Announcement of the official start date of the 2024 Tax Season with an overview of the expanded IRS tools and resources available. The IRS and Security Summit partners warn of surge in “new client” scams aimed at tax pros.

Monday, January 29, 2024 has been announced by the IRS as the official start date for the 2024 Tax Season for individual returns. The filing deadline for most of the nation is Monday, April 15, 2024 with the exception of taxpayers in Maine or Massachusetts who are required to file resident returns by Wednesday, April 17, 2024 due to holidays specific to those states. Tax filing tips highlighted in the news alert include a reminder for Tax Pros to encourage their clients to use direct deposit for the fastest refunds. Tax returns with EITC or ACTC credits resulting in a refund situation will be available for those taxpayers on or after February 27, 2024. Read the full news alert here. Key filing dates for the 2024 Tax Season: January 12: IRS Free File opens. January 16: The IRS will begin accepting all business tax returns through Modernized e-File (MeF) at 9 AM EST.     January 16: Due date for 2023 fourth quarter estimated tax payments. January 26: Earned Income Tax Credit Awareness Day. January 29: Filing season start date for individual tax returns through Modernized e-File (MeF) at 9 AM EST.   February 27: First Date Refunds Available for Taxpayers Claiming EITC or ACTC. April 15: Due date of filing a tax return or to request an extension for most of the nation. April 17: Due date for Maine and Massachusetts. October 15: Due date for extension filers. An additional release was issued by the IRS alerting tax professionals to be vigilant of increased threats in the form of fradulent emails. This new round of filing season-related email schemes include scenarios where cybercriminals pose as potential clients. Read the full news alert here for additional information. Those who receive any phishing emails from the IRS or IRS-related functions should forward the full emails including headers to phishing@irs.gov.

The Internal Revenue Service and the Treasury Department reached a major milestone in implementation of key provisions in the Inflation Reduction Act with more than 1,000 projects registered through the new IRS Energy Credits Online (ECO) tool.

The Inflation Reduction Act created two new credit delivery mechanisms—elective pay (otherwise known as “direct pay”) and transferability — that enable state, local and Tribal governments; non-profit organizations, U.S. territories; and other entities to take advantage of clean energy tax credits.

“The IRS is working hard to put in place tools that can help taxpayers and the wider tax community, and this important new online tool reflects our progress in this area. We have surpassed a major milestone with more than 1,000 facility registrations through the tool,” said IRS Commissioner Danny Werfel. “This new tool helps key groups with these clean energy credits as well as improves communication and reduces compliance issues. This effort is part of our larger transformation effort underway across the IRS as our efforts continue to accelerate.”

To facilitate taxpayers receiving a direct payment, transferring a clean energy credit, or claiming a CHIPS credit, the IRS built ECO for taxpayers to complete the pre-file registration process and receive a registration number. The registration number must be included on the taxpayer’s annual return when making a direct payment or transfer election for a clean energy credit.

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

For the IRS ECO direct pay, transferability, and CHIPS functionality, as of this week approximately 145 entities have requested registration numbers for more than 1,290 projects or facilities located in 40 states and territories, with more than 1,170 projects or facilities pursuing transferability and more than 110 projects or facilities pursuing direct pay. The value of the tax credits for these projects will be determined when the credit recipient files their taxes.

The IRS has published detailed information on how to complete pre-filing registration, including Publication 5884, Inflation Reduction Act (IRA) and CHIPS Act of 2022 (CHIPS) Pre-Filing Registration Tool -- User Guide.

An extension can be filed for both forms or paper file with Form 1120-POL

WASHINGTON ̶ The Internal Revenue Service today alerted a limited group of tax exempt organizations that they won’t be able to electronically file Form 990-T, Exempt Organization Business Income Tax Return, or Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations, until March 17, 2024.

IRS system upgrades mean e-filing of Forms 990-T and Forms 1120-POL (including returns on extension) with due dates from Jan. 15, 2024, to March 15, 2024, are currently unavailable. The IRS notes previous filing data show only about 2,000 Forms 990-T and 1120-POL were electronically filed during this time period, with the vast majority of those involving 990-T. Entities needing to file in this timeframe should follow the below instructions.

