IRS Tax News

  • 24 Aug 2021 2:48 PM | Anonymous

    Notice 2021-51 announces that the Treasury Department and the IRS intend to amend certain regulations under sections 1446(a) and 1446(f) to defer the applicability date to January 1, 2023 for certain provisions relating to the following:  (i) withholding under section 1446(f) on transfers of interests in publicly traded partnerships (“PTP interests”); (ii) withholding under section 1446(a) on distributions made with respect to PTP interests; and (iii) withholding under section 1446(f)(4) by partnerships on distributions to transferees.   

    Notice 2021-51 will be in:  2021-36, dated 8/22/2021.


  • 23 Aug 2021 2:15 PM | Anonymous

    WASHINGTON — The Internal Revenue Service announced today the opening of the application period for the 2022 Compliance Assurance Process (CAP) program. The application period runs September 1 to November 1, 2021. The IRS will inform applicants if they’re accepted into the program in February 2022.

    Launched in 2005, CAP employs real-time issue resolution, through transparent and cooperative interaction between taxpayers and the IRS, to improve federal tax compliance by resolving issues prior to the filing of a tax return.
     
    To be eligible to apply for CAP, new applicants must:

    • Have assets of $10 million or more,
    • Be a U.S. publicly traded corporation with a legal requirement to prepare and submit SEC Forms 10-K, 10-Q, and 8-K, and
    • Not be under investigation by, or in litigation with, any government agency that would limit the IRS’s access to current tax records.

    To be eligible to participate in CAP, taxpayers must adhere to CAP program limits on the number of open years. For 2022, the IRS is continuing the modification of the open-year criteria to allow- "two filed" open returns.

    General program information and the 2022 application details are available on the CAP webpage


  • 20 Aug 2021 3:26 PM | Anonymous

    Need to update direct deposit information?

    Many families are asking how they can change the bank account where they get their monthly Child Tax Credit payment.

    First, families should use the Child Tax Credit Update Portal to confirm their eligibility for the payments. If eligible, the tool will also indicate whether they are enrolled to receive their payments by direct deposit.

    For those currently with direct deposit, the tool will list the full bank routing number and the last four digits of their account number. This is the account where the IRS sent their payments so far. All subsequent payments will also be sent to this account. If necessary, the bank account to which the IRS is sending the payment can now be changed starting with the Sept. 15 payment. They can do that by updating the routing number and account number and indicating whether it is a savings or checking account. Note that only one account number is permitted for each recipient—that is, the entire payment must be direct deposited in only one account.

    How to switch from paper check to direct deposit

    If the Update Portal shows that a family is eligible to receive payments but not enrolled to receive direct deposits, they will receive a paper check each month. If they choose, they can now switch to receiving their payments by direct deposit.

    They can use the tool to add their bank account information. They do that by entering their bank routing number and account number, and indicating whether it is a savings or checking account.

    The IRS urges any family receiving checks to consider switching to the speed and convenience of direct deposit. With direct deposit, families can access their money more quickly. Direct deposit removes the time, worry and expense of cashing a check. In addition, direct deposit eliminates the chance of a lost, stolen or undelivered check.

    Families can stop payments any time

    Even after payments begin, families can stop all future monthly payments if they choose. They do that by using the unenroll feature in the Child Tax Credit Update Portal. Eligible families who make this choice will still receive the rest of their Child Tax Credit as a lump sum when they file their 2021 federal income tax return next year.

    To stop all payments starting in September and the rest of 2021, they must unenroll by Aug. 30, 2021. For more information about the unenrollment process, including a schedule of deadlines for each monthly payment, see Topic J of the Child Tax Credit FAQs on IRS.gov.

    For married couples, each spouse must unenroll separately. If they each choose to unenroll, they will receive no monthly payments. If only one spouse unenrolls, the other spouse will still receive monthly payments, but they will be half the normal amount.

    Who should unenroll?

    Instead of receiving these advance payments, some families may prefer to wait until the end of the year and receive the entire credit as a refund when they file their 2021 return. The Child Tax Credit Update Portal enables them to quickly and easily unenroll from receiving monthly payments.

    The unenroll feature can also be helpful to any family that no longer qualifies for the Child Tax Credit or believes they will not qualify when they file their 2021 return. This could happen if, for example, someone else, such as an ex-spouse or another family member, qualifies to claim their child or children as dependents in 2021.

