To all the Prodessional Tax Software Professionals

IRS Announces Interest Payments to 13.9 Million Refund Recipients

Receiving a tax refund might be the only thing people like about filing their return, and it looks like some taxpayers are about to get just a little more money from the Department of Treasury.

The Internal Revenue Service today announced that it “will send interest payments to about 13.9 million individual taxpayers who timely filed their 2019 federal income tax returns and are receiving refunds.” As with seemingly everything else in 2020, this is a direct result of the coronavirus pandemic.

Why are 13.9 million taxpayers receiving a tax refund interest payment?

Federal law requires the IRS issue interest payments to taxpayers who file on time after a disaster postpones the filing deadline. In this case, the obvious culprit is COVID-19 pushing Tax Day back to July 15, 2020. But before people start exchanging socially distanced air high fives, there are a few things they’ll need to know:

  • Interest payments will not be issued to businesses nor taxpayers who received their refund before April 15
  • The interest payment will in most cases not arrive at the same time as the refund payment
  • The average interest payment is $18
  • The interest payment is taxable if it’s $10 or more

The longer it takes for a timely filed tax refund to arrive after the original deadline (April 15, 2020), the more interest the IRS will owe. And since the interest is calculated using the adjusted quarterly rate (compounded daily), that can sometimes result in using a blended rate for refunds that “span quarters.”

Here are the rates specifically cited by the IRS:

  • 5% for the second quarter
  • 3% for the third quarter

Interest payments affected by the blended rate will be calculated using “the number of days falling in each calendar quarter.” Perhaps making it a little easier to report a taxable interest payment, the IRS will send letters containing Form 1099-INT at the beginning of next year.

How are these tax refund interest payments being issued?

Taxpayers should generally expect to receive their tax refund interest payment the same way they received their tax refund: “In most cases, taxpayers who received their refund by direct deposit will have their interest payment direct deposited in the same account …. [and] everyone else will receive a check.”

As you well know, many people plan their finances based on the assumption that they will receive a tax refund every year. When everything feels like it’s up in the air, a little good news is welcome—even if it requires some paperwork.

Treasury, IRS provide tax relief to investors and businesses affected by COVID-19 in new markets tax credit transactions

IR-2020-120, June 12, 2020

WASHINGTON — The Treasury Department and the Internal Revenue Service today provided tax relief for certain taxpayers affected by the COVID-19 pandemic involved in new markets tax credit transactions.

The taxpayers receiving relief through today’s guidance are community development entities (CDEs) and qualified active low-income community businesses (QALICBs) investing and conducting businesses in low-income communities.

Notice 2020-49 (PDF) provides a CDE or QALICB with relief for certain specified time-sensitive acts that are due to be performed between April 1, 2020, and Dec. 31, 2020, in order to meet requirements under section 45D of the Internal Revenue Code and its regulations. A CDE or QALICB may perform these acts by Dec. 31, 2020. The additional time is provided for the following time-sensitive acts:

Making investments

If a CDE is due to invest cash received in a qualified low-income community investment (QLICI) on or after April 1, 2020, and before Dec. 31, 2020, that cash investment is treated as invested in a QLICI to the extent it is invested by Dec. 31, 2020.

Reinvestments

If a CDE is due to reinvest certain amounts of cash or payment in a QLICI on or after April 1, 2020, and before Dec. 31, 2020, the amounts are treated as continuously invested in a QLICI to the extent the amounts are so reinvested by Dec. 31, 2020.

Expending amounts for construction of real property

If a QALICB is due to expend the proceeds of a capital or equity investment or loan by a CDE for construction of real property on or after April 1, 2020, and before Dec. 31, 2020, such proceeds are treated as a reasonable amount of working capital of the QALICB if so expended by Dec. 31, 2020.

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

IRS provides guidance on employer leave-based donation programs that aid victims of the COVID-19 pandemic

IR-2020-119, June 11, 2020

WASHINGTON — The Internal Revenue Service today provided guidance for employers whose employees forgo sick, vacation or personal leave because of the COVID-19 pandemic.

