Tag Archives: tax extension

IRS Updates July 11, 2023

Design by Paul Davis

Refunds Deadline Approaching

The IRS reminds those who haven’t filed their 2019 tax return that the window for claiming potential refunds is closing. The deadline for filing and claiming any refund for 2019 is July 17, 2023. The law allows 3 years to file and claim refunds (although that deadline was extended for 2019 due to COVID-19), and requires taxpayers to properly address, mail, and ensure the tax return is postmarked by July 17, 2023. Over 18,000 South Carolina residents are presumed to be among those who haven’t filed. Unclaimed refunds become the property of the US Treasury. Refund checks may also be held if tax returns for 2020 and 2021 have not been filed. Prior year tax forms are available online, and key documents must be obtained from employers or the IRS. 

Disaster Victims Given Notice

The IRS is sending a “special follow-up mailing” to taxpayers in several states to let them know that they have additional time to pay their taxes. An initial mailing of a CP14 notice told taxpayers who have a balance due that they needed to pay within 21 days. These taxpayers actually have until later this year to pay, under the disaster declaration and relief. These new mailings, CP14CL, aim to mitigate confusion caused by the earlier CP14 notice and to help reassure people. The IRS Commissioner Danny Werfel says, “this mailing reflects how we’re trying to be more taxpayer-focused given the additional resources that we’ve been given under the Inflation Reduction Act.”

New Scam Warning Issued

The IRS is warning taxpayers to be on the lookout for a new scam mailing intended to mislead people into believing they are owed a tax refund. This new scheme involves a cardboard mailer from a delivery service and an enclosed letter with wording that the notice is “in relation to your unclaimed refund.” Naturally the contact information and phone number on the document do not belong to the IRS, but the notice seeks sensitive personal information from taxpayers – including detailed photos of drivers’ licenses – that can be used by identity thieves. The requests are often as follows: 

“A Clear Phone of Your Driver’s License That Clearly Displays All Four (4) Angles, Taken in a Place with Good Lighting.”

And: 

“You’ll Need to Get This to Get Your Refunds After Filing. These Must Be Given to a Filing Agent Who Will Help You Submit Your Unclaimed Property Claim. Once You Send All The Information Please Try to Be Checking Your Email for Response From The Agents Thanks”

The IRS urges taxpayers to note the multitude of warning signs, including odd punctuation, a mixture of fonts, and inaccuracies. Other known scams can be reviewed on the IRS Dirty Dozen list. 

 

 

Tax Updates End of June

IRS Updates June 2023 by Paul Davis
July 17 Deadline for 2019 Refunds

The IRS estimates that nearly 1.5 million people in the nation could be due refunds for tax year 2019, if they submit a tax return by the July 17 deadline. The usual deadline for submitting a tax return and getting a refund is 3 years from the initial deadline, but under the COVID-19 emergency, the deadline for 2019 was postponed. Taxpayers can still request key documents from their employers or banks, or request a wage and income transcript from the IRS, online or by filing Form 4506-T, Request for Transcript of Tax Return. 

Advance Energy Project Guidance

The IRS has issued Notice 2023-44, providing further details for applicants seeking section 48C credit allocations in the qualifying advanced energy project credit allocation program under the Inflation Reduction Act. Notice 2023-18 earlier this year established the section 48C(3) program to allocate $10 billion in credits, at least $4 billion of which will be allocated to projects located in certain energy communities census tracts. This guidance is mainly of interest to owners of clean energy manufacturing and recycling projects, greenhouse gas emission reduction projects, and critical material projects. Notice 2023-44 updates the earlier guidance, defining qualifying advance energy projects and the Department of Energy (DOE) application process, in Appendices A and B, respectively. Appendix C has also been added, containing a list of the energy communities census tracts.

Penalty Relief for Corporations

The IRS and Treasury have issued Notice 2023-42, which will grant penalty relief for corporations that did not pay estimated tax in connection with the new corporate alternative minimum tax (CAMT). The Inflation Reduction Act created the CAMT, which imposes a 25% minimum tax on the adjusted financial statement income of large corporations for taxable years beginning after December 31, 2022. Due to the challenges associated with determining the amount of a corporation’s CAMT liability and whether a corporation is subject to the CAMT, the IRS will waive the penalty for failure to pay estimated income tax with respect to its CAMT for a taxable year that falls within specific dates. 

