The IRS will be hosting a live webinar with important information for tax practitioners and withholding agents, discussing:

• Overview of Form 1042-S
• Overview of each section of the Form 1042-S
• Common Errors on Form 1042-S
• Overview of Form 1042-T
• Live Q&A

When: Thursday, September 22, 2022, at 2:00 pm Eastern

How to Register: Click Here to Register

WASHINGTON – The Internal Revenue Service reminds taxpayers who pay estimated taxes that the deadline to submit their third quarter payment is Sept. 15, 2022.

Taxpayers not subject to withholding, such as those who are self-employed, investors or retirees, may need to make quarterly estimated tax payments. Taxpayers with other income not subject to withholding, including interest, dividends, capital gains, alimony, cryptocurrency and rental income, also normally make estimated tax payments.

In most cases, taxpayers should make estimated tax payments if they expect:

• To owe at least $1,000 in taxes for 2022 after subtracting their withholding and tax credits.
• Their withholding and tax credits to be less than the smaller of:
• • 90% of the tax to be shown on their 2022 tax return or
  • 100% of the tax shown on their 2021 tax return. Their 2021 tax return must cover all 12 months.

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.

How to figure estimated tax
To figure estimated tax, individuals must figure their expected Adjusted Gross Income (AGI), taxable income, taxes, deductions and credits for the year.

When figuring 2022 estimated tax, it may be helpful to use income, deductions and credits for 2021 as a starting point. Use the 2021 federal tax return as a guide. Taxpayers can use Form 1040-ES to figure their estimated tax.

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

How to avoid an underpayment penalty
Taxpayers who underpaid their taxes 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.

To see if they owe a penalty, taxpayers should use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. Taxpayers can also see the Form 2210 instructions under the “Waiver of Penalty” section. The IRS may waive the penalty if someone underpaid because of unusual circumstances and not willful neglect. Examples include:

• Casualty, disaster or another unusual situation.
• An individual retired after reaching age 62 during a tax year when estimated tax payments applied.
• An individual became disabled during a tax year when estimated tax payments applied.
• Specific written advice from an IRS agent given in response to a specific written request. The taxpayer must provide copies of both.

The fourth and final 2022 estimated tax payment is due Jan. 17, 2023.

Other IRS.gov resources

• The Pay tab on the front page of IRS.gov provides complete tax payment information, how and when to pay, payment options and more.
• Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts
• Form 2220, Underpayment of Estimated Tax by Corporations

WASHINGTON — September is National Preparedness Month. With the height of hurricane season fast approaching and the ongoing threat of wildfires in many places, the Internal Revenue Service urges everyone to develop an emergency preparedness plan, or if they already have one, update it for 2022.

Everyone, from individuals to organizations and businesses, can start now by:

In the aftermath of a disaster, having the updated documents and other information readily available can help victims apply for the relief available from the IRS and other agencies. Disaster assistance and emergency relief may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area.

Start secure

Taxpayers should keep critical original documents inside waterproof containers in a secure space. These include tax returns, birth certificates, deeds, titles, insurance policies and other similarly important items. In addition, consider having a relative, friend or other trusted person retain duplicate copies of these documents at a location outside the potentially impacted disaster area.

Make copies

If original documents are available only on paper, try scanning them into a digital file format. Saving them in a secure digital location, like a cloud-based storage application, can provide added security and portability.

Document valuables

Maintain a detailed inventory of your property and business contents. Taxpayers can take photos or videos to record their possessions but should also write down descriptions including year, make and model numbers, where appropriate. After a disaster hits, this kind of documentation can help support claims for insurance or tax benefits. The IRS disaster-loss workbooks can help individuals and businesses compile lists of belongings or business equipment.

Employer fiduciary bonds

Employers using payroll service providers should check if their provider has a fiduciary bond in place to protect the employer against a possible provider default.

Most employers already use the Electronic Federal Tax Payment System (EFTPS) to make their federal tax deposits and business tax payments. Because these payments can easily be made either by phone or online, EFTPS offers an especially convenient option when a disaster may displace many businesses and their employees. It’s also easy to track tax payments and receive email alerts through EFTPS. Any business that doesn’t have one can create an EFTPS account by visiting EFTPS.gov.