Notice 2020-46 (PDF) provides that cash payments employers make to charitable organizations that provide relief to victims of the COVID-19 pandemic in exchange for sick, vacation or personal leave which their employees forgo will not be treated as compensation. Similarly, the employees will not be treated as receiving the value of the leave as income and cannot claim a deduction for the leave that they donated to their employer.

Employers, however, may deduct these cash payments as a business expense or as a charitable contribution deduction if the employer otherwise meets the respective requirements of either section.

Notice 2020-46 provides further details for employers with leave donation programs.

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

Recent tax law changes have extended or changed many expiring tax law provisions, including: 

  • Treatment of mortgage insurance premiums as qualified residence interest
  • Reduction in medical expense deduction floor
  • Deduction of qualified tuition and related expenses
  • Energy efficient homes credit
  • Employer credit for paid family and medical leave
  • Work opportunity credit
  • Special rule for determining earned income  
  • Repeal of maximum age for traditional IRA contributions
  • Increase in age for required beginning date for mandatory distributions
  • Expansion of section 529 plans
For a complete list of affected tax law provisions see the: 
Joint Committee on Taxation List of Expiring Tax Provisions 2020.

Where is your Stimulus Check

The IRS unveiled a new online tool to help non-filers register to receive an Economic Impact Payment (EIP): the “Non-Filers: Enter Payment Info Here” feature on IRS.gov. This new resource was quickly developed to help more qualifying Americans receive their payment, since the Treasury will begin sending EIPs next week.

While the IRS has repeatedly explained that the vast majority of taxpayers won’t have to do anything to receive an EIP, eligible non-filers who aren’t recipients of Social Security, Railroad Retirement, or Social Security Disability Insurance still need to provide some basic information to get the payment. In general, this includes:

  • Individual non-filers with an AGI less than $12,200
  • Married non-filers with a combined AGI of less than $24,400

The reason is that the IRS is currently required to use filing information from tax-year 2018 and 2019 returns and Forms SSA-1099 and RRB-1099 to determine whether filers qualify for an EIP and where it will be sent. The IRS simply doesn’t have up-to-date information for those who haven’t filed for more than a couple of years and aren’t receiving the government benefits mentioned above.

Luckily, the IRS says that using the “Non-Filers: Enter Payment Info Here” tool should be a straightforward affair: “First, visit IRS.gov, and look for ‘Non-Filers: Enter Payment Info Here.’ Then provide basic information including Social Security number, name, address, and dependents. The IRS will use this information to confirm eligibility and calculate and send an Economic Impact Payment.”  Filers who want to receive their payment via direct deposit will be able to choose that option while filling out their information.

The IRS is also launching the “Get My Payment” tool on April 17, which the agency says will “help everyone check on the status of their payments … including the date their payment is scheduled to be deposited into their bank account or mailed to them.” Those who had not previously supplied direct-deposit banking information will be able to use Get My Payment to do just that.

Additional EIP- and COVID-19-related updates will be available on the “Coronavirus Tax Relief and Economic Impact Payments” page on IRS.gov.

Economic Impact Payment Information Center

 
 

CARES Act – Payroll Protection Program Loan Amount and Estimated Forgiveness Calculator


Overview of Program: The CARES Act provides businesses with fewer than 500 employees, including sole proprietorships and non-profits, access to up to a $10 million loan through the ”Covered Period”, which runs from February 15, 2020 through June 30, 2020. The program includes a provision that allows these loans to be forgiven by the Small Business Administration (”SBA”). It is possible for the entire principal of the loan to be forgiven. Borrowers of this loan program will receive the loan without the need to pledge collateral or provide a personal guarantee.

  • Non-Filers: Enter Payment Info Here

 

Who should use Non-Filers: Enter Payment Info to provide additional information to receive the

Economic Impact Payment?

Eligible U.S. citizens or permanent residents who:

  • Had gross income that did not exceed $12,200 ($24,400 for married couples) for 2019
  • Were not otherwise required to file a federal income tax return for 2019, and didn’t plan to

You can provide the necessary information to the IRS easily and quickly for no fee through Non-Filers:

Enter Payment Info.   IRS will use this information to determine your eligibility and payment amount and send
you an Economic Impact Payment.  After providing this information you won’t need to take any additional action.

