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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

IRS Begins 2022 Tax Season and Issues Tips for a Smooth Filing Season

The IRS has reminded taxpayers to take extra precautions to file accurate tax returns electronically to speed refunds as the agency begins the 2022 tax filing season. The IRS is now accepting and processing 2021 tax returns. Over 160 million individual tax returns for the 2021 tax year are expected to be filed. Most taxpayers face an April 18, 2022, […]

No Filing Deadline Extension Recommended Despite IRS Backlog – NTA

The Internal Revenue Service should not extend the individual filing tax deadline, currently set at April 18 for most of the country, despite the significant backlog in processing of paper tax returns and other mail correspondence that can have an impact in the current the filing season, National Tax Advocate Erin Collins said.

“I don’t think the IRS needs additional time,” Collins […]

IRS Backs Off of Facial Recognition Verification

The Internal Revenue Service is halting its plans for widespread implementation of a system that would have required taxpayers to use facial recognition and authentication to access services on the agency’s website.

In a February 7 statement released by the IRS, the agency said “it will transition away from using a third-party service for facial recognition to help authenticate people creating new […]

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 […]

Treasury Secretary Yellen Promotes Corporate Minimum Tax

A corporate minimum tax is needed to provide tax relief to the working and middle class, Department of Treasury Secretary Janet Yellen said.

“Over the past several decades, the burden of taxation – in the United States and globally – has shifted away from corporations and on the middle class,” Secretary Yellen said January 21 during the World Economic Forum’s Virtual Davos […]

AICPA Requests Guidance On How To Handle Prepayment Of Events Canceled By COVID

The American Institute of CPAs has asked the Internal Revenue Service to issue updated guidance on how to account, from a tax perspective, prepayments received for live events that were canceled or deferred due to the COVID-19 pandemic.

“During the pandemic, taxpayers offering live events or live productions to customers were often significantly affected by government actions and restrictions implemented originally […]

February 2022

IRS Highlights Online Tools and Resources Ahead of Tax Filing Season

The IRS encouraged taxpayers to use its online tools and resources to find the information they need to be ready to file their 2021 federal tax returns, including important special steps related to Economic Impact Payments (EIP) and advance Child Tax Credit (CTC) payments. This is the third in a series of reminders to help taxpayers get ready for the […]

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 […]

ABA Section Calls For Research Credit Refund Claim Regs

The American Bar Association’s Section of Taxation is asking the Internal Revenue Service to issue regulations related to the filing of a research credit refund claim.

In a January 6 letter to the agency, the Section suggested that an October 15, 2021, memorandum providing specific instructions on filing the claim requires “the inclusion of such an extensive amount of documentation at the […]

Pandemic Highlights IRS’ Underfunding Issues

Two recent reports, one from the Internal Revenue Service and the other from the National Taxpayer Advocate, show how the ongoing pandemic exposed the effects of being an underfunded agency.

The IRS in its recently issued Progress Update report for fiscal year 2021, highlights some of those issues caused by the pandemic and how the agency is working to respond to them.

In a […]

IRS Highlights Special Charitable Tax Benefit

The IRS has joined with several leading nonprofit groups to highlight a special tax provision that allows more people to deduct donations to qualifying charities on their 2021 income tax return. Accordingly, the Independent Sector and National Council of Nonprofits joined with the IRS to highlight this pandemic-related provision where married couples filing jointly can deduct up to $600 in […]

State And Local Fiscal Recovery Funds Program Final Rule Issued

The U.S. Department of the Treasury issued the final rule implementing the State and Local Fiscal Recovery Funds (SLFRF) Program.

The program, created as part of the American Rescue Plan, provides $350 billion to state, local, and tribal governments to support their response to the COVID-19 pandemic, ensuring they have resources to provide for health and vaccine services, funding to support […]

Conservation Easement Extinguishment Proceeds Regulation Found Invalid

D.F. Hewitt, CA-11, 2022-1 ustc¶50,102

The IRS’s interpretation of Reg. §1.170A-14(g)(6)(ii), which disallows the subtraction of post-donation improvements to property on which a conservation easement exists in the event of a judicial extinguishment, was arbitrary and capricious because it violated the procedural requirements of the Administrative Procedures Act (APA). As a result, the Tax Court’s denial of a married couple’s carryforward charitable deduction for […]

National Taxpayer Advocate Delivers Annual Report to Congress

The National Taxpayer Advocate (NTA), Erin M. Collins, has released her 2021 Annual Report to Congress. The NTA called the calendar year 2021 the most challenging year taxpayers and tax professionals have ever experienced. The report states that tens of millions of taxpayers experienced delays in the processing of their returns, and with 77 percent of individual taxpayers receiving refunds.

Further, the […]

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