ALERT – Page 5 – Larson Accounting Group

15 de April de 2022

Deputy Secretary of the Treasury Wally Adeyemo and IRS Commissioner Charles P. Rettig traveled to the IRS Campus in Philadelphia where they thanked employees for their tireless efforts and outlined an aggressive plan that will end the pandemic backlog this year.

“Since the pandemic began, IRS employees have been called on to go above and beyond for the American people, and they have met the moment. But they’ve had to do so without adequate resources and funding, which is why the agency faces the challenges that it does today. The Biden Administration is committed to getting the IRS the stable, long-term funding it needs to be able to serve the American people,” said Deputy Secretary Adeyemo.

This year, millions of taxpayers are awaiting the processing of their tax returns and receipt of their refunds. The backlog—unprocessed returns and correspondence sent to the IRS but yet unanswered—has created one of the most challenging tax filing seasons in our nation’s history.

“IRS employees have been working tirelessly to process backlogged returns and taxpayer correspondence. To ensure inventory is back to a healthy level for next filing season, we are leaving no stone unturned—taking an all- hands-on-deck approach to ensure as many employees as possible are dedicating time to return processing,” said Commissioner Rettig. “This includes bringing on new employees and reassigning current IRS employees to process inventory.”

The IRS’s backlog challenges today stem from two key sources.

First, the agency has been chronically underfunded for more than a decade, with its budget cut by nearly 20% since 2010. Today’s historically low level of funding means that the IRS isn’t equipped to provide the American people the service they deserve. This is all a result of resource constraints: The IRS workforce is the same size it was in 1970, though the U.S. population has grown by 60 percent and the complexity of the economy has increased exponentially. In the first half of 2021, fewer than 15,000 workers handled nearly 200 million calls received, which translates to one person for every 13,000 calls.

Second, the pandemic created a unique set of new operational challenges for the IRS. The agency was called upon to support emergency relief for taxpayers, like distributing an unprecedented three rounds of Economic Impact Payments, totaling over $830 billion, to 85% of American households. Including individual refunds, the IRS has distributed over $1.5 trillion to Americans since the pandemic began. This was all done at a time when the IRS budget was at historic lows, and while adjusting operating protocols to ensure the IRS workforce was safe and healthy in the midst of the pandemic.

These circumstances have created significant challenges. Entering a normal filing season, the IRS typically has well under one million pieces of inventory. This year, the IRS entered the filing season with a backlog that is more than 15 times as large. This has a huge impact on people, and Commissioner Rettig has committed to addressing the backlog and returning to normal, healthy levels by the end of this year.

To meet this commitment, the IRS has laid out an ‘all-hands-on-deck’ approach:

HIRING AND SURGING THOUSANDS OF EMPLOYEES TO TACKLE THE BACKLOG

Hiring 10,000 new employees: The IRS today announced plans to hold job fairs across the country in March in Kansas City (March 18-19), Austin (March 24-25) and Ogden (March 31-April 1) with the aim of filling 5,000 open positions in the coming months. Working with Treasury, the Office of Personnel Management, and the National Treasury Employees Union, the IRS recently secured direct hiring authority for these employees, as well as an additional 5,000 new hires to be made over the course of the next year. Congress also helpfully provided hiring flexibilities in the House-passed omnibus to further expedite hiring in critical positions. This will allow for onboarding and training new emergency teams which will begin working on inventory within just a few weeks.

Creating new 700-person surge team to process new returns: The IRS is in the process of shifting approximately 700 employees at the Austin, Ogden, and Kansas City campuses to process original returns. These efforts will address the historically high inventories of paper tax returns. At full capacity, this surge will close millions of cases each month.
Maintaining initial surge team to process amended returns and taxpayer correspondence: The second surge effort builds on efforts earlier in filing season, when the IRS moved hundreds of existing employees with previous experience to address the backlog. The IRS currently has approximately 800 people on this team, which started in February.
Paying overtime to thousands of IRS employees: The IRS has required mandatory overtime for the over 6,000 employees processing original returns. Overtime is also available for approximately 10,000 employees processing amended returns and taxpayer correspondence. In all three submission processing centers, employees are working night shifts to work on return and correspondence processing.
Supporting additional contractor support for inventory: The IRS is quickly pursuing additional contracting options to help with original return processing, including mailroom operations, transcription, and input of paper returns into IRS systems.

