Notice 2021-53 provides guidance to employers on the requirement to report qualified sick leave wages and qualified family leave wages paid to employees under the Families First Coronavirus Response Act, as amended by the COVID-related Tax Relief Act of 2020 and under sections 3131, 3132, and 3133 of the Internal Revenue Code for leave provided in 2021.

Notice 2021-53 will be in IRB:  2021-39, dated September 27, 2021.

WASHINGTON – The Treasury Department and the Internal Revenue Service today issued Notice 2021-53, which provides guidance to employers about reporting on Form W-2 the amount of qualified sick and family leave wages paid to employees for leave taken in 2021. The notice provides guidance under recent legislation, including:  the Families First Coronavirus Response Act (FFCRA), as amended by the COVID-Related Tax Relief Act of 2020, and the American Rescue Plan Act of 2021.

Employers will be required to report these amounts to employees either on Form W-2, Box 14, or in a separate statement provided with the Form W-2. The guidance provides employers with model language to use as part of the Instructions for Employee for the Form W-2 or on the separate statement provided with the Form W-2.

The wage amount that the notice requires employers to report on Form W-2 will provide employees who are also self-employed with the information necessary to determine the amount of any sick and family leave equivalent credits they may claim in their self-employed capacities.

In July 2020, the IRS issued Notice 2020-54, which provided guidance regarding W-2 reporting of qualified sick leave and family leave under FFCRA for wages paid to employees for leave taken in 2020.

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

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Estimated Tax Payments - English

WASHINGTON – The Internal Revenue Service reminds people that Sept. 15, 2021, is the deadline for third quarter estimated tax payments. This generally applies to people who are self-employed and some investors, retirees and those who may not normally have taxes withheld from their paycheck by their employers.

The U.S. tax system operates on a pay-as-you-go basis. This means taxpayers are to pay most of their tax during the year, as they earn or receive income. Therefore, individuals not subject to withholding may need to make quarterly estimated tax payments.

Who should pay quarterly?

In most cases, taxpayers should make quarterly estimated tax payments for 2021 if both of the following apply:

Taxpayers with income not subject to withholding, including interest, dividends, capital gains, alimony, cryptocurrency and rental income, normally make estimated tax payments.

Special rules apply to some groups of taxpayers, such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year. Publication 505, Tax Withholding and Estimated Tax, provides more information on estimated tax rules. The worksheet in Form 1040-ES, Estimated Tax for Individuals, or Form 1120-W, Estimated Tax for Corporations, has details on who must pay estimated tax.

Penalty for underpayment

If a taxpayer underpaid their taxes, they may have to pay a penalty. This applies whether they paid through withholding or through estimated tax payments. A penalty may also apply for late estimated tax payments even if someone is due a refund when they file their tax return.

To see if they owe a penalty, taxpayers should use Form 2210. The IRS may waive the penalty if someone underpaid because of unusual circumstances and not willful neglect. Examples include:

How to figure estimated tax

To figure estimated tax, an individual must figure their expected adjusted gross income (AGI), taxable income, taxes, deductions and credits for the year. When figuring 2021 estimated tax, it may be helpful to use income, deductions and credits for 2020 as a starting point. Use the 2020 federal tax return as a guide. Taxpayers can use Form 1040-ES to figure their estimated tax. Nonresident aliens use Form 1040-ES (NR) to figure estimated tax.

Taxpayers must make adjustments both for changes in their own situation and for recent changes in the tax law. For instance, tax provisions in the American Rescue Plan of 2021 may impact an individual taxpayer’s situation. For more information, see Publication 505 under What’s New for 2021 (.pdf).

For information about these and other changes in the law, visit IRS.gov. The instructions for Form 1040-ES include a worksheet to help taxpayers figure their estimated tax. Keep the worksheet for records.

The Tax Withholding Estimator on IRS.gov offers taxpayers a clear, step-by-step method to have the right amount of tax withheld from wages and pensions. It also has instructions to file a new Form W-4 to give to their employer to adjust the amount withheld each payday.

Other IRS.gov resources

The fourth and final 2021 estimated tax payment is due Jan. 17, 2022.

Notice 2021-52 announces the special per diem rates effective October 1, 2021, which taxpayers may use to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home.  This notice provides the special transportation industry rate, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method.  Notice 2021-52 also modifies Notice 2020-71, 2020-40 I.R.B. 786, to correct the portion of the year Sedona, Arizona is a high-cost locality under section 5 of Notice 2020-71.

