e-News for Tax Professionals 2020-10

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Issue Number:  2020-10

Inside This Issue

1. IRS increasing focus on taxpayers who have not filed tax returns
2. IRS extends April 15 and other upcoming deadlines, provides other tax relief for victims of Tennessee tornadoes
3. Employers: Should you file Form 944 or 941?
4. Two updated IRA publications, other online resources for retirement planning
5. News from the Justice Department’s Tax Division
6. Technical Guidance

As part of a larger effort to ensure both tax compliance and fairness, the IRS has increased its focus on taxpayers who have unfiled tax returns. The IRS is using data analytics, research and new compliance strategies, including personal visits, to reach taxpayers and tax return preparers who have not filed federal tax returns.

The goal of these strategies is to bring delinquent taxpayers into compliance with their filing and payment obligations and promote future tax compliance.

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Victims of this week's tornadoes and severe storms in parts of Tennessee, including Nashville, will have until July 15, 2020, to file various individual and business tax returns and make tax payments. IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance, which currently this includes Davidson, Putnam and Wilson counties. Taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time. The tax relief is part of a coordinated federal response to the damage caused by these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

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Employers currently required to file Form 944, Employer's Annual Federal Tax Return, but who have estimated tax liability of more than $1,000 may be able to switch their filing requirement to Form 941, Employer's Quarterly Federal Tax Return.

Likewise, employers required to file quarterly Form 941 but who have estimated tax liability of $1,000 or less for the tax year may be eligible to switch to the annual Form 944.

To request a change, send a written request postmarked by March 15 or call the IRS at 1-800-829-0115 by April 1. The IRS will send a written notice if it changes the filing requirement.

For more information visit IRS.gov.

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The IRS has updated two publications designed to help anyone making IRA contributions or receiving IRA distributions for tax year 2019 or considering making retirement donations before April 15, 2020. The 2019 editions of Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs) and Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), address the unique features of both Roth and traditional IRAs.

Most people who work can make contributions to a traditional or Roth IRA. Contributions to a traditional IRA are usually tax deductible and distributions are generally taxable. On the other hand, contributions to a Roth IRA are not tax deductible, but qualified distributions are tax-free. Taxpayers can make contributions until April 15, and count them on their 2019 tax returns.

For details, visit IRS.gov/RMD or see fact sheet FS-2020-4, also available on IRS.gov.

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A federal jury in Philadelphia found Nvahbulai Quisiah guilty of conspiracy to defraud the United States, preparing false client tax returns, wire fraud, and identity theft. According to the evidence presented at trial, Quisiah owned and operated First Premier Tax Service, a tax return preparation business in Philadelphia. From 2010 through 2017, Quisiah falsified clients’ tax returns by claiming false dependents, itemized deductions and business losses to fraudulently increase the refunds paid by the IRS. At sentencing, Quisiah faces 20 years in prison for each wire fraud count, a maximum of five years in prison for conspiracy, three years in prison for aiding and assisting in preparing tax returns, and a mandatory minimum sentence of two years in prison for aggravated identity theft. He also faces a period of supervised release, restitution, and monetary penalties.

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Revenue Procedure 2020-17 exempts from foreign trust information reporting requirements certain U.S. individuals’ transactions with, and ownership of, certain tax-favored foreign trusts that are established and operated exclusively or almost exclusively to provide pension or retirement benefits, or to provide medical, disability, or educational benefits.

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