IRS Tax News

  • 29 Apr 2024 10:05 AM | Anonymous

    WASHINGTON —The Internal Revenue Service today issued its annual Data Book detailing the agency’s activities during fiscal year 2023 (Oct. 1, 2022 – Sept. 30, 2023), including revenue collected and tax returns processed. 

    For FY 2023, the IRS collected approximately $4.7 trillion, or about 96 percent of the funding that supports the federal government’s operations — to fund everything from education to national defense. 

    During FY 2023, the IRS processed more than 271.4 million tax returns and other forms, including more than 163.1 million individual income tax returns. 

    Beyond statistics, the 2023 Data Book reflects the initial impacts of the historic long-term funding provided under the Inflation Reduction Act (IRA) of 2022 to transform the IRS and modernize how the agency serves the American people. 

    “This once-in-a-generation funding opportunity provided by the IRA is an investment in the transformation of the IRS and an investment in the financial future of our nation,” IRS Commissioner Danny Werfel wrote in the Data Book introduction. “The effects of this IRA funding — to hire more IRS employees and modernize the agency’s technology and systems to provide better service to the American people — started showing up in the 2023 tax season. And that progress has accelerated into 2024.” 

    In FY 2023, with new phone assistors hired through IRA funding, IRS employees answered nearly 27.3 million phone calls — a 25% increase from FY 2022. The IRS opened or reopened more than 50 Taxpayer Assistance Centers in FY 2023 that were closed during the pandemic. The IRS had more than 1.6 million contacts at 363 centers across the nation in FY 2023 to provide more in-person help to taxpayers – up 18% from FY 2022. 

    These increases in taxpayer assistance – on the phones, in person and on IRS.gov – are continuing in 2024, as highlighted earlier this week. The IRA funding is already making a difference for taxpayers, Werfel said — from shorter wait times for IRS telephone help, to more in-person and online resources for taxpayers, to the IRS’s free Direct File pilot tax filing program launched for 2024 in 12 states. 

    And the IRS has increased its enforcement and collections efforts on high wealth non-filers and those who underreport their tax liability through complex schemes. In FY 2023, there was no increase in audits of tax returns for taxpayers making under $400,000 per year. 

    After several challenging pandemic years, the IRS had a successful filing season in 2023, with the addition of 5,800 new employees hired to provide taxpayer service. Overall, the IRS’s workforce grew 5% in FY 2023. 

    Data highlights 

    The IRS issued $659 million in refunds to taxpayers during FY 2023 — a 2.7% increase over FY 2022. 

    In FY 2023, the IRS closed 582,944 tax return audits, resulting in $31.9 billion in recommended additional tax. 

    For all returns filed for Tax Years 2013 through 2021, the IRS examined 0.44% of individual returns filed and 0.74% of corporation returns filed, through the end of FY 2023. 

    The IRS has examined the returns of 8.7% of taxpayers filing individual returns reporting total positive income of $10 million or more for Tax Years 2013 through 2021, as of the end of FY 2023. 

    The IRS website had more than 880.9 million visits in FY 2023, including more than 303.1 million inquiries on its “Where’s My Refund?” online tool that enables taxpayers to check the status of their tax refund. 

    Some new features in the 2023 Data Book include two new tables from IRS’s Large Business & International Division focused on tax certainty programs. The Advance Pricing Agreement and Compliance Assurance Programs provide businesses the opportunity to work with the IRS to ensure tax compliance prior to filing, which benefits both businesses and the government. 

    The 2023 Data Book also features added information on telephone level of service with automation called LOS(A), and a Trust Score based on Performance.gov metrics. 

    To learn more details, view the complete 2023 Data Book online.


  • 29 Apr 2024 10:04 AM | Anonymous

    Revenue Procedure 2024-20 provides the domestic asset/liability percentages and domestic investment yields needed by foreign life insurance companies and foreign property and liability insurance companies to compute their minimum effectively connected net investment income under section 842(b) of the Internal Revenue Code for taxable years beginning after December 31, 2022. This revenue procedure applies to foreign insurance companies. 

    Revenue Procedure 2024-20 will be in IRB:  2024-19, dated 5/6/24.


  • 29 Apr 2024 10:03 AM | Anonymous

    WASHINGTON – The Internal Revenue Service announced the closure of the Direct File pilot with several hundred thousand taxpayers across 12 states signing up for Direct File accounts, and 140,803 taxpayers filing their federal tax returns using the new service. 

    By design, the Direct File Pilot started out small, and in mid-March the IRS incrementally ramped up availability of the option. During the final days and weeks of the filing season, there was steadily increasing interest from taxpayers in pilot states using the new tool. By the final week of the filing season, Direct File processed more than 5,000 accepted returns each day, bringing the total number of returns filed to more than 140,000. 

    Overall, for the pilot, leading states with accepted returns included California (33,328), Texas (29,099), Florida (20,840), New York (14,144) and Washington (13,954). Across the 12 pilot states, taxpayers using Direct File claimed more than $90 million in tax refunds and reported $35 million in tax balances due. 

