WASHINGTON –The Internal Revenue Service today issued Notice 2024-30 that expands certain rules for determining what an energy community is for the production and investment tax credits.

The IRS also released Appendix 1, identifying additional Metropolitan Statistical Areas (MSAs) and non-MSAs that meet the Fossil Fuel Employment threshold, and Appendix 2, identifying additional MSAs and non-MSAs that qualify as energy communities in 2023 by meeting the Fossil Fuel Employment threshold and the unemployment rate requirement for calendar year 2022.

The Inflation Reduction Act allows for increased credit amounts or rates if certain requirements pertaining to energy communities are satisfied.

There are three categories of energy communities:

• Brownfield sites,
• Certain metropolitan statistical areas and non-metropolitan statistical areas based on unemployment rates (MSA/non-MSA), and
• Census tracts where a coal mine closed after 1999 or where a coal-fired electric generating unit was retired after 2009 (and directly adjoining census tracts).

The increased credit amount or rate available for meeting the requirements of the energy community provisions is generally 10 percent for the production tax credit and 2 percentage points for the investment tax credit. If prevailing wage and apprenticeship requirements or certain other requirements are met, 10 percentage points.

This notice expands the Nameplate Capacity Attribution Rule in Notice 2023-29 to include additional attribution property. It also adds two 2017 North American Industry Classification System (NAICS) industry codes to the table in section 3.03(2) of Notice 2023-29 for purposes of determining the Fossil Fuel Employment rate.

The IRS also updated the frequently asked questions for energy communities.

More information can be found on the Inflation Reduction Act of 2022 page on IRS.gov.

Notice 2024-30 modifies Notice 2023-29 by expanding the Nameplate Capacity Attribution Rule under section 4.02(1)(b) to include additional attribution property and by adding two 2017 North American Industry Classification System (NAICS) industry codes to the table in section 3.03(2) for purposes of determining the Fossil Fuel Employment rate.

Notice 2024-30 will be in IRB: 2024-15, dated April 8, 2024.

WASHINGTON — As the end of tax season draws near, the Internal Revenue Service reminds taxpayers there’s an easy way to get a tax filing extension through the Free File program.

A tax filing extension guarantees the taxpayer six additional months to file – with an extended deadline of Oct. 15, 2024. The IRS Free File program is one of the easiest ways to get an extension.

Although an extension grants extra time to file, it does not extend the obligation to pay taxes due on April 15, 2024. To avoid penalties and late fees, taxpayers who owe should pay either their full tax bill or at least what they can afford to pay by the April 15 deadline. Taxpayers in Maine and Massachusetts have until April 17 to file and pay taxes due this year. This is because these states observe the Patriots’ Day holiday on April 15 this year and April 16 is the Emancipation Day holiday in the District of Columbia.

Free File makes filing an extension easier
An easy way to file an extension is through IRS Free File on IRS.gov. All individual filers can use the program software to request an extension on Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, regardless of income. Taxpayers must estimate their tax liability and file by the deadline to receive the extension.

Free File also is one of the options available to help taxpayers file their taxes. Now in its 22nd filing season, taxpayers across the nation can access free software products provided by IRS Free File trusted partners by visiting IRS.gov. Through this public-private partnership, tax preparation and filing software providers make their online products available to eligible taxpayers. Eight private-sector Free File partners provide online guided tax software products this year to any taxpayer with an Adjusted Gross Income (AGI) of $79,000 or less in 2023. Free access to online products is only available by starting from IRS Free File.

Make a payment, get an extension
Other quick and efficient ways to get an extension are through the Electronic Federal Tax Payment System (EFTPS), paying with a credit, debit card or digital wallet, and IRS Direct Pay. The IRS will automatically grant an extension when a taxpayer makes an electronic payment and indicates it’s for an extension. In that case, there is no need for that taxpayer to file Form 4868.

