Notice 2020-75 announces that the Department of Treasury and the Internal Revenue Service (IRS) intend to issue proposed regulations to clarify that State and local income taxes imposed on and paid by a partnership or an S corporation on its income are allowed as a deduction by the partnership or S corporation in computing its non-separately stated taxable income or loss for the taxable year of payment, and therefore are not subject to the State and local tax deduction limitation for partners and shareholders who itemize deductions.

Notice 2020-75 will appear in IRB 2020-49, dated Nov. 30, 2020

WASHINGTON — The Internal Revenue Service (IRS) today issued Notice 2020-75, which announces rules to be included in forthcoming proposed regulations.  Specifically, the proposed regulations will clarify that State and local income taxes imposed on and paid by a partnership or S corporation on its income are allowed as a deduction by the partnership or S corporation in computing its  non-separately stated taxable income or loss for the taxable year of payment, and therefore are not subject to the State and local tax deduction limitation for partners and shareholders who itemize deductions.  

The notice describing the forthcoming proposed regulations applies to these types of income taxes starting today, and also allows taxpayers to apply these rules to specified income tax payments made in a taxable year of a partnership or an S corporation ending after Dec. 31, 2017, and before the date the forthcoming proposed regulations are published in the Federal Register.

Updates on the implementation of the Tax Cuts and Jobs Act (TCJA) can be found on the Tax Reform page of IRS.gov.

Dear IVES Participants,

We have received questions from the IVES community about the Form 4506-C, IVES Request for Transcript of Tax Return. Below are the questions we received most often and the answers to those questions. If you have further questions after reviewing this information please contact us at wi.ives.participant.assistance@irs.gov.

Thank you,

IRS IVES Team

 

Can I use the Form 4506-C now?

Yes. However, starting March 1, 2021, all IVES requests received by the IRS must be on Form 4506-C.

Can I still use the Form 4506-T?

Yes, you can still send IVES requests on Form 4506-T (September 2018 and March 2019 versions only) and Form 4506T-EZ until February 28, 2021. You cannot use the June 2019 revision of Form 4506-T for IVES requests. The last day that IRS will accept an IVES request on a Form 4506-T or a Form 4506T-EZ will be February 28, 2021.

Can I send batches that include both the Form 4506-C and the Form 4506-T/Form 4506T-EZ?

Yes, but only until February 28, 2021.

Does the 2:00 p.m. local time cut-off apply to sending a Form 4506-T on February 28, 2021?

No, you can send a Form 4506-T or Form 4506T-EZ for IVES processing through 11:59 p.m. your local time.

What happens if I send a Form 4506-T or Form 4506T-EZ on or after March 1, 2021?

IRS will reject the form back to the participant.

Will IRS be releasing a Form 4506C-EZ for IVES participants to use?

No, IRS will be not be releasing a Form 4506C-EZ.

Do I still have to use the Qualified Disclosures Only and the Non-Qualified Disclosures Only coversheets?

Yes, you still need to separate Qualified Disclosure requests from Non-Qualified Disclosure requests with the corresponding IVES fax coversheet when sending the Form 4506-C.

The mandatory separation of Qualified and Non-Qualified IVES requests has been in effect since March 1, 2020. Use of the Form 4506-C does not change this policy.

What is a Qualified Disclosure and Non-Qualified Disclosure?

As a reminder, per the Taxpayer First Act, a "qualified disclosure" means a disclosure under section 6103(c) of the Internal Revenue Code of 1986 of returns or return information by the IRS to a person seeking to verify the income or creditworthiness of a taxpayer who is a borrower in the process of a loan application. Common examples of “qualified disclosures” are disclosures to lenders verifying income or creditworthiness on customers for various types of loans (auto, home mortgage, business, etc.). Some examples of non-qualified disclosures would be disclosures for tax administration, employment verification checks, and other non-lending purposes.

 

What are the differences between the Form 4506-T and Form 4506-C?

There are some minor differences between the Form 4506-T and Form 4506-C. These include:

• Removal of the Tip at the top of the form, because the Tip did not apply to IVES requests.
• Line 5a was changed to include IVES participant name, address and Secure Object Repository (SOR) mailbox ID.
• The Caution language below Line 5b was updated to be limited for IVES requests.
• Because the Verification of Non-Filing product has never been available through IVES, the option for that product was removed.
• Date formatting instructions were added for Line 8 entries.
• A field was added below the signature lines to print or type the name(s) of the individual(s) signing the form.
• IVES Service Center fax numbers replaced the tables showing states and corresponding fax numbers. The fax numbers by state were not for IVES usage.
• Notification language for designated recipients and taxpayers was added to advise that a designated recipient will be subject to penalties for unauthorized access, other use, or redisclosure of the taxpayer’s information without the taxpayer’s express permission and authorization.