INCREASED TAXPAYER ASSISTANCE TO REDUCE PROCESSING DELAYS

Communicating directly with taxpayers to ensure accurate returns: A large share of the backlog stems from small errors by millions of taxpayers on their tax returns, which then require manual review by IRS employees before they can be processed. By helping taxpayers file accurately, the IRS can ensure that refunds are issued quickly (an error-free electronic return is processed within 21 days). Accurate individual filings also proactively reduce inventory by decreasing the share of returns that require time- intensive manual attention by employees. Efforts help taxpayers file accurately include:
- Sending taxpayers more information than ever to prevent processing delays. The IRS has sent more than 100 million letters to taxpayers to prevent delays in processing. In the letters, the IRS proactively calculates the amounts received by individual taxpayers in both third Economic Impact Payments and the advance Child Tax Credit to ensure more accurate returns.
- Providing online help. The IRS created and expanded self-service portals for taxpayers, including for online payment agreements, requesting payment transcripts, requesting Identity Protection PINs, and updating personal information. In just the last year, 9.4 million taxpayers have accessed their online accounts, allowing for important information—on benefits received, notices, and taxpayer payment history—to be easily and securely accessed.
- Providing in-person help. The IRS has increased the availability of in-person support for taxpayers through extra hours (including weekends) at Taxpayer Assistance Centers throughout the filing season. It also awarded $41 million of support to over 330 organizations across the United States, including Tax Counseling for the Elderly and Volunteer Income Tax Assistance organizations which provide free federal tax return preparation for the underserved.
- Providing help on the phones. The IRS has expanded customer callbacks to 70% of its toll-free lines. Already this fiscal year, an callback option has been offered to more than three million taxpayers, saving those preparing their taxes almost one million hours of wait time. Additionally, the IRS has deployed 2,000 contractors to respond to taxpayer questions about Economic Impact Payments and the advance Child Tax Credit. Since the summer of 2021, these contractors have answered over 40 million calls.

DEVELOPING AND DEPLOYING UPDATED TECHNOLOGY TO AUTOMATE FUNCTIONS

New automated tool to correct return errors: Last filing season, any error on a tax return required manual review by an IRS processing employee, meaning that just a few dozen such returns could be processed each hour. For this filing season, the IRS developed an automated tool that dramatically expands efficiencies and has helped the IRS close 1.5 million error resolution cases in a single week.
Suspension of dozens of common notices to prevent inventory increases: To provide relief for taxpayers, the IRS reconfigured its systems to temporarily halt sending approximately 40 form notices to taxpayers, including mailing automated collection notices that are normally issued when a taxpayer owes additional tax, and the IRS has no record of a taxpayer filing a return. This action provides important relief for taxpayers who otherwise could have received a notice for taxes already paid, but not processed due to the backlog. Importantly, this also results in less inventory since taxpayers won’t contact the IRS to inquire about the notices received.
Improving automated tools for taxpayer assistance: The IRS developed new automated support technology to help taxpayers, including online live assistance and new voice and chat bots (in English and Spanish) to quickly answer taxpayer queries. Taxpayers’ use of automated services more than doubled in the last year. The improvement of automated phone assistance and other tools has allowed the IRS to move many phone service representatives to work inventory given the exigencies of this filing season.

Ultimately, these approaches are short-term salves for 2022’s tax season but don’t address the much deeper structural problem at the IRS. Had Congress funded the IRS adequately for the past decade, it would have entered the pandemic with the resources it needed – and would not have millions of tax returns waiting to be processed. The IRS and Treasury have worked closely with legislators to highlight these needs, and this year’s House-passed omnibus represents the largest funding increase for the agency in the last two decades. This is a meaningful step that will help the IRS hire thousands of new employees and secure contractor support that will expedite the processing of returns and correspondence.

But it is far from sufficient. The agency needs stable, long-term funding to be able to modernize outdated technological infrastructure and transition much of its manual work into automated processes that will be more efficient. IRS employees should not be hand-transcribing paper returns. Taxpayers should interact with the agency using state-of-the-art online tools. And every taxpayer who wants to call the IRS with a question should have their call and questions answered promptly. Providing the IRS the resources it needs to rebuild and modernize into the 21st century is critical to ensuring that the agency is able to serve the American people and the nation.

Source: U.S. DEPARTMENT OF THE TREASURY

by Larson Accounting

14 de April de 2022

The Internal Revenue Service plans to hire 10,000 employees in a push to cut into its backlog of tens of millions of tax returns by recruiting for jobs across the agency that have gone unfilled for years, according to four people familiar with the plan.

The agency will accelerate recruiting in the coming weeks for 80 distinct positions, from entry-level clerical workers to advanced engineers and tax attorneys, one person familiar with the plan said. Among the recruiting targets are high-skill technology professionals to modernize its outdated infrastructure, according to those familiar with the plan, who spoke on the condition of anonymity because the details have not been publicly released.

The agency plans to use money from its existing budget, a large share of it from coronavirus stimulus funding, to pay for the new hires, to be made over the next two years. The number of new jobs would represent a 14 percent increase in the IRS workforce. It remains unclear how much the agency will spend on the hiring plan, officials said, but it will be significantly smaller than President Biden’s proposed IRS investment of $80 billion over the next decade.

The IRS entered the tax season this year with 24 million unprocessed paper returns and correspondence, almost all dating back to the 2020 filing season. Taxpayer advocates and members of Congress have been calling on the agency to tackle the backlog, citing potentially dire financial consequences for Americans who rely on their tax credits and refunds for basic living expenses.

A government official said the IRS does not expect to resolve the backlog until the end of 2022. But it hopes the hiring surge, the largest at the IRS in decades, will galvanize a strong response to the mountain of unprocessed paperwork at the agency. It also hopes to restore public confidence in the tax collector after the coronavirus pandemic sidelined much of its staff, hobbled customer service and led to a rash of unexpected retirements.