Extensions are automatic for some taxpayers
Some taxpayers will automatically get extra time to file their tax return, even if they do not request an extension:

• Members of the military on duty outside the United States and Puerto Rico receive an automatic two-month extension to file. This year they have until June 17 to file. However, tax payments are still due April 15 or interest will be charged. Details are available in Publication 3, Armed Forces’ Tax Guide.
• Those serving in combat zones have up to 180 days after they leave the combat zone to file returns and pay any taxes due.
• U.S. citizens and resident aliens who live and work outside of the United States and Puerto Rico get an automatic two-month extension to file their tax returns. This year they have until June 17 to file. However, tax payments are still due April 15 or interest will be charged.
• When the U.S. president declares a disaster in an area, the IRS can postpone certain taxpayer deadlines for residents and businesses in the affected area. Taxpayers in certain disaster areas are not required to submit an extension electronically or on paper. Information on the most recent tax relief for disaster situations is available on the IRS website.

Keep in mind
Taxpayers should be aware that payments are still due by the original April 15 deadline, unless in Maine or Massachusetts, regardless of whether they request an extension of time to file a tax return. Taxpayers should file an extension even if they cannot pay the full amount owed. By filing either a return on time or requesting an extension by the April 15 filing deadline, taxpayers can avoid the late-filing penalty.

Taxpayers reduce the overall amount of tax subject to interest and penalty charges by paying as much as they can by the due date. The interest rate for an individual’s unpaid taxes is currently 8%, compounded daily. The late-filing penalty is generally 5% per month and the late-payment penalty is normally 0.5% per month, both of which max out at 25%.

The IRS will work with taxpayers who cannot pay the full amount of tax they owe. Other options to pay, such as getting a loan or paying by credit card, may help resolve a tax debt. Most people can set up a payment plan on IRS.gov to pay off their balance over time.

Revenue Procedure 2024-17 adds Ukraine, Belarus, Sudan, Haiti, Niger, and Iraq to the list of waiver countries for tax year 2023 for which the minimum time requirements are waived. Generally, U.S. citizens or resident aliens living and working abroad are taxed on their worldwide income. However, if their tax home is in a foreign country and they meet either the bona fide residence test or the physical presence test, they can choose to exclude from their income a limited amount of their foreign earned income (up to $120,000 for 2023). Both the bona fide residence test and the physical presence test contain minimum time requirements. Revenue Procedure 2024-17 provides a waiver under section 911(d)(4) for the time requirements for individuals electing to exclude their foreign earned income who must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country.

Revenue Procedure 2024-17 will be in IRB: 2014-15, dated Monday, April 8, 2024.

Notice 2024-29 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for February 2024 used under § 417(e)(3)(D), the 24-month average segment rates applicable for March 2024, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

Notice 2024-29 will be in IRB: 2024-14, dated April 1, 2024.

Notice 2024-31 provides for adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code for the 2024 tax year. These adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States. If the limitation on housing expenses is higher for the 2024 tax year than the adjusted limitations on housing expenses provided in Notice 2023-26, qualified taxpayers may apply the adjusted limitations in this notice for the 2024 tax year to their 2023 tax year.

Notice 2024-31 will be in IRB: 2024-15, dated Monday, April 8, 2024.

WASHINGTON — To counter promoters that marketed misleading information about the Employee Retention Credit (ERC), the Internal Revenue Service urged businesses to review seven suspicious signs of a bad claim and see if the agency’s special programs can help them avoid future compliance issues.

To combat a wave of dubious ERC claims, the IRS has sharply increased compliance action through audits and criminal investigations – with more activity planned in the future. To help those businesses that were misled, the IRS has created special programs to help, including a limited-time offer through March 22 for employers to correct improper ERC claims at a sharp discount.

Employers who improperly claimed ERC can avoid penalties and interest – and even get a discount on repayments if they apply by March 22, 2024, to the ERC Voluntary Disclosure Program. The IRS also offers a special claim withdrawal process for businesses whose claim is still pending. Taking steps now to resolve these issues can help businesses get right and avoid future IRS action, and the agency urged businesses to immediately seek the help of a trusted tax professional to get help.

