by | Mar 12, 2021 | Tax Tips and News
The Internal Revenue Service yesterday released a COVID Tax Tip highlighting guidance for employers who deferred payment of their employee’s 2020 Social Security tax. Initially described by legislators as a “payroll tax holiday,” the agency reminds participating employers that they still have to pay deferred employee Social Security tax by the new deadlines.
The IRS explains that employers were provided payroll-related tax relief in two parts last year:
- The Coronavirus, Aid, Relief and Economic Security Act allowed employers to defer payment of the employer’s share of Social Security tax.
- IRS Notice 2020-65 allowed employers to defer withholding and payment of the employee’s Social Security taxes on certain wages paid in calendar year 2020.
Notice 2020-65 was issued by the IRS following an August 8, 2020 Presidential Memorandum that “[directed] the Secretary of the Treasury (Secretary) to use his authority pursuant to section 7508A of the Internal Revenue Code (Code) to defer the withholding, deposit, and payment of certain payroll tax obligations” (Notice 2020-65, 1).
IRS COVID Tax Tip 2021-32 addresses three important points from the notice: which employee wages qualified for deferral, when payments for deferred employee withholding are due, and how employers can pay the deferred withholding.
Which employee wages qualified for deferral under Notice 2020-65?
Employers were permitted to defer Social Security tax withholding for employees making less than $4,000 every two weeks. While private employers could voluntarily participate in the payroll tax holiday, the IRS notes in the tax tip that “it was mandatory for federal employees and military service members.”
When are payments for deferred employee withholding due?
Deferred employee withholding should be paid ratably from January 1, 2021 to December 31, 2021, though the IRS notes that, due to the holidays, December 31 payments will be considered timely as long as they’re made by January 3, 2022. Importantly, employers who miss repayment deadlines could face penalties and interest.
How do employers make deferral payments for 2020 employee withholding?
The IRS recommends the Electronic Federal Tax Payment System for making deferred employee Social Security tax payments. The system accepts credit cards, debit cards, money orders, and checks, but there is an important caveat: You have to make deferral payment separate from other payroll tax payments, since “IRS systems won’t recognize the payment if it is with other tax payments or sent as a deposit.”
That said, be on the lookout for the upcoming “deferral payment” option for EFTPS.
To make deferral payments, the IRS says “employers can visit EFTPS.gov, or call 800-555-4477 or 800-733-4829 for details.”
One final note: Business clients who elected to defer the employee Social Security withholding may want to remind affected employees that the previously deferred tax will come out of their pay in 2021, possibly resulting in lower-than-expected paychecks.
Sources: COVID Tax Tip 2021-32
– Story provided by TaxingSubjects.com
by | Mar 11, 2021 | Tax Tips and News
The Internal Revenue Service has a number of resources and accessibility services available to taxpayers who need them.
The IRS’s Alternative Media Center has tax-related content available in several formats for use with assistive technology. Available services include screen-reading software, refreshable Braille displays and screen magnifying software.
Taxpayers can visit the AMC to view and download hundreds of tax forms and publications in alternative formats such as:
- Text-only
- Braille ready files
- Browser-friendly HTML
- Accessible PDF
- Large print PDF
The IRS says the content of the Alternative Media Center is not static; they are working to make its resources as accessible as possible. However, not every product is available in every format.
For example, tax forms are not available as HTML.
The AMC operates a facility to produce interpoint Braille and large-print pages. The AMC also has Braille transcriptionists who use translation software to provide customized translation services.
Getting accessible tax products
People who need accessible tax forms, instructions or publications can download them from the Accessible Forms and Publications page of IRS.gov, or call 800-TAX-FORM (800-829-3676) to request copies.
A taxpayer who gets an IRS notice or letter can request it in Braille or large print. There are three basic options:
- Call the IRS at 800-829-1040.
- Fax the notice with a cover sheet to the AMC at 855-473-2006. The cover sheet should include their name, address, phone number and the desired format of the document. Write “Alternative Media Format” at the top of the cover page.
- Mail the notice or letter with a note stating the preferred format to:
IRS Alternative Media Center
400 N. 8th St., Room G39
Richmond, VA 23219
Once the AMC receives a notice it will take up to 15 business days to convert and mail it back.
The IRS is planning ahead
The IRS is developing a process to make it easier for visually impaired taxpayers to request post-filing tax notices in Braille, large print, audio or electronic formats. These offerings will include notices about additional taxes or penalties owed.
The agency expects the new process will be in place by Jan. 31, 2022.
The IRS is also creating an Accessibility Helpline to answer questions related to current and future accessibility services and alternative media formats available to taxpayers with disabilities.
File a complaint
The IRS says its Office of Equity, Diversity and Inclusion (EDI), Civil Rights Division “upholds and protects the civil rights of all taxpayers, including individuals with disabilities or limited English proficiency.”
