ERC deadline; Fraud Street Mafia; IRS compliance efforts; Where's My Refund? tool; and more

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e-News for Tax Professionals March 1, 2024

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Issue Number: 2024-09

Inside This Issue

* Less than a month remaining on ERC deadline [ #First ]
* Operation Fraud Street Mafia: Nine arrested for tax fraud and more [ #Second ]
* IRS launches new effort focused on 125,000 noncompliant high-income taxpayers [ #Third ]
* Tax Time Guide: IRS enhances Where’s My Refund? Tool [ #Fourth ]
* E-filed returns rejected for missing Form 8962 [ #Fifth ]
* Form 1099-K: Myth vs. Fact [ #Sixth ]
* IRS hires two notable former executives from the cryptocurrency industry [ #Seventh ]
* IRS extends office hours to assist with IRA/CHIPs pre-filing registration process [ #Eighth ]
* Tax relief available for San Diego, Washington state area disaster victims [ #Ninth ]
* USDA’s Discrimination Financial Assistance Program FAQs [ #Tenth ]
* Supplemental grant applications accepted at Low Income Taxpayer Clinic [ #Eleventh ]
* Webinar: Scams, tax related identity theft and identity protection PIN for National Consumer Protection Week [ #Twelfth ]
* News from the Justice Department’s Tax Division [ #Thirteenth ]
* Technical Guidance [ #Fourteenth ]
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*1.  Less than a month remaining on ERC deadline*________________________________________________________________________

The March 22 deadline is nearing for the Employee Retention Credit (ERC) Voluntary Disclosure Program [ [link removed] ] for businesses that mistakenly submitted a claim and were compensated. The IRS urges businesses to review their eligibility for the Employee Retention Credit [ [link removed] ] due to time limitations for them to voluntarily resolve incorrect claims and avoid future issues, such as penalties and interest. The IRS offers resources online to answer questions and help employers check whether they’re eligible for the credit. They can review the ERC frequently asked questions [ [link removed] ] and the ERC Eligibility Checklist, which is available as an interactive tool [ [link removed] ] or as a printable guide [ [link removed] ].

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*2.  Operation Fraud Street Mafia: Nine arrested for tax fraud and more*________________________________________________________________________

The IRS Criminal Investigation Division partnered with the FBI and DEA in a recent investigation that found more than $550 million in fraudulent claims for the Employee Retention Credit (ERC). The so-called Operation Fraud Street Mafia [ [link removed] ] investigation found that Kristopher Thomas, a prison inmate, led a multi-million-dollar ERC scheme whereby Thomas and his co-conspirators filed payroll tax returns with the IRS that claimed the ERC for businesses that were not entitled to receive the credits. Thomas has been charged in two separate federal complaints with drug trafficking and ERC-related tax fraud. Defendants in California and Maryland are also charged in the two schemes. IRS records show Thomas and his co-conspirators filed hundreds of payroll tax returns that claimed over $550 million in tax refunds.

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*3.  IRS launches new effort focused on 125,000 noncompliant high-income taxpayers*________________________________________________________________________

The IRS announced a new initiative aimed at 125,000 high-income taxpayers who have not filed [ [link removed] ] federal income tax returns since 2017. The new effort begins with IRS compliance letters to be mailed this week. The mailings include more than 25,000 to those with more than $1 million in income, and over 100,000 to people with incomes between $400,000 and $1 million between tax years 2017 and 2021. Roughly 20,000 to 40,000 letters will go out weekly, starting with the filers in the highest-income categories. These taxpayers should take immediate action to avoid additional follow-up notices, higher penalties as well as increasingly stronger enforcement measures.

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*4.  Tax Time Guide: IRS enhances Where’s My Refund? Tool*________________________________________________________________________

Tax pros: Remind your clients of the enhancements made to the Where’s My Refund? Tool [ [link removed] ] this filing season, including:


* Messages with detailed refund status in plain language.
* Seamless access on mobile devices and with the IRS2Go [ [link removed] ] app.
* Notifications indicating whether the IRS needs additional information.