The IRS staffing demands have been compounded by recruiting challenges and low pay across its operations. Vacancies range from entry-level jobs crucial to a smooth filing season to more specialized roles for technology experts who can upgrade computer systems and tax attorneys to lead complex audits of wealthy taxpayers and businesses.

The IRS won approval from federal personnel officials this week to accelerate the hiring process by bypassing the time-consuming recruiting and vetting procedures common to federal hiring, the people said. Officials will also be able to offer competitive salaries to lure experts from the private sector.

Hiring managers across the government have chafed for years at the logjams they confront when seeking new talent along with the salary limits in many roles that pay higher at private companies. By gaining what is known as direct hiring authority, the IRS will be able to expedite hiring with a less complicated process, eliminating some selection requirements.

The agency also will be able to get around a salary cap that for years restricted the pay of many workers, although it is unclear how many jobs that would cover. But experts warn that the reinforcements may come too late to spare taxpayers from mounting delays during the 2022 filing season.

Commissioner Charles Rettig announced in February that he was temporarily reassigning 1,200 employees as part of a “surge team” to help. But those workers only began their new details this week, a person familiar with the hiring plans said. A second “surge team,” the person said, is now being formed with staff to be pulled from departments around the agency.

Meanwhile, thousands of employees are working overtime to plow through the accumulation of paper and amended returns and correspondence leftover from last year’s filing season, and are bringing in outside contractors to help with processing.

The internal staff shuffling came after the IRS advertised for 5,000 new positions in the division that answers phones and handles correspondence, in hopes of laying the groundwork for a smooth tax season this year. But fewer than 200 new employees were hired due to the challenging labor market.

Many of the positions included in the new hiring authority require months of training. For instance, tax examiners in the wage and investment division, the agency’s largest taxpayer services section, need between eight and 18 weeks of training before they can begin work. Contact service representatives, the workers who answer phones, respond to mail and log data from paper returns, need more than 37 weeks of training.

The fresh recruitment efforts for IT professionals could take even longer to pay off. The IRS is in the midst of revamping the backbone of the tax administration infrastructure, a program called the “individual master file,” that was built in the 1960s using a coding language that has largely gone extinct.

The most ambitious estimate for the project’s completion is 2030, according to the Government Accountability Office, but developments have been slowed each time Congress passes new tax laws, which mandate the already limited IRS staff to reprogram parts of the software.

The IRS administration of stimulus payments and the child care tax credit forced the agency to divert staff from modernization efforts to plugging programming holes. Experts say that has given the IRS a poor reputation among IT professionals who believe the agency is not committed to modernization, and that top talent can be reassigned at the whim of Congress.

“The IRS entered the filing season so far behind on processing that it’s going to take until December to sort through all this paperwork,” said Nina Olson, executive director of the Center for Taxpayer Rights, and the former national taxpayer advocate. “If they get authority to hire people, even if they’re only bringing in 100 people at a time here and there but on a regular basis over the next months, that will help. But what it will do is allow the IRS to enter the 2023 filing season not in a hole. I don’t want people to get their hopes up about 2022.”

The IRS applied for direct hiring authority from the Office of Personnel Management, the federal government’s human resources department, in the spring of 2021, but OPM rejected the request, saying it was too broad, according to an official with knowledge of that effort.

Staffing has long been one of the IRS’s most pressing obstacles. The agency has lost nearly 20,000 employees since 2010. The division responsible for opening paper returns and manually transcribing them into a computer file lost about 20 percent of its staff last year to retirements and departures, two agency officials familiar with the situation said.

Chronic underfunding from Republican-mandated budget cuts over a decade, with its annual legislative appropriation adjusted for inflation falling by about $2.5 billion in that span, has meant the IRS often cannot replace employees who retire or leave for other jobs.

Another wave could hit the agency soon. Leaders predict another 5,590 workers will retire this year. Close to a quarter of the workforce of 74,000 is eligible for retirement.

“For so many years, they were underfunded and they had a steady workforce, so they weren’t focused on recruiting,” said Rebecca Thompson, vice president at the civil rights group Prosperity Now and a member of the Internal Revenue Service Advisory Council. “Now the rubber is about to hit the road.”

Complicating the ambitious expansion is the intense competition for workers trained in the complexities of the U.S. tax code and the IRS internal processes. The agency has long paid well below the private sector for comparable positions. Employees who answer taxpayer questions on the phone and handle correspondence make between $24,000 and $41,000 annually, depending on seniority.

“It just sets up a situation where the IRS will continue to be completely outgunned by the professional wealth-defense industry that obviously compensates their professional wealth-hiders at much higher levels,” said Chuck Collins, a senior scholar at the Institute for Policy Studies think tank and author of “The Wealth Hoarders.”

Besides allowing its workforce to shrink, those critical of the IRS say it has not invested in new technologies for those who remain, in recent years because it has been focused on beefing up electronic processing of returns.

At the agency’s Kansas City, Mo., tax processing center, employees are working six-day weeks with mandatory overtime, said Shannon Ellis, president of the local chapter of the National Treasury Employees Union, which represents IRS employees.

For years, the IRS has struggled to attract local job applicants, as nearby employers boost their own wages. A local Amazon facility is offering $19 an hour, she said. A nearby Target just began advertising $24 an hour wages. Entry level IRS employees in Kansas City make $15 an hour. The staffing crunch in Kansas City could worsen, she said. Nearly half of the campus’s 5,000 workers will be eligible for retirement in the next two years.

