Issue Number: 2020-14
Inside This Issue
- Economic Impact Payments: More information; graphics available to share with clients, others
- Scam alert: Schemes related to coronavirus and Economic Impact Payments
- Employee Retention Credit available for many businesses hurt by COVID-19
- Follow IRS on social media for updates on COVID-19
- IRS extends deadline for 2021 Taxpayer Advocacy Panel applications
- Education tax benefits may help your clients with college costs
- Technical Guidance
1. Economic Impact Payments: More information; graphics available to share with clients, others
The Treasury Department and the IRS announced this week that distribution of Economic Impact Payments will begin in the next three weeks and will be distributed automatically, with no action required for most people. More information on these payments, as well as other relief pertaining to COVID-19, will be posted to IRS.gov/coronavirus as it becomes available.
Share information: In addition, the IRS is creating special informational graphics about the Economic Impact Payments that can be shared with your clients or posted on your website. These graphics include details about who qualifies for the $1,200 payments. The first graphic is available at IRS.gov/coronavirus and additional ones will be available soon. Please share these to help taxpayers understand important details about these payments.
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2. Scam alert: Schemes related to coronavirus and Economic Impact Payments
The IRS is urging everyone to be on the lookout for calls and email phishing attempts about the coronavirus, or COVID-19. These contacts can lead to tax-related fraud and identity theft. Taxpayers should watch not only for emails but text messages, websites and social media attempts that request money or personal information.
"History has shown that criminals take every opportunity to perpetrate a fraud on unsuspecting victims, especially when a group of people is vulnerable or in a state of need," said IRS Criminal Investigation Chief Don Fort. "While you are waiting to hear about your Economic Impact Payment, criminals are working hard to trick you into getting their hands on it. The IRS Criminal Investigation Division is working hard to find these scammers and shut them down, but in the meantime, we ask people to remain vigilant."
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3. Employee Retention Credit available for many businesses hurt by COVID-19
The Treasury Department and the IRS this week launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payrolls during the pandemic. The refundable tax credit is 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
Updates on the implementation of this credit, Frequently Asked Questions on Tax Credits for Required Paid Leave and other information can be found on the Coronavirus page of IRS.gov.
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4. Follow IRS on social media for updates on COVID-19
The IRS reminded taxpayers, businesses, tax professionals and others to follow the agency’s official social media accounts and email subscription lists, such as e-News for Tax Professionals, to get urgent information on COVID-19 and economic impact payments. These platforms provide the latest alerts and information on various tax topics to include emerging scams and are especially important during the COVID-19 pandemic. Recent changes to filing and payment deadlines, coupled with new business credits and economic impact payments make these free and reliable communications crucial for anyone wanting the latest information.
Visit IRS.gov to review all of the IRS social media platforms and the IRS e-News Subscription service.
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5. IRS extends deadline for 2021 Taxpayer Advocacy Panel applications
The IRS has extended the deadline for members of the public to apply for membership on the Taxpayer Advocacy Panel for 2021. Individuals may submit a TAP application online at www.improveirs.org through April 20, 2020.
Additionally, the IRS recommended, and the Department of the Treasury has approved, the selection of 33 new members to serve on the TAP for 2020. The new TAP members will join 32 returning members to round out the panel of 65 volunteers for 2020.
The TAP is a federal advisory committee charged with listening to taxpayers, identifying issues, and making suggestions to improve IRS service and customer satisfaction.
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6. Education tax benefits may help your clients with college costs
Please remind your clients that if they are paying higher education costs for themselves, a spouse or a dependent, they may be eligible to save some money with education tax credits or the Tuition and Fees Deduction. Here are some facts about tax credits for higher education:
The American Opportunity Tax Credit (AOTC) is:
- Worth a maximum benefit up to $2,500 per eligible student
- Only for the first four years at an eligible educational or vocational institution
- For students pursuing a degree or other recognized education credential
- Partially refundable. Taxpayers can potentially get up to $1,000 back
The Lifetime Learning Credit (LLC) is:
- Worth up to $2,000 per tax return, per year, no matter how many students qualify
- Available for all years of postsecondary education and for courses to acquire or improve job skills
- Available for an unlimited number of tax years
Remember, to claim the AOTC or LLC, taxpayers must use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits). Additionally, if they claim the AOTC, the law requires taxpayers to include the school’s Employer Identification Number on this form.
If they do not qualify for the AOTC or LLC, your clients may still benefit from the Tuition and Fees Deduction:
- They may be able to deduct qualified education expenses paid during the year for themselves, their spouse, or their dependent(s). The qualified expenses must be for higher education.
- Taxpayers cannot claim this deduction if their filing status is married filing separately or if another person can claim them as a dependent on their tax return.
- The Tuition and Fees Deduction can reduce the amount of their income subject to tax by up to $4,000. This means they can claim this deduction even if they don't itemize deductions on Schedule A (Form 1040).
To be eligible to claim the Tuition and Fees Deduction, American Opportunity Tax Credit or Lifetime Learning Credit, the law requires taxpayers (or their dependents) to have received a Form 1098-T,Tuition Statement, from an eligible educational institution. There are exceptions for some students.
For a complete explanation of all education benefits, read IRS Publication 970, Tax Benefits for Education.
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7. Technical Guidance
Notice 2020-22 provides a waiver of additions to tax for failure to make a deposit of taxes for employers required to pay qualified sick leave wages and qualified family leave wages mandated by the Families First Coronavirus Response Act (Families First Act) and qualified health plan expenses allocable to these wages. This notice also provides a waiver of additions to tax for failure to make a deposit of taxes for certain employers subject to a full or partial closure order due to the coronavirus disease 2019 (COVID-19) or experiencing a statutorily specified decline in business under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This notice applies to deposits of Employment Taxes (including withheld income taxes, taxes under the Federal Insurance Contributions Act and taxes under the Railroad Retirement Act) reduced in anticipation of the credits with respect to qualified sick leave wages and qualified family leave wages paid with respect to the period beginning April 1, 2020, and ending Dec. 31, 2020. This notice applies with respect to deposits of Employment Taxes reduced in anticipation of the credits with respect to qualified wages paid with respect to the period beginning on March 13, 2020, and ending December 31, 2020. This relief ensures that such employers may pay qualified sick leave wages and qualified family leave wages required by the Families First Act or qualified wages under the CARES Act using Employment Taxes that would otherwise be required to be deposited without incurring a failure to deposit penalty.
Announcement 2020-04 provides that all hearings on notices of proposed rulemaking will be held telephonically and encourages submission of public comments via regulations.gov.
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