Revenue Procedure 2024-24 provides updated procedures for taxpayers requesting private letter rulings from the IRS regarding certain matters pertaining to section 355 transactions, including representations, information, and analysis to be submitted with those requests. This revenue procedure modifies Rev. Proc. 2017-52, 2017-41 I.R.B. 283, and supersedes Rev. Proc. 2018-53, 2018-43 I.R.B. 667. 

Notice 2024-38 accompanies Rev. Proc. 2024-24, which provides procedures for requesting private letter rulings from the IRS regarding certain matters pertaining to section 355 transactions. Specifically, this notice requests public feedback on the provisions set forth in the Rev. Proc. 2024-24 and describes the Treasury Department’s and the IRS’s views and concerns relating to certain matters addressed in the revenue procedure. 

Revenue Procedure 2024-24 and Notice 2024-38 will be published in Internal Revenue Bulletin 2024-21 on May 20, 2024.

The Internal Revenue Service reminds businesses that starting in tax year 2023 changes under the SECURE 2.0 Act may affect the amounts they need to report on their Forms W-2. 

The SECURE 2.0 Act allows for additional features in various employer retirement plans to encourage use of these plans. 

The provisions potentially affecting Forms W-2 (including Forms W-2AS, W-2GU and W-2VI) are: 

• De minimis financial incentives (Section 113 of the SECURE 2.0 Act), 

• Roth Savings Incentive Match Plan for Employees (SIMPLE) and Roth Simplified Employee Pension (SEP) Individual Retirement Arrangements (IRAs) (Section 601 of the SECURE 2.0 Act), and 

• Optional treatment of employer nonelective or matching contributions as Roth contributions (Section 604 of the SECURE 2.0 Act). 

De minimis financial incentives 

The SECURE 2.0 Act made changes designed to encourage employees to contribute to their employers’ 401(k) or 403(b) plans. These changes allow employers to offer small financial incentives to employees who choose to participate in these retirement savings arrangements. 

If an employer offers such an incentive, it's considered part of the employee's income and is subject to regular tax withholding unless there's a specific exemption. For more information, refer to Questions and Answers D-1 through D-6 in Notice 2024-2, published in the Internal Revenue Bulletin. 

Roth SIMPLE and Roth SEP IRAs 

Under section 601 of the SECURE 2.0 Act, an employer that maintains a SEP or SIMPLE IRA plan can offer participating employees the option of having their salary reduction contributions deposited in a Roth IRA instead of a traditional IRA. For more information, refer to Questions and Answers K-1 through K-8 in Notice 2024-2, published in the Internal Revenue Bulletin. 

Contributions made at the employee’s election to a Roth SEP or Roth SIMPLE IRA are subject to federal income tax withholding, the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA). These contributions should be included in boxes 1, 3 and 5 (or box 14 for railroad retirement taxes) of Form W-2. They’ll also be reported in box 12 with code F (for a SEP) or code S (for a SIMPLE IRA). 

Employer contributions to a Roth SEP or Roth SIMPLE IRA are not subject to withholding for federal income tax, FICA or FUTA. These contributions should be reported on Form 1099-R for the year in which they’re allocated to the individual’s account. The total amount should be listed in boxes 1 and 2a of Form 1099-R with code 2 or 7 in box 7, and the IRA/SEP/SIMPLE checkbox checked. 

Designated Roth nonelective contributions and designated Roth matching contributions 

Under section 604 of the SECURE 2.0 Act, plans can allow employees to designate certain matching and nonelective contributions made after Dec. 29, 2022, as Roth contributions. These contributions are not subject to withholding for federal income tax, Social Security or Medicare tax. For more information, refer to Questions and Answers L-1 through L-11 in Notice 2024-2, published in the Internal Revenue Bulletin. 

Unlike regular Roth contributions, designated Roth nonelective and matching contributions must be reported on Form 1099-R for the year in which they're allocated to an individual's account. They’re reported in boxes 1 and 2a of Form 1099-R, and code “G” is used in box 7. 

