IRS Tax News

  • 18 Feb 2020 2:16 PM | Anonymous

    Revenue Ruling 2020-06 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274. 

    The rates are published monthly for purposes of sections 42, 382, 412, 642, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

    Revenue Ruling 2020-06 will be in IRB:  2020-11, dated March 9, 2020.

  • 14 Feb 2020 1:09 PM | Anonymous

    WASHINGTON — The IRS and its Security Summit partners today called on tax professionals and taxpayers to use the free, multi-factor authentication feature being offered on tax preparation software products. 

    Already, nearly two dozen tax practitioner firms have reported data thefts to the IRS this year. Use of the multi-factor authentication feature is a free and easy way to protect clients and practitioners’ offices from data thefts. Tax software providers also offer free multi-factor authentication protections on their Do-It-Yourself products for taxpayers.

    “The IRS, state tax agencies and the private-sector tax industry have worked together as the Security Summit to make sure the multi-factor authentication feature is available to practitioners and taxpayers alike,” said Kenneth Corbin, Commissioner of the IRS Wage and Investment division. “The multi-factor authentication feature is simple to set up and easy to use. Using it may just save you from the financial pain and frustration of identity theft.”

    Multi-factor authentication means returning users must enter their username/password credentials plus another data point that only they know, such as a security code sent to their mobile phone. For example, thieves may steal passwords but will be unable to access the software accounts without the mobile phones to receive the security codes.

    Multi-factor authentication protections are now commonly offered by financial institutions, email providers and social media platforms to protect online accounts. Users should always opt for multi-factor authentication when it is offered but especially with tax software products because of the sensitive data held in the software or online accounts.

    The IRS reminded tax professionals to beware of phishing scams that are commonly used by thieves to gain control of their computers. Thieves may claim to be a potential client, a cloud storage provider, a tax software provider or even the IRS in their effort to trick tax professionals to download attachments or open links. These scams often have an urgent message, implying there are issues with the tax professionals’ accounts that need immediate attention.

    The IRS also reminds tax professionals that they can track the number of returns filed with their Electronic Filing Identification Number (EFIN) on a weekly basis. This helps ensure EFINS are not being misused. Simply go to e-Services, access the EFIN application and select EFIN status to see a weekly total of returns filed using the EFIN. If there are excessive returns, contact the IRS immediately.

    Taxpayers can learn more about identity theft and how to protect themselves at Identity Theft Central on IRS.gov.

    Tax professionals can learn more about protecting data, signs of theft or reporting data thefts Identity Theft Information for Tax Professionals. Also, Publication 4557, Safeguarding Taxpayer Data, provides a comprehensive overview of steps to protect computer systems and client data.

  • 14 Feb 2020 10:26 AM | Anonymous

    WASHINGTON — Offering time-saving alternatives to a telephone call, the Internal Revenue Service reminds taxpayers they can get fast answers to their refund questions by using the “Where’s My Refund?” tool available on IRS.gov and through the IRS2Go app. 

    The IRS issues nine out of 10 refunds in less than 21 days, and the fastest way to get a refund is to file electronically and choose direct deposit. The time around Presidents Day is a peak period for telephone calls to the IRS, resulting in longer than normal hold times for callers. 

    The question most frequently asked this time of year is, “Where’s my refund?”. The IRS reminds taxpayers that IRS customer service representatives can only research a refund’s status if it has been 21 days or more since the taxpayer filed electronically or six weeks since they mailed a paper return. 

    Taxpayers can avoid the Presidents Day rush and get a personalized answer by using the “Where’s My Refund?” tool. All that is needed is the taxpayer’s Social Security number, tax filing status (single, married, head of household) and exact amount of the tax refund claimed on the return. Alternatively, taxpayers may call 800-829-1954 for the automated phone line, which provides the same information. 

    Within 24 hours of filing a return electronically, the tool can tell taxpayers that their returns have been received. That time extends to four weeks if a paper return is mailed to the IRS, which is another reason to file electronically and choose direct deposit. 

    Once the tax return is processed, “Where’s My Refund?” will tell a taxpayer when their refund is approved and provide a date when they can expect to receive it. “Where’s My Refund?” is updated no more than once every 24 hours, usually overnight, so taxpayers don’t need to check the status more often. 

    Refunds held for certain returns

    As a reminder, by law, the IRS cannot release refunds for Earned Income Tax Credit or Additional Child Tax Credit tax returns before mid-February. “Where’s My Refund?” on IRS.gov and the IRS2Go app will be updated with projected deposit dates for most early Earned Income Tax Credit/Additional Child Tax Credit refund filers by Feb. 22.           

    The IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by the first week of March, if they chose direct deposit and there are no other issues with their tax return. Taxpayers should check the “Where’s My Refund?” tool for their personalized refund date.

