Addressing Erroneous Employee Retention Credit (ERC) Claims – The IRS continues to urge employers to review their ERC claims. There’s a deadline to resolve inaccurate claims without penalties and interest. Resources to check ERC eligibility include:
If their inaccurate claim is still pending, they should consider the claim withdrawal program to withdraw their pending ERC claim to avoid interest and penalties. The IRS continues processing valid ERC claims as quickly as possible while protecting against improper payments driven by unethical marketers.
IRS Sending Letters Disallowing Improper ERC Claims – As part of its ongoing effort to combat questionable Employee Retention Credit (ERC) claims, the IRS is sending letters to thousands of taxpayers informing them of disallowed ERC claims.
For more information on how to respond to a disallowance letter, see IRS guidance.
Form 1099-K – Payment Card and Third Party Network Transactions – The IRS issued Notice 2024-85 providing transitional relief for third party settlement organizations (TPSOs), also known as payment apps and online marketplaces, with respect to transactions in calendar years 2024 and 2025.
Under the guidance, TPSO’s will be required to report transactions where gross payments exceed $5,000 in 2024; exceed $2,500 in 2025; and exceed $600 for calendar years 2026 and later.
Taxpayers who received more than $5,000 in payments for goods and services through online marketplaces or payment apps in 2024 should expect to receive a Form 1099-K in January 2025. A copy of the form will also be sent to the IRS.
While the IRS is applying a phased-in approach to implementation of the Form 1099-K reporting threshold, there is no change to the taxability of income.
It is important for taxpayers to understand why they received Form 1099-K and how to use it with their other records to calculate and report the correct amount of income on their tax return. Taxpayers also need to know what to do if they receive a Form 1099-K when they should not have. In both cases, good recordkeeping is key. Having good records makes filing taxes easier.
IRS Helps Taxpayers by Waiving Penalties for Nearly 5 Million 2020 and 2021 Tax Returns with Unpaid Balances – In a major step to help people with outstanding tax bills, the IRS announced a new penalty relief for roughly 4.7 million individuals, businesses and tax-exempt organizations who did not receive automated collection reminder notices during the pandemic.
This relief is valued at about $1 billion in total, and most recipients have incomes below $400,000 a year.
Given the unusual circumstances related to the pandemic, the IRS is taking a series of steps before resuming normal collection notices for tax years 2020 and 2021 to help taxpayers resolve unpaid tax bills. These include:
- Issuing special reminder letters starting next month
- Taking steps to waive failure-to-pay penalties for eligible taxpayers affected by this situation for tax years 2020 and 2021
This penalty relief is automatic. Eligible taxpayers don’t need to take any action to receive it.
IRS Stops Unannounced Visits by Revenue Officers to Taxpayers – The IRS announced a major policy change stopping unannounced visits to taxpayers by the agency’s revenue officers, part of an effort to reduce public confusion and enhance overall safety. The change reverses a decades-old practice by IRS Revenue Officers, the agency’s unarmed civil enforcement employees whose duties include visiting homes and businesses to collect unpaid taxes. Effective immediately, unannounced visits will stop except in a few unique circumstances.
Inflation Reduction Act Strategic Operating Plan – The IRS announced its Strategic Operating Plan, an ambitious effort to transform the tax agency and dramatically improve service to taxpayers and the nation over the next decade. The report outlines the agency’s historic plans to make fundamental changes after receiving funding from last year’s Inflation Reduction Act.
Inflation Adjustments for Tax Year 2025 – The IRS announced the annual inflation adjustments for tax year 2025. Revenue Procedure 2024-40 provides details about adjustments and changes to over 60 tax provisions that will affect taxpayers when they file their tax returns in 2026.
Standard Mileage Rates for 2024 – Beginning on January 1, 2024, the standard mileage rates for the use of a car (and vans, pickups or panel trucks for delivery purposes) is 67 cents per mile for business use. See the IRS notice on standard mileage rates for 2024 for more details.
Clean Vehicle and Energy Credits
Credits for New, Previously Owned and Qualified Commercial Clean Vehicles – The 2022 Inflation Reduction Act (IRA) made several changes to the new clean vehicle credit for qualified plug-in electric drive motor vehicles, including adding fuel cell vehicles. The IRA also added a new credit for previously owned clean vehicles and commercial clean vehicles. Get answers to frequently asked questions about the new, previously owned, and qualified commercial clean vehicles credits.
Home Energy Credits – The 2022 Inflation Reduction Act (IRA) revises the credits for energy efficient home improvements and residential energy property. See details on eligible expenses and how credit limits work in the frequently asked questions about energy efficient home improvement credit and clean energy for your home credit.
