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NEWSLETTERS
Where’s My Refund?
IRS seeks upgrade to dreaded online tool, but don’t hold your breath
In the midst of a particularly horrific tax season, with the beleaguered Internal Revenue Service (IRS) swamped by backlogged returns and citizens waiting anxiously for missing refunds to appear, many taxpayers seeking clarity have been referred to the dreaded online “Where’s My Refund” tracker. In other words, the place where inquiries go to die.
The “Where’s My Refund” tool, which lives on the IRS website, has been of scant help to many visitors, informing taxpayers with late refunds only that their returns are “pending.” It does not offer any estimate of when refunds can be expected, nor does it advise if additional supporting documents are needed. The lack of such basic services was flagged by the Taxpayer Advocate Service (TAS)—the arm of the IRS that ensures fair treatment of citizen taxpayers—which recommended that the IRS supply these features as quickly as possible.
And according to a TAS report, the IRS seems to have taken the first steps. It has submitted several “Unified Work Requests” to its engineers, requesting programming upgrades to the tool that would include more specific reasons for why a refund has been delayed, or a notice if it’s still reviewing whether supporting documents are needed. It also says it’s exploring a system by which taxpayers can digitally transmit documents to the IRS, such as uploading through the IRS.gov website. That could include a permanent extension of the interim rules, allowing people to submit identity verification files over eFax during the COVID-19 pandemic.
But it’s not a done deal by any means: The IRS cautions that such programming upgrades are “subject to funding limitations and competing priorities,” meaning all this could very well amount to nothing if cash is thin or other issues are deemed more important. It’s also worth noting that another request—to supply relevant contact telephone numbers through the “Where’s My Refund” tool—has already been denied “due to funding limitations.” So if you’re still waiting for your 2020 refund, maybe don’t hold your breath.
Further along in the report, the IRS also notes it would not be able to expedite legitimate refunds by modernizing its “obsolete” systems—also “due to funding limitations”—nor would it be sharing data about how long it detains legitimate refunds that are tagged by fraud filters.
IRS Allocates Unused Low-Income Housing Credits, Rev. Proc. 2024-41 The IRS has published the amounts of unused housing credit carryovers allocated to qualified states under Code Sec. 42(h)(3)(D) for calendar year 2024. The IRS allocates the national pool of unused ...
CT - Change in withholding requirements for nonpayroll amounts Effective January 1, 2025, payers of nonpayroll amounts are no longer required to withhold Connecticut personal income tax from certain retirement income distributions. Payers of nonpayroll amounts ar...
GA - Local Rate Changes Announced for Q1 A Georgia county has a sales and use tax rate change for first quarter. Clay County's sales tax rate will be 8% effective January 1, 2025. Important Bulletins - County Tax Rate Changes, Georgia Depar...
ME - Certain services exempt from provider tax in 2025 Maine Revenue Services reminders taxpayer that starting in 2025, the following services are exempt from service provider tax:private nonmedical institution services;community support services for pers...
RI - Interest rates for 2025 released For calendar year 2025, the interest rate on delinquent Rhode Island trust fund tax payments remains at 18%, the rate on other types of delinquent tax payments remains at 12%, and the rate on overpaym...
VT - Local option rates announced for berlin Vermont announced that the municipality of Berlin will have a 1% local option sales tax, as well as a 1% local option meals and rooms tax and alcoholic beverage tax, effective beginning January 1, 202...
The agency's overall backlog is growing and its processing time is slowing.
While the Internal Revenue Service has made significant progress in slashing the backlog of tax returns from 2021, it is now processing the filings at a slower clip and taxpayers are facing unprecedented months of delays before receiving their refunds.
IRS boasted this week that it has made major strides to dig out from the mountain of unprocessed cases, but National Taxpayer Advocate Erin Collins said in a new report issued Wednesday things have not actually improved. Despite all of the agency’s efforts, the backlog has actually grown since the same period last year and IRS remains unlikely to meet its year-end goals.
“Taxpayers are still experiencing unprecedented delays in receiving their refunds,” Collins wrote. “Taxpayers continue to face unprecedented challenges in reaching the IRS by phone. And the IRS’s unprecedented delays in processing correspondence are contributing to additional refund delays and taxpayer frustrations.”
