WASHINGTON — The Internal Revenue Service today updated its frequently-asked-questions (FAQs) (FS-2022-36) on Coronavirus State and Local Fiscal Recovery Funds (SLFR Funds). These funds give eligible state and local governments a substantial infusion of resources to meet pandemic response needs.

This update adds Question 15 through 17.

These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.

More information about reliance is available.

WASHINGTON — Victims of storms and flooding that began on Sept. 15 in parts of Alaska now have until Feb. 15, 2023, to file various federal individual and business tax returns and make tax payments, the Internal Revenue Service announced today. 

The IRS is offering relief to any area designated for individual or public assistance by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business in the Regional Education Attendance Areas of Bering Strait, Kashunamiut, Lower Kuskokwim and Lower Yukon, in Alaska qualify for tax relief. Other areas added later will also qualify for this relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov. 

The tax relief postpones various tax filing and payment deadlines that occurred starting on Sept. 15, 2022. As a result, affected individuals and businesses will have until Feb. 15, 2023, to file returns and pay any taxes that were originally due during this period. 

This means individuals who had a valid extension to file their 2021 return due to run out on Oct. 17, 2022, will now have until Feb. 15, 2023, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments are not eligible for this relief.   

The Feb. 15, 2023, deadline also applies to quarterly estimated income tax payments due on Sept. 15, 2022, and Jan. 17, 2023, and the quarterly payroll and excise tax returns normally due on Oct. 31, 2022, and Jan. 31, 2023. Businesses with an original or extended due date also have the additional time including, among others, calendar year partnerships and S corporations whose 2021 extensions ran out on Sept. 15, 2022, and calendar-year corporations whose 2021 extensions run out on Oct. 17, 2022. Similarly, tax-exempt organizations also have the additional time, including for 2021 calendar-year returns with extensions due to run out on Nov. 15, 2022.      

In addition, penalties on payroll and excise tax deposits due on or after Sept. 15, 2022, and before Sept. 30, 2022, will be abated as long as the deposits are made by Sept. 30, 2022. 

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time. 

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated. 

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization. 

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or the return for the prior year (2021). Be sure to write the FEMA declaration number – DR-4672-AK − on any return claiming a loss. See Publication 547 for details. 

The tax relief is part of a coordinated federal response to this disaster and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Notice 2022-43 explains the circumstances under which the four-year replacement period under section 1033(e)(2) is extended for livestock sold on account of drought.  The Appendix to this notice contains a list of counties that experienced exceptional, extreme, or severe drought conditions during the 12-month period ending August 31, 2022.  Taxpayers may use this list to determine if an extension is available.

Notice 2022-43 will be in IRB:  2022- 42, dated October 17, 2022.

Notice 2022-45 extends the deadline for amending an eligible retirement plan (including an individual retirement arrangement or annuity contract) to reflect the provisions of section 2202 of the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136, 134 Stat. 281 (2020) (CARES Act), and section 302 of Title III of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act), set forth in Division EE of the Consolidated Appropriations Act, 2021, Pub. L. 116-260, 134 Stat. 1182.

Notice 2022-45 will be in IRB: 2022-42, dated October 17, 2022.

Notice 2022-44 announces the special per diem rates effective October 1, 2022, which taxpayers may use to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home.  This notice provides the special transportation industry rate, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method. 

Rev. Proc. 2019-48 provides the rules for using per diem rates, rather than actual expenses, to substantiate the amount of expenses for lodging, meals, and incidental expenses for travel away from home.  Taxpayers who use per diem rates to substantiate the amount of travel expenses under Rev. Proc. 2019-48 may use the federal per diem rates published annually by the General Services Administration.  Rev. Proc. 2019-48 allows certain taxpayers to use a special transportation industry rate or to use rates under a high-low substantiation method for certain high-cost localities.  The IRS announces these rates and the rate for the incidental expenses only deduction in an annual notice.

Use of a per diem substantiation method is not mandatory.  A taxpayer may substantiate actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence for proper substantiation.

Notice 2022-44 will be in IRB:  2022-41, dated October 11, 2022.

WASHINGTON  ̶  The Internal Revenue Service today reminded struggling individuals and businesses, affected by the COVID-19 pandemic, that they may qualify for late-filing penalty relief if they file their 2019 and 2020 returns by Sept. 30, 2022.

