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.

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.

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 

• Video: How to complete Form 990-T for elective payment election
• Publication 5884, Inflation Reduction Act (IRA) and CHIPS Act of 2022 (CHIPS) Pre-Filing Registration Tool User Guide
• Elective Pay and Transferability Frequently Asked Questions: Elective Pay
• Credits and Deductions Under the Inflation Reduction Act of 2022
• Elective Pay and Transferability
• About Form 3800, General Business Credit

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

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.

Retirement plan help

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.

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:

• FAQs for disaster victims
• Publication 584, Disaster Resource Guide for Individuals and Businesses
• Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
• Publication 547, Casualties, Disasters, and Thefts

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.

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. 

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 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. 

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 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.

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. 

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.

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

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.