e-News for Small Business Issue 2024-24

The IRS issued Notice 2024-85 which provides transition relief for third-party settlement organizations (TPSOs), also known as payment apps and online marketplaces, regarding transactions during calendar years 2024 and 2025.

Under the new guidance, TPSOs will be required to report transactions when the amount of total payments for those transactions reaches a certain amount, which varies by year. TPSOs will be required to report transactions when the amount of total payments for those transactions is more than $5,000 in 2024; more than $2,500 in 2025; and more than $600 in calendar year 2026 and after.

TPSOs that have performed backup withholding for a payee during calendar year 2024 must file a Form 945 and a Form 1099-K with the IRS and furnish a copy to the payee.

The IRS won’t assert penalties for calendar year 2024. However, for calendar year 2025 and after, the IRS will assert penalties if a TPSO fails to withhold and pay backup withholding tax.

Resolve improper Employee Retention Credits soon

The IRS recommends that businesses review signs of incorrect Employee Retention Credit credits and resolve incorrect claims soon to avoid future issues. The claim withdrawal program remains open.

To help more businesses with resolving incorrect ERC claims, the IRS extended the deadline for payroll companies and other third-party payers through Dec. 31, 2024, to use the consolidated claim process.

Offer in Compromise instructional videos now on IRS YouTube channel

The IRS added an Offer in Compromise Overview playlist to its YouTube channel. The series talks viewers through the steps to complete the forms to submit an offer in compromise, or OIC.

An OIC allows taxpayers to settle their tax debt for less than the full amount they owe. By working directly with the IRS instead of through a third-party company, taxpayers can save themselves time and money.

Visit the OIC webpage for more information, including FAQs and the Pre-Qualifier tool.

Get tips to protect data during National Tax Security Awareness Week

The IRS and Security Summit partners announced a special awareness week Dec. 2-6 for taxpayers and tax professionals.

For more information, review the annual event that emphasizes the importance of protecting sensitive financial information from identity theft and tax scams as the holidays and tax season approach.

Interest rates decrease for first quarter of 2025

The IRS announced interest rates will decrease for the calendar quarter beginning Jan. 1, 2025.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points, and the overpayment rate is the federal short-term rate plus 2 percentage points.

The rate for large corporate underpayments is the federal short-term rate plus five percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

These interest rates are computed from the federal short-term rate determined during October 2024. See Revenue Ruling 2024-2025 for details.

International Fraud Awareness Week: How to report fraud, scams and schemes

The IRS Office of Fraud Enforcement and IRS Criminal Investigation aim to raise awareness of tax-related fraud, scams and schemes.

The IRS encourages businesses, individuals and tax professionals to recognize red flags and put defenses in place to stop scammers and those who promote unscrupulous tax schemes. Refer to the Dirty Dozen list, which the IRS compiles to raise awareness about common tax-related scams.

How to report suspected fraud:

Form 13909, Tax Exempt Organization Complaint
Form 14242, Report Suspected Abusive Tax Promotions or Preparers

Other tax news

These topics may be of interest to small businesses and their partners:

Give more, tax-free: Eligible IRA owners can donate up to $105,000 to charity in 2024
Healthcare FSA reminder: Employees can contribute up to $3,300 in 2025; must elect every year
IRS publishes 2024 Financial Report; resolves longstanding significant deficiency

Prepare for tax filing 2025 season

IRS takes steps to help prevent refund delays: IP PIN for 2025 filing season; taxpayers encouraged to sign up soon for IP PIN, Online Account
Prepare for 2025 filing season with online tools and key reminders
Save for retirement now, get a tax credit later: Saver’s Credit can help low- and moderate-income taxpayers save more in 2025

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