Collins noted that IRS was processing 242,000 individual paper income tax returns per week in April, but that had declined by 15% in May. The agency would have to process 500,000 forms per week to eliminate the backlog this year. She added it was “deeply concerning” that IRS ended May with a bigger backlog of paper tax returns than it had one year prior.
“The math is daunting,” Collins said. She added she was pleased IRS leadership committed to reducing the backlog to a “healthy” level by the end of the year, but said it “will be a difficult commitment to achieve.” Additionally, she stressed that IRS is now taking six months to distribute refunds to paper-filing taxpayers and implored IRS management to get that down to the normal four-to-six week period before it considers any backlog “healthy.”
Despite the ongoing problems, IRS announced it would complete the processing of individual tax returns without issues from 2021 this week. It will complete business returns filed in 2021 shortly thereafter. As of April, there were still 6 million returns outstanding. The agency has taken several steps to address the backlog, including mandating overtime for 6,000 employees and allowing for voluntary overtime for an additional 10,000 workers, deploying surge teams, bringing on contractors and going on a hiring spree aided by a hastened onboarding process authorized by Congress.
"IRS employees have been working tirelessly to process these tax returns as quickly as possible and help people who are waiting on refunds or resolution of an account issue," IRS Commissioner Chuck Rettig said. "Completing the individual returns filed last year with no errors is a major milestone, but there is still work to do.”
The taxpayer advocate did note that things have mostly gone smoothly for e-filers, or about 85% of taxpayers. By late May, IRS had received 145 million returns and processed refunds for 66% of them. Overall, however, the backlog has actually grown since the end of May 2021. It is now at 21.3 million, compared to 20 million last year. IRS noted much of this year’s backlog consists of original returns, which can be processed more quickly than amended returns.
Earlier this year, Rettig announced a plan to hire 10,000 new employees by the end of 2023. He told Congress in April the agency was halfway to its goal for 2022. Collins, however, noted IRS had hoped to hire around 5,500 processing employees this year and as of May was more than 3,400 workers short of that goal. It has found more success in hiring for accounts management—workers who handle taxpayer interactions, including by answering calls—hiring 99% of its goal of 5,000 employees.
Still, the agency has struggled immensely to keep pace with demand for service. The number of calls IRS received dropped by more than half this year, but it only grew its answer rate from 9% in 2021 to 10% in 2022. Individuals waited on hold for an average of 29 minutes, up from 20 minutes last year. The agency failed to improve its answer rate as it shifted employees in Accounts Management away from the phones and toward processing correspondence.
“We remain focused on doing everything possible to expedite processing of these tax returns, and we continue to add more people to this effort as our hiring efforts continue this summer," Rettig said.
Collins said IRS should have acted more quickly to reassign employees to processing functions, which would have reduced the existing backlog and allowed the agency to address this year’s returns more quickly. She also faulted IRS for dragging its feet in installing new technology to read paper returns more quickly.
The taxpayer advocate said she would push IRS management over the next year to automate paper returns processing, reduce barriers to e-filing, improve hiring and training and improve telephone service. Congress provided IRS with a funding boost of $675 million as part of the fiscal 2022 omnibus spending bill, a 6% increase and the largest bump since 2001. President Biden requested an additional 18% bump for fiscal 2023, and has sought an $80 billion surge over 10 years as part of his larger social and climate spending package.
The 2025 cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirement-related provisions have been released by the IRS. In general, many of the pension plan limitations will change for 2025 because the increase in the cost-of-living index due to inflation met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged.
The 2025 cost-of-living adjustments (COLAs) that affect pension plan dollar limitations and other retirement-related provisions have been released by the IRS. In general, many of the pension plan limitations will change for 2025 because the increase in the cost-of-living index due to inflation met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged.
The SECURE 2.0 Act (P.L. 117-328) made some retirement-related amounts adjustable for inflation beginning in 2024. These amounts, as adjusted for 2025, include:
The catch up contribution amount for IRA owners who are 50 or older remains $1,000.
The amount of qualified charitable distributions from IRAs that are not includible in gross income is increased from $105,000 to $108,000.
The dollar limit on premiums paid for a qualifying longevity annuity contract (QLAC) is increased from $200,000 to $210,000.
Highlights of Changes for 2025
The contribution limit has increased from $23,000 to $23,500. for employees who take part in:
-401(k),
-403(b),
-most 457 plans, and
-the federal government’s Thrift Savings Plan
The annual limit on contributions to an IRA remains at $7,000. The catch-up contribution limit for individuals aged 50 and over is subject to an annual cost-of-living adjustment beginning in 2024 but remains at $1,000.