    Please note: Ordering a tax transcript will not speed delivery of tax refunds nor does the posting of a tax transcript to a taxpayer’s account determine the timing of refund delivery. Calls to request transcripts for this purpose are unnecessary. 

    While the IRS still expects to issue more than nine out of 10 refunds in less than 21 days, it’s possible a particular tax return may require additional review and a refund could take longer. Many different factors can affect the timing of a refund. And, remember to take into consideration that many banks do not process payments on weekends or holidays and it can take time for a financial institution to post the refund to a taxpayer’s account or to receive it by mail.

  • 13 Feb 2020 3:16 PM | Anonymous

    WASHINGTON — With a surge of tax returns expected the two weeks following the Feb. 17 Presidents Day holiday, the Internal Revenue Service is offering taxpayers several tips and various time-saving resources to get them the help they need quickly and easily.

    To help avoid this period of high telephone demand, the IRS encourages taxpayers and tax preparers to use online resources available at IRS.gov. And when it comes time to file, taxpayers are encouraged to file electronically and choose direct deposit for faster refunds. Filing electronically reduces tax return errors as the tax software does the calculations, flags common errors and prompts taxpayers for missing information.

    Here are a few featured tips to avoid the rush.

    • Use IRS.gov to track refunds. The IRS issues more than nine out of 10 refunds in less than 21 days. IRS customer service representatives cannot answer refund questions until it has been 21 days or more since the taxpayer filed electronically, or six weeks since they mailed a paper return. But taxpayers can track their refund anytime by using the “Where’s My Refund?” tool on IRS.gov and the IRS2Go app. Taxpayers can also call the IRS refund hotline at 800-829-1954.
    • Taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit can use the “Where’s My Refund?” tool to track refunds too. By law, the IRS cannot release refunds that include EITC or the ACTC before February 15. “Where’s My Refund?” on IRS.gov and the IRS2Go app will be updated with projected deposit dates for most early EITC/ACTC refund filers by Feb. 22. IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by the first week of March, if they chose direct deposit and there are no other issues with their tax return.
    • Use IRS.gov to find answers to tax questions. IRS offers a variety of online tools to help taxpayers answer common tax questions. For example, taxpayers can search the Interactive Tax Assistant, Tax Topics, Frequently Asked Questions, and Tax Trails to get faster answers.
    • Let free tax software or free volunteer assistance do the work. Most taxpayers who want to prepare their own returns can file electronically for free with IRS Free File. Alternatively taxpayers who qualify can get free tax help from trained volunteers at community sites around the country.
    • Turn to a trusted tax professional. To find more information about choosing a tax return preparer, including understanding the differences in credentials and qualifications, visit www.irs.gov/chooseataxpro.
    • Use digital payment options if additional tax is owed. Some taxpayers may receive a smaller refund or even owe an unexpected tax bill when they file their 2019 tax return particularly if they didn’t do a Paycheck Checkup in 2019. Taxpayers should use the IRS Tax Withholding Estimator to make sure they are withholding enough tax in 2020.
    • Make an appointment before visiting an IRS Taxpayer Assistance Centers. Anyone who needs face-to-face service should make an appointment before showing up. Most TAC visits can be avoided by using online tools available on IRS.gov.
    • Call the employer first for that missing Form W-2. Those who have not received a Form W-2, Wage and Tax Statement, from one or more employers should first contact the issuer to inform them of the missing form. Those who do not get a response must still file on time and may need to use Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans and IRA's Insurance Contracts.
    • Use the IRS Services Guide and the Let Us Help You page on IRS.gov to find additional ways to get help.  
    • Use the Tax Information for Members of the Military page on IRS.gov for details on tax benefits for military members and veterans, filing options and more.
  • 12 Feb 2020 11:17 AM | Anonymous

    WASHINGTON — The Internal Revenue Service is holding a free webinar designed to help gig workers, employers, contractors and other businesses understand their tax reporting responsibilities.

    This free 60-minute webinar will take place on Thursday, Feb. 20 at 2 p.m. Eastern Time. It is open to gig workers, businesses, tax professionals and anyone else interested in the tax rules that affect the gig economy. Tax pros can earn one continuing education credit.

    Topics to be covered include:

    • What is the gig economy?
    • How does a gig worker know whether they are an employee or self-employed?
    • Business expenses and recordkeeping.
    • Rules for home rentals.
    • Tax payment options.

    The webinar will feature a live question and answer session and will be closed captioned for viewers who are deaf or hearing impaired. Anyone interested in attending can register online.

    For more information on the gig economy, visit Understanding the Gig Economy and the Gig Economy Tax Center on IRS.gov.

    Archived versions of past IRS webinars are available at www.irsvideos.gov.