During this busy part of filing season, millions of taxpayers are anticipating refunds. The Where’s My Refund? tool provides taxpayers with three key pieces of information: IRS confirmation of receipt, approval of the tax refund, issuing date of the approved tax refund. Where’s My Refund? [ [link removed] ] remains the best way to check the status of a refund.

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*5.  E-filed returns rejected for missing Form 8962*________________________________________________________________________

The IRS reminds taxpayers to include the required Form 8962, Premium Tax Credit (PTC) [ [link removed] ] when using tax software to file their returns. An e-filed tax return will be rejected for a missing Form 8962 [ [link removed] ] if the taxpayer is required to reconcile advance payments of the premium tax credit (APTC), but does not complete the form in the software and submit it with their tax return. For information on how to correct an e-filed return that is rejected for a missing Form 8962, visit How to correct an electronically filed return rejected for a missing Form 8962 [ [link removed] ].

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*6.  Form 1099-K: Myth vs. Fact*________________________________________________________________________

The IRS debunked some common myths [ [link removed] ] to help taxpayers understand Form 1099-K. After receiving feedback from partners, the IRS announced that the reporting threshold for Form 1099-K, Payment Card and Third Party Network Transactions [ [link removed] ], would not change for 2023. The reporting threshold requirements remain over $20,000 in payments and over 200 transactions. The IRS continues to see misinformation about why taxpayers may or may not have received a Form 1099-K. More information is available at IRS.gov for what to do with Form 1099-K [ [link removed] ] and frequently asked questions [ [link removed] ].

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*7.  IRS hires two notable former executives from the cryptocurrency industry*________________________________________________________________________

The IRS has hired two former executive advisors, Sulolit “Raj” Mukherjee and Seth Wilks [ [link removed] ], to support the agency’s efforts in the cryptocurrency and digital assets arena. The pair will help lead IRS efforts building service, reporting, compliance and enforcement programs focused on digital assets. “It’s important we get this right for taxpayers and the nation,” said IRS Commissioner Danny Werfel. “Pulling in expertise from the private sector to work with the IRS team is critical to successfully building the agency’s efforts involving digital assets and helping us do it in a way that works well for everyone.”

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*8.  IRS extends office hours to assist with IRA/CHIPs pre-filing registration process*________________________________________________________________________

The IRS offers additional office hours to help entities with the pre-filing registration process on the new IRA/CHIPS Pre-filing Registration Tool [ [link removed] ]. Pre-filing registration is a required step for applicable entities and eligible taxpayers to take advantage of elective payment or transfer of credits [ [link removed] ] available in the Inflation Reduction Act and CHIPS Act. Representatives from the IRS will be available to answer your pre-filing registration questions over Microsoft Teams. Registration is required and can be completed by clicking on one of the following links:


* March 6 from 1-2:30 p.m. ET [ [link removed] ]
* March 13 from 1-2:30 p.m. ET [ [link removed] ]
* March 20 from 1-2:30 p.m. ET [ [link removed] ]
* March 27 from 1-2:30 p.m. ET [ [link removed] ]
* April 3 from 1-2:30 p.m. ET [ [link removed] ]
* April 10 from 1-2:30 p.m. ET [ [link removed] ]
* April 17 from 1-2:30 p.m. ET [ [link removed] ]
* April 24 from 1-2:30 p.m. ET [ [link removed] ]

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*9.  Tax relief available for San Diego, Washington state area disaster victims*________________________________________________________________________

The IRS is providing tax relief to the following individuals and business who have recently been affected by storms or wildfires:


* Individuals and businesses in parts of California [ [link removed] ] affected by severe storms and flooding that began on Jan. 21 now have until June 17 to file various federal individual and business tax returns and make tax payments. The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, this includes San Diego County. The same relief will be available to any other California localities added later to the disaster area.
* Individuals and businesses in parts of Washington state affected by wildfires [ [link removed] ] that began on Aug. 18, 2023, now have until June 17, to file various federal individual and business tax returns and make tax payments. Currently, this includes Spokane County. The same relief will be available to any other Washington state localities added later to the disaster area.

