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News & Press: Federal Tax News

IRS NEWS FOR TAX PROFESSIONALS - August 2020

Thursday, July 30, 2020  
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Submitted by Brian Wozniak, IRS Stakeholder Liaison C&L: SL: Area 6
503-265-3671   Brian.Wozniak@irs.gov

►UPCOMING WEBINARS

August 13: Understanding the e-Services Transcript Delivery System

Register here: https://www.webcaster4.com/Webcast/Page/1148/36244

Check Webinars for Tax Practitioners or Webinars for Small Businesses for updates.

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►HOT TOPICS

IRS statement on interest payments

Did your client get a refund that’s higher than expected? It might be due to interest paid on their refund.

Interest on individual 2019 refunds reflected on returns filed by July 15, 2020 will generally be paid from April 15, 2020 until the date of the refund. Interest payments may be received separately from the refund.

IRS debunks tax refund myths

With the July 15 tax deadline now past, the IRS reminds all taxpayers that there is no secret way to find out when a refund will be issued.

Most taxpayers have already filed their federal tax return, and many have already received their refund. Those that have not are understandably eager for details about when their refund will arrive. When it comes to tax refunds, a few common myths keep circulating and misinforming taxpayers.

IRS creates new Enterprise Digitalization and Case Management office

The IRS announced the creation of the new Enterprise Digitalization and Case Management office, which will spearhead IRS efforts to empower taxpayers and IRS employees to rapidly resolve issues in a simplified digital environment.

The office's efforts will support overall IRS modernization and implementation of long-term changes stemming from the Taxpayer First Act .

 

►CHARITABLE CONTRIBUTIONS

Temporary changes regarding charitable contributions

Individuals and businesses may take advantage of temporary changes this year involving charitable contributions.

Individuals may deduct qualified contributions of up to 100 percent of their adjusted gross income in 2020, while a corporation may deduct qualified contributions of up to 25 percent of its taxable income. Contributions that exceed that amount can carry over to the next tax year. For 2020, a special rule is also in effect allowing enhanced deductions by businesses for contributions of food inventory for the care of the ill, needy or infants.

 

►PEOPLE FIRST INITIATIVE

Taxpayers need to resume payments by July 15

The IRS reminds taxpayers who took advantage of the People First Initiative tax relief and did not make previously owed tax payments between March 25 to July 15 that they need to restart their payments.

As the IRS continues to reopen its operations across the country, taxpayers who were in payment agreements and skipped any payments from March 25 and July 15 should start paying again to avoid penalties and possible default on their agreements.

See also: Have an installment agreement or payment plan? Payments should resume starting July 15

 

►IRS OPERATIONS AND SERVICES

IRS Operations During COVID-19: Mission-critical functions continue

This page is updated as IRS operations and services change. Please check back often. Updated July 27, 2020

IRS Working to Reduce CAF Backlog; Make Future Digital Improvements: We are working hard to reduce the backlog of third-party authorizations. However, due to site closures relating to COVID-19 concerns, we currently are exceeding our five-business day target for approval. Our current time frame for authorization approval is approximately 15 business days. Please consider the additional approval time and plan accordingly. We request you do not submit duplicate authorizations as duplicate filings will only cause further delays. We expect to have full staffing in place soon and reduce the wait time.

Also, the IRS acknowledges the burden on taxpayers and the tax professional community to apply physical signatures to forms, especially during these unprecedented times. The IRS is working on a solution to accept digital signatures on Forms 8821 and 2848 by early 2021. The IRS will continue to work on accepting digital transmissions of these forms in support of the Taxpayer First Act.

Taxpayer Protection Program: If you received correspondence (Letters 5071C, 5447C or 5747C) from the IRS asking if you filed a suspicious tax return, you may use the online Identity Verification Service to validate your identity. If you received a Letter 4883C, follow its instructions. Please note: phone assistance is limited and wait times are lengthy.


►SCAMS

IRS unveils "Dirty Dozen" list of tax scams for 2020

The IRS announced its annual "Dirty Dozen" list of tax scams with a special emphasis on aggressive and evolving schemes related to coronavirus tax relief, including Economic Impact Payments.

