IRS | TaxConnections

29 Jun 2021

IRS Announces Tax Scams For 2021

The Internal Revenue Service today began its “Dirty Dozen” list for 2021 with a warning for taxpayers, tax professionals and financial institutions to be on the lookout for these 12 nefarious schemes and scams.

This year’s “Dirty Dozen” will be separated into four separate categories:

pandemic-related scams like Economic Impact Payment theft;
personal information cons including phishing, ransomware and phone “vishing;”
ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud; and
schemes that persuade taxpayers into unscrupulous actions such as Offer In Compromise mills and syndicated conservation easements.

The agency compiled the list into these categories based on who perpetuates the schemes and who they impact. In addition to today’s scams the IRS will highlight the other schemes over the next three days.

Written by IRS | Posted in Tax Scam

25 Jun 2021

IRS Online Tool Helps Families See If They Qualify For The Child Tax Credit

IRS online tool helps families see if they qualify for the Child Tax Credit; one of three tools now available for the upcoming advance payments

The Treasury Department and the Internal Revenue Service urge 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.

Written by IRS | Posted in Child Tax Credit

23 Jun 2021

IRS Estate And Gift Tax Frequently Asked Questions

The FAQs on this page provide details on how tax reform affects Estate and Gift Tax. Visit the Estate and Gift Taxes page for more comprehensive estate and gift tax information.

Making large gifts now won’t harm estates after 2025

On November 26, 2019, the IRS clarified that individuals taking advantage of the increased gift tax exclusion amount in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount is scheduled to drop to pre-2018 levels. The IRS formally made this clarification in final regulations released that day. The regulations implement changes made by the Tax Cuts and Jobs Act (TCJA), tax reform legislation enacted in December 2017. Here are some questions and answers on the new law and regulations.

Q. What are gift and estate taxes?

A. Gift and estate taxes apply to transfers of money, property and other assets. Simply put, these taxes only apply to large gifts made by a person while they are alive, or large amounts left for heirs when they die.

Q. How are gift and estate taxes figured?

A. In general, the Gift Tax and Estate Tax provisions apply a unified rate schedule to a person’s cumulative taxable gifts and taxable estate to arrive at a net tentative tax. Any tax due is determined after applying a credit based on an applicable exclusion amount. A key component of this exclusion is the basic exclusion amount (BEA). The credit is first applied against the gift tax, as taxable gifts are made. To the extent that any credit remains at death, it is applied against the estate tax.

Written by IRS | Posted in Estate And Gift Tax • IRS

18 Jun 2021

IRS Charges $113,500 Fee To Review Your Transfer Pricing Methodology Prior To Filing Corporate Tax Return

IRS Charges $113,500 To Review Your Transfer Pricing Methodology

We found this important information on the IRS site…while most multinational corporate tax executives are aware of this fee, there are many company executives who are unaware of the costs of transfer pricing when they hire a transfer pricing consultant. Contact us for referrals to TaxConnections Members who are experts in transfer pricing: https://www.taxconnections.com/contact

Consider if…
Prior to filing a return, you seek tax certainty and the avoidance of a transfer pricing dispute with the IRS and one or more treaty partner administrations by securing an agreement on a transfer pricing methodology. In an APA, the IRS and one or more foreign tax administrations come to an agreement with the taxpayer on: (1) the factual nature of the inter-company transaction to which the APA applies; (2) an appropriate transfer pricing method (“TPM”) to be applied to any allocation of income, deductions credits or allowances among two or more controlled organizations; and (3) an expected range of results from applying the TPM to the transactions. This program is designed to promptly and fairly resolve APA requests based on principled and cooperative negotiations between the IRS, treaty partner tax administrations, and the taxpayer.

Written by IRS | Posted in IRS Review Fees • IRS Transfer Pricing Methodology Review • TaxConnections

15 Jun 2021

IRS Reminder: June 15 Deadline For Taxpayers Second Quarter Estimated Tax Payments

The Internal Revenue Service reminds taxpayers who pay estimated taxes that they have until June 15 to pay their estimated tax payment for the second quarter of tax year 2021 without penalty.

Estimated tax is the method used to pay tax on income that isn’t subject to withholding. This includes income from self-employment, interest, dividends, rent, gains from the sale of assets, prizes and awards. You may also have to pay estimated tax if the amount of income tax being withheld from your salary, pension or other income isn’t enough.

Who must pay estimated tax?

Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when they file their return.

