WASHINGTON – In day seven of the Dirty Dozen tax scam series, the Internal Revenue Service and Security Summit partners today alerted taxpayers to be on the lookout for unscrupulous tax preparers who could encourage people to file false tax returns and steal valuable personal information.

A common problem seen annually during tax season, “ghost preparers” pop up to encourage taxpayers to take advantage of tax credits and benefits for which they don’t qualify. These preparers can charge a large percentage fee of the refund or even steal the entire tax refund. After the tax return is prepared, these “ghost preparers” can simply disappear, leaving well-meaning taxpayers to deal with the consequences.

While most tax professionals offer quality service, these ghost preparers and other unscrupulous preparers try to take advantage of people and should be avoided at all costs. The IRS encourages people to use a trusted tax professional, and IRS.gov has important information to help people choose a reputable, accredited practitioner.

“Ghost preparers and other shady return preparers form a real threat every tax season to well-meaning taxpayers,” said IRS Commissioner Danny Werfel. “By trying to make a fast buck, these scammers prey on seniors and underserved communities, enticing them with bigger refunds by including bogus tax credit claims or making up income or deductions. But after the tax return is filed, these ghost preparers disappear, leaving the taxpayer to deal with consequences ranging from a stolen refund to follow-up action from the IRS. We urge people to choose a trusted tax professional that will be around if questions arise later.”

Unethical tax preparers serve as day seven of the annual IRS Dirty Dozen campaign – a list of 12 scams and schemes to help taxpayers and the tax professional community protect their personal and financial information. Compiled annually since 2002, the Dirty Dozen lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes.

Bogus tax preparers have been a recurring theme in the Dirty Dozen for years. Anyone can file a tax return because preparing tax returns is unregulated, which adds risks for vulnerable taxpayers during filing season. To protect taxpayers, the IRS and the Treasury Department have again proposed regulating tax practitioners as part of the proposed Fiscal Year 2025 budget.

Shady tax practitioners can also be involved in stealing taxpayer identities. As a member of the Security Summit, the IRS has worked with state tax agencies and the nation’s tax industry for nine years to cooperatively implement a variety of internal security measures to protect taxpayers. The collaborative effort by the Summit partners also has focused on educating taxpayers about scams and fraudulent schemes throughout the year, which can lead to tax-related identity theft. Through initiatives like the Dirty Dozen and the Security Summit program, the IRS strives to protect taxpayers, businesses and the tax system from cyber criminals and deceptive activities that seek to extract information and money, including ghost preparers.

Tips for taxpayers: Warning signs to look out for

Most tax return preparers provide honest, high-quality service. But some may cause harm through fraud, identity theft and other scams. Paid preparers must sign and include a valid Preparer Tax Identification Number (PTIN) on every tax return. A ghost preparer is someone who doesn't sign tax returns they prepare. These unethical tax return preparers should be avoided, especially if they refuse to sign a complete paper tax return or digital form when filing electronically.

Taxpayers are also encouraged to check the tax preparer’s credentials and qualifications to make sure they are capable of assisting with the taxpayer’s needs. The IRS offers resources for taxpayers to educate themselves on types of preparers, representation rights, as well as a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to help choose which tax preparer is the best fit.

Some of the warning signs of a bad preparer include:

• Shady fees. Taxpayers should always ask about service fees. Shady tax preparers can ask for a cash-only payment without providing a receipt. They are also known to base their fees on a percentage of the taxpayer’s refund.
• False income. Untrustworthy tax preparers may also invent false income to try to get their clients more tax credits or claim fake deductions to boost the size of the refund.
• Wrong bank account. Taxpayers should also be wary of a tax preparer attempting to convince them to deposit the taxpayer’s refund in their bank account rather than the taxpayer’s account.

Good preparers ask to see all relevant documents like receipts, records and tax forms. They also ask questions to determine the client’s total income, deductions, tax credits and other items. Taxpayers should never hire a preparer who e-files a tax return using a pay stub instead of a Form W-2. This is also against IRS e-file rules.

File accurately and check eligibility for credits and deductions

Taxpayers are ultimately responsible for all the information on their income tax return, regardless of who prepares it. Taxpayers can visit IRS.gov to find answers to tax-related questions and access tools like the Interactive Tax Assistant, which provides answers to several tax law questions specific to individual circumstances.

Filing electronically reduces tax return errors, and people can take advantage of free online and in-person tax preparation options if they qualify through programs like IRS Free File and the Volunteer Income Tax Assistance and Tax Counseling for the Elderly.

Taxpayers should also make sure that they are taking advantage of available credits and deductions, like the Earned Income Tax Credit (EITC), which is refundable and can help low-to-moderate income workers receive up to $7,340 based on their qualifications. People need to make sure they understand which credits and deductions they are eligible to claim and keep records to show their eligibility.