    The IRS saw strong interest in the Direct File option from taxpayers throughout the country. Millions of people – including many from outside of Direct File’s 12 pilot states – visited the Direct File website to learn more about the new system. Over the course of the pilot, more than 3.3 million taxpayers started the eligibility checker, 423,450 taxpayers logged into Direct File and 140,803 taxpayers submitted accepted returns. In cases where a user’s tax situation was out of scope of the pilot, they were directed to other options to complete their tax returns, including the separate Free File program that provides free software from the private sector. Overall, usage exceeded IRS expectations for the limited pilot and far exceeded what was necessary to provide sufficient data for the agency to evaluate.                            

    “From the very beginning of the Direct File pilot, we wanted to test new ways to give taxpayers an easy, accurate and free way to file their taxes online directly with the IRS,” said IRS Commissioner Danny Werfel. “We saw a strong response from the pilot, and Direct File’s users generally found it fast and easy to use. This is an important part of our effort to meet taxpayers where they are, give them options to interact with the IRS in ways that work for them and help them meet their tax obligations as easily and quickly as possible. We will be reviewing the results of the pilot and gathering feedback to help us determine our future course involving Direct File. We anticipate making an announcement about future plans later this spring.” 

    The Direct File pilot was designed to test the feasibility of building a system to allow taxpayers to file their federal income tax returns directly with the IRS for free. As part of this, the IRS needed to understand how Direct File would complement existing tax filing options, strengthen the tax filing ecosystem and fulfill transformation objectives from the Inflation Reduction Act reflected in the IRS’s Strategic Operating Plan. 

    The agency’s approach to the Direct File pilot revolved around three themes: 

    • Get it right from the start – A goal of Direct File was to help every taxpayer file an accurate return and get all of the tax benefits to which they are entitled.
    • Taxes are the product – Direct File was designed to improve the tax filing experience.
    • One option among many – While Direct File provided an additional free filing option, the IRS recognizes how taxpayers file their taxes is a personal choice. 

    The Direct File pilot offered customer support via a live chat feature, where users communicated with IRS employees in both English and Spanish. The innovative live chat feature allowed customer support to be integrated directly into the product and didn’t require taxpayers to leave Direct File to get assistance through another channel, such as the phone. Direct File customer support agents worked alongside the product team to ensure a joined-up taxpayer experience. Lessons learned and technology developed by Direct File are being shared across the IRS. 

    User Feedback

    A General Services Administration Touchpoints survey of more than 11,000 Direct File users found that 90% of respondents ranked their experience with Direct File as “Excellent” or “Above Average.” When asked what they particularly liked, respondents most commonly cited Direct File’s ease of use, trustworthiness and that it was free. Additionally, 86% of respondents said that their experience with Direct File increased their trust in the IRS, and 90% of survey respondents who used customer support responded that their experience was “Excellent” or “Above Average.” Additionally, user feedback received throughout the pilot informed product updates and enhancements. 

    “Direct File provided important lessons for us,” Werfel said. “A team of experts from across government worked together – alongside private sector partners with critical expertise – to build and test Direct File. This team designed and built Direct File from the beginning with taxpayers’ help, and we worked with taxpayers to refine the system throughout the pilot. We will consult a wide variety of stakeholders to understand how lessons from Direct File can help us improve the entire tax system as well as assess next steps.” 

    “The IRS was also pleased that we saw increases in use for other free options for taxpayers this tax season, including Free File and returns prepared at our VITA and TCE sites,” Werfel added. 

    Pilot Costs

    Through the end of the pilot, the total amount spent by IRS was $24.6 million, including the Report to Congress. Direct File’s operational costs – including customer service, cloud computing and user authentication – were just $2.4 million. To build and run the pilot, the IRS also engaged the U.S. Digital Service (USDS). The IRS’s agreement with the U.S. Digital Service does not involve costs to IRS. 

    Pilot for Filing Season 2024

    The IRS launched the Direct File pilot for the 2024 filing season. The Inflation Reduction Act mandated that the IRS study interest in and feasibility of creating a direct e-filing tool taxpayers could use to prepare and file their federal income tax return. The IRS commissioned an independent study, which indicated broad interest in such a system, which the IRS detailed in a Direct File Report to Congress in May 2023. 

    Shortly after that report, as directed by the Treasury Department, the IRS assembled a team of tax experts, technologists, engineers and strategists from across government to build the Direct File system. The IRS worked closely with the U.S. Digital Service and the General Services Administration’s technology office 18F to build and test Direct File. 

    Initial testing began in early February 2024 with a handful of federal and state government employees, followed by short open availability windows for more taxpayers to start their returns. After a round of final testing in early March, Direct File opened to all eligible taxpayers in pilot states. 

    Starting Small to Get It Right

    The IRS purposefully designed the pilot to follow best practices for launching a new technology platform – start small, make sure it works then build from there. The pilot was purposefully limited to cover relatively straightforward tax situations such as W-2 wage income; the Earned Income Tax Credit, Child Tax Credit and the Credit for Other Dependents; the standard deduction and deductions for educator expenses and student loan interest. Taxpayers had to live in the same state for the entire tax year 2023 to be eligible to use Direct File. 

