Today, the IRS published the latest executive column “A Closer Look,” which features Scott Irick, Director of Examination discussing how the IRS has a variety of compliance programs and outreach efforts to help employers meet their employment tax responsibilities. “The tax law can be complex for these taxpayers, and part of my role as director is to use a variety of tools to help people understand and meet their tax obligations,” said Irick. 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 announced that the “Dirty Dozen” tax scams for 2021 will be issued in a four-part series, starting Monday, June 28. Just like in prior years, this “Dirty Dozen” will highlight a variety of common scams. While the income tax filing deadline has passed for many, some may be waiting to hear from the IRS about a refund, an Economic Impact Payment, advance Child Tax Credit payments or other tax benefit. The IRS encourages taxpayers to be vigilant, as this can be a peak season for scammers. These schemes can continue throughout the year with multiple variations as con artists work to catch people off guard.

This year’s “Dirty Dozen” will be separated into the following categories:

Check out the “Dirty Dozen” tax scams from prior years here.

WASHINGTON —The Internal Revenue Service today issued the Data Book detailing the agency’s activities during fiscal year 2020 (Oct. 1, 2019 – Sept. 30, 2020).

“This year's Data Book describes the important work that IRS employees accomplish on behalf of the public,” said IRS Commissioner Chuck Rettig. “The IRS accounts for approximately 96% of the funding that supports the federal government’s operations, while proudly serving and interacting with more Americans than any other public or private organization.”

“The 2020 Data Book also details the extraordinary measures the IRS took to protect the health and safety of taxpayers and IRS employees during the COVID-19 pandemic while implementing critical economic relief legislation – the largest economic rescue packages in US history,” Rettig added.

The Data Book details how during the COVID-19 pandemic the IRS developed new technologies and provided the equipment necessary to allow thousands of employees to work from home, which enabled the IRS to resume processing returns and providing phone assistance to taxpayers.

At the same time, the agency eased burdens on people facing tax issues by extending the deadline to file and pay federal income taxes from April 15, 2020, to July 15, 2020.

The agency also launched the People First Initiative, which eased payment guidelines, postponed compliance actions and suspended most collection enforcement activities, such as new notices of lien or levy, from April 15, 2020, to July 15, 2020.

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the IRS issued 161.9 million Economic Impact Payments (EIPs) in the first round: 122.5 million by direct deposit, 35.8 million by check, and nearly 3.6 million by debit card. Under the COVID-Related Tax Relief (CRTR) Act of 2020 the IRS issued 146.5 million second-round EIPs, including 112.8 million by direct deposit, 25.7 million by check, and 8 million by debit card. Combined, the IRS provided $412.9 billion in relief under these programs during the calendar year.

The IRS continued its operations, processing more than 240 million tax returns, and collected nearly $3.5 trillion in federal taxes during the fiscal year – about 96% of federal revenue from all sources.

“You’ll find many interesting statistics within the Data Book," said Rettig. "But there’s more to the IRS story than charts and tables. IRS employees care, and our agency is made up of people who give back to their communities and help one another. Our employees provide significant support for those devastated by hurricanes, wildfires, and other natural disasters, and across the nation, they did amazing work in their communities to help those impacted by COVID-19."

The IRS Data Book for fiscal 2020 comprises 33 tables describing all IRS activities from returns processed and revenue collected to numbers and amounts from examinations of returns and collection methods, as well as budget and personnel information.

WASHINGTON — The Treasury Department and the Internal Revenue Service today urged families to take advantage of a special online tool that can help them determine whether they qualify for the Child Tax Credit and the special monthly advance payments beginning on July 15.

Available exclusively on IRS.gov, the new Child Tax Credit Eligibility Assistant, launched earlier this week, is interactive and easy to use. By answering a series of questions about themselves and their family members, a parent or other family member can quickly determine whether they qualify for the credit.

