by | Nov 9, 2020 | Tax Tips and News
New guidance has been issued by the Department of the Treasury and the Internal Revenue Service for employers and employees with terminating 403(b) plans. The guidance is aimed specifically at plans that fund benefits through 403(b)(7) custodial accounts.
This new guidance was driven by changes provided in the Setting Every Community Up for Retirement Enhancement Act of 2019—also known as the SECURE Act.
Details are laid out in Revenue Ruling 2020-23. It provides that 403(b) retirement plans funded through individual or group 403(b)(7) custodial accounts can be terminated through the distribution of individual custodial accounts.
If a distributed custodial account continues to comply with certain requirements, then no portion of the distributed custodial account can be included in gross income until amounts are actually paid out of the account to a participant or a beneficiary.
The IRS has also issued Notice 2020-80, which requests comments on the application of annuity and spousal rights provisions that relate to distributions in certain plans described in Revenue Ruling 2020-23.
Source: IR-2020-251
– Story provided by TaxingSubjects.com
by | Nov 6, 2020 | Tax Tips and News
The Internal Revenue Service announced that some college students could qualify for an Economic Impact Payment. This press release is part of the agency’s push to get all eligible non-filers to register for an EIP before the Nov. 21, 2020 deadline, and it comes days before National EIP Registration Day.
“In advance of the National EIP Registration Day on November 10 and highlighted in ‘A Closer Look,’ the IRS is reminding people who don’t normally file a tax return they may be able to register for an Economic Impact Payment with a quick visit to the Non-Filers tool on IRS.gov,” the IRS explains. “In particular, the IRS wants to remind self-supporting students with little or no income that they may be eligible for payments of $1,200 or more.”
Why do non-filers need to register to receive an Economic Impact Payment?
The IRS does not have EIP-qualifying information for Americans who do not make enough money to be required to file a tax return. To help these non-filers provide the information needed to receive a $1,200 payment, the agency developed an online EIP-registration tool.
How do self-supporting college students register for an Economic Impact Payment?
The IRS says that the Non-Filers: Enter Payment Info Here online tool is now the only way for qualifying self-supporting college students and other non-filers to register for an EIP before the deadline on Nov. 21, 2020. To get started, visit IRS.gov/Coronavirus/Non-Filers-Enter-Payment-Info-Here.
Do all college students qualify to use the Non-Filers registration tool?
The IRS clarifies that not all college students qualify to use the Non-Filers registration tool. “Students who either need to or want to file a regular return should not use the Non-Filers tool,” the agency writes. “This includes, for example, any student who had federal income tax withheld from their pay and wants to file a return to claim a refund. The IRS reminds students who have summer jobs or part-time positions not to overlook filing a tax return so they can receive a potential federal tax refund.”
Additionally, students who can be claimed as a dependent do not qualify for an Economic Impact Payment.
Watch out for coronavirus and EIP text message scams!
As the IRS makes a final push to help eligible non-filers get an EIP ahead of the deadline, identity thieves are also paying close attention. The agency and its Security Summit partners this week warned about a new text message-based phishing scam.
The phishing text messages impersonate state tax agencies and tax relief organizations, and they often contain a link to a phishing website that is designed to steal your bank account information. To learn more about the latest phishing scam, check out “Security Summit Warning: Taxpayers Receiving EIP Text Message Scam” on Taxing Subjects.
Source: IR-2020-250
– Story provided by TaxingSubjects.com
by | Nov 6, 2020 | Tax Tips and News
The Security Summit yesterday reported that taxpayers are being targeted by a new series of text-message scams that impersonate state departments of revenue and tax relief organizations. An organization comprised of the Internal Revenue Service, state tax agencies, and private members of the tax industry, the Summit has been raising awareness of identity theft tax refund fraud since 2015.
In an Internal Revenue Service press release, the Security Summit explains that identity thieves are asking taxpayers to provide bank account information finalize transfer of Economic Impact Payment funds. The text messages include a link to a website that is designed to look like the online “Get My Payment” tool, reading: “You have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required to accept this payment into your account. Continue here to accept this payment.”
