WASHINGTON –The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning Jan. 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 October 2021 to take effect Nov. 1, 2021, based on daily compounding.

Revenue Ruling 2021-24, announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2021-50, dated Dec. 13, 2021.

Attached is an advance copy of REG-109128-21 , proposed regulations, which provide that “minimum essential coverage,” as that term is used in health insurance-related tax laws, does not include Medicaid coverage that is limited to COVID-19 testing and diagnostic services provided under the Families First Coronavirus Response Act.  The proposed regulations also provide an automatic extension of time for providers of minimum essential coverage to furnish individual statements regarding such coverage, and an alternative method for furnishing individual statements when the shared responsibility payment amount is zero.  Lastly, the proposed regulations provide an automatic extension of time for “applicable large employers” to furnish statements relating to health insurance that the employer offers to its full-time employees.

WASHINGTON – With the 2022 tax season and the holidays rapidly approaching, the Internal Revenue Service, state tax agencies and the nation's tax industry today announced a special week focusing attention on taxpayers protecting sensitive financial information against identity thieves.

Working together as the Security Summit, the coalition of the IRS, the states and the nation’s tax community plan the 6th Annual National Tax Security Awareness Week to take place from Nov. 29-Dec. 3. The announcement coincides with International Fraud Awareness Week coming to a conclusion.

The Summit partners warned that taxpayers and tax professionals face a heightened risk in coming months as fraudsters continue to use the pandemic as a way of tricking people into sharing sensitive personal information by email, text message and online. Identity thieves can use that information to try filing tax returns and stealing refunds.

As Security Summit partners have increased their joint defenses against identity theft, including through the Identity Theft Information Sharing and Analysis Center (ISAC), fraudsters have increasingly looked for ways to obtain sensitive personal financial information to help slip past common defenses. That has made tax professionals – who hold valuable tax information for their clients – a tempting target for scam artists.
 
“The nation’s tax community has successfully joined forces to protect taxpayers through the Security Summit effort, but we need help in this continuing battle,” said IRS Commissioner Chuck Rettig. “Taxpayers and tax professionals are the first line of defense against scammers looking for refunds. We are entering a sensitive holiday and tax period, and we urge people to protect their personal information – and avoid problems at tax time.”
 
The IRS and Summit partners continue to see constantly evolving threats and scams. They can mimic IRS and others in the tax community with fake emails, texts and online scams. These schemes can lurk underneath COVID-related messages, stimulus payments or tax refunds. And they can frequently use recent tragedies or charitable groups to coax people into sharing sensitive financial data.

To help combat this, the Summit partner’s National Tax Security Awareness Week will feature a week-long series of educational materials to help protect individuals, businesses and tax pros from identity theft. The effort will include special informational graphics and a social media effort on Twitter and Instagram with @IRSnews and #TaxSecurity.

A special emphasis for this year will be focusing tax security awareness on younger and older Americans. Even if someone doesn’t file a tax return, their online interactions can lead to scam artists obtaining sensitive information and using it to try obtaining a refund.

As part of the larger effort, the IRS and Security Summit partners are sharing YouTube videos on security steps for taxpayers. The videos can be viewed or downloaded at Easy Steps to Protect Your Computer and Phone and Security Measures Help Protect Against Tax-Related Identity Theft.

Employers also can share Publication 4524, Security Awareness for Taxpayers, with their employees and customers while tax professionals can share with clients.

Highlights of this year’s National Tax Security Awareness Week include:

Day 1 - Cyber Monday: Protect personal and financial information online
The IRS and the Security Summit partners remind people to take these basic steps:

• Use security software for computers and mobile phones – and keep it updated.
• Avoid phishing scams, especially related to tax refunds and COVID-19, Economic Impact Payments and other tax law changes.
• Use strong and unique passwords for all accounts.
• Use multi-factor authentication whenever possible.
• Shop only secure websites; look for the "https" in web addresses and the padlock icon; avoid shopping on unsecured and public Wi-Fi in places like coffee shops, malls or restaurants.

Day 2 - Giving Tuesday: Beware of scammers using fake charities
The IRS and the Security Summit partners warn people to avoid getting scammed when donating to charities. The agency provides the following tips:

• Individuals should never let any caller pressure them into giving a donation without allowing time for them to do some research.
• Confirm the charity is real by asking for its exact name, website and mailing address and confirming it later.
• Be careful about how a donation is made. After researching the charity, pay by credit card or check and not by gift card or wiring money.

