IRS Tax News

  • 07 Jun 2022 12:11 PM | Anonymous

    WASHINGTON — The Internal Revenue Service today said that a recent court decision upholds its long-standing position regarding abusive microcaptive insurance transactions. Taxpayers should be alert to these schemes, normally peddled by promoters, as they will ultimately cost them.

    On May 12, 2022, in Reserve Mechanical Corp. v. Commissioner, the United States Court of Appeals for the Tenth Circuit appropriately upheld the Internal Revenue Service’s position on abusive microcaptive insurance transactions. The Tenth Circuit affirmed the Tax Court’s decision holding that the taxpayer was not engaged in the insurance business and that the purported insurance premiums it received were therefore taxable. After the Tax Court decided in favor of the IRS in numerous cases involving microcaptives, Reserve Mechanical is the first appellate decision recognizing the IRS’ position that these abusive transactions are shams.

    The IRS encourages anyone considering entering a promoted microcaptive insurance transaction to first speak with a qualified, independent advisor. These transactions will result in serious economic loss to taxpayers, including the loss of deductions, required income inclusion and penalties. Taxpayers should understand that the IRS has asserted in many of these cases that the microcaptive insurance transactions lack economic substance and that when transactions are held to lack economic substance, then a 20% penalty (40% if undisclosed) will automatically apply, and it cannot be waived or reduced by the IRS or the courts.

    Likewise, taxpayers who have already engaged in such a transaction should speak with a qualified independent tax advisor about their options. The IRS previously offered settlement opportunities for abusive microcaptive transactions, and for taxpayers who come forward seeking to resolve their case, the IRS will consider providing a resolution opportunity as appropriate.

    The IRS and Department of Justice will use all available legal options to challenge improper attempts to avoid or evade U.S. income tax, regardless of how long it takes for these cases to wind their way through the courts.  The IRS will also aggressively pursue penalties for all participants in these abusive transactions. 


  • 06 Jun 2022 2:05 PM | Anonymous

    WASHINGTON – The Internal Revenue Service today kicked off the week with the 5th item on its 2022 annual "Dirty Dozen" scams warning list, with a sad reminder that criminals still use the COVID-19 pandemic to steal people's money and identity with bogus emails, social media posts and unexpected phone calls, among other things. 

    These scams can take a variety of forms, including using unemployment information and fake job offers to steal money and information from people. All of these efforts can lead to sensitive personal information being stolen, with scammers using this to try filing a fraudulent tax return as well as harming victims in other ways. 

    "Scammers continue using the pandemic as a device to scare or confuse potential victims into handing over their hard-earned money or personal information,” said IRS Commissioner Chuck Rettig. "I urge everyone to be leery of suspicious calls, texts and emails promising benefits that don’t exist.” 

    The IRS has compiled the annual Dirty Dozen list for more than 20 years as a way of alerting taxpayers and the tax professional community about scams and schemes. The list is not a legal document or a literal listing of agency enforcement priorities. It is designed to raise awareness among a variety of audiences that may not always be aware of developments involving tax administration. 

    “Caution and awareness are our best lines of defense against these criminals,” Rettig added. “Everyone should verify information on a trusted government website, such as IRS.gov.”

    A common scam the IRS continues to see during this period involves using crises that affect all or most people in the nation, such as the COVID-19 pandemic. Some of the scams for which people should continue to be on the lookout include: 

    Economic Impact Payment and tax refund scams: Identity thieves who try to use Economic Impact Payments (EIPs), also known as stimulus payments, are a continuing threat to individuals. Similar to tax refund scams, taxpayers should watch out for these tell-tale signs of a scam: 

    Any text messages, random incoming phone calls or emails inquiring about bank account information, requesting recipients to click a link or verify data should be considered suspicious and deleted without opening. This includes not just stimulus payments, but tax refunds and other common issues.

    Remember, the IRS won't initiate contact by phone, email, text or social media asking for Social Security numbers or other personal or financial information related to Economic Impact Payments. Also be alert to mailbox theft. Routinely check your mail and report suspected mail losses to postal inspectors. 

    Reminder: The IRS has issued all Economic Impact Payments. Most eligible people already received their stimulus payments. People who are missing a stimulus payment or got less than the full amount may be eligible to claim a Recovery Rebate Credit on their 2020 or 2021 federal tax return. Taxpayers should remember that the IRS website, IRS.gov, is the agency's official website for information on payments, refunds and other tax information.

    Unemployment fraud leading to inaccurate taxpayer 1099-Gs: Because of the pandemic, many taxpayers lost their jobs and received unemployment compensation from their state. However, scammers also took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims. Payments made on these fraudulent claims went to the identity thieves. 

