IRS People First Initiative provides relief to taxpayers

Due to COVID-19, the IRS is providing relief on a variety of issues as part of the People First Initiative. The IRS is modifying certain activities through the filing and payment deadline, Wednesday, July 15, 2020. Here’s what people need to know about relief related to IRS exams or audits

Field, office and correspondence audits – Generally, the IRS won’t start new field, office and correspondence audits. The agency will continue to work refund claims, where possible, without in-person contact.
However, the IRS may start new audits if needed to preserve the statute of limitations.

• In-person meetings – In-person meetings for current field and office audits are on hold. However, examiners will continue their work remotely, where possible. Taxpayers should respond to any requests for information during this period, if possible.

• Unique situations – Corporations and businesses may want to begin a previously scheduled audit while people and records are available. When it’s in the best interest of both parties and appropriate people are available, the IRS may move forward with an audit. COVID-19 developments could slow activities.

• General requests for information – Taxpayers should reply to all IRS correspondence, if requested. 

Earned income tax credit and wage verification reviews – Taxpayers have until July 15, 2020, to respond to the IRS and verify that they qualify for the earned income tax credit or to verify their income. These taxpayers should submit all requested information. If they can’t contact the agency and explain why the information is not available, the IRS won’t deny these credits for a failure to provide information until July 15, 2020.

Independent Office of Appeals – Appeals employees will continue to work their cases. They aren’t currently holding in-person meetings, but conferences may be held by phone or video. Taxpayers should respond to any requests for information form the Independent Office of Appeals.

Statute of limitations – The IRS will continue to protect all statutes of limitations. If statute expirations might be jeopardized during this period, taxpayers are encouraged to cooperate in extending these statutes. Otherwise, the IRS will issue Statutory Notices of Deficiency and pursue similar actions to protect the interests of the government.

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IRS People First Initiative provides relief to taxpayers facing COVID-19 issues

Due to COVID-19, the IRS’ People First Initiative provides relief to taxpayers on a variety of issues from easing payment guidelines to delaying compliance actions. This relief is effective through the filing and payment deadline, Wednesday, July 15, 2020.

• Existing Installment Agreements – Under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are delayed. Those currently unable to meet the terms of an Installment Payment Agreement or Direct Deposit Installment Agreement may cancel payments during this period with no default. By law, interest will continue to accumulate on any unpaid balances.

• New Installment Agreements – People who can’t pay all their federal taxes can establish a monthly payment agreement.

• Pending Offer in Compromise applications – Taxpayers have until July 15, 2020, to provide additional information for a pending OIC. The agency generally won’t close any pending OIC request before July 15 without the taxpayer’s consent.

• OIC payments – Taxpayers can delay all payments on accepted OICs until July 15, 2020. Interest may accrue, and missed payments are due when the suspension period ends. Taxpayers can call the number on their acceptance letter to address their needs.

• Delinquent return filings – The IRS will not default an OIC for taxpayers who are delinquent in filing their tax return for 2018. However, they should file any delinquent 2018 return and their 2019 return by July 15, 2020.

• Non-filers – More than 1 million households who haven’t filed tax returns in the last three years are owed refunds. The deadline to get refunds on 2016 tax returns is July 15, 2020.  Those who owe taxes on delinquent returns may visit for payment options. The longer the debt is owed, the more penalties and interest accrue.

• Field collection activities – IRS stopped field revenue officer enforcement actions, such as liens and levies. Revenue officers will continue to pursue high-income non-filers and perform other similar activities where necessary.

• Automated liens and levies – IRS delayed issuing new automated and systemic liens and levies. Taxpayers experiencing a hardship due to a levy should reach out to their assigned IRS contact or fax their information to (855) 796-4524.

• Certifications to the State Department – IRS has delayed new certifications of taxpayers who are considered seriously delinquent. This affects a person’s ability to receive a new or renewed passport. Existing certifications will remain in place unless their tax situation changes. 

• Private debt collection – IRS will not forward new delinquent accounts to private collection agencies during this period.

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Act by Wednesday for chance to get quicker #Economic_Impact_Payment; timeline for payments continues to accelerate

WASHINGTON – With a variety of steps underway to speed Economic Impact Payments, the Treasury Department and the Internal Revenue Service urged people to use Get My Payment by noon Wednesday, May 13, for a chance to get a quicker delivery.

The IRS, working in partnership with Treasury Department and the Bureau of Fiscal Services (BFS), continues to accelerate work to get Economic Impact Payments to even more people as soon as possible. Approximately 130 million individuals have already received payments worth more than $200 billion in the program’s first four weeks.

Starting later this month, the number of paper checks being delivered to taxpayers will sharply increase. For many taxpayers, the last chance to obtain a direct deposit of their Economic Impact Payment rather than receive a paper check is coming soon. People should visit Get My Payment on by noon Wednesday, May 13, to check on their payment status and, when available, provide their direct deposit information.

“We’re working hard to get more payments quickly to taxpayers,” said IRS Commissioner Chuck Rettig. “We want people to visit Get My Payment before the noon Wednesday deadline so they can provide their direct deposit information. Time is running out for a chance to get these payments several weeks earlier through direct deposit.”

After noon Wednesday, the IRS will begin preparing millions of files to send to BFS for paper checks that will begin arriving through late May and into June. Taxpayers who use Get My Payment before that cut-off can still take advantage of entering direct deposit information.

