The Indian Panorama

Tag: IRS

  • Special Saturday help available April 13 at 70 IRS Taxpayer Assistance Centers nationwide; no appointment needed

    Special Saturday help available April 13 at 70 IRS Taxpayer Assistance Centers nationwide; no appointment needed

    WASHINGTON, D.C. (TIP):  As the April 15 federal tax filing deadline nears, the Internal Revenue Service, on April 8,  announced it will open more than 70 Taxpayer Assistance Centers (TACs) around the country on Saturday, April 13, for face-to-face help. This special help is available from 9 a.m. to 4 p.m. local time.

    At TACs, people meet face-to-face with IRS employees to get help with tax account issues, such as authenticating someone’s identity, asking about account adjustments and making payments by check or money order. The IRS plans one additional special Saturday opening on May 18.

    “IRS employees have been working hard throughout this tax season to help taxpayers, and the special Saturday hours are one more way we’ve expanded our services,” said IRS Commissioner Danny Werfel. “With the help of additional funding through the Inflation Reduction Act, we’ve been able to serve more taxpayers and provide additional assistance. For these special Saturday sessions, we encourage taxpayers to plan ahead so they have the right information. Frequently, taxpayers can get the help they need by visiting IRS.gov.”

    Before travelling to an office, the IRS encourages everyone to visit the event page IRS face-to-face Saturday help to get current information. The IRS notes representatives can’t accept cash payments during the special Saturday openings, and tax return preparation is not an available service.

    The IRS has online resources for many common tax situations, including several tools for making payments, getting an extension to file and setting up installment agreements. Taxpayers can make payments using their personal financial accounts, debit or credit cards and even digital wallets using tools on IRS.gov.

    Tips for taxpayers planning a visit

    Individuals should bring the following documents when they visit IRS Taxpayer Assistance Centers:

    Current government-issued photo identification, along with a second form of identification for identity verification services. Social Security or Individual Taxpayer Identification numbers for themselves and all members of their household, including their spouse and dependents (if applicable).

    Any IRS letters or notices received and related documents.

    A copy or digital image of the tax return in question if one was filed.

    The IRS noted that because appointments aren’t necessary for these special Saturday hours, some locations may see high demand and wait times can be longer than usual. To help with this and avoid delays, the IRS encourages people to plan ahead, review key tips and come prepared with needed information. IRS employees will be working hard to serve as many people as quickly as possible.

    Extended office hours on Tuesdays and Thursdays

    During the filing season, the IRS has also been providing extended office hours at many TACs nationwide. The added hours will end on Tuesday, April 16. To see if a nearby office is participating in the program, check its listing on the IRS/taclocator. Taxpayers can walk in or make appointments for service during extended hours. Cash payments are accepted during the additional office time, but taxpayers must have an appointment at a TAC currently accepting cash.

    Normally, TACs are open Monday through Friday, 8:30 a.m. to 4:30 p.m., and provide service by appointment only. To make an appointment, call 844-545-5640.

    Services provided

    The IRS’s Contact Your Local Office site lists all services provided at specific TACs. Tax return preparation is not a service offered at IRS TACs during these events or any operating hours. The IRS will provide information to anyone needing to find free local tax preparation resources. Additionally, File your return on IRS.gov gives step-by-step information on how to file individual tax returns.

    If someone has questions about a tax bill or IRS audit, or if they need help resolving a tax problem, they’ll receive assistance from IRS employees specializing in those services. If these employees aren’t available, the individual will receive a referral for these services. IRS Taxpayer Advocate Service employees may also be available to help with some issues.

    Professional foreign language interpretation will be available in many languages through an over-the-phone translation service. For deaf or hard of hearing individuals who need sign language interpreter services, IRS staff will schedule appointments for a later date. Alternatively, these individuals can call TTY/TDD 800-829-4059 to make an appointment.

    During the visit, IRS staff may also request the following information:

    A current mailing address,

    Proof of financial account information included on a tax return to receive payments or refunds by direct deposit.

    Tax return preparation options

    While tax return preparation is not a service offered at IRS TACs, information will be shared about available local free tax preparation options. Help is also available using the following services:

    Eligible individuals or families can get free help preparing their tax return at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites. To find the closest free tax return preparation help, use the VITA Locator Tool or call 800-906-9887.

    To find an AARP Tax-Aide site, use the AARP Site Locator Tool or call 888-227-7669.

    Any individual or family whose adjusted gross income (AGI) was $79,000 or less in 2023 can use IRS Free File’s Guided Tax Software at no cost. There are products in English and Spanish.

    Free File Fillable Forms are electronic federal tax forms, equivalent to a paper 1040 form. Taxpayers should know how to prepare their own tax return using form instructions and IRS publications, if needed. Anyone, regardless of income, can use the forms. They are a free option for those whose AGI is greater than $79,000.

    MilTax, a Department of Defense program, offers free return preparation software and electronic filing for federal tax returns and up to three state income tax returns. It’s available for all military members, and some veterans, with no income limit.

    IRS Direct File. Eligible taxpayers can file 2023 federal tax returns online, for free, directly with the IRS. Direct File is available to taxpayers who live in one of the 12 participating pilot states and report certain types of income, deductions and credits. Taxpayers can check their eligibility at directfile.irs.gov to see if Direct File is the right option for them. Once they’ve started their return, taxpayers can pause and sign back into IRS Direct File securely to complete it any time before the April filing deadline.

    Help available 24/7 at IRS.gov

    The fastest and easiest way for people to get the help they need is through IRS.gov. Go to IRS.gov for more information. Available resources include:

    Where’s My Refund?, check refund status and estimated delivery date.

    Get Transcript, view and print a tax transcript online.

    Payments, get information on a variety of payment methods, including cash.

    Direct Pay, make tax payments or estimated tax payments for free from a checking or savings account.

    Electronic Federal Tax Payment System, individuals or businesses can make all types of federal tax payments.

    Online Payment Agreement, set up installment payments to pay taxes owed.

    Where’s My Amended Return?, track the status of an amended return.

    Interactive Tax Assistant and FAQs, get answers to many tax law questions.

    All IRS Forms and Publications, find and download current tax forms, instructions and publications. Those without access to the internet can call 800-829-3676 to order tax forms by mail.

    For additional information on available services, see IRS Publication 5136, IRS Services Guide.

  • Dirty Dozen: IRS warns about fake charities exploiting taxpayer generosity

    Dirty Dozen: IRS warns about fake charities exploiting taxpayer generosity

    WASHINGTON D.C. (TIP): In the sixth part of the “Dirty Dozen” tax scams for 2024, the Internal Revenue Service warned taxpayers about groups masquerading as charitable organizations to attract donations from unsuspecting contributors. In natural disasters and other tragic events, it’s common for compassionate individuals to donate money to help the victims. Unfortunately, scammers often use fake charities as a cover to not only obtain money but also gather sensitive personal and financial information that can be exploited for tax-related identity fraud.

    “We see repeated instances of scammers using major disasters as a way to prey on well-meaning taxpayers,” said IRS Commissioner Danny Werfel. “In these tragic situations, many people want to help, but con artists too frequently come in posing as charitable groups to take advantage of the situation, stealing money and personal information. People should remember it’s important to never feel pressured to give donations immediately. They should do some research and only donate to clearly established charities that help victims.”

    Fake charities mark day six of the Dirty Dozen. Started in 2002, the IRS’ annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes, including fake charities.

    As a member of the Security Summit, the IRS has worked with state tax agencies and the nation’s tax industry for nine years to cooperatively implement a variety of internal security measures to protect taxpayers. The collaborative effort by the Summit partners also has focused on educating taxpayers about scams and fraudulent schemes throughout the year, which can lead to tax-related identity theft. Through initiatives like the Dirty Dozen and the Security Summit program, the IRS strives to protect taxpayers, businesses and the tax system from cyber criminals and deceptive activities that seek to extract information and money, including fake charities.

    Real tragedies; fake charities

    During times of disasters, fake charities become a concern. These deceitful organizations are created by scammers who take advantage of people’s generosity. They solicit money and personal information to victimize individuals through identity theft.

    When taxpayers decide to contribute funds or goods to an organization, they may qualify for a deduction on their tax return, but only if they itemize their deductions. It is important to remember that charitable donations are valid when directed toward IRS-recognized tax-exempt organizations. Individuals intending to donate can utilize the Tax-Exempt Organization Search (TEOS) tool on IRS.gov to ensure legitimacy.

    Beware of scammers who might use email communications or manipulate caller IDs to deceive people into donating funds to charities. These fraudsters often target groups such as seniors and those with limited English proficiency.

    Here are some helpful tips to avoid getting scammed:

    Don’t give in to pressure. Scammers often create situations to get people to make payments. Genuine charities are always grateful for donations. Donors should take their time and research before making a charitable contribution.
    Exercise caution when making donation payments. Avoid any charity that requests gift card numbers or wire transfers. It’s better to pay by credit card or check after ensuring the charity’s authenticity.
    Verify the legitimacy of the charity. Scammers often use similar-sounding names for charities to confuse people. Before donating, potential donors need to ask the fundraiser for the charity’s name, website and mailing address so they can independently verify its authenticity. Use the special IRS TEOS tool to verify if an organization is a legitimate tax-exempt charity.
    Avoid sharing too much information. Scammers are always on the lookout for both money and personal data. Never disclose Social Security numbers, credit card numbers or Personal Identification Numbers. Only provide bank or credit card details after confirming the charity’s legitimacy.
    Report fraud

    As part of the Dirty Dozen awareness effort regarding tax schemes and unscrupulous tax return preparers, the IRS encourages individuals to report those who promote abusive tax practices and tax preparers who intentionally file incorrect returns.

    To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242, Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed paper Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

    Mail:
    Internal Revenue Service Lead Development Center
    Stop MS5040
    24000 Avila Road
    Laguna Niguel, California 92677 3405
    Fax: 877 477 9135

    Taxpayers and tax professionals can also submit this information to the IRS Whistleblower Office, where they may be eligible for a monetary award. For details, refer to the sections on Abusive Tax Schemes and Abusive Tax Return Preparers.

  • Dirty Dozen: IRS warns about fake charities exploiting taxpayer generosity

    Dirty Dozen: IRS warns about fake charities exploiting taxpayer generosity

    WASHINGTON D.C. (TIP): In the sixth part of the “Dirty Dozen” tax scams for 2024, the Internal Revenue Service warned taxpayers about groups masquerading as charitable organizations to attract donations from unsuspecting contributors. In natural disasters and other tragic events, it’s common for compassionate individuals to donate money to help the victims. Unfortunately, scammers often use fake charities as a cover to not only obtain money but also gather sensitive personal and financial information that can be exploited for tax-related identity fraud.

    “We see repeated instances of scammers using major disasters as a way to prey on well-meaning taxpayers,” said IRS Commissioner Danny Werfel. “In these tragic situations, many people want to help, but con artists too frequently come in posing as charitable groups to take advantage of the situation, stealing money and personal information. People should remember it’s important to never feel pressured to give donations immediately. They should do some research and only donate to clearly established charities that help victims.”

    Fake charities mark day six of the Dirty Dozen. Started in 2002, the IRS’ annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes, including fake charities.

    As a member of the Security Summit, the IRS has worked with state tax agencies and the nation’s tax industry for nine years to cooperatively implement a variety of internal security measures to protect taxpayers. The collaborative effort by the Summit partners also has focused on educating taxpayers about scams and fraudulent schemes throughout the year, which can lead to tax-related identity theft. Through initiatives like the Dirty Dozen and the Security Summit program, the IRS strives to protect taxpayers, businesses and the tax system from cyber criminals and deceptive activities that seek to extract information and money, including fake charities.

    Real tragedies; fake charities

    During times of disasters, fake charities become a concern. These deceitful organizations are created by scammers who take advantage of people’s generosity. They solicit money and personal information to victimize individuals through identity theft.

    When taxpayers decide to contribute funds or goods to an organization, they may qualify for a deduction on their tax return, but only if they itemize their deductions. It is important to remember that charitable donations are valid when directed toward IRS-recognized tax-exempt organizations. Individuals intending to donate can utilize the Tax-Exempt Organization Search (TEOS) tool on IRS.gov to ensure legitimacy.

    Beware of scammers who might use email communications or manipulate caller IDs to deceive people into donating funds to charities. These fraudsters often target groups such as seniors and those with limited English proficiency.

    Here are some helpful tips to avoid getting scammed:

    Don’t give in to pressure. Scammers often create situations to get people to make payments. Genuine charities are always grateful for donations. Donors should take their time and research before making a charitable contribution.
    Exercise caution when making donation payments. Avoid any charity that requests gift card numbers or wire transfers. It’s better to pay by credit card or check after ensuring the charity’s authenticity.
    Verify the legitimacy of the charity. Scammers often use similar-sounding names for charities to confuse people. Before donating, potential donors need to ask the fundraiser for the charity’s name, website and mailing address so they can independently verify its authenticity. Use the special IRS TEOS tool to verify if an organization is a legitimate tax-exempt charity.
    Avoid sharing too much information. Scammers are always on the lookout for both money and personal data. Never disclose Social Security numbers, credit card numbers or Personal Identification Numbers. Only provide bank or credit card details after confirming the charity’s legitimacy.
    Report fraud

    As part of the Dirty Dozen awareness effort regarding tax schemes and unscrupulous tax return preparers, the IRS encourages individuals to report those who promote abusive tax practices and tax preparers who intentionally file incorrect returns.

    To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242, Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed paper Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

    Mail:
    Internal Revenue Service Lead Development Center
    Stop MS5040
    24000 Avila Road
    Laguna Niguel, California 92677 3405
    Fax: 877 477 9135

    Taxpayers and tax professionals can also submit this information to the IRS Whistleblower Office, where they may be eligible for a monetary award. For details, refer to the sections on Abusive Tax Schemes and Abusive Tax Return Preparers.

  • Dirty Dozen: Beware of Offer in Compromise ‘mills’ that falsely claim their services are necessary to resolve IRS debt

    Dirty Dozen: Beware of Offer in Compromise ‘mills’ that falsely claim their services are necessary to resolve IRS debt

    April 3, 2024

    WASHINGTON, D.C. (TIP):  As part of the annual Dirty Dozen list of tax scams, the Internal Revenue Service, on April 3,  renewed its warning to taxpayers concerning pricey Offer in Compromise (OIC) “mills” that aggressively mislead taxpayers into thinking their tax debts can disappear.