    The 12 pilot states included Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming. After completing their federal returns, taxpayers in states with state-income tax – Arizona, California, Massachusetts and New York – were guided to a state-sponsored tool to complete their state filing. 

    What Comes Next

    Since the pilot began, the IRS has been collecting and analyzing data, which we will continue analyzing in the coming weeks. In the coming days, the agency plans to release a report about the pilot’s scope, technology and taxpayer experience, customer support, state integration and the costs and benefits. The report examines both the strengths of the pilot and areas that could be improved if Direct File goes forward. 

    No decision has been made about the future of Direct File at this time. Over the next several weeks, the IRS will meet with a wide variety of partners and stakeholders to learn more about how taxpayers interacted with Direct File and what they expect from a direct e-filing system, then carefully review data from the pilot and feedback from those discussions. Based on that data and feedback, the IRS expects to announce a decision about the future of Direct File later this spring. 

    “We will consult a wide variety of stakeholders to understand how lessons from Direct File can help us improve the entire tax system as well as assess next steps,” Werfel said.


  • 29 Apr 2024 10:02 AM | Anonymous

    WASHINGTON – The Internal Revenue Service today offered helpful information to entrepreneurs in anticipation of the upcoming kick-off of National Small Business Week, celebrating and recognizing the crucial contributions America's small businesses make to the nation's economy.

     

    Each year, the U.S. Small Business Administration spearheads National Small Business Week, helping entrepreneurs with resources, benefits and other important business startup information that small business owners can use to launch their enterprises. This year's celebration — Building on America’s Small Business Boom — runs from April 28 through May 4.

     

    The Internal Revenue Service is a partner in the National Small Business Week celebration, and this year the IRS will be showcasing numerous resources to help small business entrepreneurs learn and understand their tax responsibilities and benefits. Throughout the week, IRS will be publishing helpful information in its popular Tax Tips e-News publications, as well as on IRS social media platforms including Facebook, X (formerly Twitter), LinkedIn and Instagram.

     

    Next week, the IRS will share several important tax topics to help small business entrepreneurs prosper and grow: 

    ·         Monday, April 29. Best practices for small businesses — The IRS strongly encourages small business entrepreneurs to take advantage of the numerous resources available on gov. Knowing how to start a business and understanding best practices are essential for the success of small businesses.

    ·         Tuesday, April 30. What to know when starting a business — Gain insights into key factors to consider when launching a new business venture. Access the Starting a business webpage to ensure a strong foundation for an entrepreneurial journey.

    ·         Wednesday, May 1. Beware of scams — The IRS "Dirty Dozen" and more. Most cyberattacks are aimed at small businesses with fewer than 100 employees. Small business owners must implement data protection safeguards and always be on the lookout for tax-related scams.

    ·         Thursday, May 2. Tips for tax pros who support small businesses — Stay informed with the latest IRS updates and access resources tailored for tax professionals.

    ·         Friday, May 3. Expect the unexpected — The IRS can help small businesses after a disaster. A critical focus of the IRS is to relieve the federal tax burden of taxpayers who have been impacted by federally declared disasters. The IRS works with various agencies to provide assistance and coordinate disaster relief. 

    Seeking to start a small business involves several important considerations related to tax issues:

     

    How to get an Employer Identification Number

     

    Most business owners need an Employer Identification Number (EIN), a permanent form of identification that, in many cases, must be used for filing a tax return and can be used for various business needs such as opening bank accounts. Businesses can get an EIN online immediately at IRS.gov, and it's free.

     

    Choosing a business structure

     

    Small business owners, as taxpayers, must decide on what the most appropriate business structure should be for their enterprise when they start their new business. The business structure they choose dictates the type of income tax return form that the business owner will file each year. Some common business structures include: 

    ·         Sole proprietorship. Individuals who own unincorporated businesses exclusively, by and for themselves are sole proprietors.

    ·         Partnerships. A partnership is the relationship between two or more people to conduct trade or business, with each person contributing money, property, labor or skill and sharing in the profits and losses of the business.

    ·         Corporations. In a corporation, prospective shareholders exchange money, property or both in order to acquire the corporation's capital stock.

    ·         S corporations. An S corporation is a corporation that elects to pass corporate income, losses, deductions and credits to its shareholders for federal tax purposes.

    ·         Limited liability company (LLC). An LLC may be treated as a corporation, a partnership or as part of the owner’s tax return (e.g., sole proprietorship), depending on elections made by the LLC and its members. LLCs may also be subject to state regulations, which vary from state to state. 

    Understanding business taxes

     

    Federal law requires all individuals, including small business owners, to pay taxes on all income earned. This typically involves making quarterly estimated tax payments for small business owners and self-employed individuals. How business taxes are paid depends on the business structure that an entrepreneur has chosen. The following are the four generally recognized business tax types: 

    ·         Income tax. With the exception of partnerships, all businesses must file an annual federal income tax return; partnerships must file an information return.

    ·         Self-employment tax. A Social Security and Medicare tax primarily for individuals who work for themselves. Tax payments contribute to the individual’s Social Security system coverage.