Though anyone can use this tool, it may be particularly useful to families who don’t normally file a federal tax return and have not yet filed either a 2019 or 2020 tax return. Often, these are people who receive little or no income, including those experiencing homelessness, low income households, and other underserved groups. Using this tool can help them decide whether they should take the next step and register for the Child Tax Credit payments on another new IRS tool unveiled earlier this week.

“This new tool provides an important first step to help people understand if they qualify for the Child Tax Credit, which is especially important for those who don’t normally file a tax return,” said IRS Commissioner Chuck Rettig. “The eligibility assistant works in concert with other features on IRS.gov to help people receive this important credit. The IRS is working hard to deliver the expanded Child Tax Credit, and we will be rolling out additional help for taxpayers in the near future. Where possible, please help us help others by distributing CTC information in your communities.”

To help people understand and receive this benefit, the IRS has created a special Advance Child Tax Credit 2021 page at IRS.gov/childtaxcredit2021 designed to provide the most up-to-date information about the credit and the advance payments. Among other things, the page already features a link to both the Non-filer Sign-up Tool, and the Child Tax Credit Eligibility Assistant, along with a third tool launched earlier this week—the Child Tax Credit Update Portal.

The Child Tax Credit Eligibility Assistant does not request any personally-identifiable information (PII) for any family member. For that reason, its results are not an official determination by the IRS. Though the results are reliable, if the questions are answered accurately, they should be considered preliminary. Neither the answers supplied by the user, nor the results, are retained by the IRS.

After checking the Eligibility Assistant, Non-filer Sign-Up Tool is available to help those who don’t normally file tax returns

The online Non-filer Sign-Up Tool is designed to help eligible families who don’t normally file tax returns register for the monthly Advance Child Tax Credit payments.

This tool, an update of last year’s IRS Economic Impact Payment Non-filers tool, is also designed to help eligible individuals who don’t normally file tax returns register for the $1,400 third round of Economic Impact Payments (also known as stimulus checks) and claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed.

Developed in partnership with Intuit and delivered through the Free File Alliance, this tool provides a free and easy way for eligible people who don’t make enough income to have an income tax return-filing obligation to provide the IRS the basic information needed to figure and issue their Advance Child Tax Credit payments. This includes name, address, and social security numbers. This also enables them to provide information about their qualifying children age 17 and under, their other dependents, and their direct deposit bank information so the IRS can quickly and easily deposit the payments directly into their checking or savings account. It is available only on IRS.gov.

The Non-filer Sign-Up tool should not be used by anyone who has already filed a 2019 or 2020 federal income tax return.

No action needed by most other families

Eligible families who already filed or plan to file 2019 or 2020 income tax returns should not use the Non-filer Sign-Up Tool. Once the IRS processes their 2019 or 2020 tax return, the information will be used to determine eligibility and issue advance payments.

Families who want to claim other tax benefits, such as the Earned Income Tax Credit for low-and moderate-income families, should not use this tool and instead file a regular tax return. For them, the fastest and easiest way to file a return is the Free File system, available only on IRS.gov.

Watch out for scams

The IRS urges everyone to be on the lookout for scams related to both Advance Child Tax Credit payments and Economic Impact Payments. The IRS emphasized that the only way to get either of these benefits is by either filing a tax return with the IRS or registering online through the Non-filer Sign-up Tool, exclusively on IRS.gov. Any other option is a scam.

Watch out for scams using email, phone calls or texts related to the payments. Remember, the IRS never sends unsolicited electronic communications asking anyone to open attachments or visit a non-governmental web site.

Child Tax Credit Update Portal

Earlier this week, Treasury and IRS launched another useful tool, the Child Tax Credit Update Portal. Initially, this tool only enables anyone who has been determined to be eligible for advance payments to see that they are eligible and unenroll from (opt out of) the advance payment program. Later, it will allow people to check on the status of their payments and make updates to their information, including their bank account information. Later this year, the tool will also be available in Spanish.

