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Archive for IRS Notice

IRS Online Tool Helps U.S. Withholding Agents Validate 1042-S Data Prior To Filing

IRS Online Tool Helps U.S. Withholding Agents Validate1042-S Data Prior To Filing

The Internal Revenue Service launched a new online tool designed to help U.S. withholding agents comply with their reporting and withholding responsibilities with respect to IRS Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding.

The tool performs a quality review of data before submission to the IRS. Use of the tool does not change a withholding agent’s obligations to file Forms 1042-S with the IRS and furnish a copy of the Form 1042-S to the payee.

“U.S. withholding agents play an important role in helping the IRS administer the tax code so we are delighted to be able to provide this tool free of charge to assist agents in meeting their filing requirement,” said Nikole Flax, IRS Large Business and International division commissioner.

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IRS Delivers 15 Billion In Child Tax Credit Payments In 4th Quarter As Part Of Their Child Tax Credit Program

IRS Delivers 15 Billion In Child Tax Credit Payments In 4th Quarter As Part Of Their Child Tax Credit Program

In October, the IRS delivered a fourth monthly round of approximately 36 million Child Tax Credit payments totaling $15 billion. As part of the continuing process of building out the advance CTC program, which has included outreach to bring in previous non-filers and the launch of the CTC Update Portal that has allowed millions of taxpayers to choose options for their payments, the IRS has also identified certain payees who appear to have mistakenly received advance CTC payments. These payments were made in July, August, and September for children who are too old to qualify for payments or, in some cases, for children who were claimed on multiple tax returns. Fewer than 1% of advance monthly payments fall into these categories. Starting with the October payments, the individuals who received those payments (approximately 220, 000 people) will stop receiving payments.

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IRS Helps Employers Wanting To Rehire Retirees Or Retain Employees After Retirement Age

IRS Helps Employers Wanting To Rehire Retirees Or Retain Employees After Retirement Age

To help address COVID-related labor shortages, the Internal Revenue Service today reminded employers that they generally will not jeopardize the tax status of their pension plans if they rehire retirees or permit distributions of retirement benefits to current employees who have reached age 59 ½ or the plan’s normal retirement age.

With the COVID-19 pandemic, many employers, including governmental employers (such as public school districts), are looking for ways to encourage retirees to return to the workforce to fill open positions and experienced employees to stay on the job.

The IRS is providing help to these employers in two new frequently asked questions (FAQs), designed to offer technical guidance to public and private employers who sponsor pension plans for their employees. The FAQs highlight existing ways that employers can meet their employment objectives and still comply with the plan qualification rules.

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IRS Launches New Webpage To Assist Taxpayers With Refunds Subject To Joint Committee On Taxation Review

Joint Committee Refund Case

The IRS announced a new webpage that provides information to taxpayers whose large refunds are subject to further review by the Joint Committee on Taxation (JCT or Joint Committee).

By law, when taxpayers claim a federal tax refund or credit of more than $2 million ($5 million for a C corporation), the IRS must review the refund or credit and provide a report to the JCT, a non-partisan committee of the U.S. Congress. Refunds subject to this review are known as “Joint Committee Refund Cases.”

Taxpayers can now find answers to most questions about Joint Committee case reviews and links to additional resources at Large Tax Refunds and Credits Subject to Review by the Joint Committee on Taxation – What to Expect.

The new webpage covers the following topics:

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Thousands Of Taxpayers Received Inaccurate Collection Notices From IRS

Thousands Of Taxpayers Received Inaccurate Collection Notices From IRS

MEMORANDUM FOR: COMMISSIONER OF INTERNAL REVENUE

FROM: Michael E. McKenney
Deputy Inspector General for Audit

SUBJECT: Final Audit Report – People First Initiative Actions Helped Taxpayers During the Pandemic; However, Many Taxpayers Received Inaccurate Collection Notices (Audit # 202030628)

This report presents the results of our review to evaluate actions taken by the Small Business/ Self-Employed Division to assist taxpayers in response to the Coronavirus Disease 2019 (COVID-19) pandemic. This review is part of our Fiscal Year 2021 Annual Audit Plan and addresses the major management and performance challenge of Responding to the COVID-19 Pandemic.

Management’s complete response to the draft report is included as Appendix III. Copies of this report are also being sent to the Internal Revenue Service managers affected by the report recommendation.

