e-News for Tax Professionals 2021-02
Internal Revenue Service (IRS) sent this bulletin at 01/15/2021 05:19 PM EST
 |
|||
|
|||
Useful Links:Stakeholders Partners' Training and Upcoming EventsSeminars, Workshops, Conferences, and Other Practitioner Activities By State:Alabama Kentucky North Dakota |
Issue Number: 2021-02Inside This Issue
1. 2021 tax filing season begins Feb. 12; IRS outlines steps to speed refunds during pandemic The 2021 tax season will start on Friday, Feb. 12, 2021, when the IRS will begin accepting and processing 2020 tax year returns. The Feb. 12 start date for individual tax return filers allows the IRS time to do additional programming and testing of IRS systems following the Dec. 27 tax law changes that provided a second round of Economic Impact Payments and other benefits. The additional programming work is critical to ensuring IRS systems run smoothly. These changes ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 tax return. “Planning for the nation’s filing season process is a massive undertaking, and IRS teams have been working non-stop to prepare for this as well as delivering Economic Impact Payments in record time,” said IRS Commissioner Chuck Rettig. “Given the pandemic, this is one of the nation’s most important filing seasons ever. This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible.” 2. Last-minute changes to tax laws included in IRS forms and instructions The IRS assured tax professionals that updates to key federal tax forms and instructions are complete and will be available when Americans begin filing their tax returns. IRS has incorporated recent changes to the tax laws into Form 1040 and Form 1040-SR and instructions, and shared the updates with its partners who develop the software used by individuals and tax professionals to prepare and file their returns. 3. IRS publishes Taxpayer First Act Report to Congress After more than a year of research and feedback, the IRS submitted the Taxpayer First Act Report to Congress to Congress this week and released it to the public. The Taxpayer First Act, signed into law in July 2019, was designed to improve service to taxpayers and tax professionals and to ensure the IRS continues to enforce the tax law in a fair and impartial manner. The report includes recommendations from the tax professional community, and the IRS will continue conversations with key stakeholders and congressional committees to secure funding and begin to work toward implementation of these recommendations over the next several years. The success of the Taxpayer Experience Strategy, Training Strategy and Organizational Redesign will make service improvements possible for taxpayers, tax professionals, small businesses, payroll tax professionals and many others. 4. A Closer Look: Maximizing the Earned Income Tax Credit The IRS published its latest executive column, “A Closer Look,” featuring Sunita Lough, Deputy Commissioner for Services and Enforcement. Lough addressed the Earned Income Tax Credit, or EITC. “EITC has been benefitting low- and moderate-income workers for 46 years… We estimate that approximately 20% of eligible taxpayers do not claim the EITC. We want everyone who is eligible for the EITC to claim it – after all, it’s your money,” said Lough. The column is also available in Spanish here. 5. Help your clients find out if they qualify for EITC The Earned Income Tax Credit (EITC) is a financial boost for families with low- or moderate- incomes. EITC can lower a taxpayer’s taxes, and even result in a refund. The amount of EITC varies based on income, filing status and family size. This year, your client may elect to use their 2019 earned income to figure their 2020 EITC or ACTC or both if their 2019 earned income is more than their 2020 earned income. For details, see the instructions for Form 1040. As a reminder, to qualify, your clients must have earned income and adjusted gross income within certain limits and meet certain basic rules. 6. TAS Releases 2020 Annual Report to Congress National Taxpayer Advocate Erin M. Collins released the 2020 Annual Report to Congress. This year, the report focuses on the unprecedented challenges taxpayers faced in filing their tax returns and receiving refunds and stimulus payments during a year consumed by the COVID-19 pandemic. The report also identifies and discusses insufficient employee hiring and retention, limited functionality of online taxpayer accounts and antiquated information technology as some of the Most Serious Issues facing taxpayers and tax professionals. Also included in the report is the 2021 Purple Book, which proposes 66 legislative recommendations for consideration by Congress, the most litigated issues from the prior year, and much more. 7. IRS Advisory Committees: ETAAC seeking applications; IRSAC selects new members for 2021 The IRS is seeking qualified applicants for nomination to the Electronic Tax Administration Advisory Committee. The ETAAC provides an organized public forum for discussion of electronic tax administration issues. Approved ETAAC applicants will serve three-year terms beginning in September 2021. Applications will be accepted through March 1, 2021. Questions about the ETAAC and the application process can be e-mailed to