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by Larson Accounting
29 de January de 2024
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Tax 2024Tax 2024Tax 2024Tax 2024Tax 2024Tax 2024

IRS, partners highlight EITC Awareness Day with tax resources that benefit millions of low- and moderate-income workers

The Internal Revenue Service and partners around the nation today launched the annual Earned Income Tax Credit Awareness Day outreach campaign to help millions of low-to-moderate income working Americans that are eligible to claim the Earned Income Tax Credit (EITC).

For the past 18 years, the IRS has invited community organizations, elected officials, state and local governments, schools, employers and other interested parties to join this national grassroots effort.

According to the most recent figures, approximately 23 million workers and families received about $57 billion in EITC for tax year 2022, and the average amount of EITC received was about $2,541. The IRS estimates that about one in five of EITC eligible taxpayers don’t claim this valuable credit, a statistic that stresses the importance of the annual EITC Awareness Day outreach campaign.

“The IRS and our partners across the nation urge people to look into this frequently overlooked tax credit that can help millions of taxpayers,” said IRS Commissioner Danny Werfel. “On EITC Awareness Day and throughout the filing season, the IRS and our partners work hard to reach eligible taxpayers and provide useful information and resources to help people determine their eligibility and how to properly claim this valuable credit. Even people who don’t normally file might still be eligible for the Earned Income Tax Credit, which can be thousands of dollars.”

Werfel attended a special EITC Awareness Day event Friday in Baltimore sponsored by the CASH (Creating Assets, Savings and Hope) Campaign of Maryland. IRS leaders across the nation are also participating in local events this month highlighting the importance of EITC, which helps millions of taxpayers each year.

The IRS administers the EITC, which Congress originally approved in 1975. It was developed in part to offset the burden of Social Security taxes and provide an incentive to work.

Who is eligible to claim the EITC?

Workers must meet certain requirements and file a tax return, even if they are not required to file due to earned income levels. The IRS estimates that a third of those who qualify for EITC became eligible for the first time this year due to changes in their marital, parental or financial status.

The IRS encourages workers to use the EITC Assistant to check for eligibility or visit Child-related tax benefits comparison for basic eligibility rules.

Eligible workers must have valid Social Security numbers for themselves, their spouse if filing a joint return, and for each qualifying child claimed for the EITC. There are special rules for those in the military or those out of the country.

Those with qualifying children can receive a maximum of $7,430 when claiming the EITC, up from $6,935 in 2022.

Eligible workers between the ages of 25 and 64 with no dependents can also receive up to $600 by claiming the EITC. Married but separated spouses who do not file a joint return may qualify to claim EITC if they meet certain requirements.

EITC is for workers whose income does not exceed the following limits in 2023:

  • $56,838 ($63,398 married filing jointly) with three or more qualifying children who have valid Social Security numbers (SSNs).
  • $52,918 ($59,478 married filing jointly) with two qualifying children who have valid SSNs.
  • $46,560 ($53,120 married filing jointly) with one qualifying child who has a valid SSN.
  • $17,640 ($24,210 married filing jointly) with no qualifying children with valid SSNs.
  • Investment income must be $11,000 or less.

Filing options to choose from when claiming the EITC

To get the EITC, workers must file a tax return and claim the credit. The IRS also reminds taxpayers that the quickest way to get a tax refund is by filing an accurate tax return electronically and choosing direct deposit for their refund.

Here are some options on how to claim the EITC:

  • Free File on IRS.gov. Qualified taxpayers can prepare and file federal income tax returns online free of charge using guided tax preparation software. Free File also provides Free File Fillable Forms to help taxpayers regardless of income level who are comfortable preparing their own returns.
  • Free tax preparation assistance. There are thousands of Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites across the country available to help taxpayers who are eligible to claim the EITC. Visit IRS.gov, the IRS2go smartphone app or call toll-free 800-906-9887. Taxpayers should bring all required documents and information.

When to expect EITC refunds

Most EITC or Additional Child Tax Credit (ACTC) related refunds should be available in bank accounts or on debit cards by Feb. 27 if taxpayers chose direct deposit and there are no other issues with their tax return. Taxpayers can check Where’s My Refund?for their personalized refund date. Where’s My Refund? will be updated with projected deposit dates for most early EITC/ACTC refund filers by February 17.

Take advantage of other valuable tax credits

Taxpayers should make IRS.gov their first stop to find valuable info this filing season. Even if a taxpayer does not qualify for the EITC, they may be eligible for other credits or deductions. The Interactive Tax Assistant is a helpful tool for taxpayers to see if they qualify for the Child Tax Credit, Additional Child Tax Credit or Credit for Other Dependents.

Source: IRS-2024-22, Jan. 26, 2024

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by Larson Accounting
29 de January de 2024
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IRS: Free Jan. 30 webinar to focus on navigating through restart of automated collection notices, penalty relief

WASHINGTON — The Internal Revenue Service will hold a free webinar, designed primarily for tax professionals whose clients were affected by the delayed notices during the COVID pandemic.

The webinar will take place on Tuesday, Jan. 30, at 2 p.m. ET. It will reflect last month’s announcement that in general, the IRS will restart collection notices reminding taxpayers of their balance due this year and provide penalty relief on millions of tax returns.

During this free webinar the IRS will:

  • Discuss the restart of collection notices and letters, including:
    • Special reminder letter, LT38 – Reminder, Notice Resumption.
    • Changes to typical sequence of automated notices.
    • Gradual approach to sending notices during filing season.
  • Explain penalty relief for tax years 2020 and 2021.
  • Share helpful IRS resources to resolve tax debt.
  • Plus, the IRS will host a live question and answer session.

Certificates of completion are being offered. Tax professionals earn up to one continuing education (CE) credit in the category federal tax.

Closed captioning will be offered.

To register for the webinar, visit the Internal Revenue Service webinar website.