Plans to hire more employees could improve morale and productivity, Ellis said, but she and her colleagues remain skeptical. They’ve seen the IRS advertise for job openings previously, only for the agency to fall well short of its recruitment goals or for newly hired colleagues to leave their jobs within months because of frustrating working conditions.

“Expediting the hiring process is one thing and that can help, but you’ve still got to get the people interested,” she said. “You’ve got to increase the wages to entice people to come.”

Source: Washington Post

by Larson Accounting

11 de April de 2022

The Internal Revenue Service today reminded all taxpayers – particularly those who are identity theft victims – of an important step they should take to protect themselves from tax fraud.

Some identity thieves use taxpayers’ information to file fraudulent tax returns. By requesting Identity Protection PINs from the Get an IP PIN tool on IRS.gov, taxpayers can prevent thieves from claiming tax refunds in their names.

Identity Protection PINs and how to get one

An IP PIN is a six-digit number the IRS assigns to an individual to help prevent the misuse of their Social Security number or Individual Taxpayer Identification Number (ITIN) on federal income tax returns. The IP PIN protects the taxpayer’s account, even if they’re no longer required to file a tax return, by rejecting any e-filed return without the taxpayer’s IP PIN

Taxpayers should request an IP PIN:

If they want to protect their SSN or ITIN with the IRS,
If they want to protect their dependent’s SSN or ITIN with the IRS,
If they think their SSN, ITIN or personal information was exposed by theft or fraudulent acts or
If they suspect or confirm they’re a victim of identity theft.

Taxpayers can go to IRS.gov/getanippin to complete a thorough authentication check. Once authentication is complete, an IP PIN will be provided online immediately. A new IP PIN is generated every year for added security. Once an individual is enrolled in the IP PIN program, there’s no way to opt-out.

The IRS may automatically assign an IP PIN if the IRS determines the taxpayer’s a victim of tax-related identity theft. The taxpayer will receive a notification confirming the tax-related ID theft incident along with an assigned IP PIN for future tax-return filings.

Taxpayers will either receive a notice with their new IP PIN every year in early January for the next filing season or they must retrieve their IP PIN by going to IRS.gov.

Tax-related identity theft and how to handle it

Tax-related identity theft occurs when someone uses a taxpayer’s stolen SSN to file a tax return claiming a fraudulent refund. In the vast majority of tax-related identity theft cases, the IRS identifies a suspicious tax return and pulls the suspicious return for review. The IRS then sends a letter to the taxpayer and won’t process the tax return until the taxpayer responds.

Depending on the situation, the taxpayer will receive one of three letters asking them to verify their identity:

Letter 5071C, asks them to use an online tool to verify their identity and tell the IRS if they filed the return in question.
Letter 4883C, asks the taxpayer to call the IRS to verify their identity and tell the IRS if they filed the return.
For those who have been a victim of a data breach, they may receive Letter 5747C and be asked to verify their identity in-person at a Taxpayer Assistance Center.

If the taxpayer receives any of these letters, they don’t need to file an Identity Theft Affidavit (Form 14039). Instead, they should follow the instructions in the letter.

When to file an Identity Theft Affidavit

If a taxpayer hasn’t heard from the IRS but suspects tax-related identity theft, they should complete and submit a Form 14039, Identity Theft Affidavit PDF. Signs of possible tax-related identity theft include:

A taxpayer can’t e-file their tax return because a duplicate tax return was filed using their Social Security number. (Check that there’s no error in the SSN, such as transposed numbers.)
A taxpayer can’t e-file because a dependent’s Social Security number or ITIN was already used by someone on another return without the taxpayer’s knowledge or permission. (Also check that the SSN or ITIN is correct and be sure the dependent hasn’t filed a separate tax return.)
A taxpayer receives a tax transcript in the mail they did not request.
A taxpayer receives a notice from a tax preparation software company confirming an online account was created in their name, and they did not create one.
A taxpayer receives a notice from their tax preparation software company that their existing online account was accessed or disabled when they took no action.
A taxpayer receives an IRS notice informing them that they owe additional tax, or their refund was offset to a balance due, or that they have had collection actions taken against them for a year they did not earn any income or file a tax return.
The IRS sends a taxpayer a notice indicating that the taxpayer received wages or other income from an employer for whom they didn’t work.
The taxpayer was assigned an Employer Identification Number (EIN), but they did not request or apply for an EIN.

The IRS will work to verify the legitimate taxpayer, clear the fraudulent return from the taxpayer’s account and, generally, place a special marker on the account that will generate an IP PIN each year for the taxpayer who is a confirmed victim.

For information about tax-related identity theft, see Identity Protection: Prevention, Detection and Victim Assistance and IRS Identity Theft Victim Assistance: How It Works on IRS.gov. The Federal Trade Commission website also includes information about tax-related identity theft.

Source: IRS – 2022-78, April 11, 2022

by Larson Accounting

29 de March de 2022

The tax filing deadline less than a month away. The IRS reminds all taxpayers but especially those who haven’t yet filed, to choose a tax return preparer wisely. Taxpayers are responsible for all the information on their income tax return regardless of who prepares the return.