The Caution underneath Line 5b instructs the taxpayer to make sure that Lines 5 through 8 are complete before signing. Can I add the Customer File Number and the SOR mailbox after the taxpayer signs?

Yes, you can still add the SOR mailbox information on Line 5a and the Customer File Number on Line 5b after the taxpayers sign the form.

Can I still make a notation in the upper right corner of the Form 4506-C?

You can still put a unique identifier in the upper right corner of Form 4506-C. You cannot put your SOR mailbox information in the upper right corner on Form 4506-C. SOR mailbox information must go on Line 5a.

How do I request a Verification of Non-Filing product?

This product is not available through IVES. The taxpayer can request it for themselves via the IRS Get Transcript website or by sending a completed Form 4506-T.

Do I have to complete the printed or typed name of the taxpayers signing the form underneath the taxpayers’ signatures? What if it is a legible, handwritten signature or an electronic signature?

Yes, the printed/typed name must be completed on Form 4506-C in order to be processable. This is true even if the individuals’ wet signatures are legible or they electronically sign the form. The IRS will reject forms that don’t have the printed/typed name underneath the signature.

Will IRS be updating the IVES Rejection Code listing?

Yes, the IVES Rejection Code listing will be updated to show the form will reject if the printed or typed name is not present on the Form 4506-C.

Did the acceptable signature business titles change for Form 4506-C?

No, the acceptable signature business titles have not changed with the release of the Form 4506-C.

Is the taxpayer’s phone number an optional entry or does it have to be entered on the Form 4506-C?

No, the phone number is not required for the Form 4506-C to be processed.

Can I fax batches that include Form 4506-C to any of the IVES fax numbers in the instructions?

No, IVES participants must continue to fax their requests to their assigned IVES Service Center.

Will the taxpayer consent form still be required with the new Form 4506-C form or was it specific to the Form 4506-T?

The taxpayer is providing consent for the IRS to disclose tax return information to the specific IVES participant entered on line 5a of the Form 4506-T or Form 4506-C. The IRS does not require a separate taxpayer consent form in order to process either form. If the IVES participant or lender is collecting a separate taxpayer consent to meet an industry or legal requirement for disclosure of information, do not send this consent form to the IRS with either the Form 4506-T or the Form 4506-C.

Revenue Procedure 2020-50 provides guidance for taxpayers wishing to apply Section 168(k) to certain depreciable property acquired and placed in service after September 27, 2017, by the taxpayer during its taxable years ending on or after September 28, 2017, and before the taxpayer’s first taxable year that begins on or after January 1, 2021;

(2) certain plants planted or grafted, as applicable, after September 27, 2017, by the taxpayer during its taxable years ending on or after September 28, 2017, and before the taxpayer’s first taxable year that begins on or after January 1, 2021;

(3) components acquired or self-constructed after September 27, 2017, of certain larger self-constructed property and placed in service by the taxpayer during its taxable years ending on or after September 28, 2017, and before the taxpayer’s first taxable year that begins on or after January 1, 2021. 

If the taxpayer retroactively applies §§ 1.168(k)-2 and 1.1502-68, or relies on the 2019 proposed regulations, this revenue procedure also allows the taxpayer to make a late election under § 168(k)

Revenue Procedure 2020-50 will be in IRB-2020-48, dated 11/23/2020.

Revenue Ruling 2020-23 provides guidance on the distribution of an individual custodial account in kind upon termination of a section 403(b) plan.  Notice 2020-80 is related to Rev. Rul. 2020-23 and requests comments regarding the protection of annuity and spousal rights under section 205 of ERISA with respect to a terminating § 403(b) plan funded through the use of custodial accounts.

Notice 2020-80 requests comments on the application of the annuity and spousal rights provisions of section 205 of the Employee Retirement Income Security Act of 1974, P.L. 93-406, 88 Stat. 829, as amended (ERISA), in connection with a distribution of an individual custodial account (ICA) in kind from a terminating § 403(b) plan.  Although no § 403(b) plans are subject to the annuity and spousal rights provisions of §§ 401(a)(11) and 417 of the Internal Revenue Code (Code), some § 403(b) plans that are subject to ERISA (such as a plan of a non-church tax-exempt employer that provides for matching contributions) are subject to the parallel annuity and spousal rights provisions of section 205 of ERISA.  Revenue Ruling 2020-23, 2020-47 I.R.B., issued contemporaneously with this notice, provides guidance regarding termination of a § 403(b) plan that is funded through the use of § 403(b)(7) custodial accounts and distribution of an ICA in kind to a participant or beneficiary of the plan.  The revenue ruling does not, however, address the application of the annuity and spousal rights provisions under section 205 of ERISA in connection with a distribution of an ICA in kind as part of a plan termination.