Taxpayers with due dates on April 15, 2024, and later will be able to e-file Forms 990-T and Forms 1120-POL on time.

Returns due from Jan. 15, 2024, to March 15, 2024:

• Form 990-T, Exempt Organization Business Income Tax Return
A relatively small number of 990-T filers are affected by this.

Organizations subject to unrelated business income tax (UBIT) are required by law to file Form 990-T electronically. An organization with a Form 990-T due from Jan.15, to March 15, 2024, should request an automatic six-month extension of time to file by submitting Form 8868, Application for Extension of Time To File an Exempt Organization Return, by the due date of the return. The IRS estimates only about 2,000 of the 200,000 Form 990-T filers have a due date in this time period and are affected by this.

Any balance due must be submitted with Form 8868 to avoid interest and penalties. Beginning March 17, 2024, organizations will be able to timely e-file Form 990-T by the extended due date.

If an affected organization doesn’t timely submit an extension, or if the extended due date falls within the period from Jan. 15, 2024, to March 15, 2024, and the organization consequently doesn’t timely e-file its Form 990-T, it should include with its late e-filed Form 990-T a request that any penalties for late filing not be imposed due to reasonable cause. The reasonable cause request should reference that e filing was not available as of the due date of the return.

• Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations
Organizations filing a Form 1120-POL that is due from Jan. 15, 2024, to March 15, 2024, (including returns on extension) may file on paper. An organization that wishes to e-file a return with an original due date during that period may request an automatic six-month extension of time to file Form 1120-POL by submitting Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, and paying the full balance due with that form to avoid interest and penalties. As noted earlier, only a handful of these groups typically file electronically in the affected time period.

Filing only to make an elective payment election for Clean Energy Credits
The electronic filing delay won’t affect the ability of government entities and Indian tribal governments – that aren’t subject to UBIT – to timely file Form 990-T to make an elective payment election (EPE) for Clean Energy Tax Credits. EPE is available for tax years beginning in 2023, therefore the returns won’t be due until after March 17.

In addition, under the law, an entity can’t receive the elective payment amount before the original due date of the return. Filing before the original due date for the return will not shorten the time for payment. While government entities and Indian tribal governments that aren’t subject to UBIT aren’t subject to the electronic filing mandate, the IRS encourages all taxpayers to e-file. See the Elective Pay and Transferability FAQs on irs.gov for more information on EPE for Clean Energy Credits.

WASHINGTON — As part of continuing transformation work, the Internal Revenue Service today  announced the launch of the second phase of a new online self-service tool for businesses that expands the business tax account capabilities and eligible entity types. As a result, individual partners of partnerships and individual shareholders of S corporation businesses are now eligible for a Business Tax Account in addition to sole proprietors. Available at IRS.gov/businessaccount, the new business tax account is a key part of the agency’s continuing service improvement initiative. This is part of the larger effort under last year’s Inflation Reduction Act (IRA) and described in the multi-year Strategic Operating Plan released this spring. “This is part of the ongoing IRS modernization effort to make improvements for business taxpayers and others,” said IRS Commissioner Danny Werfel. “This next step in the evolution of the Business Tax Account will help these businesses download transcripts and other features. Ultimately, these new online options will help make interactions easier for businesses while reducing paper-based processes and the need to call the IRS.” This phase of Business Tax Account also adds new features:  Users can now download a PDF of a business tax transcript: For sole proprietors, this includes Forms: 940, 941, 943, 944, 945, 8752, 8288, 11-C, 730, 2290. For S corporations, this includes Forms: 940, 941, 943, 944, 945, 8752, 8288, 11-C, 730, 1120S, 2290. For partnerships, this includes Forms: 940, 941, 943, 944, 945, 1065, 8752, 8288, 8804, 11-C, 730, 2290. Sole proprietors can also view certain notices: CP080: Reminder - We Have Not Received Your Return, Credits May be on Your Account. CP136: Annual Notification of Federal Tax Deposit (FTD) Requirements (Forms: 941, 941-SS). CP216F: Application for Extension of Time to File an Employee Plan Return – Approved.  Individual partners and individual shareholders will be able to access Business Tax Account information once they have filed a business return with the Schedule K-1 and it is processed by the IRS. To access Business Tax Account, individuals must have a Schedule K-1 for a minimum of one year during the 2019-2022 period on file. They will only be able to view information for the year(s) they have a Schedule K-1 on file. New businesses won’t have access until a business return is submitted, processed, and on file with the IRS.  Sole proprietors with an Employer Identification Number (EIN) qualify to access their Business Tax Account. Also known as self-employed individuals, sole proprietors with EINs are those who file a business return under their EIN, such as reporting payroll taxes and reporting the highway use tax on trucks and buses. Sole proprietors who have already set up an individual account under their SSN or ITIN, and have an EIN linked to their SSN or ITIN, can use their existing login to access their Business Tax Account. At this time, sole proprietors who do not have an EIN are not eligible to set up a Business Tax Account. Instead, they can access their tax records by setting up an IRS individual Online Account.  Over time, Business Tax Account will be a one-stop application that provides business taxpayers a suite of digital products and services, including access to viewing letters or notices, requesting tax transcripts, adding third parties for power of attorney or Tax Information Authorization, and storing bank account information to manage tax payments.  It will help users manage their tax obligations, reducing the burden on taxpayers who would otherwise need to call or mail the IRS.  To set up a new Business Tax Account, or for more information about this app, visit www.IRS.gov/businessaccount.