The income ranges increased for determining eligibility to make deductible contributions to:
-IRAs,
-Roth IRAs, and
-to claim the Saver's Credit.
Phase-Out Ranges
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. The deduction phases out if the taxpayer or their spouse takes part in a retirement plan at work. The phase out depends on the taxpayer's filing status and income.
-For single taxpayers covered by a workplace retirement plan, the phase-out range is $79,000 to $89,000, up from between $77,000 and $87,000.
-For joint filers, when the spouse making the contribution takes part in a workplace retirement plan, the phase-out range is $126,000 to $146,000, up from between $123,000 and $143,000.
-For an IRA contributor who is not covered by a workplace retirement plan but their spouse is, the phase out is between $236,000 and $246,000, up from between $230,000 and $240,000.
-For a married individual covered by a workplace plan filing a separate return, the phase-out range remains $0 to $10,000.
The phase-out ranges for Roth IRA contributions are:
-$150,000 to $165,000, for singles and heads of household,
-$236,000 to $246,000, for joint filers, and
-$0 to $10,000 for married separate filers.
Finally, the income limit for the Saver' Credit is:
WASHINGTON–With Congress in its lame duck session to close out the remainder of 2024 and with Republicans taking control over both chambers of Congress in the just completed election cycle, no major tax legislation is expected, although there is potential for minor legislation before the year ends.
WASHINGTON–With Congress in its lame duck session to close out the remainder of 2024 and with Republicans taking control over both chambers of Congress in the just completed election cycle, no major tax legislation is expected, although there is potential for minor legislation before the year ends.
The GOP takeover of the Senate also puts the use of the reconciliation process on the table as a means for Republicans to push through certain tax policy objectives without necessarily needing any Democratic buy-in, setting the stage for legislative activity in 2025, with a particular focus on the expiring provision of the Tax Cuts and Jobs Act.
Eric LoPresti, tax counsel for Senate Finance Committee Chairman Ron Wyden (D-Ore.) said November 13, 2024, during a legislative panel at the American Institute of CPA’s Fall Tax Division Meetings that"there’s interest"in moving a disaster tax relief bill.
Neither offered any specifics as to what provisions may or may not be on the table.
One thing that is not expected to be touched in the lame duck session is the tax deal brokered by House Ways and Means Committee Chairman Jason Smith (R-Mo.) and Chairman Wyden, but parts of it may survive into the coming year, particularly the provisions around the employee retention credit, which will come with $60 billion in potential budget offsets that could be used by the GOP to help cover other costs, although Don Snyder, tax counsel for Finance Committee Ranking Member Mike Crapo (R-Idaho) hinted that ERC provisions have bipartisan support and could end up included in a minor tax bill, if one is offered in the lame duck session.
Another issue that likely will be debated in 2025 is the supplemental funding for the Internal Revenue Service that was included in the Inflation Reduction Act. LoPresti explained that because of quirks in the Congressional Budget Office scoring of the funding, once enacted, it becomes part of the IRS baseline in terms of what the IRS is expected to bring in and making cuts to that baseline would actually cost the government money rather than serving as a potential offset.
The IRS reminded individual retirement arrangement (IRA) owners aged 70½ and older that they can make tax-free charitable donations of up to $105,000 in 2024 through qualified charitable distributions (QCDs), up from $100,000 in past years.
The IRS reminded individual retirement arrangement (IRA) owners aged 70½ and older that they can make tax-free charitable donations of up to $105,000 in 2024 through qualified charitable distributions (QCDs), up from $100,000 in past years. For those aged 73 or older, QCDs also count toward the year's required minimum distribution (RMD). Following are the steps for reporting and documenting QCDs for 2024:
IRA trustees issueForm 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., in early 2025 documenting IRA distributions.
Record the full amount of any IRA distribution on Line 4a ofForm 1040, U.S. Individual Income Tax Return, orForm 1040-SR, U.S. Tax Return for Seniors.
Enter "0" on Line 4b if the entire amount qualifies as a QCD, marking it accordingly.
Obtain a written acknowledgment from the charity, confirming the contribution date, amount, and that no goods or services were received.
