Announcement 2020-05 provides additional guidance on an issue not addressed in 2017 and 2018 IRB guidance on the subject of prematurely deteriorating concrete foundations due to the presence of the mineral pyrrhotite in the concrete mixture used to pour the foundations.  Specifically, in response to requests for this additional guidance from Connecticut Members of Congress, the Announcement clarifies the Federal income tax treatment of a payment made by the Connecticut Foundation Solutions Indemnity Company, Inc., an entity organized by the State of Connecticut, to Connecticut homeowners who have not claimed Federal income tax deductions for amounts paid to repair damage to personal residences with concrete foundations that prematurely deteriorated.

Announcement 2020-05 will be in IRB: 2020-19, dated 05/04/2020.

FAQs: Payroll Support for Air Carriers and Contractors under the CARES Act

Division A, Title IV, Subtitle B, of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) authorizes the Department of the Treasury (Treasury Department) to provide payments to passenger air carriers, cargo air carriers, and certain contractors that must be exclusively used for the continuation of payment of employee wages, salaries, and benefits (Payroll Support).  Section 4117 of the CARES Act provides that the Treasury Department may receive warrants, options, preferred stock, debt securities, notes, or other financial instruments issued by a company receiving Payroll Support (Recipient) to provide appropriate compensation to the Federal Government for the provision of the financial assistance (Taxpayer Protection Instruments).

The Payroll Support Program Agreement provides that unless otherwise provided in guidance issued by the Treasury Department or the Internal Revenue Service, “the form of any Taxpayer Protection Instrument held by the Treasury Department and any subsequent holder will be treated as such form for purposes of the Internal Revenue Code of 1986 (for example, a Taxpayer Protection Instrument in the form of a note will be treated as indebtedness for purposes of the Internal Revenue Code of 1986).”

Additional non-Federal income tax information on the Treasury Department’s Payroll Support program for air carriers and contractors is available at https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry.

Q. If a Recipient does not issue Taxpayer Protection Instruments to the Treasury Department in exchange for Payroll Support, is the receipt of the Payroll Support taxable to the Recipient under the Internal Revenue Code (Code)?

A. Yes.  If the Recipient does not provide Taxpayer Protection Instruments to the Treasury Department as compensation for the Payroll Support, the receipt of the Payroll Support is not excluded from the Recipient’s gross income under the Code and therefore is taxable.

Q. When a Recipient that does not issue any Taxpayer Protection Instruments uses the Payroll Support to pay wages, salaries, and benefits to its employees as required under the Payroll Support Program, are all of those expenses deductible under the Code?

A. Yes.  The Code generally permits the payment of wages, salaries, and benefits to employees to be deducted as ordinary and necessary business expenses.

Q. If a Recipient issues to the Treasury Department any warrants, options, preferred stock, debt securities, or notes (or a combination of these Taxpayer Protection Instruments) as compensation for the Payroll Support, is the receipt of the Payroll Support taxable under the Code?

A. Part of the Payroll Support received is taxable and part of the Payroll Support received is not taxable.  Payroll Support in excess of the fair market value of the warrants, options, or preferred stock, plus the issue prices of any debt securities or notes issued, is taxable to the Recipient under the Code.  The remaining Payroll Support is not taxable to the Recipient under the Code.

Q. When a Recipient that issues Taxpayer Protection Instruments to the Treasury Department uses the Payroll Support to pay wages, salaries, and benefits to its employees as required, are all of these expenses deductible under the Code?

A. Yes.  The Code generally permits the payment of wages, salaries, and benefits to employees to be deducted as ordinary and necessary business expenses, regardless of whether the Recipient issues Taxpayer Protection Instruments.

