Revenue Procedure 2021-54 prescribes discount factors for the 2021 accident year for insurance companies to compute discounted unpaid losses under § 846 of the Internal Revenue Code and discounted estimated salvage recoverable under § 832. 

Revenue Procedure 2021-54 will be in IRB:  2021-52, dated 12/27/2021.

Today, the IRS published the latest executive column “A Closer Look,” which features Sunita Lough, Commissioner, Tax Exempt and Government Entities Division, providing information for taxpayers on charitable giving. “We are committed to ensuring that taxpayers who generously make a difference through their charitable support are aware of the relief the government provides for them,” said Lough. 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.

Today, the IRS published the latest executive column “A Closer Look,” which features Fred Schindler, Director, Collection, Small Business/Self-Employed, discussing how the IRS’s Collection organization has taken a number of actions to help taxpayers since the onset of COVID-19, including some policy changes that will continue beyond the pandemic. “The IRS’s Collection organization has played an important role in efforts to implement economic relief measures passed by Congress,” said Schindler. “We will continue to carry out our mission of collecting delinquent taxes and securing delinquent tax returns through the fair and equitable application of the tax laws while respecting taxpayer rights.” 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.

In the summer, the Treasury Department and the IRS finalized Schedules K-2 and K-3 for Forms 1065, 1120-S, and 8865 for tax year 2021. The schedules are designed to provide greater clarity for partners and shareholders on how to compute their U.S. income tax liability with respect to items of international tax relevance, including claiming deductions and credits. The Treasury Department and the IRS also finalized instructions associated with the Schedules K-2 and K-3. However, the tax year 2021 Forms, to which Schedules K-2 and K-3 must be attached, have not yet been finalized. Questions have arisen whether the Schedules K-2 and K-3 must be attached to tax year 2020 Forms for partnerships or S corporations with 2021 short tax years; or, in the case of Form 8865, filers of Form 8865 with 2021 short tax years. New FAQs address questions concerning Schedules K-2 and K-3 with respect to 2021 short tax years for pass-through entities and filers of Form 8865.

WASHINGTON — The Internal Revenue Service today reminded retirement plan participants and individual retirement account owners that payments, called required minimum distributions, must usually be taken by Dec. 31.

Required minimum distributions (RMDs) generally are minimum amounts that retirement plan account owners must withdraw annually starting with the year they reach 72 or, if later, the year they retire. However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder is age 72, even if they’re still working. RMD amounts not timely withdrawn from accounts may be subject to penalties.

Individuals who reached 70 ½ in 2019, (70th birthday was June 30, 2019 or earlier) did not have an RMD due for 2020, but will have to take one by Dec. 31, 2021.

Individuals who reach 72 in 2021 (and their 70th birthday was July 1, 2019 or later) have their first RMD due by April 1, 2022.

The required distribution rules apply to:

Roth IRAs do not require distributions while the original owner is alive.

An IRA trustee, or plan administrator, must report the amount of the RMD to the IRA owner. An IRA owner, or trustee, must calculate the RMD separately for each IRA owned. However, they can choose to withdraw the total amount from one or more of the IRAs. In contrast, RMDs required from workplace retirement plans must be taken separately from each plan. Not taking a required distribution, or not withdrawing enough, could mean a 50% excise tax on the amount not distributed.

The RMD is based on the taxpayer’s life expectancy and their account balance. Often, a trustee will use Form 5498, IRA Contribution Information, to report the RMD to the recipient. For most taxpayers, life expectancy used to calculate the RMD is based on Uniform Lifetime Table III in Publication 590-B, Distributions from IRAs. Individuals can use online worksheets on IRS.gov to figure the RMD.

2020 RMDs
An IRA owner or beneficiary who received an RMD in 2020 had the option of returning it to their account or other qualified plan to avoid paying taxes on that distribution. A 2020 RMD that qualified as a coronavirus-related distribution may be repaid over a 3-year period or have the taxes due on the distribution spread over three years. A 2020 withdrawal from an inherited IRA could not be repaid to the inherited IRA but may be spread over three years for income inclusion.

IRS online tools and publications can help
Taxpayers can find frequently asked questions, forms and instructions and easy-to-use tools at IRS.gov.

