WASHINGTON — In the wake of the devastating hurricanes that have ravaged Florida and the Southeast in recent weeks, the Internal Revenue Service today reassured victims that it stands ready to provide the tax-related assistance they need to recover from these storms.

IRS.gov has a variety of information to help disaster victims navigate common situations in the aftermath of disasters. The IRS also has a special hotline specifically dedicated to taxpayers with disaster-related tax questions; disaster victims can call the agency’s disaster hotline at 866-562-5227.

Here is a rundown on tax help available from the IRS.

More time to file and pay

The IRS automatically gives taxpayers whose address of record is in a disaster-area locality more time to file returns and pay taxes. Taxpayers get the extra time without having to ask for it.

• Currently, taxpayers in the entire states of Alabama, Florida, Georgia, North Carolina and South Carolina, and parts of Tennessee and Virginia, who received extensions to file their 2023 returns have until May 1, 2025, to file. Tax-year 2023 tax payments are not eligible for this extension. In addition, May 1 is also the deadline for filing 2024 returns and paying any tax due.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

This page also provides disaster updates and links to resources, and information is usually available on the IRS Twitter (now X) account as well.

Disaster payments usually tax-free

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details.

Retirement plan help

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

Disaster loss deduction may be available

In some instances, individuals and businesses in a federally-declared disaster area can qualify for a casualty loss tax deduction. The deduction is available for damaged or destroyed property not covered by insurance or other reimbursement and can result in a larger refund.

A unique feature of this deduction is that taxpayers can choose to claim it on either the return for the year the loss occurred (in this instance, the 2024 return normally filed next year), or the return for the prior year

(the 2023 return filed this year). For individual taxpayers, the deadline for making this election is Oct. 15, 2025.

If deductions exceed a taxpayer’s income, it can result in a net operating loss (NOL). A taxpayer need not have a business to have a NOL from a casualty. A NOL can normally be carried forward and deducted in a future tax year. See Publication 547, Casualties, Disasters, and Thefts,and Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts, for details.

Free tax transcripts available

The IRS reminds anyone whose tax records were lost or destroyed, or who needs tax records to apply for disaster assistance that they can get a free transcript of their returns from the IRS. Immediate access to these transcripts is available through the Get Transcriptlink on IRS.gov. Alternatively, taxpayers can use Get Transcript to request that transcripts be mailed to them. They can also call 800-908-9946 to request mail delivery or submit Form 4506-T, Request for Transcript of Tax Return.

As a reminder, taxpayers must have filed all required tax returns in order to qualify for disaster loans or grants for business owners, homeowners and renters from the Small Business Administration.

Free copy of tax return

Disaster-area taxpayers can get a free copy of their tax return by filing Form 4506, Request for Copy of Tax Return. The IRS waives the usual fees and expedites requests for copies of returns for people who need them to apply for disaster-related benefits or to file amended returns claiming disaster-related losses. To speed processing, be sure to notate that this is a disaster-related request and list the state and type of event.

Address change

After a disaster, people might need to temporarily relocate. Those who move should notify the IRS of their new address by submitting Form 8822, Change of Address.

Disaster hotline

Taxpayers with disaster-related tax questions can call the agency’s disaster hotline at 866-562-5227.

Taxpayers should also call this number if they live outside the disaster area but believe they qualify for a disaster-related extension or deadline postponement. This might be true, for example, if their records necessary to meet a deadline occurring during the postponement period are located in the affected area. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

More information

The IRS encourages affected taxpayers to review all federal disaster relief at DisasterAssistance.gov.

Here are other helpful IRS resources:

• FAQs for disaster victims
• Publication 584, Disaster Resource Guide for Individuals and Businesses
• Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
• Publication 547, Casualties, Disasters, and Thefts

WASHINGTON — In response to disruptions resulting from Hurricane Milton, the Internal Revenue Service will not impose a penalty when dyed diesel fuel with a sulfur content that does not exceed 15 parts-per-million is sold for use or used on the highway throughout the state of Florida. 

This relief is in addition to the limited relief provided in response to Hurricane Helene. The relief begins on Oct. 9, 2024, and will remain in effect through Oct. 30, 2024. 

This penalty relief is available to any person that sells or uses dyed diesel fuel in vehicles suitable for highway use. In the case of the operator of the highway vehicle in which the dyed diesel fuel is used, the relief is available only if the operator or the person selling such fuel pays the tax of 24.4 cents per gallon that is normally applied to undyed diesel fuel for highway use. 

The IRS will not impose penalties for failure to make semimonthly deposits of tax for dyed diesel fuel sold for use or used in diesel powered vehicles on the highway in the state of Florida during the relief period. IRS Publication 510, Excise Taxes, has information on the proper method for reporting and paying the tax. 

