WASHINGTON – On Aug. 28, the IRS announced that it would temporarily allow the use of digital signatures on certain forms that cannot be filed electronically. Today, the agency added several more forms to that list.

The IRS made this decision to help protect the health of taxpayers and tax professionals during the COVID-19 pandemic. The change will help to reduce in-person contact and lessen the risk to taxpayers and tax professionals, allowing both groups to work remotely to timely file forms.

The IRS added the following forms to the list of those being accepted digitally:

The forms are available at IRS.gov and through tax professional’s software products. These forms cannot be e-filed and generally are printed and mailed.

The below list was announced Aug. 28, and all of these forms can be submitted with digital signatures if mailed by or on Dec. 31, 2020:

The IRS will continue to monitor this temporary option for e-signatures and determine if additional steps are needed.

In addition, the IRS understands the importance of digital signatures to the tax community. The agency will continue to review its processes to determine where long-term actions can help reduce burden for the tax community, while at the same appropriately balancing that with critical security and protection against identity theft and fraud.

WASHINGTON – The Internal Revenue Service today reminded the self-employed, investors, retirees and others with income not subject to withholding that third quarter estimated tax payments for 2020 are due Sept. 15. 

Taxes are paid as income is received during the year through withholding from pay, pension or certain government payments such as Social Security or unemployment; and/or making quarterly estimated tax payments. 

Who should pay quarterly?

Individuals, including sole proprietors, partners and S corporation shareholders, generally make quarterly estimated tax payments if they expect to owe $1,000 or more when their tax return is filed. Taxpayers with income not subject to withholding, including interest, dividends, capital gains, alimony and rental income, normally make estimated tax payments.

Special rules apply to some groups of taxpayers, such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year. Publication 505, Tax Withholding and Estimated Tax, provides more information on estimated tax rules. The worksheet in Form 1040-ES, Estimated Tax for Individuals, or Form 1120-W, Estimated Tax for Corporations, has details on who must pay estimated tax.

Penalty for underpayment

If a taxpayer underpaid their taxes, they may have to pay a penalty. This applies whether they paid through withholding or through estimated tax payments. A penalty may also apply for late estimated tax payments even if someone is due a refund when they file their tax return. 

In general, taxpayers don’t have to pay a penalty if they meet any of these conditions:

at least 90% (however, see 2018 Penalty Relief, below) of the tax for the current year

100% of the tax shown on their tax return for the prior year – this can increase to 110% based on adjusted gross income 

To see if they owe a penalty, taxpayers should use Form 2210. The IRS may waive the penalty if someone underpaid because of unusual circumstances and not willful neglect. Examples include:

There are special rules for underpayment for farmers and fishermen. Publication 505 has more information.

Tax Withholding Estimator

The Tax Withholding Estimator on IRS.gov offers taxpayers a clear, step-by-step method to have the right amount of tax withheld from wages and pensions. It also has instructions to file a new Form W-4 to give to their employer to adjust the amount withheld each payday. 

Other IRS.gov resources 

The fourth and final 2020 estimated tax payment is due Jan. 15, 2021.

Notice 2020-66 provides guidance addressing whether certain Medicaid coverage of COVID-19 testing and diagnostic services is minimum essential coverage for purposes of the premium tax credit under section 36B of the Code.  This notice also announces that the Treasury Department and the IRS intend to amend § 1.5000A-2 of the Income Tax Regulations to add Medicaid coverage of COVID-19 testing and diagnostic services to the list of health care coverage that is not minimum essential coverage under a government-sponsored program. 

The IRS has issued an advance copy of TD 9911 on life insurance reserves under IRC 807(f)

Revenue Ruling 2020-19, which provides guidance on what constitutes a change in basis of computing life insurance reserves under § 807(f) of the Internal Revenue Code, as amended by the Tax Cuts and Jobs Act, and § 1.807-4 of the final regulations (TD 9911), which is being released contemporaneously with this revenue ruling.  This revenue ruling provides specific holdings in a number of different situations, with each holding indicating whether the described situation is a change in basis under § 807(f). 

