WASHINGTON –The Joint Board for the Enrollment of Actuaries today provided enrolled actuaries with notice that it is waiving the physical presence requirement for continuing professional education (CPE) credit for any formal programs conducted from Jan. 1, 2020, through Dec. 31, 2022. The Joint Board made this decision due to the hardships that the COVID-19 pandemic has caused, particularly those involving traveling to and participating in gatherings requiring close contact with others.

This waiver applies to all enrolled actuaries, whether they are in active or inactive status. Joint Board regulations require that no less than 1/3 of the total hours of continuing professional education credit required for an enrollment cycle must be obtained by participation in a formal program or programs. Without this waiver, an enrolled actuary earning credit hours for a formal program would have to participate in the program in the same physical location with at least two other participants engaged in substantive pension service.

Enrolled actuaries are still required to earn the same number of credit hours under formal programs that would otherwise be required. Although the physical presence requirement is temporarily waived, the other requirements for a formal program continue to apply, including all requirements for a qualifying program under the Joint Board regulations, attendance by at least three participants engaged in substantive pension service, and an opportunity for participants to interact with the instructor during the program. In addition, the certificate of completion or instruction issued by a qualifying sponsor of the program must indicate that the program is a formal program.    
 
The Joint Board is committed to protecting the health and welfare of enrolled actuaries and understands the challenges that this health pandemic creates. By waiving the physical location requirement while retaining all other steps to earn credit hours in formal programs, the Joint Board feels these measures serve to protect the well-being of enrolled actuaries by encouraging social distancing and reducing person-to-person contact without compromising the integrity of the CPE requirements.

An active or inactive enrolled actuary who did not receive a waiver notice by email should contact the Joint Board at nhqjbea@irs.gov.

Notice 2020-55 provides expanded disaster relief, in the form of a postponement until October 31, 2020, of certain Federal excise tax filing and payment deadlines, and associated interest, penalties, and additions to tax, for taxpayers who owe a federal excise tax for sales of sport fishing or archery equipment for the first quarter of 2020.  Notice 2020-48, 2020-29 IRB 72 (July 13, 2020), previously postponed certain Federal tax filing and payment deadlines related to second quarter 2020 sport fishing and archery equipment excise taxes.

Notice 2020-55 will be in IRB 2020-35, dated August 24, 2020.

First Small Business/Self Employed Annual Report Released
The IRS Small Business/Self Employed division today released a new annual report covering FY 2019. The new report, which will be done annually going forward, focuses on program highlights, priorities and accomplishments of the SB/SE organization and its employees.  The SB/SE Annual Report provides a 28-page overview of one of the largest IRS organizations, which services about 57 million taxpayers, and includes enforcement priorities including virtual currency and other topics.

Notice 2020-61 provides guidance regarding the special rules relating to single-employer defined benefit pension plans under § 3608 of the CARES Act.  Under these special rules, a contribution that would otherwise be required to be made to such a plan during 2020 is required to be made by January 1, 2021, and special interest adjustment rules apply to a contribution that is made after the otherwise applicable deadline.  In addition, an employer may elect to apply the benefit restrictions for underfunded plans under § 436 of the Code for the 2020 plan year (or a fiscal plan year that contains any part of 2020) using the plan’s funded status for the last plan year ending in 2019.

It will appear in IRB 2020-35 dated Aug. 24, 2020.

Notice 2020-62: Administrators of qualified retirement plans are required to provide a written explanation of tax consequences when making distributions that are eligible for rollover. The explanation is often referred to as the “402(f) notice” after the relevant section of the Internal Revenue Code governing the requirement, or simply as the “special tax notice.” The IRS has historically provided “safe harbor” model notices that plan administrators may rely upon to satisfy the requirement. The IRS periodically updates the notice based on changes in the law. The last IRS notice being Notice 2018-74, 2018-40 I.R.B. 529. Notice 2020-62 modifies the two model notices in Notice 2018-74, that may be provided to recipients of eligible rollover distributions to satisfy the notice requirements under section 402(f).  The model notices as modified by this Notice 2020-62 take into consideration certain legislative changes, including changes related to the Setting Every Community Up for Retirement Enhancement Act of 2019, Pub. L. 116-94 (“SECURE Act”). 

It will appear in IRB 2020-35 dated Aug. 24, 2020.

WASHINGTON — As more tax professionals consider teleworking during COVID-19, the Internal Revenue Service and the Security Summit partners today urged practitioners to secure remote locations by using a virtual private network (VPN) to protect against cyber intruders.