Tax Court strikes down four more abusive syndicated conservation easement transactions

On July 9, the U.S. Tax Court struck down four more abusive syndicated conservation easement transactions. The IRS calls on any taxpayer involved in syndicated conservation easement transactions who receives a settlement offer from the agency to accept it soon.

J5 reflects on two-years pursuing global tax cheats

Leaders from five international tax organizations are marking the two-year anniversary of the formation of the Joint Chiefs of Global Tax Enforcement (J5) this week.

The J5 includes the Australian Taxation Office (ATO, the Canadian Revenue Agency (CRA), the Dutch Fiscal Information and Investigation Service (FIOD), Her Majesty's Revenue and Customs (HMRC) from the UK and the Internal Revenue Service Criminal Investigation Division (IRS-CI) from the US.

 

►IN CASE YOU MISSED IT

IRS says a Paycheck Checkup helps avoid tax surprises

The IRS reminds taxpayers that using the IRS Tax Withholding Estimator to do a Paycheck Checkup can help them have the right amount of tax withheld and avoid surprises when filing next year.

Because income taxes are pay-as-you-go, taxpayers are required by law to pay most of their tax as income is received.

National Taxpayer Advocate Erin Collins delivers her first report to Congress

National Taxpayer Advocate Erin M. Collins released her first report to Congress, identifying taxpayer challenges arising from the COVID-19 pandemic, the CARES Act, and the IRS's implementation of the Taxpayer First Act as priority issues the Taxpayer Advocate Service plans to focus on in the coming year.

Electronic Tax Administration Advisory Committee releases annual report to Congress

The Electronic Tax Administration Advisory Committee (ETAAC) released its annual report to Congress, featuring recommendations that focus on the prevention of identity theft and refund fraud.

The ETAAC is a public forum whose members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and the nation's tax industry that was established in 2015 to fight identity theft-reflated refund fraud and cybercrime.


►NEWS FOR INDIVIDUALS

IRS advice for those who missed the July 15 deadline, file now to avoid bigger bill

For those who missed the July 15 tax deadline and didn't request an extension, the IRS reminds taxpayers about some important tips, including filing electronically as soon as possible to reduce potential penalties.

 

►NEWS FOR BUSINESSES and EMPLOYERS

How to report nonemployee compensation and backup withholding

There is a new Form 1099-NEC, Nonemployee Compensation for business taxpayers who pay or receive nonemployee compensation.

Starting in tax year 2020, payers must complete this form to report any payment of $600 or more to a payee.

IRS reminds businesses filing cash transaction reports about e-file option; batch filing now available

The IRS reminds businesses required to file reports of large cash transactions that e-filing is a fast, easy and secure option for filing their reports. Now, businesses can batch file their reports, which is especially helpful to those required to file many forms.

Although businesses have the option of filing Form 8300, Report of Cash Payments Over

$10,000, on paper, many have already found the free and secure e-filing system is a more convenient and cost-effective way to meet the reporting deadline. The form is due 15 days after a transaction and there's no charge for the e-file option.

See also: Reporting cash transactions helps government combat criminal activities

What you need to know about “lock-in” letters and employer federal income tax withholding

Has one of your clients received a “lock-in” letter from the IRS?

The IRS sends Letter 2800C, also called a “lock-in” letter, to instruct employers to follow a specific federal income tax withholding arrangement for an employee who doesn’t have enough income taxes withheld from their wages. The employee has 60 days from the date of the letter to discuss the determination with the IRS before the withholding arrangement takes effect. Starting 60 days after the date of the letter, the withholding rate in Letter 2800C is locked in and the employer must begin withholding from the employee at that new rate.

Employers that do not withhold federal income tax from their employee as instructed by a “lock-in” letter will be liable for paying the additional tax required to be withheld. But there are situations in which the employer may withhold at a rate that is different from the rate in Letter 2800C.

You can find more information at Withholding Compliance Q&As and view the Lock-In Letter Video.


► COVID-RELATED, CARES ACT, and FFCRA NEWS

BUSINESSES:

Treasury, IRS issue guidance on reporting qualified sick and family leave wages paid

The Treasury Department and the IRS provided guidance in Notice 2020-54 to employers requiring them to report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act (FFCRA) on Form W-2.