Rev. Proc. 2019-48 provides the rules for using per diem rates, rather than actual expenses, to substantiate the amount of expenses for lodging, meals, and incidental expenses for travel away from home.  Taxpayers who use per diem rates to substantiate the amount of travel expenses under Rev. Proc. 2019-48 may use the federal per diem rates published annually by the General Services Administration.  Rev. Proc. 2019-48 allows certain taxpayers to use a special transportation industry rate or to use rates under a high-low substantiation method for certain high-cost localities.  The IRS announces these rates and the rate for the incidental expenses only deduction in an annual notice.

Use of a per diem substantiation method is not mandatory.  A taxpayer may substantiate actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence for proper substantiation.

Notice 2021-52 will be in IRB: 2021-38, dated 9/20/21.

Revenue Procedure 2021-40 amplifies Rev. Proc. 2021-3, 2021-1 IRB 140, which sets forth areas of the Internal Revenue Code (Code) relating to issues on which the Internal Revenue Service (Service) will not issue letter rulings or determination letters.  The revenue procedure announces that the Service will not issue letter rulings on whether certain transactions are self-dealing within the meaning of section 4941(d) of the Code.  Specifically, the Service will not issue rulings on whether an act of self-dealing occurs when a private foundation (or other entity subject to section 4941) owns or receives an interest in a limited liability company or other entity that owns a promissory note issued by a disqualified person.

 

Revenue Procedure 2021-40 will be in IRB: 2021-38, dated 09/20/2021.

WASHINGTON – The Internal Revenue Service, in response to shortages of undyed diesel fuel caused by Hurricane Ida, will not impose a penalty when dyed diesel fuel is sold for use or used on the highway for a number of parishes in the state of Louisiana.

The Louisiana parishes are: Ascension, Assumption, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson, Lafourche, Livingston, Orleans, Plaquemines, Pointe Coupee, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Martin, St. Mary, St. Tammany, Tangipahoa, Terrebonne, Washington, West Baton Rouge and West Feliciana.

This relief is effective as of Aug. 29, 2021, and will remain in effect through Sept. 15, 2021.
 
This penalty relief is available to any person that sells or uses dyed fuel for highway use. In the case of the operator of the vehicle in which the dyed fuel is used, the relief is available only if the operator or the person selling the fuel pays the tax of 24.4 cents per gallon that is normally applied to diesel fuel for highway use. The IRS will not impose penalties for failure to make semimonthly deposits of this tax. IRS Publication 510, Excise Taxes, has information on the proper method for reporting and paying the tax.

Ordinarily, dyed diesel fuel is not taxed, because it is sold for uses exempt from excise tax, such as to farmers for farming purposes, for home heating use and to local governments for buses.

Also, this waiver does not apply to the Internal Revenue Code penalty for using adulterated fuels that do not comply with applicable EPA regulations. Consequently, diesel fuel with sulfur content higher than 15 parts-per-million may not be used in highway vehicles.

The IRS is closely monitoring the situation and will provide additional relief as needed

Revenue Procedure 2021-37 sets forth the procedures of the IRS for issuing opinion letters regarding the satisfaction in form of § 403(b) pre-approved plans with respect to the requirements of § 403(b) of the Internal Revenue Code for the second remedial amendment cycle (Cycle 2).  This revenue procedure also sets forth the rules for determining when remedial amendment periods expire for § 403(b) pre-approved plans.

Revenue Procedure 2021-38 modifies Rev. Proc. 2016-37 to extend the deadline for adopting an interim amendment for a § 401(a) pre-approved plan to match the deadline for adopting an interim amendment for a § 403(b) pre-approved plan, which is set forth in Rev. Proc. 2021-37 (issued simultaneously).

Revenue Procedure 2021-37 & Revenue Procedure 2021-38 will be in IRB:  2021-38, dated 09/20/2021.

Revenue Procedure 2021-39 provides temporary guidance regarding the public approval requirement under § 147(f) of the Internal Revenue Code for tax-exempt qualified private activity bonds.  Specifically, in light of the continuing Coronavirus Disease 2019 (COVID-19) pandemic, this revenue procedure extends until March 30, 2022, the time period described in section 4.02 of Rev. Proc. 2020-21, 2020-22 I.R.B. 872, as modified by Rev. Proc. 2020-49, 2020-48 I.R.B. 1121, during which certain telephonic hearings are permitted.

Revenue Procedure 2021-39 will be in IRB:  2021-38, dated 9/20/2021.