Ordinarily, dyed diesel fuel is not taxed, because it is sold for uses exempt from excise tax, such as to farmers for farming purposes, for home heating use and to local governments. 

The IRS is closely monitoring the situation and will provide additional relief as needed.

WASHINGTON — Due to Hurricane Milton, the Internal Revenue Service today announced relief for individuals and businesses in 51 counties in Florida.  

Individuals and businesses in six counties that previously did not qualify for relief under either Hurricane Debby or Hurricane Helene will receive disaster tax relief beginning Oct. 5, 2024, and concluding on May 1, 2025. They are Broward, Indian River, Martin, Miami-Dade, Palm Beach and St. Lucie. 

In addition, individuals and businesses in 20 counties previously receiving relief under Debby, but not Helene will receive disaster tax relief under Hurricane Milton, from Aug. 1, 2024, thru May 1, 2025. They are Baker, Brevard, Clay, DeSoto, Duval, Flagler, Glades, Hardee, Hendry, Highlands, Lake, Nassau, Okeechobee, Orange, Osceola, Polk, Putnam, Seminole, St. Johns and Volusia counties. 

As a result, affected taxpayers in all of Florida now have until May 1, 2025, to file various federal individual and business tax returns and make tax payments, including 2024 individual and business returns normally due during March and April 2025 and 2023 individual and corporate returns with valid extensions and quarterly estimated tax payments.   

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Individuals and households that reside or have a business in any one of the localities listed above qualify for tax relief. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov. 

Filing and payment relief 

Hurricane Milton-related tax relief postpones various tax filing and payment deadlines that occurred beginning on Oct. 5, 2024, and ending on May 1, 2025 (postponement period). As a result, affected individuals and businesses will have until May 1, 2025, to file returns and pay any taxes that were originally due during this period. 

This means, for example, that the May 1, 2025, deadline now applies to: 

• Any individual or business that has a 2024 return normally due during March or April 2025.
• Any individual, C corporation or tax-exempt organization that has a valid extension to file their calendar-year 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the hurricane occurred.
• 2024 quarterly estimated tax payments normally due on Jan. 15, 2025, and 2025 estimated tax payments normally due on April 15, 2025.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2024, Jan. 31, 2025, and April 30, 2025. 

In addition, for localities affected by Hurricane Milton, penalties for failing to make payroll and excise tax deposits due on or after Oct. 5, 2024, and before Oct. 21, 2024, will be abated, as long as the deposits are made by Oct. 21, 2024. Localities eligible for this relief are: Alachua, Baker, Bradford, Brevard, Broward, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Gilchrist, Glades, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lafayette, Lake, Lee, Levy, Madison, Manatee, Marion, Martin, Miami-Dade, Monroe, Nassau, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putman, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Taylor, Union and Volusia counties. 

Deposit penalty relief and other relief was previously provided to taxpayers affected by Debby and Helene. For details, see the Florida page on IRS.gov. The Disaster assistance and emergency relief for individuals and businesses page also has details, as well as information on other returns, payments and tax-related actions qualifying for relief during the postponement period. 

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief. 

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated. 

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief efforts who are affiliated with a recognized government or philanthropic organization. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov. 

Additional tax relief 

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number – 3622-EM – on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details. 

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details. 

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow. 

The IRS may provide additional disaster relief in the future. 

The tax relief is part of a coordinated federal response to the damage caused by the hurricane and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov. 

Reminder about tax return preparation options 

• Eligible individuals or families can get free help preparing their tax return at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites. To find the closest free tax help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
• To find an AARP Tax-Aide site, use the AARP Site Locator Tool or call 888-227-7669.
• Any individual or family whose adjusted gross income (AGI) was $79,000 or less in 2023 can use IRS Free File’s guided tax software at no cost. There are products in English and Spanish.
• Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040 and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

• MilTax, a Department of Defense program, offers free return preparation software and electronic filing for federal tax returns and up to three state income tax returns. It’s available for all military members and some veterans, with no income limit.

WASHINGTON – The Internal Revenue Service announced today continued progress on Employee Retention Credit claims, with processing underway on about 400,000 claims, representing about $10 billion of eligible claims.    

Work on the claims for small businesses and others is ongoing as the agency continues to navigate a large volume of claims from the complex pandemic-era credit. A significant number of the Employee Retention Credit (ERC) claims came in during a period of aggressive marketing by promoters, leading to a large percentage of improper, ineligible claims.    

