Resources - Last updated 10/15/21
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IRS News Releases
FTB News Releases
2021 Main Street Small Business Tax Credit II
- The Main Street Small Business Tax Credit II will provide Covid-19 financial relief to qualified small business employers.
- On November 1, 2021, the California Department of Tax and Fee Administration will begin accepting applications for tentative small business hiring credit reservation amounts through our online reservation system. Qualified small business employers must apply with the CDTFA for a credit reservation.
- The credit reservations will be allocated to qualified small business employers on a first-come, first-served basis. The reservation system will be available from November 1, 2021, through November 30. 2021. Qualified small business employers may apply to reserve $1,000 per net increase in qualified employees, not to exceed $150,000.
- Tentative credit reservation amounts will generally be reduced by credit amounts reserved or received under the first Main Street Small Business Tax Credit. Qualified small businesses will be able to offset their income taxes or their sales and use taxes with the credit when filing their returns.
Oct. 15 deadline, other dates extended to Jan. 3
- The tax relief postpones various tax filing and payment deadlines that occurred starting on August 26, 2021. As a result, affected individuals and businesses will have until January 3, 2022, 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 2020 return due to run out on October 15, 2021, will now have until January 3, 2022, to file.
- The January 3, 2022 deadline also applies to quarterly estimated income tax payments due on September 15, 2021, and the quarterly payroll and excise tax returns normally due on November 1, 2021. It also applies to tax-exempt organizations, operating on a calendar-year basis, that had a valid extension due to run out on November 15, 2021. Businesses with extensions also have the additional time including, among others, calendar-year corporations whose 2020 extensions run out on October 15, 2021.
- In addition, penalties on payroll and excise tax deposits due on or after August 26 and before September 10, will be abated as long as the deposits are made by September 10, 2021.
October Child Tax Credit payments; still time for eligible families to sign up for advance payments
- The Internal Revenue Service and the Treasury Department announced today that millions of American families are now receiving their advance Child Tax Credit (CTC) payment for the month of October.
- This fourth batch of advance monthly payments, totaling about $15 billion, is reaching about 36 million families today across the country. The majority of payments will be issued by direct deposit.
- Under the American Rescue Plan, most eligible families received payments dated July 15, August 13 and September 15. Future payments are scheduled for November 15 and December 15. For these families, each payment is up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17. The vast majority will be issued by direct deposit.
- Links to online tools, a step-by-step guide to using the Non-filer Sign-up Tool, answers to frequently asked questions and other helpful resources are available on the IRS' special advance CTC 2021 page. It's at IRS.gov/childtaxcredit2021.
IRS announces 2022 Tax Counseling for the Elderly and Volunteer Income Tax Assistance Program Grants
- The Internal Revenue Service recently awarded over $41 million in Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) grants to organizations that provide free federal tax return preparation.
- This year, the IRS awarded grants to 34 TCE and 300 VITA applicants. The IRS received 379 applications requesting over $70 million.
- The TCE program, established in 1978, provides free tax counseling and federal return preparation to individuals who are age 60 or older. Volunteers receive training and technical assistance to provide assistance at community locations across the nation.
- For information on applying for the TCE or VITA programs along with a list of current grant recipients, visit the TCE webpage or the VITA Grant webpage. For details on becoming a TCE or VITA volunteer, visit IRS Tax Volunteers.
Give tax withholding a fresh look as 2021 year-end nears
- The Internal Revenue Service reminds taxpayers today that the last quarter of 2021 is a good time to check withholding. Life brings constant changes to individual financial situations. Events like marriage, divorce, a new child or home purchase can all be reasons to adjust withholding.
- The convenient Tax Withholding Estimator, also available in Spanish, will help taxpayers determine if they have too much withheld and how to make an adjustment to put more cash into their own pocket now.
- In other cases, it will help taxpayers see that they should withhold more or make an estimated tax payment to avoid a tax bill when they file their tax return next year.
- Taxes are generally paid throughout the year whether from salary withholding, quarterly estimated tax payments or a combination of both. About 70% of taxpayers, however, over withhold their taxes every year, which typically results in a refund. The average refund in 2021 was more than $2,700.
IRS Free File program available through Oct. 15
- The Internal Revenue Service announced today that Free File remains available through Oct. 15 for those taxpayers who still need to file their 2020 tax returns.
- Free File is the IRS' public-private partnership with tax preparation software industry leaders to provide their brand-name products for free.
- Traditional IRS Free File provides free online tax preparation and filing options on IRS partner sites. Taxpayers whose adjusted gross income (AGI) is $72,000 or less qualify for any IRS Free File partner offers.
- For taxpayers whose income (AGI) is greater than $72,000, there's the Free File Fillable Forms option. It provides electronic federal tax forms that can be filled out and filed online for free. To use this option taxpayers should know how to prepare their own tax return.
- Taxpayers who requested the six-month filing extension should complete their tax returns and file on or before the Oct. 15 deadline.
IRS Nationwide Tax Forums Online launches 18 new seminars
- The Internal Revenue Service today announced that 18 new self-study seminars are available through the IRS Nationwide Tax Forums Online.
- Tax professionals – CPAs, enrolled agents, Annual Filing Season Program participants and others – can earn continuing education for $29 per credit.
- The new seminars were recorded in July and August at the 2021 IRS Nationwide Tax Forum.
- The Nationwide Tax Forums Online is a qualified sponsor of continuing education registered with the IRS Return Preparer Office (RPO) and the National Association of State Boards of Accountancy (NASBA).
- To earn credit, tax pros need to create an account, answer review questions throughout the seminar and pass a short test.
Oct. 15 FBAR extension deadline nears for foreign bank and financial account holders
- The Internal Revenue Service reminds U.S. citizens, resident aliens and any domestic legal entity that the extension deadline to file their annual Report of Foreign Bank and Financial Accounts (FBAR) is Oct. 15, 2021.
- Filers missing the April 15 annual due date earlier this year received an automatic extension until Oct. 15, 2021, to file the FBAR. They did not need to request the extension.
- Filers affected by a natural disaster may have their FBAR due date further extended. It's important filers review relevant FBAR Relief Notices for complete information.
- Those who don't file an FBAR when required may be subject to significant civil and criminal penalties that can result in a fine and/or prison. The IRS will not penalize those who properly reported a foreign account on a late-filed FBAR if the IRS determines there was reasonable cause for late filing.
Starting Oct. 28, new $67 user fee applies to estate tax closing letters
- The Internal Revenue Service announced today that starting Oct. 28, a new $67 user fee will apply to any estate that requests a closing letter for its federal estate tax return.
- The new user fee was authorized under final regulations, TD 9957, available today in the Federal Register. Closing letter requests must be made using Pay.gov. The IRS will provide further procedural details before the user fee goes into effect.
- By law, federal agencies are required to charge a user fee to cover the cost of providing certain services to the public that confer a special benefit to the recipient.
- Moreover, agencies must review these fees every two years to determine whether they are recovering the cost of these services.
IRS launches new webpage to assist taxpayers with refunds subject to Joint Committee on Taxation review
- The IRS today introduced a new webpage that provides information to taxpayers whose large refunds are subject to further review by the Joint Committee on Taxation (JCT or Joint Committee).
- By law, when taxpayers claim a federal tax refund or credit of more than $2 million ($5 million for a C corporation), the IRS must review the refund or credit and provide a report to the JCT, a non-partisan committee of the U.S. Congress. Refunds subject to this review are known as “Joint Committee Refund Cases.”
- Taxpayers can now find answers to most questions about Joint Committee case reviews and links to additional resources at Large Tax Refunds and Credits Subject to Review by the Joint Committee on Taxation – What to Expect.
- The IRS estimates the new webpage will help hundreds of taxpayers. The agency notifies taxpayers who have Joint Committee Refund Cases that are subject to review. Taxpayers who have been contacted by an IRS agent should work with the agent assigned to their Joint Committee Refund Case.
Expanded tax benefits help individuals and businesses give to charity during 2021
- The Internal Revenue Service today explained how expanded tax benefits can help both individuals and businesses give to charity before the end of this year.
- The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted last December, provides several provisions to help individuals and businesses who give to charity.
- The new law generally extends through the end of 2021 four temporary tax changes originally enacted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Here is a rundown of these changes.
Deductions up to $600 available for cash donations by non-itemizers
- Ordinarily, individuals who elect to take the standard deduction cannot claim a deduction for their charitable contributions. The law now permits these individuals to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to certain qualifying charitable organizations.
- Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify to claim a limited deduction for cash contributions.