Besides providing relief to both individuals and businesses impacted by the pandemic, this step is designed to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season.

“We thought carefully about the type of penalties, the period covered and the duration before granting this penalty relief.  We understand the concerns being raised by the tax community and others about the Sept. 30 penalty relief deadline,” said IRS Commissioner Chuck Rettig. “Given planning for the upcoming tax season and ongoing work on the inventory of tax returns filed earlier this year, this penalty relief deadline of Sept. 30 strikes a balance. It is critical to us to not only provide important relief to those affected by the pandemic, but this deadline also allows adequate time to prepare our systems and our workstreams to serve taxpayers and the tax community during the 2023 filing season.”

The relief, announced last month, applies to the failure-to-file penalty. The penalty is typically assessed at a rate of 5% per month, up to 25% of the unpaid tax, when a federal income tax return is filed late. This relief applies to forms in both the Form 1040 and 1120 series, as well as others listed in Notice 2022-36, posted on IRS.gov.

For anyone who has gotten behind on their taxes during the pandemic, this is a great opportunity to get caught up. To qualify for relief, any eligible income tax return must be filed on or before Sept. 30, 2022.

Those who file during the first few months after the Sept. 30 cutoff will still qualify for partial penalty relief. That’s because, for eligible returns filed after that date, the penalty starts accruing on Oct. 1, 2022, rather than the return’s original due date. Because the penalty accrues, based on each month or part of a month that a return is late, filing sooner will limit any charges that apply.

Unlike the failure-to-file penalty, the failure-to-pay penalty and interest will still apply to unpaid tax, based on the return’s original due date. The failure-to-pay penalty is normally 0.5% (one-half-of-one percent) per month. The interest rate is currently 5% per year, compounded daily, but that rate is due to rise to 6% on Oct. 1, 2022.

Taxpayers can limit these charges by paying promptly. For more information, including details on fast and convenient electronic payment options, visit IRS.gov/Payments. Penalty and interest charges generally don’t apply to refunds.  

The notice also provides details on relief for filers of certain international information returns when a penalty is assessed at the time of filing. No relief is available for applicable international information returns when the penalty is part of an examination. To qualify for this relief, any eligible tax return must be filed on or before Sept. 30, 2022.

Penalty relief is automatic. This means that eligible taxpayers who have already filed their return do not need to apply for it, and those filing now do not need to attach a statement or other documents to their return. Generally, those who have already paid the penalty are getting refunds, most by the end of September.

Penalty relief is not available in some situations, such as where a fraudulent return was filed, where the penalties are part of an accepted offer in compromise or a closing agreement, or where the penalties were finally determined by a court.

This relief is limited to the penalties that the notice specifically states are eligible for relief. For ineligible penalties, such as the failure-to-pay penalty, taxpayers may use existing penalty relief procedures, such as applying for relief under the reasonable cause criteria or the First-Time Abate program. Visit IRS.gov/penaltyrelief for details.

This relief doesn’t apply to 2021 returns. Whether or not they have a tax-filing extension, the IRS urges everyone to file their 2021 return soon to avoid processing delays. For filing tips, visit IRS.gov. 

Revenue Procedure 2022-35 updates and supersedes Rev. Proc. 2021-32.  One country, Turkey, is added to the list of jurisdictions with which Treasury and the IRS have determined it is appropriate to have an automatic exchange relationship with respect to the information collected under Treas. Reg. §§ 1.6049-8 and 1.6049-4(b)(5).

Revenue Procedure 2022-35 will be in IRB: 2022-40, dated October 3, 2022.

WASHINGTON – The Internal Revenue Service recently issued guidance addressing improper forgiveness of a Paycheck Protection Program loan (PPP loan).

The guidance confirms that, when a taxpayer’s loan is forgiven based upon misrepresentations or omissions, the taxpayer is not eligible to exclude the forgiveness from income and must include in income the portion of the loan proceeds that were forgiven based upon misrepresentations or omissions. Taxpayers who inappropriately received forgiveness of their PPP loans are encouraged to take steps to come into compliance by, for example, filing amended returns that include forgiven loan proceed amounts in income.

“This action underscores the Internal Revenue Service’s commitment to ensuring that all taxpayers are paying their fair share of taxes,” said IRS Commissioner Chuck Rettig. “We want to make sure that those who are abusing such programs are held accountable, and we will be considering all available treatment and penalty streams to address the abuses.”

