Forms 2848 and 8821 can now be submitted online. Tax professionals must have a Secure Access username and password or create an account. The tool is protected by Secure Access authentication. Previously tax professionals could mail or fax authorization forms to the IRS. That process is still available. But mailed or faxed forms must be hand-signed – electronic signatures are not allowed.  More information can be found here.

WASHINGTON — The Internal Revenue Service is reminding those with income from a farming or fishing business can avoid making any estimated tax payments by filing and paying their entire tax due on or before March 1.

This rule generally applies if farming or fishing income was at least two-thirds of the taxpayer’s total gross income in either the current or the preceding tax year. Those who choose not to file by March 1 should have made an estimated tax payment by Jan. 15 to avoid an estimated tax penalty. For more information on estimated tax, refer to Publication 505, Tax Withholding and Estimated Tax.

Those in the farming business report income and expenses on Schedule F (Form 1040), Profit or Loss From Farming. They also use Schedule SE (Form 1040), Self-Employment Tax to figure self-employment tax if their net earnings from farming are $400 or more. For more information refer to Topic No. 554, Publication 225, Farmer's Tax Guide and Agriculture Tax Center.

Those in the fishing business report income and expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship). They also use Schedule SE (Form 1040) to figure self-employment tax if their net earnings from fishing are $400 or more. For general information about the rules applying to individuals, including commercial fishermen who file Schedule C, refer to Publication 334, Tax Guide for Small Business.

Those whose trade or business is a partnership or corporation see Publication 541, Partnerships or Publication 542, Corporations.

IRS Direct Pay is safe, fast and free
IRS Direct Pay is a free online service where people can make same day payments or schedule them up to 365 days in advance directly from a checking or savings account. There are no IRS fees and no pre-registration. IRS Direct Pay is available seven days a week, and users receive instant confirmation after they submit a payment or they can opt-in to receive email notifications.

IRS Direct Pay cannot be used to pay the federal highway use tax, payroll taxes or other business taxes. Anyone wishing to pay these business taxes electronically can enroll in the Electronic Federal Tax Payment System (EFTPS). EFTPS is also a free service.

For more information about these and other payment options visit IRS.gov/payments.

Related items

• Tax Topic 416, Farming and Fishing Income
• Publication 5034, Need to Make a Tax Payment? (English and Spanish)

WASHINGTON — The Internal Revenue Service's Low Income Taxpayer Clinic (LITC) Program office today announced highlights from its 2020 annual report, featuring successful taxpayer outreach to thousands of taxpayers. The report describes how LITCs provide representation, education and advocacy for taxpayers who are low income or speak English as a second language (ESL). The program also announced its 2021 LITC grant recipient list.

The LITC Program is a federal grant program administered by the Taxpayer Advocate Service, led by National Taxpayer Advocate Erin M. Collins. LITCs represent individuals whose incomes are below a certain level, generally within 250% of the federal poverty guideline, and need to resolve tax problems with the IRS, such as audits, appeals and tax collection disputes. They can represent taxpayers in court as well as within the IRS. They also can provide information about taxpayer rights and responsibilities in different languages for ESL taxpayers. LITCs provide services for free or a small fee. They receive IRS grants but work independently to assist and advocate for taxpayers.

“I applaud the Low Income Taxpayer Clinic Program for another successful year filling a crucial role in helping low-income taxpayers resolve their tax problems with the IRS,” said National Taxpayer Advocate Erin M. Collins. “The services LITCs provide are critical, and I encourage organizations to consider applying for an LITC grant to open a clinic, especially in areas currently lacking an LITC.”

Thousands of taxpayers impacted

During 2019, LITCs represented 20,259 taxpayers dealing with an IRS tax controversy. They helped taxpayers secure more than $6.8 million in tax refunds and reduced taxpayers' liabilities by more than $50 million. They also brought more than 4,100 taxpayers back into payment compliance.

Through outreach and education activities, LITCs strived to ensure individuals understood their rights as U.S. taxpayers by conducting more than 1,800 educational activities that were attended by nearly 42,000 people. More than 1,500 volunteers contributed to the success of LITCs by contributing over 52,500 hours of their time. More than 65% of the volunteers were attorneys, certified public accountants, or enrolled agents.