Day 3 – Get an Identity Protection PIN
Taxpayers who can verify their identities online may opt into the IRS IP PIN program – a major expansion of the program from previous years. This is another tool taxpayers can use to protect themselves – and their tax refund. Here’s what taxpayers need to know:

• The Identity Protection PIN or IP PIN is a six-digit code known only to the individual and the IRS. It provides another layer of protection for taxpayers’ Social Security numbers on tax returns.
• Use the Get an Identity Protection PIN (IP PIN) tool at IRS.gov/IPPIN to immediately get an IP PIN.
• Never share the IP PIN with anyone but a trusted tax provider.

Day 4 – Tax professionals should review their security protocols
As identity thieves continue targeting tax professionals, the IRS and the Summit partners urge practitioners to review the “Taxes-Security-Together” Checklist, including:

• Deploy basic security measures.
• Use multi-factor authentication to protect tax software accounts.
• Create a Virtual Private Network if working remotely.
• Create a written data security plan as required by federal law.
• Know about phishing and phone scams, especially related to Electronic Filing Identification Numbers (EFINs), COVID-19 related tax-law changes including Economic Impact Payments.
• Create data security and data theft recovery plans.

Day 4 - Use digital signatures to submit IRS forms and check account details on secure portal
The IRS began accepting digital signatures on a variety of forms this past year. Additionally, the agency made improvements to its online accounts platform to help both tax pros and individuals.

• Tax pros may go to the new Tax Pro Account on IRS.gov to digitally initiate Power of Attorney and Tax Information Authorization requests.
• Taxpayers have digital control over who can represent them or see their account information on the Online Account portal.
• The IRS now accepts a wide array of digital signatures on a number of forms that cannot be electronically filed.

Day 5 – Businesses should implement safeguards; watch out for tax-related scams
Most cyberattacks are aimed at small businesses with fewer than 100 employees. Here are some details from this segment:

• Learn about best security practices for small businesses.
• IRS continues protective masking of sensitive information on business transcripts.
• A Business Identity Theft Affidavit – Form 14039-B – is available for all businesses to report theft to the IRS.
• Beware of various scams, especially the W-2 scam that attempts to steal employee income information.
• Check out the “Business” section on IRS’s Identity Theft Central at IRS.gov/identify theft.

-30-

Also today, the IRS published the latest executive column “A Closer Look,” which features James Lee, IRS Criminal Investigation Chief, and Damon Rowe, Executive Director, IRS Office of Fraud Enforcement, providing a glimpse of how the IRS investigates and helps prosecute fraud.

Today, the IRS published the latest executive column “A Closer Look,” which features James Lee, IRS Criminal Investigation Chief, and Damon Rowe, Executive Director, IRS Office of Fraud Enforcement, providing a glimpse of how the IRS investigates and helps prosecute fraud. “As financial crimes become more complex, we will do our best to make sure our investigators  stay ahead of the game,” said Lee. “Combined with your vigilance, we can help stamp out fraud and keep the American people safe.” Read more here. Read the Spanish version here.

“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.

Revenue Procedure 2021-48 provides that taxpayers may treat amounts that are excluded from gross income (tax-exempt income) in connection with the forgiveness of Paycheck Protection Program (PPP) Loans as received or accrued: (1) as eligible expenses are paid or incurred, (2) when an application for PPP Loan forgiveness is filed, or (3) when PPP Loan forgiveness is granted.  To the extent tax-exempt income resulting from the forgiveness of a PPP Loan is treated as gross receipts under a particular Federal tax provision, this revenue procedure applies for purposes of determining the timing and, to the extent relevant, reporting of such gross receipts.

Revenue Procedure 2021-49 provides guidance for partnerships and consolidated groups regarding amounts excluded from gross income and deductions relating to the Paycheck Protection Program and certain other COVID-19 relief programs.  More specifically: This revenue procedure provides guidance for partners and their partnerships regarding allocations under § 704(b) of the Internal Revenue Code and  the corresponding adjustments to be made with respect to the partners’ bases in their partnership interests under § 705 of the Code. This revenue procedure also provides guidance under § 1502 of the Code and § 1.1502-32 of the Income Tax Regulations regarding the corresponding basis adjustments for stock of subsidiary members of consolidated groups as a result of tax exempt income arising from certain forgiven PPP Loans, grant proceeds, or subsidized payment of certain principal, interest and fees.

Revenue Procedure 2021-50 allows eligible BBA partnerships to file amended Forms 1065 and furnish amended Schedules K-1 on or before December 31, 2021, to adopt the guidance set forth in Rev. Procs. 2021-48 and 2021-49 if certain requirements are met.

