Interest rates decrease for the first quarter of 2025

WASHINGTON — The Internal Revenue Service today announced that interest rates will decrease for the calendar quarter beginning Jan. 1, 2025.

For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily.

Here is a complete list of the new rates:

• 7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
• 5% for the portion of a corporate overpayment exceeding $10,000.
• 7% for underpayments (taxes owed but not fully paid).
• 9% for large corporate underpayments.

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 2024. See the revenue ruling for details.

Revenue Ruling 2024-25 announcing the rates of interest will appear in Internal Revenue Bulletin 2024-49, dated Dec. 2, 2024.

Inside This Issue

1. Businesses must report Beneficial Ownership Information to Treasury by Jan. 1; free webinar can help
2. Offer in Compromise instructional videos now on IRS YouTube channel
3. IRA reminder: Qualified owners may contribute up to $105,000 to charity in 2025
4. Technical Guidance

1.  Businesses must report Beneficial Ownership Information to Treasury by Jan. 1; free webinar can help

Businesses that were established or registered prior to Jan. 1, 2024, are required to submit their initial Beneficial Ownership Information (BOI) by Jan. 1, 2025.

To assist companies that are required to submit their Beneficial Ownership Information to the Treasury Department’s Financial Crimes Enforcement Network, the IRS will sponsor a free one-hour webinar on Tuesday, Nov. 19, at 2:00 p.m. ET.

In this complimentary webinar, FinCEN will:

• Explain the Corporate Transparency Act.
• Provide Beneficial Ownership reporting resources.
• Analyze the BOI reporting requirement using the Small Entity Compliance Guide.
• Describe what happens if a company does not timely report BOI to FinCEN.
• Feature live question-and-answer session.

No continuing education credit is being offered. Click here to register. 

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2.  Offer in Compromise instructional videos now on IRS YouTube channel

The IRS has added an Offer in Compromise Overview playlist to its YouTube channel. The series of videos walks viewers step-by-step through how to complete the forms needed to submit an offer in compromise, or OIC. An OIC allows taxpayers to settle their tax debt for less than the full amount they owe. And by working directly with the IRS instead of through a third-party company, taxpayers can save themselves both time and money. Visit the OIC webpage for more information, including FAQs and the Pre-Qualifier tool.

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3.  IRA reminder: Qualified owners may contribute up to $105,000 to charity in 2025

The Internal Revenue Service reminds owners of Individual Retirement Arrangement (IRA) who are 70½ years of age or older that they can make qualified charitable distributions in 2024 that allow them to donate up to $105,000 tax-free. Compared to previous years, that is an increase of $5,000.

Qualified charitable distributions (QCDs) also count toward the year's required minimum distribution (RMD) for individuals over age 73. IRA distributions are typically taxable, but QCDs remain tax-free if sent directly to a qualified charity by the trustee. To make a QCD for 2024, IRA owners should contact their IRA trustee soon to ensure the transaction completes by year-end.

For additional information, refer to Publication 526, Charitable Contributions and Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).

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4.  Technical Guidance

Notice 2024-81 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for October 2024 used under section 417(e)(3)(D), the 24-month average segment rates applicable for November 2024, and the 30-year Treasury rates, as reflected by the application of section 430(h)(2)(C)(iv). 

WASHINGTON — The Internal Revenue Service reminds individual retirement arrangement (IRA) owners age 70½ and older that they can make up to $105,000 in tax-free charitable donations during 2024 through qualified charitable distributions. That’s up from $100,000 in past years.

For those age 73 or older, qualified charitable distributions (QCDs) also count toward the year's required minimum distribution (RMD).

Generally, IRA distributions are taxable, but QCDs remain tax-free if sent directly to a qualified charity by the trustee. To make a QCD for 2024, IRA owners should contact their IRA trustee soon to ensure the transaction completes by year-end.

Each eligible IRA owner can exclude up to $105,000 in QCDs from taxable income. Married couples, if both meet qualifications and have separate IRAs, can donate up to $210,000 combined. QCDs don’t require itemizing deductions.

For those planning ahead, starting this year, the QCD limit is subject to annual adjustment, based on inflation. For that reason, the annual QCD limit will rise to $108,000 in 2025.

Reporting and documenting QCDs

For 2024, QCDs should be reported on the 2024 tax return. IRA trustees will issue Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., in early 2025 documenting IRA distributions.

The full amount of any IRA distribution goes on Line 4a of Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors. Enter “0” on Line 4b if the full amount is a QCD, marking it as such.

