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.

WASHINGTON — The Internal Revenue Service reminds taxpayers who’ve yet to file their 2021 federal income tax return to make sure they take advantage of the deductions and credits for which they’re entitled and to file electronically as soon as possible.

“Each year, eligible taxpayers overlook money saving deductions and credits that can help them with the cost of raising a family, daycare, paying for college, saving for retirement or making a donation to charity,” said IRS Commissioner Chuck Rettig. “We want to ensure they’re aware of all the tax benefits for which they may qualify.”

This year, the IRS received about 19 million requests for extensions to file until Oct. 17. Those who qualify can prepare and file their return for free with IRS Free File. Electronically filing and choosing direct deposit can help taxpayers get their refund faster. If they owe, sending the tax return with full payment prevents additional interest and penalties. There's no penalty for failure to file if the taxpayer is due a refund.

Filing tips for taxpayers who haven’t filed their 2021 tax return are available on IRS.gov.

Taxpayers should consider the following tax benefits when filing their tax return:

Helpful reminders

The IRS urges taxpayers to ensure they have all their year-end statements in hand before filing their 2021 return. Besides W-2s and 1099s, this includes two statements issued by the IRS – Letter 6419, showing their total advance Child Tax Credit payments, and Letter 6475, showing their total EIP3 payments.

Individuals can also use their IRS Online Account to see the total amounts of their third round of Economic Impact Payments or advance Child Tax Credit payments. Married spouses who received joint payments will each need to sign into their own account to retrieve their separate amounts.

Taxpayers can find answers to questions, forms and instructions, and easy-to-use tools online at IRS.gov. They can use these resources to get help when it's needed at home, at work or on the go.

Adjust 2022 withholding now to avoid tax surprises next year

Summer is a great time for taxpayers to check their 2022 withholding to avoid a tax surprise when they file next year. Life events like marriage, divorce, having a child or a change in income can affect taxes. Too little tax withheld can lead to a tax bill or penalty. Too much can mean the taxpayer won’t have use of the money until they get their tax refund in 2023.

The IRS Tax Withholding Estimator on IRS.gov helps employees assess their income tax, credits, adjustments and deductions, and determine whether they need to change their withholding. If a change is recommended, the estimator will provide instructions to update their withholding with their employer, either online or by submitting a new Form W-4, Employee's Withholding Allowance Certificate.

Find a Taxpayer Assistance Center

The Taxpayer Assistance Center Locator tool has a new look and feel, featuring a dynamic map, a directions button and two tabs for entering search criteria. It’s important to remember that Taxpayer Assistance Centers operate by appointment only. Taxpayers must make an appointment by calling the number for the office they want to visit.

Read information in other languages

Many pages on IRS.gov are now available in Spanish, Vietnamese, Russian, Korean, Haitian Creole and Chinese. Some of the multilingual resources include the Taxpayer Bill of Rights, e-file resources and many tax forms and publications.

WASHINGTON — As part of a larger effort to expand tax resources in more languages, the Internal Revenue Service announced today the addition of a translation of the Instructions for Form 8821, Tax Information Authorization, in traditional Chinese.

A Tax Information Authorization (TIA) is a critical form often used in assisting taxpayers with their IRS tax matters. Form 8821 is a taxpayer's written authorization designating one or more third parties, including an entity, to receive and view the taxpayer's information.

The designee(s) may inspect or receive confidential tax information for the tax matters, forms and periods specified on Form 8821. This authorization includes the right to receive verbal and written account information (e.g., transcripts) and copies of IRS notices. The designee(s) of a TIA can be anyone the taxpayer chooses, including family and friends.

Form 8821 and its instructions were already available in English and Spanish; also making the instructions available in traditional Chinese will expand access and understanding of this important process.

“This is another step we’ve taken in our ongoing efforts to do more to help taxpayers in their most comfortable language,” said IRS Commissioner Chuck Rettig. “Providing Chinese-language instructions for this form helps ensure additional taxpayers with limited English proficiency can understand the authorization they’re giving to those who are helping them with tax matters.”

While Form 8821 is not yet available in traditional Chinese, the Instructions for Form 8821 (zh-t) in traditional Chinese joins other multilingual forms and publications available to assist tax professionals and third-party designees:

Most tax professionals now use the online Tax Pro Account at IRS.gov/TaxProAccount. Tax Pro Account allows for faster processing of certain Form 8821 authorizations versus filing Form 8821; most online requests record immediately to the Centralized Authorization File (CAF). See the Instructions for Form 8821 for details.

Increasing the availability of services and tax products that are easy to use and support the needs of all communities is part of the IRS’s recently released new five-year Strategic Plan that outlines the agency’s goals to improve taxpayer service and tax administration. Information about IRS services available in languages other than English is available at IRS.gov/MyLanguage.

