IRS NEWS FOR TAX PROFESSIONALS July 2020

 ►UPCOMING WEBINARS

Please check Webinars for Tax Practitioners or Webinars for Small Businesses for updates.

►HOT TOPICS 

Keep Economic Impact Payment notice with other tax records

  • People who receive an Economic Impact Payment this year should keep Notice 1444, Your Economic Impact Payment, with their tax records. This notice provides information about the amount of their payment, how the payment was made and how to report any payment that wasn’t received.

Taxpayers should be aware of myths about tax refunds

  • Now that many taxpayers have filed their federal tax returns electronically and the IRS is back to processing paper tax returns sent by mail, they’re eager for details about their refund. When it comes to refunds, there are several common myths.

Deadline is October 15 to use Non-Filers tool on IRS.gov

  • To help people who aren’t normally required to file a tax return, the IRS created the Non-Filers tool, available in English and Spanish.
  • The Non-Filers tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles. This includes couples and individuals who are homeless.
  • People can qualify, even if they do not have earned income or work.
  • The Non-Filers tool will remain available through the summer and fall.
  • Anyone who registers by October 15 will receive their payment by the end of the year.
  • To help reach these non-filers, over the next few months the IRS will be conducting an extensive outreach and education effort to partner groups who serve homeless individuals, underserved communities, limited English households and others.
  • As part of this effort, the agency has created an Economic Impact Payment partner page, and materials are available in multiple languages.
  • Anyone who already filed either a 2018 or 2019 return does not qualify to use this tool.
  • The IRS cautions that some people who need to file a tax return have been mistakenly using the Non-Filers tool to try to get an Economic Impact Payment.

►IRS OPERATIONS AND SERVICES

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

This page is updated as IRS operations and services change. Please check back often.

Updated July 2, 2020.

  • Processing Delays for Paper Tax Returns
  • Taxpayer Assistance Centers
  • Practitioner Priority Service and Centralized Authorization File processing operations
  • Taxpayer Correspondence
  • Balance Due Notice Mailings – Due Dates Extended to Help Taxpayers

►SCAM ALERT

IRS warns against COVID-19 fraud; other financial schemes

  • The IRS reminds taxpayers to guard against tax fraud and other related financial scams related to COVID-19.
  • In the last few months, the IRS Criminal Investigation division (CI) has seen a variety of Economic Impact Payment scams and other financial schemes looking to take advantage of unsuspecting taxpayers. CI continues to work with law enforcement agencies domestically and abroad to educate taxpayers about these scams and investigate the criminals perpetrating them during this challenging time.

►IN CASE YOU MISSED IT

Taxpayers will soon be able to file amended tax returns electronically

  • Later this summer, for the first time taxpayers will be able to file their Form 1040-X, Amended U.S. Individual Income Tax Return electronically.
  • Making this form electronically fileable has been a long-time goal for the IRS. It will greatly benefit the tax professional community and taxpayers.

Flowchart helps employers understand new tax credits

  • The IRS recently issued Publication 5419, New Employer Tax Credits in English and Spanish to help employers understand that tax credits available to them due to the coronavirus pandemic. The one-page document breaks down the details of the Employer Retention Credit and the credits for paid sick and family leave in easy-to-follow charts. Using the document, employers can quickly determine whether they are eligible for the credits, the amount of the credits and which wages apply to the credits.

Deferral of employment tax deposits and payments through December 31, 2020

  • The CARES Act allows employers to defer the deposit and payment of the employer’s share of Social Security taxes and self-employed individuals to defer payment of certain self-employment taxes. These FAQs address specific issues related to the deferral of deposit and payment of these employment taxes.

►NEWS FOR INDIVIDUALS

IRS announces rollover relief for required minimum distributions from retirement accounts that were waived under the CARES Act

  • Anyone who already took a required minimum distribution in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020.

Relief for taxpayers affected by COVID-19 who take distributions or loans from retirement plans

  • The IRS released Notice 2020-50 to help retirement plan participants affected by the COVID-19 coronavirus take advantage of the CARES Act provisions providing enhanced access to plan distributions and plan loans. This includes expanding the categories of individuals eligible for these types of distributions and loans (referred to as “qualified individuals”) and providing helpful guidance and examples on how qualified individuals will reflect the tax treatment of these distributions and loans on their federal income tax filings.

IRS provides relief to retirement plan participants to sign elections remotely

  • The IRS provided temporary administrative relief to help certain retirement plan participants or beneficiaries who need to make participant elections by allowing flexibility for remote signatures.
  • The change relates to signatures of the individual making the election to be witnessed in the physical presence of a plan representative or notary public, including a spousal consent (“the physical presence requirement”).

IRS outlines changes to health care spending available under CARES Act

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

IRS provides answers about Coronavirus related tax relief for Qualified Opportunity Funds and investors

  • The IRS provided guidance for Qualified Opportunity Funds and their investors in response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic.
  • Notice 2020-39 (PDF) answers questions regarding relief from certain requirements under section 1400Z-2 of the Internal Revenue Code (Code) and the implementing regulations. Additionally, the IRS has updated the Qualified Opportunity Zones frequently asked questions.

Proposed regulations address direct primary care arrangements and health care sharing ministry memberships

  • The IRS released proposed regulations addressing the treatment of certain medical care arrangements under section 213 of the Internal Revenue Code.

► NEWS FOR EMPLOYERS

Who qualifies for which new employer tax credit?