Community partners can help

The IRS urges community groups, non-profits, associations, education organizations and anyone else with connections to people with children to share this critical information about the Advance Child Tax Credit as well as other important benefits. Among other things, the IRS is already working closely with its community partners to ensure wide access to the Non-filer Sign-up Tool and the Child Tax Credit Update Portal. The agency is also providing additional materials and information that can be easily shared by social media, email and other methods.

About the Advance Child Tax Credit

The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March. Normally, the IRS will calculate the payment based on a family’s 2020 tax return, including those who use the Non-filer Sign-up Tool.  If that return is not available because it has not yet been filed or is still being processed, the IRS will instead determine the initial payment amounts using the 2019 return or the information entered using the Non-filers tool that was available in 2020.

The payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 through 17.

To make sure families have easy access to their money, the IRS will issue these payments by direct deposit, as long as correct banking information has previously been provided to the IRS. Otherwise, people should watch their mail around July 15 for their mailed payment. The dates for the Advance Child Tax Credit payments are July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15, and Dec. 15.

For more information, visit IRS.gov/childtaxcredit2021, or read FAQs on the 2021 Child Tax Credit and Advance Child Tax Credit Payments.

Notice 2021-40 provides a 12-month extension of the relief provided in Notice 2020-42, as extended by Notice 2021-3.  For the period from July 1, 2021, through June 30, 2022, this notice extends two types of relief from the physical presence requirement in § 1.401(a)-21(d)(6)(i) for participant elections required to be witnessed by a plan representative or a notary public: (1) temporary relief from the physical presence requirement for any participant election witnessed by a notary public in a state that permits remote notarization (either by law or through an executive order), and (2) temporary relief from the physical presence requirement for any participant election witnessed by a plan representative. This notice also solicits comments on whether permanent guidance modifying the physical presence requirement in § 1.401(a)(21)-1(d)(6)(i) should be issued. 

 

Notice 2021-40 will be in IRB:  2021-28, dated July 12, 2021.

Partners urged to use AdvCTC online information and tools to help eligible taxpayers get registered

WASHINGTON — The Internal Revenue Service is partnering with non-profit organizations, churches, community groups and others in 12 cities to help eligible families, particularly those who normally do not file a federal tax return, file a 2020 income tax return or register for the monthly Advance Child Tax Credit (AdvCTC) payments using the new Non-filer Sign-up Tool. 

This tool, an update of last year’s IRS Non-Filers tool, is also designed to help eligible individuals who don’t normally file tax returns register for the $1,400 third round of Economic Impact Payments (also known as stimulus checks) and claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed. Individuals do not need to have children in order to attend these events and sign up for Economic Impact Payments.

The special events by IRS and partner groups to help people quickly file income tax returns and register for the advance payments will take place over two weekends, June 25-26 and July 9-10, 2021. Events will be held in Atlanta; New York; Detroit; Houston; Los Angeles; Las Vegas; Miami; Milwaukee; Philadelphia; Phoenix; St. Louis; and Washington.

“This important new tax change affects millions of families across the nation, and the IRS wants to do everything it can to help people get the payments,” said IRS Wage & Investment Commissioner Ken Corbin, who also serves as the agency’s Chief Taxpayer Experience Officer. “Many people miss out on tax benefits simply because they don’t file a tax return. Our work in these cities is designed to help people receive monthly Advance Child Tax Credit payments and Economic Impact Payments.”

People can check their eligibility for the AdvCTC payments by using the new Advance Child Tax Credit Eligibility Assistant.

To make the sign-up process go quickly and smoothly, people are encouraged to have the following information when they come to one of these events: (1) Social Security numbers for their children, (2) Social Security numbers or Tax Identification Numbers for themselves and their spouse, (3) a reliable mailing address, (4) an e-mail address, and (5) their bank account information if they want to receive their payment by direct deposit.

As part of a wider effort to raise awareness of the expanded Child Tax Credit, the IRS also encourages its partners to use available online tools and toolkits to help non-filers, low-income families and other underserved groups sign up to receive the AdvCTC.