    What is the Child Tax Credit Update Portal?

    The Child Tax Credit Update Portal is a secure, password-protected tool, available to any eligible family with internet access and a smart phone or computer. It is designed to enable them to manage their Child Tax Credit payments, including, if they choose, unenrolling from monthly payments.

    To access the Child Tax Credit Update Portal, a person must first verify their identity. If a person has an existing IRS username or an ID.me account with a verified identity, they can use those accounts to easily sign in. People without an existing account will be asked to verify their identity with a form of photo identification using ID.me, a trusted third party for the IRS. Identity verification is an important safeguard and will protect the user’s account from identity theft.

    Anyone who lacks internet access or otherwise cannot use the online tool may unenroll by contacting the IRS at the phone number included in the outreach Letter 6416 or L6416-A they received from the IRS.

    Who is getting a monthly payment?

    In general, monthly payments are going to eligible families who:

    • Filed either a 2019 or 2020 federal income tax return.
    • Used the Non-Filers tool on IRS.gov in 2020 to register for an Economic Impact Payment.
    • Registered for the advance Child Tax Credit this year using the new Non-Filer Sign-Up Tool on IRS.gov.

    An eligible family who took any of these steps does not need to do anything else to get their payments.

    Normally, the IRS is calculating the advance payment based on the 2020 income tax return. If that return is not available, either because it has not yet been filed or it has not yet been processed, the IRS is instead determining the payment using the 2019 tax return.

    Low-income families can still sign up

    It’s not too late for low-income families to sign up for advance CTC payments, as well as Economic Impact Payments and the Recovery Rebate Credit. People can get these benefits, even if they don’t work and even if they receive no income.

    The IRS urges anyone who normally isn’t required to file a tax return to explore the tools available only on IRS.gov.

    First, people can check their eligibility for the advance payments by using the advance Child Tax Credit Eligibility Assistant. Then, if they qualify, they can use the Non-filer Sign-up Tool to file a simplified return with the IRS. The Non-filer Sign-up Tool will be available until Oct. 15.

    The IRS urges partners and community groups to share information and use available online tools and toolkits to help non-filers, low-income families, people experiencing homelessness and other underserved groups sign up to receive these benefits.

    Child Tax Credit changes

    The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 for children under the age of 6 and to $3,000 per child for children ages 6 through 17. Before 2021, the credit was worth up to $2,000 per eligible child.

    The new maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:

    • $75,000 or less for singles,
    • $112,500 or less for heads of household and
    • $150,000 or less for married couples filing a joint return and qualified widows and widowers.

    For most people, modified AGI is the amount shown on Line 11 of their 2020 Form 1040 or 1040-SR. Above these income thresholds, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every $1,000 in modified AGI. In addition, the credit is fully refundable for 2021. This means that eligible families can get it, even if they owe no federal income tax. Before this year, the refundable portion was limited to $1,400 per child.

    For the most up-to-date information on the Child Tax Credit and advance payments, visit Advance Child Tax Credit Payments in 2021.


  • 20 Aug 2021 3:05 PM | Anonymous

    WASHINGTON — The Internal Revenue Service has launched a new feature allowing any family receiving monthly Child Tax Credit payments to quickly and easily update their mailing address using the Child Tax Credit Update Portal, found exclusively on IRS.gov. This feature will help any family that chooses to receive their payment by paper check avoid mailing delays or even having a check returned as undeliverable.

    Any family can easily have their September check and all future checks sent to their new address by using the portal to make an address change request. To have the change take effect in September, people need to complete the request before midnight Eastern Time on Monday, Aug. 30. Families can still make changes after that date, but their request will not be effective until the next scheduled monthly payment.

    If you change your mailing address using the Child Tax Credit Update Portal, the IRS will use this updated address for all future IRS correspondence so the address change feature can also be helpful to taxpayers that are receiving payments by direct deposit. For example, the IRS will mail a year-end summary statement (Letter 6419) to all taxpayers who have received advance Child Tax Credit payments during 2021, and having a current address on file with the IRS will ensure prompt delivery of this statement.

    Families will need Letter 6419 to quickly and accurately fill out their 2021 federal income tax return next year. This is important because, for most families, the advance payments they are receiving during 2021 cover only half of the total credit. They will claim the remaining portion on their 2021 tax return.

