of Georgia tax return preparers seeking to bar them from owning or operating a tax return preparation business and preparing federal tax returns for others. The complaint also requests that the court require the defendants to surrender the fees they received for fraudulently prepared returns. The complaint claims that the defendants prepared thousands of tax returns for 2020 through 2023, and between the beginning of the 2025 filing season and today’s filing, they had already prepared over 400 returns. In addition, the complaint claims that the IRS reviewed income tax returns for 34 of the defendants’ customers and found that returns for 33 of those customers had errors that required an adjustment, often included without the customers’ knowledge or consent. As a result, the complaint alleges that the defendants have cost the United States lost tax revenue as well as the time and resources necessary to investigate the false returns. Furthermore, the complaint claims that the defendants harmed their clients who could potentially face large income tax debts and may be liable for penalties and interest.

FinCEN Announcement

Thu, 20 Feb 2025 18:21:51 GMT

Corporate Transparency Act Reporting Requirements Back in Effect with Extended Reporting Deadline; FinCEN Announces Intention to Revise Reporting Rule

Following the February 18, 2025, decision by the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336, the Financial Crimes Enforcement Network (FinCEN) has announced that beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act are back in effect, with a new deadline of March 21, 2025 for most companies.

FinCEN has also announced that it will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.

Notice: https://www.fincen.gov/sites/default/files/shared/FinCEN-BOI-Notice-Deadline-Extension-508FINAL.pdf

Applicable federal rates

Wed, 19 Feb 2025 19:12:07 GMT

Revenue Ruling 2025-06 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 2025-06 will be in IRB: 2025-11, dated March 10, 2025.

Tax Time Guide 2025: Essentials needed for filing a 2024 tax return

Wed, 19 Feb 2025 17:00:38 GMT

Issue Number: IR-2025-23

Inside This Issue

Tax Time Guide 2025: Essentials needed for filing a 2024 tax return

WASHINGTON — As the 2025 tax filing season continues, the Internal Revenue Service encourages taxpayers to make essential preparations and be aware of significant changes that may affect their 2024 tax returns.

This announcement marks the commencement of the Tax Time Guide series. The IRS uses this guide to provide updated information to assist taxpayers in filling an accurate return. A wealth of resources and tools is also available on IRS.gov, including a dedicated special free help page accessible 24/7.

The IRS encourages taxpayers to read Publication 17, Your Federal Income Tax (For Individuals), for additional guidance and updates.

Tips for filing an accurate tax return

The deadline for submitting Form 1040, U.S. Individual Income Tax Return, or 1040-SR, U.S. Tax Return for Seniors, is April 15, 2025. To avoid mistakes and potential processing delays, taxpayers should refrain from filing until they have received all necessary tax documents. Taxpayers should always carefully review documents for inaccuracies or missing information. They should immediately contact their employer or payer to request a correction if issues arise.

The IRS recommends taxpayers create an IRS Online Account, which provides secure access to their tax information, including payment history, tax records and other key information. Maintaining digitally organized tax documents can streamline the preparation of a complete and accurate tax return and may help identify overlooked deductions or credits.

Taxpayers who have an Individual Taxpayer Identification Number or ITIN may need to renew it if it has expired. The IRS can accept a tax return with an expiring or expired ITIN, but there may be processing delays.

Updates to Additional Child Tax Credit for tax year 2024

The maximum Additional Child Tax Credit (ACTC) amount has increased to $1,700 for each qualifying child.

Bona fide residents of Puerto Rico are no longer required to have three or more qualifying children to be eligible to claim the ACTC. Bona fide residents of Puerto Rico may be eligible to claim the ACTC if they have one or more qualifying children.

The IRS cannot issue refunds before mid-February 2025 for returns that properly claim the ACTC. This time frame applies to the entire refund, not just the portion associated with the ACTC.

Other changes for tax year 2024

Standard deduction amount increase. For 2024, the standard deduction amount has been increased for all filers. The amounts are:

Single or married filing separately — $14,600.
Head of household — $21,900.
Married filing jointly or qualifying surviving spouse — $29,200.

Child Tax Credit enhancements. Taxpayers eligible for the Child Tax Credit should not wait to file their 2024 tax return. If Congress changes the CTC guidelines in the future, the IRS will automatically adjust for those who have already filed. No additional action will be needed by those eligible taxpayers.

Under current law for tax year 2024, the following currently apply:

The initial amount of the CTC is $2,000 for each qualifying child. The credit amount begins to phase out where adjusted gross income (AGI) income exceeds $200,000 ($400,000 in the case of a joint return).
A child must be under age 17 at the end of 2024 to be a qualifying child.

Changes to the Earned Income Tax Credit (EITC). To claim the EITC without a qualifying child in 2024, taxpayers must be at least age 25 but under age 65 at the end of 2024. If a taxpayer is married filing a joint return, one spouse must be at least age 25 but under age 65 at the end of 2024.

Taxpayers may find more information on various child tax credits in the Instructions for Schedule 8812 (Form 1040).

Adoption Credit. The Adoption Credit and the exclusion for employer-provided adoption benefits are both $16,810 per eligible child in 2024. The amount begins to phase out if taxpayers have a modified AGI in excess of $252,150 and is completely phased out if their modified AGI is $292,150 or more. For more information, see Form 8839and Instructions for Form 8839.

Clean Vehicle Credit. The Clean Vehicle Credit is reported on Form 8936 and Schedule 3 (Form 1040), line 6f. For more information, see Form 8936, Clean Vehicle Credit.

Previously owned Clean Vehicle Credit. This credit is available for previously owned clean vehicles acquired and placed in service after 2022. For more information, see Form 8936, Clean Vehicle Credit.

More information on these and other credit and deduction changes for tax year 2024 may be found in Publication 17, Your Federal Income Tax (For Individuals), taxpayer guide.

IRA contribution limit increased

Beginning in 2024, the IRA contribution limit is increased to $7,000 ($8,000 for individuals aged 50 or older) from $6,500 ($7,500 for individuals aged 50 or older) the prior year.

1099-K reporting requirements have changed for tax year 2024

The reporting threshold for 2024 has changed. Third-party settlement organizations (TPSOs), also known as payment apps and online marketplaces, are now required to report transactions when the amount of the total payments for those transactions in 2024 was more than $5,000. The IRS has issued Notice 2024-85 providing transition relief for TPSOs. To understand what to do, taxpayers should become familiar with Form 1099-K.

Free filing options

IRS Free File, available only through IRS.gov, offers eligible taxpayers brand-name tax preparation software packages to use at no cost. Some of the Free File packages also offer free state tax return preparation. The software does all the work of finding deductions, credits and exemptions.

Taxpayers who are comfortable preparing their own taxes can use Free File Fillable Forms, regardless of their income, to file their tax returns either by mail or online.

Direct File is an option for taxpayers to file federal tax returns online—for free—directly and securely with the IRS. Direct File is a filing option for taxpayers in participating states who have relatively simple tax returns and report only certain types of income and claim certain credits and deductions. Go to IRS Direct File to find more information, including updates to the list of states who have joined and the new tax situations Direct File has added to the service for the 2024 tax year.

MilTax is a free tax resource available to the military community, offered through the Department of Defense. There are no income limits. MilTax includes tax preparation and electronic filing software, personalized support from tax consultants and current information about filing taxes. It is designed to address the realities of military life—including deployments, combat and training pay, housing and rentals, and multi-state filings. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free.

VITA and TCE. The IRS's Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free basic tax return preparation to qualified individuals. To locate the nearest VITA or TCE site, use the VITA Locator Tool or call 800-906-9887.

Comprehensive information on these and other changes for tax year 2024 are found on Publication 17, Your Federal Income Tax (For Individuals), and on IRS.gov.

e-News for Tax Professionals 2025-07

Tue, 18 Feb 2025 16:00:19 GMT

Inside This Issue

Upcoming holiday period marks peak time for IRS phone lines; use IRS online resources for help
Technical Guidance

1. Upcoming holiday period marks peak time for IRS phone lines; use IRS online resources for help

Presidents Day weekend historically marks a peak period for IRS phone lines. Encourage your clients to use online self-help tools and resources available on IRS.gov to get quick answers and avoid phone delays during the anticipated peak demand for IRS phone lines around the federal holiday. The IRS also has a variety of information available on IRS.gov to help taxpayers and tax professionals, including the Let us help you page.

2. Technical Guidance

Notice 2025-14 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for January 2025 used under section 417(e)(3)(D), the 24-month average segment rates applicable for February 2025, and the 30-year Treasury rates, as reflected by the application of section 430(h)(2)(C)(iv).

Revenue Procedure 2025-15 sets forth the unpaid loss discount factors for the 2024 accident year for purposes of section 846 of the Internal Revenue Code. This revenue procedure also provides the salvage discount factors for the 2024 accident year, which must be used to compute discounted estimated salvage recoverable under section 832 of the Internal Revenue Code.

Certain Interest Rates for February 2025

Thu, 13 Feb 2025 14:01:34 GMT

Notice 2025-14 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for January 2025 used under § 417(e)(3)(D), the 24-month average segment rates applicable for February 2025, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

Notice 2025-14 will be in IRB: 2025-10, dated March 3, 2025.

Don’t wait on hold; use IRS online tools for faster help

Thu, 13 Feb 2025 14:00:37 GMT

Don’t wait on hold; use IRS online tools for faster help

Presidents Day weekend is peak time for IRS phone traffic. Skip the wait by visiting IRS.gov.

WASHINGTON — With the 2025 filing season underway and the anticipated high demand for IRS phone lines around the Presidents Day holiday, the Internal Revenue Service today encouraged taxpayers to visit IRS.gov and use online tools to get immediate answers.

Presidents Day weekend is typically a busy time in the tax filing season, according to IRS statistics, when calls to IRS phone lines are often at their highest.

The IRS has resources to help taxpayers beat the rush. On IRS.gov, taxpayers can use the Let Us Help You page that covers most topics for filing season and beyond. In addition, people can get free help online with self-service options.

The IRS offers several free filing options. There’s also step-by-step help about filing a personal federal income tax return.

Skip the mail: File electronically and choose direct deposit

Approximately 93% of taxpayers file their federal income tax returns electronically, and most choose direct deposit to receive their refunds. According to Treasury’s Bureau of the Fiscal Service, paper refund checks are 16 times more likely to have an issue, like the check being lost, misdirected, stolen or uncashed.

The IRS offers free online and in-person tax preparation options for eligible taxpayers through IRS Free File, IRS Direct File and Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs.

Taxpayers who earned $84,000 or less in 2024 can use IRS Free File Guided Tax Software now through Oct 15. IRS Free File Fillable forms are also available at no cost to any income level and provide electronic forms that people fill out and electronically file themselves.

Direct File is now open in 25 participating states where taxpayers can use Direct File to e-file directly with the IRS for free. It’s a free web-based service – available in English and Spanish – that works on mobile phones, laptops, tablets or desktop computers. It guides taxpayers through a series of questions to prepare their federal tax return step-by-step. Direct File automatically guides taxpayers to state tools to complete their state taxes. Get help from IRS customer service representatives through a live chat feature in English and Spanish. Interested taxpayers can go to directfile.irs.gov, where they can determine if they’re eligible.

The VITA and TCE programs offer free tax return preparation to eligible people in the community by IRS certified volunteers through a network of community partnerships. The VITA program has operated for over 50 years. VITA sites offer free tax help to people who need assistance in preparing their own tax returns, including, people who generally make $67,000 or less, persons with disabilities and limited English-speaking taxpayers. In addition to VITA, TCE program volunteers offer free tax help, particularly for those who are 60 years of age and older, specializing in questions about pensions and retirement-related issues unique to seniors.

MilTax, a Department of Defense program, generally offers free return preparation and electronic filing software for federal income tax returns and up to three state income tax returns for all military members and some veterans, with no income limit.

Skip the wait: Get tax info with an Individual Online Account

Individuals with Social Security numbers or Individual Taxpayer Identification Numbers (ITIN) can create or securely access their Individual Online Account and get the latest information about their federal tax account.

With an IRS online account, taxpayers can:

Access their tax records, including their Adjusted Gross Income from their most recently filed tax return.
View, approve and sign authorizations from their tax professional.
Request and view their Identity Protection PIN (IP PIN), a six-digit number known only to the taxpayer and the IRS that prevents someone else from filing a tax return using their information.
Check refund status.
Validate and save bank accounts.
View balance and payment history and create a payment plan.
Make a payment and schedule or cancel future payments.
Get virtual assistance for balance due and payment-related questions.
Manage their communication preferences.

Skip the wondering: Check refund status online

The popular Where’s My Refund? tool on IRS.gov has the most up-to-date information available about a taxpayer’s refund status. Recent improvements to Where’s My Refund? allow taxpayers to see more detailed refund status messages in plain language, reducing the need for taxpayers to call the IRS.

Most Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) related refunds should be available in bank accounts or on debit cards by March 3 if taxpayers chose direct deposit and there are no other issues with their tax return. Taxpayers can check Where’s My Refund? for their personalized refund date. Where's My Refund? should show an updated status by February 22 for most early EITC/ACTC filers.

Skip the phone: Get answers to tax questions online

The Interactive Tax Assistant (ITA) tool on IRS.gov provides answers to several tax questions specific to individual circumstances. Based on input, ITA determines a person’s filing status, whether they should file a tax return, if someone is an eligible dependent, if a type of income is taxable, if a filer is eligible to claim a credit, if an expense is deductible and more.

Skip the headache: Use online checklists when preparing to file

Taxpayers can find out what tax paperwork and records they need to file an accurate and complete return on IRS.gov. Taxpayers should have all their important and necessary documents before preparing their return. They should also check for common errors and omissions that may slow down tax processing, including refund times.

If a taxpayer receives Form 1099-K, they should visit What to do with Form 1099-K to help them determine if that money should be reported as income on their federal tax return. Missing a W-2? Certain information return documents are available in Individual Online Account. People can sign on and get copies of Forms W-2, Wage and Tax Statement; Forms 1095-A, Health Insurance Marketplace Statement; and Forms 1099-NEC, Nonemployee Compensation. These forms are available for tax years 2023 and 2024.

Skip the guessing: Check eligibility for EITC using online tax assistant

The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families get a tax break. The IRS estimates that about one in five EITC eligible taxpayers don’t claim this valuable credit. If a taxpayer qualifies, they can use the credit to reduce the taxes they owe – and maybe increase their refund.

The Earned Income Tax Credit Assistant on IRS.gov can help individuals determine:

If they are eligible to claim the EITC.
If they have any qualifying children or relatives.
The estimated amount of their credit.
The filing status they should use.

Skip the worry: Use an IP PIN to protect against tax-related identity theft

An Identity Protection PIN (IP PIN) is a proactive way to protect against tax-related identity theft. Tax-related identity theft occurs when someone uses stolen personal information, including Social Security numbers, to file a tax return claiming a fraudulent refund. If a person suspects they are a victim of identity theft, they should continue to pay their taxes and file their tax return, even if they must file a paper return. Visit Identity Theft Central to find out more.

An Identity Protection PIN (IP PIN) is a six-digit number known only to the taxpayer and the IRS that prevents someone else from filing a tax return using their Social Security number or Individual Taxpayer Identification Number. It helps the IRS verify a person’s identity when they file their electronic or paper tax return. The fastest way to request and receive an IP PIN is by creating an Individual Online Account. If someone wishes to get an IP PIN and they don’t already have an account on IRS.gov, they must register to validate their identity.

Skip the stress: Find a reputable tax professional at IRS.gov

The IRS also reminds taxpayers that a trusted tax professional can prepare their tax return and provide helpful information and advice. People can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to find a preparer who is skilled in tax preparation and accurately files income tax returns.

Most tax professionals provide outstanding and professional tax service. However, choosing the wrong tax return preparer hurts taxpayers financially every year. Be sure to check tips for choosing a tax preparer and how to avoid unethical "ghost" return preparers.

While all tax professionals are required to list their preparer tax identification number (PTIN) and sign the return, some do not. Referred to as ghost preparers, these people encourage taxpayers to take advantage of tax credits and benefits for which they do not qualify. Sometimes they charge a large percentage fee of the refund or even steal the entire tax refund. After the tax return is prepared, these “ghost preparers” may simply disappear, leaving well-meaning taxpayers to deal with the consequences.

The IRS encourages people to use a trusted tax professional because even when the tax return preparer signs the return, the taxpayer is ultimately responsible for the accuracy of every item reported on their return. Visit IRS.gov to find a reputable tax professional.

Skip the surprise: Use the Tax Withholding Estimator

Taxpayers should check their tax withholding every year, especially if they experience a major life change. The Tax Withholding Estimator tool allows taxpayers to estimate the federal income tax they want their employer to withhold from their paycheck.

By using the Tax Withholding Estimator, taxpayers can adjust their tax withheld up front so they can protect against having too little tax withheld and prevent an unexpected tax bill or penalty at tax time next year. Taxpayers should submit a new Form W-4 to their employer to make any adjustments.

IRS.gov is the first stop for help

IRS.gov is the quickest and easiest option to get help. Taxpayers can visit IRS.gov anytime to get answers to tax questions. People can find more tips and resources by visiting the Let Us Help You page on IRS.gov.

For more information

Revenue Procedure 2025-16 provides: (1) two tables of limitations on depreciation deductions for owners of passenger automobiles placed in service by the taxpayer during calendar year 2025; and (2) a table of dollar amounts that must be used to determine income inclusions by lessees of passenger automobiles with a lease term beginning in calendar year 2025. The tables detailing these depreciation

Wed, 12 Feb 2025 16:30:47 GMT

Revenue Procedure 2025-16 provides: (1) two tables of limitations on depreciation deductions for owners of passenger automobiles placed in service by the taxpayer during calendar year 2025; and (2) a table of dollar amounts that must be used to determine income inclusions by lessees of passenger automobiles with a lease term beginning in calendar year 2025. The tables detailing these depreciation limitations and amounts used to determine lessee income inclusions reflect the automobile price inflation adjustments required by section 280F(d)(7). For purposes of this revenue procedure, the term “passenger automobiles” includes trucks and vans.

Revenue Procedure 2025-16 will be in IRB: 2025-11, dated March 10, 2025.

IR-2025-20: IRS, national partners launch EITC Awareness Day on 50th anniversary of the Earned Income Tax Credit

Mon, 03 Feb 2025 17:12:59 GMT

EITC has helped America’s working families since 1975

WASHINGTON — The Internal Revenue Service and partners around the nation today celebrated the 50^th anniversary of the Earned Income Tax Credit (EITC)with the launch of this year’s EITC Awareness Day campaign.

The annual campaign, now in its 19^th year, helps increase awareness among the millions of working Americans with a low-to-moderate income who are eligible for the EITC. The IRS estimates that roughly one in five eligible taxpayers miss out on claiming this valuable credit.

EITC was signed into law on March 29, 1975. Through numerous legislative changes, the tax break has helped encourage work and lift many financially challenged families out of poverty.

As of December 2024, approximately 23 million workers and families had received about $64 billion total from the EITC, according to IRS statistics. On average, eligible taxpayers received $2,743 from the credit in tax year 2023.

For the past 19 years, the IRS has invited community organizations, elected officials, state and local governments, schools, employers and other interested parties to join this national grassroots effort to help reach workers eligible for the credit. IRS offers an online social media toolkit with sample text and downloadable graphics to help spread the word about the EITC.

Who is eligible to claim the EITC?

Workers may use the EITC Assistant, an online tool, to check their eligibility, which may be affected by changes in marital, parental or financial status. Workers also may visit the Child-related Tax Benefits Comparison page to learn more about basic eligibility rules for the EITC and several other tax credits.

EITC is for workers whose income did not exceed the following limits in 2024:

No. of Dependents	Single Filer Income Limit	Married, Filing Jointly Income Limit
No children	$18,591	$25,511
1 child	$49,084	$56,004
2 children	$55,768	$62,688
3+ children	$59,899	$66,819

*Investment income limit: $11,600

Workers also must:

Be a U.S. citizen or resident alien all year.
File a tax return even if their income level doesn’t usually require them to file.
Have a valid Social Security number (SSN) for themselves, as well as for their spouse, if filing a joint return, and for each qualifying dependent claimed for the EITC.
File a return without Form 2555, Foreign Earned Income.

There are special rules for military personnel, clergy and ministersand taxpayers with certain types of disability income or a child who is disabled.

Eligible workers between the ages of 25 and 64 who have no dependents may receive up to $632 by claiming the EITC, while married but separated spouses who do not file a joint return may qualify for the EITC if they meet certain requirements.

Those with qualifying children can receive a maximum of $7,830 when claiming the EITC for tax year 2024, up from $7,430 in tax year 2023.

How to claim the EITC

To get the EITC, workers must file a tax return and claim the credit on that return. They can file in a variety of ways, including by using:

IRS Free File on IRS.gov. Qualified taxpayers can prepare and file federal income tax returns online for free using guided tax preparation software. IRS Free File also provides Fillable Forms free online for use by any taxpayer, regardless of income, who is comfortable preparing their own return.
Direct File. An option for eligible people in participating states to prepare and file their federal tax return online for free directly and securely with IRS. Taxpayers have access to live chat support from IRS staff. While Direct File doesn't prepare state returns, if someone lives in a participating state, Direct File guides taxpayers to a state-supported tool to prepare and file their state tax return for free.
A reputable tax professional. To help taxpayers avoid unscrupulous “ghost preparers,” the IRS offers tips for choosing a trustworthy tax professional, whether that’s a certified public accountant, Enrolled Agent, or a trusted person without a professional credential. Taxpayers can check whether someone is credentialed using the Directory of Federal Tax Return Preparers, and find information on national tax professional groups at irs.gov.
Free tax preparation assistance. There are thousands of Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites across the country available to help workers eligible to claim the EITC. Taxpayers can find a VITA or TCE site by using the VITA/TCE Locator Tool, through the IRS2Go smartphone app or by calling 1-800-906-9887.

As a reminder, the quickest way for taxpayers to get their refund is by e-filing an accurate return and choosing to receive that refund via direct deposit.

New this year: Duplicate dependents

Starting this filing season, the IRS will accept an e-filed return even if a dependent has already been claimed on a separate, previously filed return as long as the primary taxpayer on the second return includes a valid Identity Protection Personal Identification Number (IP PIN).

This change will reduce the time it takes for the agency to receive the tax return and accelerate the issuance of tax refunds for those with duplicate dependent returns. In previous years, the second tax return had to be filed by paper.

Meanwhile, taxpayers who do not have IP PINs will have their e-filed returns rejected if one of their dependents has already been claimed by another taxpayer.

Note that the use of an IP PIN does not exempt taxpayers from receiving notices questioning their right to claim certain dependents.

Claiming other valuable tax credits

Whether they qualify for the EITC, taxpayers may be eligible for other valuable tax credits, such as the Child Tax Credit (CTC), the Additional Child Tax Credit (ACTC) or the Credit for Other Dependents (ODC). The Interactive Tax Assistant is a helpful tool for taxpayers to check their eligibility for those credits.

When to expect EITC refunds

The “Where’s My Refund?” tool, which allows taxpayers to monitor the status of their refunds, will be updated with projected deposit dates for most early EITC/ACTC refund filers by Feb. 22. Most EITC or ACTC related refunds should be available in bank accounts or on debit cards by March 3 if there are no issues with a taxpayer’s return and they chose to receive their refund by direct deposit.

Additional resources

Celebrating 50 Years of the Earned Income Tax Credit.
EITC Central.
EITC reports and statistics, including participation rates by state.
Publication 596, Earned Income Credit, offers a detailed view of the EITC, eligibility rules and instructions on how to claim the credit.
Other Refundable Credits Toolkit.
@IRSnews and @IRSenEspanol, the IRS X news feeds, provide the latest federal tax news and information for taxpayers in English and Spanish.
IRSvideos available on YouTube that provide information about credits, deductions and tax law changes.
Get an Identity Protection Personal Identification Number (IP PIN).

FW: e-News for Tax Professionals 2025-05

Mon, 03 Feb 2025 17:11:56 GMT

Issue Number: 2025-05

Inside This Issue

2025 filing season underway with expanded services for taxpayers
IRS, national partners promote EITC Awareness Day on 50th anniversary of the Earned Income Tax Credit
Upcoming webinars and continuing education for tax professionals
News from the Justice Department’s Tax Division

1. 2025 filing season underway with expanded services for taxpayers

The IRS opened the 2025 tax season on Jan. 27 with a focus on expanding options and features to help taxpayers. The IRS expects more than 140 million individual tax returns to be filed this season. The filing deadline is April 15. Taxpayers residing in a federally declared disaster area may have additional time to file and pay federal taxes.

2. IRS, national partners promote EITC Awareness Day on 50th anniversary of the Earned Income Tax Credit

In honor of the 50th anniversary of the Earned Income Tax Credit, the IRS and its partners nationwide launched this year’s EITC Awareness Day Campaign.

Now in its 19th year, the annual campaign aims to increase awareness among the millions of working Americans with a low-to-moderate income who are eligible for the EITC. The IRS estimates that roughly one in five eligible taxpayers miss out on claiming this credit. As of December 2024, roughly 23 million workers and families had received about $64 billion total from the EITC, according to IRS statistics. On average, eligible taxpayers received $2,743 from the credit in tax year 2023.

Taxpayers may use the EITC Assistant to check their eligibility, which may be affected by changes in marital, parental or financial status. Even if taxpayers do not qualify for the EITC, they may be eligible for other credits or deductions. The Interactive Tax Assistant can help determine eligibility for the Child Tax Credit, Additional Child Tax Credit or Credit for Other Dependents.

Visit the Tax Return Preparer Toolkit for more information.

3. Upcoming webinars and continuing education for tax professionals

The IRS offers the upcoming live webinars to the tax pro community:

The ABCs of Foreign Tax Credit for Individuals (FTC) on Feb. 19 at 1 p.m. ET. Earn up to two continuing education credits (Federal Tax). Visit the registration page for this webinar for more information.

The IRS also encourages tax professionals to register for the IRS Nationwide Tax Forum Online to get access to 18 seminars recorded at the 2024 IRS Nationwide Tax Forum. The Nationwide Tax Forum Online offers tax professionals a convenient way to stay informed about current legislation, IRS procedures and key topics for the upcoming tax season.

4. News from the Justice Department’s Tax Division

A federal grand jury in New Jersey returned an indictment charging Christopher Demba with 55 counts of tax return fraud and obstructing the IRS. For tax years 2018 through 2023, Demba, a New Jersey tax preparation business owner, allegedly prepared returns for clients that contained false information resulting in the clients claiming refunds to which they were not entitled. In addition, the claim alleges that Demba obstructed the IRS by providing fictitious working papers to IRS personnel to support some of the claims on returns he prepared for clients. Demba faces three years in prison for each count as well as a period of supervised release, restitution and monetary penalties. IRS Criminal Investigation is investigating the case.

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IR-2025-19: IRS offers top tips to make tax time easier

Thu, 30 Jan 2025 17:09:20 GMT

IRS offers top tips to make tax time easier

WASHINGTON —The Internal Revenue Service today provided taxpayers with six tips to make filing their 2024 tax return easier.

Most of the information below is also available on the IRS.gov Let Us Help You page. Taxpayers should follow these handy suggestions as they prepare to file:

1. Gather all important and necessary tax paperwork and records needed for filing a complete and accurate tax return. Errors and omissions can lead to missing a deduction or credit and slow down tax return processing and refunds.

Before filing, taxpayers should have their:

Social Security numbers for everyone listed on the tax return.
Bank account and routing numbers.
Tax forms such as W-2s, 1099s, 1098s, records of digital asset transactions and other income documents.
Form 1095-A, Health Insurance Marketplace statement.
IRS letters they may have citing an amount received for a certain tax deduction or credit.

2. Report all types of income on the tax return to avoid receiving a notice or a bill from the IRS. Include income from:

Goods created and sold on online platforms.
Investment income.
Part-time or seasonal work.
Self-employment or other business activities.
Services provided and paid through mobile apps.

3. Avoid paper returns. Filing electronically with direct deposit is the fastest way to get a refund. Plus, tax software helps taxpayers avoid mistakes. It does the math and guides people through each section of their tax return.

4. Consider IRS free resources to help eligible taxpayers file.

IRS Free File provides a free online alternative to filing a paper tax return to any individual or family who earned $84,000 or less in 2024.
Direct File is available in 25 participating states for eligible taxpayers to file online directly with the IRS for free. This year, Direct File supports reporting more income types and claiming more credits and deductions. The free web-based service – available in English and Spanish – provides access to IRS customer service representatives through a live chat feature and works on mobile phones, laptops, tablets or desktop computers. Direct File guides taxpayers through a series of questions to prepare their federal tax return step-by-step and automatically guides taxpayers to state tools to complete their state taxes.
People who make over $84,000 can use the IRS' Free File Fillable Forms. These are the electronic version of IRS paper forms. This product is best for people who are comfortable preparing their own taxes.
People who generally make $67,000 or less, persons with disabilities, limited English-speaking taxpayers and those who are 60 years of age and older, can also find free one-on-one tax preparation help around the nation through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.
The Department of Defense provides MilTaxas a free tax resource for the military community. MilTax is a suite of tax services available for members of the military, as well as qualifying veterans and family members. There are no income limits. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free.

5. Choose tax filing options based on personal situation and comfort level with tax preparation:

Personally file taxes.
Use online filing services.
Hire a tax professional and choose carefully. Most tax return preparers are professional, honest and provide excellent service to their clients. However, dishonest tax return preparers who file false income tax returns do exist. The IRS has a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications and more on choosing a tax pro on IRS.gov.

6. Use online resources at IRS.gov to quickly get answers to tax questions, check a refund status or pay taxes. There’s no wait time or appointment needed. Online tools and resources are available 24 hours a day, including the IRS’ Interactive Tax Assistant tooland Let Us Help You resources, which are especially helpful.

Stay updated

Follow the IRS’ official social media accounts and email subscription lists to stay current on the latest tax topics and alerts.
Download the IRS2Go mobile app.
Watch IRS YouTube videos.

2025 tax filing season starts as IRS begins accepting tax returns today; taxpayers have many options for help

Tue, 28 Jan 2025 16:50:24 GMT

WASHINGTON — The Internal Revenue Service opened the 2025 tax filing season today and is accepting and processing federal individual tax year 2024 returns.

During today’s early morning opening, IRS systems have already received millions of tax returns from across the nation for processing.

The IRS expects more than 140 million individual tax returns for tax year 2024 to be filed ahead of the Tuesday, April 15 federal deadline. More than half of all tax returns are expected to be filed this year with the help of a tax professional, and the IRS urges people to use a trusted tax pro to avoid potential scams and schemes.

Taxpayers residing in a federally declared disaster area may have additional time to file and pay federal taxes.

Get free help preparing and filing taxes electronically

Taxpayers can visit IRS.gov to get answers to tax questions. IRS.gov is the quickest way for taxpayers to get help. The Interactive Tax Assistant (ITA) is a tool that provides answers to several tax law questions specific to individual circumstances. Based on input, it can determine a taxpayer’s filing status, if a person should file a tax return, if someone can be claimed as a dependent, if a type of income is taxable, if a filer is eligible to claim a credit or if an expense can be deducted.

The IRS encourages people to file their tax returns electronically and choose direct deposit for more secure and faster refunds. According to Treasury’s Bureau of the Fiscal Service, paper refund checks are 16 times more likely to have an issue, like the check being lost, misdirected, stolen or uncashed. Filing electronically reduces tax return errors as the tax software does the calculations, flags common errors and prompts taxpayers for missing information.

Free tax filing options

IRS Free File. Taxpayers with income of $84,000 or less last year can use IRS Free File Guided Tax Software now through Oct. 15. IRS Free File Fillable forms, a part of this program, is available at no cost to any income level and provides electronic forms that people fill out and e-file themselves, also at no cost.

Direct File. Now open in 25 participating states, taxpayers can use Direct File to file online directly with the IRS for free. It is a free web-based service – available in English and Spanish – that works on mobile phones, laptops, tablets or desktop computers. It guides taxpayers through a series of questions to prepare their federal tax return step-by-step. Direct File automatically guides taxpayers to state tools to complete their state taxes. Get help from IRS customer service representatives through a live chat feature in English and Spanish. Interested taxpayers can go to directfile.irs.gov, where they can determine if they are eligible.

Volunteer Income Tax Assistance (VITA). The VITA program offers free tax help to people who generally make $67,000 or less, persons with disabilities and taxpayers whose preferred language is not English. IRS-certified volunteers provide free basic income tax return preparation with electronic filing to qualified individuals.

In addition to VITA, the Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 and older, specializing in questions about pensions and retirement-related issues unique to seniors.

MilTax. This is a Department of Defense program available to members of the military and some veterans with no income limit. MilTax generally offers free return preparation and electronic filing software for federal income tax returns and up to three state income tax returns.

Most refunds issued in less than 21 days: EITC refunds for many available by March 3

The easiest way to check a refund's status is by using “Where's My Refund?” on IRS.gov or the IRS2Go app.

Many factors can affect refund timing after the IRS receives a tax return. Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some returns may require additional review and may take longer.

Under the federal Protecting Americans from Tax Hikes (PATH) Act, the IRS cannot issue Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) refunds before mid-February. “Where's My Refund?” should show an updated status by February 22 for most early EITC/ACTC filers. The IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by March 3 if they chose direct deposit and there are no other issues with their tax return.

Report taxable income; don’t file before receiving key documents

People should report all taxable income on their tax return and wait to file until they receive all of their income and informational documents. Taxpayers may receive various income and information statements such as Forms 1099 from banks or other payers, unemployment compensation, dividends, pensions, annuities or retirement plan distributions. Taxpayers receiving Forms 1099-K, for payments on sale of goods and services through an online marketplace or payment app, can visit What to do with Form 1099-K to help them figure and report the correct amount of income on their tax return.

Choose a trusted tax professional

More than half of taxpayers turn to a tax professional for help filing a tax return. While most tax preparers deliver exceptional and professional service, selecting the wrong preparer can lead to financial harm.

Taxpayers should review the tips for choosing a tax preparer and learn how to avoid unethical “ghost” returnpreparers who don’t sign or include a valid preparer tax identification number (PTIN) on every tax return they prepare. Taxpayers can also use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to find trusted professionals. The IRS also reminds taxpayers that choosing someone affiliated with a recognized national tax association is always a good option. Tax professionals accepted into the IRS electronic filing program are authorized IRS e-file providers, qualified to prepare, transmit and process electronically filed tax returns.

Be aware of tax scams

Be aware of scammers, who can become more active during tax season. They will attempt to mislead people about tax refunds, credits and payments. They pressure people for personal, financial, employment information or money.

Watch out for:

A big payday. If it sounds too good to be true, it probably is. Bad tax advice on social media may convince people to lie on tax forms or mislead them about credits they can claim.
Demands or threats. Impersonators want people to pay “now or else.” They threaten arrest or deportation. They don’t let people question or appeal the amount of tax they owe.
Odd or misspelled website links. Odd or misspelled web links can take people to harmful sites instead of IRS.gov.

Tax-related identity theft occurs when someone uses stolen personal information, including Social Security numbers, to file a tax return claiming a fraudulent refund. If a person suspects they are a victim of identity theft, they should continue to pay their taxes and file their tax return, even if they must file a paper return. Visit Identity Theft Central to find out more.

Know the signs of identity theft

Thousands of people have lost millions of dollars and their personal information to tax scams. Scammers use the regular mail, telephone and email to set up individuals, businesses, payroll and tax professionals. Check out the latest consumer alerts and read more about the most recent tax related scams identified by the IRS.

More help is now available

The IRS also provides taxpayers help in-person at Taxpayer Assistance Centers nationwide.

Some improvements taxpayers will see during the 2025 filing season are:

IRS Individual Online Account. The IRS continues to add more functionality to this important tool. Individuals can create or access their IRS Online Account at Online account for individuals. With an IRS Online Account, people can:

View key details from their most recent tax return, such as adjusted gross income.
Request an Identity Protection PIN.
Get account transcripts, to include wage and income records.
Sign tax forms like powers of attorney or tax information authorizations.
View and edit language preferences and alternative media.
Receive and view over 200 IRS electronic notices.
View, make and cancel payments.
Set up or change payment plans and check their balance.

New scam alert. To help protect taxpayers against emerging threats, there’s a new banner on the Online Account homepage that alerts taxpayers of potential scams and schemes, along with a link to their Digital Notices and Letters page to view correspondence sent to them from the IRS. The feature helps to educate taxpayers on common scams and fraudulent efforts to steal taxpayer information and provide taxpayers with more ability to validate the legitimacy of IRS communications.

Redesigned notices. The IRS successfully redesigned 284 notices in 2024, exceeding the agency’s 200 notice goal. It is important to note that 200 notices were redesigned and deployed in 2024 and an additional 84 redesigned notices are in line to be deployed in 2025. All notices will be added to Individual Online Account so taxpayers receiving a specific letter can see it.

Mobile-adaptive tax forms. Taxpayers can now access 67 forms on cell phones and tablets. The most recent forms feature “save and draft” capabilities, which allow the taxpayer to start a form, save it and return to it later. The addition of save and draft allows for future capabilities, including the ability for multiple spouses to sign a form.

Virtual assistants to help with refunds and other questions. Whether a taxpayer uses an online tool or calls the IRS, they will experience upgraded help features. During filing season 2025, the IRS will offer voicebot services to all taxpayers calling the IRS for refund information. The voicebot is available in English and Spanish and has helped thousands of callers without the need to wait for the next available representative. Taxpayers will have to authenticate their identity to gain access to their refund information by providing select information from their tax return.

Last year the IRS began using online chatbots for various functions. These chatbots use either guided help through choice buttons or an open text box for a customized question. The chatbots use natural language processing and understanding to interpret the input from the taxpayer to provide an appropriate response. To launch the chatbot, the taxpayer simply clicks on the “Chat” button in the lower right corner of the webpage. Currently taxpayers can use chatbots from eight webpages.

e-News for Tax Professionals 2025-03

Sat, 18 Jan 2025 13:46:32 GMT

Inside This Issue

1. IRS selects 18 new IRS Advisory Council members for 2025

The IRS this week announced the appointment of 18 new members to the Internal Revenue Service Advisory Council (IRSAC). Established in 1953, the IRSAC is an organized public forum for IRS officials and representatives of the public to discuss a broad range of issues in tax administration. The Council provides the IRS Commissioner and agency leaders with feedback, observations and recommendations. The Council will present its annual report at a public meeting in November. The Chair of the IRSAC this year is Christine Freeland.

Visit Internal Revenue Service Advisory Council on IRS.gov to learn more.

2. IRS, Coalition Against Scam and Scheme Threats announce 2025 filing season changes aimed at increasing fraud detection

The IRS and its partners in the Coalition Against Scam and Scheme Threats (CASST) this week announced changes for the 2025 filing season to help protect taxpayers from becoming victims of a scam or scheme and preventing tax professionals from having their credentials compromised.

The changes include a new form involving the Fuel Tax Credit designed to make it harder for taxpayers to be misled into claiming the credit. The IRS is also stepping up review on a variety of “other withholding” claims on Form 1040 that have been targets of scammers. And the IRS is reaching out to taxpayers who have potentially been using “ghost preparers” to prepare tax returns.

3. Get answers to your questions using IRS’ new chatbot feature

The IRS recently expanded the availability of chatbot technology to e-Servicessupport to give tax professionals, software developers and transmitters a new way to access answers to frequently asked questions.

The chatbot provides answers to questions such as:

What is the status of my e-Services Application?
What is the status of my e-File application?
Why was my electronically filed return rejected?
Where do I find information on transmitter control codes?
What is the status of my electronically filed information return?
How do I perform software testing?

To access the chatbot, visit our e-Services page on IRS.gov.

4. IRS launches Fast Track Settlement pilot programs to make ADR more efficient

Three pilot programs have been announced by the IRS to test modifications to current alternative dispute resolution (ADR) programs. IRS ADR programs are intended to assist taxpayers resolve tax disputes. The pilots focus on Fast Track Settlement (FTS)—a program that allows Appeals to mediate disputes between a taxpayer and the IRS while the case is still within the jurisdiction of the examination function, and Post-Appeals Mediation (PAM), a program in which a mediator is introduced to help foster a settlement between Appeals and the taxpayer.

“The IRS has been revitalizing existing ADR programs as part of IRS transformation efforts in alignment with the IRS Strategic Operating Plan,” said Elizabeth Askey, Chief of the IRS Independent Office of Appeals. “We’re committed to providing taxpayers who wish to resolve their issues without litigation a choice of effective and efficient ADR options as early as possible.”

5. Wage statements and certain information returns due Jan. 31

Businesses have until Jan. 31 to file certain information returns and wage statements. The Jan. 31 deadline applies to:

Employers filing Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration.
Payers filing Form 1099-NEC, Nonemployee Compensation, with the IRS.

Jan. 31 is also the deadline to:

Furnish copies of W-2, Form 1099-NEC and other information returns to the recipients. See each form’s filing instructions for the due dates to furnish copies to recipients.

6. Treasury, IRS seek feedback on proposed rules and a draft form for certain corporate reorganizations and separations

The Department of the Treasury and the IRS released proposed rules for corporate separations and reorganizations, including reporting requirements for multi-year corporate separations. Additionally, the IRS has posted to IRS.gov a preliminary draft of new Form 7216, Multi-Year Transaction Reporting. The new form will give the IRS the information it needs regarding corporate separations, and these proposed regulations offer thorough, authoritative guidance regarding the Internal Revenue Code provisions addressing corporate mergers and acquisitions transactions. Comments on both the proposed regulations and the new form are due by March 17.

7. Upcoming webinars for tax professionals

The IRS offers the upcoming live webinars to the tax pro community:

Document Upload Tool on Jan. 21 at 2 p.m. ET. Earn up to one continuing education credit (Federal Tax). Visit the webinar’s registration page for more information and to register.
New Features for Tax Pros: Do Business Faster and Easier with IRS Online on Jan. 23 at 2 p.m. ET. Earn up to two continuing education credits (Federal Tax). Visit the webinar’s registration page for more information and to register.

8. News from the Justice Department’s Tax Division

The Justice Department filed a civil injunction suit against a group of Florida tax return preparers seeking to bar them from owning or operating a tax return preparation business and preparing tax returns. The defendants allegedly used several schemes to prepare and file tax returns that improperly inflated their customers’ returns and falsely reduced their taxable incoming, according to the complaint.

Arthur Grimes, a Florida man who used the “Note Program,” a tax fraud scheme, was found guilty of obstructing the IRS and received a 21-month prison sentence. The tax fraud scheme run by tax return preparers Christopher Johnson and Jasen Harvey included Grimes as a co-conspirator. Grimes caused four false income tax returns to be filed as part of the scheme. The bad actors sought refunds totaling $627,587 of which the IRS paid approximately $270,000.

9. Technical Guidance

Announcement 2025-06 implements a pilot program testing changes to Fast Track Settlement programs currently available to taxpayers under examination in the Large Business and International, Small Business/Self-Employed, and Tax Exempt/Government Entities divisions.

Notice 2025-08 modifies the New Elective Safe Harbor for the domestic content bonus credit contained in Notice 2024-41, 2024-24 I.R.B. 1615, by updating the tables in sections 4.04(1)-(3), clarifying the rules and defined terms, reclassifying the Manufactured Products and Manufactured Product Components, and by providing new associated cost percentages for those components.

Notice 2025-09 provides safe harbors regarding the incremental cost and retail price equivalent of certain qualified commercial clean vehicles for purposes of the credit for qualified commercial clean vehicles under section 45W of the Internal Revenue Code.

Notice 2025-12 provides the percentage increase for calculating the qualifying payment amounts for items and services furnished during 2025 for purposes of sections 9816 and 9817 of the Internal Revenue Code, sections 716 and 717 of the Employee Retirement Income Security Act of 1974, and sections 2799A–1 and 2799A–2 of the Public Health Service Act.

Notice 2025-13 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for December 2024 used under section 417(e)(3)(D), the 24-month average segment rates applicable for January 2025, and the 30-year Treasury rates, as reflected by the application of section 430(h)(2)(C)(iv).

Revenue Procedure 2025-06 provides the exclusive procedures for certain applicable entities, as defined in section 6417(d)(1)(A) of the Internal Revenue Code and the regulations thereunder that are not required to file either a federal income tax return under section 6011 or an annual information return under section 6033(a), but previously filed a Form 990-T solely to make an elective payment election under section 6417, to change their annual accounting period.

Revenue Procedure 2025-13 provides a streamlined method by which taxpayers who have elected the application of the alternative tax under section 831(b) may obtain automatic consent of the Secretary to revoke such election by making certain representations.

Revenue Procedure 2025-14 provides the first Annual Table for sections 45Y and 48E.

Revenue Ruling 2025-04 provides guidance regarding the income and employment tax treatment of contributions and benefits paid in certain situations under a state paid family and medical leave program, as well as the related reporting requirements.

Revenue Ruling 2025-05 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.

IRS provides updated frequently asked questions for the energy efficient home improvement and residential clean energy property credits

Fri, 17 Jan 2025 21:08:50 GMT

WASHINGTON — The Internal Revenue Service today updated the frequently asked questions in Fact Sheet 2025-01.

These FAQs supersede earlier FAQs that were posted in Fact Sheet 2024-15, on April 17, 2024.

The updates to the FAQs contain substantial changes within each section of the Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit.

More information about reliance is available.

Changes in annual accounting periods

Fri, 17 Jan 2025 13:27:37 GMT

Revenue Procedure 2025-06 provides the exclusive procedures for certain applicable entities, as defined in § 6417(d)(1)(A) of the Internal Revenue Code and the regulations thereunder that are not required to file either a federal income tax return under § 6011 or an annual information return under § 6033(a), but previously filed a Form 990-T solely to make an elective payment election under § 6417, to change their annual accounting period.

Revenue Procedure 2025-06 will be in IRB: 2025-6, dated 2/3/2025.

Certain interest rates for January 2025

Wed, 15 Jan 2025 16:12:52 GMT

Notice 2025-13 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for December 2024 used under § 417(e)(3)(D), the 24-month average segment rates applicable for January 2025, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

Notice 2025-13 will be in IRB: 2025-6, dated February 3, 2025.

IRS, Coalition Against Scam and Scheme Threats announce 2025 filing season changes aimed at preventing spread of scams, schemes; new Fuel Tax Credit statement and increased review of “other withholding” claims among highlights

Tue, 14 Jan 2025 17:45:23 GMT

WASHINGTON — The Internal Revenue Service and partners in the Coalition of Scam and Scheme Threats (CASST) today released changes for the 2025 filing season designed to help protect taxpayers from becoming victims of a scam or scheme and preventing tax professionals from having their credentials compromised.

The changes to protect taxpayers include a new form involving the Fuel Tax Credit that’s designed to make it harder for well-meaning taxpayers to be misled into claiming the credit by promoters. This specialized credit that’s been promoted on social media is designed for off-highway business and farming use. Taxpayers need a business purpose and a qualifying business activity such as running a farm or purchasing aviation gasoline to be eligible for the credit. Most taxpayers don’t qualify for this credit.

The IRS is also stepping up review on a variety of “other withholding” claims on Form 1040 that have been targets of scammers and schemers. And the IRS is reaching out to taxpayers who have potentially been using “ghost preparers” to prepare tax returns. These preparers don’t identify themselves on the tax return, which is a red flag for taxpayers to be misled into a scam or scheme.

Convened at the request of IRS Commissioner Danny Werfel, the CASST task force of federal and state tax agencies, software and financial companies, as well as key national tax professional associations, agreed to a new public private partnership in August focused on scams and schemes.

“Since its creation, this special group across the tax community has been working to take extra steps to protect taxpayers and the tax professional community,” Werfel said. “This effort includes expanding outreach and education on emerging scams, developing innovative approaches to identify potentially fraudulent returns at the point of filing and creating infrastructure improvements to protect taxpayers as well as federal, state and industry tax systems. CASST partners have already worked together on important changes to protect taxpayers and tax professionals in the 2025 filing season, but this needs to be an ongoing effort given the continued expansion and threats from scams.”

CASST accomplishments that will improve the 2025 tax season

Highlights of the coalition’s accomplishments include:

New Fuel Tax Credit Statement - The IRS developed the “Statement Supporting Fuel Tax Credit (FTC) Computation - 1”, to educate taxpayers on eligibility requirements for claiming the credit.

Here are key details:

Who should file the new statement? Individuals filing Form 1040, U.S. Individual Income Tax Return, for tax year 2024 who claim nontaxable use of gasoline, aviation gasoline, undyed diesel fuel or undyed kerosene on Form 4136, Credit For Federal Tax Paid On Fuels.
Where is the new statement located? “Statement Supporting Fuel Tax Credit (FTC) Computation – 1” is located in the instructions for Form 4136 for tax year 2024. The statement should be completed and attached to Form 1040 with Form 4136.
What information is the statement asking for? The statement asks for the business information, including name and Employer Identification Number or EIN (if applicable), and make, model and type of machinery or vehicle for which the fuel was purchased. The taxpayer will also be required to complete a table to show the relationship between the estimated purchase price of the fuel compared to the actual cost and gallons reported as being purchased on Form 4136. The IRS used Gasoline and Diesel Fuel Update - U.S. Energy Information Administration (EIA), when determining the average price of fuel for the year.
Should documentation to support the claim be included with the statement? No. Taxpayers should not include any receipts or explanation with their tax return but maintain them with their books and records for their tax return. Taxpayers may be asked at a later time to submit proof, such as receipts, of the actual costs paid for each fuel type.
What happens if the Fuel Tax Credit is claimed erroneously? Claims and filings that are based upon a position identified as frivolous by the IRS or reflect a desire to delay or impede tax administration are subject to the Internal Revenue Code (IRC) 6702(a) penalty. This penalty is $5,000 for each return (or copy of return) claiming an improper credit as defined above. The penalty is assessed against each spouse on a married filing joint return. (Notice 2010-33)

Increased Review of “Other Withholding” Claims – To protect taxpayers, the IRS is increasing its review of “Other Withholding” on Line 25C of Form 1040. To reduce potential delays in verifying the “Other Withholding” claimed, taxpayers are encouraged to attach the supporting documentation to their return. Key forms covered by Line 25c, “Other Withholding”, include Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding; Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax; Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests; Form W2G, Certain Gambling Winnings; Form 8959, Additional Medicare Tax; and Schedule K1, Partner’s Share of Income, Deductions, Credits, etc.

Increased “Ghost Preparer” Education – During the 2025 filing season, the IRS will send letters to taxpayers whose tax returns appear to have been completed by a paid tax preparer who did not sign or include their Preparer Tax Identification Number (PTIN) on the tax return. The letters are meant to educate the taxpayer about “ghost preparers” and to help the IRS identify those who are being paid to prepare returns and are not signing or including their PTIN on the return. The IRS continues to see instances where ghost preparers dupe taxpayers into filing inaccurate tax returns for bigger refunds. The preparers later vanish like a ghost, leaving the taxpayer exposed to inaccurate claims.

Preparer Tax Identification Numbers (PTIN) - During the 2025 filing season, the IRS will be working to add more protections for tax professionals. The protections will be aimed at protecting the tax professional’s Electronic Filing Identification Number or EFIN and PTIN from unauthorized use; more details on these will be available in the near future.

Stay vigilant

Threats are present year-round, but the IRS and CASST members anticipate that misinformation spread by influencers and outright scammers will intensify around the 2025 tax season in an effort to persuade the public to take their bad advice.

Instead of looking to ill-informed information on social media or from shady tax return preparers presenting themselves as reputable tax professionals, a better option for taxpayers is to learn what scams are trending and to speak to a trusted tax professional.

Additional information on tax scams can be found at Tax Scams, and victims of tax-related identity theft can visit Identity Theft Central.

Other reliable tax information is available from the following trusted sources:

Pass it on

The IRS encourages the public to report improper and abusive tax schemes, as well as tax return preparers who knowingly prepare improper returns, including “ghost preparers.”

To report an abusive tax scheme or a tax return preparer, people should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service

Lead Development Center MS7900 1973 N. Rulon White Blvd Ogden, UT 84404 Fax: 877-477-9135

Alternatively, taxpayers and tax professionals may report the information to the IRS Whistleblower Office for possible monetary award.

Taxpayers can also report scams to the Treasury Inspector General for Tax Administration or the Internet Crime Complaint Center. The Report Phishing and Online Scams page at IRS.gov provides complete details.

Calculating the qualifying payment amount in 2025

Tue, 14 Jan 2025 17:44:05 GMT

Notice 2025-12 will be in IRB: 2025–8, dated 2/18/2025.

Treasury, IRS request comments on proposed regulations and a draft form for certain corporate separations and reorganizations

Tue, 14 Jan 2025 17:43:48 GMT

WASHINGTON – The Department of the Treasury and the Internal Revenue Service today issued proposed regulations for corporate separations and reorganizations, including reporting requirements for multi-year corporate separations.

In connection with this proposed guidance, the IRS has posted to IRS.gov a draft version of new Form 7216, Multi-Year Transaction Reporting. These proposed regulations provide comprehensive, authoritative guidance with respect to core provisions of the Internal Revenue Code addressing corporate mergers and acquisitions transactions, and the new form will provide the IRS with necessary information with respect to corporate separations.

Treasury and IRS have proposed this guidance to improve the IRS’s ability to administer the rules in the tax law governing the distribution of stock and securities of a controlled corporation, and to ensure that corporate separations satisfy the requirements to qualify for tax-free treatment. The proposed reporting regulations require certain filers to attach the new Form 7216 to their federal income tax return to provide data to the IRS regarding their multi-year corporation separation. Generally, filers would include the distributing corporation, the controlled corporation and certain significant shareholders or security holders of the distributing corporation.

Importantly, the increased reporting requirements under the proposed reporting guidance would enable Treasury and the IRS to provide increased transactional flexibility through the proposed regulations. Examples of this increased transactional flexibility include addressing retentions of controlled corporation stock, monetization transactions and several other significant issues that arise from multi-year transactions.

The IRS intends to follow these proposed regulations when it issues private letter rulings about certain corporate separations. The IRS plans to issue an update to Rev. Proc. 2024-24 to incorporate these proposed regulations into the procedures for requesting such private letter rulings.

Treasury and IRS invite comments on both the proposed regulations and the new form. Commentors are encouraged to use the Federal e-Rulemaking portal to submit comments on both the proposed substantive regulations (users should indicate “IRS” and “REG-112261-24”) and the proposed reporting regulations and related form (users should indicate “IRS” and “REG-116085-23”). However, comments may also be mailed to: CC:PA:01:PR, Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Comments are due by March 17, 2025. Interested parties can also use the portal and the address above to provide comments regarding the draft of Form 7216.

Streamlined method by which taxpayers who have elected the application of the alternative tax under section 831

Tue, 14 Jan 2025 17:42:45 GMT

WILL BE IN IRB: IRB 2025-8 DATED: 02/18/2025

reasury and IRS issue final rules identifying certain partnership related-party ‘basis shifting’ transactions as Transactions of Interest

Fri, 10 Jan 2025 21:23:49 GMT

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued final regulations identifying certain partnership related-party “basis shifting” transactions as transactions of interest – TOIs – subject to the rules for reportable transactions.

Comments on the proposed rules reflected in the final regulations

Treasury and IRS received comments on the proposed regulations stating that the final regulations should avoid unnecessary burdens for small, family-run businesses, limit retroactive reporting, provide more time for reporting and differentiate publicly traded partnerships, among other suggested changes. The final regulations address these comments and include certain changes reflecting the comments.

Increased dollar threshold for basis increase in a TOI Treasury and IRS increased the threshold amount for a basis increase in a TOI from $5 million to $25 million for tax years before 2025 and $10 million for tax years thereafter.

Limited retroactive reporting for open tax years

To address comments on creating an unnecessary burden for taxpayers subject to the disclosure rules of the final regulations, Treasury and IRS limited reporting for open tax years to those that fall within a six-year lookback window. The six-year lookback window is the seventy-two-month period before the first month of a taxpayer’s most recent tax year that began before the publication of the final regulations. In addition, the threshold amount for a basis increase in a TOI during the six-year lookback period is $25 million.

Additional time for reporting

The final regulations give taxpayers and material advisors more time to file disclosure statements. Taxpayers have an additional 90 days from the final regulation’s publication date to file disclosure statements for TOIs in open tax years for which a tax return has already been filed and that fall within the six-year lookback window. Material advisors have an additional 90 days to file their disclosure statements for tax statements made before the final regulations.

Publicly Traded Partnerships Because PTPs are typically owned by a large number of unrelated owners, the final regulations exclude many owners of PTPs from the disclosure rules.

Final Regulations

In June 2024, the Department of the Treasury and the IRS issued proposed regulations that identified certain partnership basis adjustment transactions by related parties as TOIs. Today, Treasury and IRS issued regulations finalizing the proposed regulations, with several important changes, including those described above.

The final regulations identify certain partnership related-party basis adjustment transactions, and substantially similar transactions, as TOIs. They apply to related partners and partnerships that participated in the identified transactions through distributions of partnership property or the transfer of an interest in the partnership by a related partner to a related transferee. The affected taxpayers and their material advisors are subject to the disclosure requirements for reportable transactions.

The identified transactions generally result from either a tax-free distribution of partnership property to a partner that is related to one or more partners of the partnership, or the tax-free transfer of a partnership interest by a related partner to a related transferee. The tax-free distribution or transfer generates an increase to the basis of the distributed property or partnership property of $10 million or more ($25 million or more in the case of a TOI undertaken in a tax year before 2025) under the rules of Internal Revenue Code sections 732(b) or (d), 734(b) or 743(b) but for which no corresponding tax is paid.

The basis increase to the distributed or partnership property allows the related parties to significantly decrease taxable income through increased cost recovery allowances (such as depreciation deductions) or decrease taxable gain (or increase taxable loss) on the disposition of the property subject to the basis increase.

IRS announces Jan. 27 start to 2025 tax filing season; agency continues historic improvements to expand, enhance tools and filing options to help taxpayers

Fri, 10 Jan 2025 21:22:54 GMT

Free File program now open; Direct File available starting Jan. 27 for taxpayers in 25 states

WASHINGTON — The Internal Revenue Service today announced that the nation’s 2025 tax season will start on Monday, Jan. 27, 2025, and will feature expanded and enhanced tools to help taxpayers as a result of the agency’s historic modernization efforts.