A VPN provides a secure, encrypted tunnel to transmit data between a remote user via the Internet and the company network. As teleworking or working from home continues during the coronavirus, VPNs are critical to protecting and securing internet connections.

Using virtual private networks is the third in a five-part Security Summit series called Working Virtually: Protecting Tax Data at Home and at Work. The security awareness initiative by the IRS, state tax agencies and the private-sector tax industry – working together as the Security Summit – spotlights basic security steps for all practitioners, but especially those working remotely or social distancing in response to COVID-19.

“For firms expanding telework options during this time, a virtual private network is a must have,” said IRS Commissioner Chuck Rettig. “We continue to see tax pros fall victim to attacks every week. These networks are something you can’t afford to go without. The risk is real. Taking steps now can protect your clients and protect your businesses.”

Failure to use VPNs risks remote takeovers by cyberthieves, giving criminals access to the tax professional’s entire office network simply by accessing an employee’s remote internet.

Tax professionals should seek out cybersecurity experts if they can afford it. If not, practitioners can search for “Best VPNs” to find a legitimate vendor, or major technology sites often provide lists of top services. Remember, never click on a “pop-up” ad marketing security product. Those generally are scams.

The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) also encourages organizations to use VPNs. CISA also offers this advice:

Additional resources

Tax professionals also can get help with security recommendations by reviewing the recently revised IRS Publication 4557, Safeguarding Taxpayer Data (PDF), and Small Business Information Security: the Fundamentals (PDF) by the National Institute of Standards and Technology.

Publication 5293, Data Security Resource Guide for Tax Professionals (PDF), provides a compilation of data theft information available on IRS.gov. Also, tax professionals should stay connected to the IRS through subscriptions to e-News for Tax Professionals and Social Media or visit Identity Theft Central at IRS.gov/IdentityTheft.

WASHINGTON – The Internal Revenue Service announced today that James Lee will become the new chief of IRS Criminal Investigation (CI) on Oct. 1.

Lee, currently CI’s deputy chief and a 25-year veteran of the organization, will succeed current Chief Don Fort, who announced last month he will retire on Sept. 30.

“Jim brings a quarter-century of Criminal Investigation management and field experience into this key enforcement role,” said IRS Commissioner Chuck Rettig. “Jim is highly respected throughout the IRS and will continue long-standing working relationships with the civil enforcement functions of the IRS as well as with the Department of Justice’s Tax Division and tax prosecutors throughout the country. He understands the need to support compliant taxpayers by maintaining a strong, robust enforcement effort focused on those who are compliance challenged.” 

As Chief, CI, Lee will lead the IRS’s criminal enforcement efforts to investigate tax code violations and other related financial crimes such as money laundering, public corruption, cyber-crimes, identity theft, narcotics and terrorist-financing.

Prior to serving as Deputy Chief of CI, he served as the Director of Field Operations, Northern Area where he oversaw CI enforcement programs in the Boston, New Jersey, New York, Ohio and Philadelphia Field Offices. He also previously served in executive roles as the Director of Field Operations, Southern Area and the Director, Strategy.

Lee began his IRS CI career in 1995 as a special agent in Detroit. He moved into the CI leadership ranks and has held positions of increasing responsibility throughout his career including Supervisory Special Agent in the New Orleans Field Office; Headquarters Senior Analyst in the International and Financial Crimes Sections; Assistant Special Agent in Charge within the Boston Field Office; and Special Agent in Charge of the New Orleans Field Office and later the Chicago Field Office. 

Lee has a Bachelor of Business Administration Degree with a concentration in Accounting from Tiffin University in Ohio.

He will follow Fort into CI’s top position. Fort, who was named CI Chief in June 2017 will retire after a long career, which began in 1991 as a special agent in CI’s Baltimore District.

“Don has been a remarkable leader and champion for IRS Criminal Investigation,” Rettig said. “He has a distinguished career and the entire IRS leadership team appreciates everything he has done to uphold the law and support tax administration. We look forward to Don’s remaining time at the IRS as well as Jim taking on a new role and building on the great tradition in CI.”

WASHINGTON — The Internal Revenue Service today issued proposed regulations proposed regulations updating various tax accounting regulations to adopt the simplified tax accounting rules for small businesses under the Tax Cuts and Jobs Act (TCJA).