Taxpayers who have experienced discrimination during an IRS-conducted program or by an IRS staff member or volunteer should address their complaint or issue using the Accessibility Helpline when it comes available, or submit a complaint in writing using Form 14652, Civil Rights Complaint, to:
Director, IRS Civil Rights Division
Room 2413
1111 Constitution Avenue, NW
Washington, DC 20224
Contact EDI at this mailing address for all other inquiries concerning taxpayer civil rights, or send an email to edi.civil.rights.division@irs.gov.
Sources: IRS provides resources and services for visually impaired taxpayers; Information About the Alternative Media Center
– Story provided by TaxingSubjects.com
by | Mar 10, 2021 | Tax Tips and News
It’s tax season, and that means you’re as busy as you can be. But it’s also the busy season for crafty criminals: scammers impersonating the IRS, either over the phone, by email or in person. Any of these methods can be used to steal money from people.
All taxpayers—and their trusted tax professionals—should stay vigilant against these schemes.
The Internal Revenue Service has released a list of tips to help people recognize and avoid tax-related scams.
While most of these tips are aimed at taxpayers, today’s tax pros take security seriously, so their clients should, too. Besides, when taxpayers are targeted by one of these scams, many times their tax preparer is the first one they call.
Help them be prepared.
Email Phishing Scams
Help your clients remember that the IRS does not initiate contact with taxpayers by email to seek personal or financial information. In most cases, the IRS first mails a paper bill to a person who owes taxes. In some special situations, the IRS will call or come to a home or business.
IRS-, Treasury-, or tax-related suspicious online or email phishing scams should be reported to phishing@irs.gov. Recipients should not open any attachments, click on any links, reply to the sender or take any other actions that could put them at risk.
Telephone Scams
As we mentioned, the IRS generally first mails a bill to a taxpayer who owes taxes. There are specific ways to pay taxes.
Scammers frequently exhibit behavior that the real IRS and its authorized private collection agencies just won’t allow, thus showing themselves to be imposters.
The IRS and its private collection agencies will not:
- Leave pre-recorded, urgent, or threatening messages on an answering system.
- Threaten to immediately bring in local police or other law enforcement groups to arrest the taxpayer for not paying, deport them, or revoke their licenses.
- Call to demand immediate payment with a prepaid debit card, gift card or wire transfer.
- Ask for checks to third parties.
- Demand payment without giving the taxpayer an opportunity to question or appeal the amount owed.
Remind your taxpayers that these criminals can fake or spoof caller ID numbers that appear to be from anywhere in the country. The scammers can even spoof an IRS office phone number or the numbers of various local, state, federal or tribal government agencies.
If a taxpayer gets an IRS- or Treasury-related phone call, but doesn’t owe taxes and has no reason to think they do, they should NOT give out any information, and hang up immediately.
Next, contact the Treasury Inspector General for Tax Administration to report the IRS impersonation scam call.
Report the caller ID and callback number to the IRS by sending it to phishing@irs.gov. Include “IRS Phone Scam” in the subject line of the email.
Lastly, they should report the call to the Federal Trade Commission.
If your taxpayer clients want to verify what taxes they owe to the IRS they should view tax account information online at IRS.gov and review their payment options.
Sources: Tips to help taxpayers spot and avoid tax scams
– Story provided by TaxingSubjects.com
by | Mar 9, 2021 | Tax Tips and News
The dates for the 2021 Nationwide Tax Forum have been set. But before you start calling for airline tickets, the announcement from IRS Commissioner Chuck Rettig has some helpful advice about travel plans:
“Like many of you, we look forward to resuming the IRS Tax Forum in-person events once we can safely do so. However, due to ongoing and evolving public health and safety concerns resulting from the COVID-19 health emergency, the 2021 IRS Nationwide Tax Forum and Expo will once again be offered virtually,” Rettig says.
This year’s Virtual Tax Forum will be held beginning July 20, and includes live webinars every Tuesday, Wednesday, and Thursday. The list of topics and program schedule will be released in early April.
In the meantime, IRS Commissioner Rettig has released a YouTube video on open registration for the event. In the video, the commissioner stresses that for now, the event remains a virtual affair.
“We’ve been working hard to ensure the IRS Nationwide Tax Forum program provides the information and services you need,” Rettig says. “I’m confident you’ll find this format just as informative as the in-person sessions and will enjoy the experience.”
To register, visit www.irstaxforum.com.
Held each summer for the past 30 years, the IRS Nationwide Tax Forums are the IRS’s signature outreach event to the tax professional community. In years past, the forums have been scheduled to take place in six cities around the country each summer.
For 2021, the IRS Nationwide Tax Forums will be held in a virtual environment with a series of live-streamed webinars and other online events.
What are the benefits of the Virtual Tax Forums?
Why attend this year’s Virtual Tax Forum? It’s a great opportunity to:
- Learn and earn CE credits from the comforts of home;
- Hear the latest updates on tax law, cybersecurity, ethics, and more;
- Get reliable information directly from the IRS;
- Visit the industry-leading vendors at the Virtual Expo; and
- Share experiences and discuss innovative ideas with the IRS through focus groups.