    As in past years, companies running OIC mills continue heavily advertising their promises to settle taxpayer debt at steep discounts for pennies on the dollar. While OIC is a legitimate IRS program, many taxpayers do not meet the technical requirements for the tax resolution program, often leaving them facing excessive fees from the promoters for information they could have easily obtained for free by using the IRS’s Offer in Compromise Pre-Qualifier tool.

    The OIC is a valuable IRS program to help taxpayers who cannot pay their federal tax debts, and some companies offer legitimate services. But the IRS encourages individuals to take a few minutes to assess the information available on IRS.gov to determine if they meet the eligibility criteria for the OIC program and to avoid hiring expensive promoters.

    “Taxpayers need to be cautious with aggressive marketing around the Offer in Compromise program that can mislead taxpayers,” said IRS Commissioner Danny Werfel. “These mills try to pull in steep fees while raising false expectations and exploiting vulnerable individuals with promises that tax debt can magically disappear.”

    “The program is legitimate, but it’s not for everyone,” Werfel added. “The IRS wants to help taxpayers who qualify for this program, but there are very specific requirements for people to qualify. A good first step is for taxpayers to take a few minutes and explore our free resources on IRS.gov. They can find out if they might qualify for this program – and at the same time avoid paying someone a hefty fee.”

    OIC mills are the focus of the fifth news release in the Dirty Dozen series. Started in 2002, the IRS’ annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes.

    Beware of Offer in Compromise mills

    An OIC is a legitimate IRS program that allows qualifying taxpayers to work with the IRS to settle a tax debt for less than the full amount owed. It is an option for those who may be unable to pay their full tax liability, or if doing so creates a financial hardship. In determining eligibility, the IRS considers the taxpayer’s unique situation. The OIC agreement occurs directly between the taxpayer and the IRS without a third party.

    Taxpayers, however, should be cautious of OIC mills, which make exaggerated claims through radio and TV ads about settling tax debts inexpensively. In reality, these mills often charge excessive fees, and taxpayers end up paying for a service they could have obtained for free directly from the IRS.

    The IRS urges individuals to spend a few minutes reviewing information on IRS.gov to determine if they may be eligible for the OIC program by using the IRS’s Offer in Compromise Pre-Qualifier tool for free.

    The IRS also reminds taxpayers about the First Time Penalty Abatement policy, where taxpayers can go directly to the IRS for administrative relief from a penalty that would otherwise be added to their tax debt.

    Help others: Report fraud, scams and schemes

    The IRS encourages taxpayers to report any individuals promoting improper, abusive or fraudulent tax schemes, as well as tax return preparers who deliberately prepare improper or fraudulent returns.

    To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242, Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed paper Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

    Mail:

    Internal Revenue Service Lead Development Center

    Stop MS5040

    24000 Avila Road

    Laguna Niguel, California 92677-3405

    Fax: 877-477-9135

    Additionally, taxpayers and tax practitioners may submit their report of improper or fraudulent practices to the IRS Whistleblower Office, which may offer a possible monetary award.

    To learn more about avoiding becoming a victim of tax preparation schemes and fraud, please see Abusive Tax Schemes and Abusive Tax Return Preparers on IRS.gov.

  • Get ahead of the tax deadline; act now to file, pay or request an extension

    Get ahead of the tax deadline; act now to file, pay or request an extension

    April 2, 2024

    WASHINGTON, D.C. (TIP): With the April 15 tax deadline approaching, the IRS reminds taxpayers there is still time to file their federal income tax return electronically and request direct deposit.

    Filing electronically reduces tax return errors as tax software does the calculations, flags common errors and prompts taxpayers for missing information. Most people qualify for electronic filing at no cost and, when they choose direct deposit, receive their refund within 21 days.

    Free electronic filing options

    Taxpayers with income of $79,000 or less in 2023 can use IRS Free File guided tax software now through Oct 15. IRS Free Fillable forms, a part of this program, is available at no cost to taxpayers of any income level and provides electronic forms for people to fill out and e-file themselves.

    IRS Direct File is now open to all eligible taxpayers in 12 pilot states to decide if it is the right option for them to file their 2023 federal tax returns online, for free, directly with the IRS. Go to the Direct File website for more information about Direct File pilot eligibility and the 12 participating states.

    Through a network of community partnerships, the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free tax return preparation to eligible people in the community by IRS certified volunteers.

    MilTax, a Department of Defense program, generally offers free return preparation and electronic filing software for federal income tax returns and up to three state income tax returns for all military members, and some veterans, with no income limit.

    Use ‘Where’s My Refund?’ to check refund status

    The Where’s My Refund? tool will normally show a refund status within 24 hours after e-filing a 2023 tax return, three to four days after e-filing a 2021 or 2022 return and four weeks after filing a tax return by mail. To use the tool, taxpayers need their Social Security number, filing status and exact refund amount. Taxpayers can also check ‘Where’s My Refund?’ by downloading our free mobile app, IRS2Go, from an iPhone or Android device. The tool updates once a day, so people don’t need to check more often.

    Taxpayers that owe on their tax return

    IRS reminds people they can avoid paying interest and some penalties by filing their tax return and, if they have a balance due, paying the total amount due by the tax deadline of Monday, April 15. For residents of Maine or Massachusetts, the tax deadline is Wednesday, April 17, due to Patriot’s Day and Emancipation Day holidays.

    Payment options for individuals to pay in full

    The IRS offers various options for taxpayers who are making tax payments:

    Direct Pay – Make a payment directly from a checking or savings account without any fees or registration.

    Pay with debit card, credit card or digital wallet – Make a payment directly from a debit card, credit card or digital wallet. Processing fees are paid to the payment processors. The IRS doesn’t receive any fees for these payments. Authorized card processors and phone numbers are available at IRS.gov/payments.

    Electronic Federal Tax Payment System (EFTPS) –This free service gives taxpayers a safe, convenient way to pay individual and business taxes by phone or online. To enroll and for more information, taxpayers can call 800-555-4477 or visit eftps.gov. Electronic funds withdrawal – Taxpayers can file and pay electronically from their bank account when using tax preparation software or a tax professional. This option is free and only available when electronically filing a tax return.

    Check or money order –Payments made by check or money order should be made payable to the “United States Treasury.”

    Cash – Make a cash payment through a retail partner and other methods. The IRS urges taxpayers choosing this option to start early because it involves a four-step process. Details, including answers to frequently asked questions, are at IRS.gov/paywithcash.

    Payment options for individuals unable to pay their taxes in full

    Taxpayers that are unable to pay in full by the tax deadline, should pay what they can now and apply for an online payment plan. They can receive an immediate response of payment plan acceptance or denial without calling or writing to the IRS. Online payment plan options include:

    Short-term payment plan –The total balance owed is less than $100,000 in combined tax, penalties and interest. Additional time of up to 180 days to pay the balance in full.

    Long-term payment plan – The total balance owed is less than $50,000 in combined tax, penalties and interest. Pay in monthly payments for up to 72 months. Payments may be set up using direct debit (automatic bank withdraw) which eliminates the need to send in a payment each month, saving postage costs and reducing the chance of default. For balances between $25,000 and $50,000, direct debit is required.

    Though interest and late-payment penalties continue to accrue on any unpaid taxes after April 15, the failure to pay penalty is cut in half while an installment agreement is in effect. Find more information about the costs of payment plans on the IRS’ Additional Information on Payment Plans webpage.

    Unable to file by the April 15 deadline?

    Individuals unable to file their tax return by the tax deadline can apply for a tax-filing extension in the following ways:

    Individual tax filers, regardless of income, can electronically request an automatic tax-filing extension through IRS Free File by filing a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.

    Make an electronic payment using Direct Pay, debit card, credit card or digital wallet and indicate the payment is for an extension.

    Mail Form 4868 by the tax deadline.

    Things people should know when requesting a tax-filing extension:

    Tax-filing extension requests are due by the tax deadline date, and it does not give an extension of time to pay the taxes.

    Avoid some penalties by estimating and paying the tax due by the tax deadline.

    Special rules for tax deadlines and automatic tax-filing extensions may apply for taxpayers serving in a combat zone or qualified hazardous duty areas, living outside the United States, and people living in certain disaster areas. They may not need to submit a tax-filing extension; however, people should check to see if they qualify before the tax deadline.

    Use IRS.gov for the quickest and easiest information

    Taxpayers can visit IRS.gov 24 hours a day for answers to tax questions, more tips and resources by visiting the Let Us Help You page.

  • IRS New Voluntary Disclosure Program lets employers who received questionable Employee Retention Credits pay them back at discounted rate; interested taxpayers must apply by March 22

    IRS New Voluntary Disclosure Program lets employers who received questionable Employee Retention Credits pay them back at discounted rate; interested taxpayers must apply by March 22

    WASHINGTON, D.C. (TIP): As part of an ongoing initiative aimed at combating dubious Employee Retention Credit (ERC) claims, the Internal Revenue Service, on December 21, launched a new Voluntary Disclosure Program to help businesses who want to pay back the money they received after filing ERC claims in error.

    The new disclosure program, which has been in the works for several months, is part of a larger effort at the IRS to stop aggressive marketing around ERC that misled some employers into filing claims. The special disclosure program runs through March 22, 2024, and the IRS added provisions allowing repayment of 80% of the claim received.

    The IRS also continues to urge employers with pending ERC claims to consider a separate withdrawal program that allows them to remove a pending ERC claim with no interest or penalty. The IRS has already received more than $100 million in withdrawals as the agency continues intensifying audits and criminal investigation work in this area.

    As these special initiatives for ERC continue, the IRS will provide an update in the new year on the status of the moratorium. Additionally, the IRS mailed out 20,000 denial letters to ERC claimants earlier this month.

    “The disclosure program provides a much-needed option for employers who were pulled into these claims and now realize they shouldn’t have applied,” said IRS Commissioner Danny Werfel. “From discussions we have had with taxpayers and tax professionals around the country, we understand that there are many employers eager to correct their error, but who remain concerned about their ability to pay back the portion of the credit that has been lost to the promoter that brought them into this mess. This new option, with an opportunity to get right with a lower financial cost, provides the relief these taxpayers requested. The new initiative will also help with our ongoing efforts to gather information on promoters who created this situation by aggressively pushing people to apply for the credit.”

    Interested employers must apply to the ERC Voluntary Disclosure Program by March 22, 2024. Those that the IRS accepts into the program will need to repay only 80% of the credit they received. If the IRS paid interest on the employer’s ERC refund claim, the employer doesn’t need to repay that interest. Employers who are unable to repay the required 80% of the credit may be considered for an installment agreement on a case-by-case basis, pending submission and review of a Form 433-B, Collection Information Statement for Businesses, available on IRS.gov, and all required supporting documentation.

    The IRS will not charge program participants interest or penalties on any credits they repay. However, if the employer is unable to repay the required 80% of the credit at the time of signing their closing agreement, then the employer will be required to pay penalties and interest in connection with entering into an installment agreement.

    The IRS selected an 80% repayment because many of the ERC promoters charged a percentage fee that they collected at the time of payment or in advance of the payment, and the recipients never received the full amount.

    To qualify for this program, the employer must provide the IRS with the names, addresses and telephone numbers of any advisors or tax preparers who advised or assisted them with their claim and details about the services provided. Further qualifications and program details are in Announcement 2024-3, posted today on IRS.gov.

    As part of this expanding effort for employers that claimed an erroneous or excessive ERC, the IRS also announced today it has started sending up to 20,000 letters with proposed tax adjustments that will recapture the erroneously claimed ERC. These mailings – which are on top of the 20,000 denial letters announced earlier in December – are currently just for tax year 2020, and work continues for tax year 2021, with additional mailings planned. If the IRS identifies an employer that has received excessive or erroneous ERC, the agency will reclaim that ERC through normal tax assessment and collection procedures.

    “These letters are another incentive for businesses that believe they received an erroneous Employee Retention Credit payment to come forward and participate in the disclosure program,” Werfel said. “Our compliance activities involving these payments continue to accelerate, and the disclosure program’s 80% repayment figure is much more generous than later IRS action, which includes steeper costs and greater risk. We hope these taxpayers take advantage of this window now.”

    ERC Voluntary Disclosure Program: Who can apply?

    A variety of ERC recipients can apply. Any employer who already received the ERC for a tax period but isn’t entitled to it can apply if the following are also true:

    The employer is not under criminal investigation and has not been notified that they are under criminal investigation.
    The employer is not under an IRS employment tax examination for the tax period for which they’re applying to the Voluntary Disclosure Program.
    The employer has not received an IRS notice and demand for repayment of part or all of the ERC.
    The IRS has not received information from a third party that the taxpayer is not in compliance or has not acquired information directly related to the noncompliance from an enforcement action.
    How to apply

    To apply, the employer must first file Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, available on IRS.gov. This form must be submitted using the IRS Document Upload Tool. Employers will be expected to repay their full ERC, minus the 20% reduction allowed through the Voluntary Disclosure Program. Employers who are not able to pay the amount in full will have the option to set up an installment agreement under certain conditions.

    Employers who outsource their payroll must apply through the third party

    Many employers outsource their payroll obligations to a third party who reports, collects and pays employment taxes on the employer’s behalf using the third party’s Employer Identification Number. In this situation, the third-party, not the employer, must file Form 15434. See the form and its instructions for details.

    Help options for those considering applying

    As part of a larger set of information on ERC, the IRS has provided a set of Frequently Asked Questions to help employers understand the terms of the program.

    Once the employer has applied to the program and submitted their Form 15434, an IRS employee will contact them to go over the application and answer any questions.

    Next steps after an application is approved

    If the IRS approves the employer’s application, they will mail the employer a closing agreement. The employer must then repay 80% of the ERC they received, either online or by phone, using the Electronic Federal Tax Payment System (EFTPS). EFTPS is the Treasury Department system that most businesses already use to pay various federal tax obligations.