The 2025 tax filing season will reflect continued IRS progress to modernize and add new tools and features to help taxpayers. Since last tax season, the improvements include more access to tax account information from text and voice virtual assistants, expanded features on the IRS Individual Online Account, more access to dozens of tax forms through cell phones and tablets and expanded alerts for scams and schemes that threaten taxpayers.

The IRS has also expanded features and availability of last year’s Direct File program. This year, Direct File will be available starting Jan. 27 to taxpayers in 25 states. In addition, the IRS Free File program opens today. Available only on IRS.gov, IRS Free File Guided Tax Software provides millions of taxpayers nationwide access to free software tools offered by trusted IRS Free File partners.

The IRS is also working to continue the success of the 2023 and 2024 tax filing seasons made possible with additional resources. The past two filing seasons saw levels of service at roughly 85% and wait times averaging less than 5 minutes on the main phone lines, as well as significant increases in the number of taxpayers served at Taxpayer Assistance Centers across the country. Based on the IRS’ current plan and funding levels, the agency will work to provide similar levels of performance on these key service metrics in the upcoming filing season.

“This has been a historic period of improvement for the IRS, and people will see additional tools and features to help them with filing their taxes this tax season,” said IRS Commissioner Danny Werfel. “These taxpayer-focused improvements we’ve done so far are important, but they are just the beginning of what the IRS needs to do. More can be done with continued investment in the nation’s tax system.”

The Get Readypage on IRS.gov highlights steps taxpayers can take now to streamline the filing process and the many resources available to interact with the IRS before, during and after filing their federal tax return.

Direct File opens Jan. 27 for taxpayers in 25 states

On the first day of the filing season, Direct File will open to eligible taxpayers in 25 states to file their taxes directly with the IRS for free: 12 states that were part of the pilot last year, plus 13 new states where Direct File will be available in 2025. During last year’s pilot, Direct File was available in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming. For the 2025 tax filing season, Direct File will also be available in Alaska, Connecticut, Idaho, Illinois, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin.

Direct File will include new features this year to make filing taxes quicker and easier. Similar to commercial tax software, a data import tool will allow taxpayers to opt-in to automatically import data from their IRS account, including personal information, the taxpayer’s IP PIN and some information from the taxpayer’s W-2.

This year, Direct File users can try a new chat bot to help guide them through the eligibility checker. Live chat will again be available in English and Spanish, and users can opt into additional authentication and verification, which will allow customer service representatives to provide more information.

Also, this year, Direct File will cover more tax situations. During the pilot, Direct File supported taxpayers claiming the Earned Income Tax Credit, Child Tax Credit and Credit for Other Dependents. This year, Direct File will also cover taxpayers claiming the:

Child and Dependent Care Credit
Premium Tax Credit
Credit for the Elderly and Disabled
Retirement Savings Contribution Credits

In addition to covering taxpayers claiming the standard deduction and deductions for student loan interest and educator expenses, this year, Direct File will support taxpayers claiming deductions for Health Savings Accounts. The Treasury Department estimates that more than 30 million taxpayers will be eligible to use Direct File across the 25 states.

Direct File is a web-based service that works on mobile phones, laptops, tablets or desktop computers. It guides taxpayers through a series of questions to prepare their federal tax return step-by-step. Last year, thousands of Direct File users got help from IRS customer service representatives through a live chat feature in English and Spanish. Once taxpayers have completed their federal tax return, the Direct File system automatically guides them to state tools to complete their state tax filings.

Free File program opens early; available in English and Spanish

Although the IRS will not begin accepting tax returns until Jan. 27, taxpayers have several options available now to get a head start on their taxes.

Starting today, almost everyone can file electronically for free by using IRS Free File, available only on IRS.gov. Now in its 23^rd year, Free File offers free tax preparation software from eight companies in the public-private partnership between the IRS and Free File Inc. As part of this partnership, tax preparation and filing software partners offer their online products to eligible taxpayers for free. To access these free tools, taxpayers must start from the IRS Free Filepage on IRS.gov.

This year, eight private-sector partners will provide online guided tax software products for taxpayers with an Adjusted Gross Income (AGI) of $84,000 or less in 2024. Additionally, one partner will offer a product in Spanish.

Although the IRS official tax filing season begins later this month, IRS Free File providers will allow taxpayers to prepare and file returns now and hold them until they can be electronically filed on that date. Many other software companies offer a similar option.

Other free options to file tax returns

In addition to Free File and Direct File, the IRS reminds taxpayers there are important programs available to help taxpayers:

Volunteer Income Tax Assistance/Tax Counseling for the Elderly. Taxpayers can find organizations in their community with IRS certified volunteers that provide free tax help for eligible taxpayers including working families, the elderly, the disabled and people who speak limited English.
MilTax. A Department of Defense program, MilTax generally offers free return preparation and electronic filing software for federal income tax returns and up to three state income tax returns for all military members, and some veterans, with no income limit.

Highlights of other IRS changes to help taxpayers

As part of ongoing IRS improvement efforts, the agency is working to build on the success of the 2023 and 2024 filing seasons.

The IRS is once again working to provide taxpayers expanded help in-person through more hours at Taxpayer Assistance Centers nationwide. The IRS also will be focused on continuing high levels of service on its main taxpayer phone lines, with a goal of up to 85% level of service.

The IRS also continues to urge taxpayers to visit a trusted tax professional for help with their taxes or visit IRS.gov first. As part of IRS improvement efforts since 2022, the agency continues to add and expand a variety of online tools and services to help people with their taxes.

Included among the improvements taxpayers will see during the 2025 filing season are:

IRS Individual Online Account: The IRS continues to add more functionality to this important tool. Individuals can create or access their IRS Online Account at Online Account for individuals. With an IRS Online Account, people can:

View key details from their most recent tax return, such as adjusted gross income.
Request an Identity Protection PIN.
Get account transcripts to include wage and income records.
Sign tax forms like powers of attorney or tax information authorizations.
View and edit language preferences and alternative media.
Receive and view over 200 IRS electronic notices.
View, make and cancel payments.
Set up or change payment plans and check their balance.

New scam alert available on Individual Online Account: To help protect taxpayers against emerging threats, there’s a new banner on the Online Account homepage that alerts taxpayers of potential scams and schemes, along with a link to their Digital Notices and Letters page to view correspondence sent to them from the IRS. The feature helps to educate taxpayers on common scams and fraudulent efforts to steal taxpayer information and provide taxpayers with more ability to validate the legitimacy of IRS communications.

Redesigned Notices: The IRS successfully redesigned 284 notices in 2024, exceeding the agency’s 200 notice goal. It is important to note that 200 notices were redesigned and deployed in 2024 and that the 84 additional redesigned notices are in line to be deployed in 2025. All notices will be added to Individual Online Account so taxpayers receiving a specific letter can see them.

Mobile-Adaptive Tax Forms: Taxpayers can now access 67 forms on cell phones and tablets. The most recent forms feature “save and draft” capabilities, which allow the taxpayer to start a form, save it and return to it later. The addition of save and draft allows for future capabilities, including the ability for multiple spouses to sign a form.

Virtual assistants to help with refunds, others questions: Whether a taxpayer uses an online tool or calls the IRS, they will experience upgraded help features. During filing season 2025, the IRS will offer voicebot services to all taxpayers calling the IRS for refund information. The voicebot is available in English and Spanish and has helped thousands of callers without the need to wait for the next available representative. Taxpayers will have to authenticate their identity to gain access to their refund information by providing select information from their tax return.

Taxpayers should check ‘Where’s My Refund?’ on IRS.gov

Most refunds are issued in less than 21 calendar days. Taxpayers can use Where's My Refund? to check the status of their 2024 income tax refund within 24 hours of e-filing. Refund information is normally available after four weeks for taxpayers who filed a paper return. Information on Where's My Refund? will update overnight so there is no need to check the tool more than once a day.

The easiest, safest and fastest way to receive a refund is to file electronically (e-file) and select direct deposit. According to Treasury’s Bureau of the Fiscal Service, paper refund checks are 16 times more likely to have an issue, like the check being lost, misdirected, stolen or uncashed. People should check FDIC and National Credit Union Administration websites if they don’t have a bank account. Veterans can use the Veterans Benefits Banking Program to find participating financial institutions.

The IRS also notes that starting Jan. 1, 2025, people will no longer be able to buy paper Series I savings bonds with their tax refund. Instead, Series I bonds are available in electronic format in TreasuryDirect.

Choose a trusted tax professional

Taxpayers should review the tips for choosing a tax preparer and learn how to avoid unethical “ghost” return preparers. Taxpayers can also use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to find trusted professionals. The IRS also reminds taxpayers that choosing someone affiliated with a recognized national tax association is always a good option.

Tax professionals accepted into the IRS electronic filing program are authorized IRS e-file providers, qualified to prepare, transmit and process electronically filed tax returns.

Section 45Z Clean Fuel Production Credit; Request for Public Comments

Fri, 10 Jan 2025 21:21:29 GMT

Notice 2025-10 describes forthcoming proposed regulations on the § 45Z clean fuel production credit (§ 45Z credit) enacted under the Inflation Reduction Act of 2022. In addition to providing background on the § 45Z credit, the notice explains the forthcoming proposed regulations and requests public comments on the draft text of the forthcoming proposed regulations contained in the appendix. The draft text includes intended rules on how to calculate the credit, allowed methodologies for determining emissions rates, unrelated party certification of emissions rates, how to claim the credit, and requirements for registration.

Notice 2025-11 provides taxpayers with guidance about emissions rates, including the initial emissions rate table, for the clean fuel production credit. For a transportation fuel established on the emissions rate table that is not a sustainable aviation fuel, this notice directs a taxpayer producing such fuel to calculate emissions rates using the most recent determinations under the new 45ZCF-GREET model. For a transportation fuel established on the emissions rate table that is a sustainable aviation fuel, this notice directs a taxpayer producing such fuel to calculate emissions rates using either determinations from fuel pathways approved under the most recent version of the CORSIA Program or the most recent determinations under the 45ZCF-GREET model. This notice also requests public comments.

Notice 2025-10 & Notice 2025-11 will be in IRB: 2025-5, dated 01/27/2025.

Treasury, IRS issue proposed regulations on new automatic enrollment requirement for 401(k) and 403(b) plans

Fri, 10 Jan 2025 21:20:52 GMT

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued proposed regulations addressing certain SECURE 2.0 Act provisions, including a provision generally requiring newly-established 401(k) and 403(b) plans to automatically enroll eligible employees beginning with the 2025 plan year.

In general, unless an employee opts out, a plan must automatically enroll the employee at an initial contribution rate of at least 3% of the employee’s pay and automatically increase the initial contribution rate by one percentage point each year until it reaches at least 10% of pay. This requirement generally applies to 401(k) and 403(b) plans established after Dec. 29, 2022, the date the SECURE 2.0 Act became law, with exceptions for new and small businesses, church plans, and governmental plans.

The proposed regulations provide guidance to plan administrators for properly implementing this requirement and are proposed to apply to plan years that begin more than 6 months after the date that final regulations are issued. Before the final regulations are applicable, plan administrators must apply a reasonable, good faith interpretation of the statute.

Treasury and IRS welcome comments on these proposed regulations. Comments may be submitted through the Federal Register. See the proposed regulations for details.

e-News for Tax Professionals 2025-02

Fri, 10 Jan 2025 21:20:07 GMT

Inside This Issue

IRS: 2025 tax filing season to start on Jan. 27; agency continues historic improvements to expand, enhance tools and filing options
National Taxpayer Advocate delivers annual report to Congress
Get Ready to file taxes in 2025
Final 2024 quarterly estimated tax payment due Jan. 15
Don’t miss out on the upcoming EITC Awareness Day
Treasury, IRS issue proposed regulations on new Roth catch-up rule, other SECURE 2.0 Act provisions
Treasury, IRS issue final rules identifying partnership related-party “basis shifting” transactions as transactions of interest
Upcoming webinars for tax professionals
Technical Guidance

1. IRS: 2025 tax filing season to start on Jan. 27; agency continues historic improvements to expand, enhance tools and filing options

The nation’s 2025 tax season will start on Monday, Jan. 27, and will feature expanded and enhanced tools to help taxpayers due to the agency’s historic modernization efforts. Since last tax season, the improvements include more access to tax account information from text and voice virtual assistants, expanded features on the IRS Individual Online Account, more access to dozens of tax forms through cell phones and tablets, and expanded alerts for scams and schemes that threaten taxpayers. The IRS is once again working to provide taxpayers expanded help in-person through more hours at Taxpayer Assistance Centers nationwide. The IRS also will be focused on continuing high levels of service on its main taxpayer phone lines, with a goal of up to 85% level of service. “These taxpayer-focused improvements we’ve done so far are important, but they are just the beginning of what the IRS needs to do,” said IRS Commissioner Danny Werfel. “More can be done with continued investment in the nation’s tax system.”

2. National Taxpayer Advocate delivers annual report to Congress

National Taxpayer Advocate Erin M. Collins released her 2024 Annual Report to Congress on Jan. 8. For the first time since 2020, Collins reports the taxpayer experience has noticeably improved, but backlogs in identity theft cases, the processing of Employee Retention Credit claims and scams targeting taxpayers and tax professionals continue to be problems. By law, the Advocate’s report must identify the 10 most serious problems taxpayers are experiencing in their dealings with the IRS and makes administrative and legislative recommendations to address those problems. Some key recommendations include protecting taxpayers in federally declared disaster areas who receive filing and payment relief from inaccurate and confusing collection notices, adjusting estimated tax payment deadlines to occur quarterly, and establishing a uniform mileage deduction rate for all purposes.

3. Get Ready to file taxes in 2025

Tax pros: Remind your clients to Get Ready now to file their taxes. Visit the Get Ready page for key information about gathering and organizing tax records, life changes that can affect a refund, what to do with a Form 1099-K, home and energy related credits, how to avoid refund delays and refund timing.

4. Final 2024 quarterly estimated tax payment due Jan. 15

If you have clients who paid too little tax in 2024, encourage them to make a fourth quarter estimated tax payment on or before Jan. 15. The Tax Withholding Estimator, available on IRS.gov, can help people determine if they need to make an estimated tax payment. It also helps taxpayers calculate the correct amount of tax to withhold throughout the year based on their complete set of tax facts and circumstances.

5. Don’t miss out on the upcoming EITC Awareness Day

Preparations are underway for the 19th annual Earned Income Tax Credit (EITC) Awareness Day, taking place on Jan. 31. IRS partners will be hosting awareness day events nationwide and sharing EITC outreach to ensure taxpayers are aware of the credit. Tax pros: the IRS asks you to share the details about EITC with your clients. Individuals who qualify for the EITC must file a tax return to claim the credit. Visit the EITC Awareness day webpage for more information.

EITC started as a modest tax credit that provided financial assistance to low-income, working families with children. Through numerous legislative changes over the past 50 years, the credit is one of the federal government’s largest anti-poverty programs providing cash support to low-income working families.

6. Treasury, IRS issue proposed regulations on new Roth catch-up rule, other SECURE 2.0 Act provisions

The Department of the Treasury and the IRS issued proposed regulations addressing several SECURE 2.0 Act provisions relating to catch-up contributions, which are additional contributions under a 401(k) or similar workplace retirement plan that generally are allowed with respect to employees who are age 50 or older. This includes proposed rules related to a provision requiring that catch-up contributions made by certain higher-income participants be designated as after-tax Roth contributions. The proposed regulations provide guidance for plan administrators to implement and comply with the new Roth catch-up rule and reflect comments received in response to Notice 2023-62, issued in August 2023.

7. Treasury, IRS issue final rules identifying partnership related-party “basis shifting” transactions as transactions of interest

The Department of the Treasury and the IRS issued final regulations identifying certain partnership related-party “basis shifting” transactions as transactions of interest subject to the rules for reportable transactions. They apply to related partners and partnerships that participated in the identified transactions through distributions of partnership property or the transfer of an interest in the partnership by a related partner to a related transferee. The affected taxpayers and their material advisors are subject to the disclosure requirements for reportable transactions.

8. Upcoming webinars for tax professionals

The IRS offers the upcoming live webinars to the tax pro community:

The ABCs of Due Diligence on Jan. 14 at 2 p.m. ET. Earn up to 1CE credit (Federal Tax). Visit the webinar’s registration page for more information and to register.
Steering Clear of Mistakes – A Review of Refundable Credits Eligibility Rules on Jan. 16 at 2 p.m. ET. Earn up to 1 CE credit (Federal Tax). Visit the webinar’s registration page for more information and to register.
Document Upload Tool on Jan. 21 at 2 p.m. ET. Earn up to 1 CE credit (Federal Tax). Visit the webinar’s registration page for more information and to register.
New Features for Tax Pros: Do Business Faster and Easier with IRS Online on Jan. 23 at 2 p.m. ET. Earn up to 2 CE credits (Federal Tax). Visit the webinar’s registration page for more information and to register.

9. Technical Guidance

Notice 2025-06 requests comments on any potential implications if the characterization rules currently contained in sections 1.861-18 and 1.861-19, as amended and added, respectively, by Treasury Decision 10022, were to apply to all provisions of the Internal Revenue Code, including the need for additional guidance, and seeks specific comments on the possible impacts and guidance that may be necessary with respect to certain identified provisions.

Revenue Procedure 2025-10 modifies and supersedes Revenue Procedure 85-18, 1985-1 CB 518; it clarifies the provisions of Rev. Proc. 85-18 with respect to the definition of employee, the section 530 requirement for the filing of required returns, and the reasonable basis safe harbor rules.

Revenue Procedure 2025-11 provides the process under section 48E(h) of the Internal Revenue Code to apply for an allocation of Capacity Limitation as part of the Clean Electricity Low-income Communities Bonus Credit Amount Program for 2025 and subsequent years.

Revenue Ruling 2025-3 addresses the application of section 530 of the Revenue Act of 1978 (section 530), section 3509 rates, and the requirements to issue a Notice of Employment Tax Determination Under IRC section 7436 (section 7436 Notice) in several distinct factual situations.

RR-2025-3 & RP-2025-10: The definition of employees under section 530 of the Internal Revenue Code

Wed, 08 Jan 2025 19:01:31 GMT

Revenue Ruling 2025-3addresses the application of Section 530 of the Revenue Act of 1978 (section 530), section 3509 rates, and the requirements to issue a Notice of Employment Tax Determination Under IRC § 7436 (§ 7436 Notice) in several distinct factual situations. Internal Revenue Code section 3509 allows an employer to remit unpaid taxes at reduced rates if an employer fails to deduct and withhold income tax or the employee share of FICA tax with respect to any of its employees because the employer treated that employee as a non-employee.

Revenue Procedure 2025-10modifies and supersedes Revenue Procedure 85-18, 1985-1 CB 518; it clarifies the provisions of Rev. Proc. 85-18 with respect to the definition of employee, the section 530 requirement for the filing of required returns, and the reasonable basis safe harbor rules. This revenue procedure also amplifies the guidelines set forth in section 3.03 of Rev. Proc. 85-18 (interpreting the word “treat” for purposes of determining whether a taxpayer did not treat an individual as an employee for purposes of section 530(a)). This revenue procedure also includes new provisions that reflect statutory changes made to section 530 since 1986 that added sections 530(d), (e), and (f). Section 530 of the Revenue Act of 1978 (as amended) was enacted to provide relief to taxpayers involved in worker classification disputes with the IRS. Section 530 is not an Internal Revenue Code provision.

Revenue Ruling 2025-3 and Revenue Procedure 2025-10 will be published in Internal Revenue Bulletin 2025-4 on Jan. 21, 2025.

IRS: For Carter remembrance, taxpayers have extra day to file, pay; returns, payments due Jan. 9 are now due Jan. 10

Wed, 08 Jan 2025 19:00:38 GMT

WASHINGTON - The Internal Revenue Service today granted taxpayers an extra day, until Friday, Jan. 10, 2025, to file any return or pay any tax originally due on Thursday, Jan. 9.

The IRS granted the extra time following the Dec. 29 Presidential Proclamation marking Jan. 9 as a National Day of Mourning for James Earl Carter, Jr., the thirty-ninth President of the United States.

The one-day extension applies to any return required to be filed with the IRS on Thursday, Jan. 9, 2025. It also applies to any required federal tax payment originally due on that day.

In addition, it also applies to any federal income, payroll or excise tax deposit due on Jan. 9, 2025, including those required to be made through the Treasury Department’s Electronic Federal Tax Payment System (EFTPS).

Latest 2025 Tax Changes

Wed, 08 Jan 2025 15:10:46 GMT

The Internal Revenue Service (IRS) has announced several key adjustments for the 2025 tax year, reflecting annual inflation and legislative changes. Here's an overview of the most significant updates affecting federal income tax returns:

1. Standard Deduction Increase

Single Filers: The standard deduction rises to $15,000, up from $14,600 in 2024.

Married Filing Jointly: Increases to $30,000 from $29,200.

Head of Household: Now $22,500, up from $21,900.

2. Adjusted Income Tax Brackets

Tax brackets have been modified to account for inflation. Notably:

The top 37% rate applies to incomes over $626,350 for single filers and $751,600 for married couples filing jointly, up from $609,350 and $731,200, respectively, in 2024.

3. Retirement Contribution Limits

401(k), 403 (b) and 457 Plans: Contribution limits increase to $23,500 from $23,000.

Catch-Up Contributions: Normally $7,500 if over 49, but for individuals aged 60 to 63, a new catch-up contribution limit of $11,250 is introduced, $3,750 higher than the standard catch-up amount.

IRAs $7,000, plus $1,000 catch-up if over 49

Simple IRAs: Contribution limit increased to $16,500, plus $3,500 catch-up if over 49. (Increased by 10% for employers with fewer than 25 employees). Those age 60-63 can save $5,250 as a catch-up contribution

SEP IRAs: Contribution limit increased to $70,000

4. Earned Income Tax Credit (EITC)

The maximum EITC amount has been adjusted for inflation, providing increased benefits to eligible taxpayers.

5. Annual Gift Tax Exclusion

The exclusion amount rises to $19,000 per recipient, up from $18,000 in 2024, allowing individuals to gift more without incurring tax liabilities.

6. Estate Tax Exemption

The lifetime estate exemption increases to nearly $14 million, up from $13.61 million in 2024, enabling larger transfers of wealth without estate tax implications.

7. Child Tax Credit

The refundable portion of the Child Tax Credit remains at $1,700 for 2025, unchanged from 2024.

8. Mileage Rates

Business Use: 70 cents per mile, an increase of 3 cents from 2024.

Medical Purposes: 21 cents per mile, unchanged from 2024.

Moving Purposes (for qualified active-duty members of the Armed Forces): 21 cents per mile, unchanged from 2024.

Charitable Organizations: 14 cents per mile, unchanged from 2024 (this rate is set by statute).
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Allocation of Capacity Limitation as part of the Clean Electricity Low-income Communities Bonus Credit Amount Program

Wed, 08 Jan 2025 15:09:32 GMT

Revenue Procedure 2025-11 provides the process under § 48E(h) of the Internal Revenue Code to apply for an allocation of Capacity Limitation as part of the Clean Electricity Low-income Communities Bonus Credit Amount Program for 2025 and subsequent years.

Revenue Procedure 2025-11 will be published in Internal Revenue Bulletin 2025-4, on Jan. 21, 2025.

National Taxpayer Advocate delivers Annual Report to Congress; flags Employee Retention Credit, Identity Theft Victim Assistance processing delays and calls for adequate funding to improve taxpayer services

Wed, 08 Jan 2025 15:08:41 GMT

WASHINGTON — National Taxpayer Advocate Erin M. Collins today released her 2024 Annual Report to Congress, finding overall improvement in IRS taxpayer service but also highlighting persistent challenges, particularly delays in processing Employee Retention Credit (ERC) claims and resolving Identity Theft Victim Assistance cases.

“For the first time since I became the National Taxpayer Advocate in 2020, I can begin this report with good news: The taxpayer experience has noticeably improved,” Collins writes. “In 2024, taxpayers and practitioners experienced better service, generally received timely refunds, and faced shorter wait times to reach customer service representatives…. After receiving multiyear funding, the IRS has [also] made major strides toward improving its taxpayer services and information technology (IT) systems.”

By law, the National Taxpayer Advocate’s report must identify the 10 most serious problems taxpayers face in their dealings with the IRS and make administrative and legislative recommendations to address those problems. Two of the most critical issues are:

Continuing delays in processing Employee Retention Credit claims. As of Oct. 26, 2024, the IRS faced a backlog of about 1.2 million ERC claims, with many claims pending for more than a year. While the IRS has valid concerns about paying ineligible claims, the slow processing time is harming many eligible businesses that are relying on these funds to pay expenses. Additional concerns include lack of transparency for businesses trying to track the status of their claims; confusing disallowance letters that have omitted critical information; the use of audit-like procedures for disallowed claims without standard taxpayer audit protections; and significant delays for businesses whose refund checks were stolen and have waited months or longer to receive replacement checks. After the National Taxpayer Advocate’s report went to press, the Commissioner announced in mid-December he anticipates that approximately 500,000 additional claims will be processed in 2025, but the details and timing of the refunds are still to be determined.

Continuing delays in resolving identity theft cases. For cases closed by the IRS’s Identity Theft Victim Assistance (IDTVA) unit in Fiscal Year 2024, the average time it took the IRS to resolve identity theft cases and issue refunds to the affected victims was almost two years. These delays impacted nearly half a million taxpayers and were even worse than the delays seen in FY 2023, when cases took almost 19 months to resolve. Collins again calls these delays “unconscionable” and recommends the IRS prioritize identity theft case resolution by keeping all IDTVA employees focused on these cases rather than reassigning them to other tasks during the filing season. In addition, she urged the agency to reduce case resolution times to 90 days or less.

Adequate funding for taxpayer services, technology upgrades is critical

In her preface to the report, Collins emphasizes the need for adequate funding to support critical taxpayer services and technology upgrades. She notes that the bulk of the nearly $80 billion in multiyear IRS funding provided by the Inflation Reduction Act (IRA) was allocated for tax law enforcement and has been controversial. She further notes, however, that there has been bipartisan support for the smaller amounts allocated for taxpayer services and IT modernization. Stressing the importance of taxpayer services funding, she urges Congress, if it cuts IRA enforcement funding, not to make commensurate cuts to taxpayer services and IT. Congress should not, Collins urged, “inadvertently throw out the baby with the bathwater.”

The following table shows the original IRA funding total broken out among the IRS’s four budget accounts, highlighting that only 4% of the funding was allocated for Taxpayer Services and only 6% was allocated for Business Systems Modernization (BSM).

Inflation Reduction Act IRS Funding Allocations

IRS Budget Account	Amount Allocated	Percentage of Total
Enforcement	$45.6 billion	58%
Operations Support	$25.3 billion	32%
Business Systems Modernization	$4.8 billion	6%
Taxpayer Services	$3.2 billion	4%
Total	$78.9 billion	100%

“I have previously criticized this extreme imbalance in funding priorities, and to improve the taxpayer experience, I have recommended that Congress either provide additional funding for the Taxpayer Services and BSM accounts or reallocate a portion of the Enforcement funding to those accounts. I reiterate that recommendation as the new Congress convenes,” Collins writes.

The report highlights numerous examples of improvements the IRS has made using its multiyear funding. Taxpayer Services funding has enabled the IRS to hire more customer service representatives, allowing the agency to answer nearly 9 million more telephone calls than 2 years earlier and to cut in half the average time needed to process individual taxpayer correspondence from about 7 months to about 3½ months. The IRS has also expanded in-person help at its Taxpayer Assistance Centers, adding evening and weekend service in many locations to accommodate taxpayers who are unable to visit during normal business hours.

BSM funding has supported critical automation improvements, allowing taxpayers to resolve issues without the involvement of an IRS employee. With these improvements, taxpayers can now obtain more information and transact more business with the IRS through their online accounts, use voicebots and chatbots to get answers to many of their questions, submit correspondence to the IRS electronically and communicate with the IRS through secure messaging in pending cases. Furthermore, the IRS now allows taxpayers to submit 30 of the most common taxpayer forms from mobile devices, which is a game-changer for the estimated 15% of Americans who rely solely on their smartphones for internet access.

“With sufficient funding for Taxpayer Services and BSM, I believe the IRS can exponentially build on the improvements of the last two years and produce a tax system that respects taxpayer rights, is world-class, and makes compliance easier, which will likely improve revenue collection as well,” Collins writes.

Most serious taxpayer problems

In addition to ERC and IDTVA processing delays, the report identifies eight other serious taxpayer problems, including the following:

Continuing delays in IRS return processing are frustrating taxpayers and causing refund delays. The IRS receives more than 10 million paper-filed Forms 1040 each year and more than 75 million paper-filed returns and forms overall. Until recently, IRS employees had to manually transcribe the data from those returns into IRS systems. While the IRS has made strides toward automating return processing by scanning more than half of paper-filed returns and forms, it still has a long way to go to digitize all paper. Additionally, e-filed returns are sometimes rejected – nearly 18 million (about 12%) of e-filed Forms 1040 were rejected in the past year. The IRS generally rejects returns flagged by its fraud detection filters, but most rejected returns are valid, requiring taxpayers to jump through additional hoops to resubmit their returns electronically or submit their returns on paper. The report highlights the strain this puts on taxpayers, particularly low-income taxpayers eligible for refundable Earned Income Tax Credit (EITC) benefits. Taxpayer Advocate Service (TAS) recommends the IRS continue its efforts to automate tax processing including digitizing nearly all paper-filed returns by the 2026 filing season and enabling electronic processing of amended tax returns.

Taxpayer service is often not timely or adequate. While taxpayer service improved across the IRS’s three main channels – telephone, in-person and online – significant service gaps remain. The IRS achieved an 88% “Level of Service” (LOS) on its Accounts Management lines during the filing season, but this measure excludes calls directed to telephone lines that fall outside the “Accounts Management” umbrella (30% of all calls in FY 2024), calls where a taxpayer hangs up before being placed in a calling queue, and calls made outside the filing season. Overall, the LOS for all toll-free lines in FY 2024 was just 56%, with only 31% of callers reaching an assistor. Of the 6.2 million calls the IRS received from taxpayers whose returns had been stopped by the IRS’s identify theft filters and who were calling to authenticate their identities, the IRS answered only about 20%. This has left millions of taxpayers without the support they need. TAS recommends the IRS adopt more accurate service metrics and prioritize answering non-Accounts Management telephone lines that serve largely vulnerable taxpayer populations. Among these are the Installment Agreement/Balance Due, Taxpayer Protection Program, and Automated Collection System telephone lines.

Continuing challenges in employee recruitment, hiring, training and retention are hindering the IRS’s ability to achieve transformational change in taxpayer service and tax administration. The IRS faces ongoing difficulties in hiring, training, and maintaining employees. Job postings are not consistently targeted to reach the desired candidates. The agency often takes several months to hire new employees, leading some candidates to accept other offers. New hires require extensive training before they become productive employees, and experienced employees often must be reassigned to train them. Additionally, a Congressional Budget Office study published in 2024 found that federal employees with professional degrees earn almost 29% less than their non-federal counterparts, making it harder for the IRS to compete in the tight job market. TAS recommends the IRS explore alternative recruitment platforms, review pay disparities and implement strategies to improve employee retention.

Legislative recommendations: the “Purple Book”

The National Taxpayer Advocate’s 2025 Purple Bookproposes 69 legislative recommendations intended to strengthen taxpayer rights and improve tax administration. Among the recommendations:

Authorize the IRS to establish minimum competency standards for federal tax return preparers and revoke the identification numbers of sanctioned preparers. The IRS receives over 160 million individual income tax returns each year, and most are prepared by paid tax return preparers. While some tax return preparers must meet licensing requirements (e.g., certified public accountants, attorneys and Enrolled Agents), most tax return preparers are not credentialed. Numerous studies have found that non-credentialed preparers prepare inaccurate returns disproportionately, causing some taxpayers to overpay their taxes and other taxpayers to underpay their taxes, which subjects them to penalties and interest charges. Non-credentialed preparers also drive much of the high improper payments rate attributable to wrongful EITC claims. In FY 2023, 33.5% of EITC payments, amounting to $21.9 billion, were estimated to be improper, and among tax returns claiming the EITC prepared by paid tax return preparers, 96% of the total dollar amount of EITC audit adjustments was attributable to returns prepared by non-credentialed preparers. Federal and state laws generally require lawyers, doctors, securities dealers, financial planners, actuaries, appraisers, contractors, motor vehicle operators, and barbers and beauticians to obtain licenses or certifications and, in most cases, to pass competency tests. The Obama, first Trump and Biden administrations have each recommended that Congress authorize the Treasury Department to establish minimum competency standards for federal tax return preparers. To protect taxpayers and the public fisc, TAS likewise recommends that Congress provide this authorization as well as authorization for the Treasury Department to revoke the Preparer Tax Identification Numbers of preparers who have been sanctioned for improper conduct.
Expand the U.S. Tax Court’s jurisdiction to hear refund cases. Under current law, taxpayers seeking to challenge an IRS tax-due adjustment can file a petition in the U.S. Tax Court, while taxpayers who have paid their tax and are seeking a refund must file suit in a U.S. district court or the U.S. Court of Federal Claims. Litigating a case in a U.S. district court or the Court of Federal Claims is generally more challenging – filing fees are relatively high, rules of civil procedure are complex, the judges generally do not have tax expertise and proceeding without a lawyer is difficult. By contrast, taxpayers litigating their cases in the Tax Court face a low $60 filing fee, may follow less formal procedural rules, are generally assured their positions will be fairly considered because of the tax expertise of the Tax Court’s judges, even if they do not present their arguments effectively, and can more easily represent themselves. For these reasons, the requirement that refund claims be litigated in a U.S. district court or the Court of Federal Claims effectively deprives many taxpayers of the right to judicial review of an IRS refund disallowance. In FY 2024, about 97% of all tax-related litigation was adjudicated in the Tax Court. TAS recommends Congress expand the jurisdiction of the Tax Court to give taxpayers the option to litigate all tax disputes, including refund claims, in that forum.
Enable the Low Income Taxpayer Clinic (LITC) program to assist more taxpayers in controversies with the IRS. The LITC program assists low-income taxpayers and taxpayers who speak English as a second language. When the LITC program was established as part of the IRS Restructuring and Reform Act of 1998, the law limited annual grants to no more than $100,000 per clinic. The law also imposed a 100% “match” requirement, so a clinic cannot receive more in grant funds than it raises from other sources. The nature and scope of the LITC Program have evolved considerably since 1998, and those requirements are preventing the program from expanding assistance to a larger universe of eligible taxpayers. TAS recommends Congress remove the per-clinic cap and allow the IRS to reduce the match requirement to 25%, where doing so would expand coverage to additional taxpayers.
Require the IRS to timely process claims for refund or credit. Millions of taxpayers file refund claims with the IRS each year. Under current law, there is no requirement that the IRS pay or deny them. It may simply ignore them. The taxpayers’ remedy is to file suit in a U.S. district court or the U.S. Court of Federal Claims. For many taxpayers, that is not a realistic or affordable option. The report says the absence of a processing requirement is a “poster child” for non-responsive government. While the IRS generally does process refund claims, the claims can and sometimes do spend months and even years in administrative limbo within the IRS. TAS recommends Congress require the IRS to act on claims for credit or refund within one year and impose certain consequences on the IRS for failing to do so.
Allow the limitation on theft loss deductions in the Tax Cuts and Jobs Act to expire so scam victims are not taxed on amounts stolen from them. Many financial scams involve the theft of retirement assets. In a typical scam, a con artist may pose as a law enforcement officer, convince a victim that her retirement savings are at risk and persuade the victim to transfer her retirement savings to an account that the scammer controls. Then, the scammer absconds with the funds. Under the tax code, the victim’s withdrawal of funds from a retirement account is treated as a distribution subject to income tax and, if the victim is under age 59½, to a 10% additional tax as well. Thus, the victim may not only lose her life savings but also owe significant tax on the stolen funds. Prior to 2018, scam victims generally could claim a theft loss deduction to offset the stolen amounts included in gross income, but the Tax Cuts and Jobs Act (TCJA) eliminated the deduction. TAS recommends Congress allow this TCJA limitation to expire so the theft deduction is again available in these circumstances.

Research studies

The report contains three TAS research studies offering insight into challenges facing taxpayers and practitioners and recommending ways to improve IRS services and processes.

Identity theft filters and unpaid refunds. A TAS study reviewed tax returns flagged by IRS identity theft filters and found that some legitimate taxpayers were not receiving refunds to which they were entitled. Each year, several million returns claiming refunds are flagged by IRS fraud filters and suspended during processing. The IRS issues one letter to each taxpayer notifying them that they need to authenticate their identities to receive their refunds. If a taxpayer does not respond – whether due to not receiving the letter or misplacing it – the IRS does not follow up and does not issue the refund. This study explored the effect of sending additional letters to a sample of potentially eligible taxpayers who had filed Tax Year 2020 returns and had not responded to the original IRS letter. The study found that more than 7% of recipients of a second letter successfully authenticated their identities, suggesting that thousands of taxpayers may be losing refunds simply because they were not reached. Among other things, TAS recommends the IRS send a follow-up letter if a taxpayer does not respond to the initial letter within 60-90 days.

IRS telephone service performance measures. The IRS typically receives about 100 million telephone calls each year, but its method for measuring service effectiveness, LOS, has been widely criticized for failing to accurately reflect the taxpayer experience. For the 2024 filing season, the IRS reported an 87.6% LOS, but only 32.1% of calls were answered by an employee. TAS reviewed call center operations of other large government agencies and private sector businesses to identify best practice processes and measures. Of the call centers reviewed, the study found the IRS is the only one that uses this LOS measure. By comparison, other call centers in both government and the private sector typically answer a higher percentage of calls and use more comprehensive metrics, such as first contact resolution (FCR) rate. TAS recommends the IRS eliminate or revise its LOS formula to account for total call attempts and calls answered through automation.

Challenges in obtaining Individual Taxpayer Identification Numbers (ITINs). TAS conducted a review of the IRS’s ITIN program and confirmed that the application process is burdensome for taxpayers. ITINs are required for individuals who are required to file U.S. tax returns but are not eligible for a Social Security number, such as foreign workers on temporary visas and nonresidents with U.S.-based income. Overall, several million returns include at least one ITIN each year, and they account for several billion dollars in revenue. The study identified significant taxpayer challenges, including the cost and difficulty of using Certifying Acceptance Agents (CAAs) to verify documents as well as the risk of losing original identity documents (such as passports, birth certificates, driver’s licenses and visas) when submitting ITIN applications by mail. Many applicants are unable to give up these documents for several weeks or run the risk of document loss. The study examined the size and composition of the ITIN population and the IRS’s administration of the program. TAS makes several recommendations to improve the ITIN program, including expanding CAA services in Volunteer Income Tax Assistance sites and addressing recurring issues that lead to the erroneous deactivation of ITINs.

TAS celebrates 25 years of advocacy

This year marks the 25th anniversary of the Taxpayer Advocate Service, which was created by Congress as part of the IRS Restructuring and Reform Act of 1998. After developing an organizational structure, TAS officially launched in March 2000, and over the past quarter century, it has been a strong advocate for taxpayers, ensuring their voices are heard and their rights are protected.

“For 25 years, TAS has served as the ‘safety net’ for taxpayers experiencing problems with the IRS and as Congress’s eyes and ears within the agency on issues of taxpayer rights and taxpayer burden,” Collins writes.

Since inception, TAS has helped more than 5 million taxpayers resolve their account problems, worked hundreds of advocacy projects with the IRS, made hundreds of recommendations to improve the IRS’s administrative practices that the agency has implemented and made hundreds of recommendations for legislative change, many of which Congress has enacted. As TAS celebrates its 25th anniversary, it remains committed to resolving taxpayer account problems and identifying and addressing systemic issues within the IRS to improve the taxpayer experience.

Other report highlights

The report also contains a taxpayer rights and service assessment that presents performance measures and other relevant data, a description of TAS’s case advocacy and systemic advocacy operations, and a discussion of the 10 federal tax issues most frequently litigated in court last year.

Visit TAS’s 2024 Annual Report to Congress for more information.

Related items

Subscribe to receive the National Taxpayer Advocate’s blogs about key issues in tax administration in your inbox or visit the TAS website to read her previous blogs. For media inquiries, contact TAS Media Relations at TAS.media@irs.gov or call the media line at (202) 317-6802.

About the Taxpayer Advocate Service

The Taxpayer Advocate Service is an independent organization within the Internal Revenue Service that helps taxpayers and protects taxpayer rights. We can offer you free help if your tax problem is causing a financial difficulty, if you’ve tried and been unable to resolve your issue with the IRS or if you believe an IRS system, process or procedure just isn't working as it should. Learn more at Taxpayer Advocate Service or call 877-777-4778. Get updates on tax topics by following TAS on social media at: Your Voice at IRS on Facebook, Your Voice at IRS on X, Taxpayer Advocate Service on LinkedIn, and TASNTA on YouTube.

Affordable Care Act (ACA) Information Returns (AIR) Starting Date Change

Tue, 07 Jan 2025 19:55:02 GMT

Attention: AIR Participants - Transmitters, Software Developers and Issuers

AIR Production environment Start-up

Due to the National Day of Mourning on January 9, 2025, start-up for Filing Season 2025/Tax Year 2024 AIR Production will now begin on:

Monday, January 13, 2025, 9:00 a.m. Eastern time

AIR Assurance Testing System (AATS)

The AIR AATS environment will still be available during the Production Shutdown, except for the routine maintenance window that occurs each Sunday.

Please monitor the AIR Operational Status page for any updates

IRS reminder to disaster area taxpayers with extensions: All or parts of 14 states, 2 territories need to file 2023 returns by Feb. 3; others have until May 1

Tue, 07 Jan 2025 16:07:49 GMT

WASHINGTON —The Internal Revenue Service today reminded disaster-area taxpayers who received extensions to file their 2023 returns that, depending upon their location, their returns are due by Feb. 3 or May 1, 2025.

Currently:

Taxpayers in the entire states of Louisiana and Vermont, all of Puerto Rico and the Virgin Islands and parts of Arizona, Connecticut, Illinois, Kentucky, Minnesota, Missouri, Montana, New York, Pennsylvania, South Dakota, Texas and Washington state have until Feb. 3, 2025, to file their 2023 returns.
Taxpayers in the entire states of Alabama, Florida, Georgia, North Carolina and South Carolina, and parts of Alaska, New Mexico, Tennessee, Virginia and West Virginia will have until May 1, 2025, to file their 2023 returns. For these taxpayers, May 1 will also be the deadline for filing their 2024 returns and paying any tax due.

Eligible taxpayers are individuals and businesses affected by various disasters that occurred during the late spring through the end of 2024. For extension filers, payments on the 2023 tax year returns are not eligible for the additional time because they were originally due last spring before any of these disasters occurred.

The IRS normally provides relief, including postponing various tax filing and payment deadlines, for any area designated by the Federal Emergency Management Agency (FEMA). As long as their address of record is in a disaster-area locality, individual and business taxpayers automatically get the extra time, without having to ask for it. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

Special relief for terrorist attacks in Israel

Taxpayers who live or have a business in Israel, Gaza or the West Bank, and certain other taxpayers affected by the terrorist attacks in the State of Israel have until Sept. 30, 2025, to file and pay. This includes all 2023 and 2024 returns.

Announcement 2025-5 confirms the suspension of a part of the Convention between the United States of America and the Union of Soviet Socialist Republics on Matters of Taxation

Tue, 07 Jan 2025 16:02:22 GMT

Announcement 2025-5 confirms the suspension of the operation of paragraph 1, subparagraph (g), of Article III of the Convention between the United States of America and the Union of Soviet Socialist Republics on Matters of Taxation, with related letters, signed at Washington June 20, 1973, as it relates to Belarus, by mutual agreement.

Announcement 2025-5 will be published in Internal Revenue Bulletin 2025-04 on Jan. 21, 2025

N-2025-07: Temporary relief for making an adequate identification for units of a digital asset held in the custody of a broker

Tue, 07 Jan 2025 16:01:52 GMT

Notice 2025-07provides temporary relief allowing eligible taxpayers to rely on alternative methods for making an adequate identification, within the meaning of § 1.1012-1(j)(3)(ii), with respect to units of a digital asset held in the custody of a broker.

Notice 2025-07will be published in Internal Revenue Bulletin 2025-5, on Jan. 27, 2025.

RP-2025-09: Safe harbor and safe harbor percentage under section 5000D(b)

Tue, 07 Jan 2025 16:01:06 GMT

Rev. Proc. 2025-09 provides a safe harbor under which a manufacturer, producer, or importer may identify the applicable sales of a designated drug made during a day described in section 5000D(b) by using a safe harbor percentage. It also provides such safe harbor percentage. A manufacturer, producer, or importer may use the safe harbor and safe harbor percentage provided in this revenue procedure until the proposed regulations are finalized or other guidance is published in the Internal Revenue Bulletin or the Federal Register.

WILL BE IN IRB: 2025-4 DATED: January 21, 2025

e-News for Tax Professionals 2024-52

Tue, 07 Jan 2025 15:59:54 GMT

Inside This Issue

Get ready now to file 2025 taxes
ETAAC is accepting membership applications through Jan. 31
Tax pros: New continuing education seminars available on IRS Nationwide Tax Forum Online
Technical Guidance

1. Get ready now to file 2025 taxes

Tax pros: Remind your clients to get ready now to file their taxes in 2025. Visit the Get Ready page to view key information such as steps to make tax filing easier, gathering and organizing tax records, life changes that can affect a refund, what to do with a Form 1099-K, home and energy related credits, avoiding refund delays, understanding refund timing and more.

2. ETAAC is accepting membership applications through Jan. 31

The IRS is seeking qualified applicants for nomination to the Electronic Tax Administration Advisory Committee (ETAAC), an organized public forum for discussion of issues in electronic tax administration, such as prevention of identity theft and refund fraud. New members will serve three-year terms beginning in September 2025. Applications will be accepted through Jan. 31. For more information about ETAAC, the application process and qualification criteria, email publicliaison@irs.gov.

3. Tax pros: New continuing education seminars available on IRS Nationwide Tax Forum Online

The IRS encourages tax professionals to register for the IRS Nationwide Tax Forum Online to get access to 18 seminars recorded at the 2024 IRS Nationwide Tax Forum. The Nationwide Tax Forum Online offers tax professionals a convenient way to stay informed about current legislation, IRS procedures and key topics for the upcoming tax season.

4. Technical Guidance

Notice 2025-03 provides transitional relief under provisions of the Internal Revenue Code with respect to the reporting of information and backup withholding on digital assets for digital asset brokers providing trading front-end services.

N-2025-03: To provide for transitional relief on reporting of information and backup withholding on digital assets

Tue, 07 Jan 2025 15:59:36 GMT

Notice 2025-03 provides transitional relief under provisions of the Internal Revenue Code with respect to the reporting of information and backup withholding on digital assets for digital asset brokers providing trading front-end services.

Notice 2025-03will be published in Internal Revenue Bulletin 2025-4, on Jan. 21,2025.

e-News for Tax Professionals 2024-51

Tue, 07 Jan 2025 15:58:48 GMT

Inside This Issue

IRS announces special payments going this month to 1 million taxpayers who did not claim 2021 Recovery Rebate Credit
Get ready now to file 2025 taxes
Taxpayers can now submit Form 8898 digitally
e-Filing requirement for Information Returns
Treasury and IRS propose regulations to update rules for tax professionals who can practice before the IRS
ETAAC is accepting membership applications through Jan. 31
IRS needs your feedback on Form 6765 draft instructions
Tax pros: New continuing education seminars available on IRS Nationwide Tax Forum Online
News from the Justice Department’s Tax Division
Technical Guidance

1. IRS announces special payments going this month to 1 million taxpayers who did not claim 2021 Recovery Rebate Credit

The Internal Revenue Service will issue automatic payments later this month to eligible people who did not claim the Recovery Rebate Credit on their 2021 tax returns. The IRS announced the special step Friday after reviewing internal data showing many eligible taxpayers who filed a return but did not claim the credit. The Recovery Rebate Credit is a refundable credit for individuals who did not receive one or more Economic Impact Payments (EIP), also known as stimulus payments.

No action is needed for eligible taxpayers to receive these payments, which will go out automatically in December and should arrive in most cases by late January 2025. The payments will be automatically direct deposited or sent by paper check; eligible taxpayers will also receive a separate letter notifying them of the payment.

2. Get ready now to file 2025 taxes

3. Taxpayers can now submit Form 8898 digitally

Effective Dec. 8, taxpayers can submit IRS Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Territory using the IRS Digital Mobile Application Format (DMAF). Many of these submissions originate from outside the 50 states and mailing these forms to ensure timely receipt may require extra effort. Using this format will provide taxpayers with:

Paperless option to file Form 8898,
Faster and easier submission process,
Guaranteed timely receipt and
Reduced burden.

To access this form, filers can go to IRS.gov and:

Select Find Forms & Instructions.
Select Mobile–friendly forms from the list on the left sidebar.
Select F8898 from the menu.

There is no need to submit a paper copy to the IRS, and the filer can download or print a copy of what was submitted.

4. e-Filing requirement for Information Returns

The IRS reminds taxpayers of the filing requirements for information returns that must be filed on or before Jan. 1. Electronic submission is required for those who are filing 10 or more information returns. This includes Forms W-2, e-filed with the Social Security Administration. In addition, taxpayers may prepare to file information returns electronically by applying for a Transmitter Control Code (TCC) from the IRS as soon as possible, as it may take up to 45 days for processing. (Note: A TCC is not required to electronically file Form W-2, although registration with Business Services Online at SSA.gov is required. Form 8809, Application for Extension of Time to File Information Returns can be used to request an extension if a taxpayer needs more time to file information returns. E-Filing options can be found at IRS.gov/inforeturn.

5. Treasury and IRS propose regulations to update rules for tax professionals who can practice before the IRS

The Department of the Treasury and the Internal Revenue Service today issued proposed regulations to update the rules for certain tax professionals who can practice before the IRS; these rules are contained in Treasury Department Circular 230.

The IRS Office of Professional Responsibility generally has responsibility for matters related to practitioner conduct, and exclusive responsibility for discipline, including disciplinary proceedings and sanctions. The proposed regulations, if finalized, would amend Circular 230 in various ways to account for changes in the law and the evolving nature of tax practice. Among other changes, the proposed regulations would remove or update the parts of Circular 230 related to registered tax return preparers and tax return preparation, as well as contingent fees to reflect changes in the law since the prior amendments to Circular 230 in 2011 and 2014. The proposed regulations would also revise or eliminate other provisions that are out of date.

6. ETAAC is accepting membership applications through Jan. 31

7. IRS needs your feedback on Form 6765 draft instructions

Draft instructions for Form 6765, Credit for Increasing Research Activities, commonly referred to as the research credit, were released by the IRS today. The IRS is looking for feedback on the draft instructions, particularly on the Section G reporting for controlled groups, ASC 730 Directive, Section G business component detail and statistical sampling.

Feedback regarding the tax year 2024 draft or final instructions can be submitted to lbi.rt.team@irs.gov through June 30, 2025, using the subject line: “Instructions for Form 6765.” All responses will be considered to ensure the tax year 2025 (processing year 2026) instructions provide clear and updated guidance on completing the form. The IRS remains committed to engaging with stakeholders in preparation for tax year 2025 (processing year 2026).

For additional information, visit Form 6765, Credit for Increasing Research Activities on IRS.gov to learn more.

8. Tax pros: New continuing education seminars available on IRS Nationwide Tax Forum Online

9. News from the Justice Department’s Tax Division

Monica McGinley was charged with tax fraud and theft of government funds in an indictment delivered by a federal grand jury in Greenbelt, Md. According to the indictment, McGinley assisted with the preparation and filing false tax returns, so that she may receive large refunds from the IRS to which she was not entitled from 2014 to 2024. McGinley allegedly claimed nonexistent payments or withholdings and requested nearly $12 million in refunds. The IRS issued refunds to McGinley totaling over $1.5 million. In one example, she allegedly received a U.S. Treasury check for over $1 million. McGinley faces a maximum penalty of 10 years in prison for the theft of government funds charge and a maximum penalty of three years in prison for each of the six counts of aiding and assisting in the preparation and presentation of false tax returns. IRS Criminal Investigation is investigating the case.

10. Technical Guidance

Announcement 2025-02 provides that the Treasury Department and the IRS anticipate that certain portions of future regulations finalizing the proposed regulations will apply beginning in the 2026 distribution calendar year.

Notice 2025-01 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for November 2024 used under section 417(e)(3)(D), the 24-month average segment rates applicable for December 2024, and the 30-year Treasury rates, as reflected by the application of section 430(h)(2)(C)(iv).

Notice 2025-04 announces that the Department of the Treasury and the Internal Revenue Service intend to issue proposed regulations that, for purposes of applying section 482, provide a new simplified and streamlined approach ("SSA") for pricing certain controlled transactions involving baseline marketing and distribution activities.

Revenue Procedure 2025-08 modifies section 7 of Revenue Procedure 2024-23, 2024-23 I.R.B. 1334, to modify the procedures under section 446 of the Internal Revenue Code and section1.446-1(e) of the Income Tax Regulations for obtaining automatic consent of the Commissioner of Internal Revenue to change methods of accounting for research or experimental expenditures paid or incurred in taxable years beginning after Dec. 31, 2021.

Revenue Ruling 2025-01 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 section 1274.

IRS announces special payments going this month to 1 million taxpayers who did not claim 2021 Recovery Rebate Credit; encourages non-filers about approaching deadline to claim credits

Tue, 07 Jan 2025 15:57:38 GMT

WASHINGTON - As part of continuing efforts to help taxpayers, the Internal Revenue Service today announced plans to issue automatic payments later this month to eligible people who did not claim the Recovery Rebate Credit on their 2021 tax returns.

The IRS announced the special step after reviewing internal data showing many eligible taxpayers who filed a return but did not claim the credit. The Recovery Rebate Credit is a refundable credit for individuals who did not receive one or more Economic Impact Payments (EIP), also known as stimulus payments.

“The IRS continues to work hard to make improvements and help taxpayers,” said IRS Commissioner Danny Werfel. “These payments are an example of our commitment to go the extra mile for taxpayers. Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible. To minimize headaches and get this money to eligible taxpayers, we’re making these payments automatic, meaning these people will not be required to go through the extensive process of filing an amended return to receive it.”

The payments vary depending on several factors, but the maximum payment is $1,400 per individual. The estimated amount of payments going out will be about $2.4 billion.

The IRS also reminded taxpayers who haven’t filed 2021 tax returns they might be eligible as well, but they face an April 15, 2025, deadline to file their returns to claim the credit and any other refund they might be owed.

Most eligible taxpayers already claimed the credit

Most taxpayers eligible for EIPs have already received their EIP or Recovery Rebate Credit.

These December payments for the 2021 Recovery Rebate Credit are only going to taxpayers where IRS data demonstrates a taxpayer qualifies for the credit. Qualified taxpayers are those who filed a 2021 tax return, but where the data field for the Recovery Rebate Credit was left blank or was filled out as $0 when the taxpayer was actually eligible for the credit.

How automatic payments work

Taxpayers who qualify but did not claim any portion of the credit on their 2021 tax return should receive these payments by late January 2025. The payment will be sent to the bank account listed on the taxpayer’s 2023 tax return or to the address of record.

An IRS letter will be sent to the taxpayer receiving these 2021 Recovery Rebate Credit payments. If the taxpayer closed their bank account since filing their 2023 tax return, taxpayers do not need to take any action. The bank will return the payment to the IRS and the refund will be reissued to the address of record.

For questions regarding eligibility and how the payment was calculated, see 2021 Recovery Rebate Credit Questions and Answers.

Taxpayers who didn’t file a 2021 tax return may be eligible to claim the credit if they file a return

The IRS reminds taxpayers who have not yet filed their 2021 tax returns that they may be eligible for a refund if they file and claim the Recovery Rebate Credit by the April 15, 2025, deadline.

Eligible taxpayers who did not file must file a tax return to claim a Recovery Rebate Credit, even if their income from a job, business or other source was minimal or non-existent.

Additional information about automatic payments; filing 2021 tax returns

To calculate the amount of Recovery Rebate Credit, taxpayers may access their IRS Online Account to determine the amount they received in Economic Impact Payment(s). See FAQ G2 2021 Recovery Rebate Credit — Topic G: Finding the Third Economic Impact Payment Amount to Calculate the 2021 Recovery Rebate Credit and 2021 Recovery Rebate Credit — Topic A: General Information.

Any Recovery Rebate Credit received does not count as income when determining eligibility for federal benefits such as Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).

As the 2025 tax filing season approaches, the IRS is committed to helping taxpayers understand and claim the credits and deductions for which they are eligible including Coronavirus tax relief. Many taxpayers are unaware of tax credits and deductions for which they are eligible or face other barriers keeping them from claiming them. The IRS will be reminding taxpayers about these credits, including the Earned Income Tax Credit, during the 2025 filing season.

Treasury and IRS propose regulations to update rules for tax professionals who can practice before the IRS

Tue, 07 Jan 2025 15:56:44 GMT

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued proposed regulations to update the rules for certain tax professionals who can practice before the IRS; these rules are contained in Treasury Department Circular 230.

Among other changes, the proposed regulations would remove or update the parts of Circular 230 related to registered tax return preparers and tax return preparation, as well as contingent fees to reflect changes in the law since the prior amendments to Circular 230 in 2011 and 2014. The proposed regulations would also revise or eliminate other provisions that are out of date.

Additionally, the proposed regulations would incorporate new provisions that better align Circular 230 with the current practice environment, such as requiring that practitioners maintain technological competency as part of their practice before the IRS. The proposed regulations would also clarify some provisions, such as confirming that OPR retains jurisdiction over practitioners who have been suspended or disbarred from practice.

Finally, the proposed regulations would provide rules related to appraisers, including the standards for disqualification.

e-News for Tax Professionals 2024-51

Sat, 21 Dec 2024 00:19:52 GMT

Issue Number: 2024-51

Inside This Issue

1. IRS announces special payments going this month to 1 million taxpayers who did not claim 2021 Recovery Rebate Credit

2. Get ready now to file 2025 taxes

3. Taxpayers can now submit Form 8898 digitally

Paperless option to file Form 8898,
Faster and easier submission process,
Guaranteed timely receipt and
Reduced burden.

To access this form, filers can go to IRS.gov and:

Select Find Forms & Instructions.
Select Mobile–friendly forms from the list on the left sidebar.
Select F8898 from the menu.

There is no need to submit a paper copy to the IRS, and the filer can download or print a copy of what was submitted.

