Notice 2022-29 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for June 2022 used under § 417(e)(3)(D), the 24-month average segment rates applicable for June 2022, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv). 

Notice 2022-29 will be in IRB: 2022-28, dated July 11, 2022.

WASHINGTON – Following intensive work during the past several months, the Internal Revenue Service announced today that processing on a key group of individual tax returns filed during 2021 will be completed by the end of this week. 

Due to issues related to the pandemic and staffing limitations, the IRS began 2022 with a larger than usual inventory of paper tax returns and correspondence filed during 2021. The IRS took a number of steps to address this, and the agency is on track to complete processing of originally filed Form 1040 (individual tax returns without errors) received in 2021 this week. 

Business paper returns filed in 2021 will follow shortly after. The IRS continues to work on the few remaining 2021 individual tax returns that have processing issues or require additional information from the taxpayer.

As of June 10, the IRS had processed more than 4.5 million of the more than 4.7 million individual paper tax returns received in 2021. The IRS has also successfully processed the vast majority of tax returns filed this year: More than 143 million returns have been processed overall, with almost 98 million refunds worth more than $298 billion being issued. 

IRS employees continue working hard to process these and other tax returns filed in the order received. The IRS continues to receive current and prior-year individual returns and related correspondence as people file extensions, amended returns and a variety of business tax returns. 

To date, more than twice as many returns await processing compared to a typical year at this point in the calendar year, although the IRS has worked through almost a million more returns to date than it had at this time last year. And a greater percentage of this year’s inventory awaiting processing is comprised of original returns which, generally, take less time to process than amended returns. 

To work to address the unprocessed inventory by the end of this year, the IRS has taken aggressive, unprecedented steps to accelerate this important processing work while maintaining accuracy. This effort included significant, ongoing overtime for staff throughout 2022, creating special teams of employees focused solely on processing aged inventory, and expediting hiring of thousands of new workers and contractors to help with this ongoing effort. 

Additionally, the IRS has greatly improved the process for taxpayers whose paper and electronically filed returns were suspended during processing for manual review and correction – referred to as error resolution. Last filing season, an IRS tax examiner could correct an average of 70 tax returns with errors per hour. Thanks to new technology implemented this filing season, 180 to 240 returns can now be corrected per hour. As of June 12, 2021, there were 8.9 million tax returns in error resolution. As of June 10, 2022, there were just 360,000 returns awaiting correction.

The IRS will continue its intense effort to make progress on processing these paper returns in the months ahead.

“IRS employees have been working tirelessly to process these tax returns as quickly as possible and help people who are waiting on refunds or resolution of an account issue,” said IRS Commissioner Chuck Rettig. “Completing the individual returns filed last year with no errors is a major milestone, but there is still work to do. We remain focused on doing everything possible to expedite processing of these tax returns, and we continue to add more people to this effort as our hiring efforts continue this summer.”

Rettig emphasized that adding sustained funding increases for the IRS will help the agency add more employees to process tax returns and answer phones as well as help improve technology and ensure fair enforcement of the tax laws.

“Taxpayers and tax professionals deserve the absolute highest-quality service from the nation’s tax system,” Rettig said. “Long-term and consistent funding for the agency is critical to ensuring the IRS is prepared for future tax seasons. It’s also critical for the IRS to be ready to answer the call for the nation during the next crisis, just as the agency did delivering three rounds of historic stimulus payments and advance Child Tax Credit payments during the pandemic.” 

The IRS reminds millions of taxpayers who have not yet filed their 2021 tax returns this year – including those who requested an extension until October 17 – to make sure they file their returns electronically with direct deposit to avoid delays. People who use e-file avoid the delays facing those who file paper returns; e-filed returns with no errors are typically processed in 21 days. 

The IRS also urges people to file as soon as they are ready. There is no need to wait until the last minute before the October 17 extension deadline. Filing sooner avoids potential delays for taxpayers, and it also assists the larger ongoing IRS efforts to complete processing tax returns this year.