• FAQs regarding Required Minimum Distributions
• Individual Retirement Arrangements (IRAs)

Coronavirus Relief for Retirement Plans and IRAs

In the summer, the Treasury Department and the IRS finalized Schedules K-2 and K-3 for Forms 1065, 1120-S, and 8865 for tax year 2021. The schedules are designed to provide greater clarity for partners and shareholders on how to compute their U.S. income tax liability with respect to items of international tax relevance, including claiming deductions and credits. The Treasury Department and the IRS also finalized instructions associated with the Schedules K-2 and K-3. However, the tax year 2021 Forms, to which Schedules K-2 and K-3 must be attached, have not yet been finalized. Questions have arisen whether the Schedules K-2 and K-3 must be attached to tax year 2020 Forms for partnerships or S corporations with 2021 short tax years; or, in the case of Form 8865, filers of Form 8865 with 2021 short tax years. New FAQs address questions concerning Schedules K-2 and K-3 with respect to 2021 short tax years for pass-through entities and filers of Form 8865.

IRS Office of National Public Liaison

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WASHINGTON — The Internal Revenue Service is seeking qualified applicants for nomination to the Electronic Tax Administration Advisory Committee (ETAAC).

The ETAAC is an organized public forum for discussion of issues in electronic tax administration, such as prevention of identity theft and refund fraud. The committee supports the overriding goal that paperless filing should be the preferred and most convenient method of filing tax and information returns. ETAAC members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and private-sector tax partners to fight electronic fraud.

The IRS is looking for up to 10 qualified individuals who will serve three-year terms beginning in September 2022. Applicants should have experience in such areas as state tax administration, cybersecurity and information security, tax software development, tax preparation, payroll and tax financial product processing, systems management and improvement, and implementation of customer service initiatives. The IRS also strongly encourages applications from people representing the viewpoints of average taxpayers, including consumer advocates and others with an interest in tax issues.

Applications will be accepted through Jan. 31, 2022.

Nominations of qualified individuals may be made by letter and received from organizations or the individuals themselves. Applicants should complete the ETAAC application and include a short statement of interest and a resume. Applicants should describe and document their qualifications, past and current affiliations, and dealings with cybersecurity and electronic tax administration.

Applicants must complete and submit a tax check waiver form and undergo an IRS practitioner background check and an FBI background check. Information on the tax check waiver and FBI background check will be provided upon receipt of application. More information can be found at: Apply for Membership on the Electronic Tax Administration Advisory Committee (ETAAC) | Internal Revenue Service (irs.gov).

ETAAC is a Federal Advisory Committee established by the Internal Revenue Service Restructuring and Reform Act of 1998.
 
Questions about the ETAAC and the application process can be e-mailed to publicliaison@irs.gov.

WASHINGTON – The Internal Revenue Service today encouraged taxpayers to take important actions this month to help them file their federal tax returns in 2022, including special steps related to Economic Impact Payments and advance Child Tax Credit payments.

This is the second in a series of reminders to help taxpayers get ready for the upcoming tax filing season. A special page, updated and available on IRS.gov, outlines steps taxpayers can take now to make tax filing easier in 2022.

Here are some key items for taxpayers to consider before they file next year.

Check on advance Child Tax Credit payments
Families who received advance payments will need to compare the advance Child Tax Credit payments that they received in 2021 with the amount of the Child Tax Credit that they can properly claim on their 2021 tax return.

Taxpayers who received less than the amount for which they're eligible will claim a credit for the remaining amount of Child Tax Credit on their 2021 tax return. Taxpayers who received more than the amount for which they're eligible may need to repay some or all of the excess payment when they file.

In January 2022, the IRS will send Letter 6419 with the total amount of advance Child Tax Credit payments taxpayers received in 2021. People should keep this and any other IRS letters about advance Child Tax Credit payments with their tax records. 

See Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return for more information.

Eligible families who did not get monthly advance payments in 2021 can still get a lump-sum payment by claiming the Child Tax Credit when they file a 2021 federal income tax return next year. This includes families who don’t normally need to file a return.

Economic Impact Payments and claiming the Recovery Rebate Credit
Individuals who didn't qualify for the third Economic Impact Payment or did not receive the full amount may be eligible for the Recovery Rebate Credit based on their 2021 tax information. They’ll need to file a 2021 tax return, even if they don't usually file, to claim the credit.