Here are some tips to remember when selecting a tax return preparer:
Check the preparer’s qualifications. People can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with specific qualifications. The directory is a searchable and sortable listing of preparers.

Check the preparer’s history. Taxpayers can ask the local Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. Here’s how to check on specific types of preparers:

Enrolled Agents: Go to the verify enrolled agent status page on IRS.gov.
Certified Public Accountants: Check with the State Board of Accountancy.
Attorneys: Check with the State Bar Association.
Ask about service fees. People should avoid tax return preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition.

Ask to e-file. To avoid pandemic related paper delays, taxpayers should ask their preparer to file electronically and choose direct deposit.

Make sure the preparer is available. Taxpayers may want to contact their tax return preparer after this year’s April 18 due date.

Provide records and receipts. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure things like the total income, tax deductions and credits.

Never sign a blank return. Taxpayers should not use a tax return preparer who asks them to sign a blank tax form.

Review before signing. Before signing a tax return, the taxpayer should review it. They should ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it.

Review details about any refund. Taxpayers should confirm the routing and bank account number on their completed return if they’re requesting direct deposit.

Ensure the preparer signs the return and includes their PTIN. All paid tax return preparers must have a Preparer Tax Identification number. By law, paid preparers must sign returns and include their PTIN on the return they file. The taxpayer’s copy of the return is not required to have the PTIN on it.

Report abusive tax preparers to the IRS. Most tax return preparers are honest and provide great service to their clients. However, some preparers are dishonest. People can report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer PDF.

Source: IRS Tax Tip 2022-48, March 29, 2022

by Larson Accounting

1 de February de 2022

WASHINGTON – Today, the U.S. Small Business Administration (SBA) announced updated guidance for those small businesses that have already applied for the Targeted EIDL Advance program, received a decline, and are interested in applying for reevaluation. Specifically, the following updated guidance is being provided:

Current Targeted EIDL Advance applicants:

Those interested in being considered for reevaluation can submit their reevaluation requests until February 15. The SBA is no longer accepting new Targeted EIDL Advance applications as of December 31, 2021.
This opportunity is for small businesses that were declined for the Targeted Advance program and can provide additional information to demonstrate their eligibility.

About the Targeted EIDL Advance program

In response to the COVID-19 pandemic, the Targeted EIDL Advance program provides eligible applicants funds of up to $10,000 that do not have to be repaid. Under the Biden-Harris Administration, the Targeted Advance program has provided approximately $5 billion to nearly 600,000 businesses, especially our hardest-hit small businesses in underserved communities, a priority of Administrator Guzman. For small business owners who apply for reevaluation, it is recommended they confirm they meet the below eligibility criteria:

Located in a low-income community. To help applicants determine if they are in a low-income community as defined in section 45D(e) of the Internal Revenue Code, a mapping tool (sbaeidl.policymap.com) is available. The business address must be in a low-income community to qualify. Applicants whose businesses have re-located to a low-income community since submitting their original application must submit proof of relocation, such as a lease agreement, utility bill, or mortgage with the name of the business.
Demonstrated reduction in revenue. Eligible applicants must demonstrate a more than 30 percent reduction in revenue during an eight-week period beginning on March 2, 2020, or later. If an applicant meets the low-income community criteria, they will be asked to provide gross monthly revenue (all forms of combined monthly earnings received, such as profits or salaries) to confirm the 30 percent reduction; and
Have 300 or fewer employees.

How to apply

If your business meets the eligibility criteria and your original application was declined, you may request Targeted EIDL Advance reevaluation by emailing targetedadvancereevaluation@sba.gov. Please include documentation that demonstrates your eligibility for the Targeted EIDL Advance program.

Small business owners may call SBA’s Customer Service Center 1-833-853-5638 (855-440-4960 for the deaf and hard-of-hearing) or email DisasterCustomerService@sba.gov for additional assistance. The center is open Monday through Friday from 8 a.m. to 8 p.m. EST. Multilingual representatives are available.

Visit www.sba.gov/eidl to learn more about eligibility and application requirements. For additional information on COVID EIDL and other recovery programs, please visit www.sba.gov/relief.

Small business owners may also contact SBA’s Resource Partners by visiting www.sba.gov/local-assistance.

Application Process and Fraud Control Enhancements

In addition to the policy enhancements, the SBA has invested in optimized processes and increased capacity to improve the customer service experience for applicants. Directed by Administrator Guzman to swiftly and drastically enhance COVID EIDL, the revamped management team implemented new processes and performance management, such as prioritizing personnel for COVID EIDL and increasing the average number of application decisions made. The SBA accelerated daily processing of loan increases from close to 2,000 applications to more than 37,000 applications daily. Loan officer productivity also went from 1.86 applications per day to 15 applications per day. As a result of these increased loan review rates, the 600,000+ loan increase backlog has been cleared, and new applications were processed immediately.

At the same time, and to ensure taxpayer dollars are used to support businesses that need COVID EIDL funding most, the SBA increased fraud controls and is working in collaboration with the SBA Inspector General to closely monitor the program.