    If the taxpayer is unable to pay the amount in full, they may enter into an installment agreement with the IRS to pay overtime. However, under the standard installment agreement policy, penalties and interest will apply, so the IRS encourages those who cannot pay in full to consider obtaining a loan from a financial institution to avoid the costs of an installment agreement with the IRS. Once payment has been made, the employer must return the signed closing agreement to the IRS.

    Ongoing ERC initiatives

    The new Voluntary Disclosure Program is just the latest step taken by the IRS in its ongoing fight against ERC fraud.

    In July, the IRS said it was shifting its focus to review ERC claims for compliance concerns, including intensifying audit work and criminal investigations on promoters and businesses filing dubious claims. The IRS has hundreds of criminal cases being worked, and thousands of ERC claims have been referred for audit.
    Following concerns about aggressive ERC marketing from tax professionals and others, the IRS announced Sept. 14 a moratorium on processing new ERC claims. Enhanced compliance reviews of existing claims submitted before the moratorium is critical to protect against fraud and also to protect businesses and organizations from facing penalties or interest payments stemming from bad claims pushed by promoters.
    Then, earlier this month, the IRS began sending an initial round of more than 20,000 letters to employers disallowing their ERC claims either because their business did not exist, or they didn’t have employees for the period covered by their claim.
    As mentioned earlier, the IRS also announced today it has started sending letters to up to 20,000 employers that claimed an erroneous or excessive ERC that propose tax adjustments that will remove the ERC.
    In addition to these efforts, IRS audit and Criminal Investigation work involving ERC continues to expand involving dubious claims. The IRS has more than 300 criminal cases being worked with claims worth almost $3 billion, and thousands of ERC claims have been referred for audit.
    IRS reminder: Still time to withdraw pending ERC claims

    The IRS is also continuing to accept and process requests to withdraw an employer’s full ERC claim under the special withdrawal process. Employers have until at least the end of the year to request a withdrawal.

    The IRS continues to see a large amount of interest in the withdrawals, with more than $100 million from pending applicants withdrawn by early December. With the announcement of the Voluntary Disclosure Program today, the IRS continues to urge pending applicants to review their claims.

    This withdrawal option allows certain employers that filed an ERC claim but have not yet received a refund to withdraw their submission and avoid future repayment, interest and penalties. Employers that submitted an ERC claim that has not yet been paid can withdraw their claim and avoid the possibility of getting a refund for which they’re ineligible. They can also withdraw their claim if they’ve received a check but have not yet deposited or cashed it.

    The IRS created the withdrawal option to help small business owners and others who were pressured or misled by ERC marketers or promoters into filing ineligible claims. Claims that are withdrawn will be treated as if they were never filed. The IRS will not impose penalties or interest. During this period, the IRS warns taxpayers to use extreme caution before applying for the ERC as aggressive maneuvers continue by marketers and scammers. In addition, the IRS continues to urge employers who submitted claims to review the ERC requirements and talk to a trusted tax professional about their eligibility amid misleading marketing around the credit.

    When properly claimed, the ERC is a refundable tax credit designed for businesses that continued paying employees during the COVID-19 pandemic while their business operations were either fully or partially suspended due to a government order, or had a decline or significant decline in gross receipts during the eligibility periods.

    For more information on ERC eligibility, see the ERC frequently asked questions and the ERC Eligibility Checklist, which is available as an interactive tool or as a printable guide.

  • IRS expands Business Tax Account access to S corporations, partnerships; adds ability to view business tax transcripts

    IRS expands Business Tax Account access to S corporations, partnerships; adds ability to view business tax transcripts

    WASHINGTON, D.C. (TIP): As part of continuing transformation work, the Internal Revenue Service, on December 18, announced the launch of the second phase of a new online self-service tool for businesses that expands the business tax account capabilities and eligible entity types. As a result, individual partners of partnerships and individual shareholders of S corporation businesses are now eligible for a Business Tax Account in addition to sole proprietors.

    Available at IRS.gov/businessaccount, the new business tax account is a key part of the agency’s continuing service improvement initiative. This is part of the larger effort under last year’s Inflation Reduction Act (IRA) and described in the multi-year Strategic Operating Plan released this spring.

    “This is part of the ongoing IRS modernization effort to make improvements for business taxpayers and others,” said IRS Commissioner Danny Werfel. “This next step in the evolution of the Business Tax Account will help these businesses download transcripts and other features. Ultimately, these new online options will help make interactions easier for businesses while reducing paper-based processes and the need to call the IRS.”

    This phase of Business Tax Account also adds new features:

    Users can now download a PDF of a business tax transcript:
    For sole proprietors, this includes Forms: 940, 941, 943, 944, 945, 8752, 8288, 11-C, 730, 2290.
    For S corporations, this includes Forms: 940, 941, 943, 944, 945, 8752, 8288, 11-C, 730, 1120S, 2290.
    For partnerships, this includes Forms: 940, 941, 943, 944, 945, 1065, 8752, 8288, 8804, 11-C, 730, 2290.
    Sole proprietors can also view certain notices:
    CP080: Reminder – We Have Not Received Your Return, Credits May be on Your Account.
    CP136: Annual Notification of Federal Tax Deposit (FTD) Requirements (Forms: 941, 941-SS).
    CP216F: Application for Extension of Time to File an Employee Plan Return – Approved.
    Individual partners and individual shareholders will be able to access Business Tax Account information once they have filed a business return with the Schedule K-1 and it is processed by the IRS. To access Business Tax Account, individuals must have a Schedule K-1 for a minimum of one year during the 2019-2022 period on file. They will only be able to view information for the year(s) they have a Schedule K-1 on file. New businesses won’t have access until a business return is submitted, processed, and on file with the IRS.

    Sole proprietors with an Employer Identification Number (EIN) qualify to access their Business Tax Account. Also known as self-employed individuals, sole proprietors with EINs are those who file a business return under their EIN, such as reporting payroll taxes and reporting the highway use tax on trucks and buses.

    Sole proprietors who have already set up an individual account under their SSN or ITIN, and have an EIN linked to their SSN or ITIN, can use their existing login to access their Business Tax Account. At this time, sole proprietors who do not have an EIN are not eligible to set up a Business Tax Account. Instead, they can access their tax records by setting up an IRS individual Online Account.

    Over time, Business Tax Account will be a one-stop application that provides business taxpayers a suite of digital products and services, including access to viewing letters or notices, requesting tax transcripts, adding third parties for power of attorney or Tax Information Authorization, and storing bank account information to manage tax payments.

    It will help users manage their tax obligations, reducing the burden on taxpayers who would otherwise need to call or mail the IRS.

    To set up a new Business Tax Account, or for more information about this app, visit www.IRS.gov/businessaccount.

  • IRS issues guidance on the incremental cost for the Commercial Clean Vehicle Credit

    IRS issues guidance on the incremental cost for the Commercial Clean Vehicle Credit

    WASHINGTON, D.C. (TIP): The Treasury Department and Internal Revenue Service, on December 20, issued Notice 2024-05 regarding the commercial clean vehicle credit for commercial vehicles placed in service in 2024.

    The guidance provides a safe harbor for certain qualified commercial clean vehicles placed in service in calendar year 2024, which allows for reliance on the Department of Energy (“DOE”) analysis of incremental costs. The analysis shows that the incremental cost of all street electric vehicles (other than in the case of compact car PHEVs) that have a gross vehicle weight rating of less than 14,000 pounds will be greater than $7,500 in calendar year 2024.

    Accordingly, the incremental cost will not limit the available credit amount for street electric vehicles that have a gross vehicle weight rating of less than 14,000 pounds and are placed in service in calendar year 2024. For compact car plug-in electric hybrids placed in service during calendar year 2024, for which the incremental cost was calculated to be less than $7,500, the IRS will accept a taxpayer’s use, when calculating the credit amount, of the incremental cost published by the DOE.

    In addition, the DOE analysis provided an incremental cost analysis of current costs for several representative classes of street electric vehicles with a gross vehicle weight rating of 14,000 pounds or more. For those vehicles placed in service during calendar year 2024, the IRS will accept a taxpayer’s use, in calculating the credit amount, of the incremental cost published by the DOE.

     

  • Rudy Giuliani files for bankruptcy after $148m defamation verdict

    Rudy Giuliani files for bankruptcy after $148m defamation verdict

    NEW YORK (TIP): Rudy Giuliani, once famous as “Mayor of America” and a longtime associate of former President Donald Trump, has filed for bankruptcy just days after he was ordered to pay $148m (£116m) in a defamation case.

    He was ordered to pay the sum after a judge found he defamed two Georgia election workers over false claims they tampered with votes in 2020. The filing shows he owes millions of dollars in legal fees and unpaid taxes.

    A spokesman said the move should “be a surprise to no-one”. In a statement, the spokesman for Mr Giuliani, Ted Goodman, said “no person could have reasonably believed that [Mr Giuliani] would be able to pay such a high punitive amount”.

    He added that December 21 bankruptcy filing in New York would give Mr Giuliani the “opportunity and time to pursue an appeal, while providing transparency for his finances under the supervision of the bankruptcy court”.

    Mr Giuliani, 79, said earlier this year that he was having financial difficulties because of his increasing legal fees and expenses.

    Last week, an eight-person jury ordered him to pay $20m to Georgia poll workers Ruby Freeman and her daughter Wandrea “Shaye” Moss. The pair said Mr Giuliani’s false claim that they tampered with votes had a traumatizing impact on their lives. Ms Freeman said she would “always have to be careful” because of lingering fears she might be recognized publicly.

    Ms Freeman and Ms Moss were also awarded more than $16m each for emotional distress. Another payment of $75m in punitive damages was ordered to be split between them.

    Addressing reporters outside the court after he was ordered to pay the sum, Mr Giuliani said: “I don’t regret a damn thing.”

    On Wednesday, a judge ordered him to start paying the two women immediately and expressed concern he might not comply with the judgement. It is unclear how the bankruptcy declaration will impact on the payments, but US bankruptcy law does not allow the dissolution of debts stemming from “wilful and malicious injury” inflicted on another party.

    The bankruptcy filing lists nearly 20 creditors, including Ms Freeman, Ms Moss and Hunter Biden who sued him in September.

    Other creditors include the Internal Revenue Service (IRS), which he owes more than $700,000 in income tax, and two voting software companies that sued him over his false claims of election fraud.

    A law firm that previously represented Mr Giuliani, Davidoff Hutcher & Citron LLP, is also included. The firm sued Mr Giuliani for $1.4m in unpaid legal fees in September. Mr Giuliani still faces an indictment in Georgia on racketeering and conspiracy charges as well as a $10m lawsuit by a former business associate over sexual harassment claims.
    (Agencies)

  • IRS reminds taxpayers, Jan. 16 due date for final 2023 quarterly estimated tax payments

    IRS reminds taxpayers, Jan. 16 due date for final 2023 quarterly estimated tax payments

    WASHINGTON D.C. (TIP): The Internal Revenue Service  reminded taxpayers who didn’t pay enough tax in 2023 to make a fourth quarter tax payment on or before Jan. 16 to avoid a possible penalty or tax bill when filing in 2024. Taxes are normally paid throughout the year by withholding tax from paychecks, by making quarterly estimated tax payments to the IRS or by a combination of both. This is done because taxpayers need to pay most of their tax during the year as income is earned or received.

    Who needs to make a payment?

    Taxpayers who earn income not subject to tax withholding such as self-employed people or independent contractors should pay their taxes quarterly to the IRS.

    In addition, people who owed tax when they filed their current year tax return often find themselves in the same situation again when they file the next year. Taxpayers in this situation normally include:

    Those who itemized in the past but are now taking the standard deduction,

    Two wage-earner households,

    Employees with non-wage sources of income such as dividends,

    Those with complex tax situations and/or

    Those who failed to increase their tax withholding.

    What income is taxable?

    The IRS reminds taxpayers that most income is taxable, whether it’s unemployment income, refund interest or income from the gig economy and digital assets. When estimating quarterly tax payments, taxpayers should include all forms of earned income, including from part-time work, side jobs or the sale of goods.

    Also, various financial transactions, especially late in the year, can often have an unexpected tax impact. Examples include year-end and holiday bonuses, lottery winnings, stock dividends, capital gain distributions from mutual funds, stocks, bonds, virtual currency, real estate or other property sold at a profit.

    Delay in requirement for Forms 1099-K

    After feedback from taxpayers, tax professionals and payment processors the IRS announced that calendar year 2023 will be treated as another transition year for the reduced reporting threshold of $600. For calendar year 2023, third-party settlement organizations that issue Forms 1099-K are only required to report transactions where gross payments exceed $20,000 and there are more than 200 transactions. The IRS also issued a fact sheet to help people who may receive Forms 1099-K.

    How to make an estimated tax payment

    The fastest and easiest way to make an estimated tax payment is to do so electronically. Taxpayers have options when paying electronically from their bank account.

    Pay using IRS Direct Pay. This option allows taxpayers to schedule a payment in advance of the Jan. 16 deadline.

    Pay using IRS Online Account. This option allows taxpayers to view their payment history, pending or recent payments and other tax information.

    Pay using Electronic Filing Tax Payment System, or EFTPS. EFTPS is a free system which offers selections such as scheduling payments a year in advance, paying estimated tax payments and tracking and changing scheduled payments.

    Taxpayers also have the option to pay with their debit or credit card. The card processors, not the IRS, charge a fee for the service.

    Using these or other electronic payment options ensures that a payment gets credited promptly. More information on other payment options is available at IRS.gov/payments.

    Use the Tax Withholding Estimator to keep track

    The Tax Withholding Estimator, available on IRS.gov, can often help taxpayers determine if they need to make an estimated tax payment. It also helps them calculate the correct amount of tax to withhold throughout the year based on their complete set of tax facts and circumstances.

    Alternatively, taxpayers can use the worksheet included with Form 1040-ES, Estimated Tax for Individuals, or read through Publication 505, Tax Withholding and Estimated Tax, available on IRS.gov.

    Plan ahead

    It’s never too early to get ready for the tax-filing season. For more tips and resources, check out the Get Ready and Estimated Tax pages on IRS.gov.

  • IRS highlights International Fraud Awareness Week; taxpayers urged to protect against scams, schemes

    IRS highlights International Fraud Awareness Week; taxpayers urged to protect against scams, schemes

    WASHINGTON, D.C. (TIP):  As part of ongoing efforts to protect taxpayers, the Internal Revenue Service reminds people that International Fraud Awareness Week serves as an important time to protect personal and financial information from scam artists and tax schemes.