Tax Updates Early May

IRS Updates May 2023 by Paul Davis

Better Late Than Later

The IRS is urging taxpayers who missed the April 18 tax-filing deadline to file as soon as possible. Those who owe taxes should file quickly to minimize penalties and interest, which can accrue over time. For those who should receive a refund, there is no late-filing penalty. Some taxpayers automatically qualify for extra time to file and pay, including disaster victims, military members serving in a combat zone and support personnel, and taxpayers outside the United States. There are options for taxpayers struggling to pay their tax bill. 

May 15 Deadline for Tax-Exempt

The IRS reminds tax-exempt organizations that their filing deadline is May 15, 2023. Those operating on a calendar-year basis must file a return by this date. Form 990-series (information returns such as Form 990, 990-EZ, 990-PF), Forms 990-N, 990-T, and Form 4720 must be e-filed. Those requiring additional time to file beyond the May 15 deadline can request a six-month automatic extension, however this does not extend the time for paying any taxes due. Online Workshops are also available to help exempt organizations comply with their filing requirements. 

Tax Relief for Indiana Victims

Storm victims in Indiana now have until July 31, 2023, to file various federal individual and business tax returns and make tax payments. This relief applies to any area designated by the Federal Emergency Management Agency (FEMA) as a result of tornadoes, severe storms, and wind that occurred on March 31 and April 1. Taxpayers and businesses in Allen, Benton, Clinton, Grant, Howard, Johnson, Lake, Monroe, Morgan, Owen, Sullivan, and White counties qualify, in addition to any other areas later designated. This relief is automatic, and there is no need to contact the IRS unless an affected taxpayer incorrectly receives a late filing or late payment penalty notice. As always, an updated list of eligible localities is available.

Put Withholding Estimator to Work

The IRS suggests taxpayers get a head start on the 2024 filing season by using the Tax Withholding Estimator to help update the amount of tax to have taken out of their 2023 pay. It is especially useful after a major life change such as marriage, divorce, birth or adoption of a child, a home purchase, or a significant change in income. Those who received a large refund or owed a lot of tax this year would also benefit from using the estimator. To receive the most accurate estimate, have on hand recent pay statements (for both spouses if married), other income sources, and the most recent income tax return.

Tax Updates Mid April

Dirty Dozen Tax Scams, Part 2

The IRS has completed their Dirty Dozen tax scam series, warning individuals and businesses about popular schemes and scams targeting taxpayers. Information to help recognize a scam, and steps to take for those who have been targeted or have fallen prey to such predators. The final scams to be aware of are:

  • Tax advice on social media can lure otherwise honest taxpayers into compromising tax situations. Two recent schemes currently circulating involve filing fraudulent Form 8944 and Form W-2. 
  • Spearfishing emails, where fraudsters attempt to steal client data or professional credentials from tax preparers. These can look like potential new clients or a request targeting payroll or human resource departments asking for Form W-2 information.
  • Offer in Compromise “mills” claiming they can help settle IRS debts for pennies on the dollar. Taxpayers who don’t meet the technical requirements for an offer often face excessive fees from promoters for information easily obtained themselves. Taxpayers should know they can check their eligibility using the IRS’s Offer in Compromise Pre-Qualifier tool.
  • Abusive tax arrangements targeting wealthy taxpayers may involve things like Charitable Remainder Annuity Trusts and monetized installment sales. The promoters often misapply the rules, leaving filers vulnerable. “People should seek out trusted, reputable tax advice and not be fooled by aggressive advertising,” says IRS commissioner Danny Werfel.
  • Bogus schemes to reduce or avoid taxes may involve syndicated conservation easements, micro-captive insurance arrangements. They can also involve international methods; hiding cash and digital assets offshore or using Maltese foreign individual retirement accounts or foreign captive insurance. 
  • A summary of the scams may be found here.