“The IRS understands the vital importance of Employee Retention Credits payments for struggling small businesses, and we are continuing to make important progress on one of the most complex tax administration provisions we’ve ever had,” said IRS Commissioner Danny Werfel. “The IRS is working diligently to process ERC claims as quickly as possible, while guarding against improper payments driven by unscrupulous marketers. In recent weeks, the IRS has made substantial progress in separating eligible claims from the wave of ineligible claims that have come in, and we continue working to refine our models to identify more eligible claims.”    

The approximately 400,000 claims being processed include eligible and ineligible claims, with the vast majority in this tranche being processed for approval. The total value of eligible claims represents about $10 billion. Checks are being mailed for eligible claims with refunds, with more planned in the weeks and months ahead.   

New consolidated claim process for third-party payers helps with claims   

To help speed processing, the IRS announced last month the opening of a consolidated claim process to help third-party payers and their clients resolve incorrect claims for the Employee Retention Credit.  

Third-party payers report and pay clients’ federal employment taxes under the third-party payer’s Employer Identification Number. They handle clients’ payroll and tax reporting duties. Some of these TPPs filed ERC claims for multiple employers. If a third-party payer’s client has since determined it is ineligible for the ERC and wants to resolve their claim, it is the third-party payer that needs to correct it.  

This consolidated claim process lets a third-party payer that filed a prior claim with multiple clients “withdraw” only some clients’ claims while maintaining the claims of the qualifying clients.  

The ERC program began as an effort to help businesses during the pandemic, but as time went on the program increasingly became the target of aggressive marketing – and potentially predatory in some cases – well after the pandemic ended. Some promoter groups called the credit by another name, such as a grant, business stimulus payment, government relief or other names besides ERC or the Employee Retention Tax Credit (ERTC).   

In addition to processing valid claims, the IRS is continuing to work denials of improper ERC claims, intensifying audits and pursuing civil and criminal investigations of potential fraud and abuse. The findings of the IRS review, announced in June, confirmed concerns raised by tax professionals and others that there was an extremely high rate of improper ERC claims in the current inventory of ERC claims.  

Voluntary Disclosure Program remains open through Nov. 22; Withdrawal Program also available  

The IRS reminds businesses that have received Employee Retention Credit payments to recheck eligibility requirements and consider the second Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP) to resolve incorrect claims without penalties or interest.  

The second ERC-Voluntary Disclosure Program will run through Nov. 22, 2024, and allow businesses to correct improper payments at a 15% discount and avoid future audits, penalties and interest.  

The reopening of ERC Voluntary Disclosure Program is designed to help businesses with questionable claims to self-correct and repay the credits they received after filing ERC claims in error. Many of these claims were driven by aggressive marketing from unscrupulous promoters.  

As the IRS continues intensifying compliance work involving improper ERC claims, the VDP can protect businesses from potential costly compliance action in the future, such as audits, full repayment, penalties and interest. Full details are available in IRS Announcement 2024-30.  

The IRS’s claim withdrawal program remains open for businesses whose ERC claims haven’t been paid yet.  

To help businesses caught in this situation, the IRS urges businesses to review important warning signs and eligibility requirements, and to talk to a trusted tax professional. The IRS’s ERC Eligibility Checklist can also help businesses understand eligibility requirements and suggest next steps. 

WASHINGTON — The Internal Revenue Service today released the tax gap projections for tax year 2022, a detailed analysis showing the nation’s projected gross tax gap at $696 billion. This reflects the difference between projected ‘true’ tax liability and the amount of tax that is actually paid on time. 

The new tax gap projections reflect an increase over the tax year 2014-2016 estimates and the tax year 2017-2019 projections. The 2022 projection is an increase of $200 billion over tax years 2014-2016. 

However, the IRS noted the increase for 2022 is similar to the 41 percent increase in the economy since the 2014-2016 time period as measured by the Gross Domestic Product. With the new study also showing the voluntary compliance rate among taxpayers remaining steady at 85%, the IRS noted the tax gap increase ultimately reflects growth in the economy and changes in the sources of income – not a change in taxpayer behavior involving filing or paying their taxes. 

In addition, the new tax gap projections reflect the time period before the IRS began increasing tax compliance work following passage of the Inflation Reduction Act (IRA) in August of 2022. Since then, the IRS has stepped up compliance activity in a variety of areas with the additional funding, including the agency collecting an initial $1.3 billion from high-income non-filers following IRA funding. 