How do phishing sites steal my information?
Phishing websites use many different mechanisms to steal victims’ information and money, many of which also appear in phishing emails, social media messages, and text messages:
- Collecting data from information-gathering fields
- Installing malware with embedded links
- Getting visitors to call listed numbers
- Running background scripts that install malware
Since some of these sites can steal information simply by visiting them, recipients of phishing emails should make it a habit to never click on embedded links and attachments in unsolicited digital messages. (Another good practice is to only visit trusted websites by entering the URL into a web browser.)
What should people do if they receive a phishing message?
The Security Summit says that victims should report tax-related phishing attempts to the IRS, since collecting data and raising awareness can help us all avoid falling victim to impersonation scams. Specific to this text-message scam, the Summit recommends sending a screenshot of the message in an email containing the following information to Phishing@IRS.gov:
- Date/Time/Timezone that they received the text message
- The number that appeared on their Caller ID
- The number that received the text message
“The IRS does not send unsolicited texts or emails,” the Summit reminds taxpayers. “The IRS does not call people with threats of jail or lawsuits, nor does it demand tax payments on gift cards.”
Finally, the Summit notes that the remaining non-filers who could be eligible to receive an EIP need to use the “Non-Filers: Enter Payment Info Here” tool before the upcoming Nov. 21, 2020 deadline.
Source: IR-2020-249
– Story provided by TaxingSubjects.com
by | Nov 4, 2020 | Tax Tips and News
The Internal Revenue Service has unveiled changes they say will help struggling taxpayers affected by the pandemic settle their IRS tax debts more easily.
The agency says it took a hard look at its collection activities to see how it could offer some relief to taxpayers who owe tax due but are struggling financially because of the pandemic. The goal, IRS says, was to expand taxpayer options for making payments while offering alternatives to resolve the balances owed.
“The IRS understands that many taxpayers face challenges, and we’re working hard to help people facing issues paying their tax bills,” said IRS Commissioner Chuck Rettig. “Following up on our People First Initiative earlier this year, this next phase of our efforts will help with further taxpayer relief efforts.”
“We want people to know our IRS employees are committed to continue helping taxpayers wherever possible, including offering many options for those struggling to pay their tax bills,” said Darren Guillot, the IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support. Guillot discussed the new relief options in a new edition of IRS “A Closer Look.”
To be sure, taxpayers who owed tax due have long had options through payment plans and other IRS tools; the new Taxpayer Relief Initiative expands on those tools even more.
The revised COVID-related collection procedures will be helpful to taxpayers, especially those who have a record of filing their returns and paying their taxes on time.
Among the highlights of the Taxpayer Relief Initiative:
- Taxpayers who qualify for a short-term payment plan option may now have up to 180 days to resolve their tax liabilities instead of 120 days.
- The IRS is offering flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted Offer in Compromise.
- The IRS will automatically add certain new tax balances to existing Installment Agreements, for individual and out of business taxpayers. This taxpayer-friendly approach will occur instead of defaulting the agreement, which can complicate matters for those trying to pay their taxes.
- To reduce burden, certain qualified individual taxpayers who owe less than $250,000 may set up Installment Agreements without providing a financial statement or substantiation if their monthly payment proposal is sufficient.
- Some individual taxpayers who only owe for the 2019 tax year and who owe less than $250,000 may qualify to set up an Installment Agreement without a notice of federal tax lien filed by the IRS.
Additionally, qualified taxpayers with existing Direct Debit Installment Agreements may now be able to use the Online Payment Agreement system to propose lower monthly payment amounts and change their payment due dates.
The IRS has more details on the Taxpayer Relief Initiative.
The IRS offers options for short-term and long-term payment plans—including Installment agreements—through the Online Payment Agreement (OPA) system.
In general, this service is available to individual taxpayers who owe $50,000 or less in combined income tax, penalties and interest or businesses that owe $25,000 or less combined that have filed all tax returns. The short-term payment plans are now able to be extended from 120 to 180 days for certain taxpayers.
Installment Agreement options are available to those who cannot fully pay their balance now, but can pay their balance over time. The Installment Agreement options were expanded to remove the requirement for financial statements and substantiation in more circumstances for balances owed up to $250,000 if the monthly payment proposal is sufficient.
The IRS also modified Installment Agreement procedures to further limit the requirements for Federal Tax Lien determinations for some taxpayers who only owe taxes for tax year 2019.
In addition to payment plans and Installment Agreements, the IRS also offers other tools to assist taxpayers who owe taxes:
Temporarily Delaying Collection — Taxpayers can contact the IRS to request a temporary delay of the collection process. If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer’s financial condition improves.
Offer in Compromise — Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an Offer in Compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool. Now, the IRS is offering additional flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise.
Relief from Penalties — The IRS is highlighting reasonable cause assistance available for taxpayers with failure to file, pay and deposit penalties. First-time penalty abatement relief is also available for the first time a taxpayer is subject to one or more of these tax penalties.
All taxpayers can access important information on IRS.gov. Many taxpayers requesting payment plans, including Installment Agreements, can apply through IRS.gov without ever having to talk to a representative.
Requests for relief—including the options in this new initiative—can be made by contacting the phone number on the taxpayer’s IRS notice. Taxpayers can also make the request in writing. But the IRS stresses that if taxpayers get a notice of a balance due, the one thing they should not do is nothing.
“If you’re having a tax issue, don’t go silent. Please don’t ignore the notice arriving in your mailbox,” Guillot said. “These problems don’t get better with time. We understand tax issues and know that dealing with the IRS can be intimidating, but our employees really are here to help.”
Throughout the pandemic, the IRS has adjusted its operations to help ensure the health and safety of employees and taxpayers alike. The adjustments have extended to the relief contained in its People First Initiative.
More information and background on collection relief and procedures can be found in “A Closer Look.”
“While it’s been important for us and the nation to resume our critical tax compliance responsibilities, we continue to assess the wide-ranging impacts of COVID-19 and other difficulties people are experiencing,” Guillot said.
Source: IR-2020-248
– Story provided by TaxingSubjects.com
by | Nov 3, 2020 | Tax Tips and News
Most US citizens, entities, and resident aliens with a foreign bank or financial account have seen their IRS reporting deadline come and go. But for some taxpayers, one more deadline remains to file their 2019 Report of Foreign Bank and Financial Accounts, or FBAR.
Most FBAR filings were due by October 31, 2020.
The bulk of FBAR filings came on Oct. 31. Originally slated for the April 15 tax filing deadline, FBAR filing of the Financial Crimes Enforcement Network Form 114 was automatically extended to Oct. 15 due to the coronavirus pandemic, then extended again to Oct. 31.
But taxpayers got a further reprieve if they were affected by one of the following federally recognized natural disasters:
These FBAR filers have until Dec. 31, 2020 to file their forms. At present, the relief for FBAR filers applies only to those within the federally declared disaster areas.
FBAR filers who live outside the affected areas seeking assistance in meeting their filing obligations (including workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization), should contact the FinCEN Regulatory Support Section at 800.767.2825 or electronically at frc@fincen.gov.
Who needs to file?
This requirement to file applies to, among others, U.S. citizens and anyone with dual citizenship. It also applies to legal entities, such as corporations, partnerships, limited liability companies, estates and trusts.
In addition, U.S. citizens, entities and resident aliens should check to see if they have a U.S. tax liability and a federal tax return filing requirement. Those required to file should make sure all income is reported and federal tax return filing requirements are met regarding the reported accounts.
In general, the requirement to file applies to anyone who had an interest in, or signature or other authority, over foreign financial accounts with an aggregate value of over $10,000 at any time during 2019.
Because of the threshold, the IRS encourages U.S. individuals or entities with foreign accounts—even relatively small ones—to check if the filing requirement applies to them.
The FBAR, FinCEN Form 114, is only available through the BSA E-Filing System website.
The IRS reminds taxpayers that the FBA should never be filed with individual, business, trust or estate tax returns.
Source: IR-2020-247
– Story provided by TaxingSubjects.com