LITCs used a variety of approaches to successfully advocate for taxpayers. These included utilizing collection alternatives to resolve issues administratively within the IRS, litigating cases in the United States Tax Court and other federal courts, and elevating systemic issues through the Taxpayer Advocate Service's Systemic Advocacy Management System.

One success story among many

Here is one example of how an LITC assisted a taxpayer in need: A domestic violence shelter referred a recently divorced mother to an LITC for assistance with a large tax liability. The taxpayer explained that her ex-husband was a heroin addict who abused her for years. The taxpayer’s divorce decree ordered her ex-husband to pay their large tax bill to the IRS, but the taxpayer was concerned he would not pay it. She explained that her ex-husband had hidden income from her and did not provide all his income documents when she prepared their joint tax returns.
 
The IRS discovered the unreported income and adjusted their tax returns, resulting in a large tax liability. The LITC helped the taxpayer gather supporting documentation and prepared a Form 8857, Request for Innocent Spouse Relief. With the documentation gathered by the taxpayer, the LITC established that the tax liability resulted from the ex-husband’s unreported income and that the taxpayer experiencing domestic violence didn’t know, or have any reason to know, of the unreported income when she signed the joint tax returns.

The IRS determined it would be unfair to hold this taxpayer liable and granted her full relief.

The full report PDF contains more extraordinary stories about the representation that LITCs provide and extensive details about the LITC Program. It also details the results that LITCs achieved on behalf of their clients.

How to Locate an LITC Near You

Through the LITC Program, the IRS awards matching grants of up to $100,000 per year to qualifying organizations. IRS Publication 4134, Low Income Taxpayer Clinic List PDF, provides a list of the 2021 LITC grant recipients by geographic area, including contact information and details about the languages, in addition to English, in which each LITC offers services. Publication 4134 is available at IRS.gov.

Today, the IRS published the latest executive column, “A Closer Look,” which features IRS Human Capital Officer, Robin D. Bailey Jr., discussing working for the IRS and the commitment of its employees. “I often characterize the IRS as the heartbeat of America … It’s a great feeling to know that no matter what position you hold at the IRS, you are contributing to the success of our country,” said Bailey. 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.

Please contact newsroom@irs.gov for any questions or requests for interviews.

Notice 2021-15 provides guidance on the application of recently enacted § 214 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the Act), which provides temporary special rules for health flexible spending arrangements (FSAs) and dependent care assistance programs under § 125 cafeteria plans.  Specifically, § 214 of the Act: provides flexibility with respect to carryovers of unused amounts from the 2020 and 2021 plan years; extends the permissible grace period for plan years ending in 2020 and 2021; provides a special rule regarding post-termination reimbursements from health FSAs; provides a special carryover rule for dependent care assistance programs when a dependent “ages out” during the public health emergency posed by COVID-19; and allows certain mid-year election changes for health FSAs and dependent care assistance programs for plan years ending in 2021.  In addition, the notice provides that a § 125 cafeteria plan may permit employees who are eligible to make salary reduction contributions under the plan to, with respect to employer-sponsored health coverage: make a new election on a prospective basis, if the employee initially declined to elect employer-sponsored health coverage; revoke an existing election and make a new election to enroll in different health coverage sponsored by the same employer on a prospective basis; and revoke an existing election on a prospective basis, provided that the employee attests in writing that the employee is enrolled, or immediately will enroll, in other health coverage not sponsored by the employer.  The notice also provides relief with respect to the effective date of amendments to § 125 cafeteria plans to implement the expansion under the CARES Act of allowed expenses for health FSAs and health reimbursement arrangements to include over-the-counter drugs without prescriptions and menstrual care products.

Notice 2021-15 will be in IRB 2021-10, dated 3/8/2021

Employers may allow participants to carry over unused amounts

WASHINGTON — The Internal Revenue Service today provided greater flexibility, due to the pandemic, to employee benefit plans offering health flexible spending arrangements (FSAs) or dependent care assistance programs. Under the COVID-related Taxpayer Certainty and Disaster Tax Relief Act of 2020, these plans now have additional discretion in 2021 and 2022 to adjust their programs to help employees better meet the unanticipated consequences of the public health emergency.