“This is a critical study about the nation’s tax system, and the results underscore there remains a sizable tax gap between taxes that are legally owed but aren’t actually being paid,” said IRS Commissioner Danny Werfel. “While the bottom line for the new tax gap numbers shows the increase basically reflects growth in the larger economy, the size of the gap also vividly illustrates the ongoing need for adequate funding for the IRS. We need to focus both on compliance efforts to enforce existing laws as well as improving service to help taxpayers with their tax obligations to help address the tax gap. Since passage of the Inflation Reduction Act in 2022, we have taken important steps to begin improving tax compliance. While our recent work will not be fully reflected in the tax gap analysis for several years, we will continue to provide routine, interim updates on how enhanced enforcement on complex areas of tax evasion and delinquency impacts compliance.” 

The new projections are published in Tax Gap Projections for Tax Years 2021 and 2022 (IRS Publication 5869).  

Gross tax gap

The projected $696 billion gross tax gap is the difference between projected ‘true’ tax liability for a given period and the amount of tax that is paid on time. The gross tax gap covers three key areas – non-filing of taxes, underreporting of taxes and underpayment of taxes. 

• Non-filing, which means tax not paid on time by those who do not file on time:
• • $63 billion in tax year 2022, representing 9% of the gross tax gap.
• Underreporting, which reflects tax understated on timely filed returns.
• • $539 billion in tax year 2022, representing 77% of the gross tax gap.
• Underpayment, or tax that was reported on time, but not paid on time.
• •  $94 billion in tax year 2022, representing 14% of the gross tax gap. 

The primary focus on tax gap estimation is to measure compliance behavior as manifested in tax paid voluntarily and on time. The tax gap estimates and projections provide insight into the historical scale of tax compliance and to the persisting sources of low compliance. 

Net tax gap

Late payments and IRS enforcement efforts are projected to generate an additional $90 billion on tax years 2021 and 2022 returns, resulting in a projected net tax gap of $617 billion and $606 billion respectively. 

Between tax years 2017-2019 and tax year 2022, the estimated tax liability increased by about 27%, roughly the same increase as the gross and net tax gaps. Much of these increases in true total tax liability and the gross tax gap can be attributed to economic growth. 

The IRS notes that the tax gap estimates and projections cannot fully account for all types of noncompliance. 

Voluntary compliance rate remains unchanged

The tax year 2021 and 2022 tax gap projections translate to about 85% of taxes paid voluntarily and on time, which is consistent with recent levels. The projections are based largely upon the compliance behavior estimated from the most recent set of completed audits (from tax years 2014-2016). That estimated compliance behavior is projected forward to taxpayers in subsequent tax years to generate the gross tax gap. 

After IRS compliance efforts and other late payments are factored in, the projected share of taxes eventually paid is 86.9% for tax year 2022, down slightly from the 87% for tax years 2014-2016. 

Tax gap analysis consistently shows that compliance is higher when there is third-party information reporting, and even higher when also subject to withholding. 

With the help of Inflation Reduction Act resources, the IRS is taking a variety of steps to help improve voluntary compliance by improving taxpayer services and offering new technology tools to work in concert with additional compliance work. In fiscal year 2023, the latest year for which data is available, the IRS collected more than $4.6 trillion in taxes, penalties, interest and user fees. 

The IRS also has an array of other taxpayer service programs aimed at supporting accurate tax filing and helping address the tax gap. These range from working with businesses and partner groups such as IRS’s Volunteer Income Tax Assistance and Tax Counseling for the Elderly to a variety of education and outreach efforts. 

The voluntary compliance rate of the U.S. tax system is vitally important for the nation. A one-percentage-point increase in voluntary compliance would bring in about $46 billion in additional tax receipts. 

Projecting the tax gap

Given the complexity of the tax system and available data, no single approach can be used for estimating each component of the tax gap. Each approach is subject to measurement or non-sampling error; the component estimates that are based on samples are also subject to sampling error. 

The projections do not fully represent noncompliance in some components of the tax system, particularly as it relates to corporate income tax, income from flow-through entities, foreign or illegal activities, digital assets and pandemic credits because data are lacking.  

Details on how the IRS projects the Tax Gap can be found in IRS Publication 6031: Tax Gap Projections Methodology.  

The IRS continues to actively work on new methods for estimating and projecting the tax gap to better reflect changes in taxpayer behavior as they emerge. More information about the tax gap and estimates for prior tax years can be found at IRS: The tax gap.

WASHINGTON — The Internal Revenue Service today encouraged taxpayers to file their 2023 tax year federal income tax return on or before the upcoming Tuesday, Oct. 15, 2024, deadline to avoid possible late filing penalties.

Convenient electronic filing options, including IRS Free File, are still available. MilTax is a free online service that members of the military and qualifying veterans can use to file their federal income tax returns and up to three state income tax returns.

Disaster-area taxpayers and military members and their families may have extra time to file. Those with an IRS address of record in areas covered by Federal Emergency Management Agency (FEMA) disaster declarations and those returning from a combat zone may qualify for additional time to file.

