WASHINGTON – The Internal Revenue Service today warned taxpayers not to fall victim to a new emerging scam involving buying clean energy tax credits. 

In this latest scam, the IRS is seeing instances where unscrupulous tax return preparers are misrepresenting the rules for claiming clean energy tax credits under the Inflation Reduction Act (IRA).

The transferability provisions of the IRA enable the purchase of eligible federal income tax credits from investments in clean energy to offset a buyer’s tax liability. The IRS has seen taxpayers file returns using unscrupulous return preparers who are claiming purchased clean energy credits that the taxpayer is ultimately unable to benefit from. 

The scam is generally targeting individuals who file Form 1040. The preparers file returns that have individuals improperly claiming IRA credits that offset income tax from sources such as wages, Social Security and retirement account withdrawals. 

Individuals purchasing tax credits under the IRA are subject to the passive activity rules for any purchased credits. Generally, this means they can only use purchased credits to offset income tax from a passive activity. Most taxpayers do not have passive income and a passive income tax liability. Most investment activities are not considered passive. 

“This is another example where scammers are trying to use the complexity of the tax law to entice people into claiming credits they’re not entitled to,” said IRS Commissioner Danny Werfel. Taxpayers should be wary of promoters pushing dubious credits like this and others. The IRS is watching out for this scam, and we urge people to use a reputable tax professional before claiming complex credits like clean energy.” 

The IRS noted individual taxpayers claiming inappropriate credits risk future compliance action by the IRS and are responsible for repaying the inflated credit, plus interest and possible penalties. 

Individual taxpayers considering purchasing clean energy credits under the IRA should consult a trusted tax professional for advice on whether they are eligible to purchase credits and claim the tax benefits. They should also understand how the limitations under the passive activity rules, and other portions of the tax code, may apply to their particular tax situation. 

More information about clean energy can be found on the Inflation Reduction Act of 2022 page on IRS.gov. 

The IRS continues to warn taxpayers about other scams it continues to see that are misleading taxpayers into filing inappropriate claims for other tax credits. The IRS has warned taxpayers not to fall for scams centered around the Fuel Tax Credit, the Sick and Family Leave Credit and household employment taxes. Fueled by misleading social media advice and promoters, the IRS has seen thousands of dubious claims come in earlier this year where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and the need for taxpayers to show they have legitimate documentation to support these claims. 

Report fraud 

The IRS is committed to investigating paid tax return preparers who act improperly. To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242 – Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed Form 14242 and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations. 

Mail:             

Internal Revenue Service Lead Development Center

Stop MS5040

24000 Avila Road

Laguna Niguel, California 92677 3405

Fax: 877 477 9135 

Taxpayers and tax professionals can also submit this information to the IRS Whistleblower Office, where they may be eligible for a monetary award. For details, refer to Abusive tax schemes and abusive tax return preparers on IRS.gov.

WASHINGTON — The Internal Revenue Service today reminded individuals and businesses in parts of Alaska, Maine and Rhode Island that their 2023 federal income tax returns and tax payments are due on Monday, July 15, 2024. 

The IRS normally provides relief, including postponing various tax filing and payment deadlines, for any area designated by the Federal Emergency Management Agency (FEMA). As long as their address of record is in a disaster-area locality, individual and business taxpayers automatically get the extra time, without having to ask for it. 

What areas qualify for the July 15 deadline? 

The July 15 deadline applies to taxpayers affected by disaster declarations in three states. These include: 

• The Wrangell Cooperative Association of Alaska Tribal Nation.
• Eight counties in Maine: Cumberland, Hancock, Knox, Lincoln, Sagadahoc, Waldo, Washington and York.
• Four counties in Rhode Island: Kent, Newport, Providence and Washington. 

The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov. 

What returns and payments qualify for the July 15 deadline? 

Eligible returns and payments include: 

• Calendar-year 2023 partnership and S corporation returns normally due on March 15.
• 2023 individual income tax returns and payments normally due on April 15.
• Quarterly estimated tax payments normally due on April 15 and June 17.
• Calendar-year 2023 corporate and fiduciary income tax returns and payments normally due on April 15.

• Calendar-year 2023 returns filed by tax-exempt organizations normally due on May 15. 

Other returns, payments and time-sensitive tax-related actions also qualify for the extra time. See the Disaster assistance and emergency relief for individuals and businesses page for details. 