Know where to go

Reconstructing records after a disaster may be required for tax purposes, getting federal assistance or insurance reimbursement. Most financial institutions can provide statements and documents electronically, an option that can aid the reconstruction process. For tips on reconstructing records, visit IRS's Reconstructing Records.

IRS is ready to help

Following a federal disaster declaration, the IRS may postpone various tax filing and tax payment deadlines or provide other relief. For a list of localities qualifying for relief and details on relief available, visit the IRS Tax Relief in Disaster Situations webpage or Around the Nation on IRS.gov.

The IRS identifies taxpayers located in the covered disaster area and automatically applies filing and payment relief. This means taxpayers whose IRS address of record is located in the disaster area do not need to contact the IRS to get disaster tax relief.

In addition, many taxpayers living outside the disaster area may also qualify for relief. This includes those assisting with disaster relief and taxpayers whose records necessary to meet a filing or payment deadline postponed during the relief period, are located in the disaster area. Eligible individuals and businesses located outside the disaster area can request relief by calling the IRS disaster hotline at 866-562-5227.

In addition, a special rule allows both individuals and businesses to choose to deduct uninsured or unreimbursed disaster losses on either the tax return for the year the disaster occurred, or the return for the previous year. For more information, see Publication 547, Casualties, Disasters, and Thefts, available on IRS.gov. 

For more information about National Preparedness Month, visit Ready.gov/September.

Related items:

Notice 2022-36 provides systemic penalty relief to taxpayers for certain civil penalties with respect to 2019 and 2020 returns.  The relevant penalties will be waived or, to the extent previously assessed, abated, refunded, or credited, as appropriate.

Notice 2022-36 will be in IRB:  2022-36, dated 09/06/22.

WASHINGTON  ̶  To help struggling taxpayers affected by the COVID-19 pandemic, the Internal Revenue Service today issued Notice 2022-36,which provides penalty relief to most people and businesses who file certain 2019 or 2020 returns late.

The IRS is also taking an additional step to help those who paid these penalties already. Nearly 1.6 million taxpayers will automatically receive more than $1.2 billion in refunds or credits. Many of these payments will be completed by the end of September.

Besides providing relief to both individuals and businesses impacted by the pandemic, this step is designed to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season.

“Throughout the pandemic, the IRS has worked hard to support the nation and provide relief to people in many different ways,” said IRS Commissioner Chuck Rettig. “The penalty relief issued today is yet another way the agency is supporting people during this unprecedented time. This penalty relief will be automatic for people or businesses who qualify; there’s no need to call.”

The relief applies to the failure to file penalty. The penalty is typically assessed at a rate of 5% per month and up to 25% of the unpaid tax when a federal income tax return is filed late. This relief applies to forms in both the Form 1040 and 1120 series, as well as others listed in Notice 2022-36, posted today on IRS.gov. 

To qualify for this relief, any eligible income tax return must be filed on or before Sept. 30, 2022.

In addition, the IRS is providing penalty relief to banks, employers and other businesses required to file various information returns, such as those in the 1099 series. To qualify for relief, the notice states that eligible 2019 returns must have been filed by Aug. 1, 2020, and eligible 2020 returns must have been filed by Aug. 1, 2021.

Because both of these deadlines fell on a weekend, a 2019 return will still be considered timely for purposes of relief provided under the notice if it was filed by Aug. 3, 2020, and a 2020 return will be considered timely for purposes of relief provided under the notice if it was filed by Aug. 2, 2021. The notice provides details on the information returns that are eligible for relief.

The notice also provides details on relief for filers of various international information returns, such as those reporting transactions with foreign trusts, receipt of foreign gifts, and ownership interests in foreign corporations. To qualify for this relief, any eligible tax return must be filed on or before Sept. 30, 2022.

Relief is automatic; most of $1.2 billion in refunds delivered to eligible taxpayers by next month

Penalty relief is automatic. This means that eligible taxpayers need not apply for it. If already assessed, penalties will be abated. If already paid, the taxpayer will receive a credit or refund.