Deadlines vary depending upon the disaster and locality. Details on all recent disaster relief are on the Around the nation page on IRS.gov. Currently:

·         Taxpayers in parts of Arkansas, Florida, Iowa, Kentucky, Mississippi, New Mexico, Oklahoma, Texas and West Virginia have until Nov. 1, 2024, to file their 2023 tax year return.

·         Taxpayers in all or parts of Connecticut, Florida, Illinois, Kentucky, Louisiana, Minnesota, Missouri, New York, Pennsylvania, Puerto Rico, South Dakota, Texas, Vermont, Virgin Islands and Washington state have until Feb. 3, 2025, to file their 2023 tax year returns.

·         Taxpayers affected by Helene in all or parts of Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee and Virginia will have until May 1, 2025, to file their 2023 tax year returns.

·         Taxpayers affected by the terrorist attacks in Israel have until Sept. 30, 2025, to file their 2023 returns and pay any tax due.

·         Members of the military and others serving in a combat zone typically have 180 days after they leave the combat zone to file returns and pay any taxes due.

IRS Free File and other online resources

IRS Free File is available through Oct. 15, 2024. It:

·         Allows qualified taxpayers to prepare and file federal income tax returns online using guided tax preparation software.

·         Is available to any person or family with an adjusted gross income (AGI) of $79,000 or less in 2023.

·         Includes preparation of returns claiming the Child Tax Credit, the Earned Income Tax Credit and other important credits.

IRS Free File Fillable Forms is available for taxpayers whose 2023 AGI was greater than $79,000 and who are comfortable preparing their own tax return.

IRS Individual Online Account

To help file an accurate tax return, taxpayers can access their Individual Online Account information, including any amount owed, payments, tax records and more. The IRS lets taxpayers access most tax tools online with one account using the same login and password. New users will need their photo identification to verify their identity.

The IRS uses ID.me, a technology provider, for identity verification and sign-in services. If taxpayers have an ID.me account from a state government or federal agency, they can sign in to IRS Online Account. If they’re a new user, they’ll have to create a new ID.me account.

This identity verification process applies to IRS services including Online Account, Get Transcript Online, Online Payment Agreement, Get an Identity Protection PIN (IP PIN), Tax Pro Account, e-Services, Submit Forms 2848 and 8821 Online, and Business Tax Account.

Schedule and pay electronically

Taxpayers can file anytime and schedule their federal tax payments up to the Oct. 15, 2024, due date. They can pay online, by phone or with their mobile device and the IRS2Go app. Some other key points to keep in mind when filing and paying federal taxes electronically include:

·         Electronic payment options are easy and flexible. Taxpayers can pay when they file electronically using online tax software. Those who use a tax preparer should ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.

·         Electronic Federal Tax Payment System (EFTPS). Convenient, safe and easy, EFTPS allows for payments online or by phone using the EFTPS Voice Response System. EFTPS payments must be scheduled by 8 p.m. ET at least one calendar day before the tax due date.

·         IRS Direct Pay. This feature allows taxpayers to pay online directly from a checking or savings account for free and schedule payments up to 365 days in advance.

·         Pay by card. Payments can be made with a credit card, debit card or a digital wallet option. These are available through a payment processor. The payment processor, not the IRS, charges a fee for this service.

·         The IRS2Go mobile app provides access to mobile-friendly payment options, including Direct Pay and debit or credit card payments.

Tax help

Taxpayers can get answers to many tax law questions by using the IRS's Interactive Tax Assistant tool. Additionally, taxpayers can view tax information in several languages by clicking on the "English" menu located at the top of the IRS.gov home page.

Additional help

·         Publication 5136, IRS Services Guide

·         Let us help you

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued final regulations identifying certain syndicated conservation easement transactions as "listed transactions" – abusive tax transactions that must be reported to the IRS.

Syndicated conservation easements have been included in the IRS’ annual list of “Dirty Dozen” tax schemes for many years.

“These regulations send a clear signal on abusive syndicated conservation easement arrangements, which generate high fees for promoters and willing participants who gamed the tax system with grossly inflated appraisals,” said IRS Commissioner Danny Werfel. “As the Senate Finance Committee has shown in its review, abusive syndicated conservation easement transactions are operating too often as nothing more than retail tax shelters that let taxpayers buy deductions at the end of any given year.”

In these transactions, investors typically acquire an interest in a partnership that owns land and then claim an inflated charitable contribution deduction based on a grossly overvalued appraisal. Going forward, participants and material advisors will need to report their participation in these transactions using Forms 8886 and 8918.