Revenue Procedure 2020-20 provides relief to certain nonresident individuals who, but for COVID-19 Emergency Travel Disruptions, would not have been in the United States long enough during 2020 to be considered resident aliens under the “substantial presence test” (“SPT”) or to be ineligible for treaty benefits on services income.  With respect to the relief provided under the SPT, this revenue procedure establishes procedures to apply the SPT’s medical condition exception to exclude up to 60 consecutive days spent in the United States during a time period starting on or after February 1, 2020 and on or before April 1, with the specific start date to be chosen by each individual (the “COVID-19 Emergency Period”).  It also provides procedures for an individual to exclude those days of presence in order to claim benefits under an income tax treaty with respect to services income.

Rev. Proc. 2020-20 will be published in Internal Revenue Bulletin 2020-20, to be issued on May 11, 2020.

Revenue Procedure 2020-27 provides that The Secretary of the Treasury has determined that the global health emergency caused by the outbreak of COVID-19 is an adverse condition that precludes the normal conduct of business globally.  Therefore, relief is being provided to any individual that reasonably expected to become a “qualified individual” for purposes of claiming the foreign earned income exclusion under section 911 but left the foreign jurisdiction during the period described in this revenue procedure. 

Rev. Proc. 2020-27 will be published in Internal Revenue Bulletin 2020-20, to be issued on May 11, 2020.

WASHINGTON –The Treasury Department and the Internal Revenue Service today issued guidance that provides relief to individuals and businesses affected by travel disruptions arising from the COVID-19 emergency. 

The guidance includes the following:

The Treasury Department and the IRS are continuing to monitor these and other issues related to the COVID-19 emergency, and updated information about relief will continue to be posted on Coronavirus Tax Relief on IRS.gov.  

Special alert for benefit recipients who don’t file a tax return and have dependents

WASHINGTON – The Internal Revenue Service today issued a special alert for several groups of federal benefit recipients to act by this Wednesday, April 22, if they didn’t file a tax return in 2018 or 2019 and have dependents so they can quickly receive the full amount of their Economic Impact Payment.

Their $1,200 payments will be issued soon and, in order to add the $500 per eligible child amount to these payments, the IRS needs the dependent information before the payments are issued. Otherwise, their payment at this time will be $1,200 and, by law, the additional $500 per eligible child amount would be paid in association with a return filing for tax year 2020.

Following extensive work by the IRS and other government agencies, $1,200 automatic payments will be starting soon for those receiving Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) and Veterans Affairs beneficiaries who didn’t file a tax return in the last two years. No action is needed by these groups; they will automatically receive their $1,200 payment.

For those benefit recipients with children who aren’t required to file a tax return, an extra step is needed to quickly add $500 per eligible child onto their automatic payment of $1,200.

For people in these groups who have a qualifying child and didn’t file a 2018 or 2019 tax return, they have a limited window to register to have $500 per eligible child added automatically to their soon-to-be-received $1,200 Economic Impact Payment. A quick trip to a special non-filer tool on IRS.gov by noon Eastern time, Wednesday, April 22, for some of these groups may help put all of their eligible Economic Income Payment into a single payment.

“We want to ‘Plus $500’ these recipients with children so they can get their maximum Economic Impact Payment of $1,200 plus $500 for each eligible child as quickly as possible,” said IRS Commissioner Chuck Rettig. “They’ll get $1,200 automatically, but they need to act quickly and register at IRS.gov to get the extra $500 per child added to their payment. These groups don’t normally have a return filing obligation and may not realize they qualify for a larger payment. We’re asking people and organizations throughout the country to share this information widely and help the IRS with the Plus $500 Push.”

To help spread the word to recipients with children about this special “Plus $500 Push,” the IRS has additional material available on a special partners page that can be shared with friends, family members and community groups. This effort will focus on the initial April 22 deadline and continue this spring to reach as many people as possible since the child payments will continue to be made in the weeks and months ahead.

Have a child but don’t file a tax return? Visit IRS.gov now

Those receiving federal benefits – including Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) or Veterans Administration benefits – who have with children and who weren’t required file a tax return in 2018 or 2019 should visit the Non-Filer: Enter Payment Info Here tool on IRS.gov. By quickly taking steps to enter information on the IRS website about them and their qualifying children, they can receive the $500 per dependent child payment automatically in addition to their $1,200 individual payment. Otherwise, their payment at this time will be $1,200 and, by law, the additional $500 per eligible child amount would be paid in association with a return filing for tax year 2020.
 
