ERC claims; hurricane scams; digital assets; disaster relief; Direct File

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e-News for Small Business October 22, 2024

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Issue Number:  2024-21

Inside This Issue

* IRS accelerates work on Employee Retention Credit claims [ #First ]
* IRS warns of charity scams following recent hurricanes [ #Second ]
* IRS requests comments on Form 1099-DA, related to digital assets [ #Third ]
* Regulations issued to identify syndicated conservation easement transactions as abusive tax transactions [ #Fourth ]
* Proposed regulations clarify federal tax classification of entities owned by Tribal governments [ #Fifth ]
* Tax relief: fires, hurricanes, terrorist attacks [ #Sixth ]
* IRS Direct File set to double for 2025 filing season [ #Seventh ]
* Other tax news [ #Eighth ]
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*  IRS accelerates work on Employee Retention Credit claims*
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The IRS continues working Employee Retention Credit claims for small businesses and others [ [link removed] ], with processing underway on about 400,000 claims, representing about $10 billion of eligible claims.

“The IRS understands the vital importance of Employee Retention Credits payments for struggling small businesses, and we are continuing to make important progress on one of the most complex tax administration provisions we’ve ever had,” said IRS Commissioner Danny Werfel. “The IRS is working diligently to process ERC claims as quickly as possible, while guarding against improper payments driven by unscrupulous marketers.”

The IRS reminds businesses that received ERC payments to recheck eligibility rules and consider the second Voluntary Disclosure Program or the Claim Withdrawal Program to resolve incorrect claims.

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*  IRS warns of charity scams following recent hurricanes*
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The IRS cautions taxpayers about scammers who use fake charities to get money and sensitive personal and financial data from unsuspecting donors.

Those interested in making donations should check the Tax Exempt Organization Search tool on IRS.gov to help find or verify qualified, legitimate charities. People encountering a fake or suspicious charity should check out the FBI’s resources on charity and disaster fraud.

Find more info on how to protect against charity scams [ [link removed] ].

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*  IRS requests comments on Form 1099-DA, related to digital assets*
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The Federal Register notice posted on Oct. 7, 2024, starts the official 30-day comment period for the draft Form 1099-DA, Digital Asset Proceed From Broker Transactions [ [link removed] ].

The IRS invites the public and other federal agencies to comment on information collection requirements related to digital asset proceeds from broker transactions. Submit comments by *Wednesday, Nov. 6, 2024*.

See final regulations requiring custodial brokers to report sales and exchanges of digital assets, including cryptocurrency [ [link removed] ] for more information. 

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*  Regulations issued to identify syndicated conservation easement transactions as abusive tax transactions*
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The Treasury and IRS issued final regulations identifying certain syndicated conservation easement transactions [ [link removed] ] as "listed transactions" – abusive tax transactions that must be reported to the IRS.

In these abusive transactions, investors typically acquire an interest in a partnership that owns land and then claim an inflated charitable contribution deduction based on a grossly overvalued appraisal. Participants and material advisors will need to report their participation in these transactions using Forms 8886 and 8918.

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*  Proposed regulations clarify federal tax classification of entities owned by Tribal governments*
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Proposed regulations address the federal tax classification of corporations or LLCs owned entirely by Indian Tribal governments (Tribes) [ [link removed] ] and formed under the laws of the Tribes.

Under the proposed regulations, Tribal law entities that are entirely owned by Tribes wouldn’t be recognized as separate entities for federal tax purposes and wouldn’t be subject to federal income tax. The proposed regulations would also clarify that Tribal law entities entirely owned by Tribes may receive the value of certain energy credits under the Inflation Reduction Act.

Treasury and IRS encourage interested parties to submit comments on this guidance through Regulations.gov.

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*  Tax relief: fires, hurricanes, terrorist attacks*
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The IRS’s Tax relief in disaster situations [ [link removed] ] page has the most recent tax relief provisions for taxpayers affected by disaster situations, including:


* Fires
* Watch Fire victims in the San Carlos Apache Tribe in Arizona; multiple deadlines postponed to *Feb. 3, 2025*
* Wildfire victims in parts of Washington; multiple deadlines postponed to *Feb. 3, 2025*

* Hurricanes
* Helene and Milton: *May 1* deadline now applies to individuals and businesses; dyed diesel penalty relief

* Extensions
* Combat zones, disaster areas, Israel have more time for the *Oct. 15* extension deadline

The IRS also has a special hotline for disaster victims with disaster-related tax questions. Call 866-562-5227 [ tel:866-562-5227 ].

*IRS employees help Hurricane Helene efforts*

The IRS provided than 500 employees to help with the Federal Emergency Management Agency’s (FEMA) disaster relief call lines and sent IRS Criminal Investigation (IRS-CI) agents into devastated areas [ [link removed] ] to help with search and rescue efforts and other relief work.

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*  IRS Direct File set to double for 2025 filing season*
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IRS Direct File will be available for the 2025 tax filing season in double the number of states [ [link removed] ] than last year’s pilot. It will also cover a wider range of tax situations, greatly expanding the number of taxpayers who can use the free e-filing service.

Direct File will expand from 12 to 24 states, adding *Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin*.

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*  Other tax news*
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These topics may be of interest to small businesses and their partners:


* 2022 IRS tax gap projections [ [link removed] ]; voluntary compliance rate among taxpayers remains steady.
* 2024 IRS Nationwide Tax Forum Online: Tax professionals can now access new online seminars [ [link removed] ].
* Extension of time for certain applicable entities to make an elective payment election on Form 990-T [ [link removed] ].
* Free *Nov. 18* IRS webinar on Compliance Assurance Process to help large businesses [ [link removed] ].
* Guidance on long-term, part-time employees in 403(b) retirement plans [ [link removed] ] and announce delayed applicability date for related final 401(k) regulation.

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