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Weekly IRS Roundup January 22 – January 26, 2024

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 22, 2024 – January 26, 2024.

January 22, 2024: The IRS released Internal Revenue Bulletin 2024-4, which includes Revenue Procedure 2024-8. This revenue procedure lists qualified census tracts used to determine income limits for targeted area residences for purposes of Internal Revenue Code (Code) § 143(a), dealing with qualified mortgage bonds, and Code § 25(c), dealing with mortgage credit certificates.

January 22, 2024: The IRS announced that individuals and businesses in parts of Connecticut affected by severe storms, flooding and a potential dam breach that began on January 10 now have until June 17, 2024, to file various federal individual and business tax returns and make tax payments.

January 22, 2024: The IRS reminded taxpayers that they must disclose whether they received or disposed of digital assets, such as cryptocurrency, on their 2023 personal income tax returns.

January 22, 2024: The IRS announced that IRS Free File is now available for the 2024 filing season. IRS Free File is generally available to taxpayers with adjusted gross income of $79,000 or less. Additional information can be accessed here.

January 23, 2024: The IRS announced that work is underway on the Simple Notice Initiative, which will review and redesign various IRS notices. The IRS intends to focus first on the notices that are most commonly sent to individual taxpayers.

January 23, 2024: The IRS published a Request for Information from the US Department of the Treasury, Employee Benefits Security Administration, US Department of Labor, and Pension Benefit Guaranty Corporation following the directive provided under the SECURE 2.0 Act of 2022 to review the existing reporting and disclosure requirements for retirement plans. Comments are due by April 22, 2024, and each agency will be required to report to US Congress on December 29, 2025. Reports will offer recommendations for simplifying, standardizing and improving reporting and disclosure requirements.

January 25, 2024: The IRS issued Notice 2024-23, which provides special relief under Code § 529 for certain rollovers to or from Maryland Prepaid College Trust (MPCT) accounts. Due to accounting discrepancies and administrative issues, access to MPCT interest earnings was frozen in April 2022 and restored in July 2023. As a result of the freeze, many taxpayers executed a qualified rollover out of MPCT accounts. Notice 2024-23 permits taxpayers to transfer funds back into an MPCT account in a qualified rollover even though the transfer of funds out of the MPCT account may have occurred within 12 months of the transfer back into an MPCT account.

January 26, 2024: In the spirit of the IRS’s annual Earned Income Tax Credit Awareness Day outreach campaign, the IRS posted information on the Earned Income Tax Credit to help educate low- to middle-income taxpayers who may be eligible to [...]

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Weekly IRS Roundup September 4 – September 8, 2023

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 4, 2023 – September 8, 2023.

September 5, 2023: The IRS released Internal Revenue Bulletin 2023-36, which includes proposed regulations implementing the Mental Health Parity and Addiction Equity Act of 2008.

September 5, 2023: The IRS released Tax Tip 2023-108, outlining basic tax advice for entrepreneurs who want to start a new business. The Tax Tip addresses business structures, selecting a tax year, employer identification numbers and reminds taxpayers to investigate applicable state tax requirements.

September 5, 2023: In light of September being National Preparedness Month, the IRS reminded taxpayers to develop an emergency preparedness plan and outlined steps for mitigating losses during a disaster.

September 5, 2023: The IRS issued Fact Sheet 2023-20 to explain how pass-through entities that are electronically filing Schedules K-2 and K-3 should report negative amounts, which are not permitted for certain line items. The Fact Sheet cautions that the IRS has not opined on whether it is legally appropriate to use negative values.

September 6, 2023: The IRS released Tax Tip 2023-109, providing advice to taxpayers who are still considering a tax return preparer.

September 6, 2023: The IRS extended tax relief to individuals and businesses impacted by Hurricane Idalia in South Carolina. As a result, affected individuals filing personal income tax returns on extensions expiring on October 16, 2023, calendar-year partnerships and S corporations whose extensions expire on October 16, 2023, and calendar-year corporations whose 2022 extensions expire on November 15, 2023, now have until February 15, 2024, to file returns and pay related taxes.

September 6, 2023: The IRS announced that the application period for the 2024 Compliance Assurance Process (CAP) program is now open and will run from September 6 to October 31, 2023. The IRS will inform applicants if they’re accepted into the program in February 2024. The CAP program enables taxpayers and the IRS to resolve issues before filing tax returns. To apply, applicants must (1) have assets of $10 million or more, (2) be a US publicly traded corporation with a legal requirement to prepare and submit US Securities and Exchange Commission Forms 10-K, 10-Q and 8-K, and (3) not be under investigation by, or in litigation with, any government agency that would limit the IRS’s access to current tax records.

September 6, 2023: The IRS reminded taxpayers who pay estimated taxes that the deadline to submit their third quarter payments is September 15, 2023.

September 8, 2023: The IRS announced it will be dedicating greater resources to wealthy taxpayers. As part of this effort, the IRS will ensure audit rates do not increase for those earning less than $400,000 a year and will add new fairness safeguards for those claiming the Earned Income Tax Credit. The IRS [...]