publicliaison@irs.gov. Additionally, the IRS announced the appointment of 13 new members to the Internal Revenue Service Advisory Council. The IRSAC is an organized public forum for IRS officials and representatives of the public to discuss various issues in tax administration. The council provides the IRS commissioner with relevant feedback, observations and recommendations. It will submit its annual report to the agency at a public meeting in November 2021. For more information, please visit the IRSAC overview page on IRS.gov. 8. IRS Free File available; claim Recovery Rebate Credit and other tax credits IRS Free File launched this week, giving individuals an early opportunity to claim credits like the Recovery Rebate Credit and other deductions. Leading tax software providers make their online products available for free as part of a 19-year partnership with the IRS, which include nine products in English and two in Spanish. 9. All taxpayers now eligible for Identity Protection PINs The IRS expanded the Identity Protection PIN Opt-In Program to all taxpayers who can verify their identities. The Identity Protection PIN (IP PIN) is a six-digit code known only to the taxpayer and to the IRS. It helps prevent identity thieves from filing fraudulent tax returns using a taxpayers' personally identifiable information. "This is a way to, in essence, lock your tax account, and the IP PIN serves as the key to opening that account," said IRS Commissioner Chuck Rettig. "Electronic returns that do not contain the correct IP PIN will be rejected, and paper returns will go through additional scrutiny for fraud." 10. Report Abusive Tax Promotions and/or Preparers The IRS requests assistance from the tax professional community in identifying promoters of “too good to be true” abusive tax scams and unscrupulous tax preparers using illegal scams to avoid paying taxes. Tax professionals should be careful to protect their clients from tax scams. Those who do take part in scams could face owing more taxes and substantial penalties and interest. Common abusive tax scams include falsifying income, inflating home-based business deductions, trust and offshore schemes. To report promoters of these scheme types or any other types you are aware of, use the Report Suspected Abusive Tax Promotions or Preparers form to make a referral to the IRS. Learn more at www.irs.gov/scams. 11. Amended Tax Relief for Louisiana Disaster Victims Victims of Hurricane Laura that began Aug. 22, 2020, who reside or have businesses in Richland Parish, Louisiana, now qualify for tax relief from the IRS. Visit the IRS Disaster Relief page for more information. 12. News from the Justice Department’s Tax Division Seven Charlotte, N.C., tax return preparers pleaded guilty to conspiracy to defraud the United States by preparing and filing false tax returns. Joseph Octave and Vonyeda Carson pleaded guilty on Jan. 12, 2021, while Melissa Greene, Natisha Holloman, Kimberly Joline, Whitney Vargas-Medrano and Wendia Courtois pleaded guilty earlier in 2020. In addition to the conspiracy charge, Octave pleaded guilty to one count of aiding and assisting in the filing of false tax returns. According to court documents and statements made in court, Octave owned and operated Kapital Financial Services. From 2014 through at least 2019, Octave and certain employees, specifically Carson, Courtois, Vargas-Medrano, Greene, Holloman, and Joline conspired to falsify clients’ tax returns by claiming deductions, business losses, American Opportunity credits, education credits, and earned income tax credits that the clients did not incur, to fraudulently increase refunds to be paid by the IRS. By filing false returns, Octave and his co-conspirators increased their client base and unjustly enriched themselves. At sentencing, Octave faces a maximum of eight years in prison, and Carson, Courtois, Greene, Holloman, Joline, and Vargas-Medrano each face a maximum of five years in prison. They all also face a period of supervised release, restitution, and monetary penalties. 13. Technical Guidance Rev. Proc. 2021-12 extends to September 30, 2021, the expiration dates relevant to the application of the safe harbors in Rev. Proc. 2020 26, 2020-618 I.R.B. 753, and Rev. Proc. 2020 34, 2020-26 I.R.B. 990. Revenue Ruling 2021-03 provides the covered compensation tables effective January 1, 2021. Notice 2021-12 extends the temporary relief from certain requirements under section 42 for qualified low-income housing projects and under 142(d) and 147(d) for qualified residential rental projects that was provided in Notice 2020-53, 2020-30 I.R.B. 151 in response to the continuing Coronavirus Disease 2019 (COVID-19) pandemic. This notice also provides relief for additional section 42 requirements not previously addressed in Notice 2020-53.
Thank you for subscribing to e-News for Tax Professionals an IRS e-mail service. If you have a specific concern about your client's tax situation, call the IRS Practitioner Priority Service 1-866-860-4259. This message was distributed automatically from the mailing list e-News for Tax Professionals. Please Do Not Reply To This Message To subscribe to or unsubscribe from another list, please go to the e-News Subscriptions page on the IRS Web site. |
||