About Targeted Advance Grants

A component of the COVID-19 Economic Injury Disaster Loan (EIDL), the Targeted Advance program provides up to $10,000 in funds that do not need to be repaid to small business owners, including agricultural businesses and nonprofit organizations in all U.S. states, Washington D.C., and territories. The purpose of Targeted Advance is to provide additional financial assistance beyond the COVID EIDL Loan program, which allows small businesses impacted by the COVID-19 disaster to focus on running their businesses without the stress of repayment.

About Economic Injury Disaster Loans

In response to COVID-19, small business owners, including agricultural businesses and nonprofit organizations in all U.S. states, Washington D.C., and territories were able to apply for the COVID-19 Economic Injury Disaster Loan (EIDL). The purpose of EIDL is to provide financial assistance for small businesses to meet financial obligations and operating expenses that could have been met had the disaster not occurred.

About the U.S. Small Business Administration

The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.

Source: SBA – 2022

by Larson Accounting

5 de January de 2022

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Millions of small business owners who rely on payment apps like Venmo, PayPal and Cash App could be subject to a new tax law that just took effect in January.

Beginning this year, third-party payment processors will be required to report a user’s business transactions to the IRS if they exceed $600 for the year. The payment apps were previously required to send users Form 1099-K if their gross income exceeded $20,000 or they had 200 separate transactions within a calendar year.

The new rule only applies to payments received for goods and services transactions, meaning that using Venmo or PayPal to send a loved one a gift, pay your roommate rent, or reimburse a friend for dinner will be excluded. Also excluded is anyone who receives money from selling a personal item at a loss; for example, if you purchased a couch for $300 and sold it for $250, the amount is not taxable.

To be clear, business owners are already required to report these incomes to the IRS. The new rule simply means that the IRS will figure out what business owners earned on the cash apps regardless of what that individual actually reports on their 1099-K because it broadens the scope of the threshold. (This rule is separate from another Democratic proposal that would require banks and other financial institutions to disclose accounts with $10,000 of annual deposits or outflows to the IRS).

Form 1099-K is used to report goods and services payments received by a business or individual in the calendar year, but there are certain exclusions from gross income and are therefore not subject to income tax. This includes: Amount from selling personal items at a loss, amounts sent as reimbursement and amounts sent as a gift.

“For the 2022 tax year, you should consider the amounts shown on your Form 1099-K when calculating gross receipts for your income tax return,” PayPal said in a Q&A on its website. “The IRS will be able to cross-reference both our report and yours.”

The cash apps will now be required to send users who meet the newest requirements Form 1099-K for transactions made electronically or by mail. Although the change took effect in the new year, it is not applicable to the 2021 tax season, meaning that small businesses do not need to take it into consideration until the 2022 tax-filing season begins next year.

The apps may request additional information from users in the near future in order to properly report your transactions, and users may be asked to provide their Employer Identification Number (EIN), Individual Tax Identification Number (ITIN) or Social Security Number (SSN) if it’s not already on file.

Source: FoxBusiness

by Larson Accounting

30 de November de 2021

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Kicking off a special week, the Internal Revenue Service and the Security Summit partners today warned taxpayers and tax professionals to beware of a dangerous combination of events that can increase their exposure to tax scams or identity theft.

The combination of the holiday shopping season, the upcoming tax season and the pandemic create additional opportunities for criminals to steal sensitive personal or finance information. People should take extra care while shopping online or viewing emails and texts.

The IRS, state tax agencies and the nation’s tax industry – working together as the Security Summit – mark today’s start of the 6th annual National Tax Security Awareness Week with tips on basic safeguards everyone should take. These can help protect against identity theft as well as help safeguard sensitive tax information that criminals can use to try filing fake tax returns and obtaining refunds.

“Don’t let this be the most wonderful time of the year for identity thieves,” said IRS Commissioner Chuck Rettig. “The approach of the holidays and tax season increases risk for taxpayers and opportunities for criminals. We urge people to be extra careful with their personal and financial information during this period while shopping online or getting suspicious emails or text. Taking a few simple steps can keep people from becoming victims of identity theft and protect their sensitive personal information needed for tax returns and refunds.”

Since 2015, the IRS and Security Summit partners have taken important steps to protect taxpayers and the nation’s tax professionals from tax-related identity theft. But progress in this area led identity thieves to evolve their tactics, trying to obtain sensitive information from taxpayers and tax professionals to help prepare fraudulent tax returns. Taxpayers can help in this fight by protecting their financial and tax information. Summit partners continue to highlight safety steps in the “Taxes.Security.Together” effort.

IRS YouTube Video:

Security Measures Protect Against Tax-Related Identity Theft

As part of that effort, National Tax Security Awareness Week is designed to help share information with taxpayers and tax professionals during this critical period. The special week includes special informational graphics and social media efforts on platforms including Twitter and Instagram through @IRSnews and #TaxSecurity.

A special emphasis for this year on social media will be focusing tax security awareness on younger and older Americans. Even if someone doesn’t file a tax return, their online interactions can lead to scam artists obtaining sensitive information and using it to try obtaining a refund.