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Weekly IRS Roundup February 13 – February 17, 2023

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 13, 2023 – February 17, 2023.

February 13, 2023: The IRS released Internal Revenue Bulletin 2023-7, which highlights the following:

  • Revenue Procedure 2023-9: This procedure provides new rules and conditions for implementing the optional safe harbor method of accounting for real estate developers to determine when common improvement costs may be included in the basis of individual units of real property in a real property development project held for sale to determine the gain or loss from sales of those units (the Alternative Cost Method).

February 13, 2023: The IRS announced that interest rates will remain the same for the second quarter of 2023. As of April 1, 2023, the rates will be as follows:

  • Overpayments: 7%
  • Overpayments for corporations: 6%
  • Corporate overpayments for portion exceeding $10,000: 4.5%
  • Underpayments: 7%
  • Large corporate underpayments: 9%

Revenue Ruling 2023-4 contains the complete explanation of the calculations.

February 13, 2023: The IRS announced a new pilot phase for the Compliance Assurance Process (CAP) program called “Bridge Plus.” CAP is a cooperative pre-filing program for large corporate taxpayers. Taxpayers will be required to provide book-to-tax reconciliations, credit utilization and other supporting documentation shortly after their audited financial statement is finalized. An IRS team will then risk-assess the documents to determine if the taxpayer is suitable for the “Bridge Plus” phase.

February 13, 2023: The US Department of the Treasury (Treasury) and the IRS announced guidance to establish a program that would provide solar and wind power to certain low-income areas under the Inflation Reduction Act of 2022. Notice 2023-17 establishes the Low-Income Communities Bonus Credit Program and provides initial guidance for potential applicants for allocations of calendar year 2023 capacity limitation.

February 13, 2023: The IRS and the Treasury announced guidance on the Qualifying Advanced Energy Product Credit. Notice 2023-18 establishes the Section 48C(e) program to allocate $10 billion in credits ($4 billion of which may only be allocated to projects located in certain energy communities census tracts). The notice also provides initial program guidance. The goal of the program is to expand US manufacturing capacity and quality jobs for clean energy technologies (including production and recycling), reduce greenhouse gas emissions in the US industrial sector and secure domestic supply chains for critical materials (including specified critical minerals) that serve as inputs for clean energy technology production.

February 13, 2023: The IRS released Tax Tip 2023-18, reminding people that the Earned Income Tax Credit is a major tax benefit for millions of low- and moderate-income workers. Taxpayers can check their eligibility and how much they qualify for here.

February 14, 2023: The IRS released Tax Tip 2023-19, providing resources and suggestions for choosing [...]

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Weekly IRS Roundup October 31 – November 4, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 31, 2022 – November 4, 2022.

October 31, 2022: The IRS released Internal Revenue Bulletin 2022-44, which highlights the following:

  • Treasury Decision 9966: These final regulations increase the renewal user fee for enrolled retirement plan agents from $67 to $140 and also increase both the enrollment and renewal of enrollment user fees for enrolled agents from $67 to $140.
  • Proposed Regulations 113068-22: These proposed regulations relate to recordkeeping and reporting requirements for the average income test for purposes of the low-income housing credit.
  • Revenue Ruling 2022-19: This revenue ruling provides a rule for valuing noncommercial flights on employer-provided aircraft, including the three Standard Industry Fare Level (SIFL) rates: the Unadjusted SIFL Rate, the SIFL Rate Adjusted for PSP Grants, and the SIFL Rate Adjusted for PSP Grants and Promissory Notes.
  • Treasury Decision 9967: This document contains final and temporary regulations, which set forth guidance on the average income test for purposes of the low-income housing credit.

October 31, 2022: The IRS released COVID Tax Tip 2022-166, announcing that more than nine million people may qualify for tax benefits they did not claim by filing a 2021 federal income tax return. Many of these people may be eligible to claim some or all of the 2021 Recovery Rebate Credit, the Child Tax Credit and the Earned Income Tax Credit, among others, which were expanded last year under the American Rescue Plan Act of 2021 and other legislation.

November 1, 2022: The IRS released COVID Tax Tip 2022-167, alerting taxpayers in areas covered by certain Federal Emergency Management Agency disaster declarations that they may have more time to file their returns and may qualify for penalty relief under Notice 2022-36.

November 2, 2022: The IRS released COVID Tax Tip 2022-168, reminding people to review their tax withholdings to avoid tax surprises, such as a balance due or a larger-than-expected refund.

November 3, 2022: The IRS requested comments on three notices related to different aspects of extensions and enhancements of energy tax benefits in the Inflation Reduction Act of 2022. The IRS hopes that comments will aid the agency in drafting the related guidance items. Feedback should be submitted by December 3, 2022. The notices include:

  • Notice 2022-56, which requests comments related to the qualified commercial clean vehicles provisions and the alternative fuel vehicle refueling property
  • Notice 2022-57, which requests comments related to the carbon capture tax credit
  • Notice 2022-58, which requests comments related to the tax credit for the production of clean hydrogen and the clean fuel production tax credit.

