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.

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.

“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.

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.

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.

Inside This Issue

1. Directions for responding to Employee Retention Credit disallowance letter
2. IRS warns of "mills" taking advantage of taxpayers with Offer in Compromise program
3. Tax relief now available to Debby victims in parts of Pennsylvania; various deadlines postponed to Feb. 3
4. IRS Electronic Tax Administration Advisory Committee selects 10 new members
5. Treasury, IRS issue guidance on the Alternative Fuel Vehicle Refueling Property Credit
6. IRS provides an update to frequently asked questions for the Premium Tax Credit
7. Sept. 26 webinar deals with disasters from an individual tax perspective
8. Tax pros may be contacted about IRS survey
9. 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

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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.”

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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.  

[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.

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.

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.

• Follow IRS on social media
• Visit an IRS walk-in center
• Talk to a trusted tax professional

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

 

• Tax scams
• Recognize tax scams and fraud
• If you were scammed
• Report a tax scam or fraud
• Know the warning signs of a tax scam
• Protect Your Clients; Protect Yourself
• IRS warns against scams targeting seniors; joins other federal agencies to recognize special awareness day
• IRS warns taxpayers they may be scam victims if they filed for big refunds; misleading advice leads to false claims for Fuel Tax Credit, Sick and Family Leave Credit, household employment taxes
• National Small Business Week: IRS warns entrepreneurs to take precautions on data security; protect their businesses, employees, customers
• Protect your business against data loss and fraud
• IRS reminds car dealers and sellers to be aware of phishing scams
• IRS warns of new scam targeting Clean energy tax credit
• Tax pros: Know the potential signs of a data breach
• IRS Online Account and identity protection PINs protect against identity thieves and scammers

Scam safety tip: Follow IRS verified social media accounts and subscribe to e-news services

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.

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.

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 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.  

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 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. 

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. 

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.

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.