    The address change feature joins a growing set of services available through the Child Tax Credit Update Portal. Available only on IRS.gov, the portal already allows families to verify their eligibility for the payments and then, if they choose to:

    • Switch from receiving a paper check to direct deposit;
    • Change the account where their payment is direct deposited; or
    • Stop monthly payments for the rest of 2021.

    Any of these changes made before midnight ET on Aug. 30, will apply to the Sept. 15 payment and all subsequent monthly payments, scheduled for Oct. 15, Nov. 15, and Dec. 15.

    Future enhancements are planned for the Child Tax Credit Portal

    Later this year, families will also be able to use the Update Portal tool to:

    • Add or remove children in most situations;
    • Report a change in marital status; or
    • Report a significant change in income.

    Latest information for the Child Tax Credit payments on IRS.gov

    The IRS has created a special Advance Child Tax Credit 2021 page designed to provide the most up-to-date information about the credit and the advance payments. It’s at IRS.gov/childtaxcredit2021.

    The web page now features an updated set of frequently asked questions and a new user guide for the Child Tax Credit Update Portal (Publication 5549). It also provides direct links to the portal, as well as two other online tools-- the Non-Filer Sign Up Tool and the Child Tax Credit Eligibility Assistant -- and other useful resources.


  • 17 Aug 2021 11:29 AM | Anonymous

    WASHINGTON – With identity thieves continuing to target the tax community, Internal Revenue Service Security Summit partners today urged tax professionals to learn the signs of data theft so they can react quickly to protect clients. 

    The IRS, state tax agencies and the tax industry – working together as the Security Summit – reminded tax professionals that they should contact the IRS immediately when there’s an identity theft issue while also contacting insurance or cybersecurity experts to assist them with determining the cause and extent of the loss. 

    “There are tell-tale signs of identity theft that tax pros can easily miss,” said IRS Commissioner Chuck Rettig. “Identity thieves continue to look for ways to slip into the systems of tax pros to steal data. We urge practitioners to take simple steps and remain on the lookout for signs of data and identity theft. They are a critical first line of defense against identity theft.” 

    Knowing the signs of identity theft is the final part of a five-part series sponsored by the Summit partners to highlight critical steps tax professionals can take to protect client data. This year’s theme “Boost Security Immunity: Fight Against Identity Theft,” focused on urging tax professionals to try harder to secure their systems and protect client data during this pandemic and its aftermath. 

    This summer-time Summit series, now in its sixth year, highlighted the protections offered by multi-factor authentication and key security steps, the use of the Identity Protection PIN for clients, scams to steal unemployment benefits and the dangers of phishing email/text scams. 

    One common refrain the IRS hears from tax professionals reporting data thefts is that they did not immediately recognize its signs. 

    Summit partners urged tax professionals to watch out for these critical signs:

    • Client e-filed returns rejected because client’s Social Security Number was already used on another return.
    • More e-file acknowledgements received than returns the tax pro filed.
    • Clients responded to emails the tax pro didn’t send.
    • Slow or unexpected computer or network responsiveness such as:
      • Software or actions take longer to process than usual,
      • Computer cursor moves or changes numbers without touching the mouse or keyboard,
      • Unexpectedly locked out of a network or computer.

    Tax professionals should also watch for warning signs when clients report they’ve received:

    • IRS Authentication letters (5071C, 4883C, 5747C) even though they haven’t filed a return.
    • A refund even though they haven’t filed a return.
    • A tax transcript they didn’t request.
    • Emails or calls from the tax pro that they didn’t initiate.
    • A notice that someone created an IRS online account for the taxpayer without their consent.
    • A notice the taxpayer wasn’t expecting that:
      • Someone accessed their IRS online account,
      • The IRS disabled their online account.

    These are just a few common examples. Tax pros should ensure they have the highest security possible and contact these sources if they sense or see something amiss. 

    If you or your firm are the victim of data theft, immediately:

     

    • Report it to your local IRS Stakeholder Liaison Liaisons will notify IRS Criminal Investigation and others within the agency on the practitioner’s behalf. Speed is critical. If reported quickly, the IRS can take steps to block fraudulent returns in the clients’ names and will assist tax pros through the process. 
    • Email the Federation of Tax Administrators at StateAlert@taxadmin.org Get information on how to report victim information to the states. Most states require that the state attorney general be notified of data breaches. This notification process may involve multiple offices. 