- These individuals, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2021. The maximum deduction is increased to $600 for married individuals filing joint returns.
- Cash contributions include those made by check, credit card or debit card as well as amounts incurred by an individual for unreimbursed out-of-pocket expenses in connection with the individual's volunteer services to a qualifying charitable organization. Cash contributions don't include the value of volunteer services, securities, household items or other property.
Oct. 15 deadline approaches for taxpayers who requested extensions to file 2020 tax returns
- The Internal Revenue Service today reminds taxpayers about the upcoming October 15 due date to file 2020 tax returns.
- People who asked for an extension should file on or before the extension deadline to avoid the penalty for filing late. Electronic filing options, such as IRS Free File, are still available.
- Although October 15 is the last day for most people to file, some taxpayers may have more time. They include: (1) Members of the military and others serving in a combat zone. They typically have 180 days after they leave the combat zone to file returns and pay any taxes due. (2) Taxpayers in federally declared disaster areas who already had valid extensions. For details, see the disaster relief page on IRS.gov.
- There is usually no penalty for failure to file if the taxpayer is due a refund. However, people who wait too long to file and claim a refund, risk losing it altogether. Those who have yet to file a 2020 tax return, owe tax, and did not request an extension can generally avoid additional penalties and interest by filing the return as soon as possible and paying any taxes owed.
IRS reminds business owners to correctly identify workers as employees or independent contractors
- Internal Revenue Service reminds business owners that it's critical to correctly determine whether the individuals providing services are employees or independent contractors.
- An employee is generally considered to be anyone who performs services, if the business can control what will be done and how it will be done. What matters is that the business has the right to control the details of how the worker's services are performed.
- Independent contractors are normally people in an independent trade, business or profession in which they offer their services to the public. Doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers or auctioneers are generally independent contractors.
- The Self-Employed Individuals Tax Center has information for those who are in an independent trade, business or profession in which they offer their services to the general public.
New mailing address for some Western states as Fresno, California, paper tax return processing center closes
- The Internal Revenue Service will close its paper return processing center in Fresno, California, permanently at the end of September this year.
- Originally announced in 2016, this closure is part of a larger, ongoing efficiency strategy as most taxpayers now file electronically.
- The number of individual returns taxpayers filed electronically has grown from 90 million in 2008 to over 145 million in 2020, which is more than 90% of all returns filed. The IRS expects this trend to continue for both individual and non-individual returns.
- Taxpayers located in Alaska, California, Hawaii, Ohio and Washington state who previously filed their federal tax returns with Fresno should now mail their returns to the Ogden, Utah, processing center.
IRS recognizes Small Business Week: Resources available to help employers
- Internal Revenue Service wants small business owners to know that information and resources to help them understand and meet their tax obligations are available free at IRS.gov.
- Small businesses play a pivotal role in our nation's economy. The IRS has a variety of resources available to help employers meet their tax responsibilities as well as help their employees.
- IRS online resources can also help employers with things like how to determine if workers should be classified as employees or independent contractors, when employment taxes are due and what forms they need to file.
- It's important a small business understand employment taxes such as federal income tax, Social Security and Medicare taxes as well as Federal Unemployment (FUTA) Tax. Employers must regularly report wages, tips and other compensation paid to an employee by filing the required form(s) to the IRS.
IRS: Cost of home testing for COVID-19 is eligible medical expense; reimbursable under FSAs, HSAs
- The Internal Revenue Service reminds taxpayers today that the cost of home testing for COVID-19 is an eligible medical expense that can be paid or reimbursed under health flexible spending arrangements (health FSAs), health savings accounts (HSAs), health reimbursement arrangements (HRAs), or Archer medical savings accounts (Archer MSAs).
- That is because the cost to diagnose COVID-19 is an eligible medical expense for tax purposes.
- The IRS also reminds taxpayers that the costs of personal protective equipment, such as masks, hand sanitizer and sanitizing wipes, for the primary purpose of preventing the spread of COVID-19 are eligible medical expenses that can be paid or reimbursed under health FSAs, HSAs, HRAs, or Archer MSAs.
- Additional information is available on IRS.gov.
IRS: Tax relief now available to Ida victims in New York and New Jersey
- Victims of Hurricane Ida in parts of New York and New Jersey now have until January 3, 2022, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today. This is comparable to relief provided last week to Ida victims in Louisiana.
- The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. In New York, this currently includes Bronx, Kings, New York, Queens, Richmond and Westchester counties, and in New Jersey, it includes Bergen, Gloucester, Hunterdon, Middlesex, Passaic and Somerset counties.
- Taxpayers in Ida-impacted localities subsequently designated by FEMA in other parts of these states will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.
IRS: Deadline for third quarter estimated tax payments is Sept. 15
- The Internal Revenue Service reminds people that September 15, 2021, is the deadline for third quarter estimated tax payments.
- This generally applies to people who are self-employed and some investors, retirees and those who may not normally have taxes withheld from their paycheck by their employers.
- The U.S. tax system operates on a pay-as-you-go basis. This means taxpayers are to pay most of their tax during the year, as they earn or receive income. Therefore, individuals not subject to withholding may need to make quarterly estimated tax payments.
- If a taxpayer underpaid their taxes, they may have to pay a penalty. This applies whether they paid through withholding or through estimated tax payments. A penalty may also apply for late estimated tax payments even if someone is due a refund when they file their tax return.
Treasury, IRS issue guidance for 2021 on reporting qualified sick and family leave wages
- The Treasury Department and the Internal Revenue Service today issued Notice 2021-53, which provides guidance to employers about reporting on Form W-2 the amount of qualified sick and family leave wages paid to employees for leave taken in 2021.
- The notice provides guidance under recent legislation, including: the Families First Coronavirus Response Act (FFCRA), as amended by the COVID-Related Tax Relief Act of 2020, and the American Rescue Plan Act of 2021.
- Employers will be required to report these amounts to employees either on Form W-2, Box 14, or in a separate statement provided with the Form W-2. The guidance provides employers with model language to use as part of the Instructions for Employee for the Form W-2 or on the separate statement provided with the Form W-2.
- The wage amount that the notice requires employers to report on Form W-2 will provide employees who are also self-employed with the information necessary to determine the amount of any sick and family leave equivalent credits they may claim in their self-employed capacities.
IRS grants dyed diesel fuel penalty relief in Louisiana due to Hurricane Ida
- The Internal Revenue Service, in response to shortages of undyed diesel fuel caused by Hurricane Ida, will not impose a penalty when dyed diesel fuel is sold for use or used on the highway for a number of parishes in the state of Louisiana.
- This penalty relief is available to any person that sells or uses dyed fuel for highway use. In the case of the operator of the vehicle in which the dyed fuel is used, the relief is available only if the operator or the person selling the fuel pays the tax of 24.4 cents per gallon that is normally applied to diesel fuel for highway use.
- Also, this waiver does not apply to the Internal Revenue Code penalty for using adulterated fuels that do not comply with applicable EPA regulations. Consequently, diesel fuel with sulfur content higher than 15 parts-per-million may not be used in highway vehicles.
- This relief is effective as of August 29, 2021, and will remain in effect through September 15, 2021.
September is National Preparedness Month; IRS urges taxpayers to prepare for natural disasters
- With the height of hurricane season fast approaching and the ongoing threat of wildfires in some parts of the country, the Internal Revenue Service reminds everyone to develop an emergency preparedness plan.
- All taxpayers, from individuals to organizations and businesses, should take time now to create or update their emergency plans.
- Taxpayers can begin getting ready for a disaster with a preparedness plan that includes securing and duplicating essential tax and financial documents, creating lists of property and knowing where to find information once a disaster has occurred.
- Securing this information can help in the aftermath of a disaster, and it can help people more quickly take advantage of disaster relief available from the IRS.
Interest rates remain the same for the fourth quarter 2021
- The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning October 1, 2021.
- The rates will be: 3% for overpayments (2% in the case of a corporation); 0.5 % for the portion of a corporate overpayment exceeding $10,000; 3% percent for underpayments; and 5% percent for large corporate underpayments.
- Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.
- The interest rates announced today are computed from the federal short-term rate determined during July 2021 to take effect August 1, 2021, based on daily compounding.
IRS accepting applicants for the Compliance Assurance Process for 2022
- he Internal Revenue Service announced today the opening of the application period for the 2022 Compliance Assurance Process (CAP) program.
- The application period runs September 1 to November 1, 2021. The IRS will inform applicants if they're accepted into the program in February 2022.
- Launched in 2005, CAP employs real-time issue resolution, through transparent and cooperative interaction between taxpayers and the IRS, to improve federal tax compliance by resolving issues prior to the filing of a tax return.