 Additional details on processing and other operations are available on a special page on IRS.gov

Revenue Procedure 2022-28 notifies taxpayers that the IRS will not issue letter rulings on whether a spin-off/termination transaction that involves excess assets results in an employer reversion under section 4980(c)(2) of the Code.  Rev. Proc. 2022-3 is amplified.

Revenue Procedure 2022-28 will be in IRB:  2022-27, dated July 5, 2022.

Assistance for eligible taxpayers in setting up or modifying payment plans now available; more functions planned in 2022 to help taxpayers obtain account information
 
Voice Bot Video

WASHINGTON – The Internal Revenue Service today announced expanded voice bot options to help eligible taxpayers easily verify their identity to set up or modify a payment plan while avoiding long wait times.

"This is part of a wider effort at the IRS to help improve the experience of taxpayers," said IRS Commissioner Chuck Rettig. "We continue to look for ways to better assist taxpayers, and that includes helping people avoid waiting on hold or having to make a second phone call to get what they need. The expanded voice bots are another example of how technology can help the IRS provide better service to taxpayers."

Voice bots run on software powered by artificial intelligence, which enables a caller to navigate an interactive voice response. The IRS has been using voice bots on numerous toll-free lines since January, enabling taxpayers with simple payment or notice questions to get what they need quickly and avoid waiting. Taxpayers can always speak with an English- or Spanish-speaking IRS telephone representative if needed.

Eligible taxpayers who call the Automated Collection System (ACS) and Accounts Management toll-free lines and want to discuss payment plan options can authenticate or verify their identities through a personal identification number (PIN) creation process. Setting up a PIN is easy: Taxpayers will need their most recent IRS bill and some basic personal information to complete the process.

"To date, the voice bots have answered over 3 million calls. As we add more functions for taxpayers to resolve their issues, I anticipate many more taxpayers getting the service they need quickly and easily," said Darren Guillot, IRS Deputy Commissioner of Small Business/Self Employed Collection & Operations Support.

Additional voice bot service enhancements are planned in 2022 that will allow authenticated individuals (taxpayers with established or newly created PINs) to get:

In addition to the payment lines, voice bots help people who call the Economic Impact Payment (EIP) toll-free line with general procedural responses to frequently asked questions. The IRS also added voice bots for the Advance Child Tax Credit toll-free line in February to provide similar assistance to callers who need help reconciling the credits on their 2021 tax return.

The IRS also reminds taxpayers about numerous other available self-service options.

Revenue Ruling 2022-12 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274. 

The rates are published monthly for purposes of sections 42, 382, 412, 642, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

Revenue Ruling 2022-12 will be in IRB:  2022-27, dated July 5, 2022.

Audience: Payroll Industry, Tax Professionals, Small Business and Self Employed, Tax Exempt and Government Entities, Financial Institutions

The IRS is continuing its transition to the new Information Returns TCC (IR-TCC) Application for Filing Information Returns Electronically (FIRE) for customers who received their TCC(s) prior to September 26, 2021. Customers must take action to keep their existing TCCs active.

Beginning in September 2022, FIRE TCC holders who submitted their TCC Application prior to September 26, 2021, will need to submit and complete the IR-TCC Application. The IR-TCC application can be done at any time between September 2022 and August 1, 2023. Your TCC will remain active for use until August 1, 2023, after that date, any FIRE TCC that does not have a completed IR-TCC Application will be dropped and will not be available for e-file. Visit Filing Information Returns Electronically Update for more information.

What are the benefits?

The online application allows easier application updates, including requesting additional TCCs, and provides more control over who has access to your TCC(s).

What do you need to do?

We encourage you to complete the transition as soon as possible.

Audience: Payroll Industry, Tax Professionals, Small Business and Self Employed, Tax Exempt and Government Entities, Financial Institutions

Beginning September 2022, IRS will transition filers who received their FIRE Transmitter Control Codes(TCC) prior to September 26, 2021, to the new Information Returns Application for Transmitter Control Code (IR-TCC). As part of this transition, Form 4419, Revise Existing TCC for FIRE, will be phased out effective August 1, 2022. Your TCC will remain valid for use until August 1, 2023, after that date, any FIRE TCC that does not have a completed IR-TCC Application will be dropped and will not be available for e-file.     