    ·         Employment tax. Small businesses with employees have certain employment tax responsibilities that must be paid, along with specific forms that must be filed.

    ·         Excise tax. Imposed on various goods, services and activities, excise taxes may be imposed on a manufacturer, retailer or consumer, depending on the specific tax. 

    Choosing a “tax year”

     

    A "tax year" is an accounting period for reporting income and expenses. Small businesses can choose which tax year works best for their operational needs: 

    ·         Calendar year. Twelve consecutive months beginning January 1 and ending December 31.

    ·         Fiscal year. Twelve consecutive months ending on the last day of any month except December. A 52- to 53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month. 

    Be a responsible recordkeeper

     

    Maintaining well-organized business records not only helps in tax return preparation, but also assists small business owners in preparing financial statements, identifying income sources, tracking deductible expenses and monitoring their business progress. Small business owners should retain their business records for at least three years.

     

    More small business information 

    ·         Small Business and Self-Employed Tax Center

    ·         10 Steps to Start Your Business

    ·         Hobby or Business? IRS Offers Tips to Decide

    ·         Industries, Professions and Business Tax Centers 

    Finally, for more information on a broader range of topics and answers to small business tax questions, visit the IRS website at IRS.gov


  • 29 Apr 2024 10:01 AM | Anonymous

    Inside This Issue

    1. Virtual information session on BOI reporting requirements April 30
    2. Tax Pros: Register now for the 2024 IRS Nationwide Tax Forum
    3. IRS Appeals forms new office
    4. Final guidance on transfers of certain credits under IRA
    5. IRS accepting 2025 Low Income Taxpayer Clinic grant applications
    6. National Small Business Week begins April 28
    7. Direct File pilot officially closes after more than 140,000 taxpayers successfully use system in 12 states
    8. Upcoming webinars for tax practitioners
    9. News from the Justice Department’s Tax Division

    1.  Virtual information session on BOI reporting requirements April 30

    A new law requires many companies doing business in the United States to report information to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) about who ultimately owns or controls them. Join FinCEN on April 30 at 2 p.m. ET for a virtual information session on beneficial ownership information reporting requirements and how to comply with the law. Learn more about beneficial ownership information reporting at https://www.fincen.gov/boi

    Back to top

    2.  Tax Pros: Register now for the 2024 IRS Nationwide Tax Forum

    The IRS encourages tax professionals to register now for the 2024 IRS Nationwide Tax Forum, coming this summer to Chicago, Orlando, Baltimore, Dallas and San Diego.

    The Nationwide Tax Forum is the IRS’s largest annual outreach event designed and produced for the tax professional community. This year’s agenda will feature more than 40 sessions on tax law and ethics as well as hot topics like beneficial ownership information, cybersecurity, tax scams and schemes, digital assets and clean energy credits. Attendees at the forums will also learn how the IRS is evolving to meet their needs and those of their clients.

    “This is a historic time at the IRS, with change taking place across the agency with our ongoing transformation work,” said IRS Commissioner Danny Werfel. “This summer you’ll have a chance to learn more about these changes. We encourage you to register soon. Some of these locations will fill up quickly.”

    For more information, and to register online, visit IRS Nationwide Tax Forum.

    Back to top

    3.  IRS Appeals forms new office

    The IRS Independent Office of Appeals has created the Alternative Dispute Resolution Program Management Office (ADR PMO), which will collaborate with business operating divisions to help taxpayers resolve tax disputes earlier and more efficiently. ADR PMO will remove barriers to participating in Post-Appeals Mediation - a program that introduces a new mediator if the parties are unable to reach agreement during traditional Appeals settlement negotiations.

    “This new office will revitalize existing programs and pilot new initiatives as part of IRS transformation efforts in alignment with the IRS Strategic Operating Plan,” IRS Commissioner Daniel Werfel said in a statement. “We’re committed to providing taxpayers who wish to resolve their issues without litigation a choice of early resolution options, and the Alternative Dispute Resolution Program Management Office will ensure taxpayers are aware of those options.”

    Back to top

    4.  Final guidance on transfers of certain credits under IRA

    The Department of Treasury and the IRS released final guidance detailing the transfer of clean energy tax credits, a provision that permits tax credit holders to sell their credits to interested parties. The Inflation Reduction Act (IRA) and the Creating Helpful Incentives to Produce Semiconductors Act (CHIPs) allows taxpayers to take advantage of certain manufacturing investment, clean energy investment and production tax credits through elective pay or transfer provisions. The final guidance provides defined guidelines, with detailed rules for partnerships and S corporations. Companies must obtain a pre-filing registration number to complete a tax credit transfer.

    Back to top

    5.  IRS accepting 2025 Low Income Taxpayer Clinic grant applications

    The IRS is accepting 2025 Low Income Taxpayer Clinic grant applications from all qualified organizations through June 12. The funding and the period of performance for the grant will be Jan. 1, 2025, to Dec. 31, 2025.

