Tag Archives: economic impact

Tax Updates November 14

Beware of Text Scam

The IRS and Security Summit partners have alerted taxpayers that neither the IRS nor local agencies will ever text taxpayers asking for bank account information so that an economic impact payment may be made to them. Scam texts may read, “you have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required to accept this payment into your account. Continue here to accept this payment…” A link to a fake phishing web address is included, and can result in identity theft. If you’ve received such a text, the IRS asks that you contact them and share the details. As a reminder the IRS does not send unsolicited texts or emails, nor do they call people with threats of jail or lawsuits.

Some College Students May Still Qualify For EIP

The IRS is reminding non-filers to register for an economic impact payment (EIP) if they haven’t received one yet. This includes self-supporting college students who have little to no income – but are not listed as dependents on anyone else’s return. Those who do not file a tax return will only receive an EIP if they use the Non-Filers Tool to register. The tool is designed for married couples making less than $24,400 or individuals making less than $12,200. The deadline for such registrations is November 21, 2020. 

Terminating 403(b) Guidance Issued

The IRS and Treasury have issued guidance for employers and employees with terminating 403(b) plans that fund benefits through 403(b)(7) custodial accounts. Changes in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) are reflected in the guidance. Revenue Ruling 2020-23 provides the details and Notice 2020-80 requests comments regarding the application of annuity and spousal rights provisions included in the guidance.

Taxpayer Relief For IRS Debtors

The IRS has announced changes aimed at helping taxpayers who owe the IRS and are affected by the Covid-19 crisis. The relief includes payment plans and installment agreements, as well as temporary collections delay, offers in compromise, and penalties relief. 

Tax Updates June 8

Guidance Issued re: Retirement, Annuity Withholding

The IRS and Treasury have issued a proposed regulation impacting federal income tax withholding rules for periodic retirement and annuity payments made after December 31, 2020. Prior to the Tax Cuts and Jobs Act (TCJA), if there was no W-4 in effect for periodic payments, the withholding was determined by treating the taxpayer as a married individual claiming three withholding exemptions. That will continue for year 2020. Beginning in 2021, when there is no W-4 in effect, the IRS and Treasury Department will provide the rules and procedures to determine the withholding with
various forms, instructions, publications and other guidance.

Plain Envelopes Deliver Economic Impact Payments

The IRS reminds taxpayers that their economic impact payment may arrive in the form of a prepaid debit card in a plain white envelope from "Money Network Cardholder Services.” Not every recipient will receive their payment in the form of a prepaid debit card, but for those who do, it may be used to make purchases online or in person anywhere a Visa credit card is accepted, get cash from an ATM, and transfer money to a bank account. More information can be found at EIPcard.com.

Safe Harbor For Renewable Energy Projects

Because Covid-19 has impacted the supply chain for many renewable energy projects eligible for tax credits , the IRS and Treasury have issued a notice for tax relief. Projects include those that produce electricity from wind, biomass, geothermal, landfill gas, trash, and hydropower, and use technologies such as solar panels, fuel cells, microturbines, and combined heat and power systems. Some projects begun in 2016 or 2017 have had a fifth year added to the four-year "Continuity Safe Harbor,” and those paid for by the taxpayer on or after September 16, 2019 and received by October 15 of this year have 3½ months safe harbor added. This aims to allow the taxpayers to remain eligible for certain tax credits.

Qualified Opportunity Funds Tax Relief

The Internal Revenue Service has provided guidance for Qualified Opportunity Funds (QOFs) and their investors in response to the ongoing COVID-19 pandemic. Taxpayers looking to invest in a QOF to defer gain may have additional time. Certain statutory penalties and working capital safe harbor rules have been eased and timelines extended. The QOF FAQ has also been updated.