    Taxpayers should also be on the lookout for a Form 1099-G reporting unemployment compensation they didn't receive. For people in this situation, the IRS urges them to contact their appropriate state agency for a corrected form. If a corrected form cannot be obtained so that a taxpayer can file a timely tax return, taxpayers should complete their return claiming only the unemployment compensation and other income they actually received. See Identity Theft and Unemployment Benefits for tax details and DOL.gov/fraud for state-by-state reporting information. 

    Fake employment offers posted on social media: There have been many reports of fake job postings on social media. The pandemic created many newly unemployed people eager to seek new employment. These fake posts entice their victims to provide their personal financial information. This creates added tax risk for people because this information in turn can be used to file a fraudulent tax return for a fraudulent refund or used in some other criminal endeavor. 

    Fake charities that steal your money: Bogus charities are always a problem. They tend to be a bigger threat when there is a national crisis like the pandemic.

    Taxpayers who give money or goods to a charity may be able to claim a deduction on their federal tax return. Taxpayers must donate to a qualified charity to get a deduction. To check the status of a charity, use the IRS Tax Exempt Organization Search tool

    Here are some tips to remember about fake charity scams: 

    • Individuals should never let any caller pressure them. A legitimate charity will be happy to get a donation at any time, so there's no rush. Donors are encouraged to take time to do the research.
    • Potential donors should ask the fundraiser for the charity's exact name, web address and mailing address, so it can be confirmed later. Some dishonest telemarketers use names that sound like large well-known charities to confuse people.
    • Be careful how a donation is paid. Donors should not work with charities that ask them to pay by giving numbers from a gift card or by wiring money. That's how scammers ask people to pay. It's safest to pay by credit card or check — and only after having done some research on the charity.

    For more information about avoiding fake charities, visit the Federal Trade Commission website


  • 02 Jun 2022 12:06 PM | Anonymous

    WASHINGTON — The Internal Revenue Service is encouraging taxpayers who have yet to file their 2021 tax return – including those who requested an extension of time – to file a complete and accurate return electronically as early as possible once they have all their information together. There’s no need to wait until the October deadline. 

    Taxpayers who requested an extension have until October 17 this year to file their tax return. However, if a taxpayer has all the necessary information to file an accurate return, filing before summer vacation can be a win-win. 

    “IRS employees continue working hard to process tax returns and address our inventory issues,” said IRS Commissioner Chuck Rettig. “We continue to urge people to file electronically and do it as soon as possible. Even if people have an extension to file until October, sending the tax return as soon as possible can either help get them a refund quicker or it can save them money if they owe by avoiding additional interest and penalties.” 

    Filing electronically as soon as possible can also help taxpayers who did not file an extension and missed the April deadline to avoid further penalties and interest if they owe taxes. 

    File electronically and choose direct deposit

    Generally, people who choose not to file a tax return because they didn't earn enough money to be required to file won't receive a penalty if they are owed a refund. But they may miss out on receiving a refund if they don’t file. The IRS advises individuals who still need to file a 2021 tax return to file electronically and, if due a refund, to choose direct deposit

    Filing electronically is fast, accurate and secure, and when an individual chooses direct deposit, their refund goes directly from the IRS into their bank or financial account getting them their refund in the fastest time possible. If they have a prepaid debit card, they may be able to have their refund applied to the card by providing the account and routing numbers to the IRS. The IRS processes most e-filed returns and issues direct deposit refunds in less than three weeks. 

    Here’s a tip to help with e-filing a 2021 tax return for those still waiting on their 2020 tax return to be processed: To validate and successfully submit an electronically filed tax return to the IRS, taxpayers need their Adjusted Gross Income, or AGI, from their most recent tax return. Those waiting on their 2020 tax return can still file their 2021 return by entering $0 for their 2020 AGI on their 2021 tax return. Remember, if using the same tax preparation software as last year, this field will auto-populate. 

    Taxpayers who haven’t filed a 2021 tax return yet – including extension filers – can file electronically any time before the October deadline and avoid the last-minute rush to file. 

    Find help on IRS.gov

    People may be waiting to file because they need help or more information, have a more complicated tax situation, or owe taxes. The IRS has resources to help taxpayers get the answers they need so they can file an accurate return. Take the time to file an accurate tax return, but don’t wait until the last minute and risk missing the October deadline. 

    Tools on the IRS website are easy to use and available 24 hours a day. Millions of people use them to find information about their accounts, get answers to tax questions or file and pay taxes. The online tools include important, special steps related to Economic Impact Payments and advance Child Tax Credit payments

    IRS.gov has many online tools and resources ranging from tax preparation and refund tracking tools, to tax law research tools like the Interactive Tax Assistant and answers for Frequently Asked Questions on dozens of subjects. 

