IRS News: Economic Impact Payments on their way, visit IRS.gov instead of calling

 WASHINGTON – The Internal Revenue Service today urged people to visit IRS.gov for the most current information on the second round of Economic Impact Payments rather than calling the agency or their financial institutions or tax software providers. IRS phone assistors do not have additional information beyond what’s available on IRS.gov.

 
The IRS and the Treasury Department began issuing a second round of Economic Impact Payments, often referred to as stimulus payments, last week. 

The direct deposit payments may take several days to post to individual accounts. Some Americans may have seen the direct deposit payments as pending or as provisional payments in their accounts before the scheduled payment date of Jan. 4, 2021, which is the official date funds are available.

Paper checks also began going out and will continue to be sent through January. Some people will be mailed debit cards in January, and the IRS urges people to carefully check their mail. Mailed payments will require more processing and mailing time. Those who reside abroad will have longer wait times for checks as disruptions to air travel and mail delivery in some countries will slow delivery.

The IRS emphasizes that there is no action required by eligible individuals to receive this second payment. The payments are automatic, and people should not contact their financial institutions or the IRS with payment timing questions.

Eligibility
Generally, U.S. citizens and resident aliens who are not eligible to be claimed as a dependent on someone else’s income tax return are eligible for this second payment. Eligible individuals will automatically receive an Economic Impact Payment of up to $600 for individuals or $1,200 for married couples and up to $600 for each qualifying child. Most people who have an adjusted gross income for 2019 of up to $75,000 for individuals and up to $150,000 for married couples filing joint returns and surviving spouses, will receive the full amount of the second payment. For filers with income above those amounts, the payment amount is reduced.

Checking the status of a payment
Starting today, people can check the status of both their first and second payments by using the Get My Payment tool, available in English and Spanish only on IRS.gov.

Payment not received or less than expected? Claim on 2020 tax return 
Payments started going out last week and will continue through mid-January. Direct deposit payments are being made first to those that have valid routing and account information on file for direct deposit purposes. Because of the speed at which IRS issued this second round of payments, some payments may have been sent to an account that may be closed or no longer active. By law, the financial institution must return the payment to the IRS, they cannot hold and issue the payment to an individual when the account is no longer active. While the IRS is exploring options to correct these payments, if you have not received your full payment by the time you file your 2020 tax return, you may claim the Recovery Rebate Credit on your tax return.

The credit is figured like the Economic Impact Payment, except that the credit eligibility and the credit amount are based on the 2020 tax year information, including income.

For people who received a partial Economic Impact Payment, they can take the Recovery Rebate Credit for any remaining amount they’re eligible for by completing line 30 of the 2020 Form 1040 or 1040-SR.

Changing bank account or mailing information 
The IRS cannot change payment information, including bank account or mailing information. If an eligible taxpayer does not get a payment or it is less than expected, it may be claimed on the 2020 tax return as the Recovery Rebate Credit. Remember, Economic Impact Payments are an advance payment of what will be called the Recovery Rebate Credit on the 2020 Form 1040 or Form 1040-SR.

More information

For more information about Economic Impact Payments and the 2020 Recovery Rebate Credit, visit IRS.gov/eip. Starting next week, people can check the status of their payment at IRS.gov/GetMyPayment. For other COVID-19-related tax relief, visit IRS.gov/Coronavirus. 

Pre-Ack and Bank Product Season Readiness

 

Today marks the beginning of the tax season for those of you offering Pre-acknowledgement advances through our bank partners.  We have prepared a FAQ for you to review with common questions for our pre-ack product. 

If you haven’t enrolled to offer bank products yet, our partners are still open and accepting enrollment applications for all products. 

Once you have enrolled, check out our FAQ below for pre-ack advance products

How do I  apply for pre-ack inside of the return? 

On the main information, Select bank products and check the box for the appropriate bank (your active bank).  You will then visit the bank application and complete the necessary steps, including selecting advance and the taxpayers preferred disbursement.  Once that is completed you will efile the return. 

What is EFC reject 91?

EFC 91 is an EFC reject you will receive when the bank rejects the Pre-ack return.  To fix these rejects the print the ack report and search for the bank rejection, this will tell you what is the reject is and you can fix and resend. 