4. e-Filing requirement for Information Returns

5. Treasury and IRS propose regulations to update rules for tax professionals who can practice before the IRS

6. ETAAC is accepting membership applications through Jan. 31

7. IRS needs your feedback on Form 6765 draft instructions

For additional information, visit Form 6765, Credit for Increasing Research Activities on IRS.gov to learn more.

8. Tax pros: New continuing education seminars available on IRS Nationwide Tax Forum Online

9. News from the Justice Department’s Tax Division

10. Technical Guidance

IRS requests feedback on draft Instructions for Form 6765, Credit for Increasing Research Activities

Fri, 20 Dec 2024 17:10:41 GMT

WASHINGTON — The Internal Revenue Service today announced the release of draft Instructions for Form 6765, Credit for Increasing Research Activities, also known as the research credit.

The IRS is seeking feedback regarding the draft instructions but specifically about Section G reporting for controlled groups, ASC 730 Directive, Section G business component detail and statistical sampling.

Feedback regarding the tax year 2024 draft or final instructions can be submitted to lbi.rt.team@irs.gov through June 30, 2025, using the subject line: “Instructions for Form 6765.” All feedback will be considered to ensure the tax year 2025 (processing year 2026) instructions provide clear and updated guidance on completing the form. The IRS remains committed to engaging with stakeholders in preparation for tax year 2025 (processing year 2026).

These instructions will be used in conjunction with revised draft Form 6765 released on Dec. 12, 2024, which includes a new Section E seeking other business information, a new Section F summarizing the qualified research expenses and a new Section G for reporting business component details. The IRS encourages taxpayers and their representatives to review and consider using the new format when preparing their tax year 2024 return.

The IRS anticipates publishing the final tax year 2024 Form 6765 and Instructions by the end of January 2025.

Section G will be optional for all filers for tax year 2024 (processing year 2025). For tax year 2025 (processing year 2026) and beyond, Section G will be mandatory for all filers with optional reporting for:

Qualified Small Business (QSB) taxpayers, defined under section 41(h)(1) & (2) of the Internal Revenue Code who check the box to claim a reduced payroll tax credit; or

Taxpayers with total qualified research expenses (QREs) equal to or less than $1.5 million, determined at the control group level and equal to or less than $50 million of gross receipts, as determined under section 448(c)(3) (without regard to subparagraph (A) thereof), claiming a research credit on an original filed return.

The Form 6765 improvement effort was informed by stakeholder feedback. The IRS released an early preview of Form 6765 changes on Sept. 15, 2023, and invited comments from interested parties on the proposed changes. In response, the IRS received numerous helpful comments from various external stakeholders and revised the form as discussed in the prior news release on June 21, 2024.

Annually, the IRS receives thousands of returns claiming the research credit that involve hundreds of millions of dollars. There are a substantial number of cases examining research credit issues, which consume significant resources of both taxpayers and the IRS. Improvements to Form 6765 are intended to make tax reporting more consistent, improve the information received for tax administration and build an ongoing effort to manage resources in a more effective and efficient way.

For more information visit IRS.gov to learn more about Form 6765

2025 Standard Mileage Rates

Thu, 19 Dec 2024 21:41:28 GMT

Notice 2025-05 provides the optional 2025 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. This notice also provides the amount taxpayers must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate plan. Additionally, this notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2025 for which employers may use the fleet-average valuation rule in § 1.61-21(d)(5)(v) or the vehicle cents-per-mile valuation rule in § 1.61-21(e).

Notice 2025-05 will be in IRB: 2025-4, dated January 21, 2025.

IRS increases the standard mileage rate for business use in 2025; key rate increases 3 cents to 70 cents per mile

Thu, 19 Dec 2024 21:38:39 GMT

WASHINGTON — The Internal Revenue Service today announced that the optional standard mileage rate for automobiles driven for business will increase by 3 cents in 2025, while the mileage rates for vehicles used for other purposes will remain unchanged from 2024.

Optional standard milage rates are used to calculate the deductible costs of operating vehicles for business, charitable and medical purposes, as well as for active-duty members of the Armed Forces who are moving.

Beginning Jan. 1, 2025, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

70 cents per mile driven for business use, up 3 cents from 2024.
21 cents per mile driven for medical purposes, the same as in 2024.
21 cents per mile driven for moving purposes for qualified active-duty members of the Armed Forces, unchanged from last year.
14 cents per mile driven in service of charitable organizations, equal to the rate in 2024.

The rates apply to fully-electric and hybrid automobiles, as well as gasoline and diesel-powered vehicles.

While the mileage rate for charitable use is set by statute, the mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes, meanwhile, is based on only the variable costs from the annual study.

Under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. And only taxpayers who are members of the military on active duty may claim a deduction for moving expenses incurred while relocating under orders to a permanent change of station.

Use of the standard mileage rates is optional. Taxpayers may instead choose to calculate the actual costs of using their vehicle.

Taxpayers using the standard mileage rate for a vehicle they own and use for business must choose to use the rate in the first year the automobile is available for business use. Then, in later years, they can choose to use the standard mileage rate or actual expenses.

For a leased vehicle, taxpayers using the standard mileage rate must employ that method for the entire lease period, including renewals.

Notice 2025-5 contains the optional 2025 standard mileage rates, as well as the maximum automobile cost used to calculate mileage reimbursement allowances under a fixed-and variable rate (FAVR) plan. The notice also provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in 2025 for which employers may calculate mileage allowances using a cents-per-mile valuation rule or the fleet-average-valuation rule

Prepare to file in 2025: Get Ready for tax season with key updates, essential tips

Thu, 19 Dec 2024 17:42:29 GMT

WASHINGTON — With the 2025 filing season quickly approaching, the Internal Revenue Service encouraged taxpayers to take key steps now to prepare for filing their 2024 federal income tax returns next year.

The IRS continues to improve taxpayer services to help people prepare for tax season with more digital tools and options available. The IRS encourages taxpayers to sign up now for an IRS Online Account to make tax season easier and help safeguard their tax information.

There are a number of things taxpayers can do to get ready as the end of 2024 nears and the start of the 2025 tax season approaches.

The IRS’s Get Readypage on IRS.gov offers practical tips and resources to help taxpayers prepare. It highlights key updates and important steps for taxpayers to consider to make tax filing easier in 2025.

This reminder is part of a series designed to help taxpayers “Get Ready” for the upcoming filing season. Taking action now can reduce stress and ensure a smoother filing process next year.

Do more with an IRS Online Account

Individuals can create or access their IRS Online Account at Online account for individuals. With an IRS Online Account, they can:

View key details from their most recent tax return, such as adjusted gross income.
Request an Identity Protection PIN.
Get account transcripts to include wage and income records.
Sign tax forms like powers of attorney or tax information authorizations.
View and edit language preferences and alternative media.
Receive and view over 200 IRS electronic notices.
View, make and cancel payments.
Set up or change payment plans and check their balance.

Get an Identity Protection Personal Identification Number (IP PIN)

An IP PIN is a six-digit number that prevents someone else from filing a federal tax return using an individual’s Social Security number or Individual Taxpayer Identification Number. It’s a vital tool for ensuring the safety of taxpayers’ personal and financial information.

New for the 2025 filing season, the IRS will accept Forms 1040, 1040-NR and 1040-SS even if a dependent has already been claimed on a previously filed return, as long as the primary taxpayer on the second return includes a valid IP PIN. This change will reduce the time for the agency to receive the tax return and accelerate the issuance of tax refunds for those with duplicate dependent returns.

The best way to sign up for an IP PIN is through the IRS Online Account. If an individual is unable to create an Online Account, alternative methods are available, such as in-person authentication at a Taxpayer Assistance Center. More information is available on how to sign up at Get an identity protection PIN (IP PIN).

Deadline for 2024 last quarterly estimated payment is Jan. 15, 2025

Taxpayers with non-wage income—such as unemployment benefits, self-employment income, annuity payments or earnings from digital assets—may need to make estimated or additional tax payments. The Tax Withholding Estimator on IRS.gov can help wage earners determine if they need to make an additional payment to avoid an unexpected tax bill when filing their return.

1099-K reporting changes

Taxpayers who received more than $5,000 in payments for goods and services through an online marketplace or payment app in 2024 should expect to receive a Form 1099-K in January 2025. A copy of this form will be sent to the IRS as well.

Although the IRS is taking a phased in approach to implementation of the Form 1099-K reporting threshold, there have been no changes to the taxability of income. All income, including proceeds from part-time work, side jobs or the sale of goods and services is taxable. Taxpayers must report all income on their tax return unless it's excluded by law, whether they receive a Form 1099-K or not. The law doesn’t allow taxpayers to avoid taxes on income earned just because they didn’t get a form reporting the payments received.

It is important for taxpayers to understand why they received a Form 1099-K and how to use it along with their other records to figure and report the correct amount of income on their tax return. It is also important for taxpayers to know what to do if they received a Form 1099-K but shouldn't have. In either situation, good recordkeeping is key. Having good records will help make tax filing easier.

Prepare to include digital assets on taxes in 2025

Just like previous filing years, taxpayers must report all digital asset-related income when they file their 2024 federal income tax return. A digital asset is property that is stored electronically and can be bought, sold, owned, transferred or traded. Examples include convertible virtual currencies and cryptocurrencies, stablecoins and non-fungible tokens (NFTs).

If a taxpayer had digital asset transactions last year, they should be sure to keep records that prove their purchase, receipt, sale, exchange or any other disposition of the digital assets and that includes the fair market value, as measured in U.S. dollars of all digital assets received as income or as a payment in the ordinary course of a trade or business.

When filing 2024 federal income tax returns, taxpayers will be asked to answer “Yes” or “No” to the following question:

“At any time during the tax year, did you:

(a) receive (as a reward, award or payment for property or services); or (b) sell, exchange or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”

Taxpayers should be prepared to answer the question by reviewing the digital assets landing page and FAQ available on IRS.gov. In addition to checking the "Yes" box, taxpayers must report all income related to their digital asset transactions. Information on how to report digital asset transactions, including calculating capital gain or loss, determining basis and reporting the income on the correct form can also be found on the digital assets landing page.

Understand refund timing and how to avoid delays

Several factors can influence the timing of a refund after the IRS receives a tax return. While the IRS issues most refunds in less than 21 days, taxpayers are advised not to depend on receiving a 2024 federal tax refund by a specific date for major purchases or bill payments. Some returns may require additional review and take longer to process if there are possible errors, missing information, or indications of identity theft or fraud.

Additionally, under the PATH Act, the IRS cannot issue refunds for tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) before mid-February. The IRS must hold the entire refund—not just the portion associated with these credits—until the review is complete.

Gather and organize 2024 tax documents

To make tax time easier, taxpayers should establish an effective record-keeping system, either electronic or paper, to organize all important documents in one place. This includes year-end income forms such as Forms W-2 from employers, Forms 1099 from banks or other payers, Forms 1099-K from third-party payment networks, Forms 1099-NEC for nonemployee compensation, Forms 1099-MISC for miscellaneous income, Forms 1099-INT for interest income and records of all digital asset transactions.

Having all necessary documentation ensures taxpayers can file an accurate return and reduces the likelihood of processing delays or refund issues.

Use direct deposit for a faster refund

Filing electronically and selecting direct deposit remains the fastest and safest way for taxpayers to receive their 2024 tax refunds. Direct deposit ensures quicker access to refunds compared to receiving a paper check.

For those without a bank account, resources are available to help. Individuals can learn how to open an account at an FDIC-insured bank or use the national Credit Union Locator tool. Veterans can explore the Veterans Benefits Banking Program for financial services at participating banks.

Tax refunds can also be deposited onto prepaid debit cards or through mobile payment apps, provided they have routing and account numbers. Taxpayers should confirm with the mobile app provider or financial institution which numbers to use when completing their tax return.

Free filing options

Seventy percent of all taxpayers can use free brand name tax software to prepare and file their federal income tax return electronically using IRS Free File. All taxpayers, regardless of income level, can also use IRS Free File Fillable Forms.

Taxpayers living in participating states with relatively simple tax returns can use Direct File and file their tax return online directly with the IRS. The Direct File program is another option for taxpayers to file their taxes. Taxpayers can see if they are eligible for Direct File.

Older adults, members of the military and many other taxpayers—depending on their income—may also qualify for free tax return preparation and electronic filing by IRS-trained volunteers through the Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs.

RP-2025-08, procedures for automatic consent to change methods of accounting for research or experimental expenditures after TY 2021

Tue, 17 Dec 2024 15:26:42 GMT

Revenue Procedure 2025-08 modifies section 7 of Rev. Proc. 2024-23, 2024-23 I.R.B. 1334, to modify the procedures under section 446 of the Internal Revenue Code and §1.446-1(e) of the Income Tax Regulations for obtaining automatic consent of the Commissioner of Internal Revenue to change methods of accounting for research or experimental expenditures paid or incurred in taxable years beginning after December 31, 2021. The attached revenue procedure expands the waiver of the eligibility rules in section 5.01(1)(d) and (f) of Rev. Proc. 2015-13 to accounting method changes described in section 7.01 of Rev. Proc. 2024-23 that are made for any taxable year beginning in 2022, 2023, or 2024. This revenue procedure also permits a taxpayer to make a change under section 7.01 of Rev. Proc. 2024-23 regardless of whether the taxpayer made a change for the same item for any other taxable year beginning in 2022, 2023, or 2024. The attached revenue procedure will be effective for Forms 3115, Application for Change in Accounting Method, filed on or after the date this revenue procedure is released to the public.

Revenue Procedure 2025-08 will be in IRB: 2025-4, dated January 21, 2025.

Setting forth certain interest rates for December 2024

Mon, 16 Dec 2024 19:24:22 GMT

Notice 2025-01 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for November 2024 used under § 417(e)(3)(D), the 24-month average segment rates applicable for December 2024, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

Notice 2025-01will be published in Internal Revenue Bulletin 2025-3, on Jan. 13, 2025.

IRS recovers billions in tax, financial criminal cases focused on drug trafficking, terrorist financing; launches new business online account features

Thu, 12 Dec 2024 17:45:12 GMT

WASHINGTON — The Internal Revenue Service today provided the regular quarterly update to the Strategic Operating Plan, outlining key milestones in criminal investigations, improvements to taxpayer services and advancements in digital modernization that have transformed agency operations while protecting billions of taxpayer dollars.

The IRS has now recovered $4.7 billion from new initiatives underway. This includes more than $1.3 billion from high-income, high-wealth individuals who have not paid overdue tax debt or filed tax returns, $2.9 billion related to IRS Criminal Investigation work into tax and financial crimes, including drug trafficking, cybercrime and terrorist financing, and $475 million in proceeds from criminal and civil cases attributable to whistleblower information.

The IRS also announced today new results from the focus on high-income non-filers who have not filed taxes since 2017. The IRS has now collected an initial $292 million from more than 28,000 non-filers, an increase of $120 million since September 2024. These are cases where IRS has received third party information—such as through Forms W-2 and 1099s—indicating these people received income between $400,000 and $1 million or more than $1 million, but failed to file a tax return. The non-filer program ran sporadically since 2016 due to severe budget and staff limitations that did not allow these cases to be pursued. With additional funding, the IRS had the capacity to resume this core tax administration work earlier this year.

“The IRS continues to show dramatic progress on a wide array of the agency’s transformation efforts, producing real-world improvements to help taxpayers and businesses while also taking important steps in the law-enforcement and compliance arena to protect billions from ongoing schemes, ensure high-income individuals file returns and pay their taxes and penalties, and battle everything from terrorist financing to drug traffickers,” said IRS Commissioner Danny Werfel.

Pursuing drug traffickers, cybercrime, terrorist financing

IRS Criminal Investigation (IRS-CI) is charged with investigating tax and financial crimes, including drug trafficking, cybercrime and terrorist financing. In Fiscal Year 2024 (FY24), IRS-CI identified more than $9.1 billion in fraud, obtained court orders totaling $1.7 billion in restitution to U.S. taxpayers and seized criminal assets totaling approximately $1.2 billion.

Examples of IRS-CI Cases

As part of the Organized Crime Drug Enforcement Task Force (OCDETF), CI has helped investigate numerous cases in partnership with other law enforcement agencies. CI’s financial expertise in following the money not only helped unravel financial and tax crimes, but other crimes including organized drug trafficking. According to public court records, these include:

In October, Jason Brown was sentenced to 18 years in federal prison for trafficking fentanyl and attempting to provide material support to the Islamic State of Iraq and al-Sham, also known as ISIS. On three occasions in 2019, Brown provided $500 in cash to an individual with the understanding that the money would be wired to an ISIS soldier engaged in terrorist activity in Syria. Unbeknownst to Brown, the individual to whom he provided the money was confidentially working with law enforcement, and the purported ISIS fighter was actually an undercover law enforcement officer. Also in 2019, Brown trafficked fentanyl and other drugs from California to the Chicago suburbs and illegally possessed several loaded handguns in furtherance of his drug trafficking activities.

IRS-CI provided significant assistance in an investigation that led to drug dealer George Pherai-Bogeajis being sentenced in November to 19 years and 7 months in federal prison for conspiring to distribute methamphetamine and fentanyl and possessing firearms in furtherance of drug trafficking. Pherai-Bogeajis also forfeited four vehicles and four firearms used in the offense, along with $867,265 of drug proceeds. In April, law enforcement executed a search warrant at his Florida home, seizing nearly 50 kilograms of methamphetamine, thousands of grams of MDMA, more than two kilograms of cocaine and nearly a kilogram of other narcotics, including fentanyl.

Christian Grajeda-Varela was sentenced in October to nearly four years in prison for fentanyl trafficking and money laundering. He admitted to selling roughly 1.5 pounds of fentanyl in July 2023 to a drug dealer in San Francisco. Upon a search of Grajeda-Varela’s Oakland residence, federal agents found 109 grams of fentanyl, more than six pounds of mannitol (a common mixing agent used to cut or dilute fentanyl), cocaine base, cocaine and heroin as well as drug distribution tools. Grajeda-Varela also admitted that, between March and August 2022, he laundered more than $200,000 in cash tied to the drug trade at America Latina, a money service business in Oakland; the funds were wired to recipients in Mexico and Honduras in the form of roughly 125 international wires.

Assistance from Whistleblowers

Whistleblowers continue to provide valuable contributions in both criminal and civil cases. Whistleblower information has led to successful criminal investigations, prosecutions and the collection of tax, fines, penalties, interest and other amounts. In FY24, the IRS paid awards totaling $123.5 million to whistleblowers for aiding in the collection of $474.7 million in proceeds on cases that included unreported/underreported income, hidden offshore assets, overstated deductions, general allegations of tax fraud and abusive international transactions.

Improving Taxpayer Service

As part of the Digital First Initiative, the IRS is continuing to expand features in Business Tax Account, an online self-service tool for business taxpayers. C corporations can now activate a Business Tax Account, bringing the total number of business entities eligible for this online self-service tool into the millions. Highlights include:

Authorized individuals of C corporations and S corporations who can legally act on behalf of their corporation are now able to view and pay tax balances and Federal Tax Deposits. 
The IRS also introduced a new feature that helps to speed up the lending process by providing sole proprietors and authorized individuals with access to the long-standing IRS Income Verification Express Service (IVES) to approve or reject a tax transcript authorization request from a lending company. 
Business taxpayers can now access available tax returns, account and most entity transcripts in Spanish.

These changes follow upgrades announced in September that allow business taxpayers to view and submit balance-due payments.

In addition, the IRS has expanded the types of Transcript Delivery System (TDS) transcripts available to business taxpayers, historically an underserved population. Previously, taxpayers and their representatives had to call to request information not available through a TDS transcript. Customer service representatives would provide an internal print with the requested information, manually masking the personally identifiable information before providing the prints to the caller. Masking the transcripts was time consuming. Now taxpayers and their representatives can access these new transcripts through online self-help tools that include Business Tax Account and e-Services TDS.

Business Entity and Form 94X Series Tax Return transcripts are now available through TDS for tax professionals and reporting agents with access to TDS through e-Services. IRS employees can access these transcripts through the Employee User Portal, and authorized users of Business Tax Account can download these transcripts. Transcript expansion will continue in a phased approach through December 2026. Future releases will include the Form 990 series, Form 1041, Form 2290, Form 1042, Form 706, and transcripts in Spanish.

More details on the Digital First Initiative; more digital tools launched in the last 2 years than the previous 20 years

The IRS is significantly improving taxpayer service in person, over the phone and online. The IRS is working to deliver the same modern online experience that taxpayers experience with their bank or financial institutions. The IRS has created and enhanced popular and convenient online tools that save taxpayers time and money by providing easy, secure self-service options to get information and resolve issues. For example, in Filing Season 2024, the IRS updated the “Where’s My Refund?” tool to provide more detailed refund status information in plain language, increasing use by nearly 30%.

The IRS has launched more digital tools in the last two years than the previous 20 years, including:

More than two dozen new features and enhancements to Individual Online Account and Tax Pro Account.
The launch of Business Tax Account.
The release of more than 60 digital mobile-adaptive forms.
The ability for taxpayers to receive their refund status via a conversational hotline.
A mobile-friendly web tool for “Where’s My Refund?”.

Through the Digital First Initiative, the IRS is pursuing a vision where taxpayers can complete all their transactions with the IRS digitally if they prefer. At the core of that improved digital experience for taxpayers are enhancements to Individual Online Account, including the ability to self-correct withholding amounts, redesigned notices for better user experience, provided digital mobile-adaptive tax forms, transcript requests in Spanish and sign-up for paperless and email preferences. Expanded payment options including Offer-in-Compromise and multiple payments in one session. Other expanded services include:

A lien payoff calculator that can generate an IRS letter that they can share with authorized third parties to confirm the payoff balance.
The ability to see their correspondence audit status.
For taxpayers whose employer has received a “lock in” letter requiring a minimum amount of federal tax to be withheld from each paycheck, they can now find information about actions needed to release or modify the lock in amount.
The ability to use a self-service Offer-in-Compromise (OIC) eligibility check to determine if they meet the major eligibility requirements for submitting an OIC.
Single Transaction for Multiple Payments, allowing taxpayers to add and delete multiple payments to a shopping cart for a single transaction within their online account.
Transcripts available in English and Spanish.
Selection for paperless contact and email preferences.
Request an Identity Protection PIN.

The IRS has also expanded Tax Pro Account, helping tax professionals manage their authorization relationship with taxpayers, view the taxpayers’ information and act on the taxpayers’ behalf. New capabilities include:

The ability to view individual and business taxpayer payment activity.
A new virtual assistant that allows tax professionals access to an automated chatbot to resolve tax issues, with the ability to escalate to live chat for help with collection related issues.
The ability to view and act on behalf of individual taxpayers to set up and revise payment plans.
The option to make up to five same day payments on behalf of authorized clients using a checking or savings account.

When fully developed, Tax Pro Account will become a robust online tool, including the ability to initiate POA/TIA for business taxpayers that they can review and approve in their Business Tax Account, link and manage business CAF access, view refund and audit status for individual and business taxpayers and much more.

Additional progress in developing digital tools for taxpayers includes:

Redesigning notices to be more clear as part of the Simple Notice Initiative: The IRS has redesigned 247 of the most common notices, with additional notices scheduled to deploy in the coming months. All notices have recently been added to Individual Online Account for taxpayers to view.

Mobile-adaptive forms through the Paperless Processing Initiative: The IRS now has more than 60 forms available for mobile use, allowing taxpayers to fill out common non-tax forms on cell phones and tablet devices. Taxpayers have submitted more than 100k forms since the September 2023 launch. The most recent forms feature “save and draft” capabilities, which allow the taxpayer to start a form, save it and return to it later. The addition of save and draft allows for future capabilities including the ability for multiple spouses to sign a form. It will also allow a taxpayer to sign a form, save the form and send to a second taxpayer to sign using their Individual Online Account. Seventeen additional forms went live on Dec. 8, 2024, bringing the total to 67 mobile-adaptive forms currently available.

Through the Paperless Processing Initiative, Document Upload Tool use continues to increase: The Document Upload Tool makes it easier for taxpayers and tax professionals to correspond digitally with the IRS. Thanks to the tool, taxpayers can digitally submit correspondence and responses to notices and letters to the IRS. The tool launched in March 2021 and expanded in 2023. The Document Upload Tool has surpassed over 1.5 million submissions with 1,669,625 submissions to date. It is estimated that 94% of taxpayers no longer need to send mail to the IRS, decreasing a substantial amount of paper correspondence entering the IRS.

Business Tax Account now available for Corporate Designated Officials; Income Verification Express Service open to designated officials and sole proprietors

Thu, 12 Dec 2024 17:44:07 GMT

The Internal Revenue Service continues to open its Business Tax Account (BTA) to a growing number of business taxpayers, expanding the useful features available.

The latest expansion makes this online self-service tool for business taxpayers available to C corporations. In addition, a person who can legally bind the corporation, known as a Designated Official (DO), can now access BTA on behalf of their S corporation or C corporation.

New features also include tax return, tax account and entity transcripts for the current tax year and some previous tax years, with some transcripts now available in Spanish.

Available in both English and Spanish, BTA is a key part of the agency’s wide-ranging transformation initiative, transforming service at the IRS by offering taxpayers a seamless and convenient digital experience and helping them easily meet their tax obligations.

With the latest expansion, Designated Officials can view and pay their corporation’s tax balances and make Federal Tax Deposits (FTDs). In addition, DOs and sole proprietors can now use BTA to approve or reject a tax transcript authorization request from a lender through the IRS Income Verification Express Service (IVES).

What is a Designated Official?

A person who is legally authorized to bind the corporation and a current employee who received a W-2 form from the corporation for the most recent tax-filing year. By registering as a DO, this person will have full access to the corporation’s tax information and can act on behalf of the corporation within BTA. Although a corporation can have more than one DO, every DO must be one of these officials.

Designated Official titles:

President
Vice President
Chief Executive Officer (CEO)
Chief Financial Officer (CFO)
Chief Operating Officer (COO)
Secretary
Treasurer
Limited liability company (LLC) Managing Member

What is Income Verification Express Service?

IVES helps both borrowers and lenders speed up the lending process. Through IVES, mortgage companies, banks, credit unions and other lenders can easily access a taxpayer’s tax records to verify the income of those applying for mortgages and other loans. The IRS can only provide a lender access to this information if a taxpayer authorizes it. Tax records include transcripts of a taxpayer’s tax returns, as well as 1099s and other forms filed by banks and other payors reporting business income to the IRS. Through BTA and IVES, business taxpayers can now quickly and easily approve or reject these authorization requests from lenders.

What’s available through Business Tax Account?

Business taxpayers can view:

Their balance due.
Their payment history, including payments made through BTA, the Electronic Federal Tax Payment System (EFTPS) online, payroll processor payments, wire transfers, checks or money orders, and if any payments were returned or refused.
Authorization requests from a lender submitted through IVES.
Transcripts for various income, payroll and excise tax returns.
Digital copies of select IRS notices.
Their business name and address on file.
A tax compliance report or a tax certificate for award use.
Business entity transcripts with their business name, mailing address and location address (limited to sole proprietors).

Business taxpayers can also:

Make an electronic payment on a tax balance or Federal Tax Deposit.

Set up a future payment or cancel a scheduled payment.

Approve or reject a tax transcript authorization request from a lender.

Download transcripts and select IRS notices.

Give account access to employees of the business (limited to sole proprietors).

Who qualifies to use BTA?

Most business taxpayers can now activate and use their Business Tax Account. This includes:

A sole proprietor who has an Employer Identification Number (EIN) issued by the IRS.

An individual partner or individual shareholder with both:

A Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN) and
A Schedule K-1 on file (for partners, from 2012-2023; for shareholders, from 2006-2023).

Individual partners and individual shareholders of limited liability companies (LLC) reporting income on Form 1065, U.S. Return of Partnership Income or Form 1120-S, U.S. Income Tax Return for an S Corporation, can access BTA. They must also have both the SSN/ITIN and K-1.

The President, Vice President, CEO, CFO, COO, Secretary, Treasurer or LLC Managing Member of a corporation.

Single-member LLCs (SMLLCs) with an EIN that are reporting business income on Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship), can’t currently access BTA. A tax preparer or representative of a company will not have access to BTA and in the future will use Tax Pro to support their business taxpayers. Under the agency’s Digital First Initiative, these businesses, as well as other entities including tax-exempt organizations, government agencies and partnerships, will be able to access BTA in the future.

How to get ready for BTA

The IRS urges every eligible business to activate and use their BTA. The first step is to gather all required tax records. This can include:

Their Social Security number or Individual Taxpayer Identification Number.
Their Employer Identification Number found on an EIN confirmation or verification letter or on a federal tax return.
Federal tax documents:

- Schedule C, (Form 1040), Profit or Loss from Business Sole Proprietorship,
- Form 1065, U.S. Return of Partnership Income,
- Form 1120, U.S. Corporation Income Tax Return or
- Form 1120-S, U.S. Income Tax Return for an S Corporation,
- Schedule K-1 of a partnership or of an S corporation.
Their business or mailing address from the most recent IRS records.

Then, using their existing or newly established ID.me profile, complete the activation process at Business Tax Account.

How to register as a DO

First, gather all required tax records. Some of the same records needed to activate the BTA are also needed for DO registration. This includes the corporation’s EIN, federal tax return--either Form 1120 or Form 1120-S—and mailing address from the most recent IRS records.

Next, sign into the corporation’s existing Business Tax Account.

Finally, register as a DO by requesting a PIN. The PIN is unique to the requesting user and cannot be transferred to another user and is sent to the most recent business mailing address. The DO will receive the PIN within five to ten business days.

All DOs must re-validate annually using BTA. Though not required, a corporation can help ensure continued business access to BTA by having multiple DOs.

What new features will be added to BTA in the future?

For more information visit Business Tax Account, view the Business Tax Account Overview video or review Publication 5904, Access Your Business Tax Account.

IRS urges many retirees to make required withdrawals from retirement plans by year-end deadline

Wed, 11 Dec 2024 20:42:51 GMT

WASHINGTON — The Internal Revenue Service today reminded those aged 73 and older of the deadline to take Required Minimum Distributions from Individual Retirement Arrangements (IRAs) and other retirement plans, and highlighted updates introduced by the SECURE 2.0 Act.

Required Minimum Distributions (RMDs) are amounts that many retirement plan and IRA account owners must withdraw annually. These withdrawals are considered taxable income and may incur penalties if not taken on time. The IRS.gov Retirement Plan and IRA Required Minimum Distributions FAQs webpage provides detailed information regarding the new provisions in the law.

SECURE 2.0 Act: The new law raised the age that account owners must begin taking RMDs, while eliminating RMDs for Designated Roth accounts in 401(k) and 403(b) retirement plans.

The minimum distribution rules generally apply to original account holders and their beneficiaries in these types of plans:

IRAs: IRA withdrawals from traditional IRAs and IRA-based plans occur every year once people reach age 73, even if they’re still employed.
Retirement plans: The RMD rules apply to employer-sponsored plans, with delays allowed until retirement unless the participants own more than 5% of the sponsoring business.
Roth IRAs: Roth IRA owners are not required to take withdrawals during their lifetime, however beneficiaries are subject to the RMD rules after the account owner’s death.

Designated Roth accounts in a 401(k) or 403(b) plan will not be subject to the RMD rules while the account owner is still alive for 2024. The RMD Comparison Chart outlines key RMD rules for IRAs and defined contribution plans.

Penalties for missed distributions

If an account owner fails to withdraw the full amount of the RMD by the due date, the owner is subject to a 25% excise tax on the amount not withdrawn. The 25% excise tax rate is reduced to 10% if the error is corrected within two years.

RMD calculations

IRA trustees or plan administrators must either report the RMD amount to the account owner or offer to calculate it. Each IRA plan’s RMD must be calculated separately, however owners can withdraw the total required amount from one or more accounts of their choice as long as the annual requirement is met. An IRA trustee or plan administrator may calculate the RMD, but the account owner is ultimately responsible for ensuring the correct RMD is taken. The IRS provides required minimum distribution worksheets to help calculate the RMD amounts and payout periods.

Account owners should file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, with their federal tax return for the year the full amount of the RMD was required but not taken.

Inherited IRAs

Beneficiaries of inherited IRAs, retirement plan accounts, or Roth IRAs may be required to take RMDs. For guidance on taking RMDs from an inherited account and reporting taxable distributions as part of gross income, refer to Retirement Topics - Beneficiary and Required Minimum Distributions for IRA Beneficiaries. Help for those in charge of the estate to complete and file federal income tax returns can be found in Publication 559, Survivors, Executors and Administrators. The factors that affect the distribution requirements for inherited retirement plan accounts and IRAs include:

Whether the account owner died after 2019, as the SECURE Act introduced new RMD rules for beneficiaries in these cases.
The beneficiary’s relationship to the account owner and their specific characteristics, such as being a spouse, minor child, disabled or chronically ill individual, entity other than an individual.
Whether the original account owner passed away before or after the date required to begin taking RMDs.

Taxpayers can find easy-to-use tools such as forms, instructions and publications at IRS.gov.

Outreach Connection FY25-03

Mon, 09 Dec 2024 17:27:52 GMT

Helping taxpayers prepare for 2025 filing season

In this edition

Steps to prepare for filing
Sign up for an IRS Online Account
Protect yourself from tax fraudsters
New guidance on reporting income on Form 1099-K
Volunteers needed for tax help programs
More resources

Steps to prepare for filing

The IRS reminds people of simple steps they can take now to prepare to file their 2024 federal tax returns.

Prepare for 2025 filing season with online tools and key reminders

Sign up for an IRS Online Account

Taxpayers can securely access and view their IRS tax information anytime through their individual Online Account. They can see important information when preparing to file their tax return or following up on balances, notices, payments, tax records and more.

Information about Online Account

Protect yourself from tax fraudsters

Get an identity protection PIN

Taxpayers can add an extra layer of protection between their tax returns and identity thieves using the identity protection personal identification number (IP PIN) program at the start of the 2025 tax season.

Guard against fraudsters with an IRS identity protection PIN

Beware of bad tax advice on social media

Wildly inaccurate tax claims continue building across social media. These scams take many different forms and make outlandish promises to inflate refunds.

Watch out for bad tax advice on social media

New guidance on reporting income on Form 1099-K

Payment apps and online marketplaces will be required to report transactions when the amount of total payments for those transactions is more than $5,000 in 2024.

Form 1099-K threshold is $5,000 for calendar year 2024

Volunteers needed for tax help programs

The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs are seeking volunteers for filing season 2025.

Help your community by becoming a VITA/TCE volunteer.

More resources

IRS Online Account
Get an identity protection PIN (IP PIN)
National Tax Security Awareness Week 2024
IRS tax volunteers
IRS webinar on Dec 19: Digital Assets Existing and New Reporting Requirements
IRS launches 2024 Nationwide Tax Forum Online: Tax professionals can now access new online seminars
For the latest information, follow IRS on irs.gov/socialmedia

e-News for Tax Professionals 2024-49

Fri, 06 Dec 2024 23:07:03 GMT

ue Number: 2024-49

Inside This Issue

1. National Tax Security Awareness Week: IRS, Security Summit partners warn of potential scams and more

The IRS and the Security Summit partners recently kicked off the 9th annual National Tax Security Awareness Week with information for tax professionals and taxpayers on how to avoid scams and protect sensitive personal information:

Monday: IRS and Security Summit partners warn individuals to exercise extra caution while shopping during this holiday season. The pair shared the warning to alert consumers of scammers who are also shopping for the personal information of their next victim.
Tuesday: Taxpayers should be wary of the growing number of inaccurate tax claims that are presented on social media. These scams use a variety of tactics to inflate refunds and make ludicrous claims.
Wednesday: Consider additional protection between their tax returns and identity thieves by joining the Identity protection personal identification number (IP PIN) program at the start of the 2025 tax season.
Thursday: Review and update security measures and practices to guard against the latest scams and to exercise extreme caution when responding to shared solicitations and the links, attachments and contact details that go with them. Never call, click or respond without first confirming the source.
Friday: Tax professionals are encouraged to review their Written Information Security Plans and reevaluate their strategies for safeguarding sensitive client and personal data.

For additional information, visit National Tax Security Awareness Week 2024.

2. IRS warns: Beware of charitable contribution scams and other fraudulent schemes

The IRS cautioned taxpayers against falling victim to scammers of fraudulent tax schemes involving donations of ownership interests in closely held businesses, which are sometimes sold as “Charitable LLCs.” The IRS views these promotions, which frequently target high-income individuals, as abusive transactions.

Taxpayers can report abusive tax schemes using:

The complaint form located at Treasury Inspector General for Tax Administration or by calling 800-366-4484.
Form 14242, Report Suspected Abusive Tax Promotions or Preparers, to report a suspected abusive tax avoidance scheme and tax return preparers who promote such schemes.

3. ETAAC is accepting membership applications through Jan. 31

The IRS is seeking qualified applicants for nomination to the Electronic Tax Administration Advisory Committee (ETAAC), an organized public forum for discussion of issues in electronic tax administration, such as prevention of identity theft and refund fraud. The IRS is looking for qualified individuals who will serve three-year terms beginning in September 2025. Applications will be accepted through Jan. 31. For more information about ETAAC, the application process and qualification criteria, email publicliaison@irs.gov.

4. IRS-CI releases 2024 annual report; notes agency’s billion-dollar impact, global reach

The IRS Criminal Investigation (IRS-CI) published its Fiscal Year 2024 (FY24) Annual Report, which includes investigative statistics, improved domestic and international partnerships and noteworthy cases involving crimes ranging from tax fraud to cybercrime.

“FY24 was one for the history books. For years, IRS-CI has been known as the agency that took down Al Capone, but this year, our cases hold their own place in U.S. history,” said IRS-CI Chief Guy Ficco. “As with Al Capone, financial trails eventually lead to criminals’ downfall. Our agents are the best at following the money trail, and that’s why they have an integral role in bringing down criminals ranging from national security threats to drug traffickers.”

5. Grants announced for the Tax Counseling for the Elderly and Volunteer Income Tax Assistance Program

The IRS announced the award of $53 million in Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) grants to organizations that provide free federal tax return preparation.

6. Tax pros: New continuing education seminars available on IRS Nationwide Tax Forum Online

7. Upcoming webinars for tax professionals

The IRS offers the upcoming live webinar to the tax professional community:

Digital Assets Existing and New Reporting Requirements on Dec. 19, at 2 p.m. ET. Earn up to one continuing education credit (Federal Tax). Certificates of Completion are being offered. Click here to register.

8. News from the Justice Department’s Tax Division

Anthony Judd, of White Plains, Maryland, pleaded guilty to preparing and filing a false tax return for a client. According to court documents and statements made in court, Judd was a full-time special police officer staffed at the National Archives and Records Administration and a part-time return preparer. Judd prepared and filed each client’s tax return as a “ghost preparer” and did not identify himself as the preparer on the returns. Judd caused a tax loss to the IRS of approximately $484,525. Sentencing is scheduled on April 16, 2025. He faces a maximum penalty of three years in prison. He also faces a period of supervised release, restitution and monetary penalties.

9. Technical Guidance

Notice 2024-82 sets forth the 2024 Required Amendments List (2024 RA List). The 2024 RA List applies to individually designed plans qualified under section 401(a) of the Internal Revenue Code and individually designed plans that satisfy the requirements of section 403(b).

National Tax Security Awareness Week, Day 5: Tax pros urged to guard against identity theft with updated Written Information Security Plan

Fri, 06 Dec 2024 15:54:18 GMT

WASHINGTON – On the final day of National Tax Security Awareness Week, the Internal Revenue Service and its Security Summit partners urged tax professionals to reassess their plans for protecting themselves and their clients’ sensitive information amid increasing attempts by identity thieves to steal tax data.

Identity thieves on the hunt for taxpayer data aren’t just targeting taxpayers, they’re going after the tax professionals, who hold enormous amounts of sensitive taxpayer data, in hopes of filing fraudulent tax returns. This year, the IRS has already received more than 250 reports of data breach incidents from tax professionals affecting approximately 200,000 clients.

Amid these continuing reports of tax professionals encountering data breaches, the Security Summit partners urged practitioners to review the newly updated Written Information Security Plan (WISP).

Tax professionals are required by federal law to have written plans identifying foreseeable data security risks and safeguards, and a plan of action to take in the event of a security breach. To simplify this complex task, a special team of Security Summit members from the tax community released an updated WISP that tax professionals can use as a roadmap to apply to their own practice.

The IRS also reminds taxpayers that additional safeguards, like multi-factor authentication (MFA), are required by federal law to better protect themselves and their clients. MFA provides an extra layer of security to ensure the proper people are accessing sensitive accounts and systems.

“Countering identity theft is a collective effort, and tax pros are the first line of defense when it comes to protecting taxpayer information,” said IRS Commissioner Danny Werfel. “Millions of taxpayers entrust their personal data to tax professionals, and we want to make it as easy as possible for tax pros to know what they need to do to keep themselves and their clients’ information safe. The Written Information Security Plan forms an essential part of the tax professionals’ defense against data breaches and identity thieves, helping protect their clients and protect themselves.”

The WISP, available in IRS Publication 5708, Creating a Written Information Security Plan for your Tax & Accounting Practice, walks tax professionals through the steps of assembling a plan, including understanding security compliance requirements and professional responsibilities. It also provides a sample template that tax professionals can use as they draft a plan for their business.

The new version of the WISP, the result of a year-long collaborative effort between the IRS and its Security Summit partners, includes several updates, like highlighting best practices for implementing multi-factor authentication.

During National Tax Security Awareness Week, now in its ninth year and concluding today, the Security Summit partnership of the IRS, tax professionals, tax software and financial companies as well as state tax agencies work to raise awareness among taxpayers and tax professionals about the importance of safeguarding information to protect against identity theft. The Security Summit formed in 2015 to combat tax-related identity theft through better public-private sector coordination as well as strengthening internal protections in the tax community and raising public awareness about security threats.

Tax pros are on the front lines of defense in protecting taxpayer information. The Summit partners highlighted several key steps that tax pros – regardless of the size of their practice – should take to protect their systems and comply with federal standards.

WISPs and MFA are crucial – and necessary

Members of the Summit's tax professional team developed a helpful guide that allows practitioners to quickly develop their own WISP to provide a blueprint for information security.

“This helpful guide with sample templates provides a starting point for businesses large or small, and can be scaled for a company's size, scope of activities, complexity and customer data sensitivity,” said Kimberly Rogers, the IRS Return Preparer Office director and co-chair of the Summit’s tax pro group. “There's not a one-size-fits-all WISP. A sole practitioner can use a more abbreviated and simplified plan than a 10-partner accounting firm. This flexibility is reflected in the sample policies and pre-populated templates included in the publication.”

Addressing security issues for a tax professional can be difficult and expensive. A WISP addresses risk considerations for inclusion in an effective plan and provides a blueprint of applicable actions in the event of a security incident, data loss or theft.

Tax pros can also review IRS Publication 5709, How to Create a Written Information Security Plan for Data Safety, for more information on WISPs.

In addition to requirements to have a WISP, the IRS also reminds the tax community that the Federal Trade Commission last year updated its safeguards standards and now require tax professionals to use MFA to protect client information. MFA, which can include sending text/SMS verification codes to a user or asking additional questions to confirm the identity of a person logging into a system, provides an extra layer of security to ensure the proper people are accessing sensitive accounts and systems.

"Building and maintaining a resilient security plan is more than just a requirement — it's a safeguard for both tax professionals and their clients," said Jared Ballew, president of the National Association of Computerized Tax Processors and one of the Summit members who helped develop the WISP.

"There’s no single silver bullet for security; effective protection requires multiple layers of defense,” Ballew continued. “Our goal with these resources is to help tax pros create and reinforce those layers, with the WISP providing a solid foundation to start or enhance that process. The Security Summit partners remain committed to helping every tax professional stay proactive and protected in today’s digital landscape."

IRS Tax Pro Account: Protects pros and their clients’ data and saves time, too

The IRS and Summit partners also emphasize another way to help protect sensitive information from identity thieves is through secure online tools such as the Tax Pro Account. These tools can help manage client information to safeguard sensitive taxpayer and financial data from cyberthreats.

The Tax Pro Account is a secure, mobile-friendly, digital, self-service application that enables tax professionals to act on a taxpayers' behalf, view the taxpayers' information and manage their authorization relationships more efficiently.

As part of IRS transformation efforts, the IRS will continue adding new features to the Tax Pro Account in the future to help tax professionals securely and efficiently serve their clients.

Currently, tax professionals can use Tax Pro Account to send Power of Attorney and Tax Information Authorization requests directly to a taxpayer's individual IRS Online Account. Once the taxpayer approves the request, it's processed in real time — no faxing, mailing, uploading or long waits.

Visit the Tax Professionals page on IRS.gov to learn more about E-Services, Tax Pro Account, Employer Identification Numbers, filing, forms, third-party authorizations as well as other safe and secure online tools to serve clients.

Data breaches: What to do when the worst happens

The IRS also recommends tax professionals create an action plan to outline the steps to take in the event of a breach or data theft, in addition to the required Written Information Security Plan. Tax pros now need to report a security event affecting 500 or more people to the Federal Trade Commission as soon as possible, but no later than 30 days from the date of discovery.

A key component to an effective action plan is knowing who to contact. In addition to reporting data loss to the IRS, tax professionals should contact law enforcement, the appropriate states, clients and security professionals.

Places to get help in case of a data breach:

IRS Stakeholder Liaison – The IRS recommends reporting data theft to the local Stakeholder Liaison first. Liaisons will notify IRS Criminal Investigation and others within the agency on the tax professional's behalf. Speed is critical. If reported quickly, the IRS can take steps to block fraudulent returns in clients' names.
Federal Trade Commission – Data breaches involving 500 or more people are now required to be reported to the FTC as soon as possible, but no later than 30 days from the date of discovery.
Federal Bureau of Investigation – the local office.
Secret Service – the local office (if directed).
Local police – to file a police report on the data breach.

Contacting states in which tax pros prepare state returns:

Federation of Tax Administrators – Tax professionals can reach this special "report a data breach" web page for victim reporting guidance to the states.
State Attorneys General – most states require that the state attorney general be notified of data breaches.

Additional resources

Go to National Tax Security Awareness Week 2024 for additional information.
For more information on preventing tax information theft, visit Security Summit.
Victims of identity theft, or a client that is, can visit Identity Theft Central.
Publication 4557, Safeguarding Taxpayer Data.
Publication 5293, Data Security Resource Guide for Tax Professionals.
Publication 4524, Security Awareness for Taxpayers.
National Institute of Standards and Technology — Small Business Information Security: The Fundamentals.
Federal Trade Commission's Cybersecurity for Small Businesses.

Tax professionals should also stay connected to the IRS through subscriptions to e-News for tax professionals and its social media sites.

National Tax Security Awareness Week, Day 2: IRS, Security Summit partners urge people to watch out for bad tax advice on social media

Tue, 03 Dec 2024 15:11:08 GMT

National Tax Security Awareness Week, Day 2: IRS, Security Summit partners urge people to watch out for bad tax advice on social media

WASHINGTON – The Internal Revenue Service and the Security Summit partners issued a consumer alert today about the growing threat of bad tax advice on social media that continues to dupe people into filing inaccurate tax returns.

On day two of the ninth annual National Tax Security Awareness Week, the IRS and the Security Summit partners are spotlighting the wildly inaccurate tax claims that continuing building across social media. These scams take many different forms and make outlandish promises to inflate refunds.

“The growth of bad tax advice on social media continues to grow, luring unsuspecting taxpayers into filing bad tax returns,” said IRS Commissioner Danny Werfel. “We urge people to do some research before falling for these scams. Finding a trusted tax professional or visiting IRS.gov is a better way to research a tax issue than relying on someone talking in their car or their kitchen about a non-existent tax hack.”

For years, members of the Security Summit - representing state tax agencies, tax professionals, tax software companies and the financial industry - have worked to raise awareness about tax-related identity theft and related tax scams. To counter this growing threat of tax scams, many of the Summit members have joined together to launch a related group, the Coalition Against Scam and Scheme Threats (CASST).

Throughout the past year, the IRS and the Summit partners saw an escalation of new scams and bad advice surface on social media that promise to magically enrich taxpayers. This year, the public has seen the emergence and rapid spread of financial scams ranging from the Fuel Tax Credit on federal tax returns to “pig-butchering” scams that involve investments in fake cryptocurrencies that ultimately leave the victims penniless.

The newly formed CASST alliance, comprising dozens of public and private sector organizations, is working cooperatively to combat these growing scams and protect taxpayers against filing of inaccurate tax returns fueled by social media advice. Increasing awareness of new and emerging tax schemes on social media is one part of a multi-pronged effort by the CASST coalition to combat tax scams and fraud.

Scams that promise easy money through claiming inaccurate credits or other schemes are seen in social media and in other places. Some producers of misleading content on social media are driven by a criminal profit motive, while others are simply trying to gain attention and clicks, with little regard for the risks it poses to their followers.

“Common wisdom dictates that if it sounds too good to be true, it often is, and that’s especially with some of the crazy ideas about taxes being spread on social media,” Werfel said. “Social media platforms are rife with influencers making claims about tax credits or deductions that stretch the truth or are outright lies, aimed at gaining themselves clout or pushing up their views. At the same time, this puts their audience’s tax returns and personal finances at risk. If people want good tax information on social media, they should follow options like a trusted tax professional or the IRS social media platforms.”

What to watch out for on social media

The IRS is aware of various filing season hashtags and social media topics leading to inaccurate and potentially fraudulent information. A common theme among many of these examples involves people trying to use legitimate tax forms for the wrong reason.

The IRS has seen a spike this year in the following types of scams on social media:

"Self Employment Tax Credit": Promoters on social media have made misleading claims that taxpayers – particularly self-employed individuals and gig economy workers -- can get up to $32,000 through the so-called “Self Employment Tax Credit.”

In reality, there is no “Self Employment Tax Credit”; rather, scammers are advising taxpayers to incorrectly use Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to improperly claim the specialized and very limited Sick Leave and Family Leave Credit on their income.

People who were self-employed could claim credits for Sick and Family Leave only for limited COVID-19 related circumstances in 2020 and 2021; the credit is not available for 2023 or 2024 tax returns. The IRS has a detailed set of FAQs describing the very technical requirements for meeting this provision of the law.

Household employment taxes: In a variation on the “Self Employment Tax Credit” scheme, taxpayers are being advised to “invent” fictional household employees and then file Schedule H (Form 1040), Household Employment Taxes, to claim a refund based on false sick and family medical leave wages they never paid.

Fuel Tax Credit: This specialized credit is designed for off-highway business and farming use. Taxpayers need a business purpose and a qualifying business activity such as running a farm or purchasing aviation gasoline to be eligible for the credit.

The vast majority of individual taxpayers do not qualify for the Fuel Tax Credit. It is only for businesses that use certain types of fuel (not for the gas people put in their car). Yet promoters increasingly advise ineligible taxpayers to claim it, and then the promoters line their own pockets by charging the individual a hefty fee.

Inflated income and withholding: This scheme encourages people to use tax software to manually fill out Form W-2, Wage and Tax Statement, and include false income information. Scam artists suggest people make up large income and withholding figures, as well as the employer from which it’s coming. They then instruct people to file the bogus tax return electronically in hopes of getting a substantial refund – sometimes as much as five figures – due to the large amount of withholding.

Claim of Right: In this long-seen scheme, taxpayers are advised to file tax returns and attempt to take a deduction equal to the entire amount of their wages. Promoters advise them to label the deduction as “a necessary expense for the production of income” or “compensation for personal services actually rendered.” The deduction is based on a complete misinterpretation of the Internal Revenue Code and has no basis in law.

The IRS has seen hundreds of thousands of dubious claims like these, leading to refunds being delayed and the need for taxpayers to show legitimate documentation to support their claims – which they often don’t have. Many of these scams were highlighted during this spring’s annual Dirty Dozen series. The IRS is on the lookout for each of these types of false tax claims as well as others.

The IRS and Summit partners urge taxpayers to exercise caution when filing their tax returns and ensure they only claim credits to which they’re entitled. Taxpayers who did fall victim need to follow steps to verify their eligibility for the claim. Otherwise, they could face audits and expensive fines; in some cases, they could be subject to federal criminal prosecution and imprisonment.

If individuals have doubts about the legitimacy of a particular tax credit, they should review the many resources available on IRS.gov or seek advice from a qualified tax professional and, in some cases, file an amended return to remove claims for which they’re ineligible to avoid potential penalties.

‘Tis the season

These threats are present year-round, but the approach of the 2025 tax filing season means that misinformed influencers and outright scammers will intensify efforts to persuade the public to take their bad advice.

Instead of looking to shady or ill-informed influencers on social media, a better option for taxpayers to learn how to properly use tax forms and claim credits is to go to IRS.gov and follow IRS social media channels.

IRS.gov has a forms repository with legitimate and detailed instructions for taxpayers on how to fill out the forms properly.

Use IRS.gov to find the official IRS social media accounts, or other government sites, to fact check information.

Taxpayers should also consider consulting a tax pro if they’re thinking of applying tax advice seen on social media to their own tax situations.

Pass it on

The IRS encourages the public to report improper and abusive tax schemes, as well as tax return preparers who knowingly prepare improper returns, including “ghost preparers.”

Mail:

Internal Revenue Service

Lead Development Center MS7900

1973 N. Rulon White Blvd

Ogden, UT 84404

Fax: 877-477-9135

Alternatively, taxpayers and tax professionals may report the information to the IRS Whistleblower Office for possible monetary award.

Save for retirement now, get a tax credit later: Saver’s Credit can help low- and moderate-income taxpayers save more in 2025

Mon, 25 Nov 2024 18:01:52 GMT

WASHINGTON —The Internal Revenue Service today reminded low- and moderate-income taxpayers that they can save for retirement now and possibly earn a tax credit in 2025 and future years.

The Retirement Savings Contributions Credit, also known as the Saver’s Credit, helps taxpayers offset a portion of the first $2,000 ($4,000 if married filing jointly) they voluntarily contribute to Individual Retirement Arrangements (IRAs), 401(k) plans and similar workplace retirement programs.

The credit also helps eligible persons with a disability who are the designated beneficiary of an Achieving a Better Life Experience (ABLE) account and contributes to that account. For more information about ABLE accounts, see Publication 907, Tax Highlights for Persons with Disabilities, on IRS.gov.

The maximum Saver’s Credit is $1,000 ($2,000 for married couples). The credit can increase a taxpayer’s refund or reduce the tax owed but is affected by other deductions and credits. Rollover contributions do not qualify for the credit, and distributions from a retirement plan or ABLE account reduce the contribution amount used to figure the credit.

Who is eligible?

Taxpayers can use the Interactive Tax Assistant tool for the Saver’s Credit to determine their eligibility. A taxpayer is eligible for the credit if they’re:

Age 18 or older,
Not claimed as a dependent on another person’s return, and
Not a full-time student.

Furthermore, the Saver’s Credit can be claimed by:

Married couples filing jointly with adjusted gross incomes up to $76,500.
Heads of household with adjusted gross incomes up to $57,375.
Married individuals filing separately and singles with adjusted gross incomes up to $38,250.
Qualified surviving spouse filers.

Contribution deadlines

Individuals with IRAs have until April 15, 2025 - the due date for filing their 2024 return - to set up a new IRA or add money to an existing IRA for 2024. Both Roth and traditional IRAs qualify.

Individuals with workplace retirement plans still have time to make qualifying retirement contributions and possibly get the Saver’s Credit on their 2024 tax return. Contributions to workplace retirement plans must be made by December 31 to a:

401(k) plan.
403(b) plan for employees of public schools and certain tax-exempt organizations.
Governmental 457 plan for state or local government employees.
Thrift Savings Plan (TSP) for federal employees.

See the instructions to Form 8880, Credit for Qualified Retirement Savings Contributions, for a list of qualifying workplace retirement plans and additional details. Finally, visit the Saver’s Credit page on IRS.gov to learn about rules, contribution rates and credit limits.

IRS encourages taxpayers to prepare for 2025 filing season with online tools and key reminders

Fri, 22 Nov 2024 17:17:47 GMT

WASHINGTON — As the nation's tax season approaches, the Internal Revenue Service is reminding people of simple stepsthey can take now to prepare to file their 2024 federal tax returns.

This reminder is part of the IRS's "Get Ready" campaign to help everyone prepare for the upcoming filing season in early 2025.

“Our focus at the IRS continues to be on making tax filing easier and more accessible for everyone,” said IRS Commissioner Danny Werfel. “We’ve added more digital tools to help taxpayers. But as tax season quickly approaches, the IRS reminds taxpayers there are important steps they can take now to get ready for 2025. From reviewing withholding to signing up for an IRS Online Account, there are multiple ways for people to help make the 2025 filing season easier.”

As the IRS continues its historic transformation work, the agency continues introducing new online tools as well as expanding and updating other digital tools. These are designed to help taxpayers and make tax filing easier.

Access IRS Online Account for helpful information

Taxpayers can create or access their IRS Online Account, where they can find all their tax related information for the 2025 filing season. New users will need to have a photo ID ready to verify their identity. Through their IRS Online Account, taxpayers can:

View key details from their most recent tax return, such as adjusted gross income.
Request an Identity Protection PIN.
Get account transcripts to include wage and income records.
Sign tax forms like powers of attorney or tax information authorizations.
View and edit language preferences and alternative media (such as braille, large print, etc.).
Receive and view over 200 IRS electronic notices.
View, make and cancel payments.
Set up or change payment plans and check their balance.

Gather and organize tax documents

Having well-organized tax records can make filing a complete and accurate return easier and help avoid errors that can delay refunds. This may also help identify deductions or credits that may have been overlooked.

Most income is taxable, including unemployment compensation, refund interest and income from the gig economyand digital assets. Taxpayers should watch for and gather essential forms, such as Forms W-2, Wage and Tax Statement, and other income documents.

It’s also important to notify the IRS of any address changesand the Social Security Administration of any legal name changes.

Check withholding before the end of 2024

The IRS Tax Withholding Estimator on IRS.gov can help taxpayers make sure the correct amount of tax is withheld from their paychecks. This tool is especially useful for individuals who owed taxes or received large refunds last year, or those who have experienced life changes such as marriage, divorce, or the welcoming of a child. Taxpayers who need to adjust their withholding can update their information with their employer using Form W-4, Employee’s Withholding Allowance Certificate.

Time is running out to make changes for 2024, as only a few pay periods remain in the year. Taxpayers need to act quickly to make any adjustments.