Additionally, to ensure QCDs for 2024 are processed by year-end, IRA owners should contact their trustee soon. Each eligible IRA owner can exclude up to $105,000 in QCDs from taxable income. Married couples, if both meet qualifications and have separate IRAs, can donate up to $210,000 combined. QCDs did not require itemizing deductions. New this year, the QCD limit was subject to annual adjustments based on inflation. For 2025, the limit rises to $108,000.
Further, for more details, seePublication 526, Charitable Contributions, andPublication 590-B, Distributions from Individual Retirement Arrangements (IRAs).
The Treasury Department and IRS have issued final regulations allowing certain unincorporated organizations owned by applicable entities to elect to be excluded from subchapter K, as well as proposed regulations that would provide administrative requirements for organizations taking advantage of the final rules.
The Treasury Department and IRS have issued final regulations allowing certain unincorporated organizations owned by applicable entities to elect to be excluded from subchapter K, as well as proposed regulations that would provide administrative requirements for organizations taking advantage of the final rules.
Background
Code Sec. 6417, applicable to tax years beginning after 2022, was added by the Inflation Reduction Act of 2022 (IRA),P.L. 117-169, to allow “applicable entities” to elect to treat certain tax credits as payments against income tax. “Applicable entities” include tax-exempt organizations, the District of Columbia, state and local governments, Indian tribal governments, Alaska Native Corporations, the Tennessee Valley Authority, and rural electric cooperatives.Code Sec. 6417also contains rules specific to partnerships and directs the Treasury Secretary to issue regulations on making the election (“elective payment election”).
Reg. §1.6417-2(a)(1), issued underT.D. 9988in March 2024, provides that partnerships are not applicable entities for Code Sec. 6417 purposes. The 2024 regulations permit a taxpayer that is not an applicable entity to make an election to be treated as an applicable entity, but only with respect to certain credits. The only credits for which a partnership could make an elective payment election were those underCode Secs. 45Q,45V, and45X.
However, Reg. §1.6417-2(a)(1) of the March 2024 final regulations also provides that if an applicable entity co-ownsReg. §1.6417-1(e)“applicable credit property” through an organization that has madeCode Sec. 761(a)election to be excluded from application of the rules of subchapter K, then the applicable entity’s undivided ownership share of the applicable credit property is treated as (i) separate applicable credit property that is (ii) owned by the applicable entity. The applicable entity in that case may make an elective payment election for the applicable credit related to that property.
At the same time as they issued final regulations underT.D. 9988, the Treasury and IRS published proposed regulations (REG-101552-24, the “March 2024 proposed regulations”) underCode Sec. 761(a)permitting unincorporated organizations that meet certain requirements to make modifications (called “exceptions”) to the then-existing requirements for aCode Sec. 761(a)election in light ofCode Sec. 6417.
Code Sec. 761(a)authorizes the Treasury Secretary to issue regulations permitting an unincorporated organization to exclude itself from application of subchapter K if all the organization’s members so elect. The organization must be “availed of”: (1) for investment purposes rather than for the active conduct of a business; (2) for the joint production, extraction, or use of property but not for the sale of services or property; or (3) by dealers in securities, for a short period, to underwrite, sell, or distribute a particular issue of securities. In any of these three cases, the members’ income must be adequately determinable without computation of partnership taxable income. The IRS believes that most unincorporated organizations seeking exclusion from subchapter K so that their members can makeCode Sec. 6417elections are likely to be availed of for one of the three purposes listed inCode Sec. 761(a).
Reg. §1.761-2(a)(3)before amendment by T.D. 10012 required that participants in the joint production, extraction, or use of property (i) own that property as co-owners in a form granting exclusive ownership rights, (ii) reserve the right separately to take in kind or dispose of their shares of any such property, and (iii) not jointly sell services or the property (subject to exceptions). The March 2024 proposed regulations would have modified some of theseReg. §1.761-2(a)(3)requirements.
The regulations under T.D. 10012 finalize some of the March 2024 proposed regulations. Concurrently with the publication of these final regulations, the Treasury and IRS are issuing proposed regulations (REG-116017-24) that would make additional amendments toReg. §1.761-2.
The Final Regulations
The final regulations issued under T.D. 10012 revise the definition in the March 2024 proposed regulations of “applicable unincorporated organization” to include organizations existing exclusively to own and operate “applicable credit property” as defined inReg. §1.6417-1(e). The IRS cautions, however, that this definition should not be read to imply that any particular arrangement permits aCode Sec. 761(a)election.