- To be eligible to apply for CAP, new applicants must: Have assets of $10 million or more, Be a U.S. publicly traded corporation with a legal requirement to prepare and submit SEC Forms 10-K, 10-Q, and 8-K, and Not be under investigation by, or in litigation with, any government agency that would limit the IRS's access to current tax records.
- To be eligible to participate in CAP, taxpayers must adhere to CAP program limits on the number of open years. For 2022, the IRS is continuing the modification of the open-year criteria to allow- "two filed" open returns.
Child Tax Credit: New update address feature available with IRS online portal; make other changes by August 30 for September payment
- The Internal Revenue Service has launched a new feature allowing any family receiving monthly Child Tax Credit payments to quickly and easily update their mailing address using the Child Tax Credit Update Portal, found exclusively on IRS.gov.
- This feature will help any family that chooses to receive their payment by paper check avoid mailing delays or even having a check returned as undeliverable.
- Families will need Letter 6419 to quickly and accurately fill out their 2021 federal income tax return next year. This is important because, for most families, the advance payments they are receiving during 2021 cover only half of the total credit. They will claim the remaining portion on their 2021 tax return.
- Any of these changes made before midnight ET on August 30, will apply to the September 15 payment and all subsequent monthly payments, scheduled for October 15, November 15, and December 15.
Filing Information Returns Electronically (FIRE) Users
- Beginning September 15, 2021, the FIRE System Production Login will require additional information.
- The current login requires your FIRE Account User ID and Password. Beginning September 15, 2021, you will be required to enter your Transmitter Control Code (TCC), EIN and legal business name as it exists in the FIRE System.
- The spelling, and abbreviations used to login will require an exact match with the information in the FIRE System. The information used at login will now pre-populate for you during the file submission process, you will no longer have to enter the information above for each submission.
- Before September 15, 2021, we recommend you take the following actions to ensure you have the correct spelling on the business name.
- To further assist with this transition, the FIRE Trading Partner Test System has been updated to reflect the changes discussed above. You are encouraged to try out the new login and test your transmissions.
Security Summit warns tax pros to watch for tell-tale signs of identity theft
- With identity thieves continuing to target the tax community, Internal Revenue Service Security Summit partners today urged tax professionals to learn the signs of data theft so they can react quickly to protect clients.
- Knowing the signs of identity theft is the final part of a five-part series sponsored by the Summit partners to highlight critical steps tax professionals can take to protect client data.
- Report it to your local IRS Stakeholder Liaison Liaisons will notify IRS Criminal Investigation and others within the agency on the practitioner's behalf. Speed is critical. If reported quickly, the IRS can take steps to block fraudulent returns in the clients' names and will assist tax pros through the process.
- Email the Federation of Tax Administrators at statealert@taxadmin.org Get information on how to report victim information to the states. Most states require that the state attorney general be notified of data breaches. This notification process may involve multiple offices.
IRS: Families now receiving August Child Tax Credit payments; still time for low-income families to sign up
- The Internal Revenue Service and the Treasury Department announced today that millions of American families are now receiving their advance Child Tax Credit (CTC) payment for the month of August as direct deposits begin posting in bank accounts and checks arrive in mailboxes.
- This second batch of advance monthly payments, worth about $15 billion, are reaching about 36 million families today across the country. The majority will be issued by direct deposit.
- Under the American Rescue Plan, most eligible families received the first payment on July 15, and payments will continue each month for the rest of 2021.
- For these families, each payment is up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17.
- Besides the July 15 and Aug. 13 payments, payment dates are September 15, October 15, November 15 and December 15.
IRS Provides More Guidance for Businesses Claiming Employee Retention Tax Credit
- The Internal Revenue Service (IRS) recently published guidance, notice 2021-49, that addressed changes for the Employer Retention Tax Credit (ERTC) in 3rd and 4th quarters of 2021 instituted under the American Rescue Plan Act.
- More detailed guidance was provided for newly added categories under this law: Recovery Startup Businesses and financially distressed businesses. Additionally, it clarified some open questions that apply to the ERTC for 2020 and 2021, including tip wages and owner/spouse wages.
- The updated Employee Retention Credit (ERC) provides a refundable credit of up to $5,000 for each full-time equivalent employee you retained from March 13, 2020, to Dec. 31, 2020, and up to $14,000 for each retained employee from Jan. 1, 2021, to June 30, 2021.
- You can claim your credit immediately by reducing payroll taxes sent to the Internal Revenue Service (IRS).
- If your credits exceed payroll taxes, then you can request a direct refund from the IRS.
- The new law, retroactive to March 27, 2020, now allows employers that received Paycheck Protection Program (PPP) loans to claim the ERC for qualified wages not treated as payroll costs in obtaining forgiveness of the PPP loan.
IRS provides relief for certain employers claiming the Work Opportunity Tax Credit
- The Internal Revenue Service today announced it is providing transition relief to certain employers claiming the Work Opportunity Tax Credit (WOTC).
- The WOTC is a federal income tax credit available to employers that hire certified members of certain groups specified in the Internal Revenue Code who face significant barriers to employment, including Designated Community Residents or Qualified Summer Youth Employees.
- The IRS today issued Notice 2021-43 PDF, which extends the 28-day deadline for employers to submit a request to a designated local agency (DLA) to certify that an employee hired between January 1 and October 8 of this year is a Designated Community Resident or a Qualified Summer Youth Employee.
- Empowerment Zone designations terminated on December 31, 2020, but the Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted as Division EE of the Consolidated Appropriations Act, 2021, permitted the designations to be extended through 2025. On May 26, 2021, all Empowerment Zone designations were extended from Dec. 31, 2020 to December 31, 2025.
Treasury, IRS provide gross receipts safe harbor for employers claiming the Employee Retention Credit
- The Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) today issued a safe harbor allowing employers to exclude certain items from their gross receipts solely for determining eligibility for the Employee Retention Credit (ERC).
- An employer elects to apply the safe harbor by excluding these amounts solely for determining whether it is an eligible employer for a calendar quarter for purposes of claiming the ERC on its employment tax return.
- Revenue Procedure 2021-33 requires employers to apply the safe harbor consistently for determining eligibility for the ERC. The employer must exclude the amounts from their gross receipts for each calendar quarter in which gross receipts are relevant to determining eligibility to claim the ERC.
- The employer claiming the credit must also apply the safe harbor to all employers treated as a single employer under the aggregation rules.
IRS provide additional guidance to employers claiming the employee retention credit, including for the third and fourth quarters of 2021
- The Treasury Department and the Internal Revenue Service today issued further guidance on the employee retention credit, including guidance for employers who pay qualified wages after June 30, 2021, and before January 1, 2022, and additional guidance on miscellaneous issues that apply to the employee retention credit in both 2020 and 2021.
- Notice 2021-49 addresses changes made by the American Rescue Plan Act of 2021 (ARP) to the employee retention credit that are applicable to the third and fourth quarters of 2021.
- Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their employment tax returns (generally, Form 941) for the applicable period. If a reduction in the employer's employment tax deposits is not sufficient to cover the credit, certain employers may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.
- Treasury and the IRS continue to closely monitor pending legislation related to the employee retention credit and will provide additional information as needed.
Treasury, IRS provide additional guidance to employers claiming the employee retention credit, including for the third and fourth quarters of 2021
- The Treasury Department and the Internal Revenue Service today issued further guidance on the employee retention credit, including guidance for employers who pay qualified wages after June 30, 2021, and before January 1, 2022, and additional guidance on miscellaneous issues that apply to the employee retention credit in both 2020 and 2021.
- Those changes include, among other things:
(1) making the credit available to eligible employers that pay qualified wages after June 30, 2021, and before January 1, 2022,
(2) expanding the definition of eligible employer to include "recovery startup businesses,"
(3) modifying the definition of qualified wages for "severely financially distressed employers," and
(4) providing that the employee retention credit does not apply to qualified wages taken into account as payroll costs in connection with a shuttered venue grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, or a restaurant revitalization grant under section 5003 of the ARP. - Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their employment tax returns (generally, Form 941) for the applicable period.
- If a reduction in the employer's employment tax deposits is not sufficient to cover the credit, certain employers may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.
IRS reminds heavy vehicle owners of August 31 highway use tax return deadline
- The Internal Revenue Service reminds those who have registered, or are required to register, large trucks and buses that it's time to file Tax Year 2021 Form 2290, Heavy Highway Vehicle Use Tax Return.
- The deadline to file and pay is August 31, 2021, for vehicles used on the road during July 2021.
