The Internal Revenue Service updated FAQs #64 and #65 regarding the COVID-19 Employee Retention Credit for how eligible employers treat health care expenses.  

Also, the IRS has added a new FAQ #79  regarding businesses that repay their Paycheck Protection Program loan by May 14, 2020. 

 

WASHINGTON — The Internal Revenue Service today issued proposed regulations that provide guidance for estates and trusts clarifying that certain deductions of estates and non-grantor trusts are not miscellaneous itemized deductions.

The Tax Cuts and Jobs Act (TCJA) prohibits individual taxpayers from claiming miscellaneous itemized deductions for any taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2026.

Specifically, the proposed regulations clarify the following deductions are allowable in figuring adjusted gross income and are not miscellaneous itemized deductions:

Finally, the guidance clarifies how to determine the character, amount and manner for allocating excess deductions that beneficiaries succeeding to the property of a terminated estate or non-grantor trust may claim on their individual income tax returns.

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

Revenue Procedure 2020-30 provides that certain activities are not taken into account for purposes of section 1503(d) or Form 8858, as a result of travel restrictions and disruptions resulting from the global outbreak of the virus that causes COVID-19, individuals may temporarily conduct activities in a foreign country that would not otherwise have been conducted there.  

Revenue Procedure 2020-30 will be in IRB:  2020-22, dated May 26, 2020.

WASHINGTON — The Internal Revenue Service today reminds employers affected by COVID-19 about three important new credits available to them.

Employee Retention Credit:

The employee retention credit is designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.

Qualifying employers must fall into one of two categories:

Employers will calculate these measures each calendar quarter.

Paid Sick Leave Credit and Family Leave Credit:

The paid sick leave credit is designed to allow business to get a credit for an employee who is unable to work (including telework) because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis. Those employees are entitled to paid sick leave for up to 10 days (up to 80 hours) at the employee's regular rate of pay up to $511 per day and $5,110 in total.

The employer can also receive the credit for employees who are unable to work due to caring for someone with Coronavirus or caring for a child because the child's school or place of care is closed, or the paid childcare provider is unavailable due to the Coronavirus. Those employees are entitled to paid sick leave for up to two weeks (up to 80 hours) at 2/3 the employee's regular rate of pay or, up to $200 per day and $2,000 in total.

Employees are also entitled to paid family and medical leave equal to 2/3 of the employee's regular pay, up to $200 per day and $10,000 in total. Up to 10 weeks of qualifying leave can be counted towards the family leave credit.

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees' wages by the amount of the credit.

Eligible employers are entitled to immediately receive a credit in the full amount of the required sick leave and family leave, plus related health plan expenses and the employer's share of Medicare tax on the leave, for the period of April 1, 2020, through Dec. 31, 2020. The refundable credit is applied against certain employment taxes on wages paid to all employees.

How will employers receive the credit?

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees' wages by the amount of the credit.

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer's employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.

The IRS has also posted Employee Retention Credit FAQs and Paid Family Leave and Sick Leave FAQs that will help answer questions.

Updates on the implementation of the Employee Retention Credit and other information can be found on the Coronavirus page of IRS.gov.

Related Items:

•FS-2020-05, New Employee Retention Credit helps employers keep employees on payroll

WASHINGTON − The Internal Revenue Service is accepting applications for the Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) grant programs, which will allow some organizations to apply for annual funding for up to three years. 

Applications will be accepted through June 1, 2020, on grants.gov. The application packages and guidelines are available on the IRS website. For the 2020 filing season, the IRS awarded 27 TCE grantees $11 million and 238 VITA grantees $18 million. Last year, the two grant programs filed nearly 3 million returns at almost 9,000 sites nationwide.

The TCE program was established in 1978 to provide tax counseling and return preparation to persons age 60 or older and to give training and technical assistance to the volunteers who provide free federal income tax assistance within elderly communities across the nation. For more information on the TCE program visit the TCE webpage on IRS.gov.

The VITA Grant program was established in 2007 to supplement the VITA program, which was created in 1969. VITA provides underserved communities with free tax filing assistance. The grant program enables VITA partners to extend services to underserved populations in the hardest-to-reach urban and non-urban areas, to increase the capacity of targeted taxpayers to file returns electronically, to enhance training of volunteers and to maintain the high accuracy rate of returns prepared at VITA sites. For more information on the VITA Grant program, visit the VITA Grant webpage on IRS.gov.

