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IRS On Elimination Of Deduction Of Qualified Transportation Fringe Benefit Expenses

IRS On Elimination Of Deduction Of Qualified Transportation Fringe Benefit Expenses

The Internal Revenue Service issued proposed regulations that provide guidance for the deduction of qualified transportation fringe and commuting expenses.

The Tax Cuts and Jobs Act (TCJA) does not allow deductions for qualified transportation fringe (QTF) expenses and does not allow deductions for certain expenses of transportation and commuting between an employee’s residence and place of employment.

The law also provided that a tax-exempt organization’s unrelated business taxable income is increased by the amount of the QTF expense that is nondeductible. However, on December 20, 2019, this was repealed as part of the Further Consolidated Appropriations Act of 2020. This repeal was retroactive to the original date of enactment by the TCJA.
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IRS Outlines Changes To Health Care Spending Available Under CARES Act

IRS: TaxConnections: Care Act

The Internal Revenue Service has advised that new rules under the CARES Act provide flexibility for health care spending that may be helpful in the current environment where more people may need at-home services due to measures to fight the coronavirus.

Telehealth And High Deductible Health Plans

Under the CARES Act, a high deductible health plan (HDHP) temporarily can cover telehealth and other remote care services without a deductible, or with a deductible below the minimum annual deductible otherwise required by law. Telehealth and other remote care services also are temporarily included as categories of coverage that are disregarded for the purpose of determining whether an individual who has other health plan coverage in addition to an HDHP is an eligible individual who may make tax-favored contributions to his or her HSA. Thus, an otherwise eligible individual with coverage under an HDHP may still contribute to an HSA despite receiving coverage for telehealth and other remote care services before satisfying the HDHP deductible, or despite receiving coverage for these services outside the HDHP. The temporary rules under the CARES Act, as extended by IRS Notice 2020-29, apply to services provided on or after Jan. 1, 2020, with respect to plan years beginning on or before Dec. 31, 2021.

Expansion Of Qualified Medical Expenses

The CARES Act also modifies the rules that apply to various tax-advantaged accounts (HSAs, Archer MSAs, Health FSAs, and HRAs) so that additional items are “qualified medical expenses” that may be reimbursed from those accounts. Specifically, the cost of menstrual care products is now reimbursable. These products are defined as tampons, pads, liners, cups, sponges or other similar products. In addition, over-the-counter products and medications are now reimbursable without a prescription. The new rules apply to amounts paid after Dec. 31, 2019. Taxpayers should save receipts of their purchases for their records and so that they are able to submit claims for reimbursements.
More information

The IRS will provide any further updates as soon as they are available on its webpage at IRS.gov/coronavirus

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IRS’ People First Initiative Provides Compliance Relief

IRS’ People First Initiative Provides Compliance Relief

The Internal Revenue Service unveiled the People First Initiative on March 25, 2020. It is an unprecedented effort to temporarily scale back many collection and enforcement activities by the IRS during the COVID-19 global pandemic.

The purpose of the People First Initiative is to immediately ease the burden on people facing tax issues as much as possible, to enable them to better focus on the well-being of themselves and others during this unprecedented situation for the nation. It is not permanent, but it will stay in effect until it is deemed to no longer be needed.

In consultation with its partners, the IRS will continue to review the People First Initiative and modify or expand it as needed during this situation.

Main Elements of People First Initiative
The initiative modifies numerous IRS compliance programs, providing taxpayer relief for the following programs:
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Treasury, IRS Provide Safe Harbor For Taxpayers That Develop Renewable Energy Projects

The Treasury Department and the Internal Revenue Service is providing relief for taxpayers developing renewable energy projects and producing electricity from sources such as wind, biomass, geothermal, landfill gas, trash, and hydropower. Safe harbor is also available for taxpayers using technologies such as solar panels, fuel cells, microturbines, and combined heat and power systems.

The IRS recognizes that COVID-19 has caused industry-wide delays in the supply chain for components needed to complete renewable energy projects otherwise eligible for important tax credits. The IRS has issued Notice 2020-41 to provide tax relief to affected taxpayers.

For certain projects that began construction in 2016 or 2017, Notice 2020-41 adds an extra year to the four year “Continuity Safe Harbor” provided in existing guidance. If these projects are placed in service in five years construction will be deemed continuous.