    International Fraud Awareness Week, which runs through Nov. 18, is an effort to minimize the impact of fraud through awareness and education. During the special week, the IRS – including the agency’s Office of Fraud Enforcement and IRS Criminal Investigation – continue working to raise awareness of fraud and scams affecting taxpayers across the country.

    The IRS continues to encourage individuals, businesses and tax professionals to take time now to know the red flags of a scam, and to ensure defenses are in place to stop scammers and those who promote unscrupulous tax schemes. Although this special week highlights international fraud, the IRS works throughout the year to raise awareness about tax scams and schemes. These efforts range from the annual Dirty Dozen list of tax scams to other tax schemes, including aggressive marketing involving Employee Retention Credit claims. In addition, the IRS, state tax agencies and the nation’s tax industry work together in the Security Summit initiative to protect taxpayers, businesses and the tax system from identity thieves and related scams.

    “During this special week, the IRS reminds taxpayers that we are on their side and looking out for them,” said IRS Commissioner Danny Werfel. “Our work on tax scams and schemes reflects this commitment. IRS employees are working to protect honest taxpayers from scam artists, raising awareness about emerging issues and rooting out the nefarious actors that perpetrate them. With modernization funding in place, the IRS is well positioned to disrupt scams as part of our transformation efforts.”

    IRS Office of Fraud Enforcement: Shining a light on fraud

    The IRS Office of Fraud Enforcement (OFE) promotes compliance with tax laws by strengthening the IRS response to fraud and mitigating emerging threats. This includes improving fraud detection, identifying areas of high risk, enhancing enforcement and helping develop and submit fraud referrals to IRS Criminal Investigation where appropriate. During International Fraud Awareness Week, the IRS reminds taxpayers to be especially wary of scammers and promoters of bogus tax schemes aimed at reducing taxes or avoiding them altogether.

    Many of these tax avoidance schemes are included in the 2023 IRS Dirty Dozen list and often involve unscrupulous asset protection professionals or promoters who lure people into placing their assets in offshore accounts and structures.

    These promoters often sell their scams by promising that assets are out of the government’s reach. They may also suggest that digital assets are untraceable and undiscoverable by the IRS and that the transactions are anonymous. In fact, the IRS has a vast array of tools to combat offshore tax evasion, including working with its international treaty partners to identify and track assets, transactions and evidence.

    Improper Employee Retention Credit claims

    The IRS has seen a high volume of incorrect and improper Employee Retention Credit claims and continues warning taxpayers about them. The ERC, sometimes also called the Employee Retention Tax Credit or ERTC, is a pandemic-related credit for which only certain employers qualify. Credit is not available to individual employees.

    Scam promoters are luring people to incorrectly claim the ERC with “offers” online, in social media, on the radio or through unsolicited phone calls, emails and even mailings that look like official government letters but have fake agency names and usually urge immediate action.

    These unscrupulous promoters make false claims about their company’s legitimacy and often don’t discuss some key eligibility factors, limitations and income tax implications that affect an employer’s tax return.

    It’s important to watch for warning signs such as promoters who say they can quickly determine someone’s eligibility without details, and those who charge up-front fees or a fee based on a percentage of the ERC claimed.

    Anyone who incorrectly claims the ERC must pay it back, possibly with penalties and interest.

    The only way to claim the ERC is on a federal employment tax return. The IRS continues to warn employers to not fall for aggressive marketing or scams related to the ERC. Employers should first check with their trusted tax professional before submitting an ERC claim, and the IRS has developed a special Employee Retention Credit Eligibility Checklist and Frequently Asked Questions to help people quickly determine if they might be eligible.

    As part of a larger effort to protect small businesses and organizations from scams, the Internal Revenue Service created a special withdrawal process to help those who filed an ERC claim and now want to withdraw it. This new withdrawal option allows certain employers that filed an ERC claim but have not yet received, cashed or deposited a refund to withdraw their submission to avoid future repayment, interest and penalties.

    The new withdrawal process follows an immediate moratorium, announced by the IRS on Sept. 14, 2023, on processing new ERC claims. The moratorium, which will last until at least the end of this year, follows concerns about ineligible ERC claims.

    Know the red flags

    IRS impersonation scams involve fake text messages, social media accounts, e-mail and phone calls. Knowing what to watch out for can help keep taxpayers safe.

    Remember, the IRS does not:

    Initiate unexpected contact with taxpayers by email, text messages or social media channels to request personal or financial information. Scammers attempt to use these methods of contact to con individuals, businesses, payroll and tax professionals into providing personal information, PINs, passwords and other data.

    If a taxpayer receives an unsolicited SMS/text that appears to be from either the IRS or a program closely linked to the IRS, the taxpayer should copy the entire message and send it as an attachment to phishing@irs.gov.

    Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments. Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.

    Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.

    Ask for credit or debit card numbers over the phone.

    Leave pre-recorded, urgent or threatening phone messages.

    In many variations of the phone scam, victims are told if they do not call back, a warrant will be issued for their arrest. Other verbal threats include law-enforcement agency intervention, deportation or revocation of licenses.

    Criminals can fake or “spoof” caller ID numbers to appear to be anywhere in the country, including from an IRS office, which makes it difficult for taxpayers to verify the actual caller’s number.

    Fraudsters have spoofed local sheriff’s offices, state departments of motor vehicles, federal agencies and others to convince taxpayers the call is legitimate. Any taxpayer receiving a scam phone call should hang up immediately and not give out any information.

    Contact the Treasury Inspector General for Tax Administration to report the call at IRS Impersonation Scam Reporting. Report the caller ID and/or callback number to the IRS by sending it to phishing@irs.gov with the subject “IRS Phone Scam.”

    Watching for these common scams can keep people from becoming victims of identity theft. Individuals should protect their sensitive personal information that can be used to file fraudulent tax returns and steal refunds.

     Small businesses are big targets

    Businesses of all types and sizes, especially small businesses, need to be aware cybercriminals could target their businesses with scams to steal passwords, divert funds or steal employee information. The IRS continues to see instances where small businesses, including tax professionals, face a variety of identity-theft related schemes that try to obtain information to file a business tax return or use customer data for identity theft.

    Businesses, including tax professionals, are encouraged to follow best practices from the Federal Trade Commission, including to:

    Use multi-factor authentication.

    Set security software to update automatically.

    Back up important files.

    Require strong passwords for all devices.

    Encrypt devices.

    In partnership with the IRS, the Security Summit initiative is at the forefront of protecting taxpayers, businesses and the tax system from identity thieves. Working together as the Security Summit, the IRS, state tax agencies and the nation’s tax industry have taken numerous steps to warn people to watch out for common scams and schemes.

    Report fraud

    To report an abusive tax scheme or a tax return preparer, people should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting materials to the IRS Lead Development Center.

    Mail:

    Internal Revenue Service Lead Development Center

    Stop MS5040

    24000 Avila Road

    Laguna Niguel, California 92677-3405

    Fax: 877-477-9135

    Alternatively, taxpayers and tax practitioners may send the information to the IRS Whistleblower Office for possible monetary reward.

    For more information, see Abusive Tax Schemes and Abusive Tax Return Preparers.

    Resources

    Tax Scams and Consumer Alerts on IRS.gov.

  • IRS reminds gig workers, self-employed and others of Sept. 15 third quarter estimated tax payment deadline

    IRS reminds gig workers, self-employed and others of Sept. 15 third quarter estimated tax payment deadline

    WASHINGTON D.C. (TIP): The Internal Revenue Service is reminding taxpayers who pay estimated taxes that the deadline to submit their third quarter payment is Sept. 15, 2023.

    Taxpayers not subject to withholding may need to make quarterly estimated tax payments. Taxpayers such as gig workers, sole proprietors, retirees, partners and S corporation shareholders generally must make estimated tax payments if they expect to have a tax liability of $1,000 or more when they file their return.

    A general rule of thumb is that taxpayers should make estimated tax payments if they expect:

    To owe at least $1,000 in taxes for 2023 after subtracting their withholding and tax credits.

    Their withholding and tax credits to be less than the smaller of:

    90% of the tax to be shown on their 2023 tax return or

    100% of the tax shown on their complete 12-month 2022 tax return.

    More taxpayers will receive 1099-Ks for 2023

    Taxpayers who were paid over $600 by payment apps and online marketplaces or received any amount by payment cards could receive a Form 1099-K, Payment Card and Third Party Network Transactions, starting January 2024, for payments received in 2023. This includes anyone with a side hustle, sole proprietors, and anyone selling goods and services online. It’s important to remember that taxpayers should report their income, unless it’s excluded by law, regardless of whether they receive a Form 1099-K or any other third-party reporting document. The 1099-K reporting threshold for third party reporting doesn’t change what counts as income or how tax is calculated. Find more information at Understanding Your Form 1099-K.

    Figuring estimated tax

    To figure estimated tax, taxpayers must calculate their expected Adjusted Gross Income (AGI), taxable income, taxes, deductions and credits for the year. To figure 2023’s estimated tax, it may be helpful to use income, deductions and credits from 2022 as a starting point. Taxpayers can use the tools on IRS.gov to check if they are required to pay estimated taxes. The Tax Withholding Estimator, the IRS Interactive Tax Assistant and the worksheet in Form 1040-ES, Estimated Tax for Individuals all offer clear step-by-step instructions.

    Avoid a penalty for underpayment

    Taxpayers who underpay their taxes may have to pay a penalty regardless of whether they paid through withholding or through estimated tax payments. Late and skipped estimated tax payments can incur penalties even if a refund is due when a tax return is filed.

    Taxpayers should use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if they owe a penalty. Taxpayers can also request a waiver of the penalty if they underpaid because of unusual circumstances and not willful neglect.

    Special rules apply to some groups of taxpayers such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year.

    Paying the easy way

    An electronic payment is the easiest, fastest and most secure way to make an estimated tax payment. The Payments page on IRS.gov provides complete tax payment information, how and when to pay, payment options and more.

    Taxpayers can securely log into their IRS Online Account or use IRS Direct Pay to submit a payment from their checking or savings account.

    Taxpayers can also pay using a debit card, credit card or digital wallet. Taxpayers should note that the payment processor, not the IRS, charges a fee for debit and credit card payments. Both Direct Pay and the pay by debit card, credit card or digital wallet options are available online at IRS.gov/payments and through the IRS2Go app.

    Taxpayers can also use the Electronic Federal Tax Payment System (EFTPS) to make an estimated tax payment. Payment by check or money order made payable to the “United States Treasury” is also an option. The IRS encourages taxpayers earning income not normally subject to withholding to consider making estimated tax payments throughout the year to stay current and avoid a surprise at tax time. The fourth and final estimated tax payment for tax year 2023 is due on Jan. 16, 2024.

     

     

  • IRS announces administrative transition period for new Roth catch‑up requirement; catch-up contributions still permitted after 2023

    IRS announces administrative transition period for new Roth catch‑up requirement; catch-up contributions still permitted after 2023

    WASHINGTON , D.C. (TIP): Today, the Internal Revenue Service announced an administrative transition period that extends until 2026 the new requirement that any catch-up contributions made by higher‑income participants in 401(k) and similar retirement plans must be designated as after-tax Roth contributions.

    At the same time, the IRS also clarified that plan participants who are age 50 and over can continue to make catch‑up contributions after 2023, regardless of income.

    Today’s announcements were included in Notice 2023-62, now posted on IRS.gov. This notice provides initial guidance for section 603 of the SECURE 2.0 Act, enacted in December 2022. Under that provision, starting in 2024, the new Roth catch-up contribution rule applies to an employee who participates in a 401(k), 403(b) or governmental 457(b) plan and whose prior-year Social Security wages exceeded $145,000.

    The administrative transition period will help taxpayers transition smoothly to the new Roth catch-up requirement and is designed to facilitate an orderly transition for compliance with that requirement. The notice also clarifies that the SECURE 2.0 Act does not prohibit plans from permitting catch-up contributions, so plan participants who are age 50 and over can still make catch-up contributions after 2023.

    The Treasury Department and the IRS plan to issue future guidance to help taxpayers, and the notice describes several positions that are expected to be included. In addition, the notice invites public comment on the matters discussed in the notice and suggestions for the future. The notice provides details on how to submit comments.

  • IRS alerts businesses, tax-exempt groups of warning signs for misleading Employee Retention scams; simple steps can avoid improperly filing claims

    IRS alerts businesses, tax-exempt groups of warning signs for misleading Employee Retention scams; simple steps can avoid improperly filing claims

    WASHINGTON, D.C. (TIP):  As aggressive marketing continues; the Internal Revenue Service, on May 25,  renewed an alert for businesses to watch out for tell-tale signs of misleading claims involving the Employee Retention Credit. The IRS and tax professionals continue to see a barrage of aggressive broadcast advertising, direct mail solicitations and online promotions involving the Employee Retention Credit. While the credit is real, aggressive promoters are wildly misrepresenting and exaggerating who can qualify for the credits.

    The IRS has stepped up audit and criminal investigation work involving these claims. Businesses, tax-exempt organizations and others considering applying for this credit need to carefully review the official requirements for this limited program before applying. Those who improperly claim the credit face follow-up action from the IRS.

    “The aggressive marketing of the Employee Retention Credit continues preying on innocent businesses and others,” said IRS Commissioner Danny Werfel. “Aggressive promoters present wildly misleading claims about this credit. They can pocket handsome fees while leaving those claiming the credit at risk of having the claims denied or facing scenarios where they need to repay the credit.”

    The Employee Retention Credit (ERC), also sometimes called the Employee Retention Tax Credit or ERTC, is a legitimate tax credit. Many businesses legitimately apply for the pandemic-era credit. The IRS has added staff to handle ERC claims, which are time-consuming to process because they involve amended tax returns.

    “This continual barrage of marketing by advertisers means many invalid claims are coming into the IRS, which also means it takes our hard-working employees longer to get to the legitimate Employee Retention Credits,” Werfel said. “The IRS understands the importance of these credits, and we appreciate the patience of businesses and tax professionals as we continue to work hard to get valid claims processed as quickly as possible while also protecting against fraud.”

