Tax Tips: IRS urges businesses to act by Nov. 22 to resolve improper Employee Retention Credit claims through Voluntary Disclosure Program; third-party payer deadline newly extended to Dec. 31
WASHINGTON — With a Nov. 22 deadline rapidly approaching for the second Voluntary Disclosure Program, the Internal Revenue Service urgently recommends that businesses review Employee Retention Credit guidelines and resolve incorrect claims soon to avoid future issues.
And to help payroll companies and other third-party payers assist more clients with resolving incorrect ERC claims, the IRS announced today the extension of the deadline for third-party payers through Dec. 31, 2024, to use the consolidated claim process. Originally, the third-party option was set to close Nov. 22.
Amid high-pressure marketing that misled many ineligible businesses into filing claims for this pandemic-era tax credit, the IRS opened special programs to help businesses voluntarily resolve incorrect claims.
“Tax professionals and IRS staff are hearing repeatedly that many businesses very much believe they qualify for the credit when, in fact, they don’t,” said IRS Commissioner Danny Werfel. “We urge businesses with pending claims to reexamine their claims to see if they were misled and use the options to proactively resolve their issues. They should listen to trusted tax professionals, not promoters.”
The claim withdrawal program and consolidated claim program remain open and the IRS strongly recommends that business learn about the warning signs of incorrect claims, which outline tactics that unscrupulous promoters have used and why their points are wrong. Eligibility for this credit depends on very specific facts and circumstances.
The second ERC Voluntary Disclosure Program allows businesses that received the credit after filing a claim in error to apply for this program to repay the credit, minus 15%, for tax periods in 2021. Generally, businesses that enter the program don’t have to pay penalties or interest and don’t have to repay interest received from the IRS on an ERC refund. The second ERC Voluntary Disclosure Program ends Nov. 22.
During the first Voluntary Disclosure Program more than 2,600 applications disclosed $1.9 billion worth of credits.
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Tax Tips: IRS takes steps to help prevent refund delays by accepting duplicate dependent returns with an IP PIN for 2025 filing season;
taxpayers encouraged to sign up soon for IP PIN, Online Account
WASHINGTON — The Internal Revenue Service is making it easier for taxpayers to protect their information and avoid refund delays by accepting certain e-filed tax returns that claim dependents who have already been claimed on another taxpayer’s return. This change will benefit filers claiming important tax credits like the Earned Income Tax Credit and Child Tax Credit.
Beginning in the 2025 filing season, the IRS will accept Forms 1040, 1040-NR and 1040-SS even if a dependent has already been claimed on a previously filed return as long as the primary taxpayer on the second return includes a valid Identity Protection Personal Identification Number (IP PIN). This change will reduce the time for the agency to receive the tax return and accelerate the issuance of tax refunds for those with duplicate dependent returns. In previous years, the second tax return had to be filed by paper.
Using an IP PIN is a way for taxpayers to help protect themselves against identity theft. With the new changes being made by the IRS, the IP PIN will also help protect taxpayers when someone fraudulently claims a taxpayer’s dependent. The IRS encourages taxpayers who plan to file early in 2025 to sign up for an IP PIN before Nov. 23, 2024. After that date, the IP PIN system will be offline for annual maintenance until early January 2025.
Signing up now ensures taxpayers are ready to file electronically at the start of the 2025 tax season with an additional safeguard against identity theft and helps avoid issues involving dependents being claimed on multiple tax returns.
While the IP PIN system will be down for scheduled maintenance later this month, the IRS reminds taxpayers they can still sign up for an IRS Online Account. An Online Account, which is the first step to get an IP PIN, also allows taxpayers to securely access their tax return and account information from previous years, including information from their forms W-2 and 1099. The regularly adding new digital tools and features to the Online Account as part of the agency’s transformation work.
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Tax Tips: International Fraud Awareness Week highlights how to report fraud; taxpayer protection against scams, schemes
WASHINGTON – As part of International Fraud Awareness Week, the Internal Revenue Service reminds taxpayers how to report tax-related fraud in their community to protect personal and financial information from scam artists and tax schemes.
During International Fraud Awareness Week, Nov. 17-23, the IRS Office of Fraud Enforcement and IRS Criminal Investigation aim to raise awareness of fraud, scams and schemes affecting taxpayers across the country.
The IRS also encourages individuals, businesses and tax professionals to take time now to learn to recognize red flags and to ensure defenses are in place to stop scammers and those who promote unscrupulous tax schemes.
The Security Summit, a public-private partnership between the IRS, state tax agencies and the nation’s tax industry, also works to protect taxpayers, businesses and the tax system from identity thieves and warn people to watch out for common scams and schemes.
Reporting tax fraud
Tax fraud can come in many forms, including scams targeting individuals, tax-related schemes pitched by unscrupulous promoters and fraud committed by taxpayers who knowingly file incomplete or inaccurate information with the IRS.
The public can assist the IRS in identifying and investigating possible fraud of individuals and businesses by filing Form 3949-A, Information Report Referral. Form 3949-A is a tax-related public use form submitted voluntarily by individuals to report alleged violations of tax law by individuals and businesses. A Form 3949-A submission remains confidential.
Individuals can report suspected tax law violations such as:
• False exemptions and deductions.
• Multiple tax filings.
• Organized crime, public/political corruption and kickbacks.
• Unsubstantiated and unreported income.
• Narcotics income.
• Wagering/gambling income.
• Failures to pay tax, withhold tax and file returns.
These are only some of the suspected violations individuals can report. The IRS will review submissions and determine the appropriate action to take based on the information provided. These actions may include a referral for audit or a referral for criminal prosecution.
The IRS Office of Fraud Enforcement promotes compliance with tax laws by strengthening the IRS response to fraud and mitigating emerging threats. This includes improving fraud detection, identifying areas of high risk, enhancing enforcement and helping develop and submit fraud referrals to IRS Criminal Investigation where appropriate.
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