Issue Number: 2020-01
Inside This Issue
- New Free File Agreement Signed to Strengthen Program, Help Taxpayers
- IRS Issues Standard Mileage Rates for 2020
- Source of Income from Certain Sales of Personal Property
- Recent Legislation Requires Tax-exempt Organizations to e-File Forms
- Technical Guidance
1. New Free File Agreement Signed to Strengthen Program, Help Taxpayers
The IRS announced an agreement with Free File, Inc. (FFI) designed to bring more clarity for taxpayers choosing to use free online software during the 2020 filing season. The agreement will help make the Free File program more taxpayer-friendly while strengthening consumer protections in several key areas.
"This updated agreement is part of a larger effort by the IRS to help taxpayers meet their tax obligations," said IRS Commissioner Chuck Rettig. "It continues to show the partnership we enjoy with the Free File partners and the commitment we both share in helping taxpayers since the program's creation 18 years ago. The improved process will make Free File stronger and give taxpayers another reason to consider this valuable software option."
Highlights of the new agreement reached on the Free File program include several features designed to make the program more taxpayer friendly.
"These steps will help further protect taxpayers and make important improvements to the program," Rettig continued. "The IRS is committed to improving the Free File program and providing a great option for taxpayers to consider when preparing their taxes."
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2. IRS Issues Standard Mileage Rates for 2020
The IRS issued the 2020 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning on Jan. 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 57.5 cents per mile driven for business use, down one half of a cent from the rate for 2019
- 17 cents per mile driven for medical or moving purposes, down three cents from the rate for 2019
- 14 cents per mile driven in service of charitable organizations.
Review Notice 2020-05 for more information.
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3. Source of Income from Certain Sales of Personal Property
The Department of the Treasury and the Internal Revenue Service issued proposed regulations on Special Rules for Determining Source. Gains, profits and income from the sale or exchange of inventory property that is produced in whole or in part within the United States and sold outside of the United States (or vice versa) is allocated and apportioned between U.S. and foreign sources solely on the basis of the production activities. (Code Sec. 863(b), as amended by the Tax Cuts and Jobs Act). Under the tax reform rule, if income is produced entirely in the United States, it is U.S. source income. Income produced entirely in a foreign country is foreign source income. Inventory produced in both the United States and a foreign country is mixed-source income.
Updates on this and other TCJA provisions can be found on the Tax Reform page of IRS.gov.
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4. Recent Legislation Requires Tax-exempt Organizations to e-File Forms
The Taxpayer First Act, enacted July 1, requires tax-exempt organizations to electronically file information returns and related forms. The new law affects tax-exempt organizations in tax years beginning after July 1, 2019.
The following IRS forms are included in the mandate:
- Form 990, Return of Organization Exempt from Income Tax.
- Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation.
- Form 8872, Political Organization Report of Contributions and Expenditures.
- Form 1065, U.S. Return of Partnership Income (if filed by a Section 501(d) apostolic organization).
Those who previously filed paper forms will receive a letter from the IRS informing them of the change. Filing deadlines vary by form type. The IRS will postpone the required e-filing of Form 990-EZ for one year, while optional e-filing continues to be available. Although Forms 990-T and 4720 will come under the e-filing requirement next year, the IRS will continue to accept these forms on paper pending conversion to electronic format.
For more information on the Taxpayer First Act, visit IRS.gov.
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5. Technical Guidance
Notice 2020-04 provides an additional extension of the temporary dyed fuel relief initially provided in section 3.02 of Notice 2017-30, 2017-21, I.R.B. 1248, then extended through December 31, 2018, by section 3 of Notice 2018-39, 2018-20, I.R.B. 582, and further extended through December 31, 2019, by section 3 of Notice 2019-04, 2019-02 I.R.B. 282.
Revenue Ruling 2020-02 provides the covered compensation tables for 2020.
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