Reminder 

Forms W-2 have been updated for tax year 2023 (filed in 2024). Businesses can now complete and print various copies of Forms W-2 (including Forms W-2AS, W-2GU and W-2VI) on IRS.gov for recipients. Any information entered on one copy will automatically appear on the others. 

If a business has already filed 2023 Forms W-2 without following these new guidelines, they may need to file Form W-2c to correct any errors. Refer to the General Instructions for Forms W-2 and W-3 for details on when and how to file Form W-2c.

WASHINGTON – The Internal Revenue Service today released an update on the Strategic Operating Plan, a blueprint outlining future plans for the agency’s transformation work and highlighting dozens of improvements for taxpayers since passage of the Inflation Reduction Act. 

The annual update focuses on major accomplishments the agency has accomplished since IRA’s passage in August 2022. The sweeping array of changes has improved taxpayer service, taken steps to add fairness to tax compliance and added new technology tools to help taxpayers and the tax professional community. These efforts culminated this year in one the agency’s most successful filing seasons ever with dramatic improvements in taxpayer service and new tools. 

In addition, the IRS released an accompanying 52-page document that summarizes the current work  underway and outlines the agency's historic plans to make fundamental changes with Inflation Reduction Act (IRA) funding. The report focuses on changes underway and planned for Fiscal Years 2024 and 2025 across taxpayer service, tax compliance and technology modernization. 

IRS Commissioner Danny Werfel described the modernization changes outlined in the Strategic Operating Plan as a “generational imperative” needed to serve the nation and taxpayers. 

“You will see in these documents that we have made tremendous progress toward realizing the goals of the plan, and work continues to accelerate,” Werfel wrote in the report’s introduction. “We have made fundamental changes that have improved taxpayer services, brought new fairness to compliance efforts and launched important changes to our technology. We are making a difference to taxpayers and the nation, and the improvements at the IRS are just beginning.”

“The changes outlined in this report are a stark contrast to the years of under-funding that deteriorated taxpayer service and tax enforcement, frustrating taxpayers, the tax community and IRS employees alike,” Werfel added. “The funding provided by the Inflation Reduction Act creates a unique opportunity to realize a future of tax administration that meets the evolving needs of taxpayers. This opportunity is important for the future of the IRS, the nation and especially the taxpayers we serve.” 

The road ahead in 2024 and 2025 

The Strategic Operating Plan update issued today refines last April’s initial plan. The update provides an outline of the major projects and outcomes IRS expects to deliver over the next 12 to 18 months, including progress on the Simple Notice Initiative, enforcement activities and efforts to modernize foundational technology and improve IRS employee tools to help taxpayers. The update also includes additional details on spending and staffing. 

The plan focuses on five key objectives: 

• Objective 1. Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible.
• Objective 2. Quickly resolve taxpayer issues when they arise.
• Objective 3. Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap.
• Objective 4. Deliver cutting-edge technology, data and analytics to operate more effectively.
• Objective 5. Attract, retain and empower a highly skilled, diverse workforce and develop a culture that is better equipped to deliver results for taxpayers. 

The Strategic Operating Plan update also highlighted a number of areas where changes will accelerate into Fiscal Year 2025. Key areas of focus through 2025 include: 