Questions? Email cl.sl.web.conference.team@irs.gov.

Source: IRS-2024-23, Jan. 26, 2024

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by Larson Accounting
24 de January de 2024
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ALERTNews

IRS launches Simple Notice Initiative redesign effort

Shorter, clearer letters to reduce taxpayer confusion; about 170 million notices sent to individual taxpayers annually

The Internal Revenue Service today announced work is underway on the Simple Notice Initiative, a sweeping effort to simplify and clarify about 170 million letters sent annually to taxpayers.

Part of the larger transformation work taking place at the IRS with Inflation Reduction Act funding, the Simple Notice Initiative will build off redesigned notice efforts in place for the 2024 tax season and expand on a recent successful pilot involving identity theft letters.

The Simple Notice Initiative will review and redesign hundreds of notices with an immediate focus on the most common notices that individual taxpayers receive. The redesign work will accelerate during the 2025 and 2026 filing seasons, improving common IRS letters going out to individual taxpayers and then expanding into notices going to businesses.

The IRS sends about 170 million notices to individual taxpayers every year, covering a range of issues from claiming the credits and deductions for which they are eligible for as well as meet their tax obligations. These notices are often long and difficult for taxpayers to understand. And they do not always clearly and concisely communicate the next steps a taxpayer must take.

“Simplifying and clarifying these letters will make it easier for taxpayers to understand the tax issues involved,” said IRS Commissioner Danny Werfel. “This will help reduce questions and save headaches for taxpayers, the tax professional community as well as the IRS. Improving these letters is also critical to our internal operations at the IRS, and an important part of our transformation efforts. Clearer letters can create a ripple effect, reducing taxpayer phone calls and visits and freeing up IRS staff to help others.”

This initiative builds on the IRS Paperless Processing initiative announced in August 2023 to advance the goal of providing world-class customer service to taxpayers. With these initiatives, taxpayers have the option to go paperless and conveniently submit necessary responses online, and taxpayers will receive clearer and more concise notices from the IRS, so they better understand the actions they need to take.

Filing season 2024: IRS reviewed, redesigned 31 notices

  • The Simple Notice Initiative builds on the IRS’s continuous effort to improve notices. During the last year, the IRS reviewed and redesigned 31 notices in time for this year’s tax season. The IRS sent about 20 million of these notices in calendar year 2022.
  • These include notices to taxpayers who served in combat zones that may be eligible for tax deferment, notices that remind a taxpayer that they may have unfiled returns and notices that remind a taxpayer about their balance due and where they can go for assistance.

Filing season 2025: IRS will review, redesign most common notices sent to individual taxpayers

  • By filing season 2025, the IRS will review and redesign the most common notices that individual taxpayers receive. The IRS will focus on up to 200 notices that make up about 90% of total notice volume sent to individual taxpayers. This represents about 150 million notices sent to individual taxpayers in 2022.
  • These include notices to propose adjustments to a taxpayer’s income, payments, credits, and/or deductions, notices to correct mistakes on a taxpayer’s tax return and notices to remind a taxpayer of taxes owed.
  • The IRS will be actively engaging with taxpayers and the tax professional community to gather feedback on how these notices should be redesigned.

Filing season 2026 and beyond: IRS will review, redesign notices sent to businesses taxpayers as well as less common notices sent to individual taxpayers

  • The IRS sends over 40 million notices to business taxpayers every year. In future filing seasons, the IRS will review and redesign notices sent to business taxpayers.
  • The IRS will also review and redesign less common notices sent to individual taxpayers.
  • Additional detail on the plan to redesign these notices will be shared in future updates.

Recent notice pilot shows how a redesigned notice can improve taxpayer experience while reducing call volume

The IRS is committed to delivering a better taxpayer experience through notices, over the phone, online and in-person. While taxpayers will always have the option to call, the IRS also wants to make it easier for taxpayers to resolve issues without having to pick up the phone. Plain language notices can help the IRS achieve this goal.

For example, the IRS recently conducted a pilot that sent redesigned versions of Notice 5071C to a subset of taxpayers. The Notice 5071C asks taxpayers to verify their identity and tax return online or over the phone to prevent the processing of fraudulent tax returns. As part of the redesign, the IRS shortened the 5071C notice from seven pages to two pages. The IRS also improved readability of the notice by updating the font and adding visual enhancements such as headers, icons and step-by-step instructions.

The IRS also clarified instructions and added a QR code that directs taxpayers to the IRS webpage where they can respond to the notice online instead of responding over the phone. See below for an overview of improvements that were made.

The IRS sent the redesigned Notice 5071C to 60,000 taxpayers. Compared to taxpayers who received the original notice, there was a 16% reduction in taxpayers who called the IRS as their first action, and a 6% increase in taxpayers who used the online option. The IRS will apply lessons learned from this pilot, among others, to the new initiative. These changes to this notice will be put in place during coming months.

Notice 5071C: Before and after redesign shows changes

Source: IRS-2024-19, Jan. 23, 2024

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by Larson Accounting
22 de January de 2024
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Treasury, IRS issue guidance on the Qualified Alternative Fuel Vehicle Refueling Property Credit

The Internal Revenue Service and the Department of the Treasury today issued Notice 2024-20PDF to provide guidance on eligible census tracts for the qualified alternative fuel vehicle refueling property credit and to announce the intent to propose regulations for the credit.

The Inflation Reduction Act amended the credit for qualified alternative fuel vehicle refueling property. The changes apply to qualified alternative fuel vehicle refueling property placed in service after Dec. 31, 2022 and before Jan. 1, 2033.

The credit amount for property not subject to depreciation is 30% of the cost of the qualified property placed in service during the tax year. The credit amount for depreciable property is 6% of the cost of the qualified property placed in service during the tax year but may be increased to 30% of the cost of the qualified property if the prevailing wage and apprenticeship requirements are met. The credit is limited to $100,000 for depreciable property and $1,000 for non-depreciable property.