    Payment options

    Submitting a tax return and paying any amount owed as soon as possible can help taxpayers avoid further interest and penalties. 

    Taxpayers who owe taxes can review all payment options online. These include paying taxes through an Online Account with IRS Direct Pay or paying by debit card, credit card or digital wallet. The IRS has options for people who can't pay their taxes, including applying for a payment plan on IRS.gov. 

    IRS Free File

    Eligible individuals – including those who requested an extension to file – can use the IRS Free File program to prepare and file their federal tax return for free. The program offers 70% of all taxpayers the choice of several brand-name tax preparation software packages to use at no cost. Those who earned less than $73,000 in 2021 can choose which package is best for them. Some even offer free state tax return preparation. Those that earned more have the option to use IRS Free File Fillable Forms

    MilTax online software is also available for members of the military and certain veterans, regardless of income. This software is offered through the Department of Defense. Eligible taxpayers can use MilTax to prepare and electronically file their federal tax returns and up to three state returns, for free. 

    Volunteer Income Tax Assistance

    The IRS's Volunteer Income Tax Assistance (VITA) program still offers face-to-face help preparing taxes in some locations in communities across the country. It offers free basic tax return preparation to people who generally make $58,000 or less and people with disabilities or limited English-speaking taxpayers. 

    The VITA/TCE Site Locator can help eligible taxpayers find the nearest community-based site staffed by IRS-trained and certified volunteers. Taxpayers can use the locator tool to see if there’s an available site still open near them. 

    Tax professionals

    Many people use a trusted tax professional to help guide them through the process of doing their taxes and avoiding errors. 

    There are various types of tax return preparers, including certified public accountants, enrolled agents, attorneys and many others who don't have a professional credential. 

    Because tax professionals have access to an individual’s personal and financial information, it’s important to choose a tax preparerwisely. 

    For taxpayers who want help with their taxes, this online directory can help them find a tax professional in their area.


  • 01 Jun 2022 1:06 PM | Anonymous

    WASHINGTON — The Internal Revenue Service has extended the deadline to June 17 for accepting applications for the Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) grant programs which will allow some organizations to apply for annual funding for up to three years.

    Grants.gov will continue accepting applications through June 17, 2022, for the TCE and VITA grant opportunities. Application packages and guidelines for 2022 are available on the IRS website.

    The IRS, in the past year, awarded 34 TCE grantees $11 million and 300 VITA grantees $25 million. Last year, the two grant programs filed nearly 1.6 million returns nationwide.

    The IRS established the TCE program in 1978 to provide tax counseling and return preparation to persons aged 60 or older and to give training and technical assistance to the volunteers who provide free federal income tax assistance within elderly communities across the nation. For more information on the TCE program, visit the IRS's TCE webpage.

    The VITA Grant program was established in 2007 to supplement the VITA program created in 1969. VITA provides free tax filing assistance to underserved communities. The grant program enables VITA to extend these services to underserved populations in hardest-to-reach, urban and non-urban areas; increase the capacity of targeted taxpayers to file returns electronically; enhance training of volunteers and improve the accuracy rate of returns prepared at VITA sites.

    More information on the VITA grant program is available at IRS VITA Grant Program


  • 01 Jun 2022 11:53 AM | Anonymous

    WASHINGTON — To boost its workforce and better help taxpayers and businesses, the Internal Revenue Service announced today that it’s looking to hire over 4,000 contact representative positions at several IRS offices nationwide this summer.

    A contact representative provides administrative and technical assistance to individuals and businesses primarily over the phone, through written correspondence or in person. These full-time positions fall under a special hiring condition called direct-hire authority. Full-time, bilingual (Spanish) positions are also available. No prior tax experience is required.

    "The IRS continues to increase its workforce in 2022 to improve the taxpayer experience,” said IRS Taxpayer Experience Officer and Wage and Investment Commissioner Ken Corbin. “We have a variety of jobs available all over the country. Contact representatives, among other things, deal directly with taxpayers by helping them with their tax obligations.”

    The IRS offers competitive pay and benefits, on-the-job training, and opportunities for advancement. The pay range for these positions begin at a GS-05 level. Shift availabilities vary by location but there are openings for day shift, (hours between 6 a.m. – 6 p.m.) mid shift (10 a.m. – 10 p.m.) and swing shift (2 p.m. – 1:30 a.m.) in 22 cities nationwide, including Puerto Rico.

    Virtual information-sharing events

    The agency is hosting virtual information sharing events in June where the IRS will explain the required qualifications and job duties for the contact representative position and provide tips for navigating the application process. Participants will also hear from employees who will provide insights about the work they do day-to-day.