Get refunds faster with direct deposit

The fastest and most secure way to receive a tax refund is through direct deposit. Taxpayers can direct their refund to a bank account, banking app or reloadable debit card by providing their routing and account numbers. If the routing and account number cannot be located, taxpayers should contact their bank, financial institution or app provider.

According to Treasury’s Bureau of the Fiscal Service, paper refund checks are 16 times more likely to be lost, misdirected, stolen or uncashed compared to those paid using direct deposit.

Individuals without a bank account can explore options for opening one through FDIC-insured banks or a credit union using the National Credit Union Locator tool. Veterans can use the Veterans Benefits Banking Program to find participating financial institutions.

Volunteer to help others with their taxes

The IRS and its community partners are seeking volunteers from around the country to join the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. These programs offer free tax preparation services to eligible taxpayers. Interested individuals can learn more and sign up by visiting IRS.gov.

Helpful IRS resources and online tools

IRS.gov is a valuable resource for taxpayers, offering a variety of online tools like the Individual Online Account available 24/7. These tools help individuals file and pay taxes, track refunds, access account information and get answers to tax questions. Taxpayers are encouraged to bookmark these resources for easy access.

Choosing a tax professional

Tax professionals play an essential role in the U.S. tax system. Certified public accountants, Enrolled Agents, attorneys and others without formal credentials are just a few of the professionals who help taxpayers file their returns accurately. It is important to choose a professional who is skilled and trustworthy.

Most tax return professionals provide great service but picking the wrong one can hurt taxpayers financially. The IRS offers tips for choosing a tax preparer.

People can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to find qualified professionals

A-2024-38: 403(b) pre-approved plans

Fri, 22 Nov 2024 15:36:24 GMT

Announcement 2024-38 notifies the public that the IRS intends to issue opinion letters on November 29, 2024, or, as soon as possible thereafter, for § 403(b) pre-approved plans that were updated for changes with respect to the requirements of § 403(b), including the 2022 Cumulative List, and that were filed during the second remedial amendment cycle for § 403(b) pre-approved plans. This announcement also notifies the public of the date by which an adopting employer intending to maintain a § 403(b) pre-approved plan for the second cycle must adopt that plan, and announces the beginning and ending dates of the period during which an adopting employer may file for an individual determination letter under the second remedial amendment cycle. This announcement also discusses a procedural restatement rule that applies to all pre-approved plans and provides a reminder for adopting employers of § 403(b)(9) retirement income account plans of a requirement provided by § 403(b)(9).

Announcement 2024-38 will be in IRB: 2024-50, dated 12/9/2024.

IRS Advisory Council issues 2024 annual report

Wed, 20 Nov 2024 16:11:32 GMT

WASHINGTON — The Internal Revenue Service Advisory Council (IRSAC) today issued its annual public report, including recommendations to the IRS on new and continuing issues in tax administration.

The 2024 IRSAC Public Report includes recommendations on 37 issues covering a broad range of topics.

“IRSAC members have spent numerous hours analyzing issues in tax administration and the transformation work underway across the IRS,” said IRS Commissioner Danny Werfel. “The IRS is grateful for their hard work and valuable insights they spent on this year’s report, and we look forward to reviewing their recommendations.”

The top 13 general report issues are:

IRS funding.
Strategic Operating Plan assessment and analysis.
Reporting level of service data.
Hiring.
Online Accounts promotion.
Online Accounts technical support.
Capabilities for business online tax accounts.
Authorization techniques to enable businesses to utilize online accounts.
Identity theft prevention and resolution.
PTIN database and renewal system.
Oversight of return preparers.
Broadening continuing education for Enrolled Agents to include practice management topics.
Process for issuing new and revised forms and obtaining comments.

The full 2024 IRSAC Public Report was posted today to IRS.gov.

The IRSAC serves as a federal advisory committee to the IRS commissioner and executive leadership. It provides an organized public forum for discussion of relevant issues in tax administration. IRSAC members offer observations and advice regarding current or proposed IRS policies, programs and procedures.

In addition to receiving the public report today, Werfel thanked 12 members of the council whose terms end this year:

Amanda Aguillard – Aguillard served on the Small Business/Self-Employed Subgroup.
Samuel Cohen – Cohen served on the Tax Exempt/Government Entities Subgroup.
Alison Flores – Flores served as Chair of the Taxpayer Services Subgroup.
Jodi Kessler – Kessler served on the Tax Exempt/Government Entities Subgroup.
Mason Klinck – Klinck served on the Taxpayer Services Subgroup.
Jeffrey Porter – Porter served as Chair of the Small Business/Self-Employed Subgroup.
Dawn Rhea – Rhea served on the Large Business & International Subgroup.
Jon Schausten – Schausten served on the Information Reporting Subgroup.
Tara Sciscoe – Sciscoe served on the Tax Exempt/Government Entities Subgroup.
Wendy Walker – Walker served as Chair of the Information Reporting Subgroup.
Sean Wang – Wang served on the Information Reporting Subgroup.
Katrina Welch – Welch served as Chair of the Large Business & International Subgroup.

The IRSAC is administered under the Federal Advisory Committee Act by the IRS Communications & Liaison Division, Office of National Public Liaison.

Members represent the taxpaying public, the tax professional community, small and large businesses, tax-exempt and government entities, the payroll industry and academia. The IRSAC is organized into five subgroups: Information Reporting, Large Business & International, Small Business/Self-Employed, Tax Exempt/Government Entities and Taxpayer Services.

For more information, visit www.IRS.gov/IRSAC.

CORRECTION -- IR-2024-290

Tue, 19 Nov 2024 13:35:52 GMT

WASHINGTON — The Internal Revenue Service today announced that interest rates will decrease for the calendar quarter beginning Jan. 1, 2025.

For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily.

Here is a complete list of the new rates:

7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
4.5% for the portion of a corporate overpayment exceeding $10,000.
7% for underpayments (taxes owed but not fully paid).
9% for large corporate underpayments.

The interest rates announced today are computed from the federal short-term rate determined during October 2024. See the revenue ruling for details.

Revenue Ruling 2024-25 announcing the rates of interest will appear in Internal Revenue Bulletin 2024-49, dated Dec. 2, 2024.

IRS: International Fraud Awareness Week highlights how to report fraud; taxpayer protection against scams, schemes

Mon, 18 Nov 2024 17:06:27 GMT

WASHINGTON – As part of International Fraud Awareness Week, the Internal Revenue Service reminds taxpayers how to report tax-related fraud in their community to protect personal and financial information from scam artists and tax schemes.

During International Fraud Awareness Week, Nov. 17-23, the IRS Office of Fraud Enforcement and IRS Criminal Investigation aim to raise awareness of fraud, scams and schemes affecting taxpayers across the country.

The IRS also encourages individuals, businesses and tax professionals to take time now to learn to recognize red flags and to ensure defenses are in place to stop scammers and those who promote unscrupulous tax schemes.

The Security Summit, a public-private partnership between the IRS, state tax agencies and the nation’s tax industry, also works to protect taxpayers, businesses and the tax system from identity thieves and warn people to watch out for common scams and schemes.

Reporting tax fraud

Tax fraud can come in many forms, including scams targeting individuals, tax-related schemes pitched by unscrupulous promoters and fraud committed by taxpayers who knowingly file incomplete or inaccurate information with the IRS.

The public can assist the IRS in identifying and investigating possible fraud of individuals and businesses by filing Form 3949-A, Information Report Referral. Form 3949-A is a tax-related public use form submitted voluntarily by individuals to report alleged violations of tax law by individuals and businesses. A Form 3949-A submission remains confidential.

Individuals can report suspected tax law violations such as:

False exemptions and deductions.
Multiple tax filings.
Organized crime, public/political corruption and kickbacks.
Unsubstantiated and unreported income.
Narcotics income.
Wagering/gambling income.
Failures to pay tax, withhold tax and file returns.

These are only some of the suspected violations individuals can report. The IRS will review submissions and determine the appropriate action to take based on the information provided. These actions may include a referral for audit or a referral for criminal prosecution.

The IRS Office of Fraud Enforcement promotes compliance with tax laws by strengthening the IRS response to fraud and mitigating emerging threats. This includes improving fraud detection, identifying areas of high risk, enhancing enforcement and helping develop and submit fraud referrals to IRS Criminal Investigation where appropriate.

Tax-exempt organizations

If an individual suspects a tax-exempt organization is not complying with tax laws, they can submit Form 13909, Tax-Exempt Organization Complaint. These organizations may include exempt organizations, employee plans, Indian tribal governments and other governmental units.

The details and information provided can help hold tax-exempt entities and organizations accountable for following tax law.

Possible monetary award

Information submitted by individuals regarding fraudulent tax-related activity can sometimes lead to a possible monetary award. Individuals requesting consideration for an award should submit Form 211, Application for Award of Original Information.

The Form 211 and any attachments must include specific and credible information concerning the person that the whistleblower believes will lead to the collection of proceeds. The IRS Whistleblower Office evaluates Form 211 submissions.

Fraudulent schemes, promoters or preparers

Each year, the IRS compiles a Dirty Dozen list that brings public awareness to a variety of common scams that taxpayers may encounter. This year’s list included phishing and smishing scams, questionable Employee Retention Credits, Fuel Tax Credit claims, Offer in Compromise mills and fake charities exploiting taxpayer generosity.

Anyone experiencing these scams, or taxpayers encountering promoters or tax preparers peddling these schemes, are encouraged to submit Form 14242, Report Suspected Abusive Tax Promotions or Preparers.

People should mail or fax a completed Form 14242 and any supporting materials to the IRS Lead Development Center:

Internal Revenue Service
Lead Development Center MS7900
1973 N. Rulon White Blvd
Ogden, UT 84404

Fax: 877-477-9135

The Lead Development Center within the Office of Promoter Investigations follows up on each referral and ensures cases involving abusive tax schemes and improper tax return preparation are appropriately sent for further action to the IRS. Referrals may lead to injunctions against preparers or promoters, monetary penalties or referrals to criminal enforcement action.

Interest rates decrease for the first quarter of 2025

Mon, 18 Nov 2024 15:08:11 GMT

Interest rates decrease for the first quarter of 2025

WASHINGTON — The Internal Revenue Service today announced that interest rates will decrease for the calendar quarter beginning Jan. 1, 2025.

For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily.

Here is a complete list of the new rates:

7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
5% for the portion of a corporate overpayment exceeding $10,000.
7% for underpayments (taxes owed but not fully paid).
9% for large corporate underpayments.

The interest rates announced today are computed from the federal short-term rate determined during October 2024. See the revenue ruling for details.

Revenue Ruling 2024-25 announcing the rates of interest will appear in Internal Revenue Bulletin 2024-49, dated Dec. 2, 2024.

e-News for Tax Professionals 2024-46

Fri, 15 Nov 2024 18:18:24 GMT

Inside This Issue

Businesses must report Beneficial Ownership Information to Treasury by Jan. 1; free webinar can help
Offer in Compromise instructional videos now on IRS YouTube channel
IRA reminder: Qualified owners may contribute up to $105,000 to charity in 2025
Technical Guidance

1. Businesses must report Beneficial Ownership Information to Treasury by Jan. 1; free webinar can help

Businesses that were established or registered prior to Jan. 1, 2024, are required to submit their initial Beneficial Ownership Information (BOI) by Jan. 1, 2025.

To assist companies that are required to submit their Beneficial Ownership Information to the Treasury Department’s Financial Crimes Enforcement Network, the IRS will sponsor a free one-hour webinar on Tuesday, Nov. 19, at 2:00 p.m. ET.

In this complimentary webinar, FinCEN will:

Explain the Corporate Transparency Act.
Provide Beneficial Ownership reporting resources.
Analyze the BOI reporting requirement using the Small Entity Compliance Guide.
Describe what happens if a company does not timely report BOI to FinCEN.
Feature live question-and-answer session.

No continuing education credit is being offered. Click here to register.

2. Offer in Compromise instructional videos now on IRS YouTube channel

The IRS has added an Offer in Compromise Overview playlist to its YouTube channel. The series of videos walks viewers step-by-step through how to complete the forms needed to submit an offer in compromise, or OIC. An OIC allows taxpayers to settle their tax debt for less than the full amount they owe. And by working directly with the IRS instead of through a third-party company, taxpayers can save themselves both time and money. Visit the OIC webpage for more information, including FAQs and the Pre-Qualifier tool.

3. IRA reminder: Qualified owners may contribute up to $105,000 to charity in 2025

The Internal Revenue Service reminds owners of Individual Retirement Arrangement (IRA) who are 70½ years of age or older that they can make qualified charitable distributions in 2024 that allow them to donate up to $105,000 tax-free. Compared to previous years, that is an increase of $5,000.

Qualified charitable distributions (QCDs) also count toward the year's required minimum distribution (RMD) for individuals over age 73. IRA distributions are typically taxable, but QCDs remain tax-free if sent directly to a qualified charity by the trustee. To make a QCD for 2024, IRA owners should contact their IRA trustee soon to ensure the transaction completes by year-end.

For additional information, refer to Publication 526, Charitable Contributions and Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).

4. Technical Guidance

Notice 2024-81 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for October 2024 used under section 417(e)(3)(D), the 24-month average segment rates applicable for November 2024, and the 30-year Treasury rates, as reflected by the application of section 430(h)(2)(C)(iv).

Give more, tax-free: Eligible IRA owners can donate up to $105,000 to charity in 2024

Thu, 14 Nov 2024 19:26:44 GMT

WASHINGTON — The Internal Revenue Service reminds individual retirement arrangement (IRA) owners age 70½ and older that they can make up to $105,000 in tax-free charitable donations during 2024 through qualified charitable distributions. That’s up from $100,000 in past years.

For those age 73 or older, qualified charitable distributions (QCDs) also count toward the year's required minimum distribution (RMD).

Generally, IRA distributions are taxable, but QCDs remain tax-free if sent directly to a qualified charity by the trustee. To make a QCD for 2024, IRA owners should contact their IRA trustee soon to ensure the transaction completes by year-end.

Each eligible IRA owner can exclude up to $105,000 in QCDs from taxable income. Married couples, if both meet qualifications and have separate IRAs, can donate up to $210,000 combined. QCDs don’t require itemizing deductions.

For those planning ahead, starting this year, the QCD limit is subject to annual adjustment, based on inflation. For that reason, the annual QCD limit will rise to $108,000 in 2025.

Reporting and documenting QCDs

For 2024, QCDs should be reported on the 2024 tax return. IRA trustees will issue Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., in early 2025 documenting IRA distributions.

The full amount of any IRA distribution goes on Line 4a of Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors. Enter “0” on Line 4b if the full amount is a QCD, marking it as such.

Donors must obtain a written acknowledgement from the charity showing the contribution date, amount and confirmation that no goods or services were received.

For more details, see Publication 526, Charitable Contributions, and Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)

Corporate bond monthly yield curve, the corresponding spot segment rates for October 2024

Wed, 13 Nov 2024 17:00:53 GMT

Notice 2024-81 forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for October 2024 used under § 417(e)(3)(D), the 24-month average segment rates applicable for November 2024, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

Notice 2024-81 will be in IRB: 2024-49, dated December 2, 2024.

Many businesses must report beneficial ownership information to Treasury by Jan. 1; free webinar can help

Tue, 12 Nov 2024 17:20:12 GMT

WASHINGTON — The Internal Revenue Service will sponsor a free one-hour webinar designed to help the many businesses that must report their beneficial ownership information to the Treasury Department’s Financial Crimes Enforcement Network.

Because this is not an IRS or tax-related requirement, FinCEN representatives will conduct the webinar on this new anti-money laundering provision. The webinar will take place on Tuesday, Nov. 19, 2025, beginning at 2 p.m. ET.

Many companies created or registered to do business before Jan. 1, 2024, must e-file their initial beneficial ownership information (BOI) to FinCEN by Jan. 1, 2025. In general, this means reporting the names and other information about the people who own or control the company. Exceptions and special rules apply.

During this free webinar, FinCEN will:

Explain the Corporate Transparency Act.
Provide Beneficial Ownership reporting resources.
Analyze the BOI reporting requirement using the Small Entity Compliance Guide.
Describe what happens if a company does not timely report BOI to FinCEN.

The webinar will also feature a live question-and-answer session. Though primarily aimed at tax professionals, anyone is welcome to attend.

Certificates of completion will be offered, but no continuing education credits are available for this webinar. Closed captioning will also be offered.

Time: 2 p.m. (Eastern); 1 p.m. (Central); 12 p.m. (Arizona and Mountain); 11 a.m. (Pacific); 10 a.m. (Alaska); 9 a.m. (Hawaii and Aleutian) time zones.

Registration: Visit the Internal Revenue Service webinar website. Questions about the webinar can be emailed to cl.sl.web.conference.team@irs.gov.

For more information about the BOI reporting requirement, including FAQs and a five-minute video illustrating how to file, visit FinCEN’s BOI page.

e-News for Tax Professionals 2024-45

Fri, 08 Nov 2024 20:57:15 GMT

Notice of renewal for enrolled agents
Tax pros: New continuing education seminars now available on IRS Nationwide Tax Forum Online
Tax Talk Today highlights IRS Nationwide Tax Forum: Interview with Tax Exempt Commissioner
IRS releases 2024 Financial Report
IRS shares healthcare FSA reminder: Employees may contribute up to $3,300 in 2025
Upcoming webinars for tax professionals

1. Notice of renewal for enrolled agents

Enrolled agents: If your Social Security number (SSN) ends in 0,1, 2 or 3, you have until Jan. 31, to renew your status. Enrolled agents must renew their status every three years to remain eligible to practice before the IRS. Failure to renew by the deadline will result in your enrolled agent status becoming “inactive.” To renew:

Complete Form 8554, Application for Renewal of Enrollment to Practice Before the IRS, online at Pay.gov.
Pay the $140 renewal fee.

All enrolled agents must also have an active Preparer Tax Identification Number (PTIN) that must be entered on Form 8554.

Visit IRS.gov/ea for more information.

2. Tax pros: New continuing education seminars now available on IRS Nationwide Tax Forum Online

3. Tax Talk Today highlights IRS Nationwide Tax Forum: Interview with Tax Exempt Commissioner

Want to learn more about the annual IRS Nationwide Tax Forum? Tax Talk Today’s Alan Pinck conducted several on-site interviews at the 2024 San Diego Tax Forum touching on an array of topics.

View his interview with Edward Killen, IRS Commissioner, Tax Exempt/Government Entities Division.

4. IRS releases 2024 Financial Report

The Internal Revenue Service this week released financial information and highlighted selected accomplishments and challenges in its fiscal year 2024 Financial Report.

During fiscal year 2024, the IRS collected more than $5.1 trillion in tax revenue, collected more than $98 billion in enforcement revenue and distributed $553 billion in federal tax refunds and other outlays. This year’s report presents the IRS’s current financial position and discusses key financial topics. It highlights the programs, accomplishments, challenges and management's accountability for the resources entrusted to the IRS.

5. IRS shares healthcare FSA reminder: Employees may contribute up to $3,300 in 2025

The Internal Revenue Service reminds taxpayers that during open enrollment season for flexible spending arrangements (FSAs) they may be eligible to use tax-free dollars to pay medical expenses not covered by other health plans. An employee who chooses to participate in an FSA can contribute up to $3,300 through payroll deductions during the 2025 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, the employer may also contribute to an employee's FSA. If the employee's spouse has a plan through their employer, the spouse can also contribute up to $3,300 to that plan. In this situation, the couple could jointly contribute up to $6,600 for their household.

6. Upcoming webinars for tax professionals

The IRS offers the upcoming live webinars to the tax professional community:

Energy Efficient Home Improvements Credit & Residential Clean Energy Property Credit: How the Inflation Reduction Act revised these credits on Nov. 14, at 2 p.m. ET. Earn up to one continuing education credit (Federal Tax). Certificates of completion are being offered. Click here to register.
Beneficial Ownership Information presented by Financial Crimes Enforcement Network (FinCEN) on Nov. 19, at 2 p.m. ET. No continuing education credit is being offered. Click here to register.

IRS: Healthcare FSA reminder: Employees can contribute up to $3,300 in 2025; must elect every year

Fri, 08 Nov 2024 17:22:43 GMT

WASHINGTON — The Internal Revenue Service reminds taxpayers that during open enrollment season for Flexible Spending Arrangements (FSAs) they may be eligible to use tax-free dollars to pay medical expenses not covered by other health plans.

An employee who chooses to participate in an FSA can contribute up to $3,300 through payroll deductions during the 2025 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax.

If the plan allows, the employer may also contribute to an employee's FSA. If the employee's spouse has a plan through their employer, the spouse can also contribute up to $3,300 to that plan. In this situation, the couple could jointly contribute up to $6,600 for their household.

For FSAs that permit the carryover of unused amounts, the maximum carryover amount to 2025 is $660, increasing from $640 in tax year 2024. The carryover doesn’t affect the maximum amount of salary reduction contributions that can be made.

It's important for taxpayers to annually review their health care selections during health care open enrollment season and maximize their savings.

Eligible employees of companies that offer a health flexible spending arrangement (FSA) need to act before their medical plan year begins to take advantage of an FSA during 2025. Self-employed individuals are not eligible.

Expenses to consider

Throughout the year, taxpayers can use FSA funds for qualified medical expenses not covered by their health plan. These can include co-pays, deductibles and a variety of medical products. Also covered are services ranging from dental and vision care to eyeglasses and hearing aids. Interested employees should check with their employer for details on eligible expenses and claim procedures.

Before enrollment (if an employer offers an FSA), review any expected health care expenses projected for the year. Participating employees should plan for healthcare activities when they calculate their contribution amounts. Consider:

Updating medicine cabinet with necessary supplies.
Big ticket expenses.
Seasonal needs such as allergy products, sunscreen or warm steam vaporizers.
Routine checkups or visits with specialists that regular insurance plans do not cover.
Many over-the-counter items that are FSA eligible.
Eye exams or dental visits: Out-of-pocket costs for dental and vision care are also covered by an FSA.

Employers are not required to offer FSAs. Interested taxpayers should check with their employer to see if they offer an FSA. Also, all FSAs are subject to plan terms which may be more restrictive than the maximums allowed under the law, including both the maximum dollar amounts and the expenses covered. More information about FSAs can be found at IRS.gov in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.

Outreach Connection FY25-01

Tue, 29 Oct 2024 18:22:01 GMT

Outreach Connection FY25-01

Disaster tax relief toolkit for people affected by recent disasters

In this edition

Disaster relief resources
IRS tax relief after major disasters
Beware of disaster charity scams
Tips for reconstructing tax and financial records
More information

Disaster relief resources

Disaster victim resources on IRS.gov

IRS.gov has information disaster victims may need as they recover, including information about disaster-related tax relief and extensions to file and pay taxes.

FAQs for disaster victims

IRS webinar: Dealing with disaster from an individual tax perspective

IRS tax relief after major disasters

Disaster tax relief

The IRS can authorize disaster tax relief when the disaster meets criteria from the Federal Emergency Management Agency (FEMA).

All disaster tax relief announcements

Disaster tax relief announcements by location

Beware of disaster charity scams

Charity scams following recent hurricanes

In the aftermath of Hurricanes Milton and Helene, the IRS cautions taxpayers about scammers who use fake charities to gather sensitive personal and financial data from unsuspecting donors.

Tools to help people verify legitimate groups

Tips for reconstructing tax and financial records

Resources to rebuild records after a disaster

The IRS has tips to help disaster victims reconstruct their tax and financial records. They may need these records to help prove and document their losses so they can get federal help or insurance reimbursement.

Casualty, disaster, and theft loss workbook (for individuals)

Business casualty, disaster, and theft loss workbook

More information

IRS disaster tax relief resources:
- IRS news from around the nation: News about disaster relief and tax provisions that affect certain states.
- Tax relief in disaster situations: Resources to help affected taxpayers after a disaster.
- Publication 547, Casualties, Disasters, and Thefts
- Publication 976, Disaster Relief
- Follow the IRS on X to get the latest updates @IRSnews
Disaster help resources from IRS partners:
- DisasterAssistance.gov: Help with applying for FEMA disaster assistance and guide to resources.
- FEMA disaster information: Resources include information on the disaster declaration process, types of disasters and how FEMA gets involved. Get the latest updates on X at @Fema.
- Ready.gov: Resources for planning ahead of disasters.

IRS hires new Associate Chief Counsel to focus on partnerships and other passthrough entities

Tue, 29 Oct 2024 18:11:59 GMT

WASHINGTON — The Internal Revenue Service today announced the selection of the first Associate Chief Counsel for the newly created Passthroughs, Trusts and Estates office that will focus exclusively on partnerships, S corporations, trusts and estates. Staffing for this office will be drawn from the current Passthroughs and Special Industries office. The new Associate Chief Counsel, Jeffrey Erickson, is expected to join the IRS in January 2025. Most recently, he served as a Principal in Ernst & Young’s National Tax Passthroughs Transaction Group.

Holly Porter will be the Associate Chief Counsel for the Energy, Credits, and Excise Tax office, which also will be drawn from the current Passthroughs and Special Industries office.

“We are excited that Jeff will be returning to the IRS to lead Chief Counsel’s work in this priority area,” said IRS Chief Counsel Margie Rollinson. “He will bring an extensive background in tax law that encompasses over 30 years of experience in both the federal government and the private sector.”

As the Associate Chief Counsel for Passthroughs, Trusts and Estates, Erickson will coordinate and direct the activities of the office and oversee legal advisory services that support the uniform interpretation, application, enforcement and litigation of tax laws involving partnerships, S corporations, trusts and estates.

Erickson began his tax career in 1991 as an Attorney Advisor at the IRS’s Office of Chief Counsel in Passthroughs and Special Industries and left the IRS in 1999 as an Assistant Branch Chief. Additionally, Erickson has served as an Adjunct Professor at the Georgetown University Law Center, where he co-taught Taxation of Partnerships for LL.M. and J.D. students and has authored articles for inclusion in tax publications.

National Cybersecurity Awareness Month reminder: IRS and Security Summit supply online safety tips

Mon, 28 Oct 2024 20:14:55 GMT

WASHINGTON – As National Cybersecurity Awareness Month concludes and preparation for next tax season begins, the Internal Revenue Service and its Security Summit partners today reminded taxpayers to be wary of online threats like identity theft and fraud.

Whether shopping online or browsing social media, people unfamiliar with online security could be putting themselves at risk. Lax online behavior can open the door to swindlers eager to swipe people’s personal information and leave themselves vulnerable to tax-related identity theft.

The IRS and Security Summit alert taxpayers to remain vigilant and to teach children and teens how to recognize and avoid online scams to minimize their chances of falling prey or unwittingly exposing their families to identity theft and tax fraud.

The public-private sector partnership encourages everyone to be aware of the many security vulnerabilities they face online and to review a wide range of resources available to them as October’s National Cybersecurity Awareness Month draws to a close.

Members of the Security Summit – a coalition that includes tax software and financial companies, tax professionals, state tax administrators and the IRS – also offer multiple online safety recommendations to protect taxpayers from tax-related identity theft.

Online safety tips

Options to help protect against cybersecurity attacks include:

Recognize scams and report phishing. It’s important to remember that the IRS does not use unsolicited email and social media to discuss personal tax issues, such as those involving tax refunds, payments or tax bills. Don't reply, open any attachments or click any links. To report phishing, send the full email headers or forward the email as is to phishing@irs.gov; do not forward screenshots or scanned images of emails because this removes valuable information. Then delete the email.
Protect personal information. Refrain from revealing too much personal information online. Birthdates, addresses, age and financial information, such as bank accounts and Social Security numbers, are among things that should not be shared freely. Encrypt sensitive files such as tax records stored on computers.
Use strong passwords. Consider using a password manager to store passwords.
Enable multi-factor authentication (MFA). Use this for extra security on online accounts.
Use and update computer and phone software. Enable automatic updates to install critical security updates, including anti-virus and firewall protections.
Use a VPN. Criminals can intercept personal information on insecure public Wi-Fi networks. Individuals are encouraged to always use a virtual private network (VPN) when connecting to public Wi-Fi.

Extension of Temporary Relief for Foreign Financial Institutions to Report U.S. Taxpayer Identification Numbers

Mon, 28 Oct 2024 14:04:31 GMT

Notice 2024-78 extends the temporary relief provided in Notice 2023-11, subject to the procedures and requirements of this notice, for certain foreign financial institutions (FFIs) required to report U.S. taxpayer identification numbers (U.S. TINs) for certain preexisting accounts. The extension of the temporary relief granted by Notice 2023-11 is intended to enable the Internal Revenue Service (IRS) to continue to collect and analyze additional information for accounts without U.S. TINs.

Notice 2024-78will be published in Internal Revenue Bulletin 2024-46, on November 12, 2024.

IRS relief now available to flood victims in the Juneau area; multiple deadlines postponed to May 1, 2025

Fri, 25 Oct 2024 19:58:05 GMT

WASHINGTON — The Internal Revenue Service today announced disaster tax relief for individuals and businesses in the Juneau area of Alaska, affected by flooding that began on Aug. 5, 2024.

Affected taxpayers now have until May 1, 2025, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, this includes the City and Borough of Juneau in Alaska.

Individuals and households that reside or have a business in this locality qualify for tax relief. The same relief will be available to any other localities added later to the disaster area. The current list of eligible localities is always available on the Tax Relief in Disaster Situations page on IRS.gov.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred beginning on Aug. 5, 2024, and end on May 1, 2025 (postponement period). As a result, affected individuals and businesses will have until May 1, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the May 1, 2025, deadline will now apply to:

Any 2024 individual or business tax return normally due during March or April 2025.
Any individual, business or tax-exempt organization that has a valid extension to file their 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the flooding occurred.
2024 quarterly estimated income tax payments normally due on Sept. 16, 2024, and Jan. 15, 2025, and 2025 quarterly estimated tax payments normally due on April 15, 2025.
Quarterly payroll and excise tax returns normally due on Oct. 31, 2024, and Jan. 31 and April 30, 2025.

In addition, penalties for failing to make payroll and excise tax deposits due on or after Aug. 5, 2024, and before Aug. 20, 2024, will be abated, as long as the deposits were made by Aug. 20, 2024.

The Disaster Assistance and Emergency Relief for Individuals and Businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for 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. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov.

Additional tax relief

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 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number – 4836-DR – on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

The IRS may provide additional disaster relief in the future.

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

Reminder about tax return preparation options

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 help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
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 software at no cost. There are products in English and Spanish.
Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040 and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

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.

e-News for Tax Professionals 2024-43

Fri, 25 Oct 2024 19:30:43 GMT

Inside This Issue

Tax Pros: It’s time to renew PTINs for 2025 tax season
IRS reminds disaster area filers with extensions: some states must file 2023 returns by Nov.1; others have until Feb. 3 or May 1
Encourage your clients to get for an IP PIN for 2025 tax year
IRS launches 2024 IRS Nationwide Tax Forum Online; new online seminars available to tax professionals
Tax Talk Today highlights Nationwide Tax Forum, emerging scams and schemes
LB&I pass-through unit launches; teams of agency experts to tackle complex exams
Treasury, IRS grant tax-exempt organizations relief from filing Form 4626
Treasury, IRS issue guidance on advanced manufacturing investment credit implementation
Upcoming webinars for tax practitioners
News from the Justice Department’s Tax Division
Technical Guidance

1. Tax Pros: It’s time to renew PTINs for 2025 tax season

Tax pros: The IRS is currently processing renewals of preparer tax identification numbers (PTIN) for 2025. For the upcoming year, more than 810,000 tax return preparers must renew their PTIN. The expiration date of all existing PTINs is Dec. 31. For 2025, the cost to obtain or renew a PTIN is $19.75. The PTIN fee is not refundable.

To renew a PTIN online, users should:

Log in to their existing online PTIN account;
Complete the online renewal application by verifying personal information and answering a few questions; and
Pay the $19.75 renewal fee via credit/debit/ATM card or eCheck.

First time PTIN applicants can also apply for a PTIN online. To apply for a PTIN online:

Create an account.
Apply for a PTIN. View a checklist of what’s need before getting started; and
Pay the $19.75 fee.

2. IRS reminds disaster area filers with extensions: some states must file 2023 returns by Nov.1; others have until Feb. 3 or May 1

The IRS reminds taxpayers in disaster areas who were granted extensions to file their 2023 returns that, depending upon their location, their returns are due on Nov. 1, Feb. 3, 2025, or May 1, 2025.

Taxpayers in parts of Arkansas, Iowa, Kentucky, Mississippi, New Mexico, Oklahoma, Texas and West Virginia have until Nov. 1, 2024, to file their 2023 returns.
Taxpayers in the entire states of Louisiana and Vermont, all of Puerto Rico and the Virgin Islands and parts of Arizona, Connecticut, Illinois, Kentucky, Minnesota, Missouri, New York, Pennsylvania, South Dakota, Texas and Washington state have until Feb. 3, 2025, to file their 2023 returns.
Taxpayers in the entire states of Alabama, Florida, Georgia, North Carolina and South Carolina, and parts of Tennessee and Virginia will have until May 1, 2025, to file their 2023 returns. For these taxpayers, May 1 will also be the deadline for filing their 2024 returns.

3. Encourage your clients to get for an IP PIN for 2025 tax year

Tax pros: Encourage your clients to safeguard their identity by signing up for an identity protection personal identification number (IP PIN) before Nov. 23. After this date, the IP PIN system will not be available again until early January. A taxpayer’s identity will be safeguarded during the filing season if they register for an IP PIN now. New IP PINs are generated for the 2025 filing season during this period, so online enrollees must retrieve their new IP PINs starting early January 2025. The IRS encourages taxpayers to sign up for IRS Online Account, which provides a quick and easy way to obtain an IP PIN.

4. IRS launches 2024 IRS Nationwide Tax Forum Online; new online seminars available to tax professionals

The IRS recently launched the 2024 Nationwide Tax Forum Online, giving tax professionals access to 18 seminars recorded at the 2024 IRS Nationwide Tax Forum. The Nationwide Tax Forum Online offers tax professionals a convenient way to stay informed about current legislations, IRS procedures, and key topics for the upcoming tax season. Each seminar features a 50-minute interactive video presentation with synchronized slides, downloadable materials, and complete transcripts. Courses can be taken for continuing education (CE) credit for a fee of $29, or they can be reviewed for free (no CE credit). Don’t miss this opportunity to stay informed about important tax changes and further your professional knowledge.

5. Tax Talk Today highlights Nationwide Tax Forum, emerging scams and schemes

Want to learn more about the annual IRS tax forums? Tax Talk Today’s Alan Pinck conducted onsite interviews at the 2024 San Diego Tax Forum touching on an array of topics. View his interview with IRS Communications & Liaison Chief Terry Lemons about the growing threat tax pros and taxpayers face from scams and schemes.

6. LB&I pass-through unit launches; teams of agency experts to tackle complex exams

The new pass-through field operations unit, which the IRS announced last fall, has officially begun work in its Large Business and International division to audit pass-through entities more effectively. The establishment of a new unit dedicated to ensuring pass-throughs of all shapes and sizes —including partnerships, S-corporations and trusts—are in compliance is part of IRS’s broader efforts to devote more focus and funding to a previously neglected area.

"The establishment of pass-through field operations is a significant step in our goal to increase fairness in enforcement while improving service,” said IRS Commissioner Danny Werfel. "By using Inflation Reduction Act funding and enhancing our expertise in this area, we will be able to reverse our historically low audit rates for complex arrangements employed by certain high-wealth individuals and large entities, while at the same time improving the taxpayer experience through a more tailored exam approach.”

7. Treasury, IRS grant tax-exempt organizations relief from filing Form 4626

This week, the Department of Treasury and IRS granted tax-exempt organizations a filing exception, allowing them to avoid filing Form 4626, Alternative Minimum Tax – Corporations for the 2023 tax year. To determine whether they are an applicable corporation for the purposes of the alternative minimum tax and, if so, to calculate any corporate alternative minimum tax liability, tax-exempt organizations should keep Form 4626 for recordkeeping purposes. Any tax-exempt organization that is responsible for the alternative minimum tax must pay the tax and report the amount on Part II, Line 5 of Form 990-T, Exempt Organization Business Income Tax Return.

8. Treasury, IRS issue guidance on advanced manufacturing investment credit implementation

The Department of Treasury and the IRS released final rules that offer guidance on how to implement the Advanced Manufacturing Investment Credit, which was created by the CHIPS Act of 2022. The final regulations clarify the updated investment credit recapture provisions and outline the credit’s eligibility requirements.

9. Upcoming webinars for tax practitioners

The IRS offers the upcoming live webinars to the tax practitioner community:

Energy Efficient Home Improvements Credit & Residential Clean Energy Property Credit: How the Inflation Reduction Act revised these credits on Nov. 14, at 2 p.m. ET. Earn up to one continuing education credit (Federal Tax). Certificates of completion are being offered. Click here to register.
Beneficial Ownership Information presented by Financial Crimes Enforcement Network (FinCEN) on Nov. 19, at 2 p.m. ET. No continuing education credit is being offered. Click here to register.

10. News from the Justice Department’s Tax Division

Hophine Bwosinde, a Kansas tax preparation business owner, pleaded guilty to preparing and filing false income tax returns on behalf of his clients. Bwosinde prepared and filed false tax returns on behalf of his clients by inflating legitimate business expenses or by claiming losses related to fake businesses. In addition, Bwosinde falsely reported negative income on clients’ returns. These false items caused his clients to significantly underreport their income to the IRS, which reduced the amount of taxes the clients owed and generated refunds for many to which they were not entitled. Bwosinde caused a total tax loss exceeding $1.5 million. IRS Criminal Investigation is investigating the case.

Gerald Vito, James Eleby and Kwame Thomas were found in contempt by federal court in Miami for violating a permanent injunction that forbade them from preparing, filing or aiding in the preparation or filing of federal tax returns. In March 2021, a complaint was filed against Eleby and Vito for the preparation of tax returns that significantly understated their customers’ tax liabilities by claiming deductions for fabricated or inflated charitable deductions, medical expenses, and employee business expenses. The defendants purposely underreported tax liabilities of their clients. Later that year, the court issued a default judgment of permanent injunction that barred the pair from preparing tax returns for others. In September, the court found that the United States demonstrated by clear evidence that Vito and Eleby violated the permanent injunction by continuing to prepare tax returns for others. The court further found that Thomas, who was not a defendant in the original complaint, violated the injunction by working alongside Eleby to prepare returns in violation of the injunction. The court found Vito, Eleby and Thomas in civil contempt for these infractions and mandated that they disgorge the $988,789.56 in fees they earned while violating the injunction.

11. Technical Guidance

Notice 2024-74 provides additional guidance to taxpayers using the safe harbors in Notice 2024-37 with respect to the sustainable aviation fuel (SAF) credit.

Notice 2024-76 provides guidance on the corporate bond monthly yield curve for September 2024, the corresponding spot segment rates used under section 417(e)(3), and the 24-month average segment rates under section 430(h)(2) of the Internal Revenue Code.

Revenue Procedure 2024-40 provides detailed information on adjustments and changes to more than 60 tax provisions that will impact taxpayers when they file their returns in 2026.

Treasury, IRS issue final regulations for the advanced manufacturing production credit

Thu, 24 Oct 2024 14:23:21 GMT

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued final regulations to provide guidance for the Advanced Manufacturing Production Credit established by the Inflation Reduction Act of 2022 (IRA).

The Advanced Manufacturing Production Credit provides a tax credit for the production and sale of statutorily specified eligible components to unrelated persons. Such eligible components include solar and wind energy components, inverters, qualifying battery components and 50 applicable critical minerals. The eligible components must be produced in the United States or a territory of the United States.

Generally, the final regulations define qualifying production activities, provide rules for the sale of eligible components to unrelated persons as well as special rules that apply to sales between related persons, and provide rules to address contract manufacturing scenarios.

The final regulations also provide definitions of eligible components, rules related to calculating the credit, including eligible production costs, and specific recordkeeping and reporting requirements.

More information about IRA guidance may be found on the Inflation Reduction Act of 2022 page on IRS.gov.

Manufacturer Registration and Written Agreement, Qualified Product Identification Number Assignment, Labeling, and Periodic Reporting Requirements Under Section 25C(h)

Thu, 24 Oct 2024 14:22:49 GMT

Revenue Procedure 2024-31 provides the procedures and requirements that a manufacturer of specified property must follow to be treated as a “qualified manufacturer” (QM) under § 25C(h) of the Internal Revenue Code. Section 25C(h)(1) provides that no credit will be allowed under § 25C(a) with respect to any item of specified property placed in service after December 31, 2024, unless such item is produced by a QM and the taxpayer includes the qualified product identification number (PIN) of such item on the taxpayer’s tax return for the taxable year. This revenue procedure provides that a manufacturer that wishes to become a QM must register and enter into an agreement with the Internal Revenue Service (IRS), assign a PIN unique to each item of specified property, label such items, and make periodic written reports to the IRS of the PINs so assigned.

Revenue Procedure 2024-31 will be in IRB: 2024-46, dated 11/12/2024.

Treasury and IRS issue guidance for the energy efficient home improvement credit

Thu, 24 Oct 2024 14:22:17 GMT

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued Revenue Procedure 2024-31 and proposed regulations to provide guidance for the energy efficient home improvement credit.

The revenue procedure provides procedures and requirements that a manufacturer of specified property must follow to be treated as a qualified manufacturer (QM). To become a QM, a manufacturer must:

Register and enter into an agreement with the IRS.
Assign a qualified product identification number (PIN) unique to each item of specified property.
Label such items with PINs.
Make periodic reports to the IRS of PINs assigned.

Soon manufacturers will be able to use IRS Energy Credits Online Portal (IRS ECO) to register with the IRS. IRS ECO is a free electronic service that is secure and requires no special software, making it accessible to large and small businesses alike.

Taxpayers can use the IRS ECO platform to register and provide information to the IRS for filing purposes. In addition, IRS ECO incorporates validation checks and other risk-mitigation measures and allows for monitoring in real time of key metrics to include identification of customer-service enhancements and fraudulent activity.

For property placed in service beginning in 2023, a taxpayer may take a credit equal to 30% of the total amount paid for certain energy efficient products or for a home energy audit.

The credit is limited to certain amounts, per taxpayer and per tax year. A taxpayer may claim a total credit of up to $3,200, with a general total limit of $1,200, and a separate total limit of $2,000 for electric or natural gas heat pump water heaters, electric or natural gas heat pumps, and biomass stoves or boilers that meet certain requirements.

The $1,200 general limit also includes additional limitations specific to certain types of property that meet the requirements:

$600 for any item of qualified energy property.
$600 in total for exterior windows and skylights.
$250 for an exterior door.
$600 in total for exterior doors.
Home energy audits are limited to $150.

Beginning in 2025, for each item of specified property placed in service, no credit will be allowed unless the item was produced by a QM and the taxpayer includes the PIN for the item on the taxpayer’s tax return.

Resources

Treasury, IRS grant filing exception for tax-exempt organizations from filing new Form 4626, Alternative Minimum Tax - Corporations

Wed, 23 Oct 2024 19:12:03 GMT

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today granted a filing exception for tax-exempt organizations; they do not have to file Form 4626, Alternative Minimum Tax – Corporations, for tax year 2023.

The Inflation Reduction Act of 2022 created an alternative minimum tax for corporations – a 15% minimum tax on the adjusted financial statement income (AFSI) of corporations that have average annual AFSI greater than $1 billion, beginning in 2023. For tax-exempt organizations, the corporate alternative minimum tax applies only to the AFSI of any unrelated trades or businesses.

Tax-exempt organizations should maintain Form 4626 in their books and records for purposes of documenting whether they are an applicable corporation for purposes of the alternative minimum tax and, if so, for determining any corporate alternative minimum tax liability. In addition, any tax-exempt organization that is liable for the alternative minimum tax must pay the tax and report the amount on Part II, Line 5 of Form 990-T, Exempt Organization Business Income Tax Return.

In Notice 2023-7 and in the proposed regulations published on Sept. 13, 2024, Treasury and the IRS provided a simplified method for determining whether a corporation is an applicable corporation, but this method did not take into account the specific AFSI adjustment provided by the statute for tax-exempt organizations. Comments on the proposed regulations are due Dec. 12, 2024.

To give taxpayers and the IRS time to consider the comments on the proposed regulations, including comments relating to reporting for tax-exempt entities and on the application of the simplified method for tax-exempt entities, tax-exempt organizations are exempted from the obligation to file Form 4626 for tax year 2023.

IRS and Treasury issue guidance on implementation of advanced manufacturing investment credit

Wed, 23 Oct 2024 13:56:00 GMT

WASHINGTON – The Department of the Treasury and the Internal Revenue Service today issued final regulations that provide guidance regarding the implementation of the Advanced Manufacturing Investment Credit, established by the CHIPS Act of 2022.

The final regulations provide the eligibility requirements for the credit and provide clarity on the amended investment credit recapture provisions.

This credit will incentivize the manufacturing of semiconductors and semiconductor manufacturing equipment within the United States. The credit is available to taxpayers that meet certain eligibility requirements, and there is the ability for taxpayers to make an elective payment election to be treated as making a refundable payment against the tax equal to the amount of the credit.

A partnership or S corporation can make an elective payment election to receive a payment, instead of claiming the credit.

The Advanced Manufacturing Investment Credit for any taxable year is generally equal to 25% of an eligible taxpayer’s qualified investment in an advanced manufacturing facility. An eligible taxpayer’s qualified investment equals its basis in any qualified property placed in service during the taxable year. The qualified property must be integral to the operation of the advanced manufacturing facility. The credit is generally available for qualified property placed in service after Dec. 31, 2022.

IRS announces launch of pass-through compliance unit in LB&I; new group brings together teams of specialists from across the agency to tackle large or complex exams

Wed, 23 Oct 2024 13:55:00 GMT

WASHINGTON -- The Internal Revenue Service today announced the new pass-through field operations unit announced last fall has officially started work in its Large Business and International (LB&I) division to more efficiently conduct audits of pass-through entities.

The creation of a new unit specifically devoted to ensuring compliance of pass-throughs of every size and form -- including partnerships, S-corporations and trusts -- reflects the IRS’s broader efforts to focus more attention and resources on an area that has historically been under-scrutinized.

Previously, pass-through exams were divided between LB&I and the Small Business/Self-Employed (SB/SE) division based on the size of the entity. Going forward, revenue agents in pass-through field operations will be assembled into geographically based teams that are responsible for primary exams of pass-through entity returns. LB&I will be responsible for starting pass-through exams, regardless of entity size. SB/SE will continue to examine pass-through entities as part of a related exam of a tax return.

Consolidating the case-working expertise and removing the entity-size barrier helps the IRS achieve its goal of increased audit rates in this complex area, streamlines workflows and provides a more consistent experience for taxpayers.

A pass-through is a business entity in which the profits “pass through” to the owner(s) of that business and are taxed at the individual tax rate. They are frequently used by higher-income groups and can be complex tax arrangements.

Over the last year, LB&I has made strides building the foundation of this specialized group with internal and external hiring efforts to ensure it’s well-staffed with a blend of expertise from current IRS employees and new hires. In addition to staffing, the dedicated stand-up team also focused on collaboration between LB&I and SB/SE to review and enhance support frameworks, training programs and other internal processes.

"This combination of LB&I and SB/SE’s diverse expertise is an important milestone,” said Holly Paz, LB&I Commissioner. "This group will undoubtedly have a lasting impact as we continue building a modern pass-through compliance structure that is passionate about taxpayer service and fair enforcement.”

The IRS has also embarked on other important changes to help dedicate resources and support to this complex compliance space.

The IRS launched examinations of 76 of the largest partnerships with average assets over $10 billion that includes hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms and many other industries. These audits can take years depending on the size and complexity of the partnerships.
IRS Chief Counsel announced the creation of a new associate office that will focus exclusively on partnerships, S-corporations, trusts and estates. This office will be drawn from the current Passthroughs and Special Industries (PSI) Office.

The stand-up of pass-through field operations meets one of the priorities of the Strategic Operating Plan under Objective Three: Fairness in Enforcement. It is also a significant part of the overall expanded enforcement efforts that focus on high-income and high-wealth individuals, partnerships and large corporations that have seen sharp drops in audit rates during the past decade.

IRS reminds tax professionals to renew PTINs for 2025 tax season

Tue, 22 Oct 2024 16:10:44 GMT

WASHINGTON — The Internal Revenue Service today announced that Preparer Tax Identification Number (PTIN) renewals for 2025 are now being processed.

The nation’s more than 810,000 tax return preparers must renew their PTIN for the coming year. All current PTINs will expire on Dec. 31, 2024.

Anyone who prepares or assists in preparing federal tax returns for compensation must have a valid PTIN before preparing returns. All Enrolled Agents must also have a valid PTIN. The PTIN should be included as the identifying number on any return or claim for refund filed with the IRS. Failure to have and use a valid PTIN may result in penalties.

The fee to renew or obtain a PTIN is $19.75 for 2025. The PTIN fee is non-refundable.

Tax return preparers with a 2024 PTIN should use the online renewal process, which takes about 15 minutes to complete. A paper option, Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal, along with instructions, is also available for PTIN applications and renewals. The paper form can take up to six weeks to process.

To renew a PTIN online:

Access PTIN account – If users already have an online PTIN account, they can log in there.
Renew PTIN – Complete the online renewal application by verifying personal information and answering a few questions. View a checklist of what’s needed before getting started.
Pay the fee – Pay the $19.75 renewal fee via credit/debit/ATM card or eCheck. Upon completion of the application and payment, applicants will receive confirmation that a PTIN has been renewed.

The online system not only allows PTIN renewal, but tax return preparers can:

Check their continuing education.
View a summary of the number of filed returns on which their PTIN has appeared in the current year.
Receive communications through a secure mailbox from the IRS Return Preparer Office.
Track their progress for participation in the IRS Annual Filing Season Program.

First time PTIN applicants can also apply for a PTIN online.

To apply for a PTIN online:

Create an account – First, create an account by providing a name and email address. Tax professionals should use an email address to which they always have access. The system will then email a temporary password, which can be updated after going back to enter the information in the PTIN application.
Apply for a PTIN – Complete the online application by providing personal information, information about the previous year’s tax return, professional credentials and more. View a checklist of what’s need before getting started.
Pay the fee – Pay the $19.75 application fee via credit/debit/ATM card or eCheck.
Get a PTIN – After completion of the online application and payment, a PTIN is provided online.

Opportunity for non-credentialed tax return preparers

The Annual Filing Season Program is a voluntary IRS program geared toward tax return preparers who are not Enrolled Agents, attorneys or certified professional accountants. It’s intended to encourage those non-credentialed tax return preparers to take continuing education courses to increase their knowledge and improve their filing season readiness.

Those who choose to participate must renew their PTIN, complete up to 18 hours of continuing education from IRS-approved CE providers by Dec. 31, 2024, and consent to adhere to specific obligations in Treasury Department Circular 230, Regulations Governing Practice before the Internal Revenue Service.

After completing the steps, the tax return preparer receives an Annual Filing Season Program Record of Completion from the IRS. Program participants are then included in a public directory of tax return preparers with credentials and select qualifications on the IRS website.

The searchable IRS directory helps taxpayers find tax return preparers in their area who have completed the program or hold professional credentials recognized by the IRS.

Watch Tax Pros: Here’s how to participate in the IRS Annual Filing Season Program for more details about the program.

Enrolled Agent credential

The Enrolled Agent credential is a certification issued by the IRS to tax professionals who demonstrate special competence in federal tax planning, individual and business tax return preparation and representation matters. Enrolled Agents have unlimited rights to practice before the IRS, allowing them to represent any client before the IRS on any tax matter.

As non-credentialed tax return preparers think about next steps in their professional career, the IRS encourages them to consider becoming an Enrolled Agent.

All Enrolled Agents, regardless of whether they prepare tax returns, must renew their PTIN annually to maintain their active status.

September 2024 updates on the corporate bond monthly yield curve

Mon, 21 Oct 2024 16:26:46 GMT

Notice 2024-76provides guidance on the corporate bond monthly yield curve for September 2024, the corresponding spot segment rates used under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the Internal Revenue Code. In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I).

Notice 2024-76 will be published in Internal Revenue Bulletin 2024-45, on November 4, 2024.

e-News for Tax Professionals 2024-42

Mon, 21 Oct 2024 12:26:51 GMT

Inside This Issue

PTIN renewal season now underway
IRS launches 2024 IRS Nationwide Tax Forum Online with 18 new seminars
Tax Professional Awareness Week begins Oct. 21
IRS warns taxpayers of hurricane charity scams; shares tools to help verify legitimate groups
Third-party payers’ consolidated claims for ERC must include statement
IRS offers free webinar on Nov. 18 to assist large businesses with Compliance Assurance Process
Upcoming webinars for tax practitioners
Technical Guidance

1. PTIN renewal season now underway

PTIN (Preparer Tax Identification Number) renewal season is now underway for all tax professionals. The fee to obtain or renew a PTIN for 2025 is $19.75. All current PTIN holders will receive formal notification from the IRS Return Preparer Office in the coming weeks.

All PTINs expire on Dec. 31, and must be renewed annually. Tax professionals and enrolled agents must have a valid PTIN to prepare any federal tax returns for compensation.

More information about PTINs can be found at www.irs.gov/ptin.

2. IRS launches 2024 IRS Nationwide Tax Forum Online with 18 new seminars

The IRS this week launched the 2024 Nationwide Tax Forum Online, giving tax professionals access to 18 seminars recorded at the 2024 IRS Nationwide Tax Forum. The Nationwide Tax Forum Online features information on tax legislation, IRS procedures, and key topics for the upcoming tax season.

Each seminar includes a 50-minute interactive video presentation with synchronized slides, downloadable materials and transcripts. Courses can be taken for continuing education (CE) credit for a fee of $29, or they can be reviewed for free (no CE credit).

The IRS Nationwide Tax Forum Online is a continuing education provider certified by the National Association of State Boards of Accountancy (NASBA) and the IRS Return Preparer Office. Visit the Nationwide Tax Forum Online website to learn more.

3. Tax Professional Awareness Week begins Oct. 21

Tax Professional Awareness Week begins Oct. 21, featuring educational initiatives to equip tax professionals with tools and information they need before filing season to help them prepare accurate returns.

Paid tax professionals play an important role in assisting taxpayers with their filing obligations. More than half of taxpayers who claim refundable credits like the Earned Income Tax Credit or Child Tax Credit rely on paid tax professionals to accurately file their return.

For more information, please visit the Tax Professional Awareness Week page on IRS.gov.

4. IRS warns taxpayers of hurricane charity scams; shares tools to help verify legitimate groups

The IRS this week warned taxpayers of scammers who use fictious charities to obtain sensitive personal and financial data from unwary donors in the wake of Hurricanes Milton and Helene. Fake charities are frequently established by fraudsters to exploit peoples’ generosity during natural disasters.

Those who wish to donate should first check the Tax Exempt Organization Search (TEOS) tool on IRS.gov to locate or confirm eligible, reputable charities. With this tool, people can:

Verify the legitimacy of a charity
Check its eligibility to receive tax-deductible charitable contributions, and
Search for information about an organization's tax-exempt status and filings

The IRS also urges individuals encountering a fake or suspicious charity to see the FBI’s resources on Charity and Disaster Fraud.

5. Third-party payers’ consolidated claims for ERC must include statement

The IRS recently announced a consolidated process for third-party payers to resolve clients’ incorrect claims for the Employee Retention Credit. Any consolidated claim the IRS receives after Oct. 17, 2024, must have the full statement provided at Preparing your consolidated claim. The statement verifies that the consolidated claim:

Includes only business clients that were part of a previous ERC claim; and
Doesn’t increase the amount of ERC claimed by clients.

6. IRS offers free webinar on Nov. 18 to assist large businesses with Compliance Assurance Process

The IRS announced a free webinar to help large businesses taxpayers better understand the Compliance Assurance Process (CAP). The webinar will take place Nov. 18, from 1 p.m. to 2:30 p.m. ET. Tax professionals can register on the CAP program webinar registration page. Space is limited to the first 1,000 registrants.

7. Upcoming webinars for tax practitioners

The IRS offers the upcoming live webinars to the tax practitioner community:

Energy Efficient Home Improvements Credit & Residential Clean Energy Property Credit: How the Inflation Reduction Act revised these credits on Nov. 14, at 2 p.m. ET. Earn up to one continuing education credit (Federal Tax). Certificates of completion are being offered. Click here to register.
Beneficial Ownership Information Presented by Financial Crimes Enforcement Network (FinCEN) on Nov. 19, at 2 p.m. ET. No continuing education credit is being offered. Click here to register.

8. Technical Guidance

Notice 2024-71 provides a safe harbor under section 213 of the Internal Revenue Code.

Notice 2024-75 expands the list of preventive care benefits permitted to be provided by a high deductible health plan (HDHP) under section 223(c)(2)(C) of the Internal Revenue Code without a deductible, or with a deductible below the applicable minimum deductible for the HDHP.

Notice 2024-77 provides guidance in the form of questions and answers on sections 414(aa) and 402(c)(12) of the Internal Revenue Code (Code) as added by section 301(b) of Division T of the SECURE 2.0 Act of 2022.

Revenue Ruling 2024-24 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 Section 1274.

Treasury, IRS issue guidance for the Sustainable Aviation Fuel Credit

Mon, 21 Oct 2024 12:26:10 GMT

WASHINGTON – The Treasury Department and Internal Revenue Service today issued Notice 2024-74 for the Sustainable Aviation Fuel (SAF) credit created by the Inflation Reduction Act.

The SAF credit ranges from $1.25 to $1.75 for each gallon of sustainable aviation fuel in a qualified mixture. To qualify for the credit, the sustainable aviation fuel must have a minimum reduction of 50% in lifecycle greenhouse gas emissions.

The Treasury Department and IRS have issued several notices regarding the SAF credit, including Notice 2024-37, which allows a SAF producer to use the 40BSAF-GREET 2024 model, to calculate the greenhouse gas emissions reduction percentage for purposes of the SAF credits.

The DOE released an updated version of the 40BSAF-GREET 2024 model and accompanying user manual in October 2024 that addresses a calculation issue related to catalyst inputs for the Alcohol to Jet (ATJ) SAF pathways.

Notice 2024-74 provides that a taxpayer who uses a 40BSAF-GREET 2024 safe harbor in Notice 2024-37 to calculate its emissions reduction percentage with respect to claims that relate to the sale or use of a SAF qualified mixture after the effective date, must use the October 2024 version of the 40BSAF-GREET 2024 model.