    The IRS has been issuing warnings about aggressive ERC scams since last year, and it made the agency’s list this year of the “Dirty Dozen” tax scams that people should watch out for.

    This is an ongoing priority area in many ways, and the IRS continues to increase compliance work involving ERC. The IRS has trained auditors examining ERC claims posing the greatest risk, and the IRS Criminal Investigation division is working to identify fraud and promoters of fraudulent claims.

    The IRS reminds anyone who improperly claims the ERC that they must pay it back, possibly with penalties and interest. A business or tax-exempt group could find itself in a much worse cash position if it has to pay back the credit than if the credit was never claimed in the first place. So, it’s important to avoid getting scammed.

    When properly claimed, the ERC is a refundable tax credit designed for businesses that continued paying employees while shut down due to the COVID-19 pandemic or that had a significant decline in gross receipts during the eligibility periods. The credit is not available to individuals.

    Warning signs of aggressive ERC marketing

    There are important tips that people should be wary of involving the Employee Retention Credit. Warning signs to watch out for include:

    • Unsolicited calls or advertisements mentioning an “easy application process.”
    • Statements that the promoter or company can determine ERC eligibility within minutes.
    • Large upfront fees to claim the credit.
    • Fees based on a percentage of the refund amount of Employee Retention Credit claimed. This is a similar warning sign for average taxpayers, who should always avoid a tax preparer basing their fee on the size of the refund.

    Aggressive claims from the promoter that the business receiving the solicitation qualifies before any discussion of the group’s tax situation. In reality, the Employee Retention Credit is a complex credit that requires careful review before applying. The IRS also sees wildly aggressive suggestions from marketers urging businesses to submit the claim because there is nothing to lose. In reality, those improperly receiving the credit could have to repay the credit – along with substantial interest and penalties. These promoters may lie about eligibility requirements. In addition, those using these companies could be at risk of someone using the credit as a ploy to steal the taxpayer’s identity or take a cut of the taxpayer’s improperly claimed credit.

    How the promoters lure victims

    The IRS continues to see a variety of ways that promoters can lure businesses, tax-exempt groups and others into applying for the credit.

    Aggressive marketing. This can be seen in countless places, including radio, television and online as well as phone calls and text messages. Direct mailing. Some ERC mills are sending out fake letters to taxpayers from the non-existent groups like the “Department of Employee Retention Credit.” These letters can be made to look like official IRS correspondence or an official government mailing with language urging immediate action.

    Leaving out key details. Third-party promoters of the ERC often don’t accurately explain eligibility requirements or how the credit is computed. They may make broad arguments suggesting that all employers are eligible without evaluating an employer’s individual circumstances.

    For example, only recovery startup businesses are eligible for the ERC in the fourth quarter of 2021, but promoters fail to explain this limit. Again, the promoters may not inform taxpayers that they need to reduce wage deductions claimed on their business’ federal income tax return by the amount of the Employee Retention Credit. This causes a domino effect of tax problems for the business.

    Payroll Protection Program participation. In addition, many of these promoters don’t tell employers that they can’t claim the ERC on wages that were reported as payroll costs if they obtained Paycheck Protection Program loan forgiveness. How businesses and others can protect themselves

    The IRS reminded businesses, tax-exempt groups and others being approached by these promoters that there are simple steps that can be taken to protect themselves from making an improper Employee Retention Credit.

     

    Work with a trusted tax professional. Eligible employers who need help claiming the credit should work with a trusted tax professional; the IRS urges people not to rely on the advice of those soliciting these credits. Promoters who are marketing this ultimately have a vested interest in making money; in many cases they are not looking out for the best interests of those applying.

    Don’t apply unless you believe you are legitimately qualified for this credit. Details about the credit are available on IRS.gov, and again a trusted tax professional – not someone promoting the credit – can provide critical professional advice on the ERC.

    To report ERC abuse, submit Form 14242, Report Suspected Abusive Tax Promotions or Preparers. People should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations.

    Mail:

    Internal Revenue Service Lead Development Center

    Stop MS5040

    24000 Avila Road

    Laguna Niguel, California 92677-3405

    Fax: 877-477-9135

    Properly claiming the ERC

    There are very specific eligibility requirements for claiming the ERC. These are technical areas that require review. They can claim the ERC on an original or amended employment tax return for qualified wages paid between March 13, 2020, and Dec. 31, 2021. However, to be eligible, employers must have:

     

    • Sustained a full or partial suspension of operations due to orders from an appropriate governmental authority limiting commerce, travel or group meetings because of COVID-19 during 2020 or the first three quarters of 2021,
    • Experienced a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three quarters of 2021, or
    • Qualified as a recovery startup business for the third or fourth quarters of 2021.

     

  • National Small Business Week: IRS.gov offers A-Z resources for small businesses

    National Small Business Week: IRS.gov offers A-Z resources for small businesses

    WASHINGTON, D.C. (TIP): The Internal Revenue Service today encouraged small businesses to take advantage of the numerous resources available on IRS.gov. As part of National Small Business Week April 30 to May 6, the IRS is highlighting tax benefits and resources to help small businesses.

    National Small Business Week is an annual effort led by the Small Business Administration to recognize the hard work, ingenuity and dedication of America’s small businesses and to celebrate their contributions to the economy. The IRS has a variety of resources available for small business owners to help them understand and meet their tax responsibilities. Small business owners can use IRS.gov for a wide range of tax-related information resources for their enterprise.

    The best place to start
    Small businesses should make the Small Business and Self-Employed Tax Center their first stop for finding just about everything to stay informed and compliant with their tax obligations. Whether that small business owner is self-employed, an independent contractor, a gig worker or a business with employees, the site provides in-depth information, tools and helpful education.

    A road map from start to finish
    IRS.gov’s small business pages map out the entire life cycle of a business and its tax implications. Sections include:

    Starting a Business: Basic federal tax information for those starting a business, as well as a checklist to assist in making basic business decisions.
    Business Structure: Help in choosing what form of business entity to establish because it determines which form of business income tax return forms must be filed.
    Operating a Business: Tools and tips on how to get an Employer Identification Number, how to keep good records and how to file and pay taxes.
    Closing a Business: Help navigating the closure of a business from a federal tax perspective; how to take care of employees, which forms to file, which records to keep and what tax related moves need to happen before shutting down.
    Stay on top of things and learn more
    The education and online learning products offered on IRS.gov ensure small businesses have the latest tax-related information for their enterprise.

    IRS Video Portal: Video and audio presentations on a variety of tax topics for small business including archived versions of live panel discussions and webinars.
    Webinars for Small Businesses: Topics vary from a general overview of taxes to more specific topics such as what constitutes business income and expenses.
    Workshops, Meetings and Seminars: Scheduled events held throughout the country; on occasion, the IRS participates in these events virtually.
    Keep up to date
    Staying informed on possible tax law changes that affect small business and staying up to date with tax obligations like withholding deposits and quarterly filing is easier with IRS.gov’s small business resources.

    Subscribe: e-News for Small Businesses is a free e-mail service designed to provide tax information for small businesses. It includes the latest news, upcoming tax date reminders and tips to help small businesses.
    Small Business Events: The IRS holds small business workshops, seminars and meetings at various locations throughout the country. They’re designed to help the small business owner understand and fulfill their federal tax responsibilities. Online Tax Calendar: Shows due dates and actions for each month. Users can have reminders sent to their email inbox or import the calendar into their calendar program. For more information featuring useful tax-related tools and resources to help small business owners, employers and self-employed individuals succeed, visit the IRS.gov Small Business Week webpage.

  • IRS reminds those with no filing requirement about IRS Free File; get overlooked tax credits and refunds

    IRS reminds those with no filing requirement about IRS Free File; get overlooked tax credits and refunds

    WASHINGTON  D.C. (TIP): The Internal Revenue Service today reminded low- to moderate-income taxpayers, especially those who don’t normally file a tax return, to consider IRS Free File to prepare their own federal tax return to potentially receive overlooked tax credits or refunds. The 2023 federal tax filing deadline for individuals is next Tuesday, April 18. The only way to get a refund is to file a tax return.

    IRS Free File allows qualified individuals to file electronically and get a refund by direct deposit – all for free. The program is a public-private partnership between the IRS and several tax preparation software companies who provide their online tax preparation and filing software for free. The software is safe, easy and accurate, and must be accessed through IRS.gov.

    It offers two ways for taxpayers to prepare and file their federal income tax online for free:

    Guided Tax Preparation: Provides taxpayers whose Adjusted Gross Income (AGI) is $73,000 or less with free online tax preparation that guides people through the tax return process. It uses a straightforward question-and-answer format for each section of their tax return. IRS Free File partners deliver this service at no cost to qualifying taxpayers. Some partners charge a fee for filing a state tax return.

    Free File Fillable Forms: Provides a free option to taxpayers whose AGI is greater than $73,000. These are electronic federal tax forms, equivalent to a paper 1040 form. This option is generally intended for those comfortable preparing their own tax return using instructions and IRS publications as needed.

    Not required to file doesn’t mean shouldn’t file

    Generally, taxpayers with gross income less than $12,950 for single filers, and $25,900 for married filing jointly, are not required to file a federal tax return. However, low-income individuals may mistakenly assume that since they owe no tax, they’re not entitled to a refund. In fact, they may get money back if they file a tax return. For example, if an individual qualifies for the Earned Income Tax Credit (EITC) or if their employer withheld taxes from their paycheck, they may be owed a refund when they file their taxes.

    The IRS encourages everyone to consider taking advantage of the speed and convenience of IRS Free File, including:

    Low- to moderate-income workers and working families who don’t normally file a return. They may miss out on certain credits for individuals, including the EITC, the Child Tax Credit, the Child & Dependent Credit and the Premium Tax Credit if they don’t file. People experiencing homelessness (the address of a friend, relative or trusted service provider, such as a shelter, drop-in day center or transitional housing program, may be used on the tax return). Students just entering the workforce or who may have only worked part time.

    All eligible parents of qualifying children born or welcomed through adoption or foster care in 2022. They may be eligible for the Child Tax Credit.

    In order to validate and successfully submit an electronically filed tax return to the IRS, taxpayers will need their AGI from their most recent tax return. If using the same tax preparation software as last year, this field will auto-populate. However, first-time filers over the age of 16 should enter zero as their AGI.

    Don’t have a bank account to direct deposit a refund?

    Filing a tax return electronically and choosing direct deposit is the fastest way to get a refund.

    The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration’s Credit Union Locator Tool have information on where to find a bank or credit union to open an account online.

    Veterans should use the Veterans Benefits Banking Program (VBBP) for access to financial services at participating banks.

    Many reloadable prepaid cards have account and routing numbers that can be used for direct deposit as well.

    Only one place guarantees IRS Free File for free

    While there are many offers for free tax filing software, the only guaranteed place to find IRS Free File software is IRS.gov. Anyone can use IRS Free File by accessing a computer or similar device. Even without a computer, IRS Free File products support mobile phone access too.

    For those not comfortable doing their own tax return, IRS-trained community volunteers offer free tax help through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs to qualified individuals at thousands of locations nationwide. The IRS website has a special tool for finding the nearest site. Taxpayers can also call 800-906-9887.

    More information:

    FS-2023-09, Tax credits for individuals: What they mean and how they can help refunds 2023-10, Deductions for individuals: What they mean and the difference between standard and itemized deductions.

  • IRS Says Time Running Out to Claim $1.5 Billion in Unclaimed Refunds for Tax Year 2019

    IRS Says Time Running Out to Claim $1.5 Billion in Unclaimed Refunds for Tax Year 2019

    WASHINGTON, D.C. (TIP): The Internal Revenue Service (IRS) announced Wednesday, April 12, that over a million Americans have unclaimed tax refunds for the tax year 2019 and face a looming deadline to claim a total of $1.5 billion before it becomes government property.

    The IRS said in a press release that nearly 1.5 million people across the United States have unclaimed refunds because they haven’t filed their tax returns for the 2019 tax year.

    “The 2019 tax returns came due during the pandemic, and many people may have overlooked or forgotten about these refunds,” IRS commissioner Danny Werfel said in a statement. “We want taxpayers to claim these refunds, but time is running out.”Normally, the deadline for filing older tax returns falls around the April tax deadline. But for 2019 returns, that window has been extended to July 17 due to the pandemic. “With the pandemic taking place when the 2019 tax returns were originally due, people faced extremely unusual situations,” Werfel said.

    There’s a three-year window for taxpayers to file returns and claim refunds. If they don’t file within three years, any money they could have received becomes the property of the U.S. Treasury.

    The average unclaimed amount for the 2019 tax year is $893 per filer.

    In a separate press release, the IRS issued a reminder that April 18 is the deadline for first quarter estimated tax payments for the tax year 2023. These estimated quarterly tax payments are typically made by individuals like the self-employed and entities like corporations that do not have their taxes withheld.

    Also, the IRS on Tuesday announced that taxpayers in nearly two dozen states should consider filing amended tax returns for 2022 because they may have needlessly reported income from special state relief payments and stand to get bigger refunds.

    Some Taxpayers Eligible for Bigger Refunds
    The IRS said in a press release that taxpayers who reported certain state payments related to general welfare and disaster relief as taxable income on their tax returns did so, in many cases, unnecessarily.

    The tax agency earlier this year determined that taxpayers in nearly two dozen states didn’t need to report these special payments in tax year 2022 and the IRS won’t challenge their taxability.

    Taxpayers in the following states don’t need to report any state payments related to general welfare and disaster relief: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, and Rhode Island.

    Alaska is also in this group, although the payments covered by the IRS notice apply only to special supplemental Energy Relief Payments. In addition, four states are special cases in terms of relief payment taxability because they issued such payments in the form of refunds of state taxes paid: Georgia, Massachusetts, South Carolina, and Virginia. “For these individuals, state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and the recipient either claimed the standard deduction for tax year 2022 or itemized their tax year 2022 deductions but did not receive a tax benefit,” the IRS said.

    Taxpayers who meet the above criteria and needlessly paid tax on special state payments can file an amended return either electronically or in paper form.