Report fraudulent activity and scams

The IRS highly encourages people to report tax return preparers who deliberately prepare improper returns and any activity that promotes improper and abusive tax schemes.

To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242, Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed paper Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, CA 92677-3405
Fax: 877-477-9135

Taxpayers can also report preparer misconduct using Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a preparer filed or changed their tax return without their consent, they should file Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit.

Alternatively, taxpayers and tax practitioners may send the information to the IRS Whistleblower Office for possible monetary award.

Additional Resources

Abusive Tax Schemes and Abusive Tax Return Preparers.

Identity Theft Central

Choosing a Tax Professional

Publication 5895, Who Do You Trust to Prepare Your Return?

 

WASHINGTON — The Internal Revenue Service today reminded individuals and businesses affected by the terrorist attacks in the State of Israel that they have until Oct. 7, 2024, to file various federal returns, make tax payments and perform other time-sensitive tax-related actions.

In Notice 2023-71, posted Oct. 13, 2023, on IRS.gov, the IRS provided relief to taxpayers who, due to the terrorist attacks, may be unable to meet a tax-filing or tax-payment obligation, or may be unable to perform other time-sensitive tax-related actions.

Filing and payment relief

The notice postpones various tax filing and payment deadlines that occurred or will occur during the period from Oct. 7, 2023, through Oct. 7, 2024, (postponement period). As a result, affected individuals and businesses have until Oct. 7, 2024, to file returns and pay any taxes that were originally due during this period. Among other things, this includes:

• 2023 individual and business returns and payments normally due on March 15 and April 15, 2024. These individuals and businesses have both more time to file and more time to pay.
• Quarterly estimated income tax payments normally due on Jan. 16, April 15, June 17 and Sept. 16, 2024.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2023, and Jan. 31, April 30 and July 31, 2024.
• For eligible taxpayers, 2023 contributions to IRAs and health savings accounts.
• Other retirement plan contributions and rollovers.

Other tax-related deadlines are postponed as well. Among other things, this includes individuals, corporations and tax-exempt organizations that had valid extensions to file their 2022 federal income tax returns, though payments for these returns do not get the extra time because they were due before the attacks occurred. See Notice 2023-71 and Rev. Proc. 2018-58 for details.

Who qualifies for relief?

• Any individual whose principal residence is in Israel, the West Bank or Gaza (the covered area), as well as any business entity or sole proprietor whose principal place of business is in the covered area.  Any taxpayer with an address of record in Israel, Gaza or the West Bank does not need to contact the IRS to get relief. That’s because the IRS has automatically identified and provided relief to these taxpayers, based on addresses shown on previously filed returns.
• Any individual, business or sole proprietor, or estate or trust whose books, records or tax preparer is located in the covered area.
• Anyone killed, injured, or taken hostage due to the terrorist attacks.
• Any individual affiliated with a recognized government or philanthropic organization and who is assisting in the covered area, such as a relief worker.

Eligible taxpayers, or their representatives, whose filing address is outside the covered area can obtain relief by calling the IRS disaster hotline at 866-562-5227. Alternatively, international callers may call 267-941-1000.

If an affected taxpayer receives a late filing or late payment penalty notice from the IRS for the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

Reminder about tax-preparation assistance

Any individual or family whose adjusted gross income (AGI) was $79,000 or less in 2023 can use IRS Free File’s Guided Tax Software at no cost. There are products in English and Spanish.

Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040, and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

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

WASHINGTON - The Internal Revenue Service today warned taxpayers to watch out for promoters who push improper Fuel Tax Credits claims in the fourth day of the 2024 Dirty Dozen list of tax scams.

The Fuel Tax Credit is available only for off-highway business and farming use and not for most taxpayers. But the IRS continues to see instances where unscrupulous promoters or return preparers mislead taxpayers about fuel use and create fictitious documents or receipts for fuel.

The IRS has seen an increased number of fictitious claims for fuel tax credits on Form 4136, Credit for Federal Tax Paid on Fuels. By claiming the fuel tax, these promoters are looking out for their own financial interests by charging the taxpayers inflated fees. But taxpayers should realize the IRS has heightened scrutiny on this scam, and people claiming it improperly risk future compliance action by the IRS.

“Promoters are pushing the accelerator on bad Fuel Tax Credit claims and driving honest taxpayers to a bad choice,” said IRS Commissioner Danny Werfel. “These promoters frequently charge a large fee to the taxpayer to make these false claims. While the scammers drive away with the fees, the taxpayers are left behind with a bad claim and all the risk and responsibility to make it right. Taxpayers must remain cautious and seek out a reputable tax professional rather than a reckless promoter.”

Fuel Tax Credits mark day four of the Dirty Dozen. Started in 2002, the IRS' annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes, including the Fuel Tax Credit.

