Hall of Fame Taxes and Financial Services

12/13/2021

Issue Number: 2021-49

Inside This Issue

IRS extends temporary policy on e-signatures for certain forms until Oct. 31, 2023

Get ready for taxes: What's new and what to consider when filing in 2022

A Closer Look: How IRS Collection is helping taxpayers during the pandemic

IRS provides answers for 2021 Short-Tax Year Pass-Through Entity Returns and Schedules K-2 and K-3

IRS seeking qualified applicants for the Electronic Tax Administration Advisory Committee

IRS makes available new version of Form 8918, Material Advisor Disclosure Statement, includes 2D barcodes

Technical Guidance

1. IRS extends temporary policy on e-signatures for certain forms until Oct. 31, 2023

To help reduce burden for the tax community, the IRS allows taxpayers to use electronic or digital signatures on certain paper forms they cannot file electronically. This policy has been extended through Oct. 31, 2023. The IRS is balancing the e-signature option with critical security and protection needed against identity theft and fraud. Understanding the importance of electronic signatures to the tax community, the IRS offers an overview as well as a list of forms.

2. Get ready for taxes: What's new and what to consider when filing in 2022

Individuals are encouraged to take important actions this month to help them file their federal tax returns in 2022, including special steps related to Economic Impact Payments and advance Child Tax Credit payments. A special page, updated and available on IRS.gov, outlines steps your clients can take now to make tax filing easier in 2022.

3. A Closer Look: How IRS Collection is helping taxpayers during the pandemic

The latest executive column “A Closer Look,” features Fred Schindler, Director, Collection, Small Business/Self-Employed, discussing how the IRS’s Collection organization has taken a number of actions to help taxpayers since the onset of COVID-19. These actions include some policy changes that will continue beyond the pandemic. “The IRS’s Collection organization has played an important role in efforts to implement economic relief measures passed by Congress,” said Schindler. “We will continue to carry out our mission of collecting delinquent taxes and securing delinquent tax returns through the fair and equitable application of the tax laws while respecting taxpayer rights.”

4. IRS provides answers for 2021 Short-Tax Year Pass-Through Entity Returns and Schedules K-2 and K-3

In the summer, the Treasury Department and the IRS finalized Schedules K-2 and K-3 for Forms 1065, 1120-S, and 8865 for tax year 2021. The schedules are designed to provide greater clarity for partners and shareholders on how to compute their U.S. income tax liability with respect to items of international tax relevance, including claiming deductions and credits. The Treasury Department and the IRS also finalized instructions associated with the Schedules K-2 and K-3. However, the tax year 2021 Forms, to which Schedules K-2 and K-3 must be attached, have not yet been finalized. Questions have arisen whether the Schedules K-2 and K-3 must be attached to tax year 2020 Forms for partnerships or S corporations with 2021 short tax years; or, in the case of Form 8865, filers of Form 8865 with 2021 short tax years. New FAQs address questions concerning Schedules K-2 and K-3 with respect to 2021 short tax years for pass-through entities and filers of Form 8865.

5. IRS seeking qualified applicants for the Electronic Tax Administration Advisory Committee

The IRS is seeking qualified applicants for nomination to the Electronic Tax Administration Advisory Committee (ETAAC). The ETAAC is an organized public forum for discussion of issues in electronic tax administration, such as prevention of identity theft and refund fraud. More information regarding the application process can be found at: Apply for Membership on the Electronic Tax Administration Advisory Committee (ETAAC).

6. IRS makes available new version of Form 8918, Material Advisor Disclosure Statement, includes 2D barcodes

The IRS has enhanced Form 8918, Material Advisor Disclosure Statement, to include 2D barcodes. The new version of the form is now available on IRS.gov. After June 1, 2022, the IRS will accept only the latest version of Form 8918 (Rev. November 2021). The IRS will accept prior versions of Form 8918 through June 1, 2022. After that date, the IRS will reject prior versions of the form.