WASHINGTON – In a major step to help people who owe back taxes, the Internal Revenue Service today announced new penalty relief for approximately 4.7 million individuals, businesses and tax-exempt organizations that were not sent automated collection reminder notices during the pandemic.

The IRS will be providing about $1 billion in penalty relief. Most of those receiving the penalty relief make under $400,000 a year.

Due to the unprecedented effects of the COVID-19 pandemic, the IRS temporarily suspended the mailing of automated reminders to pay overdue tax bills starting in February 2022. These reminders would have normally been issued as a follow up after the initial notice. Although these reminder notices were suspended, the failure-to-pay penalty continues to accrue for taxpayers who did not fully pay their bills in response to the initial balance due notice.

Given this unusual situation, the IRS is taking several steps in advance of resuming normal collection notices for tax years 2020 and 2021 to help taxpayers with unpaid tax bills, including some people who have not received a notice from the IRS in more than a year.

To help taxpayers as the normal processes resume, the IRS will be issuing a special reminder letter starting next month. The letter will alert the taxpayer of their liability, easy ways to pay and the amount of penalty relief, if applied. The IRS urges taxpayers who are unable to pay their full balance due to visit IRS.gov/payments to make arrangements to resolve their bill.

The IRS is also taking steps to waive the failure-to-pay penalties for eligible taxpayers affected by this situation for tax years 2020 and 2021. The IRS estimates 5 million tax returns -- filed by 4.7 million individuals, businesses, trusts, estates and tax-exempt organizations -- are eligible for the penalty relief. This represents $1 billion in savings to taxpayers, or about $206 per return.

As a first step, the IRS has adjusted eligible individual accounts and will follow with adjustments to business accounts in late December to early January, and then trusts, estates and tax-exempt organizations in late February to early March 2024. Nearly 70 percent of the individual taxpayers receiving penalty relief have income under $100,000 per year.

The IRS is releasing Notice 2024-7, which explains how the agency is providing failure-to-pay penalty relief to eligible taxpayers affected by the COVID-19 pandemic to help them meet their federal tax obligations.

“As the IRS has been preparing to return to normal collection mailings, we have been concerned about taxpayers who haven’t heard from us in a while suddenly getting a larger tax bill. The IRS should be looking out for taxpayers, and this penalty relief is a common-sense approach to help people in this situation,” said IRS Commissioner Danny Werfel. “We are taking other steps to help taxpayers with past-due bills, and we have options to help people struggling to pay.”

This penalty relief is automatic. Eligible taxpayers don’t need to take any action to get it. Eligible taxpayers who already paid their full balance will benefit from the relief, too; if a taxpayer already paid failure-to-pay penalties related to their 2020 and 2021 tax years, the IRS will issue a refund or credit the payment toward another outstanding tax liability.

