1. Electronic signature options will simplify third-party authorizations
Check out the latest IRS issue of “A Closer Look”, where Office of Professional Responsibility Director Sharyn Fisk explains how new electronic signature options will simplify third-party authorizations.
By moving submission of Form 2848, Power of Attorney and Form 8821, Tax Information Authorization, to a new online process, it gives tax/payroll professionals and taxpayers a safe option to electronically sign and upload these critical documents without an in-person meeting.
"A Closer Look" features posts from a variety of IRS executives that delve into the major issues facing the IRS and tax administration. Subscribe to IRS Newswire to get an email copy of the posts as they become available.
2. Common errors businesses should avoid when claiming employer tax credits
Here’s a short IRS COVID Tax Tip to share with employers, partners and clients explaining how they can avoid common errors when filing Form 941 and claiming an employer tax credit.
Tips include information on:
- Reporting advances requested instead of the advance payments of credits received
- Incorrectly reconciling the advance payment of the credit requested and received
- Using Form 7200 to request the advance payment of employer credit – not claiming it
The Tax Tip also contains links to more helpful information on this topic.
3. 2020 National Tax Security Awareness Week – November 30 through December 4
The IRS, state tax agencies and the nation's tax industry announced their 5th Annual National Tax Security Awareness Week will take place between November 30 and December 4, 2020.
This year there's a heightened need for security as fraudsters seek to use the COVID-19 pandemic to scam taxpayers and payroll community.
National Tax Security Awareness Week will feature a week-long series of 30-minute presentations on the following topics – click the links below to register for each event:
Monday, November 30: Cyber Monday: Security Tips from the IRS
- Shopping securely online
- Security software tips for computers and mobile devices
- Identifying phishing scams
- Cybersecurity when working from home
Tuesday, December 1: How to Protect Your Accounts Using Multi-Factor Authentication
- National Institute of Standards and Technology’s tips for strong passwords
- Password managers to secure unique passwords
- Options for multi-factor authentication
Wednesday, December 2: Get an Identity Protection Pin
- What is an Identity Protection PIN?
- January expansion of IRS IP PIN Program
- Steps to obtain an IP PIN
Thursday, December 3: Small Businesses Must Guard Against Identity Theft
- Federal Trade Commission’s security tips for small business
- Protecting wireless networks
- IRS assistance for businesses experiencing tax-related identity theft
Friday, December 4: Beware of Phishing Scams Targeting All Taxpayers
- Impact of COVID-19 on cybercriminal phishing scams
- Visual examples of recent COVID-19 related phishing scams
- Common characteristics of phishing messages
All events are at 2 p.m. Eastern, 1 p.m. Central, Noon Mountain, 11 a.m. Pacific, 8 a.m. Hawaii.
The week will also include special informational graphics and a social media effort on Twitter and Instagram with @IRSnews and #TaxSecurity.
4. IRS to mask key business transcript details; protects taxpayers from identity theft
The IRS will begin masking sensitive data on business tax transcripts beginning December 13 to protect business taxpayers from identity theft.
The announcement provides time for stakeholders to make any adjustments. The agency previously masked sensitive data on individual tax transcripts two years ago.
Here's what’s visible on the new tax transcript:
- Last 4 digits of any Employer Identification Number listed on the transcript: XX-XXX1234
- Last 4 digits of any Social Security number or Individual Tax Identification Number listed on the transcript: XXX-XX-1234
- Last 4 digits of any account or telephone number
- First 4 characters of the first, and last name for any individual (first 3 characters if the name has only 4 letters)
- First 4 characters of any name on the business name line
- First 6 characters of the street address, including spaces
- All money amounts, including wage and income, balance due, interest and penalties
More information about the masking of transcripts can be found at IRS.gov's e-Services page after December 13.
5. IRS Advisory Council issues 2020 Annual Report
The Internal Revenue Service Advisory Council (IRSAC) issued its annual report for 2020 that includes recommendations to the IRS on new and continuing issues in tax administration, such as:
- Funding of the IRS
- The Taxpayer First Act
- Expansion of e-File
- Proposal for an early exam program for Large Business
- Telephone response times for the Practitioner Priority Service
- Resources for Native American taxpayers and federally recognized tribes
- Taxpayer Digital Communications
6. Reporting nonemployee compensation and backup withholding
The IRS reminds payroll professionals that starting in tax year 2020, payers must complete the new Form 1099-NEC, Nonemployee Compensation, to report any payment of $600 or more to a payee.
Generally, payers must file Form 1099-NEC by January 31. For 2020 tax returns, the due date is February 1, 2021. There is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions.
Also, nonemployee compensation may be subject to backup withholding if a payee has not provided a taxpayer identification number to the payer or the IRS notifies the payer that the TIN provided was incorrect.
7. Technical guidance
Revenue Procedure 2020-51 provides a safe harbor for certain Paycheck Protection Program (PPP) loan participants, whose loan forgiveness has been partially or fully denied. Also for those who decide to forego requesting loan forgiveness, they may be able to deduct some or all of the eligible expenses on:
- The taxpayer’s timely filed, including extensions, original income tax return or information return, as applicable, for the 2020 taxable year
- An amended return or an administrative adjustment request (AAR) under section 6227 of the Internal Revenue Code (Code) for the 2020 taxable year, as applicable.
For taxpayers who decide to forego requesting loan forgiveness, the safe harbor also allows these taxpayers to claim a deduction for the otherwise deductible eligible payments on an original income tax return or information return, as applicable, for the taxable year in which the taxpayer decides to forego requesting forgiveness.
Revenue Ruling 2020-27 provides guidance on whether a PPP loan participant that paid or incurred certain otherwise deductible expenses can deduct those expenses in the taxable year in which the expenses were paid or incurred, provided that if, at the end of that year, the taxpayer reasonably expects to receive forgiveness of the covered loan. The revenue ruling also provides guidance if, as of the end of the 2020 taxable year, the PPP loan participant has not applied for forgiveness, but intends to apply in the next taxable year.