• Enhancing live assistance through improved efficiency in call centers, reduced backlog of paper returns and continued expanded staffing levels at Taxpayer Assistance Centers and “Pop-up Live Assistance Centers” in rural and other areas, while working to ensure taxpayers are aware of all available credits and benefits.
• Expanding online services by expanding the features available in online accounts, including digital copies of notices, status updates, secure two-way messaging and expanded payment options.
• Accelerating digitalization by providing up to 150 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.
• Simplifying notices by redesigning up to 200 notices, capturing 90% of all notice volume for individual taxpayers and initiating business process changes necessary to flexibly generate notices and reduce taxpayer burden.
• Disrupting tax scams and schemes by coordinating with partners to identify scams and victims and improving victim assistance.
• Modernizing foundational technology and aged programming from the point of intake of tax returns and information systems. Data security will be integrated throughout to protect the integrity of the tax system and taxpayers.
• Modernizing how the IRS attracts, retains, develops and empowers employees, focusing on efforts to ensure they have the tools, training and culture they need to perform at their best.
• Improving IRS employee tools by developing and integrating high priority software tools into operations to help taxpayers and improve service.
• Ensuring fairness in enforcement through hiring and increased training in critical staffing areas such as those dedicated to high-income earners and large and complex partnerships. 

More audit focus on wealthiest taxpayers, large corporations, partnerships 

The report also notes that the IRS anticipates increasing audits on the wealthiest taxpayers, large corporations and large, complex partnerships by sizable percentages for tax year 2026: 

• The plan highlights the IRS will nearly triple audit rates on large corporations with assets over $250 million to 22.6% in tax year 2026, up from 8.8% in tax year 2019.
• The IRS will increase audit rates by nearly ten-fold on large, complex partnerships with assets over $10 million, going from 0.1% in 2019 to 1% in tax year 2026.
• The IRS will increase audit rates by more than 50% on wealthy individual taxpayers with total positive income over $10 million, with audit rates going from an 11% coverage rate in 2019 to 16.5% in tax year 2026.
• At the same time, the IRS continues to emphasize the agency will not increase audit rates for small businesses and taxpayers making under $400,000, and those rates remain at historically low levels. 

Upcoming changes build off major improvements in taxpayer service, compliance and IT 

The changes planned for the rest of 2024 and 2025 build off a long string of successes made by the IRS in less than two years. 

During the just completed 2024 filing season, the IRS answered over a million more calls than last year while maintaining an average wait time of just over three minutes. The callback option saved taxpayers an estimated 1.5 million hours of sitting on hold. IRS Taxpayer Assistance Centers served more than 780,000 taxpayers in person, an increase of more than 37% over last year. 

Using IRA funding, the IRS enhanced many online tools, such as Where’s My Refund, Individual and Tax Pro Online Accounts, while also launching new ones, including the Business Tax Account for individual partners of partnerships, individual shareholders of S corporations and sole proprietors with an employer identification number (EIN). And more than 140,000 taxpayers submitted tax returns through Direct File, a pilot program for taxpayers to file for free, directly with the IRS. 

Using IRA funding, the IRS also saw progress in enforcement activities, recovering $520 million in its efforts to pursue high-income, high-wealth individuals who have either not filed their taxes or failed to pay recognized tax debt. Using artificial intelligence (AI) and advanced analytics to help select complex partnerships for audits, the IRS opened audits of 76 of the largest partnerships in the U.S. that represent a cross-section of industries including hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms and other industries. 

Werfel: Much more work remains; challenges continue with funding 

While the IRS has accomplished a lot so far with IRA funding and under the Strategic Operating Plan, Werfel emphasized the agency has a lot more work in front of it to continue the transformation efforts. 

“While we have made significant progress, we realize we need to do a lot more to make improvements and transform the IRS for the benefit of taxpayers, tax professionals and the nation,” Werfel said. “We have an opportunity to build a 21^st century tax agency to serve the American people in the manner they expect – and the level they deserve.” 

Werfel noted that the Strategic Operating Plan update also highlighted ongoing funding challenges. While the Inflation Reduction Act funding provides tens of billions of dollars, years of under-funding have created unique challenges for the agency. 

In addition, given current funding structures, the Strategic Operating Plan noted that the agency anticipates Business System Modernization funding provided under IRA – critical for technology improvements – will run out by fiscal year 2026. And current levels of taxpayer service will be unable to be supported through fiscal year 2026. This means that the nearly 88% level of service delivered for taxpayers this filing season on the IRS main phone lines could drop back to 30% levels in 2026 – meaning seven out of 10 taxpayers couldn’t get through to an assistor when calling. 

