Revenue Ruling 2022-05 containing the interest rates: underpayments and overpayments. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning April 1, 2022, will be 4 percent for overpayments (3 percent in the case of a corporation), 4 percent for underpayments, and 6 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 1.5 percent.

Revenue Ruling 2022-05 will be in IRB:    IRB 2022-10, dated March 7, 2022.

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

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points.  The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.  The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during January 2022 to take effect Feb. 1, 2022, based on daily compounding.

Revenue Ruling 2022-05 announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2022-10, dated March 7, 2022.

WASHINGTON — The Internal Revenue Service's Low Income Taxpayer Clinic (LITC) program office announced today that its 2022 Publication 4134, Low Income Taxpayer Clinic List, is now available.

IRS Publication 4134, Low Income Taxpayer Clinic List, provides information about LITCs by geographic area, including contact information and details about the languages, in addition to English, in which each LITC offers services.

How an LITC can help

A Low Income Taxpayer Clinic (LITC) represents individuals whose incomes are generally at or below 250% of the federal poverty guideline, and who are seeking to resolve tax problems with the IRS, such as audits, appeals and tax collection disputes. LITCs can represent taxpayers in court as well as before the IRS. They also can provide information about taxpayer rights and responsibilities in different languages for English as a Second Language (ESL) taxpayers.

LITC program information

The LITC program is a federal grant program administered by the Taxpayer Advocate Service, led by National Taxpayer Advocate Erin M. Collins. Through the LITC program, the IRS awards matching grants of up to $100,000 per year to qualifying organizations. LITCs provide services for free or a small fee. They receive IRS grants but work independently to assist and advocate for taxpayers.

Interested in becoming an LITC?

Organizations interested in representing, educating and advocating for low-income and ESL taxpayers can check out this video about applying for an LITC grant and review the most recent application package.

There are presently no LITCs in the states of Montana and North Dakota, the territory of Puerto Rico, as well as unserved counties in the states of Arizona, Florida, Idaho, Nevada, North Carolina and Pennsylvania. Qualifying organizations that will serve taxpayers in these states, territories and unserved counties are strongly encouraged to apply.

A complete list of organizations that are currently funded and where they are located can be found by looking at Publication 4134. Individuals who have questions or need additional information about the LITC program or application process, can contact Karen Tober with the LITC program office via email at LITCProgramOffice@irs.gov.

WASHINGTON — The Internal Revenue Service today updated frequently asked questions (FAQs) for the 2021 Recovery Rebate Credit.

These FAQs (FS-22-12) revisions are as follows:

Individuals who did not qualify for, or did not receive, the full amount of the third Economic Impact Payment may be eligible to claim the 2021 Recovery Rebate Credit based on their 2021 tax year information. Individuals may have received their third Economic Impact Payment through initial and “plus-up” payments in 2021.

Note:  Third Economic Impact Payments are different than the monthly advance Child Tax Credit payments that the IRS disbursed from July through December 2021.

Most eligible people already received their Economic Impact Payments and won’t include any information about their payment when they file. However, people who are missing stimulus payments should review the information on the Recovery Rebate Credit page to determine their eligibility and whether they need to claim a Recovery Rebate Credit for tax year 2021.

To claim any remaining credit for 2021, eligible people must file a 2021 tax return, even if they usually do not file taxes.  Also, people who did not receive all of their first and second Economic Impact Payments in 2020 can receive those amounts only by filing a 2020 tax return (or amending a previously filed return) and claiming the 2020 Recovery Rebate Credit.  They should review the Recovery Rebate Credit page to determine their eligibility.

The 2021 Recovery Rebate Credit can reduce any taxes owed or be included in the tax refund for the 2021 tax year. Filers must ensure to not mix information from their 2020 and 2021 tax years. In particular, filers should take care to NOT include any information regarding the first and second Economic Impact Payments received in 2020, or the 2020 Recovery Rebate Credit, on their 2021 return. They will need the total of the third payment received to accurately calculate the 2021 Recovery Rebate Credit when they file their 2021 federal tax return in 2022. 