Property must be placed in service in an eligible census tract to qualify for the credit. An eligible census tract is any population census tract that is a low-income community or any population census tract that is not an urban area. See Appendix APDF and Appendix BPDF for eligible census tracts.

The primary purpose of the notice is to provide taxpayers with a list of eligible census tracts in advance of the 2023 filing season and to explain how taxpayers can identify the 11-digit census tract identifier for the location where the property is placed in service. The IRS intends to propose regulations including this information in the future, but taxpayers may rely on the notice until proposed regulations are published.

This notice also provides background and definitions, describes relevant census concepts, provides definitions for low-income communities and non-urban census tracts, and explains which delineation of census tract boundaries is applicable for each type of census tract determination. Further, the notice describes how updating of low-income community census tract determinations are considered for credit eligibility.

Finally, the IRS released frequently asked questions related to the alternative fuel vehicle refueling property credit.

More information about the alternative fuel vehicle refueling property credit may be found on the Inflation Reduction Act of 2022 page on IRS.gov.

Source: IRS-2024-16, Jan. 19, 2024

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by Larson Accounting
18 de January de 2024
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Treasury and IRS announce that businesses do not have to report certain transactions involving digital assets until regulations are issued

The Treasury Department and Internal Revenue Service today issued an announcement informing businesses that they do not have to report the receipt of digital assets the same way as they must report the receipt of cash until Treasury and IRS issue regulations.

The Infrastructure Investment and Jobs Act revised the rules that require taxpayers that are engaged in a trade or business to report receiving cash of more than $10,000 by considering digital assets to be cash. Announcement 2024-4PDF provides transitional guidance as Treasury and the IRS implement the new provisions. This particular provision requires Treasury and the IRS to issue regulations before it goes into effect.

The announcement does not affect the rules in effect before the Infrastructure Investment and Jobs Act for cash received in the course of a trade or business, which must be reported on Form 8300, Report of Cash Payments over $10,000 Received in a Trade or Business, within 15 days of receiving the cash.

Treasury and the IRS intend to issue proposed regulations to provide additional information and procedures for reporting the receipt of digital assets, giving the public an opportunity to comment both in writing and, if requested, at a public hearing.

Source: IRS-2024-12, Jan. 16, 2024

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by Larson Accounting
12 de January de 2024
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NewsNewsNewsNewsTax 2024

IRS ramps up new initiatives using Inflation Reduction Act funding to ensure complex partnerships, large corporations pay taxes owed, continues to close millionaire tax debt cases

More than $482 million recovered from 1,600 millionaires who have not paid tax debts

The Internal Revenue Service announced today continued progress to expand enforcement efforts related to high-income individuals, large corporations and complex partnerships as part of wider efforts to transform the agency.

IRS Commissioner Danny Werfel noted Inflation Reduction Act resources continue to help in a variety of areas. In addition to earlier announcements focusing on further improving taxpayer service during the upcoming 2024 filing season, the IRS has focused IRA resources on strengthening enforcement to pursue complex partnerships, large corporations and high-income, high-wealth individuals who do not pay overdue tax bills.

The IRS shared today progress in its focus on people using partnerships to avoid paying self-employment taxes as well as new details on current enforcement priorities. The IRS is also continuing to pursue millionaires that have not paid hundreds of millions of dollars in tax debt, with an additional $360 million collected on top of the $122 million reported in late October. The IRS has now collected $482 million in ongoing efforts to recoup taxes owed by 1,600 millionaires with work continuing in this area.

“The IRS continues to increase scrutiny on high-income taxpayers as we work to reverse the historic low audit rates and limited focus that the wealthiest individuals and organizations faced in the years that predated the Inflation Reduction Act. We are adding staff and technology to ensure that the taxpayers with the highest income, including partnerships, large corporations and millionaires and billionaires, pay what is legally owed under federal law,” Werfel said. “At the same time, we are focused on improving our taxpayer service for hard-working taxpayers, offering them more in-person and online resources as part of our effort to deliver another successful tax season in 2024. The additional resources the IRS has received is making a difference for taxpayers, and we plan to build on these improvements in the months ahead.”

Werfel highlighted these as part of a quarterly update on the IRS Strategic Operating Plan, the transformational effort using IRA funding. As these initiatives to improve compliance among high-income individuals, complex partnerships and large corporations increase, the IRS continues its work to improve customer service and modernize core technology infrastructure.

Ensuring complex partnerships, large corporations and high-income, high-wealth individual taxpayers pay taxes owed

The IRS is working to ensure large corporate, large partnership and high-income individual filers pay the taxes they owe. Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented the IRS from keeping pace with the increasingly complicated set of tools that the wealthiest taxpayers use to hide their income and evade paying their share. The IRS is now taking swift and aggressive action to close this gap.