    • Register  Friday, June 3rd @ 12 p.m. EST
    • Register  Tuesday, June 7th @ 3 p.m. EST  
    • Register  Friday, June 10th @ 6 p.m. EST
    • Register  Tuesday, June 14th @ 12 p.m. EST
    • Register  Tuesday, June 21st @ 3 p.m. EST
    • Register  Friday, June 24th @ 6 p.m. EST

    In-person events

    In-person events will be held mostly in June, are open to the public and will be held in the following cities: Andover, Mass.; Atlanta, Ga.; Philadelphia, Pa.; Fresno and Oakland, Calif.; Brookhaven, N.Y.; Cincinnati, Ohio; Memphis, Tenn.; and Caguas, Puerto Rico. Registration for these and more can be found on the IRS careers page.

    Interested job seekers are encouraged to bring their resumé and two forms of identification (i.e., state driver’s license and/or state identification card, birth certificate, U.S. passport, military ID or Social Security card). Qualified applicants will receive tentative job offers at the in-person events.

    Preregistration is recommended and social-distancing is required to attend the in-person job fairs. Per Centers for Disease Control and Prevention (CDC) guidelines, mask wear is optional for these job fair sites. For complete details on the virtual events and to register to attend one of the in-person events, visit: jobs.irs.gov/events

    The IRS is an equal opportunity employer. All employees must be U.S. citizens, pass an FBI fingerprint check and tax compliance verification, and meet the mandatory education, training, and experience qualification requirements.

  • 01 Jun 2022 11:09 AM | Anonymous

    WASHINGTON — To boost its workforce and better help taxpayers and businesses, the Internal Revenue Service announced today that it’s looking to hire over 4,000 contact representative positions at several IRS offices nationwide this summer.

    A contact representative provides administrative and technical assistance to individuals and businesses primarily over the phone, through written correspondence or in person. These full-time positions fall under a special hiring condition called direct-hire authority. Full-time, bilingual (Spanish) positions are also available. No prior tax experience is required.

    "The IRS continues to increase its workforce in 2022 to improve the taxpayer experience,” said IRS Taxpayer Experience Officer and Wage and Investment Commissioner Ken Corbin. “We have a variety of jobs available all over the country. Contact representatives, among other things, deal directly with taxpayers by helping them with their tax obligations.”

    The IRS offers competitive pay and benefits, on-the-job training, and opportunities for advancement. The pay range for these positions begin at a GS-05 level. Shift availabilities vary by location but there are openings for day shift, (hours between 6 a.m. – 6 p.m.) mid shift (10 a.m. – 10 p.m.) and swing shift (2 p.m. – 1:30 a.m.) in 22 cities nationwide, including Puerto Rico.

    Virtual information-sharing events

    The agency is hosting virtual information sharing events in June where the IRS will explain the required qualifications and job duties for the contact representative position and provide tips for navigating the application process. Participants will also hear from employees who will provide insights about the work they do day-to-day.

    • Register  Friday, June 3rd @ 12 p.m. EST
    • Register  Tuesday, June 7th @ 3 p.m. EST  
    • Register  Friday, June 10th @ 6 p.m. EST
    • Register  Tuesday, June 14th @ 12 p.m. EST
    • Register  Tuesday, June 21st @ 3 p.m. EST
    • Register  Friday, June 24th @ 6 p.m. EST

    In-person events

    In-person events will be held mostly in June, are open to the public and will be held in the following cities: Andover, Mass.; Atlanta, Ga.; Philadelphia, Pa.; Fresno and Oakland, Calif.; Brookhaven, N.Y.; Cincinnati, Ohio; Memphis, Tenn.; and Caguas, Puerto Rico. Registration for these and more can be found on the IRS careers page.

    Interested job seekers are encouraged to bring their resumé and two forms of identification (i.e., state driver’s license and/or state identification card, birth certificate, U.S. passport, military ID or Social Security card). Qualified applicants will receive tentative job offers at the in-person events.

    Preregistration is recommended and social-distancing is required to attend the in-person job fairs. Per Centers for Disease Control and Prevention (CDC) guidelines, mask wear is optional for these job fair sites. For complete details on the virtual events and to register to attend one of the in-person events, visit: jobs.irs.gov/events

    The IRS is an equal opportunity employer. All employees must be U.S. citizens, pass an FBI fingerprint check and tax compliance verification, and meet the mandatory education, training, and experience qualification requirements.


  • 01 Jun 2022 10:16 AM | Anonymous

    WASHINGTON – The Internal Revenue Service today began its "Dirty Dozen" list for 2022, which includes potentially abusive arrangements that taxpayers should avoid. 

    The potentially abusive arrangements in this series focus on four transactions that are wrongfully promoted and will likely attract additional agency compliance efforts in the future. Those four abusive transactions involve charitable remainder annuity trusts, Maltese individual retirement arrangements, foreign captive insurance, and monetized installment sales.