First window affects SSA/RRB recipients with children; SSI and VA recipients have slightly more time to add $500 to automatic payments
 
For certain SSA / RRB beneficiaries who don’t normally file a tax return and do not register with the IRS by April 22, they will still be eligible to receive the separate payment of $500 per qualifying child. For those who miss the April 22 deadline, their payment at this time will be $1,200 and, by law, the additional $500 per eligible child amount would be paid in association with a return filing for tax year 2020. They will not be eligible to use the Non-Filer tool to add eligible children once their $1,200 payment has been issued.
 
SSI and VA beneficiaries have some additional time beyond April 22 to add their children since their $1,200 automatic payments will be made at a later date. SSI recipients will receive their automatic payments in early May, and the VA payment schedule for beneficiaries who receive Compensation and Pension (C&P) benefit payments is still being determined. If they have children and aren’t required to file a tax return, both groups are urged to use the Non-Filer tool as soon as possible. Once their $1,200 payment has been issued, they will not be eligible to use the Non-Filer tool to add eligible children. Their payment will be $1,200 and, by law, the additional $500 per eligible child amount would be paid in association with a return filing for tax year 2020.
 
No action needed by most taxpayers
 
The Treasury Department will make these automatic payments to SSA, SSI, RRB and VA recipients. Recipients will generally receive the automatic $1,200 payments by direct deposit, Direct Express debit card or by paper check, just as they would normally receive their benefits.
 
For information about Social Security retirement, survivors and disability insurance beneficiaries, please visit the SSA website at SSA.gov. For more information related to veterans and their beneficiaries who receive Compensation and Pension (C&P) benefit payments from VA, please visit VA.gov.
 
General IRS information about the Economic Impact Payments is available on a special section of IRS.gov.
 
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. There is no fee required to receive these payments.

Revenue Procedure 2020-28 provides two tax return filing procedures for certain individuals who are eligible for the economic impact payment https://www.irs.gov/coronavirus/economic-impact-payments under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public Law 116-136, 134 Stat. 281 (March 27, 2020), but are not otherwise required to file 2019 Federal income tax returns. The first procedure is a simplified procedure for eligible individuals who voluntarily wish to file a Federal income tax return only to receive allowed economic impact payments. These eligible individuals are encouraged to use the “Non-Filers: Enter Payment Info Here” https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here tool, available at www.irs.gov/coronavirus, to submit information to the Internal Revenue Service (IRS) to receive their allowed economic impact payment much more quickly than if they filed a paper return. The second procedure accommodates zero AGI electronic filers who utilize tax return preparation software or otherwise need to provide more detail in filing State or local tax returns than that allowed by the simplified procedure. 

Federal income tax returns filed in accordance with these procedures should be filed as soon as possible but not later than October 15, 2020, to ensure that the IRS will have sufficient time to process all returns and make all resulting economic impact payments before December 31, 2020, as required by the CARES Act. The “Get My Payment” tool provides the most up-to-date information regarding the status of an eligible individual’s economic impact payment. 

Revenue Procedure 2020-28 will be in IRB:    2002-19, dated 05/04/2020.

The IRS is regularly updating the Economic Impact Payment  and the Get My Payment tool frequently asked questions pages on IRS.gov as more information becomes available. Taxpayers should check the FAQs often for the latest additions; many common questions are answered in these.
 
More than 80 million Economic Impact Payments have already been delivered to the nation’s taxpayers. More payments are on their way. As part of this effort, the IRS has launched two tools to help taxpayers get their payments:

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

The Internal Revenue Service today posted new Frequently Asked Questions (FAQs) regarding COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses -- sick leave and family leave. 

