Thursday, April 25, 2024

Tax Tip 2024-38: When a taxpayer should file an amended federal tax return

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Issue Number:  Tax Tip 2024-38

When a taxpayer should file an amended federal tax return

When a taxpayer realizes that their federal tax return has a math error, missing income or other mistake, they should file an amended tax return.

A taxpayer must file an amended return if they need to correct: 

  • Filing status
  • Income
  • Deductions
  • Credits
  • Tax liability

Math errors and missing schedules
Taxpayers usually do not need to file an amended return to fix a math error or if they forgot to attach a form or schedule. The IRS will correct the math error while processing the tax return and notify the taxpayer by mail. The agency will send a letter to request any missing forms or schedules.

The IRS Interactive Tax Assistant can help taxpayers decide if an amended return is necessary
Taxpayers can use the Should I File an Amended Return? tool in the Interactive Tax Assistant on IRS.gov to help decide if they should file an amended return to correct an error or make other changes if they already filed.

How to file an amended tax return
Taxpayers should use Form 1040-X, Amended U.S. Individual Income Tax Return, to correct a previously filed Form 1040-series return or to change amounts previously adjusted by the IRS. Taxpayers can file Form 1040-X electronically for their 2020, 2021, 2022 and 2023 Forms 1040 or 1040-SR. Additionally, they can electronically amend Form 1040-NR and Form 1040-SS/PR for tax years 2021, 2022 and 2023.

Check the status of an amended return
Taxpayers can check the status of their Form 1040-X with the Where's My Amended Return online tool or by calling 866-464-2050 three weeks after filing it. They can also check the status of their refund with the Where's My Refund tool.

When using either tool, taxpayers will need to enter their Social Security or Taxpayer Identification number along with their date of birth and ZIP code to prove their identity. Once authenticated, they can view the status of their amended return across three processing stages: received, adjusted and completed.

Some tax returns may take longer to process
The IRS issues most refunds in fewer than 21 days for taxpayers who filed electronically and chose direct deposit. Some returns have errors or need more review and may take longer to process.

More information
Form 1040-X, Amended U.S. Individual Income Tax Return, Frequently Asked Questions

 

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IR-2024-120: IRS releases final guidance on transfers of certain credits under the Inflation Reduction Act 

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Issue Number:    IR-2024-120

Inside This Issue


 

IRS releases final guidance on transfers of certain credits under the Inflation Reduction Act 

WASHINGTON – The Department of Treasury and Internal Revenue Service issued final regulations today describing rules and definitions for the transfer of eligible credits in a taxable year, including specific rules for partnerships and S corporations. 

The Inflation Reduction Act and the Creating Helpful Incentives to Produce Semiconductors act (CHIPs) enable taxpayers to take advantage of certain manufacturing investment, clean energy investment and production tax credits through elective pay or transfer provisions. 

For tax years beginning after Dec. 31, 2022, eligible taxpayers can choose to transfer all or a portion of eligible credits to unrelated taxpayers for cash payments. 

The unrelated taxpayers are then allowed to claim the transferred credits on their tax returns. The cash payments are not included in gross income of the eligible taxpayers and are not deductible by the unrelated taxpayers. 

The final regulations also describe special rules related to excessive credit transfers and recapture events, including rules for determining whether an event has occurred, the resulting tax impact and the person responsible for that tax impact.  

The final regulations also provide rules for a mandatory IRS pre-filing registration process through an electronic portal. The pre-filing registration process must be completed, and a registration number received, prior to making an election to transfer eligible credits. 

In addition, the final regulations describe specific rules for partnerships and S corporations as eligible taxpayers and transferee taxpayers. 

Previously, the IRS issued proposed regulations for the transfer of applicable credits and temporary regulations for the mandatory IRS pre-filing registration process. 

For detailed instructions on how to use the tool, refer to Publication 5884, Inflation Reduction Act (IRA) and CHIPS Act of 2022 Pre-Filing Registration Tool. 

The IRS also updated the frequently asked questions based on the final regulations. 

More information can be found on the Inflation Reduction Act of 2022 page on IRS.gov.

 

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Wednesday, April 24, 2024

IR-2024-119: IRS Independent Office of Appeals forms Alternative Dispute Resolution Program Management Office  

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Issue Number:    IR-2024-119

Inside This Issue


IRS Independent Office of Appeals forms Alternative Dispute Resolution Program Management Office  

WASHINGTON —The Internal Revenue Service Independent Office of Appeals today announced the formation of a new Alternative Dispute Resolution Program Management Office. This office will collaborate with the IRS Business Operating Divisions to help taxpayers resolve tax disputes earlier and more efficiently.   

"This new office will revitalize existing programs and pilot new initiatives as part of IRS transformation efforts in alignment with the IRS Strategic Operating Plan," said IRS Commissioner Daniel Werfel. "We're committed to providing taxpayers who wish to resolve their issues without litigation a choice of early resolution options, and the Alternative Dispute Resolution Program Management Office will ensure taxpayers are aware of those options." 

For years, the IRS has offered ADR at various stages of the tax administrative process. While ADR can be a quicker, more collaborative and cost-effective approach to case resolution, use of the programs has declined in recent years. 

By increasing awareness, changing and revitalizing existing programs and piloting new approaches, the IRS hopes to make its ADR programs, such as Fast Track Settlement, Fast Track Mediation, Rapid Appeals Process and Post-Appeals Mediation more attractive and accessible for all eligible parties. 