    "Taxpayers should stop and think twice before including these questionable arrangements on their tax returns," said IRS Commissioner Chuck Rettig. "Taxpayers are legally responsible for what's on their return, not a promoter making promises and charging high fees. Taxpayers can help stop these arrangements by relying on reputable tax professionals they know they can trust." 

    The four potentially abusive transactions on the list are the first four entries in this year’s Dirty Dozen series. In coming days, the IRS will focus on eight additional scams, with some focused on the average taxpayer and others focused on more complex arrangements that promoters market to higher-income individuals. 

    "A key job of the IRS is to identify emerging threats to compliance and inform the public so taxpayers are not victimized, and tax practitioners can provide their clients the best advice possible," Rettig said. 

    "The IRS views the four transactions listed here as potentially abusive, and they are very much on our enforcement radar screen.”

    The IRS reminds taxpayers to watch out for and avoid advertised schemes, many of which are now promoted online, that promise tax savings that are too good to be true and will likely cause taxpayers to legally compromise themselves.

    Taxpayers, tax professionals and financial institutions must be especially vigilant and watch out for all sorts of scams from simple emails and calls to highly questionable but enticing online advertisements. 

    The first four on the “Dirty Dozen” list are described in more details as follows: 

    Use of Charitable Remainder Annuity Trust (CRAT) to Eliminate Taxable Gain. In this transaction, appreciated property is transferred to a CRAT. Taxpayers improperly claim the transfer of the appreciated assets to the CRAT in and of itself gives those assets a step-up in basis to fair market value as if they had been sold to the trust. The CRAT then sells the property but does not recognize gain due to the claimed step-up in basis. The CRAT then uses the proceeds to purchase a single premium immediate annuity (SPIA). The beneficiary reports, as income, only a small portion of the annuity received from the SPIA. Through a misapplication of the law relating to CRATs, the beneficiary treats the remaining payment as an excluded portion representing a return of investment for which no tax is due. Taxpayers seek to achieve this inaccurate result by misapplying the rules under sections 72 and 664. 

    Maltese (or Other Foreign) Pension Arrangements Misusing Treaty. In these transactions, U.S. citizens or U.S. residents attempt to avoid U.S. tax by making contributions to certain foreign individual retirement arrangements in Malta (or possibly other foreign countries). In these transactions, the individual typically lacks a local connection, and local law allows contributions in a form other than cash or does not limit the amount of contributions by reference to income earned from employment or self-employment activities. By improperly asserting the foreign arrangement is a “pension fund” for U.S. tax treaty purposes, the U.S. taxpayer misconstrues the relevant treaty to improperly claim an exemption from U.S. income tax on earnings in, and distributions from, the foreign arrangement.

    Puerto Rican and Other Foreign Captive Insurance. In these transactions, U.S owners of closely held entities participate in a purported insurance arrangement with a Puerto Rican or other foreign corporation with cell arrangements or segregated asset plans in which the U.S. owner has a financial interest. The U.S. based individual or entity claims deductions for the cost of “insurance coverage” provided by a fronting carrier, which reinsures the “coverage” with the foreign corporation. The characteristics of the purported insurance arrangements typically will include one or more of the following: implausible risks covered, non-arm’s-length pricing, and lack of business purpose for entering into the arrangement.

    Monetized Installment Sales. These transactions involve the inappropriate use of the installment sale rules under section 453 by a seller who, in the year of a sale of property, effectively receives the sales proceeds through purported loans. In a typical transaction, the seller enters into a contract to sell appreciated property to a buyer for cash and then purports to sell the same property to an intermediary in return for an installment note. The intermediary then purports to sell the property to the buyer and receives the cash purchase price. Through a series of related steps, the seller receives an amount equivalent to the sales price, less various transactional fees, in the form of a purported loan that is nonrecourse and unsecured.

    Taxpayers who have engaged in any of these transactions or who are contemplating engaging in them should carefully review the underlying legal requirements and consult independent, competent advisors before claiming any purported tax benefits. Taxpayers who have already claimed the purported tax benefits of one of these four transactions on a tax return should consider taking corrective steps, such as filing an amended return and seeking independent advice. Where appropriate, the IRS will challenge the purported tax benefits from the transactions on this list, and the IRS may assert accuracy-related penalties ranging from 20% to 40%, or a civil fraud penalty of 75% of any underpayment of tax. 

    While this list is not an exclusive list of transactions the IRS is scrutinizing, it represents some of the more common trends and transactions that may peak during filing season as returns are prepared and filed. Taxpayers and practitioners should always be wary of participating in transactions that seem “too good to be true.” 

