Announcement 2020-7 states that 1) the IRS plans to issue opinion letters with regard to the third six-year remedial amendment cycle for pre-approved defined contribution plans by June 30, 2020 or soon thereafter, 2) the IRS will accept from an employer eligible to submit a determination letter request an application for an individual determination letter under the third six-year remedial amendment cycle for pre-approved defined contribution plans from August 1, 2020 to July 31, 2022, and 3) an employer adopting a newly approved plan will be required to adopt the plan document by July 31, 2022. Rev. Proc. 2017-41, 2017-29 I.R.B 92, sets forth procedures for providers of pre-approved plans to obtain opinion letters, once every six years, for qualified pre-approved plans submitted with respect to the third (and subsequent) six-year remedial amendment cycles.  

WASHINGTON –The Treasury Department and the Internal Revenue Service today issued proposed regulations to help businesses understand how legislation passed in 2018 may benefit those claiming carbon capture credits.

The proposed regulations provide guidance regarding two new credits for carbon oxide captured using equipment originally placed in service on or after February 9, 2018, allowing up to:

Neither of these new credits is subject to a limitation on the number of metric tons of qualified carbon oxide captured.  The new law also expanded carbon capture to include “qualified carbon oxide,” a broader term than “qualified carbon dioxide.”  Prior to the change in law, carbon capture was limited to a total of 75,000,000 metric tons of qualified carbon oxide. 

Additionally, the proposed regulations address issues for which taxpayers had questions, including: procedures to determine adequate security measures for the geological storage of qualified carbon oxide, exceptions to the general rule for determining who the credit is attributable to, procedures for a taxpayer to make an election to allow third-party taxpayers to claim the credit, standards for measuring utilization of qualified carbon oxide and rules for credit recapture.

Prior guidance

After the enactment of the Bipartisan Budget Agreement in February 2018, the IRS issued Notice 2019-32 (PDF) requesting comments from taxpayers regarding the changes to the carbon capture credit in the new law. After carefully considering the comments, the IRS is issuing the proposed regulations to provide clarity.  Earlier this year, the IRS issued other guidance regarding the definition of "beginning of construction" and providing a safe harbor for partnerships.

In Notice 2020-12 (PDF), the IRS provides guidance to help businesses determine when construction has begun on a qualified facility or on carbon capture equipment that may be eligible for the carbon capture credit. This notice provides broad guidance in lieu of taxpayers requesting private letter rulings in this area.

In Revenue Procedure 2020-12 (PDF), the IRS creates a safe harbor for the allocation rules for carbon capture partnerships similar to the safe harbors developed for partnerships receiving the wind energy production tax credit and the rehabilitation credit. The safe harbor simplifies the application of carbon capture credit rules to partnerships able to claim the credit.

Notice 2020-35 postpones deadlines for certain specified time-sensitive actions with respect to certain employment taxes, employee benefit plans, exempt organizations, and Coverdell education savings accounts on account of the ongoing COVID-19 pandemic.  The notice also provides a temporary waiver of the requirement for a Certified Professional Employer Organization to file certain employment tax returns and their accompanying schedules electronically.

Notice 2020-35 will be in IRB:  2020-25, dated June 15, 2020.

WASHINGTON- The Internal Revenue Service  announced today that later this summer taxpayers will for the first time be able to file their Form 1040-X, Amended U.S Individual Income Tax Return, electronically using available tax software products.

Making the 1040-X an electronically filed form has been a goal of the IRS for a number of years. It’s also been an ongoing request from the nation’s tax professional community and has been a continuing recommendation from the Internal Revenue Service Advisory Council (IRSAC) and Electronic Tax Administration Advisory Committee (ETAAC).

Currently, taxpayers must mail a completed Form 1040-X to the IRS for processing. The new electronic option allows the IRS to receive amended returns faster while minimizing errors normally associated with manually completing the form. 

“This new process is a major milestone for the IRS, and it follows hard work by people across the agency,” said IRS Commissioner Chuck Rettig. “E-filing has been one of the great success stories of the IRS, and more than 90 percent of taxpayers use it routinely. But the big hurdle that’s been remaining for years is to convert amended returns into this electronic process. Our teams have worked diligently to overcome the unique challenges related to the 1040-X, and we look forward to offering this new service this summer.”

About 3 million Forms 1040-X are filed by taxpayers each year.

The new electronic filing option will provide the IRS with more complete and accurate data in an easily readable format to enable customer service representatives to answer taxpayers’ questions. Taxpayers can still use the "Where's My Amended Return?" online tool to check the status of their electronically-filed 1040-X.