 

 

Who is eligible for the Economic Impact Payment?

U.S. citizens or resident aliens who:

  • Have a valid Social Security number,
  • Could not be claimed as a dependent of another taxpayer, and
  • Had adjusted gross income under certain limits.

Who will receive the Economic Impact Payment automatically without taking additional steps?

Most eligible U.S. taxpayers will automatically receive

their Economic Impact Payments including:

  • Individuals who filed a federal income tax for 2018 or 2019
  • Individuals who receive Social Security retirement, disability (SSDI), or survivor benefits
  • Individuals who receive Railroad Retirement benefits

Who should use Non-Filers: Enter Payment Info to provide additional information to receive the Economic Impact Payment?

Eligible U.S. citizens or permanent residents who:

  • Had gross income that did not exceed $12,200 ($24,400 for married couples) for 2019
  • Were not otherwise required to file a federal income tax return for 2019, and didn’t plan to

You can provide the necessary information to the IRS easily and quickly for no fee through Non-Filers: Enter Payment Info. We will use this information to determine your eligibility and payment amount and send you an Economic Impact Payment. After providing this information you won’t need to take any additional action.

Information You will Need to Provide

  • Full name, current mailing address and an email address
  • Date of birth and valid Social Security number
  • Bank account number, type and routing number, if you have one
  • Identity Protection Personal Identification Number (IP PIN) you received from the IRS earlier this year, if you have one
  • Driver’s license or state-issued ID, if you have one
  • For each qualifying child: name, Social Security number or Adoption Taxpayer Identification Number and their relationship to you or your spouse

 

What to Expect

Clicking “Non-Filers: Enter Payment Info Here” above will take you from the IRS site to Free File Fillable Forms, a certified IRS partner. This site is safe and secure.

Follow these steps in order to provide your information:

  • Create an account by providing your email address and phone number; and establishing a user ID and password.
  • You will be directed to a screen where you will input your filing status (Single or Married filing jointly) and personal information.
  • Note: Make sure you have a valid Social Security number for you (and your spouse if you were married at the end of 2019) unless you are filing “Married Filing Jointly” with a 2019 member of the military. Make sure you have a valid Social Security number or Adoption Taxpayer Identification Number for each dependent you want to claim for the Economic Impact Payment.
  • Check the “box” if someone can claim you as a dependent or your spouse as a dependent.
  • Complete your bank information (otherwise we will send you a check).
  • You will be directed to another screen where you will enter personal information to verify yourself. Simply follow the instructions. You will need your driver’s license (or state-issued ID) information. If you don’t have one, leave it blank.

You will receive an e-mail from Customer Service at Free File Fillable Forms that either acknowledges you have successfully submitted your information, or that tells you there is a problem and how to correct it. Free File Fillable forms will use the information to automatically complete a Form 1040 and transmit it to the IRS to compute and send you a payment.

February 14th

IRS urges tax professionals, taxpayers to protect tax software accounts with multi-factor authentication

The IRS and its Security Summit partners today called on tax professionals and taxpayers to use the free, multi-factor authentication feature being offered on tax preparation software products. Already, nearly two dozen tax practitioner firms have reported data thefts to the IRS this year. Use of the multi-factor authentication feature is a free and easy way to protect clients and practitioners’ offices from data thefts. Tax software providers also offer free multi-factor authentication protections on their Do-It-Yourself products for taxpayers. “The IRS, state tax agencies and the private-sector tax industry have worked together as the Security Summit to make sure the multi-factor authentication feature is available to practitioners and taxpayers alike,” said Kenneth Corbin, Commissioner of the IRS Wage and Investment division. “The multi-factor authentication feature is simple to set up and easy to use. Using it may just save you from the financial pain and frustration of identity theft.” Multi-factor authentication means returning users must enter their username/password credentials plus another data point that only they know, such as a security code sent to their mobile phone. For example, thieves may steal passwords but will be unable to access the software accounts without the mobile phones to receive the security codes. Multi-factor authentication protections are now commonly offered by financial institutions, email providers and social media platforms to protect online accounts. Users should always opt for multi-factor authentication when it is offered but especially with tax software products because of the sensitive data held in the software or online accounts. The IRS reminded tax professionals to beware of phishing scams that are commonly used by thieves to gain control of their computers. Thieves may claim to be a potential client, a cloud storage provider, a tax software provider or even the IRS in their effort to trick tax professionals to download attachments or open links. These scams often have an urgent message, implying there are issues with the tax professionals’ accounts that need immediate attention. The IRS also reminds tax professionals that they can track the number of returns filed with their Electronic Filing Identification Number (EFIN) on a weekly basis. This helps ensure EFINS are not being misused. Simply go to e-Services, access the EFIN application and select EFIN status to see a weekly total of returns filed using the EFIN. If there are excessive returns, contact the IRS immediately.