  • Prioritization of high-income cases: The IRS has ramped up efforts to pursue high-income, high-wealth individuals who have either not filed their taxes or failed to pay recognized tax debt, with dozens of revenue officers focused on these high-end collection cases. These efforts are concentrated among taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. In an initial success, the IRS collected $38 million from more than 175 high-income earners. The IRS last fall began contacting about 1,600 new taxpayers in this category that owe hundreds of millions of dollars in taxes. The IRS has assigned over 900 of these 1,600 cases to revenue officers, with over $482 million collected so far. This brings the total recovered from millionaires through these new initiatives to $520 million.
  • Pursuing multi-million-dollar partnership balance sheet discrepancies: The IRS has identified ongoing discrepancies on balance sheets involving partnerships with over $10 million in assets, which is an indicator of potential non-compliance. Taxpayers filing partnership returns are showing millions of dollars in discrepancies between end-of-year balances compared to the beginning balances the following year. The number of these discrepancies has been increasing, with many taxpayers not attaching required statements explaining the difference. The IRS announced an initiative to address the balance sheet discrepancy in September and as of the end of October had sent 480 compliance alerts.
  • Ramp up of audits of 76 largest partnerships leveraging Artificial Intelligence (AI): The complex structures and tax issues present in large partnerships require a focused approach to best identify the highest risk issues and apply resources accordingly. In 2021, the IRS launched the first stage of its Large Partnership Compliance (LPC) program with examinations of some of the largest and most complex partnership returns in the filing population. The IRS announced in September that it would expand this program to additional large partnerships. With the help of AI, the selection of these returns is the result of groundbreaking collaboration among experts in data science and tax enforcement, who have been working side-by-side to apply cutting-edge machine learning technology to identify potential compliance risk in the areas of partnership tax, general income tax and accounting, and international tax in a taxpayer segment that historically has been subject to limited examination coverage. As of December, the IRS had open examinations of 76 of the largest partnerships in the U.S. that represent a cross section of industries including hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms and other industries. On average, these partnerships each have more than $10 billion in assets.
  • Large Foreign-Owned Corporations Transfer Pricing Initiative: The IRS is increasing compliance efforts on the U.S. subsidiaries of foreign companies that distribute goods in the U.S. and do not pay their fair share of tax on the profit they earn of their U.S. activity. These foreign companies use transfer pricing rules year after year to report losses that are engineered through the improper use of these rules to avoid reporting an appropriate amount of U.S. profits. To crack down on this strategy, as of mid-November the IRS has sent compliance alerts to more than 180 subsidiaries of large foreign corporations to reiterate their U.S. tax obligations and incentivize self-correction.
  • Expansion of the Large Corporate Compliance program: The Large Business & International Division’s (LB&I) Large Corporate Compliance (LCC) program focuses on noncompliance by using data analytics to identify large corporate taxpayers for audit. LCC includes the largest and most complex corporate taxpayers with average assets of more than $24 billion and average taxable income of approximately $526 million per year. As new accountants come on board in early 2024, LB&I is expanding the program by starting an additional 60 audits of the largest corporate taxpayers selected using a combination of artificial intelligence and subject matter expertise in areas such as cross-border issues and corporate planning and transactions.
  • Partnership Self-Employment Tax Initiative: As part of the agency’s increased focus on the tax issues applicable to partnerships and partners, the IRS has been increasing compliance to ensure that Self-Employment Contributions Act (SECA) taxes are being properly reported and paid by wealthy individual partners who provide services and have inappropriately claimed to qualify as “limited partners” in state law limited partnerships (such as investment partnerships) not subject to SECA tax. In contrast to wage earners whose employment taxes (Federal Insurance Contributions Act/FICA) are deducted from their paychecks, self-employed individuals are required to report and pay their SECA taxes on their federal income returns. The IRS efforts to date include over 80 audits of wealthy individuals. Additionally, in November 2023, the Tax Court issued an opinion in Soroban Capital Partners LP v. Commissioner that agreed with the IRS’s position that the limited partner exception to SECA tax does not apply to a partner who is “limited” in name only. As a result, partners who actively participated in the state law limited partnership must report their partnership share as net earnings from self-employment subject to SECA tax.

New examples of cases closed since the Inflation Reduction Act passed follow:

  • In January 2024, two individuals were sentenced to 25 years and 23 years respectively in prison for conspiracy to commit wire fraud, aiding and assisting the filing of false tax returns and money laundering for their role in promoting a fraudulent tax shelter scheme involving syndicated conservation easements.
  • In December, a Swiss Bank entered into a Deferred Prosecution Agreement (DPA) and agreed to pay approximately $122.9 million to the U.S. Treasury for their role in assisting U.S. taxpayer-clients with evading their U.S. taxes by opening and maintaining undeclared accounts. The bank also maintained accounts of certain U.S. taxpayer-clients in a manner that allowed them to further conceal their undeclared accounts from the IRS. In total, from 2008 through 2014, the bank held 1,637 U.S. Penalty Accounts, with aggregate maximum assets under management of approximately $5.6 billion in January 2008, on behalf of clients who collectively evaded approximately $50.6 million in U.S. taxes.
  • In December, an individual was sentenced to 10 years and 10 months and ordered to pay more than $130,000 in restitution, another was sentenced to 102 months in prison and ordered to pay more than $2.5M in restitution and a third individual was sentenced to four years in prison and ordered to pay more than $2.5M in restitution for their involvement in a RICO Conspiracy for cyber intrusion and tax fraud. These individuals used the dark web to purchase server credentials for the computer servers of Certified Public Accounting and tax preparation firms across the country.
  • In December, an individual was sentenced to 28 months in federal prison and ordered to pay over $470,000 in restitution to the IRS for filing a false tax return while working as a money mule for romance scams. The individual opened and maintained bank accounts to collect proceeds from the schemes and to send the money to himself and others overseas.
  • An individual was sentenced to 57 months in prison for their failure to pay more than $1.35 million of taxes arising from their operation of several restaurants in the Washington, D.C. area. The individual evaded taxes by concealing assets and obscuring the large sums of money they took from the businesses by purchasing property in the name of a nominee entity and causing false entries in the businesses’ books and records to hide personal purchases using business bank accounts.

Hiring additional top talent to pursue high-income individuals, complex partnerships and large corporations

The IRS offered positions to more than 560 new skilled accountants in November and December, key positions in ramping up work to pursue high-wealth individuals, complex partnerships and large corporations that do not pay taxes owed. Importantly, the IRS has been modernizing its hiring processes and holding more direct hiring events to better compete with the private sector and quickly bring top talent on board.