Further extensions available 

Affected individual taxpayers who need more time to file beyond the July 15 deadline must file their extension requests on paper using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. That’s because e-file options for requesting an extension are not available after April 15. 

By filing this form, disaster-area taxpayers will have until Oct. 15 to file, though tax payments are still due by July 15. Visit IRS.gov/extensions for details. 

Other relief 

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within 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 with relief activities who are affiliated with a recognized government or philanthropic organization. 

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 or the return for the prior year. See Publication 547, Casualties, Disasters, and Thefts, for details. 

Reminder for other disaster-area taxpayers 

In addition, individuals and businesses in three other states face deadlines, later this summer, for filing their 2023 returns and paying any taxes due. This includes: 

• July 31 for two counties in Massachusetts: Bristol and Worcester.
• Aug. 7 for two counties in Hawaii: Hawaii and Maui.
• Eleven counties in Ohio: Auglaize, Crawford, Darke, Delaware, Hancock, Licking, Logan, Mercer, Miami, Richland and Union. 

Special relief for terrorist attacks in Israel 

Taxpayers who live or have a business in Israel, Gaza or the West Bank, and certain other taxpayers affected by the terrorist attacks in the State of Israel, have until Oct. 7, 2024, to file and pay.

Revenue Procedure 2024-30 modifies Rev. Proc. 2024-23, 2024-23 I.R.B. 1334, to provide procedures under § 446 of the Internal Revenue Code and § 1.446-1(e) of the Income Tax Regulations for obtaining automatic consent of the Commissioner of Internal Revenue to change methods of accounting to the Allowance Charge-off Method described in proposed regulations under section 166.  See REG-121010-17 (88 FR 89636). 

Revenue Procedure 2024-30 will be in IRB:  2024-30, dated July 22, 2024.

“Protect Your Clients; Protect Yourself” series runs for eight weeks 

WASHINGTON — With new and evolving scams emerging, the Internal Revenue Service and the Security Summit partners today announced the start of the special summer "Protect Your Clients; Protect Yourself" campaign to help tax professionals protect themselves against new and ongoing threats involving tax-related identity theft. 

“Security threats against tax professionals and their sensitive taxpayer information continue to evolve, and it’s critical to stay on top of the latest developments to protect their business and their clients,” said IRS Commissioner Danny Werfel. “The Security Summit effort between the IRS, states and the nation’s tax industry has worked to protect taxpayers and tax returns from identity thieves, and tax professionals form a key part of these security defenses. It's critical that everyone in the tax professional community, including smaller practices, stay current on the latest developments to keep their systems safe and protect their clients." 

Now in its ninth year, the Security Summit partners have worked together to raise awareness about these issues in the tax professional community through the "Protect Your Clients; Protect Yourself" campaign. This is part of the larger effort by the Summit coalition of the IRS, state tax agencies and the nation's tax community to battle tax-related identity theft that has been in place since 2015. 

Security threats against tax professionals remain a daily threat. Through the spring, IRS Stakeholder Liaisons had received reports of nearly 200 tax professional data incidents potentially affecting up to 180,000 clients. 

With this summer’s “Protect Your Clients; Protect Yourself” campaign, the Summit partners will work to raise awareness among tax professionals about the importance of maintaining strong security, and what to do if a security incident occurs. 

“There are special steps that tax professionals need to take to protect themselves from scammers trying to obtain sensitive information in attempts to file fraudulent state and federal tax returns,” said Sharonne Bonardi, executive director of the Federation of Tax Administrators representing state tax agencies and a co-chair of the Summit’s communications team. “Continued vigilance by tax professionals is a critical part of the larger effort needed to protect tax information at the state and federal level.” 

This summer’s effort will be anchored around a series of eight news releases that will run for consecutive weeks each Tuesday, coinciding with the start of the IRS Nationwide Tax Forum on July 9 in Chicago. The news release series and the summer Tax Forums will provide important information to help protect sensitive taxpayer data that tax professionals hold while also protecting their business from identity thieves. 

“As the Security Summit has worked collaboratively to strengthen our internal protections against identity thieves, they have shifted more attention to tax professionals and other businesses in hopes of stealing vital information needed to file a tax return and slip through the tax community’s defense systems,” said Julie Magee, tax policy lead at Block Inc and a co-chair of the Summit’s communications team. “This means tax professionals need to be extra cautious in protecting their data.” 

