IRS Announcement | TaxConnections

02 May 2023

Internal Revenue Service Highlights Information And Free Resources In Recognition Of National Small Business Week

As part of National Small Business Week, April 30 to May 6, the Internal Revenue Service is highlighting tax benefits and resources to help those looking to start a business.

National Small Business Week is an annual effort led by the Small Business Administration to recognize the hard work, ingenuity and dedication of America’s small businesses and to celebrate their contributions to the economy. To support the special week, the IRS has a variety of resources available for small business owners to help them understand and meet their tax responsibilities. Next week, the IRS will be highlighting some of these resources, and @IRSnews also plans a special Twitter chat on Thursday.

When choosing to start a business, it’s important to consider the following:

Employer Identification Number
Most business owners will need an Employer Identification Number (EIN). It’s a permanent number and can be used for most business needs, from opening bank accounts to filing a tax return by mail. Business owners can get their EIN immediately by applying online at IRS.gov at no cost.

Business Structure
Taxpayers must decide what form of business entity to establish when starting a business. This helps determine which income tax return form must be filed. The most common business structures are:
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Written by TaxConnections Admin | Posted in IRS Announcement

20 Sep 2022

IRS Updates On Tax Credit Helping Businesses To Hire

IRS updates Information on tax credit helping businesses to hire certain categories of workers.

WASHINGTON — The IRS updated information on the Work Opportunity Tax Credit (WOTC), available to employers that hire designated categories of workers who face significant barriers to employment. For employers facing a tight job market, the WOTC may be able to help.

Today’s updates include information on the pre-screening and certification process. To satisfy the requirement to pre-screen a job applicant, on or before the day a job offer is made, a pre-screening notice (Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit) must be completed by the job applicant and the employer.

Written by TaxConnections Admin | Posted in IRS Announcement • IRS Updates

28 Oct 2020

IRS Provides Tax Inflation Adjustments For Tax Year 2021

The Internal Revenue Service today announced the tax year 2021 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2020-45 PDF provides details about these annual adjustments.

Highlights Of Changes In Revenue Procedure 2020-45

The Consolidated Appropriation Act for 2020 increased the amount of the minimum addition tax for failure to file a tax return within 60 days of the due date. Beginning with returns due after Dec. 31, 2019, the new additional tax is $435 or 100 percent of the amount of tax due, whichever is less, an increase from $330. The $435 additional tax will be adjusted for inflation.

Written by IRS | Posted in IRS Announcement • IRS Provides Tax Inflation Adjustments For Tax Year 2021

26 Nov 2019

Making Large Gifts Now Won’t Harm Estates After 2025

The Treasury Department and the Internal Revenue Service issued final regulations confirming that individuals taking advantage of the increased gift and estate tax exclusion amounts 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.

Treasury Decision 9884, available today in the Federal Register, implements changes made by the Tax Cuts and Jobs Act (TCJA), the tax reform legislation enacted in December 2017. Though the final regulations largely adopt the proposed regulations published last November, they also include clarifying technical language addressing concerns raised in several public comments as well as four examples which, among other things, illustrate the impact of inflation adjustments. As a result, individuals planning to make large gifts between 2018 and 2025 can do so without concern that they will lose the tax benefit of the higher exclusion level once it decreases after 2025.

Written by Kat Jennings | Posted in Estate Taxes • IRS Announcement

30 Oct 2019

Farmers And Ranchers Affected By Drought Have Extra Time To Sell Livestock

Drought can be devastating to farmers and ranchers. Those who were forced to sell livestock due to drought may get extra time to replace the livestock. They may also have more time to defer tax on any gains from the forced sales.

Here are some facts to help farmers understand how the deferral works and if they are eligible.

The one-year extension gives eligible farmers and ranchers until the end of the tax year after the first drought-free year to replace the sold livestock.
The farmer or rancher must be in an applicable region. An applicable region is a county designated as eligible for federal assistance, as well as counties contiguous to that county.
The farmer’s county, parish, city or district included in the applicable region must be listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center. All or part of 32 states, plus Guam, the U.S. Virgin Islands and the Commonwealths of Puerto Rico and the Northern Mariana Islands, are listed. The list of applicable regions is in Notice 2019-54 on IRS.gov.
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Written by IRS | Posted in IRS Announcement

03 Sep 2019

IRS Interest Rates On Overpayment And Underpayment

The Internal Revenue Service announced that interest rates will remain the same for the calendar quarter beginning October 1, 2019, as they were in the prior quarter.

