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

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e-News for Small Business December 21, 2023

Tax Resources for Small Business

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E-file Employment Tax Forms [ [link removed] ]

Businesses with Employees [ [link removed] ]

Self-Employed Individuals Tax Center [ [link removed] ]

S Corporations [ [link removed] ]

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Other Resources

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Issue Number: 2023-16

Inside This Issue

* IRS announces new Voluntary Disclosure Program for paying back erroneous ERC claims – Applications due by March 22, 2024 [ #First ]
* IRS sends 20,000 letters disallowing improper ERC claims [ #Second ]
* IRS helps taxpayers by providing penalty relief on nearly 5 million 2020 and 2021 tax returns with unpaid balances [ #Third ]
* IRS expands Business Tax Account access and capabilities [ #Fourth ]
* New IRS leadership structure announcement [ #Fifth ]
* Get Ready for the upcoming filing season [ #Sixth ]
* Eighth Annual National Tax Security Awareness Week [ #Seventh ]
* Final 2023 quarterly estimated tax payment due Jan. 16 [ #Eighth ]
* 2024 Flexible Spending Arrangement contribution limit rises by $150 [ #Ninth ]
* Standard mileage rates for 2024 [ #Tenth ]
* Reminder: Information returns filing threshold [ #Eleventh ]
* Employers should certify employees before claiming the Work Opportunity Tax Credit [ #Twelfth ]
* Businesses, taxpayers and tax pros and can stay up to date with IRS e-News [ #Thirteenth ]
* Other tax news [ #Fourteenth ]
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*1.  IRS announces new Voluntary Disclosure Program for paying back erroneous ERC claims – Applications due by March 22, 2024*
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The IRS just launched a new Voluntary Disclosure Program [ [link removed] ] 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*
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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 [ [link removed] ] 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*
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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 [ [link removed] ].

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*
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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 [ [link removed] ], 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 [ [link removed] ] released this spring.

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*5.  New IRS leadership structure announcement*
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IRS Commissioner Danny Werfel announced plans for a new leadership structure [ [link removed] ] 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*
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The IRS urges taxpayers to take important actions now [ [link removed] ] 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*
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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 [ [link removed] ], 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*
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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* [ [link removed] ], 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*
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During open enrollment season for Flexible Spending Arrangements (FSAs), taxpayers may be eligible to use tax-free dollars to pay medical expenses [ [link removed] ] 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*
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The IRS issued the 2024 optional standard mileage rates [ [link removed] ] 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*
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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 [ [link removed] ] that provides a no-cost option for electronic filing information returns. A recorded webinar [ [link removed] ] 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*
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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 [ [link removed] ] facing barriers to employment. When hiring, encourage your clients to review eligibility requirements for the WOTC:


* *Pre-screening and certification requirement.* To claim the credit, an employer must first get certification that an individual is a member of one of the specified groups by submitting IRS Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit [ [link removed] ], to their state workforce agency within 28 days after the eligible worker begins work.
* *Figuring and claiming the credit.* After the employer receives Form 8850 certification, they figure the credit on Form 5884, Work Opportunity Credit [ [link removed] ], and then claim the credit on Form 3800, General Business Credit [ [link removed] ].

For more information, visit the Work Opportunity Tax Credit [ [link removed] ] webpage on IRS.gov.

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*13.  Businesses, taxpayers and tax pros and can stay up to date with IRS e-News*
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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 [ [link removed] ] − Tax information for small business owners and self-employed people.
* e-News for Tax Professionals [ [link removed] ] – Weekly roundup of news releases and legal guidance for tax professionals.
* IRS Newswire [ [link removed] ] – 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 [ [link removed] ] − IRS news releases, tax tips and updates in Spanish.
* IRS Outreach Connection [ [link removed] ] − 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 [ [link removed] ] – 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 [ [link removed] ] webpage on IRS.gov.

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*14.  Other tax news*
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The following information may be of interest to individuals and groups in or related to small businesses:


* Interest rates remain the same [ [link removed] ] for the first quarter of 2024
* IRS honored with the Association for Federal Enterprise Risk Management’s Luminary Award [ [link removed] ]
* IRS Independent Office of Appeals releases fiscal year 2024 priorities [ [link removed] ]; focus on improving taxpayer service
* IRS requests applications for 2024 ETAAC membership [ [link removed] ]
* Time to renew Preparer Tax Identification Numbers [ [link removed] ] by *Dec. 31, 2023*

*Guidance*


* IRS clarifies rules for corporate alternative minimum tax [ [link removed] ]
* Treasury, IRS issue guidance on Sustainable Aviation Fuel Credit [ [link removed] ]
* Treasury, IRS issue guidance for the advanced manufacturing production credit [ [link removed] ]
* Treasury, IRS provide guidance for those who manufacture new clean vehicles [ [link removed] ]

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National Tax Security Awareness Week 2023 | Internal Revenue Service (irs.gov) [ [link removed] ]

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