Notice 2021-15 responds to unanticipated changes in the availability of certain medical care and dependent care. As a result of COVID-19, participating employees are more likely to have unused health FSA amounts or dependent care assistance program amounts at the end of 2020 and 2021. Generally, under these plans, an employer allows its employees to set aside a certain amount of pre-tax wages to pay for medical care and dependent care expenses. Amounts spent by the employee are then reimbursed from their designated health FSAs or dependent care assistance programs.

Notice 2021-15 provides flexibility for employers in the following areas related to health FSAs and dependent care assistance programs:

Prior guidance provided flexibility to employers with cafeteria plans through the end of calendar year 2020, during which employers could permit employees to apply unused health FSA amounts and dependent care assistance program amounts to pay for or reimburse medical care or dependent care expenses. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, signed into law on Dec. 27, 2020, provides similar flexibility for these arrangements in 2021 and 2022.

Millions of employees have access to health FSAs and dependent care assistance programs, sponsored by employers under “cafeteria plans.” The decision to adjust these employee benefit programs is at the discretion of the employer that sponsors the plan.

The amounts properly spent are not subject to federal income tax. Typically, account funds that are not spent by the employee within the plan year, subject to limited grace periods or certain carryover amounts, are forfeited.  In accordance with the Taxpayer Certainty and Disaster Tax Relief Act of 2020, Notice 2021-15 gives employers the option to amend their plans to provide greater flexibility for employees to elect and use these programs during the pandemic without risking the forfeiture of the amounts they have set aside.

The IRS has more COVID-19-related information for plan participants, employers and others who administer plans at IRS.gov.

WASHINGTON – The Internal Revenue Service recommended, and the Department of the Treasury has approved, the selection of 24 new members to serve on the Taxpayer Advocacy Panel for 2021.

The new TAP members will join returning members to round out the panel of 67 volunteers for 2021. The new members were selected from a pool of approximately 300 interested individuals who applied during an open recruitment period last spring and from alternate members who applied in prior years.

National Taxpayer Advocate Erin Collins recently shared her appreciation for all TAP volunteers: “I am grateful for these citizens volunteering their time and talent to the Taxpayer Advocacy Panel. I am very proud of the accomplishments of the TAP last year, and I look forward to the TAP bringing its valuable taxpayer perspective in recommending changes to tax administration to achieve the quality service that taxpayers expect and deserve.”

The TAP is a federal advisory committee charged with listening to taxpayers, identifying issues, and making suggestions to improve IRS service and customer satisfaction. Oversight and program support for the TAP are provided by the Taxpayer Advocate Service, an independent organization within the IRS that helps resolve taxpayer account problems and makes administrative and legislative recommendations to mitigate systemic problems.

Members of the TAP work on a variety of issues that impact taxpayers in the key areas where the IRS and the public interact the most. Members also serve as a conduit for bringing grassroots concerns raised by the taxpaying public to the attention of the IRS.

TAP members are U.S. citizens who volunteer to serve a three-year appointment and are expected to devote 200 to 300 hours per year to panel activities. To the extent possible, TAP members are demographically and geographically diverse, providing balanced representation from all 50 states, the District of Columbia and Puerto Rico. In addition, there is one TAP member from abroad who represents the interests of taxpayers working, living, or doing business abroad or in a U.S. territory.

The new TAP members by location: 

Name	City	State
Tor Daley	Anchorage	AK
April Smith	Birmingham	AL
Kristin White	Gilbert	AZ
Matthew Kinley	Long Beach	CA
Tracey Maria Randall York	Corona	CA
John Yoon	Carlsbad	CA
Rene Tiongquico	Washington DC	DC
Joanne Thurston	Marietta	GA
Christine Scott	Kapaa	HI
Daniel Mistick	Hailey	ID
Jamila Akil	Hazel Crest	IL
Pamela Memmer	Princeton	IN
Jon Ramirez	Wichita	KS
Daniel Leatham	Shrewsbury	MA
Brandon Smith	Bowie	MD
James Usseglio	Hollis	NH
Eugene Lillie	West Deptford	NJ
Richard Metzler	Las Vegas	NV
Cynthia Mills	Glenside	PA
Rita Green	Memphis	TN
Philip George	Saint George	UT
Lucinda Weigel	Vienna	VA
Donna Patterson	Bothell	WA
Charles Simineo	Cheyenne	WY

Taxpayers can contact the TAP representative for their geographic area by calling 888-912-1227 (a toll-free call) or online at www.improveirs.org. Those interested in serving on the 2022-2024 panel may apply during TAP’s next open recruitment period beginning in March 2021.