- The highway use tax applies to highway motor vehicles with a taxable gross weight of 55,000 pounds or more. Taxpayers unsure if they must file can use the IRS online tool, "Do I Need to Pay the Heavy Highway Vehicle Use Tax?" The question-and-answer format helps owners determine if they are required to pay the highway use tax.
- For more information, visit the Trucking Tax Center at IRS.gov/trucker.
Tax Pros can help clients battle identity theft risk related to unemployment
- Internal Revenue Service Security Summit partners today outlined for tax professionals how they can assist clients who were victims of unemployment compensation fraud schemes that targeted state workforce agencies in 2020 and 2021.
- Addressing unemployment compensation fraud is the third in a five-part series sponsored by the Summit partners to highlight critical steps tax professionals can take to protect client data.
- The U.S. Department of Labor's Inspector General estimated approximately $89 billion in unemployment compensation was lost in 2020 due to fraud.
- Although unemployment compensation is taxable, the American Rescue Plan Act of 2021 allows an exclusion of unemployment compensation of up to $10,200 for individuals for taxable year 2020. In the case of married individuals filing a joint Form 1040 or 1040-SR, this exclusion is up to $10,200 per spouse.
IRS announces 2021 Supplemental Application Low Income Taxpayer Clinic grant recipient
- The Internal Revenue Service announced today that West Virginia University (WVU) College of Law has been selected for its 2021 Supplemental Application Low Income Taxpayer Clinic matching grant. The IRS's LITC supplemental application expands coverage to states without a clinic, giving priority to qualified organizations in underrepresented geographic areas.
- LITCs represent low-income taxpayers in federal tax disputes with the IRS and provide taxpayer education and outreach to both low income and ESL taxpayers. They must provide all services for no more than a nominal fee.
- Through the LITC program, the IRS awards matching grants of up to $100,000 per year to qualifying organizations. The LITC program is a federal matching grant program administered by the Taxpayer Advocate Service, led by National Taxpayer Advocate Erin Collins. Although LITCs receive partial funding from the IRS, LITCs, their employees and volunteers operate independent of the IRS.
- More information about LITCs, and the work they do to represent, educate, and advocate on behalf of low income and ESL taxpayers, is available in IRS Publication 5066, LITC Program Report PDF. IRS Publication 4134, Low Income Taxpayer Clinic List PDF, provides information about LITCs by geographic area, including contact information and details about the languages, in addition to English, in which each LITC offers services. Publication 5066 and Publication 4134 are available at IRS.gov.
Paid leave credit available for providing leave to employees caring for individuals obtaining or recovering from a COVID-19 immunization
- The IRS today updated frequently asked questions (FAQs) on the paid sick and family leave tax credits under the American Rescue Plan Act of 2021 (ARP).
- The updates clarify that eligible employers can claim the credits for providing leave to employees to accompany a family or household member or certain other individuals to obtain immunization relating to COVID-19 or to care for a family or household member or certain other individuals recovering from the immunization.
- The paid sick and family leave credits reimburse eligible employers for the cost of providing paid sick and family leave for reasons related to COVID-19. The revised FAQs make clear this includes leave taken by employees to care for certain individuals to obtain immunization relating to COVID-19 or to recover from immunization relating to COVID-19. This new reason for paid sick or family leave also applies for the comparable credits for self-employed individuals.
- Self-employed individuals may claim comparable credits on the Form 1040, U.S. Individual Income Tax Return.
IRS continues unemployment compensation adjustments, prepares another 1.5 million refunds
- The Internal Revenue Service reported today that another 1.5 million taxpayers will receive refunds averaging more than $1,600 as it continues to adjust unemployment compensation from previously filed income tax returns.
- The American Rescue Plan Act of 2021, which became law in March, excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.
- Refunds by direct deposit will begin July 28 and refunds by paper check will begin July 30. This is the fourth round of refunds related to the unemployment compensation exclusion provision.
- Taxpayers will generally receive letters from the IRS within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.
Security Summit: Tax pros should encourage clients to obtain IP PINs to protect against tax-related identity theft
- Internal Revenue Service Security Summit partners today called on tax professionals to increase efforts to inform clients about the Identity Protection PIN Opt-In Program that can protect against tax-related identity theft.
- The IRS, state tax agencies and the nation's tax industry – working together as the Security Summit – need assistance from tax professionals to spread the word to clients that the IP PIN is now available to anyone who can verify their identity.
- "An Identity Protection PIN prevents someone else from filing a tax return using your Social Security number," said Chuck Rettig, IRS commissioner. "We've now made the IP PIN available to anyone who can verify their identity. This is a free way for taxpayers to protect themselves, but we need the help of tax professionals to make sure more people know about it."
- To obtain an IP PIN, the best option is the Get an IP PIN, the IRS online tool. Taxpayers must validate their identities through Secure Access authentication to access the tool and their IP PIN. Before attempting this rigorous process, see Secure Access: How to Register for Certain Online Self-Help Tools.
IRS holds additional weekend events July 23-24 to help people with Child Tax Credit payments and Economic Impact Payments
- The Internal Revenue Service and partners in non-profit organizations, churches, community groups and others will host additional events in several cities this weekend to help eligible families register for the monthly Advance Child Tax Credit (AdvCTC) payments.
- The special events on July 23-24, 2021, will be hosted by IRS and partner groups to help people file income tax returns and register for the advance payments.
- People who need to file a 2020 federal income tax return, but are unable to attend one of these events, may be able to prepare and file their own federal income tax online using IRS Free File if their income is $72,000 or less.
- People who don't need to file a 2020 federal tax return can also use the Non-filer Sign-up Tool to register to receive the advance CTC payments, the third round of the Economic Impact Payment and the Recovery Rebate Credit.
- To make sure families have easy access to their money, the IRS is issuing these payments by direct deposit, as long as correct banking information has previously been provided to the IRS. Otherwise, people should watch their mail for their mailed payment.
What's changed recently with the Employee Retention Credit (ERC 2021)?
- There have been so many changes to ERC, 2021 (Q3 and Q4) July 1, 2021 – December 31, 2021
- Eligible employers must have between 1 – 500 W2 employees (excluding the owners)
- It is possible to be eligible if you started your businesses after February 15, 2020; if your gross receipts are under $1M, you may qualify as a Recovery Startup Business
- The maximum credit amount per employee is $7000 for the quarter ($28,000 for the year)
- Credit is 70% of qualified wages
- To qualify for ERC, you must see a decline of 20% in gross receipts when comparing corresponding quarters in 2021 and 2019
IRS: Monthly Child Tax Credit payments begin
- The Internal Revenue Service and the Treasury Department announced today that millions of American families have started receiving monthly Child Tax Credit payments as direct deposits begin posting in bank accounts and checks arrive in mailboxes.
- This first batch of advance monthly payments worth roughly $15 billion reached about 35 million families today across the country. About 86% were sent by direct deposit.
- The payments will continue each month. The IRS urged people who normally aren't required to file a tax return to explore the tools available on IRS.gov.
- Additional information is available on a special Advance Child Tax Credit 2021 page, designed to provide the most up-to-date information about the credit and the advance payments.
Child Tax Credit 2021
- The child tax credit is bigger and better than ever for 2021, which should make things a little easier for families taking a financial hit during the COVID-19 pandemic.
- Thanks to the American Rescue Plan Act of 2021 ("American Rescue Plan"), the credit amount is significantly increased for one year, and the IRS is required to make advance payments to qualifying families in the second half of 2021.
- There are now two ways in which the credit can be reduced for upper-income families. That means some parents won't qualify for a larger credit and, as before, some won't receive any credit at all.
- More children will qualify for the credit in 2021. And, if you have more than one kid, the credit amount could differ from one child to another.
More than 2.2 million additional Economic Impact Payments disbursed under the American Rescue Plan
- The Internal Revenue Service, U.S. Department of the Treasury, and the Bureau of the Fiscal Service announced today they have disbursed more than 2.2 million additional Economic Impact Payments under the American Rescue Plan.
- Today's announcement covering the most recent six weeks of the effort brings the total disbursed so far under the American Rescue Plan to more than 171 million payments.
- They represent a total value of more than $400 billion since these payments began rolling out to Americans in batches on March 12.
- The IRS will continue to disburse Economic Impact Payments on a weekly basis. Ongoing payments will be sent to eligible individuals for whom the IRS previously did not have information to issue a payment but who recently filed a tax return, as well to people who qualify for "plus-up" payments.