Watch out for Fuel Tax Credit third-party promoters

The IRS continues to focus on stopping improper Fuel Tax Credit claims. Any taxpayer contemplating participating in any questionable tax scheme should know that the IRS has implemented new identity theft screening filters and processing systems that stop many suspicious Fuel Tax Credit refund claims. Falsely claiming the Fuel Tax Credit is a fraudulent practice with severe consequences, including civil and criminal penalties.

Taxpayers must exercise caution when filing their tax returns and ensure they only claim credits to which they’re entitled. Otherwise, they may face fines and be subject to federal criminal prosecution and imprisonment. If individuals have doubts about the legitimacy of a particular tax credit, they should seek advice from a qualified tax professional.

Report fraud

As part of the Dirty Dozen awareness effort regarding tax schemes and unscrupulous tax return preparers, the IRS urges individuals to report those who promote abusive tax practices and tax preparers who intentionally file incorrect returns.

To report a tax scheme or a dishonest tax return preparer individuals should send a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, along with any supporting materials via mail or fax to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center

Stop MS5040

24000 Avila Road

Laguna Niguel, California 92677 3405

Fax: 877 477 9135

Taxpayers and tax professionals can also submit this information to the IRS Whistleblower Office, where they may be eligible for a monetary award. For details, refer to the sections on Abusive Tax Schemes and Abusive Tax Return Preparers.

WASHINGTON — With the April 15 tax deadline approaching, the IRS reminds taxpayers there is still time file their federal income tax return electronically and request direct deposit.

Filing electronically reduces tax return errors as tax software does the calculations, flags common errors and prompts taxpayers for missing information. Most people qualify for electronic filing at no cost and, when they choose direct deposit, receive their refund within 21 days.

Free electronic filing options

Taxpayers with income of $79,000 or less in 2023 can use IRS Free File guided tax software now through Oct 15. IRS Free Fillable forms, a part of this program, is available at no cost to taxpayers of any income level and provides electronic forms for people to fill out and e-file themselves.

IRS Direct File is now open to all eligible taxpayers in 12 pilot states to decide if it is the right option for them to file their 2023 federal tax returns online, for free, directly with the IRS. Go to the Direct File website for more information about Direct File pilot eligibility and the 12 participating states.

Through a network of community partnerships, the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free tax return preparation to eligible people in the community by IRS certified volunteers.

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

Use ‘Where's My Refund?’ to check refund status

The Where's My Refund? tool will normally show a refund status within 24 hours after e-filing a 2023 tax return, three to four days after e-filing a 2021 or 2022 return and four weeks after filing a tax return by mail. To use the tool, taxpayers need their Social Security number, filing status and exact refund amount. Taxpayers can also check ‘Where's My Refund?’ by downloading our free mobile app, IRS2Go, from an iPhone or Android device. The tool updates once a day, so people don't need to check more often.

Taxpayers that owe on their tax return

IRS reminds people they can avoid paying interest and some penalties by filing their tax return and, if they have a balance due, paying the total amount due by the tax deadline of Monday, April 15. For residents of Maine or Massachusetts, the tax deadline is Wednesday, April 17, due to Patriot’s Day and Emancipation Day holidays.

Payment options for individuals to pay in full

The IRS offers various options for taxpayers who are making tax payments:

• Direct Pay – Make a payment directly from a checking or savings account without any fees or registration.
• Pay with debit card, credit card or digital wallet – Make a payment directly from a debit card, credit card or digital wallet. Processing fees are paid to the payment processors. The IRS doesn’t receive any fees for these payments. Authorized card processors and phone numbers are available at IRS.gov/payments.
• Electronic Federal Tax Payment System (EFTPS) –This free service gives taxpayers a safe, convenient way to pay individual and business taxes by phone or online. To enroll and for more information, taxpayers can call 800-555-4477 or visit eftps.gov.
• Electronic funds withdrawal – Taxpayers can file and pay electronically from their bank account when using tax preparation software or a tax professional. This option is free and only available when electronically filing a tax return.
• Check or money order –Payments made by check or money order should be made payable to the “United States Treasury.”
• Cash – Make a cash payment through a retail partner and other methods. The IRS urges taxpayers choosing this option to start early because it involves a four-step process. Details, including answers to frequently asked questions, are at IRS.gov/paywithcash.

Payment options for individuals unable to pay their taxes in full

Taxpayers that are unable to pay in full by the tax deadline, should pay what they can now and apply for an online payment plan. They can receive an immediate response of payment plan acceptance or denial without calling or writing to the IRS. Online payment plan options include:

• Short-term payment plan –The total balance owed is less than $100,000 in combined tax, penalties and interest. Additional time of up to 180 days to pay the balance in full.
• Long-term payment plan – The total balance owed is less than $50,000 in combined tax, penalties and interest. Pay in monthly payments for up to 72 months. Payments may be set up using direct debit (automatic bank withdraw) which eliminates the need to send in a payment each month, saving postage costs and reducing the chance of default. For balances between $25,000 and $50,000, direct debit is required.