More information:

WASHINGTON – The Internal Revenue Service Office of Chief Counsel today announced the Settlement Days program will continue remotely enabling unrepresented taxpayers to work towards resolving their pending United States Tax Court case despite "stay-at-home" orders in many jurisdictions.  The first two events are for docketed cases with place of trial in Detroit or Atlanta.  Future events may be scheduled in other cities throughout the United States.

Virtual Settlement Days is a coordinated effort to resolve Tax Court cases by giving taxpayers not represented by counsel the opportunity to receive free tax advice and possible representation from Low Income Taxpayer Clinics (LITCs) or other pro bono organizations. Taxpayers can discuss their Tax Court case and federal tax issues with members of the IRS Office of Chief Counsel, Appeals and Collections.

The program is geared to help unrepresented taxpayers receive free assistance in discussing a potential fair settlement of their tax disputes in an informal setting without the need for further litigation or a trial in Tax Court. The vast majority of taxpayers participating in previous Settlement Days programs have resolved their cases; most of those who ended up with a liability have been able to enter into an installment payment arrangement.

The Tax Court canceled scheduled trial sessions in a series of Orders issued on March 11, 13 and 23, 2020.  The Tax Court Orders state that it is expected that parties will continue to work together to exchange information and address pending issues. The Settlement Days events accomplish the Tax Court’s goals by allowing the parties to work towards settling case on a remote basis. 

Chief Counsel has scheduled Virtual Settlement Days events for May 2020 for cases docketed on the Detroit and Atlanta Tax Court trial sessions. Chief Counsel has invited more than 100 unrepresented taxpayers to meet with Chief Counsel attorneys or paralegals via WebEx for the two events. The taxpayers will be able to speak with LITC representatives prior to the WebEx meetings. If the taxpayer desires, the LITC representatives will later join the WebEx meetings.

The Detroit Office of Chief Counsel will host its event on Saturday, May 9, in conjunction with the University of Michigan Law School LITC for the Detroit trial session cases. The IRS has invited over 100 Tax Court petitioners.  The cases being selected are from recently canceled Tax Court calendars, as well as other docketed cases not yet set for trial. The event may be extended, if needed, to meet taxpayer’s needs. 

The Atlanta Office of Chief Counsel will host the second event on Thursday, May 21, in conjunction with the North Georgia Low Income Taxpayer Clinic for the cancelled Atlanta trial session cases and other docketed cases. The event may extend over several days to accommodate the schedules of the participants. The IRS will focus on inviting unrepresented taxpayers whose cases sessions have been delayed due to Tax Court cancellations.

While docket taxpayers with cases currently under consideration by the IRS Independent Office of Appeals have not been sent invitations to the Detroit and Atlanta events, the IRS encourages those petitioners to contact the Appeals Officer assigned to their case to discuss resolution. Appeals continues to work cases, including use of virtual conferences. For unrepresented taxpayers who are working with an Appeals Officer and receive an invitation to the event, the IRS will work with them at the event to resolve all their issues.

In addition, IRS Chief Counsel recently prepared a Virtual Settlement Days Best Practice Guide for external use that will be released in advance of the Virtual Settlement Days events. Chief Counsel anticipates that Virtual Settlement Days will be a mainstay of its Settlement Day efforts even after this crisis is over. Chief Counsel released an initial Settlement Days Best Practices Guide in January 2020, which outlined a remote model for the program.

Revenue Procedure 2020-19 modifies Rev. Proc. 2017-45 solely with respect to distributions declared by a publicly offered REIT or publically offered RIC on or after April 1, 2020, and on or before December 31, 2020.To enable publicly offered real estate investment trusts (REITs) and publicly offered regulated investment companies (RICs) to conserve capital, this revenue procedure modifies the safe harbor provided in Rev. Proc. 2017-45, 2017-35 I.R.B. 216, to temporarily reduce the minimum amount of cash that shareholders may receive to not less than 10 percent of the total declared distribution in order for the distribution to be taxable under section 301. 