    Find more information at Data Theft Information for Tax Professionals

    Additional resources

    Tax professionals can also get help with security recommendations by reviewing the recently revised IRS Publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security: The Fundamentals by the National Institute of Standards and Technology. The IRS Identity Theft Central pages for tax pros, individuals and businesses have important details as well. 

    Publication 5293, Data Security Resource Guide for Tax Professionals, 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

    For more information, see Boost Security Immunity: Fight Against Identity Theft.


  • 16 Aug 2021 2:46 PM | Anonymous

    Notice 2021-50 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for August 2021 used under § 417(e)(3)(D), the 24-month average segment rates applicable for August 2021, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv). 

    Notice 2021-50 will be in IRB 2021-35, dated August 30,2021


  • 16 Aug 2021 2:45 PM | Anonymous

    Revenue Ruling 2021-26 https://www.irs.gov/pub/irs-drop/rr-21-16.pdf provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.

    The rates are published monthly for purposes of sections 42, 382, 412, 642, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.


  • 13 Aug 2021 2:41 PM | Anonymous

    WASHINGTON — The Internal Revenue Service and the Treasury Department announced today that millions of American families are now receiving their advance Child Tax Credit (CTC) payment for the month of August as direct deposits begin posting in bank accounts and checks arrive in mailboxes.

    This second batch of advance monthly payments, worth about $15 billion, are reaching about 36 million families today across the country. The majority will be issued by direct deposit.

    Under the American Rescue Plan, most eligible families received the first payment on July 15, and payments will continue each month for the rest of 2021. For these families, each payment is up to $300 per month for each child under age 6 and up to $250 per month for each child ages 6 through 17.

    Besides the July 15 and Aug. 13 payments, payment dates are Sept. 15, Oct. 15, Nov. 15 and Dec. 15.

    Here are further details on these payments:

    • Families will see the direct deposit payments in their accounts starting today, Aug. 13. Like the first payments, the vast majority of families will receive these payments by direct deposit.
    • The IRS wants to alert some recipients who received direct deposits in July that they will receive the August payments by mail. Due to an issue expected to be resolved by the September payments, a percentage of these recipients – less than 15% – who received payments by direct deposit in July will be mailed paper checks for the August payment. For those affected, no additional action is needed for the September payment to be issued by direct deposit. Families can visit the Child Tax Credit Update Portal to see if they’re receiving a direct deposit or paper check this month.
    • For those receiving their payments by paper check, be sure to allow extra time for delivery by mail through the end of August.  Those wishing to receive future payments by direct deposit can make this change using the Child Tax Credit Update Portal (https://www.irs.gov/credits-deductions/child-tax-credit-update-portal), available only on IRS.gov. To access the portal or to get a new step-by-step guide for using it, visit IRS.gov/childtaxcredit2021. A change made by 11:59 p.m. ET on Aug. 30 will apply starting with the September payment.
    • Payments went to eligible families who filed a 2019 or 2020 income tax return. Returns processed by Aug. 2 are reflected in these payments. This includes people who don’t typically file a return but during 2020 successfully registered for Economic Impact Payments using the IRS Non-Filers tool on IRS.gov or in 2021 successfully used the Non-filer Sign-up Tool for advance CTC, also available only on IRS.gov.
    • Payments are automatic. Aside from filing a tax return, including a simplified return from the Non-filer Sign-up Tool, families don’t have to do anything if they are eligible to receive monthly payments. The Non-Filer Sign-Up tool is available until October 15, 2021. 
    • Families who did not get a July payment and are getting their first monthly payment in August will still receive their total advance payment for the year. This means that the total payment will be spread over five months, rather than six, making each monthly payment larger. For these families, each payment is up to $360 per month for each child under age 6 and up to $300 per month for each child ages 6 through 17
    • Additionally, the IRS is correcting an issue regarding the advance CTC payments for families where the parent(s) have an Individual Taxpayer Identification Number (ITIN) and the qualifying children have a Social Security number. Such families who did not receive a July payment are receiving a monthly payment in August, which also includes a portion of the July payment. They will receive the remainder of the July payment in late August.

    Low-income families can still sign up

    It’s not too late for low-income families to sign up for advance CTC payments. The IRS urged anyone who normally isn’t required to file a tax return to explore the tools available on IRS.gov. These tools can help determine eligibility for the advance CTC or help people file a simplified tax return to sign up for these payments as well as Economic Impact Payments and the Recovery Rebate Credit. People can get these benefits, even if they don’t work and even if they receive no income.