IRS: WARNS Avoid the rush after Presidents Day holiday; Use IRS’ online tools to get help

With a surge of tax returns expected the two weeks following the Feb. 17 Presidents Day holiday, the Internal Revenue Service is offering taxpayers several tips and various time-saving resources to get them the help they need quickly and easily. To help avoid this period of high telephone demand, the IRS encourages taxpayers and tax preparers to use online resources available at IRS.gov. And when it comes time to file, taxpayers are encouraged to file electronically and choose direct deposit for faster refunds. Filing electronically reduces tax return errors as the tax software does the calculations, flags common errors and prompts taxpayers for missing information. Here are a few featured tips to avoid the rush.
  • Use IRS.gov to track refunds. The IRS issues more than nine out of 10 refunds in less than 21 days. IRS customer service representatives cannot answer refund questions until it has been 21 days or more since the taxpayer filed electronically, or six weeks since they mailed a paper return. But taxpayers can track their refund anytime by using the Where’s My Refund? tool on IRS.gov and the IRS2Go app. Taxpayers can also call the IRS refund hotline at 800-829-1954.  
  • Taxpayers claiming the Earned Income Tax Credit or the Additional Child Tax Credit can use the “Where’s My Refund?” tool to track refunds too. By law, the IRS cannot release refunds that include EITC or the ACTC before February 15. “Where’s My Refund?” on IRS.gov and the IRS2Go app will be updated with projected deposit dates for most early EITC/ACTC refund filers by February 22. IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by the first week of March, if they chose direct deposit and there are no other issues with their tax return.  
  • Use IRS.gov to find answers to tax questions. IRS offers a variety of online tools to help taxpayers answer common tax questions. For example, taxpayers can search the Interactive Tax AssistantTax TopicsFrequently Asked Questions, and Tax Trails to get faster answers.  
  • Turn to a trusted tax professional. To find more information about choosing a tax return preparer, including understanding the differences in credentials and qualifications, visit www.irs.gov/chooseataxpro.  
  • Use digital payment options if additional tax is owed. Some taxpayers may receive a smaller refund or even owe an unexpected tax bill when they file their 2019 tax return particularly if they didn’t do a Paycheck Checkup in 2019. Taxpayers should use the IRS Tax Withholding Estimator to make sure they are withholding enough tax in 2020.  
  • Make an appointment before visiting an IRS Taxpayer Assistance Centers. Anyone who needs face-to-face service should make an appointment before showing up. Most TAC visits can be avoided by using online tools available on IRS.gov.  
  • Call the employer first for that missing Form W-2. Those who have not received a Form W-2, Wage and Tax Statement, from one or more employers should first contact the issuer to inform them of the missing form. Those who do not get a response must still file on time and may need to use Form 4852, Substitute for Form W-2 , Wage and Tax Statement (PDF), or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans and IRA’s Insurance Contracts (PDF).

Feb. 20 IRS webinar focuses on gig economy

The Internal Revenue Service is holding a free webinar designed to help gig workers, employers, contractors and other businesses understand their tax reporting responsibilities. This free 60-minute webinar will take place on Thursday, February 20 at 2 p.m. Eastern Time. It is open to gig workers, businesses, tax professionals and anyone else interested in the tax rules that affect th