e-News for Tax Professionals 2023-39

Tax pros: the IRS has expanded the capabilities of Tax Pro Account, allowing you access to new services to help your clients. New functions in Tax Pro Account allow practitioners to manage their active client authorizations on file with the Centralized Authorization File (CAF) database. Other enhancements permit tax professionals to view their client's tax information, including balance due amounts. Tax Pro Account users can now also withdraw from their active authorizations online in real time. These changes reflect ongoing IRS transformation efforts made possible under the Inflation Reduction Act.

2.??Oct. 16 tax filing extension deadline nears for millions of taxpayers

Do you have 2022 Form 1040 clients on extension? Form 1040 extension returns need to be filed on or before Monday, Oct. 16, to avoid a possible late filing penalty. Disaster-area taxpayers in most of California and in parts of Alabama and Georgia also have until Oct. 16, 2023, to file various federal individual and business tax returns and make tax payments.

3.??IRS expands use of chatbots to answer questions on key notices

The IRS recently expanded the availability of chatbot technology to help answer basic questions for people receiving notices about possibly underreporting their taxes. The new chatbot feature will assist taxpayers who receive notices CP2000, CP2501 and CP3219A. Since January 2022, IRS voice and chatbots, both in English and Spanish, have helped more than 13 million taxpayers avoid wait times by resolving their tax issues, including setting up roughly $151 million in payment agreements. This technology expansion is supported through the Inflation Reduction Act funding to transform the IRS and improve services to help taxpayers. This news release is also available in Spanish.

4.??Taxpayers affected by seawater intrusion in parts of Louisiana qualify for tax relief

Individuals and businesses affected by seawater intrusion in parts of Louisiana now have until Feb. 15, 2024, to file various federal individual and business tax returns and make tax payments. Following the disaster declaration issued by the Federal Emergency Management Agency, individuals and households affected by the seawater intrusion that reside or have a business in Jefferson, Orleans, Plaquemines and St. Bernard parishes qualify for tax relief. The current list of eligible localities is always available and updated on the disaster relief page on IRS.gov.

5.??Maine, Massachusetts taxpayers affected by Hurricane Lee qualify for tax relief

Individuals and businesses affected by Hurricane Lee in Maine and Massachusetts now have until Feb. 15, 2024, to file various federal individual and business tax returns and make tax payments. This news release is also available in Spanish and Simplified Chinese.

6.??IRS extends relief to farmers, ranchers in areas affected by drought

The IRS reminds eligible farmers and ranchers forced to sell livestock due to drought that they may have an extended period in which to replace the livestock and defer tax on any gains from the forced sales. Notice 2023-67 lists the applicable areas designated as eligible for federal assistance, including 49 states, the District of Columbia, two U.S. territories and two independent nations in a Compact of Free Association with the United States. More information about this Notice is available in the Technical Guidance section below.

7.??Guidance on employer leave-based donation programs that aid victims of the wildfires in Hawaii

The IRS has provided guidance for employers whose employees forgo sick, vacation or personal leave to aid victims of the Hawaii wildfires. Notice 2023-69 provides that cash payments employers make to charitable organizations during 2023 and 2024 providing relief to victims of the wildfires in Hawaii in exchange for sick, vacation or personal leave, which their employees forgo, will not be treated as compensation. Similarly, the employees will not be treated as receiving the value of the leave as income and cannot claim a deduction for the leave that they donated to their employer. More information about this Notice is available in the Technical Guidance section below.

8.??Builders of qualified new energy-efficient homes may qualify for an expanded tax credit

The IRS issued Notice 2023-65, providing guidance on the new energy efficient home credit as amended by the Inflation Reduction Act. The provision allows eligible contractors who construct or substantially reconstruct and rehabilitate qualified new energy efficient homes a tax credit of up to $5,000 per home. The actual amount of the credit depends on eligibility requirements such as the type of home, the home's energy efficiency and, with respect to multifamily dwelling units, whether prevailing wage requirements are met. More information about this Notice is available in the Technical Guidance section below.

9.? Increased energy investment credit for solar, wind facilities benefitting low-income communities

The Inflation Reduction Act provides for an increase to the energy investment credit for qualifying solar and wind facilities benefitting certain low-income communities. For a taxpayer to be eligible for this increase, the taxpayer must apply for and receive an allocation of environmental justice solar and wind capacity limitation with respect to their facility. If the facility continues to meet eligibility requirements and is placed in service within four years of the allocation award, the taxpayer that received that allocation may then claim the increased energy investment credit for the taxable year in which the facility is placed in service.

10.? News from the Justice Department?s Tax Division

A federal grand jury in Orlando returned an indictment, charging Christopher Johnson, Jasen Harvey and Arthur Grimes of Florida with crimes related to their respective roles in a multimillion-dollar tax refund fraud scheme. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

11.??Technical Guidance

Notice 2023-65 provides guidance on the new energy efficient home credit under section 45L of the Internal Revenue Code (section 45L credit), as amended by the Inflation Reduction Act of 2022.

Notice 2023-67 explains the circumstances under which the four-year replacement period under section 1033(e)(2) is extended for livestock sold on account of drought.

Notice 2023-68 announces the special per diem rates effective Oct. 1, 2023, which taxpayers may use to substantiate the amount of expenses for lodging, meals and incidental expenses when traveling away from home.

Notice 2023-69 provides guidance on certain charitable relief to aid victims of the Hawaii wildfires that began on Aug. 8, 2023. Under employer sponsored leave-based donation programs, employees may elect to forgo vacation, sick, or personal leave in exchange for cash payments made by the employer to tax-exempt entities described in section 170(c) of the code that provide aid to victims of the Hawaii wildfires.

Revenue Procedure 2023-35 provides that a redemption of money market fund (MMF) shares will not be treated as part of a wash sale under section 1091 of the Internal Revenue Code.

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