    The IRS remains committed to having a strong, visible, robust tax enforcement presence to support voluntary compliance. To combat the evolving variety of these potentially abusive transactions, the IRS created the Office of Promoter Investigations (OPI) to coordinate service-wide enforcement activities and focus on participants and the promoters of abusive tax avoidance transactions. The IRS has a variety of means to find potentially abusive transactions, including examinations, promoter investigations, whistleblower claims, data analytics and reviewing marketing materials.


  • 31 May 2022 4:09 PM | Anonymous

    WASHINGTON – The Internal Revenue Service today reminded taxpayers living and working outside the United States that they must file their 2021 federal income tax return by Wednesday, June 15. This deadline applies to both U.S. citizens and resident aliens abroad, including those with dual citizenship. 

    Just as most taxpayers in the U.S. must timely file their returns with the IRS, those living and working in another country are also required to file. An automatic two-month deadline extension—until June 15—is normally granted for those overseas. Anyone who qualifies gets the extra time—they don’t need to ask for it. 

    File to claim benefits

    A taxpayer must file, even if they qualify for tax benefits, such as the Foreign Earned Income Exclusion or the Foreign Tax Credit. These benefits are not automatic and are only available if a U.S. return is filed. This is true, even if these or other tax benefits substantially reduce or eliminate U.S. tax liability.

    In addition, the IRS urges families to check out expanded tax benefits, such as the Child Tax Credit, Credit for Other Dependents, and Child and Dependent Care Expenses and claim them if they qualify. Though taxpayers abroad often qualify, the calculation of these credits differs, depending upon whether they lived in the U.S. for more than half of 2021. For more information, see the instructions to Schedule 8812 and the instructions to Form 2441

    Qualifying for the June 15 extension

    A taxpayer qualifies for the special June 15 filing deadline if:

    • Both their tax home and abode are outside the United States or Puerto Rico, or
    • They are serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return.Be sure to attach a statement to the return indicating which of these two situations applies.

    Reporting required for foreign accounts and assets  A special reporting requirement applies to most people who have foreign bank or financial accounts. Often referred to as the FBAR requirement, it is separate from and in addition to any reporting required on either Schedule B or Form 8938.The FBAR requirement applies to anyone with an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2021. They must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-filing System website. Tied to the regular tax-filing due date, the deadline for filing the annual FBAR was generally April 18, 2022. But FinCEN is granting filers who missed the original deadline an automatic extension until Oct. 17, 2022. There is no need to request this extension.

    Report in U.S. dollars  To ensure tax payments are credited promptly, the IRS urges taxpayers to consider the speed and convenience of paying their U.S. tax obligation electronically. The fastest and easiest way to do that is via Online Account and IRS Direct Pay. These and other electronic payment options are available at IRS.gov/Payments.

    Expatriate reporting Extra time is available for those who cannot meet the June 15 date. The IRS urges anyone needing the additional time to make their request electronically. Several electronic options are available. Visit IRS.gov/Extensions for details.Otherwise, individual taxpayers can request a filing extension to Oct. 17, by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. Businesses that need more time must file Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.

    Combat zone extension

    Extensions beyond June 15

    Taxpayers who relinquished their U.S. citizenship or ceased to be lawful permanent residents of the United States during 2021 must file a dual-status alien tax return, and attach Form 8854, Initial and Annual Expatriation Statement. A copy of Form 8854 must also be filed with Internal Revenue Service, 3651 S IH35 MS 4301AUSC, Austin, TX 78741, by the due date of the tax return (including extensions). See the instructions for this form and Notice 2009-85, Guidance for Expatriates Under Section 877A, for further details.

    Tax payments

    • Both FINCEN Form 114 and IRS Form 8938 require the use of a Dec. 31 exchange rate for all transactions, regardless of the actual exchange rate on the date of the transaction. Generally, the IRS accepts any posted exchange rate that is used consistently. For more information on exchange rates, see Foreign Currency and Currency Exchange Rates.
    • Any income received or deductible expenses paid in foreign currency must be reported on a U.S. tax return in U.S. dollars. Likewise, any tax payments must be made in U.S. dollars.
    Treasury reporting requirement also applies to foreign accounts

    In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.

    Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

    • They serve in a combat zone or they have qualifying service outside of a combat zone, or
    • They serve on deployment outside the United States away from their permanent duty station while participating in a contingency operation. This is a military operation that is designated by the Secretary of Defense or results in calling members of the uniformed services to active duty (or retains them on active duty) during a war or a national emergency declared by the President or Congress.Deadlines are also extended for individuals serving in a combat zone or a contingency operation in support of the Armed Forces. This applies to Red Cross personnel, accredited correspondents and civilian personnel acting under the direction of the Armed Forces in support of those forces.Spouses of individuals who served in a combat zone or contingency operation are generally entitled to the same deadline extensions with some exceptions. Extension details and more military tax information is available in IRS Publication 3, Armed Forces’ Tax Guide.
     