The IRS accepts completed Form 8918 and related attachments by fax to 844-253-5607. The IRS encourages taxpayers to fax Form 8918 for faster processing. Alternatively, Form 8918 may be mailed to:

Internal Revenue Service
OTSA Mail Stop 4915
1973 Rulon White Blvd.
Ogden, UT 84201

The IRS can generally give taxpayers a reportable transaction number sooner when they file by fax. For more information about Form 8918, refer to Taxpayers can now fax Form 8918, Material Advisor Disclosure Statement.

7. Technical Guidance

Notice 2021-65 provides guidance to employers that paid wages after Sept. 30, 2021 and received an advance payment of the Employee Retention Credit for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of 2021 but are now ineligible for the credit due to the change in the law. The notice also provides guidance regarding how the rules apply to recovery startup businesses during the fourth quarter

11/29/2021

Issue Number: 2021-47
Inside This Issue

Child Tax Credit payments: IRS online portal now available in Spanish
Partnering to protect taxpayers’ information; National Tax Security Awareness Week begins Monday
IRS Nationwide Tax Forums Online offers 18 self-study seminars
News from the Justice Department’s Tax Division
Technical Guidance
1. Child Tax Credit payments: IRS online portal now available in Spanish
The Internal Revenue Service this week launched a new Spanish-language version of the Child Tax Credit Update Portal (CTC-UP). This tool is designed to help families quickly and easily make changes to the monthly Child Tax Credit payments they are receiving from the IRS.

2. Partnering to protect taxpayers’ information; National Tax Security Awareness Week begins Monday
Combatting today’s cybercriminals takes all of us working together. Working together as the Security Summit, the IRS works with state tax agencies and the tax industry to fight these 21st century identity thieves. And while we’re making progress, there’s more work to be done. Protecting taxpayer data is the law and good business. Visit the Protect Your Clients; Protect Yourself webpage on IRS.gov for tips and resources about keeping your clients’ tax information secure. In addition, the annual National Tax Security Awareness Week begins Monday with tips to help protect taxpayers and tax professionals from identity thieves.

3. IRS Nationwide Tax Forums Online offers 18 self-study seminars
Self-study seminars are available through the IRS Nationwide Tax Forums Online. These 18 seminars were recorded at the 2021 IRS Nationwide Tax Forum, and you can earn continuing education credits for $29 per credit. For more information, visit the IRS Nationwide Tax Forums Online website.

4. News from the Justice Department’s Tax Division
The U.S. Department of Justice Tax Division this week reported:

A Florida tax preparer was charged in an indictment filed in the Eastern District of Pennsylvania with scheming to fraudulently obtain more than $7 million in Paycheck Protection Program (PPP) loans, Economic Injury Disaster Loans (EIDL) and pre-pandemic Small Business Administration (SBA) loans, and to launder the proceeds of the illegal scheme.

5. Technical Guidance
Revenue Ruling 2021-24 provides interest rates for underpayments and overpayments. The rates for interest determined under Section 6621 of the code for the calendar quarter beginning January 1, 2022, will be 3 percent for overpayments (2 percent in the case of a corporation), 3 percent for underpayments, and 5 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 0.5 percent.

Revenue Ruling 2021-24 will be in IRB 2021-50, dated Dec. 13.

An advance copy of REG-109128-21 , proposed regulations, which provide that “minimum essential coverage,” as that term is used in health insurance-related tax laws, does not include Medicaid coverage that is limited to COVID-19 testing and diagnostic services provided under the Families First Coronavirus Response Act. The proposed regulations also provide an automatic extension of time for providers of minimum essential coverage to furnish individual statements regarding such coverage, and an alternative method for furnishing individual statements when the shared responsibility payment amount is zero. Lastly, the proposed regulations provide an automatic extension of time for “applicable large employers” to furnish statements relating to health insurance that the employer offers to its full-time employees.

11/29/2021

Issue Number: Tax Tip 2021-174
Understanding taxpayer rights: The right to privacy

One of the IRS's top priorities is protecting the privacy of America's taxpayers. The agency takes this so seriously that the right to privacy is one of ten rights the Taxpayer Bill of Rights gives all taxpayers.

Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary. Taxpayers can also expect that the IRS will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

Here are a few more details about what a taxpayer's right to privacy means:

• The IRS cannot seize certain personal items, such as schoolbooks, clothing and undelivered mail.