Though interest and late-payment penalties continue to accrue on any unpaid taxes after April 15, the failure to pay penalty is cut in half while an installment agreement is in effect. Find more information about the costs of payment plans on the IRS’ Additional Information on Payment Plans webpage.

Unable to file by the April 15 deadline?

Individuals unable to file their tax return by the tax deadline can apply for a tax-filing extension in the following ways:

• Individual tax filers, regardless of income, can electronically request an automatic tax-filing extension through IRS Free File by filing a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
• Make an electronic payment using Direct Pay, debit card, credit card or digital wallet and indicate the payment is for an extension.
• Mail Form 4868 by the tax deadline.
• Things people should know when requesting a tax-filing extension:
• Tax-filing extension requests are due by the tax deadline date, and it does not give an extension of time to pay the taxes.
• Avoid some penalties by estimating and paying the tax due by the tax deadline.
• Special rules for tax deadlines and automatic tax-filing extensions may apply for taxpayers serving in a combat zone or qualified hazardous duty areas, living outside the United States, and people living in certain disaster areas. They may not need to submit a tax-filing extension; however, people should check to see if they qualify before the tax deadline.

Use IRS.gov for the quickest and easiest information

Taxpayers can visit IRS.gov 24 hours a day for answers to tax questions, more tips and resources by visiting the Let Us Help You page.

IRS Direct File pilot outreach materials

The IRS provides information for taxpayers and partners about IRS Direct File – a new option for eligible taxpayers to file their 2023 tax return online. It’s free, easy, safe and secure. 

In this edition:

• IRS Direct File helps eligible taxpayers file online for free
• Check your eligibility
• Learn more about the Direct File pilot
• News release
• Fact sheet
• Direct File videos on IRS YouTube
• Get the latest Direct File news

IRS Direct File helps eligible taxpayers file online for free

IRS Direct File is a new choice for eligible taxpayers in 12 states to file their 2023 federal tax return online for free — directly with IRS.

With Direct File, you can:

• Easily add your tax information with step-by-step guidance
• Connect with real-time online support from IRS customer service representatives
• Access it from smartphones, laptops, tablets and desktop computers
• Direct deposit your refund or make a tax payment online
• File in English and Spanish

 Visit directfile.irs.gov today to see if you’re eligible to file for free!

Check your eligibility

Before using IRS Direct File, use the eligibility checker to determine if it’s the right option for you.

Direct File is only available to eligible taxpayers who live in one of the 12 participating states and report certain types of income, deductions and credits.

To log into Direct File, you need an IRS account with ID.me. If you are an existing ID.me member, do not create another account. You can use your existing, verified account to access Direct File. If you’ve never created an ID.me account and are 18 years of age or older, create an account using your personal email and then verify your identity to access Direct File. You only need to verify your identity once — then you can use your ID.me log in at the Direct File website and anywhere else ID.me is accepted. Learn more about the sign-up process for an IRS ID.me account.

Learn more about the Direct File pilot

For more information about Direct File, check out:

• File for free with IRS Direct File pilot
• Eligible taxpayers in 12 states can file for free with IRS Direct File

News release

• IR-2024-68, March 12, 2024 - Direct File officially opens in 12 pilot states following positive early reviews; eligible taxpayers can file online directly with the IRS for free

Fact sheet

• Fact Sheet: FS-2024-08, March 2024 Tips for success using Direct File

Direct File materials

• Direct File on IRS.gov
• IRS Direct File Partner Outreach Resources
• IRS Publication 5916, File for free with Direct File pilot 
• IRS Publication 5917, Direct File pilot - What you need to know
• Publication 5952, Still haven’t filed your 2023 taxes?

Resources in Spanish

• Recursos de divulgación para socios de Direct File del IRS
• News release: IR-2024-68SP, March 12, 2024 - Direct File officially opens in 12 pilot states following positive early reviews; eligible taxpayers can file online directly with the IRS for free
• Fact sheet: Fact Sheet: FS-2024-08SP, March 2024 Tips for success using Direct File
• Publication 5916 (SP), File for free with IRS Direct File Pilot
• Publication 5917 (SP), IRS Direct File - What you need to know
• Publication 5952 (SP), Still haven't filed your 2023 tax return yet?
• IRS YouTube: Programa piloto del IRS Direct File
• IRS YouTube: Direct File del IRS

Direct File videos on IRS YouTube

• IRS Direct File pilot overview
• IRS Direct File pilot

WASHINGTON — As part of this year’s Dirty Dozen, the Internal Revenue Service continues to warn businesses and others to stay clear of unscrupulous and aggressive promoters of questionable claims for the Employee Retention Credit (ERC).

