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Tag Archive for IRS

IRS Quickly Moves Forward With Taxpayer Service Improvements; 4,000 Hired Plus 1000 More By End Of Year

IRS Quickly Moves Forward With Taxpayer Service Improvements; 4,000 Hired Plus 1000 More By End Of Year

The Internal Revenue Service announced significant progress to prepare for the 2023 tax filing season as the agency passed a milestone of hiring 4,000 new customer service representatives to help answer phones and provide other services.

These assistors have been hired over the last several months and are being trained to provide help to taxpayers, including answering phone questions. This is part of a much wider IRS improvement effort tied to the Inflation Reduction Act funding approved in August. The IRS continues working hard on implementing the landmark 10-year legislation, and updates on other improvement areas will be provided in the near future.

“The IRS is fully committed to providing the best service possible, and we are moving quickly to use new funding to help taxpayers during the busy tax season,” said IRS Commissioner Chuck Rettig. “Our phone lines have been simply overwhelmed during the pandemic, and we have been unable to provide the help that IRS employees want to give and that the nation’s taxpayers deserve. But help is on the way for taxpayers. As the newly hired employees are trained and move online in 2023, we will have more assistors on the phone than any time in recent history.”

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IRS Fires Warning Shot At Promoters Of Employee Retention Credit (ERC)

IRS Fires Warning Shot At Promoters Of Employee Retention Credit (ERC)

Enacted as part of the CARES Act in 2020, the Employee Retention Credit (ERC) provided much-needed relief to employers during the COVID-19 pandemic, particularly those who were on the fence as to whether they would maintain their payroll.  However, with the COVID-19 pandemic largely behind us now, the IRS has taken steps to begin to identify whether employers who claimed the ERC on prior year employment tax returns were actually entitled to the credit and, if so, whether they properly reduced their wage expense deductions for the employment periods in which the credit was claimed.

More recently, the IRS has indicated that it is now aware of third-party ERC promoters who may have nudged employers to claim the ERC even when those employers did not qualify for the credit.  On October 19, 2022, the IRS issued an announcement in the Internal Revenue Bulletin, warning employers of these schemes.  To the extent the IRS identifies an employer who improperly claimed the ERC when it otherwise did not qualify, the IRS has indicated that it intends to reclaim the credits with penalties and interest.  In addition, given the warning shot fired at third-party promoters of ERC schemes, such promoters are now on notice that the IRS may attempt to impose civil penalties or criminal sanctions against them as well under various federal statutes that prohibit unscrupulous promoter and tax-return preparation activities.  See, e.g., I.R.C. § 6694 (understatement penalty for unreasonable position or willful or reckless conduct); § 6700 (promoting abusive tax shelters); § 6701 (aiding and abetting an understatement of tax liability).

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IRS Issues Plug-In Electric Drive Vehicle Credit (IRC 30D)

Plug-In Electric Drive Vehicle Credit (IRC 30D)

The Treasury Department and the IRS issued Notice 2022-46 PDF requesting comments on any questions arising from the IRA amendments to the Clean Vehicle Credit. Comments should be submitted by November 4, 2022.

Updated information for consumers as of August 16, 2022

New Final Assembly Requirement

If you are interested in claiming the tax credit available under section 30D (EV credit) for purchasing a new electric vehicle after August 16, 2022 (which is the date that the Inflation Reduction Act of 2022 was enacted), a tax credit is generally available only for qualifying electric vehicles for which final assembly occurred in North America (final assembly requirement).

The Department of Energy has provided a list of Model Year 2022 and early Model Year 2023 electric vehicles that may meet the final assembly requirement. Because some models are built in multiple locations, there may be vehicles on the Department of Energy list that do not meet the final assembly requirement in all circumstances.

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IRS Providing Automatic Penalty Relief: 2019 And 2020 Returns 

DAVID ELLIS - IRS Providing Automatic Penalty Relief: 2019 And 2020 Returns

The IRS has announced that it will provide automatic relief from certain failure to file penalties and information reporting penalties for 2019 and 2020 taxable years. (Notice 2022-36) The IRS will determine whether a taxpayer qualifies and will automatically abate, refund, or credit the taxpayer’s account, as appropriate. No action on the taxpayer’s part is required.

Tax professionals should be ready to answer questions from clients who receive unexpected refund checks and/or IRS notices in the mail informing them of automatic changes to their IRS account.

The purpose of the relief is to allow the IRS to focus more of its resources on clearing its backlog, as well as provide relief to taxpayers affected by the COVID-19 pandemic.

To be eligible for the automatic failure to file penalty relief for the 2019 and 2020 taxable years, eligible entities must have filed their returns by September 30, 2022. The relief applies to:

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Signs Of Identity Theft Tax Pros Should Watch Out For

Signs Of Identity Theft Tax Pros Should Watch Out For

With identity thieves continuing to target the tax community, Internal Revenue Service Security Summit partners today urged tax professionals to learn the signs of data theft so they can react quickly to protect clients.

The IRS, state tax agencies and the tax industry – working together as the Security Summit – reminded tax professionals that they should contact the IRS immediately when there’s an identity theft issue while also contacting insurance or cybersecurity experts to assist them with determining the cause and extent of the loss.

“Tax pros must be vigilant to protect their systems from identity thieves who continue to look for ways to steal data,” said IRS Commissioner Chuck Rettig. “Practitioners can take simple steps to remain on the lookout for signs of data and identity theft. It’s critical for tax pros to watch out for these details and to quickly take action when tell-tale signs emerge. This can be critical to protect their business as well as their clients against identity theft.”