“Time is running out to take advantage of special IRS programs designed to help businesses misled into making questionable Employee Retention Credit claims,” said IRS Commissioner Danny Werfel. “We have set up a special program that allows repayment of bad claims at a steep discount, and we’re also offering those with pending claims to withdraw with no strings attached. Good people have gotten caught up in the frenzy around this credit, and the IRS wants to help those who want to get right through these special, limited-time programs. There are seven important red flags that businesses should review to determine if their claim is questionable.”

Seven suspicious signs an ERC claim could be incorrect

• Too many quarters being claimed. Some promoters urged employers to claim the ERC for all quarters that the credit was available. Qualifying for all quarters is uncommon. Employers should carefully review their eligibility for each quarter.
• Government orders that don’t qualify. Some promoters told employers they can claim the ERC if any government order was in place in their area, even if their operations weren’t affected or if they chose to suspend their business operations voluntarily. This is false. To claim the ERC under government order rules:
• • Government orders must have been in effect and the employer’s operations must have been fully or partially suspended by the government order during the period for which they’re claiming the credit.
  • The government order must be due to the COVID-19 pandemic.
  • The order must be a government order, not guidance, a recommendation or a statement.

Some promoters suggest that an employer qualifies based on communications from the Occupational Safety and Health Administration (OSHA). This is generally not true. See the ERC FAQ about OSHA communications and the 2023 legal memo on OSHA communications for details and examples.

The frequently asked questions about ERC – Qualifying Government Orders section of IRS.gov has helpful examples. Employers should make sure they have documentation of the government order related to COVID-19 and how and when it suspended their operations. Employers should avoid a promoter that supplies a generic narrative about a government order.

• Too many employees and wrong calculations. Employers should be cautious about claiming the ERC for all wages paid to every employee on their payroll. The law changed throughout 2020 and 2021. There are dollar limits and varying credit amounts, and employers need to meet certain rules for wages to be considered qualified wages, depending on the tax period. Employers should review all calculations to avoid overclaiming the credit. They should not use the same credit amount across multiple tax periods for each employee. For details on credit amounts, see the ERC 2020 vs 2021 Comparison Chart.
• Business citing supply chain issues. Qualifying for ERC based on a supply chain disruption is very uncommon. A supply chain disruption by itself doesn’t qualify an employer for ERC. An employer needs to ensure that their supplier’s government order meets the requirements. Employers should carefully review the rules on supply chain issues and examples in the 2023 legal memo on supply chain disruptions.
• Business claiming ERC for too much of a tax period. It's possible, but uncommon, for an employer to qualify for ERC for the entire calendar quarter if their business operations were fully or partially suspended due to a government order during a portion of a calendar quarter. A business in this situation can claim ERC only for wages paid during the suspension period, not the whole quarter. Businesses should check their claim for overstated qualifying wages and should keep payroll records that support their claim.
• Business didn’t pay wages or didn’t exist during eligibility period. Employers can only claim ERC for tax periods when they paid wages to employees. Some taxpayers claimed the ERC but records available to the IRS show they didn’t have any employees. Others have claimed ERC for tax periods before they even had an employer identification number with the IRS, meaning the business didn’t exist during the eligibility period. The IRS has started disallowing these claims, and more work continues in this area as well as other aspects of ERC.
• Promoter says there’s nothing to lose. Businesses should be on high alert with any ERC promoter who urged them to claim ERC because they “have nothing to lose.” Businesses that incorrectly claim the ERC risk repayment, penalties, interest, audit and other expenses.

The IRS has an interactive ERC Eligibility Checklist that tax professionals and taxpayers can use to check potential eligibility for ERC. It’s also available as a printable guide. The IRS’s frequently asked questions on ERC also include links to additional resources and some helpful examples.

More details on ERC Voluntary Disclosure Program, special withdrawal option

The IRS has two programs to voluntarily resolve improper claims and reduce costs and follow-up steps for businesses who fell for misinformation and aggressive marketing about the ERC.