“We continue to educate tax professionals on security measures to prevent data breaches that expose taxpayers' private information and jeopardize their business,” said Taylor Rodier, legislative affairs director at Taxwell and a co-chair of the Summit communications team. “Staying on top of the latest developments and keeping their security up to date is vital.” 

2024 Nationwide Tax Forums in five cities focus on tax professional security; registration deadlines approaching 

In addition to the series of eight news releases, the tax professional security focus will be featured at this summer's Nationwide Tax Forums. Following the three-day forum in Chicago, the forums will continue on July 30 in Orlando, Aug. 13 in Baltimore, Aug. 20 in Dallas and Sept. 10 in San Diego.  

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

The forums will feature several specific sessions to help educate the tax professional community on security-related topics. Tax professionals will hear from experts at the IRS, the tax professional community as well as a special session from the Salve Regina University’s Pell Center from Rhode Island. The entire news release series will be available in Spanish as well. 

By taking some basic security steps, tax pros can help protect themselves against the relentless efforts of identity thieves. This summer's effort includes reminders for tax pros to focus on fundamentals and to watch out for emerging vulnerabilities as well as new updates involving multi-factor authentication and the latest on Written Information Security Plan, or WISP, which all tax professionals are required to have. 

Tax professionals are prime targets of criminal syndicates that are both tech- and tax-savvy. These scammers either trick or hack their way into tax professionals' computer systems to access client data. Even when tax pros think they have client data stored in a secure platform, such as the cloud, lack of strong authentication can make this information vulnerable. 

Identity thieves use stolen data to file fraudulent tax returns that make it more difficult for the IRS and the states to detect because the fraudulent returns use real financial information. Other data thieves sell the basic tax preparer or taxpayer information on the web so other fraudsters can try filing fraudulent tax returns. 

The summer Security Summit tax pro campaign will cover key topics that will highlight a series of simple actions that tax professionals can take to better protect their clients and themselves from data theft. Highlights of the summer news release series being issued in upcoming weeks will highlight these topics: 

• Create a security plan. The Written Information Security Plan, or WISP, is an easy-to-understand document developed by and for tax and industry professionals to keep customer and business information safe and secure. Security Summit partners, including tax professionals, software and industry partners, representatives from state tax groups and the IRS developed the WISP. The Summit partnership will highlight these plans at each of the five IRS Nationwide Tax Forums this year.
• New, emerging scams targeting tax pros. The Summit continues to see new scams targeting tax professionals in attempts to gain access to their systems. This news release will highlight new and ongoing schemes targeting the tax community, including new client scams and other elaborate efforts.
• Phishing, Spear phishing and Whaling. These aren't summer activities; these are real cyber schemes that put sensitive information at risk. Tax pros are a common, everyday target of phishing scams designed to trick the recipient into disclosing personal information such as passwords, bank account numbers, credit card numbers or Social Security numbers. Tax professionals, and taxpayers, should be aware of different phishing terms and what the scams might look like. 
• Sign up clients for Identity Protection PINs, IRS Online Account. The IRS now offers IP PINs to all taxpayers who can verify their identities online, on the phone with an IRS employee after filing a Form 15227 or in person. To obtain an IP PIN, the best option is the IRS online tool Get an IP PIN .
• Know the tell-tale signs of identity theft. Many tax professionals who report data theft to the IRS also say they were unaware of signs that a theft had already occurred. There are many signs for which tax pros should watch. These include multiple clients suddenly receiving suspicious IRS letters requesting confirmation that they filed a tax return; tax professionals seeing e-file acknowledgements for far more tax returns than they filed; and tax pros' computer cursors moving seemingly on their own.
• Understand the “Security Six” protections. This includes using anti-virus software, a firewall, multi-factor authentication, drive encryption, virtual private networks or VPN and backing up critical files. 

Related items 

• Publication 5461-D, Tax professionals should review their security protocols
• Publication 5709, How to Create a Written Security Information Plan for Data Safety

Dear IVES Participants, 

The Wage and Investment (W&I) Division has been renamed Taxpayer Services (TS). As a result, the Income Verification Express Service (IVES) Participant Assistance mailbox has changed to ts.ives.participant.assistance@irs.gov.

The IVES team will monitor both mailboxes until August 1, 2024. After this date, the W&I mailbox wi.ives.participant.assistance@irs.gov will be retired and any inquires sent to the retired mailbox will not be addressed.

