IRS News Roundup for the Week of Jan. 22, 2024
With the tax season starting in three days, the IRS has been busy announcing tax law updates with several press release hitting their online news feed this week. Here's a quick roundup of the week's tax topics affecting tax pros and their clients.
Tax Relief Announced for CT Taxpayers Impacted by Jan. 10 Storms
Jan. 22 - The Internal Revenue Service (IRS) has announced tax relief for individuals and businesses in parts of Connecticut affected by severe storms, flooding, and a potential dam breach that started on January 10. Affected taxpayers in designated areas, including New London County, Mohegan Tribal Nation, and Mashantucket Pequot Tribal Nation, now have until June 17, 2024, to file various federal individual and business tax returns and make payments.
Cryptocurrency and Digital Asset Income Reporting
Jan. 22 - The Internal Revenue Service (IRS) has reminded taxpayers to answer a digital asset question and report all digital asset-related income when filing their 2023 federal income tax return, similar to the requirement for the 2022 tax returns.
The question, found at the top of various tax forms including 1040, 1040-SR, and 1040-NR, has been revised with updated wording. The question also applies to additional forms like 1041, 1065, 1120, and 1120-S.
Taxpayers must check either "Yes" or "No" to the question, regardless of whether they engaged in digital asset transactions during 2023. Those answering "Yes" must report all income related to digital asset transactions on the appropriate forms. The IRS guides reporting requirements for various digital assets, including virtual currency, stablecoins, and non-fungible tokens.
IRS Introduces Simple Notice Initiative
Jan. 23 - The Internal Revenue Service (IRS) has introduced the Simple Notice Initiative to simplify and clarify the approximately 170 million letters sent annually to taxpayers. As part of the broader IRS transformation with funding from the Inflation Reduction Act, the initiative will begin by reviewing and redesigning the most common notices sent to individual taxpayers. The focus on simplification aims to make the letters clearer, reducing confusion for taxpayers and saving time for both taxpayers and IRS staff.
Special Relief for Some Maryland Prepaid College Trust Accounts
Jan. 25 - The Department of the Treasury and the Internal Revenue Service have issued Notice 2024-23 to provide special relief for taxpayers affected by recent system issues involving the Maryland Prepaid College Trust. Under this notice, the IRS will not enforce the usual 12-month limitation for tax-free rollovers between qualified tuition programs if certain criteria are met.
Work Continues on Employee Retention Credit
Jan. 25 - The Internal Revenue Service (IRS) is urging businesses to review their eligibility for the Employee Retention Credit (ERC) as part of ongoing efforts to increase compliance and protect against fraud. The agency is conducting educational sessions for tax professionals to ensure they have the latest information about ERC claims and understand eligibility criteria.
The IRS has been working to address concerns about aggressive marketing around the ERC, with a moratorium on processing new claims announced in September. Businesses that claimed the credit in error are encouraged to consider the Voluntary Disclosure Program, open until March 22, 2024, to avoid penalties and interest on incorrect claims. The IRS is also offering a withdrawal program for pending ERC claims to help businesses rectify eligibility concerns and avoid repayment issues.
EITC Awareness Day
Jan. 26 - The Internal Revenue Service (IRS) has launched the annual Earned Income Tax Credit (EITC) Awareness Day outreach campaign to assist low-to-moderate income working Americans eligible for the EITC. The campaign aims to raise awareness about the valuable tax credit and encourage eligible individuals to claim it.
Approximately 23 million workers and families received about $57 billion in EITC for tax year 2022, with an average amount of $2,541. The IRS estimates that about one in five eligible taxpayers doesn't claim the credit, underscoring the importance of the annual EITC Awareness Day outreach campaign.
Click here to see who is eligible to claim the EITC, filing options, and when to expect the refunds.
Free IRS Webinar on Jan. 30 on How to Deal With Delayed Notices from Pandemic
Jan. 26 - The Internal Revenue Service will hold a free webinar, designed primarily for tax professionals whose clients were affected by the delayed notices during the COVID pandemic. The webinar will take place on Tuesday, Jan. 30, at 2 p.m. ET.
It will reflect last month's announcement that in general, the IRS will restart collection notices reminding taxpayers of their balance due this year and provide penalty relief on millions of tax returns.
During this free webinar the IRS will discuss the restart of collection notices and letters, including:
Special reminder letter
LT38 - Reminder
Notice Resumption
Changes to typical sequence of automated notices
Gradual approach to sending notices during filing season
Explain penalty relief for tax years 2020 and 2021
Share helpful IRS resources to resolve tax debt
Plus, the IRS will host a live question and answer session
Certificates of completion are being offered. Tax professionals earn up to one continuing education (CE) credit in the category federal tax. Closed captioning will be offered.
To register for the webinar, visit the Internal Revenue Service webinar website.
Disclaimer: This article is for informational and educational purposes only and does not constitute legal tax advice. Advanced Tax Solutions is not liable or responsible for any damages resulting from or related to your use of this information. It is your responsibility to refer to official IRS documentation for information regarding any tax laws or tax information shown here.