  • 11 Feb 2020 4:38 PM | Anonymous

    WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service today issued proposed regulations updating the federal income tax withholding rules to reflect changes made by the Tax Cuts and Jobs Act (TCJA) and other legislation. 

    In general, the proposed regulations, available now in the Federal Register, are designed to accommodate the redesigned Form W-4, Employee’s Withholding Certificate, to be used starting in 2020, and the related tables and computational procedures in Publication 15-T, Federal Income Tax Withholding Methods. The proposed regulations and related guidance do not require employees to furnish a new Form W-4 solely because of the redesign of the Form W-4. 

    Employees who have a Form W-4 on file with their employer from years prior to 2020 generally will continue to have their withholding determined based on that form.

    To assist with computation of income tax withholding, the redesigned Form W-4 no longer uses an employee’s marital status and withholding allowances, which were tied to the value of the personal exemption. Due to TCJA changes, employees can no longer claim personal exemptions. Instead, income tax withholding using the redesigned Form W-4 will generally be based on the employee’s expected filing status and standard deduction for the year.

    The Form W-4 is also redesigned to make it easier for employees with more than one job at the same time or married employees who file jointly with their working spouses to withhold the proper amount of tax.

    In addition, employees can choose to have itemized deductions, the child tax credit, and other tax benefits reflected in their withholding for the year. As in the past, employees can choose to have an employer withhold a flat-dollar extra amount each pay period to cover, for example, income they receive from other sources that is not subject to withholding. Under the proposed regulations, employees now also have the option to request that employers withhold additional tax by reporting income from other sources not subject to withholding on the Form W-4.

    The proposed regulations permit employees to use the new IRS Tax Withholding Estimator to help them accurately fill out Form W-4. As in the past, taxpayers may use the worksheets in the instructions to Form W-4 and in Publication 505, Tax Withholding and Estimated Tax, to assist them in filling out this form correctly.

    The proposed regulations also address a variety of other income tax withholding issues. For example, the proposed regulations provide flexibility in how employees who fail to furnish Forms W-4 should be treated. Starting in 2020, employers must treat new employees who fail to furnish a properly completed Form W-4 as single and withhold using the standard deduction and no other adjustments. Before 2020, employers in this situation were required to withhold as if the employee was single and claiming zero allowances.

    In addition, the proposed regulations provide rules on when employees must furnish a new Form W-4 for changed circumstances, update the regulations for the lock-in letter program, and eliminate the combined income tax and FICA (Social Security and Medicare) tax withholding tables.

    Treasury and IRS welcome public comment on these proposed regulations. See the proposed regulations for details.

    Updates on TCJA implementation can be found on the Tax Reform page of IRS.gov.

  • 10 Feb 2020 2:33 PM | Anonymous

    Revenue Ruling 2020-05 modifies Rev. Rul. 2009-13 and Rev. Rul. 2009-14 to reflect  § 1016(a)(1)(B) of the Internal Revenue Code, which was added by section 13521 of the 2017 Tax Cuts and Jobs Act.  Under §1016(a)(1)(B), the adjusted basis of an insurance contract is not reduced by the cost of insurance.  Section 1016(a)(1)(B) reversed the position in Rev. Rul. 2009-13 and Rev. Rul. 2009-14 that the basis of an insurance contract is reduced by the cost of insurance.

    Revenue Ruling 2020-05 will be in IRB:  2020-9, dated 2/24/2020.

  • 03 Feb 2020 11:40 AM | Anonymous

    WASHINGTON – The Internal Revenue Service today launched Identity Theft Central, designed to improve online access to information on identity theft and data security protection for taxpayers, tax professionals and businesses. 

    Located on IRS.gov, Identity Theft Central is available 24/7 at irs.gov/identitytheft. It is a resource on how to report identity theft, how taxpayers can protect themselves against phishing, online scams and more. 

    Improving awareness and outreach are hallmarks of initiatives to combat identity theft coordinated by the IRS, state tax agencies and the nation’s tax industry, all working in partnership under the Security Summit banner. 

    Since 2015, the Security Summit partners have made substantial progress in the fight against tax-related identity theft. But thieves are still constantly looking for ways to steal the identities of individuals, tax professionals and businesses in order to file fraudulent tax returns for refunds. 

    The partnership has taken a number of steps to help educate and improve protections for taxpayers, tax professionals and businesses. As part of this effort, the IRS has redesigned the information into a new, streamlined page − Identity Theft Central − to help people get information they need on ID theft, scams and schemes. 

    From this special page, people can get specific information including:

    • Taxpayer Guide to Identity Theft, including what to do if someone becomes a victim of identity theft
    • Identity Theft Information for Tax Professionals, including knowing responsibilities under the law
    • Identity Theft Information for Businesses, including how to recognize the signs of identity theft

    The page also features videos on key topics that can be used by taxpayers or partner groups. The new page includes a video message from IRS Commissioner Chuck Rettig, warning signs for phishing email scams – a common tactic used for identity theft – and steps for people to protect their computer and phone. 