Security Summit partners urge tax pros to use multi-factor authentication
- Critical step to boost protection against data theft
- With security incidents on the rise, the Internal Revenue Service, state tax agencies and the tax industry urged tax professionals and taxpayers to use a special feature – multi-factor authentication – available on tax software products to help protect against identity and data theft.
- Through June 30, 2021, there have been 222 data theft reports this year from tax professionals to the IRS, outpacing the rate of 211 in 2020 and 124 in 2019.
- Each individual report may involve hundreds to thousands of taxpayers. Client information stolen from tax professionals' offices is used to create fraudulent tax returns that are difficult to detect because the identity thief is using real financial data.
IRS improves services to taxpayers with digital authorizations and launch of new Tax Pro Account
- The Internal Revenue Service today launched a new feature that will give taxpayers digital control over who can represent them or view their tax records, a groundbreaking step in the agency's expansion of electronic options for taxpayers and tax professionals.
- The new feature, one of many recent enhancements to the Online Account for individuals, will allow individual taxpayers to authorize their tax practitioner to represent them before the IRS with a Power of Attorney (POA) and to view their tax accounts with a Tax Information Authorizations (TIA).
- As of today, tax professionals may go to the new Tax Pro Account on IRS.gov to digitally initiate POAs and TIAs. These digital authorization requests are simpler versions of Forms 2848 and 8821.
- Tax professionals should use their IRS usernames and passwords to access the Tax Pro Account or create an account after verifying their identities.
California Reopening
- As of June 15, California retired its Blueprint for a Safer Economy.
- California’s economy is now fully open. Restaurants, shopping malls, movie theaters, and most everyday places are operating as normal – with no capacity limits or physical distancing required.
- However, everyone is still required to follow masking guidelines in select settings. Some restrictions also still exist for large events.
- California will keep a close eye on covid-19 vaccination and infection rates over the summer and will review these guidelines by September 1, 2021.
- Everyone regardless of vaccination status, is still required to wear masks on public transportation (buses, trains, planes, etc.) and some other places (like hospitals and shelters) per CDC guidelines.
IRS Security Summit announces summer campaign to raise awareness among tax pros about identity theft
- Continuing an effort to battle tax-related identity theft, the IRS, state tax agencies and the tax industry announced today that the annual campaign to raise awareness among tax professionals about data security will begin next week.
- The 2021 campaign begins as the number of data thefts reported by tax professionals to the IRS continued to climb. Through June 30, 2021, there have been 222 data theft reports this year from tax professionals to the IRS, outpacing the rate of 211 in 2020 and 124 in 2019.
- Identity thieves and fraudsters were especially active last year and this year as they used the COVID-19 pandemic, the nationwide teleworking practices and the economic downturn as fuel for a variety of scams and schemes to steal money and identities.
- More information on these tips will be available every Tuesday over the next five weeks.
IRS readies nearly 4 million refunds for unemployment compensation overpayments
- The Internal Revenue Service announced today it will issue another round of refunds this week to nearly 4 million taxpayers who overpaid their taxes on unemployment compensation received last year.
- The American Rescue Plan Act of 2021, which became law in March, excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.
- Refunds by direct deposit will begin July 14 and refunds by paper check will begin July 16. The IRS previously issued refunds related to unemployment compensation exclusion in May and June, and it will continue to issue refunds throughout the summer.
- Taxpayers will generally receive letters from the IRS within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.
Online Child Tax Credit eligibility tool now available in Spanish; other multilingual materials help families see if they qualify for advance payments
- The Internal Revenue Service has launched a new Spanish-language version of its online tool, Child Tax Credit Eligibility Assistant, designed to help families determine whether they qualify for the Child Tax Credit and the special monthly advance payments of the credit, due to begin on July 15.
- The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March.
- Normally, the IRS will calculate the payment based on a family's 2020 tax return, including those who use the Non-filer Sign-up Tool.
- If that return is not available because it has not yet been filed or is still being processed, the IRS will instead determine the initial payment amounts using the 2019 return or the information entered using the Non-filers tool that was available in 2020.
- The payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 through 17.
IRS provides guidance for multiemployer retirement plans receiving assistance from the PBGC
- The Internal Revenue Service today provided guidance for multiemployer qualified retirement plans that receive special financial assistance from the Pension Benefit Guaranty Corporation (PBGC) and for participants and beneficiaries in those plans.
- Notice 2021-38 PDF provides guidance under provisions of the American Rescue Plan Act of 2021 regarding special financial assistance paid by the PBGC to eligible multiemployer defined benefit pension plans that are financially at risk.
- The reinstatement of previously suspended pension benefits, along with make-up payments, as a condition that eligible multiemployer plans must meet if they receive special financial assistance.
- The individual income tax treatment of these make-up payments.
- How a plan that receives special financial assistance must treat the plan's special financial assistance account for purposes of the minimum funding requirements for multiemployer defined benefit plans
Special weekend events to help people who don’t normally file taxes get Child Tax Credit payments and Economic Impact Payments
- The Internal Revenue Service and partners in non-profit organizations, churches, community groups and others will host events in 12 cities this weekend to help people who don't normally file a federal tax return to register for the monthly Advance Child Tax Credit (AdvCTC) payments.
- The special events PDF by IRS and partner groups to help people quickly file income tax returns and register for the advance payments will take place July 9-10, 2021. Events will be held in Atlanta, New York, Detroit, Houston, Los Angeles, Las Vegas, Miami, Milwaukee, Philadelphia, Phoenix, St. Louis and Washington, DC/Maryland.
- People can check their eligibility for the AdvCTC payments by using the new Advance Child Tax Credit Eligibility Assistant.
IRS provides answers for certain transportation companies eligible for Treasury grants
- The Internal Revenue Service today posted answers to questions that certain transportation companies may have regarding Treasury grants and related taxes.
- The Coronavirus Economic Relief for Transportation Services (CERTS) Act of the Consolidated Appropriations Act of 2021 authorizes the Department of the Treasury to provide grants to transportation service providers--including eligible motorcoach companies, school bus companies, and passenger vessel companies-- that experienced annual revenue losses of 25% or more as a result of COVID-19.
- These companies must generally prioritize the use of the grants for payroll costs, though grants may be used for certain operating expenses (including the acquisition of services and equipment needed to protect workers and customers from COVID-19) and the repayment of debt accrued to maintain payroll.
- Funds not used for eligible activities within one year of receipt of the grant must be returned to the Treasury Department.
IRS extends tax relief for employer leave-based donation programs that aid victims of the COVID-19 pandemic
- The Internal Revenue Service today extended the tax relief provided in Notice 2020-46 for calendar year 2021 for employers whose employees forgo sick, vacation or personal leave because of the COVID-19 pandemic.
- Notice 2021-42 PDF 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.
- Employers, however, may deduct these cash payments as a business expense or as a charitable contribution deduction if the employer otherwise meets the respective requirements of either section.
Treasury, IRS extend safe harbor for renewable energy projects
- The Department of the Treasury and the Internal Revenue Service today issued guidance for taxpayers developing renewable energy projects to address delays related to the COVID-19 pandemic.
- The Treasury Department and the IRS recognize that the COVID-19 pandemic continues to cause delays in the development of certain projects eligible for the production tax credit and the investment tax credit.
- As a result, many taxpayers may not place projects in service in time to meet the Continuity Safe Harbor, which may significantly impact project financing and development.
- As provided in IRS guidance, a taxpayer has two methods to demonstrate the taxpayer has begun construction of a project, the Physical Work Test and the Five Percent Safe Harbor.
- Additional information about tax relief for businesses affected by the COVID-19 pandemic can be found at Coronavirus Tax Relief for Businesses and Tax-Exempt Entities.
IRS announces "Dirty Dozen" tax scams for 2021
- The Internal Revenue Service today began its "Dirty Dozen" list for 2021 with a warning for taxpayers, tax professionals and financial institutions to be on the lookout for these 12 nefarious schemes and scams.
- The agency compiled the list into these categories based on who perpetuates the schemes and who they impact. In addition to today's scams the IRS will highlight the other schemes over the next three days.
- This year's "Dirty Dozen" will be separated into four separate categories: (1) pandemic-related scams like Economic Impact Payment theft; (2) personal information cons including phishing, ransomware and phone "vishing;" (3) ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud; and (4) schemes that persuade taxpayers into unscrupulous actions such as Offer In Compromise mills and syndicated conservation easements.
- Taxpayers are encouraged to review the "Dirty Dozen: list in a special section on IRS.gov and should be alert to these scams during tax filing season and throughout the year.