Some tax credits, such as the Child Tax Credit (CTC), are "refundable," meaning that even if taxpayers don’t owe income tax, the IRS will issue them a refund if they’re eligible; but they must file a tax return or register with the new Non-filer Sign-up Tool to receive it. Some people who haven’t filed a 2020 tax return yet are also eligible for the $1,400 per person Economic Impact Payments and the Recovery Rebate Credit.

The first monthly payments of the expanded and newly-advanceable CTC from the American Rescue Plan will be made in July. Most families will begin receiving monthly payments without any additional action. Eligible families will receive a payment of up to $300 per month for each child under age 6, and up to $250 per month for each child ages 6 to 17.

People who need to file a 2020 federal income tax return, but are unable to attend one of these events, may be able to prepare and file their own federal income tax online using IRS Free File if their income is $72,000 or less.

People who don’t need to file a 2020 federal tax return can use the Non-filer Sign-up Tool to register to receive the advance CTC payments, the Third Round Economic Impact Payment, and the Recovery Rebate Credit.

The IRS encourages people to request payments via direct deposit, which is faster and more secure than other payment methods. People who don't have a bank account should visit the Federal Deposit Insurance Corporation website for details on opening an account online. They can also use the FDIC's BankFind tool to locate an FDIC-insured bank.

Finally, BankOn, American Bankers Association, Independent Community Bankers of America and National Credit Union Administration have lists of banks and credit unions that can open an account online. Veterans can see the Veterans Benefits Banking Program for financial services at participating banks.

About the advance Child Tax Credit

The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March. Normally, the IRS will calculate the payment based on a family’s 2020 tax return, including those who use the Non-filer Sign-up Tool. If that return is not available because it has not yet been filed or is still being processed, the IRS will instead determine the initial payment amounts using the 2019 return or the information entered using the Non-filers tool that was available in 2020.

The payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 through 17.

To make sure families have easy access to their money, the IRS will issue these payments by direct deposit, as long as correct banking information has previously been provided to the IRS. Otherwise, people should watch their mail around July 15 for their mailed payment. The dates for the Advance Child Tax Credit payments are July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15, and Dec. 15.

To learn more about advance CTC payments, visit IRS.gov/childtaxcredit2021 or see FAQs on the 2021 Child Tax Credit and Advance Child Tax Credit Payments.

WASHINGTON — The Electronic Tax Administration Advisory Committee (ETAAC) today released its annual report to Congress, featuring 10 recommendations with a focus on the prevention of identity theft and refund fraud.

The report groups the recommendations into two sections: recommendations to Congress involving the IRS budget, information return filing and federal data-sharing; and recommendations to the IRS grouped around electronic filing and cybersecurity.

The ETAAC is a public forum whose 21 members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and the nation’s tax industry established in 2015 to fight tax-related identity theft and cybercrime.

ETAAC members represent various segments of the tax community, including individual and business taxpayers, tax professionals and preparers, tax software developers, payroll service providers, the financial industry and state and local governments.

The 2021 Report to Congress is available on IRS.gov.

At today’s annual meeting, IRS Commissioner Chuck Rettig and IRS leaders thanked six members of the committee whose terms are now ending:

Child Tax Credit Eligibility Assistant helps families determine whether they qualify for Child Tax Credit payments

Update Portal helps families monitor and manage Child Tax Credit payments 

WASHINGTON — The Internal Revenue Service today launched two new online tools designed to help families manage and monitor the advance monthly payments of Child Tax Credits under the American Rescue Plan. These two new tools are in addition to the Non-filer Sign-up Tool, announced last week, which helps families not normally required to file an income tax return to quickly register for the Child Tax Credit.

The new Child Tax Credit Eligibility Assistant allows families to answer a series of questions to quickly determine whether they qualify for the advance credit.

