The IRS has announced that it will resume issuing the 500 series balance due notices to taxpayers later in October. While these notices were paused on May 9 due to COVID-19, the agency did not officially confirm this pause until August 21, 2020. 

"Although the IRS continued to issue most agency notices, the 500 series were suspended temporarily because of a backlog of mail at the IRS due to COVID-19. The mail backlog is now caught up enough to account for the timely mailed payments. Some taxpayers will begin seeing in late October or early November, the updated 500 series notices with current issuance and payment dates," the IRS said.

The 500 series includes the CP501, the CP503 and the CP504 notices.

The full IRS announcement is available to read here.

WASHINGTON — As part of an ongoing initiative to provide information and assistance to underserved communities more effectively, the Internal Revenue Service announced today that it is making two key publications designed for tax professionals available in Spanish.

A Spanish-language version of Publication 947, Practice Before the IRS and Power of Attorney, is now available. A Spanish version of Circular No. 230, Regulations Governing Practice before the Internal Revenue Service, will soon be posted to IRS.gov. Making these two publications available in Spanish helps the IRS reach its goal of serving all taxpayers, no matter where they live, their background, or what language they speak.

“Spanish-speaking tax pros have long played a vital role in helping businesses and families understand their tax-reporting responsibilities and take full advantage of valuable tax benefits,” said IRS Commissioner Chuck Rettig. “We believe adding these two important professional resources in Spanish will help tax pros more effectively serve and represent this important community. This is just one more step in our continuing efforts to increase the information and services available in Spanish and other languages.”

Circular 230 is a critical document for those practicing before the IRS. The title refers to Treasury Department Circular No. 230, which defines and governs who may practice before the IRS. Those covered by Circular 230 include attorneys, certified public accountants, Enrolled Agents, enrolled retirement plan agents, enrolled actuaries and others practicing before the IRS. The IRS Office of Professional Responsibility oversees Circular 230, including enforcing violations.

“Circular 230 will turn 100 years old in February, and making this document available in Spanish for the first time is an appropriate milestone,” said Sharyn Fisk, IRS Office of Professional Responsibility Director. “We will continue to look for other opportunities to make information available to tax professionals in additional languages.”

In tax-year 2020, for the first time, Form 1040 will be available in Spanish and English. In another first, the 2020 Form 1040 will also allow taxpayers to indicate on the form whether they wish to be contacted in a language other than English should the IRS need to contact them. 

For more information about tax help in Spanish and other languages, visit IRS.gov.

Rev. Proc. 2020-45 provides certain inflation adjustments, including the tax tables for Tax Year 2021, generally used on returns filed in 2022.

Notice 2020-79 provides a listing of dollar limitations applicable to qualified retirement plans as adjusted for cost-of-living adjustments for 2020.

WASHINGTON — The Internal Revenue Service today announced the tax year 2021 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2020-45 provides details about these annual adjustments. 

Highlights of changes in Revenue Procedure 2020-45: The Consolidated Appropriation Act for 2020 increased the amount of the minimum addition tax for failure to file a tax return within 60 days of the due date. Beginning with returns due after Dec. 31, 2019, the new additional tax is $435 or 100 percent of the amount of tax due, whichever is less, an increase from $330. The $435 additional tax will be adjusted for inflation. 

The tax year 2021 adjustments described below generally apply to tax returns filed in 2022. 

The tax items for tax year 2021 of greatest interest to most taxpayers include the following dollar amounts:

WASHINGTON — The Internal Revenue Service announced cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2021 in Notice 2020-79, posted today on IRS.gov. 

Highlights of changes for 2021

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2021.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or his or her spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor his or her spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2021:

Key employee contribution limits remain unchanged

The limit on contributions by employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $19,500.

The catch-up contribution limit for employees aged 50 and over who participate in these plans remains unchanged at $6,500.

The limitation regarding SIMPLE retirement accounts remains unchanged at $13,500.

The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

Details on these and other retirement-related cost-of-living adjustments for 2021 are in Notice 2020-79, available on IRS.gov.

WASHINGTON – The next quarterly payroll tax return due date is Oct. 31, and the Internal Revenue Service urges business owners to use the speed and convenience of filing the returns electronically.

IRS Forms 940, 941, 943, 944 or 945 are used to report employment tax information. The IRS recommends electronic filing, or e-filing, of these returns for many reasons.

E-filing saves taxpayers time by performing calculations and populating forms and schedules using a step-by-step process. Once submitted, the information is quickly available to the IRS, thus reducing processing time.

E-filing is the most accurate method to file returns. Those who e-file receive missing information alerts. Electronically filed returns have fewer errors, which reduces a taxpayer's chance of receiving an IRS notice.

The IRS takes safeguarding personal information seriously, and e-filing security is a top priority at the agency. E-file security standards ensure tax information is protected from security breaches. The IRS requires all authorized IRS e-file providers to ensure only authorized users have access to secure information.

The IRS acknowledges receipt of e-filed returns within 24 hours. The agency retains the information on the tax return. Unlike filing a return on paper, e-filing assures the filer that the tax return is with the IRS and not misplaced or lost in the mail.