Many PPP loan recipients who received loan forgiveness were qualified and used the loan proceeds properly to pay eligible expenses. However, the IRS has discovered that some recipients who received loan forgiveness did not meet one or more eligibility conditions. These recipients received forgiveness of their PPP loan through misrepresentation or omission and either did not qualify to receive a PPP loan or misused the loan proceeds.

The PPP loan program was established by the Coronavirus Aid, Relief and Economic Security Act (CARES Act) to assist small US businesses that were adversely affected by the COVID-19 pandemic in paying certain expenses. The PPP loan program was further extended by the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act.

Under the terms of the PPP loan program, lenders can forgive the full amount of the loan if the loan recipient meets three conditions. 

1 - The loan recipient was eligible to receive the PPP loan.  An eligible loan recipient:

2 - The loan proceeds had to be used to pay eligible expenses, such as payroll costs, rent, interest on the business’ mortgage, and utilities.

3 - The loan recipient had to apply for loan forgiveness. The loan forgiveness application required a loan recipient to attest to eligibility, verify certain financial information, and meet other legal qualifications.

If the 3 conditions above are met, then under the PPP loan program the forgiven portion is excluded from income.  If the conditions are not met, then the amount of the loan proceeds that were forgiven but do not meet the conditions must be included in income and any additional income tax must be paid.

To report tax-related illegal activities relating to PPP loans, submit Form 3949-A, Information Referral. You should also report instances of IRS-related phishing attempts and fraud to the Treasury Inspector General for Tax Administration at 800-366-4484.

WASHINGTON — Hurricane Fiona victims in all 78 Puerto Rican municipalities now have until Feb. 15, 2023, to file various federal individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). This means that individuals and households that reside or have a business anywhere in the Commonwealth of Puerto Rico qualify for tax relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Sept. 17, 2022. As a result, affected individuals and businesses will have until Feb. 15, 2023, to file returns and pay any taxes that were originally due during this period.

This means individuals who had a valid extension to file their 2021 return due to run out on Oct. 17, 2022, will now have until Feb. 15, 2023, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments are not eligible for this relief. 

The Feb. 15, 2023, deadline also applies to quarterly estimated income tax payments due on Jan. 17, 2023, and the quarterly payroll and excise tax returns normally due on Oct. 31, 2022 and Jan. 31, 2023. Businesses with an original or extended due date also have the additional time including, among others, calendar-year corporations whose 2021 extensions run out on Oct. 17, 2022. Similarly, tax-exempt organizations also have the additional time, including for 2021 calendar-year returns with extensions due to run out on Nov. 15, 2022.    

In addition, penalties on payroll and excise tax deposits due after Sept. 17, 2022 and before Oct. 3, 2022, will be abated as long as the deposits are made by Oct. 3, 2022.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or the return for the prior year (2021). Be sure to write the FEMA declaration number – DR-3583-EM − on any return claiming a loss. See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by Hurricane Fiona and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

WASHINGTON – The Internal Revenue Service has selected eight new members for the Electronic Tax Administration Advisory Committee (ETAAC).

“These eight new members bring diverse and important perspectives to a committee focused on the electronic side of tax administration,” said IRS Commissioner Chuck Rettig. “Their recommendations will inform IRS decision makers as they address critical issues like identify theft and refund fraud and further map out our digital strategy.”

Established by statute in 1998, the ETAAC is a public forum for the discussion of issues in electronic tax administration. The committee's primary goal is to promote paperless filing of tax and information returns. ETAAC members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and the nation's tax industry to fight identity theft and refund fraud.

Committee members include state tax officials, consumer advocates, cybersecurity and information security specialists, tax preparers, tax software developers and representatives of the payroll and financial communities.