IRS multilingual resources
The IRS also has a Languages webpage available in 20 languages to help taxpayers find basic tax information. Some of the multilingual resources include the Taxpayer Bill of Rights, e-file resources and many tax forms and publications. Other available multilingual resources include:

• Interpreter services. Taxpayers can access interpreters in more than 350 languages when interacting face-to-face or over the phone with IRS employees.
• The Let Us Help You page is available in seven languages.
• Latest tax news and information in seven languages through the agency’s official Twitter account @IRSnews.
• Help for taxpayers and tax professionals: Tax season alerts and planning ahead for 2023. This special page, available in seven languages on IRS.gov, includes the latest filing season updates and details of the agency's ongoing efforts to address the inventory of previously filed tax returns.
• Online tools that provide step-by-step instructions in various languages:
• • Where's My Refund?
  • Make a payment.
  • https://www.irs.gov/individuals/get-transcript.

Alternative media resources for blind, sight-impaired individuals
The IRS recently announced that the agency’s Alternative Media Center (AMC) is converting IRS Form 1040, its main schedules and six publications in Spanish Braille and large print. Taxpayers can download forms and instructions from the Accessible Forms and Publications page of IRS.gov or request copies by going to IRS.gov/OrderForms or calling 800-829-3676.

If a taxpayer has questions about IRS accessibility services, they can contact the Accessibility Helpline at 833-690-0598. This helpline does not have access to taxpayers' IRS accounts. For help with tax law, refunds or other account-related issues, visit the Let Us Help You page on IRS.gov.

Revenue Ruling 2022-17 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, and 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 2022-17 will be in IRB:  2022-36, dated September 6, 2022. 

WASHINGTON – The Security Summit partners today concluded a special summer education campaign by outlining steps tax professionals can take to help clients from becoming statistics in identity-theft related tax-fraud scams.

The IRS, state tax agencies and the tax industry – working together as the Security Summit – have been combatting identity theft since 2015. This is the final part in a five-part summer series sponsored by the Summit partners to highlight critical steps tax professionals can take to protect client data. The “Protect Your Clients; Protect Yourself” campaign is an effort to urge tax professionals to secure their computer systems and protect client data following the pandemic and its aftermath.

“Identity thieves always seem to find a hook to lure victims, and we increasingly see tax professionals as a target given the sensitive client data they handle,” said IRS Commissioner Chuck Rettig. “Tax professionals have their hands full taking care of their clients and staying on top of the latest in professional developments. But they shouldn’t overlook the basics of protecting their data and their systems. Missing these basic steps can be devastating to a tax pro – and their clients. But a few common-sense steps and being aware of security basics can go a long way to provide important protection.”

While many may be working from home either full- or part-time, the IRS and Security Summit partners urge the use of virtual private networks, or VPNs, to securely conduct business.

Online business/commerce and banking should only be done while using a secure browser connection -never at a coffee shop, restaurant or other business offering ‘free wifi.’ One way users can tell if they’re using a secure browser is by looking for a small lock visible in the lower right corner or upper left of the web browser window.

Some additional considerations:

Additional resources
In addition to reviewing IRS Publication 4557, Safeguarding Taxpayer Data, tax professionals can also get help with security recommendations by reviewing Small Business Information Security: The Fundamentals by the National Institute of Standards and Technology. The IRS Identity Theft Central pages for tax pros, individuals and businesses have important details as well.

Publication 5293, Data Security Resource Guide for Tax Professionals, provides a compilation of data theft information available on IRS.gov.

Notice 2022-34 announces that the Department of the Treasury and the Internal Revenue Service intend to amend the regulations under section 987 to defer the applicability date of the final regulations under section 987, as well as certain related final regulations, by one additional year.  The applicability date of these regulations has been deferred under prior notices to taxable years beginning after December 7, 2022.  The Treasury Department and the IRS intend to amend §§1.861-9T, 1.985-5, 1.987-11, 1.988-1, 1.988-4, and 1.989(a)-1 of the 2016 final regulations and §§1.987-2 and 1.987-4 of the 2019 final regulations (the related 2019 final regulations) to provide that the 2016 final regulations and the related 2019 final regulations apply to taxable years beginning after December 7, 2023.  The Notice also states that taxpayers may rely on certain related proposed regulations that cross-reference temporary regulations which have expired.

Notice 2022-34 will be published in Internal Revenue Bulletin 2022-34 on Aug. 22, 2022.

WASHINGTON — The Internal Revenue Service today announced that interest rates will increase for the calendar quarter beginning Oct. 1, 2022.

For individuals, the rate for overpayments and underpayments will be 6% per year, compounded daily, up from 5% for the quarter that began on July 1. Here is a complete list of the new rates:

• 6% for overpayments [5% for corporations]. (payments made in excess of the amount owed)
• 3.5% for the portion of a corporate overpayment exceeding $10,000.

• 6% for underpayments. (taxes owed but not fully paid)
• 8% for large corporate underpayments.

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, for 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 2022. See the revenue ruling for details.

Revenue Ruling 2022-15, https://www.irs.gov/pub/irs-drop/rr-22-15.pdf, 

announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2022-35, dated Aug. 29, 2022.