IRS online tool helps families see if they qualify for the Child Tax Credit
- The Treasury Department and the Internal Revenue Service today urged families to take advantage of a special online tool that can help them determine whether they qualify for the Child Tax Credit and the special monthly advance payments beginning on July 15.
- Available exclusively on IRS.gov, the new Child Tax Credit Eligibility Assistant, launched earlier this week, is interactive and easy to use.
- By answering a series of questions about themselves and their family members, a parent or other family member can quickly determine whether they qualify for the credit.
- Though anyone can use this tool, it may be particularly useful to families who don't normally file a federal tax return and have not yet filed either a 2019 or 2020 tax return.
Help for families to get advance Child Tax Credit payments and Economic Impact Payments
- Partners urged to use AdvCTC online information and tools to help eligible taxpayers get registered
- The Internal Revenue Service is partnering with non-profit organizations, churches, community groups and others in 12 cities to help eligible families, particularly those who normally do not file a federal tax return, file a 2020 income tax return or register for the monthly Advance Child Tax Credit (AdvCTC) payments using the new Non-filer Sign-up Tool.
- This tool, an update of last year's IRS Non-Filers tool, is also designed to help eligible individuals who don't normally file tax returns register for the $1,400 third round of Economic Impact Payments (also known as stimulus checks) and claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed.
- Individuals do not need to have children in order to attend these events and sign up for Economic Impact Payments.
IRS announces two new online tools to help families manage Child Tax Credit payments
- Child Tax Credit Eligibility Assistant helps families determine whether they qualify for Child Tax Credit payments
- The new Child Tax Credit Eligibility Assistant allows families to answer a series of questions to quickly determine whether they qualify for the advance credit.
- The Internal Revenue Service today launched two new online tools designed to help families manage and monitor the advance monthly payments of Child Tax Credits under the American Rescue Plan.
- These two new tools are in addition to the Non-filer Sign-up Tool, announced last week, which helps families not normally required to file an income tax return to quickly register for the Child Tax Credit.
- The Child Tax Credit Update Portal allows families to verify their eligibility for the payments and if they choose to, unenroll, or opt out from receiving the monthly payments so they can receive a lump sum when they file their tax return next year.
- Both the Child Tax Credit Eligibility Assistant and Child Tax Credit Update Portal are available now on IRS.gov.
Advance Child Tax Credit Payments in 2021
- Important changes to the Child Tax Credit will help many families get advance payments of the credit starting this summer.
- The IRS will pay half the total credit amount in advance monthly payments beginning July 15.
- You will claim the other half when you file your 2021 income tax return. These changes apply to tax year 2021 only.
- To qualify for advance Child Tax Credit payments, you — and your spouse, if you filed a joint return — must have: (1) Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return; or (2) Given us your information in 2020 to receive the Economic Impact Payment using the Non-Filers: Enter Payment Info Here tool; and (3) A main home in the United States for more than half the year (the 50 states and the District of Columbia) or file a joint return with a spouse who has a main home in the United States for more than half the year; and (4) A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number; and (5) Made less than certain income limits.
Approaching June 15 deadline for second quarter estimated tax payments
- The Internal Revenue Service reminds taxpayers who pay estimated taxes that they have until June 15 to pay their estimated tax payment for the second quarter of tax year 2021 without penalty.
- This includes income from self-employment, interest, dividends, rent, gains from the sale of assets, prizes and awards. You may also have to pay estimated tax if the amount of income tax being withheld from your salary, pension or other income isn't enough.
- Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when they file their return.
- Form 1040-ES includes instructions to help taxpayers figure their estimated taxes. The fastest and easiest ways for individuals to make an estimated tax payment is electronically by using IRS Direct Pay from their checking or savings account or pay using a debit or credit card.
New FAQs available to aid families and small business under the American Rescue Plan
- The Internal Revenue Service today posted two new, separate sets of frequently-asked-questions (FAQs) to assist families and small and mid-sized employers in claiming credits under the American Rescue Plan (ARP).
- Both the child and dependent care credit as well as the paid sick and family leave credit were enhanced under the ARP, enacted in March to assist families and small businesses with the fallout of the COVID-19 pandemic and recovery underway.
- For 2021, eligible taxpayers can claim qualifying work-related expenses up to: (1) $8,000 for one qualifying person, up from $3,000 in prior years, or (2) $16,000 for two or more qualifying persons, up from $6,000 in prior years.
- Self-employed individuals may claim comparable credits on the Form 1040, U.S. Individual Income Tax Return.
More than 2.3 million additional Economic Impact Payments disbursed under the American Rescue Plan
- The Internal Revenue Service, the U.S. Department of the Treasury, and the Bureau of the Fiscal Service announced today they have disbursed more than 2.3 million additional Economic Impact Payments under the American Rescue Plan.
- In total, this includes more than 2.3 million payments with a value of more than $4.2 billion.
- More than 900,000 payments, with a value of approximately $1.9 billion, went to eligible individuals for whom the IRS previously did not have information to issue an Economic Impact Payment but who recently filed a tax return.
- Overall, the last two weeks of payments contain more than 1.2 million direct deposit payments (with a total value over $2.2 billion) with the remainder as paper check payments.
- The IRS will continue to make Economic Impact Payments on a weekly basis.
IRS sending letters to more than 36 million families who may qualify for monthly Child Tax Credits
- The IRS has started sending letters to more than 36 million American families who, based on tax returns filed with the agency, may be eligible to receive monthly Child Tax Credit payments starting in July.
- The expanded and newly-advanceable Child Tax Credit was authorized by the American Rescue Plan Act, enacted in March.
- The letters are going to families who may be eligible based on information they included in either their 2019 or 2020 federal income tax return or who used the Non-Filers tool on IRS.gov last year to register for an Economic Impact Payment.
- Families who are eligible for advance Child Tax Credit payments will receive a second, personalized letter listing an estimate of their monthly payment, which begins July 15.
- Most families do not need to take any action to get their payment. Normally, the IRS will calculate the payment amount based on the 2020 tax return.
IRS sending more than 2.8 million refunds to those who already paid taxes on 2020 unemployment compensation
- The Internal Revenue Service is sending more than 2.8 million refunds this week to taxpayers who paid taxes on unemployment compensation that new legislation now excludes as income.
- Some will receive refunds, which will be issued periodically, and some will have the overpayment applied to taxes due or other debts. For some there will be no change.
- The American Rescue Plan Act of 2021 (ARPA) excluded up to $10,200 in unemployment compensation per taxpayer paid in 2020.
- The $10,200 is the maximum amount that can be excluded when calculating taxable income; it is not the amount of refunds.
Interest rates remain the same for the third quarter of 2021
- Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning July 1, 2021.
- Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.
- For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.
- Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points.
- The interest rates announced today are computed from the federal short-term rate determined during April 2021 to take effect May 1, 2021, based on daily compounding.
IRS reminds taxpayers living and working abroad of June 15 deadline
- Taxpayers living and working outside of the United States that they must file their 2020 federal income tax return by Tuesday, June 15.
- This deadline applies to both U.S. citizens and resident aliens abroad, including those with dual citizenship.
- Just as most taxpayers in the United States are required to timely file their tax returns with the IRS, those living and working in another country are also required to file.
- An automatic two-month deadline extension is normally granted for those overseas and in 2021 that date is still June 15 even though the normal income tax filing deadline was extended a month from April 15 to May 17.
IRS extend filing and payment deadline until May 17, 2021
- The federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.
- Even with the new deadline, we urge taxpayers to consider filing as soon as possible, especially those who are owed refunds.
- Filing electronically with direct deposit is the quickest way to get refunds, and it can help some taxpayers more quickly receive any remaining stimulus payments they may be entitled to.
- Filing Form 4868 gives taxpayers until October 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due.
- Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.
More than 1.8 million additional Economic Impact Payments disbursed under the American Rescue Plan
- Internal Revenue Service, the U.S. Department of the Treasury, and the Bureau of the Fiscal Service announced they have disbursed more than 1.8 million additional Economic Impact Payments under the American Rescue Plan.
- In total, this includes more than 1.8 million payments with a value of more than $3.5 billion.
- More than 900,000 payments, with a value of approximately $1.9 billion, went to eligible individuals for whom the IRS previously did not have information to issue an Economic Impact Payment but who recently filed a tax return.
- Overall, the last two weeks of payments contain more than 900,000 direct deposit payments (with a total value over $1.6 billion) with the remainder as paper check payments.
- The IRS will continue to make Economic Impact Payments on a weekly basis. Ongoing payments will be sent to eligible individuals for whom the IRS previously did not have information to issue a payment but who recently filed a tax return, as well to people who qualify for "plus-up" payments.