Notice 2020-41 also provides assurance for taxpayers who started construction by incurring 5 percent of project costs, and made payments for services or property and reasonably expected to receive such services or property within 3 ½ months. These taxpayers are considered incurred under economic performance rules. The Notice provides that if such services or property are received by October 15, 2020, the taxpayer’s expectations at the time of the 2019 payment are deemed reasonable.
Extending the Continuity Safe Harbor and providing a 3½ Month Safe Harbor will provide flexibility for taxpayers to satisfy the beginning of construction requirements and limit the impact of COVID-19-related delays on the ability to claim tax credits.

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IRS People First Initiative Limits Certain Enforcement Actions

IRS People First Initiative Limits Certain Enforcement Actions

The IRS postponed certain compliance actions under a new program entitled “IRS People First Initiative,” effective April 1, and running through July 15 initially, in an effort to help taxpayers facing tax challenges in light of the Coronavirus (COVID-19) pandemic. The changes include issues ranging from postponing certain payments related to Installment Agreements and Offers in Compromise to collection procedures and limiting certain enforcement actions.

The new IRS People First Initiative outlines the IRS’s temporary policies in the following key tax areas:

-Earned Income Tax Credit and Wage Verification Reviews
-Non-Filers
-Audits
-Appeals
-Field Collection Actions
-Liens and Levies
-Passport Certifications to the State Department
-Private Debt Collection
-Statute of Limitations
-Practitioner Priority Service
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IRS Provides Tax Relief Through Increased Flexibility For Taxpayers In Section 125 Cafeteria Plans

IRS Provides Tax Relief Through Increased Flexibility For Taxpayers In Section 125 Cafeteria Plans

The Internal Revenue Service today released guidance to allow temporary changes to section 125 cafeteria plans. These changes extend the claims period for health flexible spending arrangements (FSAs) and dependent care assistance programs and allow taxpayers to make mid-year changes.

The guidance issued today addresses unanticipated changes in expenses because of the 2019 Novel Coronavirus (COVID-19) pandemic and provides that previously provided temporary relief for high deductible health plans may be applied retroactively to January 1, 2020, and it also increases for inflation the $500 permitted carryover amount for health FSAs to $550.

Notice 2020-29 (PDF) provides greater flexibility for taxpayers by:

-extending claims periods for taxpayers to apply unused amounts remaining in a health FSA or dependent care assistance program for expenses incurred for those same qualified benefits through December 31, 2020.
-expanding the ability of taxpayers to make mid-year elections for health coverage, health FSAs, and dependent care assistance programs, allowing them to respond to changes in needs as a result of the COVID-19 pandemic.
-applying earlier relief for high deductible health plans to cover expenses related to COVID-19, and a temporary exemption for telehealth services retroactively to January 1, 2020.
Notice 2020-33 (PDF) responds to Executive Order 13877, which directs the Secretary of the Treasury to “issue guidance to increase the amount of funds that can carry over without penalty at the end of the year for flexible spending arrangements.” The notice increases the limit for unused health FSA carryover amounts from $500, to a maximum of $550, as adjusted annually for inflation.

IRS

IRS Adds Phone Operators To Answer Economic Impact Payment Questions

IRS Adds Phone Operators To Answer Economic Impact Payment Questions

The Internal Revenue Service is starting to add 3,500 telephone representatives to answer some of the most common questions about Economic Impact Payments.IRS telephone assistance and other services will remain limited, and answers for most of the common questions related to Economic Impact Payments are available on IRS.gov. The IRS anticipates bringing back additional assistors as state and local advisories permit.

Answers for most Economic Impact Payment questions are available on the automated message for people who call the phone number provided in the letter (Notice 1444). Those who need additional assistance at the conclusion of the message will have the option of talking to a telephone representative.
Americans are encouraged to use IRS.gov.

The IRS regularly posts new and updated answers to the most frequently asked questions about Economic Impact Payments and the Get My Payment tool. Those who wish to know the status of their Economic Impact Payment are reminded to check Get My Payment regularly; the information is frequently updated as the IRS continues to process the remaining payments for delivery.
For those who are eligible for an Economic Impact Payment but aren’t required to file a tax return, the IRS reminds them the Non-Filers tool also remains available in English or Spanish for them to register for a payment.