The Child Tax Credit Update Portal allows families to verify their eligibility for the payments and if they choose to, unenroll, or opt out from receiving the monthly payments so they can receive a lump sum when they file their tax return next year. This secure, password-protected tool is available to any eligible family with internet access and a smart phone or computer. Future versions of the tool planned in the summer and fall will allow people to view their payment history, adjust bank account information or mailing addresses and other features. A Spanish version is also planned.

Both the Child Tax Credit Eligibility Assistant and Child Tax Credit Update Portal are available now on IRS.gov.

The American Rescue plan increased the maximum Child Tax Credit amount in 2021 to $3,600 per child for children under the age of 6 and to $3,000 per child for children ages 6 through 17. The advance Child Tax Credit payments, which will generally be made on the 15th of each month, create financial certainty for families to plan their budgets. Eligible families will receive a payment of up to $300 per month for each child under age 6, and up to $250 per month for each child ages 6 through 17. The first monthly payment of the expanded and newly-advanceable Child Tax Credit will be made on July 15. Most families will begin receiving monthly payments automatically next month without any further action required.

“IRS employees continue to work hard to help people receive this important credit,” IRS Commissioner Chuck Rettig said. “The Update Portal is a key piece among the three new tools now available on IRS.gov to help families understand, register for and monitor these payments. We will be working across the nation with partner groups to share information and help eligible people receive the advance payments.”

More features coming to the Update Portal soon

Coming soon, families will be able to use the Child Tax Credit Update Portal to check the status of their payments. In late June, people will be able to update their bank account information for payments starting in August. In early August, a feature is planned that will allow people to update their mailing address. Then, in future updates planned for this summer and fall, they will be able to use this tool for things like updating family status and changes in income.

For more information see the FAQs, which will continue to be updated.

Update Portal allows people to unenroll

Instead of receiving these advance payments, some families may prefer to wait until the end of the year and receive the entire credit as a refund when they file their 2021 return. In this first release of the tool, the Child Tax Credit Update Portal now enables these families to quickly and easily unenroll from receiving monthly payments.

The unenroll feature can also be helpful to any family that no longer qualifies for the Child Tax Credit or believes they will not qualify when they file their 2021 return. This could happen if, for example:

Accessing the Update Portal

To access the Child Tax Credit Update Portal, a person must first verify their identity. If a person has an existing IRS username or an ID.me account with a verified identity, they can use those accounts to easily sign in. People without an existing account will be asked to verify their identity with a form of photo identification using ID.me, a trusted third party for the IRS. Identity verification is an important safeguard and will protect your account from identity theft.

Anyone who lacks internet access or otherwise cannot use the online tool may unenroll by contacting the IRS at the phone number included in your outreach letter.

Who is getting a monthly payment

In general, monthly payments will go to eligible families who:

An eligible family who took any of these steps does not need to do anything else to get their payments.

Normally, the IRS will calculate the advance payment based on the 2020 income tax return. If that return is not available, either because it has not yet been filed or it has not yet been processed, the IRS is instead determining the payment using the 2019 tax return.

Eligible families will receive advance payments, either by direct deposit or check. Each payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17. The IRS will issue advance Child Tax Credit payments on these dates: July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15.

The IRS urges any family who hasn’t yet filed their 2020 return – or 2019 return – to do so as soon as possible so they can receive any advance payment they’re eligible for. At the same time, the agency cautions that tax returns must be processed by June 28 to be reflected in the first batch of monthly payments scheduled for July 15, so eligible families filing now will likely receive payments in the following months. Even if monthly payments begin after July, the IRS will adjust the monthly amounts upward to ensure that people still receive half of their total eligible Child Tax Credit benefit by the end of the year.

Filing soon will also ensure that the IRS has their most current bank account information, as well as key details about qualifying family members. This includes people who don’t normally file a tax return, such as families experiencing homelessness and people in underserved groups.