Revenue Procedure 2020-19 will be in IRB:  2020-22, dated 05/26/2020.

Notice 2020-25 temporarily expands the circumstances and time periods in which a tax-exempt bond that is purchased by its state or local governmental issuer is treated as continuing in effect without resulting in a reissuance or retirement of the purchased tax-exempt bond solely for purposes of § 103 and §§ 141 through 150 of the Internal Revenue Code.

Revenue Procedure 2020-21 provides temporary guidance regarding the public approval requirement under § 147(f) of the Internal Revenue Code (Code) for tax-exempt qualified private activity bonds.  Specifically, in light of the Coronavirus Disease 2019 (COVID-19) pandemic, this revenue procedure provides that hearings held by teleconference as described in section 4.01 of this revenue procedure will be treated as held in a location that, based on the facts and circumstances, is convenient for residents of the approving governmental unit for the purpose of § 1.147-1(d)(2) of the Income Tax Regulations. 

Notice 2020-25  and Revenue Procedure 2020-21 will be in IRB 2020-22, dated May 26, 2020.

Notice 2020-36 contains a proposed revenue procedure that sets forth updated procedures under which recognition of exemption from federal income tax for organizations described in § 501(c) of the Internal Revenue Code may be obtained on a group basis for subordinate organizations affiliated with and under the general supervision or control of a central organization. 

Notice 2020-36 will be in IRB 2020-21, dated May 18, 2020.

May 5 deadline for VA, SSI recipients who don’t file a tax return and have dependents

WASHINGTON – The Internal Revenue Service today reminded Supplemental Security Income and Department of Veterans Affairs beneficiaries to act by Tuesday, May 5 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 will be paid in association with a return filing for tax year 2020.

“The deadline is quickly approaching for these groups so they can get their maximum Economic Impact Payment of $1,200 and $500 for each eligible child as quickly as possible,” said IRS Commissioner Chuck Rettig. “These groups will get $1,200 automatically, but they need to act quickly and use the Non-Filers tool on IRS.gov to get the extra $500 per child added to their payment. Everyone should share this information widely and help others with the Plus $500 Push, so that more Americans get more money as fast as possible.”

Following extensive work by the IRS and partner 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 VA Compensation and Pension (C&P) beneficiaries who didn’t file a tax return in the last two years. No action is needed by these groups to automatically receive their $1,200 payment.

For VA and SSI recipients 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-Filers tool on IRS.gov by Tuesday, May 5 for these groups may help put all of their eligible Economic Income Payment into a single payment. The Non-Filers tool is available in English and Spanish.

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.

SSI and VA recipients: Have a child but don’t file a tax return? Visit IRS.gov now

SSI and VA recipients who have children and who weren’t required file a tax return in 2018 or 2019 should visit the Non-Filers: 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.
 
SSI and VA recipients who receive Compensation and Pension (C&P) benefit payments should receive their automatic payments by mid-May. If they have children and aren’t required to file a tax return, both groups are urged to use the Non-Filers tool as soon as possible before the May 5 deadline. Once the deadline passes and processing begins on the $1,200 payment, they will not be eligible to use the Non-Filers 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.

SSA / Railroad Retirees: Economic Impact Payments started arriving this week

For recipients of Social Security retirement, survivors or disability insurance benefits (SSDI) and Railroad Retirement benefits (RRB), automatic payments of $1,200 began arriving this week. No action is needed on their part. This includes people who don’t normally file a tax return.

For Social Security / RRB beneficiaries who don’t normally file a tax return, have a child and registered using the IRS Non-Filers tool by the April 22 deadline, more payments are arriving this week as well.

For SSA/RRB beneficiaries who don’t normally file a tax return and have a child but did not register on the IRS Non-Filers tool by April 22, they still are receiving their automatic $1,200 starting this week. Given the deadline has passed, by law, the additional $500 per eligible child amount would be paid in association with filing a tax return for 2020. This group can no longer use the Non-Filers tool to add eligible children.

Note - Direct Express Account Holders:You may use the Non-Filers tool, but you cannot receive your and your children’s payment on your Direct Express account. You may only select a bank account for direct deposit or leave bank information blank and receive the money by mail.

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 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.