• The ERC Voluntary Disclosure Program, available through March 22, 2024, is for employers who need to repay ERC they received by Dec. 21, 2023, either as a refund or as a credit on a tax return. This option lets a taxpayer repay the incorrect ERC, minus 20%, for any tax period they weren’t eligible for ERC. Generally, businesses who enter this program don’t have to amend other returns affected by the incorrect ERC and don’t have to repay interest they received from the IRS on an ERC refund.
• Businesses should quickly pursue the claim withdrawal process if they need to ask the IRS not to process an ERC claim for any tax period that hasn’t been paid yet. Taxpayers who received an ERC check but haven’t cashed or deposited it can also use this process to withdraw the claim and return the check. The IRS will treat the claim as though the taxpayer never filed it. No interest or penalties will apply.

WASHINGTON - As the April 15 filing deadline approaches, the Internal Revenue Service issued a reminder to taxpayers on ways to prevent typical errors on their federal tax returns to help speed potential refunds.

Collect all tax-related paperwork
Taxpayers should collect all key documents, including Forms W-2 and 1099, as well as any supporting paperwork for tax deductions or credits such as educational credits or mortgage interest payments. Additionally, having the previous year's tax return accessible is advisable as it may be required.

Use electronic filing
The IRS advises taxpayers and their tax advisors use electronic filing methods such as IRS Free File or alternative e-file service providers. The Direct File pilot is available for some taxpayers in 12 states. Electronic filing minimizes mathematical errors and identifies potential tax credits or deductions for which the taxpayer qualifies.

It's essential for taxpayers to carefully review their tax returns to ensure accuracy. Opting for electronic filing and selecting direct deposit is the fastest and safest way to receive a refund.

Ensure filing status is correct
Tax software serves to prevent errors in selecting a tax return filing status. For taxpayers unsure of their filing status, the Interactive Tax Assistant on IRS.gov can assist in choosing the correct status, particularly when multiple statuses might apply.

Make sure names, birthdates and Social Security numbers are correct
Taxpayers must accurately provide the name, date of birth and Social Security number for each dependent listed on their individual income tax return. The SSN and individual's name should be entered precisely as indicated on the Social Security card.

In cases where a dependent or spouse lacks a SSN and is ineligible to obtain one, an assigned Individual Tax Identification Number (ITIN) should be listed instead of a SSN.

Answer the digital assets question
Everyone who files Forms 1040, 1040-SR, 1040-NR, 1041, 1065, 1120 and 1120S must check one box answering either "Yes" or "No" to the digital asset question. The question must be answered by all taxpayers, not just by those who engaged in a transaction involving digital assets in 2023. Taxpayers must report all income related to digital asset transactions.

See IRS.gov Digital Assets | Internal Revenue Service for details on when to check “yes” and how to report the income.

Report all taxable income
Keep in mind that most income is subject to taxation. Failing to accurately report income may result in accrued interest and penalties. This includes various sources of income such as interest earnings, unemployment benefits and income derived from the service industry, gig economy and digital assets. For further details, consult Publication 525, Taxable and Nontaxable Income.

Make sure banking routing and account numbers are correct
Taxpayers have the option to request direct deposit of a federal refund into one, two or even three accounts. Provide correct banking information: If expecting a refund, ensure the routing and account numbers provided for direct deposit are accurate to avoid delays or misdirected refunds.

Additionally, taxpayers can use their refund to buy U.S. Savings Bonds.

Remember to sign and date the return
When submitting a joint return, it is required for both spouses to sign and date the return. If taxpayers are preparing their taxes independently and filing electronically, they need to sign and authenticate their electronic tax return by inputting their adjusted gross income (AGI) from the prior year. Taxpayers can refer to "Validating Your Electronically Filed Tax Return" for guidance if they have any inquiries.

Ensure address is correct if mailing paper returns
Taxpayers and tax professionals are urged to choose electronic filing whenever possible. However, for those who must submit a paper tax return, it's essential to verify the accurate mailing address either on IRS.gov or in the instructions provided with Form 1040 to prevent processing delays.