WASHINGTON – The Internal Revenue Service, working in partnership with the Treasury Department and the Department of Veterans Affairs, announced today that recipients of VA benefits will automatically receive automatic Economic Impact Payments.

Veterans and their beneficiaries who receive Compensation and Pension (C&P) benefit payments from VA will receive a $1,200 Economic Impact Payment with no further action needed on their part. Timing on the payments is still being determined.

Moving VA recipients into the automatic payment category follows weeks of extensive cooperative work between VA, Treasury, IRS as well as the Bureau of Fiscal Services.

“Since many VA recipients typically aren’t required to file tax returns, the IRS had to work with these other government agencies to determine a way to quickly and accurately deliver Economic Impact Payments to this group,” said IRS Commissioner Chuck Rettig. “Additional programming work remains, but this step simplifies the process for VA recipients to quickly and easily receive these $1,200 payments automatically. We deeply appreciate the sacrifices and service to our country by each and every veteran and their families, as well as the assistance of VA and the Bureau of Fiscal Services in this effort.”

No action needed by most taxpayers
Earlier this month, the IRS took a similar action to ensure those receiving Social Security retirement or disability benefits, Supplemental Security Income and Railroad Retirement benefits can receive automatic payments of $1,200. While these groups receive Forms 1099, many in this group don’t typically file tax returns. Many people in these groups are expected to see the automatic $1,200 payments later this month, with SSI payments expected to start in early May.

For eligible taxpayers who filed tax returns for 2019 or 2018, they will also receive the payments automatically. About 80 million payments are hitting bank accounts this week.

For benefit recipients with dependents, extra step needed to claim $500 for children; Register now for earlier delivery
The law provides eligible taxpayers with qualifying children under age 17 to receive an extra $500. For taxpayers who filed tax returns in 2018 or 2019, the child payments will be automatic.

However, many benefit recipients typically aren’t required to file tax returns. If they have children who qualify, an extra step is needed to add $500 per child onto their automatic payment of $1,200 if they didn’t file a tax return in 2018 or 2019.

For those who receive these benefits – including VA, Social Security retirement or disability benefits (SSDI), Railroad Retirement benefits or SSI – and have a qualifying child, they can quickly register by visiting “Non-Filers: Enter Payment Info” available only on IRS.gov. For those who can use this tool as soon as possible, they may be able to get earlier delivery of the child payments by having these added to their automatic payments.

By quickly taking steps to enter information on the IRS website about them and their qualifying children, they can receive the $500 per dependent child payment in addition to their $1,200 individual payment. If beneficiaries in these group do not provide their information to the IRS soon, they will receive their $500 per qualifying child at a later date, depending on when they complete the registration process.

The Treasury Department, not the VA, will make these automatic payments.  Recipients will generally receive the automatic payments the way they receive their current benefits.

For more information related to veterans and their beneficiaries who receive Compensation and Pension (C&P) benefit payments from VA, please visit VA.gov.

Information for recipients using the IRS.gov Non-Filer and Get My Payment tools
We recognize that many non-tax filing beneficiaries have already begun using the “Non-Filers: Enter Payment Info” tool to provide basic personal information to receive their EIP. There will be no interruption to payments being processed using this portal, and Veterans with internet access are encouraged to continue providing information and track their EIP through the “Get My Payment” tool.

General information about the Economic Impact Payments is available on a special section of IRS.gov: https://www.irs.gov/coronavirus/economic-impact-payment-information-center

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.

More information
The IRS has posted frequently asked questions on IRS.gov/coronavirus and will provide more updates as soon as they are available. 

Revenue Procedure 2020-25 provides guidance allowing a taxpayer to change its depreciation under section 168 for certain qualified improvement property. This revenue procedure also allows a taxpayer to make a late election, or to revoke or withdraw an election, under § 168(g)(7), (k)(5), (k)(7) or (k)(10) of the Code for certain years.

Revenue Procedure 2020-25 will be in IRB:  2020-19, dated 5/4/2020.