As a result, nearly 1.6 million taxpayers who already paid the penalty are receiving refunds totaling more than $1.2 billion. Most eligible taxpayers will receive their refunds by the end of September.

Penalty relief is not available in some situations, such as where a fraudulent return was filed, where the penalties are part of an accepted offer in compromise or a closing agreement, or where the penalties were finally determined by a court. For details, see Notice 2022-36, available on IRS.gov.

This relief is limited to the penalties that the notice specifically states are eligible for relief. Other penalties, such as the failure to pay penalty, are not eligible. But for these ineligible penalties, taxpayers may use existing penalty relief procedures, such as applying for relief under the reasonable cause criteria or the First Time Abate program. Visit IRS.gov/penaltyrelief for details.

“Penalty relief is a complex issue for the IRS to administer,” Rettig said. “We’ve been working on this initiative for months following concerns we’ve heard from taxpayers, the tax community and others, including Congress. This is another major step to help taxpayers, and we encourage those affected by this to review the guidelines.”

Notice 2022-37 announces that Treasury and the IRS intend to amend the section 871(m) regulations to delay the effective/applicability date of certain rules in those final regulations and extends the phase-in period provided in Notice 2020-2, 2020-3 I.R.B. 327, for certain provisions of the section 871(m) regulations.

Notice 2022-37 will be in IRB:  2022-37, dated 9/12/22.

Notice 2022-35 specifies the current values for the corporate bond monthly yield curve and other interest rates that are used to determine minimum required contributions and minimum present values for qualified defined benefit pension plans.

Notice 2022-35 will be in IRB:  2002-36, dated 9/6/2022.

WASHINGTON – The IRS Independent Office of Appeals invites public input on best practices for conducting video conferences with taxpayers and tax professionals who have cases pending before Appeals.

Appeals’ mission is to resolve federal tax disputes without litigation in a way that’s fair and impartial to taxpayers and the government. If a case qualifies for an appeal, the office will review the issues with a fresh, objective perspective and schedule a conference with the taxpayer or their representative.

Appeals offers conferences by telephone, video or in person, and can also resolve a taxpayer’s dispute through correspondence. Generally, it’s the taxpayer’s or representative’s choice how they meet with Appeals. The type of conference chosen doesn’t impact Appeals’ decision; employees can successfully resolve taxpayer disputes with the IRS using each type of conference.

To meet taxpayer needs during the COVID-19 pandemic, Appeals expanded access to video conferences. A video conference allows taxpayers to be both seen and heard, and to visually share documents without going to an Appeals office. During the pandemic, Appeals received positive feedback from taxpayers and tax professionals about the availability and utility of video conferences.

Video conferences will remain an option in Appeals. With the return of IRS employees to the office this summer, Appeals is pleased to resume in-person conferences along with virtual options to accommodate taxpayers’ preferred choice of conference.

Public input sought for permanent video conference guidance

In March 2021, in the midst of the COVID-19 pandemic, Appeals issued interim guidance requiring employees to conduct video conferences when requested by taxpayers or their representatives. The guidance describes in detail the employee responsibilities for scheduling and conducting the video conference, procedures for verifying authorized participants and necessary technology prerequisites.

The guidance also includes basic recommendations for establishing a professional meeting environment, such as reducing extraneous background distractions, muting audio when not speaking to avoid interruptions and ensuring Appeals employees’ names are displayed for taxpayers.

As Appeals prepares to update the Internal Revenue Manual with permanent guidelines for conducting video conferences and updates to the video conferencing platform technology (Microsoft Teams), they welcome input from taxpayers and tax professionals on how video conference technology can best be used in a taxpayer’s Appeals hearing. Appeals has already heard some common themes from taxpayers and tax professionals:

Appeals welcomes comments on all aspects of video conferencing to help inform IRS policies for conducting video conferences with taxpayers into the future. Public comments can be sent to AP.Taxpayer.Experience@irs.gov by Wednesday, Nov. 16, 2022.