• The IRS cannot seize a personal residence without first getting court approval, and the agency must show there is no reasonable alternative for collecting the tax debt.

• Sometimes, taxpayers submit offers to settle their tax debt that relate only to how much they owe. This is formally known as a Doubt as to Liability Offer in Compromise. Taxpayers who make this offer do not need to submit any financial documentation.

• During an audit, if the IRS finds no reasonable indication that a taxpayer has no unreported income, the agency will not seek intrusive and extraneous information about the taxpayer's lifestyle.

• A taxpayer can expect that the IRS's collection actions are no more intrusive than necessary. During a collection due process hearing, the Office of Appeals must balance that expectation with the IRS's proposed collection action and the overall need for efficient tax collection.

More information:
Taxpayer Advocate Service
IRS Privacy Policy
Privacy Act of 1974

11/25/2021

Issue Number: Tax Tip 2021-173

What small business owners should know about the depreciation of property deduction

Depreciation is an annual tax deduction that allows small businesses to recover the cost or other basis of certain property over the time they use the property. It is an allowance for the wear and tear, deterioration or obsolescence of the property.

Small businesses can depreciate property when they place it in service for use in their trade or business or to produce income. The business stops depreciating property when they have fully recovered their cost or other basis or when they retire it from service, whichever happens first.

What property is depreciable?
Small businesses can depreciate machinery, equipment, buildings, vehicles, and furniture. They cannot claim depreciation on personal property. If a business uses an asset, such as a car, for business or investment and personal purposes, the business owner can depreciate only the business or investment use portion. Land is never depreciable, although buildings and certain land improvements may be.

Businesses may depreciate property that meets all these requirements. The business must:

• Own the property. The business is considered to own property even if it is subject to a debt.

• Use the property in a business or income-producing activity. If the property is used to produce income, the income must be taxable. Property that’s used solely for personal activities can’t be depreciated.

• Be able to assign a determinable useful life to the property. This means that it must be something that wears out, decays, gets used up, becomes obsolete or loses its value from natural causes.

• Expect the property to last more than one year. It must have a useful life that extends substantially beyond the year a business places it in service.

• Not depreciate excepted property. Excepted property includes certain intangible property, certain term interests, equipment used to build capital improvements, and property placed in service and disposed of in the same year.

Small businesses should use Form 4562 to figure their deduction for depreciation.

More information:
Tax Topic No. 704, Depreciation
About Form 4562, Depreciation and Amortization
Publication 946, How to Depreciate Property

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Tax Tip 2021-173, November 23, 2021

11/12/2021

IRS: Families will soon receive November advance Child Tax Credit payments; time running out to sign up online to get an advance payment in December

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IR-2021-222, November 12, 2021

WASHINGTON — The Internal Revenue Service and the Treasury Department announced today that millions of American families will soon receive their advance Child Tax Credit (CTC) payment for the month of November. Low-income families who are not getting payments and have not filed a tax return can still get one, but they must sign up on IRS.gov by 11:59 pm Eastern Time on Monday, Nov. 15.

This fifth batch of advance monthly payments, totaling about $15 billion, will reach about 36 million families across the country. The majority of payments are being made by direct deposit.

Under the American Rescue Plan, most eligible families received payments dated July 15, Aug. 13, Sept. 15 and Oct. 15. The last payment for 2021 is scheduled for Dec. 15. For these families, each payment is up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17.

Here are more details on the November payments:

Families will see the direct deposit payments in their accounts starting Nov. 15. Like the prior payments, the vast majority of families will receive them by direct deposit.
For those receiving payments by paper check, be sure to allow extra time, through the end of November, for delivery by mail.
Those wishing to receive their December payment by direct deposit can make this change using the Child Tax Credit Update Portal, available only on IRS.gov. Be sure to make the change by 11:59 pm Eastern Time on Nov. 29. To access the portal, visit IRS.gov/childtaxcredit2021.
Payments are going to eligible families who filed a 2019 or 2020 income tax return. Returns processed by Nov. 1 are reflected in these payments. This includes people who don’t typically file a return but either during 2020 successfully filed a return to register for Economic Impact Payments using the IRS Non-Filers tool on IRS.gov, or in 2021 successfully filed a return by using the Non-filer Sign-up Tool for advance CTC.
Payments are automatic. Aside from filing a tax return, including a return from the Non-filer Sign-up Tool, families don’t have to do anything if they are eligible to receive monthly payments.
Families who did not get a July, August, September or October payment and are getting their first monthly payment this month will still receive their total advance payment amount for the year (which is half of their total Child Tax Credit). This means that the total payment will be spread over two months, rather than six, making each monthly payment larger.
Sign up by Nov. 15
Recently, the IRS sent letters to many Americans urging them to check out the Child Tax Credit and if they qualify, to sign up soon to get advance payments. Whether or not they got one of these letters, an eligible family who is not already getting monthly payments can still sign up to get an advance payment of the Child Tax Credit.

Treasury and IRS urge any low-income family who doesn’t normally need to file a return to sign up now to get their payment. The deadline is 11:59 pm Eastern Time on Monday, November 15.

Right now, they can only sign up online. To do so, quickly and securely, visit IRS.gov/childtaxcredit2021. Families can choose to file either in English or Spanish.

Families signing up now will normally receive half of their total Child Tax Credit receive on Dec. 15. This means a payment of up to $1,800 for each child under 6, and up to $1,500 for each child age 6 to 17. This is the same total amount that most other families have been receiving in up to six monthly payments that began in July.

Any family who receives advance payments of the CTC during 2021 can claim the rest of the credit when they file their 2021 Federal income tax return. To help them do that, early in 2022 families will receive Letter 6419 documenting any advance payments issued to them during 2021 and the number of qualifying children used to calculate the advance payments.

Families can make changes to their account
Families who are already receiving monthly payments can use the Child Tax Credit Update Portal (CTC-UP) to quickly update their account. Available only on IRS.gov, CTC-UP already allows families to verify their eligibility for the payments and then, if they choose to:

Switch from receiving a paper check to direct deposit;
Change the account where their payment is direct deposited;
Update their mailing address;
Stop monthly payments and
Reflect significant changes in their income that could potentially raise or lower their monthly payments.
Updates made by 11:59 pm Eastern Time on Nov. 29 will be reflected in the monthly payment scheduled for Dec. 15.

Later this month, the IRS will launch a Spanish-language version of the tool. In addition, new features will be added to enable families to raise or lower their final monthly payment to reflect life changes, such as another child born or adopted in 2021.

Community partners can help
The IRS encourages partners and community groups to share information and use available online tools and toolkits to help non-filers, low-income families and other underserved groups sign up to receive these benefits.

Links to online tools, answers to frequently asked questions and other helpful resources are available on the IRS’ special advance CTC 2021 page.

Check if you're eligible and sign up to get advance payments of the 2021 Child Tax Credit even if you don't file taxes.

09/11/2021

Issue Number: Avoid Phishing Emails

Inside This Issue

Here is a video tax tip from the IRS:

Avoid Phishing Emails English | Spanish | ASL

Subscribe today: The IRS YouTube channels provide short, informative videos on various tax related topics in English, Spanish and ASL.

www.youtube.com/irsvideos
www.youtube.com/irsvideosmultilingua
www.youtube.com/irsvideosASL

The Internal Revenue Service's official YouTube channel features IRS videos to help America's taxpayers understand and meet their tax responsibilities and en...

09/11/2021

Issue Number: COVID Tax Tip 2021-123

Important additional guidance for employers claiming the employee retention credit

The IRS recently issued further guidance on the employee retention credit. This includes guidance for employers who pay qualified wages after June 30, 2021, and before January 1, 2022, and guidance on miscellaneous issues that apply to the employee retention credit in both 2020 and 2021. Additionally, the IRS issued a safe harbor allowing employers to exclude certain items from their gross receipts solely for determining eligibility for the employee retention credit.

Notice 2021-49 addresses changes made by the American Rescue Plan Act of 2021 to the employee retention credit that apply to the third and fourth quarters of 2021.