Taxpayers can also send written correspondence to the TAP at the following address:

Taxpayer Advocacy Panel
TA:TAP, Room 1509
1111 Constitution Avenue, N.W.
Washington, D.C.  20224

WASHINGTON – The IRS announced today that, as required by law, all legally permitted first and second round of Economic Impact Payments have been issued and the IRS now turns its full attention to the 2021 filing season.

Beginning in April 2020, the IRS and Treasury Department began delivering the first round of Economic Impact Payments within two weeks of the legislation. The IRS issued more than 160 million EIPs to taxpayers across the country totaling over $270 billion, while simultaneously managing an extended filing season. In addition, since Congress enacted the COVID-related Tax Relief Act of 2020, the IRS has delivered more than 147 million EIPs in the second-round totaling over $142 billion.

The legislation required that the second round of payments be issued by Jan. 15, 2021. While some second round Economic Impact Payments may still be in the mail, the IRS has issued all first and second Economic Impact Payments it is legally permitted to issue, based on information on file for eligible people.

Get My Payment was last updated on Jan. 29, 2021, to reflect the final payments and will not update again for first or second Economic Impact Payments.

Most people who are eligible for the Recovery Rebate Credit have already received it, in advance, in these two rounds of Economic Impact Payments. If individuals didn't receive a payment – or if they didn’t receive the full amounts – they may be eligible to claim the Recovery Rebate Credit and must file a 2020 tax return. Eligibility for and the amount of the Recovery Rebate Credit are based on 2020 tax year information while the Economic Impact Payments were based on 2019 tax year information. For the first Economic Impact Payment, a 2018 return may have been used if the 2019 was not filed or processed.

Individuals will need to know the amounts of any Economic Impact Payments they received to claim the Recovery Rebate Credit. Those who don’t have their Economic Impact Payment notices can view the amounts of their first and second Economic Impact Payments through their individual online account. For married filing joint individuals, each spouse will need to log into their own account.

To avoid refund delays, the IRS urges people to file a complete and accurate tax return. Filing electronically allows tax software to figure credits and deductions, including the Recovery Rebate Credit. The Recovery Rebate Credit Worksheet on Form 1040 and Form 1040-SR instructions can also help.

Anyone with income of $72,000 or less, including those who don’t have a tax return filing requirement, can file their federal tax return electronically for free through the IRS Free File Program. The fastest way to get a tax refund is to file electronically and have it direct deposited - contactless and free - into the individual’s financial account. Bank accounts, many prepaid debit cards and several mobile apps can be used for direct deposit when you provide a routing and account number.

IRS.gov/filing has details about IRS Free File, Free File Fillable Forms, free VITA or TCE tax preparation sites in your community or finding a trusted tax professional.

More information
Recovery Rebate Credit Video
Publication 5486, Claiming the Recovery Rebate Credit on a 2020 Tax Return
Recovery Rebate Credit Frequently Asked Questions
IRS.gov/freefile
Instructions for Form 1040 and 1040-SR
Secure Access: How to Register for Certain Online Self-Help Tools

Revenue Ruling 2021-05 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.

Notice 2021-16 provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the Internal Revenue Code.  In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I), as reflected by the application of § 430(h)(2)(C)(iv). 

Revenue Ruling 2021-05 and Notice 2021-16 will be in IRB:  2021-10, dated March 8, 2021.

WASHINGTON – The Internal Revenue Service will hold a free webinar, “How to Choose a Tax Pro,” on Thursday, Feb. 18 at 2 p.m. Eastern time.

Participants should register in advance for this hour-long event. The webinar will:

There will also be a question and answer period where participants can pose questions to the IRS presenters. The event is open to anyone who is interested.

The webinar will be offered with closed captioning for viewers who are deaf or hard of hearing. Questions before the webinar can be sent to:  cl.sl.web.conference.team@irs.gov.

More information on choosing a tax professional can be found at IRS.gov, including a directory of tax return preparers with credentials and select qualifications.

Archived webinars are available at www.irsvideos.gov.