    Back to top

    6.  National Small Business Week begins April 28

    Tax pros: As part of National Small Business Week, April 28 to May 4, the IRS has a variety of resources available for small business owners to help them understand and meet their tax responsibilities.

    Back to top

    7.  Direct File pilot officially closes after more than 140,000 taxpayers successfully use system in 12 states

    The Internal Revenue Service announced the closure of the Direct File pilot with several hundred thousand taxpayers across 12 states signing up for Direct File accounts, and 140,803 taxpayers filing their federal tax returns using the new service.

    By design, the Direct File Pilot started out small, and in mid-March the IRS incrementally ramped up availability of the option. During the final days and weeks of the filing season, there was steadily increasing interest from taxpayers in pilot states using the new tool. By the final week of the filing season, Direct File processed more than 5,000 accepted returns each day, bringing the total number of returns filed to more than 140,000.

    Back to top

    8.  Upcoming webinars for tax practitioners

    The IRS offers the upcoming live webinars to the tax practitioner community. For more information or to register, visit the Webinars for Tax Practitioners webpage

    • Tax Implications of Chapter 11 Bankruptcy Filing for Individuals on May 1, at 1 p.m. ET. Earn up to 2 CE credits (Federal Tax). Certificates of completion are being offered.
    • Tax Implications of Chapter 11 Bankruptcy Filing for Business Entities on May 15, at 1 p.m. ET. Earn up to 2 CE credits (Federal Tax). Certificates of completion are being offered.

    Back to top

    9.  News from the Justice Department’s Tax Division

    Vervia Watts, an Illinois tax preparation business owner, was sentenced to one year and one day in prison for preparing false tax returns. The complaint alleges, Watts prepared and filed over 900 fraudulent income tax returns from January 2017 through June 2023. In addition to the term of imprisonment, Watts is ordered to serve one year of supervised release and to pay approximately $1.3 million in restitution. IRS Criminal Investigation investigated the case.

    The U.S. District Court for the Southern District of Florida, filed a civil injunction suit to permanently bar Nia Daniel, a Florida tax preparation business owner. The complaint alleges that Daniel prepared over 2,000 federal income tax returns from 2020 through 2024. By repeatedly understanding her customers’ tax liabilities, the complaint alleges that the United States has been harmed by Daniel’s conduct resulting in the loss in tax revenue of more than $500,000 in 2023 alone. 


  • 26 Apr 2024 7:07 AM | Anonymous

    WASHINGTON —The Internal Revenue Service Independent Office of Appeals today announced the formation of a new Alternative Dispute Resolution Program Management Office. This office will collaborate with the IRS Business Operating Divisions to help taxpayers resolve tax disputes earlier and more efficiently.   

    “This new office will revitalize existing programs and pilot new initiatives as part of IRS transformation efforts in alignment with the IRS Strategic Operating Plan,” said IRS Commissioner Daniel Werfel. “We’re committed to providing taxpayers who wish to resolve their issues without litigation a choice of early resolution options, and the Alternative Dispute Resolution Program Management Office will ensure taxpayers are aware of those options.” 

    For years, the IRS has offered ADR at various stages of the tax administrative process. While ADR can be a quicker, more collaborative and cost-effective approach to case resolution, use of the programs has declined in recent years. 

    By increasing awareness, changing and revitalizing existing programs and piloting new approaches, the IRS hopes to make its ADR programs, such as Fast Track Settlement, Fast Track Mediation, Rapid Appeals Process and Post-Appeals Mediation more attractive and accessible for all eligible parties. 

    “We’re excited to give our programs the focus they merit,” said Acting Chief of Appeals, Elizabeth Askey. “Michael Baillif, who recently joined Appeals as a senior advisor, will serve as the director of the new office; he has extensive dispute resolution experience in both the private sector and the IRS, and I know he’ll be excellent in this role.” 

    Among other things, the ADR PMO will pilot changes to Fast Track Settlement—a program that allows Appeals to mediate disputes between a taxpayer and the IRS while the case is still in Exam’s jurisdiction.

    More specifically, the new office will also remove barriers to participating in Post-Appeals Mediation—a program that introduces a new mediator if the parties are unable to reach agreement during traditional Appeals settlement negotiations. More specifically, the ADR PMO plans to: 

    • Test ADR programs that allow Appeals to help resolve or mediate disputes earlier in the examination process; 
    • Streamline and clarify existing guidance; and
    • Remove barriers to enable easier use of and access to ADR.

    The ADR PMO, in collaboration with the IRS Business Operating Divisions, will also perform outreach and education, coordinate the training and support of mediators, collect data and monitor the effectiveness of ADR offerings. 

    The traditional appeal process will remain available for taxpayers who choose it. 

    These proposed ADR enhancements reflect input from both internal and external stakeholders who submitted comments in response to the IRS's July 27, 2023 request, and recent reports from the Government Accountability Office and the Taxpayer Advocate Service. The office is still developing the proposed pilots and changes to existing programs and will communicate changes as they become available. 

    Questions or comments about the proposal can be submitted to the ADR PMO at ap.adr.programs@irs.gov.