The following individuals have been appointed to serve three-year terms on the committee beginning in September 2022:

• Austin Emeagwai, CPA, Ph.D., Collierville, Tennessee – Dr. Emeagwai is an Associate Professor of Accounting at LeMoyne-Owen College, Memphis. He is the president of ABC Accounting and Tax Services, P.C., a full-service CPA firm. His research interests include small business and community development by Historically Black Colleges and Universities (HBCUs). Dr. Emeagwai is a member of the American Institute of Certified Public Accountants, Tennessee Society of Certified Public Accountants, National Society of Accountants, and is a Volunteer Income Tax Assistance (VITA) volunteer.
• Jerry Gaddis, EA, MBA, Winter Haven, Florida – Gaddis is the founder and Chief Executive Officer of Tropical Tax Solutions, a boutique firm headquartered in Florida providing tax consultation, preparation and representation solutions for individuals and small businesses. He began his 20-year tax career at the VITA/Tax Counseling for the Elderly clinic in the Key Largo public library. He is a former H&R Block Franchisee, a former Dave Ramsey ELP and a graduate of the National Tax Practice Institute. Gaddis served on the board of directors for the National Association of Enrolled Agents for seven years including three years as an officer and one year as President/CEO. He is an Enrolled Agent.
• Nikia Gainey, Orlando, Florida – Gainey founded Carriers Choice Logistics, LLC in central Florida this year. Carriers Choice Logistics helps the low-income community by providing advice on how to start a business, provides financial literacy assistance, offers first time home buyers program information, aids with applying for Supplemental Nutrition Assistance Program (SNAP) benefits (also known as food stamps) and offers free notary services for the surrounding community.
• Robert Gettemy, Marion, Iowa – Gettemy is a full-time instructor at the University of Iowa where he teaches both undergraduate and graduate courses in entrepreneurship. In addition, he consults in the tax software industry. Prior to teaching, Gettemy spent seven years at TaxAct where he was Chief Operating Officer. During his tenure at TaxAct, Gettemy was responsible for all back-office operations, government relations and competitive intelligence. While at TaxAct, he served as Vice Chair of the American Coalition of Taxpayer Rights, was on the board of directors for the Council of Electronic Revenue Communication Advancement and was an industry co-lead in the IRS Security Summit initiative which was formed to combat stolen identity refund fraud. Gettemy was also active in IRS free file.
• Argi O’Leary, Voorheesville, New York – O’Leary is a Principal in the Advocacy Practice at Ryan, LLC in New York, where she provides tax strategy and audit assistance, including tax issue negotiations and resolution, policy advice and advocacy for all tax types. Before joining Ryan, O’Leary was a Deputy Commissioner with the New York State Department of Taxation and Finance, leading the Department’s Civil Enforcement Division and Office of Professional Responsibility, and also served as an Assistant Deputy Commissioner, leading the Department’s litigation strategy in tax controversy matters.
• Hallie Parchman, Austin, Texas – Parchman is currently Amazon’s Senior Manager of Product Management within the Corporate Tax function focusing on the end-to-end customer experience as it relates to tax information reporting and withholding, including tax operations, tax compliance and product delivery and design. Before joining Amazon, Parchman was a Tax Analyst at Apple Inc. focused on information reporting and a Federal Tax Associate at KPMG. She is a licensed CPA in Texas.
• RaeAnn Pilarski, Tuscon, Arizona – Pilarski is Senior Manager at Code for America, where she scales and supports VITA partners that participate in the GetYourRefund program. Before joining Code for America, she oversaw the VITA program at the United Way of Tucson and Southern Arizona. During her tenure there, she worked closely with Code for America as one of the original partners in the GetYourRefund pilot and led the development of Valet VITA, a model that allowed clients’ documents to be scanned and securely uploaded to a system through which volunteers would access the information needed to prepare the return.
• Keith Richardson, Philadephia, Pennsylvania – Richardson has over 15 years of tax administration experience. He is Deputy Chief Financial Officer and Tax Commissioner for the District of Columbia. As the CFO, he contributed to the development of its new modernized tax system, including working with IDTTRF-ISAC and establishing strategic plans for its customer service for taxpayers. Richardson previously worked for the Commonwealth of Pennsylvania as the Bureau of Compliance Director and was responsible for tax compliance initiatives, clearances and creating the Gaming Control Clearance Division to oversee all tax clearances for owners, vendors, employees and winners. He has also served as Revenue Commissioner for the City of Philadelphia.

Committee Leadership for 2022 – 2023

• Jared Ballew, Government/Industry Liaison with Drake Software, will serve as chair of the ETAAC.
• Vernon Barnett, Commissioner of the Alabama Department of Revenue, will serve as co-vice chair of the ETAAC.
• Timur Taluy, CEO and co-owner of FileYourTaxes.com, will serve as co-vice chair of the ETAAC.