IRS Again Delays New Form 1099-K Reporting Threshold
By: If you were looking for something to be thankful for in the convoluted information reporting space these days, the IRS has announced in Notice 2023-74 another delay of the new $600 reporting threshold for Form 1099-K. As a result, 2023 will be another transition year for the new, lowered threshold, and reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023.Under the American Rescue Plan Act of 2021 (ARP) (P.L. 117-2), third-party settlement organizations (TPSOs), which include popular payment apps like PayPal and Venmo, were required to report payments of more …
Building a New IRS – Werfel Addresses AICPA National Tax Conference
IRS Commissioner Danny Werfel promised tax pros this week that brick by brick the industry will start to see a steadier foundation of IRS improvements. Werfel, while speaking November 14 at the AICPA National Tax & Sophisticated Tax Conference in Washington, D.C., touted improvements toward building a new IRS – both those we’ve seen and those to come. These already accomplished and expected improvements are in large part because of the significant funding boost provided to the IRS under the Inflation Reduction Act. And though IRS funding continues to be a seemingly partisan issue on Capitol Hill, the logic behind …
Treasury Secretary Yellen Talks IRS Wins, 2024 Tax Filing Season
Treasury Secretary Janet Yellen spotlighted various IRS wins and goals for the 2024 tax filing season in prepared remarks delivered on Tuesday, November 7 at IRS headquarters in Washington, D.C. Most notably, taxpayers are now able to digitally submit to the IRS all correspondence and responses to notices, Yellen announced.This digital enhancement greatly moves the IRS’s modernization efforts forward and beyond a tax system that for too long has lagged far behind the digital age in which we live, according to Yellen. IRS Wins “Last August, I announced an ambitious goal: For the 2024 filing season, taxpayers would be able …
AICPA, Over 50 CPA Organizations Call on FinCEN to Delay BOI Reporting
The American Institute of CPAs (AICPA) and over 50 affiliated CPA organizations are calling on Treasury’s Financial Crimes Enforcement Network (FinCEN) to delay a beneficial ownership information (BOI) reporting rule starting in 2024. The AICPA-led coalition consisting of over 50 state CPA societies and associations, including Washington, D.C. and Guam, stated in an October 30 letter that most businesses are in the dark about the BOI reporting rule’s existence and that the rule as currently drafted would significantly punish even the slightest misunderstanding of the reporting requirements. Small Business Burdens The controversial final rule issued by FinCEN on September 30, 2022, implements …
IRS to Launch Free Direct File Pilot During 2024 Tax Filing Season
The IRS announced today that it will launch a test run of its free Direct File program during the 2024 tax filing season. The Direct File pilot will be limited in scope but will allow eligible taxpayers to file their 2023 federal tax return for free, directly with the IRS. Currently, the IRS expects eligible taxpayers in 13 states to be able to participate in the pilot.Under the Inflation Reduction Act (IRA) (P.L. 117-169), the IRS was directed to study the feasibility of an IRS-run free direct e-file tax return system (Direct File) and submit its findings to Congress. Last …
CALIFORNIA CORNER: IRS Extends California Disaster Relief Again!