  • 25 Apr 2024 2:40 PM | Anonymous

    WASHINGTON – The Department of Treasury and Internal Revenue Service issued final regulations today describing rules and definitions for the transfer of eligible credits in a taxable year, including specific rules for partnerships and S corporations. 

    The Inflation Reduction Act and the Creating Helpful Incentives to Produce Semiconductors act (CHIPs) enable taxpayers to take advantage of certain manufacturing investment, clean energy investment and production tax credits through elective pay or transfer provisions. 

    For tax years beginning after Dec. 31, 2022, eligible taxpayers can choose to transfer all or a portion of eligible credits to unrelated taxpayers for cash payments. 

    The unrelated taxpayers are then allowed to claim the transferred credits on their tax returns. The cash payments are not included in gross income of the eligible taxpayers and are not deductible by the unrelated taxpayers. 

    The final regulations also describe special rules related to excessive credit transfers and recapture events, including rules for determining whether an event has occurred, the resulting tax impact and the person responsible for that tax impact.  

    The final regulations also provide rules for a mandatory IRS pre-filing registration process through an electronic portal. The pre-filing registration process must be completed, and a registration number received, prior to making an election to transfer eligible credits. 

    In addition, the final regulations describe specific rules for partnerships and S corporations as eligible taxpayers and transferee taxpayers. 

    Previously, the IRS issued proposed regulations for the transfer of applicable credits and temporary regulations for the mandatory IRS pre-filing registration process

    For detailed instructions on how to use the tool, refer to Publication 5884, Inflation Reduction Act (IRA) and CHIPS Act of 2022 Pre-Filing Registration Tool

    The IRS also updated the frequently asked questions based on the final regulations. 

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


  • 25 Apr 2024 2:39 PM | Anonymous

    WASHINGTON — With the funding from the Inflation Reduction Act (IRA), the Internal Revenue Service continues to help taxpayers in unique ways to take advantage of clean energy credits.   

     

    The IRA, with its associated funding, gave the IRS the opportunity to transform taxpayer services – creating new, fully electronic processes and systems, updating legacy systems and improving compliance and fraud mitigation.

     

    The agency continues focusing on customer service and expanding online tools by offering virtual sessions to answer taxpayer questions, helping with technical issues and providing a steady assistance for those looking to benefit from the clean energy credits.

     

    IRS Energy Credits Online

     

    In November 2023, the IRS announced that sellers of clean vehicles can register using the new IRS Energy Credits Online tool.

     

    Known as IRS Energy Credits Online or IRS ECO, this free electronic service is secure, accurate and requires no special software, making it accessible to large and small businesses alike.

     

    The IRS's new Energy Credits Online tool allows dealers and sellers of clean vehicles to complete the entire process online and receive advance payments within 72 hours of the expiration of a cancellation period. The tool will generate a time of sale report that the vehicle buyer will use when filing their federal tax return to claim or report the credit.

     

    IRA and CHIPS Pre-filing Registration Tool

     

    In December 2023, the IRS announced that qualifying businesses, tax-exempt organizations or entities such as state, local and Indian tribal governments can register using the new IRA/CHIPS Pre-filing Registration Tool, available free from the IRS so they can take advantage of the elective payment or transfer of credits.

     

    The Inflation Reduction Act and the Creating Helpful Incentives to Produce Semiconductors Act, known as CHIPS, allows taxpayers to take advantage of certain manufacturing investment, clean energy investment and production tax credits through elective pay or transfer.

     

    Elective payment and the transfer election create alternative ways for applicable entities and eligible taxpayers who have earned one of the IRA clean energy or the CHIPS credits to get the benefit of the credit even if the taxpayer cannot use the credit to offset their tax liability.

     

    Milestones

     

    To date, more than 900 entities registered nearly 59,000 facilities and properties for a direct payment or transfer of credit. IRS registered 13,200 dealers, acknowledged 96,800 advance payments and paid over $665 million.

     

    The IRS and Treasury conducted a robust and wide-ranging educational campaign on these new provisions to benefit taxpayers, including hosting office hour sessions where representatives from the IRS are available to answer questions related to the preregistration process.

     

    Office hours

     

    The IRS also developed new ways to engage end users and share messaging on IRA clean energy credits, to include implementing a specialized customer service model that provides personalized services so taxpayers can receive prompt assistance with applying for clean energy credits. The IRS is committed to resolving any issues facing manufacturers, dealers and sellers navigating the IRS' new ECO tool.

     

    For example, the IRS hosted over 40 “office hours” sessions with more than 5,000 attendees to assist users with clean vehicle registration, elective pay and transferability on IRS ECO. During these sessions, IRS subject matter experts conduct walk-throughs of the registration process and answer questions.  

     

    Use IRS.gov to find helpful resources

     

    The IRS reminds taxpayers that several resources for the Credits and deductions under the Inflation Reduction Act can be found on IRS.gov. 


  • 23 Apr 2024 2:35 PM | Anonymous

    Attendees get up to 19 continuing education credits, networking opportunities, case resolution, advice on practice management and more

    WASHINGTON — The IRS encourages tax professionals to register now for the 2024 IRS Nationwide Tax Forum, coming this summer to Chicago, Orlando, Baltimore, Dallas and San Diego.

