Inside This Issue
- Year-end reminder: Expanded tax benefits help individuals and businesses give to charity during 2020
- Get Ready for Taxes: Stay home and stay safe with IRS online tools
- A Closer Look: How the IRS Ensures Compliance with the Tax Laws
- Reminder: Secure Access credentials and upcoming authorization upload tool
- Hiring good employees is a win-win
- News from the Justice Department’s Tax Division
- Technical Guidance
1. Year-end reminder: Expanded tax benefits help individuals and businesses give to charity during 2020
The IRS explained this week how expanded tax benefits can help both individuals and businesses give to charity before the end of this year. The Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted last spring, includes four temporary tax changes that are designed to help people and businesses who give to charity this year. Here is a rundown of these key changes.
Individuals who elect to take the standard deduction generally cannot claim a deduction for their charitable contributions. However, the CARES Act permits these individuals to claim a limited deduction on their 2020 federal income tax returns for cash contributions made to certain qualifying charitable organizations and still claim the standard deduction. Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify.
Under this change, these individuals can claim an “above-the-line” deduction of up to $300 for cash contributions made to qualifying charities during 2020. The maximum above-the-line deduction is $150 for married individuals filing separate returns.
2. Get Ready for Taxes: Stay home and stay safe with IRS online tools
You can help your clients stay home and stay safe as they get ready to file their 2020 federal tax returns by suggesting IRS online tools and resources. IRS.gov tools are easy-to-use and available 24 hours a day.
Your clients can go to IRS.gov/account to access information about federal tax accounts, including amount owed, payment history and information from their most recent tax return.
With changes to income and other life events for many in 2020, tax credits and deductions can mean more money in a taxpayer’s pocket and thinking about eligibility now can help make tax filing easier next year. The Interactive Tax Assistant (ITA) will be updated in January 2021 to provide answers to general tax questions about filing status, credits or deductions.
The best and fastest way to get a tax refund remains direct deposit. The Where’s My Refund? tool will provide your client’s refund status within 24 hours after the IRS receives their e-filed tax return or up to four weeks after they mailed a paper return. For those without a way to receive direct deposits, the FDIC website provides information to help your clients open a financial account online.
For more information on how you and your clients can prepare for the filing season, visit IRS.gov/getready, read Publication 5348, Get Ready to File and Publication 5349, Year-Round Tax Planning is for Everyone.
3. A Closer Look: How the IRS Ensures Compliance with the Tax Laws
The latest executive column, “A Closer Look,” features Sunita Lough, the Deputy Commissioner for Services and Enforcement, explaining the variety of tools the IRS has to support compliance at all income levels. “When deciding which tool to use,” Lough said, “We work to ensure fairness while also being conscious of taxpayer burden. IRS employees work to minimize the burden of our compliance actions, seeking the right touch – all with an eye toward enforcing the nation’s tax laws for the benefit of all taxpayers.”
Check here for prior posts and new updates.
4. Reminder: Secure Access credentials and upcoming authorization upload tool
Tax professionals who specialize in representation or other services will need a Secure Access username and password to use the new authorization form upload tool launching next month.
This upload tool will allow an alternative to person-to-person contact as COVID-19 remains a threat to taxpayers and tax professionals. But tax professionals must have a Secure Access username and password in order to access it.
Many tax professionals can use their e-Services username and password to access the “Submit Forms 2848 and 8821 Online” tool when it becomes available in mid-January. Tax professionals who do not have access to e-Services may have to register using personal tools such as Get Transcript, Online Account or Get an IP PIN.
To register for one of the personal tools, review IRS.gov/SecureAccess to see what information is needed to create an account. Please note: If you do not have a mobile phone in your name you must request an authorization code by mail, which will delay the registration process.
This new upload tool will allow tax professionals to safely work with clients remotely to obtain an electronic signature and to electronically upload Forms 2848 or 8821 to the IRS. The forms will be reviewed by the IRS following the usual process.
5. Hiring good employees is a win-win
Giving someone the opportunity to work may result in a business tax credit. Check the IRS Work Opportunity Tax Credit before it expires at the end of the year: www.irs.gov/wotc.
6. News from the Justice Department’s Tax Division
A Washington, D.C., tax return preparer was sentenced to 24 months in prison for aiding and assisting in the preparation of a false tax return. According to court documents and statements made in court, Renita Jenifer of District Heights, Md., operated a tax return preparation business in the District of Columbia between 2013 and 2016 under the name RAJen Business Tax Service and prepared false tax returns for clients claiming fraudulent and inflated itemized deductions. Jenifer also prepared returns that reported fraudulent and inflated business expenses. In 2016, after IRS Criminal Investigation executed a search warrant at RAJen’s office and revoked Jenifer’s EFIN, expelling her from the IRS’s e-file program, Jenifer operated a new business in Maryland called DS Professional Tax Service LLC (DS Pro). Jenifer used the name of a different individual to obtain an EFIN for DS Pro, and she listed this individual’s name on tax returns she prepared instead of her own name and prepared false tax returns for clients of DS Pro. In addition to filing false tax returns for clients of RAJen and DS Pro, Jenifer filed false income tax returns for herself for the years 2013 and 2014, on which she failed to report all of the income generated by her business. In addition to the term of imprisonment, Jenifer was ordered to serve one year of supervised release and to pay $357,819 in restitution to the IRS.
Notice 2020-88 announces a new round of credits under the section 48A Qualifying Advanced Coal Project Program available for allocation. Section 48A was enacted in 2005 and was modified and provided additional funding in 2008.
Notice 2021-01 provides that, while subject to a delay, private foundations must electronically file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code, as required by section 3101 of the Taxpayer First Act of 2019 (Pub. L. No. 116-25) which amended section 6033 of the Internal Revenue Code.
Rev Ruling 2021-01 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate.