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Issue Number: 2023-03

Inside This Issue

1. The Dirty Dozen: The worst of the worst tax scams
2. IRS issues renewed warning on Employee Retention Credit claims
3. Form 1099-K: Tips for taxpayers that may receive one and revised FAQs
4. IRS Digital intake initiative off to strong start
5. Important details to understand when the IRS might contact a taxpayer
6. Electronic-Filing Requirements for Specified Returns and Other Documents 
7. Other tax news
8. New Forms and instructions on IRS.gov

  1.  The Dirty Dozen: The worst of the worst tax scams

The annual IRS Dirty Dozen tax scam campaign lists a variety of common scams that taxpayers may encounter anytime. Many of these schemes peak during filing season as people prepare their returns or hire someone to help them with their taxes. Don’t fall prey, check the Dirty Dozen page for more scams as they’re published.

Published scams so far:

1. Employee Retention Credit claims: increased scrutiny follows aggressive promoters making offers too good to be true
2. Watch out for scammers using email and text messages to try tricking people during tax season
3. Scammers offering “help” to set up an Online Account creates identity theft risk for honest taxpayers
4. Watch out for third-party promoters of false fuel tax credit claims
5. IRS warns of scammers using fake charities to exploit taxpayers
6. IRS warns individuals to stay clear of shady tax preparers; offers tips on carefully choosing tax professionals
7. Taking tax advice on social media can be bad news for taxpayers; schemes circulating involving tax forms
8. IRS urges tax pros and other businesses to beware of spearphishing; offers tips to avoid dangerous common scams
9. Watch out for Offer in Compromise ‘mills’ where promoters claim their services are needed to settle IRS debts
10. Watch out for schemes aimed at high-income filers; Charitable Remainder Annuity Trusts, monetized installment sales carry risk

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  2.  IRS issues renewed warning on Employee Retention Credit claims

The IRS urges people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit as promoters continue pushing ineligible people to file.

The IRS and payroll professionals continue to see third parties aggressively promoting these ERC schemes on radio and online. These promoters charge large upfront fees or a fee that is contingent on the amount of the refund. And the promoters may not inform taxpayers that wage deductions claimed on the business' federal income tax return must be reduced by the amount of the credit.

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  3.  Form 1099-K: Tips for taxpayers that may receive one and revised FAQs

Form 1099-K is an IRS form that is used to report certain payment transactions. IRS Tax Tip 2023-37 provides taxpayers with information they need to know about what to do if they receive the form and what to do if it’s incorrect.

The article addresses that money received as a gift or for reimbursement does not require a 1099-K. It advises taxpayers on how they can minimize the chances of errors when receiving those types of payments from friends or family members.

The American Rescue Plan of 2021 changed the reporting threshold requirement for payment apps, also known as third-party settlement organizations. The IRS announced that the new Form 1099-K reporting threshold will start in tax year 2023.

Also, the IRS recently revised its frequently asked questions (FAQs) for Form 1099-K, Payment Card and Third Party Network Transactions.

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  4.  IRS Digital intake initiative off to strong start

As part of its ongoing transformation efforts, the IRS announces a successful expansion of digital scanning. In a major step in the new Digital Intake scanning initiative, the IRS scanned more than 120,000 paper Forms 940 since the start of 2023 – a twenty-fold increase compared to all of 2022.

This effort will expand soon to include scanning of Forms 1040 as well as Forms 941. The scanning effort is part of a multi-form, multi-solution scanning initiative known as Digital Intake. 

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  5.  Important details to understand when the IRS might contact a taxpayer

The IRS reaches out in multiple ways to educate taxpayers while ensuring it fairly enforces the nation’s tax laws. There are important factors to keep in mind about when the IRS may initiate direct contact with a taxpayer.

Most IRS contacts with taxpayers are through regular mail delivered by the United States Postal Service. However, there are limited circumstances when the IRS will come to a home or business as part of a collection investigation, an audit or an ongoing criminal investigation.

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  6.  Electronic-filing requirements for specified returns and other documents 

Find final regulations amending the rules for filing electronically and how these new rules affects people required to file partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns, certain information returns, registration statements, disclosure statements, notifications, actuarial reports and certain excise tax returns. The final regulations reflect changes made by the Taxpayer First Act and are consistent with its emphasis on increasing electronic filing.

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  7.  Other tax news

The following information may be of interest to individuals and groups in or related to small businesses:

• 2023 IRS Nationwide Tax Forums to be held in five cities
• Tax Time Guide: Using electronic payment and agreement options for taxpayers who owe can help avoid penalties and interest
• Taxpayers can approve power of attorney or tax information authorization requests online

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  8.  New forms and instructions on IRS.gov

Forms:

• Form 941, Employer’s Quarterly Federal Tax Return
• Form 941 (PR), Planilla para la Declaración Federal Trimestral del Patrono
• Form 941 (Schedule R), Allocation Schedule for Aggregate Form 941 Filers
• Form 941-SS, Employer’s Quarterly Federal Tax Return: American Samoa, Guam, the Commonwealth of the Northern
  Mariana Islands, and the U.S. Virgin Islands
• Form 943-X, Adjusted Employer’s Annual Federal Tax Return for Agricultural Employees or Claim for Refund
• Form 944-X, Adjusted Employer’s Annual Federal Tax Return or Claim for Refund
• Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities

Instructions:

• Instruction 941 (Schedule B), Instructions for Schedule B
• Instruction 941 (Schedule R), Instructions for Schedule R
• Instruction 941 (PR), Instrucciones para el Formulario 941-PR
• Instruction 941-SS, Instructions for Form 941-SS
• Instruction 943-X, Instructions for Form 943-X
• Instruction 944-X, Instructions for Form 944-X
• Instruction 8974, Instructions for Form 8974

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