Donors must obtain a written acknowledgement from the charity showing the contribution date, amount and confirmation that no goods or services were received.

For more details, see Publication 526, Charitable Contributions, and Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)

Notice 2024-81 forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for October 2024 used under § 417(e)(3)(D), the 24-month average segment rates applicable for November 2024, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).  

Notice 2024-81 will be in IRB:  2024-49, dated December 2, 2024.

WASHINGTON — The Internal Revenue Service will sponsor a free one-hour webinar designed to help the many businesses that must report their beneficial ownership information to the Treasury Department’s Financial Crimes Enforcement Network.

Because this is not an IRS or tax-related requirement, FinCEN representatives will conduct the webinar on this new anti-money laundering provision. The webinar will take place on Tuesday, Nov. 19, 2025, beginning at 2 p.m. ET.

Many companies created or registered to do business before Jan. 1, 2024, must e-file their initial beneficial ownership information (BOI) to FinCEN by Jan. 1, 2025. In general, this means reporting the names and other information about the people who own or control the company. Exceptions and special rules apply.

During this free webinar, FinCEN will:

• Explain the Corporate Transparency Act.
• Provide Beneficial Ownership reporting resources.
• Analyze the BOI reporting requirement using the Small Entity Compliance Guide.
• Describe what happens if a company does not timely report BOI to FinCEN.

The webinar will also feature a live question-and-answer session. Though primarily aimed at tax professionals, anyone is welcome to attend.

Certificates of completion will be offered, but no continuing education credits are available for this webinar. Closed captioning will also be offered.

Time: 2 p.m. (Eastern); 1 p.m. (Central); 12 p.m. (Arizona and Mountain); 11 a.m. (Pacific); 10 a.m. (Alaska); 9 a.m. (Hawaii and Aleutian) time zones.

Registration: Visit the Internal Revenue Service webinar website. Questions about the webinar can be emailed to cl.sl.web.conference.team@irs.gov.

For more information about the BOI reporting requirement, including FAQs and a five-minute video illustrating how to file, visit FinCEN’s BOI page.

1. Notice of renewal for enrolled agents
2. Tax pros: New continuing education seminars now available on IRS Nationwide Tax Forum Online
3. Tax Talk Today highlights IRS Nationwide Tax Forum: Interview with Tax Exempt Commissioner
4. IRS releases 2024 Financial Report
5. IRS shares healthcare FSA reminder: Employees may contribute up to $3,300 in 2025
6. Upcoming webinars for tax professionals

1.  Notice of renewal for enrolled agents

Enrolled agents: If your Social Security number (SSN) ends in 0,1, 2 or 3, you have until Jan. 31, to renew your status. Enrolled agents must renew their status every three years to remain eligible to practice before the IRS. Failure to renew by the deadline will result in your enrolled agent status becoming “inactive.” To renew:

• Complete Form 8554, Application for Renewal of Enrollment to Practice Before the IRS, online at Pay.gov.
• Pay the $140 renewal fee.

All enrolled agents must also have an active Preparer Tax Identification Number (PTIN) that must be entered on Form 8554.

Visit IRS.gov/ea for more information.

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2.  Tax pros: New continuing education seminars now available on IRS Nationwide Tax Forum Online

The IRS encourages tax professionals to register for the IRS Nationwide Tax Forum Online to get access to 18 seminars recorded at the 2024 IRS Nationwide Tax Forum. The Nationwide Tax Forum Online offers tax professionals a convenient way to stay informed about current legislation, IRS procedures and key topics for the upcoming tax season.

Each seminar features a 50-minute interactive video presentation with synchronized slides, downloadable materials and complete transcripts. Courses can be taken for continuing education (CE) credit for a fee of $29, or they can be reviewed for free (no CE credit).

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3.  Tax Talk Today highlights IRS Nationwide Tax Forum: Interview with Tax Exempt Commissioner

Want to learn more about the annual IRS Nationwide Tax Forum? Tax Talk Today’s Alan Pinck conducted several on-site interviews at the 2024 San Diego Tax Forum touching on an array of topics.

View his interview with Edward Killen, IRS Commissioner, Tax Exempt/Government Entities Division.

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4.  IRS releases 2024 Financial Report

The Internal Revenue Service this week released financial information and highlighted selected accomplishments and challenges in its fiscal year 2024 Financial Report.

During fiscal year 2024, the IRS collected more than $5.1 trillion in tax revenue, collected more than $98 billion in enforcement revenue and distributed $553 billion in federal tax refunds and other outlays. This year’s report presents the IRS’s current financial position and discusses key financial topics. It highlights the programs, accomplishments, challenges and management's accountability for the resources entrusted to the IRS.