By: On October 16, 2023, the IRS issued IR-2023-189, further postponing tax deadlines for most California taxpayers to Nov. 16, 2023. In the wake of last winter’s natural disasters, the normal spring due dates had previously been postponed to October 16.As a result, most individuals and businesses in California will now have until November 16 to file their 2022 returns and pay any tax due. Fifty-five of California’s 58 counties—all except Lassen, Modoc and Shasta counties—qualify. IRS relief is based on three different FEMA disaster declarations covering severe winter storms, flooding, landslides, and mudslides over a period of several months.Eligible returns …
To The Window; To The Wall – IRS Contractor Littlejohn Pleads Guilty for Leaking Data Crawl
Charles Littlejohn, a former IRS contractor, has pleaded guilty to leaking certain high-profile individuals’ tax returns to the media after conducting an illegal data crawl. Former President Trump’s tax return information was reportedly in the mix. The Department of Justice (DOJ) said in an October 12 press release that Littlejohn (not to be confused with the could-be-debated rapper Lil Jon) while working at the IRS as a government contractor stole the tax returns of “a high-ranking government official.” Littlejohn accessed the tax returns on an IRS database after using broad search parameters designed to conceal the true purpose of his …
IRS Releases Clean Vehicle Credits Guidance Package
The IRS has issued a significant package of guidance for the transfer of new and previously owned clean vehicle credits. Under the Inflation Reduction Act (P.L. 117-169), consumers can choose to transfer their new clean vehicle credit of up to $7,500 and their previously owned clean vehicle credit of up to $4,000 to a car dealer starting in 2024. IRS Guidance Drop The IRS guidance drop, which addresses the mechanics of transferring clean vehicle credits from a taxpayer to an eligible entity for vehicles placed in service after Dec. 31, 2023, includes the following: Proposed regulations (REG-113064-23);Revenue Procedure 2023-33; and Fact Sheet …
IRS Expands Tax Pro Account Features
Hey, tax pros — have you checked out the IRS’s upgrades to its online Tax Pro Account tool? The IRS announced last Friday its expansion of Tax Pro Account features, now providing you with access to new services to help clients. New additions to the digital self-service Tax Pro Account portal include:management of active client authorizations on file with the Centralized Authorization File (CAF) database (tax pros can now send Power of Attorney (POA) and Tax Information Authorization (TIA) requests directly to a taxpayer’s individual IRS Online Account);the ability to view client’s tax information, including balance due amounts; andeasier withdraw …
FinCEN Extends BOI Reporting Deadline for Certain Companies
The Financial Crimes Enforcement Network (FinCEN) today issued proposed regulations to extend the deadline for certain entities to file their initial beneficial ownership information (BOI) reports. Under the amendment to FinCEN’s BOI Reporting Rule, it is now providing 90 days for reporting companies created or registered in 2024 to file their initial reports, instead of 30 days.The proposed rule would not make any other changes to the final BOI Reporting Rule:reporting companies created or registered before January 1, 2024, would have until January 1, 2025, to file their initial BOI reports with FinCEN, andentities created or registered on or after January 1, 2025, …
Capitol Hill Connection: Federal Gov’t Shutdown Looms
A federal government shutdown looms as lawmakers on Capitol Hill struggle to reach consensus on fiscal year 2024 appropriations. In other words, Congress has just four days to get it together on the funding front before the lights go out on October 1. A senior congressional aide told Western CPE on September 25 that a “clean” continuing resolution (CR) is expected to pass just in the nick of time this week to keep the government’s doors open, which will likely run through mid-November or December. Typically, CRs are used as a stopgap measure to continue the level of government funding at …
FinCEN Issues BOI Reporting Guide for Small Businesses
On 9/18/23, Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a guide to help small businesses comply with a new beneficial ownership information (BOI) reporting rule set to begin in 2024. The controversial final rule issued by FinCEN on September 30, 2022, implements Section 6403 of the Corporate Transparency Act (CTA), an anti-money laundering law aimed at those seeking to conceal their ownership of corporations, LLCs, or other entities in the U.S. to facilitate money laundering, tax fraud, and other illegal acts.According to FinCEN, the new Small Entity Compliance Guide: Describes each of the BOI reporting rule’s provisions in simple, easy-to-read language; Answers …
CALIFORNIA CORNER: FTB Issues Guidance Regarding Payments Made Following Disaster Relief