There are two options for electronically filing payroll tax returns:

Self-file

o Businesses purchase IRS-approved software. A list of providers offers options based on the relevant tax year.

o Business owners may need to pay a fee to electronically file their returns.

o The tax software requires a signature. The taxpayer has the option to apply for an online signature PIN or to scan and attach Form 8453-EMP, Employment Tax Declaration for an IRS e-file Return.

Tax professional file on behalf of the business

o Use the Authorized IRS e-file Provider Locator Service to find a tax professional who offers this service.

Only the business owner, authorized signers and reporting agents can apply for an online signature PIN. Third parties, such as attorneys, CPAs, tax return preparers or other tax professionals can't request a PIN on behalf of the business, nor can they use the PIN to sign returns on behalf of their clients.

For more information on electronic filing of payroll tax returns, see the E-file Employment Tax Forms Page.

WASHINGTON – The Internal Revenue Service today set Nov. 10 as “National EIP Registration Day,” as the agency and partners across the country launch a final push to encourage everyone who doesn’t normally file a tax return to register to receive an Economic Impact Payment.

“National EIP Registration Day” will take place just a few days ahead of the extended Nov. 21 registration deadline. This special event will feature support from IRS partner groups inside and outside of the tax community, including those that work with low-income and underserved communities. These groups will help spread the word about the new Nov. 21 deadline and, in some cases, provide special support for people who still need to register for the payments.

The IRS has already sent nearly 9 million letters to people who may be eligible for the $1,200 Economic Impact Payments but don’t normally file a tax return. The letters, along with the special Nov. 10 event, both urge people to use the Non-Filers: Enter Info Here tool, available exclusively on IRS.gov.

“Our partner groups have been a critical part of the unprecedented IRS outreach and education campaign this year to contact as many people as possible about these payments,” said IRS Commissioner Chuck Rettig. “As a result, millions of Americans have successfully used the Non-filers portal and received their Economic Impact Payment. Registration is quick and easy, and we urge everyone to share this information to reach as many people before time runs out on Nov. 21.”

To support the ongoing effort as well as “National EIP Registration Day,” many partner groups have been working with the IRS, helping translate and making available Economic Impact Payment information and resources in 35 languages. The IRS also plans a special push on social media to support the final registration drive in multiple languages.

While most eligible U.S. taxpayers have automatically received their Economic Impact Payment, others who don’t have a filing obligation should use the Non-Filers tool to register with the IRS to get their money. Typically, this includes people who receive little or no income.

Since the Non-Filers tool launched in the spring, over 8 million people who normally aren’t required to file a tax return have registered for the payments. The IRS continues to work to reach others who haven’t used the tool yet, which led to the special mailing and the special Nov. 10 registration event.

The tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles who could not be claimed as a dependent by someone else. This includes couples and individuals who are experiencing homelessness.

Anyone using the Non-Filers tool can speed up the arrival of their payment by choosing to receive it by direct deposit. Those not choosing this option will get a check.

Beginning two weeks after they register, people can track the status of their payment using the Get My Payment tool, available only on IRS.gov.

WASHINGTON — The Internal Revenue Service announced today a second time-limited settlement initiative for certain taxpayers under audit who participated in abusive micro-captive insurance transactions.

In the coming days, the IRS will begin sending settlement offers with terms that are stricter than the IRS’s first time-limited initiative started last year. This announcement occurs after the IRS recently deployed its 12 newly formed micro-captive examination teams to substantially increase the examinations of abusive micro-captive insurance transactions.

The IRS has decided to offer to resolve certain cases by requiring substantial concession of the income tax benefits claimed by the taxpayer together with penalties that can be partly mitigated if the taxpayer can demonstrate good faith, reasonable reliance on an independent, competent tax advisor and if the taxpayer can demonstrate it did not participate in any other reportable transactions.
 
“The IRS maintains a relentless agencywide commitment to combat abusive transactions” said IRS Large Business & International Commissioner Douglas O’Donnell. “Our offer terms are only getting stricter; and taxpayers would be well advised to consult with an objective, competent advisor with the aim of getting out now and putting this behind them.”

This settlement initiative is currently limited to taxpayers with at least one open year under exam. Taxpayers who also have unresolved years under the jurisdiction of the IRS Independent Office of Appeals may also be eligible, but those with tax years involving micro-captive transactions docketed in Tax Court under Counsel's jurisdiction, in general, are not eligible. Taxpayers who do not receive an offer letter are not eligible for this settlement.

Because the terms of this second settlement initiative reflect the IRS’s current settlement position, certain taxpayers who received but rejected an offer under the IRS first time-limited initiative may receive an offer under this second time-limited settlement initiative, but under the new, stricter terms.

Taxpayers who receive offer letters under this settlement initiative, but who opt not to participate, will continue to be audited by the IRS under its normal procedures. Potential outcomes include, but are not limited to, full disallowance of captive insurance deductions, inclusion of income by the captive, withholding tax related to any foreign captives, and imposition of all applicable penalties.

Although taxpayers who decline to participate in the settlement will have full Appeals rights, the IRS Independent Office of Appeals is aware of this settlement initiative. Given the current state of the law, taxpayers should not anticipate receiving better terms in Appeals than those offered under this initiative.

In 2016, the Department of Treasury and IRS issued Notice 2016-66, which identified certain micro-captive transactions as having the potential for tax avoidance and evasion.