e-News for Small Business Issue 2024-16

The IRS identified 50,000 valid ERC claims and is quickly moving them into the pipeline for payment processing in coming weeks. These payments are part of a low-risk group of claims. The IRS also sent out 28,000 disallowance letters to businesses whose claims showed a high risk of being incorrect. The IRS estimates that these disallowances will prevent up to $5 billion in improper payments. If a business disagrees with the disallowance they can file an appeal.

“The Employee Retention Credit is one of the most complex tax provisions ever administered by the IRS, and the agency continues working hard to balance our work to protect taxpayers from improper claims while also making payments to qualifying businesses,” said IRS Commissioner Danny Werfel. “It has been a time-consuming process to separate valid claims from invalid ones. During the past year, we maintained a steady cadence of both ERC approvals and disapprovals.”

2. New warning signs of incorrect ERC claims; resolve erroneous claims soon

As the IRS intensifies work on the Employee Retention Credit, it shared five new warning signs the IRS has seen on incorrect ERC claims by businesses.

Businesses with pending claims should carefully review their filings to confirm eligibility and ensure credits claimed don’t include any of the warning signs or other mistakes. Businesses with these indicators should talk to a trusted tax professional and explore the ERC Withdrawal Program to resolve their incorrect claim.

3. Misleading social media advice leads to false claims for tax credits

Businesses: Beware of a series of scams and inaccurate social media advice. Social media schemes led to thousands of inflated refund claims during the past tax season including claims for the Fuel Tax Credit, Sick and Family Leave Credit and household employment taxes. The IRS increased its compliance efforts related to false and questionable credits and shared FAQs to address common questions and provide next steps for those receiving IRS letters.

Myths continue to persist that these schemes are ways to obtain a huge refund. Avoid them! Many of these scams were highlighted during this spring’s annual Dirty Dozen series, including the Fuel Tax Credit scam, bad social media advice and “ghost preparers.”

4. Whistleblower Office celebrates National Whistleblower Day

On July 30, National Whistleblower Appreciation Day, the IRS Whistleblower Office recognized the important role whistleblowers play in supporting the nation’s tax administration.

Since issuing its first award in 2007 through June 2024, the IRS has paid over $1.2 billion in awards based on the successful collection of $7 billion from non-compliant taxpayers.

5. Updated frequently asked questions on New, Previously Owned and Qualified Commercial Clean Vehicle Credits

The IRS updated frequently asked questions in Fact Sheet 2024-26 to provide guidance related to eligibility rules, income limitations, transfer rules and dealer registration for the New, Previously Owned and Qualified Commercial Clean Vehicle Credits.

These FAQs supersede earlier FAQs that were posted in FS-2024-14 on April 16, 2024.

6. Security Summit Summer Series highlights identity theft protection

Learn about ways the IRS and Security Summit partners help protect business and individual taxpayers from tax-related identity theft:

IRS Identity Protection PIN program and the IRS online accounts
Multi-factor authentication, which is now a federal requirement for tax professionals

7. IRS releases draft of updated Form 1099-DA, Digital Asset Proceeds From Broker Transactions

The IRS announced the release of the updated draft of Form 1099-DA, Digital Asset Proceeds From Broker Transactions. This form is for brokers to report certain sale and exchange transactions of digital assets that take place beginning in calendar year 2025.

The IRS posted the new draft to IRS.gov along with the instructions for the recipients of the form.

The IRS expects to post the draft instructions for filers (brokers) soon. Once the draft filer instructions have been posted, a notice will be published in the Federal Register to allow for a 30-day comment period.

8. Other tax news

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

Employer-offered educational assistance programs can help pay for college
Treasury and IRS release Inflation Reduction Act clean energy statistics

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