Keep a copy of the tax return
Upon readiness to file, taxpayers should create duplicates of their signed return and any accompanying schedules for their personal records. Maintaining copies can help them prepare future tax returns and figure mathematical computations in the event of filing an amended return. Typically, taxpayers should retain records supporting income, deductions or credits claimed on their tax return until the period of limitations for that specific tax return expires.

Request an extension, if needed
Taxpayers requiring more time to file their taxes can easily request a six-month extension until October 15, thereby avoiding late filing penalties. This extension can be requested either through IRS Free File or by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, by April 15. It's important to note that while an extension provides extra time for filing, tax payments are still due on April 15 for most taxpayers.

Alternatively, taxpayers can seek an extension by making a full or partial payment of their estimated income tax and indicating that the payment is for an extension. This can be done using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a debit/credit card or digital wallet. By doing so, taxpayers avoid the necessity of filing a separate extension form and receive a confirmation number for their records.

 

WASHINGTON — The Internal Revenue Service today reminded individuals and businesses that the agency continues to increase the amount of information available in multiple languages.

As the tax filing deadline approaches, the IRS reminds taxpayers that there a variety of ways that people can get help in multiple languages. IRS work in the multilingual area continues to expand, and providing information in more languages is part of the IRS transformation work under the Strategic Operating Plan, made possible by additional resources provided by the Inflation Reduction Act.

“The IRS is committed to making further improvements for taxpayers in a wide range of areas, including expanding options available to taxpayers in multiple languages,” said IRS Commissioner Danny Werfel. “Understanding taxes can be challenging enough, so it’s important for the IRS to put a variety of information on IRS.gov and other materials into the language a taxpayer knows best. This is part of the larger effort by the IRS to make taxes easier for all taxpayers.”

On the IRS website, much of the information has now been translated into seven languages other than English. Taxpayers can simply select their preferred language from the dropdown menu at the top of the page, including Spanish, Vietnamese, Russian, Korean, Haitian Creole, Traditional Chinese and Simplified Chinese.

In addition, a special resource page on IRS.gov is offered in even more languages. The Languages page gives taxpayers an overview of key topics related to information about federal taxes in 21 languages. Topics include:

• Your Rights as a Taxpayer
• Who Needs to File
• Filing for Your Business
• Get Help Preparing Your Tax Return
• Refunds

Designate a preferred language

As the IRS continues translating more information into multiple languages, taxpayers have the option to tell the IRS what language they’d like to use now.

The Schedule LEP, with instructions available in multiple languages, can be filed with a tax return by those taxpayers who prefer to communicate with the IRS in another language. If available, the IRS will then send letters, notices and other information to that taxpayer in their preferred language.

The IRS's commitment to taxpayers who speak various languages is part of a multiyear effort that began several years ago, expanding during the pandemic period and intensifying under the current IRS transformation work. The IRS strives to serve all taxpayers, no matter where they live, their background or what language they speak.

Interpretation services

If taxpayers can't find the answers to their tax questions on IRS.gov, taxpayers can call the IRS or get help in-person at an IRS Taxpayer Assistance Center.

Over the phone, the IRS offers help in more than 350 languages with the support of professional interpreters. For assistance in English and Spanish, taxpayers should call 800-829-1040. For all other languages, taxpayers should call 833-553-9895.

IRS phone help:

• Can provide an interpreter over the phone.
• Can schedule an appointment for the taxpayer at one of IRS's local Taxpayer Assistance Centers so they can get help face-to-face. Local offices provide assistance only on specific topics.

In addition, hundreds of IRS Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs across the country have access to Over the Phone Interpreter (OPI) services. VITA and TCE offer free basic tax return preparation to qualified individuals.

Other language resources

• IRS Publication 17, Your Federal Income Tax is available in seven languages.
• The IRS YouTube multilingual channel now has videos in five different languages.
• IRS social media platforms offer the latest news and information in multiple languages. Find more at @IRSnews, @IRSenEspanol.
• Tax Updates and News From the IRS, available in seven languages, includes the latest filing season updates and the latest info on mileage rates, inflation adjustments and more.

Revenue Ruling 2024-07 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 2024-07 will be in IRB: 2024-14, dated April 1, 2024.