WASHINGTON — As part of a larger effort to reach underserved communities, the Internal Revenue Service is taking a number of aggressive steps to expand information and assistance available to taxpayers in additional languages, including providing the Form 1040 in Spanish for the first time.

In addition to being available in English and Spanish, the 2020 Form 1040 will also give taxpayers the opportunity to indicate whether they wish to be contacted in a language other than English. This is a new feature available for the first time this coming filing season. 

Other changes include Publication 1, Your Rights as a Taxpayer, is now available in 20 languages. The 2020 version of Publication 17, Your Federal Income Tax, will be available early next year in seven languages – English, Spanish, Vietnamese, Russian, Korean and Chinese (Simplified and Traditional).

The agency’s newly expanded multilingual initiative is a key part of helping the IRS reach its goal of helping everyone, no matter where they live, what their background is, or what language they speak.

“Our diverse workforce is extremely proud to be able ease the inherent burden on taxpayers attempting to voluntarily comply with their tax responsibilities, including people who are more comfortable with other languages,” said IRS Commissioner Chuck Rettig. “We are continually increasing the information and services available in other languages as well as expanding our interpreter services so that we can interact in a more respectful manner with taxpayers in their most comfortable language. We expect to continue these important efforts as we work to earn the trust and respect of every American.”
 
As part of this expansion, many of the pages on the IRS.gov site are now available in seven languages and basic tax information is newly available in 20 languages on IRS.gov. It also means that taxpayers who interact with an IRS representative now have access to over the phone interpreter services in more than 350 languages. The IRS has also recently begun inserting information about translation services and other multilingual options into the high-volume notices that IRS sends out to taxpayers.

While the IRS has long provided some assistance in Spanish and some other languages, the agency is increasing the materials available in multiple languages and expanding outreach with multilingual community partners. Most recently, the IRS worked with partners in the tax and low-income communities and provided them with information and resources that they quickly translated and made available in an unprecedented 35 languages, promoting the Economic Impact Payments. The IRS plans to continue this effort on other agency priorities, including the 2021 filing season. The agency has also been increasing its multilingual outreach on Instagram, Twitter and other social media platforms during the past 18 months.

In coming months and years, the agency will continue to expand the availability of widely used IRS forms and popular publications in multiple languages. This includes increasing the number of highly visited IRS.gov web pages accessible in seven languages later this year.

For more information about tax help in other languages, visit IRS.gov.

Notice 2020-68 provides further information regarding certain provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019, and the Bipartisan American Miners Act of 2019.  

Revenue Procedure 2020-40 amends section 15.05 of Rev. Proc. 2016-37 and section 12.02 of Rev. Proc. 2019-39 to provide that a discretionary amendment made to a qualified pre-approved plan or 403(b) pre-approved plan is timely adopted if it is adopted by the deadline set forth in a statutory provision or guidance that is earlier or later than the general deadline applicable to discretionary amendments.  

Both items of guidance will be published in Internal Revenue Bulletin  2020-38 on Sept. 14, 2020

Revenue Procedure 2020-41 provides the domestic asset/liability percentages and domestic investment yields needed by foreign life insurance companies and foreign property and liability insurance companies to compute their minimum effectively connected net investment income under section 842(b) of the Internal Revenue Code for taxable years beginning after December 31, 2018.

Revenue Procedure 2020-41 will be in IRB:   2020-40, dated September 28, 2020.

WASHINGTON – Later this month, the Internal Revenue Service will start mailing letters to roughly 9 million Americans who typically don’t file federal income tax returns who may be eligible for, but have not registered to claim, an Economic Impact Payment. 

The letters will urge recipients to register at IRS.gov by Oct. 15 in order to receive their payment by the end of the year. Individuals can receive up to $1,200, and married couples can receive up to $2,400. People with qualifying children under age 17 at the end of 2019 can get up to an additional $500 for each qualifying child.