When the electronic filing option becomes available, only tax year 2019 Forms 1040 and 1040-SR returns can be amended electronically. In general, taxpayers will still have the option to submit a paper version of the Form 1040-X and should follow the instructions for preparing and submitting the paper form. Additional enhancements are planned for the future.

“Adding amended returns to the electronic family also complements our partnership with the tax software industry, which continues to work with us to provide better ways to help taxpayers,” said Ken Corbin, Commissioner of the IRS Wage and Investment division.  

Notice 2020-41 clarifies and modifies the guidance provided in prior IRS notices regarding the beginning of construction for sections 45 and 48. Specifically, the notice extends the Continuity Safe Harbor for both the production tax credit for renewable energy facilities under section 45 and the investment tax credit for energy property under § 48 for projects that began construction in either calendar years 2016 or 2017. This notice also provides a 3½ Month Safe Harbor for services or property paid for by the taxpayer on or after September 16, 2019 and received by October 15, 2020.

Notice 2020-41 will be in IRB:  2020-25, dated 6/15/2020.

WASHINGTON –The Treasury Department and the Internal Revenue Service today is providing relief for taxpayers developing renewable energy projects and producing electricity from sources such as wind, biomass, geothermal, landfill gas, trash, and hydropower. Safe harbor is also available for taxpayers using technologies such as solar panels, fuel cells, microturbines, and combined heat and power systems.

The IRS recognizes that COVID-19 has caused industry-wide delays in the supply chain for components needed to complete renewable energy projects otherwise eligible for important tax credits. The IRS has issued Notice 2020-41 to provide tax relief to affected taxpayers.

For certain projects that began construction in 2016 or 2017, Notice 2020-41 adds an extra year to the four year “Continuity Safe Harbor” provided in existing guidance. If these projects are placed in service in five years construction will be deemed continuous.  

Notice 2020-41 also provides assurance for taxpayers who started construction by incurring 5 percent of project costs, and made payments for services or property and reasonably expected to receive such services or property within 3 ½ months. These taxpayers are considered incurred under economic performance rules. The Notice provides that if such services or property are received by October 15, 2020, the taxpayer’s expectations at the time of the 2019 payment are deemed reasonable.   

Extending the Continuity Safe Harbor and providing a 3½ Month Safe Harbor will provide flexibility for taxpayers to satisfy the beginning of construction requirements and limit the impact of COVID-19-related delays on the ability to claim tax credits.

Additional information about tax relief for businesses affected by the COVID-19 pandemic can be found on IRS.gov.

WASHINGTON – As Economic Impact Payments continue to be successfully delivered, the Internal Revenue Service today reminds taxpayers that some payments are being sent by prepaid debit card. The debit cards arrive in a plain envelope from “Money Network Cardholder Services.”

Nearly 4 million people are being sent their Economic Impact Payment by prepaid debit card, instead of paper check. The determination of which taxpayers received a debit card was made by the Bureau of the Fiscal Service, a part of the Treasury Department that works with the IRS to handle distribution of the payments.

Those who receive their Economic Impact Payment by prepaid debit card can do the following without any fees.

This free, prepaid card also provides consumer protections available to traditional bank account owners, including protection against fraud, loss and other errors.

Frequently asked questions continually updated on IRS.gov

The IRS has two sets of frequently asked questions to help Americans get answers about their Economic Impact Payments, including those arriving on prepaid debit card. These FAQs include answers to eligibility and other many common questions, including help to use two Economic Impact Payment tools.

Get My Payment, an IRS online tool, shows the projected date when a direct deposit has been scheduled or date when the payment will be mailed by check or prepaid debit card. The Non-Filers Enter Payment Info tool helps taxpayers successfully submit basic information to receive Economic Impact Payments quickly.

The IRS regularly updates the Economic Impact Payment and the Get My Payment frequently asked questions pages on IRS.gov as more information becomes available. Taxpayers should check the FAQs often for the latest additions.

Here are answers to some of the top questions people are asking about the prepaid debit cards:

Can I have my economic impact payment sent to my prepaid debit card?

Maybe. It depends on your prepaid card and whether your payment has already been scheduled.  Many reloadable prepaid cards have account and routing numbers that you could provide to the IRS through the Get My Payment application or Non-Filers: Enter Payment Info Here tool. You would need to check with the financial institution to ensure your card can be re-used and to obtain the routing number and account number, which may be different from the card number. If you obtained your prepaid debit card through the filing of a federal tax return, you must contact the financial institution that issued your prepaid debit card to get the correct routing number and account number. Do not use the routing number and account number shown on your copy of the tax return filed. When providing this information to the IRS, you should indicate that the account and routing number provided are for a checking account unless your financial institution indicates otherwise.