Those changes include:
Making the credit available to eligible employers who pay qualified wages after June 30, 2021, and before January 1, 2022.

Expanding the definition of eligible employer to include recovery startup businesses.

Modifying the definition of qualified wages for severely financially distressed employers.

Providing that the employee retention credit does not apply to qualified wages considered as payroll costs in connection with a shuttered venue grant or a restaurant revitalization grant.

This guidance also answers various questions about the employee retention credit for tax years 2020 and 2021, including:

The definition of full-time employee and whether that definition includes full-time equivalents.

The treatment of tips as qualified wages and the interaction with the credit for portion of employer Social Security taxes paid with respect to employee cash tips.

The timing of the qualified wages deduction disallowance and whether taxpayers that already filed an income tax return must amend that return after claiming the credit on an adjusted employment tax return.

Whether wages paid to majority owners and their spouses may be treated as qualified wages.

Revenue Procedure 2021-33 provides a safe harbor permitting employers to exclude certain amounts from gross receipts solely for determining eligibility for the employee retention credit. These amounts are:

The amount of the forgiveness of a Paycheck Protection Program Loan

Shuttered Venue Operators Grants under the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act

Restaurant Revitalization Grants under the American Rescue Plan Act of 2021

An employer elects to apply the safe harbor by excluding these amounts solely for determining whether it is an eligible employer for a calendar quarter for purposes of claiming the employee retention credit on its employment tax return.

Reporting
Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their employment tax returns, generally, Form 941 Employer's Quarterly Federal Tax Return, for the applicable period. If a reduction in the employer's employment tax deposits is not sufficient to cover the credit, certain employers may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

More information:
FAQs Employee Retention Credit under the CARES Act
Frequently Asked Questions on Tax Credits for Required Paid Leave Coronavirus Tax Relief

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COVID Tax Tip 2021-123, August 23, 2021

09/11/2021

Issue Number: Tax Tip 2021-124

Taxpayer can protect themselves from scammers by knowing how the IRS communicates

If the IRS does call a taxpayer, it should not be a surprise because the agency will generally send a notice or letter first. Understanding how the IRS communicates can help taxpayers protect themselves from scammers who pretend to be from the IRS with the goal of stealing personal information.

Here are some facts about how the IRS communicates with taxpayers:

The IRS doesn't normally initiate contact with taxpayers by email. Do not reply to an email from someone who claims to be from the IRS because the IRS email address could be spoofed or fake. Emails from IRS employees will end in irs.gov.

The agency does not send text messages or contact people through social media. Fraudsters will impersonate legitimate government agents and agencies on social media and try to initiate contact with taxpayers.

When the IRS needs to contact a taxpayer, the first contact is normally by letter delivered by the U.S. Postal Service. Debt relief firms send unsolicited tax debt relief offers through the mail. Fraudsters will often claim they already notified the taxpayer by U.S. mail.

Depending on the situation, IRS employees may first call or visit with a taxpayer. In some instances, the IRS sends a letter or written notice to a taxpayer in advance, but not always. Taxpayers can search IRS notices by visiting Understanding Your IRS Notice or Letter. However, not all IRS notices are searchable on that site and just because someone references an IRS notice in email, phone call, text, or social media, does not mean the request is legitimate.
IRS revenue agents or tax compliance officers may call a taxpayer or tax professional after mailing a notice to confirm an appointment or to discuss items for a scheduled audit. The IRS encourages taxpayers to review, How to Know it’s Really the IRS Calling or Knocking on Your Door: Collection.
Private debt collectors can call taxpayers for the collection of certain outstanding inactive tax liabilities, but only after the taxpayer and their representative have received written notice. Private debt collection should not be confused with debt relief firms who will call, send lien notices via U.S. mail, or email taxpayers with debt relief offers. Taxpayers should contact the IRS regarding filing back taxes properly.

IRS revenue officers and agents routinely make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed, delinquent tax returns or a business falling behind on payroll tax deposits. IRS revenue officers will request payment of taxes owed by the taxpayer. However, taxpayers should remember that payment will never be requested to a source other than the U.S. Treasury.