The current list of eligible localities is always available on the disaster relief page [ [link removed] ] on IRS.gov.

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*10.  USDA’s Discrimination Financial Assistance Program FAQs*________________________________________________________________________

The IRS issued frequently asked questions (FAQs) about the United States Department of Agriculture’s (USDA) Discrimination Financial Assistance Program [ [link removed] ] in Fact Sheet 2024-05 [ [link removed] ]. Individuals must have experienced discrimination by USDA in USDA farm lending or be a debtor with USDA farm lending debt that was the subject of discrimination. More information is available on the Discrimination Financial Assistance Program page [ [link removed] ].

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*11.  Supplemental grant applications accepted at Low Income Taxpayer Clinic*________________________________________________________________________

The IRS is accepting supplemental applications [ [link removed] ] from qualified organizations for Low Income Taxpayer Clinic (LITC) matching grants. The application period is open now through April 10. The funding and the period of performance for the grant will be July 1 to Dec. 31. Supplemental applications must be submitted electronically by 11:59 p.m. ET on April 10. Copies of IRS Publication 3319, 2024 Grant Application Package and Guidelines [ [link removed] ], can be downloaded from IRS.gov or ordered by calling 800-TAX-FORM.

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*12.  Webinar: Scams, tax related identity theft and identity protection PIN for National Consumer Protection Week*________________________________________________________________________

The IRS and the Federal Trade Commission will host the webinar Scams, tax related identity theft and identity protection PIN [ [link removed] ] on March 6 at 1 p.m. EST. Learn about tax-related identity theft scams, IRS Identity Protection Personal Identification Number (PIN) Program, reporting and recovery methods and more. To register for this webinar and for additional information on future webinars hosted by the IRS, visit the Webinars for Tax Practitioners [ [link removed] ] webpage.

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*13.  News from the Justice Department’s Tax Division*________________________________________________________________________

Florida tax return preparer Phedson Dore [ [link removed] ] was sentenced to two years in prison for conspiring to defraud the United States. Dore and his co-conspirator ran Empire Tax Services and filed hundreds of false returns and caused a tax loss to the IRS of approximately $970,000. In addition to the term of imprisonment, Dore was ordered to serve two years of supervised release and pay $970,976 in restitution to the United States. IRS Criminal Investigation investigated the case.

The Justice Department filed a complaint today seeking to bar Miami-area return preparer Aniel Saint-Hilaire [ [link removed] ] from owning or operating a tax return preparation business and preparing tax returns for others. By repeatedly understating his customers’ tax liabilities, the complaint alleges that the United States has been harmed by Saint-Hilaire’s conduct, resulting in the significant loss in tax revenue of an estimated $16.5 million each year.

A group of Mississippi tax return preparers [ [link removed] ] were sentenced to prison for charges related to a conspiracy to prepare and file false tax returns for clients in Jackson, Miss. Adam Earnest was sentenced to 100 months in prison, James Klish was sentenced to 50 months in prison and John Wells was sentenced to 15 months in prison. Each was also ordered by U.S. District Court Judge Daniel P. Jordan III for the Southern District of Mississippi to serve three years of supervised release and to pay restitution to the United States in an amount the court will later determine. Over the years, they prepared thousands of fraudulent returns, causing more than $3.5 million in tax loss to the IRS. IRS Criminal Investigation investigated the case.

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*14.  Technical Guidance*________________________________________________________________________

Notice 2024-26 [ [link removed] ] announces that the IRS is granting an administrative exemption from the electronic filing requirements for Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, set forth in final regulations issued under Internal Revenue Code sections 6011(e), 1461, and 1474 (TD 9972, 88 FR 11754).

Revenue Procedure 2024-15 [ [link removed] ] sets forth the Federal income tax treatment that may apply to certain legislatively authorized transactions entered into by a public utility to recover specified costs through a surcharge to customers within the utility’s service area.

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