Will IRS be sending prepaid debit cards?

Some payments may be sent on a prepaid debit card known as The Economic Impact Payment Card The Economic Impact Payment Card is sponsored by the Treasury Department’s Bureau of the Fiscal Service, managed by Money Network Financial, LLC and issued by Treasury’s financial agent, MetaBank®, N.A.

If you receive an Economic Impact Payment Card, it will arrive in a plain envelope from “Money Network Cardholder Services.” The Visa name will appear on the front of the Card; the back of the Card has the name of the issuing bank, MetaBank®, N.A. Information included with the Card will explain that the card is your Economic Impact Payment Card. Please go to EIPcard.com for more information.

Can I specifically ask the IRS to send the Economic Impact Payment to me as a debit card?

Not at this time. For those who don’t receive their Economic Impact Payment by direct deposit, they will receive their payment by paper check, and, in a few cases, by debit card. The determination of which taxpayers receive a debit card will be made by the Bureau of the Fiscal Service (BFS), another part of the Treasury Department that works with the IRS to handle distribution of the payments. BFS is sending nearly 4 million debit cards to taxpayers starting in mid-May. At this time, taxpayers cannot make a selection to receive a debit card. Please go to EIPcard.com for more information.

Watch out for scams related to Economic Impact Payments
The IRS urges taxpayers to be on the lookout for scams related to the Economic Impact Payments. To use the new app or get information, taxpayers should visit IRS.gov. People should watch out for scams using email, phone calls or texts related to the payments. Be careful and cautious: The IRS will not send unsolicited electronic communications asking people to open attachments, visit a website or share personal or financial information. Remember, go directly and solely to IRS.gov for official information.

Quick links to the Frequently Asked Questions on IRS.gov:
Economic Impact Payments: www.irs.gov/eipfaq
Get My Payment tool: www.irs.gov/getmypaymentfaq
Please go to EIPcard.com for more information about prepaid debit cards.

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service today issued a proposed regulation updating the federal income tax withholding rules for periodic retirement and annuity payments made after December 31, 2020.   

Prior to the Tax Cuts and Jobs Act (TCJA), if no withholding certificate was in effect for a taxpayer’s periodic payments, the amount to be withheld from the payments was determined by treating the taxpayer as a married individual claiming three withholding exemptions.

The TCJA amended this rule to provide that the rate of withholding on periodic payments when no withholding certificate is in effect would instead be determined under rules prescribed by the Secretary of the Treasury.

In Notice 2020-3, the IRS provided that, for 2020 the default rate of withholding on periodic payments will continue to be based on treating the taxpayer as a married individual claiming three withholding allowances when no withholding certificate is in effect.

Under the proposed regulation for 2021 and future calendar years, the Treasury Department and the IRS will provide the rules and procedures for determining the default rate of withholding on periodic payments when a taxpayer has no withholding certificate in effect in applicable forms, instructions, publications and other guidance.

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

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued final regulations clarifying the reporting requirements generally applicable to tax-exempt organizations.

The final regulations reflect statutory amendments and certain grants of reporting relief announced by the Treasury Department and the IRS in prior guidance to help many tax-exempt organizations generally find the reporting requirements in one place.

Among other provisions, the final regulations incorporate the existing exception from having to file an annual return for certain organizations that normally have gross receipts of $50,000 or less.  That exception was previously announced in Revenue Procedure 2011-15. The regulations also provide that the requirement to report contributor names and addresses on annual returns generally applies only to returns filed by Section 501(c)(3) organizations and Section 527 political organizations.  All tax-exempt organizations must continue to maintain the names and addresses of their substantial contributors in their books and records.  This change will have no effect on transparency, as contributor information that is open to public inspection will be unaffected by this regulation.

The final regulations allow tax-exempt organizations to choose to apply the regulations to returns filed after September 6, 2019.

Revenue Procedure 2020-33 provides guidance with respect to the United States and area median gross income figures that are to be used by issuers of qualified mortgage bonds, as defined in § 143(a) of the Internal Revenue Code, and issuers of mortgage credit certificates, as defined in § 25(c), in computing the housing cost/income ratio described in § 143(f)(5).

Revenue Procedure 2020-33 will be in IRB 2020-25, dated June 15, 2020.