Individuals can now view this information in their online account.

People can also locate this information on Notice 1444-C, which they received from the IRS during 2021 after each payment, as well as Letter 6475, which the IRS will mail to them  through March 2022. 

The FAQ’s cover most questions relating to claiming the credit and are for use by taxpayers and tax professionals and are being issued as expeditiously as possible.

File for free and use direct deposit

Taxpayers with income of $73,000 or less can file their federal tax returns electronically for free through the IRS Free File Program. The fastest way to receive a tax refund is to file electronically and have it direct deposited into a financial account. Refunds can be directly deposited into bank accounts, prepaid debit cards or mobile apps as long as a routing and account number is provided.

More information about reliance is available.

Notice 2022-09 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for February 2022 used under § 417(e)(3)(D), the 24-month average segment rates applicable for February 2022, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).
 
Notice 2022-09 will be in IRB:   2022-9, dated February 28, 2022.

Today, the IRS published the latest executive column, “A Closer Look,” which features Gwen Garren, Director, Refundable Credits Program Management, providing an overview of the Earned Income Tax Credit (EITC) and its recent changes. “The EITC has been benefitting low- and moderate-income workers for 46 years, and many working families receive more money through EITC than they pay in federal income tax,” said Garren. “It gives us a great feeling to know our hard work results in people getting the money they are eligible for, and we’re committed to getting the job done as quickly as we can, even with current constraints related to the pandemic.” Read more here. Read the Spanish version here.

See more information in a recent news release on this topic.

“A Closer Look” is a column from IRS executives that covers a variety of timely issues of interest to taxpayers and the tax community. It also provides a detailed look at key issues affecting everything from IRS operations and employees to issues involving taxpayers and tax professionals.

Check here for prior posts and new updates.

WASHINGTON — The Internal Revenue Service today reminded those with income from a farming or fishing business they should file and pay their entire tax due on or before Tuesday, March 1, if they did not make estimated tax payments.

Taxpayers can pay from their bank account using their Online Account or they can schedule payments in advance using IRS Direct Pay.

Farmers and fishers who decided to forgo making estimated tax payments have the option to pay the entire tax due on or before March 1. Normally, this special rule applies when income from farming or fishing made up at least 2/3 of the total gross income in either the current or the preceding tax year. Those opting to file by the regular April 18 deadline should have made an estimated tax payment by January 15 to avoid an estimated tax penalty. For more information on estimated tax, see Publication 505, Tax Withholding and Estimated Tax.

Those in the farming business report income and expenses on Schedule F (Form 1040), Profit or Loss From Farming. Additionally, they use Schedule SE (Form 1040), Self-Employment Tax to figure self-employment tax if their net earnings from farming are $400 or more. For more information refer to Topic No. 554, Publication 225, Farmer's Tax Guide and Agriculture Tax Center.

Those in the fishing business report income and expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship). They also use Schedule SE (Form 1040) to figure self-employment tax if their net earnings from fishing are $400 or more. For general information about the rules applying to individuals, including commercial fishermen who file Schedule C, refer to Publication 334, Tax Guide for Small Business.

Those whose trade or business is a partnership or corporation see Publication 541, Partnerships or Publication 542, Corporations.

Paying online is safe, fast and easy
Online account allows individuals to make same-day payments from a checking or savings account. Taxpayers can view up to 5 years of their payment history, any pending or scheduled payments, balance and payment plan information, and digital copies of certain notices from the IRS. They can also view their Adjusted Gross Income from their most recent tax return, their Economic Impact Payment amounts, and their advance Child Tax Credit payment information.

Taxpayers can use IRS Direct Pay to schedule a payment from their bank account for their tax deadline with no registration or login required. Those who want to pay business taxes should enroll in and use the Electronic Federal Tax Payment System (EFTPS).

For more information about these and other payment options visit IRS.gov/payments.

