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.