    The Nationwide Tax Forum is the IRS’s largest annual outreach event designed and produced for the tax professional community. This year’s agenda will feature more than 40 sessions on tax law and ethics as well as hot topics like beneficial ownership information, cybersecurity, tax scams and schemes, digital assets and clean energy credits.

    Enrolled agents, certified public accountants, Annual Filing Season Program (AFSP) participants and other tax professionals can earn up to 19 continuing education (CE) credits. A complete listing of seminar courses will be available in May.

    IRS transformation: A historic time

    Attendees at the forums will also learn how the IRS is evolving to meet their needs and those of their clients. The IRS is continuing to make changes across the agency as part of its transformation work under the Strategic Operating Plan, which is made possible with funding from the Inflation Reduction Act.

    “This is a historic time at the IRS, with change taking place across the agency with our ongoing transformation work,” said IRS Commissioner Danny Werfel. “This summer you’ll have a chance to learn more about these changes. We encourage you to register soon. Some of these locations will fill up quickly.”

    See Werfel’s YouTube video inviting tax professionals to the 2024 forums.

    Locations and registration details

    The following is the 2024 Nationwide Tax Forum lineup:

    Location

    Forum Dates

    Standard Rate Pre-Registration Deadline

    Chicago, IL

    July 9 – 11

    June 25

    Orlando, FL

    July 30 - Aug. 1

    July 16

    Baltimore, MD

    Aug. 13 - 15

    July 30

    Dallas, TX

    Aug. 20 - 22

    Aug. 6

    San Diego, CA

    Sept. 10 - 12

    Aug. 27

    Attendees who act by the June 17 Early Bird deadline can take advantage of the lowest registration rate of $255 per person. Standard pricing of $309 begins on June 17 and ends two weeks before the start of each forum. Onsite registration is also available at a cost of $390.

    Please note, members of the following associations can save $10 on their registration:

    • American Bar Association (ABA)
    • American Institute of Certified Public Accountants (AICPA)
    • National Association of Enrolled Agents (NAEA)
    • National Association of Tax Professionals (NATP)
    • National Society of Accountants (NSA)
    • National Society of Tax Professionals (NSTP)

    Members should contact their association directly for a tax forum discount code.

    Forum highlights

    Attendees get more than continuing education when they attend the IRS Nationwide Tax Forum. Here are some additional benefits for attendees:

    Exhibit Hall - In addition to the seminars, the forums also feature a two-day expo with representatives from tax, financial and business communities offering their products, services and expertise designed with the tax professional in mind. Inside the exhibit hall, attendees can visit the IRS Zone to share their perspectives with IRS representatives and to learn more about the IRS’s vision for transformation and digitalization.

    Case Resolution Program - Tax professionals can once again bring their toughest unresolved IRS case to the Case Resolution Program Room. IRS representatives with specialized expertise will be available to meet one-on-one with tax professionals (by appointment only). A new addition to the 2024 IRS Tax Forum will be the ability to book an appointment with TAS Case Resolution in advance. Because of the popularity of the program, tax professionals can bring only one client case per meeting with IRS representatives in the Case Resolution Program. For complete details including what tax professionals need to bring to the appointment, visit the Case Resolution Information Page.

    En Espanol – This year the IRS is increasing the number of Spanish-language seminar courses available to attendees. Details will be provided next month in the seminar course list. Also, see the Spanish Practice Management offering below.

    Hiring – Curious about career paths at the IRS? IRS hiring staff will be on hand to talk with attendees about jobs currently open in examination and other areas across the agency.

    Monday Pre-Forum Activities - Attendees arriving early can maximize their time at the Tax Forum by participating in additional events. On Monday, IRS partner associations NATP and NSTP will offer an optional Annual Filing Season Refresher course for participants in the IRS Annual Filing Season Program.

    Following that, at 5 p.m., IRS partners will present a 90-minute panel discussion on Practice Management. Experts from the NAEA, NATP, NSA, NSTP and Padgett Business Services will present ideas on how new, as well as established tax professionals can attract and manage customers, increase productivity and have a more satisfying work-life balance. A Spanish-language version of the panel will be presented at 7 p.m.

    National Taxpayer Advocate Town Hall - Meet National Taxpayer Advocate Erin Collins on Wednesday during the Forum Networking Reception to discuss issues facing taxpayers and tax practitioners. The Taxpayer Advocate wants to hear from tax pros and learn about issues facing taxpayers and practitioners. Includes Q&A.

    Registration information

    For more information, and to register online, visit www.irstaxforum.com.


  • 23 Apr 2024 2:34 PM | Anonymous

    Application period runs through June 12, 2024

    WASHINGTON — The Internal Revenue Service today announced it will accept applications for Low Income Taxpayer Clinic matching grants from all qualified organizations.

    The application period runs from April 22, 2024, to June 12, 2024. The funding and the period of performance for the grant will be Jan. 1, 2025, to Dec. 31, 2025. 