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Virtual Currency: IRS Issues Additional Guidance On Tax Treatment And Reminds Taxpayers Of Reporting Obligations

Virtual Currency: IRS Issues Additional Guidance On Tax Treatment And Reminds Taxpayers Of Reporting Obligations

As part of a wider effort to assist taxpayers and to enforce the tax laws in a rapidly changing area, the Internal Revenue Service today issued two new pieces of guidance for taxpayers who engage in transactions involving virtual currency.

Expanding on guidance from 2014, the IRS is issuing additional detailed guidance to help taxpayers better understand their reporting obligations for specific transactions involving virtual currency. The new guidance includes Revenue Ruling 2019-24 (PDF) and Frequently Asked Questions(FAQs).

The new revenue ruling addresses common questions by taxpayers and tax practitioners regarding the tax treatment of a cryptocurrency hard fork. In addition, a set of FAQs address virtual currency transactions for those who hold virtual currency as a capital asset.

“The IRS is committed to helping taxpayers understand their tax obligations in this emerging area,” said IRS Commissioner Chuck Rettig. “The new guidance will help taxpayers and tax professionals better understand how longstanding tax principles apply in this rapidly changing environment. We want to help taxpayers understand the reporting requirements as well as take steps to ensure fair enforcement of the tax laws for those who don’t follow the rules.”
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Avoid Scams: Know The Facts On How The IRS Contacts Taxpayers

IRS Scams

Crooks impersonating the IRS either by phone, email or in person cost people their time and money. The IRS urges people to stay vigilant against schemes and scams and avoid becoming a victim.

Here are some important tips for taxpayers to keep in mind to avoid scams:

How the IRS initiates contact
The IRS initiates most contacts with taxpayers through regular mail delivered by the U.S. Postal Service. However, there are special circumstances in which the IRS will call or come to a home or business, such as:

When a taxpayer has an overdue tax bill,

To secure a delinquent tax return or a delinquent employment tax payment, or

To tour a business, for example, as part of an audit or during criminal investigations.

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IRS Updates Guidance On Business Expense Deductions For Meals And Entertainment

IRS On Business Expense Deductions

The Internal Revenue Service issued proposed regulations on the business expense deduction for meals and entertainment following changes made by the Tax Cuts and Jobs Act (TCJA).

The 2017 TCJA eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation. It also limited the deduction for expenses related to food and beverages provided by employers to their employees.

These proposed regulations address the elimination of the deduction for expenditures related to entertainment, amusement or recreation activities and provide guidance to determine whether an activity is considered to be entertainment. The proposed regulations also address the limitation on the deduction of food and beverage expenses.

The proposed regulations affect taxpayers who pay or incur expenses for meals or entertainment. These proposed regulations generally follow Notice 2018-76 (PDF), issued on October 15, 2018, which provided transitional guidance on the deductibility of expenses for certain business meals.

Taxpayers affected by this change and other interested parties may submit comments on the proposed regulations. The IRS will hold a public hearing on these proposed regulations on April 7, 2020.

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IRS Increases Visits To High-Income Taxpayers Who Haven’t Filed Tax Returns

IRS Visits Taxpayer Homes

As part of a larger effort to ensure compliance and fairness, the Internal Revenue Service today announced that it will step up efforts to visit high-income taxpayers who in prior years have failed to timely file one or more of their tax returns.

Following the recent and ongoing hiring of additional enforcement personnel, IRS revenue officers across the country will increase face-to-face visits with high-income taxpayers who haven’t filed tax returns in 2018 or previous years. These visits are primarily aimed at informing these taxpayers of their tax filing and paying obligations and bringing these taxpayers into compliance.

“The IRS is committed to fairness in the tax system, and we want to remind people across all income categories that they need to file their taxes,” said Paul Mamo, Director of Collection Operations, Small Business/Self Employed Division. “These visits focusing on high-income taxpayers will be taking place across the country. We want to ensure taxpayers know their options to get right with their taxes and avoid bigger issues later.”
For the current tax season, the IRS reminds taxpayers that everyone should file their 2019 tax return by the April 15 filing deadline regardless of whether they can pay in full. Six-month filing extensions are also available, although that does not extend the April deadline for paying any taxes owed.
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