The IRS previously identified certain SCE transactions as listed transactions in Notice 2017-10. These final regulations, consistent with Notice 2017-10, identify certain SCE transactions as listed transactions. The issuance of these final regulations clarifies that participants and material advisors must report these transactions, including any transactions that were completed in taxable years that are still open.

This listed transaction regulation is part of a multifaceted IRS approach that is succeeding in protecting the integrity of the tax system. On a related front, the IRS has enjoyed significant success in the courts resulting in a number of syndicated partnerships having their grossly inflated easement valuations reduced for tax purposes to what the actual market value was at the time of the donation, with the partners claiming the inflated deduction often incurring substantial penalties.

The commitment to making sure that partnerships, other pass-through entities, and their owners comply with the tax law is a significant part of the agency’s strategic plan.

Inside This Issue

1. Tax relief available to disaster victims in parts of Illinois and those impacted by Hurricane Helene
2. Dyed diesel penalty relief granted because of Hurricane Helene 
3. IRS deploys 500 employees to help FEMA with Hurricane Helene efforts
4. Volunteers needed to provide free tax services
5. IRS invites public feedback on draft Form 7217
6. 2024 IRS Nationwide Tax Forum Online to launch Oct. 14
7. IRS launches “Corporate Group Mailbox” pilot program
8. News from the Justice Department’s Tax Division
9. Technical Guidance

1.  Tax relief available to disaster victims in parts of Illinois and those impacted by Hurricane Helene

The IRS is providing tax relief to the following individuals and businesses who have been affected by severe storms and wildfires:

• Disaster-area taxpayers in parts of Illinois affected by severe storms and flooding that began on July 13 have until Feb. 3, 2025, to file various individual and business tax returns and make tax payments. Currently, this includes Cook, Fulton, Henry, St. Clair, Washington, Will and Winnebago counties. The same relief will be available to other Illinois localities added later to the disaster area.
• Taxpayers in Washington state affected by wildfires that began on June 22 now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments. Currently, this includes the Confederated Tribes and Bands of the Yakama Nation. Individuals and households that reside or have a business in these localities qualify for tax relief. The same relief will be available to any other localities added later to the disaster area.
• IRS declared tax relief in seven states impacted by Hurricane Helene. Individuals and businesses in all of Alabama, Georgia, North and South Carolina, as well as portions of Florida, Tennessee and Virginia have until May 1, 2025, to file various federal individual and business tax returns and make required payments. 

The IRS offers relief to any area designated by the Federal Emergency Management Agency (FEMA), and the same relief will be available to other states and localities that receive FEMA disaster declarations. The current list of eligible localities is available on the Tax relief in disaster situations page on IRS.gov.

Back to top

2.  Dyed diesel penalty relief granted because of Hurricane Helene 

In response to Hurricane Helene-related disruptions, the IRS will not impose a penalty when dyed diesel fuel with a sulfur content that does not exceed 15 parts-per-million is sold for use or used on the highway throughout Alabama, Georgia, North Carolina and South Carolina. Selected counties in Florida, Tennessee and Virginia will be subject to the same rules.

Back to top

3.  IRS deploys 500 employees to help FEMA with Hurricane Helene efforts

The IRS deployed over 500 workers to assist with the Federal Emergency Management Agency (FEMA) disaster relief efforts to aid Hurricane Helene victims. To assist FEMA with phone operations, the IRS sent representatives from Dallas and Philadelphia earlier this week. Employees of the IRS will take the initial information from callers, assist with federal relief as IRS Criminal Investigation (IRS-CI) agents will help with search and rescue efforts and other relief work.

Back to top

4.  Volunteers needed to provide free tax services

The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs are currently seeking volunteers for the upcoming filing season. The IRS’s peak period for enlisting volunteers is October through January. Individuals can enroll during other months, but their information will be held until IRS partners are accepting volunteers for the next filing season. No experience is necessary to become a VITA or TCE volunteer; free specialized training is provided by the IRS. Available positions are not limited to tax preparation and can include interpreters, greeters and computer specialists. Volunteers have the option to participate at both in-person and virtual sites. Hours are flexible with many sites operating at night and on weekends. Locating a nearby free tax help site is simple. They can often be found in local libraries, community centers, schools and churches. Locate the VITA/TCE site closest to you by using the VITA Locator Tool.

For additional information or to learn more about becoming a VITA/TCE volunteer, visit IRS tax volunteers.