Moving forward, please email ts.ives.participant.assistance@irs.gov, if you have any questions regarding the IVES program.

 

Thank you,

IRS IVES Team

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service today issued final regulations requiring custodial brokers to report sales and exchanges of digital assets, including cryptocurrency. These reporting requirements will help taxpayers to file accurate tax returns with respect to digital asset transactions, which are already subject to tax under current law. 

These final regulations reflect consideration of more than 44,000 public comments received last fall on the proposed regulations. They require brokers to report certain sale and exchange transactions that take place beginning in calendar year 2025 and will be reported on the soon-to-be released Form 1099-DA. The regulations implement reporting requirements by the Infrastructure Investment and Jobs Act, enacted in 2021. 

“We reviewed thousands of public comments and believe this new guidance addresses those concerns while striking a balance between industry implementation challenges and closing the tax gap related to digital assets,” said IRS Commissioner Danny Werfel. “These regulations are an important part of the larger effort on high-income individual tax compliance. We need to make sure digital assets are not used to hide taxable income, and these final regulations will improve detection of noncompliance in the high-risk space of digital assets. Our research and experience demonstrate that third-party reporting improves compliance. In addition, these regulations will provide taxpayers with much needed information, which will reduce burden and simplify the process of reporting their digital asset activity.”                                                                                                                                       

“Our work to address potential non-compliance in digital currency is another reason why it is so critical to fully fund IRS operations,” Werfel added. “These new assets expand the complexity of our tax system, and the technology and personnel necessary for the IRS to keep pace with these changes is resource intensive. Ultimately, this IRS funding helps address emerging issues and creates significantly more savings than costs to the government’s bottom line.”     

The final regulations require reporting by brokers who take possession of the digital assets being sold by their customers. These brokers include operators of custodial digital asset trading platforms, certain digital asset hosted wallet providers, digital asset kiosks, and certain processors of digital asset payments (PDAPs). The majority of digital asset transactions today occur using these brokers. By focusing first on this group, the IRS intends these regulations to cover the greatest number of taxpayers while allowing the IRS and U.S. Treasury Department more time to consider the nuances of transactions involving non-custodial and decentralized brokers. 

The final regulations do not include reporting requirements for brokers that do not take possession of the digital assets being sold or exchanged. These brokers are commonly called decentralized or non-custodial brokers. The U.S. Treasury Department and the IRS intend to provide rules for these brokers in a different set of final regulations. 

In addition to the broker reporting rules, the regulations provide rules for taxpayers to determine their basis, gain, and loss from digital asset transactions. The regulations also provide backup withholding rules.

The IRS is aware of the challenges that implementing new reporting requirements can pose, which is why the agency is also providing transitional and penalty relief from reporting and backup withholding rules on certain transactions to help phase-in implementation. 

Real estate professionals are also required to report the fair market value of digital assets paid by buyers and received by sellers in real estate transactions with closing dates on or after January 1, 2026.

The final regulations provide for an optional, aggregate reporting method for certain sales of stablecoins and certain non-fungible tokens (NFTs) applicable only after sales of these stablecoins and NFTs exceed de minimis thresholds. For PDAP transactions, the regulations require reporting on a transactional basis only if the customer’s sales are above a de minimis threshold. 

Finally, basis reporting will be required by certain brokers, for transactions occurring on or after January 1, 2026. 

Additional guidance to provide transitional relief regarding digital asset transactions includes: 

Transitional relief Notice 2024-56 provides general transitional relief from reporting penalties and backup withholding for any broker who does not timely and accurately file information returns and furnish payee statements for sales and exchanges of digital assets during calendar year 2025, provided that the broker makes a good faith effort to comply with the reporting obligations. Additionally, the Notice provides more limited relief from backup withholding for certain sales of digital assets during 2026 for brokers using the IRS’s TIN-matching system in place of certified TINs. Finally, the Notice also provides backup withholding relief for exchanges of digital assets in return for specified NFTs and real property and for certain sales effected by PDAPs. 

Delay on information reporting for certain transactions until future guidance is issued Notice 2024-57 informs brokers that until the U.S. Treasury Department and the IRS issue further guidance, brokers will not have to file information returns or furnish payee statements on digital asset sales and exchanges for the following six types of transactions: 

1. Wrapping and unwrapping transactions,
2. Liquidity provider transactions,
3. Staking transactions,
4. Transactions described by digital asset market participants as lending of digital assets,
5. Transactions described by digital asset market participants as short sales of digital assets, and
6. Notional principal contract transactions. 