Tax pros who want to earn continuing education at the Virtual Tax Forums need to make sure they satisfy the three requirements outlined in the “Earning CE Credits” section of IRSTaxForum.com:
- Be present for the entire 60-minute presentation
- Respond to all polling questions throughout the presentation
- Complete the survey at the end of the presentation
That said, there is an important limitation for certain topics: “In cases where the same subject matter is presented in English and Spanish, the webinar will only qualify for one CE credit even if you participate in both the English and Spanish versions.”
When can I register for the IRS 2021 Nationwide Tax Forums?
Early registration for the 2021 Nationwide Tax Forums runs through June 15, and carries an Early Bird Rate of $240 per person. After June 15, the signup rate rises to $289.
Come see Drake Software at the Virtual Expo!
Drake Software will once again take part in the Virtual Expo, so be sure to visit our virtual booth!
Sources: IRS Nationwide Tax Forum Information; 2021 IRS Tax Forum Will Be Virtual; IRS Nationwide Tax Forum 2021; Annual Filing Season Program
– Story provided by TaxingSubjects.com
by | Mar 6, 2021 | Tax Tips and News
It’s not uncommon for taxpayers to forget some of the tax documents required to accurately file their return, even in a normal year. When dealing with a chaotic mix of mail delays, new tax credits, underemployment, and unemployment, it’s almost guaranteed that there will be at least a few issues. That’s why the Internal Revenue Service this week issued a tax tip to help taxpayers with missing or incorrect tax documents.
How do taxpayers request a replacement for a missing or incorrect form?
The type of form that is missing or incorrect dictates what a taxpayer should do to get a replacement. The IRS says taxpayers need to reach out to their “employer, payer or issuing agency and request the missing documents” for missing income-related tax documents that didn’t arrive in January, like Forms W-2, 1099-MISC, 1099-INT, 1099-NEC, and 1099-G.
Speaking of Form 1099-G, first-time recipients of unemployment benefits face two potential hurdles:
- Knowing they need to report unemployment payments as income in the first place
- Getting a correct Form 1099-G to help accurately report this income on Schedule 1
Further complicating matters relating to unemployment, some taxpayers have been getting a Form 1099-G for unemployment benefits that they never received. In addition to possibly being a sign that their identity has been stolen and used to fraudulently claim unemployment payments, affected taxpayers need to let the issuing state know they never received the unemployment payments listed on the form.
What should I do if my replacement forms won’t arrive before Tax Day?
Depending on when the replacement request is made, it’s possible the documents won’t arrive in time to meet the April 15 deadline. In that case, the agency suggests using substitute forms to “estimate the wages or payments made to them … [and] the taxes withheld” to timely file:
- Form 4852, Substitute for Form W-2, Wage and Tax Statement
- Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, Etc.
The IRS says that taxpayers who got a Form 1099-G listing unreceived unemployment benefits should “[report] only the income they received.”
What should taxpayers do if they suspect their information has been used to fraudulently file for unemployment benefits?
After requesting a corrected Form 1099-G to accurately file a tax year 2020 return, taxpayers who receive an incorrect Form 1099-G may need to take steps to prevent identity thieves from using their information to fraudulently apply for credit cards, bank loans, and other financial services.
Drake Software Chief Compliance Officer Suzanne Vanderpool recommends a Federal Trade Commission resource for taxpayers who suspect they are a victim of identity theft: “The FTC has a very informative website, www.identitytheft.gov, that not only gives you steps you can take but also allows you to create a personal recovery plan.”
Sources: “Tax Tip 2021-26,” IRS.gov
– Story provided by TaxingSubjects.com
by | Mar 5, 2021 | Tax Tips and News
The Internal Revenue Service says its interest rates will hold at previous levels for the second quarter of 2021.
The IRS says the interest rates will be:
- 3% for overpayments (2% in the case of a corporation);
- 0.5% for the portion of a corporate overpayment exceeding $10,000;
- 3% for underpayments; and
- 5% for large corporate underpayments.
The Internal Revenue Code declares that the rate of interest is determined on a quarterly basis. For taxpayers who aren’t corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.
In the case of a corporation, the underpayment rate is generally the federal short-term rate plus 3 percentage points. The corporate overpayment rate is the federal short-term rate plus 2 percentage points.
However, when the underpayment is large, the rate increases to the federal short-term rate plus 5 percentage points.
The rate on the portion of a corporate overpayment of tax that exceeds $10,000 for a taxable period is the federal short-term rate plus half of a percentage point.
The new interest rates are calculated from the federal short-term rate that was determined during January 2021 and took effect Feb. 1.
The rates of interest are contained in Revenue Ruling 2021-6, and will appear in Internal Revenue Bulletin 2021-12, Dated March 22, 2021.
Source: IR-2021-50
– Story provided by TaxingSubjects.com
Holland and Associates