    Electronic filers can opt for a direct deposit, while paper filers can expect a paper check for any resulting refunds.
    (Source: Epoch Times)

  • IRS reminds taxpayers of April estimated tax payment deadline

    IRS reminds taxpayers of April estimated tax payment deadline

    WASHINGTON, D.C. (TIP): The Internal Revenue Service today reminded people that Tax Day, April 18, is also the deadline for first quarter estimated tax payments for tax year 2023.
    These payments are normally made by self-employed individuals, retirees, investors, businesses, corporations and others that do not have taxes withheld or employees that don’t have enough taxes withheld by their employers throughout the year. Income taxes are a pay-as-you-go process. This means, by law, taxes must be paid as income is earned or received during the year. Most people pay their taxes through withholding from paychecks, pension payments, Social Security benefits or certain other government payments including unemployment compensation.

    Most often, those who are self-employed or in the gig economy need to make estimated tax payments. Similarly, investors, retirees and others often need to make these payments because a substantial portion of their income is not subject to withholding.

    Other income generally not subject to withholding includes interest, dividends, capital gains, alimony and rental income. Paying quarterly estimated taxes will usually lessen and may even eliminate any penalties.

    Exceptions to the penalty and special rules apply to some groups of taxpayers, such as farmers and fishers, those who recently became disabled, recent retirees, those who receive income unevenly during the year and casualty and disaster victims. Due to recent disasters, eligible taxpayers in California, Alabama and Georgia, for example, have until Oct. 16, 2023, to make 2023 estimated tax payments, normally due on April 18, June 15 and Sept. 15. People in other states may have extended deadlines as well; a full list is available on a special IRS.gov page.

    How to pay estimated taxes
    Form 1040-ES, Estimated Tax for Individuals, includes instructions to help taxpayers figure their estimated taxes. They can also visit IRS.gov/payments to pay electronically.

    The best way to make a payment is through IRS online account. There taxpayers can see their payment history, any pending payments and other useful tax information. Taxpayers can make an estimated tax payment by using IRS Direct Pay; Debit Card, Credit Card or Digital Wallet; or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS). For information on other payment options, visit IRS.gov/payments. If paying by check, taxpayers should be sure to make the check payable to the “United States Treasury.”

    Publication 505, Tax Withholding and Estimated Tax, has additional details, including worksheets and examples, that can be especially helpful to those who have dividend or capital gain income, owe alternative minimum tax or self-employment tax, or have other special situations.

    Tax Withholding Estimator
    The IRS urges people to use its Tax Withholding Estimator tool to help ensure the right amount of tax is withheld from their paychecks. Checking taxes withheld periodically helps to protect against having too little tax withheld and possibly facing an unexpected tax bill or penalty at tax time. It also allows people to check taxes withheld up front, resulting in bigger paychecks throughout the year and likely a smaller refund at tax time.

    IRS.gov assistance 24/7
    Tax help is available 24/7 on IRS.gov. The IRS website offers a variety of online tools to help taxpayers answer common tax questions. For example, taxpayers can search the Interactive Tax Assistant, Tax Topics and Frequently Asked Questions to get answers to common questions.

    The IRS is continuing to expand ways to communicate to taxpayers who prefer to get information in other languages. The IRS has posted translated tax resources in 20 other languages on IRS.gov. For more information, see We Speak Your Language.

     

  • IRS wraps up 2023 Dirty Dozen list; reminds taxpayers and tax pros to be wary of scams and schemes, even after tax season

    IRS wraps up 2023 Dirty Dozen list; reminds taxpayers and tax pros to be wary of scams and schemes, even after tax season

    WASHINGTON, D.C. (TIP): The Internal Revenue Service wrapped up the annual Dirty Dozen list of tax scams for 2023 with a reminder for taxpayers, businesses and tax professionals to watch out for these schemes throughout the year, not just during tax season.

    Many of these schemes peak during filing season as people prepare their tax returns. In reality, these scams can occur throughout the year as fraudsters look for ways to steal money, personal information, data and more.

    To help people watch out for these scams, the IRS and the Security Summit partners are providing an overview recapping this year’s Dirty Dozen scams.

    “Scammers are coming up with new ways all the time to try to steal information from taxpayers,” said IRS Commissioner Danny Werfel. “People should be wary and avoid sharing sensitive personal data over the phone, email or social media to avoid getting caught up in these scams. And people should always remember to be wary if a tax deal sounds too good to be true.”

    Working together as the Security Summit, the IRS, state tax agencies and the nation’s tax industry, including tax professionals, have taken numerous steps since 2015 to warn people about common scams and schemes during tax season and beyond that can increase the risk of identity theft. The Security Summit initiative is committed to protecting taxpayers, businesses and the tax system from scammers and identity thieves.

    Some items on this year’s list were new and some made a return visit. While the list is not a legal document or a formal listing of agency enforcement priorities, it is intended to alert taxpayers and the tax professional community about various scams and schemes.

    2023 Dirty Dozen summary:

    Employee Retention Credit claims
    Taxpayers should be aware of aggressive pitches from scammers who promote large refunds related to the Employee Retention Credit (ERC). The warning follows blatant attempts by promoters to con ineligible people to claim credit. The IRS highlighted these schemes from promoters who have been blasting ads on radio and the internet touting refunds involving Employee Retention Credits. These promotions can be based on inaccurate information related to eligibility for and computation of the credit. Additionally, some of these advertisements exist solely to collect the taxpayer’s personally identifiable information in exchange for false promises. The scammers then use the information to conduct identity theft.

    Phishing and smishing
    Taxpayers and tax professionals should be alert to fake communications from those posing as legitimate organizations in the tax and financial community, including the IRS and the states. These messages arrive in the form of an unsolicited text (smishing) or email (phishing) to lure unsuspecting victims to provide valuable personal and financial information that can lead to identity theft. The IRS initiates most contacts through regular mail and will never initiate contact with taxpayers by email, text or social media regarding a bill or tax refund.

    Online account help from third-party scammers
    Swindlers pose as a “helpful” third party and offer to help create a taxpayer’s IRS Online Account at IRS.gov. In reality, no help is needed. The online account provides taxpayers with valuable tax information. But third parties making these offers will try to steal a taxpayer’s personal information this way. Taxpayers can and should establish their own online account through IRS.gov.

    False Fuel Tax Credit claims
    The fuel tax credit is meant for off-highway business and farming use and, as such, is not available to most taxpayers. However, unscrupulous tax return preparers and promoters are enticing taxpayers to inflate their refunds by erroneously claiming the credit. The IRS has seen an increase in the promotion of filing certain refundable credits using Form 4136, Credit for Federal Tax Paid on Fuels.

    Fake charities
    Bogus charities are a perennial problem that gets bigger whenever a crisis or natural disaster strikes. Scammers set up these fake organizations to take advantage of the public’s generosity. They seek money and personal information, which can be used to further exploit victims through identity theft. Taxpayers who give money or goods to a charity might be able to claim a deduction on their federal tax return if they itemize deductions, but charitable donations only count if they go to a qualified tax-exempt organization recognized by the IRS.

    Unscrupulous tax return preparers
    Most tax preparers provide outstanding and professional service. However, people should be careful of shady tax professionals and watch for common warning signs, including charging a fee based on the size of the refund. A major red flag or bad sign is when the tax preparer is unwilling to sign the dotted line. Avoid these “ghost” preparers, who will prepare a tax return but refuse to sign or include their IRS Preparer Tax Identification Number (PTIN) as required by law. Taxpayers should never sign a blank or incomplete return.

    Social media: Fraudulent form filing and bad advice
    Social media can circulate inaccurate or misleading tax information, and the IRS has recently seen several examples. These can involve common tax documents like Form W-2 or more obscure ones like Form 8944. While Form 8944 is real, it is intended for a very limited, specialized group. Both schemes encourage people to submit false, inaccurate information in hopes of getting a refund. Taxpayers should always remember that if something sounds too good to be true, it probably is.

    Spearphishing and cybersecurity for tax professionals
    Phishing is a term given to emails or text messages designed to get users to provide personal information. Spearphishing is a tailored phishing attempt to a specific organization or business. The IRS is warning tax professionals about spearphishing because there is greater potential for harm if the tax preparer has a data breach. A successful spearphishing attack can ultimately steal client data and the tax preparer’s identity, allowing the thief to file fraudulent returns.

    Offer in Compromise mills
    Offers in Compromise are an important program to help people who can’t pay to settle their federal tax debts. But “mills” can aggressively promote Offers in Compromise in misleading ways to people who clearly don’t meet the qualifications, frequently costing taxpayers thousands of dollars. A taxpayer can check their eligibility for free using the IRS Offer in Compromise Pre-Qualifier tool.

    Schemes aimed at high-income filers

    Charitable Remainder Annuity Trust (CRAT): Charitable Remainder Trusts are irrevocable trusts that let individuals donate assets to charity and draw annual income for life or a specific period. Unfortunately, these trusts are sometimes misused by promoters, advisors and taxpayers to try to eliminate ordinary income and/or capital gain on the sale of the property.
    Monetized Installment Sales: In these potentially abusive transactions, promoters find taxpayers seeking to defer the recognition of gain upon the sale of appreciated property. They facilitate a purported monetized installment sale for the taxpayer in exchange for a fee.
    Bogus tax avoidance strategies

    Micro-captive insurance arrangements: A micro-captive is an insurance company whose owners elect to be taxed on the captive’s investment income only. Abusive micro-captives involve schemes that lack many of the attributes of legitimate insurance. These structures often include implausible risks, failure to match genuine business needs and, in many cases, unnecessary duplication of the taxpayer’s commercial coverages.
    Syndicated conservation easements: A conservation easement is a restriction on the use of real property. Generally, taxpayers may claim a charitable contribution deduction for the fair market value of a conservation easement transferred to a charity if the transfer meets the requirements of Internal Revenue Code 170. In abusive arrangements, which generate high fees for promoters, participants attempt to game the tax system with grossly inflated tax deductions.
    Schemes with international elements

    Offshore accounts and digital assets: The IRS continues to scrutinize attempts to hide assets in offshore accounts and accounts holding digital assets, such as cryptocurrency. The IRS continues to identify individuals who attempt to conceal income in offshore banks, brokerage accounts, digital asset accounts and nominee entities. Asset protection professionals and unscrupulous promoters continue to lure U.S. persons into placing their assets in offshore accounts and structures saying they are out of reach of the IRS. These assertions are not true. The IRS can identify and track anonymous transactions of foreign financial accounts as well as digital assets.
    Maltese individual retirement arrangements misusing treaty: These arrangements involve U.S. citizens or residents who attempt to avoid U.S. tax by contributing to foreign individual retirement arrangements in Malta (or potentially other host countries). The participants in these transactions typically lack any local connection to the host country. By improperly asserting the foreign arrangement as a “pension fund” for U.S. tax treaty purposes, the U.S. taxpayer misconstrues the relevant treaty provisions and improperly claims an exemption from U.S. income tax on gains and earnings in and distributions from the foreign individual retirement arrangement.
    Puerto Rican and foreign captive insurance: U.S. business owners of closely held entities participate in a purported insurance arrangement with a Puerto Rican or other foreign corporation in which the U.S. business owner has a financial interest. The U.S. business owner (or a related entity) claims a deduction for amounts paid as premiums for “insurance coverage” provided by a fronting carrier, which reinsures the “coverage” with the Puerto Rican or other foreign corporation. Despite being labeled as insurance, these arrangements lack many of the attributes of legitimate insurance. Where appropriate, the IRS will challenge the purported tax benefits from these types of transactions and impose penalties. The IRS Criminal Investigation Division is always on the lookout for promoters and participants of these types of schemes. Taxpayers should think twice before including questionable arrangements like this on their tax returns. After all, taxpayers are legally responsible for what’s on their return, not a promoter making promises and charging high fees. Taxpayers can help stop these arrangements by relying on reputable tax professionals they know and trust.

    Help stop fraud and scams
    As part of the Dirty Dozen awareness effort, the IRS encourages people to report individuals who promote improper and abusive tax schemes as well as tax return preparers who deliberately prepare improper returns.

    To report an abusive tax scheme or a tax return preparer, people should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

    Mail:
    Internal Revenue Service Lead Development Center
    Stop MS5040
    24000 Avila Road
    Laguna Niguel, California 92677-3405
    Fax: 877-477-9135

  • IRS unveils Strategic Operating Plan; ambitious effort details a decade of change

    IRS unveils Strategic Operating Plan; ambitious effort details a decade of change

    42 key initiatives, 190 key projects designed to help taxpayers, the tax community and the nation

    WASHINGTON D.C. (TIP): Following months of work, the Internal Revenue Service, on April 6, unveiled its Strategic Operating Plan, an ambitious effort to transform the tax agency and dramatically improve service to taxpayers and the nation during the next decade. The 150-page report to the Secretary of the Treasury outlines the agency’s historic plans to make fundamental changes following funding from last year’s Inflation Reduction Act. The plan makes clear that the resources to be deployed over the short and long term will be used to:

    Rebuild and strengthen IRS customer service activities, putting an end to long wait times on the phone, adding capacity to the in-person taxpayer assistance centers around the country, and providing new online tools for those who want to engage with the IRS digitally.
    Add capacity to unpack the complex filings of high-income taxpayers, large corporations and complex partnerships, addressing a growing chasm between the number of experienced compliance personnel at the IRS who audit high-income, high-wealth tax filings for compliance (about 2,600 employees) and the roughly 30,000 individuals making more than $10 million a year, 60,000 large corporations and 300,000 large partnerships and S corps. Update various outdated systems in IRS core operations to help ensure the agency has the most modern and robust security in technology to protect taxpayer data.

    In IRS customer service initiatives, taxpayers can already see important changes this tax season, and the plan provides a foundation for future efforts. In compliance initiatives, the IRS will ensure that the agency follows Treasury Secretary Yellen’s directive not to raise audit rates above historical levels for small businesses and households making less than $400,000. What this means is that over the next number of years, as the IRS moves to implement the Strategic Operating Plan, the agency is focused on pursuing high-income and high-wealth individuals, complex partnerships and large corporations that are not paying the taxes they owe. As a result, the IRS has no plans to increase the audit rate for small businesses and households making less than $400,000.
    “The plan is a bold look at what the future can look like for taxpayers and the IRS,” IRS Commissioner Danny Werfel said. “Now that we have long-term funding, the IRS has an opportunity to transform its operations and provide the service people deserve. Through both service and technology enhancements, the experience of the future will look and feel much different from the IRS of today. This plan charts the course forward for the IRS and tax administration.”