IRS is sending letters to those experiencing a delay with advance payment of employer credits

The IRS has started sending letters to taxpayers who have experienced a delay in the processing of their Form 7200, Advance Payment of Employer Credits Due To COVID-19.

A taxpayer will receive letter 6312 if the IRS either rejected Form 7200 or made a change to the requested amount of advance payment due to a computation error.

IRS provides guidance on recapturing excess employment tax credits

The IRS issued a temporary regulation and a proposed regulation to reconcile advance payments of refundable employment tax credits and recapture the benefit of these credits when necessary.

INDIVIDUALS:

Major changes to retirement plans due to COVID-19

Qualified individuals affected by COVID-19 may be able to withdraw up to $100,000 from their eligible retirement plans, including IRAs, between January 1 and December 30, 2020.

 

►ECONOMIC IMPACT PAYMENTS

Economic Impact Payments: Partner and Promotional Materials

SEE: Reaching People Who Are Eligible for a Payment and Don’t Normally File a Tax Return

EIP RESOURCES

Economic Impact Payment Information Center (EIP FAQs)

Get My Payment FAQs

TIP: When a question is added or updated, it will say “added July 2”, or “updated July 10”. Use Ctrl F to search for the words “added”, “updated”, or “July”. This will help you find new or updated questions.

As we add new questions, sometimes an FAQ gets a new number. Use Ctrl F to find the FAQ using key words for that topic.

 

►YOUR PRACTICE, YOUR CLIENTS

Security Summit focuses on tax pro security during coronavirus; new series on working virtually: protecting tax data at home and at work

The IRS and the Security Summit partners today urged tax professionals this summer to review critical security steps to ensure they are fully protecting client data whether working in the office or a remote location.

Working Virtually: Protect tax data at home and at work with the "Security Six;" Part 1 of Security Summit tips for tax professionals

With cyberthieves active during COVID-19, the IRS and the Security Summit partners today urged tax professionals to review critical security steps to ensure they are fully protecting client data whether working in the office or a remote location.

During this period, the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency (CISA) have urged organizations to maintain a heightened state of alert as cybercriminals seek to exploit Covid-19 concerns.

IRS announces 2021 PTIN fees for tax return preparers

The IRS announced the annual fee for 2021 that tax return preparers must pay to apply for or renew their Preparer Tax Identification Number (PTIN).

In final regulations, the IRS set a $21 fee per PTIN application or renewal (plus a $14.95 fee payable to a contractor).

IRS Guidance

This is a starting point for understanding some of the basic guidance issued by the IRS.

 

►NEWS FROM OTHER AGENCIES

From the SBA:

Virtual Mentoring and Training

Offices around the country may be closed to the Coronavirus pandemic, but SCORE, Small Business Development Centers, Women’s Business Centers, and Veterans Business Outreach Centers and other resource partners are providing free business mentoring and training by phone, email, and video. Find an SBA resource partner near you.

Beware of Scams and Fraud Schemes

The Office of Inspector General recognizes that we are facing unprecedented times and is alerting the public about potential fraud schemes related to economic stimulus programs offered by the U.S. Small Business Administration in response to COVID-19. The CARES Act, the largest financial assistance bill to date, includes provisions to help small businesses. Fraudsters have already begun targeting small business owners during these economically difficult times. Be on the lookout for grant fraud, loan fraud, and phishing.

 

►e-NEWS SUBSCRIPTIONS and SOCIAL MEDIA

e-News Subscriptions

The IRS offers several e-News subscriptions on a variety of tax topics. Click above for information about subscribing.

IRS Social Media

The IRS uses social media tools to share the latest information on tax changes, scam alerts, initiatives, products and services. Connect with the IRS through social media tools.

 

►HOW TO SHARE IRS INFO ON SOCIAL MEDIA

When you find an article you want to share, click on the “Share” link. Like so:

Scroll to the bottom of any page on IRS.gov. Look for “Share / Print”

Click on Share

You can share on Facebook, Twitter, or Linkedin.

 


more Calendar

5/20/2020 » 8/19/2020
ON-DEMAND WEBINAR - OATC 2020 Safety Net: "The Twists and Turns of Schedules C & E" (6 hrs CE)

7/1/2020 » 10/8/2020
ON-DEMAND WEBINAR: Ethics (2 hrs CE)

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