All three of these revenue procedures will be published in Internal Revenue Bulletin 2021-49 on Dec. 6, 2021.

Notice 2021-62 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for November 2021 used under § 417(e)(3)(D), the 24-month average segment rates applicable for November 2021, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv). 

Notice 2021-62 will be in IRB:   2021-49, dated December 6, 2021.

Enforcement actions focused on tax and COVID-related fraud, money laundering, cybercrimes

WASHINGTON – Over 2,500 criminal investigations, the identification of more than $10 billion from tax fraud and financial crimes, and a nearly 90% conviction rate are just a few highlights from the IRS-Criminal Investigation (IRS-CI) Fiscal Year 2021 Annual Report. The report, released Thursday, details statistics, important partnerships and significant criminal enforcement actions from IRS-CI, the criminal investigative arm of the IRS, for the past fiscal year, which began Oct. 1, 2020 and ended Sept. 30, 2021.

“IRS-CI agents are the only federal law enforcement officers with the authority to investigate criminal violations of the U.S. tax code. Their work reinforces the backbone of our voluntary compliance tax system -- a system that funds services and benefits for our nation, including defense, infrastructure and education,” said IRS Commissioner Chuck Rettig.

In fiscal year 2021, IRS-CI built upon its existing network of U.S. field offices and international attachés to combat financial crimes across the globe. The agency’s alliance with the Joint Chiefs of Global Tax Enforcement (J5) helped strengthen public-private partnerships with financial institutions and the Fin-Tech industry to deter and identify criminal activity. Additionally, IRS-CI established its first cyber attaché in The Hague, Netherlands, to proactively support cyber investigative needs in coordination with Europol.

“IRS-CI continues to lead tax and financial investigations here in the U.S. and across the globe,” said IRS-CI Chief Jim Lee. “In fiscal year 2021, as we faced the second year of a global pandemic, our team of agents continued to overcome personal and professional challenges to target criminals who exploited the U.S. tax and financial systems for personal gain.” 

While IRS-CI agents spent most of their investigative man-hours, about 72%, investigating tax-related crimes like tax evasion and tax fraud during fiscal year 2021, they also made significant contributions to money laundering, narcotics trafficking, public corruption, terrorism and COVID-19 fraud investigations. 

Case examples include:

In April 2021, a dual Russian-Swedish national was arrested in Los Angeles on criminal charges related to his alleged operation of the longest-running bitcoin money laundering service on the darknet dubbed Bitcoin Fog. The bulk of cryptocurrency laundered through Bitcoin Fog came from darknet marketplaces and was tied to illegal narcotics, computer fraud and identity theft. This case marked the second U.S. prosecution of a cryptocurrency mixing service; both were investigated by IRS-CI.

The ringleader of a transnational criminal organization, with ties to the Sinaloa Cartel, operating in California and along the East Coast was sentenced to 33 years in prison in July 2021 for narcotics trafficking-related charges. The sentencing followed a multiagency operation dubbed Operation Cookout that netted 65 kilograms of illegal drugs, 24 firearms, more than $700,000 in cash and guilty pleas from 45 defendants.

Numerous IRS-CI investigations resulted in individuals being sentenced for fraudulently obtaining small business relief loans under the CARES Act. One of those cases involved a Texas businessman who was sentenced in September 2021 to 31 months confinement and 36 months of supervised release after he created a scheme to fraudulently obtain more than $3.3 million in Paycheck Protection Program loans for personal use.

The report includes additional case examples for each U.S. field office, an overview of IRS-CI’s international footprint, details about the specialized services provided by IRS-CI and investigative statistics, broken down by discipline, for fiscal year 2021.

WASHINGTON – The Internal Revenue Service today provided answers regarding Coronavirus State and Local Fiscal Recovery Funds (SLFR Funds). These funds give eligible state and local governments a substantial infusion of  resources to meet pandemic response needs.

The answers are in FAQs (FS-2021-16) and detail the tax consequences for   individual recipients and the reporting requirements for the states and local governments and employers, as applicable.

Some SLFR Fund recipients may have to report certain payments as income and may owe tax depending on the purpose of the payment. Today’s FAQs also provide answers regarding payments used to assist with childcare or other basic needs.

States and local government administrators will find answers regarding their filing requirements, including when Forms 1099 need to be filed.

These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.

More information about reliance is available.

WASHINGTON — Victims of Hurricane Ida throughout Mississippi now have additional time--until Jan. 3, 2022--to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

Following the recent decision by the Federal Emergency Management Agency (FEMA) to add 63 counties to its Oct. 22 disaster declaration, the IRS is offering this expanded relief to these newly-designated localities, as well as the 19 counties listed in the original FEMA declaration.