“The IRS will continue focusing on making improvements and efficient use of funding,” Werfel said. “We highlight accomplishments rather than taking a victory lap because more work remains. But to stress the importance of continuing this momentum, the IRS will continue working to make a difference for the nation’s taxpayers. At the same time, it’s critical that the IRS has stable, secure funding to allow technology modernization and taxpayer service improvements to continue into the future.” 

The Administration’s Fiscal Year 2025 budget proposal would restore and maintain the full IRA investment in the IRS through 2034 and avoid funding cliffs that would dramatically degrade IRS work ability in many different areas, including taxpayer services beginning in 2026 as well as technology modernization. 

To address these funding cliffs, the Administration’s budget plan includes a mandatory proposal that will extend IRA funding through FY 2034. This proposal would provide $104 billion to the IRS over the 10-year budget window and is estimated to generate at least an additional $341 billion in revenue for the nation. 

“This funding will ensure the IRS can continue its transformation efforts that we have outlined in the updated Strategic Operating Plan,” Werfel said. “We need to continue working to make more improvements in taxpayer service, modernize technology and ensure those with complex returns, including certain high-income individuals, large corporations and complex partnerships, pay the taxes they owe.”

Secure Object Repository (SOR) Maintenance 

Dear IVES Participants,

Maintenance is scheduled for the SOR database on Saturday, May 4, 2024, from 12:30 PM-5:00 PM ET.   

SOR mailboxes are expected to be unavailable during this maintenance window. 

Thank you,

IRS IVES Team

WASHINGTON – The Department of Treasury and the Internal Revenue Service today issued Notice 2024-37 for the new Sustainable Aviation Fuel (SAF) credit created by the Inflation Reduction Act of 2022 (IRA). 

The Treasury Department and the IRS developed this guidance in consultation with the Environmental Protection Agency, the Department of Energy, the Department of Agriculture (USDA) and the Federal Aviation Administration of the Department of Transportation. 

The SAF credit applies to a qualified fuel mixture containing sustainable aviation fuel for certain sales or uses after Dec. 31, 2022, and before Jan. 1, 2025. 

The SAF credit is $1.25 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. Additionally, there is a supplemental credit of one cent for each percent that the reduction exceeds 50%, for a maximum increase of $0.50. 

Today's notice provides additional safe harbors using the 40BSAF-GREET 2024 model. DOE worked with the Treasury Department and other federal agencies to develop the 40BSAF-GREET 2024 model, including specifications for and limitations on taxpayer inputs and background inputs to the model.  

The safe harbors in this notice can be used to calculate the emissions reduction percentage and for the corresponding unrelated party certification for the SAF credit. 

Further, this notice provides a safe harbor for use of the USDA Climate Smart Agriculture Pilot Program to further reduce the emissions reduction percentage calculated using the 40BSAF-GREET 2024 model for domestic soybean and domestic corn feedstocks and for certifying the related requirements.

Dear IVES Participants,

Maintenance is scheduled for the SOR database on Saturday, May 11, 2024, from 2:30 PM-5:00 PM ET.   

SOR mailboxes are expected to be unavailable during this maintenance window. 

Thank you,

IRS IVES Team

Dear IVES Participants,    The 2024 Compliance Review process for Income Verification Express Service (IVES) participants will begin in June of 2024. This review is to ensure IVES participants are in adherence with the standards set in the IVES Participant Certification of Compliance memorandum.   IVES participants will be selected at random for review. If selected, the IVES account principal will be notified their company has been selected to participate in this year's review. Please ensure your IVES account information is correct on External Services Authorization Management (ESAM).    Any questions should be sent to the IVES Participant Assistance Mailbox at wi.ives.participant.assistance@irs.gov.    Thank you,    IRS IVES Team

Notice 2024-36 announces the 2024 allocation round of the section 48C qualifying advanced energy project credit to allocate approximately $6 billion of section 48C credits, with approximately $2.4 billion in section 48C credits to be allocated to projects located in section 48C(e) energy communities census tracts.  Additionally, Notice 2024-36 updates and modifies Appendices A, B and C, as published in Notice 2023-18 and Notice 2023-44.  