What you need to do:

• Beginning in September 2022, access the IR-TCC Application to submit your application and update your information.

Note: You will have to validate your identity using the latest IRS authentication process.

• If you do not plan to immediately complete the IR TCC application, you must take the following actions:

• By August 1, 2022, ensure the information on your application (submitted via Form 4419) contains the current contact’s name, current email address and current telephone number. Also, please verify the company’s current legal name is correct (spelling, abbreviations, special characters and spacing) to match IRS records.

IMPORTANT - If your legal business name isn’t correct, you won’t be able to log into the FIRE System to file electronically. These changes must be received by August 1, 2022, to ensure the information can be updated timely. Once the transition is complete, the Form 4419, Revise Existing TCC for FIRE, will no longer be available. You’ll need to complete the online IR Application for TCC process to make updates to your application.

• By August 1, 2023, you must complete the new IR-TCC Application process to continue to file electronically and retain use of your current TCC(s). If you complete the IR-TCC Application after this date you will be issued new TCC(s).

WASHINGTON –The Internal Revenue Service announced the selection of Guy Ficco as the next Deputy Chief for IRS Criminal Investigation (IRS-CI). He will oversee 20 field offices and 11 foreign posts, including approximately 2,000 special agents investigating tax fraud and other financial crimes.

“The Deputy Chief position demands someone with vast experience in tax law and financial crimes, but also a passionate leader who can further the development of CI’s workforce”, said Jim Lee, Chief of IRS Criminal Investigation. “After nearly three decades serving our agency in various roles, Guy’s experience will prove invaluable as we continue uncovering financial crimes around the world.”

Ficco currently serves as IRS-CI’s Executive Director of Global Operations where he oversees CI’s policies related to investigations, as well as the agency’s international footprint. He provides executive leadership over CI’s Financial Crimes, Asset Recovery and Investigative Services, Special Investigative Techniques, and Narcotics and National Security sections, as well as CI’s International Field Operations. 

Ficco will replace Jim Robnett, who will be retiring July 15 after 36 years of service at the IRS, 28 of which were with IRS-CI.

In previous IRS-CI positions, Ficco served as Special Agent in Charge, providing oversight and direction in matters relating to criminal investigation activities and programs for the Philadelphia Field Office. Additionally, during his tenure he held various leadership roles including Supervisory Special Agent in the Washington Field Office, Senior Analyst in both Financial Crimes and International Operations sections, Assistant Special Agent in Charge for the Washington Field Office, Director of Special Investigative Techniques, Washington DC, and long-term actor for Deputy Director, Strategy.

Ficco served as a Congressional Fellow through the Government Affairs Institute at Georgetown University, assigned to the Permanent Subcommittee on Investigations in the Senate Homeland Security Committee. He holds a bachelor’s degree in business administration with a concentration in Accounting from Dominican College in New York. He is a Certified Fraud Examiner and joined IRS Criminal Investigation in 1995.

IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, boasting a nearly 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 11 attaché posts abroad.

Cryptocurrency, non-filing, abusive syndicated conservation easement, abusive micro-captive deals make list

WASHINGTON – The Internal Revenue Service today wrapped up its annual "Dirty Dozen" scams list for the 2022 filing season, with a warning to taxpayers to avoid being misled into using bogus tax avoidance strategies.

The IRS warned taxpayers to watch out for promoters peddling these schemes. As part of its mission, the IRS is focused on high-income taxpayers who engage in various types of tax violations, ranging from the most basic, failing to file returns up to sophisticated transactions involving abusive syndicated conservation easement deals and abusive domestic micro-captive insurance arrangements.