The final regulations also add examples toReg. §1.761-2(a)(5), not found in the March 2024 proposed regulations, to illustrate (1) a rule that the determination of the members’ shares of property produced, extracted, or used be based on their ownership interests as if they co-owned the underlying properties, and (2) details of a rule regarding “agent delegation agreements.”
In addition, the final regulations clarify that renewable energy certificates (RECs) produced through the generation of clean energy are included in “renewable energy credits or similar credits,” with the result that each member of an unincorporated organization must reserve the right separately to take in or dispose of that member’s proportionate share of any RECs generated.
The Treasury and IRS also clarify in T.D. 10012 that “partnership flip structures,” in which allocations of income, gains, losses, deductions, or credits change at some after the partnership is formed, violate existing statutory requirements for electing out of subchapter K and, thus, are by existing definition not eligible to make aCode Sec. 761(a)election.
The Proposed Regulations
The preamble to the March 2024 proposed regulations noted that the Treasury and IRS were considering rules to prevent abuse of theReg. §1.761-2(a)(4)(iii)modifications. For instance, a rule mentioned in the preamble would have prevented the deemed-election rule in priorReg. §1.761-2(b)(2)(ii)from applying to any unincorporated organization that relies on a modification in then-proposedReg. §1.761-2(a)(4)(iii). The final regulations under T.D. 10012 do not contain any rules on deemed elections, but the Treasury and the IRS believe that more guidance is needed underCode Sec. 761(a)to implementCode Sec. 6417. Therefore, proposed rules (REG-116017-24, the “November 2024 proposed regulations”) are published concurrently with the final regulations to address the validity of Code Sec. 761(a) elections by applicable unincorporated organizations with elections that would not be valid without application of revisedReg. §1.761-2(a)(4)(iii).
Specifically, Proposed Reg. §1.761-2(a)(4)(iv)(A) would provide that a specified applicable unincorporated organization’sCode Sec. 761(a)election terminates as a result of the acquisition or disposition of an interest in a specified applicable unincorporated organization, other than as the result of a transfer between a disregarded entity (as defined in Reg. §1.6417-1(f)) and its owner.
Such an acquisition or disposition would not, however, terminate an applicable unincorporated organization’sCode Sec. 761(a)election if the organization (a) met the requirements for making a newCode Sec. 761(a)election and (b) in fact made such an election no later than the time inReg. §1.6031(a)-1(e)(including extensions) for filing a partnership return with respect to the period of time that would have been the organization’s tax year if, after the tax year for which the organization first made the election, the organization continued to have tax years and those tax years were determined by reference to the tax year in which the organization made the election (“hypothetical partnership tax year”).
Such an election would protect the organization’sCode Sec. 761(a)election against all terminating acquisitions and dispositions in a hypothetical year only if it contained, in addition to the information required byReg. §1.761-2(b), information about every terminating transaction that occurred in the hypothetical partnership tax year. If a new election was not timely made, theCode Sec. 761(a)election would terminate on the first day of the tax year beginning after the hypothetical partnership taxable year in which one or more terminating transactions occurred.Proposed Reg. §1.761-2(a)(5)(iv)would add an example to illustrate this new rule.
These provisions would not apply to an organization that is no longer eligible to elect to be excluded from subchapter K. Such an organization’sCode Sec. 761(a)election automatically terminates, and the organization must begin complying with the requirements of subchapter K.
The proposed regulations would also clarify that the deemed election rule inReg. §1.761-2(b)(2)(ii)does not apply to specified applicable unincorporated organizations. The purpose of this rule, according to the IRS, is to prevent an unincorporated organization from benefiting from the modifications in revisedReg. §1.761-2(a)(4)(iii)without providing written information to the IRS about its members, and to prevent a specified applicable unincorporated organization terminating as the result of a terminating transaction from having its election restored without making a new election in writing.
In addition, the proposed regulations would require an applicable unincorporated organization making aCode Sec. 761(a)election to submit all information listed in the instructions to Form 1065, U.S. Return of Partnership Income, for making aCode Sec. 761(a)election. The IRS explains that this requirement is intended to ensure that the organization provides all the information necessary for the IRS to properly administerCode Sec. 6417with respect to applicable unincorporated organizations makingCode Sec. 761(a)elections.