When visited by someone from the IRS, the taxpayers should always ask for credentials. IRS representatives can always provide two forms of official credentials: a pocket commission and a Personal Identity Verification Credential.

More Information:
IRS Taxpayers Bill of Rights
Secure tax payment options
Consumer alerts
Report phishing and online scams
Phone scams

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Tax Tip 2021-124, August 24, 2021

09/11/2021

Issue Number: Tax Tip 2021-125

Here’s how taxpayers can rebuild records after a natural disaster

After a natural disaster, taxpayers need records to help them prove and recover disaster-related losses. This may be for tax purposes, getting support from federal assistance program or for insurance claims.

While personal or business property may have been destroyed, all hope is not lost. Here are some steps that can help people reconstruct important records.

Tax records

Get free tax return transcripts immediately using Get Transcript on IRS.gov.
Order transcripts by calling 800-908-9946 and following the prompts.
Financial statements

People can gather past statements from their credit card company or bank. These records may be available online. People can also contact their bank to get paper copies of these statements.

Property records

To get documents related to property, homeowners can contact the title company, escrow company or bank that handled the purchase of their home or other property.
Taxpayers who made home improvements can get in touch with the contractors who did the work and ask for statements to verify the work and cost. They can also get written descriptions from friends and relatives who saw the house before and after any improvements.
For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, taxpayers can contact the attorney who handled the trust.
When no other records are available, people should check the county assessor's office for old records that might address the value of the property.
Car owners can research the current fair-market value for most vehicles. Resources are available online and at most libraries. These include Kelley's Blue Book, the National Automobile Dealers Association and Edmunds.

More Information:
Publication 547, Casualties, Disasters, and Thefts
Publication 584, Casualty, Disaster, and Theft Loss Workbook Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
Publication 976, Disaster Relief
Small Business Administration
DisasterAssistance.gov

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09/11/2021

Issue Number: Tax Tip 2021-129

All taxpayers have the right to challenge the IRS’s position and be heard

Taxpayers have the right to challenge the IRS's position and be heard. This is part of the Taxpayer Bill of Rights, which clearly outlines the fundamental rights every taxpayer has when working with the IRS.

Taxpayers have the right to:

• Raise objections.
• Provide additional documentation in response to formal or proposed IRS actions.
• Expect the IRS to consider their timely objections.
• Have the IRS consider any supporting documentation promptly and fairly.
• Receive a response if the IRS does not agree with their position.

Here are some specific things this right affords taxpayers.

• In some cases, the IRS will notify a taxpayer that their tax return has a math or clerical error. If this happens, the taxpayer:

o Has 60 days to tell the IRS that they disagree.
o Should provide copies of any records that may help correct the error.
o May call the number listed on the letter or bill for assistance.
o Can expect the agency to make the necessary adjustment to their account and send a correction if the IRS upholds the taxpayer's position.

• Here's what will happen if the IRS does not agree with the taxpayer's position:

o The agency will issue a notice proposing a tax adjustment. This is a letter that comes in the mail.
o This notice provides the taxpayer with a right to challenge the proposed adjustment.
o The taxpayer makes this challenge by filing a petition in U.S. Tax Court. The taxpayer must generally file the petition within 90 days of the date of the notice, or 150 days if it is addressed outside the United States.

• Taxpayers can submit documentation and raise objections during an audit. If the IRS does not agree with the taxpayer's position, the agency issues a notice explaining why it is increasing the tax. Prior to paying the tax, the taxpayer has the right to petition the U.S. Tax Court and challenge the agency's decision.

• In some circumstances, the IRS must provide a taxpayer with an opportunity for a hearing before an independent Office of Appeals. The agency must do this:

o Before taking enforcement actions to collect a tax debt. These actions include levying the taxpayer's bank account. Immediately after filing a notice of federal tax lien in the appropriate state filing location. If the taxpayer disagrees with the decision of the Appeals Office, they can petition the U.S. Tax Court.

More Information:
Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund
Publication 1,Your Rights as a Taxpayer

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Tax Tip 2021-129, September 1, 2021