In a Tax News Flash issued September 15, 2023, the California Franchise Tax Board (FTB) has warned taxpayers and tax professionals about combining payments due October 16, 2023. The disaster declarations from the winter storms that were applicable to most counties of California extended the due date for multiple personal and business entity tax payments covering two tax years. To ensure your clients’ payments are processed timely and accurately, please submit separate payments for each payment type and do not combine payments for different tax years. As an example, be sure that payments for 2022 tax year liabilities are made …
IRS Stops All New ERC Processing to Combat Fraud
The IRS has stopped processing all new employee retention credit (ERC) claims in an effort to combat rampant fraud associated with the program. The IRS announced the immediate moratorium on processing all new ERC claims on 9/14/23, which is expected to be in place through at least the end of the year.The move ordered by IRS Commissioner Danny Werfel comes after growing concerns from the IRS and tax pros alike that a substantial share of new claims from the aging program are ineligible and fraudulent, ultimately putting businesses at financial risk by being pressured and scammed by aggressive promoters and …
IRS Readies Boost in Partnership, High-Income Audits Using AI
The IRS has announced the rollout of a sweeping, historic effort to redirect its focus of taxpayer examinations on high-income earners, partnerships, and large corporations. The shift in the agency’s attention to more complex audits comes as a result of increased funding provided to the IRS under the Inflation Reduction Act (IRA) (P.L. 117-169).Key variables in the IRS’s new audit equation include:Prioritization of high-income cases.The IRS will intensify work on nearly 1,600 identified taxpayers with total positive income above $1 million that have more than $250,000 in recognized tax debt.Expansion of pilot focused on largest partnerships leveraging Artificial Intelligence.With the …
BREAKING: IRS Issues Much-Anticipated Section 174 Guidance
Happy Friday before September 15, tax pros. With stellar timing, the IRS has issued much-anticipated guidance intended to clarify the application of § 174, as amended by the 2017 law commonly known as the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97).The guidance in Notice 2023-63 provides a preview of the Treasury Department and IRS’s intent to issue proposed regulations addressing:Capitalization and amortization of specified research or experimental (SRE) expenditures under § 174, as amended;Treatment of SRE expenditures under § 460; andApplication of § 482 to cost sharing arrangements involving SRE expenditures. Background Generally, TCJA’s amendment to § 174 requires …
IRS Issues FAQ for Pass-Through Entities to Report Negative Amounts on Schedules K-2/K-3
ICYMI: In case you missed it this week, the IRS has issued a frequently asked question (FAQ) in Fact Sheet 2023-20 to provide guidance to pass-through entities e-filing Schedules K-2 and K-3 on reporting negative amounts.For tax year 2022, the schema for e-filing Schedule K-2 and K-3 do not permit negative values for certain line items in Part II. Thus, the FAQ issued this week provides guidance to pass-through entities about how to report these amounts. STAY TUNED Stay updated with more breaking tax-related developments by subscribing to Tax Bytes with Jessica Jeane, J.D. SUBSCRIBE TODAY
Employee Retention Credit (ERC) – What Tax Pros Need to Know
By: The Employee Retention Credit (ERC) enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) was a blessing for many businesses during the COVID-19 pandemic, providing much needed financial assistance to help keep staff on payroll. When Congress changed the law allowing Paycheck Protection Program (PPP) borrowers to retroactively claim the ERC under the Consolidated Appropriations Act, 2021 (P.L. 116-260), which included the Taxpayer Certainty and Disaster Relief Act of 2020 (TCDRA), the flood gates opened, and many more businesses were eligible for the ERC. ERC – Not for the Faint of Heart Determining ERC eligibility and …
IRS Extends New $145,000 401(k) Catch-Up Contribution Rule by Two Years
By: The IRS issued Notice 2023-62, extending the effective date for a new SECURE Act 2.0* Roth catch-up contribution rule for eligible participants with more than $145,000 in compensation. Under this new rule, catch-up contributions for such participants must be made to a designated Roth account (DRA). Notice 2023-62 extends the effective date from 2024 to 2026. *SECURE Act 2.0 was enacted as Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117-328, 136 Stat. 4459 (2022). Notice 2023-62 also corrected a SECURE Act 2.0 error, which unintentionally repealed IRC Section 402(g)(1)(C). IRC Section 402(g)(1)(C permits catch-up contributions. How We …
Congressional Report: Tax Prep Companies Share Taxpayer Data with Big Tech
A recent congressional report is spotlighting major tax preparation companies’ dissemination of sensitive taxpayer data to Big Tech firms such as Meta (parent company of Facebook) and Google. The 54-page report, Attacks on Tax Privacy, details the findings of a 7-month long investigation spearheaded by Sen. Elizabeth Warren, D-Mass., and Senate Finance Committee Chair Ron Wyden, D-Ore.In a letter to the IRS summarizing the report, the lawmakers’ participating in the investigation wrote, “the findings of this report reveal a shocking breach of taxpayer privacy by tax prep companies and by Big Tech firms that appeared to violate taxpayers’ rights and …