Related items

WASHINGTON -  The IRS today provided further details on additional transition relief for certain domestic partnerships and S corporations preparing the new schedules K-2 and K-3 to further ease the change to these new schedules. Those eligible for the relief will not have to file the new schedules for tax year 2021.

The new schedules K-2 and K-3 improve reporting by standardizing international tax information to partners and flow-through investors, making it easier for them to report these items on their tax returns. In addition, the changes ease flow-through return preparation compliance by clarifying obligations and standardizing the format for reporting. 

Notice 2021-39 provides penalty relief for good-faith efforts to adopt the new schedules. Today’s transition relief, appearing in new frequently asked questions (FAQs) on Schedules K-2 and K-3, allows an additional exception for tax year 2021 filing requirements by certain domestic partnerships and S corporations.

The IRS is providing an additional exception for tax year 2021 to filing the Schedules K-2 and K-3 for certain domestic partnerships and S corporations. To qualify for this exception, the following must be met:

If a partnership or S corporation qualifies for this exception, the domestic partnership or S corporation does not need to file Schedules K-2 and K-3 with the IRS or with its partners or shareholders.  However, if the partnership or S corporation is subsequently notified by a partner or shareholder that all or part of the information contained on Schedule K-3 is needed to complete their tax return, then the partnership or S corporation must provide the information to the partner or shareholder. If a partner or shareholder notifies the partnership or S corporation before the partnership or S corporation files its return, the conditions for the exception are not met and the partnership or S corporation must provide the Schedule K-3 to the partner or shareholder and file the Schedules K-2 and K-3 with the IRS.

The IRS welcomes additional comments on Schedules K-2 and K-3. This feedback and inquiries can be sent to lbi.passthrough.international.form.changes@irs.gov.

WASHINGTON — The Internal Revenue Service today announced it is seeking civic-minded volunteers to serve on the Taxpayer Advocacy Panel (TAP). Applications will be accepted through April 8.

What is the Taxpayer Advocacy Panel?

The TAP is a federal advisory committee that serves a vital role in tax administration. TAP members volunteer their time and energy to improve IRS services and taxpayer satisfaction by listening to taxpayers, identifying significant taxpayer concerns and making recommendations to address those concerns. The TAP is a diverse group of ordinary citizens who possess a sense of civic duty, patriotism and belief in an effective and well-regarded tax system The TAP makes a difference and by joining it you can too.

TAP successes in 2021

Each year, the TAP submits dozens of recommendations to the IRS. In 2021 alone, the TAP made 193 recommendations to the IRS, many of which have already been implemented. Because of the TAP’s recommendations in 2021, the IRS has improved many of its tax forms, instructions and publications, and clarified the information in several frequently-used IRS letters.

When the IRS closed one of its processing centers in 2021, the TAP worked with the IRS to ensure news releases and other messaging was issued to alert impacted taxpayers in several states. The TAP effectively advocated to have the IRS partner with volunteer tax preparation organizations to spread the message even further.

Martha J. Lewis, 2022 National TAP Chair, recently stated, “If we look at the past and all that TAP has accomplished, it’s truly amazing. We still have a lot of work to do, especially in the area of taxpayers understanding what we do and how we can help them.”

Who can apply

To the extent possible, the TAP includes members from all 50 states, the District of Columbia and Puerto Rico, as well as one member to represent U.S. citizens living and working abroad. Each member is appointed to represent the interests of taxpayers in their geographic location as well as taxpayers overall.

Federal advisory committees are required to have a balanced representation of different viewpoints. Therefore, applicants from under-represented groups, such as Native Americans and non-tax professionals, are particularly encouraged to apply. TAP is currently seeking candidates in the following states: Alabama, Arkansas, Arizona, California, Colorado, Florida, Iowa, Idaho, Illinois, Indiana, Kentucky, Massachusetts, Maine, Missouri, Mississippi, Montana, North Carolina, North Dakota, New Hampshire, New Mexico, Nevada, New York, Ohio, Oklahoma, Oregon, Puerto Rico, Rhode Island, South Carolina, South Dakota, Texas, Vermont, Wisconsin and West Virginia. However, candidates residing in all the listed locations are encouraged to apply, and all timely applications will be considered. 