The letters are being sent to people who haven’t filed a return for either 2018 or 2019. Based on an internal analysis, these are people who don’t typically have a tax return filing requirement because they appear to have very low incomes, based on Forms W-2, 1099s and other third-party statements available to the IRS. But many in this group are still eligible to receive an Economic Impact Payment.

“The IRS has made an unprecedented outreach effort to make sure people are aware of their potential eligibility for an Economic Impact Payment this year,” said IRS Commissioner Chuck Rettig. “Millions who don’t normally file a tax return have already registered and received a payment. We are taking this extra step to help Americans who may not know they could be eligible for this payment or don’t know how to register for one. People who aren’t required to file a tax return can quickly register on IRS.gov and still get their money this year.”

The letter, officially known as IRS Notice 1444-A, is written in English and Spanish and includes information on eligibility criteria and how eligible recipients can claim an Economic Impact Payment on IRS.gov. The mailing, which will begin around Sept. 24, will be delivered from an IRS address. To help address fraud concern, a copy of the letter is available on IRS.gov.

If those receiving letters haven’t done so already, this letter urges eligible individuals to register by Oct. 15 for a payment by using the free Non-Filers: Enter Payment Info tool, available in English and Spanish and only on IRS.gov. More than 7 million people have used the Non-Filers tool so far to register for a payment. Those unable to access the Non-Filers tool may submit a simplified paper return following the procedures described in the Economic Impact Payment FAQs on IRS.gov.

The IRS reminds recipients that receiving a letter is not a guarantee of eligibility for an Economic Impact Payment. An individual is likely eligible if he or she is a U.S. citizen or resident alien; has a work-eligible Social Security number; and can’t be claimed as dependent on someone else’s federal income tax return. However, there can be a variety of situations that could affect an individual’s eligibility. For more information on eligibility requirements, recipients should read the Economic Impact Payment eligibility FAQs on IRS.gov.

The registration deadline for non-filers to claim an Economic Impact Payment through the Non-Filers tool is Oct. 15, 2020. People can also wait until next year and claim it as a credit on their 2020 federal income tax return by filing in 2021.

The IRS emphasizes that anyone required to file either a 2018 or 2019 tax return should file the tax return and not use the Non-Filers tool.

Don’t wait:  Non-Filers can still get a payment; must act by Oct. 15

Though most Americans − more than 160 million in all − have already received their Economic Impact Payments, the IRS reminds anyone with little or no income who is not required to file a tax return that they may be eligible to receive an Economic Impact Payment. This is true regardless of whether they get a letter.

“Time is running out this year for the IRS to issue payments,” Rettig said. “People who normally don’t file a tax return shouldn’t wait to see if they receive one of these letters. They can review the guidelines and register now if they’re eligible.”

Available in both English and Spanish, the Non-Filers tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles. This includes couples and individuals who are experiencing homelessness.

People can qualify for a payment, even if they don’t work or have no earned income. But low- and moderate-income workers and working families eligible to receive special tax benefits, such as the Earned Income Tax Credit or Child Tax Credit, cannot use this tool. They will need to file a regular return as soon as possible. The IRS will use their tax return information to determine and issue any EIP for which they are eligible.

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.

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.

Watch out for scams

The IRS urges everyone to be on the lookout for scams related to the Economic Impact Payments. In particular, watch out for scams using email, phone calls or texts related to these payments. Be careful and cautious: The IRS will not send unsolicited electronic communications asking people to open attachments, visit a website or share personal or financial information.

Remember, go directly and solely to IRS.gov for official information. In particular, both the Non-Filers tool and the Get My Payment tool are available exclusively on IRS.gov. They are not available on any other web site.

For more Information on the Economic Impact Payment, including updated answers to frequently asked questions and other resources, visit IRS.gov/coronavirus.

WASHINGTON – The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning Oct. 1, 2020. The rates will be:  

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during July 2020 to take effect Aug. 1, 2020, based on daily compounding.

Revenue Ruling 2020-18, announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2020-39, dated Sept. 21, 2020.