April 2022

Taxpayers Reminded to Report Gig Economy Income, Virtual Currency Transactions, and Foreign Source Income and Assets

The IRS has reminded taxpayers of reporting and potential tax obligations from working in the gig economy, making virtual currency transactions, earning foreign-source income, or holding certain foreign assets. The information available on IRS.gov and instructions on Form 1040 can help taxpayers in understanding and meeting these requirements. Generally, income earned from the gig economy is taxable and must be […]

2021 Earned Income Tax Credit FAQs Issued

The IRS has issued frequently asked questions (FAQs) for the 2021 Earned Income Tax Credit (EITC) to educate eligible taxpayers on how to properly claim the EITC when they prepare their 2021 tax returns. The EITC helps low-to-moderate-income workers and families as a credit to either reduce the taxes owed or an added payment to increase a tax refund. The […]

Estimated Tax Underpayment Penalty Waived for Certain Farmers, Fishermen

The IRS has provided a waiver of the penalty (referred to as addition to tax) under Code Sec. 6654 for the underpayment of estimated income tax by qualifying farmers and fishermen. Under Code Sec. 6654(i)(1), a qualifying farmer or fisherman has only one required installment payment (instead of four quarterly payments) due on January 15 of the year following the tax year if […]

2022 Luxury Auto Depreciation Caps and Lease Inclusion Amounts Issued

The IRS has issued the luxury car depreciation limits for business vehicles placed in service in 2022 and the lease inclusion amounts for business vehicles first leased in 2022.

Luxury Passenger Car Depreciation Caps

The luxury car depreciation caps for a passenger car placed in service in 2022 limit annual depreciation deductions to:

$11,200 for the first year without bonus depreciation$19,200 for the […]

AICPA Pushes For More Action On Schedules K-2 And K-3 Reporting

The American Institute of CPAs reiterated its call for the Internal Revenue Service to delay the implementation of the Schedules K-2 and K-3 reporting until 2023 and suspend any penalties against partnerships and S corporations for failing to file Schedules K-2 and K-3 for the 2021 tax year.

The call, outlined in a February 24 letter to Lily Batchelder, assistant secretary of tax […]

IRS Unveils Voice and Chat Bots to Assist Taxpayers

The IRS has announced that it has begun using voice and chat bots on two of its specialized toll-free telephone assistance lines and IRS.gov. These features will assist taxpayers with simple payment or collection notice questions quickly and avoid waiting. Taxpayers can still speak with an IRS telephone representative if needed. IRS Commissioner Chuck Rettig stated that this step is […]

IRS Reminds Taxpayers to Conveniently Check Tax Refund Status

The IRS has reminded taxpayers that the fastest and easiest way to check on tax refunds is by using the “Where’s My Refund?” tool (the tool) on IRS.gov or through the IRS2Go mobile app. The IRS encouraged individuals to file a return this year to get child-related tax credits that were expanded by the American Rescue Plan. These include the Child Tax Credit and […]

Treasury and IRS Announce Aggressive Plan to End Pandemic Inventory Backlog

The Treasury Department and the IRS announced an aggressive plan to end the pandemic inventory backlog this year. Deputy Secretary of the Treasury Wally Adeyemo and IRS Commissioner Charles P. Rettig traveled to the IRS Campus in Philadelphia where they outlined an aggressive plan to end the backlog. This year, millions of taxpayers are awaiting the processing of their tax […]

March 2022

Simplified Return Filing Procedures Let Individuals Claim 2021 Child, Recovery Rebate and Earned Income Credits

Individuals who are not required to file tax returns for 2021 may use simplified procedures to file returns to claim:

The 2021 child credit, which was expanded and increased for 2021. The IRS may have paid up to one-half of an eligible individual’s credit in advance during 2021, but individuals must file returns to claim the remaining credit, plus any additional […]

Form 14457, Voluntary Disclosure Practice Preclearance Request and Application Has Been Updated

The IRS has announced that Form 14457, Voluntary Disclosure Practice Preclearance Request and Application, has been revised. Form 14457 allows taxpayers who may face criminal prosecution for willful violation of tax law to voluntarily disclose information to the IRS. These updates and additions include:

IRS Criminal Investigation now accepts photocopies, facsimiles, and scans of taxpayer signatures;an expanded section for reporting virtual […]

Further Details Provided on Relief in Preparing Schedules K-2 and K-3

The IRS has provided further details on additional transition relief for certain domestic partnerships and S corporations preparing the new schedules K-2 and K-3 to further ease the transition to these new schedules. Those eligible for the relief will not have to file the new schedules for tax year 2021. The new schedules K-2 and K-3 improve reporting by standardizing […]

February 2022

Low-Income Housing Credit Deadlines Extended

Notice 2022-5

The IRS extended several deadlines related to the low-income housing credit, in response to the continuing coronavirus (COVID-19) pandemic and precautions necessitated by new disease variants. The extensions generally apply to deadlines that occur between April 1, 2020, and December 31, 2022, for the:

10-percent test for carryover allocations,24-month minimum rehabilitation expenditure period (through December 31, 2023),placed in service deadline,reasonable […]