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Treasury General For Tax Administration: Ongoing Threat Of IRS Impersonation Scams

Tax Scams

WASHINGTON – J. Russell George, the Treasury Inspector General for Tax Administration, announced the release of new public service announcements (PSAs) to educate taxpayers about the continuing threat of Internal Revenue Service (IRS) impersonation scams.

The English and Spanish-language PSAs are available on TIGTA’s YouTube Channel.

“IRS impersonation scams continue to plague Americans and have claimed victims in every State,” George said. “TIGTA’s new public service announcements share advice on how to recognize these scams. If you receive a suspicious phone call from someone claiming to be from the IRS, just hang up.”

Scammers undermine Federal tax administration by impersonating IRS employees in an effort to obtain personally identifiable information (PII) from unsuspecting taxpayers or to steal their money. Such impersonators may claim to be IRS employees on the telephone or may misuse IRS logos, seals, or symbols to create official-looking letters and e-mails.

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The IRS And Nominee Liability

The IRS And Nominee Liability

Nominee Liability

Under the Internal Revenue Code, the IRS can satisfy a tax deficiency by imposing a lien on any “property” or “rights to property” belonging to the taxpayer.  The statutory language is broad and reaches virtually every interest in property that a taxpayer might have, with limited exceptions.  In fact, the IRS’s legal ability to reach “property” and “rights to property” can include not only property and rights to property owned by the taxpayer in the taxpayer’s name, but also property held by a third party if the third party is holding the property as a nominee of the delinquent taxpayer.

What is a nominee?

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IRS Highlights Special Charitable Tax Benefit

IRS Highlights Special Charitable Tax Benefit

Special rule helps most people get a deduction of up to $300 per individual, $600 for couples for gifts to charity; National Council of Nonprofits and Independent Sector highlight how donations can help the nation’s charitable community.

The Internal Revenue Service joined with several leading nonprofit groups to highlight a special tax provision that allows more people to deduct donations to qualifying charities on their 2021 federal income tax return.

The Independent Sector and National Council of Nonprofits joined with the IRS to highlight this pandemic-related provision where married couples filing jointly can deduct up to $600 in cash donations and individual taxpayers can deduct up to $300 in donations.

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IRS Issues Guidance Regarding The Retroactive Termination Of The Employee Retention Credit

IRS Issues Guidance Regarding The Retroactive Termination Of The Employee Retention Credit

The Internal Revenue Service today issued guidance for employers regarding the retroactive termination of the Employee Retention Credit. The Infrastructure Investment and Jobs Act, which was enacted on Nov. 15, 2021, amended the law so that the Employee Retention Credit  applies only to wages paid before October 1, 2021, unless the employer is a recovery startup business.

Notice 2021-65 applies to employers that paid wages after September 30, 2021, and received an advance payment of the Employee Retention Credit for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of 2021, but are now ineligible for the credit due to the change in the law. The notice also provides guidance regarding how the rules apply to recovery startup businesses during the fourth quarter of 2021.

Employers Who Received Advance Payments
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Giving Tuesday: Important Charitable Giving Reminders For Taxpayers

Giving Tuesday: Important Charitable Giving Reminders For Taxpayers

Giving Tuesday is the kickoff of the season of charitable giving. The IRS encourages taxpayers to research charities before donating and to familiarize themselves with the expanded tax benefits that may come with giving to causes that mean something to them.

Taxpayers may be able to deduct donations to tax-exempt organizations on their tax return. As people are deciding where to make their donations, the IRS has a tool that may help. Tax Exempt Organization Search on IRS.gov is a tool that allows users to search for charities. TEOS provides information about an organization’s federal tax status and filings.

Here are some facts about the Tax Exempt Organization Search tool:

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Pre-Marital Agreements And The IRS

Pre-Marital Agreements And The IRS

It is certainly not uncommon for one taxpayer with significant federal tax debts to want to marry another taxpayer without any tax debts at all.  In these instances, both taxpayers may naturally desire to enter into a pre-marital agreement to ensure that their respective assets and debts (including federal tax debts) are kept separate.  This is particularly so in so-called “community property states” where the presumption is that each taxpayer is deemed to have rights to one-half of the other taxpayer’s community property income and assets.

Taxpayers in these circumstances should understand that the IRS will not always respect a pre-marital agreement.  Rather, the IRS will, in many cases, carefully scrutinize the agreement itself and the surrounding circumstances to determine whether it can pierce through the agreement and reach the liable spouse’s community property share of assets.  Accordingly, taxpayers should, where warranted, consult with a tax professional to determine whether the pre-marital agreement complies with federal tax law and IRS guidance.

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IRS Releases Reporting Guidance For Partnership Interests Held In Connection With The Performance Of Services

IRS Releases Reporting Guidance For Partnership Interests Held In Connection With The Performance Of Services

The Internal Revenue Service posted detailed reporting directions for certain passthrough entities and taxpayers reporting of partnership interests held in connection with the performance of services, often referred to as “carried interests,” in the form of frequently asked questions (FAQs).

The FAQs contain sample worksheets that certain passthrough entities and taxpayers may be required to use in reporting “carried interests,” partnership interests held in connection with the performance of services for tax returns, filed after December 31, 2021 in which a passthrough entity applies the final regulations.

In addition, the FAQs contain additional instructions for certain passthrough entities and taxpayers who though not required to file the sample worksheets must provide similar information and must disclose whether the information was determined under the proposed regulations or another method for tax returns filed after December 31, 2021 for a taxable year beginning before January 19, 2021.

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