These questionable ERC claims often put unsuspecting businesses and other entities in jeopardy of penalties, interest and potentially even criminal prosecution for claiming the ERC when they don’t qualify and aren’t entitled to it.

In day two of the Dirty Dozen series, this latest warning comes as the IRS continues to take special steps to counter aggressive marketing around the ERC, sometimes referred to as the Employee Retention Tax Credit or ERTC. Since the IRS announced a moratorium on processing new claims filed after Sept. 14, 2023, the agency’s compliance efforts on ERC claims have topped more than $1 billion so far since last fall as work continues on a number of efforts to counter questionable claims.

With compliance work on ERC claims continuing to expand through both audits and criminal investigations, the IRS reminded businesses they still have an option to pull back on any unprocessed claims. Businesses should quickly pursue the claim withdrawal process if they need to ask the IRS not to process an ERC claim for any tax period that hasn’t been paid yet.

While this work continues, the IRS continues to urge businesses to carefully review the complex ERC guidelines before submitting a claim. The IRS remains concerned that some ineligible businesses are being encouraged by marketers to submit an incorrect ERC claim; people should contact a trusted tax professional first to avoid potential IRS compliance action in the future.

“We remain concerned that unscrupulous promoters and numerous myths about eligibility for this credit could put well-meaning businesses at risk,” said IRS Commissioner Danny Werfel. “Before anyone files an Employee Retention Credit claim, they should carefully review the eligibility guidelines and talk to a trusted tax professional. Relying on a marketer who is looking to take a hefty percentage fee of the potential claim adds risk for well-meaning businesses given the ongoing IRS compliance work.”

The IRS took significant compliance steps regarding the ERC program after the well-intentioned pandemic-era program came under aggressive, misleading marketing that oversimplified or misrepresented eligibility rules. Promoters pushed more applicants into the program, frequently by taking a percentage of the payout.

When properly claimed, the ERC is a refundable tax credit designed for businesses that continued paying employees during the COVID-19 pandemic while their business operations were either fully or partially suspended due to a government order, or had a decline or significant decline in gross receipts during the eligibility periods.

Started in 2002, the IRS' annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes.

ERC withdrawal program
The IRS is also continuing to accept and process requests to withdraw an employer’s full ERC claim under a special withdrawal process. The IRS has already received more than $250 million in withdrawals as the agency continues intensifying audits and criminal investigation work in this area.

This withdrawal option allows certain employers that filed an ERC claim but have not yet received a refund to withdraw their submission and avoid future repayment, interest and penalties. Employers that submitted an ERC claim that have not yet been paid can withdraw their claim and avoid the possibility of getting a refund for which they're ineligible. They can also withdraw their claim if they’ve received a check but have not yet deposited or cashed it.

The IRS created the withdrawal option to help small business owners and others who were pressured or misled by ERC marketers or promoters into filing ineligible claims. Claims that are withdrawn will be treated as if they were never filed. The IRS will not impose penalties or interest.

The IRS continues to encourage employers who submitted claims to review the ERC requirements and talk to a trusted tax professional about their eligibility amid misleading marketing around the credit.

For more information on ERC eligibility, taxpayers can see the ERC frequently asked questions and the ERC Eligibility Checklist, which is available as an interactive tool or as a printable guide.

Signs an ERC claim could be incorrect
Recently, the IRS highlighted special warning signs that an ERC claim may be questionable to help small businesses that may need to resolve incorrect claims.

The agency shared suspicious warning signs that could signal future IRS problems involving ERC claims. Built on feedback from the tax professional community and IRS compliance personnel, the warning signs center on misinformation some unscrupulous ERC promoters used.

Here are common red flags IRS is seeing on ERC claims:

• Too many quarters being claimed. Some promoters have urged employers to claim the ERC for all quarters that the credit was available. Qualifying for all quarters is uncommon and this could be a sign of an incorrect claim.
• Government orders that don’t qualify. Some promoters have falsely told employers they can claim the ERC if any government order was in place in their area, even if their operations weren’t affected or if they chose to suspend their business operations voluntarily.
• Too many employees and wrong calculations. Employers should be cautious about claiming the ERC for all wages paid to every employee on their payroll. The law changed throughout 2020 and 2021. There are dollar limits and varying credit amounts, and employers need to meet certain rules for wages to be considered qualified wages, depending on the tax period.
• Business citing supply chain issues. Qualifying for the ERC based on a supply chain disruption is very uncommon. A supply chain disruption by itself doesn’t qualify an employer for the ERC.
• Business claiming the ERC for too much of a tax period. It's uncommon for an employer to qualify for the ERC for the entire calendar quarter if their business operations were fully or partially suspended due to a government order during a portion of a calendar quarter.
• Business didn’t pay wages or didn’t exist during eligibility period. Employers can only claim the ERC for tax periods when they paid wages to employees.
• Promoter says there’s nothing to lose. Businesses should be on high alert with any ERC promoter who urged them to claim the ERC because they “have nothing to lose.” Businesses that incorrectly claim the ERC risk repayment requirements, penalties, interest, audit and potential expenses of hiring someone to help resolve the incorrect claim.

