Inside This Issue
1. IRS announces new Voluntary Disclosure Program for paying back erroneous ERC claims – Applications due by March 22, 2024
The IRS just launched a new Voluntary Disclosure Program to help businesses who want to pay back the money they received after filing Employee Retention Credit claims in error.
This is part of a larger effort at the IRS to stop aggressive marketing around ERC that misled some employers into filing claims. Interested employers must apply to the ERC Voluntary Disclosure Program by March 22, 2024. Those accepted into the program will need to repay only 80% of the credit they received.
The IRS also continues to urge employers with pending ERC claims to consider a separate withdrawal program that allows them to remove a pending ERC claim with no interest or penalty.
As part of continuing efforts to combat dubious Employee Retention Credit (ERC) claims, the IRS is sending an initial round of more than 20,000 letters to taxpayers notifying them of disallowed ERC claims. The IRS is rejecting claims to entities that did not exist or did not have paid employees during the period of eligibility.
This is the latest in an expanded compliance effort that includes a special withdrawal program for those with pending claims who realize they may have filed an inaccurate tax return. Later this month, the IRS will unveil a separate voluntary disclosure program allowing those who received questionable payments to come in and avoid future IRS action.
3. IRS helps taxpayers by providing penalty relief on nearly five million 2020 and 2021 tax returns with unpaid balances
In a major step to help people who owe back taxes, the IRS announced new penalty relief for approximately 4.7 million individuals, businesses and tax-exempt organizations that were not sent automated collection reminder notices during the pandemic.
The relief will total about $1 billion and most of those receiving it make under $400,000 a year.
Given the unusual situation due to the pandemic, the IRS is taking several steps in advance of resuming normal collection notices for tax years 2020 and 2021 to help taxpayers with unpaid tax bills. They include:
This penalty relief is automatic. Eligible taxpayers don’t need to take any action to get it.
Following feedback from taxpayers, tax professionals and payment processors and to reduce taxpayer confusion, the IRS released Notice 2023-74 announcing a delay of the new $600 Form 1099-K reporting threshold for third party settlement organizations for calendar year 2023.
As the IRS continues to work to implement the new law, the agency will treat 2023 as an additional transition year. This will reduce the potential confusion caused by the distribution of an estimated 44 million Forms 1099-K sent to many taxpayers who wouldn’t expect one and may not have a tax obligation. As a result, reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023.
Beginning Jan. 1, 2024, the electronic filing threshold for information returns will reduce from 250 to 10 for filing season 2024. Until now, only those who filed more than 250 information returns were required to file electronically and the 250-return threshold was applied separately to each type of information return. Now, filers need to combine all information return types they file to determine if they meet the 10-return threshold and the requirement to file electronically applies to them.
To make e-file easier for those who have traditionally filed paper information returns, the IRS recently launched the Information Returns Intake System (IRIS). If you are new to electronic filing and not an existing Filing Information Returns Electronically (FIRE) customer, consider using the new 1099 Taxpayer Portal located on IRS.gov/IRIS that provides a no-cost option for electronic filing information returns.
Also, check out a 12-minute-long recorded IRS webinar explaining this change and additional ways to file information returns electronically.
The IRS is alerting payroll professionals to a change in the access and registration process for the Social Security Administration’s Business Services Online (BSO). Additional levels of security are now required to access BSO for submitting W-2s to the SSA.
BSO User ID and password is no longer used to access BSO employer services. You must use a Social Security online account, ID.me or Login.gov credential to gain access to the BSO application.
Extra security is a requirement to access the following BSO employer services:
You will not be able to use the above services without adding the additional level of security to your account. Allow a minimum of two weeks for the registration process to be completed. Act now to avoid delays.
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