    The plan is organized around five objectives:

    Dramatically improve services to help taxpayers meet their obligations and receive the tax incentives for which they are eligible. Quickly resolve taxpayer issues when they arise. Focus expanded enforcement on taxpayers with complex tax filings and high-dollar noncompliance to address the tax gap.
    Deliver cutting-edge technology, data and analytics to operate more effectively.
    Attract, retain and empower a highly skilled, diverse workforce and develop a culture that is better equipped to deliver results for taxpayers.
    Each objective will be accomplished through specific initiatives outlined in the plan. The plan contains 42 initiatives designed to achieve IRS goals, each of which includes multiple key projects and milestones to measure progress. The plan covers more than 190 key projects and more than 200 specific milestones. The IRS will identify additional projects and milestones as work continues. The number of projects and milestones will grow significantly over time as the plan evolves to meet the needs of the nation and tax administration.

    For each milestone, the plan includes specific timeframes based on year.

    Following passage of the law last August, the IRS embarked on this effort to identify the highest-priority opportunities to deliver transformational change. In addition to working with the Department of the Treasury, the IRS received input from tax professionals, partner groups inside and outside of the tax community, taxpayer groups, IRS federal advisory groups and IRS employees. The planning process also built on prior IRS efforts that received feedback, including the Taxpayer First Act Report to Congress.
    In addition to the efforts outlined in the plan, the Inflation Reduction Act is already making a difference for taxpayers and tax professionals during the 2023 filing season.

    “People can see the first signs of change this filing season following this infusion of funding,” Werfel said. “Taxpayers and tax professionals can see the difference as we have dramatically improved our phone service thanks to more staff. More walk-in services are available across the country. New digital tools have been added. And these are just first steps.” The future will bring more improvements, with taxpayers able to get more online access to their tax accounts – simplifying their interactions with the IRS. Detailed information about refunds will be easier to track through improvements to the “Where’s My Refund?” tool. Many more service improvements are detailed in the plan.

    “For years, the agency has not had the resources to provide the service people deserve. Across all of our operations we’ve seen the impact. We’ve lost employees and seen our resources stretched thin with new mandates and an increasingly complex economy,” Werfel said. “The IRS looks forward to demonstrating how the actions under this plan will translate into real improvements for taxpayers. Technology as well as in-person assistance will be cornerstones of this effort.”

    The plan also highlights how the IRS will be working to ensure fair enforcement of the nation’s tax laws and compliance with existing laws while respecting taxpayer rights. The IRS will be solely focused on increased efforts on identified compliance issues involving large corporations, larger partnerships and high-wealth individuals.

    “Effective enforcement is an important component of this plan,” Werfel said. “Revenue collected by the IRS supports everything from the nation’s defense to education and roads.”

    As the IRS begins implementation of this plan, the agency will work with the public, partners and oversight groups to ensure the transformation work meets the needs of taxpayers and the nation.

    “This plan is only the beginning of our work,” Werfel said. “This is a unique opportunity for the IRS and the nation, and we will continue to work closely with our partners as this effort moves forward. This investment in the IRS is already helping taxpayers this tax season, and this plan shows that historic changes are coming.”

     

  • Taxpayer Advocacy Panel welcomes 8 new members dedicated to improving IRS taxpayer services; seeks civic-minded volunteers to apply for next year’s group

    Taxpayer Advocacy Panel welcomes 8 new members dedicated to improving IRS taxpayer services; seeks civic-minded volunteers to apply for next year’s group

    Interested candidates from all states encouraged to apply by March 31

    WASHINGTON, D.C. (TIP):  The Internal Revenue Service  announced , March 2,  the selection of eight new members to serve on the Taxpayer Advocacy Panel for 2023. The IRS recommended and the Department of the Treasury approved the new members, who will join eight TAP alternates approved in a prior year, for a total of 16 new active members. When added to returning members, these new TAP members will round out the panel with 63 volunteers for 2023.

    New members were selected from a pool of approximately 200 interested individuals who applied during an open recruitment period last spring and from alternate members who applied in previous years. “Congratulations and welcome to all of our new Taxpayer Advocacy Panel members,” said National Taxpayer Advocate Erin M. Collins. “I am grateful for the time and talents the members bring to the panel and their devotion to making the American tax system work better for everyone. Their commitment to listen to taxpayers, understand the problems they are experiencing, and then bring that perspective to the table with our IRS partners is a great model for how we can improve the taxpayer experience with the IRS when we work together.”

    TAP members serve as a conduit for bringing grassroots concerns raised by the taxpaying public to the attention of the IRS, and work on a variety of issues that impact taxpayers in key areas where the IRS and the public interact the most.

    “I predict this is going to be a busy and productive year, and I know our TAP volunteers are up to the challenge,” said 2023 National TAP Chair Dr. Eugene Lilly. For a breakdown of the new TAP members by location, visit: www.improveirs.org/about-tap/members.

    20 years of advocacy

    For more than 20 years, TAP members have worked hard to make the tax system work better for taxpayers. In the last 20 years, the TAP has submitted more than 2,200 recommendations on customer service issues that directly impact how taxpayers interact with the IRS, whether by phone, mail or online.

    In 2022 alone, the TAP made 201 recommendations to the IRS, many of which were implemented. These recommendations have resulted in improvements to IRS tax forms, instructions and publications that make them easier for taxpayers to understand.

    Some examples of issues on which TAP members have partnered with the IRS to improve taxpayer service include:

    Implementing customer callback technology;

    Providing taxpayers with the option to get copies of past tax returns through Free File;

    Allowing longer extension times for taxpayers to file returns; and

    Creating an online portal taxpayers can use to easily look up information needed to claim education credits.

    Additionally, the TAP has developed outreach materials to educate entrepreneurs about tax return filing requirements, and successfully proposed improvements to the Volunteer Income Tax Assistance (VITA) program.

    Recruitment now open for 2024

    Applications for the 2024 TAP year are now being accepted from civic-minded volunteers looking for ways to serve their communities. TAP members volunteer to serve a three-year term and are expected to devote 200 to 300 hours per year to panel activities. The TAP continues to make a difference in the U.S. tax system, and new members have a unique opportunity to join this dynamic group.

    To the extent possible, TAP members are selected in part to achieve demographic and geographic diversity, providing balanced representation from all 50 states, the District of Columbia and Puerto Rico, with an additional member representing the interests of taxpayers working, living or doing business abroad.

    Who can apply?

    Federal advisory committees are required to have a balanced representation of different viewpoints. Therefore, applicants from under-represented groups, such as Native Americans and non-tax professionals, are particularly encouraged to apply.

    The TAP is currently seeking candidates in the following states and territories: Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Hawaii, Illinois, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New Mexico, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia and Wyoming. However, candidates residing in all locations are encouraged to apply, and all timely applications will be considered.

    TAP members must be U.S. citizens who are current with their federal tax obligations and able to commit 200 to 300 volunteer hours during the year. TAP members must also pass a Federal Bureau of Investigation criminal background check. Members cannot be federally registered lobbyists or current employees of the Department of the Treasury or the IRS. Former Treasury or IRS employees and former TAP members can be considered for appointment three years after their employment or previous TAP membership has ended. Tax practitioner applicants must be in good standing with the IRS (meaning not currently under suspension or disbarment).

    New TAP members will serve a three-year term starting in Dec. 2023. Applicants chosen as alternate members will be considered to fill any vacancies in their areas during the next three years. Applications must be submitted by March 31, 2023, to be considered. Visit USAJobs for more details about how to apply to become a TAP member.

    More about the Taxpayer Advocacy Panel

    The TAP is a federal advisory committee that serves an important role in tax administration. TAP members are a diverse group of citizens who possess a sense of civic duty, patriotism and belief in an effective and well-regarded tax system.

    TAP members volunteer their time and energy to improve IRS services and taxpayer satisfaction by listening to taxpayers, identifying issues and making recommendations to improve IRS service and customer satisfaction.

    Oversight and program support for the TAP are provided by the Taxpayer Advocate Service, an independent organization within the IRS led by the National Taxpayer Advocate. TAS helps resolve taxpayer account problems and makes administrative and legislative recommendations to mitigate systemic problems in tax administration.

    For additional information about the TAP, visit www.improveirs.org or call toll-free at 888-912-1227 and select prompt number five. Callers outside the U.S. may call 202-317-3087 (not a toll-free number) or email the TAP staff at tap.recruitment@irs.gov. A video is also available with more information about the TAP and about how to contribute to this dynamic group of volunteers.

  • New IRS features allow taxpayers electronically filing amended returns to choose direct deposit to speed refunds

    New IRS features allow taxpayers electronically filing amended returns to choose direct deposit to speed refunds

    WASHINGTON, D.C. (TIP): In the latest improvement for taxpayers, the Internal Revenue Service announced today, February 9, that people electronically filing their Form 1040-X, Amended U.S Individual Income Tax Return, will for the first time be able to select direct deposit for any resulting refund.
    Previously, taxpayers who filed Form 1040-X with the IRS had to wait for a paper check for any refund, a step that added time onto the amended return process. Now, anyone who electronically files the Form 1040-X can select direct deposit and enter their banking or financial institution information for quicker delivery of refunds. Taxpayers file a total of approximately 3 million amended returns each year.
    “This is a big win for taxpayers and another achievement as we transform the IRS to improve taxpayer experiences,” said IRS Acting Commissioner Doug O’Donnell. “This important update will cut refund time and reduce inconvenience for people who file amended returns. We always encourage direct deposit whenever possible. Getting tax refunds into taxpayers’ hands quickly without worry of a lost or stolen paper check just makes sense.”
    The IRS began accepting the Form 1040-X electronically in 2020 but until now did not offer direct deposit as an option for a refund. Following IRS system updates, those filing amended returns can now enjoy the same speed and security of direct deposit as those filing an original Form 1040 tax return. Taxpayers filing an original tax return using tax preparation software can file an electronic Form 1040-X if the software manufacturer offers that service. This is the latest step the IRS is taking to improve service this tax filing season. As part of funding for the Inflation Reduction Act, the IRS has hired more than 5,000 new telephone assistors and is adding staff to IRS Taxpayer Assistance Centers (TACs). The IRS also plans special service hours at dozens of TACS across the country on four Saturdays between February and May.
    No matter how a taxpayer files the amended return, they can still use the “Where’s My Amended Return?” online tool to check the status.
    Taxpayers still have the option to submit a paper version of the Form 1040-X and receive a paper check. They should follow the instructions for preparing and submitting the paper form. Direct deposit is not available on amended returns submitted on paper.
    Current processing time is more than 20 weeks for both paper and electronically filed amended returns, as processing an amended return remains a manual process even if it’s filed electronically. However, filing electronically cuts out the mail time, and including direct deposit information on an electronically submitted form provides a convenient and secure way to receive refunds faster.

  • IRS sets Jan. 23 as official start to 2023 tax filing season; more help available for taxpayers this year

    IRS sets Jan. 23 as official start to 2023 tax filing season; more help available for taxpayers this year

    WASHINGTON, D.C. (TIP):  The Internal Revenue Service, on January 12, announced Monday, Jan. 23, 2023, as the beginning of the nation’s 2023 tax season when the agency will begin accepting and processing 2022 tax year returns.

    More than 168 million individual tax returns are expected to be filed, with the vast majority of those coming before the April 18 tax deadline. People have three extra days to file this year due to the calendar.

    With the three previous tax seasons dramatically impacted by the pandemic, the IRS has taken additional steps for 2023 to improve service for taxpayers. As part of the August passage of the Inflation Reduction Act, the IRS has hired more than 5,000 new telephone assistors and added more in-person staff to help support taxpayers.

    “This filing season is the first to benefit the IRS and our nation’s tax system from multi-year funding in the Inflation Reduction Act,” said Acting IRS Commissioner Doug O’Donnell.  “With these new additional resources, taxpayers and tax professionals will see improvements in many areas of the agency this year. We’ve trained thousands of new employees to answer phones and help people. While much work remains after several difficult years, we expect people to experience improvements this tax season. That’s just the start as we work to add new long-term transformation efforts that will make things even smoother in future years. We are very excited to begin to deliver what taxpayers want and our employees know we could do with this funding.”

    These steps took place as the IRS worked for months to prepare for the 2023 tax season. The Jan. 23 start date for individual tax return filers allows the IRS time to perform annual updates and readiness work that are critical to ensuring IRS systems run smoothly. This is the date IRS systems officially begin accepting tax returns. Many software providers and tax professionals are already accepting tax returns; they will transmit those returns to the IRS when the agency begins accepting tax returns on Jan. 23.

    The IRS urges people to have all the information they need before they file a tax return. Filing a complete and accurate tax return can avoid extensive processing and refund delays as well as avoid the possibility of needing to file an amended tax return.

    In addition, the IRS encourages people to carefully review their tax situation to make sure they don’t overlook important tax credits they may be eligible for, like the Earned Income Tax Credit (EITC). The IRS has set a special day on Jan. 27 to encourage people to make sure they understand the important benefits of the EITC, a credit that can help low- and moderate-income workers and families.

    The IRS has a variety of free services available to help people. The IRS’s Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs also offer free basic tax return preparation to qualified individuals. People can also get help from trusted tax professionals, commercially available tax software as well as IRS Free File, which provides free electronic filing of tax returns.

    April 18 tax filing deadline in 2023

    The filing deadline to submit 2022 tax returns or an extension to file and pay tax owed is Tuesday, April 18, 2023, for most taxpayers. By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way as federal holidays. The due date is April 18, instead of April 15, because of the weekend and the District of Columbia’s Emancipation Day holiday, which falls on Monday, April 17.

    Taxpayers requesting an extension will have until Monday, Oct. 16, 2023, to file.

    Tips to help people with the 2023 tax season

    The IRS recommends several things for people to keep in mind for a smooth filing experience this year:

    Have the right information before filing. The IRS encourages individuals to have all the information they need before filing a complete and accurate return. Organize and gather 2022 tax records including Social Security numbers, Individual Taxpayer Identification Numbers, Adoption Taxpayer Identification Numbers and this year’s Identity Protection Personal Identification Numbers valid for calendar year 2023. Filing an accurate tax return can help taxpayers avoid delays or later IRS notices. Sometimes this means waiting to make sure individuals have accounted for all their income and the related documents. This is especially important for people who may receive one of the various Forms 1099 from banks or other payers reporting unemployment compensation, dividends, pension, annuity or retirement plan distributions.