April 18 Deadline Reminder

The IRS reminds taxpayers that Tax Day, April 18, is also the deadline for first quarter estimated tax payments for tax year 2023. These payments are usually due from those who do not have taxes withheld from their paychecks throughout the year, such as the self-employed, retirees, investors, businesses and corporations. Income not subject to withholding includes interest, dividends, capital gains, alimony and rental income. Paying estimated taxes in a timely fashion will lessen and even eliminate any penalties. Eligible taxpayers in recent disaster areas in California, Alabama, Georgia and now Tennessee have several deadlines extended to make their estimated payments. A current list of areas qualifying for disaster relief can be found at Tax Relief in Disaster Situations.

Debunking Tax Myths

“I don’t need to report income since I didn’t receive a Form 1099-K.” “If I file an extension, I don’t have to pay anything until October.” Find the truth about these and other myths before Tax Day.

 

IRS Tax Updates

Filing Season Scams Abound

The IRS has issued an alert warning taxpayers of new scams that urge people to claim false tax credits with inaccurate wage information. One scheme encourages people to use tax software to manually fill out Form W-2, Wage and Tax Statement with false income information. Scam artists instruct people to use the bogus information in their electronically-filed return with the aim of getting a large refund. A variation of the scam involves using Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals to claim a credit based on income earned as an employee. These credits are not available for 2022 tax returns. 

Another warning has been renewed, urging people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit. Third parties are aggressively pushing ineligible people to use this, misleading people and businesses into thinking they can claim these credits. Penalties are wide-ranging and may include a $5000 fine or criminal prosecution. Those who have participated in such schemes can amend a previous return or consult with a trusted tax professional.

Digital Intake Ramps Up

The IRS has announced an expansion of digital scanning, having already scanned more than 120,000 paper Forms 940 since the beginning of the year. This is a 20-fold increase compared to all of 2022. The effort will expand soon to include scanning of Forms 1040 and Forms 941. The IRS has used various technologies to scan tax returns over the years, but recently took a leap forward thanks to the Inflation Reduction Act. Most tax returns are filed electronically but millions of forms are still filed by paper. With an increased capability to scan and electronically process these paper returns, the IRS will be able to shorten overall processing time.

Retiree Reminder: April 1 Deadline Approaches

The IRS reminds retirees who turned 72 during 2022 that, in most cases, Saturday, April 1, 2023 is the last day to begin receiving payments from Individual Retirement Arrangements (IRAs), 401(k)s and similar workplace retirement plans. These payments, called required minimum distributions (RMDs) are normally made by the end of the year. However, those who reached age 72 during 2022 are covered by a special rule that allows them to wait until as late as April 1, 2023 to take their first RMD. This delayed deadline only applies to the RMD for the first year. In subsequent years the RMD must be made by the year’s end. This means that those who opt for their 2022 RMD by April 1 must still receive their 2023 RMD by December 31, 2023. Both RMDs are taxable and will be reported on the 2023 tax return. Visit the RMD FAQs page for more information.

 

Tax Updates Beginning March

Business E-File Regulations Finalized

The IRS and Treasury have issued final regulations amending the rules for filing returns and other documents electronically. Filers of partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns, some information returns and other statements, notifications, and reports will be required to e-file beginning in 2024. A new online portal has been created to help businesses file form 1099 returns electronically.

May 15 Disaster Area Deadlines Extended

Disaster area taxpayers in much of California and parts of Alabama and Georgia now have until Oct 16, 2023 to file various federal tax returns and make payments, the IRS has announced. Previously, the deadline had been postponed to May 15 for these areas. This deadline includes individual and business returns normally due on March 15 and April 18; returns of tax-exempt organizations normally due on May 15. Those affected also have until October 16 to make 2022 contributions to IRAs and health savings accounts. The deadline also applies to various tax payments. Current tax-related disaster information can always be found on the IRS Disaster Tax Relief page.