2021 IRS Virtual Nationwide Tax Forum begins in July
- The 2021 Virtual Nationwide Tax Forum will begin on July 20 and continue through Aug. 19 with live-streamed webinars broadcast on Tuesdays, Wednesdays and Thursdays.
- Registration enables attendees to participate in all of the live webinars earning up to 28 continuing education credits.
- Tax professionals who register by June 15 at 5 p.m. ET qualify for an Early Bird rate of $240 per person. The standard rate, starting June 16, will be $289.
- Register now to take advantage of this virtual program.
With the May 17 deadline in the past, file taxes now to get refund or cut penalties and interest
- The Internal Revenue Service reminds taxpayers who missed the recent tax-filing deadline who are due a refund that there is no penalty for filing late.
- Those who owe and missed the deadline without requesting an extension should file quickly to limit penalties and interest.
- Members of the military who served or are currently in a combat zone. They may qualify for an additional extension of at least 180 days to file and pay taxes.
- Support personnel in combat zones or a contingency operation in support of the Armed Forces. They may also qualify for a filing and payment extension of at least 180 days.
- Some disaster victims. Those who qualify have more time to file and pay what they owe.
IRS reminds taxpayers of May 17 deadline for individual income tax returns: extensions, other help available
- The Internal Revenue Service reminds taxpayers that the deadline for filing most individual income tax returns this year is May 17.
- The agency also wants taxpayers who have yet to file their tax returns to know that there are a variety of options available to help them.
- IRS tax help is available 24 hours a day on IRS.gov. Whether filing a tax return, requesting an extension or making a payment, the IRS website can help last-minute filers on just about everything related to taxes.
- Anyone who needs more time to file can get it. The easiest way to do so is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an extension on Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
Facing a surprise tax bill? Be sure to still file by May 17
- The most important thing everyone with a tax bill should do is file a return by the May 17 due date, even if they can't pay in full, or request a six-month extension to avoid higher penalties for failing to file on time.
- Though automatic tax-filing extensions are available to anyone who wants one, these extensions don't change the payment deadline. It is not an extension to pay.
- Usually anyone who owes tax and waits until after that date to file will be charged a late-filing penalty of 5% per month. So, if a tax return is done, filing it by May 17 is always less costly, even if the full amount due can't be paid on time.
- Visit IRS.gov/extensions for details.
IRS extends May 17, other tax deadlines for victims of Tennessee storms
- Victims of this spring's storms and tornadoes in Tennessee will have until August 2, 2021, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.
- The tax relief postpones various tax filing and payment deadlines that occurred starting on March 25. As a result, affected individuals and businesses will have until August 2 to file returns and pay any taxes that were originally due during this period.
- This includes 2020 individual income tax returns due on May 17, as well as various 2020 business returns normally due on April 15. Among other things, this also means that affected taxpayers will have until August 2 to make 2020 IRA contributions.
- The August 2 deadline also applies to quarterly estimated income tax payments due on April 15 and June 15, and the quarterly payroll and excise tax returns normally due on April 30.
Reminder to tax-exempt organizations: 990s, other forms due on May 17
- The Internal Revenue Service today reminds tax-exempt organizations that operate on a calendar-year (CY) basis that certain annual information and tax returns they file with the IRS are due on May 17, 2021.
- Organizations filing a Form 990, 990-PF or 990-N for CY2020 must file their returns electronically. Organizations filing Form 990-EZ for CY2020 received transitional relief and may file electronically or in paper.
- An organization will be allowed a six-month extension beyond the original due date.
- In situations where tax is due, extending the time for filing a return does not extend the time for paying tax. The IRS encourages organizations requesting an extension to electronically file Form 8868.
More than 1.1 million additional Economic Impact Payments disbursed under the American Rescue Plan
- Today, the Internal Revenue Service, the U.S. Department of the Treasury, and the Bureau of the Fiscal Service announced they are disbursing more than 1.1 million payments in the eighth batch of Economic Impact Payments from the American Rescue Plan.
- Today's announcement brings the total disbursed so far to approximately 164 million payments, with a total value of approximately $386 billion, since these payments began rolling out to Americans in batches as announced on March 12.
- The eighth batch of payments began processing on Friday, April 30, with an official payment date of May 5, with some people receiving direct payments in their accounts earlier as provisional or pending deposits.
- The IRS will continue to make Economic Impact Payments on a weekly basis. Ongoing payments will be sent to eligible individuals.
Low Income Taxpayer Clinic 2022 grant application period now open
- The Internal Revenue Service today announced that the application period for Low Income Taxpayer Clinic (LITC) matching grants for calendar year 2022 will run from May 3, 2021, to June 18, 2021.
- Under Internal Revenue Code (IRC) Section 7526, the IRS awards matching grants of up to $100,000 per year to qualifying organizations to develop, expand or maintain an LITC.
- The IRS is committed to achieving maximum access to representation for taxpayers under the terms of the LITC Program.
- Interested individuals may join LITC Program Office staff for a Zoom webinar, where staff will provide information about the LITC Program and the application process. For details on the date and time of the webinar, please check the LITC page on IRS.gov.
IRS now accepting TCE and VITA grant applications
- Eligible organizations can now submit applications for the Internal Revenue Service's Tax Counseling for the Elderly and Volunteer Income Tax Assistance grant programs, allowing some organizations to apply for up to three years of annual funding.
- Organizations can apply on Grants.gov through June 4, 2021, and can find application packages and guidelines on IRS.gov. In 2021, the IRS awarded 31 TCE grantees $11 million and 297 VITA grantees $25 million.
- The two programs prepare millions of tax returns each year.
Draft Schedules K-2 and K-3 released to enhance reporting of international tax matters by pass-through entities
- The Treasury and the IRS released today updated early drafts of new Schedules K-2 and K-3 for Forms 1065, 1120-S, and 8865 for tax year 2021 (filing season 2022).
- The schedules are designed to provide greater clarity for partners and shareholders on how to compute their U.S. income tax liability with respect to items of international tax relevance, including claiming deductions and credits.
- The redesigned forms and instructions will also give useful guidance to partnerships, S corporations and U.S persons who are required to file Form 8865 with respect to controlled foreign partnerships on how to provide international tax information.
- The updated forms will apply to any persons required to file Form 1065, 1120-S or 8865, but only if the entity for which the form is being filed has items of international tax relevance (generally foreign activities or foreign partners).
Options for gig economy workers and those with unemployment benefits
- The Internal Revenue Service reminds workers in the gig economy and those who claimed unemployment compensation in 2020 of their options and where to find information on meeting their tax obligations.
- The gig economy refers to income earned providing on-demand work performing services or selling goods, including driving a car for booked rides or deliveries, renting out property, selling goods online or freelance work.
- Taxpayers should collect and keep records and receipts during the year. Recordkeeping can help track income, deduct expenses and complete tax returns.
- Anyone who received unemployment benefits will need to report it on their tax returns.
- Unemployment benefit recipients should have received a Form 1099-G, Certain Government Payments, from the agency paying the benefits.
IRS: Some people get more time to file without asking; anyone else can request an automatic extension
- Anyone can request an automatic tax-filing extension, but some people get extra time without asking, according to the Internal Revenue Service.
- Due to the ongoing pandemic, this year the IRS postponed the usual April 15 deadline for filing individual income tax returns until May 17, 2021.
- Even so, as is the case every year, many Americans will still need more time to meet their tax-filing obligation.
- Victims of the February winter storms in Texas, Oklahoma and Louisiana have until June 15, 2021, to file their 2020 returns and pay any tax due.
- Military service members and eligible support personnel serving in a combat zone have at least 180 days after they leave the combat zone to file their tax returns and pay any tax due.
- U.S. citizens and resident aliens who live and work outside the U.S. and Puerto Rico have until June 15, 2021 to file their 2020 tax returns and pay any tax due.
- Taxpayers who don't qualify for any of these three special situations can still get more time to file by submitting a request for an automatic extension. This will extend their filing deadline until October 15, 2021. But because this is only a tax-filing extension, their 2020 tax payments are still due by May 17.
Nearly 2 million more Economic Impact Payments disbursed under the American Rescue Plan
- Today's announcement brings the total disbursed so far to approximately 163 million payments, with a total value of approximately $384 billion, since these payments began rolling out to Americans in batches as announced on March 12.
- The seventh batch of payments began processing on Friday, April 23, with an official payment date of April 28, with some people receiving direct payments in their accounts earlier as provisional or pending deposits.