Final Regulations Address Foreign Tax Credit Issues

The Treasury and IRS have issued final regulations affecting taxpayers that claim credits or deductions for foreign income taxes or claim a deduction for foreign derived intangible income (FDII). The regulations finalize 2020 proposed regulations (REG-101657-20) and address:

the disallowance of a foreign tax credit or deduction for foreign income taxes under Code Sec. 245A(d);the determination of oil and gas extraction income […]

January 2022

IRS Guidance on Retroactive Termination of COVID-19 Employee Retention Credit

The IRS has issued guidance for employers on the retroactive termination of the COVID-19 employee retention credit against the employer’s share of Medicare tax. The Infrastructure Investment and Jobs Act (P.L. 117-58) amended Code Sec. 3134 so that for most employers the credit applies only to wages paid before October 1, 2021. If the employer is a recovery startup business, the credit […]

Tax Pros, Taxpayers Advised to Use Secure Online Account and Digital Signature Options

The IRS has reminded tax professionals and taxpayers that they can use digital signatures on a variety of common IRS forms and access a secure online platform to view and make changes to their account. The IRS has balanced the e-signature option with critical security and protection needed against identity theft and fraud. The Service has informed taxpayers that acceptable […]

Taxpayers Requested to Join IRS Identity Protection Personal Identification Number Program

The IRS has reminded taxpayers that they can get extra protection starting in January by joining the Service’s Identity Protection Personal Identification Number (IP PIN) program. The IRS has made recent changes to the program to make it easier for more taxpayers to join. The fastest and easiest way to receive an IP Pin is by using the Get an IP […]

IRS Official Details Enforcement Agenda For High Earners

The Internal Revenue Service is keeping the pressure on high income taxpayers who do not file their taxes as well as other high wealth taxpayers who may otherwise be hiding their earnings to avoid paying taxes.

And while agents are actively pursuing these people, Darren Guillot, Commissioner of the IRS Small Business/Self-Employed – Collection division said the goal is to avoid […]

December 2021

PPP Tax-exempt Income Timing and Basis Adjustment Guidance Issued

The IRS has released additional Paycheck Protection Program (PPP) loan forgiveness guidance. The guidance addresses (1) timing issues; (2) partner and consolidated group member basis adjustments; and (3) filing of amended partnership returns and information statements.

Timing of Tax-exempt IncomeA taxpayer that received a PPP loan may treat tax-exempt income resulting from the partial or complete forgiveness of the PPP loan […]

November 2021

COBRA Extension Guidance Clarified

The IRS issued a notice clarifying the application of certain extensions granted under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) for the election of COBRA coverage and payment of COBRA premiums due to the COVID-19 emergency. The IRS also addressed the interaction of COBRA continuation coverage under the Emergency Relief Notices with the COBRA premium assistance available for […]

IRS Highlights Tax Withholding Estimator

The IRS has reminded taxpayers that the last quarter of 2021 is a good time to check withholding. The IRS’s convenient Tax Withholding Estimator (https://www.irs.gov/individuals/tax-withholding-estimator), will help taxpayers determine if they have too much withheld and how to make an adjustment to put more cash into their own pocket now. About 70 percent of taxpayers over withhold their taxes every year, […]

LLC Tax-Exempt Determination Letter Requirements Released

The IRS released standards that a limited liability company (LLC) must satisfy to receive a determination letter recognizing it as tax-exempt under Code Secs. 501(a)(1) and 501(c)(3). This does not affect the status of organizations currently recognized under Code Sec. 501(c)(3).

Required ProvisionsThe IRS would issue said letter only if an LLC’s articles of organization and its operating agreement each include:

provisions requiring that each member […]

Final Regulations Reflect CARES Act Impact on FDII, GILTI, and FTC Transition Carryback Rules

The Treasury and IRS have issued final regulations addressing the calculation of qualified business asset investment for qualified improvement property, under the alternative depreciation system (ADS), for purposes of the Code Sec. 250 deduction (for foreign-derived intangible income and Code Sec. 951A global intangible low-taxed income (GILTI)) and for purposes of determining GILTI.

The regulations also contain transition rules relating to the impact of loss […]

October 2021

Qualified Sick and Family Leave Wages Reporting Guidance Issued

The IRS and the Treasury Department have issued guidance to employers about reporting the amount of qualified sick and family leave wages paid to employees for leave taken in 2021 on Form W-2, Wage and Tax Statement. Further, the notice provides guidance under recent legislation, including: the Families First Coronavirus Response Act (FFCRA) ( P.L. 116-127), as amended by the COVID-Related Tax […]

IRS Reminder for Classification of Workers as Employees or Independent Contractors

The IRS has emphasized the importance of correctly determining whether the individuals providing services to businesses were employees or independent contractors. Generally, an employee performs services that businesses control. Independent contractors offer their services to the public. Businesses have a right to control the details of the services performed.

The classification depends on the:

company’s behavioral Control on what the worker does […]

September 2021

Guidance Provided on Premium Assistance for COBRA Continuation Coverage

The IRS provided additional guidance on the application of the American Rescue Plan Act of 2021 (ARP) (P.L. 117-2) relating to temporary premium assistance for Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) continuation coverage. This notice supplements Notice 2021-31, I.R.B. 2021-23, and addresses additional issues.

EligibilityThe IRS noted that if the original qualifying event was a reduction in hours or an […]

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