Help for businesses that may have been misled on the ERC
Some promoters told taxpayers every employer qualifies for the ERC. The IRS and the tax professional community emphasize that this is not true. Eligibility depends on specific facts and circumstances. The IRS has dozens of resources to help people learn about and check ERC eligibility, and businesses can also consult their trusted tax professional. Key IRS materials include:

• ERC Eligibility Checklist (interactive version and a printable guide) includes cautions about common areas of misinformation and links to facts and examples.
• 7 warning signs ERC claims may be incorrect outlines tactics that unscrupulous promoters have used and why their points are wrong.
• Frequently asked questions about the Employee Retention Credit includes eligibility rules, definitions, examples and more.

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued Revenue Procedure 2024-19 to provide guidance for owners of certain solar or wind facilities built in connection with low-income communities.

The guidance issued today provides important clarifying changes to the application and documentation requirements for the 2024 program year. In addition, this revenue procedure provides how the Capacity Limitation for the 2024 program year will be divided across facility categories described and the additional selection criteria application options.

The Inflation Reduction Act added section 48(e) to the federal tax law to provide for an increase in the energy investment credit for solar and wind facilities that apply for and receive an allocation of environmental justice solar and wind capacity limitation. Taxpayers that receive an allocation and properly place the facility in service may then claim the increased energy investment credit in the year that the facility is placed in service.

The final regulations provide definitions and requirements for the program. The regulations state the four project categories under which facilities apply for an allocation, and the increase of either 10% or 20% associated with a project category. Additionally, the regulations:

• Define financial benefits for the two applicable project categories.
• Define energy storage technology installed in connection with the solar or wind facility.
• Define and describe the additional selection criteria for eligible potential applicants.
• Remind potential applicants that facilities placed in service prior to an allocation are not eligible.
• Provide the disqualification and credit recapture rules specific to the program.

Revenue Procedure 2023-27 provided procedures for applicants for the 2023 program year. Soley with respect to the 2024 program year, today’s guidance supersedes Revenue Procedure 2023-27. The Treasury Department and IRS also released Notice 2023-17 on Feb. 13, 2023, to establish the Low-Income Communities Bonus Credit Program. Notice 2023-17 provided initial guidance for potential applicants seeking allocations of calendar year 2023 environmental justice solar and wind capacity limitation.

Revenue Procedure 2024-19 provides clarifying and procedural guidance applicable to the low-income communities bonus credit program (Program) for the 2024 Program year. The Program was established pursuant to the Inflation Reduction Act of 2022. Under this Program, applicants investing in certain solar and wind-powered electricity generation facilities may apply for an allocation of environmental justice solar and wind capacity limitation to increase the amount of an energy investment credit under section 48 for the taxable year in which the facility is placed in service.

Revenue Procedure 2024-19 will be in IRB 2024-16, dated April 15, 2024.

WASHINGTON — The Internal Revenue Service today continues its Dirty Dozen scam series warning taxpayers to watch out for scammers attempting to sell or offer help setting up an Online Account on IRS.gov.

The goal for these criminals is getting personal tax and financial information that can be used to commit identity theft.

The IRS Online Account is a tool that provides convenient access to an individual’s tax information. The information is also valuable to identity thieves who use it to submit fraudulent tax returns in a victim's name to get a big refund. These third-party online account scams are day three of the IRS annual Dirty Dozen tax scam campaign.

“As the IRS and the Security Summit partners strengthen our internal defenses, scammers evolve to come up with new ways to try to steal valuable information from taxpayers,” said IRS Commissioner Danny Werfel. “An Online Account at IRS.gov can help taxpayers view important details about their tax situation. But scammers have realized the sensitive information there is valuable to them, so they’re now focusing on tricking people that they need help setting up an account.”

“This is just an elaborate scam designed to obtain valuable and sensitive tax information that scammers will use to try to steal a refund,” Werfel added. “This is another reminder that people should be wary of unexpected reach-outs from the IRS and other financial institutions. Taxpayers should avoid sharing sensitive personal data over the phone, email or social media to protect themselves and avoid getting caught up in these scams.”

This marks the third day of the special Dirty Dozen series. Started in 2002, the IRS' annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes.

