Signs of incorrect ERCs; FAQs revised for Form 1099-K; tax relief for disaster areas; eligibility for business tax credits

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e-News for Small Business02/21/2024

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Issue Number:  Issue 2024-03

Inside This Issue

  1. Review warning signs and resolve incorrect ERC claims ahead of March deadline
  2. Tax relief available in qualifying disaster areas
  3. IRS provides tools to help businesses choose a tax professional 
  4. IRS updates frequently asked questions about Form 1099-K
  5. IRS reminds businesses of important deadlines for backup withholding
  6. Employer-Provided Childcare Tax Credit page helps employers determine eligibility for business tax credit
  7. IRS outlines who must file 2024 tax return
  8. Other tax news

1.  Review warning signs and resolve incorrect ERC claims ahead of March deadline


The IRS urges small businesses to review 7 warning signs and recheck their eligibility to see if their Employee Retention Credit (ERC) claim may be questionable.

The ERC Voluntary Disclosure Program is open through March 22, 2024, to help employers repay their ERC at a discounted rate if they filed an incorrect ERC claim. There’s also a special ERC Withdrawal Program for those who have claims that haven’t been processed yet.

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2.  Tax relief available in qualifying disaster areas


The IRS announced tax relief for individuals and businesses in parts of Maine and West Virginia affected by severe storms and flooding that began on Dec. 17, 2023, and Aug. 28, 2023.

These taxpayers now have until June 17, 2024, to file various federal individual and business tax returns and make tax payments. The current list of eligible localities is available on the disaster relief page on IRS.gov.

In addition, tax relief postpones various tax filing and payment deadlines from Dec. 17, 2023, through June 17, 2024.

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3.  IRS provides tools to help businesses choose a tax professional


The IRS reminds businesses to carefully choose a tax professional to ensure personal and financial information is safe and secure.
To help, the IRS shared resources and tips to help guide businesses in making a good choice, including:

  • The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications
  • A listing of nationally recognized tax associations
  • A special page on IRS.gov with questions and answers

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4.  IRS updates frequently asked questions about Form 1099-K


In an effort to provide resources for taxpayers during the filing season, the IRS revised FAQs for Form 1099-K, Payment Card and Third-Party Network Transactions, in Fact Sheet 2024-03.

The revised FAQs provide more general information, including common situations, along with more clarity for industry and what organizations should send Forms 1099-K.

The updates to the FAQs contain substantial changes within each section:

  • General Information
  • What to Do If You Receive a Form 1099-K
  • Common Situations
  • Third Party Filers of Form 1099-K
  • Should My Organization Be Preparing, Filing and Furnishing Form 1099-K?

The IRS also recently updated the Understanding Your Form 1099-K page on IRS.gov, which includes other communications resources.

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5.  IRS reminds businesses of important deadlines for backup withholding


The IRS reminds entities that withhold money from payments they make to certain people to satisfy backup withholding to remember upcoming filing deadlines. See this fact sheet for details about backup withholding, due dates and extensions.

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6.  Employer-Provided Childcare Tax Credit page helps employers determine eligibility for business tax credit


The IRS launched the Employer-Provided Childcare Tax Credit page, which explains the business incentive to provide childcare services for employees.

This tax credit is designed to help employers cover some of the qualified childcare facility and resource and referral expenses associated with providing childcare services to their employees.

The Employer-Provided Childcare Tax Credit page on IRS.gov has more information about claiming the credit, including the requirements for qualified childcare expenditures and qualified childcare facilities.

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7.  IRS outlines who must file 2024 tax return


Most U.S. citizens and permanent residents who work in the United States need to file a tax return if they make more than a certain amount for the year – including those who are self-employed.

Taxpayers can visit the Small Business and Self-Employed Tax Center on IRS.gov for more resources on filing requirements and other filing season topics.

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8.  Other tax news


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

  • The IRS provides the Form 1042-S Data Integrity Tool to help withholding agents such as banks, insurance companies, universities, entertainment venues, resorts or other financial institutions to improve compliance by identifying potential errors and reducing potential penalties. The tool does not change a withholding agent’s obligations to file with the IRS and furnish a copy of the Form 1042-S to the payee.
  • IRS warns tax professionals to be aware of EFIN scam email; special webinars offered.

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