Transition from universal or multi-wallet approach to allocating basis in digital assets to wallet by wallet or account by account approach. Revenue Procedure 2024-28 generally permits taxpayers to rely on any reasonable allocation of units of unused basis to wallets or accounts that hold the same number of remaining digital asset units based on the taxpayers’ records of unused bases and remaining units in those wallets or accounts. 

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued final regulations that provide taxpayers and tax professionals with guidance on how to report and pay the 1 percent excise tax owed on corporate stock repurchases. 

The Inflation Reduction Act imposed a new excise tax on stock repurchases equal to 1 percent of the aggregate fair market value of stock repurchased by certain corporations during the taxable year, subject to adjustments. The stock repurchase excise tax applies to repurchases after Dec. 31, 2022. 

These final regulations require that the stock repurchase excise tax be reported on Form 720, Quarterly Federal Excise Tax Return, due for the first full calendar quarter after the end of the corporation’s taxable year, with the Form 7208, Excise Tax on Repurchase of Corporate Stock, attached. The Form 7208 is used to figure the amount of stock repurchase excise tax owed. 

Forms 720 and 7208 due for taxable years ending after Dec. 31, 2022, and on or before June 30, 2024, must be filed by the third quarter due date for Form 720, which is Oct. 31, 2024. 

If a corporation has more than one taxable year ending after Dec. 31, 2022, and on or before June 30, 2024, the corporation should file a single Form 720 with two separate Forms 7208 (one for each taxable year) attached by Oct. 31, 2024. 

The final regulations affect publicly traded domestic corporations that repurchase their stock or whose stock is acquired by certain affiliates after Dec. 31, 2022. The regulations also affect certain publicly traded foreign corporations that repurchase their stock or whose stock is acquired by certain affiliates after Dec. 31, 2022. 

More information can be found on the Inflation Reduction Act of 2022 page on IRS.gov.     

Notice 2024-56 provides transition relief with respect to the reporting of information and backup withholding on digital assets by brokers under section 6045. 

Notice 2024-57 provides that brokers are not required to report certain identified digital asset transactions under section 6045 until further notice. 

Notices 2024-56 and 2024-57 will be published in Internal Revenue Bulletin 2024-29 on July 15, 2024. 

Revenue Procedure 2024-28, subject to certain requirements, generally permits taxpayers to rely on any reasonable allocation of units unattached basis to a wallet or account that holds the same number of remaining digital asset units based on the taxpayer’s records of such unattached basis and remaining units.  The allocation must be a reasonable allocation as defined in section 5.02 of this Revenue Procedure and must be made as of January 1, 2025.  However, the taxpayer may identify the method of allocation and may comply with the requirements set forth in section 4.02 of this Revenue Procedure at a later date to the extent permitted by section 5.02(4) or 5.02(5) of this Revenue Procedure. 

Final regulations are being published under section 6045 of the Internal Revenue Code that require brokers to file information returns, furnish payee statements, and backup withhold on certain digital asset sales and exchange transactions effected on or after January 1, 2025.  These final regulations require taxpayers to specifically identify units of digital assets disposed of for purposes of determining basis and holding period on a wallet by wallet or account by account basis. Comments received in response to the Notice of Proposed Rulemaking for the broker reporting regulations mentioned that, prior to the issuance of the NPRM, taxpayers had interpreted IRS Virtual Currency FAQs 39-41 as permitting, or at least not prohibiting, use of a universal or multi-wallet basis allocation methodology, in which a taxpayer would treat all of its units of a particular cryptocurrency held across all of the taxpayer’s wallets as a single pool for purposes of basis allocation.  The Treasury Department and the IRS have determined that guidance to taxpayers regarding how to transition from the universal basis approach to the wallet by wallet or account by account approach required by the broker reporting regulations is necessary. 

Revenue Procedure 2024-28, will be published in Internal Revenue Bulletin 2024-31 on July 27, 2024.