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5.  IRS shares healthcare FSA reminder: Employees may contribute up to $3,300 in 2025

The Internal Revenue Service reminds taxpayers that during open enrollment season for flexible spending arrangements (FSAs) they may be eligible to use tax-free dollars to pay medical expenses not covered by other health plans. An employee who chooses to participate in an FSA can contribute up to $3,300 through payroll deductions during the 2025 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, the employer may also contribute to an employee's FSA. If the employee's spouse has a plan through their employer, the spouse can also contribute up to $3,300 to that plan. In this situation, the couple could jointly contribute up to $6,600 for their household.

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6.  Upcoming webinars for tax professionals

The IRS offers the upcoming live webinars to the tax professional community:

• Energy Efficient Home Improvements Credit & Residential Clean Energy Property Credit: How the Inflation Reduction Act revised these credits on Nov. 14, at 2 p.m. ET. Earn up to one continuing education credit (Federal Tax). Certificates of completion are being offered. Click here to register.
• Beneficial Ownership Information presented by Financial Crimes Enforcement Network (FinCEN) on Nov. 19, at 2 p.m. ET. No continuing education credit is being offered. Click here to register.

WASHINGTON — The Internal Revenue Service reminds taxpayers that during open enrollment season for Flexible Spending Arrangements (FSAs) they may be eligible to use tax-free dollars to pay medical expenses not covered by other health plans. 

An employee who chooses to participate in an FSA can contribute up to $3,300 through payroll deductions during the 2025 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. 

If the plan allows, the employer may also contribute to an employee's FSA. If the employee's spouse has a plan through their employer, the spouse can also contribute up to $3,300 to that plan. In this situation, the couple could jointly contribute up to $6,600 for their household. 

For FSAs that permit the carryover of unused amounts, the maximum carryover amount to 2025 is $660, increasing from $640 in tax year 2024. The carryover doesn’t affect the maximum amount of salary reduction contributions that can be made. 

It's important for taxpayers to annually review their health care selections during health care open enrollment season and maximize their savings. 

Eligible employees of companies that offer a health flexible spending arrangement (FSA) need to act before their medical plan year begins to take advantage of an FSA during 2025. Self-employed individuals are not eligible. 

Expenses to consider

Throughout the year, taxpayers can use FSA funds for qualified medical expenses not covered by their health plan. These can include co-pays, deductibles and a variety of medical products. Also covered are services ranging from dental and vision care to eyeglasses and hearing aids. Interested employees should check with their employer for details on eligible expenses and claim procedures. 

Before enrollment (if an employer offers an FSA), review any expected health care expenses projected for the year. Participating employees should plan for healthcare activities when they calculate their contribution amounts. Consider: 

• Updating medicine cabinet with necessary supplies.
• Big ticket expenses.
• Seasonal needs such as allergy products, sunscreen or warm steam vaporizers.
• Routine checkups or visits with specialists that regular insurance plans do not cover.
• Many over-the-counter items that are FSA eligible.
• Eye exams or dental visits: Out-of-pocket costs for dental and vision care are also covered by an FSA. 

Employers are not required to offer FSAs. Interested taxpayers should check with their employer to see if they offer an FSA. Also, all FSAs are subject to plan terms which may be more restrictive than the maximums allowed under the law, including both the maximum dollar amounts and the expenses covered. More information about FSAs can be found at IRS.gov in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.

Outreach Connection FY25-01 Disaster tax relief toolkit for people affected by recent disasters   In this edition Disaster relief resources IRS tax relief after major disasters Beware of disaster charity scams Tips for reconstructing tax and financial records More information Disaster relief resources Disaster victim resources on IRS.gov IRS.gov has information disaster victims may need as they recover, including information about disaster-related tax relief and extensions to file and pay taxes. FAQs for disaster victims IRS webinar: Dealing with disaster from an individual tax perspective IRS tax relief after major disasters Disaster tax relief The IRS can authorize disaster tax relief when the disaster meets criteria from the Federal Emergency Management Agency (FEMA).  All disaster tax relief announcements Disaster tax relief announcements by location Beware of disaster charity scams Charity scams following recent hurricanes In the aftermath of Hurricanes Milton and Helene, the IRS cautions taxpayers about scammers who use fake charities to gather sensitive personal and financial data from unsuspecting donors. Tools to help people verify legitimate groups Tips for reconstructing tax and financial records Resources to rebuild records after a disaster The IRS has tips to help disaster victims reconstruct their tax and financial records. They may need these records to help prove and document their losses so they can get federal help or insurance reimbursement.  Casualty, disaster, and theft loss workbook (for individuals) Business casualty, disaster, and theft loss workbook More information IRS disaster tax relief resources: IRS news from around the nation: News about disaster relief and tax provisions that affect certain states. Tax relief in disaster situations: Resources to help affected taxpayers after a disaster. Publication 547, Casualties, Disasters, and Thefts Publication 976, Disaster Relief Follow the IRS on X to get the latest updates @IRSnews Disaster help resources from IRS partners: DisasterAssistance.gov: Help with applying for FEMA disaster assistance and guide to resources. FEMA disaster information: Resources include information on the disaster declaration process, types of disasters and how FEMA gets involved. Get the latest updates on X at @Fema. Ready.gov: Resources for planning ahead of disasters.