“These tax avoidance strategies are promoted to unsuspecting folks with too-good-to-be-true promises of reducing taxes or avoiding taxes altogether,” said IRS Commissioner Chuck Rettig. "Taxpayers should not kid themselves into believing they can hide income from the IRS.  The agency continues to focus on these deals, and people who engage in them face steep civil penalties or criminal charges.”

The IRS publishes the Dirty Dozen as part of a broad ranging effort to inform taxpayers.  People should be careful not to get conned into using well-worn abusive arrangements with high fees as well as the other Dirty Dozen schemes.

The IRS has stepped up efforts on abusive schemes in recent years. As part of this wider effort, the IRS Office of Chief Counsel announced earlier this year it would hire up to 200 additional attorneys to help the agency combat abusive syndicated conservation easements and micro-captive transactions as well as other abusive schemes. (IR-2022-17).

Last week, the IRS kicked off the 2022 Dirty Dozen list (IR-2022-113) with four heavily promoted abusive deals that taxpayers need to avoid. The IRS followed this up with a number of common scams that can target average taxpayers. These consumer-focused scams can prey on any individual or organization, steal sensitive financial information or money, and in some cases leave the taxpayer to clean up the legal mess.

For today’s conclusion of the Dirty Dozen, the IRS highlights four other schemes that typically target high-net-worth individuals who are looking for ways to avoid paying taxes. Solicitations for investment in these schemes are generally more targeted than solicitations for widespread scams, such as email scams, that can hit anyone.

Hiding assets in what the taxpayer hopes is an anonymous account or simply not filing a return in the hopes of staying off the grid are tax avoidance scams that have been around for decades. The IRS remains committed to stopping these methods of cheating that short-change taxpayers who reliably pay their fair share of taxes every year.

The IRS warns anyone thinking about using one of these schemes – or similar ones – that the agency continues to improve work in these areas thanks to new and evolving data analytic tools and enhanced document matching. These Dirty Dozen schemes cover:

Concealing Assets in Offshore Accounts and Improper Reporting of Digital Assets:
The IRS remains focused on stopping tax avoidance by those who hide assets in offshore accounts and in accounts holding cryptocurrency or other digital assets.

International tax compliance is a top priority of the IRS. New patterns and trends emerging in complex international tax avoidance schemes and cross-border transactions have heightened concerns regarding the lack of tax compliance by individuals and entities with an international footprint. As international tax and money laundering crimes have increased, the IRS continues to protect the integrity of the U.S. tax system by helping American taxpayers to understand and meet their tax responsibilities and by enforcing the law with integrity and fairness, worldwide.

Over the years, numerous individuals have been identified as evading U.S. taxes by attempting to hide income in offshore banks, brokerage accounts or nominee entities. They then access the funds using debit cards, credit cards, wire transfers or other arrangements. Some individuals have used foreign trusts, employee-leasing schemes, private annuities and structured transactions attempting to conceal the true owner of accounts or insurance plans.

U.S. persons are taxed on worldwide income. The mere fact that money is placed in an offshore account does not put it out of reach of the U.S. tax system.  U.S. persons are required, under penalty of perjury, to report income from offshore funds and other foreign holdings. The IRS uses a variety of sources to identify promoters who encourage others to hide their assets overseas.

Digital assets are being adopted by mainstream financial organizations along with many other parts of the economy. The proliferation of digital assets across the world in the last decade or so has created tax administration challenges regarding digital assets, in part because there is an incorrect perception that digital asset accounts are undetectable by tax authorities. Unscrupulous promoters continue to perpetuate this myth and make assertions that taxpayers can easily conceal their digital asset holdings.

The IRS urges taxpayers to not be misled into believing this storyline about digital assets and possibly exposing themselves to civil fraud penalties and criminal charges that could result from failure to report transactions involving digital assets.

"The IRS is able to identify and track otherwise anonymous transactions of international accounts as well as digital assets during the enforcement of our nation's tax laws," Rettig said. "We urge everyone to come into compliance with their filing and reporting responsibilities and avoid compromising themselves in schemes that will ultimately go badly for them."