TAP members must be U.S. citizens who are current with their federal tax obligations and able to commit 200 to 300 volunteer hours during the year. TAP members must also pass a Federal Bureau of Investigation criminal background check. Members cannot be federally registered lobbyists. Current Department of the Treasury or IRS employees cannot serve on the panel. Former Department of the Treasury or IRS employees and former TAP members can be considered for appointment three years after their employment or previous TAP membership has ended. Tax practitioner applicants must be in good standing with the IRS (meaning not currently under suspension or disbarment).

New TAP members will serve a three-year term starting in December 2022. Applicants chosen as alternate members will be considered to fill any vacancies in their areas during the next three years.

More information

For additional information about the TAP and to start the application process, visit www.improveirs.org or call toll-free at 888-912-1227 and select prompt number five. Callers outside the U.S. may call 214-413-6523 (not a toll-free number) or email the TAP staff at tap.recruitment@irs.gov. A video is also available with more information about the TAP and about how to contribute to this dynamic group of volunteers.

WASHINGTON – With tax season in full swing, the Internal Revenue Service, state tax agencies and tax industry today warned tax professionals of new email scams that attempt to steal their tax software preparation credentials.

The Security Summit partners warned these  scams serve as a reminder that tax professionals remain prime targets for thieves. These thieves try to steal client data and tax preparers' identities in an attempt to file fraudulent tax returns for refunds.

The latest phishing email uses the IRS logo and a variety of subject lines such as "Action Required: Your account has now been put on hold.” The IRS has observed similar bogus emails that claim to be from a “tax preparation application provider.” One such variation offers an “unusual activity report” and a solution link for the recipient to restore their account.

“Scams continue to evolve, and this one is especially sinister since it threatens tax professional’s accounts,” said IRS Commissioner Chuck Rettig. “Tax professionals must remain vigilant in identifying and staying clear of these IRS impersonation emails. A little extra care can protect the tax professionals and their clients.”

Emails claiming “Your account has been put on hold” are scams
The IRS has observed similar bogus emails that claim to be from tax software providers. The scam email will send users to a website that shows the logos of several popular tax software preparation providers. Clicking on one of these logos requests tax preparer account credentials.

The IRS warns tax pros not to respond or take any of the steps outlined in the email. Similar emails include malicious links or attachments that are set up to steal information or to download malware onto the tax professional's computer.

In this case, if recipients enter their credentials into the pop up window, thieves can use this information to file fraudulent returns by using credentials that were provided by the tax professional.

An example of this type of bogus email states:
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Your account has now been put on hold

ALL preparers are required to apply security feature to their Tax Pro account towards 2021 Tax Returns processing.
You have failed to apply new update before expiry date
You are restore and update your acc|ount immediately.
Please Click Here to update your acc|ount now.
Important
Failure to update your account within the next 24hours will lead to you account being terminated and be barred from filing tax returns  claims for 2021 tax season Your access will be restored once you have updated your details.

Sincerely,
IRS.gov eServices
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Tax professionals who clicked on one of the URLs and then entered in their account information should contact their tax software preparation provider’s support hotline.

Tax professionals who get a scam email should save the email as a file and then send it as an attachment to phishing@irs.gov. They should also notify the Treasury Inspector General for Tax Administration at www.tigta.gov to report the IRS impersonation scam. Both TIGTA and the IRS Criminal Investigation division are aware of this scam.

The IRS, state tax agencies and the nation’s tax industry – working together in the Security Summit initiative – have taken numerous steps since 2015 to protect taxpayers, businesses and the tax system from identity thieves. Summit partners continue to warn people to watch out for common scams and schemes this tax season.

For additional information and help, tax professionals should review Publication 4557, Safeguarding Taxpayer Data and Identity Theft Information for Tax Professionals.