e-News for Payroll ProfessionalsAugust 4, 2023

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Issue Number: 2023-07

Inside This Issue

  1. Certain FIRE users must act now to keep their TCCs active 
  2. IRS provides transition guidance for 2023 RMDs
  3. New phase of Employee Retention Credit work to deal with growing fraud; watch out for aggressive marketing 
  4. IRS launches paperless processing initiative
  5. Major IRS policy change ending unannounced RO visits
  6. ID thieves bombard taxpayers with fraudulent emails and texts this summer
  7. Video tax tip for those making extra cash selling goods or providing services

  1.  Certain FIRE users must act now to keep their TCCs active 

Payroll professionals who received their Filing Information Returns Electronically (FIRE) Transmitter Control Codes (TCC) before September 26, 2021, must complete the new Information Returns (IR) Application for TCC by August 1, 2023, for their codes to remain active. After August 1, FIRE TCCs not having a completed IR Application for TCC will not be able to e-file.

Steps for completing an IR Application for TCC prior to August 1, 2023:

  1. Validate identities using the current IRS Credential Service Provider (CSP)
  2. Log into the IR Application for TCC
  3. Complete the online application

Because the IR Application for TCC requires a Social Security number (SSN) or Individual Tax Identification Number (ITIN) for system access and individual authentication, non-U.S. Form 1042-S filers won’t be able to complete the IR Application for TCC by the August 1 deadline – therefore, Form 1042 TCCs will remain available for e-filing after this date. The IRS continues to explore ways to resolve this specific issue.

Visit FIRE for more information.

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  2.  IRS provides transition guidance for 2023 RMDs

The IRS released Notice 2023-54, which provides transition relief for plan administrators, payors, plan participants, individual retirement account and annuity (IRA) owners, and beneficiaries in connection with the change in the required beginning date for required minimum distributions (RMDs) under the Secure 2.0 Act of 2022.

The notice also:

  • Announces that the final regulations that the IRS intends to issue related to RMDs for purposes of determining RMDs for calendar years beginning no earlier than 2024
  • Provides guidance related to certain specified RMDs for 2023

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  3.  New phase of Employee Retention Credit work to deal with growing fraud; watch out for aggressive marketing 

With the IRS making substantial progress in the ongoing effort related to Employee Retention Credit claims, Commissioner Danny Werfel said the agency has entered a new phase of increasing scrutiny on suspicious submissions while renewing consumer warnings against aggressive marketing.

Many businesses legitimately apply for the credit, but aggressive marketing has overshadowed the program. The period of eligibility for the credit for affected businesses is very limited, covering only between March 13, 2020, and December 31, 2021.

The IRS recently updated the ERC frequently asked questions (FAQs) to provide general information about eligibility, claiming the credit, scams and more.

Also, the IRS reminds anyone who improperly claims the ERC that they must pay it back, possibly with penalties and interest. A business or tax-exempt group could find itself in a much worse cash position if they have to pay back the credit than if they had not claimed the credit in the first place.

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  4.  IRS launches paperless processing initiative

Paper-based processes have long hampered the IRS and frustrated taxpayers. Using resources from the Inflation Reduction Act, the IRS has made significant progress in adopting new technology that automates the scanning of millions of paper returns, and taxpayers are now able to respond to more notices online.

In the next phase of its modernization, the IRS is accelerating paperless processing efforts. Plans are to ensure that by filing season 2024, taxpayers will be able to go paperless if they choose to do so, and by filing season 2025, the IRS will achieve paperless by processing digitizing all paper-filed returns when received.

The IRS paperless processing initiative will eliminate up to 200 million pieces of paper annually, cut processing times in half and expedite refunds by several weeks.

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  5.  Major IRS policy change ending unannounced RO visits

The IRS announced a major policy change that ends most unannounced visits to taxpayers by agency revenue officers (ROs) to reduce public confusion and enhance overall safety measures for taxpayers and employees.

This change is part of a larger effort to transform IRS operations following passage of the Inflation Reduction Act last year and the creation of the new IRS Strategic Operating Plan in April.

Instead of making an unannounced or unscheduled field visit, ROs will send an appointment letter to schedule an initial or follow-up meeting with the taxpayer. Revenue officer unannounced visits will only be done in a few unique circumstances.

The rest of the IRS collection process will remain the same and will depend on the facts and circumstances of the case. Information on the IRS collection process is available on Topic No. 201, The Collection Process.

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  6.  ID thieves bombard taxpayers with fraudulent emails and texts this summer

Identity thieves continue to inundate taxpayers with emails and text messages promising tax refunds or offers to help ‘fix’ tax problems. The latest email schemes touch on a variety of topics, but many center around promises about a third round of Economic Impact Payments.

Like many scams, these emails urge people to click on a link so they can complete their “application.” Instead, it takes the taxpayer to a website where identity thieves will try to harvest valuable personal information.

IRS news release 2023-131 details other current schemes and scams including the:

  • Claim your tax refund online
  • Delivery service at your door
  • Help you fix-it text
  • You may be eligible for the Employee Retention Credit (ERC) claim

Remember, the IRS never initiates contact with taxpayers by email, text or social media regarding a bill or tax refund.

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  7.  Video tax tip for those making extra cash selling goods or providing services

People who sell items or provide a service and get paid by a payment card or through a payment app may get a Form 1099-K reporting these transactions.

IRS video tax tip: “Are you making extra cash selling stuff or providing a service?” provides taxpayers tips on how to report this type of income or correct erroneous 1099-Ks.

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