The penalty relief only applies to eligible taxpayers with assessed tax under $100,000. Eligible taxpayers include individuals, businesses, trusts, estates and tax-exempt organizations that filed certain Forms 1040, 1120, 1041 and 990-T income tax returns for tax years 2020 or 2021, with an assessed tax of less than $100,000, and that were in the IRS collection notice process -- or were issued an initial balance due notice between Feb. 5, 2022, and Dec. 7, 2023. The IRS notes the $100,000 limit applies separately to each return and each entity. The failure-to-pay penalty will resume on April 1, 2024, for taxpayers eligible for relief.

Taxpayers who are not eligible for this automatic relief also have options. They may use existing penalty relief procedures, such as applying for relief under the reasonable cause criteria or the First-Time Abate program. Visit IRS.gov/penaltyrelief for details.

If the automatic relief results in a refund or credit, individual and business taxpayers will be able to see it by viewing their tax transcript. The IRS will send the first round of refunds starting now through January 2024. If a taxpayer does not receive a refund, a special reminder notice may be sent with their updated balance beginning in early 2024. Taxpayers with questions on penalty relief can contact the IRS after March 31, 2024.

Help for taxpayers needing assistance
The IRS reminds taxpayers that there are a number of payment options and online tools that can help taxpayers with unpaid tax debts, whether it’s a new tax bill or a long-standing tax debt for an unfiled return.

“The IRS wants to help taxpayers and provide them easy options to deal with unpaid tax bills and avoid additional interest and penalties,” said Werfel. “People receiving these notices should remember that there are frequently overlooked options that can help them set up an automatic payment plan or catch up with their tax filings. Making additional improvements in the collection area will be an important focus for the IRS going forward as we continue and accelerate our transformation work.”

Following funding from the Inflation Reduction Act, it’s now easier for taxpayers to get assistance with tax bills with new self-help tools, like the IRS Document Upload Tool, improved phone service with callback features and the addition of bots that can answer simple questions, set up or modify a payment plan and request a transcript. The IRS also encourages taxpayers to get an IRS Online Account, where they can see information about an unpaid tax bill or apply for an online payment plan.

Resumption of collection notices begins in 2024
In January, the IRS will begin sending automated collection notices and letters to individuals with tax debts prior to tax year 2022, and businesses, tax exempt organizations, trusts and estates with tax debts prior to 2023, with exceptions for those with existing debt in multiple years. These notices and letters were previously paused due to the pandemic and high inventories at the IRS but will gradually resume during the next several months. Current tax year 2022 individual and third quarter 2023 business taxpayers began receiving automated collection notices this fall as the IRS took steps to return to business as usual.

The pause in collection mailings affected only follow-up reminder mailings. The IRS did not suspend the mailing of the first, or initial, balance due notices for taxpayers such as the CP14 and CP161 notices.

The pause meant that some taxpayers who have long-standing tax debt have not received a formal letter or notice from the IRS in more than a year while some of this older collection work has been paused. To help the taxpayers in this category as the normal processes resume, the IRS will be issuing a special reminder letter to them starting next month.

This reminder letter will alert the taxpayer of the liability and will direct them to contact the IRS or make alternative arrangements to resolve the bill. Tax professionals and taxpayers will see these reminder letters in the form of letter LT38, Reminder, Notice Resumption.

This letter will remind taxpayers about their tax liability, giving them an opportunity to address the tax issue before the next round of letters are issued. After receiving the reminder mailing, these taxpayers with long-standing unresolved tax issues will receive the next notice, informing them of a more serious step in the tax collection process.

The IRS urges taxpayers to carefully read any letter or notice they receive before calling the IRS. There are also important resources available to get help for tax debt on IRS.gov.

The IRS will issue these balance due notices and letters in gradual stages next year to ensure taxpayers who have questions or need help are able to reach an IRS assistor. This will also provide additional time for tax professionals assisting taxpayers.

Here's what taxpayers should know about possible penalties and interest
Taxpayers who owe tax and don't file on time may be charged a failure-to-file penalty. This penalty is usually 5 percent of the tax owed for each month or part of a month that the tax return is late, up to 25 percent.

The failure-to-pay penalty applies if a taxpayer doesn't pay the taxes they report on their tax return by the due date or if the taxpayer doesn’t pay the amount required to be shown on their return within 21 calendar days of receiving a notice demanding payment (or 10 business days if the amount is greater than $100,000).

