News

As work continues to focus more attention onto high-income compliance issues, the Internal Revenue Service announced plans today to establish a special area to focus on large or complex pass-through entities.

To protect taxpayers from scams, the IRS has ordered an immediate stop to new Employee Retention Credit processing amid a surge of questionable claims, concerns from tax professionals, and aggressive marketing to ineligible applicants, posing unacceptable risk to businesses and the tax system.

The Internal Revenue Service released a sneak peak Friday of some of the changes it's hoping to make to the form for claiming research tax credits.

The Department of Treasury and the Internal Revenue Service today issued Notice 2023-64PDF to provide additional interim guidance designed to help corporations determine whether the new corporate alternative minimum tax (CAMT) applies to them and how to compute the tax.

In what he described as "the start of sweeping, historic effort," IRS commissioner Danny Werfel announced a plan to focus more tax enforcement efforts on the wealthy and those who abuse the law. While some of the plans are familiar — such as auditing more millionaires — the specificity is new, particularly an announced focus on large partnerships.

Certain businesses that receive payments of over $10,000 in cash must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, electronically starting in 2024, the IRS said Wednesday in a news release (IR-2023-157). This new requirement applies to businesses that are required to file at least 10 information returns of one or more types other than Form 8300 in 2024.

The IRS today provided guidancePDF on the federal tax status of refunds of state or local taxes and certain other payments made by state or local governments to individuals. The IRS previously provided guidance on state payments made in 2022 in news release IR-2023-23, IRS issues guidance on state tax payments to help taxpayers.

Today, the Internal Revenue Service announced an administrative transition period that extends until 2026 the new requirement that any catch-up contributions made by higher‑income participants in 401(k) and similar retirement plans must be designated as after-tax Roth contributions.

Tax professionals are giving mixed reviews to the wait times and quality of service for the IRS's Practitioner Priority Service (PPS) line, especially since the Service ended its pilot program to thwart line-jumping companies at the end of March.

The IRS is uncertain about what happened to millions of tax records with sensitive information that could be used "to commit tax refund fraud identity theft," the Treasury Inspector General for Tax Administration (TIGTA) said in a report posted Tuesday.

The Treasury Inspector General for Tax Administration said the IRS cybersecurity program should not be considered fully effective, as three out of five of the criteria outlined in the agency's framework were considered to be "not at an acceptable maturity level."

The software that CPA tax preparers use to prepare clients' income tax returns is one of their most important professional tools. These products vary not only in such basic features as how tax return data is input and displayed but also in their adaptability to the myriad variations in tax clients' sources of income, deductions and credits, and other pertinent details. CPAs naturally take a keen interest in how performance of the products compares.

Taxpayers will have the option to go paperless for IRS correspondence by 2024 filing season, IRS to achieve paperless processing for all tax returns by filing season 2025.

Final regulations issued Monday (T.D. 9978) authorize the assessment of erroneous refunds of paid sick leave credits, family leave credits, and employee retention credits paid to employers under the Families First Coronavirus Response Act, P.L. 116-127; the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136; and the American Rescue Plan Act of 2021, P.L. 117-2.

With the Internal Revenue Service making substantial progress in the ongoing effort related to the Employee Retention Credit (ERC) claims, Commissioner Danny Werfel said the agency has entered a new phase of increasing scrutiny on dubious submissions while renewing consumer warnings against aggressive marketing.

The Internal Revenue Service warned taxpayers today to be on the lookout for a summer surge of tax scams as identity thieves continue pounding out a barrage of email and text messages promising tax refunds or offers to help 'fix' tax problems. The latest email schemes touch on a variety of topics, but many center around promises about a third round of Economic Impact Payments. The IRS is seeing hundreds of complaints daily pouring into phishing@irs.gov about this scam, which has an embedded URL link that takes people to phishing website to steal sensitive taxpayer information.

As a preteen, one of Aidan Hunt's favorite times of year was the day after his father filed taxes. That was when he was allowed to play with the software his dad used. "After he had finished using it, I would just make some different returns and try out the different options and see what they did," Hunt, who recently turned 21, said in an interview with the JofA. "You could say I was interested in seeing the different forms that would produce when you check all the different options. I just thought it was cool how many different forms and lines and possibilities that there were."

With the year already past the halfway point, a review of some of the more notable developments affecting taxpayers and their CPAs is in order. The following is a brief summary of some of the major developments to give a flavor of the types of issues addressed; a full list of the 40 most important developments — selected by David De Jong, CPA, LLM, a partner at Stein Sperling Bennett De Jong Driscoll in Rockville, Maryland — follows below.

The IRS is progressing on its plan to become more accessible to taxpayers and tax professionals, with improved or new online accounts, mobile-friendly forms, and a new platform for Forms 1099-K, Payment Card and Third Party Network Transactions, just in time for the first tax season with stricter requirements for filing those, Commissioner Danny Werfel said in a call with reporters.

Thanks to Inflation Reduction Act resources, the IRS delivered dramatically improved service in filing season 2023. IRS achieved an 87% level of service. Through the end of filing season, IRS answered 3 million more calls, cut phone wait times to three minutes from 28 minutes, served 140,000 more taxpayers in-person, digitized 80 times more returns than in 2022 through the adoption of new scanning technology, cleared the backlog of unprocessed 2022 individual tax returns with no errors, launched two new digital tools, and enabled a new direct-deposit refund option for taxpayers with amended returns.