Sustainable Aviation Fuel Credit; 40BSAF-GREET 2024

Mon, 21 Oct 2024 12:25:41 GMT

Notice 2024-74 provides additional guidance to taxpayers using the safe harbors in Notice 2024-37 with respect to the sustainable aviation fuel (SAF) credit. Notice 2024-74 provides that a taxpayer using a 40BSAF-GREET 2024 safe harbor to calculate its emissions reduction percentage with respect to claims that relate to the sale or use of a SAF qualified mixture after the effective date of the notice must use the newly released October 2024 version of the 40BSAF-GREET 2024 model.

Notice 2024-74 will be in IRB: 2024-45, dated 11/04/2024.

IRS provides free Nov. 18 webinar on Compliance Assurance Process to help large businesses

Tue, 15 Oct 2024 18:46:38 GMT

WASHINGTON – The Internal Revenue Service will offer a free webinar to help large business taxpayers understand the Compliance Assurance Process (CAP) by discussing updates and clarifications to the program to better prepare applicants.

The CAP helps large corporate taxpayers improve federal tax compliance through real-time issue resolution tools that promote accurate tax returns and shorten the IRS examination process.

The webinar will take place from 1 p.m. to 2:30 p.m. ET on Monday, Nov. 18, 2024. Those who are interested can register on the CAP Program Webinar registration page. Space is limited to the first 1,000 registrants.

In response to questions concerning the changes to the eligibility requirements for the CAP program, the IRS is providing some clarifications.

To be eligible to apply for CAP, applicants must:

Have assets of $10 million or more,
Be a U.S. publicly traded C-corporation with a legal requirement to prepare and submit SEC Forms 10-K, 10-Q, and 8-K or a U.S. privately held C-corporation including foreign owned.
- S. privately held C-corporations will be required to timely submit audited financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS) or another permissible method, as deemed appropriate by the IRS, specific to the taxpayer applying to the CAP program on an annual basis and unaudited financial statements on a quarterly basis.
Not be under investigation by, or in litigation with, any government agency that would limit the IRS’s access to current tax records.

As a new exception, taxpayers will be eligible for the CAP program if they have a tax return that remains open due to outstanding Inflation Reduction Act (IRA) and/or Creating Helpful Incentives to Produce Semiconductors Act (CHIPS) tax issues.

Taxpayers may apply for the 2025 CAP program until Oct. 31, 2024. The IRS will inform applicants if they’re accepted into the program in February 2025.

To prepare new applicants for the CAP program, the IRS will assist taxpayers in meeting the eligibility requirements. Taxpayers currently under IRS examination and possibly not meeting the current eligibility criteria are encouraged to discuss their interest in CAP with their local IRS team or by sending an email to the CAP mailbox found on the CAP webpage.

Launched in 2005, CAP employs real-time issue resolution through transparent and cooperative interaction between taxpayers and the IRS to improve federal tax compliance by resolving issues prior to the filing of a tax return. To learn more, visit the CAP FAQ webpage.

Guidance Under Sections 414(aa) and 402(c)(12) of the Internal Revenue Code with Respect to Inadvertent Benefit Overpayments

Tue, 15 Oct 2024 18:45:26 GMT

Notice 2024-77 provides guidance in the form of questions and answers on sections 414(aa) and 402(c)(12) of the Internal Revenue Code (Code) as added by section 301(b) of Division T of the SECURE 2.0 Act of 2022. Section 414(aa) of the Code addresses the requirements of sections 401(a) and 403 with respect to inadvertent benefit overpayments. Section 402(c)(12) addresses the treatment of certain inadvertent benefit overpayments as eligible rollover distributions.

Notice 2024-77will be published in Internal Revenue Bulletin 2024-45, on November 4, 2024.

IRS announces extension of time for certain applicable entities to make an elective payment election on Form 990-T

Fri, 11 Oct 2024 19:16:11 GMT

WASHINGTON — The Internal Revenue Service announced today in Revenue Procedure 2024-39

that grants certain applicable entities that are making an elective payment election a six-month automatic extension of time to file an original or superseding Form 990-T, Exempt Organization Business Income Tax Return, with relevant schedules and forms.

This relief means that applicable entities that were required to but did not file a timely extension on Form 8868, Application for Extension of Time to File an Exempt Organization Return, will be granted a six-month automatic extension of time to file a Form 990-T for purposes of making an elective payment election from the original return due date.

The document also provides a procedure to follow if an applicable entity entitled to this relief receives a notice that their election was ineffective because the return on which it was made was filed after the due date of the return and on or before the automatically extended due date provided under the revenue procedure.

In addition to the six-month automatic extension of time to file for certain applicable entities, this revenue procedure temporarily waives the requirement to make an elective payment election on an electronically filed Form 990-T, allowing applicable entities that would otherwise be required to file Form 990-T electronically to make an elective payment election on a paper-filed Form 990-T if they follow certain procedural requirements.

The relief provided in this revenue procedure applies to applicable entities described above that are filing a Form 990-T to make an elective payment election for a taxable year ending on any day from Dec. 31, 2023, through Nov. 30, 2024.

Resources

IRS help available to victims of Hurricanes Helene and Milton; May 1 deadline now applies to individuals and businesses

Fri, 11 Oct 2024 19:15:29 GMT

WASHINGTON — In the wake of the devastating hurricanes that have ravaged Florida and the Southeast in recent weeks, the Internal Revenue Service today reassured victims that it stands ready to provide the tax-related assistance they need to recover from these storms.

IRS.gov has a variety of information to help disaster victims navigate common situations in the aftermath of disasters. The IRS also has a special hotline specifically dedicated to taxpayers with disaster-related tax questions; disaster victims can call the agency’s disaster hotline at 866-562-5227.

Here is a rundown on tax help available from the IRS.

More time to file and pay

The IRS automatically gives taxpayers whose address of record is in a disaster-area locality more time to file returns and pay taxes. Taxpayers get the extra time without having to ask for it.

Currently, taxpayers in the entire states of Alabama, Florida, Georgia, North Carolina and South Carolina, and parts of Tennessee and Virginia, who received extensions to file their 2023 returns have until May 1, 2025, to file. Tax-year 2023 tax payments are not eligible for this extension. In addition, May 1 is also the deadline for filing 2024 returns and paying any tax due.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

This page also provides disaster updates and links to resources, and information is usually available on the IRS Twitter (now X) account as well.

Disaster payments usually tax-free

Retirement plan help

Disaster loss deduction may be available

In some instances, individuals and businesses in a federally-declared disaster area can qualify for a casualty loss tax deduction. The deduction is available for damaged or destroyed property not covered by insurance or other reimbursement and can result in a larger refund.

A unique feature of this deduction is that taxpayers can choose to claim it on either the return for the year the loss occurred (in this instance, the 2024 return normally filed next year), or the return for the prior year

(the 2023 return filed this year). For individual taxpayers, the deadline for making this election is Oct. 15, 2025.

If deductions exceed a taxpayer’s income, it can result in a net operating loss (NOL). A taxpayer need not have a business to have a NOL from a casualty. A NOL can normally be carried forward and deducted in a future tax year. See Publication 547, Casualties, Disasters, and Thefts ,and Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts, for details.

Free tax transcripts available

The IRS reminds anyone whose tax records were lost or destroyed, or who needs tax records to apply for disaster assistance that they can get a free transcript of their returns from the IRS. Immediate access to these transcripts is available through the Get Transcriptlink on IRS.gov. Alternatively, taxpayers can use Get Transcript to request that transcripts be mailed to them. They can also call 800-908-9946 to request mail delivery or submit Form 4506-T, Request for Transcript of Tax Return.

As a reminder, taxpayers must have filed all required tax returns in order to qualify for disaster loans or grants for business owners, homeowners and renters from the Small Business Administration.

Free copy of tax return

Disaster-area taxpayers can get a free copy of their tax return by filing Form 4506, Request for Copy of Tax Return. The IRS waives the usual fees and expedites requests for copies of returns for people who need them to apply for disaster-related benefits or to file amended returns claiming disaster-related losses. To speed processing, be sure to notate that this is a disaster-related request and list the state and type of event.

Address change

After a disaster, people might need to temporarily relocate. Those who move should notify the IRS of their new address by submitting Form 8822, Change of Address.

Disaster hotline

Taxpayers with disaster-related tax questions can call the agency’s disaster hotline at 866-562-5227.

Taxpayers should also call this number if they live outside the disaster area but believe they qualify for a disaster-related extension or deadline postponement. This might be true, for example, if their records necessary to meet a deadline occurring during the postponement period are located in the affected area. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

More information

The IRS encourages affected taxpayers to review all federal disaster relief at DisasterAssistance.gov.

Here are other helpful IRS resources:

IRS granting dyed diesel penalty relief as a result of Hurricane Milton

Fri, 11 Oct 2024 15:21:29 GMT

WASHINGTON — In response to disruptions resulting from Hurricane Milton, the Internal Revenue Service 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 on the highway throughout the state of Florida.

This relief is in addition to the limited relief provided in response to Hurricane Helene. The relief begins on Oct. 9, 2024, and will remain in effect through Oct. 30, 2024.

This 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 undyed 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 state of Florida 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.

IRS provides Hurricane Milton relief; May 1 deadline now applies to individuals and businesses in all of Florida; many businesses qualify for deposit penalty relief

Fri, 11 Oct 2024 15:20:54 GMT

WASHINGTON — Due to Hurricane Milton, the Internal Revenue Service today announced relief for individuals and businesses in 51 counties in Florida.

Individuals and businesses in six counties that previously did not qualify for relief under either Hurricane Debby or Hurricane Helene will receive disaster tax relief beginning Oct. 5, 2024, and concluding on May 1, 2025. They are Broward, Indian River, Martin, Miami-Dade, Palm Beach and St. Lucie.

In addition, individuals and businesses in 20 counties previously receiving relief under Debby, but not Helene will receive disaster tax relief under Hurricane Milton, from Aug. 1, 2024, thru May 1, 2025. They are Baker, Brevard, Clay, DeSoto, Duval, Flagler, Glades, Hardee, Hendry, Highlands, Lake, Nassau, Okeechobee, Orange, Osceola, Polk, Putnam, Seminole, St. Johns and Volusia counties.

As a result, affected taxpayers in all of Florida now have until May 1, 2025, to file various federal individual and business tax returns and make tax payments, including 2024 individual and business returns normally due during March and April 2025 and 2023 individual and corporate returns with valid extensions and quarterly estimated tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Individuals and households that reside or have a business in any one of the localities listed above qualify for tax relief. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

Filing and payment relief

Hurricane Milton-related tax relief postpones various tax filing and payment deadlines that occurred beginning on Oct. 5, 2024, and ending on May 1, 2025 (postponement period). As a result, affected individuals and businesses will have until May 1, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the May 1, 2025, deadline now applies to:

Any individual or business that has a 2024 return normally due during March or April 2025.
Any individual, C corporation or tax-exempt organization that has a valid extension to file their calendar-year 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the hurricane occurred.
2024 quarterly estimated tax payments normally due on Jan. 15, 2025, and 2025 estimated tax payments normally due on April 15, 2025.
Quarterly payroll and excise tax returns normally due on Oct. 31, 2024, Jan. 31, 2025, and April 30, 2025.

In addition, for localities affected by Hurricane Milton, penalties for failing to make payroll and excise tax deposits due on or after Oct. 5, 2024, and before Oct. 21, 2024, will be abated, as long as the deposits are made by Oct. 21, 2024. Localities eligible for this relief are: Alachua, Baker, Bradford, Brevard, Broward, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Gilchrist, Glades, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lafayette, Lake, Lee, Levy, Madison, Manatee, Marion, Martin, Miami-Dade, Monroe, Nassau, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putman, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Taylor, Union and Volusia counties.

Deposit penalty relief and other relief was previously provided to taxpayers affected by Debby and Helene. For details, see the Florida page on IRS.gov. The Disaster assistance and emergency relief for individuals and businesses page also has details, as well as information on other returns, payments and tax-related actions qualifying for relief during the postponement period.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for 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 efforts who are affiliated with a recognized government or philanthropic organization. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov.

Additional tax relief

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 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number – 3622-EM – on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

The IRS may provide additional disaster relief in the future.

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

Reminder about tax return preparation options

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 help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
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 software at no cost. There are products in English and Spanish.
Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040 and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

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.

IRS accelerates work on Employee Retention Credit claims; agency currently processing 400,000 claims worth about $10 billion

Thu, 10 Oct 2024 20:59:00 GMT

WASHINGTON – The Internal Revenue Service announced today continued progress on Employee Retention Credit claims, with processing underway on about 400,000 claims, representing about $10 billion of eligible claims.

Work on the claims for small businesses and others is ongoing as the agency continues to navigate a large volume of claims from the complex pandemic-era credit. A significant number of the Employee Retention Credit (ERC) claims came in during a period of aggressive marketing by promoters, leading to a large percentage of improper, ineligible claims.

“The IRS understands the vital importance of Employee Retention Credits payments for struggling small businesses, and we are continuing to make important progress on one of the most complex tax administration provisions we’ve ever had,” said IRS Commissioner Danny Werfel. “The IRS is working diligently to process ERC claims as quickly as possible, while guarding against improper payments driven by unscrupulous marketers. In recent weeks, the IRS has made substantial progress in separating eligible claims from the wave of ineligible claims that have come in, and we continue working to refine our models to identify more eligible claims.”

The approximately 400,000 claims being processed include eligible and ineligible claims, with the vast majority in this tranche being processed for approval. The total value of eligible claims represents about $10 billion. Checks are being mailed for eligible claims with refunds, with more planned in the weeks and months ahead.

New consolidated claim process for third-party payers helps with claims

To help speed processing, the IRS announced last month the opening of a consolidated claim process to help third-party payers and their clients resolve incorrect claims for the Employee Retention Credit.

Third-party payers report and pay clients’ federal employment taxes under the third-party payer’s Employer Identification Number. They handle clients’ payroll and tax reporting duties. Some of these TPPs filed ERC claims for multiple employers. If a third-party payer’s client has since determined it is ineligible for the ERC and wants to resolve their claim, it is the third-party payer that needs to correct it.

This consolidated claim process lets a third-party payer that filed a prior claim with multiple clients “withdraw” only some clients’ claims while maintaining the claims of the qualifying clients.

The ERC program began as an effort to help businesses during the pandemic, but as time went on the program increasingly became the target of aggressive marketing – and potentially predatory in some cases – well after the pandemic ended. Some promoter groups called the credit by another name, such as a grant, business stimulus payment, government relief or other names besides ERC or the Employee Retention Tax Credit (ERTC).

In addition to processing valid claims, the IRS is continuing to work denials of improper ERC claims, intensifying audits and pursuing civil and criminal investigations of potential fraud and abuse. The findings of the IRS review, announced in June, confirmed concerns raised by tax professionals and others that there was an extremely high rate of improper ERC claims in the current inventory of ERC claims.

Voluntary Disclosure Program remains open through Nov. 22; Withdrawal Program also available

The IRS reminds businesses that have received Employee Retention Credit payments to recheck eligibility requirements and consider the second Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP) to resolve incorrect claims without penalties or interest.

The second ERC-Voluntary Disclosure Program will run through Nov. 22, 2024, and allow businesses to correct improper payments at a 15% discount and avoid future audits, penalties and interest.

The reopening of ERC Voluntary Disclosure Program is designed to help businesses with questionable claims to self-correct and repay the credits they received after filing ERC claims in error. Many of these claims were driven by aggressive marketing from unscrupulous promoters.

As the IRS continues intensifying compliance work involving improper ERC claims, the VDP can protect businesses from potential costly compliance action in the future, such as audits, full repayment, penalties and interest. Full details are available in IRS Announcement 2024-30.

The IRS’s claim withdrawal program remains open for businesses whose ERC claims haven’t been paid yet.

To help businesses caught in this situation, the IRS urges businesses to review important warning signs and eligibility requirements, and to talk to a trusted tax professional. The IRS’s ERC Eligibility Checklist can also help businesses understand eligibility requirements and suggest next steps.

IRS releases 2022 tax gap projections; voluntary compliance rate among taxpayers remains steady

Thu, 10 Oct 2024 18:51:30 GMT

WASHINGTON — The Internal Revenue Service today released the tax gap projections for tax year 2022, a detailed analysis showing the nation’s projected gross tax gap at $696 billion. This reflects the difference between projected ‘true’ tax liability and the amount of tax that is actually paid on time.

The new tax gap projections reflect an increase over the tax year 2014-2016 estimates and the tax year 2017-2019 projections. The 2022 projection is an increase of $200 billion over tax years 2014-2016.

However, the IRS noted the increase for 2022 is similar to the 41 percent increase in the economy since the 2014-2016 time period as measured by the Gross Domestic Product. With the new study also showing the voluntary compliance rate among taxpayers remaining steady at 85%, the IRS noted the tax gap increase ultimately reflects growth in the economy and changes in the sources of income – not a change in taxpayer behavior involving filing or paying their taxes.

In addition, the new tax gap projections reflect the time period before the IRS began increasing tax compliance work following passage of the Inflation Reduction Act (IRA) in August of 2022. Since then, the IRS has stepped up compliance activity in a variety of areas with the additional funding, including the agency collecting an initial $1.3 billion from high-income non-filers following IRA funding.

“This is a critical study about the nation’s tax system, and the results underscore there remains a sizable tax gap between taxes that are legally owed but aren’t actually being paid,” said IRS Commissioner Danny Werfel. “While the bottom line for the new tax gap numbers shows the increase basically reflects growth in the larger economy, the size of the gap also vividly illustrates the ongoing need for adequate funding for the IRS. We need to focus both on compliance efforts to enforce existing laws as well as improving service to help taxpayers with their tax obligations to help address the tax gap. Since passage of the Inflation Reduction Act in 2022, we have taken important steps to begin improving tax compliance. While our recent work will not be fully reflected in the tax gap analysis for several years, we will continue to provide routine, interim updates on how enhanced enforcement on complex areas of tax evasion and delinquency impacts compliance.”

The new projections are published in Tax Gap Projections for Tax Years 2021 and 2022 (IRS Publication 5869).

Gross tax gap

The projected $696 billion gross tax gap is the difference between projected ‘true’ tax liability for a given period and the amount of tax that is paid on time. The gross tax gap covers three key areas – non-filing of taxes, underreporting of taxes and underpayment of taxes.

Non-filing, which means tax not paid on time by those who do not file on time:
- $63 billion in tax year 2022, representing 9% of the gross tax gap.
Underreporting, which reflects tax understated on timely filed returns.
- $539 billion in tax year 2022, representing 77% of the gross tax gap.
Underpayment, or tax that was reported on time, but not paid on time.
- $94 billion in tax year 2022, representing 14% of the gross tax gap.

The primary focus on tax gap estimation is to measure compliance behavior as manifested in tax paid voluntarily and on time. The tax gap estimates and projections provide insight into the historical scale of tax compliance and to the persisting sources of low compliance.

Net tax gap

Late payments and IRS enforcement efforts are projected to generate an additional $90 billion on tax years 2021 and 2022 returns, resulting in a projected net tax gap of $617 billion and $606 billion respectively.

Between tax years 2017-2019 and tax year 2022, the estimated tax liability increased by about 27%, roughly the same increase as the gross and net tax gaps. Much of these increases in true total tax liability and the gross tax gap can be attributed to economic growth.

The IRS notes that the tax gap estimates and projections cannot fully account for all types of noncompliance.

Voluntary compliance rate remains unchanged

The tax year 2021 and 2022 tax gap projections translate to about 85% of taxes paid voluntarily and on time, which is consistent with recent levels. The projections are based largely upon the compliance behavior estimated from the most recent set of completed audits (from tax years 2014-2016). That estimated compliance behavior is projected forward to taxpayers in subsequent tax years to generate the gross tax gap.

After IRS compliance efforts and other late payments are factored in, the projected share of taxes eventually paid is 86.9% for tax year 2022, down slightly from the 87% for tax years 2014-2016.

Tax gap analysis consistently shows that compliance is higher when there is third-party information reporting, and even higher when also subject to withholding.

With the help of Inflation Reduction Act resources, the IRS is taking a variety of steps to help improve voluntary compliance by improving taxpayer services and offering new technology tools to work in concert with additional compliance work. In fiscal year 2023, the latest year for which data is available, the IRS collected more than $4.6 trillion in taxes, penalties, interest and user fees.

The IRS also has an array of other taxpayer service programs aimed at supporting accurate tax filing and helping address the tax gap. These range from working with businesses and partner groups such as IRS’s Volunteer Income Tax Assistance and Tax Counseling for the Elderly to a variety of education and outreach efforts.

The voluntary compliance rate of the U.S. tax system is vitally important for the nation. A one-percentage-point increase in voluntary compliance would bring in about $46 billion in additional tax receipts.

Projecting the tax gap

Given the complexity of the tax system and available data, no single approach can be used for estimating each component of the tax gap. Each approach is subject to measurement or non-sampling error; the component estimates that are based on samples are also subject to sampling error.

The projections do not fully represent noncompliance in some components of the tax system, particularly as it relates to corporate income tax, income from flow-through entities, foreign or illegal activities, digital assets and pandemic credits because data are lacking.

Details on how the IRS projects the Tax Gap can be found in IRS Publication 6031: Tax Gap Projections Methodology.

The IRS continues to actively work on new methods for estimating and projecting the tax gap to better reflect changes in taxpayer behavior as they emerge. More information about the tax gap and estimates for prior tax years can be found at IRS: The tax gap.

IRS reminds taxpayers of Oct. 15 tax-filing extension deadline; combat zones, disaster areas, Israel have more time

Mon, 07 Oct 2024 17:30:44 GMT

WASHINGTON — The Internal Revenue Service today encouraged taxpayers to file their 2023 tax year federal income tax return on or before the upcoming Tuesday, Oct. 15, 2024, deadline to avoid possible late filing penalties.

Convenient electronic filing options, including IRS Free File, are still available. MilTax is a free online service that members of the military and qualifying veterans can use to file their federal income tax returns and up to three state income tax returns.

Disaster-area taxpayers and military members and their families may have extra time to file. Those with an IRS address of record in areas covered by Federal Emergency Management Agency (FEMA) disaster declarations and those returning from a combat zone may qualify for additional time to file.

Deadlines vary depending upon the disaster and locality. Details on all recent disaster relief are on the Around the nation page on IRS.gov. Currently:

· Taxpayers in parts of Arkansas, Florida, Iowa, Kentucky, Mississippi, New Mexico, Oklahoma, Texas and West Virginia have until Nov. 1, 2024, to file their 2023 tax year return.

· Taxpayers in all or parts of Connecticut, Florida, Illinois, Kentucky, Louisiana, Minnesota, Missouri, New York, Pennsylvania, Puerto Rico, South Dakota, Texas, Vermont, Virgin Islands and Washington state have until Feb. 3, 2025, to file their 2023 tax year returns.

· Taxpayers affected by Helene in all or parts of Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee and Virginia will have until May 1, 2025, to file their 2023 tax year returns.

· Taxpayers affected by the terrorist attacks in Israel have until Sept. 30, 2025, to file their 2023 returns and pay any tax due.

· Members of the military and others serving in a combat zone typically have 180 days after they leave the combat zone to file returns and pay any taxes due.

IRS Free File and other online resources

IRS Free File is available through Oct. 15, 2024. It:

· Allows qualified taxpayers to prepare and file federal income tax returns online using guided tax preparation software.

· Is available to any person or family with an adjusted gross income (AGI) of $79,000 or less in 2023.

· Includes preparation of returns claiming the Child Tax Credit, the Earned Income Tax Credit and other important credits.

IRS Free File Fillable Forms is available for taxpayers whose 2023 AGI was greater than $79,000 and who are comfortable preparing their own tax return.

IRS Individual Online Account

To help file an accurate tax return, taxpayers can access their Individual Online Account information, including any amount owed, payments, tax records and more. The IRS lets taxpayers access most tax tools online with one account using the same login and password. New users will need their photo identification to verify their identity.

The IRS uses ID.me, a technology provider, for identity verification and sign-in services. If taxpayers have an ID.me account from a state government or federal agency, they can sign in to IRS Online Account. If they’re a new user, they’ll have to create a new ID.me account.

This identity verification process applies to IRS services including Online Account, Get Transcript Online, Online Payment Agreement, Get an Identity Protection PIN (IP PIN), Tax Pro Account, e-Services, Submit Forms 2848 and 8821 Online, and Business Tax Account.

Schedule and pay electronically

Taxpayers can file anytime and schedule their federal tax payments up to the Oct. 15, 2024, due date. They can pay online, by phone or with their mobile device and the IRS2Go app. Some other key points to keep in mind when filing and paying federal taxes electronically include:

· Electronic payment options are easy and flexible. Taxpayers can pay when they file electronically using online tax software. Those who use a tax preparer should ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.

· Electronic Federal Tax Payment System (EFTPS). Convenient, safe and easy, EFTPS allows for payments online or by phone using the EFTPS Voice Response System. EFTPS payments must be scheduled by 8 p.m. ET at least one calendar day before the tax due date.

· IRS Direct Pay. This feature allows taxpayers to pay online directly from a checking or savings account for free and schedule payments up to 365 days in advance.

· Pay by card. Payments can be made with a credit card, debit card or a digital wallet option. These are available through a payment processor. The payment processor, not the IRS, charges a fee for this service.

· The IRS2Go mobile app provides access to mobile-friendly payment options, including Direct Pay and debit or credit card payments.

Tax help

Taxpayers can get answers to many tax law questions by using the IRS's Interactive Tax Assistant tool. Additionally, taxpayers can view tax information in several languages by clicking on the "English" menu located at the top of the IRS.gov home page.

Additional help

· Publication 5136, IRS Services Guide

· Let us help you

Treasury and IRS issue final regulations identifying syndicated conservation easement transactions as abusive tax transactions

Mon, 07 Oct 2024 15:05:30 GMT

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued final regulations identifying certain syndicated conservation easement transactions as "listed transactions" – abusive tax transactions that must be reported to the IRS.

Syndicated conservation easements have been included in the IRS’ annual list of “Dirty Dozen” tax schemes for many years.

“These regulations send a clear signal on abusive syndicated conservation easement arrangements, which generate high fees for promoters and willing participants who gamed the tax system with grossly inflated appraisals,” said IRS Commissioner Danny Werfel. “As the Senate Finance Committee has shown in its review, abusive syndicated conservation easement transactions are operating too often as nothing more than retail tax shelters that let taxpayers buy deductions at the end of any given year.”

In these transactions, investors typically acquire an interest in a partnership that owns land and then claim an inflated charitable contribution deduction based on a grossly overvalued appraisal. Going forward, participants and material advisors will need to report their participation in these transactions using Forms 8886 and 8918.

The IRS previously identified certain SCE transactions as listed transactions in Notice 2017-10. These final regulations, consistent with Notice 2017-10, identify certain SCE transactions as listed transactions. The issuance of these final regulations clarifies that participants and material advisors must report these transactions, including any transactions that were completed in taxable years that are still open.

This listed transaction regulation is part of a multifaceted IRS approach that is succeeding in protecting the integrity of the tax system. On a related front, the IRS has enjoyed significant success in the courts resulting in a number of syndicated partnerships having their grossly inflated easement valuations reduced for tax purposes to what the actual market value was at the time of the donation, with the partners claiming the inflated deduction often incurring substantial penalties.

The commitment to making sure that partnerships, other pass-through entities, and their owners comply with the tax law is a significant part of the agency’s strategic plan.

e-News for Tax Professionals 2024-40

Mon, 07 Oct 2024 14:48:01 GMT

Inside This Issue

Tax relief available to disaster victims in parts of Illinois and those impacted by Hurricane Helene
Dyed diesel penalty relief granted because of Hurricane Helene
IRS deploys 500 employees to help FEMA with Hurricane Helene efforts
Volunteers needed to provide free tax services
IRS invites public feedback on draft Form 7217
2024 IRS Nationwide Tax Forum Online to launch Oct. 14
IRS launches “Corporate Group Mailbox” pilot program
News from the Justice Department’s Tax Division
Technical Guidance

1. Tax relief available to disaster victims in parts of Illinois and those impacted by Hurricane Helene

The IRS is providing tax relief to the following individuals and businesses who have been affected by severe storms and wildfires:

Disaster-area taxpayers in parts of Illinois affected by severe storms and flooding that began on July 13 have until Feb. 3, 2025, to file various individual and business tax returns and make tax payments. Currently, this includes Cook, Fulton, Henry, St. Clair, Washington, Will and Winnebago counties. The same relief will be available to other Illinois localities added later to the disaster area.
Taxpayers in Washington state affected by wildfires that began on June 22 now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments. Currently, this includes the Confederated Tribes and Bands of the Yakama Nation. Individuals and households that reside or have a business in these localities qualify for tax relief. The same relief will be available to any other localities added later to the disaster area.
IRS declared tax relief in seven states impacted by Hurricane Helene. Individuals and businesses in all of Alabama, Georgia, North and South Carolina, as well as portions of Florida, Tennessee and Virginia have until May 1, 2025, to file various federal individual and business tax returns and make required payments.

The IRS offers relief to any area designated by the Federal Emergency Management Agency (FEMA), and the same relief will be available to other states and localities that receive FEMA disaster declarations. The current list of eligible localities is available on the Tax relief in disaster situations page on IRS.gov.

2. Dyed diesel penalty relief granted because of Hurricane Helene

In response to Hurricane Helene-related disruptions, the IRS 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 on the highway throughout Alabama, Georgia, North Carolina and South Carolina. Selected counties in Florida, Tennessee and Virginia will be subject to the same rules.

3. IRS deploys 500 employees to help FEMA with Hurricane Helene efforts

The IRS deployed over 500 workers to assist with the Federal Emergency Management Agency (FEMA) disaster relief efforts to aid Hurricane Helene victims. To assist FEMA with phone operations, the IRS sent representatives from Dallas and Philadelphia earlier this week. Employees of the IRS will take the initial information from callers, assist with federal relief as IRS Criminal Investigation (IRS-CI) agents will help with search and rescue efforts and other relief work.

4. Volunteers needed to provide free tax services

The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs are currently seeking volunteers for the upcoming filing season. The IRS’s peak period for enlisting volunteers is October through January. Individuals can enroll during other months, but their information will be held until IRS partners are accepting volunteers for the next filing season. No experience is necessary to become a VITA or TCE volunteer; free specialized training is provided by the IRS. Available positions are not limited to tax preparation and can include interpreters, greeters and computer specialists. Volunteers have the option to participate at both in-person and virtual sites. Hours are flexible with many sites operating at night and on weekends. Locating a nearby free tax help site is simple. They can often be found in local libraries, community centers, schools and churches. Locate the VITA/TCE site closest to you by using the VITA Locator Tool.

For additional information or to learn more about becoming a VITA/TCE volunteer, visit IRS tax volunteers.

5. IRS invites public feedback on draft Form 7217

Tax Pros: The IRS welcomes public feedback on draft Form 7217 and its accompanying instructions. On Aug. 28, the IRS released draft Form 7217, with the new title “Partner’s Report of Property Distributed by a Partnership.” The new tax form will be used for distributions to partners made in the 2024 tax year. The form’s objective is to document every property distribution that a partner gets from a partnership. According to draft instructions posted by the IRS on Sept. 3, any partner receiving a property distribution from a partnership is required to file Form 7217. Comments can be submitted to the IRS about drafts, instructions or publications on the IRS Draft tax forms page.

6. 2024 IRS Nationwide Tax Forum Online to launch Oct. 14

The 2024 IRS Nationwide Tax Forum Online will go live on Oct. 14, providing tax professionals access to interactive video seminars and downloadable resources and materials from the 2024 IRS Nationwide Tax Forum. This year, the Nationwide Tax Forum Online will launch 18 new seminars featuring IRS subject matter experts offering insights into the latest developments in tax law and IRS procedures. Courses can be taken for continuing education (CE) credit for a fee of $29, or they can be reviewed for free (no CE credit). Don’t miss this opportunity to stay informed about important tax changes and further your professional knowledge. Visit the Nationwide Tax Forum Online website to learn more.

7. IRS launches “Corporate Group Mailbox” pilot program

As part of its continuous transformation efforts to increase the number of online tools and enhance user experiences, the IRS’s Independent Office of Appeals has initiated a new pilot program. The “Corporate Group Mailbox” pilot program is designed to improve secure messaging for large business taxpayers with multiple representatives. The use of this new feature permits qualified business taxpayers with a team of representatives to request a Group Mailbox to communicate with the Appeals employee assigned to their case. The pilot program is available now through March 31.

Corporate Group Mailboxes will help Appeals deliver:

Prompt taxpayer service with 24/7 online access to secure digital messages
Streamlined communication with central access available for multiple authorized individuals
Secure records sharing and 
Faster case resolution

Large business taxpayers represented by multiple individuals with an open case in Appeals should ask their assigned Appeals employee if this pilot is available for them.

8. News from the Justice Department’s Tax Division

The United States issued a permanent injunction in the U.S. District Court for the Southern District of Florida to permanently bar Gregory Salgado and his tax return preparation business from preparing federal income tax returns for others. According to the complaint, Salgado entered a guilty plea in 2012 for filing a false return for himself and another taxpayer. The IRS levied civil penalties against Salgado totaling more than $500,000 for intentionally underreporting tax on returns he prepared for customers. The complaint alleges neither Salgado’s conviction, 33-month incarceration nor civil penalties corrected his behavior. After his release from prison in August 2015, Salgado continued to prepare thousands of returns. Salgado is required by the court’s order to pay $85,000 and notify all the individuals for whom he or his business prepared federal tax returns between January 2019 and the present of the injunction.

9. Technical Guidance

Notice 2024-70 explains the circumstances under which the four-year replacement period under section 1033(e)(2) is extended for livestock sold on account of drought.

Notice 2024-72 postpones various time-sensitive deadlines for taxpayers affected by the terrorist attacks in Israel throughout 2023 and 2024.

Revenue Ruling 2024-23 holds that European Energy Exchange is a “qualified board or exchange” within the meaning of section 1256(g)(7)(C).

IRS Direct File set to expand availability in a dozen new states and cover wider range of tax situations for the 2025 tax filing season

Fri, 04 Oct 2024 00:38:07 GMT

WASHINGTON – The Internal Revenue Service announced today that Direct File will be available for the 2025 tax filing season in double the number of states than last year’s pilot, and it will cover a wider range of tax situations, greatly expanding the number of taxpayers eligible to use the free e-filing service.

State and eligibility expansion

For the 2025 tax filing season, eligible taxpayers in 24 states will be able to use Direct File: 12 states that were part of the pilot last year, plus 12 new states where Direct File will be available in the upcoming filing season.

During the pilot last year, Direct File was available in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming. For the 2025 tax filing season, Direct File will also be available in Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin.

In 2025, more than 30 million taxpayers in those 24 states will be eligible to use Direct File. Additional states could still join Direct File in 2025, and several states have expressed interest or announced that they will participate in Direct File in 2026.

In addition to doubling the number of states where Direct File will be available, the service will also cover a wider range of tax situations for the 2025 filing season. During the pilot last year, Direct File covered limited tax situations, including wage income reported on a W-2 form, Social Security income, unemployment compensation and certain credits and deductions. For the 2025 filing season, Direct File will support 1099’s for interest income greater than $1,500, retirement income and the 1099 for Alaska residents reporting the Alaska Permanent Fund dividend.

During the pilot, Direct File supported taxpayers claiming the Earned Income Tax Credit, Child Tax Credit and Credit for Other Dependents. This year, Direct File will also cover taxpayers claiming the Child and Dependent Care Credit, Premium Tax Credit, Credit for the Elderly and Disabled, and Retirement Savings Contribution Credits. In addition to covering taxpayers claiming the standard deduction and deductions for student loan interest and educator expenses, this year, Direct File will support taxpayers claiming deductions for Health Savings Accounts. Over the coming years, the IRS will gradually expand Direct File’s scope to support most common tax situations, focusing – in particular – on tax situations that impact working families.

“We’re excited about the improvements to Direct File and the millions more taxpayers who will be eligible to use the service this year,” said IRS Commissioner Danny Werfel. “Above all, our goal is to improve the experience of tax filing itself and help taxpayers meet their obligations quickly and easily. Direct File will be a critical part of achieving that goal as we expand and improve the service.”

Direct File service improvements

For the 2025 filing season, Direct File will include new features to make filing taxes quicker and easier. Direct File users can try a new chat bot to help guide them through the eligibility checker. Live chat will again be available in English and Spanish, and users can opt into additional authentication and verification, which will allow customer service representatives to provide more information.

“User experience, both within the Direct File tool and the integration with state tax systems, will continue to be the foundation for Direct File moving forward,” Werfel said. “We will focus – first and foremost – on continuing to get it right. Accuracy and comprehensive tax credit uptake will be paramount concerns to ensure taxpayers file a correct return and get the refund to which they’re entitled.”

Direct File’s role in the tax system

Following a successful pilot during the 2024 tax filing season, where more than 140,000 taxpayers across 12 states used Direct File, the IRS undertook a comprehensive review of the service and its role in the broader tax system.

Taxpayers across the country told the IRS they want more no-cost electronic filing options. The IRS heard directly from hundreds of organizations across the country, more than 100 members of Congress, individual Direct File users and from those that are interested in using Direct File. Millions of taxpayers who did not live in one of the12 pilot states visited the Direct File website to learn more about the service or asked live chat assistors to make Direct File available in their state.

In May 2024, the IRS announced that Direct File would be a permanent tax filing option, and the service is working with all states interested in participating. In the coming years, Direct File will continue to be one option among many from which taxpayers can choose, and it will complement important options, such as preparation by tax professionals or through commercial software providers, who are critical partners with the IRS in delivering a successful tax system for the nation.

The IRS also noted another side effect of the Direct File pilot was increased attention on all free filing options, including an increase in usage of Free File. The IRS remains committed to the ongoing relationship with Free File, Inc., which has served taxpayers for two decades in the joint effort to provide free commercial software. Last spring, the IRS signed a five-year extension with industry to continue Free File. As the IRS works to expand Direct File, it will work to strengthen all free filing options for taxpayers, including Free File, the Volunteer Income Tax Assistance program (VITA) and the Tax Counseling for the Elderly program (TCE) – all of which saw increased usage and interest last year.

“Direct File is an important component of a stronger, more comprehensive tax system that gives taxpayers electronic filing options that best suit their needs,” Werfel said. “It is a critical tool in the IRS’ effort to meet taxpayers where they are, give them options to interact with us in ways that work for them and help them meet their tax obligations as easily and quickly as possible.”

Direct File will begin accepting tax returns when the filing season opens.

Additional Guidance with Respect to Long-Term, Part-Time Employees, Including Guidance Regarding Application of Section 403(b)(12) to Long-Term, Part-Time Employees under Section 403(b) Plans

Thu, 03 Oct 2024 19:25:25 GMT

Notice 2024-73 provides guidance regarding discrete issues related to the application of the nondiscrimination rules of section 403(b)(12) with respect to the ERISA long-term, part-time (LTPT) employee rules for a section 403(b) plan. The ERISA LTPT rules were added under section 125 of the SECURE 2.0 Act of 2022 and are effective for plan years beginning after December 31, 2024.

This notice also (1) provides that the Department of the Treasury and the Internal Revenue Service anticipate issuing proposed regulations with respect to section 403(b)(12)(D) and guidance with respect to sections 202(c) and 203(b)(4) of ERISA, (2) announces that the final regulation that the Treasury Department and the IRS intend to issue related to long term, part time employees under section 401(k) plans will apply no earlier than to plan years that begin on or after January 1, 2026, and (3) asks for comments on the content of this notice.

Notice 2024-73 will be in IRB: 2024-43, dated 10/21/2024.

Treasury and IRS issue guidance on long-term, part-time employees in 403(b) retirement plans and announce delayed applicability date for related final 401(k) regulation

Thu, 03 Oct 2024 19:24:44 GMT

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued guidance addressing long-term, part-time employees in 403(b) retirement plans under the SECURE 2.0 Act, which applies to 403(b) plans beginning in 2025. These plans are similar to 401(k) plans but are generally for employees of charities and public schools.

Notice 2024-73 includes a question-and-answer section on the application of the nondiscrimination rules for 403(b) plans with respect to long-term, part-time employees, including application of the rules to permitted exclusions from participation for part-time employees and student employees. The notice informs the public that the Treasury Department and the IRS plan to issue additional guidance with respect to section 125 of the SECURE 2.0 Act, including proposed regulations with respect to the rules in today’s notice.

The notice also announces that the final regulation the Treasury Department and the IRS plan to issue for 401(k) plans on long-term, part-time employees will apply no earlier than to plan years beginning on or after Jan. 1, 2026. A proposed regulation related to the rules for long-term, part-time employees in 401(k) plans was issued on Nov. 27, 2023.

The Treasury Department and the IRS welcome public comments on this notice, which provides details on how to submit comments.

IRS relief now available to wildfire victims in parts of Washington; multiple deadlines postponed to Feb. 3, 2025

Thu, 03 Oct 2024 16:23:13 GMT

WASHINGTON — The Internal Revenue Service today announced disaster tax relief for individuals and businesses in the Confederated Tribes and Bands of the Yakama Nation in Washington state affected by wildfires that began on June 22, 2024.

Affected taxpayers now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, this includes the Confederated Tribes and Bands of the Yakama Nation in Washington state.

Individuals and households that reside or have a business in these localities qualify for tax relief. The same relief will be available to any other localities added later to the disaster area. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred beginning on June 22, 2024, and ending on Feb. 3, 2025 (postponement period). As a result, affected individuals and businesses will have until Feb. 3, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 3, 2025, deadline will now apply to:

Any individual, business or tax-exempt organization that has a valid extension to file their 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the storms occurred.
Quarterly estimated income tax payments normally due on Sept. 16, 2024, and Jan. 15, 2025.
Quarterly payroll and excise tax returns normally due on July 31, Oct. 31, 2024, and Jan. 31, 2025.

In addition, penalties for failing to make payroll and excise tax deposits due on or after June 22, 2024, and before July 8, 2024, will be abated, as long as the deposits were made by July 8, 2024.

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for 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. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov.

Additional tax relief

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 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number – 4823-Dr – on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

The IRS may provide additional disaster relief in the future.

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

Reminder about tax return preparation options

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 help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
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 software at no cost. There are products in English and Spanish.
Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040 and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

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.

Relief for Taxpayers Affected by the 2023-2024 Terroristic Action in the State of Israel

Tue, 01 Oct 2024 18:43:25 GMT

Notice 2024-72 postpones various time-sensitive deadlines for taxpayers affected by the terrorist attacks in Israel throughout 2023 and 2024. The notice defines the covered area, identifies categories of “affected taxpayers,” and provides a list of the acts postponed. The postponement period is September 30, 2024, to September 30, 2025. The separate determination of terroristic action and grant of relief in this notice will also postpone acts that were postponed by Notice 2023-71 until September 30, 2025 for taxpayers eligible for relief under both notices.

Notice 2024-72 will be in IRB: IRB 2024-43, dated 10/21/2024.

IRS announces new relief for taxpayers affected by terrorist attacks in Israel: 2023 and 2024 returns and payments are now due Sept. 30, 2025; other relief available

Tue, 01 Oct 2024 18:42:30 GMT

WASHINGTON — The Internal Revenue Service announced today that due to recent terrorist attacks in Israel, the agency is providing additional tax relief to affected individuals and businesses, postponing until Sept. 30, 2025, a wide range of deadlines for filing federal returns, making tax payments and performing other time-sensitive tax-related actions.

Notice 2024-72, posted today on IRS.gov, covers similar groups but is separate from Notice 2023-71, which originally provided relief to taxpayers affected by the Oct. 7, 2023 attacks in Israel.

In both Notice 2023-71 and Notice 2024-72, the IRS is providing relief to taxpayers who, due to the terrorist attacks, may be unable to meet a tax-filing or tax-payment obligation, or may be unable to perform other time-sensitive tax-related actions.

Today’s notice (along with Notice 2023-71) postpones various tax filing and payment deadlines that occurred or will occur during the period from Oct. 7, 2023, through Sept. 30, 2025, for taxpayers eligible for relief under both notices. As a result, affected individuals and businesses have until Sept. 30, 2025, to file returns and pay any taxes that are due during this period. See Notice 2024-72 for additional relief provided and who qualifies for the relief.

The IRS automatically identifies taxpayers whose principal residence or principal place of business is located in the covered area based on previously filed returns and applies relief. Other eligible taxpayers, or their representatives, whose filing address is outside the covered area can obtain relief by calling the IRS disaster hotline at 866-562-5227. Alternatively, international callers may call 267-941-1000.

Reminder about tax-preparation assistance

Any individual or family whose adjusted gross income (AGI) was $79,000 or less in 2023 can use IRS Free File’s Guided Tax Software at no cost. There are products available in English and Spanish.

Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper Form 1040, and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

Volunteers needed across the country to provide free tax services; sign up from Oct. to Jan. for the upcoming filing season

Tue, 01 Oct 2024 16:15:48 GMT

WASHINGTON — The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs are currently recruiting volunteers for the upcoming filing season.

Each year, thousands of volunteers help their community and gain invaluable professional experience. Volunteers often include students, tax professionals, retirees and those looking to help their community.

VITA/TCE sites can be found nationwide and prepare millions of tax returns each year for low-to moderate-income taxpayers at no cost. The free tax program is generally available for individuals and families with low to moderate incomes and help underserved populations such as persons with disabilities, limited English speakers, senior citizens and more.

No experience is necessary to become a VITA or TCE volunteer. Free specialized training is provided by the IRS. Available positions are not limited to tax preparation and can include interpreters, greeters and computer specialists.

Volunteers have the option to participant at both in-person and virtual sites. Hours are often flexible with many sites operating at night and on weekends. Finding a nearby free tax help location is easy. They can often be found in local libraries, community centers, schools and churches. Locate the VITA/TCE site closest to you by using the VITA Locator Tool.

The IRS’ peak period for recruiting volunteers is October through January. Individuals can sign up during other months, but their information will be held until IRS partners are accepting volunteers for the next filing season. Those who signed up within the last two months do not need to sign up again unless their contact information has changed.

To learn more about becoming a VITA/TCE volunteer, visit IRS Tax Volunteers. Those interested can sign up using the VITA/TCE Volunteer and Partner Sign Up. Approximately 14 days after signing up, the IRS will provide a list of available local VITA/TCE sites and an invite to a virtual orientation.

IRS relief now available to storm victims in parts of Illinois; multiple deadlines postponed to Feb. 3, 2025

Tue, 01 Oct 2024 16:14:30 GMT

WASHINGTON — The Internal Revenue Service today announced disaster tax relief for individuals and businesses in parts of Illinois affected by severe storms, tornadoes, straight-line winds and flooding that began on July 13, 2024.

Affected taxpayers now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, this includes Cook, Fulton, Henry, St. Clair, Washington, Will and Winnebago counties in Illinois.

Individuals and households that reside or have a business in any one of these localities qualify for tax relief. The same relief will be available to any other counties added later to the disaster area. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred beginning on July 13, 2024, and ending on Feb. 3, 2025 (postponement period). As a result, affected individuals and businesses will have until Feb. 3, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 3, 2025, deadline will now apply to:

Any individual, business or tax-exempt organization that has a valid extension to file their 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the storms occurred.
Quarterly estimated income tax payments normally due on Sept. 16, 2024, and Jan. 15, 2025.
Quarterly payroll and excise tax returns normally due on July 31, Oct. 31, 2024, and Jan. 31, 2025.

In addition, penalties for failing to make payroll and excise tax deposits due on or after July 13, 2024, and before July 29, 2024, will be abated, as long as the deposits were made by July 29, 2024.

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for 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. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov.

Additional tax relief

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 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number – 4819-DR – on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

The IRS may provide additional disaster relief in the future.

Reminder about tax return preparation options

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 help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
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 software at no cost. There are products in English and Spanish.
Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040 and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

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.

e-News for Tax Professionals 2024-39

Fri, 27 Sep 2024 20:12:52 GMT

Issue Number: 2024-39

Inside This Issue

1. IRS opens new process for payroll companies, third-party payers to help clients resolve incorrect claims for the Employee Retention Credit

The IRS is opening a supplemental claim process to help third-party payers and their clients resolve incorrect claims for the Employee Retention Credit (ERC). Third-party payers report and pay clients’ federal employment taxes under the third-party payer’s Employer Identification Number. They handle clients’ payroll and tax reporting duties. Some of these TPPs filed ERC claims for multiple employers. If a third-party payer’s client has since determined it is ineligible for the ERC and wants to resolve their claim, it is the third-party payer that needs to correct it. This supplemental claim process lets a third-party payer that filed a prior claim with multiple clients “withdraw” only some clients while maintaining the claims of the qualifying clients.

2. Chief of IRS Independent Office of Appeals selected

The IRS announced that Elizabeth Askey has been selected to serve as the Chief of the IRS Independent Office of Appeals. Askey will set strategy and oversee the operations of Appeals, which resolves tax controversies between taxpayers and the IRS without litigation. Askey has served as the Deputy Chief of Appeals since December 2022 and has been acting as the Appeals Chief since April, responsible for approximately 1,750 Appeals employees nationwide. Appeals is independent of the IRS compliance functions, including the examination and collection areas that make tax assessments and initiate collection actions.

3. Technical Guidance

Revenue Ruling 2024-22 holds that Bourse de Montréal (MX) is a “qualified board or exchange” within the meaning of section 1256(g)(7)(C). MX is a regulated exchange of Québec, Canada that offers electronic trading. Revenue Ruling 2024-22 will be published in IRB: 2024-43 DATED: October 21, 2024

Revenue Procedure 2024-38 provides guidance on the effect on the income requirements under sections 142(d) and 42 of the alternative income eligibility requirements for the Department of Housing and Urban Development–Veterans Affairs Supportive Housing (HUD–VASH) program. Revenue Procedure 2024-38 will be in IRB-2024-43, dated October 21, 2024.

Notice 2024-68 announces the special per diem rates effective October 1, 2024, which taxpayers may use to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home. This notice provides the special transportation industry rate, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method. Use of a per diem substantiation method is not mandatory.

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IRS opens new process for payroll companies, third-party payers to help clients resolve incorrect claims for the Employee Retention Credit

Thu, 26 Sep 2024 20:49:36 GMT

WASHINGTON — The Internal Revenue Service announced today that the agency is opening a supplemental claim process to help third-party payers and their clients resolve incorrect claims for the Employee Retention Credit.

This supplemental claim process lets a third-party payer that filed a prior claim with multiple clients “withdraw” only some clients while maintaining the claims of the qualifying clients.

“The supplemental claim program is a critical step to improve the IRS’s ability to process Employee Retention Credit claims for this more complex segment of taxpayers,” said IRS Commissioner Danny Werfel. “As we continue to accelerate and intensify our work in this area to help qualifying small businesses and protect against improper claims, we continue to explore and develop additional ways to speed our work on this incredibly detailed credit where the number of claims exploded following aggressive marketing.”

About supplemental claims

A supplemental claim is an adjusted employment tax return that allows a third-party payer to correct and/or consolidate previous claims that they filed on or before Jan. 31, 2024, if those claims have not yet been processed by the IRS.

By filing a supplemental claim, the third-party payer is asking the IRS not to process outstanding adjusted employment tax returns for the tax period. The IRS will treat claims filed before the supplemental claim as if they were never filed.

The supplemental claim process is for third-party payers to which all of the following apply:

The third-party payer has filed one or more claims aggregating Employee Retention Credits for itself and/or clients using the TPP’s Employer Identification Number.
The third-party payer made the claim on an adjusted employment tax return (Forms 941-X, 943-X, 944-X or CT-1X).
The IRS has not processed any of the claims the third-party payer is including in the supplemental claim.

This process is not for:

Common law employers who did not use a third-party payer and instead filed adjusted employment tax returns using their own Employer Identification Number. These employers may be eligible for either the claim withdrawal process if their claim is pending, or for the IRS’s second Voluntary Disclosure Programif they received the ERC either as a refund or a credit against tax owed.
Third-party payers that received the full amount of ERC claimed on behalf of themselves and their clients – either as a refund or a credit against tax owed. They may be eligible for the IRS’s second Voluntary Disclosure Program.

Submitting supplemental claims related to ERC

A third-party payer must prepare one supplemental claim for each tax period filed on or before Jan. 31, 2024. Each claim must include the correct amount of ERC and any other corrections for that tax period. The third-party payer should use the adjusted employment tax return for their type of business – Form 941-X, Form 943-X, Form 944-X or Form CT1-X – to prepare the supplemental claim.

The third-party payer should not include ERC amounts that were filed after Jan. 31, 2024. The amount of ERC on the supplemental claim must be equal to or less than the cumulative amount of ERC claimed on the returns the third-party payer is replacing by filing the supplement claim.

Third-party payers can submit a supplemental claim using a computer or mobile device to fax the documents by 11:59 p.m., Nov. 22, 2024.

For details see Filing a Supplemental Claim for the Employee Retention Credit and Supplemental Claim Frequently Asked Questions for Third-Party Payers.

What happens next

The IRS will review the supplemental claim to make sure it has all items necessary for it to be processed.

If the supplemental claim is complete, the IRS will review the claim and determine if it will be accepted as filed, partially allowed/disallowed, or if the supplemental claim needs additional review or examination.

The supplemental claim becomes the sole adjusted employment tax return for the tax period. The IRS will review the supplemental claims instead of adjusted employment tax returns filed on or before Jan. 31, 2024.

Alternative income eligibility requirements for the Department of Housing and Urban Development–Veterans Affairs Supportive Housing (HUD–VASH) program

Tue, 24 Sep 2024 19:17:02 GMT

Revenue Procedure 2024-38 provides guidance on the effect on the income requirements under §§ 142(d) and 42 of the alternative income eligibility requirements for the Department of Housing and Urban Development–Veterans Affairs Supportive Housing (HUD–VASH) program.

Revenue Procedure 2024-38 will be in IRB-2024-43, dated October 21, 2024.

Elizabeth Askey named Chief of IRS Independent Office of Appeals

Mon, 23 Sep 2024 17:57:25 GMT

WASHINGTON — The Internal Revenue Service today announced that Elizabeth Askey has been selected to serve as the Chief of the IRS Independent Office of Appeals (Appeals).

Askey will set strategy and oversee the operations of Appeals, which resolves tax controversies between taxpayers and the IRS without litigation. Askey has served as the Deputy Chief of Appeals since December 2022 and has been acting as the Appeals Chief since April, responsible for approximately 1,750 Appeals employees nationwide.

“Liz has a wide range of experience and expertise both inside and outside the IRS,” said IRS Commissioner Danny Werfel. “Her leadership will enhance and support the talented team of Appeals employees working with taxpayers every day to resolve tax controversies fairly and impartially without going to court.”

Appeals is independent of the IRS compliance functions, including the examination and collection areas that make tax assessments and initiate collection actions. Appeals’ mission is to resolve tax controversies without litigation on a basis that is fair and impartial to both the government and taxpayers.

Askey joined the IRS Office of Chief Counsel in 2019, where she served as Deputy Division Counsel (International) for the Large Business and International Division. Prior to joining the IRS, she spent nearly 30 years as a tax controversy and policy practitioner at several law and accounting firms and in private industry, where her focus was resolving administrative controversies in examinations and at Appeals.

Askey also served as an attorney-advisor and associate tax legislative counsel in the Office of Tax Policy at the Department of the Treasury from 1999-2002.

She received her Bachelor of Arts degree from Bryn Mawr College and her Juris Doctor degree from Harvard Law School.

Askey is a fellow of the American College of Tax Counsel and admitted to practice before the U.S. Tax Court, the U.S. Court of Federal Claims and the U.S. Court of Appeals for the Federal Circuit as well as the state bars of the District of Columbia, New York and Pennsylvania.

e-News for Tax Professionals 2024-38

Fri, 20 Sep 2024 20:19:51 GMT

Inside This Issue

Directions for responding to Employee Retention Credit disallowance letter
IRS warns of "mills" taking advantage of taxpayers with Offer in Compromise program
Tax relief now available to Debby victims in parts of Pennsylvania; various deadlines postponed to Feb. 3
IRS Electronic Tax Administration Advisory Committee selects 10 new members
Treasury, IRS issue guidance on the Alternative Fuel Vehicle Refueling Property Credit
IRS provides an update to frequently asked questions for the Premium Tax Credit
Sept. 26 webinar deals with disasters from an individual tax perspective
Tax pros may be contacted about IRS survey
Technical Guidance

1. Directions for responding to Employee Retention Credit disallowance letter

Businesses that claimed the Employee Retention Credit may have received IRS Letter 105-C, a disallowance letter, if the IRS identified their claim as ineligible.
A new page on IRS.gov, Understanding Letter 105-C, Disallowance of the Employee Retention Credit, can help tax professionals and business clients learn about next steps if they disagree with the disallowance. This page has information on:
• Rechecking eligibility for the credit before disagreeing
• Responding to the letter, including what documentation to send the IRS
• Requesting an appeal or filing suit and the timelines to do so

2. IRS warns of "mills" taking advantage of taxpayers with Offer in Compromise program

The Internal Revenue Service reminds taxpayers to beware of promoters claiming their services are necessary to resolve unpaid taxes owed to the IRS while charging excessive fees, often with no results. These unscrupulous “mills” use aggressive marketing to make false claims of guaranteed settlements for “pennies-on-the-dollar,” or will say there’s a limited window of time to resolve tax debts through the IRS Offer in Compromise (OIC) program. "Taxpayers should be cautious of aggressive marketing that can mislead them,” said IRS Commissioner Danny Werfel. “Many OIC mills charge steep fees, give false assurances and can take advantage of taxpayers with empty promises that their tax debt will disappear. The result is often good money paid for bad results.”

3. Tax relief now available to Debby victims in parts of Pennsylvania; various deadlines postponed to Feb. 3

The Internal Revenue Service today announced disaster tax relief for individuals and businesses in parts of Pennsylvania affected by Tropical Storm Debby. Affected taxpayers now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments. This relief is comparable to that provided in other states impacted by Debby. The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, this includes Lycoming, Potter, Tioga and Union counties in Pennsylvania.

4. IRS Electronic Tax Administration Advisory Committee selects 10 new members

The Internal Revenue Service has appointed 10 new members to the Electronic Tax Administration Advisory Committee or ETAAC. Founded by statute in 1998, the ETAAC serves as a public forum for discussing electronic tax administration issues. Initially, the committee's main objective was to encourage paperless filing of tax and information returns. However, its focus has broadened in recent years. ETAAC members closely collaborate with the Security Summit, a partnership involving the IRS, state tax administrators and the national tax industry to combat identity theft and refund fraud. The committee is made up of state tax officials, cybersecurity and information security experts, tax professionals, tax software developers and representatives from the payroll and financial sectors, along with consumer groups.