WASHINGTON — The Internal Revenue Service today announced the selection of the first Associate Chief Counsel for the newly created Passthroughs, Trusts and Estates office that will focus exclusively on partnerships, S corporations, trusts and estates. Staffing for this office will be drawn from the current Passthroughs and Special Industries office. The new Associate Chief Counsel, Jeffrey Erickson, is expected to join the IRS in January 2025. Most recently, he served as a Principal in Ernst & Young’s National Tax Passthroughs Transaction Group. 

Holly Porter will be the Associate Chief Counsel for the Energy, Credits, and Excise Tax office, which also will be drawn from the current Passthroughs and Special Industries office. 

“We are excited that Jeff will be returning to the IRS to lead Chief Counsel’s work in this priority area,” said IRS Chief Counsel Margie Rollinson. “He will bring an extensive background in tax law that encompasses over 30 years of experience in both the federal government and the private sector.”  

As the Associate Chief Counsel for Passthroughs, Trusts and Estates, Erickson will coordinate and direct the activities of the office and oversee legal advisory services that support the uniform interpretation, application, enforcement and litigation of tax laws involving partnerships, S corporations, trusts and estates. 

Erickson began his tax career in 1991 as an Attorney Advisor at the IRS’s Office of Chief Counsel in Passthroughs and Special Industries and left the IRS in 1999 as an Assistant Branch Chief. Additionally, Erickson has served as an Adjunct Professor at the Georgetown University Law Center, where he co-taught Taxation of Partnerships for LL.M. and J.D. students and has authored articles for inclusion in tax publications.

WASHINGTON – As National Cybersecurity Awareness Month concludes and preparation for next tax season begins, the Internal Revenue Service and its Security Summit partners today reminded taxpayers to be wary of online threats like identity theft and fraud.

Whether shopping online or browsing social media, people unfamiliar with online security could be putting themselves at risk. Lax online behavior can open the door to swindlers eager to swipe people’s personal information and leave themselves vulnerable to tax-related identity theft.

The IRS and Security Summit alert taxpayers to remain vigilant and to teach children and teens how to recognize and avoid online scams to minimize their chances of falling prey or unwittingly exposing their families to identity theft and tax fraud.

The public-private sector partnership encourages everyone to be aware of the many security vulnerabilities they face online and to review a wide range of resources available to them as October’s National Cybersecurity Awareness Month draws to a close.

Members of the Security Summit – a coalition that includes tax software and financial companies, tax professionals, state tax administrators and the IRS – also offer multiple online safety recommendations to protect taxpayers from tax-related identity theft.

Online safety tips

Options to help protect against cybersecurity attacks include:

• Recognize scams and report phishing. It’s important to remember that the IRS does not use unsolicited email and social media to discuss personal tax issues, such as those involving tax refunds, payments or tax bills. Don't reply, open any attachments or click any links. To report phishing, send the full email headers or forward the email as is to phishing@irs.gov; do not forward screenshots or scanned images of emails because this removes valuable information. Then delete the email.
• Protect personal information. Refrain from revealing too much personal information online. Birthdates, addresses, age and financial information, such as bank accounts and Social Security numbers, are among things that should not be shared freely. Encrypt sensitive files such as tax records stored on computers.
• Use strong passwords. Consider using a password manager to store passwords.
• Enable multi-factor authentication (MFA). Use this for extra security on online accounts.
• Use and update computer and phone software. Enable automatic updates to install critical security updates, including anti-virus and firewall protections.
• Use a VPN. Criminals can intercept personal information on insecure public Wi-Fi networks. Individuals are encouraged to always use a virtual private network (VPN) when connecting to public Wi-Fi.