10 key steps to protect sensitive information:

To help taxpayers and tax professionals, the Security Summit offers 10 basic steps everyone should remember during the holidays and as the 2022 tax season approaches:

Don’t forget to use security software for computers, tablets and mobile phones – and keep it updated. Protect electronic devices of family members, especially teens and young children.
Make sure anti-virus software for computers has a feature to stop malware, and there is a firewall enabled that can prevent intrusions.
Phishing scams – like imposter emails, calls and texts — are the No. 1 way thieves steal personal data. Don’t open links or attachments on suspicious emails. This year, fraud scams related to COVID-19, Economic Impact Payments and other tax law changes are common.
Use strong and unique passwords for online accounts. Use a phrase or series of words that can be easily remembered or use a password manager.
Use multi-factor authentication whenever possible. Many email providers and social media sites offer this feature. It helps prevent thieves from easily hacking accounts.
Shop at sites where the web address begins with “https” – the “s” is for secure communications over the computer network. Also, look for the “padlock” icon in the browser window.
Don’t shop on unsecured public Wi-Fi in places like a mall. Remember, thieves can eavesdrop.
At home, secure home Wi-Fis with a password. With more homes connected to the web, secured systems become more important, from wireless printers, wireless door locks to wireless thermometers. These can be access points for identity thieves.
Back up files on computers and mobile phones. A cloud service or an external hard drive can be used to copy information from computers or phones – providing an important place to recover financial or tax data.
Working from home? Consider creating a virtual private network (VPN) to securely connect to your workplace.

Other common warning signs; additional places for information

The IRS and Summit partners continue to see identity thieves trying to look like government agencies and others in the tax community by emailing or texting about tax refunds, stimulus payments or other items. Remember, the IRS will not call or send unexpected texts or emails about things like refunds. More information about these common scams is available at IRS Tax Tip: Common tax scams and tips to help taxpayers avoid them.

The IRS and Security Summit partners are sharing YouTube videos on security steps for taxpayers. The videos can be viewed or downloaded at Easy Steps to Protect Your Computer and Phone and Here’s How to Avoid IRS Text Message Scams.

Employers also can share Publication 4524, Security Awareness for Taxpayers PDF, with their employees and customers while tax professionals can share with clients.

In addition, the Summit partners remind people these security measures include mobile phones – an area that people sometimes can overlook. Thieves have become more adept at compromising mobile phones. Phone users also are more prone to open a scam email from their phone than from their computer.

Taxpayers can check out security recommendations for their specific mobile phone by reviewing the Federal Communications Commission’s Smartphone Security Checker. Since phones are used for shopping and even for doing taxes, remember to make sure phones and tablets are just as secure as computers.

During the pandemic, there continue to be numerous scams related to COVID-19. These can be attempts to gain sensitive personal or financial information. The Federal Trade Commission also has issued alerts; consumers can keep atop the latest scam information and report COVID-related scams.

The IRS, state tax agencies, the private sector tax industry, including tax professionals, work in partnership as the Security Summit to help protect taxpayers from identity theft and refund fraud. This is the first in a week-long series of tips to raise awareness about identity theft. See IRS.gov/securitysummit for more details.

Source: IRS-2021-236, November 29, 2021

by Larson Accounting

5 de October de 2021

WASHINGTON — The Internal Revenue Service reminds U.S. citizens, resident aliens and any domestic legal entity that the extension deadline to file their annual Report of Foreign Bank and Financial Accounts (FBAR) is Oct. 15, 2021.

Filers missing the April 15 annual due date earlier this year received an automatic extension until Oct. 15, 2021, to file the FBAR. They did not need to request the extension.

Filers affected by a natural disaster may have their FBAR due date further extended. It’s important filers review relevant FBAR Relief Notices for complete information.

Who needs to file?

The Bank Secrecy Act requires U.S. persons to file an FBAR if they have:

Financial interest in, signature authority or other authority over one or more accounts, such as a bank account, brokerage account, mutual fund or other financial account located outside the United States, and
The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

Because of this threshold, the IRS encourages U.S. persons or entities with foreign accounts, even relatively small ones, to check if this filing requirement applies to them. A U.S. person is a citizen or resident of the United States or any domestic legal entity such as a partnership, corporation, limited liability company, estate or trust.

How to file

Filers do not file the FBAR with their federal income tax return. The 2020 FBAR must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) and is only available through the BSA E-Filing System website. Those who are unable to e-file their FBAR must call FinCEN at 800-949-2732, or from outside the U.S. at 703-905-3975.

Avoid penalties

Those who don’t file an FBAR when required may be subject to significant civil and criminal penalties that can result in a fine and/or prison. The IRS will not penalize those who properly reported a foreign account on a late-filed FBAR if the IRS determines there was reasonable cause for late filing.

Source: IRS – IR-2021-196, October 1, 2021

by Larson Accounting

29 de August de 2021

The Internal Revenue Service has stepped up efforts to collect employment taxes from S corporation officers, but business owners are still getting away with avoiding billions of dollars in taxes.

A new report, released Tuesday by the Treasury Inspector General for Tax Administration, found the IRS is selecting less than 1% of all S corporations for examination for compliance with payment of employment taxes. When the IRS does examine an S corp, nearly half of IRS revenue agents don’t evaluate compensation during the examination, even when there’s a sole proprietor who didn’t report officer’s compensation and may have taken tax-free distributions in lieu of compensation.