November 3, 2022: The IRS
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IRS Releases 2023 Annual Inflation Adjustments

On October 18, 2022, the Internal Revenue Service (IRS) announced the annual inflation adjustments for 2023 related to more than 60 tax provisions, with some increasing, some maintaining and some new additions to the list. The tax adjustments generally apply to tax returns for the 2023 tax year that will be filed in 2024 (i.e., the adjustment will not apply to tax returns filed next year for the 2022 tax year). The highlights are summarized below, but you can find the complete list detailed in Revenue Procedure 2022-38.

2023 Marginal Income Tax Brackets

Tax Rate Single Taxpayers,
Income Greater Than: Married Couples Filing Jointly, Income Greater Than: 37% $578,125 $693,750 35% $231,250 $462,500 32% $182,100 $364,200 24% $95,375 $190,750 22% $44,725 $89,450 12% $11,000 $22,000 10% $11,000 or less $22,000 or less

 

2023 Standard Deduction

Married couples filing jointly $27,700 (increase of $1,800) Single taxpayers and married individuals filing separately $13,850 (increase of $900) Heads of households $20,800 (increase of $1,400)

 

Alternative Minimum Tax Exemption

  • Unmarried individuals: $81,300
  • Joint returns or surviving spouses: $126,500
  • Married individuals filing separately: $63,250
  • Estates and Trusts: $28,400

Earned Income Tax Credit

  • $3,995 for one qualifying child
  • $6,604 for two qualifying children
  • $7,430 for three or more qualifying children

Qualified Transportation Fringe Benefit

  • $300

Foreign Earned Income Exclusion

  • $120,000

Basic Exclusion Amount for Estates of Decedents

  • $12,920,000

Annual Exclusion for Gifts

  • $17,000

New for 2023: Energy-Efficient Commercial Building Deduction

  • The applicable dollar value used to determine the maximum allowance of the deduction is $0.54 (increased by $0.02), but not above $1.07, for each percentage point by which the total annual energy and power costs for the building are certified to be reduced by a percentage greater than 25%.
  • The applicable dollar value used to determine the increased deduction amount for certain property is $2.68 (increased by $0.11), but not above $5.36, for each percentage point by which the total annual energy and power costs for the building are certified to be reduced by a percentage greater than 25%.

Items Not Changing

  • Personal exemption for the 2023 tax year remains at zero
  • No limit on itemized deductions (same as 2022, 2021, 2020, 2019 and 2018)

Practice Point: The above adjustments are a welcome development for taxpayers in the wake of inflation. However, it is important to note that any tax relief will not be immediate as the adjustments are for the 2023 tax year and will be reflected on tax returns filed in 2024.




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Weekly IRS Roundup October 10 – October 14, 2022

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 10, 2022 – October 14, 2022. 

October 11, 2022: The IRS released Internal Revenue Bulletin 2022-41, which highlights the following:

  • Notice 2022-42: This notice announces that the IRS and the US Department of the Treasury (Treasury) intend to amend the regulations under Section 901 with respect to the application of the noncompulsory payment regulations to certain amended Puerto Rico tax decrees.
  • Notice 2022-44: This notice provides annual awareness of the 2022-2023 special per diem rates for taxpayers to use when substantiating the amount of business expenses incurred while traveling away from home. The guidance addresses (1) the special transportation industry meal and incidental expenses rates, (2) the rate for the incidental expenses only deduction and (3) the rates and list of high-cost localities for purposes of the high-low substantiation method.
  • Revenue Procedure 2022-19: This revenue procedure provides guidance to allow S corporations and their shareholders to resolve frequently encountered issues with certainty and without requesting a private letter ruling issued by the IRS.

October 11, 2022: The IRS issued Notice 2022-41, which expands the application of permitted change-in-status rules for health coverage under a Section 125 cafeteria plan. This guidance addresses when a plan participant may want to revoke the employee’s election under the cafeteria plan for family coverage under a group health plan (other than a flexible spending arrangement) in order to allow one or more family members to enroll in a Qualified Health Plan through a Health Insurance Exchange in the individual market.

October 11, 2022: The IRS announced that seminars from the 2022 IRS Nationwide Tax Forum are now available online. The platform offers 18 self-study seminars, including ones on the following topics:

  • IRS Commissioner Chuck Rettig’s Keynote Address
  • Tax Law Changes for Tax Year 2022 – in English and Spanish
  • Professional Responsibility Obligations (Ethics) – in English and Spanish
  • Tax Treatment of Digital Assets
  • Tax-Exempt Organizations Update
  • Emerging Cyber Crimes – in English and Spanish

October 11, 2022: The IRS announced that it is expanding dyed diesel penalty relief in response to Hurricane Ian. The IRS will not impose a penalty when dyed diesel fuel with a sulfur content that does not exceed 15 parts-per-million is sold for use or used on highways in the state of Florida. The relief began on September 28, 2022, and lasts through October 19, 2022. The penalty relief previously only applied to emergency vehicles.

October 11, 2022: The IRS issued a statement related to uncertain tax positions (UTP) reporting. Draft changes to the Schedule UTP and the UTP instructions are available at Draft Task Forms. The draft changes are intended to improve the form’s usefulness by incorporating additional relevant examples and [...]

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