The IRS is required by law to charge interest when a tax balance is not paid on time. Interest cannot be reduced due to reasonable cause. Interest is based on the amount of tax owed for each day it's not paid in full. The interest is compounded daily, so it is assessed on the previous day's balance plus the interest. Interest rates are determined every three months and can vary based on type of tax; for example, individual or business tax liabilities. More information is available on the interest page of IRS.gov.

WASHINGTON – The Treasury Department and Internal Revenue Service today issued Notice 2024-05 regarding the commercial clean vehicle credit for commercial vehicles placed in service in 2024.

The guidance provides a safe harbor for certain qualified commercial clean vehicles placed in service in calendar year 2024, which allows for reliance on the Department of Energy (“DOE”) analysis of incremental costs. The analysis shows that the incremental cost of all street electric vehicles (other than in the case of compact car PHEVs) that have a gross vehicle weight rating of less than 14,000 pounds will be greater than $7,500 in calendar year 2024.

Accordingly, the incremental cost will not limit the available credit amount for street electric vehicles that have a gross vehicle weight rating of less than 14,000 pounds and are placed in service in calendar year 2024.

For compact car plug-in electric hybrids placed in service during calendar year 2024, for which the incremental cost was calculated to be less than $7,500, the IRS will accept a taxpayer’s use, when calculating the credit amount, of the incremental cost published by the DOE.

In addition, the DOE analysis provided an incremental cost analysis of current costs for several representative classes of street electric vehicles with a gross vehicle weight rating of 14,000 pounds or more. For those vehicles placed in service during calendar year 2024, the IRS will accept a taxpayer’s use, in calculating the credit amount, of the incremental cost published by the DOE.

Revenue Ruling 2024-01 provides tables of covered compensation under § 401(l)(5)(E) of the Internal Revenue Code and the Income Tax Regulations thereunder, for the 2024 plan year. The covered compensation tables are effective January 1, 2024.

Revenue Ruling 2024-01 will be in IRB 2024-02, dated January 8, 2024.

WASHINGTON — The Treasury Department and Internal Revenue Service today issued Notice 2024-06 for the new Sustainable Aviation Fuel (SAF) credit created by the Inflation Reduction Act of 2022.

The SAF credit applies to a qualified fuel mixture containing sustainable aviation fuel for certain sales or uses in calendar years 2023 and 2024.

The SAF credit is $1.25 for each gallon of sustainable aviation fuel in a qualified mixture. To qualify for the credit, the sustainable aviation fuel must have a minimum reduction of 50% in lifecycle greenhouse gas emissions. Additionally, there is a supplemental credit of one cent for each percent that the reduction exceeds 50%, for a maximum increase of $0.50.

The IRA provides two methods to determine the lifecycle greenhouse gas emissions reduction percentage (emissions reduction percentage) that can be used to qualify for and calculate the credit. These are the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) method and any similar method that meets certain requirements of the Clean Air Act (CAA). Additionally, the IRA requires certain aspects of each method to be certified by an unrelated party.

Today’s notice provides additional safe harbors using the Environmental Protection Agency’s Renewable Fuel Standard (RFS) program and related guidance. The RFS program uses a methodology similar to CORSIA and meets the requirements of the CAA, and the safe harbors in this notice can be used to calculate the emissions reduction percentage and for the corresponding unrelated party certification for the SAF credit.

Further, this notice explains that the current Greenhouse gases, Regulated Emissions, and Energy use in Transportation (GREET) model of the Argonne National Laboratory and other GREET-based models do not currently satisfy the applicable statutory requirements for the SAF credit.

Finally, this notice announces that the Department of Energy is collaborating with other federal agencies to develop a modified version of the GREET model that would satisfy the statutory requirements for the SAF credit. The agencies developing this modified GREET model currently anticipate its release in early 2024.

Previously, the IRS issued Notice 2023-06, which explains the requirements for the fuel to be eligible for the SAF credit, including safe harbors for the CORSIA method and the corresponding unrelated party certification, and explained which parties must be registered for the different activities in the process.

WASHINGTON — The Department of Treasury and the Internal Revenue Service today issued Notice 2024-10 to provide additional interim guidance on the new corporate alternative minimum tax (CAMT).