The proposed regulations would also clarify the procedure for obtaining permission to revoke aCode Sec. 761(a)election. An application for permission to revoke would need to be made in a letter ruling request meeting the requirements ofRev. Proc. 2024-1or successor guidance. The IRS indicates that taxpayers may continue to submit applications for permission to revoke an election by requesting a private letter ruling and can rely onRev. Proc. 2024-1or successor guidance before the proposed regulations are finalized.
Applicability Dates
The final regulations under T.D. apply to tax years ending on or after March 11, 2024 (i.e., the date on which the March 2024 proposed regulations were published). The IRS states that an applicable unincorporated organization that made aCode Sec. 761(a)election meeting the requirements of the final regulations for an earlier tax year will be treated as if it had made a validCode Sec. 761(a)election.
The proposed regulations (REG-116017-24) would apply to tax years ending on or after the date on which they are published as final.
National Taxpayer Advocate Erin Collins is criticizing the Internal Revenue Service for proposing changed to how it contacts third parties in an effort to assess or collect a tax on a taxpayer.
Current rules call for the IRS to provide a 45-day notice when it intends to contact a third party with three exceptions, including when the taxpayer authorizes the contact; the IRS determines that notice would jeopardize tax collection or involve reprisal; or if the contact involves criminal investigations.
The agency is proposing to shorten the length of proposing to shorten the statutory 45-day notice to 10 days when the when there is a year or less remaining on the statute of limitations for collection or certain other circumstances exist.
"The IRS’s proposed regulations … erode an important taxpayer protection and could punish taxpayers for IRS delays,"Collins wrote in a November 7, 2024,blogpost. The agency generally has three years to assess additional tax and ten years to collect unpaid tax. By shortening the timeframe, it could cause personal embarrassment, damage a business’s reputation, or otherwise put unreasonable pressure on a taxpayer to extend the statute of limitations to avoid embarrassment.
"Furthermore, the ten-day timeframe is so short, it is possible that some taxpayers may not receive the notice with enough time to reply,"Collins wrote."As a result, those taxpayers may incur the embarrassment and reputational damage caused by having their sensitive tax information shared with a third party on an expedited basis without adequate time to respond."
"The statute of limitations is an important component of the right to finality because it sets forth clear and certain boundaries for the IRS to act to assess or collect taxes,"she wrote, adding that the agency"should reconsider these proposed regulations and Congress should consider enacting additional taxpayer protections for third-party contacts."
The IRS has amended Reg. §30.6335-1 to modernize the rules regarding the sale of a taxpayer’s property that the IRS seizes by levy. The amendments allow the IRS to maximize sale proceeds for both the benefit of the taxpayer whose property the IRS has seized and the public fisc, and affects all sales of property the IRS seizes by levy. The final regulation, as amended, adopts the text of the proposed amendments (REG-127391-16, Oct. 15, 2023) with only minor, nonsubstantive changes.
The IRS has amended Reg. §30.6335-1 to modernize the rules regarding the sale of a taxpayer’s property that the IRS seizes by levy. The amendments allow the IRS to maximize sale proceeds for both the benefit of the taxpayer whose property the IRS has seized and the public fisc, and affects all sales of property the IRS seizes by levy. The final regulation, as amended, adopts the text of the proposed amendments (REG-127391-16, Oct. 15, 2023) with only minor, nonsubstantive changes.
Code Sec. 6335governs how the IRS sells seized property and requires the Secretary of the Treasury or her delegate, as soon as practicable after a seizure, to give written notice of the seizure to the owner of the property that was seized. The amended regulation updates the prescribed manner and conditions of sales of seized property to match modern practices. Further, the regulation as updated will benefit taxpayers by making the sales process both more efficient and more likely to produce higher sales prices.
The final regulation provides that the sale will be held at the time and place stated in the notice of sale. Further, the place of an in-person sale must be within the county in which the property is seized. For online sales,Reg. §301.6335-1(d)(1)provides that the place of sale will generally be within the county in which the property is seized. so that a special order is not needed. Additionally,Reg. §301.6335-1(d)(5)provides that the IRS will choose the method of grouping property selling that will likely produce that highest overall sale amount and is most feasible.