AMT Guidance for Insurance Providers Issued

The Treasury and IRS have issued Notice 2023-20 which provides interim guidance for insurance companies and some other taxpayers for the new corporate alternative minimum tax (CAMT) until proposed regulations are issued. The Inflation Reduction Act of 2022 created the CAMT, imposing a 15% minimum tax on the adjusted financial statement income of large corporations for taxable years beginning in 2023. Large corporations, including insurance companies, with adjusted financial statement income exceeding $1 billion will be those generally affected by the CAMT. Comments on the rules are welcome and must be submitted by April 3, 2023. 

2022 Return Tax Time Guide

The IRS reminds taxpayers to gather their necessary information and visit IRS.gov or their trusted tax preparer for help with their 2022 tax return. Several changes have been implemented due to the Inflation Reduction Act and American Rescue Plan Act, including the reduction in Earned Income Tax Credit, Child Tax Credit, and Child and Dependent Care Credit amounts. Additionally, those that don’t itemize cannot deduct their charitable contributions this year. More in the Tax Time Guide series will be forthcoming.

IRS Updates End of August

Interest Rates to Increase

The IRS has announced that interest rates will increase again, beginning October 1, 2022. Individuals will see an increase of 1% as compared to the quarter that began in July, with 6% as the rate for underpayments (taxes owed but not yet paid) and overpayments (payments made in excess of the amount owed). Other rates are as follows:

  • 6% for overpayments (5% for corporations). 
  • 3.5% for the portion of a corporate overpayment exceeding $10,000.
  • 6% for underpayments.
  • 8% for large corporate underpayments. 

These interest rates are computed from the federal short-term rate determined during July 2022.

Pandemic-Related Penalty Relief

The IRS has issued a notice which provides penalty relief to most people and businesses who file certain 2019 or 2020 returns late. In addition, the IRS will be issuing more than $1.2 billion in refunds and credits to those who already paid these penalties, nearly 1.6 million taxpayers. They say this aims to allow the IRS to focus resources on processing backlogged tax returns and other correspondence before next year’s filing season. The relief will be automatic for those who qualify, so no action is required on the part of businesses or individuals. To qualify for this relief, however, tax returns for those years must be filed on or before September 30, 2022.

Reminder to Extension Filers

The IRS reminds taxpayers who haven’t filed their 2021 tax return to make sure they take advantage of available entitlements and to file electronically as soon as possible. These tax benefits include Earned Income Tax Credit, Child Tax Credit, Child and Dependent Care Credit, Charitable Giving Deduction, and others. Taxpayers will need to have their year-end statements available, as well as the letters issued by the IRS showing advance Child Tax Credit payments and third round Economic Impact Payments.

Input Requested

The IRS is requesting input from both taxpayers and tax professionals regarding its best practices for conducting video conferences with those who have cases pending before Appeals. During the COVID-19 pandemic, video conferences were expanded. These allowed taxpayers to be seen and heard and be able to visually share documents without going in-person to an Appeals office. This garnered positive feedback, so Appeals will continue to offer video conferences as an option. Public input is sought for permanent guidance regarding scheduling and conducting the conferences, procedures for verification, and recommendations for establishing a professional meeting environment. Public comments can be sent to ap.taxpayer.experience@irs.gov by Wednesday, November 16, 2022.

Tax Updates April 27

Properly Withhold for 2022

The IRS is urging taxpayers to use the Tax Withholding Estimator to ensure they’re having the right amount of tax taken out of their earnings. Now that 2021 returns have been completed, workers can use that information to adjust their withholding to more accurately reflect their tax burden. A large refund or surprise tax bill suggest that withholding needs to change. Those who have recently experienced a major life change such as marriage, divorce, birth of a child, or purchase of a home should also use the Estimator.

Nationwide Tax Forum In July

The IRS has announced that the 2022 IRS Nationwide Tax Forum will be held virtually over five weeks starting July 19. Live-streamed webinars will occur every Tuesday, Wednesday, and Thursday over the weeks. This summer event, held for more than 30 years, is an outreach to the tax professional community, and while many other events and organizations are meeting in person this year, the Nationwide Tax Forum will be online. Early bird registration is available, and tax professionals are encouraged to register soon. Topics will include tax law, ethics, virtual currency, and more, and will confer up to 28 continuing education credits upon attendees.