Rev. Rul. 2020-23 and Notice 2020-80 will be published in 2020-47 IRB on November 16, 2020. 

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued guidance for employers and employees with terminating 403(b) plans that fund benefits through 403(b)(7) custodial accounts. The guidance reflects changes provided in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).

Revenue Ruling 2020-23  provides that 403(b) retirement plans funded through individual or group 403(b)(7) custodial accounts can be terminated through the distribution of individual custodial accounts.  If a distributed custodial account continues to comply with certain requirements, no portion of the distributed custodial account is includible in gross income until amounts are actually paid out of the account to a participant or beneficiary. 

Notice 2020-80 requests comments on the application of annuity and spousal rights provisions related to distributions in certain plans described in Revenue Ruling 2020-23.

The latest post of “A Closer Look” features information on how people can still claim their Economic Impact Payments if they haven’t done so already. The IRS set November 10 as "National EIP Registration Day." It’s a final push before the November 21st deadline to encourage everyone who doesn't normally file a tax return to register to receive an Economic Impact Payment.

“A Closer Look” covers a variety of timely issues of interest to taxpayers and the tax community. It also provides a detailed look at key issues affecting everything from IRS operations and employees to issues involving taxpayers and tax professionals.

Check here for prior posts and new updates.

WASHINGTON – The Internal Revenue Service today urged any eligible self-supporting college student who doesn’t need to file a tax return to register by Nov. 21 so they can receive an Economic Impact Payment before the end of the year.

In advance of the National EIP Registration Day on Nov. 10 and highlighted in “A Closer Look,” the IRS is reminding people who don’t normally file a tax return they may be able to register for an Economic Impact Payment with a quick visit to the Non-Filers tool on IRS.gov. In particular, the IRS wants to remind self-supporting students with little or no income that they may be eligible for payments of $1,200 or more.

“The IRS is working hard with our partners across the country to raise awareness about the upcoming deadline to register for a payment,” said IRS Commissioner Chuck Rettig. “College students in particular should be careful not to overlook these payments if they’re supporting themselves and can’t be claimed as a dependent on someone’s tax returns. A few minutes of research could really help students.”

While most eligible individuals automatically received their Economic Impact Payment, others who don’t have a filing obligation can only get their money by registering online with the IRS. The only way to do that is to use the Non-Filers tool, available exclusively on IRS.gov. Those eligible to use the tool can include people who receive little or no income, including many self-supporting students.

The IRS emphasized that only self-supporting students who are not required to file a tax return should use the Non-Filers tool. Dependent students do not qualify. This means that any student who is claimed as a dependent by their parents or someone else cannot get a payment.

Students who either need to or want to file a regular return should not use the Non-Filers tool. This includes, for example, any student who had federal income tax withheld from their pay and wants to file a return to claim a refund. The IRS reminds students who have summer jobs or part-time positions not to overlook filing a tax return so they can receive a potential federal tax refund.

Since the Non-Filers tool launched in the spring, over 8 million people have used it to register for a payment. But time is running out, and the IRS urges any eligible student to register soon, ahead of the Nov. 21 registration deadline. Anyone who misses the Nov. 21 cutoff will need to wait until next year and instead claim the Recovery Rebate Credit when they file their 2020 federal income tax return.

Some recent college graduates from 2019 and 2020 may not have received an Economic Impact Payment because they were claimed as a dependent by their parents or someone else. The IRS reminds these graduates they may be eligible for the Economic Impact Payments when they file their 2020 tax return in early 2021.

Anyone using the Non-Filers tool can speed up the arrival of their payment by choosing to receive it by direct deposit. Those not choosing this option will get a check.

The Non-Filers tool is designed for people with incomes typically below $24,400 for married
couples, and $12,200 for singles who could not be claimed as a dependent by someone else. This includes couples and individuals who are experiencing homelessness and students.

Beginning two weeks after they register, people can track the status of their payment using the Get My Payment tool, available only on IRS.gov.

Normally, a self-supporting student who registers will receive a $1,200 payment if they are single or $2,400 if married and file a joint return. If they have dependent children, they will normally also get an additional $500 for each qualifying child.

Visit IRS.gov and “A Closer Look” to find out more.

Revenue Procedure 2020-49 provides temporary guidance regarding the public approval requirement under § 147(f) of the Internal Revenue Code for tax-exempt qualified private activity bonds.  Specifically, in light of the continuing Coronavirus Disease 2019 (COVID-19) pandemic, this revenue procedure extends until September 30, 2021, the time period described in section 4.02 of Rev. Proc. 2020-21, 2020-22 I.R.B. 872, during which certain telephonic hearings are permitted.

Revenue Procedure 2020-49 will be in IRB:  2020-48, dated 11/3/20.