High-income individuals who don’t file tax returns: The IRS continues to focus on people who choose to ignore the law and not file a tax return, especially those individuals earning more than $100,000 a year.

Taxpayers who exercise their best efforts to file their tax returns and pay their taxes, or enter into agreements to pay their taxes, deserve to know that the IRS is pursuing others who have failed to satisfy their filing and payment obligations. The good news is most people file on time and pay their fair share of tax.

Those who choose not to file a return even when they have a legal filing requirement, and especially those earning more than $100,000 per year who don’t file, represent a compliance problem that continues to be a top priority of the IRS.

Here’s a key reminder for taxpayers who may be wrongly persuaded that not filing their return is a smart move. The Failure to File Penalty is initially much higher than the Failure to Pay Penalty. It is more advantageous to file an accurate return on time and set up a payment plan if needed than to not file. The Failure to File Penalty is generally 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty generally will not exceed 25% of unpaid taxes. The Failure to Pay Penalty is generally 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. The penalty will not exceed 25% of unpaid taxes.

If a person’s failure to file is deemed fraudulent, the penalty generally increases from 5 percent per month to 15 percent for each month or part of a month the return is late, with the maximum penalty generally increasing from 25 percent to 75 percent.

Abusive Syndicated Conservation Easements: In syndicated conservation easements, promoters take a provision of the tax law allowing for conservation easements and twist it by using inflated appraisals of undeveloped land (or, for a few specialized ones, the facades of historic buildings), and by using partnership arrangements devoid of a legitimate business purpose. These abusive arrangements do nothing more than game the tax system with grossly inflated tax deductions and generate high fees for promoters.

The IRS urges taxpayers to avoid becoming ensnared in these deals sold by unscrupulous promoters. If something sounds too good to be true, then it probably is. People can risk severe monetary penalties for engaging in questionable deals such as abusive syndicated conservation easements.

In the last five years, the IRS has examined many hundreds of syndicated conservation easement deals where tens of billions of dollars of deductions were improperly claimed. It is an agency-wide effort using a significant number of resources and thousands of staff hours. The IRS examines 100 percent of these deals and plans to continue doing so for the foreseeable future. Hundreds of these deals have gone to court and hundreds more will likely end up in court in the future.

“We are devoting a lot of resources to combating abusive conservation easements because it is important for fairness in tax administration,” Commissioner Rettig stated. “It is not fair that wage-earners pay their fair share year after year but high-net-worth individuals can, under the guise of a real estate investment, avoid millions of dollars in tax through overvalued conservation easement contributions.”  

Abusive Micro-Captive Insurance Arrangements: In abusive "micro-captive" structures, promoters, accountants, or wealth planners persuade owners of closely held entities to participate in schemes that lack many of the attributes of insurance.

For example, coverages may "insure" implausible risks, fail to match genuine business needs or duplicate the taxpayer's commercial coverages. The "premiums" paid under these arrangements are often excessive and are used to skirt the tax law.

Recently, the IRS has stepped up enforcement against a variation using potentially abusive offshore captive insurance companies. Abusive micro-captive transactions continue to be a high-priority area of focus.

The IRS has conducted thousands of participant examination and promoter investigations, assessed hundreds of millions of dollars in additional taxes and penalties owed, and launched a successful settlement initiative. Additional information regarding the settlement initiative can be found at IR-2020-26. The IRS’s activities have been sustained by the Independent Office of Appeals, and the IRS has won all micro-captive Tax Court and appellate court cases, decided on their merits, since 2017.

Announcement 2022-13 advises that the Internal Revenue Service is revising the optional standard mileage rates that were provided in Notice 2022-3, 2022-2 I.R.B. 308, for substantiating the costs of operating an automobile for business, medical or moving purposes.  Beginning July 1, 2022, the rates are 62.5 cents per mile for business use of an automobile and 22 cents per mile for costs of using an automobile as a medical or moving expense.  Notice 2022-3 is modified.

Announcement 2022-13 will be in IRB:  2022-26, dated June 27, 2022.