COVID-19 penalty relief; PPP loans; Puerto Rico hurricane victim tax relief; ETAAC committee members; and more

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e-News for Tax Professionals September 23, 2022

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Issue Number: 2022-38

Inside This Issue

* File 2019, 2020 returns by Sept. 30 to get COVID penalty relief [ #First ]
* Improperly forgiven Paycheck Protection Program loans are taxable [ #Second ]
* Tax relief for Hurricane Fiona victims in Puerto Rico [ #Third ]
* IRS selects new members for the Electronic Tax Administration Advisory Committee [ #Fourth ]
* Updated information for Work Opportunity Tax Credit [ #Fifth ]
* News from the Justice Department?s Tax Division [ #Sixth ]
* Technical Guidance [ #Seventh ]
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*1.??File 2019, 2020 returns by Sept. 30 to get COVID penalty relief*________________________________________________________________________

If you have clients who were negatively affected by the COVID-19 pandemic, they may qualify for late-filing penalty relief [ [link removed] ] if they file their 2019 and 2020 returns by Sept. 30. Besides providing relief to both individuals and businesses impacted by the pandemic, this step is designed to allow the IRS to focus its resources on processing backlogged tax returns and taxpayer correspondence to help return to normal operations for the 2023 filing season. This news release is also available in Spanish [ [link removed] ] and Simplified Chinese [ [link removed] ].

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*2.??Improperly forgiven Paycheck Protection Program loans are taxable*________________________________________________________________________

The IRS recently issued guidance addressing improper forgiveness of a Paycheck Protection Program (PPP) loan [ [link removed] ]. The guidance confirms that, when a taxpayer's loan is forgiven based upon misrepresentations or omissions, the taxpayer is not eligible to exclude the forgiveness from income and must include the portion of the loan proceeds that were forgiven based upon misrepresentations or omissions.

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*3.??Tax relief for Hurricane Fiona victims in Puerto Rico*________________________________________________________________________

Hurricane Fiona victims in all 78 Puerto Rican municipalities [ [link removed] ] now have until Feb. 15, 2023, to file various federal individual and business tax returns and make tax payments. The IRS disaster relief [ [link removed] ] page has details on other returns, payments and tax-related actions qualifying for the additional time. This news release is also available in Spanish [ [link removed] ].

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*4.??IRS selects new members for the Electronic Tax Administration Advisory Committee*________________________________________________________________________

The IRS has selected eight new members for the Electronic Tax Administration Advisory Committee [ [link removed] ] (ETAAC), a public forum for the discussion of issues in electronic tax administration. Committee members include state tax officials, consumer advocates, cybersecurity and information security specialists, tax preparers, tax software developers and representatives of the payroll and financial communities. Visit IRS.gov for more information about ETAAC and the individuals who?ve been appointed to serve three-year terms on the committee.

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*5.??Updated information for Work Opportunity Tax Credit*________________________________________________________________________

The IRS recently updated information on the Work Opportunity Tax Credit [ [link removed] ] (WOTC), available to employers who hire designated categories of workers who face significant barriers to employment. Visit IRS.gov for more information about these updates and WOTC?s [ [link removed] ] 10 designated categories of workers.

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*6.??News from the Justice Department?s Tax Division*________________________________________________________________________

Two North Carolina women pleaded guilty to conspiring to defraud the United States by preparing false tax returns for clients and causing them to be filed with the IRS. According to court documents and statements made in court, from approximately 2009 through 2018 Betty Hawkins and Phyllis Ricks [ [link removed] ], both of Rocky Mount, conspired with others to file false tax returns for clients of the tax preparation businesses where they both worked. Hawkins, Ricks and their co-conspirators caused more than 1,000 false tax returns to be filed with the IRS that claimed a total of approximately $5 million in fraudulent refunds.

Orland Reed [ [link removed] ], a Mississippi tax preparer, was sentenced to 27 months in prison for preparing false tax returns for his clients. Reed also misappropriated portions of his clients? refunds that were sent by the IRS to the tax preparation business in the form of prepaid debit cards. In addition to the term of imprisonment, U.S. District Judge Taylor B. McNeel ordered Reed to serve one year of supervised release and to pay $69,185 in restitution to the United States.

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*7.??Technical Guidance*________________________________________________________________________

Notice 2022-40 [ [link removed] ] sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for September 2022 used under section 417(e)(3)(D), the 24-month average segment rates applicable for September 2022, and the 30-year Treasury rates, as reflected by the application of section 430(h)(2)(C)(iv).

Notice 2022-42 [ [link removed] ] addresses the application of the noncompulsory payment rules in the foreign tax credit regulations to amended tax decrees between MNEs and the Puerto Rico tax authority.

Revenue Procedure 2022-35 [ [link removed] ] updates and supersedes Rev. Proc. 2021-32. One country, Turkey, is added to the list of jurisdictions with which Treasury and the IRS have determined it is appropriate to have an automatic exchange relationship with respect to the information collected under Treas. Reg. sections 1.6049-8 and 1.6049-4(b)(5).

Revenue Ruling 2022-18 [ [link removed] ] provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate and the adjusted federal long-term tax-exempt rate.

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