5. Treasury, IRS issue guidance on the Alternative Fuel Vehicle Refueling Property Credit

The Department of Treasury and Internal Revenue Service issued proposed regulations to provide guidance for the Alternative Fuel Vehicle Refueling Property Credit.

The Inflation Reduction Act amended the credit for qualified alternative fuel vehicle refueling property. The changes apply to qualified alternative fuel vehicle refueling property placed in service after Dec. 31, 2022, and before Jan. 1, 2033.

The credit amount for property not subject to depreciation is 30% of the cost of the qualified property placed in service during the tax year. The credit amount for depreciable property is 6% of the cost of the qualified property placed in service during the tax year but may be increased to 30% of the cost of the qualified property if the prevailing wage and apprenticeship requirements are met. The credit is limited to $1,000 per item of non-depreciable property and $100,000 per item of depreciable property.

6. IRS provides an update to frequently asked questions for the Premium Tax Credit

The Internal Revenue Service today updated its frequently asked questions in Fact Sheet 2024-30 PDF for the Premium Tax Credit. This revision is under the Affordability of Employer Coverage for Employees and for Family Members of Employees section, specifically Q11, to provide the required contribution percentage for determining whether employer coverage is considered affordable for plan years beginning in 2025. The revision is based on Revenue Procedure 2024-35.

7. Sept. 26 webinar deals with disasters from an individual tax perspective

The Internal Revenue Service announced today that it will offer a free webinar Sep. 26 on dealing with disasters from an individual tax perspective. The webinar will begin at 2 p.m. ET. During this free webinar, the IRS will provide an overview of awareness of tax-related disaster relief, types of relief, casualty losses, federally declared disaster areas, and other permanent relief. Register here.

8. Tax pros may be contacted about IRS survey

Tax professionals may be randomly selected to take part in a voluntary survey to help the IRS improve services to the tax professional community and taxpayers. Survey invitations will arrive by mail with phone follow ups. This is not a scam. Please don’t hang up. The survey will be conducted through Dec. 6 by ICF, an independent research firm. Tax professionals can complete the survey online or by mail in about 20 minutes. It covers topics like e-filing, due diligence requirements, data security and electronic document submission. All responses are anonymous and confidential. The survey won’t ask for personal info about tax pros or their clients.

Calls will be on weekdays from 8:30 a.m. to 6:30 p.m. local time from a Kansas City area code (816).

For more information email TaxProfessional@icfsurvey.com or call (888) 504-6387.

9. Technical Guidance

Revenue Procedure 2024-37 provides guidance to issuers of tax-exempt and other tax-advantaged bonds regarding the procedures for filing claims for recovery of overpayments of rebate, penalty in lieu of rebate, and yield reduction payments under section 148 of the Internal Revenue Code. Revenue Procedure 2024-37 will be in IRB: 2024-41, dated October 7, 2024.

Notice 2024-67 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for August 2024 used under § 417(e)(3)(D), the 24-month average segment rates applicable for September 2024, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv). Notice 2024-67 will be in IRB: 2024-41, dated October 7, 2024.

Revenue Ruling 2024-21 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, for October 2024.

Special per diem rates effective Oct. 1, 2024

Fri, 20 Sep 2024 18:13:00 GMT

[Rev. Proc. 2019-48 provides the rules for using per diem rates, rather than actual expenses, to substantiate the amount of expenses for lodging, meals, and incidental expenses for travel away from home. Taxpayers who use per diem rates to substantiate the amount of travel expenses under Rev. Proc. 2019-48 may use the federal per diem rates published annually by the General Services Administration. Rev. Proc. 2019-48 allows certain taxpayers to use a special transportation industry rate or to use rates under a high-low substantiation method for certain high-cost localities. The IRS announces these rates and the rate for the incidental expenses only deduction in an annual notice.]

Use of a per diem substantiation method is not mandatory. A taxpayer may substantiate actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence for proper substantiation.

Notice 2024-68 will be in IRB: 2024-41, dated October 7, 2024.

IRS provides an update to frequently asked questions for the Premium Tax Credit

Thu, 19 Sep 2024 18:52:23 GMT

WASHINGTON —The Internal Revenue Service today updated its frequently asked questions (FAQs) in Fact Sheet 2024-30 for the Premium Tax Credit.

These FAQs supersede earlier FAQs that were posted in FS 2024-04 on Feb. 9, 2024.

Today’s revision is under the Affordability of Employer Coverage for Employees and for Family Members of Employees section, specifically Q11, to provide the required contribution percentage for determining whether employer coverage is considered affordable for plan years beginning in 2025. The revision is based on Revenue Procedure 2024-35.

More information about reliance is available.

What to know and do about tax-related scams and schemes

Thu, 19 Sep 2024 15:23:43 GMT

Thousands of people have lost money and personal information to tax scams. Scammers use regular mail, phone and email to trick individuals, businesses, payroll providers and tax professionals.

In this edition

Coalition to combat tax scams and schemes
Recognize scams and schemes
Tips for taxpayers
Tips for businesses
Tips for tax professionals
How you can avoid tax scams and schemes
Related information

Coalition to combat tax scams and schemes

The IRS, state tax agencies and the tax industry stood up a new task force called Coalition Against Scam and Scheme Threats (CASST) to combat the growth of scams and schemes threatening taxpayers and tax systems. The effort follows increased scams and schemes during the past filing season that aimed to exploit vulnerable taxpayers while enriching fraudsters and promoters.

CASST announcement

Recognize scams and schemes

Click on image to play IRS YouTube video: Here's what to know about tax scams

The best way to avoid falling prey to misleading tax advice is to get reliable tax information from a trusted source.

What to know, what to do

Tips for taxpayers

Getting a call, text or letter that claims to be from the IRS, or seeing information online about a big tax refund, might be a scam or just bad tax advice. The IRS urges taxpayers to look out for:

A big payday — if it sounds too good to be true, it probably is
Threats or urgent requests to pay right now or else, or to pay in a specific way
Misspellings and grammatical errors
Links, attachments or odd URLs — all trusted IRS links go to irs.gov

Recognize tax scams and fraud

Tips for businesses

The IRS issued alerts about a series of scams and inaccurate social media advice including misleading guidance to claim existing and nonexistent tax credits. The IRS urges taxpayers to stay vigilant to unsolicited emails or texts and to avoid clicking any links or attachments if they are uncertain of its source.

Protect your business

Tips for tax professionals

The IRS and the Security Summit partners urge tax professionals to stay alert against tax-related scams, schemes and identity theft. To help the tax professional community and their clients, the partners highlight tips on how tax pros can avoid these threats to protect clients and themselves in the annual summer campaign Protect Your Clients; Protect Yourself.

Protect your clients; Protect yourself

How you can avoid tax scams and schemes

Refer to irs.gov for official tax information
Make sure it’s the IRS reaching out: See how to know if it’s really the IRS contacting you or give the IRS a call
Protect yourself and your information: Get an Identity Protection PIN and establish an IRS Online Account
If you were scammed — report it

Find out more on irs.gov/tax-scams

Related information

Scam safety tip: Follow IRS verified social media accounts and subscribe to e-news services

IRS: Free Sept. 26 webinar on dealing with disasters from an individual tax perspective

Thu, 19 Sep 2024 14:31:08 GMT

WASHINGTON — The Internal Revenue Service announced today that it will offer a free webinar September 26 on dealing with disasters from an individual tax perspective.

The webinar will begin at 2 p.m. ET, Thursday, Sept. 26, 2024.

During this free webinar, the IRS will provide an overview of:

Awareness of tax-related disaster relief.
Types of relief.
Casualty losses.
Federally declared disaster areas.
Other permanent relief.

There will also be a live question and answer session. Though primarily aimed at tax professionals, anyone is welcome to attend.

Certificates of completion are being offered. Tax professionals can earn up to two continuing education credits in the category of Federal Tax. Closed captioning will also be offered.

Time: 2 p.m. (Eastern); 1 p.m. (Central); 12 p.m. (Mountain); 11 a.m. (Arizona and Pacific), 8 a.m. (Hawaii–Aleutian Time Zone).

Registration: Visit the Internal Revenue Service webinar website.

Questions can be emailed to cl.sl.web.conference.team@irs.gov.

IRS relief now available to Debby victims in parts of Pennsylvania; various deadlines postponed to Feb. 3, 2025

Wed, 18 Sep 2024 19:16:06 GMT

WASHINGTON — The Internal Revenue Service today announced disaster tax relief for individuals and businesses in parts of Pennsylvania affected by Tropical Storm Debby.

Affected taxpayers now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments. This relief is comparable to that provided in other states impacted by Debby.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, this includes Lycoming, Potter, Tioga and Union counties in Pennsylvania.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred beginning on Aug. 9, 2024, and ending on Feb. 3, 2025 (postponement period). As a result, affected individuals and businesses will have until Feb. 3, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 3, 2025, deadline will now apply to:

Any individual, business or tax-exempt organization that has a valid extension to file their 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the storm occurred.
Quarterly estimated income tax payments normally due on Sept. 16, 2024, and Jan. 15, 2025.
Quarterly payroll and excise tax returns normally due on Oct. 31, 2024, and Jan. 31, 2025.

In addition, penalties for failing to make payroll and excise tax deposits due on or after Aug. 9, 2024, and before Aug. 26, 2024, will be abated, as long as the deposits were made by Aug. 26, 2024.

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for 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. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov.

Additional tax relief

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 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number – 4815-DR – on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

The IRS may provide additional disaster relief in the future.

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

Reminder about tax return preparation options

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 help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
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 software at no cost. There are products in English and Spanish.
Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040 and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

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.

Modification of Notice 2024-20

Wed, 18 Sep 2024 13:57:52 GMT

Notice 2024-64 modifies Notice 2024-20, 2024-7 I.R.B. 668, by updating the mapping tools referenced in Notice 2024-20 and extending section 5.03 in Notice 2024-20.

On February 12, 2024, the Treasury Department and the IRS published Notice 2024-20, 2024-7 I.R.B. 668, to provide guidance on eligible census tracts for the § 30C credit in advance of the 2023 filing season and to announce the intent to propose regulations for the credit. Section 5.01 of Notice 2024-20 refers taxpayers to appendices with lists of eligible census tracts based on either the 2015 census tract boundaries or the 2020 census tract boundaries, as relevant, using a unique identifier called an 11-digit census tract GEOID. Section 5.02 of Notice 2024-20 provides website addresses for mapping tools that taxpayers can use to identify the 11-digit census tract GEOID for a location where a property is placed in service.

Section 5.03 of Notice 2024-20 provides that until the issuance of the forthcoming proposed regulations, taxpayers may rely on Notice 2024-20 and its appendices for purposes of determining whether qualified alternative fuel vehicle refueling property has been placed in service in an eligible census tract. In addition, until the issuance of the forthcoming proposed regulations, the IRS will administer § 30C in a manner consistent with the appendices and related rules described in this notice. This notice modifies sections 5.02 and 5.03 of Notice 2024-20 by updating the mapping tools referenced in Notice 2024-20 and extending section 5.03 in Notice 2024-20.

Notice 2024-64 will be in IRB: 2024-39, dated September 23, 2024.

Treasury, IRS issue guidance on the Alternative Fuel Vehicle Refueling Property Credit

Wed, 18 Sep 2024 13:56:32 GMT

WASHINGTON – The Department of Treasury and Internal Revenue Service issued proposed regulations to provide guidance for the Alternative Fuel Vehicle Refueling Property Credit.

Property must be placed in service in an eligible census tract to qualify for the credit. An eligible census tract is any population census tract that is a low-income community or any population census tract that is not an urban area. The proposed regulations provide guidance for determining whether a population census tract is an eligible census tract.

The proposed regulations also provide guidance on how to calculate the credit, including what constitutes an “item” of qualified alternative fuel vehicle refueling property, the additional costs considered in determining the cost of the item, and how to treat dual-use property.

Additionally, today’s guidance provides definitions, general rules, and special rules, including basis reduction, recapture, and apportionment of the credit between business-use and personal-use property.

Today, the Treasury Department and the IRS also issued Notice 2024-64 that modifies Notice 2024-20, that was published on Feb. 12, 2024 that provided guidance on eligible census tracts.

Notice 2024-20 refers taxpayers to Appendix A and Appendix B that contain eligible census tracts using a unique identifier called an 11-digit census tract GEOID.

Today’s notice modifies Notice 2024-20 by updating the mapping tools that taxpayers can use to identify the 11-digit census tract GEOID for a location where a property is placed in service. Notice 2024-64 also extends the time period to which Notice 2024-20 applies.

More information about the alternative fuel vehicle refueling property credit may be found on the Inflation Reduction Act of 2022 page on IRS.gov.

2024 Service to the Citizen Awards: Kenneth C. Corbin wins Government Executive of the Year

Tue, 17 Sep 2024 19:00:35 GMT

WASHINGTON – The Internal Revenue Service today announced that Taxpayer Services Chief Kenneth C. Corbin has received the 2024 Government Executive of the Year Award from the Service to the Citizen Awards program.

This recognition highlights Corbin’s outstanding contributions to public service and his dedication to improve the service provided to taxpayers. The prestigious annual award recognizes federal leaders who demonstrate excellence in delivering services that impact the public.

“This is such a well-deserved honor,” said IRS Commissioner Danny Werfel. “Ken’s commitment to service is evident in all the ways he leads his team, making sure they have what they need to go above and beyond for the nation’s taxpayers.”

Corbin serves as the Taxpayer Services Chief at the IRS. He is responsible for directing efforts to ensure the IRS serves taxpayers through multiple platforms and channels. The IRS’s Taxpayer Services Division assists taxpayers in understanding and fulfilling their tax responsibilities. The division is responsible for the processing of more than 150 million individual income tax returns, provides customer service, offers resources for tax preparation and conducts outreach and education to help improve taxpayer compliance and overall engagement.

Under Corbin’s leadership, the IRS has implemented several transformative initiatives focused on improving taxpayer online services via IRS.gov, reducing wait times for tax help and simplifying tax filing processes. His initiatives have resulted in an 84% customer approval rating and 3.7 billion views of IRS digital resources, enabling millions of Americans to access tax-related information and services more efficiently.

“I am deeply honored to receive this award,” said Corbin. “This recognition is a testament to the hard work and dedication of the entire IRS team, which strives every day to make our service more accessible, efficient and responsive to the needs of the American people.”

Corbin, who began his IRS career in 1986, has served as IRS Taxpayer Services Chief since 2017. He helped introduce the “Where’s My Refund” tool, one of the most popular features on IRS.gov, which helps taxpayers track their refund. Among the more visible initiatives implemented under Ken’s leadership are a callback feature to reduce hold times for taxpayers calling IRS toll free, efforts to support disabled and underserved communities, services offered in multiple languages and enhanced accessibility features on IRS platforms. His vision has focused on leveraging technology to create a taxpayer-first approach, ensuring that all taxpayers receive equitable service and support.

The award was presented to Corbin at the Service to the Citizen Awards ceremony on Sept. 13 in Washington, D.C.

More than 100 IRS employees were also named as 2024 Service to the Citizen Award winners for delivering for taxpayers. IRS employees were recognized in Category 1: Building a Customer-Focused Culture and in Category 2: Delivering Excellence in Digital Services, including now retired Taxpayer Services Deputy Chief Kevin Morehead and IT Senior Executive Jim Keith.

The Service to the Citizen Awards program recognizes federal, state and local government or industry employees and teams who demonstrate excellence in delivering services that impact the lives of the public. Presented by the Public Service Leadership Academy, the awards honor those who have shown innovation, dedication and impact in enhancing customer service, digital services and overall government responsiveness to the needs of citizens.

Visit Service to the Citizen for more information about the Government Executive of the Year Award and the Service to the Citizen Awards.

IRS Electronic Tax Administration Advisory Committee selects 10 new members

Tue, 17 Sep 2024 16:14:25 GMT

WASHINGTON — The Internal Revenue Service has appointed 10 new members to the Electronic Tax Administration Advisory Committee or ETAAC.

Founded by statute in 1998, the ETAAC serves as a public forum for discussing electronic tax administration issues. Initially, the committee's main objective was to encourage paperless filing of tax and information returns. However, its focus has broadened in recent years. ETAAC members closely collaborate with the Security Summit, a partnership involving the IRS, state tax administrators and the national tax industry to combat identity theft and refund fraud.

The committee is made up of state tax officials, cybersecurity and information security experts, tax professionals, tax software developers and representatives from the payroll and financial sectors, along with consumer groups.

The following individuals have been appointed to serve three-year terms on the committee beginning in September 2024:

David Casey, Madison, Wisconsin - Casey was appointed Secretary of the Wisconsin Department of Revenue in April 2024. He previously served as deputy secretary of the department from 2019 to 2022. Casey has a bachelor’s degree in economics from Grinnell College. Additionally, he holds a Master of Public Administration in public policy and management from Carnegie Mellon University.

Manuel Dominguez, Kansas City, Missouri - Dominguez is Program Manager, Agency and Industry Relations with The Tax Institute at H&R Block. He participates in the IRS Security Summit and the Identity Theft Tax Refund Fraud Information Sharing and Analysis Center. He is a co-lead for the Council for Electronic Revenue Communication Advancement's Digital Services working group. Dominguez holds a bachelor’s degree in accounting from the University of Phoenix.

Jane Chou, San Diego, California - Chou is a tax consultant, tax professional, Chinese Mandarin interpreter and founder of CKYFS Inc. Chou belongs to the National Association of Tax Professionals. She is a U.S. Navy veteran who served as a Military Cryptologic Technician Interpretive. Chou holds a bachelor’s degree in liberal arts from Regent College.

Richard Lavina, Coconut Grove, Florida - Lavina is co-founder and CEO of Taxfyle. He is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants (AICPA) and Florida Institute of CPAs. He previously worked at PwC. Lavina holds a Master of Accountancy from Florida International University and Bachelor of Business Administration from the University of Miami.

Jack Mao, San Francisco, California - Mao is founder and CEO of ZipperTax, Inc. Mao is an IRS enrolled agent and manages his own tax firm in Palo Alto, California, as well as a mid-size Volunteer Income Tax Assistance site in partnership with the IRS and Stanford University. Mao studied computer science at Stanford.

Jose Martinez, East Rutherford, New Jersey - Martinez is in private accounting practice and is the founder of J.A. Martinez Jr. Inc. He has over 25 years of experience as a tax accountant and has worked with a variety of accounting firms. Martinez holds a bachelor’s degree in accounting from Rutgers.

Ryan Minnick, Orlando, Florida - Minnick is chief operating officer with the Federation of Tax Administrators (FTA) and a regular host of FTA’s podcast, FTA Tax Breaks. Minnick is also a speaker and writer on the topic of technology and its application in tax and revenue. He holds a Bachelor of Business Administration from the College of William and Mary.

Amy Nowak, New Orleans, Louisiana - Nowak is a senior attorney in tax law at Frost Law in Annapolis, Maryland. She received her Juris Doctor from Loyola University New Orleans College of Law and her Master of Laws in taxation from Boston University School of Law. During her time in law school, Nowak was a legal intern with the IRS Office of Chief Counsel.

Graham O’Neill, Philadelphia, Pennsylvania - O'Neill has broad experience in IRS Volunteer Income Tax Assistance program management and tax credit program administration. O’Neill is the former Director of Partnerships & Virtual Tax Operations at the Campaign for Working Families, and former Administrator of Taxpayer Assistance & Credit Programs for the Philadelphia Department of Revenue. O’Neill holds a Bachelor of Arts in history from Dickinson College.

Kristine Willson, CPP, Snohomish, Washington - Willson is Director of Global Payroll at Talkdesk, Inc. She has over three decades of payroll, benefits and accounting experience and is a Certified Payroll Professional. Willson has worked in payroll with a variety of industries including biotechnology, insurance, retail and healthcare. She is a member of PayrollOrg, where she is co-chair of the Electronic Payments Committee.

e-News for Tax Professionals 2024-36

Sat, 07 Sep 2024 15:49:42 GMT

Inside This Issue

Treasury, IRS announce over $1 billion recovered in collections from wealthy non-filers under IRA initiatives
Register for the IRS Business Tax Account Virtual Focus Groups; first registration deadline is Sept. 6
Deadline to submit third estimated tax payment is Sept. 16; more time may be granted to taxpayers in disaster-affected areas
IRA funding continues to modernize online tools, improve taxpayer service
September is National Preparedness Month; taxpayers encouraged to prepare for natural disasters
Upcoming webinars for tax professionals
Technical Guidance

1. Treasury, IRS announce over $1 billion recovered in collections from wealthy non-filers under IRA initiatives

The U.S. Secretary of Treasury and the IRS Commissioner made remarks at the IRS campus in Austin, Texas, to announce new initiatives under the Inflation Reduction Act that will ensure wealthy individuals pay their taxes, enhance taxpayer service through the Digital First Initiative and modernize essential technology. Approximately $1.1 billion have been recovered because of the nearly 80% of 1,600 millionaires having paid their outstanding tax debt. This is an additional $100 million just since July, when Treasury and IRS announced reaching the $1 billion milestone.

Through the Digital First Initiative, the IRS is pursuing a vision where taxpayers can do all their transactions with the IRS digitally if they prefer. Thanks to Inflation Reduction Act resources, the IRS has launched more digital tools to provide improved digital experience for taxpayers:

More than two dozen new features and enhancements to Individual and Tax Professional Online Account;
The launch of Business Tax Account;
The release of 30 digital mobile-adaptive forms;
The ability for taxpayers to receive their refund status via a conversational hotline;
A mobile-friendly web tool for Where’s My Refund; and
Direct File, a new tool that allows taxpayers to file for free, directly with the IRS.

2. Register for the IRS Business Tax Account Virtual Focus Groups; first registration deadline is Sept. 6

Tax pros: The IRS is conducting virtual focus groups to gather feedback on the Business Tax Account (BTA) authorization process. We are looking for comments and suggestions from stakeholders who will use the BTA online platform. BTA was created to allow business entities to communicate and transact business with the IRS. If you are a CEO, shareholder, partner, designated official or can legally bind your organization, this focus group is for you. To register, send an email with “Focus Group Volunteer: Business Tax Account” in the subject line to txo.share.with.us@irs.gov. Include the following information in the email body:

Name
Type of Entity (i.e., Partnership, S Corporation, etc.)
Position Title
State
Email Address
Phone Number
Session Date
Special accommodations

Focus groups are limited to 12 participants. Selected volunteers will receive a confirmation email with a meeting link from txo.share.with.us@irs.gov. Below are images of the solicitation email that includes the focus group dates and times, and deadlines to register. Right-click on the images to save and open the files from your device. Please note: the first round of registration deadlines is September 6.

3. Deadline to submit third estimated tax payment is Sept. 16; more time may be granted to taxpayers in disaster-affected areas

Remind your clients that the deadline to submit the third quarter estimated tax payment is September 16. Delay in payment deadlines may be automatically granted to taxpayers who are impacted by disasters in 17 states, Puerto Rico and the Virgin Islands. Deadlines vary depending upon the disaster and locality. For specifics on all recent disaster relief, visit the Around the nation page on IRS.gov.

4. IRA funding continues to modernize online tools, improve taxpayer service

The IRS continues to modernize its online tools to help taxpayers take advantage of clean energy credits, thanks to funding provided by the Inflation Reduction Act (IRA). Through the IRA and related funding, the IRS can update outdated systems, create new, fully electronic systems and processes, improve compliance and reduce fraud, thereby revolutionizing taxpayer services. The momentous funding will continue the IRS's ability to integrate modern technology to deliver unprecedented service quality and efficiency to taxpayers, all while supporting the clean energy tax incentives.

Visit credits and deductions under the Inflation Reduction Act on IRS.gov to learn more.

5. September is National Preparedness Month; taxpayers encouraged to prepare for natural disasters

September is designated as National Preparedness Month. Now is a good time to create or review emergency preparedness plans for surviving natural disasters. The IRS recommends taxpayers take the following steps:

Protect key documents;
Maintain detailed inventory lists (individuals and businesses);
Reconstruct records; and
Verify or create an Electronic Federal Tax Payment System (EFTPS) account.

Visit Ready.gov/September to learn more about National Preparedness Month.

6. Upcoming webinars for tax professionals

The IRS offers the upcoming live webinars to the tax practitioner community:

Dealing with disasters from an individual tax perspective on Sept. 26, at 2 p.m. ET. Earn up to one continuing education credit (Federal Tax). Certificates of completion are being offered.
U.S. taxation of stock-based compensation received by nonresident aliens on Oct. 3, at 2 p.m. ET. Earn up to one continuing education credit (Federal Tax). Certificates of completion are being offered.

For more information or to register, visit Webinars for tax practitioners webpage.

7. Technical Guidance

Notice 2024-65 requests comments from the public regarding all aspects of sections 103 and 104 of the SECURE 2.0 Act of 2022.

Revenue Procedure 2024-35 provides the applicable percentage table in § 36B(b)(3)(A) of the Internal Revenue Code for taxable years beginning in calendar year 2024.

U.S. Department of the Treasury, IRS announce $1.3 billion recovered from high-income, high-wealth individuals under Inflation Reduction Act initiatives

Fri, 06 Sep 2024 16:40:26 GMT

$172 million recovered from 21,000 wealthy taxpayers who have not filed tax returns since 2017 in first six months of new initiative

WASHINGTON — Today, U.S. Secretary of the Treasury Janet L. Yellen and Commissioner of the Internal Revenue Service Danny Werfel are delivering remarks at the Austin, Texas, IRS campus to announce new milestones under Inflation Reduction Act initiatives to ensure wealthy individuals pay taxes owed, improve service for taxpayers through the Digital First Initiative and modernize foundational technology.

Ensuring high-income, high-wealth taxpayers pay taxes owed

The IRS in February 2024 launched an initiative to pursue 125,000 high-income, high-wealth taxpayers who have not filed taxes since 2017. These are cases where IRS has received third party information—such as through Forms W-2 and 1099s—indicating these people received income between $400,000 and $1 million or more than $1 million, but failed to file a tax return. Prior to the Inflation Reduction Act, the IRS non-filer program ran sporadically since 2016 due to severe budget and staff limitations that did not allow these cases to be pursued. With new Inflation Reduction Act funding, the IRS now has the capacity to do this core tax administration work. In the first six months of this initiative, nearly 21,000 of these wealthy taxpayers have filed, leading to $172 million in taxes being paid.
The IRS in the fall of 2023 launched a new initiative using Inflation Reduction Act funding to pursue high-income, high-wealth individuals who have failed to pay recognized tax debt, with dozens of senior employees assigned to these cases. This work is concentrated on taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. The IRS was previously unable to collect from these individuals due to a lack of resources. After successfully collecting $38 million from more than 175 high-income, high-wealth individuals last year, the IRS expanded this effort last fall to around 1,600 additional high-income, high-wealth individuals. Nearly 80% of these 1,600 millionaires with delinquent tax debt have now made a payment, leading to over $1.1 billion recovered. This is an additional $100 million just since July, when Treasury and IRS announced reaching the $1 billion milestone.

Improving taxpayer service through the Digital First Initiative

With Inflation Reduction Act resources, the IRS is significantly improving taxpayer service in person, over the phone, and online. The IRS is working to deliver the same modern online experience that taxpayers experience with their bank or financial institutions. Using Inflation Reduction Act resources, the IRS has created and enhanced popular and convenient online tools that save taxpayers time and money, while also reducing phone calls, paper processes, and other burdens on IRS employees. For example, in Filing Season 2024, IRS updated the “Where’s My Refund?” tool to provide more detailed refund status information in plain language, increasing use by nearly 30%.

Thanks to Inflation Reduction Act resources, the IRS has launched more digital tools in the last two years than the previous 20 years, including:

More than two dozen new features and enhancements to Individual and Tax Professional Online Account;
The launch of Business Tax Account;
The release of 30 digital mobile-adaptive forms;
The ability for taxpayers to receive their refund status via a conversational hotline;
A mobile-friendly web tool for Where’s My Refund; and
Direct File, a new tool that allows taxpayers to file for free, directly with the IRS.

Through the Digital First Initiative, the IRS is pursuing a vision where taxpayers can do all their transactions with the IRS digitally if they prefer. At the core of that improved digital experience for taxpayers are enhancements to Individual Online Account. Thanks to funding from the Inflation Reduction Act, taxpayers can now:

View the status of refunds and certain audits.
Access a complete overview of their account information, including detailed historical data.
Access identity protection services, a lien payoff calculator, and the ability to complete the pending installment agreement process using smartphones or tablets—all critical as taxpayers prepare for Filing Season 2025.
Retrieve tax related information from a single source, including digital copies of notices and letters—with more than 170 different types of notices and letters currently available in their Online Account. The agency’s goal is to make an additional 98 notices available for digital viewing, reaching a total of 268 notices digitally available by the end of 2024.

Through the Simple Notice Initiative, the IRS is also redesigning up to 200 individual taxpayer notices to be shorter and clearer, reducing taxpayer frustration and the number of phone calls requiring live assistance, for Filing Season 2025. The IRS has completed 109 notices as of the end of July 2024.

Additionally, Tax Pro Online Account rolled out more self-service options for tax professionals, including easier navigation to secure two-way messaging where authorized tax professionals can digitally communicate with the IRS on behalf of their clients. The IRS is also continuing to expand the features within Business Tax Account, an online self-service tool for business taxpayers that now allows them to view and submit balance-due payments. The account is also now accessible in Spanish, with more translations planned.

Modernizing 65-year-old foundational technology to improve taxpayer service and better secure taxpayer data

For 65 years, the IRS has relied on the same foundational technology for many of its critical systems, including the Individual Master File (IMF), which houses taxpayer data and feeds into key systems. The core technology, based on ALC and COBOL coding, has become a liability due to the diminishing pool of experts proficient in this legacy language.
The IRS has reached a critical milestone in modernizing a core technology component of the Individual Master File, by porting the outdated Assembly-based codebase to Java, a more modern, more sustainable language. Reflecting the agency’s focus on technology best practices, this new system, Integrated Tax Processing Engine (ITPE), is now running simultaneously with IMF to verify accuracy of its data processing. The system's data will be hosted in the Enterprise Data Platform, a modern, cloud-based system for managing data.
Making taxpayer history available in a modern data environment is a key step toward the IRS implementing real-time data processing with platforms that will enable transactions to be processed more quickly, transparently, and securely. These improvements are a critical enabler for the IRS’s Digital First Initiative. For example, it will improve taxpayer service by allowing taxpayers and customer service representatives to access real-time account information in the future just as any bank or financial institution does. These improvements will also empower IRS to implement tax code changes and emergency benefit programs more quickly, while reducing the costs of maintaining IRS systems. This project was delayed for years due to underfunding.

Request for Comments Regarding Implementation of Saver’s Match Contributions

Fri, 06 Sep 2024 13:54:07 GMT

Notice 2024-65 requests comments from the public regarding all aspects of sections 103 and 104 of the SECURE 2.0 Act of 2022. Section 103 of the SECURE 2.0 Act of 2022, in part, added section 6433 to the Internal Revenue Code, which provides for matching contributions (Saver’s Match contributions) paid by the Secretary of the Treasury to applicable retirement savings vehicles on behalf of eligible individuals who make qualified retirement savings contributions. Section 104 of the SECURE 2.0 Act of 2022 requires the Department of the Treasury to take steps to increase public awareness of the availability of Saver’s Match contributions and to provide a report to Congress on anticipated promotion efforts by the Department of the Treasury.

Notice 2024-65 will be in IRB: 2024-39, dated September 23, 2024.

Treasury and IRS request comments on issues related to Saver’s Match contributions

Fri, 06 Sep 2024 13:53:18 GMT

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued a notice requesting comments on Saver’s Match contributions to be paid by Treasury under the SECURE 2.0 Act of 2022. Notice 2024-65 requests comments on all aspects of Saver’s Match contributions and asks specific questions on a variety of Saver’s Match topics.

Saver’s Match contributions represent a new approach to promoting retirement savings and an important opportunity to improve the long-term financial security for millions of low- to moderate-income Americans. Beginning in 2027, by making annual contributions of up to $2,000 to a 401(k)-type plan or an Individual Retirement Account (IRA), an individual can receive as much as an annual $1,000 Saver’s Match contribution from the Treasury.

Unlike the existing Saver’s Credit, a nonrefundable tax credit that will be replaced by Saver’s Match contributions, the Saver’s Match contribution is paid by Treasury to a 401(k)-type plan or non-Roth IRA designated by an individual claiming the Saver’s Match contribution. The amount of an individual’s Saver’s Match contribution depends on the individual’s income or joint income level. For example, for a married individual filing jointly, the Saver’s Match contribution phases out completely at a joint income of $71,000, and, for a single filer, the Saver’s Match contribution phases out completely at an income of $35,500.

The notice issued today requests specific comments on the following topics:

Eligibility for Saver’s Match contributions
How Saver’s Match contributions would be claimed
How the account receiving Saver’s Match contributions would be designated
The process for completing Saver’s Match contributions
Saver’s Match recovery taxes on specified early distributions
Reporting and disclosure for Saver’s Match contributions
Miscellaneous issues, including how Treasury and the IRS could ensure that individuals in underserved communities know how to participate and receive the full benefits of Saver’s Match contributions

Treasury and the IRS are seeking input necessary for the program to reach its full potential to improve the retirement readiness of low- to moderate-income individuals. To enhance the implementation of this new tax benefit, it is important to receive the perspective of all interested parties. Comments are requested from all stakeholders, including low- to moderate-income taxpayers, volunteer and for-profit tax preparers, organizations that serve and advise low- to moderate-income taxpayers, IRA custodians and trustees, and retirement plan administrators, recordkeepers, and plan sponsors.

Interested parties should provide comments by Nov. 4, 2024, either at www.regulations.gov or by mailing the comments to Internal Revenue Service, CC:PA:01:PR (Notice 2024-65), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

IRS reminder: Third estimated tax payment due Sept. 16; disaster-area taxpayers have more time

Thu, 05 Sep 2024 14:29:13 GMT

WASHINGTON — The Internal Revenue Service today reminded taxpayers the deadline to submit their third quarter estimated tax payment is Sept. 16, 2024.

The IRS also reminded taxpayers affected by disasters in 17 states, Puerto Rico and the Virgin Islands that they may automatically qualify for a delayed tax-payment deadline. Deadlines vary depending upon the disaster and locality.

Taxes must be paid as income is earned or received during the year, either through withholding or estimated tax payments. Taxpayers such as gig workers, sole proprietors, retirees, partners and S corporation shareholders generally should make estimated tax payments if they expect to have a tax liability of $1,000 or more when they file their return.

A general rule of thumb is that taxpayers should make estimated tax payments if they expect:

To owe at least $1,000 in taxes for 2024 after subtracting their withholding and tax credits.
Their withholding and tax credits to be less than the smaller of:
- 90% of the tax to be shown on their 2024 tax return or
- 100% of the tax shown on their complete 12-month 2023 tax return.

Figuring estimated tax

To figure estimated tax, taxpayers calculate their expected adjusted gross income (AGI), taxable income, taxes, deductions and credits for the year. To figure 2024's estimated tax, it may be helpful to use income, deductions and credits from 2023 as a starting point.

Taxpayers can use the tools on IRS.gov to check if they’re required to pay estimated taxes. The Tax Withholding Estimator, the IRS Interactive Tax Assistant and the worksheet in Form 1040-ES, Estimated Tax for Individuals, all offer clear step-by-step instructions.

Payment options

The IRS encourages taxpayers earning income not normally subject to withholding to consider making estimated tax payments throughout the year to stay current and avoid a surprise at tax time.

An electronic payment is the easiest, fastest and most secure way to make an estimated tax payment. The Payments page on IRS.gov provides complete tax payment information, how and when to pay, payment options and more.

Taxpayers can securely log into their IRS Online Account or use IRS Direct Pay to submit a payment from their checking or savings account. Taxpayers can also pay using a debit card, credit card or digital wallet.

Direct Pay and the pay by debit card, credit card or digital wallet options are available online at IRS.gov/payments and through the IRS2Go app. Taxpayers should note that the payment processor, not the IRS, charges a fee for debit and credit card payments

Taxpayers can also use the Electronic Federal Tax Payment System (EFTPS) to make an estimated tax payment. Payment by check or money order made payable to the "United States Treasury" is also an option.

Avoid a penalty for underpayment

Taxpayers who underpay their taxes may have to pay a penalty regardless of whether they paid through withholding or through estimated tax payments. Late and skipped estimated tax payments can incur penalties even if a refund is due when a tax return is filed.

Taxpayers should use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if they owe a penalty. Taxpayers can also request a waiver of the penalty if they underpaid because of unusual circumstances and not willful neglect.

Special rules apply to some groups of taxpayers such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year.

Disaster-area taxpayers get more time

Taxpayers who live, work or have a business in a disaster-area locality automatically qualify for a delayed tax-payment deadline. Deadlines vary depending upon the disaster and locality. Currently:

Taxpayers in parts of Arkansas, Iowa, Mississippi, New Mexico, Oklahoma, Texas and West Virginia have until Nov. 1, 2024, to make their estimated tax payment and
Taxpayers in all or parts of Florida, Georgia, Kentucky, Minnesota, Missouri, North Carolina, Puerto Rico, South Carolina, South Dakota, Texas, Vermont and the Virgin Islands have until Feb. 3, 2025, to make their estimated tax payment.

For details on all recent disaster relief, visit the Around the nation page on IRS.gov.

1099-Ks for payments received in 2024

Taxpayers who were paid by payment apps and online marketplaces or received any amount by payment cards could receive a Form 1099-K, Payment Card and Third Party Network Transactions, for reporting payments received in 2024. This includes anyone with a “side hustle,” sole proprietors and anyone selling goods and services online.

Taxpayers must report their income, unless it's excluded by law, regardless of whether they receive a Form 1099-K or any other third-party reporting document. The 1099-K reporting threshold for third party reporting doesn't change what counts as income or how tax is calculated. Find more information at Understanding Your Form 1099-K.

The fourth and final estimated tax payment for tax year 2024 is due on Jan. 15, 2025.

RP-2024-34: this revenue procedure expands the waiver of the eligibility rules to accounting method changes

Thu, 29 Aug 2024 17:53:18 GMT

Revenue Procedure 2024-34 modifies section 7 of Rev. Proc. 2024-23, 2024-23 I.R.B. 1334, to modify the procedures under section 446 of the Internal Revenue Code and §1.446-1(e) of the Income Tax Regulations for obtaining automatic consent of the Commissioner to change methods of accounting for research or experimental expenditures paid or incurred in taxable years beginning after December 31, 2021. Specifically, this revenue procedure expands the waiver of the eligibility rules in section 5.01(1)(d) and (f) of Rev. Proc. 2015-13 to accounting method changes described in section 7.01 of Rev. Proc. 2024-23 that are made in any taxable year beginning in 2022 or 2023. This revenue procedure also permits a taxpayer to make changes under section 7.01 of Rev. Proc. 2024-23 regardless of whether a change under that section has been filed for any other taxable year beginning in 2022 or 2023. Finally, for any change under section 7.01 of Rev. Proc. 2024-23 made in a taxable year beginning in 2022 or 2023 (other than the first taxable year beginning after December 31, 2021), this revenue procedure limits audit protection for research or experimental expenditures paid or incurred in the taxpayer’s first taxable year beginning after December 31, 2021 if the taxpayer failed to make a change for such expenditures for such taxable year.

WILL BE IN IRB: 2024-38 DATED: September 16, 2024

IRS reminds taxpayers of important tax guidelines involving contributions and distributions from online crowdfunding

Thu, 29 Aug 2024 14:10:53 GMT

FS-2024-28, August 2024

Crowdfunding distributions may be includible in the gross income of the person receiving them depending on the facts and circumstances. The crowdfunding website or its payment processor may be required to report distributions of money raised if the amount distributed meets certain reporting thresholds.

Here are some important basics to keep in mind.

Crowdfunding is a method of raising money through websites by soliciting contributions from a large number of people. The contributions may be solicited to fund businesses, for charitable donations or for gifts. In some cases, the money raised through crowdfunding is solicited by crowdfunding organizers on behalf of other people or businesses. In other cases, people establish crowdfunding campaigns to raise money for themselves or their businesses.

Receipt of a Form 1099-K for distributions of money raised through crowdfunding

The crowdfunding website or its payment processor may be required to report distributions of money raised, if the amount distributed meets certain reporting thresholds, by filing Form 1099-K, Payment Card and Third Party Network Transactions, with the IRS.

If required to file a Form 1099-K with the IRS, the crowdfunding website or its payment processor must also furnish a copy of that form to the person to whom the distributions are made. The American Rescue Plan Act (ARPA) clarifies that the crowdfunding website or its payment processor is not required to file Form 1099-K with the IRS or furnish it to the person to whom the distributions are made if the payments are not made in exchange for goods or services.

The reporting thresholds for a crowdfunding website or payment processor to file and furnish Form 1099-K are:
• Calendar years 2023 and prior – Form 1099-K is required if the total of all payments distributed to a person exceeded $20,000 and resulted from more than 200 transactions. See Notice 2023-10 and Notice 2023-74.
• Calendar year 2024 – The IRS announced a plan for the threshold to be reduced to $5,000 as a phase-in for the lower threshold provided under the ARPA. See (IR-2023-221).

Note: The ARPA lowered the reporting threshold for third party settlement organizations (TPSOs) so that TPSOs are only required to report on Forms 1099-K if the total of all payments distributed to a payee in a calendar year exceeds $600, regardless of the number of transactions. However, implementation of this lower threshold has been delayed.

Crowdfunding distributions may be made to the crowdfunding organizer, or directly to individuals or businesses for whom the organizer solicited funds. A Form 1099-K must be filed with the IRS and furnished to the person or entity that received the payments if the reporting threshold is met for the year in which the distributions were made.

A person receiving a Form 1099-K for distributions of money raised through crowdfunding may not recognize the filer's name on the form. Sometimes the payment processor used by the crowdfunding website, rather than the crowdfunding website itself, will furnish the Form 1099-K and will be listed as the filer on the form. If the recipient of a Form 1099-K does not recognize the filer's name or the amounts included on the Form 1099-K, the recipient can use the filer's telephone number listed on the form to contact a person knowledgeable about the payments reported.

Box 1 on the Form 1099-K will show the gross amount of the distributions made to a person during the calendar year. But the furnishing of a Form 1099-K doesn't automatically mean the amount reported on the form is taxable to the person receiving the form.

If non-taxable distributions are reported on Form 1099-K, the recipient should report the transaction on Form 1040, Schedule 1, as follows:

• Part I – Line 8z, Other Income – “Form 1099-K Received for Non-Taxable Crowdfunding Distributions” to show the gross proceeds from the distributions reported on Form 1099-K.
• Part II – Line 24z, Other Adjustments – “Form 1099-K Received for Non-Taxable Crowdfunding Distributions” to show the non-taxable amount of the distributions reported on Form 1099-K.

The net effect of these two adjustments on income is $0.

Alternatively, if non-taxable distributions are reported on Form 1099-K and the recipient does not report the transaction on their tax return, the IRS may contact the recipient for more information. The recipient will have the opportunity to explain why the crowdfunding distributions were not reported on their tax return. As discussed below, the income tax consequences depend on all the facts and circumstances.

Tax treatment of money raised through crowdfunding

Under federal tax law, gross income includes all income from whatever source derived unless it is specifically excluded from gross income by law. Whether crowdfunding distributions are includible in the gross income of the person receiving them depends on all the facts and circumstances of the distribution.

In most cases, property received as a gift is not includible in the gross income of the person receiving the gift.

If crowdfunding contributions are made as a result of the contributors' detached and disinterested generosity, and without the contributors receiving or expecting to receive anything in return, the amounts may be gifts and therefore may not be includible in the gross income of those for whom the campaign was organized. Contributions to crowdfunding campaigns are not necessarily a result of detached and disinterested generosity, and therefore may not be gifts. Additionally, contributions to crowdfunding campaigns by an employer to, or for the benefit of, an employee are generally includible in the employee's gross income.

If a crowdfunding organizer solicits contributions on behalf of others, distributions of the money raised to the organizer may not be includible in the organizer's gross income if the organizer further distributes the money raised to those for whom the crowdfunding campaign was organized.

More information is available to help taxpayers determine what their tax obligations are in connection with their Form 1099-K at Understanding Your Form 1099-K. Taxpayers may want to consult a trusted tax professional for information and advice regarding how to treat amounts received from crowdfunding campaigns.

Recordkeeping for money raised through crowdfunding

Crowdfunding organizers and any person receiving amounts from crowdfunding should keep complete and accurate records of all facts and circumstances surrounding the fundraising and disposition of funds for at least three years.

More Information
• About Form 1099-K, Payment Card and Third Party Network Transactions
• Understanding your Form 1099-K
• Form 1099-K FAQs
• Gig economy tax center

IRS reminder: Employer educational assistance programs can still be used to help pay off workers’ student loans through Dec. 31, 2025

Wed, 28 Aug 2024 17:05:24 GMT

WASHINGTON – The Internal Revenue Service today issued a reminder that employers who offer educational assistance programs can also use them to help pay for their employees’ student loan obligations through Dec. 31, 2025.

Though educational assistance programs have been available for many years, the option to use them to pay for workers’ student loans has only been available for payments made after March 27, 2020. Under current law, this student loan provision is set to expire Dec. 31, 2025.

Traditionally, educational assistance programs have been used to pay for books, equipment, supplies, fees, tuition and other education expenses for the employee. These programs can now also be used to pay principal and interest on an employee’s qualified education loans. Payments made directly to the lender, as well as those made to the employee, may qualify.

In most cases, educational benefits are excluded from federal income tax withholding, Social Security tax, Medicare tax and federal employment (FUTA) tax. By law, tax-free benefits under an educational assistance program are limited to $5,250 per employee per year. Normally, assistance provided above that level is taxable as wages.

Employers who don’t have an educational assistance program may want to consider setting one up. Fringe benefits, such as educational assistance programs, can help employers attract and retain qualified workers.

These programs must be in writing and cannot discriminate in favor of highly compensated employees. For information on other requirements, see Publication 15-B, Employer’s Tax Guide to Fringe Benefits.

For details on what qualifies as a student loan, see Chapter 10 in Publication 970, Tax Benefits for Education.

For more information visit the following pages on IRS.gov:

Security Summit partners conclude special campaign with reminders to protect tax professionals from identity theft, security threats

Tue, 27 Aug 2024 16:17:36 GMT

Week 8 of “Protect Your Clients; Protect Yourself” series focuses on important steps to protect data

WASHINGTON — Concluding a special summer awareness campaign, the Internal Revenue Service and the Security Summit today urged tax professionals to maintain strong safety measures to protect themselves and their taxpayer clients against evolving data security threats.

In this eighth and final installment of the “Protect Your Clients; Protect Yourself” series, the IRS and Security Summit partners strongly recommended tax professionals to embrace critical and necessary steps to protect sensitive information, including taking extra care with how they handle data and security.

“Tax professionals remain a tempting target for identity thieves and cybercriminals,” said IRS Commissioner Danny Werfel. “They face countless attacks from those hoping to harvest valuable personal and financial information that can be used to file an authentic-looking tax return and slip through the tax system’s defenses. By taking some basic steps, tax professionals at firms both large and small can protect their clients and protect themselves from these relentless security threats.”

The Security Summit is a public-private coalition started in 2015 with tax professionals, industry partners, state tax groups and the IRS to guard the tax system against tax-related identity theft and fraud. The Summit group succeeded in bolstering internal defenses to protect against identity theft, a collective effort that has protected millions of taxpayers through the years.

But as the IRS and the Summit partners increased their vigilance, identity thieves shifted their attention to collect better data and focused on targeting tax professionals and businesses to clandestinely harvest information to file authentic-looking tax returns. With this shift in focus, the Summit partners have worked for the past nine years to raise awareness in the tax professional community through the "Protect Your Clients; Protect Yourself" campaign. Stronger tax pro defenses protect not just their firms, but also their clients and the greater tax system.

Tax pros can see the entire summer series on a special page at IRS.gov.

Identity thieves continue to change their tactics, and security threats against tax professionals remain a daily threat. In the first half of the year, IRS Stakeholder Liaisons have already received reports of nearly 200 tax professional data incidents potentially affecting up to 180,000 clients.

This summer’s special awareness campaign coincided with the IRS Nationwide Tax Forum, which visited four cities this summer and concludes the week of September 9 in San Diego. That final session has already sold out.

Tax pros should remain on the lookout

Tax pros should know identity thieves take many different approaches to steal sensitive information, and there are several common schemes to look out for.

For example, in a presently trending scheme, some scammers pose as new clients reaching out to practitioners to get their sensitive information or client data. In these fake “new client” schemes, a fraudster can send a malicious attachment or include a link to a site that a tax pro wrongly thinks they need to get the supposed new client’s tax information. However, the site is actually collecting information from a tax pro, such as their email and password, or loading malware onto the tax pro’s computer.

Other scammers send phishing emails to trick people into sharing other content, such as Central Authorization Fileinformation.

Phishing and related scams are among the most common threats facing tax pros. These are designed to deceive recipients into disclosing personal information such as passwords, bank account numbers, credit card numbers or Social Security numbers, or fool them into clicking a suspicious link, filling out information or downloading a malware file.

Scammers also employ elaborate schemes involving calls, texts and even fake printed correspondence to try to worm their way into tax pros’ sensitive files. Professionals should also watch out for clients being duped by social media scams circulating inaccurate or misleadingtax information.

Watch out for warning signs

Tax pros should also learn the signs of data theft so they can act quickly to protect their clients. These red flags can include a notice that an IRS online account was created without their consent, clients receiving a tax transcript they didn’t request or client tax returns being rejected because their Social Security number was already used on another return. Other warning signs can be more technical in nature, like unexpected slowdowns on their computer networks or cursor movements or number changes when no one is touching a mouse or keyboard.

If tax pros encounter situations like these or others, they should contact the IRS immediately when an identity theft issue surfaces.

Helpful tools available

The IRS and Security Summit reminded tax pros that they now need to have a Written Information Security Plan, or WISP. As part of this summer’s awareness effort, the Summit Tax Professionals Working Group released an updated WISP template to help tax and industry professionals keep customer and business information safe and secure.

The requirements include implementing multi-factor authentication or MFA for any individual accessing any information system unless a firm’s qualified individual has approved in writing the use of reasonably equivalent or more secure access controls.

MFA is required for tax pros’ systems under new Federal Trade Commission rules to strengthen account security by requiring more than just a username and password to confirm one’s identity when accessing any system, application or device. Other factors include something users have, like a token or random number sequence sent to their cell phone, or something about them like biometric information, to provide extra assurance that a tax pro’s client is gaining access rather than an impostor.

This summer’s series also highlights for tax professionals the importance of using a set of protections called the Security Six: anti-virus software, firewalls, backup software or services, encrypted drives, MFAs and virtual private networks or VPNs.

The IRS and the Security Summit partners also reminded tax pros and taxpayers about the IRS Identity Protection PIN Opt-In Program and to set up IRS online accounts. Both steps help further protect people against tax-related identity theft.

After a taxpayer gets a six-digit IP PIN, they must include it on their tax return before e-filing. To get one, taxpayers should visit the Get an IP PIN, and after they have it, remember the following:

Taxpayers should share their IP PIN only with their trusted tax prep provider.
Tax pros should never store clients’ IP PINs on computer systems. This reduces taxpayer risk if a tax pro's system is compromised by an identity thief or cyberattack.
The IRS will never call, email or text either taxpayers or tax professionals to request the IP PIN. This is a sign of a scam.

Tax pro with a security problem? Contact an IRS Stakeholder Liaison, states and FTC

Tax pros who receive scams by email should send the email to phishing@irs.gov.

Those who fall victim to a security breach should report a theft to their IRS Stakeholder Liaison, who will ensure that appropriate IRS offices are alerted. If incidents are reported quickly, the IRS can take steps to block fraudulent returns in clients’ names and will assist tax pros through the process.

Tax professionals can also share information with the appropriate state tax agency by visiting a special “Report a Data Breach” page with the Federation of Tax Administrators.

Tax professionals should also understand the FTC data breach response requirements as part of their overall information and data security plan. The new WISP also includes information on the requirement to report an incident to the FTC within 30 days of the incident when 500 or more people are affected.

Additional resources

Review Publication 5293, Data Security Resource Guide for Tax Professionals, which provides an overview and resources about how to avoid data theft.
Tax professionals can also get help with security recommendations by reviewing IRS Publication 4557, Safeguarding Taxpayer Data, the IRS' Identity theft information page for tax pros and Identity theft central page.
Publication 5709, How to Create a Written Information Security Plan for Data Safety.
Publication 5708, Creating a Written Information Security Plan for your Tax & Accounting Practice.
Read Small Business Information Security: The Fundamentals, by the National Institute of Standards and Technology.

Tax professionals should also stay connected to the IRS through subscriptions to e-News for tax professionals and its social media sites.

e-News for Tax Professionals 2024-34

Fri, 23 Aug 2024 19:05:50 GMT

Inside This Issue

Tax pros: Protect Your Clients, Protect Yourself with “security six”
Business Tax Account: New fact sheet available
Teachers eligible to deduct up to $300 in classroom expenses for 2024
Child and Dependent Care tax credit helps offset summer day camp costs
Interest rates unchanged for fourth quarter
Technical Guidance

1. Tax pros: Protect Your Clients, Protect Yourself with “security six”

In the seventh installment of the “Protect Your Clients; Protect Yourself” summer security series, the IRS and its Security Summit partners identify six practices tax professionals should follow to improve data security. The “security six” include anti-virus software, firewalls, multi-factor authentication, backup software, drive encryption and virtual private networks.

In the event of a security breach, tax professionals must:

Share information with the appropriate state tax agency by visiting Report a Data Breach;
Review and understand the FTC data breach response requirements as part of their overall information and data security plan; and
Report the incident to their local IRS stakeholder liaison.

Visit the Data Theft information for tax professionals webpage to learn more.

2. Business Tax Account: New fact sheet available

Fact Sheet-2024-27 provides guidance on the Business Tax Account (BTA), an online self-service tool for business taxpayers that facilitates the viewing and payment of balances due. According to the IRS, more features are on the way for the BTA, which is now available in both English and Spanish and offers business taxpayers new options for payment processing.

3. Teachers eligible to deduct up to $300 in classroom expenses for 2024

The federal deduction for classroom expenses applies to educators again in 2024, the IRS announced this week. Federal law permits educators to deduct the cost, up to $300, of supplies and other classroom necessities that they buy themselves.

4. Child and Dependent Care tax credit helps offset summer day camp costs

The Child and Dependent Care tax credit may be applied to summer day camp expenses, according to the IRS. Publication 503, Child and Dependent Care Expenses, provides a detailed explanation of all the regulations, the requirements to apply for the credit and an exception for certain taxpayers who live apart from their spouse.

5. Interest rates unchanged for fourth quarter

The IRS announced no change in interest rates for the fourth quarter of 2024, beginning Oct. 1. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning October 1, 2024, will be 8 percent for overpayments (7 percent in the case of a corporation), 8 percent for underpayments, and 10 percent for large corporate underpayments. See Revenue Ruling 2024-18 for details.

6. Technical Guidance

The IRS released interim guidance for sponsors of 401(k) and other comparable retirement plans that match contributions based on qualifying student loan payments made by their employees. The 2022 regulation allows employers with a 401(k) plan, 403(b) plan, governmental 457(b) plan or SIMPLE IRA plan to offer matching contributions based on student loan payments, rather than based only on elective contributions to retirement plans, in plan years beginning after Dec. 31, 2023.

Notice 2024-62 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for July 2024 used under section 417(e)(3)(D), the 24-month average segment rates applicable for August 2024, and the 30-year Treasury rates, as reflected by the application of section 430(h)(2)(C)(iv).

Notice-2024-63 provides guidance in the form of questions and answers with respect to section 110 of Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117 328, 136 Stat. 4459 (2022), known as the SECURE 2.0 Act of 2022.

IRS reminder for schoolteachers: Up to $300 in classroom expenses deductible for 2024

Wed, 21 Aug 2024 17:31:53 GMT

WASHINGTON – As educators gear up for the new school year, the IRS reminds schoolteachers that the maximum deduction for classroom expenses in 2024 remains at $300.

This deduction allows educators to offset the cost of supplies, materials and other classroom essentials, providing some financial relief for those who spend their own money to improve their students' learning experience.

Under federal law, this $300 cap is unchanged from 2023, continuing the adjustment for inflation that began in 2022 when the limit was raised from $250.

Who qualifies for educator expense deductions?

This deduction is available for teachers, instructors, counselors, principals and aides who work at least 900 hours a school year in a school providing elementary or secondary education. Educators filing jointly can claim up to $600 if both spouses are eligible, but no more than $300 per person. Educators can claim this deduction even if they take the standard deduction, and both public and private school educators qualify.

What's deductible?

Educators can claim deductions for out-of-pocket expenses on classroom items like books, supplies, equipment (including computers and software) and COVID-19 safety measures such as masks, disinfectants and air purifiers. They may also deduct costs for professional development courses relevant to their teaching, though it could be more advantageous to use other educational tax benefits like the lifetime learning credit (refer to Publication 970, Tax Benefits for Education, Chapter 3).

Expenses for homeschooling or nonathletic supplies for health or physical education are not eligible. The IRS recommends educators maintain detailed records, such as receipts and canceled checks, to substantiate their deductions.

Use E-file to claim educator expenses

For educators who have been granted a tax filing extension or qualify for a disaster extension, or for any other pertinent reason are still in the process of completing their 2023 tax return, the rules for claiming deductions remain consistent for the 2024 tax year. The filing extension deadline is Oct. 15, 2024. However, submitting a return before this date can aid in averting processing delays.

The IRS advises taxpayers to file electronically for a smoother process, whether they use tax software or a professional. Choose direct deposit for faster refunds. For more details, visit E-file options to file your return.

Individuals who owe taxes should consider using IRS Direct Pay or other electronic payment options available at IRS’ Make a payment page for convenience.

Business Tax Account now gives many business taxpayers new options for making payments easier; available in both English, Spanish; more features coming soon

Mon, 19 Aug 2024 16:35:15 GMT

The Internal Revenue Service is continuing to expand the features within Business Tax Account (BTA), an online self-service tool for business taxpayers that now allows them to view and make balance-due payments.