Back to top

5.  IRS invites public feedback on draft Form 7217

Tax Pros: The IRS welcomes public feedback on draft Form 7217 and its accompanying instructions. On Aug. 28, the IRS released draft Form 7217, with the new title “Partner’s Report of Property Distributed by a Partnership.” The new tax form will be used for distributions to partners made in the 2024 tax year. The form’s objective is to document every property distribution that a partner gets from a partnership. According to draft instructions posted by the IRS on Sept. 3, any partner receiving a property distribution from a partnership is required to file Form 7217. Comments can be submitted to the IRS about drafts, instructions or publications on the IRS Draft tax forms page.

Back to top

6.  2024 IRS Nationwide Tax Forum Online to launch Oct. 14

The 2024 IRS Nationwide Tax Forum Online will go live on Oct. 14, providing tax professionals access to interactive video seminars and downloadable resources and materials from the 2024 IRS Nationwide Tax Forum. This year, the Nationwide Tax Forum Online will launch 18 new seminars featuring IRS subject matter experts offering insights into the latest developments in tax law and IRS procedures. Courses can be taken for continuing education (CE) credit for a fee of $29, or they can be reviewed for free (no CE credit). Don’t miss this opportunity to stay informed about important tax changes and further your professional knowledge. Visit the Nationwide Tax Forum Online website to learn more.

Back to top

7.  IRS launches “Corporate Group Mailbox” pilot program

As part of its continuous transformation efforts to increase the number of online tools and enhance user experiences, the IRS’s Independent Office of Appeals has initiated a new pilot program. The “Corporate Group Mailbox” pilot program is designed to improve secure messaging for large business taxpayers with multiple representatives. The use of this new feature permits qualified business taxpayers with a team of representatives to request a Group Mailbox to communicate with the Appeals employee assigned to their case. The pilot program is available now through March 31.

Corporate Group Mailboxes will help Appeals deliver:

• Prompt taxpayer service with 24/7 online access to secure digital messages
• Streamlined communication with central access available for multiple authorized individuals
• Secure records sharing and 
• Faster case resolution

Large business taxpayers represented by multiple individuals with an open case in Appeals should ask their assigned Appeals employee if this pilot is available for them.

Back to top

8.  News from the Justice Department’s Tax Division

The United States issued a permanent injunction in the U.S. District Court for the Southern District of Florida to permanently bar Gregory Salgado and his tax return preparation business from preparing federal income tax returns for others. According to the complaint, Salgado entered a guilty plea in 2012 for filing a false return for himself and another taxpayer. The IRS levied civil penalties against Salgado totaling more than $500,000 for intentionally underreporting tax on returns he prepared for customers. The complaint alleges neither Salgado’s conviction, 33-month incarceration nor civil penalties corrected his behavior. After his release from prison in August 2015, Salgado continued to prepare thousands of returns. Salgado is required by the court’s order to pay $85,000 and notify all the individuals for whom he or his business prepared federal tax returns between January 2019 and the present of the injunction.

Back to top

9.  Technical Guidance

Notice 2024-70 explains the circumstances under which the four-year replacement period under section 1033(e)(2) is extended for livestock sold on account of drought.

Notice 2024-72 postpones various time-sensitive deadlines for taxpayers affected by the terrorist attacks in Israel throughout 2023 and 2024.

Notice 2024-73 provides guidance regarding discrete issues related to the application of the nondiscrimination rules of section 403(b)(12) with respect to the ERISA long-term, part-time (LTPT) employee rules for a section 403(b) plan.

Revenue Ruling 2024-23 holds that European Energy Exchange is a “qualified board or exchange” within the meaning of section 1256(g)(7)(C).

WASHINGTON – The Internal Revenue Service announced today that Direct File will be available for the 2025 tax filing season in double the number of states than last year’s pilot, and it will cover a wider range of tax situations, greatly expanding the number of taxpayers eligible to use the free e-filing service.  

State and eligibility expansion

For the 2025 tax filing season, eligible taxpayers in 24 states will be able to use Direct File: 12 states that were part of the pilot last year, plus 12 new states where Direct File will be available in the upcoming filing season. 

During the pilot last year, Direct File was available in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming. For the 2025 tax filing season, Direct File will also be available in Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin. 

In 2025, more than 30 million taxpayers in those 24 states will be eligible to use Direct File. Additional states could still join Direct File in 2025, and several states have expressed interest or announced that they will participate in Direct File in 2026. 

In addition to doubling the number of states where Direct File will be available, the service will also cover a wider range of tax situations for the 2025 filing season. During the pilot last year, Direct File covered limited tax situations, including wage income reported on a W-2 form, Social Security income, unemployment compensation and certain credits and deductions. For the 2025 filing season, Direct File will support 1099’s for interest income greater than $1,500, retirement income and the 1099 for Alaska residents reporting the Alaska Permanent Fund dividend. 