As a member of the Security Summit, the IRS has worked with state tax agencies and the nation’s tax industry for nine years to cooperatively implement a variety of internal security measures to protect taxpayers. The collaborative effort by the Summit partners also has focused on educating taxpayers about scams and fraudulent schemes throughout the year, which can lead to tax-related identity theft. Through initiatives like the Dirty Dozen and the Security Summit program, the IRS strives to protect taxpayers, businesses and the tax system from cyber criminals and deceptive activities that seek to extract information and money, including this Online Account scheme.

IRS Online Account: Steer clear of help from third-party scammers

An IRS Online Account allows taxpayers access to the information about their tax account. They can log in and get the latest on their payment history, current balance, see copies of select IRS notices and more. It is a useful and easy to use tool that scammers target.

The third-party helper scam begins with swindlers posing as a "helpful" third party who offers to help create a taxpayer's IRS Online Account at IRS.gov. Third parties make these offers to steal a taxpayer's personal information. While they may make it seem like a complicated task needing their assistance, taxpayers can and should establish their own Online Account through IRS.gov.

These scammers often ask for the taxpayer's personal information including address, Social Security number or Individual Taxpayer Identification number (ITIN) and photo identification. They can sell the information or use the sensitive details to file fraudulent tax returns, obtain loans and open credit accounts.

The IRS encourages people to watch out for these scams. The only place individuals should go to create an IRS Online Account is IRS.gov. People should not use third-party assistance, other than the approved IRS authentication process through IRS.gov, to create their own IRS Online Account.

Report fraud

As part of the Dirty Dozen awareness effort, the IRS encourages people to report individuals who promote improper and abusive tax schemes as well as tax return preparers who deliberately prepare improper returns.

To report an abusive tax scheme or a tax return preparer, people should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center

Stop MS5040

24000 Avila Road

Laguna Niguel, California 92677-3405

Fax: 877-477-9135

Alternatively, taxpayers and tax professionals may send the information to the IRS Whistleblower Office for possible monetary award. For more information, see Abusive Tax Schemes and Abusive Tax Return Preparers.

WASHINGTON ― The Internal Revenue Service announced today that almost 940,000 people across the nation have unclaimed refunds for tax year 2020 but face a May 17 deadline to submit their tax returns. 

The IRS estimates more than $1 billion in refunds remain unclaimed because people haven’t filed their 2020 tax returns yet. The average median refund is $932 for 2020, and the state-by-state table below shows how many people are potentially eligible for these refunds in each state along with the median average refund by state. 

“There’s money remaining on the table for hundreds of thousands of people who haven’t filed 2020 tax returns,” said IRS Commissioner Danny Werfel. “We want taxpayers to claim these refunds, but time is running out for people who may have overlooked or forgotten about these refunds. There’s a May 17 deadline to file these returns so taxpayers should start soon to make sure they don’t miss out.” 

Under the law, taxpayers usually have three years to file and claim their tax refunds. If they don’t file within three years, the money becomes the property of the U.S. Treasury. 

But for 2020 tax returns, people have a little more time than usual to file to claim their refunds. Typically, the normal filing deadline to claim old refunds falls around the April tax deadline, which is April 15 this year for 2023 tax returns. But the three-year window for 2020 unfiled returns was postponed to May 17, 2024, due to the COVID-19 pandemic emergency. The IRS issued Notice 2023-21 on Feb. 27, 2023, providing legal guidance on claims required by the postponed deadline. 

The IRS estimates the midpoint for the individual refund amounts for 2020 to be $932 — that is, half of the refunds are more than $932 and half are less. This estimate does not include the Recovery Rebate Credit or other credits that may be applicable; the IRS has previously reminded those who may be entitled to the COVID-era Recovery Rebate Credit in 2020 that time is running out to file a tax return and claim their money. 

“People faced extremely unusual situations during the pandemic, which may have led some people to forget about a potential refund on their 2020 tax returns,” Werfel said. “People may have just overlooked these, including students, part-time workers and others. Some people may not realize they may be owed a refund. We encourage people to review their files and start gathering records now, so they don’t run the risk of missing the May deadline.” 

By missing out on filing a tax return, people stand to lose more than just their refund of taxes withheld or paid during 2020. Many low- and moderate-income workers may be eligible for the Earned Income Tax Credit (EITC). For 2020, the EITC was worth as much as $6,660 for taxpayers with qualifying children. The EITC helps individuals and families whose incomes are below certain thresholds. The thresholds for 2020 were: 

• $50,594 ($56,844 if married filing jointly) for those with three or more qualifying children:
• $47,440 ($53,330 if married filing jointly) for people with two qualifying children;
• $41,756 ($47,646 if married filing jointly) for those with one qualifying child, and;
• $15,820 ($21,710 if married filing jointly) for people without qualifying children. 