Alternative Fuel Credits – Find the rules for making a one-time claim for the credit and payment allowable for alternative fuels sold or used during calendar year 2022 quarters one, two, and three in Notice 2022-39. Also get guidance on how to reduce excise tax liability by claiming the allowable alternative fuel mixture credit for 2002 quarter one and two. The alternative fuel credit is part of the Inflation Reduction Act.
Prevailing Wage and Apprenticeship – The 2022 Inflation Reduction Act (IRA) modified and enacted numerous clean energy tax incentives providing for increased credit or deduction amounts if certain prevailing wage and registered apprenticeship requirements are met. The Treasury Department and the IRS issued final regulations and frequently asked questions providing rules and definitions for taxpayers seeking to meet the prevailing wage and apprenticeship requirements.
Elective Pay and Transferability – Elective pay allows applicable entities (as defined), including tax-exempt entities and governments who otherwise could not claim these credits because they do not owe federal income tax, to take certain clean energy credits by treating the amount of the credit as a tax payment and receive a refund of any overpayment.
Transferability allows entities that cannot use elective pay but otherwise qualify for an eligible credit to transfer all, or a portion of, the credit to a third-party buyer in exchange for cash. The buyer and seller will negotiate and agree upon the terms and pricing.
The IRS has provided an overview and a number of fact sheets that can be found on the elective pay and transferability landing page and frequently asked questions providing rules and definitions for taxpayers seeking to meet the prevailing wage and apprenticeship requirements.
See information on Tax Credits and Deductions under the Inflation Reduction Act.
Filing in 2023
Inflation Adjustments for Tax Year 2023 – The IRS announced the annual inflation adjustments for tax year 2023 for over 60 tax provisions, including the tax rate schedules and other tax changes. Revenue Procedure 2022-38 provides details about this annual adjustment.
Standard Mileage Rates for 2023 – Beginning on January 1, 2023, the standard mileage rates used to compute the deductible costs of operating an automobile (and vans, pickups or panel trucks for delivery purposes) is 65.5 cents per mile for business use. See the IRS notice on standard mileage rates for 2023 for more details.
Missed the Filing Deadline – The IRS urged taxpayers who missed the April 15 filing deadline to file their 2023 return as soon as possible. Any taxpayer who owes and missed the filing deadline without requesting an extension should file quickly to limit penalties and interest. For taxpayers struggling to pay their tax bill, the IRS has several options available to help.
Disaster Tax Relief – Find the latest tax relief provisions available to taxpayers affected by a disaster.
State Payments – The IRS provided details clarifying the federal tax status relating to special payments made by 21 states in 2022. During its review, the IRS determined that taxpayers in many states will not need to report these payments on their 2022 tax return.
Families Who Owe No Taxes Can Still Claim Important Tax Credits – Qualifying families and individuals can still file a 2021 tax return and claim some or all of the 2021 Recovery Rebate Credit, Child Tax Credit, Earned Income Tax Credit and other tax credits without penalty. The IRS sent letters to 9 million individuals and families who appear to qualify for a variety of important 2021 tax benefits but have not yet claimed them.
Puerto Rico Families Can Claim Child Tax Credit – Families with children in Puerto Rico who owe the IRS no taxes can still file a 2021 tax return at any time until April 15, 2025, and claim the Child Tax Credit of $3,600 per child without penalty.
Family Tax Credits Return to 2019 Levels – You will likely receive a significantly smaller refund than last year because the Child Tax Credit (CTC), Earned Income Tax Credit, and the Child and Dependent Care Credit have returned to pre-COVID levels:
- The CTC is worth $2,000 per qualifying child in 2022. A child must be under age 17 at the end of 2022 to be a qualifying child.
- For the EITC, eligible taxpayers with no children who received about $1,500 in 2021 will receive $560 for tax year 2022.
- The Child and Dependent Care Credit returned to a maximum of $2,100 in 2022 instead of $8,000 in 2021.
Expanded Premium Tax Credit – You may qualify for 2022 under the temporarily expanded eligibility for the Premium Tax Credit. You must meet both income requirements and other eligibility criteria.
No Above-the-Line Charitable Deduction – During COVID, taxpayers could deduct up to $600 in charitable contributions on their tax returns. However, for the 2022 tax year, taxpayers who did not itemize and took the standard deduction will be unable to deduct their charitable contributions.
Improperly Forgiven Paycheck Protection Program (PPP) Loans Are Taxable – If you had a PPP loan improperly forgiven, we encourage you to file an amended return in which you include the amount of the loan forgiven in income. The IRS issued guidance confirming that if your PPP loan was forgiven based on a misrepresentation or omission, you may not exclude the forgiveness from your income. You must include in your income loan forgiveness obtained based on misrepresentation or omission.
IRS Operations
Backlog of Tax Returns from Previous Years – Visit the IRS Operations: Status of Mission-Critical Functions page for the current status of the IRS’s processing of certain prior year tax returns and amended returns.