    Visit IRS.gov for tax information

    Tax help and filing information is available anytime on IRS.gov. The IRS website offers a variety of online tools to help taxpayers answer common tax questions. For example, taxpayers can search the Interactive Tax Assistant, Tax Topics and Frequently Asked Questions to get answers to common questions. IRS.gov/payments provides information on electronic payment options. 

    Other resources:


  • 26 May 2022 4:18 PM | Anonymous

    WASHINGTON —The Internal Revenue Service today issued the Data Book detailing the agency’s activities during fiscal year 2021 (Oct. 1, 2020 – Sept. 30, 2021).  

    “During Fiscal Year 2021, the COVID-19 pandemic continued to present the IRS with some of the greatest challenges in our agency’s history, and the way our employees responded illustrates the significant role that the IRS plays in the overall health of our country,” said IRS Commissioner Chuck Rettig.  

    “The IRS was called on to provide economic relief during this national crisis while also fulfilling our agency’s core responsibilities of tax administration; IRS employees answered Congress’ call to deliver two more rounds of Economic Impact Payments and also implemented changes to the Earned Income Tax Credit, the Child Tax Credit and other refundable credits as part of the American Rescue Plan. The breadth of these missions has strengthened my belief that a fully functioning IRS is critical to the success of our nation.”

    In addition to describing work performed during the pandemic, the IRS Data Book for fiscal year 2021 comprises 33 tables describing a wide variety of IRS activities from returns processed, revenue collected, and refunds issued to the number of examinations conducted and the amount of additional tax recommended, as well as budget and personnel information. The Data Book provides point-in-time estimates of IRS activities as of September 2021. A lengthier discussion of recent data was also released today.

    As the pandemic continued into 2021, the IRS delivered tax administration relief to millions of taxpayers, providing financial assistance for Americans. The American Rescue Plan Act of 2021 authorized additional rounds of stimulus payments (EIP 3), which was signed into law on March 11, 2021. The IRS started issuing checks the very next day— March 12, 2021—providing immediate help to people across the country. The 2020 Recovery Rebate Credits allowed individuals who did not receive their first- or second-round EIPs, or who received less than the amounts they were eligible for, to claim the credits when they filed their 2020 tax return.

    Advance Child Tax Credit and online support

    The American Rescue Plan contained the important change allowing up to half of the tax year 2021 Child Tax Credits to be disbursed as advance payments to eligible families from July through

    December. As a result, during the second half of 2021, more than 37 million families—covering more than 61 million qualifying children—received more than $93 billion in advance CTC payments. 

    In addition to COVID-19-related tax relief, the IRS implemented vital online tools to support the 2021 advance CTC payments and reduce child poverty. These online tools included: 

    • The Child Tax Credit Nonfiler Signup Tool, which helped eligible families who were not required to file tax returns register for the monthly payments.
    • The Advance Child Tax Credit Eligibility Assistant, which helped families verify whether they qualified for advance CTC payments.
    • The Child Tax Credit Update Portal, to enable families to verify their eligibility, update their bank account information and mailing address and provide other information to the IRS.

    Tax administration during COVID-19

    At the same time as providing various pandemic-related tax relief measures to Americans, the agency continued its everyday operations, processing more than 261 million tax returns, and collecting more than $4.1 trillion in federal taxes during the fiscal year – about 96% of federal revenue from all sources. 

    Collection revenue Overall, net revenue through enforcement by the collection function equaled almost $60 billion, an increase of 54% over the prior year. As part of its collection activities, the IRS saw an increase in the use of Payment Plans. Almost 2.4 million taxpayers established new payment plans (Installment Agreements) with the IRS during FY 2021, an increase of 29% compared to FY 2020. Furthermore, IRS collected nearly $13.7 billion through installment agreements in 2021, up 9% from the prior fiscal year.

    Other IRS activities

    Under the IRS’s Comprehensive Taxpayer Attitude Survey, the most recent findings were that most taxpayers still agree that cheating on their income taxes is not at all acceptable.

    You’ll find many fascinating statistics within the Data Book," said Rettig. "But there’s more to the IRS than numbers and graphs. IRS employees are dedicated to the mission, and our agency is made up of people who give back to their communities and help one another. Our employees provide significant support for those devastated by hurricanes, wildfires and other natural disasters. Across the nation, they did amazing work in their communities to help those impacted by COVID-19."