The IRS reminds taxpayers seeking a 2020 tax refund that their funds may be held if they have not filed tax returns for 2021 and 2022. In addition, any refund amount for 2020 will be applied to amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or other past due federal debts, such as student loans. 

Current and prior year tax forms (such as the tax year 2020 Forms 1040 and 1040-SR) and instructions are available on the IRS.gov Forms and Publications page or by calling toll-free 800-TAX-FORM (800-829-3676).

High-income non-filers: IRS compliance letters coming

The IRS also announced Feb. 29 a new effort focused on high-income taxpayers who have failed to file federal income tax returns in more than 125,000 instances since 2017 with taxes being owed in many of those cases.

The new initiative, made possible by Inflation Reduction Act funding, began with IRS compliance letters going out in February on more than 125,000 cases where tax returns haven’t been filed since 2017. The mailings include more than 25,000 to those with more than $1 million in income, and over 100,000 to people with incomes between $400,000 and $1 million between tax years 2017 and 2021. 

Need to file a 2020 tax return? Several options to get key documents 

Although it’s been a few years since 2020, the IRS reminds taxpayers there are ways they can still gather the information they need to file this tax return. But people should start early to make sure they have enough time to file before the May deadline for 2020 refunds. Here are some options: 

• Request copies of key documents: Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for the years, 2020, 2021 or 2022 can request copies from their employer, bank or other payers. 

• Use Get Transcript Online at IRS.gov. Taxpayers who are unable to get those missing forms from their employer or other payers can order a free wage and income transcript at IRS.gov using the Get Transcript Online For many taxpayers, this is by far the quickest and easiest option. 

• Request a transcript. Another option is for people to file Form 4506-T with the IRS to request a “wage and income transcript.” A wage and income transcript shows data from information returns received by the IRS, such as Forms W-2, 1099, 1098, Form 5498 and IRA contribution information. Taxpayers can use the information from the transcript to file their tax return. But plan ahead – these written requests can take several weeks; people are strongly urged to try the other options first.

State-by-state estimates of individuals who may be due 2020 income tax refunds

Based on tax information currently available, the IRS estimated how many people in each state may be entitled to a tax refund. The actual refund amount will vary based on a household’s tax situation. 

State or District	Estimated Number of Individuals	Median Potential Refund	Total Potential Refunds*
Alabama	15,200	$926	$16,839,800
Alaska	3,700	$931	$4,335,300
Arizona	25,400	$871	$26,939,600
Arkansas	8,700	$923	$9,392,600
California	88,200	$835	$94,226,300
Colorado	18,500	$894	$20,109,900
Connecticut	9,800	$978	$11,343,600
Delaware	3,600	$945	$4,156,500
District of Columbia	2,900	$968	$3,503,800
Florida	53,200	$891	$58,210,500
Georgia	36,400	$900	$39,175,600
Hawaii	5,200	$979	$5,972,600
Idaho	4,500	$761	$4,369,600
Illinois	36,200	$956	$40,608,000
Indiana	19,200	$922	$20,893,000
Iowa	9,600	$953	$10,601,700
Kansas	8,700	$900	$9,285,600
Kentucky	10,600	$920	$11,236,300
Louisiana	15,100	$957	$17,357,300
Maine	3,800	$923	$4,030,200
Maryland	22,200	$991	$26,365,400
Massachusetts	21,800	$975	$25,071,800
Michigan	34,900	$976	$38,274,800
Minnesota	13,500	$818	$14,043,900
Mississippi	8,100	$861	$8,685,000
Missouri	19,500	$893	$20,803,400
Montana	3,400	$851	$3,632,100
Nebraska	4,700	$901	$5,007,300
Nevada	10,200	$890	$11,143,900
New Hampshire	4,200	$982	$4,923,100
New Jersey	24,400	$920	$27,408,300
New Mexico	6,500	$868	$7,032,700
New York	51,400	$1,029	$60,837,400
North Carolina	27,500	$895	$29,304,100
North Dakota	2,200	$953	$2,482,600
Ohio	31,400	$909	$32,939,900
Oklahoma	14,300	$902	$15,566,900
Oregon	15,300	$847	$15,857,800
Pennsylvania	38,600	$1,031	$43,412,900
Rhode Island	2,600	$986	$2,980,500
South Carolina	11,900	$840	$12,564,900
South Dakota	2,200	$892	$2,346,300
Tennessee	16,800	$909	$18,007,000
Texas	93,400	$960	$107,130,200
Utah	7,800	$836	$8,191,700
Vermont	1,700	$911	$1,818,600
Virginia	25,900	$914	$28,944,600
Washington	26,200	$976	$31,110,300
West Virginia	3,800	$950	$4,130,400
Wisconsin	11,800	$837	$12,139,400
Wyoming	2,100	$961	$2,416,300
Totals	938,800	$932	$1,037,161,300