For most people, the fastest and easiest way to file a return is by using IRS Free File, available only on IRS.gov. Besides qualifying them for these advance payments, using Free File will also enable them to claim other family-oriented tax benefits, if eligible, such as the Earned Income Tax Credit and the Recovery Rebate Credit/Economic Impact Payments.

New tool helps non-filers register

For families who don’t normally file an income tax return, another easy option is to register for these advance payments using the new Non-filer Sign-up Tool, introduced recently, and available only on IRS.gov. Among other things, the tool asks users to supply current bank information, along with key details about themselves and their qualifying children. The tool then automatically fills in a very basic 2020 federal income tax return that is electronically sent to the IRS. The new tool was developed in partnership with Intuit and the Free File Alliance.

Child Tax Credit Eligibility Assistant unveiled

Before filing a return or using the Non-filer Sign-up Tool, families unsure of whether they qualify for either the credit or the advance payments may want to check out another new tool—the Child Tax Credit Eligibility Assistant. By answering a series of questions, the tool helps people determine if they qualify for the credit and the payments.

The IRS emphasized that because the Child Tax Credit Eligibility Assistant requests no personalized information, it is not a registration tool, but merely an eligibility tool. Nevertheless, it can still help an eligible family determine whether they should take the next step and either file an income tax return or register using the Non-filer Sign-up Tool.

Personal help available

IRS and its partners are helping families register for the payments using the Non-filer Sign-up Tool. During late June and early July, free events will take place in Atlanta, Brooklyn, Detroit, Houston, Las Vegas, Los Angeles, Miami, Milwaukee, Philadelphia, Phoenix, St. Louis and Washington, D.C. More details will be available soon on IRS.gov.

Child Tax Credit 2021

The IRS has created a special Advance Child Tax Credit 2021 page, designed to provide the most up-to-date information about the credit and the advance payments. It’s at IRS.gov/childtaxcredit2021.

Among other things, it provides direct links to the Non-Filer Sign Up Tool, the Child Tax Credit Update Portal, the Child Tax Credit Eligibility Assistant, a set of frequently asked questions and other useful resources.

Child Tax Credit changes

The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 for children under the age of 6 and to $3,000 per child for children ages 6 through 17. Before 2021, the credit was worth up to $2,000 per eligible child.

The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:

For most people, modified AGI is the amount shown on Line 11 of their 2020 Form 1040 or 1040-SR. Above these income thresholds, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every $1,000 in modified AGI. In addition, the credit is fully refundable for 2021. This means that eligible families can get it, even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.

Help spread the word

The IRS urges community groups, non-profits, associations, education organizations and anyone else with connections to people with children to share this critical information about the Child Tax Credit as well as other important benefits. Among other things, the IRS is already working closely with its community partners to ensure wide access to the Non-filer Sign-up Tool and the Child Tax Credit Update Portal. The agency is also providing additional materials and information that can be easily shared by social media, email and other methods.

For the most up-to-date information on the Child Tax Credit and advance payments, visit Advance Child Tax Credit Payments in 2021.

Revenue Procedure 2021-28 explains how a taxpayer changes its method of computing depreciation to comply with the 2020 change in law to retroactively provide a 30-year recovery period under the alternative depreciation system in § 168(g) for certain residential rental property placed in service before 2018 and held by an electing real property trade or business.

Revenue Procedure 2021-29 allows an eligible partnership to file an amended Form 1065, U.S. Return of Partnership Income, and furnish a corresponding Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc., to each of its partners as an alternative option to filing an administrative adjustment request (AAR).

Revenue Procedure 2021-28 and 2021-29 will appear in IRB 2021-27, dated July 6, 2021.

Today, the IRS published the latest executive column “A Closer Look,” which features Damon Rowe, Director, IRS Fraud Enforcement, discussing how to stay vigilant about tax scams.

“Whether you’re a tax pro, taxpayer, state or federal tax administrator or industry professional, you play an important role in reducing scams,” said Rowe. “This is a team effort, and when everyone is working together, we protect innocent people from being scammed.” 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.