During the pilot, Direct File supported taxpayers claiming the Earned Income Tax Credit, Child Tax Credit and Credit for Other Dependents. This year, Direct File will also cover taxpayers claiming the Child and Dependent Care Credit, Premium Tax Credit, Credit for the Elderly and Disabled, and Retirement Savings Contribution Credits. In addition to covering taxpayers claiming the standard deduction and deductions for student loan interest and educator expenses, this year, Direct File will support taxpayers claiming deductions for Health Savings Accounts. Over the coming years, the IRS will gradually expand Direct File’s scope to support most common tax situations, focusing – in particular – on tax situations that impact working families. 

“We’re excited about the improvements to Direct File and the millions more taxpayers who will be eligible to use the service this year,” said IRS Commissioner Danny Werfel. “Above all, our goal is to improve the experience of tax filing itself and help taxpayers meet their obligations quickly and easily. Direct File will be a critical part of achieving that goal as we expand and improve the service.” 

Direct File service improvements

Direct File is a web-based service that works on mobile phones, laptops, tablets or desktop computers. It guides taxpayers through a series of questions to prepare their federal tax return step-by-step. Last year, thousands of Direct File users got help from IRS customer service representatives through a live chat feature in English and Spanish. Once taxpayers have completed their federal tax return, the Direct File system automatically guides them to state tools to complete their state tax filings.  

For the 2025 filing season, Direct File will include new features to make filing taxes quicker and easier. Direct File users can try a new chat bot to help guide them through the eligibility checker. Live chat will again be available in English and Spanish, and users can opt into additional authentication and verification, which will allow customer service representatives to provide more information. 

“User experience, both within the Direct File tool and the integration with state tax systems, will continue to be the foundation for Direct File moving forward,” Werfel said. “We will focus – first and foremost – on continuing to get it right. Accuracy and comprehensive tax credit uptake will be paramount concerns to ensure taxpayers file a correct return and get the refund to which they’re entitled.”  

Direct File’s role in the tax system

Following a successful pilot during the 2024 tax filing season, where more than 140,000 taxpayers across 12 states used Direct File, the IRS undertook a comprehensive review of the service and its role in the broader tax system.  

Taxpayers across the country told the IRS they want more no-cost electronic filing options. The IRS heard directly from hundreds of organizations across the country, more than 100 members of Congress, individual Direct File users and from those that are interested in using Direct File. Millions of taxpayers who did not live in one of the12 pilot states visited the Direct File website to learn more about the service or asked live chat assistors to make Direct File available in their state. 

In May 2024, the IRS announced that Direct File would be a permanent tax filing option, and the service is working with all states interested in participating. In the coming years, Direct File will continue to be one option among many from which taxpayers can choose, and it will complement important options, such as preparation by tax professionals or through commercial software providers, who are critical partners with the IRS in delivering a successful tax system for the nation.  

The IRS also noted another side effect of the Direct File pilot was increased attention on all free filing options, including an increase in usage of Free File. The IRS remains committed to the ongoing relationship with Free File, Inc., which has served taxpayers for two decades in the joint effort to provide free commercial software. Last spring, the IRS signed a five-year extension with industry to continue Free File. As the IRS works to expand Direct File, it will work to strengthen all free filing options for taxpayers, including Free File, the Volunteer Income Tax Assistance program (VITA) and the Tax Counseling for the Elderly program (TCE) – all of which saw increased usage and interest last year.  

“Direct File is an important component of a stronger, more comprehensive tax system that gives taxpayers electronic filing options that best suit their needs,” Werfel said. “It is a critical tool in the IRS’ effort to meet taxpayers where they are, give them options to interact with us in ways that work for them and help them meet their tax obligations as easily and quickly as possible.” 

Direct File will begin accepting tax returns when the filing season opens.

Notice 2024-73 provides guidance regarding discrete issues related to the application of the nondiscrimination rules of section 403(b)(12) with respect to the ERISA long-term, part-time (LTPT) employee rules for a section 403(b) plan. The ERISA LTPT rules were added under section 125 of the SECURE 2.0 Act of 2022 and are effective for plan years beginning after December 31, 2024.

This notice also (1) provides that the Department of the Treasury and the Internal Revenue Service anticipate issuing proposed regulations with respect to section 403(b)(12)(D) and guidance with respect to sections 202(c) and 203(b)(4) of ERISA, (2) announces that the final regulation that the Treasury Department and the IRS intend to issue related to long term, part time employees under section 401(k) plans will apply no earlier than to plan years that begin on or after January 1, 2026, and (3) asks for comments on the content of this notice. 

Notice 2024-73 will be in IRB:  2024-43, dated 10/21/2024.