  • 26 May 2022 10:23 AM | Anonymous

    Issues that TAS will not Accept

    IRM 13.1.7.4, Exceptions to Taxpayer Advocate Service Criteria, includes information about cases TAS will no longer accept. On May 13, 2022, TAS changed its case acceptance criteria and will no longer accept referrals for assistance regarding the following:

    Issue

    Exclusion Period

    Processing of Mailed Paper Original Returns

    • TAS will not accept any cases where the primary issue is processing a 2021 original return.
    • TAS will still accept economic burden cases (Criteria 1 - 4) and Best Interest of the Taxpayer (Criteria 8) for tax year 2020 and prior year original returns filed before 6/1/2021 based on either the IRS received date on IDRS or the date the taxpayer claims to have filed for returns not yet showing as received on IDRS.

    Employees can use IDRS Command Code TRDBV, Element/Data Lines 15 and 16 to determine if a return was filed on Paper. See Exhibit 2.3.73-3, COMMAND CODE TRDBV.

    1/1/2022 to 10/15/2022

    Processing of Mailed Paper Amended Returns

    • TAS will not accept any cases where the primary issue is processing an amended tax year 2021 return.
    • TAS will still accept economic burden cases (Criteria 1 - 4) and Best Interest of the Taxpayer (Criteria 8) for tax year 2020 and prior year amended returns filed before 6/1/2021 based on either the IRS received date on IDRS or the date the taxpayer claims to have filed for returns not yet showing as received on IDRS.

    Employees can use IDRS Command Code TRDBV, Element/Data Lines 15 and 16 to determine if a return was filed on Paper. See Exhibit 2.3.73-3, COMMAND CODE TRDBV.

    1/1/2021 to 10/15/2022

    Returns held in Submission Processing's Unpostables or ERS Rejects Units; including returns held for issues regarding the claimed Health Insurance Premium Tax Credit for Individuals:

    • TAS will not accept a case where the return is in ERS Status 900 (overflow), 100 (initial screening stage), 281-284 (systemic pilot program non-workable suspense), or 481-484 (systemic pilot program, workable suspense).
    • TAS will not accept any systemic burden cases (Criteria 5 -7) where the sole issue is the return is assigned to Unpostables or ERS Rejects Units.

    5/18/2022 to 10/15/2022

    Do not refer cases to TAS involving a Taxpayer Protection Program (TPP) Unpostable 126 Reason Code 0 that has been closed. In these instances, the taxpayer has verified identity either via the TPP phone line or the Identity Verification Service website. Once the unpostable is closed and the taxpayers have requested a direct deposit refund, most taxpayers will receive their refund within two weeks. If the unpostable is closed and the taxpayers requested a paper check, most taxpayers will receive their refund within four weeks. There is nothing TAS can do to accelerate issuance of the refund.

    See the TAS Criteria Determinator tool for assistance in determining if a taxpayer's issue meets TAS case acceptance criteria.

    What TAS Cannot Do

    TAS cannot obtain a refund for a taxpayer within 24 hours. TAS follows the same manual refund procedures as all other IRS employees contained in IRM 21.4.4, Manual Refunds. IRS should not tell taxpayers or transfer taxpayers to TAS with an expectation that TAS can get their refund any sooner than normal manual refund processing timeframes.

    Per IRM 21.4.6.5.11.1, Offset Bypass Refund, if a TOP debt exists, the IRS has no authority to issue an OBR. TAS cannot bypass this either so do not send the taxpayer to TAS.

    Communication with Taxpayers

    Last year TAS was not able to meet its normal timeframes to contact taxpayers due to reduced IRS staffing and employees being evacuated from the workspace because of COVID-19. Due to ongoing challenges faced by everyone Servicewide, TAS continues to be in the same position again this year. When advising taxpayers of the date they will be contacted by TAS, let them know that it could take up to four weeks for them to hear from their Case Advocate because of high volumes of TAS referrals. Please share with taxpayers that TAS employees are diligently working to serve taxpayers, but we are experiencing delays and interruptions in working cases due to the widespread impact on IRS operations from COVID-19. Once a request for assistance (AMS e-911) meeting TAS case acceptance criteria has been sent to TAS additional e-911s should not be sent to TAS until the four-week time period from the original e-911 has passed.

    After a case has been assigned, the Case Advocate will discuss with the taxpayer what actions will be performed to resolve their issue. Due to the COVID-19 impact on IRS operations the time needed to resolve a taxpayer's issue may be greater than normal. Therefore, do not provide the taxpayer with an estimated timeframe for resolution before sending the referral to TAS.

    Before sending a taxpayer's inquiry to TAS, the IRS needs to verify a correct address for the taxpayer and include it on the e-911; otherwise TAS is unable to correspond with the taxpayer. The e-911 systemically populates with the IDRS address, but the assistor can erase that address and input the correct address. Please be sure the address and contact information on the e-911 is current before sending the referral to TAS.


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