How Get My Payment works
The Get My Payment tool provides eligible taxpayers with a projected Economic Impact Payment deposit date. The information is updated once daily, usually overnight. There is no need to check more than once a day. Taxpayers who did not choose direct deposit on their last tax return can use this tool to input bank account information to receive their payment by direct deposit, expediting receipt.

Non-Filers portal remains available
For those not required to file a federal tax return, the Non-Filers: Enter Payment Info Here tool helps them submit basic information to receive an Economic Impact Payment quickly to their bank account. Developed in partnership between the IRS and the Free File Alliance, this tool provides a free and easy option for those who don’t receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) and VA Compensation and Pension (C&P) benefits. The Non-filers tool is also available in Spanish.

Eligible taxpayers who filed tax returns for 2019 or 2018 will receive the payments automatically. Automatic payments will also be sent to those receiving Social Security retirement, disability benefits, Railroad Retirement benefits, Veterans Affairs benefits or Supplemental Security Income soon.

Watch out for scams related to Economic Impact Payments
The IRS urges taxpayers to be on the lookout for scams related to the Economic Impact Payments. To use the new app or get information, taxpayers should visit People should watch out for scams using email, phone calls or texts related to the payments. Be careful and cautious: The IRS will not send unsolicited electronic communications asking people to open attachments, visit a website or share personal or financial information.

Stay informed with Economic Impact Payment FAQs; Social Media platforms
Taxpayers should check the Frequently Asked Questions (FAQs) for more information.

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8 Things You Need To Know About The 2020 Payroll Tax Credit

by:Gene Marks/Hartford

There’s a lot of attention right now on programs like the Paycheck Protection Program and disaster loans offered by the Small Business Administration. Those options were meant to help business owners receive immediate funding as a crisis management strategy resulting from COVID-19. But there’s another big federal benefit that may apply to you: The Payroll Tax Credit (also known as the Employee Retention Credit).

1. The credit is part of the federal response to the pandemic.

As part of one of the numerous pandemic-related stimulus bills passed by Congress in March, the Payroll Tax Credit, otherwise known as the Employee Retention Credit, is a way to receive funding from the government. Eligible businesses must have been impacted by COVID-19 between March 12, 2020 and January 1, 2021. The intention of this credit is to help keep employees on the payroll for as long as possible by providing some tax incentives to employers. Non-profits also qualify, but self-employed individuals do not.

2. The credit only applies if you don’t take money from the Paycheck Protection Program.

Because the credit is intended to provide additional subsidies to help employers maintain payroll levels, you can not apply for it if you’ve already opted in to the Paycheck Protection Program, which offered low cost forgivable loans that also cover payroll expenses. You are, however, eligible to apply for other types of loans, like the Economic Injury Disaster Loans, from the SBA.

3. The credit is in addition to the tax credit for Emergency Family Medical Leave.

This credit is not to be confused with the tax credit under the Families First Coronavirus Response Act (which includes Emergency Family Medical Leave provisions). This article is not intended to go into detail on that legislation, but know that if you’re paying for your employees to take time off for themselves or their families as a result of COVID-19, you’re also entitled to an additional credit to help you afford those expenses. You can use both tax credits, but just not for the same wages. You can learn more about the Families First Legislation on The Hartford’s Paid family and Medical Leave Resource Center.

4. You must show your business has been significantly harmed by the pandemic.

To be eligible for the credit, you must demonstrate that either your business had to shut down during a payroll quarter because of the pandemic (as a result of a government order), or that your business suffered a 50% or greater loss of revenue during the quarter when compared to the previous year.

5. The credit is quite generous.

The credit is 50% of up to $10,000 of each employee’s wages (including healthcare premiums) each quarter through December 31, 2020. In other words, it’ll likely be $5,000 per employee each quarter, assuming they make more than $10,000 that quarter. So, if you have ten employees, you’ll get a $50,000 credit against your payroll taxes that quarter. If you had more than 100 full time employees in 2019, you include only full time workers. If you had less than 100 full time employees in 2019, you can include both full time and part time workers.

6. The credit is taken on your payroll tax returns.

This is not an income tax credit. It’s a payroll tax credit. That means you can take it against the employer’s share of FICA you owed during the eligible quarter when you do quarterly Federal 941 payroll tax returns.

7. The big news: it’s refundable!

More importantly, it’s refundable, which means that whatever portion of the credit you don’t need will be considered an over-payment of payroll taxes and will be returned back to you as cash.

8. You can also reduce your tax deposits.

If you think that you’ll be qualifying for the credit during a quarter, the IRS will allow you to hold back on your tax deposits so that you’ll have more cash available, rather than waiting for them to send you the cash back after you file your 941.

This payroll tax credit may not be for everyone, but it’s certainly applicable for your business if you’re not receiving any other aid. If that’s the case, it could be a substantial cash infusion from the government and may make the difference for your company’s survival. Talk to your accountant and payroll company to make sure you’re taking advantage!

No deduction is allowed expenses incurred with PPP

Important IRS Update!
The IRS published Notice 2020-32 indicating that expenses paid to qualify for loan forgiveness under the Paycheck Protection Program (such as payroll costs, rent, utilities, and interest on mortgage obligations) will not be deductible. This seems contrary to the intent of the original legislation, and it is possible the next COVID-19 bill (assuming there is one) could clarify that such expenses are, in fact, deductible. At this time, businesses should prepare for these amounts to be non-deductible. We will be sure to update you if this changes.

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