Inside This Issue

1. IRS Nationwide Tax Forum: Chicago and Orlando sold out; register soon for Baltimore, Dallas
2. ETAAC 2024 Annual Report includes recommendations for IRS, Congress
3. National Taxpayer Advocate issues midyear report to Congress
4. Treasury, IRS issue final rules requiring brokers report sales and exchanges of digital assets that are subject to current tax law
5. IRS reminds taxpayers that marijuana remains a schedule I controlled substance
6. IRS to send settlement offer letters in July to taxpayers who took part in Syndicated Conservation Easement transactions
7. Tax relief for disaster victims in Mississippi
8. IRS Whistleblower Office collects $338 million based on Whistleblower information
9. IRS extends office hours to assist with IRA/CHIPS pre-filing registration process
10. Upcoming webinar for tax practitioners
11. Technical Guidance

1.  IRS Nationwide Tax Forum: Chicago and Orlando sold out; register soon for Baltimore, Dallas

The IRS Nationwide Tax Forum at Chicago (July 9-11) and Orlando (July 30-Aug. 2) have sold out, but space remains available at Baltimore, Aug. 13-15, Dallas, Aug. 20-22, and San Diego, Sept. 10-12.

The IRS encourages tax professionals to sign up at the remaining locations today.

The Nationwide Tax Forum provides continuing education credit for enrolled agents, certified public accountants, Annual Filing Season Program participants and California Tax Education Council participants. Attendees can earn up to 19 credits this year. The tax forum seminar schedule and seminar descriptions outline the curriculum.

This year attendees can once again bring their toughest unresolved IRS case to the Case Resolution Room. Taxpayer Advocate Service employees and IRS representatives with specialized expertise will be available to meet by appointment with tax professionals. For complete details, visit the Case Resolution Information Page.

For information on special events and to register, visit IRS Nationwide Tax Forum.

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2.  ETAAC 2024 Annual Report includes recommendations for IRS, Congress

The IRS Electronic Tax Administration Advisory Committee (ETAAC) this week released its 2024 annual report with a total of 12 recommendations – nine for IRS and three for Congress.

“ETAAC members serve as trusted advisors to the IRS on key issues of interest to tax administration and taxpayers,” said IRS Commissioner Danny Werfel. “The committee has helped on a variety of fronts to help improve tax administration. The IRS leadership team will carefully review the recommendations in this report.”

Members of the ETAAC represent state and local government, the software industry, tax and payroll professionals and individual taxpayers. Members work closely with the IRS Security Summit.

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3.  National Taxpayer Advocate issues midyear report to Congress

National Taxpayer Advocate Erin Collins this week released her midyear report to Congress.

“For most taxpayers, the filing season is the only time they interact with the IRS,” Collins wrote. “After several years of abysmal taxpayer service during the COVID-19 pandemic, the IRS has now delivered two filing seasons that demonstrate the agency has restored service to pre-pandemic levels and has improved in most, but not all, areas of service. This is excellent news for most taxpayers.”
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4.  Treasury, IRS issue final rules requiring brokers report sales and exchanges of digital assets that are subject to current tax law

The Department of Treasury and the IRS issued final regulations requiring custodial brokers to report sales and exchanges of digital assets, including cryptocurrency. These reporting requirements will help taxpayers to file accurate tax returns with respect to digital asset transactions, which are already subject to tax under current law.

These final regulations reflect consideration of more than 44,000 public comments received last fall on the proposed regulations. They require brokers to report certain sale and exchange transactions that take place beginning in calendar year 2025 and will be reported on the soon-to-be released Form 1099-DA. The regulations implement reporting requirements by the Infrastructure Investment and Jobs Act, enacted in 2021. 

"We reviewed thousands of public comments and believe this new guidance addresses those concerns while striking a balance between industry implementation challenges and closing the tax gap related to digital assets," said IRS Commissioner Werfel. 

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5.  IRS reminds taxpayers that marijuana remains a schedule I controlled substance

Until a final federal rule is published, the Internal Revenue Service today reminded taxpayers that marijuana remains a Schedule I controlled substance and is subject to the limitations of Internal Revenue Code. The law with respect to the schedule or classification of marijuana has not changed. Taxpayers seeking a refund of taxes paid related to Internal Revenue Code Section 280E by filing amended returns are not entitled to a refund or payment.

Although the law has not changed, some taxpayers are filing amended returns. The grounds for filing such claims vary, but these claims are not valid. The IRS is taking steps to address these claims.

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6.  IRS to send settlement offer letters in July to taxpayers who took part in Syndicated Conservation Easement transactions

The IRS announced a time-limited settlement offer for certain taxpayers who participated in Syndicated Conservation Easements (SCE) and substantially similar transactions that are under audit in the IRS’s Large Business & International and Small Business and Self-Employed divisions. Eligible taxpayers will be notified by letter with the applicable terms and timelines to respond. Taxpayers who don't receive a letter are not entitled for this resolution, and the IRS will continue enforcement-related actions. Taxpayers with cases pending in the United States Tax Court are not eligible for this settlement offer.