    The IRS continues to raise awareness of the expanded Child Tax Credit. The IRS encourages partners and community groups to share information and use available online tools and toolkits to help non-filers, low-income families and other underserved groups sign up to receive the advance Child Tax Credits as well as Economic Impact Payments. People can check their eligibility for the advance payments by using the new advance Child Tax Credit Eligibility Assistant.

    Families can stop payments anytime

    Families can stop payments anytime, even after payments begin. They do that by using the unenroll feature in the Child Tax Credit Update Portal. Eligible families who make this choice will still receive the rest of their Child Tax Credit as a lump sum when they file their 2021 federal income tax return next year. To stop all payments starting in September and the rest of 2021, they must unenroll by 11:59 p.m. ET on Aug. 30, 2021.

    For married couples, each spouse must unenroll separately. If they each choose to unenroll, they will receive no monthly payments. If only one spouse unenrolls, they will still receive monthly payments, but they will be half the normal amount.

    The unenroll feature can also be helpful to any family that no longer qualifies for the CTC or believes they will not qualify when they file their 2021 return. This could happen if, for example, someone else, such as an ex-spouse or another family member, qualifies to claim their child or children as dependents in 2021.

    Links to these tools, a step-by-step guide to using the Non-filer Sign-up Tool, answers to frequently asked questions and other helpful resources are available on the tax agency’s special advance CTC 2021 page. It’s at IRS.gov/childtaxcredit2021.


  • 13 Aug 2021 9:59 AM | Anonymous

    Today, the IRS published the latest executive column “A Closer Look,” which features Dietra Grant, director of the Customer Account Services (CAS) organization, discussing the new Tax Pro Account, an application on IRS.gov that allows greater online interaction and collaboration between tax professionals and taxpayers. “This new, groundbreaking application allows for all-digital interaction between tax professionals and taxpayers on authorizations and sets the stage for several advancements on third-party authorizations in the future,” said Grant. Read more here. Read the Spanish version here.

    A Closer Look” is a column from IRS executives that covers a variety of timely issues of interest to taxpayers and the tax community. It also provides a detailed look at key issues affecting everything from IRS operations and employees to issues involving taxpayers and tax professionals.


  • 12 Aug 2021 10:20 AM | Anonymous

    Rev. Proc. 2021-34 modifies Rev. Proc. 2019-43, 2019-48 I.R.B. 1107, to provide procedures under § 446 of the Internal Revenue Code (Code) and § 1.446-1(e) of the Income Tax Regulations to obtain automatic consent of the Commissioner to change methods of accounting to comply with final regulations under §§ 1.451-3, 1.451-8, and 1.1275-2(l) and to change methods of accounting for certain inventory costs to comply with §§ 263A, 461, and 471 if made in connection with a change to comply with § 1.451-3 and/or § 1.451-8, as applicable. 

    Rev. Proc 2021-34 also modifies Rev. Proc. 2015-13, 2015-5 I.R.B. 419, as clarified and modified by Rev. Proc. 2015-33, 2015-24 I.R.B. 1067, and further modified by Rev. Proc. 2016-1, 2016-1 I.R.B. 1, Rev. Proc. 2017-59, 2017-48 I.R.B. 543, and Rev. Proc. 2021-26, 2021-22 I.R.B. 1163, to provide procedures for a taxpayer to obtain the consent of the Commissioner to change its method of accounting to comply with §§ 1.451-3 and/or 1.451-8, as applicable, by providing rules related to cost offset method changes.

    Rev. Proc. 2021-35 modifies Rev. Proc. 2013-26 to reflect changes made to the treatment of certain credit card fees by § 451(b), as amended by section 13221 of the Tax Cuts and Jobs Act, and §§ 1.451-3 and 1.1275-2(l) of the Income Tax Regulations. Rev. Proc. 2013-26, 2013-22 I.R.B. 1160, allows a taxpayer to use a safe harbor method of accounting for original issue discount on a pool of credit card receivables for purposes of § 1272(a)(6) of the Internal Revenue Code—the "proportional method." 

    Both Rev. Proc. 2021-34 and Rev. Proc. 2021-35 will be published in Internal Revenue Bulletin 2021-35 on August 30, 2021.


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