Tax Updates April 30, 2021

Tax Court Cases Resolved

Virtual Settlement Days, first announced in May 2020, help taxpayers resolve their cases and avoid taking their chances in court. Building on that, March was National Virtual Settlement month, which saw Virtual Settlement Days events held in all 50 states and the District of Columbia. Nearly 240 taxpayers met with Chief Council employees and pro bono organizations to help them with free advice and to understand their cases; 148 cases were settled. Taxpayers with cases before the court are encouraged to contact their assigned Chief Counsel attorney or paralegal to inquire about participating in future events. 

Avoid Common Return Errors

The IRS is reminding taxpayers to check their tax returns for common errors that could delay their processing and refunds. As the May 17 due date approaches, taxpayers are encouraged to:

  • Use electronic filing 
  • Report all taxable income
  • Double check names and social security numbers
  • Check filing status accuracy (use the Interactive Tax Assistant)
  • Correctly answer virtual currency question
  • Use correct routing and account numbers if receiving a refund
  • Sign and date your return
  • If mailing a paper return, double check address
  • Keep a copy for your records
  • Request an extension if needed – avoid late filing penalties

American Rescue Plan Tax Credits

A new fact sheet outlines the details of tax credits available to small businesses, including paid leave for employees receiving COVID-19 vaccinations. Eligible employers, which may include 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 who needs time to recover from the jab. Self-employed individuals may claim comparable credits. 

Economic Impact Payments Continue

The sixth batch of Economic Impact Payments (EIPs) from the American Rescue Plan is disbursing another two million payments, for a total of approximately 161 million payments. This totals $379 billion since payments began rolling out on March 12. More than $1.3 billion went to individuals for whom the IRS previously did not have information to issue an EIP, but who recently filed a tax return. This batch also includes “additional ongoing supplemental payments” for people who received an EIP earlier this year based on their 2019 return, but became eligible for more after their 2020 return was processed. Another 600,000 payments went to Social Security beneficiaries and Supplemental Security Income recipients, including those with foreign addresses. The IRS will continue to make EIPs on a weekly basis.