For tax years beginning in 2019 and 2020, these simplified tax accounting rules apply for taxpayers having inflation-adjusted average annual gross receipts of $26 million or less (known as the gross receipts test).

Taxpayers classified as tax shelters cannot use the simplified rules even if they would meet the gross receipts test.

Prior to the TCJA, certain taxpayers could determine whether they were eligible to figure taxable income under the cash method of accounting by meeting a different gross receipts test.  That gross receipts test was met if the taxpayer’s average annual gross receipts for all prior taxable years did not exceed $5 million. 

After the TCJA, a taxpayer meets the gross receipts test and can use the cash method if average annual gross receipts for the three-taxable year period ending immediately before the current taxable year are $25 million (adjusted for inflation) or less.

The TCJA also exempted taxpayers meeting the gross receipts test from the uniform capitalization rules.  Tax reform also added an exception to the requirement to use an inventory method if their inventory is treated as non-incidental materials and supplies, or in accordance with the applicable financial statement (AFS).  If they do not have an AFS, taxpayers can use their books and records. The proposed regulations issued today implement these statutory changes and provide clarifying definitions.

The proposed regulations issued today also provide guidance for small businesses with long-term construction contracts and the requirements for exemption from the percentage-of-completion method and the uniform capitalization rules. For taxpayers with income from long-term contracts reported under the percentage-of-completion method, guidance is provided for applying the look-back method after repeal of the corporate alternative minimum tax and enactment of the base erosion and anti-abuse tax (BEAT).

For more information about this and other TCJA provisions, visit IRS.gov/taxreform.

WASHINGTON — Because of the burdens the COVID-19 pandemic has placed on taxpayers claiming the rehabilitation credit, the Internal Revenue Service today issued Notice 2020-58 that provides additional relief to taxpayers in satisfying the substantial rehabilitation test. 

Projects must satisfy the “substantial rehabilitation test” within a 24- or 60-month period for determining whether the rehabilitation work is sufficient to qualify a building for the rehabilitation credit.

The Tax Cuts and Jobs Act (TJCA) generally requires the rehabilitation credit to be claimed over a five-year period for amounts that taxpayers pay or incur for qualified rehabilitation expenditures after Dec. 31, 2017.  However, taxpayers may claim the credit all in one year under pre-TCJA rules for projects that qualify under a transition rule.

The notice issued today allows taxpayers that have a measuring period under the substantial rehabilitation test ending on or after April 1, 2020, and before March 31, 2021, now have until March 31, 2021 to satisfy the test.  This relief applies to the substantial rehabilitation test for claiming the credit or qualifying under the TCJA transition rule. 

Previously, the IRS issued Notice 2020-23 that provided additional time for satisfying the substantial rehabilitation test. 

Additional tax relief related to the COVID-19 pandemic can be found on IRS.gov.

WASHINGTON − The Internal Revenue Service provided a reminder today that the Coronavirus Aid, Relief, and Economic Security (CARES) Act can help eligible taxpayers in need by providing favorable tax treatment for withdrawals from retirement plans and IRAs and allowing certain retirement plans to offer expanded loan options.
 
Can I get money from my retirement account now?
 
Under the CARES Act, individuals eligible for coronavirus-related relief may be able to withdraw up to $100,000 from IRAs or workplace retirement plans before Dec. 31, 2020, if their plans allow. In addition to IRAs, this relief applies to 401(k) plans, 403(b) plans, profit-sharing plans and others.
 
These coronavirus-related withdrawals:

Can I take out a loan?
 
Individuals eligible to take coronavirus-related withdrawals may also, until Sept. 22, 2020, be able to borrow as much as $100,000 (up from $50,000) from a workplace retirement plan, if their plan allows. Loans are not available from an IRA.
 
For eligible individuals, plan administrators can suspend, for up to one year, plan loan repayments due on or after March 27, 2020, and before Jan. 1, 2021. A suspended loan is subject to interest during the suspension period, and the term of the loan may be extended to account for the suspension period.
 
Taxpayers should check with their plan administrator to see if their plan offers these expanded loan options and for more details about these options.

Who is eligible?
 
To be eligible for COVID-19 relief, coronavirus-related withdrawals or loans can only be made to an individual if:

Where can I find more information?
 
Retirement plan recipients can learn more about these provisions in IRS Notice 2020-50.
 
The IRS has also posted FAQs that provide additional information regarding this relief.
 
Additional information on the CARES Act and retirement plans, as well as updates, other FAQs, and other information can be found at IRS.gov/coronavirus.