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7.  Tax relief for disaster victims in Mississippi

The IRS is providing tax relief for individuals and businesses in Mississippi that were impacted by severe storms, straight-line winds, tornadoes and flooding that began on April 8. Taxpayers now have until Nov. 1, to file various federal individual and business tax returns and make tax payments. The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, individuals and households that reside or have a business in Hancock, Hinds, Humphreys, Madison, Neshoba and Scott counties qualify for tax relief. The same relief will be available to any other counties added later to the disaster area.

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8.  IRS Whistleblower Office collects $338 million based on Whistleblower information

The Whistleblower Office Report to Congress was recently released, including information showing a 10-year history of awards, the whistleblower claim processing flowchart, average claim processing time by major process, an analysis of length of time for various claim processes and a 5-year analysis of claims built and submissions received. In addition, the report included more information on administrative priorities for the Whistleblower Program. In fiscal year 2023, the Whistleblower Office made 121 awards to whistleblowers totaling more than $88 million (before sequestration). This included 21 awards under IRC section 7623(b). Proceeds collected were $338 million.

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9.  IRS extends office hours to assist with IRA/CHIPS pre-filing registration process

The IRS offers additional office hours to help entities with the pre-filing registration process on the new IRA/CHIPS Pre-filing Registration Tool. Pre-filing registration is a required step for applicable entities and eligible taxpayers to take advantage of elective payment or transfer of credits available in the Inflation Reduction Act and CHIPS Act. Representatives from the IRS will be available to answer your pre-filing registration questions over Microsoft Teams. Registration is required and can be completed by clicking on the links:

• July 2, 2024 from 12:30-2 p.m. ET
• July 17, 2024 from 1-2:30 p.m. ET
• July 31, 2024 from 1-2:30 p.m. ET
• August 14, 2024 from 1-2:30 p.m. ET
• September 4, 2024 from 1-2:30 p.m. ET
• September 18, 2024 from 1-2:30 p.m. ET
• October 2, 2024 from 1-2:30 p.m. ET

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10.  Upcoming webinar for tax practitioners

The IRS offers the upcoming live webinar to the tax practitioner community:

Understanding Form 2290 - Heavy Highway Vehicle Use Tax on July 18, at 2 p.m. ET. Earn up to 2 CE credits (Federal tax). Certificates of completion are being offered.

For more information or to register, visit Webinars for tax practitioners webpage.

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11.  Technical Guidance

WASHINGTON — The Internal Revenue Service announced today tax relief for individuals and businesses in Mississippi that were affected by severe storms, straight-line winds, tornadoes and flooding that began on April 8, 2024. 

These taxpayers now have until Nov. 1, 2024, to file various federal individual and business tax returns and make tax payments. 

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business in Hancock, Hinds, Humphreys, Madison, Neshoba and Scott counties qualify for tax relief. 

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

Filing and payment relief 

The tax relief postpones various tax filing and payment deadlines that occurred from April 8, 2024, through Nov. 1, 2024 (postponement period). As a result, affected individuals and businesses will have until Nov. 1, 2024, to file returns and pay any taxes that were originally due during this period. 

This means, for example, that the Nov. 1, 2024, deadline will now apply to: 

• Individual income tax returns and payments normally due on April 15, 2024.
• 2023 contributions to IRAs and health savings accounts for eligible taxpayers.
• Quarterly estimated income tax payments normally due on April 15, June 17 and Sept. 16, 2024.
• Quarterly payroll and excise tax returns normally due on April 30, July 31 and Oct. 31, 2024.
• Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2024.
• Calendar-year tax-exempt organization returns normally due on May 15, 2024. 

In addition, penalties for failing to make payroll and excise tax deposits due on or after April  8, 2024, and before April 23, 2024, will be abated, as long as the deposits were made by April 23, 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 – 4790-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 these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov. 

Reminder about tax return preparation options 

• Eligible individuals or families can get free help preparing their tax return at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites. To find the closest free tax help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
• To find an AARP Tax-Aide site, use the AARP Site Locator Tool or call 888-227-7669.
• Any individual or family whose adjusted gross income (AGI) was $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.