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Issue Number:  2019-12

Inside This Issue

1. IRS provides tax year 2020 annual inflation adjustments for tax provisions including standard deductions
2. Cost-of-living adjustments for pension plans and other retirement items for 2020 now available
3. IRS launches Taxpayer First Act webpage, email
4. Security Summit's 4th National Tax Security Awareness Week slated for December 2 – 6
5. Redesigned Backup Withholding CP2100 and CP2100A Notices – More information to payers
6. Publication 3112 updated
7. 2020 Form W-4 webinar archived for viewing any time
8. New and draft forms, instructions and publications on IRS.gov

The Internal Revenue Service announced tax year 2020 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes. The tax year 2020 adjustments generally are used on tax returns filed in 2021.

The items for tax year 2020 of greatest interest to most taxpayers include the following standard deduction dollar amounts:

• Single and married filing separately – $12,400
• Married filing jointly – $24,800
• Head of household – 18,650

Revenue Procedure 2019-44 (pdf) provides details about these annual adjustments.

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The IRS announced cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2020.
 
Highlights for 2020 include increases to:

• Contribution limit for employees participating in 401(k), 403(b), most 457 plans and the federal government's Thrift Savings Plan is $19,500
• The catch-up contribution limit for employees aged 50 and over who participate in these plans is $6,500
• The limitation regarding SIMPLE retirement accounts for 2020 is $13,500

Also, the income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver's Credit all increased for 2020.

Notice 2019-59 (pdf) provides detailed cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2020.

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The Taxpayer First Act of 2019 aims to broadly redesign the Internal Revenue Service. Generally, the legislation aims to expand and strengthen taxpayer rights and to reform the IRS into a more taxpayer friendly agency by requiring it to develop a comprehensive customer service strategy, modernize its technology and enhance its cyber security.

We want to hear from all stakeholders: taxpayers, tax and payroll professionals, tax software companies, advisory groups, financial industry stakeholders and other partners inside and outside the tax administration universe.

TFA leaders have been meeting with a variety of organizations to receive feedback on these provisions. Those interested in providing feedback on reorganization or other components of TFA are encouraged to share written information with their regular IRS contact point, or send it to TFAO@irs.gov, and it will be shared with the TFA office.

For more information about TFA, visit www.irs.gov/taxpayer-first-act.

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The IRS, state tax agencies and the nation’s tax industry announced that the 4th Annual National Tax Security Awareness Week will take place December 2 through 6, 2019.

December's event promotes basic security guidance for those most at-risk: individual taxpayers, business taxpayers, tax and payroll professionals.

This year’s awareness week will feature a:

• Week-long series of educational materials to help protect taxpayers and payroll pros against identity theft
• Special partner toolkit featuring ready-to-use communication products to raise awareness among clients, customers and employees
• Special social media effort on Twitter and Instagram with @IRSnews and the hashtag #TaxSecurity
  • Twitter chat on December 5 using the hashtag

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CP2100 and CP2100A Notices have a new look. The redesigned notices provide more information to payers who file certain information returns about:

• Types of taxpayer identification numbers issued
• Which “B” notice to use
• How and when to send “B” notices
• How to validate TINs
• When to stop backup withholding
• What to do after receiving a notice

The IRS sends out these notices twice a year, in October and the following April. The notices let payers know they may be responsible for backup withholding when TINs are missing from IRS records or have incorrect name/TIN combinations. The notice will list payees identified as having TIN issues. The payers should compare the notice with their account records and take appropriate action. Find more information is in Publication 1281, Backup Withholding for Missing and Incorrect Name/TIN(s) (pdf).

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Publication 3112, IRS E-file Application and Participation (pdf) is updated. The current October 2019 version supersedes all others.

This pub provides important information for tax and payroll professionals, and Authorized IRS e-file Providers regarding applying for and participating in IRS e-file.

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The IRS’ Understanding the 2020 Form W-4 and How to Use it to Calculate Withholding webinar is now posted to the IRS video portal.

This hour-long webinar covers:

• Reasons for a new design of the W-4
• Explanation of Steps 1-5 of the 2020 Form W-4
• Explanation of who must use it
• Illustration of how to complete two of the five worksheets from
  Publication 15-T
• Recorded Q&A session from the live event

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New forms:

• Form 944, Employer's Annual Federal Tax Return
• Form 944 (SP), Declaracion Federal ANUAL de Impuestos del Patrono o Empleador
• Form 945, Annual Return of Withheld Federal Income Tax
• Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding

New instruction:

• Inst 943, Instructions for Form 943, Employer's Annual Federal Tax Return for Agricultural Employees
• Inst 944, Instructions for Form 944, Employer's Annual Federal Tax Return
• Inst 945, Instructions for Form 945, Annual Return of Withheld Federal Income Tax

New Publications:

• Pub 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G
• Pub 1693, SSA/IRS Reporter Newsletter
• Pub 5165, Guide for Electronically Filing Affordable Care Act (ACA) Information Returns for Software Developers and Transmitters

Draft Forms:

• Form SS-4, Application for Employer Identification Number
• Form W-2AS, American Samoa Wage and Tax Statement (Info Copy Only)
• Form W-2GU, Guam Wage and Tax Statement (Info Copy Only)
• Form W-2VI, U.S. Virgin Islands Wage and Tax Statement (Info Copy Only)

Draft Publications:

• Pub 15-T, Federal Income Tax Withholding Methods
• Pub 907, Tax Highlights for Persons with Disabilities

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