ERC paying it back, claim letters; Business Tax Account expands; tax security; quarterly tax payments

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e-News for Small BusinessDecember 21, 2023

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Issue Number: 2023-16

Inside This Issue

  1. IRS announces new Voluntary Disclosure Program for paying back erroneous ERC claims – Applications due by March 22, 2024
  2. IRS sends 20,000 letters disallowing improper ERC claims
  3. IRS helps taxpayers by providing penalty relief on nearly 5 million 2020 and 2021 tax returns with unpaid balances
  4. IRS expands Business Tax Account access and capabilities
  5. New IRS leadership structure announcement
  6. Get Ready for the upcoming filing season
  7. Eighth Annual National Tax Security Awareness Week
  8. Final 2023 quarterly estimated tax payment due Jan. 16
  9. 2024 Flexible Spending Arrangement contribution limit rises by $150
  10. Standard mileage rates for 2024
  11. Reminder: Information returns filing threshold
  12. Employers should certify employees before claiming the Work Opportunity Tax Credit
  13. Businesses, taxpayers and tax pros and can stay up to date with IRS e-News
  14. Other tax news

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.

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2.  IRS sends 20,000 letters disallowing improper ERC claims


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.

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3.  IRS helps taxpayers by providing penalty relief on nearly 5 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:

  • Issuing a special reminder letter starting next month
  • Taking steps to waive the failure-to-pay penalties for eligible taxpayers affected by this situation for tax years 2020 and 2021

This penalty relief is automatic. Eligible taxpayers don’t need to take any action to get it.

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4.  IRS expands Business Tax Account access and capabilities


As part of continuing transformation work, the IRS announced the launch of the second phase of a new online self-service tool for businesses. The launch includes business tax account access for S corporations and partnerships and the ability to view business tax transcripts.

Available at IRS.gov/businessaccount, the new Business Tax Account is a key part of the agency’s continuing service improvement initiative. This is part of the larger effort under last year’s Inflation Reduction Act (IRA) and described in the multi-year Strategic Operating Plan released this spring.

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5.  New IRS leadership structure announcement


IRS Commissioner Danny Werfel announced plans for a new leadership structure at the agency, a step designed to reflect new transformation goals and update the top of the organization for the first time in two decades. The new organizational structure will feature a single IRS deputy commissioner and four new IRS chief positions to oversee taxpayer service, tax compliance, information technology and operations. The changes will streamline operational efficiencies and align with major transformation work underway at the agency through the Inflation Reduction Act funding.

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6.  Get Ready for the upcoming filing season


The IRS urges taxpayers to take important actions now to help them file their 2023 federal income tax return in 2024. Visit the Get Ready page to see what’s new and what to consider before filing next year, such as IRS online account enhancements, compiling important 2023 tax documents, understanding refund timing, the delay of 1099-K reporting threshold, understanding energy-related credits and more.

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7.  Eighth Annual National Tax Security Awareness Week


IRS, state tax agencies and the nation’s tax industry joined together for the 8th Annual National Tax Security Awareness Week on November 27-December 1, to urge increased security measures to protect against tax-related identity theft and scams.

Check out related NTSAW materials at IRS.gov/NTSAW, which include:

  • Day 1 – The launch focusing on holiday scams, protecting personal information as tax season near
  • Day 2 – Tax pros focus on importance of written security plans and data breach response; special webinar planned for Nov. 30
  • Day 3 – IRS Identity Protection PIN can help avoid fraud and tax-related identity theft
  • Day 4 – Businesses to take steps to prevent data loss, fraud
  • Day 5 – Taxpayers, tax professionals to watch out for emerging scams by email, text, phone as tax season approaches
  • Charity Fraud Awareness Week – IRS supports international efforts to fight fraud during

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8.  Final 2023 quarterly estimated tax payment due Jan. 16


The IRS reminds taxpayers who didn’t pay enough tax in 2023 to make a fourth quarter tax payment on or before Jan. 16, 2024, to avoid a possible penalty or tax bill when filing in 2024.

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9.  2024 Flexible Spending Arrangement contribution limit rises by $150


During open enrollment season for Flexible Spending Arrangements (FSAs), taxpayers may be eligible to use tax-free dollars to pay medical expenses not covered by other health plans through their FSA.

Eligible employees of companies that offer a health flexible spending arrangement (FSA) need to act before their medical plan year begins to take advantage of an FSA during 2024. Self-employed individuals are not eligible.

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10.  Standard mileage rates for 2024


The IRS issued the 2024 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. The mileage rate for business use increases to 67 cents a mile, up 1.5 cents from 2023.

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11.  Reminder: Information returns filing threshold


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. A recorded webinar explains this change, how it affects you and additional ways to file information returns electronically.

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12.  Employers should certify employees before claiming the Work Opportunity Tax Credit


Giving someone a work opportunity may translate into a business tax credit for your client and greater stability for a family. The Work Opportunity Tax Credit (WOTC) encourages employers to hire workers certified as members of any of the 10 groups facing barriers to employment. When hiring, encourage your clients to review eligibility requirements for the WOTC:

For more information, visit the Work Opportunity Tax Credit webpage on IRS.gov.

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13.  Businesses, taxpayers and tax pros and can stay up to date with IRS e-News


The IRS publishes newsletters on a variety of tax topics and audiences. Anyone can sign up to get IRS information, news and tips.

  • e-News for Small Businesses − Tax information for small business owners and self-employed people.
  • e-News for Tax Professionals – Weekly roundup of news releases and legal guidance for tax professionals.
  • IRS Newswire – Up-to-date news releases on tax administration issues such as breaking news and detailed legal guidance.
  • IRS News in Spanish – Noticias del IRS en Español − IRS news releases, tax tips and updates in Spanish.
  • IRS Outreach Connection − Up-to-date materials for tax professionals and partner groups inside and outside the tax community. Outreach Connection has information designed for subscribers to share with their clients or members through email, social media, internal newsletters, emails or a website.
  • IRS Tax Tips – Plain language tips that cover topics of interest to taxpayers. They include the latest on tax scams, tax reform, tax deductions, filing extensions and amending returns.

People can find a list of all IRS e-News subscriptions and sign up at the e-News Subscriptions webpage on IRS.gov.

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14.  Other tax news


The following information may be of interest to individuals and groups in or related to small businesses:

Guidance

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