Appendix A provides definitions and examples of qualifying advanced energy projects.  Appendix B provides the application process that the Department of Energy will use to evaluate concept papers and § 48C applications to decide whether recommend a project for a section 48C allocation.  Appendix C contains a list of census tracts that are section 48C(e) energy community census tracts. 

Notice 2024-36 will be in IRB:  2024-21, dated May 20, 2024.

WASHINGTON —The Internal Revenue Service today issued its annual Data Book detailing the agency’s activities during fiscal year 2023 (Oct. 1, 2022 – Sept. 30, 2023), including revenue collected and tax returns processed. 

For FY 2023, the IRS collected approximately $4.7 trillion, or about 96 percent of the funding that supports the federal government’s operations — to fund everything from education to national defense. 

During FY 2023, the IRS processed more than 271.4 million tax returns and other forms, including more than 163.1 million individual income tax returns. 

Beyond statistics, the 2023 Data Book reflects the initial impacts of the historic long-term funding provided under the Inflation Reduction Act (IRA) of 2022 to transform the IRS and modernize how the agency serves the American people. 

“This once-in-a-generation funding opportunity provided by the IRA is an investment in the transformation of the IRS and an investment in the financial future of our nation,” IRS Commissioner Danny Werfel wrote in the Data Book introduction. “The effects of this IRA funding — to hire more IRS employees and modernize the agency’s technology and systems to provide better service to the American people — started showing up in the 2023 tax season. And that progress has accelerated into 2024.” 

In FY 2023, with new phone assistors hired through IRA funding, IRS employees answered nearly 27.3 million phone calls — a 25% increase from FY 2022. The IRS opened or reopened more than 50 Taxpayer Assistance Centers in FY 2023 that were closed during the pandemic. The IRS had more than 1.6 million contacts at 363 centers across the nation in FY 2023 to provide more in-person help to taxpayers – up 18% from FY 2022. 

These increases in taxpayer assistance – on the phones, in person and on IRS.gov – are continuing in 2024, as highlighted earlier this week. The IRA funding is already making a difference for taxpayers, Werfel said — from shorter wait times for IRS telephone help, to more in-person and online resources for taxpayers, to the IRS’s free Direct File pilot tax filing program launched for 2024 in 12 states. 

And the IRS has increased its enforcement and collections efforts on high wealth non-filers and those who underreport their tax liability through complex schemes. In FY 2023, there was no increase in audits of tax returns for taxpayers making under $400,000 per year. 

After several challenging pandemic years, the IRS had a successful filing season in 2023, with the addition of 5,800 new employees hired to provide taxpayer service. Overall, the IRS’s workforce grew 5% in FY 2023. 

Data highlights 

The IRS issued $659 million in refunds to taxpayers during FY 2023 — a 2.7% increase over FY 2022. 

In FY 2023, the IRS closed 582,944 tax return audits, resulting in $31.9 billion in recommended additional tax. 

For all returns filed for Tax Years 2013 through 2021, the IRS examined 0.44% of individual returns filed and 0.74% of corporation returns filed, through the end of FY 2023. 

The IRS has examined the returns of 8.7% of taxpayers filing individual returns reporting total positive income of $10 million or more for Tax Years 2013 through 2021, as of the end of FY 2023. 

The IRS website had more than 880.9 million visits in FY 2023, including more than 303.1 million inquiries on its “Where’s My Refund?” online tool that enables taxpayers to check the status of their tax refund. 