Written by IRS | Posted in Withholding Tax

09 Jun 2021

What Is The Transfer Pricing Examination Process? IRS Using Data Analytics To Identify Issues For Examinations

The Transfer Pricing Examination Process (TPEP) provides a guide to best practices and processes to assist with the planning, execution, and resolution of transfer pricing examinations consistent with the Large Business & International (LB&I) Examination Process (LEP), Publication 5125. This guide will be shared with taxpayers at the start of a transfer pricing examination, so they understand the process and can work effectively with the examination team.

Transfer pricing examinations are factually intensive and require a thorough analysis of functions performed, assets employed, and risks assumed along with an accurate understanding of relevant financial information. They are resource intensive for both the IRS and taxpayers. To ensure resources are applied effectively, LB&I is using data analytics to identify issues for examination that have the most significant risk for non-compliance. In addition, teams should continually assess the merits of issues during an examination. Our goal in a transfer pricing examination is to determine an arm’s length result under the facts and circumstances of the case.

Written by IRS | Posted in IRS Examination • Transfer Pricing

20 May 2021

Bidens American Rescue Plan Gives Millions With Children Free Monthly Payments Starting July 15th Through Direct Deposit

IRS urges groups to share information to help those without permanent addresses get benefits including Economic Impact Payments, upcoming advance Child Tax Credit

The Internal Revenue Service today continued an ongoing effort to help those experiencing homelessness by reminding people who don’t have a permanent address or a bank account that they may still qualify for stimulus payments and other credits, including the advance Child Tax Credit.

The agency is also asking for help from groups that assist vulnerable or underserved people who may have difficulty getting a stimulus payment automatically. Filing a 2020 tax return, even if people don’t have to, could put money in their pocket.

Written by IRS | Posted in American Rescue Plan • IRS Notice

19 May 2021

IRS Provides Guidance On Premium Assistance And Tax Credit For Continuation Health Coverage

The Internal Revenue Service today provided guidance on tax breaks under the American Rescue Plan Act of 2021 for continuation health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).

Notice 2021-31 provides guidance for employers, plan administrators, and health insurers regarding the new credit available to them for providing continuation health coverage to certain individuals under COBRA.

The American Rescue Plan provides a temporary 100% reduction in the premium that individuals would have to pay when they elect COBRA continuation health coverage following a reduction in hours or an involuntary termination of employment. The new law provides a corresponding tax credit for the entities that maintain group health plans, such as employers, multiemployer plans, and insurers. The 100% reduction in the premium and the credit are also available with respect to continuation coverage provided for those events under comparable State laws, sometimes referred to as “mini-COBRA.”

Written by IRS | Posted in TaxConnections

18 May 2021

IRS, Treasury Announce Families of 88% of Children In The U.S. To Automatically Receive Monthly Payment Of Refundable Child Tax Credit

The Internal Revenue Service and the U.S. Department of the Treasury announced that the first monthly payment of the expanded and newly-advanceable Child Tax Credit (CTC) from the American Rescue Plan will be made on July 15. Roughly 39 million households—covering 88% of children in the United States—are slated to begin receiving monthly payments without any further action required.

IRS and Treasury also announced the increased CTC payments will be made on the 15th of each month unless the 15th falls on a weekend or holiday. Families who receive the credit by direct deposit can plan their budgets around receipt of the benefit. 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 age 6 and above.

Written by IRS | Posted in Refundable Child Tax Credit

12 May 2021

IRS Offers Overview Of Tax Provisions In American Rescue Plan; Retroactive Tax Benefits

The Internal Revenue Service yesterday provided an overview of some of the key tax provisions in the American Rescue Plan Act.

Several provisions affect the 2020 tax return people are filling out this filing season, including one exempting up to $10,200 in unemployment compensation from tax and another benefiting many people who purchased subsidized health coverage through either federal or state Health Insurance Marketplaces. In addition, the law also includes a third round of Economic Impact Payments, now going out to eligible Americans, that are generally equal to $1,400 per person for most people, as well as several other key changes for tax-year 2021.
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Written by IRS | Posted in American Rescue Plan Act • IRS • TaxConnections

11 May 2021

IRS Issues Guidance On Taxability Of Dependent Care Assistance Programs For 2021, 2022

The Internal Revenue Service issued guidance on the taxability of dependent care assistance programs for 2021 and 2022, clarifying that amounts attributable to carryovers or an extended period for incurring claims generally are not taxable. The guidance also illustrates the interaction of this standard with the one-year increase in the exclusion for employer-provided dependent care benefits from $5,000 to $10,500 for the 2021 taxable year under the American Rescue Plan Act.

Because of the pandemic, many people were unable to use the money they set aside in their dependent care assistance programs in 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 dependent care expenses. The employee’s expenses are then reimbursed from the dependent care assistance program.

Written by IRS | Posted in IRS On Taxability Of Dependent Care