Previously, the IRS issued Notice 2023-64, which clarifies and supplements Notice 2023-07 and Notice 2023-20 issued earlier this year. Treasury and IRS anticipate that forthcoming proposed regulations will be consistent with this interim guidance.

The Inflation Reduction Act created the CAMT, which imposes a 15% minimum tax on the adjusted financial statement income (AFSI) of large corporations for taxable years beginning after Dec. 31, 2022. The CAMT generally applies to large corporations with average annual financial statement income exceeding $1 billion.

Today’s guidance provides rules for determining the AFSI of a U.S. Shareholder when a controlled foreign corporation (CFC) pays a dividend to the U.S. Shareholder or another CFC.

The guidance also modifies and clarifies the rules in Notice 2023-64 for determining the applicable financial statement of a corporation that is included in a consolidated tax return.

WASHINGTON –The Internal Revenue Service today reminded taxpayers who didn’t pay enough tax in 2023 to make a fourth quarter tax payment on or before Jan. 16 to avoid a possible penalty or tax bill when filing in 2024.

Taxes are normally paid throughout the year by withholding tax from paychecks, by making quarterly estimated tax payments to the IRS or by a combination of both. This is done because taxpayers need to pay most of their tax during the year as income is earned or received.

Who needs to make a payment?
Taxpayers who earn income not subject to tax withholding such as self-employed people or independent contractors should pay their taxes quarterly to the IRS.

In addition, people who owed tax when they filed their current year tax return often find themselves in the same situation again when they file the next year. Taxpayers in this situation normally include:

• Those who itemized in the past but are now taking the standard deduction,
• Two wage-earner households,
• Employees with non-wage sources of income such as dividends,
• Those with complex tax situations and/or
• Those who failed to increase their tax withholding.

What income is taxable?
The IRS reminds taxpayers that most income is taxable, whether it’s unemployment income, refund interest or income from the gig economy and digital assets. When estimating quarterly tax payments, taxpayers should include all forms of earned income, including from part-time work, side jobs or the sale of goods.

Also, various financial transactions, especially late in the year, can often have an unexpected tax impact. Examples include year-end and holiday bonuses, lottery winnings, stock dividends, capital gain distributions from mutual funds, stocks, bonds, virtual currency, real estate or other property sold at a profit.

Delay in requirement for Forms 1099-K
After feedback from taxpayers, tax professionals and payment processors the IRS announced that calendar year 2023 will be treated as another transition year for the reduced reporting threshold of $600. For calendar year 2023, third-party settlement organizations that issue Forms 1099-K are only required to report transactions where gross payments exceed $20,000 and there are more than 200 transactions. The IRS also issued a fact sheet to help people who may receive Forms 1099-K.

How to make an estimated tax payment
The fastest and easiest way to make an estimated tax payment is to do so electronically. Taxpayers have options when paying electronically from their bank account.

• Pay using IRS Direct Pay. This option allows taxpayers to schedule a payment in advance of the Jan. 16 deadline.
• Pay using IRS Online Account. This option allows taxpayers to view their payment history, pending or recent payments and other tax information.
• Pay using Electronic Filing Tax Payment System, or EFTPS. EFTPS is a free system which offers selections such as scheduling payments a year in advance, paying estimated tax payments and tracking and changing scheduled payments.
• Taxpayers also have the option to pay with their debit or credit card. The card processors, not the IRS, charge a fee for the service.

Using these or other electronic payment options ensures that a payment gets credited promptly. More information on other payment options is available at IRS.gov/payments.

Use the Tax Withholding Estimator to keep track
The Tax Withholding Estimator, available on IRS.gov, can often help taxpayers determine if they need to make an estimated tax payment. It also helps them calculate the correct amount of tax to withhold throughout the year based on their complete set of tax facts and circumstances.

Alternatively, taxpayers can use the worksheet included with Form 1040-ES, Estimated Tax for Individuals, or read through Publication 505, Tax Withholding and Estimated Tax, available on IRS.gov.

Plan ahead
It’s never too early to get ready for the tax-filing season. For more tips and resources, check out the Get Ready and Estimated Tax pages on IRS.gov.