Report Number: 2021-36-060

IRS States Abusive Trust Tax Evasion Schemes

Trust Tax Evasion Schemes
Accessing The Offshore Funds

How do taxpayers involved in these schemes enjoy the fruits of their abusive scheme since their funds are offshore? There are several methods to repatriate the taxpayer’s funds to the U.S. All of these methods, at some point, involve the opening of foreign bank accounts. Two examples are described below:

  • A bank account is opened in the tax haven country and a debit or credit card is issued from the account. These cards are used by the taxpayer in the U.S. to withdraw cash and to pay for everyday expenses. Since the cards are issued by banks located in tax haven countries, it is very difficult for the IRS to trace these transactions back to the taxpayer.
  • An International Business Corporation (IBC) is established. Funds are transferred from the foreign trusts to the IBC via foreign bank accounts. Fraudulent loans are set up from the IBC to taxpayers and funds are wired back to the taxpayers in the U.S. Because loans are generally not taxable, the repatriation of funds is not reported on a U.S. tax return. In addition, because the ownership of IBCs is documented with bearer shares and IBCs are located in tax haven countries, it is very difficult for the IRS to prove that fraudulent loans are actually the taxpayer’s income.

IRS

IRS Warning About Promoted Abusive Arrangements

IRS Warning About Promoted Abusive Arrangements

IRS wraps up its 2021 “Dirty Dozen” scams list with warning about promoted abusive arrangements.

The Internal Revenue Service concludes the “Dirty Dozen” list of tax scams with a warning to taxpayers to watch out for schemes peddled by tax promoters, including syndicated conservation easements, abusive micro-captive insurance arrangements and other abusive arrangements.

The IRS warns people to be on the lookout for promoters who peddle false hopes of large tax deductions from abusive arrangements. These “deals” are generally marketed by unscrupulous promoters who make false claims about their legitimacy and charge high fees to boot. These promoters frequently devise new ways to cheat the system and market them aggressively. Some taxpayers play the audit lottery hoping they don’t get noticed.

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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 Address Get Benefits Including Economic Impact Payments

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.

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IRS Office Of Chief Counsel’s First National Virtual Settlement Month Successful In Resolving Almost 150 Tax Court Cases

IRS Office Of Chief Counsel's First National Virtual Settlement Month Successful In Resolving Almost 150 Tax Court Cases

Building on the success of Settlement Days and Virtual Settlement Days, the Internal Revenue Service Office of Chief Counsel hosted its first National Virtual Settlement Month in March 2021. The results are impressive.

Settlement Days events are coordinated efforts to resolve cases in the United States Tax Court by providing taxpayers who are not represented by counsel the opportunity to receive free tax advice from Low Income Taxpayer Clinics (LITCs), American Bar Association (ABA) volunteer attorneys and other pro bono organizations.

“The March Settlement Days campaign yielded great results with well over half of participating taxpayers settling their cases on a basis agreeable to them without having to represent themselves in Tax Court,” said IRS Commissioner Chuck Rettig. “These strong results could not be achieved without the dedication and support of our partner groups–the LITCs, ABA and other pro bono organizations.”

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IRS, Treasury Disburse 25 Million More Economic Impact Payments

IRS, Treasury Disburse 25 Million More Economic Impact Payments

Today, the Internal Revenue Service, the U.S. Department of the Treasury, and the Bureau of the Fiscal Service announced they are disbursing more than 25 million payments in the fourth batch of Economic Impact Payments from the American Rescue Plan.

Today’s announcement brings the total disbursed so far to more than 156 million payments, with a total value of approximately $372 billion, since these payments began rolling out to Americans in batches, as announced on March 12.

The fourth batch of payments began processing on Friday, April 2, with an official payment date of April 7, with some people receiving direct payments in their accounts earlier as provisional or pending deposits. Here is additional information on this batch of payments:

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IRS, Treasury Disburse More Economic Impact Payments Under The American Rescue Plan; Total Tops 130 Million With More To Come

IRS, Treasury Disburse More Economic Impact Payments Under The American Rescue Plan; Total Tops 130 Million With More To Come

Today, the Internal Revenue Service, the U.S. Department of the Treasury and the Bureau of the Fiscal Service announced they are disbursing several million more payments in the third batch of Economic Impact Payments from the American Rescue Plan. This brings the total disbursed so far to more than 130 million payments worth approximately $335 billion.

As announced on March 12, Economic Impact Payments continue to roll out in batches to millions of Americans. The third batch of payments began processing on Friday, March 26, with an official payment date of March 31, with some people receiving direct payments in their accounts earlier as provisional or pending deposits. Here is additional information on this batch of payments:

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IRS Criminal Investigation Pledges Continued Commitment To Investigating COVID-19 Fraud

IRS Criminal Investigation Pledges Continued Commitment To Investigating COVID-19 Fraud

The Internal Revenue Service’s Criminal Investigation Division (IRS-CI) marks the one-year anniversary of the Coronavirus Aid, Relief and Economic Security (CARES) Act by pledging its continued commitment to investigating COVID-19 fraud.

Over the last year, IRS-CI has been combatting COVID-19 fraud related to the Economic Impact Payments, Paycheck Protection Program (PPP) and Employee Retention Credit. The agency has investigated more than 350 tax and money laundering cases nationwide totaling $440 million. These investigations covered a broad range of criminal activity, including fraudulently obtained loans, credits and payments meant for American workers, families, and small businesses.

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