Missed April 18 Filing Deadline?

The IRS is encouraging taxpayers who missed the April 18 deadline to file as soon as possible. Taxpayers who are owed refunds will not be penalized for filing late, but those who owe taxes should file quickly to limit penalties and interest. Additionally, families can still claim the Child Tax Credit for 2021 if they have not received it. This year also marks the first time that families in Puerto Rico can claim the Credit, up to $3600 for each child.

May 16 Deadline For the Tax-Exempt

The IRS reminds tax-exempt organizations that May 16 is the deadline for filing certain returns, including Forms 990, 990-EZ, 990-PF, 990-N, 990-T, and Form 4720. Electronic filing is mandatory, and there are pre-recorded online workshops to help exempt organizations comply with filing requirements, if needed.

Tax Updates Late September

Extension Deadline Approaching

The IRS is reminding those taxpayers who filed an extension for their 2020 tax returns that they have until October 15, 2021 to file . Electronic and FreeFile options are still available. Those who are in a federally declared disaster area may have more time to file, thanks to the disaster relief offered by the IRS. Additionally, those serving in a combat zone typically have 180 days after they leave the combat zone to file returns and pay taxes. There are many online resources available to file and pay, view information on one’s own tax history, and check Economic Impact Payment or advance Child Tax Credit status.

New Collection Agencies Contracted

The IRS has contracted with three new private-sector collection agencies (PCAs) for collection of tax debt . Those who have unpaid tax bills may be contacted by CBE Group, Inc based in Iowa, or Coast Professional, Inc. or ConServe, both in New York.The IRS will always notify a taxpayer in writing before transferring their account to a PCA. The PCAs may not take enforcement actions, but they are authorized to discuss payment options and set up payment agreements. Tax payments must still be made to the IRS or US Treasury.

Relief For Drought and Hurricane

Farmers and ranchers forced to sell livestock due to drought may take an additional year to replace the livestock and defer tax on any gains. To qualify, the dairy, draft, or breeding livestock must have been sold on account of drought conditions in an applicable region – this is a county or other area designated as eligible for federal assistance plus counties contiguous to it. Specific regions are listed in Notice 2021-55. The relief does not apply to livestock raised for slaughter or sporting purposes, or
poultry.
Due to shortages of undyed diesel fuel caused by recent hurricanes, the IRS is extending penalty relief to additional areas of Louisiana. The penalty relief is available to anyone who sells or uses dyed fuel for highway use, so long as the operator or seller pays the tax of 24.4¢ per gallon that normally applies to diesel fuel for highway use. Generally dyed fuel is not taxed, because it is only to be sold and used for exempt purposes, such as farming, bus transportation, and home heating.

What is the Estimated Tax Payment?

The IRS extended the tax filing deadline to May 17th, but they did not extend the estimated tax filing deadline.

What does this mean for our customers?

If your taxes are taken out of every paycheck and you receive a W-2, you do not have to make the quarterly estimated tax payments.

If you are an individual who expects to owe more than $1,000 in income taxes at your tax filing or a corporation which expects to owe more than $500 in income taxes, then you have to pay estimated taxes. For these tax filers, the IRS has not extended tax filings like they did in 2020.

For many of our customers, your tax filing deadline is May 17th, but if you fall into one of the estimated tax categories you still need to make that estimated tax payment on time.

2017 Returns Extended

US tax law gives taxpayers 3 years to file a return and receive a refund. After that, the money goes into the US Treasury and is no longer available to individuals.

We had posted on Facebook that this due date was still on April 15th. According to the IRS’s announcement, the tax extension is for the 2017 taxes as well. Also according to that announcement, there are over 16,000 taxpayers in South Carolina who have not yet filed their 2017 returns and are owed a total of over 15 million dollars.

If you need to file your 2017 tax return, please come see us! We can help you navigate the complexities of old documents and you might actually come out with more money than you owe.