Launched last fall, BTA is a key part of the agency’s service improvement initiative funded under the Inflation Reduction Act (IRA). When fully developed, BTA will allow many types of business taxpayers to check their tax history, make payments, view notices, authorize powers of attorney and conduct other business with the IRS.

With the latest expansion, an eligible business taxpayer can now use BTA to pay Federal Tax Deposits (FTDs) and see and make a payment on their full balance due – all in one place. The account is also now accessible in Spanish with more translations planned.

BTA is a key part of the agency’s ongoing work to transform and modernize service at the IRS by offering a seamless and convenient digital experience. It’s also an important part of a wide-ranging initiative to reduce paper-based processes that hamper the IRS and frustrate taxpayers.

Who can use BTA now?

Business taxpayers who can activate and use their IRS business tax account include:

A sole proprietor who has an Employer Identification Number (EIN) issued by the IRS.
An individual partner or individual shareholder with both:
- A Social Security number or an individual tax ID number (ITIN).
- A Schedule K-1 on file (for partners, from 2012-2023; for shareholders, from 2006-2023).

Currently, a limited liability company that reports business income on a Schedule C can’t access Business Tax Account. Future access will be available for these businesses, as well as other entities including tax-exempt organizations, government agencies, partnerships, C corporations and S corporations.

What can business taxpayers do now?

Within BTA, business taxpayers can now:

View and make a payment toward a balance due by using a bank account. This includes a payment on a return filed for the current year as well as late payments for past tax years and Federal Tax Deposits.

Schedule a payment for any business day for up to a year and cancel a scheduled payment.
View recently processed payments, including payments made through the Electronic Federal Tax Payment System (EFTPS) online, wire transfers, checks or money orders, and see if any payments were returned or refused.
Store multiple bank accounts in their online “wallet” to manage tax payments.

Request a tax compliance check.
View the business name and address on file.
Give account access to employees of the business.
Register for clean energy credits (if eligible).
View and download transcripts for various payroll, income and excise tax returns.
Sole proprietors can now download business entity transcripts from their BTA account. The transcript shows entity information like business name, mailing address, location address and more for the Employer Identification Number on file.
View and download select digital notices including:
- CP080: Reminder - We Have Not Received Your Return, Credits May be on Your Account.
- CP136: Annual Notification of Federal Tax Deposit (FTD) Requirements (Forms: 941, 941-SS).
- CP216F: Application for Extension of Time to File an Employee Plan Return – Approved.

What new features will be added to BTA in the future?

Future capabilities made available through funding from the IRA will enable access by all business and organizational entities and help the business tax account become a robust online self-service tool.

To set up a new business tax account, or for more information visit Business Tax Account.

Child and Dependent Care tax credit can help offset summer day camp expenses

Mon, 19 Aug 2024 15:25:50 GMT

WASHINGTON – The Internal Revenue Service today reminded taxpayers that summer day camp expenses may count towards the Child and Dependent Care tax credit.

Many working parents arrange for care of their younger children under age 13 during the summer. A popular solution is a day camp program, which can sometimes also lead to a tax benefit. Taxpayers who pay for the care of a child, or other qualifying person, so they could work or look for work may be able to take the credit for child and dependent care expenses.

Unlike overnight camps, the cost of day camp may count as an expense towards the Child and Dependent Care credit.

How it works

Taxpayers must have earned income to claim this credit. The credit is calculated based on income and a percentage of expenses incurred for the care of qualifying people to enable taxpayers to work, look for work or attend school.

Depending on income, taxpayers can get a credit worth up to 35% of their qualifying childcare expenses. At minimum, it’s 20% of those expenses. For 2024, the maximum eligible expense for this credit is $3,000 for one qualifying person and $6,000 for two or more.
Reimbursed expenses, such as from a state social services agency, must first be deducted as work-related expenses used to calculate the amount of the credit.
The amount of work-related expenses used to figure the credit generally cannot be more than earned income for the year if single, or the smaller of a spouse’s income, if married.
Taxpayers who claim it must list the name and address of the day camp on their return, along with the taxpayer identification number unless an exception applies.

IRS Publication 503, Child and Dependent Care Expenses, explains all the rules, the tests needed to claim the credit and describes an exception for certain taxpayers living apart from their spouse and meeting other requirements. Taxpayers can also use the Interactive Tax Assistant on IRS.gov to determine if they can claim this credit.

Additional information

e-News for Tax Professionals 2024-33

Fri, 16 Aug 2024 20:31:37 GMT

IRS, states, tax industry announce new joint effort to combat growing scams and schemes
New Written Information Security Plan protects tax professionals, their businesses and clients
IRS reopens Employee Retention Credit Voluntary Disclosure Program through Nov. 22
Tax pros: Special information available to provide information to clients on Employee Retention Credit Voluntary Disclosure Program
Tax relief available for disaster victims in Minnesota, Vermont
IRS accepting 2025 Compliance Assurance Process (CAP) applications
Impending tax deadline for truckers Sept. 3
Taxpayers can use new option to request relief for certain late-filed international documents
Upcoming webinar for tax practitioners
Technical Guidance

1. IRS, states, tax industry announce new joint effort to combat growing scams and schemes

A coalition representing the Internal Revenue Service, state tax agencies and the nation’s tax industry today announced a new joint effort to combat the growth of scams and schemes threatening taxpayers and tax systems. The new combined effort follows a variety of increased scams and schemes that intensified during the past filing season that aimed to exploit vulnerable taxpayers while enriching fraudsters and promoters.

Convened at the request of IRS Commissioner Danny Werfel, the coalition of federal and state tax agencies, software and financial companies and key national tax professional associations agreed to a three-pronged approach. They will work to expand outreach and education about emerging scams, develop new approaches to identify potentially fraudulent returns at the point of filing and create infrastructure improvements to protect taxpayers as well as federal, state and industry tax systems.

2. New Written Information Security Plan protects tax professionals, their businesses and clients

In the sixth installment of the “Protect Your Clients; Protect Yourself” special series, the IRS and its Security Summit partners informed tax professionals of a new, updated Written Information Security Plan (WISP) designed to help safeguard tax professionals from identity theft and data breaches. After a year-long endeavor, the new WISP is an easily comprehensible document created by and for tax and industry professionals to protect client and business data. Tax pros are required to have a security plan under federal law.

“Tax professionals play a vital role in the nation’s tax system, and they hold a vast amount of taxpayer information that can be a treasure trove to identity thieves,” said IRS Commissioner Danny Werfel. “The newly updated Written Information Security Plan provides a helpful road map for tax pros to help protect their clients and themselves from the constant threat of data breaches. The IRS and the Security Summit partners urge tax pros to stay on top of these evolving threats, and this updated plan is an important part of that effort.”

Tax professionals may do the following to report stolen data:

Share information with the appropriate state tax agency by visiting Report a Data Breach;
Review and understand the FTC data breach response requirements as part of their overall information and data security plan; and
Report the incident to their local IRS stakeholder liaison.

Visit the Data Theft information for tax professionals webpage to learn more.

3. IRS reopens Employee Retention Credit Voluntary Disclosure Program through Nov. 22

The IRS has announced the reopening of the Voluntary Disclosure Program to assist businesses in correcting erroneous received Employee Retention Credit (ERC) claims.

4. Tax pros: Special information available to provide information to clients on Employee Retention Credit Voluntary Disclosure Program

For businesses and clients with questions on the ERC Voluntary Disclosure Program, the IRS has created special information that will help provide information on the new program. The second Employee Retention Credit Voluntary Disclosure Program (VDP) is available for businesses to settle inaccurate claims without incurring penalties or interest. The second ERC-Voluntary Disclosure Program will run through Nov. 22, and allows businesses to correct improper payments at a 15% discount and avoid future consequences. The IRS continues to urge businesses to review the eligibility requirements given aggressive marketing around the pandemic-era credit.

5. Tax relief available for disaster victims in Minnesota, Vermont

Disaster-area taxpayers in Minnesota and Vermont now have until Feb. 3, 2025, to file various federal individual and business tax returns and make required payments. The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA), and the same relief will be available to any other counties added later to the disaster areas. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

6. IRS accepting 2025 Compliance Assurance Process (CAP) applications

The IRS announced the opening of the application period for the 2025 Compliance Assurance Process (CAP) program, which will run from Sept. 4 to Oct. 31. Applicants will be informed of acceptance into the program in February 2025.

For more information, visit the CAP webpage.

7. Impending tax deadline for truckers Sept. 3

The IRS reminds drivers who operate large buses and trucks that, for vehicles used in July 2024, the deadline for filing Form 2290, Heavy Highway Vehicle Use Tax Return is Sept. 3.

For additional information, visit the Trucking Tax Center on IRS.gov.

8. Taxpayers can use new option to request relief for certain late-filed international documents

The IRS reminded taxpayers of the capability to submit electronic requests for relief for certain late-filed international documents. Requests can be submitted via eFax at 855-582-4842. Guidance for making each request can be found on IRS.gov using the following links:

9. Upcoming webinar for tax practitioners

The IRS offers the upcoming live webinar to the tax practitioner community:

In the know with RPO: An update from the Return Preparer Office on August 22, at 2 p.m. ET. Earn up to 1 CE credit (Federal Tax). Certificates of completion are being offered.

For more information or to register, visit Webinars for tax practitioners webpage.

10. Technical Guidance

Revenue Ruling 2024-17 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 section 1274.

Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Fri, 16 Aug 2024 17:30:28 GMT

Notice 2024-62 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for July 2024 used under § 417(e)(3)(D), the 24-month average segment rates applicable for August 2024, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

Notice 2024-62 will be in IRB: 2024-35, dated August 26, 2024.

IRS, states, tax industry announce new joint effort to combat growing scams and schemes; ongoing coordination to follow in footsteps of Security Summit’s identity theft efforts to help taxpayers and protect revenue

Fri, 16 Aug 2024 17:29:15 GMT

WASHINGTON — A coalition representing the Internal Revenue Service, state tax agencies and the spectrum of the nation’s tax industry today announced a new joint effort to combat the growth of scams and schemes threatening taxpayers and tax systems.

The new combined effort follows a variety of increased scams and schemes that intensified during the past filing season that aimed to exploit vulnerable taxpayers while enriching fraudsters and promoters.

Convened at the request of IRS Commissioner Danny Werfel, the coalition of federal and state tax agencies along with software and financial companies as well as key national tax professional associations agreed to a three-pronged approach. They will work to expand outreach and education about emerging scams, develop new approaches to identify potentially fraudulent returns at the point of filing and create infrastructure improvements to protect taxpayers as well as federal, state and industry tax systems.

The new task force will be called the Coalition Against Scam and Scheme Threats (CASST).

“Across the spectrum of the tax system, we’ve seen a rising tide of scams and schemes that try to exploit taxpayers and find gaps in government and industry defenses,” Werfel said. “This new collaborative approach will allow the private and public sectors to throw our combined weight against this threat. We will do more to work closely together, share information faster, respond quickly to threats and quickly alert the public to new and emerging threats. Our goal is to have a mass effect on this expanding problem that’s spread on social media and through bad actors.”

The new CASST project has wide support across the nation’s tax community. In addition to the IRS, other participants include state tax agencies represented by the Federation of Tax Administrators as well as the leading software and financial industries working in the tax space and key national tax professional organizations. The Council for Electronic Revenue Communication Advancement, the National Association of Computerized Tax Processors and the American Coalition for Taxpayer Rights are among those that have signed on to support the initiative. In all, more than 60 different groups from the private sector have signed on to the initiative, either individually or as part of a group.

“The FTA membership is dedicated to protecting taxpayers from fraudulent attacks on the country’s tax ecosystem,” said Federation of Tax Administrators Executive Director Sharonne Bonardi. “We are committed to continuing our collaborative efforts by working with the IRS, industry and other stakeholders to implement strategies that allow for proactive detection, prevention and mitigation of scams and schemes deployed by bad actors intending to defraud tax agencies.”

The new coalition is an outgrowth of the Security Summit effort, and while the new collaborative effort will not replace the Summit, the scams coalition will be closely modeled on the Summit. The Security Summit was launched in 2015 by the same groups to stem the growth in tax-related identity theft. The combined effort improved information sharing between the groups, identified common approaches to combat tax-related identity theft, improved internal tax system defenses and conducted extensive public awareness campaigns for taxpayers and tax professionals. While tax-related identity theft remains a concern, the improved protections have protected millions of taxpayers and prevented billions of dollars of fraudulent payments.

For this new project targeting scams, the CASST task force has agreed to high-level principles. The purpose of the group will be to better protect taxpayers from falling prey to unscrupulous actors by leveraging multilateral relationships across the tax ecosystem to minimize the filing of fraudulent tax returns.

"CERCA is pleased to work with the IRS and the states to combat the proliferation of ‘scams and schemes’ that are victimizing millions of Americans,” said Shannon Bond, chair of the Council for Electronic Revenue Communication Advancement. CERCA represents companies in the tax software and preparation industries as well as financial service groups and others in the tax community. “Continuing our long partnership with the IRS, CERCA stands shoulder to shoulder with both the federal government and the states to reduce first-party fraud, which threatens the viability of tax systems and imperils vulnerable taxpayers."

During the past tax season, there has been increased activity involving a variety of scams and schemes harming taxpayers, including the Fuel Tax Credit, household employment taxes and the Sick and Family Leave Credit. The IRS has seen hundreds of thousands of dubious claims come in where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and the need for taxpayers to show they have legitimate documentation to support these claims.

Numerous other scams and schemes continue to be seen circulating on social media and are highlighted through efforts including the annual IRS Dirty Dozen list and alerts from the Security Summit partners. The new approach will increase collaborative efforts to raise awareness and education about schemes, not just during tax season but throughout the year.

With the new scam and scheme initiatives, the IRS, states and the private sector will work to put in place new protections by filing season 2025. The combined effort is particularly important because the group has seen instances where scammers look for weak points in government systems and the private sector to exploit. The combined effort will improve defenses across both the private and public sector with a goal of making it more difficult for scammers to slip improper or false tax returns through the system.

The group will also work to make long-term structural changes to fundamentally improve the ability to identify and stop scams. This includes working to improve EFIN and PTIN validation and new steps to combat “ghost preparers,” who prepare tax returns for a fee and do not in any way sign a tax return or disclose their role on the tax return as the preparer. In many cases, these are inflated tax refunds that lead to millions in revenue loss and add risk for taxpayers who file potentially improper claims with only the individual’s name associated with the tax return.

IRS reopens Voluntary Disclosure Program to help businesses with problematic Employee Retention Credit claims; sending up to 30,000 letters to address more than $1 billion in errant claims

Thu, 15 Aug 2024 18:26:17 GMT

WASHINGTON —The Internal Revenue Service announced today a limited time reopening of the Voluntary Disclosure Program to help businesses fix incorrect Employee Retention Credit claims as the agency continues compliance work.

The Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP) will run through November 22 and allow businesses a chance to correct improper payments at a 15% discount and avoid future audits, penalties and interest. During the first disclosure program that ended in March, there were more than 2,600 applications from ERC recipients that disclosed $1.09 billion worth of credits.

To underscore the importance of participating in the Voluntary Disclosure Program, the IRS also announced it plans to mail up to 30,000 new letters to reverse or recapture potentially more than $1 billion in improper ERC claims. Thousands more mailings on additional questionable payments will be made in the fall.

“The limited reopening of the Voluntary Disclosure Program provides an opportunity for those with improper claims to come in ahead of IRS compliance work and get a discount on repayments,” said IRS Commissioner Danny Werfel. “This is especially important given increasing IRS compliance actions involving bad claims, many of them are the result of aggressive marketing tactics to lure unsuspecting businesses into claiming the complex credit. This provides a final window of opportunity for those misled businesses to make adjustments and avoid future compliance action by the IRS.”

“The push by promoters flooded the IRS with questionable ERC claims, which clogged our systems and slowed work,” Werfel added. “We recognize well-meaning businesses are caught up in this, and we are taking important steps to help them. This includes reopening the Voluntary Disclosure Program as well as getting more payments out to qualifying businesses.”

Last week, the IRS announced it was taking additional steps to move forward with ERC, including updates on the processing moratorium, compliance actions and upcoming payments. In recent weeks, the IRS separately sent out 28,000 disallowance letters to businesses whose pending claims showed a high risk of being incorrect. The IRS estimates that these disallowances will prevent up to $5 billion in improper payments. The IRS has also identified 50,000 valid ERC claims and is quickly moving them into the pipeline for payment processing in coming weeks. These payments are part of a low-risk group of claims.

The ERC program began as an effort to help businesses during the pandemic, but as time went on, the program increasingly became the target of aggressive marketing – and potentially predatory in some cases – well after the pandemic ended. For example, some promoter groups called the credit by another name, such as a grant, business stimulus payment or government relief besides ERC or the Employee Retention Tax Credit (ERTC) to increase claims. The IRS continues compliance work on questionable ERC claims on multiple fronts, with thousands of audits underway and 460 criminal cases initiated.

ERC Voluntary Disclosure Program reopens; special discount available through November 22

Today’s announcement features a special reopening of the ERC Voluntary Disclosure Program (VDP) through November 22 to help businesses that received questionable payments to self-correct and repay the credit they received after filing ERC claims in error. The IRS urged businesses with claims that show warning sign indicators to review eligibility requirements and talk to a trusted tax professional to see if the disclosure program is a good option for them.

As the IRS continues intensifying its compliance work involving improper ERC claims, the disclosure program protects businesses from more costly future compliance action. The second VDP offers a 15% discount for businesses repaying credits for tax periods in 2021, a slightly reduced rate from the first program’s 20% discount that ended in March.

Businesses should act soon to resolve incorrect claims and avoid potential future issues such as audits, full repayment, penalties and interest. Full details are available in IRS Announcement 2024-30, also released today, with highlights outlined in another IRS news release, IR-2024-213, IRS provides details of second Employee Retention Credit Voluntary Disclosure Program; program for improper claims open through Nov. 22.

Thousands of new recapture letters going out for improper ERC claims made for Tax Year 2021, some Tax Year 2020

As part of ongoing compliance work, the IRS announced today plans to mail thousands of additional letters reversing or recapturing improperly paid ERC claims. The IRS currently anticipates this round of mailings could reach up to 30,000 letters this fall. These “clawback” notices potentially represent more than $1 billion in claims from Tax Year 2021 and some additional, later-filed Tax Year 2020 claims. These letters notify taxpayers that the IRS is reversing or recapturing their previous credit. Several thousand of the letters have been mailed, with more coming in upcoming weeks and into the fall.

The IRS notes that those who receive these recapture letters will be ineligible to participate in the Voluntary Disclosure Program for the calendar quarter the letter covers.

This is the second round of these letters. Previously, the IRS determined that more than 12,000 entities filed claims that were improper for Tax Year 2020, resulting in $572 million in assessments.

The latest letters generally involve larger claims than earlier letters regarding 2020 because Congress increased the maximum ERC in 2021. Congress increased the maximum ERC from $5,000 per employee per year in 2020 to $7,000 per employee for each quarter of the year in 2021.

When the IRS identifies an employer that has received excessive or erroneous ERC, the agency will reclaim that ERC through normal tax assessment and collection procedures.

"This new round of letters serves as another incentive for businesses that believe they received an erroneous Employee Retention Credit payment to come forward and participate in the disclosure program and resolve the matter on more favorable terms," Werfel said. “The disclosure program provides a limited, unique opportunity to avoid future IRS compliance problems as well as sidestep a significant repayment fee with penalties and interest.”

Separate ERC Claim Withdrawal Program remains available for those with pending claims

The IRS also continues to urge employers with pending, unpaid ERC claims to consider a separate ERC Claim Withdrawal Program that allows them to remove a pending ERC claim – one that the IRS has not processed yet. They can withdraw the claim and pay no interest or penalty. Already, the claim withdrawal process for those with unprocessed ERC claims has led to more than 7,300 entities withdrawing $677 million.

ERC compliance work continues

The IRS continues analyzing ERC claims, intensifying audits and pursing promoter and criminal investigations. Beyond the disallowance letters, current initiatives results include:

Criminal investigations: As of July 1, 2024, IRS Criminal Investigation has initiated 460 criminal cases, with potentially fraudulent claims worth nearly $7 billion. In all, 37 investigations have resulted in federal charges so far, with 17 investigations resulting in convictions and nine sentencings with an average sentence of 20 months.

Promoter investigations: The IRS is gathering information about suspected abusive tax promoters and preparers improperly promoting the ability to claim the ERC. The IRS’s Office of Promoter Investigations has received hundreds of referrals from internal and external sources. The IRS will continue civil and criminal enforcement efforts of these unscrupulous promoters and preparers.

Audits: The IRS has thousands of ERC claims currently under audit.

IRS provides details of second Employee Retention Credit Voluntary Disclosure Program; program for improper claims open through Nov. 22

Thu, 15 Aug 2024 18:24:54 GMT

WASHINGTON — The Internal Revenue Service urged businesses that have received Employee Retention Credit payments to recheck eligibility requirements and consider the second Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP) to resolve incorrect claims without penalties or interest.

The second ERC-Voluntary Disclosure Program will run through Nov. 22, 2024, and allow businesses to correct improper payments at a 15% discount and avoid future audits, penalties and interest.

To help businesses caught in this situation, the IRS urges businesses to review important warning signsand eligibility requirements, and to talk to a trusted tax professional to see if the VDP is a good option. The IRS’s ERC Eligibility Checklist can also help businesses understand eligibility requirements and suggest next steps.

The IRS’s claim withdrawal program remains open for businesses whose ERC claims haven’t been paid yet.

Details about the second ERC Voluntary Disclosure Program

Interested employers must apply to the second ERC Voluntary Disclosure Program by Nov. 22, 2024. Applicants that the IRS accepts into the program will need to repay only 85% of the credits they received. This second round of the program is open for tax periods in 2021. Employers can’t use the second VDP to disclose and repay ERC money from tax periods in 2020.

If the IRS paid interest on the employer’s ERC refund claim, the employer doesn’t need to repay that interest. Employers who are unable to repay the required 85% of the credit may be considered for an Installment Agreement on a case-by-case basis, pending submission and review of Form 433-B, Collection Information Statement for Businesses, and all required supporting documentation. Form 433-B is available on IRS.gov.

The IRS will not charge program participants interest or penalties on any credits they timely repay. However, if an employer can’t repay the required 85% of the credit at the time they sign their closing agreement, they’ll be required to pay penalties and interest in connection with an alternative payment arrangement such as an installment agreement.

To qualify for this program, employers must provide the IRS with the names, addresses, telephone numbers and details about the services provided by any advisors or tax preparers who advised or assisted them with their claims.

The IRS has provided a set of Frequently Asked Questions about the second ERC Voluntary Disclosure Program to help employers understand the terms of the program.

ERC Voluntary Disclosure Program: Who can apply?

A variety of ERC recipients can apply for the second ERC Voluntary Disclosure Program. Any employer who already received the ERC for a tax period in 2021 for which they weren’t entitled can apply if the following are also true:

The employer hasn’t already applied to the first ERC VDP for the same tax periods. The IRS is still processing VDP applications from the first program. Taxpayers should not reapply for the same periods.
The employer isn’t under criminal investigation.
The employer isn’t under an IRS employment tax examination for the tax period for which they’re applying to the VDP.
The employer hasn’t received a Letter 6577-C, Employee Retention Credit (ERC) Recapture, or an IRS notice and demand for repayment of part or all of its ERC claim.
The employer hasn’t already filed an amended return to eliminate their ERC.
The IRS hasn’t received information from a third party or directly from an enforcement action that the taxpayer is not in compliance.

How to apply

To apply, employers must file Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, available on IRS.gov, and submit it through the IRS Document Upload Tool. Employers are expected to repay their full ERC, minus the 15% reduction allowed through the VDP. Under certain conditions, employers who aren’t able to pay the amount in full will have the option to set up an installment agreement.

Employers who outsource their payroll must apply to VDP through the third party

Many employers outsource their payroll obligations to a third party who reports, collects and pays employment taxes on the employer’s behalf using the third party’s Employer Identification Number. In this situation, the third party, not the employer, must file Form 15434. See the form and its instructions for details.

Next steps after an application is approved

Once the employer has applied to the VDP and submitted their Form 15434, an IRS employee will contact them to go over the application and answer any questions.

If the IRS approves the employer’s application, they will mail the employer a closing agreement. The employer must then repay 85% of the ERC they received, either online or by phone, using the Electronic Federal Tax Payment System (EFTPS). EFTPS is the Treasury Department system that most businesses already use to pay various federal tax obligations.

VDP participants unable to repay 85% of the ERC they received in full may enter into an installment agreement with the IRS to pay over time. Penalties and interest will apply under the standard installment agreement policy, so the IRS encourages those who can’t pay in full to consider getting a loan from a financial institution to avoid these costs. Once payment has been made, the employer must return the signed closing agreement to the IRS.

Second Employee Retention Credit Voluntary Disclosure Program

Thu, 15 Aug 2024 18:24:04 GMT

Announcement 2024-30 announces a second Voluntary Disclosure Program for taxpayers to resolve refunds or credits for erroneous Employee Retention Credit (ERC) claims. It explains taxpayer eligibility criteria, terms, and procedures for taxpayers electing to participate in the second Voluntary Disclosure Program. It is intended to provide taxpayers an opportunity to efficiently resolve their civil tax liabilities under this second Voluntary Disclosure Program and avoid potential litigation.

Announcement 2024-30 will be in IRB: 2024-36, dated 09/02/2024.

IRS accepting applicants for 2025 Compliance Assurance Process with expanded eligibility criteria

Thu, 15 Aug 2024 18:21:51 GMT

WASHINGTON – The Internal Revenue Service today announced the opening of the application period for the 2025 Compliance Assurance Process (CAP) program, which will run from Sept. 4 to Oct. 31, 2024.

The IRS will inform applicants if they’re accepted into the program in February 2025.

To be eligible to apply for CAP, applicants must:

Have assets of $10 million or more,

Be a U.S. publicly traded corporation with a legal requirement to prepare and submit SEC Forms 10-K, 10-Q and 8-K or a privately held C-corporation including foreign-owned. Privately held applicants will be required to submit audited financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS) or another permissible method, as deemed appropriate by the IRS, specific to the taxpayer applying to the CAP program on an annual basis and unaudited financial statements on a quarterly basis.

Not be under investigation by, or in litigation with, any government agency that would limit the IRS’s access to current tax records.

See highlights and updates for detailed information on revisions to the CAP program for 2025, including updates on Bridge Plus, an expansion of the applicant eligibility criteria, a new eligibility exception and a new form for international issues. General program information and the 2025 application details are available on the CAP webpage.

IRS encourages organizations planning to claim elective pay to complete pre-filing registration now for 2023 tax year

Wed, 14 Aug 2024 16:39:02 GMT

WASHINGTON — The Internal Revenue Service strongly urges qualifying businesses, tax-exempt organizations, and state, local and Indian tribal governments to complete the pre-filing registration process now for projects placed in service in 2023 if they plan to claim elective pay.

Taxpayers should file their annual return after completing the pre-filing registration process. A timely filed return (including extensions) is required to make an elective payment election. Electronic return filing, if not required, is strongly encouraged.

Taxpayers who file their return electronically can review information about IRS approved-e-file providers to find a Modernized e-File (MeF) provider, and should confirm that the software chosen supports all necessary forms, such as Form 3800, General Business Credit, and forms required to figure and report each credit.

The Inflation Reduction Act and the CHIPS Act of 2022 allow taxpayers to take advantage of certain manufacturing investment, clean energy investment and production tax credits through elective pay or transfer.

Elective payment and the transfer election create alternative ways for applicable entities and eligible taxpayers who have earned one of the IRA clean energy or the CHIPS credits to get the benefit of the credit even if the taxpayer cannot use the credit to offset their tax liability.

Taxpayers who intend to make an elective payment or credit transfer election must earn the credit, which means they must make a tax credit qualifying investment or undertake tax credit qualifying production activities to earn a credit eligible for an elective payment or transfer election.

The taxpayer must complete the pre-file registration process to receive a registration number. The registration number must be included on the taxpayer’s annual return as part of making a valid election. Complete and submit the pre-filing registration request no earlier than the beginning of the tax year in which the taxpayer will earn the credit related to an elective payment election or transfer election.

The IRS recommends that taxpayers submit the pre-filing registration at least 120 days prior to when the organization or entity plans to file its tax return on which it will make its election. This should allow time for IRS review, and for the taxpayer to respond if the IRS requires additional information before issuing the registration numbers.

The IRS will share information about the status of a taxpayer’s pre-file registration package exclusively through the IRA/CHIPS Pre-Filing Registration tool. If the taxpayer affirmatively opts in to receive email communications, the IRS will notify the taxpayer by email that the status of a registration package has changed.

Taxpayers are not required to opt in to receiving email notifications. However, if they choose not to opt in to receive email notifications, they are responsible to return to the IRA/CHIPS Pre-Filing Registration tool to monitor the status of the registration packages.

The IRS is hosting office hour sessions to assist organizations with the pre-filing registration process and the IRA/CHIPS Pre-filing Registration Tool for elective payment and transferability of clean energy and CHIPS credits. Subject matter experts from Large Business & International and Tax Exempt/Government Entities are available to answer questions.

Organizations may register to attend the following sessions.

8/14/2024	1-2:30 p.m. EDT	Register
9/4/2024	1-2:30 p.m. EDT	Register
9/18/2024	1-2:30 p.m. EDT	Register
10/2/2024	1-2:30 p.m. EDT	Register

Resources

IRS provides relief to Minnesota victims of severe storms, flooding; various deadlines postponed to Feb. 3, 2025

Tue, 13 Aug 2024 16:14:48 GMT

WASHINGTON — The Internal Revenue Service announced today tax relief for individuals and businesses in 25 Minnesota counties affected by severe storms and flooding that began on June 16, 2024.

These taxpayers now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA).

This means that individuals and households that reside or have a business in Blue Earth, Carver, Cass, Cook, Cottonwood, Faribault, Fillmore, Freeborn, Goodhue, Itasca, Jackson, Lake, Le Sueur, Mower, Murray, Nicollet, Nobles, Pipestone, Rice, Rock, St. Louis, Steele, Wabasha, Waseca and Watonwan counties qualify for tax relief.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred from June 16, 2024, through Feb. 3, 2025 (postponement period). As a result, affected individuals and businesses will have until Feb. 3, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 3, 2025, deadline will now apply to:

• Any individual, business or tax-exempt organization that has a valid extension to file their 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the storms occurred.
• Quarterly estimated income tax payments normally due on June 17 and Sept. 16, 2024, and Jan. 15, 2025.
• Quarterly payroll and excise tax returns normally due on July 31 and Oct. 31, 2024, and Jan. 31, 2025.

In addition, penalties for failing to make payroll and excise tax deposits due on or after June 16, 2024, and before July 1, 2024, will be abated, as long as the deposits were made by July 1, 2024.

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for 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. Tax preparers located in the disaster area with clients located outside the disaster area can choose to use theBulk Requests from Practitioners for Disaster Relief option, described on IRS.gov.

Additional tax relief

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 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number – 4797-DR − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

The IRS may provide additional disaster relief in the future.

Reminder about tax return preparation options

• 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 help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
• 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 software at no cost. There are products in English and Spanish.
• Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040 and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.
• 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.

IRS, Security Summit release new Written Information Security Plan to help tax pros protect against identity thieves, data risks

Tue, 13 Aug 2024 16:13:45 GMT

Week 6 of “Protect Your Clients; Protect Yourself” series highlights tips that tax pros can take

WASHINGTON — The Internal Revenue Service and the Security Summit partners today announced the availability of a new, updated Written Information Security Plan designed to help protect tax professionals against continuing threats from identity thieves and data breaches.

As part of a special eight-part series, the IRS and Summit partners highlighted the newly updated Publication 5708, Creating a Written Information Security Plan for your Tax & Accounting Practice. This Written Information Security Plan, or WISP, is a 28-page template designed to help tax pros, particularly smaller practices. The WISP has been updated and expanded to make data security planning easier.

The new WISP, the result of a year-long effort, is an easy-to-understand document developed by and for tax and industry professionals to keep customer and business information safe and secure. Tax pros are required to have a security plan under federal law.

The new version of the WISP includes several new information updates since the first version came out. This includes highlighting best practices for implementing multi-factor authentication for any individual accessing any information system, unless their qualified individual has approved in writing the use of reasonably equivalent or more secure access controls.

In addition, tax pros now need to report a security event affecting 500 or more people to the Federal Trade Commission (FTC) as soon as possible, but no later than 30 days from the date of discovery. This is in addition to reporting the incident to an IRS Stakeholder Liaison and state tax authorities.

This marks the sixth part of a special summer news release series focused on tax professional security. Now in its ninth year, the "Protect Your Clients; Protect Yourself" campaign provides timely tips to help protect sensitive taxpayer data that tax professionals hold while also protecting their own businesses from identity thieves.

This is part of an annual education effort by the Security Summit, a group that includes tax professionals, industry partners, state tax agencies and the IRS. The public-private partnership has worked since 2015 to protect the tax system against tax-related identity theft and fraud.

These security tips and the newly updated WISP are a key focus of the Nationwide Tax Forum, being held this summer in five cities throughout the U.S. In addition to the series of eight news releases, the tax professional security component is featured at the three-day continuing education events. The forums continue this week in Baltimore, as well as the weeks of August 19 in Dallas and September 9 in San Diego. The IRS reminds tax pros that registration deadlines are quickly approaching for the Dallas forum, as San Diego has already sold out.

The forums will feature several specific sessions to help educate the tax professional community on security-related topics. Tax professionals will hear from experts at the IRS, the tax professional community as well as a special session from Salve Regina University’s Pell Center from Rhode Island.

In the remaining weeks, the news release series and the IRS Tax Forums will provide timely tips to help protect sensitive taxpayer data that tax professionals hold while also protecting their own businesses from identity thieves.

Tax professionals are required by law to secure their clients’ data, and to help them meet this obligation, the IRS and the Security Summit partners are advising them to use the WISP template designed to make data security planning easier.

Knowing that tax professionals play a critical role in our nation's tax system, the Summit – led by the Tax Professionals Working Group – spent months originally developing two publications: Publication 5708, Creating a Written Information Security Plan for your Tax & Accounting Practice and Publication 5709, How to Create a Written Information Security Plan for Data Safety. Publication 5708 is the WISP, and Publication 5709 is a special summary flyer designed to be shared among the tax professional community.

“It’s more important than ever for tax pros to protect their data, passwords and other information,” said Kimberly Rogers, director of the IRS Return Preparer Office and co-chair of the Summit's Tax Pro Working Group. “The updated Written Information Security Plan is a result of months of work by tax professionals across the country. The Security Summit members worked together on this plan to make it easier for all tax professionals to develop a plan and an approach that is right for them.”

As part of legal requirements to implement and maintain a WISP in their practices, tax pros need to have it in a written form that’s accessible. In addition, tax professionals are recommended to review, test and update their WISPs.

The basics of a WISP

The WISP, available in Publication 5708, begins with the basics. It walks users through getting started on a plan, including understanding security compliance requirements and professional responsibilities. It continues with an outline for a basic WISP and a sample template. The sample is not intended to be the final word on written 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.

Throughout the process, tax pros are reminded that 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.

The IRS also reminds tax professionals that a WISP is just one part of what they need to protect their clients and themselves. Given the rapidly evolving nature of threats, the Summit also strongly encourages tax professionals to consult with technical experts to help with security issues and safeguard their systems.

A good WISP focuses on three areas:

Employee management and training;
Information systems;
Detecting and managing system failures.

Tax pros required by law to have a security plan

There are many aspects to running a successful business in the tax preparation industry, including reviewing tax law changes, learning software updates as well as managing and training staff. One often overlooked but critical component is creating a WISP. However, federal law requires all professional tax preparers to create and implement a data security plan.

The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to protect customer data. Under this law, tax and accounting professionals are considered financial institutions, regardless of size. In its implementation of this law, the FTC issued measures required to keep customer data safe. One requirement is implementing a WISP.

As a part of the plan, the FTC requires each firm to:

Designate one or more employees to coordinate its information security program.
Identify and assess risks to customer information in each relevant area of the company's operation and evaluate the effectiveness of the current safeguards for controlling these risks.
Design and implement a safeguards program and regularly monitor and test it.
Select service providers that can maintain appropriate safeguards by ensuring the contract requires them to maintain safeguards and oversee their handling of customer information.

Evaluate and adjust the program considering relevant circumstances, including changes in the firm's business or operations, or the results of security testing and monitoring.

Tax pro with a security problem? Contact an IRS Stakeholder Liaison, states and FTC

As part of a security plan, the IRS also recommends tax professionals create a data theft response plan, which includes contacting their IRS Stakeholder Liaison to report a security incident. Tax professionals can also share information with the appropriate state tax agency by visiting a special “Report a Data Breach” page with the Federation of Tax Administrators.

Tax professionals should also understand the FTC data breach response requirements as part of their overall information and data security plan. The new WISP also includes information on the requirement to report an incident to the FTC when 500 or more people are affected within 30 days of the incident.

Additional resources

Publication 5709, How to Create a Written Information Security Plan for Data Safety
Publication 5708, Creating a Written Information Security Plan for your Tax & Accounting Practice
Review Publication 5293, Data Security Resource Guide for Tax Professionals, which provides an overview and resources about how to avoid data theft.
Tax professionals can also get help with security recommendations by reviewing IRS Publication 4557, Safeguarding Taxpayer Data, and the IRS' Identity theft information page for tax pros.
Read Small Business Information Security: The Fundamentals, by the National Institute of Standards and Technology.

Tax professionals should also stay connected to the IRS through subscriptions to e-News for tax professionals and its social media sites.

e-News for Tax Professionals 2024-32

Fri, 09 Aug 2024 20:03:58 GMT

Inside This Issue

IRS moves forward with Employee Retention Credit claims; expedites work on complex credit; remains vigilant against fraudulent claims
Tax relief available for Hurricane Debby victims in four states
Security Summit partners urge use of multi-factor authentication to protect against evolving scams to tax professionals, businesses and clients
IRS Nationwide Tax Forum: Limited time remaining to register for Baltimore, Dallas
IRS revamps draft version of Form 1099-DA, Digital Asset Proceeds from Broker Transactions; requests feedback for 2025
Treasury, IRS shares Inflation Reduction Act clean energy statistics
Upcoming webinar for tax practitioners
Technical Guidance

1. IRS moves forward with Employee Retention Credit claims; expedites work on complex credit; remains vigilant against fraudulent claims

The IRS takes more steps to support small businesses and stop improper payments in the Employee Retention Credit (ERC) program. These steps include increasing the pace at which payments are made and carrying out compliance work on the intricate pandemic-era credit that saw a surge in claims as a result of deceptive marketing.

“The Employee Retention Credit is one of the most complex tax provisions ever administered by the IRS, and the agency continues working hard to balance our work to protect taxpayers from improper claims while also making payments to qualifying businesses,” said IRS Commissioner Danny Werfel. “It has been a time-consuming process to separate valid claims from invalid ones. During the past year, we maintained a steady cadence of both ERC approvals and disapprovals.”

“The IRS is committed to continuing our work to resolve this program as Congress contemplates further action, both for the good of legitimate businesses and tax administration,” Werfel added.

2. Tax relief available for Hurricane Debby victims in four states

Disaster-area taxpayers affected by Hurricane Debbie in South Carolina, North Carolina, Florida and Georgia now have until Feb. 3 to file various federal individual and business tax returns and make required payments. The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA), and the same relief will be available to any other counties added later to the disaster areas. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

3. Security Summit partners urge use of multi-factor authentication to protect against evolving scams to tax professionals, businesses and clients

In the fifth installment of the “Protect Your Clients; Protect Yourself” special series, the IRS and its Security Summit partners informed tax professionals that multi-factor authentication is now required by federal law, in addition to being a crucial security measure for their businesses and their clients. The Federal Trade Commission’s safeguards rule now mandates that all tax professionals use multi-factor authentication, or MFA, to secure sensitive client data.

“Multi-factor authentication is now more than just a good idea for tax professionals; it’s a requirement,” said IRS Commissioner Danny Werfel. “This is an effective way to increase security and protect tax professionals and their clients from a data breach. Multi-factor authentication is a little like a deadbolt on a door; its additional security supplementing the doorknob lock. This is an important step to protect not just tax professionals and their firms, but also the sensitive taxpayer information from their clients.”

Tax professionals may do the following to report stolen data:

Share information with the appropriate state tax agency by visiting Report a Data Breach;
Review Publication 5293, Data Security Resource Guide for Tax Professionals;
Obtain an identity protection PIN or complete Form 14039, Identity Theft Affidavit, if applicable; and
Report the incident to their local IRS stakeholder liaison.

Visit the Data Theft information for tax professionals webpage to learn more.

4. IRS Nationwide Tax Forum: Limited time remaining to register for Baltimore, Dallas

Last-minute registrants: Space is still available at the upcoming IRS Nationwide Tax Forum in Baltimore, Aug. 13-15, and Dallas, Aug. 20-22. The San Diego Tax Forum, Sept. 10-12, is sold out.

Each IRS Tax Forum offers tax professionals 45 different continuing education seminars. Attendees can earn up to 19 continuing education credits.

Other forum features include the Taxpayer Advocate Service’s Case Resolution Room - where attendees can get assistance on a tough client case – and the Digital Account Services Room, which provides help on IRS Online Accounts, Preparer Tax Identification Numbers (PTINs) and Centralized Authorization File (CAF) issues. Multiple IRS experts will be on hand to answer questions on digital assets, cybersecurity, and scams, while recruiting staff will be interviewing for IRS revenue agent and officer positions.

For a description of the program and to register, visit IRS Nationwide Tax Forum.

You can learn more about this year’s program on the following videos produced independently by Tax Talk Today:

5. IRS revamps draft version of Form 1099-DA, Digital Asset Proceeds from Broker Transactions; requests feedback for 2025

The IRS published a draft version of Form 1099-DA, Digital Assets, which brokers must use to report specific exchange and sale transactions involving digital assets starting in 2025. Typically, in early 2026, taxpayers and IRS will receive separate copies of these forms. The updated Form 1099-DA draft incorporates the transitional relief outlined in Notice 2024-56, Notice 2024-57 and Revenue Procedure 2024-28 and conforms to the final regulations for custodial broker reporting regulations.

Comments regarding the draft can be submitted to the IRS through the forms and publications comments page on IRS.gov.

6. Treasury, IRS shares Inflation Reduction Act clean energy statistics

The Department of Treasury and the IRS released data regarding the clean energy tax credits under the Inflation Reduction Act for the 2023 tax year. Taxpayers can now claim more tax credits for residential and energy efficient homes. More than $6 billion in tax credits have been claimed by taxpayers for home energy investments and more than $2 billion will be used for energy-efficient home improvements thanks to the Inflation Reduction Act.

7. Upcoming webinar for tax practitioners

The IRS offers the upcoming live webinar to the tax practitioner community:

In the know with RPO: An update from the Return Preparer Office on August 22, at 2 p.m. ET. Earn up to 1 CE credit (Federal Tax). Certificates of completion are being offered.

For more information or to register, visit Webinars for tax practitioners webpage.

8. Technical Guidance

Revenue Procedure 2024-32 updates Rev. Proc. 2017-55 to set forth the procedure by which the sponsor of a defined benefit plan that is subject to the funding requirements of section 430 may request approval from the IRS for the use of plan-specific substitute mortality tables in accordance with section 430(h)(3)(C) and section 1.430(h)(3)-2.

IRS moves forward with Employee Retention Credit claims: Agency accelerates work on complex credit as more payments move into processing; vigilance, monitoring continues on potentially improper claims

Thu, 08 Aug 2024 19:59:32 GMT

WASHINGTON – The Internal Revenue Service announced today additional actions to help small businesses and prevent improper payments in the Employee Retention Credit program, including accelerating more payments and continuing compliance work on the complex pandemic-era credit that was flooded with claims following misleading marketing.

The IRS is continuing to work denials of improper ERC claims, intensifying audits and pursuing civil and criminal investigations of potential fraud and abuse. The findings of the IRS review, announced in June, confirmed concerns raised by tax professionals and others that there was an extremely high rate of improper ERC claims in the current inventory of ERC claims.

In recent weeks, the IRS has sent out 28,000 disallowance letters to businesses whose claims showed a high risk of being incorrect. The IRS estimates that these disallowances will prevent up to $5 billion in improper payments. Thousands of audits are underway, and 460 criminal cases have been initiated. The IRS has also identified 50,000 valid ERC claims and is quickly moving them into the pipeline for payment processing in coming weeks. These payments are part of a low-risk group of claims.

Given the complexity of the ERC and to reduce the risk of improper payments, the IRS emphasized it is moving methodically and deliberately on both the disallowances as well as additional payments to balance the needs of businesses with legitimate claims against the promoter-fueled wave of improper claims that came into the agency.

“The IRS is committed to continuing our work to resolve this program as Congress contemplates further action, both for the good of legitimate businesses and tax administration,” Werfel added.

To counter the flood of claims, the IRS announced last fall a moratorium on processing claims submitted after Sept. 14, 2023, to give the agency time to digitize information on the large study group of ERC claims, which are made on amended paper tax returns. The subsequent analysis of the results during this period helped the IRS evaluate next steps, providing the agency valuable information to improve the accuracy of ERC claims processing going forward.

The detailed review during the moratorium allowed the IRS to move into this new stage of the program with more payments and disallowances. In addition, the IRS will remain in close contact with the tax professional community to help navigate through the complex landscape.

“This has been a resource-intensive credit for IRS teams to evaluate,” Werfel said. “Unfortunately, the situation was compounded by misleading marketing flooding businesses to claim these credits, creating a perfect storm that added risk of improper payments for taxpayers and the government while complicating processing for the IRS and slowing claims to legitimate businesses.”

Work continues on improper claims as IRS closely monitors feedback; appeals process available for denied claims

With the recent issuance of 28,000 disallowance letters, the IRS is aware of concerns raised by tax professionals about potential errors. While we are still evaluating the results of this first significant wave of disallowances in 2024, early indications indicate errors are relatively isolated and that more than 90% of disallowance notices were validly issued.

The IRS will continue to remain in contact with the tax community and monitor the situation and make any adjustments to minimize burden on businesses and their representatives. Specifically, the IRS will adjust its processes and filters for determining invalid claims following each wave of disallowances. While the IRS is still evaluating the results of this first significant wave of disallowances in 2024, early indications indicate errors are isolated.

The IRS also noted that in limited cases where claims can be proven to have been improperly denied, the agency will work with taxpayers to get it right.

The IRS also reminds businesses that when they receive a denial of an ERC claim they have options available to file an administrative appeal by responding back to the address on the denial letter. IRS.gov also has additional information on administrative appeals with the IRS independent Office of Appeals.

The IRS learned that some of the recent early mailings have inadvertently omitted a paragraph highlighting the process for filing an appeal to the IRS or District Court, and the agency is taking steps to ensure this language is mailed to all relevant taxpayers. Regardless of the language in the notice, the IRS emphasizes taxpayers have administrative appeals rights available to them and reminds all taxpayers that details on the process for filing an appeal or otherwise challenging an IRS determination can be found throughout the agency’s literature and on IRS.gov.

Additional payments for 50,000 valid claims moving into processing; more in the fall

In the latest step, the IRS announced today that low-risk ERC claims will be paid out quickly. The IRS is moving 50,000 of these claims. After processing is complete, the claims will be paid out to taxpayers. The IRS projects payments will begin in September with additional payments going out in subsequent weeks. The IRS anticipates adding another large block of additional low-risk claims for processing and payment in the fall.

The IRS also noted that it is a making a shift in the moratorium period on new claims now that it has additional information. Previously, the agency was not processing claims filed after Sept. 14, 2023. As the agency moves forward, it will now start judiciously processing claims filed between Sept. 14, 2023, and Jan. 31, 2024. Like the rest of the ERC inventory, work will focus on the highest and lowest risk claims at the top and bottom end of the spectrum. This means there will be instances where the agency will start taking actions on claims submitted in this time period when the agency has seen a sound basis to pay or deny a refund claim.

As the IRS begins to process additional claims, the agency reminds businesses that they may receive payments for some valid tax periods – generally quarters – while the IRS continues to review other periods for eligibility. ERC eligibility can vary from one tax period to another if, for example, government orders were no longer in place or a business’s gross receipts increased. Alternatively, qualified wages may vary due to a forgiven Paycheck Protection Program loan or because an employer already claimed the maximum amount of qualified wages in an earlier tax period.

ERC compliance work continues

The IRS continues analyzing ERC claims, intensifying audits and pursing promoter and criminal investigations. Beyond the disallowance letters, current initiatives results include:

ERC Claim Withdrawal Program: The claim withdrawal process for unprocessed ERC claims has led to more than 7,300 entities withdrawing $677 million.
ERC Voluntary Disclosure Program: During the VDP, which ended in March, the IRS received more than 2,600 applications from ERC recipients that disclosed $1.09 billion worth of credits.
Criminal investigations: As of July 1, 2024, IRS Criminal Investigation has initiated 460 criminal cases, with potentially fraudulent claims worth nearly $7 billion. In all, 37 investigations have resulted in federal charges so far, with 17 investigations resulting in convictions and nine sentencings with an average sentence of 20 months.
Promoter investigations: The IRS is gathering information about suspected abusive tax promoters and preparers improperly promoting the ability to claim the ERC. The IRS’s Office of Promoter Investigations has received hundreds of referrals from internal and external sources. The IRS will continue civil and criminal enforcement efforts of these unscrupulous promoters and preparers.
Audits: The IRS has thousands of ERC claims currently under audit.

Additional information

Warning sign indicators about potentially improper claims.
ERC Claim Withdrawal Program.

Department of Treasury and IRS release Inflation Reduction Act clean energy statistics

Wed, 07 Aug 2024 14:49:32 GMT

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued statistics on the Inflation Reduction Act clean energy tax credits for tax year 2023.

The Inflation Reduction Act, or IRA, extended and expanded tax credits that allow taxpayers to claim residential and energy efficient home energy credits.

Taxpayers have claimed more than $6 billion in credits for residential clean energy investments—which include solar electricity generation, solar water heating and battery storage—and more than $2 billion for energy efficient home improvements — which include heat pumps, efficient air conditioners, insulation, windows and doors — on 2023 tax returns filed and processed through May 23, 2024.

Residential and Energy Efficient Home Improvement Credit

Credit	Number of returns	Credit value
*Residential Clean Energy Credit*	1,246,440	Total: $6.3 billion, Average per return: $5,084
Rooftop solar	752,300	Up to 30% of cost
Batteries	48,840	Up to 30% of cost

*Energy Efficient Home Improvement Credit*	2,338,430	Total: $2.1 billion, Average per return: $882
Home insulation	669,440	Up to 30% of cost^c
Windows and skylights	694,450	Up to 30% of cost or $600^c
Central air conditioners	488,050	Up to 30% of cost or $600^c
Doors	400,070	Up to 30% of cost, $250 per door, or $500 total
Heat pumps	267,780	Up to 30% of cost or $2,000
Heat pump water heaters	104,180	Up to 30% of cost or $2,000

Multi-Factor Authentication: Key protection to tax professionals’ security arsenal now required

Tue, 06 Aug 2024 16:35:15 GMT

Week 5 of “Protect Your Clients; Protect Yourself” series focuses on strengthening account security

WASHINGTON — The Internal Revenue Service and the Security Summit partners remind tax professionals that using multi-factor authentication is now more than an important protection for their businesses and their clients – it’s now a federal requirement.

All tax professionals are now required under the Federal Trade Commission’s safeguards rule to use multi-factor authentication, or MFA, to protect clients’ sensitive information. The June 2023 change mandates MFA to strengthen account security by requiring more than just a username and password to confirm an identity when accessing any system, application or device.

“Multi-factor authentication is now more than just a good idea for tax professionals; it’s a requirement,” said IRS Commissioner Danny Werfel. “This is an effective way to increase security and protect tax professionals and their clients from a data breach. Multi-factor authentication is a little like a deadbolt on a door; it’s additional security supplementing the doorknob lock. This is an important step to protect not just tax professionals and their firms, but also the sensitive taxpayer information from their clients.”

This is the fifth week of an eight-part "Protect Your Clients; Protect Yourself" summer series, part of an annual education effort by the Security Summit, a group that includes tax professionals, industry partners, state tax agencies and the IRS. The public-private partnership has worked since 2015 to protect the tax system against tax-related identity theft and fraud.

Security is a key focus of the Nationwide Tax Forum, being held this summer in five cities throughout the U.S. In addition to the series of eight news releases, the tax professional security component is featured at the three-day continuing education events. The forums continue the weeks of August 12 in Baltimore, August 19 in Dallas and September 9 in San Diego. The IRS reminds tax pros that registration deadlines are quickly approaching for the Baltimore and Dallas forums, as San Diego has already sold out.

In upcoming weeks, the news release series and the IRS Tax Forums will provide timely tips to help protect sensitive taxpayer data that tax professionals hold while also protecting their own businesses from identity thieves.

A key part of tax pro security now revolves around MFA. The extra layers of different authentication factors include something only a user knows, like a username and password; something they have, like a token or random number sequence sent to their cell phone; or something unique, like biometric information. These provide extra assurance that a tax pro’s client, not an impostor, is gaining access.

The Summit partners noted that implementing MFA is one of the most cost-effective ways to increase security and reduce a tax pro’s fraud and data breach risks. Once in place, MFA helps protect against phishing, social engineering and other types of technology attacks that exploit weak or stolen passwords.

Common MFA examples

The general public makes wide use of MFA these days, so tax pro clients shouldn’t be surprised by the extra scrutiny asked of them.

For example, many smartphone users are accustomed to fingerprint or facial recognition that authenticates their identity before unlocking their device. Certain smartphone applications can also rely on that biometric factor along with a PIN or password for app-level MFA.

Many online banks, financial applications and payroll services use MFA to verify account holders’ identities before granting access or allowing high-risk transactions, such as money transfers.

In addition, taxpayers connecting to the IRS will be asked to set up MFA to create an IRS Online Account. After that, to sign in, they will first log in with an email address and password, then receive a one-time passcode by text or call to one’s chosen device and finally enter the passcode into the account to complete sign-in. A bad actor cannot access one’s account without also having their passcode.

MFA required by law

Under the new FTC MFA rules, there’s a requirement to use at least two of the following factors for anyone accessing customer information: something a user knows like a username; something sent to them like numbers texted to a cell phone; or a physical part of them like a fingerprint or facial scan.

In addition, MFA should be used to secure client information on a tax pro’s computer or network, but it should also be used to access client information stored within their tax preparation software. MFA is required by law for all companies – not just tax professionals. The size of the company does not matter. Opting out of using MFA in tax prep software is a violation of the FTC safeguards rules.

Best implementation practices

Tax pros should implement MFA across all their services and data access points.

In addition, they should regularly evaluate current MFA methods, standards and new technologies to stay protected against the latest threats, and they should offer a variety of authentication factors to suit the needs of different users.

Finally, tax pros should always enable MFA within tax software products and cloud storage services containing sensitive client data, and they should never share usernames.

Additional resources

If a tax pro or their firm are the victim of data theft, they should:

Report the incident to their local IRS Stakeholder Liaison. Speed is critical. IRS stakeholder liaisons will ensure all the appropriate IRS offices are alerted. If reported quickly, the IRS can take steps to block fraudulent returns in the clients' names and assist tax pros through the process.
Visit the Federation of Tax Administrators to find state contact information. Tax professionals can share information with the appropriate state tax agency by visiting the special “Report a Data Breach.”
Review Publication 5293, Data Security Resource Guide for Tax Professionals, which provides an overview and resources about how to avoid data theft.
Tax professionals can also get help with security recommendations by reviewing IRS Publication 4557, Safeguarding Taxpayer Data, and the IRS' Identity theft information page for tax pros.
Read Small Business Information Security: The Fundamentals, by the National Institute of Standards and Technology.

Tax professionals should also stay connected to the IRS through subscriptions to e-News for tax professionals and its social media sites.

e-News for Tax Professionals 2024-31

Fri, 02 Aug 2024 18:11:16 GMT

Inside This Issue

Security Summit partners urge continued vigilance against evolving scams to tax professionals, businesses and clients
IRS business forms now electronic
IRS Nationwide Tax Forum: Registration still open for Baltimore, Dallas
IRS celebrates National Whistleblower Day; collects over $7 billion thanks to whistleblowers
Technical Guidance

1. Security Summit partners urge continued vigilance against evolving scams to tax professionals, businesses and clients

In the fourth installment of the “Protect Your Clients; Protect Yourself” special series, the IRS and its Security Summit partners reminded taxpayers and tax professionals about the IRS online accounts and the special Identity Protection PIN program, which can help prevent identity theft related to taxes.

“To protect against continuing and evolving threats from identity thieves, these two special tools provide an extra layer of security for taxpayers and tax professionals,” IRS Commissioner Danny Werfel said. “The IRS and the Security Summit urge people to sign up for both IP PINs and the Online Account to help protect their valuable information as well as avoid tax problems down the road.”

Tax professionals may do the following to report stolen data:

Share information with the appropriate state tax agency by visiting Report a Data Breach;
Obtain an identity protection PIN or complete Form 14039, Identity Theft Affidavit, if applicable; and
Report the incident to their local IRS stakeholder liaison.

Visit the Data Theft information for tax professionals webpage to learn more.

2. IRS business forms now electronic

Taxpayers can now electronically file business Forms 940, 941, 943 and 945, including the Spanish version of Forms 941 and 943. In addition, the IRS can now accept related electronic payments while minimizing errors normally associated with processing paper returns.

Visit the Modernized eFile for Employment Taxes FAQ page for more information on electronically filing employment taxes.

3. IRS Nationwide Tax Forum: Registration still open for Baltimore, Dallas

Tax pros: It’s not too late to reserve your space at the upcoming IRS Nationwide Tax Forum in Baltimore, Aug. 13-15, and Dallas, Aug. 20-22.

Each forum offers tax professionals a total of 45 different continuing education seminars. Attendees can earn up to 19 continuing education credits. In addition, the IRS will have employees on-site to assist attendees who need personalized help. For example, those in need of assistance with a client case can make an appointment with a representative in the Case Resolution Room. Those who need help creating an IRS Online Account or resolving a Preparer Tax Identification Number (PTIN) or Centralized Authorization File (CAF) issue should visit the Digital Account Services Room. There will also be staff available to assist with e-Services, cybersecurity, digital assets, Form 1099-K, Low Income Taxpayer Clinics and more.