Some new features in the 2023 Data Book include two new tables from IRS’s Large Business & International Division focused on tax certainty programs. The Advance Pricing Agreement and Compliance Assurance Programs provide businesses the opportunity to work with the IRS to ensure tax compliance prior to filing, which benefits both businesses and the government. 

The 2023 Data Book also features added information on telephone level of service with automation called LOS(A), and a Trust Score based on Performance.gov metrics. 

To learn more details, view the complete 2023 Data Book online.

WASHINGTON —The Internal Revenue Service today issued its annual Data Book detailing the agency’s activities during fiscal year 2023 (Oct. 1, 2022 – Sept. 30, 2023), including revenue collected and tax returns processed. 

For FY 2023, the IRS collected approximately $4.7 trillion, or about 96 percent of the funding that supports the federal government’s operations — to fund everything from education to national defense. 

During FY 2023, the IRS processed more than 271.4 million tax returns and other forms, including more than 163.1 million individual income tax returns. 

Beyond statistics, the 2023 Data Book reflects the initial impacts of the historic long-term funding provided under the Inflation Reduction Act (IRA) of 2022 to transform the IRS and modernize how the agency serves the American people. 

“This once-in-a-generation funding opportunity provided by the IRA is an investment in the transformation of the IRS and an investment in the financial future of our nation,” IRS Commissioner Danny Werfel wrote in the Data Book introduction. “The effects of this IRA funding — to hire more IRS employees and modernize the agency’s technology and systems to provide better service to the American people — started showing up in the 2023 tax season. And that progress has accelerated into 2024.” 

In FY 2023, with new phone assistors hired through IRA funding, IRS employees answered nearly 27.3 million phone calls — a 25% increase from FY 2022. The IRS opened or reopened more than 50 Taxpayer Assistance Centers in FY 2023 that were closed during the pandemic. The IRS had more than 1.6 million contacts at 363 centers across the nation in FY 2023 to provide more in-person help to taxpayers – up 18% from FY 2022. 

These increases in taxpayer assistance – on the phones, in person and on IRS.gov – are continuing in 2024, as highlighted earlier this week. The IRA funding is already making a difference for taxpayers, Werfel said — from shorter wait times for IRS telephone help, to more in-person and online resources for taxpayers, to the IRS’s free Direct File pilot tax filing program launched for 2024 in 12 states. 

And the IRS has increased its enforcement and collections efforts on high wealth non-filers and those who underreport their tax liability through complex schemes. In FY 2023, there was no increase in audits of tax returns for taxpayers making under $400,000 per year. 

After several challenging pandemic years, the IRS had a successful filing season in 2023, with the addition of 5,800 new employees hired to provide taxpayer service. Overall, the IRS’s workforce grew 5% in FY 2023. 

Data highlights 

The IRS issued $659 million in refunds to taxpayers during FY 2023 — a 2.7% increase over FY 2022. 

In FY 2023, the IRS closed 582,944 tax return audits, resulting in $31.9 billion in recommended additional tax. 

For all returns filed for Tax Years 2013 through 2021, the IRS examined 0.44% of individual returns filed and 0.74% of corporation returns filed, through the end of FY 2023. 

The IRS has examined the returns of 8.7% of taxpayers filing individual returns reporting total positive income of $10 million or more for Tax Years 2013 through 2021, as of the end of FY 2023. 

The IRS website had more than 880.9 million visits in FY 2023, including more than 303.1 million inquiries on its “Where’s My Refund?” online tool that enables taxpayers to check the status of their tax refund. 

Some new features in the 2023 Data Book include two new tables from IRS’s Large Business & International Division focused on tax certainty programs. The Advance Pricing Agreement and Compliance Assurance Programs provide businesses the opportunity to work with the IRS to ensure tax compliance prior to filing, which benefits both businesses and the government. 

The 2023 Data Book also features added information on telephone level of service with automation called LOS(A), and a Trust Score based on Performance.gov metrics. 

To learn more details, view the complete 2023 Data Book online.