  • Many businesses affected by COVID-19 qualify for tax relief though credits or deferrals.
    • Credits for paid sick and family leave
    • Employee Retention Credit
    • Deferral of employment tax deposits and payments.

IRS provides guidance on employer leave-based donation programs that aid victims of the COVID-19 pandemic

  • The IRS recently provided guidance for employers whose employees forgo sick, vacation or personal leave because of the COVID-19 pandemic.
  • Notice 2020-46 provides that cash payments employers make to charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation or personal leave which their employees forgo will not be treated as compensation. Similarly, the employees will not be treated as receiving the value of the leave as income and cannot claim a deduction for the leave that they donated to their employer.

► NEWS FOR BUSINESSES 

Reminder: Business payment P.O. Boxes in Cincinnati and Hartford close July 1

  • July 1 marks the closing of several business paymentO. Boxes (also known as Lockbox addresses), in the Cincinnati and Hartford areas. Payments will be returned to sender. There will be no forwarding service. Where to File on IRS.gov has current payment addresses. Publication 3891, Lockbox Addresses for 2020, has more information.

Tax Capital Reporting Requirement – Notice 2020-43

  • Notice 2020-43 seeks public comment on a proposed requirement for partnerships to use only one of two alternative methods to satisfy the Tax Capital Reporting Requirement with respect to partnership taxable years that end on or after December 31, 2020. Written or electronic comments must be received by August 4th, 2020.

Aviation Excise Tax Holiday under the CARES Act

  • The CARES Act, enacted on March 27, 2020, provides an excise tax holiday that suspends certain aviation excise taxes. The excise tax holiday began on March 28, 2020 and will end on December 31, 2020. During the excise tax holiday, no tax is imposed on kerosene used in commercial aviation, and normally taxed pursuant to I.R.C. §§ 4041(c) or 4081.

Notice 2020-48 – Sport Fishing Equipment and Bows and Arrows Excise Tax

  • Notice 2020-48 provides expanded disaster relief, in the form of postponing until October 31, 2020, certain Federal excise tax filing and payment deadlines, and associated interest, penalties, and additions to tax, for taxpayers who owe a federal excise tax for sales of sport fishing or archery equipment for the second quarter of 2020. The notice further provides the specific procedures to follow for taxpayers who wish to take advantage of the postponement. It will appear in IRB 2020-29 dated July 13, 2020.

►PEOPLE FIRST INITIATIVE

IRS’ People First Initiative provides compliance relief

  • The IRS unveiled the People First Initiative on March 25, 2020. It is an unprecedented effort to temporarily scale back many collection and enforcement activities by the IRS during the COVID-19 global pandemic.
  • The purpose of the People First Initiative is to immediately ease the burden on people facing tax issues as much as possible, to enable them to better focus on the well-being of themselves and others during this unprecedented situation for the nation. It is not permanent, but it will stay in effect until it is deemed to no longer be needed.
  • In consultation with its partners, the IRS will continue to review the People First Initiative and modify or expand it as needed during this situation.

►ECONOMIC IMPACT PAYMENTS

Economic Impact Payments: Partner and Promotional Materials

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

Recent News Releases

►YOUR PRACTICE, YOUR CLIENTS

IRS Nationwide Tax Forums: Seminar dates, times now available

  • The IRS released the seminar schedule for the 2020 IRS Nationwide Tax Forums and reminded interested tax professionals that registration information is available.
  • Held online this year, the Nationwide Tax Forums will begin on July 21 and continue through August 20 with live-streamed webinars broadcast on Tuesdays, Wednesdays and Thursdays. Registration enables attendees to participate in all of the webinars and earn up to 30 continuing education credits for one price.

Processing of paper Forms 94x and Forms 8655 has resumed

  • Processing of paper employment tax returns, Forms 941, 943, 944, 945, and Form 8655, Reporting Agent Authorizations has resumed. The Ogden and Kansas City campuses have recently re-opened (but not yet at full staffing levels), and they are working on the backlog and processing new submissions. Even if a Form 8655 has not yet been processed, a reporting agent can still e-file and electronically deposit on behalf of clients, and those processes have been continuously open.

Additional signature requirement for Reporting Agents who sign/submit Forms 7200 on behalf of clients

  • There is a new requirement for Reporting Agents (RAs) who sign and submit Form 7200, Advance Payment of Employer Credits Due to COVID-19. This new requirement applies to reporting agents that have the authority to sign and file 94x employment tax returns via a Form 8655, Reporting Agent Authorization.
  • The new requirement is that, in the box “Printed Title,” the signer must include the RA’s company name or name of business as it appeared on line 9 of the Form 8655. As before, the signer must be the principal or responsible official listed on the RA’s e-file application.
  • For the complete requirements, see Employee Retention Credit Q/A-88.

►TCJA (Tax Cuts and Jobs Act)

IRS issues guidance on the elimination of the deduction of qualified transportation fringe benefit expenses

  • The IRS issued proposed regulations that provide guidance for the deduction of qualified transportation fringe and commuting expenses.
  • The Tax Cuts and Jobs Act (TCJA) does not allow deductions for qualified transportation fringe expenses and does not allow deductions for certain expenses of transportation and commuting between an employee’s residence and place of employment.

►TAX EXEMPT ORGANIZATIONS 

►e-NEWS SUBSCRIPTIONS and SOCIAL MEDIA

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►HOW TO SHARE IRS INFO ON SOCIAL MEDIA

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