Tax Updates August 13

Security Summit Continues

The IRS is continuing its annual education effort regarding online security for tax professionals and taxpayers. This year includes a five-part “Protect Your Clients; Protect Yourself” series to help tax pros, especially smaller practices, protect against tax-related identity theft and fraud. The next two parts of the series are below:

Inflation Reduction = Energy Efficiency Credits

The IRS has issued Notice 2023-59 regarding the requirements for home energy audits for taxpayers that want to claim the Energy Efficient Home Improvement Credit. As one of several clean energy credits created by the Inflation Reduction Act of 2022, the non-refundable Energy Efficient Home Improvement Credit is equal to 30 percent of the total amount paid during the year for home energy audits, as well as other expenditures or improvements. To qualify, the audit must identify the most significant and cost-effective energy efficiency improvements to the residence, including an estimate of energy and cost savings to each improvement. The maximum credit for such audits is $150.

Tax Credits for Energy-Efficient Builders

The IRS reminds contractors who build or reconstruct qualified new energy efficient homes that they might qualify for a tax credit of up to $5000 per home. This Section 45L credit was expanded as part of the Inflation Reduction Act of 2022. Builders must own the home and have a basis in it during the construction, and the home must be sold or leased to a person for use as a residence. The credit amount varies depending on standards met, including Energy Star program requirements, prevailing wage requirements, and others. 

Paperless Initiative Launched

Thanks again to the Inflation Reduction Act, the IRS is launching a paperless processing initiative. Taxpayers will have the option to go paperless for IRS correspondence (not just filing their tax return) by 2024 filing season, and by filing season 2025, an additional 150 of the most used non-tax forms will be available in digital, mobile-friendly formats. This will eliminate up to 200 million pieces of paper annually, cut processing times in half, and expedite refunds by several weeks. More information from IRS Commissioner Danny Werfel on the subject.