WASHINGTON — Victims of Hurricane Ida that began on Aug. 26 now have until Jan. 3, 2022, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. Currently this includes the entire state of Louisiana, but taxpayers in Ida-impacted localities designated by FEMA in neighboring states will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

“During this difficult time, the IRS stands ready to help victims of Hurricane Ida,” said IRS Commissioner Chuck Rettig. “We want people affected by this devastating hurricane focused on their safety and recovery for themselves and their families. To provide assistance now and in the weeks ahead, we have a variety of different types of relief available to help people and businesses affected by this disaster.”

The tax relief postpones various tax filing and payment deadlines that occurred starting on Aug. 26, 2021. As a result, affected individuals and businesses will have until Jan. 3, 2022, to file returns and pay any taxes that were originally due during this period. This means individuals who had a valid extension to file their 2020 return due to run out on Oct. 15, 2021, will now have until Jan. 3, 2022, to file. The IRS noted, however, that because tax payments related to these 2020 returns were due on May 17, 2021, those payments are not eligible for this relief.

The Jan. 3, 2022 deadline also applies to quarterly estimated income tax payments due on Sept. 15, 2021, and the quarterly payroll and excise tax returns normally due on Nov. 1, 2021. It also applies to tax-exempt organizations, operating on a calendar-year basis, that had a valid extension due to run out on Nov. 15, 2021. Businesses with extensions also have the additional time including, among others, calendar-year corporations whose 2020 extensions run out on Oct. 15, 2021.    

In addition, penalties on payroll and excise tax deposits due on or after Aug. 26 and before Sept. 10, will be abated as long as the deposits are made by Sept. 10, 2021.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2021 return normally filed next year), or the return for the prior year (2020). Be sure to write the FEMA declaration number – 4611 − for Hurricane Ida in Louisiana on any return claiming a loss. See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by Hurricane Ida and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

WASHINGTON — September is National Preparedness Month. With the height of hurricane season fast approaching and the ongoing threat of wildfires in some parts of the country, the Internal Revenue Service reminds everyone to develop an emergency preparedness plan.

All taxpayers, from individuals to organizations and businesses, should take time now to create or update their emergency plans.

Taxpayers can begin getting ready for a disaster with a preparedness plan that includes securing and duplicating essential tax and financial documents, creating lists of property and knowing where to find information once a disaster has occurred. Securing this information can help in the aftermath of a disaster, and it can help people more quickly take advantage of disaster relief available from the IRS.

Start secure

Taxpayers should keep critical original documents inside waterproof containers in a secure space. Documents such as tax returns, birth certificates, deeds, titles and insurance policies should also be duplicated and kept with a trusted person outside the area a natural disaster may affect. 

Make copies

If original documents are available only on paper, taxpayers can use a scanner and save them on a USB flash drive, CD or in the cloud, which provide security and easy portability. 

Document valuables

After a disaster hits, photographs and videos of a home or business's contents can help support claims for insurance or tax benefits. All property, especially expensive and high- value items, should be recorded. The IRS disaster-loss workbooks can help individuals (.pdf) and businesses (.pdf) compile lists of belongings or business equipment. 

Employer fiduciary bonds

Employers using payroll service providers should check if their provider has a fiduciary bond in place to protect the employer in the event of a default by provider. Employers are encouraged to create an Electronic Federal Tax Payment System account at EFTPS.gov to monitor their payroll tax deposits and receive email alerts. 

Know where to go

Reconstructing records after a disaster may be required for tax purposes, getting federal assistance or insurance reimbursement. Find out if financial institutions provide statements and documents electronically. Taxpayers who have lost some or all of their records during a disaster should visit IRS' Reconstructing Records webpage. 

IRS is ready to help

Taxpayers living in a federally declared disaster can visit the IRS Tax Relief in Disaster Situations webpage or Around the Nation on IRS.gov and check for the available disaster tax relief. The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. Affected taxpayers can call 866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues. 

A taxpayer impacted by a disaster outside of a federally declared disaster area may qualify for disaster relief. This includes taxpayers who are not physically located in a disaster area, but whose records necessary to meet a filing or payment deadline postponed during the relief period are located in a covered disaster area. 

For more information about National Preparedness Month, visit Ready.gov/September.

Related items:

• Publication 2194, Disaster Resource Guide for Individuals and Businesses (.pdf)
• Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
• Publication 5307, Tax Reform: Basics for Individuals and Families
• Publication 583, Starting a Business and Keeping Records
• Publication 547, Casualties, Disasters, and Thefts
• Reconstructing Records After a Natural Disaster or Casualty Loss
• Tax Relief in Disaster Situations
• Federal Emergency Management Agency
• Small Business Administration
• Disasterassistance.gov
• Ready.gov