e-News for Tax Professionals Issue 2021-38

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Issue Number:  2021-38

Inside This Issue

1. IRS statement: Child Tax Credits update
2. Amended tax relief for disaster victims in California, New Jersey
3. Drought-stricken farmers, ranchers have more time to replace livestock
4. IRS launches new webpage to help taxpayers with refunds subject to review
5. New contracts awarded to three private collection agencies
6. On-demand webinar: Overview of the revised Form 5471
7. News from the Justice Department’s Tax Division
8. Technical Guidance

Last week, the IRS successfully delivered a third monthly round of approximately 35 million Child Tax Credits, totaling $15 billion. We have resolved a technical issue, which we estimate caused fewer than 2% of CTC recipients not to receive their September payment. These individuals will receive their payments as early as today by direct deposit or in the coming days for those receiving checks by mail. The impacted group primarily included taxpayers who recently made an update on their bank account or address on the IRS Child Tax Credit Update Portal and affected payments to married filing jointly taxpayers where only one spouse made a bank or address change. We know people depend on receiving these payments on time and we apologize for the delay.
 
There are multiple reasons why people may be seeing a different amount than they expected. If only one spouse changed an address or bank account, the other spouse’s half could be going to the old address or bank account. In these instances the full payment will still be distributed. Monthly payment amounts can also change depending on recently processed tax returns. We encourage people to check the IRS CTC Update Portal for the latest payment information.

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Victims of the California wildfires that began on July 14, 2021, now have until Nov. 15, 2021, to file various individual and business tax returns and make payments. This relief has been extended to individuals and households affected by wildfires that reside or have a business in Tehama and Trinity counties. Also, New Jersey victims of remnants of Hurricane Ida that began Sept. 1, 2021, now have until Jan. 3, 2022, to file various individual and business tax returns and make tax payments. This relief has been extended to individuals and households affected by Hurricane Ida that reside or have a business in Morris and Warren counties. The current list of eligible localities is available on the disaster relief page on IRS.gov.

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Farmers and ranchers who were forced to sell livestock due to drought may have an additional year to replace the livestock and defer tax on any gains from the forced sales. To qualify for relief, farmers or ranchers must have sold livestock on account of drought conditions in an applicable region. Notice 2021-55 lists applicable regions in 36 states and one U.S. territory. This article is also available in Spanish.

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The IRS introduced a new webpage that provides information to taxpayers whose large refunds are subject to further review by the Joint Committee on Taxation (JCT or Joint Committee). By law, when taxpayers claim a federal tax refund or credit of more than $2 million ($5 million for a C corporation), the IRS must review the refund or credit and provide a report to the JCT, a non-partisan committee of the U.S. Congress.

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The IRS has awarded new contracts to three private-sector collection agencies for collection of overdue tax debts. Effective Sept. 23, taxpayers with unpaid bills may be contacted by CBE Group, Inc.; Coast Professional, Inc; or ConServ. This article is also available in Spanish and Simplified Chinese.

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The IRS webinar Overview of the Revised Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations, is now available for on-demand viewing. Please note that this archived webinar, which was delivered live on Sept. 2, is not eligible for CE credits or certificates of completion.

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The United States has filed a complaint in the U.S. District Court for the Eastern District of Texas seeking to bar Michelle Denise Johnston, a Beaumont, Texas, tax return preparer from owning or operating a tax return preparation business and preparing federal income tax returns for others.

Nikency Alexis and Thony Guillaume, two Florida tax preparers, pleaded guilty to conspiring to defraud the United States and preparing false tax returns. Both are scheduled to be sentenced on Nov. 30 and face a maximum penalty of five years in prison on the conspiracy charge and three years in prison on the filing false tax returns charges. In addition, the defendants face a period of supervised release, restitution and monetary penalties.

Lenore Worthy and Veronica Fortune, two Maryland tax return preparers, were sentenced to prison for conspiring to defraud the United States and preparing false tax returns. Worthy was sentenced to six months in prison and Veronica Fortune was sentenced to 12 months and one day in prison. In addition to the term of imprisonment, U.S. District Judge Paul W. Grimm ordered Worthy to serve three years of supervised release and pay approximately $189,748 in restitution to the United States. Judge Grimm ordered Fortune to serve three years of supervised release and pay approximately $86,590 in restitution.

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Notice 2021-54 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for September 2021 used under section 417(e)(3)(D), the 24-month average segment rates applicable for September 2021, and the 30-year Treasury rates, as reflected by the application of section 430(h)(2)(C)(iv).

Notice 2021-55 explains the circumstances under which the four-year replacement period under section 1033(e)(2) is extended for livestock sold on account of drought.

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