    Tax professionals and others may want to bookmark Identity Theft Central and check their specific guidance periodically for updates. 

    This is part of an ongoing effort by the IRS to share identity theft-related information with the public. The IRS continues to look for ways to raise awareness and improve education and products related to identity theft for taxpayers and the tax professional community.

  • 03 Feb 2020 9:04 AM | Anonymous

    WASHINGTON − The Internal Revenue Service announced today the overwhelming acceptance of a time-limited settlement offer made to certain taxpayers under audit who participated in abusive micro-captive insurance transactions.

    Nearly 80% of taxpayers who received offer letters elected to accept the settlement terms. In addition, the IRS is establishing 12 new examination teams that are expected to open audits related to thousands of taxpayers in coming months.

    “The overwhelming acceptance rate of the private settlement offer is a reflection of the success of the government’s work to stop this abuse,” said IRS Commissioner Chuck Rettig. “Taxpayers who elected to accept the IRS’ terms have done the right thing by coming into compliance with their federal tax obligations and putting this behind them. Putting an end to abusive schemes is a high priority for the IRS.”

    Abusive micro-captives have been a threat to tax administration and a concern to the IRS for several years. The transaction has appeared on the IRS “Dirty Dozen” list of tax scams since 2014. In 2016, the Department of the Treasury and IRS issued Notice 2016-66, which identified certain micro-captive transactions as having the potential for tax avoidance and evasion. 

    The settlement offer followed three U.S. Tax Court decisions confirming that certain micro-captive arrangements are not eligible for federal tax benefits. The terms of the settlement required substantial concession of the income tax benefits claimed by the taxpayer together with appropriate penalties.

    The IRS will continue to vigorously pursue those involved in these and other similar abusive transactions going forward. Enforcement activity in this area is being significantly increased. To that end, the IRS is deploying additional resources, which includes standing up 12 new examination teams comprised of employees from the IRS Large Business and International and Small Business/Self-Employed divisions that will be working to address these abusive transactions and open additional exams. These teams will use all available enforcement tools, including summonses, to obtain necessary information.
     
    Examinations impacting micro-captive insurance transactions of several thousand taxpayers will be opened by these teams in the coming months. Potential civil outcomes can include full disallowance of claimed captive insurance deductions, inclusion of income by the captive entity and imposition of all applicable penalties.
     
    The IRS reminds taxpayers and advisors that disclosure of participation in micro-captive insurance transactions is required with the IRS Office of Tax Shelter Analysis under Notice 2016-66. Failure to properly disclose can result in significant civil penalties. Taxpayers involved in these abusive transactions should immediately consult with independent, competent tax advisors on the proper treatment for past and future tax years to consider best available options.

  • 03 Feb 2020 9:03 AM | Anonymous

    WASHINGTON – As part of an ongoing effort to improve service for the tax-exempt community, the Internal Revenue Service has revised Form 1023 to allow electronic filing for the first time starting later this month.

    To help charities apply for Section 501(c)(3) tax-exempt status, the IRS has revised Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and its instructions.

    “Filing electronically reduces errors, and we believe this will help provide a smoother application process for those seeking tax exemption,” said Tammy Ripperda, Commissioner of the IRS Tax Exempt and Government Entities division. “As we’ve seen with the 1023-EZ, we believe this change will help with application processing time and help with our wider efforts to improve our work with the tax-exempt community.”

    The IRS expects the electronic Form 1023 benefits to mirror those realized when Form 1023-EZ went online in 2014. IRS statistics show the 1023-EZ improved application processing time for both the Form 1023 and 1023-EZ while maintaining similar approval and rejection rates between the two forms.

    Beginning Jan. 31, 2020, applications for recognition of exemption on Form 1023 must be submitted electronically online at www.pay.gov. The IRS will provide a 90-day grace period during which it will continue to accept paper versions of Form 1023 (Rev. 12-2017).

    The required user fee for Form 1023 will remain $600 for 2020. Applicants must pay the fee through www.pay.gov when submitting the form. Payment can be made directly from a bank account or by credit or debit card.

    Updates about Form 1023 can be obtained by subscribing to Exempt Organizations Update, a free e-Newsletter from the IRS Exempt Organizations’ office. EO Update provides information on tax policy, services and information that’s important to tax-exempt organizations including:

    • News releases from the IRS related to exempt organizations
    • New forms, guidance and other publications
    • Changes and additions to the IRS Charities and Nonprofits website
    • Upcoming IRS training and outreach events

    Additional information on how to apply for IRS recognition of tax-exempt status is available:

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