The final regulation, as amended, removes the previous requirement that (on a sale of more than $200) the bidder make an initial payment of $200 or 20 percent of the purchase price, whichever is greater. Instead, it provides that the public notice of sale, or the instructions referenced in the notice, will specify the amount of the initial payment that must be made when full payment is not required upon acceptance of the bid. Additionally,Reg. §301.6335-1updates details regarding permissible methods of sale and personnel involved in sale.
The Financial Crimes Enforcement Network (FinCEN) has announced that certain victims of Hurricane Milton, Hurricane Helene, Hurricane Debby, Hurricane Beryl, and Hurricane Francine will receive an additional six months to submit beneficial ownership information (BOI) reports, including updates and corrections to prior reports.
The Financial Crimes Enforcement Network (FinCEN) has announced that certain victims of Hurricane Milton, Hurricane Helene, Hurricane Debby, Hurricane Beryl, and Hurricane Francine will receive an additional six months to submit beneficial ownership information (BOI) reports, including updates and corrections to prior reports.
The relief extends the BOI filing deadlines for reporting companies that (1) have an original reporting deadline beginning one day before the date the specified disaster began and ending 90 days after that date, and (2) are located in an area that is designated both by the Federal Emergency Management Agency as qualifying for individual or public assistance and by the IRS as eligible for tax filing relief.
FinCEN Provides Beneficial Ownership Information Reporting Relief to Victims of Hurricane Beryl; Certain Filing Deadlines in Affected Areas Extended Six Months (FIN-2024-NTC7)
FinCEN Provides Beneficial Ownership Information Reporting Relief to Victims of Hurricane Debby; Certain Filing Deadlines in Affected Areas Extended Six Months (FIN-2024-NTC8)
FinCEN Provides Beneficial Ownership Information Reporting Relief to Victims of Hurricane Francine; Certain Filing Deadlines in Affected Areas Extended Six Months (FIN-2024-NTC9)
FinCEN Provides Beneficial Ownership Information Reporting Relief to Victims of Hurricane Helene; Certain Filing Deadlines in Affected Areas Extended Six Months (FIN-2024-NTC10)
FinCEN Provides Beneficial Ownership Information Reporting Relief to Victims of Hurricane Milton; Certain Filing Deadlines in Affected Areas Extended Six Months (FIN-2024-NTC11)
National Taxpayer Advocate Erin Collins offered her support for recent changes the Internal Revenue Service made to inheritance filing and foreign gifts filing penalties.
National Taxpayer Advocate Erin Collins offered her support for recent changes the Internal Revenue Service made to inheritance filing and foreign gifts filing penalties.
In an October 24, 2024, blogpost, Collins noted that the IRS has"ended its practice of automatically assessing penalties at the time of filing for late-filed Forms 3250, Part IV, which deal with reporting foreign gifts and bequests."
She continued:"By the end of the year the IRS will begin reviewing any reasonable cause statements taxpayers attach to late-filed Forms 3520 and 3520-A for the trust portion of the form before assessing any Internal RevenueCode Sec. 6677penalty."
Collins said this change will"reduce unwarranted assessments and relieve burden on taxpayers"by giving them an opportunity to explain the circumstances for a late file to be considered before the agency takes any punitive action.
She noted this has been a change the Taxpayer Advocate Service has recommended for years and the agency finally made the change. The change is an important one as Collins suggests it will encourage more taxpayers to file corrected returns voluntarily if they can fix a discovered error or mistake voluntarily without being penalized.
"Our tax system should reward taxpayers’ efforts to do the right thing,"she wrote."We all benefit when taxpayers willingly come into the system by filing or correcting their returns."
Collins also noted that there are"numerous examples of taxpayers who received a once-in-a-lifetime tax-free gift or inheritance and were unaware of their reporting requirement. Upon learning of the filing requirement, these taxpayers did the right thing and filed a late information return only to be greeted with substantial penalties, which were automatically assessed by the IRS upon the late filing of the form 3520,"which could have penalized taxpayers up to 25 percent of their gift or inheritance despite having no tax obligation related to the gift or inheritance.
She wrote that the abatement rate of these penalties was 67 percent between 2018 and 2021, with an abatement rate of 78 percent of the $179 million in penalties assessed.
"The significant abetment rate illustrates how often these penalties were erroneously assessed,"she wrote."The automatic assessment of the penalties causes undue hardship, burdens taxpayers, and creates unnecessary work for the IRS. Stopping this practice will benefit everyone."