For example, at a December hiring event in Houston, the IRS hired 160 skilled accountants in two days, compressing the typical three to six month hiring process into one day. These events are marketed in advance, and onsite Human Capital Office staff review all applicants’ credentials and ensure they are qualified for the position. Following this initial screening, applicants are interviewed by hiring managers and passed to selecting officials for a final decision. Successful applicants are given tentative offers, sponsored and fingerprinted on site, leaving only background and tax checks to be completed.

Improving taxpayer service

The IRS is focused on helping taxpayers get it right the first time — claiming the credits and deductions they are eligible for and avoiding back-and-forth with the agency when errors arise. To help taxpayers get it right, the IRS is working toward taxpayers being able to seamlessly interact with the agency in the ways that work best for them on the phone, in-person and online. The IRS is expanding in-person service and meeting taxpayers where they are, particularly those in underserved and rural communities. The IRS is continuing to expand Taxpayer Assistance Centers across the country.

  • Opening Taxpayer Assistance Centers: Currently, the IRS has opened or reopened 54 Taxpayer Assistance Centers since the passage of the Inflation Reduction Act, including four since November:
    • Bellingham, Washington
    • Eau Claire, Wisconsin
    • Washington, Pennsylvania
    • Media, Pennsylvania

Taxpayer Assistance Centers, which provide in-person support to local communities across the country, will collectively offer over 8,000 more hours of in-person assistance than they did last filing season.

  • Taxpayer Assistance Center hiring update: As of the end of December, the IRS has hired 858 employees to staff Taxpayer Assistance Centers. This represents a 410 net increase in Taxpayer Assistance Center staffing compared to Fiscal Year 2022, and IRS continues to hire to replace departing staff.

Taxpayers deserve the same functionality in their online accounts that they experience with their bank or other financial institutions. As detailed in the Strategic Operating Plan, in the next five years, taxpayers will be able to securely file all documents and respond to all notices online and securely access and download their data and account history. The IRS has hit or has in progress several milestones toward this goal, including the launch of Business Tax Account, the expansion of the Document Upload Tool to accept responses to nearly all notices and letters, and the launch of digital mobile-adaptive forms.

  • Respond to notices online: Taxpayers are now able to respond to notices online. Until Filing Season 2023, when taxpayers received notices for things like document verification, they had to respond through the mail. During Filing Season 2023, taxpayers were able to respond to 10 of the most common notices for credits like the Earned Income and Health Insurance Tax Credits online, saving them time and money. By July 2023, taxpayers had the option to respond to 61 IRS notices and letters, and by October 2023, taxpayers could respond to all notices and letters that do not have a filing or payment action. As of December, the IRS has received more than 45,000 responses to notices via the online tool.
  • Processing Status for Tax Forms dashboard: The IRS has launched a public facing Processing Status for Tax Formsdashboard listing current processing status for key forms (e.g., 1040, 941) and general correspondence. The IRS operations: Status of mission-critical functions webpage has also been updated to link to the new dashboard. For electronically filed forms, processing status is the typical number of days it currently takes to process a form after receipt from the taxpayer. For paper forms, processing status reflects which month of receipt is currently being processed. The IRS included forms that had significant volumes of submission in paper format and lead to a follow-on action for the taxpayer after submissions are processed. For example, forms that trigger refunds or the receipt of an Individual Taxpayer Identification Number (ITIN). The page is updated weekly to reflect current processing status.
  • Voice bots on Where’s My Refund? and Where’s My Amended Return?: IRS launched natural voice language voice bots for taxpayers calling about refunds and amended returns. These voice bots allow callers to ask questions using natural language instead of following menu-driven prompts.

In addition, the IRS continues to expand the functionality of several online platforms:

  • With the latest updates to Individual Online Account, individuals can now save multiple bank accounts, validate bank account information and display their bank name. Individuals can also schedule and cancel payments and expand and revise payment plans.
  • The IRS launched the second phase of Business Tax Account that expands its capabilities and eligible entity types. As a result, individual partners of partnerships and individual shareholders of S corporation businesses are now eligible for a business tax account, in addition to sole proprietors with an employer identification number (EIN). Eligible entities can now access business tax transcripts and view digital notices and letters.
  • Enhancements to Tax Pro Account include the ability to manage active client authorizations with the Centralized Authorization File (CAF) database, view and manage active authorizations, and view their individual and business clients’ tax information including business balance due and canceled and returned checks for individuals.

Modernizing technology

On the technology side, the IRS is modernizing decades-old technology to drive the agency’s efforts to provide world-class customer service and protect taxpayers’ data.

  • Digitalization: The IRS also continues to make significant progress scanning and e-filing paper returns. By the end of February, the IRS will have replaced scanning equipment that is older than five years and the automated mail-sorter machines in the six highest-volume locations, streamlining the process of mail sorting, opening and scanning. As of the end of December, the IRS had scanned more than 1.5 million forms during the 2023 calendar year — more than 484,000 Forms 940, 907,000 Forms 941 and more than 111,000 Forms 1040. Digitization has far-reaching implications for how the IRS can improve service.

Source: IRS-2024-09, Jan. 12, 2024

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by Larson Accounting
12 de January de 2024
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Annual Report List by State for LLCs and Corporations

Many state governments require LLCs, Corporations, and other registered business entities to file annual reports each year. And some Secretary of State (or comparable agency) offices may require these types of reports to be filed according to different timeframes (e.g., biennial and decennial reports).

Figuring out the reports they must file and the deadlines they must meet can become frustrating for busy small business owners. Ferreting out states’ specific requirements can prove a daunting task—especially with so many other tasks to juggle when starting and growing a company. Who has time to stay on top of everything?!

Key Things to Know About Annual Reports

As you review the information on our list, keep the following things in mind:

  • Currently, all states, except Ohio, require some sort of annual report filing.
  • Specific filing requirements and deadlines vary by state.
  • Some states also require an initial report when first starting a business.
  • When businesses fail to file on time, they might get hit with fines or other penalties.
  • In worst-case scenarios, companies risk losing their status of good standing with the state. That could result in the business owners losing their personal liability protection and other benefits of being a registered business entity.
  • State requirements sometimes change depending on economic factors (such as the COVID-19 pandemic).