 

Business eFile end date

 We will stop accepting incoming e-files for business returns on Tuesday, December 22, 2020 @ 6:00pm EST. This is two business days in advance of the IRS e-filing shutdown, thus giving IRS and state agencies a window of time to provide acknowledgements (or, ACKS) back to you before the IRS shuts down e-filing completely on Saturday, December 26^th at 12:00Noon EST. To explain how this affects you:

• 2017 business returns: We will permanently shut down all 2017 EFC Services on Tuesday 22 DEC 2020 @ 6:00pm EST). If you still need to transmit 2017 returns, you should transmit them as soon as possible to receive ACKS before this deadline. After December 22^nd, no further acknowledgements will be received or delivered to clients; if you try to transmit a 2017 return, you will receive a "404 – Not Found" error.

• 2018 and 2019 business returns: After Tuesday, December 22, 2020 @ 6:00pm EST, 2018 and 2019 EFC will continue to return available IRS\State Acknowledgements until the IRS closes business operations on/around Saturday, December 26th, 2020 at 12:00 Noon EST. You will be able to receive outstanding ACKS once the IRS resumes business operations in January.

In addition to this e-filing shut down, the EFC will also stop all EFC reporting on Tuesday, December 22, 2020 @ 6:00pm EST. 

IRS News: IRS issues scam warning to EROs

 

The Internal Revenue Service today warned Electronic Return Originators of an identity theft scam targeting EFIN holders. Fraudsters posing as a “contractor” for the IRS may contact EROs, suggesting they are verifying or checking on the ERO’s EFIN acceptance letter. The scammers may request that the ERO email them a copy of the EFIN acceptance letter and provide a telephone number to call for questions. As with all scams, this one can evolve and the elements may change. EROs should remain vigilant and take steps to protect their identities and taxpayer data. EROs who receive contacts from individuals posing as the IRS should contact the Treasury Inspector General for Tax Administration at www.tigta.gov to file a complaint. EROs who received a contact and disclosed their acceptance letter should contact the e-Services help desk immediately.

NJ State News: Automatic Extension for 2020 CBT Returns for Certain Fiscal Tax Year Filers

 One of the changes resulting from the enactment of P.L. 2020, c. 118 (which was signed into law on November 4, 2020), was a change in the original due date of a Corporation Business Tax return to 30 days after the due date of the federal return. In general, this means that a return is due on the 15th day of the month following the due date of the federal return. This may impact some taxpayers' original due dates.

The 2020 Corporation Business Tax returns (Forms CBT-100, CBT-100U, BFC-1, BFC-1-F, and CBT-100S) are currently in the process of being updated to incorporate the new law's changes, which is delaying the start of the filing season.

Taxpayers with returns that have an original due date that falls anytime between November 15, 2020 and March 15, 2021, are granted an automatic extension to file their tax returns by April 15, 2021. A taxpayer will not be charged late filing penalties if the return is filed by April 15, 2021 (the extended due date). This extension applies only to the filing of the return and does not extend the time to make all required payments. (Note: If a due date falls on a weekend or a legal holiday, the return and payment are due on the following business day.)

Affected taxpayers that apply for an extension of time to file have 6 months from the original due date to file their tax returns. If you are filing form CBT-100, CBT-100U, or BFC-1 (BFC-1-F) and your year ended on July 31, 2020, you must file your tax return on or before June 15, 2021, which is 6 months after the original due date of December 15, 2020. If you are filing Form CBT-100S and your year ended on July 31, 2020, you must file your tax return on or before May 15, 2021, which is 6 months after the original due date of November 15, 2020.

PaperlessPLUS 20.0 Download

 

Customers who downloaded PaperlessPLUS 20.0 for use in a network environment may experience issues accessing the product (standalone users are working as expected). Our team is actively working to resolve this issue and we will provide a product update later this week.

 

We have temporarily removed the PaperlessPLUS download from the Refunds Today support site and will replace it with an updated release as soon as it is available.

 

We apologize for any inconvenience. We will keep you updated on our progress resolving this issue.

IRS News: e-News for Payroll Professionals

 

1.  Electronic signature options will simplify third-party authorizations

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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

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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.

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  3.  2020 National Tax Security Awareness Week – November 30 through December 4

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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.

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  4.  IRS to mask key business transcript details; protects taxpayers from identity theft

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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.

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  5.  IRS Advisory Council issues 2020 Annual Report

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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

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  6.  Reporting nonemployee compensation and backup withholding

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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.

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  7.  Technical guidance

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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.