The report comes less than a week after the investigative news site ProPublica reported on how business owners were leveraging a tax break stemming from the Tax Cuts and Jobs Act of 2017 that enables them to save millions of dollars in taxes by being paid in profits rather than salaries, while costing the Treasury billions of dollars in revenue. Tax advisors have been promoting a strategy that encourages business owners to reduce their own salaries while increasing their own company’s profits, which they can then use. The strategy leverages the lower tax rates under the TCJA, where profits are taxed at a top rate of 29.6%, as opposed to salaries being taxed at up to 37% (plus additional Medicare taxes). The TIGTA report focuses more on employment taxes, also known as FICA taxes for the Federal Insurance Contributions Act.

Business owners have been leveraging the strategy for a number of years predating the passage of the TCJA. “The issue of S corporations not paying salaries to officers and avoiding employment taxes has been reported for many years,” said the report. “IRS revenue agents have the opportunity to assess the issue when examining Forms 1120-S, U.S. Income Tax Return for an S corporation, in the field; addressing the issue more directly by examining it in the IRS’s Employment Tax function; or through Compliance Initiative Projects.”

For its report, TIGTA analyzed all the S corporation returns received by the IRS between 2016 and 2018, looking for returns where the profits exceeded $100,000, there was a single shareholder, and no officer’s compensation was claimed. It found the IRS didn’t select 266,095 of such returns for a field examination. The analysis found that single-shareholder owners made profits of $108 billion and took $69 billion in the form of a distribution, without reporting they received officer’s compensation for which they would have needed to pay Social Security and Medicare taxes. TIGTA estimated 266,095 tax returns may not have reported nearly $25 billion in compensation, allowing business owners to avoid paying approximately $3.3 billion in FICA taxes.

Another issue is the involvement of nonresident aliens as business owners. TIGTA identified 151 S corporations with nonresident alien shareholders, but pointed out that S corporations are not allowed to have nonresident aliens as shareholders. “If the IRS had identified these 151 S corporations and their 424 returns, it may have converted them to C corporations and assessed $5 million in corporate income taxes,” said the report.

IRS officials agreed with two of the five recommendations in TIGTA’s report, agreeing to issue letters to the 151 S corporations with nonresident alien shareholders, asking them to review their eligibility status and analyze the population after a year. But the IRS didn’t agree with the other three recommendations to: evaluate the risk of noncompliance with officer’s compensation and update the IRS examination plan; evaluate the benefits of using thresholds and criteria in classification guidance; or use compliance results from established work streams to better inform decision-making.

“We believe our existing policies and procedures properly address compliance risk regarding officers’ compensation,” wrote De Lon Harris, commissioner of the IRS’s Small Business/Self-Employed Examination unit, in response to the report. He noted that the IRS relies on a highly trained workforce to exercise their professional judgment to determine which issues in an audit will be examined. He also pointed out that due to the COVID-19 pandemic, TIGTA was unable to review the complete case files and instead needed to work from a database that indicates how often an examiner formally pursues a particular line item on a return but doesn’t reflect how often the examiner evaluates and determines an issue was reported correctly.

Source: AccoutingToday – August 26, 2021

by Larson Accounting

28 de June de 2021

WASHINGTON — The Internal Revenue Service and its Security Summit partners today warned taxpayers and tax professionals about a new IRS impersonation scam campaign spreading nationally on email. Remember: the IRS does not send unsolicited emails and never emails taxpayers about the status of refunds.

The IRS this week detected this new scam as taxpayers began notifying phishing@irs.gov about unsolicited emails from IRS imposters. The email subject line may vary, but recent examples use the phrase “Automatic Income Tax Reminder” or “Electronic Tax Return Reminder.”

The emails have links that show an IRS.gov-like website with details pretending to be about the taxpayer’s refund, electronic return or tax account. The emails contain a “temporary password” or “one-time password” to “access” the files to submit the refund. But when taxpayers try to access these, it turns out to be a malicious file.

“The IRS does not send emails about your tax refund or sensitive financial information,” said IRS Commissioner Chuck Rettig. “This latest scheme is yet another reminder that tax scams are a year-round business for thieves. We urge you to be on-guard at all times.”

This new scam uses dozens of compromised websites and web addresses that pose as IRS.gov, making it a challenge to shut down. By infecting computers with malware, these imposters may gain control of the taxpayer’s computer or secretly download software that tracks every keystroke, eventually giving them passwords to sensitive accounts, such as financial accounts.

The IRS, state tax agencies and the tax industry, which work together in the Security Summit effort, have made progress in their efforts to fight stolen identity refund fraud. But people remain vulnerable to scams by IRS imposters sending fake emails or harrassing phone calls.

The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.

The IRS also doesn’t call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. See Report Phishing and Online Scams for more details.

Source: IRS News

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IRS YouTube Video:

10 key steps to protect sensitive information:

Other common warning signs; additional places for information

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Who needs to file?

How to file

Avoid penalties

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Security Summit warns of new IRS impersonation email scam; reminds taxpayers the IRS does not send unsolicited emails