- This batch also includes additional ongoing supplemental payments for people who earlier this year received payments based on their 2019 tax returns but are eligible for a new or larger payment based on their recently processed 2020 tax returns.
- Overall, this seventh batch of payments contains about 1.1 million direct deposit payments (with a total value of $2.5 billion) and about 850,000 paper check payments (with a total value of more than $1.8 billion).
- Ongoing payments will be sent to eligible individuals for whom the IRS previously did not have information to issue a payment but who recently filed a tax return, as well to people who qualify for "plus-up" payments.
State Postpones Deadline For Claiming 2016 Tax Refunds to May 17, 2021
- State Controller and Franchise Tax Board (FTB) Chair Betty T. Yee today announced an extension to May 17, 2021, for individual California taxpayers to claim a refund for tax year 2021
- Individual taxpayers now have additional time to collect money owed to them on their 2016 tax returns.
- With the postponement, individual taxpayers who are due a refund may now file their return for the 2016 tax year no later than May 17, 2021, to claim their money.
- Taxpayers claiming a state refund for previous tax years can find Form 540 on FTB’s forms locator for the applicable tax year.
Two million more Economic Impact Payments disbursed under the American Rescue Plan
- Today's announcement brings the total disbursed so far to approximately 161 million payments, with a total value of more than $379 billion, since these payments began rolling out to Americans in batches as announced on March 12.
- The sixth batch of payments began processing on Friday, April 16, with an official payment date of April 21, with some people receiving direct payments in their accounts earlier as provisional or pending deposits.
- Nearly 700,000 payments, with a value of more than $1.3 billion, went to eligible individuals for whom the IRS previously did not have information to issue an Economic Impact Payment but who recently filed a tax return.
- The IRS will continue to make Economic Impact Payments on a weekly basis. Ongoing payments will be sent to eligible individuals for whom the IRS previously did not have information to issue a payment but who recently filed a tax return, as well to people who qualify for "plus-up" payments.
Safe harbor for small businesses to claim deductions
- The Treasury Department and the Internal Revenue Service today issued Revenue Procedure 2021-20 PDF for certain businesses that received first-round Paycheck Protection Program (PPP) loans but did not deduct any of the original eligible expenses because they relied on guidance issued before the enactment of tax relief legislation in December of 2020.
- Under prior guidance, businesses that received PPP loans to cover payroll costs, interest on covered mortgage obligations, covered rent obligation payments, and covered utility payments could not deduct corresponding expenses.
- With the Dec. 27, 2020, enactment of the Consolidated Appropriations Act, 2021, businesses now may claim these deductions even though they received PPP loans to cover original eligible expenses.
- These businesses can use the safe harbor provided by this guidance to deduct those expenses on the return for the immediately subsequent year.
American Rescue Plan tax credits available to small employers to provide paid leave to employees receiving COVID-19 vaccines new fact sheet outlines details
- The additional details, provided in a fact sheet released today, spell out some basic facts about the employers eligible for the tax credits.
- It also provides information on how these employers may claim the credit for leave paid to employees related to COVID-19 vaccinations.
- Eligible employers, such as businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, can receive a tax credit for providing paid time off for each employee receiving the vaccine and for any time needed to recover from the vaccine.
- The ARP tax credits are available to eligible employers that pay sick and family leave for leave from April 1, 2021, through Sept. 30, 2021.
Steer clear of typical tax return errors; May 17 deadline nears
- The Internal Revenue Service today reminded taxpayers to check their tax returns for common errors that could delay refunds or otherwise affect normal processing.
- Be sure to have income documents on hand before starting the tax return. Examples are Forms W-2, 1099-MISC or 1099-NEC. Underreporting income may lead to penalties and interest.
- Taxpayers who cannot meet the May 17 deadline can easily request an automatic filing extension to October 15 and prevent late filing penalties. Use Free File or Form 4868.
- But keep in mind that while an extension grants additional time to file, tax payments are still due May 17.
Those experiencing homelessness can get Economic Impact Payments and other tax benefits
- The Internal Revenue Service today continued an ongoing effort to help those experiencing homelessness during the pandemic.
- Reminding people who don't have a permanent address or a bank account that they may still qualify for Economic Impact Payments and other tax benefits.
- To help people experiencing homelessness, the rural poor and other historically under-served groups, the IRS urges community groups, employers and others to share information about Economic Impact Payments.
- People can claim an Economic Impact Payment or other credits even if they don't have a permanent address.
- Many financial institutions will help a person lacking an account to open a low-cost or no-cost bank account.
2 million more Economic Impact Payments under the American Rescue Plan
- Internal Revenue Service, the U.S. Department of the Treasury and the Bureau of the Fiscal Service announced they are disbursing nearly 2 million payments in the fifth batch of Economic Impact Payments from the American Rescue Plan.
- Today's announcement brings the total disbursed so far to approximately 159 million payments, with a total value of more than $376 billion, since these payments began rolling out to Americans in batches as announced on March 12.
- People who don't normally file a tax return and don't receive federal benefits may qualify for these Economic Impact Payments.
- The IRS reminds taxpayers that the income levels in this new round of Economic Impact Payments have changed. This means that some people won't be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit.
IRS suspends requirement to repay excess advance payments of the 2020 Premium Tax Credit
- The American Rescue Plan Act of 2021 suspends the requirement that taxpayers increase their tax liability by all or a portion of their excess advance payments of the Premium Tax Credit (excess APTC) for tax year 2020.
- Those claiming net Premium Tax Credit must file Form 8962
- A taxpayer's excess APTC is the amount by which the taxpayer's advance payments of the Premium Tax Credit (APTC) exceed his or her Premium Tax Credit (PTC).
- Eligible taxpayers may claim a PTC for health insurance coverage in a qualified health plan purchased through a Health Insurance Marketplace.
- he process remains unchanged for taxpayers claiming a net PTC for 2020. They must file Form 8962 when they file their 2020 tax return. See the Instructions for Form 8962 for more information.
Cares Act
- Direct payments - payments made to taxpayers as a stimulus based off your income
- Unemployment - Expands eligibility and offers workers an additional $600 per week for four months
- Payroll taxes - Employers can delay payment portion of 2020 payroll taxes until 2021 & 2022
- Use of retirement funds - Waives the 10% early withdrawal penalty for distributions up to $100,000 for Coronavirus related purposes
- RMDs suspended - Required minimum distributions from IRAs and 401(k) (at age 72) are suspended
- Small business relief - Companies who maintain their payroll can receive up to 8 weeks of cash-flow assistance
- Employee retention credit - Employers subject to closure due to COVID-19 are eligible for a refundable payroll tax credit equal to 50% of qualified wages with respect to each employee. The maximum wages per employee that can be taken into account for all quarters an employer may be eligible for this credit is $10,000
- Creates a new "above-the-line" deduction for up to $300 of charitable cash contributions in 2020, this write-off is only available to people who take the standard deduction
News article (as of 12/04/20)
CA Commissioner Orders Insurance Companies to Refund Premiums to Drivers
- Covers premiums paid for at least March/ April, will extend through May if shelter in place continues
- Insurance companies will have no later than August to comply
IRS tax filing and payment deadline pushed back to July 15
- IRS pushed back tax payments 90 days to July 15
- The deadline to file was just pushed back 90 days as well to July 15 (updated 03/20/20)
- 2020 1st quarter estimated taxes also now due July 15
- IRS has pushed back the deadline to make 2019 IRA or HSA contributions to July 15 *NEW
- The IRS is currently unable to process paper tax returns, respond to paper correspondence, or staff toll-free live service lines (as of 04/13/20)
IRS Deadline to Contribute to IRA or HSA accounts extended (as of 03/24/20)
IRS Tax Payment Deadline (as of 03/21/20)
Filing and Payments Deadlines FAQ
Franchise Tax Board postpones Tax Deadlines until July 15
FTB is postponing until July 15 the filing and payment deadlines for all individuals and business entities for:
- 2019 tax returns
- 2019 tax return payments
- 2020 1st and 2nd quarter estimate payments
- 2020 LLC taxes and fees
Property Taxes - County of Santa Clara
- April 10th deadline is not extended, but penalties will be waived due to reasonable cause and circumstance
- Property owners can take advantage of a partial payment option
Executive Order Protecting Homes, Smalls Business from Water Shutoffs
- Governor Newsom signed an executive order that will restrict water shutoffs to homes and small business
- The order protects consumer who may not be able to pay for their water service from shutoffs
California Governor Issues Stay at Home Order throughout the State of California
- Started 3/19 and in effect until further notice
- Essential services will remain open
- Extended till 5/03
Stay at Home Order Extended to 05/03/20