    “Low Income Taxpayer Clinics make a tremendous impact on the lives of taxpayers. Especially, for those with the most need,” said National Taxpayer Advocate Erin M. Collins. “I encourage all qualifying organizations to apply for an LITC grant and join the community of clinics across the country that are making a real difference and changing lives.”

    Under Internal Revenue Code section 7526, the IRS awards matching grants to qualifying organizations to develop, expand or maintain an LITC. For every dollar of funding awarded by the IRS, an LITC must have a dollar of match. An LITC must provide services for free or for no more than a nominal fee (except for reimbursement of actual costs incurred).

    LITCs ensure the fairness and integrity of the tax system for taxpayers by:

    ·         Providing pro bono representation to assist low-income taxpayers in resolving tax disputes with the IRS;

    ·         Educating taxpayers for whom English is a second language (ESL taxpayers) about their rights and responsibilities as taxpayers; and

    ·         Identifying and advocating on issues that impact these taxpayers.

    For fiscal year 2024, Congress has provided overall LITC grant funding of $28 million and has authorized funding of up to $200,000 per clinic. The President’s FY 2025 budget request proposes an overall LITC grant funding level of $26 million and a continuation of the $200,000 per-clinic funding cap. In light of the President’s budget request and the uncertain timeline for final congressional action, the IRS will allow applicants to request up to $200,000 for the 2025 grant year. If, for FY 2025, Congress significantly reduces the overall LITC grant funding level or reduces the per-clinic funding cap, the IRS will adjust each grant recipient’s award to reflect any limitations in place at that time.

    To achieve maximum access to justice for low-income and ESL taxpayers, the IRS has expanded the eligibility criteria for a grant by removing the requirement for eligible organizations to provide direct controversy representation. Representation may be provided by referring taxpayers to qualified representatives who have agreed to handle the referred cases on a pro bono basis.

    The IRS will also continue the ESL Education Pilot Program that was rolled out as part of the February 2023 supplemental funding opportunity. A grant may be awarded to an organization to operate a program to inform ESL taxpayers about their rights and responsibilities under the IRC without the requirement to also provide tax controversy representation to low-income taxpayers. See IRS Publication 3319, 2025 Grant Application Package and Guidelines for examples of what constitutes a “clinic.”

    Despite the IRS's efforts to foster parity in availability and accessibility when choosing organizations to receive LITC matching grants, there remain communities that are underserved by clinics. Currently, the following counties, states and territory do not have an LITC or have only partial coverage:

    ·         Florida – Citrus, Hamilton, Hernando, Lafayette, Madison, Nassau, St. Johns, Sumter, Suwannee, Taylor, Brevard, Lake, Orange, Osceola, Seminole and Volusia counties.

    ·         Hawaii – the entire state.

    ·         Kansas – the entire state.

    ·         Montana -- Blaine, Broadwater, Carbon, Carter, Custer, Daniels, Dawson, Deer Lodge, Fallon, Fergus, Flathead, Garfield, Golden Valley, Granite, Jefferson, Judith Basin, Lincoln, Madison, McCone, Mineral, Missoula, Musselshell, Petroleum, Phillips, Pondera, Powder River, Powell, Prairie, Richland, Sanders, Sheridan, Stillwater, Sweet Grass, Toole, Treasure, Valley, Wheatland and Wibaux counties.

    ·         Nevada – the entire state.

    ·         North Dakota – the entire state.

    ·         South Dakota – the entire state.

    ·         West Virginia -– the entire state.

    ·         The territory of Puerto Rico – the entire country.

    The IRS is particularly interested in receiving applications from organizations that provide services in these underserved geographic areas. Priority will be given to established organizations that can help provide coverage to underserved geographic areas. For the ESL Education Pilot Program, special consideration will be given to established organizations with existing community partnerships that can deliver services to the target audiences.

    The LITC Program is administered by the Office of the Taxpayer Advocate at the IRS, led by National Taxpayer Advocate Erin M. Collins. Although LITCs receive partial funding from the IRS, LITCs, their employees and their volunteers operate independently of the IRS.

    Applications must be submitted electronically by 11:59 p.m. Eastern Time on June 12, 2024. The funding number is TREAS-GRANTS-042025-001.

    Copies of IRS Publication 3319, 2025 Grant Application Package and Guidelines, can be downloaded from IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676). To assist organizations in applying for funding, a "Reminders and Tips for Completing Form 13424-M" document is available on the LITC grants page.

    Questions about the LITC Program or the grant application process can be addressed to the LITC Program Office by email at litcprogramoffice@irs.gov. Alternatively, you may contact Karen Tober by email at karen.tober@irs.gov.

    More information about LITCs and the work they do to represent, educate and advocate on behalf of low-income and ESL taxpayers is available in IRS Publication 5066, 2023 LITC Program Report. A short video about the LITC Programis also available on the Taxpayer Advocate Service YouTube channel.

    Join the LITC Program Office for one of two optional webinars where they will provide information about the LITC Program and the application process. Details on the dates and times of the webinars are available at www.taxpayeradvocate.irs.gov/about-us/litc-grants.


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