C Corporation Annual Report List by State

State Report Name Submission Frequency Due Date
Alabama Business Privilege Tax Return Yearly Same as federal return
Alabama Annual Return Yearly 15th day of the fourth month after beginning of the tax year
Alaska Biennial Report 2 Years January 2
Arizona Annual Report Yearly Anniversary date
 Arkansas Annual Franchise Tax Report Yearly May 1
 California Annual Franchise Tax Report Yearly The 15th day of the 4th month from the formation date
 California Statement of Information Yearly Last day of the anniversary month
 Colorado Periodic Report Yearly Last day of the anniversary month
 Connecticut Annual Report Yearly Anniversary date
 Delaware Annual Report
Annual Franchise Tax Report		 Yearly March 1
 Florida Annual Report Yearly May 1
 Georgia Annual Registration Yearly April 1
 Hawaii Annual Report Yearly The quarter that contains the anniversary month
 Idaho Annual Report Yearly Last day of the anniversary month
 Illinois Annual Report Yearly Prior to the first day of the anniversary month
 Indiana Business Entity Report 2 Years Last day of the anniversary month
 Iowa Biennial Report 2 Years – Even April 1
 Kansas Annual Report Yearly The 15th day of the 4th month after the close of the fiscal year
 Kentucky Annual Report Yearly June 30
 Louisiana Annual Report Yearly Anniversary date
 Maine Annual Report Yearly June 1
 Maryland Annual Report Yearly April 15
 Massachusetts Annual Report Yearly Within 2.5 months after the close of the organization’s fiscal year
 Michigan Annual Report Yearly May 15
 Minnesota Annual Renewal Yearly December 31
 Mississippi Annual Report Yearly April 15
 Missouri Annual Report Yearly By the end of the 3rd month following the registration anniversary month
 Montana Annual Report Yearly April 15
 Nebraska Biennial Occupation Tax Report 2 Years – Even March 1
 Nebraska Annaul Benefit Report 2 Years – Even March 1
 Nevada Annual List of Officers and Directors Yearly Last day of the anniversary month
 New Hampshire Annual Report Yearly April 1
 New Jersey Annual Report Yearly By the end of the month prior to the registration anniversary month
 New Mexico Biennial Report 2 Years The 15th day of the 4th month after the close of the fiscal year
 New York Biennial Report 2 Years Last day of the anniversary month
 North Carolina Annual Report Yearly The 15th day of the 4th month after the close of the fiscal year
 North Dakota Annual Report Yearly August 1
 Ohio n/a n/a n/a
 Oklahoma Business Activity Tax Return Yearly July 1
 Oregon Annual Report Yearly Anniversary date
 Pennsylvania Decennial Report 10 Years December 31
 Rhode Island Annual Report Yearly May 1
 South Carolina Annual Report Yearly Report included in the tax return
C Corps are due April 15th or the 15th day of 4th month after tax year-end
 South Dakota Annual Report Yearly First day of anniversary month
 Tennessee Annual Report Yearly By the 1st day of the 4th month following the fiscal year-end
 Texas Texas Franchise Tax Report
Public Information Report (PIR)		 Yearly May 15
 Utah Annual Renewal Yearly By the last day of the anniversary month
 Vermont Annual Report Yearly Within two and a half months after the end of the organization’s fiscal year
 Virginia Annual Report Yearly Last day of the anniversary month
 Washington Annual Report Yearly Last day of the anniversary month
 West Virginia Annual Report Yearly June 30
 Wisconsin Annual Report Yearly Last day of the quarter that contains the formation month
 Wyoming Annual Report Yearly First day of anniversary month
Washington DC Biennial Report 2 Years April 1

Additional Notes of Interest:
Pennsylvania’s annual report will be due annually on June 30 starting in 2025.
Washington DC’s annual report is due the first year after organization, and then every 2 years after that.

LLC Annual Report List by State

State Report Name Submission Frequency Due Date
Alabama Business Privilege Tax Return Yearly Due the same time as federal return
Alaska Biennial Report 2 Years January 2
Arizona n/a n/a n/a
 Arkansas Annual Franchise Tax Report Yearly May 1
 California Annual Franchise Tax Report Yearly The 15th day of the 4th month from the formation date
 California Statement of Information 2 Years Last day of the anniversary month
 Colorado Periodic Report Yearly By the last day of the anniversary month
 Connecticut Annual Report Yearly March 31st
 Delaware Alternative Entity Tax Yearly June 1
 Florida Annual Report Yearly May 1
 Georgia Annual Registration Yearly April 1
 Hawaii Annual Report Yearly The quarter that contains the anniversary month
 Idaho Annual Report Yearly Last day of the anniversary month
 Illinois Annual Report Yearly Prior to the first day of the anniversary month
 Indiana Business Entity Report 2 Years Last day of the anniversary month
 Iowa Biennial Report 2 Years – Odd April 1
 Kansas Annual Report Yearly The 15th day of the 4th month after the close of the fiscal year
 Kentucky Annual Report Yearly June 30
 Louisiana Annual Report Yearly Anniversary date
 Maine Annual Report Yearly June 1
 Maryland Annual Report & Personal Property Return Yearly April 15
 Massachusetts Annual Report Yearly Anniversary date
 Michigan Annual Report Yearly Febuary 15
 Minnesota Annual Renewal Yearly December 31
 Mississippi Annual Report Yearly April 15
 Missouri n/a n/a n/a
 Montana Annual Report Yearly April 15
 Nebraska Biennial Reports 2 Years – Odd April 1
 Nevada Annual List of Managers or Members Yearly Last day of the anniversary month
 New Hampshire Annual Report Yearly April 1
 New Jersey Annual Report Yearly End of the month prior to the registration anniversary month
 New Mexico n/a n/a n/a
 New York Biennial Report 2 Years Last day of the anniversary month
 North Carolina Annual Report Yearly April 15
 North Dakota Annual Report Yearly November 15
 Ohio n/a n/a n/a
 Oklahoma Annual Certificate Yearly Anniversary date
 Oregon Annual Report Yearly Anniversary date
 Pennsylvania Decennial Report 10 Years December 31
 Rhode Island Annual Report Yearly May 1
 South Carolina n/a n/a n/a
 South Dakota Annual Report Yearly First day of anniversary month
 Tennessee Annual Report Yearly By the 1st day of the 4th month following the fiscal year-end
 Texas Texas Franchise Tax Report
Public Information Report (PIR)		 Yearly May 15
 Utah Annual Renewal Yearly By the last day of the anniversary month
 Vermont Annual Report Yearly Within three months after the end of the organization’s fiscal year
 Virginia Annual Registration Yearly Last day of the anniversary month
 Washington Annual Report Yearly Last day of the anniversary month
 West Virginia Annual Report Yearly June 30
 Wisconsin Annual Report Yearly Last day of the quarter that contains the formation month
 Wyoming Annual Report Yearly First day of anniversary month
Washington DC Biennial Report 2 Years April 1