The rates will be:

five (5) percent for overpayments [four (4) percent in the case of a corporation];
two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000;
five (5) percent for underpayments; and
seven (7) percent 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.

Written by IRS | Posted in IRS Announcement

27 Aug 2019

Retirement Savings Contributions Credit (Saver’s Credit)

You may be able to take a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan. And, beginning in 2018, if you’re the designated beneficiary you may be eligible for a credit for contributions to your Achieving a Better Life Experience (ABLE) account.

Who Is Eligible For The Credit?

You’re eligible for the credit if you’re:

Age 18 or older;
Not a full-time student; and
Not claimed as a dependent on another person’s return.

See the instructions for Form 8880, Credit for Qualified Retirement Savings Contributions, for the definition of a full-time student.

Amount Of The Credit

The amount of the credit is 50%, 20% or 10% of your retirement plan or IRA or ABLE account contributions depending on your adjusted gross income (reported on your Form 1040 series return). The maximum contribution amount that may qualify for the credit is $2,000 ($4,000 if married filing jointly), making the maximum credit $1,000 ($2,000 if married filing jointly). Use the chart below to calculate your credit.

Written by IRS | Posted in IRS Announcement

30 Jul 2019

IRS Has Begun Sending Letters To Virtual Currency Owners Advising Them To Pay Back Taxes, File Amended Returns

The Internal Revenue Service has begun sending letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the resulting tax from virtual currency transactions or did not report their transactions properly.

“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,” said IRS Commissioner Chuck Rettig. “The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”

The IRS started sending the educational letters to taxpayers last week. By the end of August, more than 10,000 taxpayers will receive these letters. The names of these taxpayers were obtained through various ongoing IRS compliance efforts.

Written by IRS | Posted in IRS Announcement • IRS Audits • Virtual Currency

06 Mar 2019

IRS Issues Proposed Regulations: Deduction For Foreign-Derived Intangible Income

The Internal Revenue Service issued proposed regulations under section 250 of the Internal Revenue Code, which offers domestic corporations deductions for foreign-derived intangible income (FDII) and global intangible low-taxed income. Section 250, as well as section 951A dealing with global intangible low-taxed income, was added by the 2017 Tax Cuts and Jobs Act (TCJA).

These proposed regulations provide guidance on both the computation of the deductions available under section 250 and determination of FDII. In addition, the proposed regulations provide rules for the computation of FDII in the consolidated return context. Proposed guidance on the computation of global intangible low-taxed income was published in the Federal Register on Oct. 10, 2018.

New reporting rules requiring the filing of Form 8993, Section 250 Deduction for Foreign-Derived Intangible Income and Global Intangible Low-Taxed Income, are also described in the proposed regulations.

Written by IRS | Posted in IRS Announcement

05 Jun 2018

IRS Offers Penalty, Filing Relief To Many Subject To New Transition Tax On Foreign Earnings

The Internal Revenue Service today it will waive certain late-payment penalties relating to the section 965 transition tax, and provided additional information for individuals subject to the section 965 transition tax regarding the due date for relevant elections.

The IRS explained the relief in three new FAQs, posted today on the agency’s tax reform page. These supplement 14 existing questions and answers that provide detailed guidance to taxpayers on reporting and paying the tax.

Section 965 of the Internal Revenue Code, enacted in December 2017, imposes a transition tax on untaxed foreign earnings of foreign corporations owned by U.S. shareholders by deeming those earnings to be repatriated. Foreign earnings held in the form of cash and cash equivalents are taxed at a 15.5 percent rate, and the remaining earnings are taxed at an 8 percent rate. The transition tax generally may be paid in installments over an eight-year period when a taxpayer files a timely election under section 965(h).

Written by IRS | Posted in IRS Announcement