    People should also remember that most income is taxable, including unemployment income, interest received or money earned from the gig economy or digital assets. Individuals should make sure they report the correct amount on their tax return to avoid processing delays. Visit IRS.gov first for questions. The IRS reminds people to visit IRS.gov first for common questions and also to check on the status of their refunds. IRS.gov has much of the same information that IRS phone assistors have.

    The IRS anticipates making significant improvements to phone service this year for taxpayers and tax professionals as more training for new phone assistors is completed in the weeks ahead. However, the IRS emphasizes it’s important to note that call volumes remain at historically high levels. The IRS urges people to visit IRS.gov for the information they need.

    “Our phone volumes remain at very high levels,” O’Donnell said. “For faster access to information, we urge people to start with IRS.gov. From there, taxpayers can quickly access the variety of free resources available to help taxpayers anytime, day or night.”

    Speed refunds by filing electronically and choosing direct deposit. There are important steps people can take to help ensure their tax return and refund are processed without delays. The most important is to file electronically with direct deposit. This is still the fastest and easiest way to file and receive a refund. To avoid delays in processing, people should avoid filing paper returns wherever possible.

    To speed refunds, the IRS urges people to file electronically with direct deposit information as soon as they have everything needed to file an accurate return. Individuals can use a bank account, prepaid debit card or mobile app to use direct deposit and will need to provide routing and account numbers with their return. Learn how to open an account at an FDIC-insured bank or through the National Credit Union Locator Tool.

    IRS Free File available Jan. 13

    IRS Free File will open Jan. 13 when participating providers will accept completed returns and hold them until they can be filed electronically with the IRS. Many commercial tax preparation software companies and tax professionals will also be accepting and preparing tax returns before Jan. 23 to submit the returns when the IRS systems open.

    The IRS’s Free File program, available only at IRS.gov, allows taxpayers who made $73,000 or less in 2022 to file their taxes electronically for free using brand-name software provided by commercial tax filing companies. Free File Fillable forms, a part of this effort, is available to any income level and provides free electronic forms that people fill out and file themselves also at no cost.

    Most refunds issued in less than 21 days; EITC refunds for many available starting Feb. 28

    The IRS anticipates most taxpayers will receive their refund within 21 days of when they file electronically, if they choose direct deposit and there are no issues with their tax return. Taxpayers should check Where’s My Refund? on IRS.gov for their personalized refund status.

    While the IRS will begin accepting returns Jan. 23, the IRS cannot issue a refund that includes the Earned Income Tax Credit or Additional Child Tax Credit (ACTC) before mid-February. This is due to the 2015 PATH Act law passed by Congress, which provides this additional time to help the IRS stop fraudulent refunds from being issued.

    Where’s My Refund? should show an updated status by Feb. 18 for most early EITC/ACTC filers. The IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by Feb. 28 if taxpayers chose direct deposit and there are no other issues with their tax return.

    Awaiting processing of previous tax returns? People can still file 2022 returns

    Currently, the IRS has processed all paper and electronic individual tax year 2021 returns received prior to November 2022 that didn’t require error-correction or further review. The IRS continues to work on remaining tax returns in these categories. This work will not impact tax refund timing for people filing in 2023, but the IRS continues to urge people to make sure they submit an error-free tax return this tax season to avoid delays. Check the IRS Operations page for the latest information about the status of tax returns received in 2022.

    IRS.gov, IRS Online Account provide free help

    Taxpayers can find online tools at IRS.gov that are easy-to-use and available anytime. Millions of people use them to help file and pay taxes, find information about their accounts, determine eligibility for tax credits and get answers to tax questions.

    An IRS Online Account allows individuals to log in securely to access personal tax account information including balance, payments and tax records including adjusted gross income.

    There are various types of tax return preparers, including enrolled agents, certified public accountants, attorneys and some who don’t have a professional credential. Choosing a Tax Professional offers information to help people select one. The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help taxpayers find local preparers who currently hold professional credentials recognized by the IRS or who hold an Annual Filing Season Program Record of Completion.

    The Interactive Tax Assistant provides answers to many tax law questions. For example, it can help people determine if a type of income is taxable, or if they can deduct certain expenses. It also helps people find out if life event changes make them eligible for credits they didn’t qualify for in the past and provides answers for general questions, such as determining filing status, if someone can claim dependents or if they have to file a tax return.

    Where’s My Refund? offers taxpayers the ability to check the status of their refund within 24 hours after the IRS accepts their e-filed tax return. The Where’s My Refund? tool updates once every 24 hours, usually overnight.

    MilTax is a free tax resource available for the military community, offered through the Department of Defense. It includes tax preparation and electronic filing software, personalized support from tax consultants and current information about filing taxes. It’s designed to address the realities of military life – including deployments, combat and training pay, housing and rentals and multi-state filings. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free.

    Key filing season dates

    There are several important dates taxpayers should keep in mind for this year’s filing season:

    Jan. 13: IRS Free File opens

    Jan. 17: Due date for tax year 2022 fourth quarter estimated tax payment.

    Jan. 23: IRS begins 2023 tax season and starts accepting and processing individual 2022 tax returns.

    Jan. 27: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.

    April 18:  National due date to file a 2022 tax return or request an extension and pay tax owed due to the Emancipation Day holiday in Washington, D.C.

    Oct. 16: Due date to file for those requesting an extension on their 2022 tax returns.

    Before filing: Plan ahead

    It’s never too early to get ready for the tax-filing season. For more tips and resources, check out the Get Ready page on IRS.gov.

  • National Tax Security Awareness Week, Day 4: Choosing a unique Identity Protection PIN adds extra safety for taxpayers

    National Tax Security Awareness Week, Day 4: Choosing a unique Identity Protection PIN adds extra safety for taxpayers

    WASHINGTON, D.C. (TIP):  As part of a broader effort to increase security, the Internal Revenue Service and the Security Summit partners today reminded taxpayers they could get extra protection starting in January by joining the agency’s Identity Protection Personal Identification Number (IP PIN) program.

    Anyone who has a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN) and is able to verify their identity is eligible to enroll in the IP PIN program. More than 6.6 million taxpayers are now protecting themselves against tax-related identity theft by participating in the IP PIN program. Last year, the IRS made changes to the program to make it easier for more taxpayers to join. The fastest and easiest way to receive an IP PIN is by using the Get an IP PIN tool, which will be available in January.

    Today’s reminder marks the fourth day of National Tax Security Awareness Week, which runs through Dec. 2. The Security Summit sponsors this annual observance as part of a larger effort between the IRS, the state tax agencies as well as the nation’s tax software and tax professional industries.

    The Security Summit was established in 2015 to protect taxpayers and the nation’s tax system against tax-related identity theft. This unique collaboration between the public and private sectors has increased mutual defenses against criminals trying to file fraudulent tax returns and steal refunds.

    One of the critical features of the IRS system involves an IP PIN, which is a six-digit number assigned to eligible taxpayers to help prevent the misuse of their Social Security number or Individual Taxpayer Identification Number on fraudulent federal income tax returns.

    An IP PIN is known only to the taxpayer and the IRS. Initially designed for confirmed victims of tax-related identity theft, the IP PIN program was expanded in 2021 to include any taxpayer nationwide who wants the additional protection and security of using an IP PIN to file tax returns with the IRS. “Preventing someone from filing a tax return under another person’s name is the main reason we want people to have this special code,” said IRS Acting Commissioner Doug O’Donnell. “We encourage people to apply for the code when the system opens up in January. This step provides an extra line of protection for taxpayers – and their tax return.” An IP PIN helps the IRS verify a taxpayer’s identity and accept their federal income tax returns, regardless of whether they are filing electronically or on paper. The online Get an IP PIN tool at IRS.gov/IPPIN displays the taxpayer’s IP PIN. Any participating taxpayer will use the tool in each subsequent year to obtain a new number.

    The IRS urges any IP PIN applicant previously rejected during the identity authentication process to try applying again in 2023. The authentication process has been refined and improved, enabling many taxpayers screened out in the past to have a better chance of passing the authentication process. The Electronic Tax Administration Advisory Committee, or ETAAC, earlier this year highlighted the importance of the IP PIN to taxpayers and tax professionals. “The IP PIN is the number one security tool currently available to taxpayers from the IRS,” the independent advisory group said in its annual report to Congress. “This tool is the key to making it more difficult for criminals to file false tax returns in the name of the taxpayer. In our view, the benefits of increased IP PIN use are many.”

    The ETAAC also recommended the IRS continue to highlight and promote the IP PIN through a public awareness effort. As part of this effort, the IRS is highlighting the IP PIN as part of National Tax Security Awareness Week. The IRS also continues to raise awareness of special items including Publication 5367, IP PIN Opt-In Program for Taxpayers, in English and Spanish, so that tax professionals can print and share the IP PIN information with clients. Special posters are also available in English and Spanish.

    Key points about the IP PIN program

    Before applying, keep these key points in mind about the IP PIN program:

    For 2023, the Get an IP PIN tool is scheduled to launch on Jan. 09, 2023. It’s the fastest and easiest way to get an IP PIN. It is also the only option that immediately reveals the IP PIN to the taxpayer. Therefore, the IRS urges everyone to try the Get an IP PIN tool before pursuing other options.

    No identity theft affidavit is required for taxpayers opting in. Anyone who voluntarily applies for an IP PIN does not need to file Form 14039, Identity Theft Affidavit, with the IRS. The IP PIN is valid for one year. This means that each January, any participating taxpayer must obtain a newly generated IP PIN. Be sure to enter the IP PIN on any return, whether it is filed electronically or on paper. This includes any amended returns or returns for prior years. Doing so will help avoid processing delays or having the return rejected by the IRS.

    Anyone with a Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) who can verify their identity is eligible for the IP PIN opt-in program. Any eligible family member can get an IP PIN. This includes the primary taxpayer (the person listed first on a tax return), the secondary taxpayer (on a joint return, the person listed second on the return), or any of their dependents.

    Never reveal an IP PIN to anyone. The only exception is a taxpayer who uses a trusted tax professional to file their return. Even then, only share the IP PIN with the trusted tax pro when it is time to sign and submit the return. The IRS will never ask for an IP PIN. Remember to watch out: Phone calls, emails and texts requesting an IP PIN are scams. Third parties offering to assist taxpayers to establish or re-gain access to IRS online accounts and asking for the taxpayer’s personal information including address, Social Security number or Individual Taxpayer Identification number (ITIN) and photo identification use this information to sell to others, or file fraudulent tax returns, open credit accounts and more. Identity theft victims should still fill out an ID theft affidavit. Any confirmed tax-related identity theft victim still needs to file Form 14039 with the IRS if the agency rejects their e-filed tax return due to a duplicate SSN filing. The IRS will then investigate their case. Once the fraudulent tax return is removed from their account, the IRS will automatically mail an IP PIN to the confirmed victim at the start of the following calendar year. Because of security risks, confirmed identity theft victims cannot opt-out of the IP PIN program.

    Options for people who can’t pass the online authentication process

    Two options are available for people who cannot pass the IRS online identity authentication process. One involves filing Form 15227, and the other requires a visit to an IRS Taxpayer Assistance Center (TAC). Unlike the online option, both of these options involve, for security reasons, a delay in receiving an IP PIN.

    Form 15227: For processing year 2023, individuals with an adjusted gross income of $73,000 or less and those filing jointly with an adjusted gross income (AGI) of $146,000 or less with access to a telephone can complete Form 15227 and either mail or fax it to the IRS. An IRS representative will then call them to verify their identity with a series of questions. Taxpayers choosing this option who pass the identity authentication process will generally receive their IP PIN in about a month. IRS Taxpayer Assistance Centers: Any taxpayer who is ineligible to file Form 15227 may make an appointment to visit an IRS Taxpayer Assistance Center (TAC). Anyone using this option must bring two forms of picture identification. Because this is in-person identity verification, an IP PIN will be mailed to the taxpayer after their visit. Usually, allow three weeks for delivery. To find the nearest TAC, use the IRS Local Office Locator online tool or call 844-545-5640.

    For more details and to learn more about this year’s National Tax Security Awareness Week’s efforts, visit IRS.gov/securitysummit

    (IRS Press Release)

  • Hurricane Ian victims in Florida qualify for tax relief; October 17 deadline, other dates extended to Feb. 15

    Hurricane Ian victims in Florida qualify for tax relief; October 17 deadline, other dates extended to Feb. 15

    WASHINGTON, D.C. (TIP):  Hurricane Ian victims throughout Florida now have until Feb. 15, 2023, to file various federal individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

    The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business anywhere in the state of Florida qualify for tax relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

    The tax relief postpones various tax filing and payment deadlines that occurred starting on Sept. 23, 2022. As a result, affected individuals and businesses will have until Feb. 15, 2023, to file returns and pay any taxes that were originally due during this period. This means individuals who had a valid extension to file their 2021 return due to run out on Oct. 17, 2022, will now have until Feb. 15, 2023, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments are not eligible for this relief.

    The Feb. 15, 2023, deadline also applies to quarterly estimated income tax payments due on Jan. 17, 2023, and the quarterly payroll and excise tax returns normally due on Oct. 31, 2022, and Jan. 31, 2023. Businesses with an original or extended due date also have the additional time including, among others, calendar-year corporations whose 2021 extensions run out on Oct. 17, 2022. Similarly, tax-exempt organizations also have the additional time, including for 2021 calendar-year returns with extensions due to run out on Nov. 15, 2022.

    In addition, penalties on payroll and excise tax deposits due on or after Sept. 23, 2022, and before Oct. 10, 2022, will be abated as long as the deposits are made by Oct. 10, 2022. The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time. The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

    In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

    Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or the return for the prior year (2021). Be sure to write the FEMA declaration number – DR-4673-FL − on any return claiming a loss. See Publication 547 for details.

    The tax relief is part of a coordinated federal response to the damage caused by Hurricane Ian and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.