IRS | TaxConnections

05 Jun 2020

IRS Provides Answers About Tax Relief For Qualified Opportunity Funds And Investors

The Internal Revenue Service today provided guidance for Qualified Opportunity Funds (QOFs) and their investors in response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic.

Notice 2020-39 (PDF) answers questions regarding relief from certain requirements under section 1400Z-2 of the Internal Revenue Code (Code) and the implementing regulations. Additionally, the IRS has updated the Qualified Opportunity Zones frequently asked questions.

Taxpayers who sold property for an eligible gain and who would have had 180 days to invest in a QOF to defer that gain, may have additional time. Notice 2020-39 provides that if a taxpayer’s 180th day to invest in a QOF would have fallen on or after April 1, 2020, and before December 31, 2020, the taxpayer now has until December 31, 2020 to invest that gain into a QOF. (The 180th day for some of these taxpayers was already postponed through July 15, 2020, under Notice 2020-23.) In addition, the notice provides that the period between April 1, 2020, and December 31, 2020, is suspended for purposes of the 30-month period during which property may be substantially improved.
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Written by IRS | Posted in IRS On Opportunity Zones

05 Jun 2020

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.

IR-2020-106

Written by IRS | Posted in IRS • Renewable Energy

20 May 2020

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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Written by IRS | Posted in IRS • People First Initiative

19 May 2020

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

Written by IRS | Posted in IRS • Section 125 Cafeteria Plans

19 May 2020

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.

IR-2020-97

Written by IRS | Posted in Economic Impact Payments • IRS

05 May 2020

Economic Impact Payments Continue To Be Sent, Answers To Common Questions

As Economic Impact Payments continue to be successfully delivered, the Internal Revenue Service today reminds taxpayers that IRS.gov includes answers to many common questions, including help to use two recently launched Economic Impact Payment tools.

The IRS is regularly updating the Economic Impact Payment and the Get My Payment tool frequently asked questions pages on IRS.gov as more information becomes available.

Get My Payment shows the projected date when a deposit has been scheduled. Information is updated once daily, usually overnight, so people only need to enter information once a day. Those who did not use direct deposit on their 2018 or 2019 tax return can use the tool to input information to receive the payment by direct deposit into their bank account, so that they can get their money faster.

The Non-Filers Enter Payment Info tool is helping millions of taxpayers successfully submit basic information to receive Economic Impact Payments quickly to their bank accounts. This tool is designed only for people who are not required to submit a tax return. It is available in English through Free File Fillable Forms and in Spanish through ezTaxReturn.
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Written by IRS | Posted in TaxConnections

21 Apr 2020

Independent Contractor (Self-Employed) Or Employee?

It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.

Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.

Select The Scenario That Applies To You:

-I am an independent contractor or in business for myself
If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Tax Center.

-I hire or contract with individuals to provide services to my business
If you are a business owner hiring or contracting with other individuals to provide services, you must determine whether the individuals providing services are employees or independent contractors. Follow the rest of this page to find out more about this topic and what your responsibilities are.

Determining Whether The Individuals Providing Services Are Employees or Independent Contractors
Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be –
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Written by IRS | Posted in TaxConnections

10 Apr 2020

IRS Provides Guidance Under The CARES Act To Taxpayers With Net Operating Losses

The Internal Revenue Service today issued guidance providing tax relief under the CARES Act for taxpayers with net operating losses. Recently the IRS issued tax relief for partnerships filing amended returns.

COVID Relief For Taxpayers Claiming NOLs

Revenue Procedure 2020-24 (PDF) provides guidance to taxpayers with net operating losses that are carried back under the CARES Act by providing procedures for:

-waiving the carryback period in the case of a net operating loss arising in a taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2021,
-disregarding certain amounts of foreign income subject to transition tax that would normally have been included as income during the five-year carryback period, and
-waiving a carryback period, reducing a carryback period, or revoking an election to waive a carryback period for a taxable year that began before Jan. 1, 2018, and ended after Dec. 31, 2017.

Six Month Extension Of Time For Filing NOL Forms

In Notice 2020-26 (PDF), the IRS grants a six-month extension of time to file Form 1045 or Form 1139, as applicable, with respect to the carryback of a net operating loss that arose in any taxable year that began during calendar year 2018 and that ended on or before June 30, 2019. Individuals, trusts, and estates would file Form 1045 (PDF), and corporations would file Form 1139 (PDF).
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Written by IRS | Posted in CARES ACT

09 Apr 2020

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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Written by IRS | Posted in IRS • Virtual Currency

26 Feb 2020

Avoid Scams: Know The Facts On How The IRS Contacts Taxpayers

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.

Written by IRS | Posted in How IRS Contacts Taxpayers • IRS • TaxConnections

20 Feb 2020

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

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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Written by IRS | Posted in IRS

12 Feb 2020

IRS, Treasury Issue Proposed Regulations Updating Income Tax Withholding Rules

The U.S. Department of the Treasury and the Internal Revenue Service issued proposed regulations updating the federal income tax withholding rules to reflect changes made by the Tax Cuts and Jobs Act (TCJA) and other legislation.

In general, the proposed regulations, available now in the Federal Register, are designed to accommodate the redesigned Form W-4, Employee’s Withholding Certificate, to be used starting in 2020, and the related tables and computational procedures in Publication 15-T, Federal Income Tax Withholding Methods. The proposed regulations and related guidance do not require employees to furnish a new Form W-4 solely because of the redesign of the Form W-4.

Employees who have a Form W-4 on file with their employer from years prior to 2020 generally will continue to have their withholding determined based on that form.
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Written by Kat Jennings | Posted in Income Tax With holding Rules • IRS • IRS Proposed Regulations