Additional Notes of Interest:
Pennsylvania’s annual report will be due annually on June 30 starting in 2025.
Washington DC’s annual report is due the first year after organization, and then every 2 years after that.

Keep Track of Your State’s Filing Requirements

As you can see, there’s a wide range of deadlines for state annual reports across the United States. Besides these reports, you may have other business filings and compliance responsibilities to take care of, too.

To take the hassle out of keeping track of what your company needs to archive, contact one of our experts.

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by Larson Accounting
11 de January de 2024
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IRS reminder: Jan. 31 filing deadline for employers to file wage statements, independent contractor forms

With tax season rapidly approaching, the IRS reminds employers that Jan. 31 is the deadline for submitting wage statements and forms for independent contractors with the government.

Employers must file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by Jan. 31.

The Jan. 31 deadline also applies to Forms 1099-MISC, Miscellaneous Income, and Forms 1099-NEC, Nonemployee Compensation, that are filed with the IRS to report non-employee compensation to independent contractors. Various other due dates related to Form 1099-MISC, Form 1099-K and Form 1099-NEC, including dates due to the IRS, can be found on the forms’ instructions.

The IRS offers a free electronic filing service for the Form 1099 series using the Information Returns Intake System (IRIS). Filers can also use this online portal to prepare payee copies for distribution, file corrections and request automatic extensions.

New filing requirements

New electronic filing requirements affect Forms W-2 that are required to be filed in 2024. Businesses that file 10 forms or more must file W-2s and certain information returns electronically. See New electronic filing requirements for Forms W-2 for more information.

E-filing is the quickest, most accurate and convenient way to file forms. For more information on e-filing Forms W-2, employers can refer to Employer W-2 Filing Instructions & Information on the Social Security Administration’s website.

Key points to remember

  • Extensions to file are not automatically granted. Employers may request a 30-day extension to file Forms W-2 by submitting Form 8809, Application for Extension of Time to File Information Returns, by Jan. 31.
  • Filing Form 8809 does not extend the due date for furnishing wage statements to employees. A separate extension must be filed by Jan. 31. See Extension of time to furnish Forms W-2 to employees for more information.
  • Filing by the deadline helps the IRS to fight fraud by making it easier to verify income. Employers can help support that process and avoid penalties by filing the forms on time and without errors.
  • Penalties may be assessed for failure to file correctly and on time. For more information visit the IRS’ Information Return Penalties page.
  • Form 1099-K $600 reporting threshold delayed. This means that for 2023 and prior years, payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions. For tax year 2024, the IRS plans for a threshold of $5,000 to phase in reporting requirements.

The IRS encourages employers and taxpayers to visit About Form W-2, Wage and Tax Statement and Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2GPDF, for more information.

Source: IRS-2024-06, Jan. 9, 2024

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by Larson Accounting
9 de January de 2024
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2024 tax filing season set for January 29; IRS continues to make improvements to help taxpayers

The Internal Revenue Service today announced Monday, Jan. 29, 2024, as the official start date of the nation’s 2024 tax season when the agency will begin accepting and processing 2023 tax returns.
The IRS expects more than 128.7 million individual tax returns to be filed by the April 15, 2024, tax deadline.

Although the IRS will not officially begin accepting and processing tax returns until Jan. 29, people do not need to wait until then to work on their taxes if they’re using software companies or tax professionals. For example, most software companies accept electronic submissions and then hold them until the IRS is ready to begin processing later this month. IRS Free File will also be available on IRS.gov starting Jan. 12 in advance of the filing season opening. The IRS Direct File pilot will be rolled out in phases as final testing is completed and is expected to be widely available in mid-March to eligible taxpayers in the participating states.

Taxpayers will continue to see helpful changes at the IRS following ongoing transformation work. Building off the success of the 2023 tax season that saw significant improvements following passage of the Inflation Reduction Act, the 2024 filing season will continue reflecting the focus on improving services to taxpayers.

“As our transformation efforts take hold, taxpayers will continue to see marked improvement in IRS operations in the upcoming filing season,” said IRS Commissioner Danny Werfel. “IRS employees are working hard to make sure that new funding is used to help taxpayers by making the process of preparing and filing taxes easier.”