Individuals will also need the amount of their third Economic Impact Payment and any Plus-Up Payments received to calculate their correct 2021 Recovery Rebate Credit amount when they file their tax return. Ensuring they use the correct payment amounts will help them avoid a processing delay that may slow their refund.

In early 2022, the IRS will send Letter 6475 that contains the total amount of the third Economic Impact Payment and any Plus-Up Payments received. People should keep this and any other IRS letters about their stimulus payments with other tax records. Individuals can also log in to their IRS.gov Online Account to securely access their Economic Impact Payment amounts.

See IRS.gov/rrc for more information.

Charitable deduction changes
Taxpayers who don't itemize deductions may qualify to take a charitable deduction of up to $600 for married taxpayers filing joint returns and up to $300 for all other filers for cash contributions made in 2021 to qualifying organizations. For more information, read Publication 526, Charitable Contributions.

Get banked to get ready to direct deposit
Direct deposit gives taxpayers access to their refund faster than a paper check. Those without a bank account can learn how to open an account at an FDIC-insured bank or through the National Credit Union Locator Tool. Veterans should see the Veterans Benefits Banking Program for access to financial services at participating banks.

Links to online tools, publications and other helpful resources are available at IRS.gov/getready.

Notice 2021-65 provides guidance regarding the retroactive termination of the employee retention credit in the fourth calendar quarter of 2021 for employers who are not recovery startup businesses. The notice provides guidance regarding how the rules apply to recovery startup businesses during the fourth quarter of 2021. The notice also provides guidance to employers who received an advance payment or reduced deposits in anticipation of claiming the employee retention credit, but who are ineligible to claim the credit due to the change in law, on how they pay the advance and timely make required deposits, as well as whether they are eligible for relief from penalties. 

Notice 2021-65 will be in IRB:  2021-51, dated December 20, 2021.

WASHINGTON – The Internal Revenue Service today issued guidance for employers regarding the retroactive termination of the Employee Retention Credit. The Infrastructure Investment and Jobs Act, which was enacted on Nov. 15, 2021, amended the law so that the Employee Retention Credit  applies only to wages paid before October 1, 2021, unless the employer is a recovery startup business. 

Notice 2021-65 applies to employers that paid wages after September 30, 2021, and received an advance payment of the Employee Retention Credit for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of 2021, but are now ineligible for the credit due to the change in the law. The notice also provides guidance regarding how the rules apply to recovery startup businesses during the fourth quarter of 2021. 

Employers who Received Advance Payments

Generally, employers that are not recovery startup businesses and received advance payments for fourth quarter wages of 2021 will avoid failure to pay penalties if they repay those amounts by the due date of their applicable employment tax returns. 

Employers who Reduced Employment Tax Deposits
Employers that reduced deposits on or before Dec. 20, 2021, for wages paid during the fourth calendar quarter of 2021 in anticipation of the Employee Retention Credit and that are not recovery startup businesses will not be subject to a failure to deposit penalty with respect to the retained deposits if—

1. The employer reduced deposits in anticipation of the Employee Retention Credit, consistent with the rules in Notice 2021-24,
2. The employer deposits the amounts initially retained in anticipation of the Employee Retention Credit on or before the relevant due date for wages paid on December 31, 2021 (regardless of whether the employer actually pays wages on that date). Deposit due dates will vary based on the deposit schedule of the employer, and
3. The employer reports the tax liability resulting from the termination of the employer’s Employee Retention Credit on the applicable employment tax return or schedule that includes the period from October 1, 2021, through December 31, 2021. Employers should refer to the instructions to the applicable employment tax return or schedule for additional information on how to report the tax liability.

Due to the termination of the Employee Retention Credit for wages paid in the fourth quarter of 2021 for employers that are not recovery startup businesses, failure to deposit penalties are not waived for these employers if they reduce deposits after Dec. 20, 2021.

If an employer does not qualify for relief under this Notice, it may reply to a notice about a penalty with an explanation and the IRS will consider reasonable cause relief. 

More information for businesses seeking coronavirus-related tax relief can be found at IRS.gov.