For information and to register, visit IRS Nationwide Tax Forum.

You can learn more about this year’s program on the following videos produced by Tax Talk Today:

4. IRS celebrates National Whistleblower Day; collects over $7 billion thanks to whistleblowers

July 30 is National Whistleblower Appreciation Day because on that day in 1778, the Continental Congress passed the nation’s first whistleblower law. The first law related to whistleblowers on tax violations was enacted almost 90 years later in March 1867.

The IRS Whistleblower Office acknowledges the critical role whistleblowers play in the nation’s tax administration. The agency has paid over $1.2 billion in awards since issuing its first award in 2007, representing the successful collection of $7 billion from taxpayers who were not in compliance.

5. Technical Guidance

Security Summit: Identity Protection PINs, IRS Online Account protect against tax-related identity theft

Tue, 30 Jul 2024 18:22:41 GMT

Week 4 of “Protect Your Clients; Protect Yourself” series focuses on special protection tools

WASHINGTON — In the fourth part of a special summer series, the Security Summit partners today reminded tax professionals and taxpayers about the special IRS Identity Protection PIN program and the IRS online accounts that can help protect against tax-related identity theft.

These two tools help protect against the threat of tax-related identity theft, both for the taxpayers who sign up and the tax professionals who hold their sensitive tax information.

Identity Protection PINs, also referred to as IP PINs, serve as a critical defense against identity thieves. The IRS is encouraging all tax pros and taxpayers to establish their IRS Online Account that allows access to IRS account information online, but it also guards against fraudsters trying to trick tax pros and taxpayers into creating such an account.

The IRS, state tax agencies and the nation's tax industry – working together as the Security Summit – need assistance from tax professionals to let their clients know that IP PINs and the IRS Online Account are available to anyone who can verify their identity.

In addition to enrolling in the IP PIN program, the IRS is encouraging all people to establish their IRS Online Account. Doing so not only provides access to IRS account information that’s now available online, but it also guards against fraudsters trying to trick tax pros and taxpayers into creating such an account. Tax pros also have access to the Tax Pro Account.

This is the fourth week of an eight-part “Protect Your Clients, Protect Yourself" summer series, part of an annual education effort by the Security Summit, a group that includes tax professionals, industry partners, state tax agencies and the IRS. The public-private partnership has worked since 2015 to protect the tax system against tax-related identity theft and fraud.

Security is a key focus of the Nationwide Tax Forum, being held in five cities this summer throughout the U.S. In addition to the series of eight news releases, the tax professional security component will be featured at the forums, which are three-day continuing education events. The forums continue today in Orlando, Florida, though the event is already sold out, and carry on the week of August 13 in Baltimore, August 20 in Dallas and September 10 in San Diego. The IRS reminds tax pros that registration deadlines are quickly approaching for the Baltimore and Dallas forums, as San Diego has also sold out.

More than 10.4 million taxpayers have taken the steps to obtain an IP PIN, a six-digit number that once issued to a taxpayer must be included on their tax return prior to filing electronically. Many, many more taxpayers should consider getting one to add another layer of protection against identity theft.

To do so, taxpayers should visit the IRS Get an IP PIN online tool. Doing that will establish a taxpayer’s access to their IRS Online Account, making themselves less likely to fall victim to social engineering schemes that trick taxpayers into setting up an IRS Online Account controlled by a bad actor.

Beginning this summer, taxpayers who enroll in the program will have the ability to unenroll if for some reason they decide they no longer want to participate in the future.

ETAAC notes IP PIN “effectively locks out” many fraudsters

The Electronic Tax Administration Advisory Committee, or ETAAC, is again this year highlighting the importance of the IP PIN to taxpayers and tax professionals, echoing past endorsements from the same independent IRS advisory group.

“The IP PIN method provides strong protection against stolen identity tax refund fraud and effectively locks out many fraudsters from e-filing using that taxpayer’s social security number,” said ETAAC’s annual report to Congress.

But the report added that IP PINS should be more widely used, calling it an overlooked tool in the fight against fraud. Underscoring the point, the ETAAC report said only 525,000 taxpayers opted into the IP PIN program in 2022, even though the Federal Trade Commission received more than 1.1 million reports of identity theft that same year.

The importance of someone’s IP PIN can be a tempting target for identity thieves, given the IP PINs' inherent strength. Summit partners urged taxpayers and tax professionals to be careful and protect the IP PIN from identity thieves, and noted these key tips:

Taxpayers should share their IP PIN only with their trusted tax provider.
Tax professionals should never store clients' IP PINs on computer systems. This reduces taxpayer risk if a tax pro's system is compromised by an identity thief or cyberattack.
The IRS will never call, email or text either taxpayers or tax professionals to request the IP PIN. This is a sign of a scam.

Tax professionals who experience a data theft can assist clients by urging them to quickly obtain an IP PIN. Even if a thief already has filed a fraudulent return, an IP PIN would still offer protections for later years and prevent taxpayers from being repeat victims of tax-related identity theft.

Key facts about IP PINs

Here are a few other things taxpayers and tax professionals should know about the IP PIN:

It's a six-digit number known only to the taxpayer and the IRS.
The opt-in program is voluntary, though strongly encouraged.
In cases of proven identity theft, an IP PIN is assigned to a taxpayer to use for future filings.
The IP PIN should be entered on the electronic tax return when prompted by the software product or on a paper return next to the signature line.
The IP PIN is valid for one calendar year; a new IP PIN is generated each year.
Only taxpayers who can verify their identities may obtain an IP PIN.
IP PIN users should never share their number with anyone but the IRS and their trusted tax preparation provider. The IRS will never call, email or text a request for the IP PIN.
Tax professionals cannot obtain an IP PIN on behalf of clients. Taxpayers must obtain their own IP PIN.

Taxpayers have the opportunity to opt out if they previously opted into the program. Taxpayers who are confirmed victims of identity theft will not have the option to opt out of the program.

How to get an IP PIN

To obtain an IP PIN, the best option is to start at Get an IP PIN. Taxpayers need to validate their identities through ID.me to access the tool and their IP PIN. Before attempting this thorough process, the IRS recommends taxpayers first check out How to register for IRS online self-help tools.

If taxpayers are unable to validate their identity online and if their income is less than $79,000 for individuals or $158,000 for married couples, they may file Form 15227, Application for an Identity Protection Personal Identification Number. The IRS will call the telephone number provided on Form 15227 to validate their identity. Once verified, the taxpayer will receive an IP PIN via the U.S. Postal Service within four to six weeks.

Taxpayers who cannot validate their identities online or on the phone with an IRS employee after submitting a Form 15227, or who are ineligible to file a Form 15227, may call the IRS to make an appointment at a Taxpayer Assistance Center. They'll need to bring one picture identification document and another identification document to prove their identity. Once verified, the taxpayer will receive an IP PIN via U.S. Postal Service within three weeks.

The IP PIN process for confirmed victims of identity theft remains unchanged. These victims will automatically receive an IP PIN each year.

Additional resources

If a tax pro or their firm are the victim of data theft, they should:

Report the incident to their local IRS Stakeholder Liaison. Speed is critical. IRS stakeholder liaisons will ensure all the appropriate IRS offices are alerted. If reported quickly, the IRS can take steps to block fraudulent returns in the clients' names and will assist tax pros through the process.
Visit the Federation of Tax Administrators to find state contact information. Tax professionals can share information with the appropriate state tax agency by visiting the special “Report a Data Breach.”
Review Publication 5293, Data Security Resource Guide for Tax Professionals, which provides an overview and resources about how to avoid data theft.
Tax professionals can also get help with security recommendations by reviewing IRS Publication 4557, Safeguarding Taxpayer Data, and the IRS' Identity theft information page for tax pros.
Read Small business information security: The fundamentals, by the National Institute of Standards and Technology.

Tax professionals should also stay connected to the IRS through subscriptions to e-News for tax professionals and its social media sites.

e-News for Tax Professionals 2024-30

Fri, 26 Jul 2024 19:29:50 GMT

IRS shares more warning signs of incorrect ERC claims; businesses urged to resolve erroneous claims to avoid penalties, interest, audit
IRS Nationwide Tax Forum: Registration still open for Baltimore, Dallas
Security Summit partners urge continued vigilance against evolving scams to tax professionals, businesses and clients
IRS online resources and taxpayer services continue to hit significant milestones with IRA funding
Tax relief available to hurricane Beryl victims in Texas
IRS updates FAQs on new, previously owned and qualified commercial clean vehicle credits
Technical Guidance

1. IRS shares more warning signs of incorrect ERC claims; businesses urged to resolve erroneous claims to avoid penalties, interest, audit

The IRS released five new warning indicators it has seen on incorrect claims made by businesses, as the agency steps up its efforts on the Employee Retention Credit (ERC). The updated list is based on frequent problems that the IRS compliance teams have encountered during the examination and processing of ERC claims.

“The IRS continues working aggressively to pursue improper claims as well as increase payments going out to businesses with legitimate claims on these complex credits,” said IRS Commissioner Danny Werfel. “We want businesses to be aware of common errors our compliance teams are seeing, many of which reflect bad advice coming from promoters. The IRS continues to urge people with pending claims or previously approved payments to talk to a trusted tax professional rather than a promoter and see if any of these red flags apply to them.”

2. IRS Nationwide Tax Forum: Registration still open for Baltimore, Dallas

With some locations already sold out, the IRS encourages tax professionals to register soon for a spot at the upcoming IRS Nationwide Tax Forum in Baltimore, Aug. 13-15, or Dallas, Aug. 20-22. Each forum offers tax professionals a total of 45 different continuing education seminars. Attendees can earn up to 19 continuing education credits.

To assist attendees needing personalized help, the IRS will have employees on-site. For example, those needing assistance with their toughest client case involving a tax matter can make an appointment with a representative in the Taxpayer Advocate Service’s Case Resolution Room. If they need help with creating an IRS Online Account or resolving a Preparer Tax Identification Number (PTIN) or Centralized Authorization File (CAF) issue, there will be appointments available in the Digital Account Services Room. For other IRS related questions, there will be staff on-hand in the IRS Zone and at various tables outside the seminar rooms.

For information and to register, visit IRS Nationwide Tax Forum. You can learn more about this year’s program on the following videos produced independently by Tax Talk Today:

3. Security Summit partners urge continued vigilance against evolving scams to tax professionals, businesses and clients

In the third installment of the “Protect Your Clients; Protect Yourself” special series, the IRS and its Security Summit partners urge tax professionals to recognize the warning signs of data theft so they can take immediate action to safeguard their clients’ information and their businesses. The IRS and Security Summit partners have observed an ongoing wave of identity thieves attempting to prey on tax professionals to obtain sensitive client tax information. Tax professionals should exercise caution to avoid becoming victims of these attacks, which put their businesses and clients at risk. To report stolen data right away, a tax professionals may do the following:

Share information with the appropriate state tax agency by visiting the special Report a Data Breach;
Obtain an identity protection PIN or complete Form 14039, Identity Theft Affidavit, if applicable; and
Report the incident to their local IRS stakeholder liaison.

Visit the Data Theft information for tax professionals webpage to learn more.

4. IRS online resources and taxpayer services continue to hit significant milestones with IRA funding

As part of ongoing transformation efforts, the IRS announced continued progress on several taxpayer service and technology projects that increase online tools and digital services. The IRS is working to update its core technology infrastructure and compliance initiatives while these projects continue to enhance taxpayer service and increase the availability of online tools. IRS Commissioner Danny Werfel emphasized these initiatives during a quarterly update on the IRS Strategic Operating Plan.

“Funding from the Inflation Reduction Act is helping spur innovation and improvement across the IRS to transform our operations in our work to help taxpayers and the nation,” said Commissioner Werfel. “This progress can be seen in our continued expansion of our online accounts to provide more features, increased use of new digital tools and additional special activities to help taxpayers in-person. By providing digital forms, making payments easier and continuing work to reduce paper-based processes that have long hampered the IRS and frustrated taxpayers, our progress is accelerating to make long-overdue improvements.”

5. Tax relief available to hurricane Beryl victims in Texas

Disaster-area taxpayers in 67 Texas counties affected by Hurricane Beryl that began on July 5 now have until Feb. 3, 2025, to file various federal individual and Business tax returns and make tax payments. The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). This currently covers 67 counties; however, any additional counties that are later added to the disaster area will be eligible for the same tax relief. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

6. IRS updates FAQs on new, previously owned and qualified commercial clean vehicle credits

The IRS revised frequently asked questions (FAQs) in Fact Sheet 2024-26, which renders guidance on dealer registration, income restrictions, eligibility requirements and transfer policies for New, Previously Owned and Qualified Clean Vehicle Credits. These FAQs supersede earlier FAQs that were posted in FS-2024-14 on April 16, 2024.

7. Technical Guidance

Notice 2024-60 describes the information that must be included in a written report described in section 1.45Q-4(c)(2) (LCA Report) and provides the procedures a taxpayer must follow to submit the LCA Report and required supporting information to the IRS and the Department of Energy for review under section 1.45Q-4(c)(5) before any credit for carbon oxide sequestration allowed under section 45Q(a)(2)(B)(ii) or (a)(4)(B)(ii) is determined for qualified carbon oxide utilized by any taxpayer in the manner described in section 45Q(f)(5) as implemented by section 1.45Q-4 (section 45Q utilization credit).

IRS shares more warning signs of incorrect claims for the Employee Retention Credit; urges businesses to proactively resolve erroneous claims to avoid penalties, interest, audits

Fri, 26 Jul 2024 16:54:45 GMT

WASHINGTON – As the Internal Revenue Service intensifies work on the Employee Retention Credit, the agency today shared five new warning signs being seen on incorrect claims by businesses.

The new list comes from common issues the IRS compliance teams have seen while analyzing and processing ERC claims. The new items are in addition to seven problem areas the IRS previously highlighted.

The IRS urged businesses with pending claims to carefully review their filings to confirm their eligibility and ensure credits claimed don’t include any of these 12 warning signs or other mistakes. Businesses with these indicators should talk to a trusted tax professional and consider using special ERC Withdrawal Program that remains available. Business considering applying for the complex credit also should follow the same steps before submitting a claim.

Businesses with previously approved claims should also review the filings as the IRS intensifies compliance efforts in this area. Businesses should act soon to resolve incorrect claims and avoid future issues such as audits, repayment, penalties and interest.

The IRS issued today’s five new warning signs to give businesses and tax professionals additional time to prepare for an upcoming announcement involving new steps being taken to counter improper ERC claims. In coming days, the IRS plans to issue more information on new compliance work involving high-risk ERC claims as well as details about an anticipated short-term reopening of the Voluntary Disclosure Program and an important update about impending processing of low-risk payments to help small business with legitimate claims. This follows up on last month’s announcement that the IRS was denying more of the highest-risk ERC claims.

“The IRS continues working aggressively to pursue improper claims as well as increase payments going out to businesses with legitimate claims on these complex credits,” said IRS Commissioner Danny Werfel. “As we prepare for the next major announcement, we want businesses to be aware of common errors our compliance teams are seeing, many of which reflect bad advice coming from promoters. The IRS continues to urge people with pending claims or previously approved payments to talk to a trusted tax professional rather than a promoter and see if any of these red flags apply to them.”

Aggressive promoters lured many businesses to mistakenly claim this pandemic-era credit when they’re not eligible. To protect against improper claims, the IRS announced in June that it digitized and analyzed about 1 million ERC claims representing more than $86 billion. To protect taxpayers from getting an improper refund they’d have to repay, the agency will deny tens of thousands of ERC claims that show clear signs of being erroneous.

The agency is also scrutinizing hundreds of thousands more claims that show risk of being incorrect as well as beginning additional processing of low-risk claims to those with eligible claims.

As the IRS begins to process additional lower-risk claims, the agency reminds businesses that they may receive payments for some valid tax periods – generally quarters – while the IRS reviews other periods for eligibility. The IRS emphasizes ERC eligibility can vary from one tax period to another if, for example, government orders were no longer in place or a business’s gross receipts increased. Alternately, qualified wages may vary due to a forgiven PPP loan or because an employer already claimed the maximum amount of qualified wages in an earlier tax period.

Work on ERC compliance efforts around erroneous claims has now topped more than $2 billion since last fall as the agency continues intensifying activity in this area.

The IRS urges taxpayers to work with a trusted tax professional who understands the complex ERC rules. Tax professionals can help businesses recheck their claims and discuss next steps; this is especially important for those who used a promoter to file claims instead of a tax professional.

Five newly announced signs of an incorrect ERC claim

IRS compliance teams have identified these additional five common signs that have been a recurring theme seen on ERC claims. None of these qualify under the rules passed by Congress. The new red flags cover these areas:

Essential businesses during the pandemic that could fully operate and didn’t have a decline in gross receipts. Promoters convinced many essential businesses to claim the ERC when, in many instances, essential businesses weren’t eligible because their operations weren’t fully or partially suspended by a qualifying government order. Modifications that didn’t affect an employer’s ability to operate, like requiring employees to wash hands or wear masks, doesn’t mean the business operations were suspended. The IRS urges essential businesses to review eligibility rules and examples related to government orders.

Business unable to support how a government order fully or partially suspended business operations. Whether a business was fully or partially suspended depends on its specific situation. When asked for proof on how the government order suspended more than a nominal portion of their business operations, many businesses haven’t provided enough information to confirm eligibility.

Business reporting family members’ wages as qualified wages. If business owners claimed the ERC using wages paid to related individuals, those claims are likely for the wrong amount or ineligible. Wages paid to related individuals aren’t qualified wages for the ERC. Generally, related individuals are the majority owner and their:

Spouse.
Child or a descendant of a child.
Brother, sister, stepbrother or stepsister.
Father, mother or an ancestor of either.
Stepfather or stepmother.
Niece or nephew.
Aunt or uncle.
Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law.
Household member, meaning an individual who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household.

Business using wages already used for Paycheck Protection Program loan forgiveness. The U.S. Small Business Administration offered the Paycheck Protection Program, which provided SBA-backed loans that helped businesses keep their workforce employed during the pandemic. The PPP ended May 31, 2021, but borrowers could still apply for PPP loan forgiveness.

If SBA forgave the loan, businesses can’t claim the ERC on wages that they reported as payroll costs to get PPP loan forgiveness. Participating in the PPP affects the amount of qualified wages used to calculate the ERC. Payroll costs up to the amount SBA forgave aren’t eligible for ERC. Taxpayers can use the rest of their qualified wages to figure their credit.

Large employers claiming wages for employees who provided services. Special rules applied to large eligible employers, which are those that averaged:

more than 100 full-time employees in 2019 and claimed ERC for 2020 tax periods, and/or
more than 500 full-time employees in 2019 and claimed ERC for 2021 tax periods.

Large eligible employers can only claim wages paid to employees who were not providing services. Many large employers’ claims incorrectly included wages for employees who were providing services during these periods. The ERC comparison chart provides more details.

Previously shared signs of an incorrect ERC claim

The IRS also reminded businesses about these other common issues being seen. The agency has continued to issue warnings involving these seven areas:

Too many quarters being claimed. Some promoters have urged employers to claim the ERC for all quarters that the credit was available. Qualifying for all quarters is uncommon, and this could be a sign of an incorrect claim. Employers should carefully review their eligibility for each quarter.

Government orders that don’t qualify. Some promoters have told employers they can claim the ERC if any government order was in place in their area, even if their operations weren’t affected or if they chose to suspend their business operations voluntarily. This is false. To claim the ERC under government order rules:

Government orders must have been in effect and the employer’s operations must have been fully or partially suspended by the government order during the period for which they’re claiming the credit.
The government order must be due to the COVID-19 pandemic.
The order must be a government order, not guidance, a recommendation or a statement. Some promoters suggest that an employer qualifies based on communications from the Occupational Safety and Health Administration (OSHA). This is generally not true. See the ERC FAQ about OSHA communications and the 2023 legal memo on OSHA communications for details and examples. The frequently asked questions about ERC – Qualifying Government Orders section of IRS.gov has helpful examples. Employers should make sure they have documentation of the government order related to COVID-19 and how and when it suspended their operations. Employers should avoid a promoter that supplies a generic narrative about a government order.

Too many employees and wrong calculations. Employers should be cautious about claiming the ERC for all wages paid to every employee on their payroll. The law changed throughout 2020 and 2021. There are dollar limits and varying credit amounts, and employers need to meet certain rules for wages to be considered qualified wages, depending on the tax period. The IRS urges employers to carefully review all calculations and to avoid overclaiming the credit, which can happen if an employer erroneously uses the same credit amount across multiple tax periods for each employee. For details about credit amounts, see the Employee Retention Credit - 2020 vs 2021 Comparison Chart.
Business citing supply chain issues. Qualifying for ERC based on a supply chain disruption is very uncommon. A supply chain disruption by itself doesn’t qualify an employer for ERC. An employer needs to ensure that their supplier’s government order meets the requirements. Employers should carefully review the rules on supply chain issues and examples in the 2023 legal memo on supply chain disruptions.

Business claiming ERC for too much of a tax period. It's possible, but uncommon, for an employer to qualify for ERC for the entire calendar quarter if their business operations were fully or partially suspended due to a government order during a portion of a calendar quarter. A business in this situation can claim ERC only for wages paid during the suspension period, not the whole quarter. Businesses should check their claim for overstated qualifying wages and should keep payroll records that support their claim.

Business didn’t pay wages or didn’t exist during eligibility period. Employers can only claim ERC for tax periods when they paid wages to employees. Some taxpayers claimed the ERC but records available to the IRS show they didn’t have any employees. Others have claimed ERC for tax periods before they even had an employer identification number with the IRS, meaning the business didn’t exist during the eligibility period. The IRS has started disallowing these claims, and more work continues in this area as well as other aspects of ERC.

Promoter says there’s nothing to lose. Businesses should be on high alert with any ERC promoter who urged them to claim ERC because they “have nothing to lose.” Businesses that incorrectly claim the ERC risk repayment requirements, penalties, interest, audit and potential expenses of hiring someone to help resolve the incorrect claim, amend previous returns or represent them in an audit.

Options for resolving incorrect ERC claims

The IRS has several options to help businesses who have discovered they have questionable ERC claims.

Claim withdrawal: Given the large number of questionable claims identified in the recent review, the IRS continues to urge ineligible businesses with unprocessed claims to consider the ERC Withdrawal Program to avoid future compliance issues. The IRS will treat the claim as though the taxpayer never filed it. No interest or penalties will apply.

Amending a return: Businesses that overclaimed the ERC can amend their returns to correct the amount of their claim.

Updated frequently asked questions on New, Previously Owned and Qualified Commercial Clean Vehicle Credits now available from the IRS

Fri, 26 Jul 2024 14:11:48 GMT

WASHINGTON — The Internal Revenue Service today updated frequently asked questions in Fact Sheet 2024-26 to provide guidance related to eligibility rules, income limitations, transfer rules and dealer registration for the New, Previously Owned and Qualified Commercial Clean Vehicle Credits.

These FAQs supersede earlier FAQs that were posted in FS-2024-14on April 16, 2024.

The FAQs revisions are as follows:

Topic A: Eligibility rules for the New Clean Vehicle Credit: updated questions 2, 7, 8, 12 and 18, and added questions 15-17.
Topic B: Income and Price Limitations for the New Clean Vehicle Credit: updated questions 3, 4, and 7-10, and added questions 12-14.
Topic C: When the New Requirements Apply to the New Clean Vehicle Credit: updated questions 4 and 6.
Topic D: Eligibility Rules for the Previously Owned Clean Vehicles Credit: updated questions 3 and 12 and added questions 13-15.
Topic E: Income and Price Limitations for Previously Owned Clean Vehicles: updated question 2.
Topic F: Claiming the Previously Owned Clean Vehicles Credit: updated question 3.
Topic H: Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicle Credit: updated questions 1-3, 11, 12, 14-15 and 18, and added questions 23-30.
Topic I: Registering a Dealer/Seller for Seller Reporting and Clean Vehicle Tax Credit Transfers: updated questions 4, 13 and 14, and added questions 19-30.

More information on IRS FAQs can be found on IRS.gov.

IRS-FAQ

IRS continues to expand taxpayer services and online tools, key milestones reached with Inflation Reduction Act funding

Thu, 25 Jul 2024 13:13:05 GMT

Quarterly update highlights expansion on Individual, Business Online Accounts; Document Upload Tool hits 1 million submissions and more amended returns can be filed electronically

WASHINGTON – As part of ongoing transformation efforts, the Internal Revenue Service announced today continued progress on a variety of taxpayer service and technology projects using Inflation Reduction Act (IRA) funding that expand online tools and digital services.

The IRS highlighted improvements, including six new features to help taxpayers using the Individual Online Account, a new Spanish version of the Business Tax Account tool and the availability of amended business forms that can be filed electronically. In addition, the IRS announced hitting the milestone of 1 million submissions through the Document Upload Tool and more special Community Assistance Visits to help taxpayers in underserved parts of the country.

“Funding from the Inflation Reduction Act is helping spur innovation and improvement across the IRS to transform our operations in our work to help taxpayers and the nation,” said IRS Commissioner Danny Werfel. “This progress can be seen in our continued expansion of our online accounts to provide more features, increased use of new digital tools and additional special activities to help taxpayers in-person. By providing digital forms, making payments easier and continuing work to reduce paper-based processes that have long hampered the IRS and frustrated taxpayers, our progress is accelerating to make long-overdue improvements.”

Werfel highlighted these efforts as part of a quarterly update on the IRS Strategic Operating Plan, the transformational effort using IRA funding. As these initiatives continue to improve taxpayer service and expand online tools, the agency is also working to modernize its core technology infrastructure and compliance efforts focused on neglected problem areas involving high-income taxpayers, partnerships and corporations.

New features, key milestones reached on online, digital products

Taxpayers deserve the same functionality in their online accounts that they experience with their bank or other financial institutions. As detailed in the Strategic Operating Plan, the IRS is working to transform its operations to enable a future in which all taxpayers can meet their responsibilities, including interactions with the IRS, in a digital manner if they prefer. As part of this vision, taxpayers will be able to securely file all documents and respond to all notices online as well as securely access and download their data and account history. The IRS has hit or is progressing toward several milestones toward these goals, including:

The IRS continues to expand the functionality of its online platforms, including several new features in Individual Online Account that give taxpayers the ability to:

Retrieve all their tax related information from one source, including Wage & Income, Account, Record of Account, and Return transcripts;
Request an update to their Identity Protection (IP) PIN using their smartphones or tablets;
View information about the status of their audit at their convenience, instead of having to call the IRS to obtain audit information;
Use a Lien Payoff Calculator to access lien information, calculate their lien payoff amount and generate a letter for download/print;
Complete the Pending Installment Agreement process within Online Account without having to be re-routed to a separate application and
View a comprehensive overview of their account information, including the status of their tax refund as it’s being processed.

With the latest expansion, Business Tax Account is now available in Spanish. In addition, eligible business taxpayers can see their balance due and make the payment all in one place. Previously, the balance due had to be viewed in a separate place from where the payment was made, adding another complicating step for businesses making payments. Sole proprietors can now download business entity transcripts from their Business Tax Account. This transcript shows entity information like business name, address, location address and more for the Employer Identification Number on file.

File new amended returns electronically: Additional business Forms 940, 941, 943 and 945, including the Spanish version of Forms 941 and 943, can now be filed electronically. Through this improved process, IRS employees can now access taxpayer return information electronically, allowing them to provide more complete and accurate answers to taxpayer questions. In addition, the IRS can now accept related electronic payments while minimizing errors normally associated with processing paper returns. Taxpayers can still choose to submit a paper version.

Respond to notices online hits 1 million uploads: IRS digitalization efforts reached another key milestone in the agency’s transformation work with the Document Upload Tool accepting its one millionth taxpayer submission. Initially launched in 2021 in a limited format and greatly expanded in 2023 with funding from IRA, the tool offers taxpayers and tax professionals the option to respond digitally to eligible IRS notices by securely uploading required documents online through IRS.gov. For anyone with a smart phone or computer, this means that replying to IRS notices is now often as easy as scanning required documents and uploading them to the tax agency.

Use mobile-adaptive forms: IRS now has a total of 30 forms available for mobile use, allowing taxpayers to fill out common non-tax forms on cell phones and tablet devices and then submit them to the IRS digitally. Taxpayers have submitted more than 72,000 mobile-friendly forms since the September 2023 launch. Providing taxpayers with common forms in this new format offers them a safe and fast way to electronically engage with the IRS. This can also help reduce mail and paper when they send forms to the IRS, a part of the Paperless Processing Initiative. Forms adapt to any screen size and ensure information is entered into all required data fields. This can help reduce errors, which can delay processing. In addition, taxpayers can access five of these forms that require signatures in their Online Account, including:

Form 13533 - VITA/TCE Partner Sponsor Agreement
Form 13533-A - FSA Remote Sponsor Agreement
Form 14039-B - Business Identity Theft Affidavit
Form 12508 - Questionnaire for Non-Requesting Spouse
Form 14157-A - Tax Return Preparer Fraud or Misconduct Affidavit

Redesigning notices: The IRS has redesigned 100 of the most common notices that individual taxpayers receive, part of the ongoing work to prepare for the 2025 filing season as part of the Simple Notice Initiative. These notices make up about 90% of total notice volume sent to individual taxpayers, representing about 150 million notices sent to individual taxpayers in 2022.

More in-person help offered; special programs offered in underserved areas

The IRS continues to focus on helping taxpayers get it right the first time, helping them to interact with the agency in the ways that work best for them on the phone, in-person and online. The IRS is expanding in-person service, particularly those in underserved and rural communities.

During the filing season, IRS Taxpayer Assistance Centers had a 37% increase in face-to-face contacts, with the IRS working with nearly 1.3 million taxpayers for this calendar year through July 13. The IRS also received 2.7 million volunteer prepared returns to date compared to 2.5 million last year, an increase of 9.1%.

This summer, the IRS is continuing its special series of Community Assistance Visits to give taxpayers living in areas far from the agency’s in-person offices an opportunity to meet face-to-face with IRS customer service representatives. These visits, which began last year with IRA funding, provide help for taxpayers who live about a two-hour drive away from an IRS office.

The IRS has already hosted events in Roma, Texas; Humboldt, Iowa; Hazlehurst, Georgia; and Orocovis, Puerto Rico. This week, the agency is offering face-to-face help at a temporary Taxpayer Assistance Center in Gallup, New Mexico. Upcoming Community Assistance Visits include:

Aug. 5-9, Thomasville, Alabama
Aug. 19-23, Great Bend, Kansas
Sept. 9-13, West Plains, Missouri
Sept. 23-27, Clarkston, Washington
Oct. 7-11, Fairbanks, Alaska
Oct. 21-25, Potsdam, New York

More information on these events will be available on IRS.govcloser to the event date.

Modernizing foundational technology

In addition to improvements to customer-facing technology, the IRS is modernizing decades-old systems and equipment:

Digitalization: The IRS continues to make significant progress scanning and electronically filing paper returns. The IRS has replaced scanning equipment that is older than five years and installed automated mail-sorter machines in the six highest-volume IRS locations, streamlining the process of mail sorting, opening and scanning. As of the end of June, the IRS had scanned more than 2 million pieces of paper. Digitization has far-reaching implications for how the IRS can improve service and will enable the IRS to create completely digital workflows.

Online Account payment plans. The IRS recently delivered a data service that improves the taxpayer experience through Individual Online Account, allowing tax professionals to access and create payment plans on behalf of individual taxpayers.

Beyond the improvements made in direct support of taxpayers, foundational technology has continued the incremental improvements needed to increase operational effectiveness and efficiency for IRS employees, which ultimately helps taxpayers:

Updating outdated Human Resource IT systems. Due to more than a decade of funding cuts to the agency, the IRS has hundreds of disparate, legacy human resources (HR) information technology (IT) systems with thousands of workflows. The transformation and streamlining of the HR IT applications using IRA funding is key to cultivating a robust organization, with a healthy HR function at its core. This multi-year project is a partnership with Treasury’s CIO and leverages cutting-edge technology to modernize IRS’s legacy HR applications, automate manual processes and make use of Treasury’s existing shared service offerings. These HR technology improvements in talent acquisition, workforce planning, labor and employee relations and other key HR processes will enhance the employee experience, improve productivity and help retain a strong and high-quality workforce needed to deliver customer service improvements for taxpayers.

Increasing network bandwidth to help employees, taxpayers. IRS has doubled the network bandwidth at many of our worksites to meet increased workforce demand and improve taxpayer service. The IRS is on track to complete this phase of network expansion at all sites ahead of filing season 2025.

Ensuring complex partnerships, large corporations and high-income, high-wealth individual taxpayers pay taxes owed

The IRS is also continuing work to ensure large corporate, large partnership and high-income individual filers pay the taxes they owe. Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented the IRS from keeping pace with the increasingly complicated set of tools that the wealthiest taxpayers use to hide their income and evade paying their share. The IRS is now taking a variety of steps to close this gap.

The IRS has ramped up efforts to pursue high-income, high-wealth individuals who have either not filed their taxes or failed to pay recognized tax debt, with dozens of revenue officers focused on these high-end collection cases. These efforts are concentrated among taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. Earlier this month, the IRS announced that it has collected more than $1 billion from high-wealth taxpayers as part of an effort to ensure these individuals pay what they owe. The $1 billion collected represents collections as of April 2024, with work continuing in this area.

More improvements planned for 2025 as filing season work intensifies

In addition to these areas mentioned above, the IRS has a number of initiatives where changes related to the Inflation Reduction Act will accelerate later this year and into the 2025 filing season. Here are some examples:

· Continuing to focus on enhancing live assistance through improved efficiency in call centers, reducing paper and continued expanded staffing levels at Taxpayer Assistance Centers, while working to ensure taxpayers are aware of all available credits and benefits.

· Expanding online services by expanding the features available in Online Account, including digital copies of notices, status updates, secure two-way messaging and expanded payment options.

· Accelerating digitalization by providing new non-tax forms in digital mobile-friendly formats, in addition to the 20 delivered in fiscal year 2024, as well as scanning at the point of entry virtually all paper-filed tax and information returns.

· Increased taxpayer information by expanding information available on important issues ranging from the availability of important tax credits and benefits, as well as more consumer-focused information raising awareness about emerging tax scams and schemes.

More information on these and other improvements related to the 2025 tax season will be available later this fall.

For further information:

· Strategic Operating Plan

· gov tools

· Taxpayer Online Account

· Tax information in non-English languages

Registration still open for IRS Tax Forum in Baltimore, Dallas; 3-day conference features education and more for tax pros

Wed, 24 Jul 2024 21:12:06 GMT

WASHINGTON — With several locations already sold out, the Internal Revenue Service today encouraged tax professionals to register soon for a spot at the upcoming IRS Nationwide Tax Forum in Baltimore, Aug. 13-15, or Dallas, Aug. 20-22.

The 2024 Nationwide Tax Forum has already sold out in Orlando, Florida, July 30-Aug. 1, and San Diego, Sept. 10-12. Space is limited for Baltimore and Dallas, but spots still remain.

Each forum offers tax professionals a total of 45 different continuing education seminars. Attendees can earn up to 19 continuing education credits.

In addition to tax law and ethics, this year’s agenda includes multiple sessions on cybersecurity, clean energy credits, digital assets, 1099 reporting, examinations and fraud awareness and prevention. This year six of the most popular sessions will also be offered in Spanish.

Through the forum, the IRS provides continuing education credits to Enrolled Agents, certified public accountants, Annual Filing Season Program participants and California Tax Education Council participants.

To assist attendees needing personalized help, the IRS will have employees on site. For example, those needing assistance with their toughest case involving a tax matter can make an appointment with a representative in the Taxpayer Advocate Service’s Case Resolution Room. If they need help with creating an IRS Online Account or resolving a Preparer Tax Identification Number (PTIN) or Centralized Authorization File (CAF) issue, there will be appointments available in the Digital Account Services Room. For other IRS related questions, there will be staff on hand in the IRS Zone, and at various tables outside the seminar rooms.

In addition to the seminar lineup, attendees at the Nationwide Tax Forum can participate in any of several special events, including discussions on tax practice management, identifying and avoiding scams and schemes, a meeting with the National Taxpayer Advocate and a session on Beneficial Ownership Information reporting requirements.

For full information and to register, visit www.irstaxforum.com.

Deadlines approaching for standard rate pricing

Potential Baltimore attendees should act by July 30 to take advantage of the standard registration rate of $309. On-site registration is $390. The standard rate is available for Dallas until Aug. 6.

To learn more about the IRS Nationwide Tax Forum, see these YouTube videos:

IRS Commissioner Werfel’s YouTube welcome video.

N-2024-60: Required Procedures to Claim a Section 45Q Credit for Utilization of Carbon Oxide

Wed, 24 Jul 2024 21:11:11 GMT

Notice 2024-60 describes the information that must be included in a written report described in § 1.45Q-4(c)(2) (LCA Report) and provides the procedures a taxpayer must follow to submit the LCA Report and required supporting information to the IRS and the Department of Energy for review under § 1.45Q-4(c)(5) before any credit for carbon oxide sequestration allowed under § 45Q(a)(2)(B)(ii) or (a)(4)(B)(ii) is determined for qualified carbon oxide utilized by any taxpayer in the manner described in § 45Q(f)(5) as implemented by § 1.45Q-4 (§ 45Q utilization credit). As required by § 1.45Q-4(c)(6), the IRS must approve the lifecycle analysis (LCA) of greenhouse gas emissions (as defined in § 1.45Q-4(c)(1)) documented in the LCA Report with respect to carbon capture property placed in service on or after February 18, 2018, before any § 45Q utilization credit otherwise satisfying the applicable requirements of § 45Q and §§ 1.45Q-1, 1.45Q-2, and 1.45Q-4 is determined. Accordingly, the IRS must approve the taxpayer’s LCA before the taxpayer may claim any § 45Q utilization credit determined with respect to a taxpayer on any federal income tax return for a taxable year beginning on or after January 13, 2021 (that is, the taxable years to which § 1.45Q-4 applies).

Notice 2024-60 will be in IRB: 2024-34, dated August 19, 2024.

IRS issues guidance for the procedures to claim a credit for utilization of carbon oxide

Wed, 24 Jul 2024 21:10:21 GMT

WASHINGTON — The Internal Revenue Service today issued Notice 2024-60 to provide initial guidance on the credit for the sequestration of carbon oxide. This credit was amended significantly by the Inflation Reduction Act of 2022 (IRA).

The notice provided today describes information that must be included in a written report known as the lifecycle analysis (LCA) report and provides the procedures a taxpayer must follow to submit the report along with required supporting information to the IRS and the Department of Energy for review.

Before any credit is determined, the IRS must approve the lifecycle analysis of greenhouse gas emissions documented in the LCA report with respect to carbon capture property placed in service on or after Feb. 18, 2018.

Accordingly, the IRS must approve the taxpayer’s LCA before the taxpayer may claim the utilization of carbon oxide credit.

More information may be found on the Inflation Reduction Act of 2022 page on IRS.gov.

IR-2024-193: Security Summit urges tax pros to watch out for identity theft red flags

Tue, 23 Jul 2024 16:39:44 GMT

Week 3 of “Protect Your Clients; Protect Yourself” series focuses on security warning signs

WASHINGTON — In the third part of a special series, the Internal Revenue Service and the Security Summit partners today urged tax professionals to learn the signs of data theft so they can respond quickly to protect their business and their clients.

The IRS and the Security Summit partners continue to see a relentless string of attempts by identity thieves to target tax professionals in hopes of gaining valuable client tax information. With stronger fraud defenses put in place by the IRS and Security Summit partners, identity thieves have shifted their attention to tax pros to get more detailed information to help prepare bogus tax returns.

"We continue to see instances where tax professionals have had their systems compromised, and they didn’t realize it for week or months,” IRS Commissioner Danny Werfel said. “Identity thieves are creative, and they can find ways of quietly penetrating systems. There are important warning signs tax pros should watch out for that can help alert them more quickly to a security issue, and speed is critical to protect clients and their businesses from a security incident.”

The IRS, state tax agencies and the nation's tax industry – working together as the Security Summit – reminded tax professionals that they should contact the IRS immediately when there's an identity theft issue while also contacting cybersecurity experts and insurance companies to assist them with determining the cause and extent of the loss.

This is the third week of an eight-part "Protect Your Clients; Protect Yourself" summer series, part of an annual education effort by the Security Summit, a group that includes tax professionals, industry partners, state tax agencies and the IRS. The public-private partnership has worked since 2015 to protect the tax system against tax-related identity theft and fraud.

These security tips will be a key focus of the Nationwide Tax Forum, being held this summer in five cities throughout the U.S. In addition to the series of eight news releases, the tax professional security component will be featured at the forums, which are three-day continuing education events. The next forum begins next week in Orlando, Florida, and is already sold out, followed by the week of August 13 in Baltimore, August 20 in Dallas and September 10 in San Diego. The IRS reminds tax pros that registration deadlines are quickly approaching for the Baltimore and Dallas forums, as San Diego has also sold out.

Each year at the tax forums, the IRS hears from tax professionals attending the sessions who realize that they’re victims of a data theft or a security breach, but they hadn’t realized the warnings signs. Here are some things that can help.

Tax pros: Know the warning signs from clients, their systems

Tax pros should be on the lookout for these critical warning signs from their clients:

Clients receive notice that an IRS Online Account was created without their consent or that:
- Someone accessed their IRS Online Account without their knowledge.
- The IRS disabled their Online Account, either their individual or business Online Account.
Tax pro clients receive a tax transcript they didn't request.
Balance due or other notices from the IRS are received that are not correct based on the tax return filed.
Clients reach out to the tax pro about calls or emails the tax pro didn't make.
Clients receive refunds without filing a tax return.

Tax professionals should also watch for these red flags when their business experiences these situations:

Slow or unexpected computer or network responsiveness such as:
- Software is slow or actions take longer to process than usual.
- Computer cursor moves or changes numbers without touching the mouse or keyboard.
- Unexpectedly being locked out of a network or computer.
Client tax returns are being rejected because their Social Security number was already used on another return.
IRS authentication letters (5071C, 6331C, 4883C, 5747C) are being received even though a tax return hasn't been filed.
Getting more e-file receipt acknowledgements than the tax pro actually filed.
The IRS disabled the tax professional’s online account.
Transcripts are being delivered to the tax pro’s Secure Object Repository (SOR) that they did not order.
Notification from the IRS that the tax professional’s Centralized Authorized File (CAF) number has been compromised. If they suffer a data compromise, they should take proactive steps to protect their CAF number and consider requesting a new one to protect themself and their clients.
Notification from the IRS regarding a client that they do not represent.

While these are only a few examples, tax pros should ensure they have the highest security possible and be ready to react quickly to protect themselves and their clients. To help tax pros, the Summit partners created the written information security plan or WISP. The newly updated 29-page, easy-to-understand document was developed by and for tax and industry professionals to help keep client and business information safe and secure.

Tax pros should report data theft immediately

If a tax pro or their firm are the victim of data theft, they should:

Report the incident to their local IRS Stakeholder Liaison. Speed is critical. IRS stakeholder liaisons will ensure all the appropriate IRS offices are alerted. If reported quickly, the IRS can take steps to block fraudulent returns in the clients' names and will assist tax pros through the process.
Visit the Federation of Tax Administrators to find state contact information. Tax professionals can share information with the appropriate state tax agency by visiting the special “Report a Data Breach”.

Tax professionals should be proactive with clients who could have been impacted and suggest appropriate actions, such as obtaining an Identity Protection PIN or completing a Form 14039, Identity Theft Affidavit, if applicable.

Find more information at Data theft information for tax professionals.

Additional resources

Publication 5293, Data Security Resource Guide for Tax Professionals, provides an overview and resources about how to avoid data theft.
Tax professionals can also get help with security recommendations by reviewing IRS Publication 4557, Safeguarding Taxpayer Data, and the IRS' Identity theft information page for tax pros.
Small Business Information Security: The Fundamentals, by the National Institute of Standards and Technology.

Tax professionals should stay connected to the IRS through subscriptions to e-News for tax professionals and its social media sites.

IRS provides relief to Hurricane Beryl victims in Texas; various deadlines postponed to Feb. 3, 2025

Mon, 22 Jul 2024 17:43:54 GMT

WASHINGTON — The Internal Revenue Service announced today tax relief for individuals and businesses in 67 Texas counties affected by Hurricane Beryl that began on July 5, 2024.

These taxpayers now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business in Anderson, Angelina, Aransas, Austin, Bowie, Brazoria, Brazos, Burleson Calhoun, Cameron, Camp, Cass, Chambers, Cherokee, Colorado, Dewitt, Fayette, Fort Bend, Freestone, Galveston, Goliad, Gregg, Grimes, Hardin, Harris, Harrison, Hidalgo, Houston, Jackson, Jasper, Jefferson, Kenedy, Kleberg, Lavaca, Lee, Leon, Liberty, Madison, Marion, Matagorda, Milam, Montgomery, Morris, Nacogdoches, Newton, Nueces, Orange, Panola, Polk, Refugio, Robertson, Rusk, Sabine, San Augustine, San Jacinto, San Patricio, Shelby, Trinity, Tyler, Upshur, Victoria, Walker, Waller, Washington, Webb, Wharton and Willacy counties qualify for tax relief.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred from July 5, 2024, through Feb. 3, 2025 (postponement period). As a result, affected individuals and businesses will have until Feb. 3, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 3, 2025, deadline will now apply to:

Any individual, business or tax-exempt organization that has a valid extension to file their 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the hurricane occurred.
Quarterly estimated income tax payments normally due on Sept. 16, 2024, and Jan. 15, 2025.
Quarterly payroll and excise tax returns normally due on July 31 and Oct. 31, 2024, and Jan. 31, 2025.

In addition, penalties for failing to make payroll and excise tax deposits due on or after July 5, 2024, and before July 22, 2024, will be abated, as long as the deposits are made by July 22, 2024.

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for 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. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov.

Additional tax relief

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 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number – 4798-DR − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

The IRS may provide additional disaster relief in the future.

Reminder about tax return preparation options

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 help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
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 software at no cost. There are products in English and Spanish.
Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040 and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

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.

Treasury, IRS issue updated guidance on required minimum distributions from IRAs, other retirement plans; generally retains proposed rules

Thu, 18 Jul 2024 14:39:56 GMT

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued final regulations updating the required minimum distribution (RMD) rules.

The final regulations reflect changes made by the SECURE Act and the SECURE 2.0 Act impacting retirement plan participants, IRA owners and their beneficiaries. At the same time, Treasury and IRS issued proposed regulations, addressing additional RMD issues under the SECURE 2.0 Act.

While certain changes were made in response to comments received on the proposed regulations issued in 2022, the final regulations generally follow those proposed regulations.

Specifically, Treasury and IRS reviewed comments suggesting that a beneficiary of an individual who has started required annual distributions should not be required to continue those annual distributions if the remaining account balance is fully distributed within 10 years of the individual’s death as required by the SECURE Act. However, Treasury and IRS determined that the final regulations should retain the provision in the proposed regulations requiring such a beneficiary to continue receiving annual payments.

The new proposed regulations include provisions for which Treasury and IRS are soliciting public comments, including provisions addressing other changes relating to RMDs made by the SECURE 2.0 Act. For details on how to submit comments, see the proposed regulations.

IRS enhances FATCA registration website by requiring users to authenticate their identities

Wed, 17 Jul 2024 14:16:59 GMT

WASHINGTON — The Internal Revenue Service today announced the agency will enhance the identity authentication process that financial institutions can use to register under the Foreign Account Tax Compliance Act (FATCA).

Taxpayers as of July 14 are required to sign in or register with either of the IRS’ credential service providers, Login.gov or ID.me, to access the FATCA registration system. FATCA requires most U.S. taxpayers holding financial assets outside the U.S. and certain foreign financial institutions to report assets and financial accounts to the IRS.

Taxpayers who already have a Login.gov or an ID.me profile will be able to sign in to the FATCA Registration System as long as the email matches that of the responsible officer or point of contact on the FATCA registration.

Taxpayers that don’t already have a Login.gov or ID.me profile will need to create one to access the system. The new authentication requirement complies with National Institute of Standards and Technology digital identity guidelines.

To create a new profile with either Login.gov or ID.me, the taxpayer will need to verify an email address, create a password and set up multi-factor authentication to secure their FATCA account. Both ID.me and Login.gov have help desks to assist taxpayers who have difficulty using the systems.

For questions and assistance regarding Login.gov, please visit the Login.gov help center. For questions and assistance regarding ID.me, please visit Verifying for the Internal Revenue Service – ID.me Help Site.

RR-2024-15: Applicable federal interest rates

Tue, 16 Jul 2024 16:18:45 GMT

Revenue Ruling 2024-15 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 2024-15 will be in IRB: 2024-32, dated August 5, 2024.

Security Summit warns tax pros to remain vigilant against phishing emails and cloud-based attacks

Tue, 16 Jul 2024 15:32:31 GMT

Week 2 of “Protect Your Clients; Protect Yourself” series focuses on evolving threats

WASHINGTON — In the second installment of a special series, the Internal Revenue Service and Security Summit partners warned tax professionals to be aware of evolving phishing scams and cloud-based schemes designed to steal sensitive taxpayer information.

The IRS and Security Summit partners – representing state tax agencies and the nation's tax industry – continue to see a steady stream of e-mail and related attacks aimed at the nation's tax professional community. These are designed to steal sensitive tax and financial information from clients.

The variants of these email attacks routinely number in the hundreds and can target tax professionals whether it’s tax season or not.

“We continue to see a barrage of email and related attacks designed to trick tax professionals and gain access to their sensitive information,” said IRS Commissioner Danny Werfel. “These attempts can be elaborate, multi-layered efforts that look convincing and can easily fool people. Tax professionals need to be wary and educate their employees to use extra caution to protect their clients and their businesses.”

This is the second release in an eight-part “Protect Your Clients; Protect Yourself” summer series, part of an annual education effort by the Security Summit, a group that includes tax professionals, industry partners, state tax agencies and the IRS. The public-private partnership has worked since 2015 to protect the tax system against tax-related identity theft and fraud.

These security tips will be a key focus of the Nationwide Tax Forum, which will be in five cities this summer throughout the U.S. In addition to the series of eight news releases, the tax professional security component will be featured at the forums, which are three-day continuing education events. The remaining forums begin July 30 in Orlando, August 13 in Baltimore, August 20 in Dallas and September 10 in San Diego.

The IRS reminds tax pros that registration deadlines are quickly approaching for several of the forums, and Orlando is already sold out.

Phishing, spear phishing, clone phishing and whaling

One of the most common threats facing tax pros are phishing and related scams. These are designed to trick the recipient into disclosing personal information such as passwords, bank account numbers, credit card numbers or Social Security numbers.

Tax professionals and taxpayers should be aware of different phishing terms and what the email scams might look like:

Phishing/Smishing – Phishing emails or SMS/texts (known as “smishing”) attempt to trick the recipient into clicking a suspicious link, filling out information or downloading a malware file. Often phishing attempts are sent to multiple email addresses at a business or agency increasing the chance someone will fall for the trick.

Spear phishing – A specific type of phishing scam that bypasses emailing large groups at an organization, but instead identifies potential victims and delivers a more realistic email known as a “lure.” These types of scams can be trickier to identify since they don't occur in large numbers. They single out individuals, can be specialized and make the email seem more legitimate. Scammers can pose as a potential client for a tax professional, luring the practitioner into sharing sensitive information.
Clone phishing – A newer type of phishing scam that clones a real email message and resends it to the original recipient pretending to be the original sender. The new message will have either an attachment that contains malware or link that tries to steal information from the tax professional or recipient.

Whaling – Whaling attacks are very similar to spear phishing, except these attacks are generally targeted to leaders or other executives with access to secure large amounts of information at an organization or business. Whaling attacks can also target people in payroll offices, human resource personnel and financial offices.

Security Summit partners continue to see instances in which tax professionals have been particularly vulnerable to emails posing as potential clients. In the “new client” scam, the criminals use this technique to trick practitioners into opening email links or attachments that infect computer systems with the potential to steal client information. Similar schemes are seen with whaling situations where scammers try to obtain a large amount of information with legitimate-looking email requests.

Warning signs of a scam

Regardless of the type of phishing attempt, tax pros can protect themselves and their organization by being aware of these scams and looking for warning signs like these:

An unexpected email or text claiming to come from a known or trusted source such as a colleague, bank, credit card company, cloud storage provider, tax software provider or even the IRS and other government agencies.

Receiving a duplicate email from what appears to be a known trusted source that contains a new attachment or hyperlink.

A message, often with an urgent tone, urging the receiver to open a link or attachment. These messages have a false narrative, like someone’s password has expired or some other urgent action is needed.
An email address, number or link that's slightly misspelled or has a different domain name or URL (irs.com vs. IRS.gov). A closer look at these email addresses – like hovering the cursor over the email address – can show slight variations on legitimate addresses.

“There are major red flags that can be easily overlooked, so tax professionals and taxpayers should be extra careful and look closely when they receive an email from an official looking source,” Werfel said.

Cloud-based schemes remain a threat

Tax professionals using cloud-based systems that store information or run tax preparation software should use multi-factor authentication to help safeguard that data. The Federal Trade Commission now requires all practitioners to secure sensitive client personally identifiable information (PII) using multi-factor authentication.

Specifically, the Security Summit continues to see attacks that take advantage of cloud-based systems and compromise personal information. Multi-factor authentication options provide an additional layer of security to access a system by using a phone, text messages or tokens. Since email is easier for identity thieves to access, having these layers of security helps guard against potential vulnerabilities.

Additional resources

For tax professionals who are victim of any of these schemes or identity theft, the IRS urges them to quickly contact their IRS Stakeholder Liaison to provide details of the situation. Tax professionals can also share information with the appropriate state tax agency by visiting a special “Report a Data Breach” page with the Federation of Tax Administrators.

Quickly reporting these incidents can not only protect the tax pro's clients, but it can also help provide critical information quickly to help prevent these attacks from hitting others in the tax community.

Tax professionals should also understand the Federal Trade Commission’s data breach response requirements as part of their overall information and data security plan. There’s a new requirement to report an incident to the FTC when 500 or more people are affected within 30 days of the incident.

To help taxpayers navigate these issues and meet the requirement to have a security plan, the Security Summit has prepared a sample Written Information Security Plan. This template can help tax pros, including smaller practitioners, protect themselves from ongoing security threats.

Tax professionals should also review IRS Publication 4557, Safeguarding Taxpayer Data, for more information.

Other resources include Small Business Information Security: The Fundamentals, by the National Institute of Standards and Technology and the IRS' Identity Theft Central pages for tax pros.

Publication 5293, Data Security Resource Guide for Tax Professionals, provides a compilation of data theft information available on IRS.gov. The IRS also encourages tax professionals to stay connected to the IRS for its latest updates and alerts through subscriptions to e-News for Tax Professionals and its social media sites.

IRS warns taxpayers about misleading claims about non-existent “Self Employment Tax Credit;” promoters, social media peddling inaccurate eligibility suggestions

Mon, 15 Jul 2024 19:05:00 GMT

Taxpayers urged to talk to a trusted tax professional, not rely on marketers or social media for tax advice

IR-2024-187, July 15, 2024

WASHINGTON — The Internal Revenue Service issued a consumer alert today following bad advice circulating on social media about a non-existent “Self Employment Tax Credit” that’s misleading taxpayers into filing false claims.

Promoters and social media are marketing something they describe as the “Self Employment Tax Credit” as a way for self-employed people and gig workers to get big payments for the COVID-19 pandemic period. Similar to misleading marketing around the Employee Retention Credit, there is inaccurate information suggesting many people qualify for the tax credit and payments of up to $32,000 when they actually do not.

In reality, the underlying credit being referred to in social media isn’t called the “Self Employment Tax Credit,” it’s a much more limited and technical credit called Credits for Sick Leave and Family Leave. Many people simply do not qualify for this credit, and the IRS is closely reviewing claims coming in under this provision so people filing claims do so at their own risk.

“This is another misleading social media claim that’s fooling well-meaning taxpayers into thinking they’re due a big payday,” said IRS Commissioner Danny Werfel. “People shouldn’t be misled by outlandish claims they see on social media. Before paying someone to file these claims, taxpayers should consult with a trusted tax professional to see if they meet the very limited eligibility scenarios.”

People who were self-employed can claim Credits for Sick and Family Leave only for limited COVID-19 related circumstances in 2020 and 2021; the credit is not available for 2023 tax returns. The IRS is seeing repeated instances where taxpayers are incorrectly using Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to incorrectly claim a credit based on income earned as an employee and not as a self-employed individual.

To qualify for the Sick and Family Leave Credits, self-employed workers have to meet a variety of technical reasons in 2020 and 2021 that didn’t allow them to work, including caring for an individual subject to a quarantine or isolation order. The IRS has a detailed set of FAQs describing the very technical requirements for meeting this provision of the law.

The IRS is seeing some similarities to marketing around this “Self Employment Tax Credit” similar to aggressive promotion of the Employee Retention Credit. Both are technical credits that have been mischaracterized by some as a way for average taxpayers to get a big government payment. In reality, these are very limited credits that have a variety of complex requirements before people can qualify.

The IRS urges people to check with a trusted tax professional before filing for any “Self Employment Tax Credit” or any other questionable tax claim circulating on social media.

The IRS has previously warned taxpayers about misuse of the Sick and Family Leave Credits stemming from various tax scams and inaccurate social media advice that led thousands of taxpayers to file inflated refund claims during the past tax season.

In addition to the Sick and Family Leave Credit, the IRS warned taxpayers not to fall for these scams centered around the Fuel Tax Credit and household employment taxes. The IRS has seen thousands of dubious claims come in where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and the need for taxpayers to show they have legitimate documentation to support these claims.

The IRS continues to urge taxpayers to avoid these scams as myths continue to persist that these are ways to obtain a huge refund. Many of these scams were highlighted during this spring’s annual Dirty Dozen series, including the Fuel Tax Credit scam, bad social media advice and “ghost preparers.”

“These improper claims have been fueled by social media and people sharing bad advice,” Werfel said. “Scam artists constantly prey on people’s hopes and try to use the complexity of the tax system to convince people there are secret ways to get a big refund. All of these scams illustrate that it’s important to carefully review the tax return for accuracy before filing and rely on the advice of a trusted tax professional, not someone trying to make a quick buck or a questionable source on social media.”