Some of the new and expanded tools and resources include:

  • Expanded in-person service that meets taxpayers where they are by opening or reopening Taxpayer Assistance Centers (TACs). The IRS will also offer extended hours at many TACs nationwide.
  • Increased help available on the toll-free line and an expanded customer call back feature designed to significantly reduce wait times.
  • Improvements to the Where’s My Refund? tool, which is the IRS’ most widely used taxpayer service tool. However, the tool provides limited information, often leading taxpayers to call the IRS to inquire about their refund status. Updates to Where’s My Refund? will allow taxpayers to see more detailed refund status messages in plain language. These updates will also ensure Where’s My Refund works seamlessly on mobile devices. Taxpayers often see a generic message stating that their returns are still being processed and to check back later. With the improvements, taxpayers will see clearer and more detailed updates, including whether the IRS needs them to respond to a letter requesting additional information. The new updates will reduce the need for taxpayers to call the IRS for answers to basic questions.
  • Enhanced paperless processing that will enable taxpayers to submit all correspondence, non-tax forms, and responses to notices digitally and will be able to e-File 20 additional tax forms. Achieving this milestone will enable up to 125 million paper documents to be submitted digitally per year.
  • An enhanced IRS Individual Online Account that includes chat, the option to schedule and cancel future payments, revise payment plans and validate and save bank accounts.
  • A new, pilot tax filing service called Direct File that gives eligible taxpayers a new choice to file their 2023 federal tax returns online, for free, directly with the IRS. It will be rolled out in phases and is expected to be widely available in mid-March. Find more about Direct File pilot eligibility, scope and the participating states on Direct File.

April 15 tax filing deadline for most taxpayers

For most taxpayers, the deadline to file their personal federal tax return, pay any tax owed or request an extension to file is Monday, April 15, 2024.

Taxpayers living in Maine or Massachusetts have until April 17, 2024, due to the Patriot’s Day and Emancipation Day holidays. If a taxpayer resides in a federally declared disaster area, they also may have additional time to file.

Tips to help people file in 2024

The IRS encourages taxpayers to take steps now to Get Ready to file their 2023 individual federal tax return. It’s important for filers to gather all the correct information they need before filing their return. Organize and gather tax records including Social Security numbers, Individual Taxpayer Identification Numbers, Adoption Identification Numbers and this year’s Identity Protection Personal Identification Numbers (IP PIN). Filing an accurate return can help taxpayers avoid refund delays or later IRS mailings about a problem.

People should report all their taxable income and wait to file until they receive all income related documents. This is especially important for people who may receive various Forms 1099 from banks or other payers reporting unemployment compensation, dividends, pensions, annuities or retirement plan distributions. If a taxpayer receives Forms 1099-K, they should visit What to do with Form 1099-K to help them determine if that money should be reported as income on their federal tax return.

People should plan to file electronically with direct deposit. This is still the fastest and easiest way to file and receive a refund. To avoid delays in processing, people should avoid filing paper returns whenever possible.

IRS Free File; opens January 12; free service on IRS.gov has helped millions

IRS Free File will open Jan. 12, 2024, when participating software companies will accept completed tax returns and hold them until they can be filed electronically with the IRS. IRS Free File Guided Tax Software, available only at IRS.gov, is available to any taxpayer or family with Adjusted Gross Income of $79,000 or less in 2023.

Beginning Jan. 29, 2024, Free File Fillable forms, a part of this effort, is available at no cost to any income level and provides electronic forms that people can fill out and e-file themselves also at no cost.

Most refunds issued in less than 21 days; EITC refunds for many available starting February 27

Many different factors can affect the timing of a refund after the IRS receives a return. Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some returns may require additional review and may take longer. The easiest way to check a refund’s status is by using Where’s My Refund? on IRS.gov or the IRS2Go app.

Under the federal Protecting Americans from Tax Hikes (PATH) Act, the IRS cannot issue Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) refunds before mid-February. Where’s My Refund? should show an updated status by February 17 for most early EITC/ACTC filers. The IRS expects most EITC/ACTC related refunds to be available in taxpayer bank accounts or on debit cards by February 27 if they chose direct deposit and there are no other issues with their tax return.

IRS.gov, IRS Online Account provide free help

Visit IRS.gov to find online tools to help get information needed to file a complete and accurate return. The tools are easy-to-use and available anytime. Check out a few resources below:

  • IRS Individual Online Account: Individuals with a Social Security number or an Individual Taxpayer Identification number can log-in or sign-up for an IRS Individual Online Account to securely access information about their federal tax account, view balance and payment options, view and approve authorizations from their tax professional, view digital copies of select IRS notices and get information on their most recently filed return that includes their Adjusted Gross Income.
  • Interactive Tax Assistant: The Interactive Tax Assistant (ITA) is a tool that provides answers to several tax law questions specific to individual circumstances. Based on input, it can determine if a person should file a tax return, their filing status, if someone can be claimed as a dependent, if a type of income is taxable, if a filer is eligible to claim a credit or if an expense can be deducted.
  • Free tax help by IRS certified volunteers: Through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs, volunteers are available in communities nationwide to provide free tax assistance to low-to-moderate income (generally under $64,000 in adjusted gross income) and elderly taxpayers (age 60 and older). At selected sites, taxpayers can input and electronically fi­le their own tax return with the assistance of an IRS certified volunteer. For additional information, visit Free Tax Return Preparation for Qualifying Taxpayers.
  • Help for the military: A Department of Defense program, MilTax generally offers free return preparation and electronic filing software for federal income tax returns and up to three state income tax returns for all military members, and some veterans, with no income limit.

Key 2024 filing season dates

  • January 12: IRS Free File opens.
  • January 16: Due date for 2023 fourth quarter estimated tax payments.
  • January 26: Earned Income Tax Credit Awareness Day.
  • January 29: Filing season start date for individual tax returns.
  • April 15: Due date of filing a tax return or to request an extension for most of the nation.
  • April 17: Due date for Maine and Massachusetts.
  • October 15: Due date for extension filers.

Source: IRS-2024-04, Jan. 8, 2024

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