Previously, the IRS relief period for the 63 newly-designated counties had ended on Nov. 1. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The updated relief, now covering the entire state of Mississippi, postpones various tax filing and payment deadlines that occurred starting on Aug. 28, 2021. As a result, affected individuals and businesses will have until Jan. 3, 2022, to file returns and pay any taxes that were originally due during this period. This means individuals who had a valid extension to file their 2020 return that ran out on Oct. 15, 2021, will now have until Jan. 3, 2022, to file. The IRS noted, however, that because tax payments related to these 2020 returns were due on May 17, 2021, those payments are not eligible for this relief.

The Jan. 3, 2022 deadline also applies to quarterly estimated income tax payments due on Sept. 15, 2021, and the quarterly payroll and excise tax returns normally due on Nov. 1, 2021. Businesses with an original or extended due date also have the additional time including, among others, calendar-year partnerships and S corporations whose 2020 extensions ran out on Sept. 15, 2021 and calendar-year corporations whose 2020 extensions ran out on Oct. 15, 2021. It also applies to calendar-year tax-exempt organizations whose 2020 extensions ran out on Nov. 15, 2021.

In addition, penalties on payroll and excise tax deposits due on or after Aug. 28, 2021 and before Sept. 13, will be abated as long as the deposits were made by Sept. 13, 2021.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2021 return normally filed next year), or the return for the prior year (2020). Be sure to write the FEMA declaration number – EM-3569 associated with the earlier relief or EM-4626 for the new relief−on any return claiming a loss. See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by Hurricane Ida and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

WASHINGTON — The Internal Revenue Service today unveiled a new how-to video series enabling taxpayers to avoid potential scams by considering and applying for an Offer in Compromise (OIC) themselves and avoid paying excessive fees to companies advertising outlandish claims.

"We encourage eligible taxpayers in real financial distress to consider looking into an Offer in Compromise to resolve their tax issues," said IRS Commissioner Chuck Rettig. "People also need to use caution with the program. Some companies routinely overstate how they can help with this program and clear up people’s back taxes for pennies on the dollar. A quick visit to IRS.gov can provide important information to help people with this program."

An Offer in Compromise allows you to settle your tax debt for less than the full amount you owe if you qualify. It may be a legitimate option if you can't pay your full tax liability or doing so creates a financial hardship. The IRS considers your unique set of facts and circumstances when making that determination. The OIC program serves an important purpose for a select group of taxpayers.

The IRS periodically warns against hiring and paying needless fees to these "Offer in Compromise mills" that contort the IRS program into something it's not and mislead people who have no chance of meeting the requirements while charging excessive fees, often thousands of dollars. OIC mills were listed in the last two annual IRS Dirty Dozen lists of tax scams to avoid.

"I encourage taxpayers who may qualify for an Offer in Compromise to watch these videos and review information on IRS.gov to help them determine if the program is right for them," Rettig said. "Don't go to costly promoters advertising on television or radio who can make overstated claims or suggestions that the IRS will accept an OIC without even reviewing your situation first."

The video playlist marks another improvement for IRS online educational videos by breaking the videos’ information out into easy-to-navigate chapters and sections that coincide with the layout of the OIC booklet and forms. It also offers taxpayers the ability to bookmark information they’d like to revisit later. This new OIC video playlist provides:

The vast majority of tax professionals are honest and don't make false claims about getting taxpayers special deals that only they can get. Taxpayers should consult a trusted reputable tax professional when needed. The videos and web materials make it easier for taxpayers to navigate the OIC process on their own.

IRS.gov contains complete information on the collection process and payment options. Publication 594, The IRS Collection Process, also provides helpful information on the options available to taxpayers. Form 656 Booklet provides detailed instructions for submitting an OIC and includes all of the necessary financial forms.

Some taxpayers may not be required to pay the $205 OIC application fee or the required payments, depending on their income and the basis of their offer. Taxpayers can determine if they qualify for the waiver of fees and payment(s) by consulting the Low-Income Guidelines in Form 656. The low-income guideline exception applies only to individuals.

All publications and forms are on IRS.gov or taxpayers may order copies by calling 1-800-829-3676. All publications and forms are available for free. Taxpayers may feel they need the assistance of a qualified tax professional to prepare and submit an OIC. Taxpayers may contact local or state tax professional associations for enrolled agents, CPAs or attorneys to locate someone who has the education and experience to assist them.