"We're excited to give our programs the focus they merit," said Acting Chief of Appeals, Elizabeth Askey. "Michael Baillif, who recently joined Appeals as a senior advisor, will serve as the director of the new office; he has extensive dispute resolution experience in both the private sector and the IRS, and I know he'll be excellent in this role." 

Among other things, the ADR PMO will pilot changes to Fast Track Settlement—a program that allows Appeals to mediate disputes between a taxpayer and the IRS while the case is still in Exam's jurisdiction.

More specifically, the new office will also remove barriers to participating in Post-Appeals Mediation—a program that introduces a new mediator if the parties are unable to reach agreement during traditional Appeals settlement negotiations. More specifically, the ADR PMO plans to: 

  • Test ADR programs that allow Appeals to help resolve or mediate disputes earlier in the examination process; 
  • Streamline and clarify existing guidance; and
  • Remove barriers to enable easier use of and access to ADR.

The ADR PMO, in collaboration with the IRS Business Operating Divisions, will also perform outreach and education, coordinate the training and support of mediators, collect data and monitor the effectiveness of ADR offerings. 

The traditional appeal process will remain available for taxpayers who choose it. 

These proposed ADR enhancements reflect input from both internal and external stakeholders who submitted comments in response to the IRS's July 27, 2023 request, and recent reports from the Government Accountability Office and the Taxpayer Advocate Service. The office is still developing the proposed pilots and changes to existing programs and will communicate changes as they become available. 

Questions or comments about the proposal can be submitted to the ADR PMO at ap.adr.programs@irs.gov.

 

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Tax Tip 2024-37: Taxpayers could settle federal tax debt with an Offer in Compromise

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Issue Number:  Tax Tip 2024-37


Taxpayers could settle federal tax debt with an Offer in Compromise

When a taxpayer can't pay their full tax debt or if paying would cause financial hardship, they should consider applying for an Offer in Compromise. For assistance filing for an OIC from a legitimate representative, taxpayers are encouraged to check for a licensed enrolled agent or a reputable accountant in their area.

How an Offer in Compromise works
This is an agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed.

The goal is a compromise that's in the best interest of both the taxpayer and the agency. The Offer in Compromise application includes a fee of $205 and an initial payment. Low-income taxpayers don't have to pay either the fee or the initial payment. Taxpayers should review the instructions for Form 656-B, Offer in Compromise, to see if they meet the qualifications to have these initial costs waved.

Who's eligible
Taxpayers can check their eligibility and prepare a preliminary proposal with the Offer in Compromise Pre-Qualifier Tool.

Review the Offer in Compromise booklet
Eligible taxpayers should download and review the
latest version of the OIC booklet., to avoid processing delays. This booklet covers everything a taxpayer needs to know about submitting an Offer in Compromise including:

  • Eligibility.
  • Costs to apply.
  • Application process.
  • Forms.

Application evaluation
When reviewing applications, the IRS considers the taxpayer's unique set of facts and special circumstances affecting their ability to pay, including their:

  • Income.
  • Expenses.
  • Asset equity.

Beware of Offer in Compromise mills
Offer in Compromise mills aggressively promote Offers in Compromise in misleading ways to people who clearly don't meet the qualifications, often costing taxpayers thousands of dollars.

An Offer in Compromise mill usually makes outlandish claims about how they can settle a person's tax debt for cheap. The promoter fees are often excessive, and eligible taxpayers pay the OIC mill to get the same deal they could have received on their own by working directly with the IRS. This takes unnecessary money out of the taxpayer's wallet.

In addition, not every taxpayer will qualify for an OIC. Some promoters knowingly advise indebted taxpayers to file an OIC application even though the promoters know the person will not qualify, costing honest taxpayers money and time.

More information:

 

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Si contribuyentes no cumplieron con fecha límite para presentar declaración federal de impuestos, IRS puede ayudar

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Consejos Tributarios del IRS 23 de abril de 2024

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Consejo Tributario del IRS 2024-36SP

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Si contribuyentes no cumplieron con fecha límite para presentar declaración federal de impuestos, IRS puede ayudar


Los contribuyentes que no cumplieron con la fecha límite de presentación y pago de impuestos de abril deben presentar la declaración lo antes posible. El IRS ofrece recursos para ayudar a quienes no puedan pagar el total de su factura de impuestos. Aquellos que no cumplieron con la fecha límite para presentar su declaración, pero adeudan impuestos deben presentarla rápidamente para minimizar las multas y los intereses.

Los contribuyentes deben tener en cuenta que los pagos aún vencen antes de la fecha límite del 15 de abril, incluso si solicitaron una extensión de tiempo para presentar una declaración de impuestos. Una prórroga para presentar no es una prórroga para pagar.

Dependiendo de sus circunstancias, algunos contribuyentes tienen más tiempo para presentar y pagar.

Contribuyentes que adeudan impuestos

Los contribuyentes que todavía adeudan impuestos deben presentar su declaración de impuestos y pagar rápidamente los impuestos adeudados para reducir las multas y los intereses. Hasta que el saldo se pague en su totalidad, se acumulan intereses y multas sobre los impuestos adeudados.

Incluso si un contribuyente no puede pagar inmediatamente el monto total de los impuestos adeudados, aun así, debe presentar una declaración de impuestos y pagar tanto como sea posible. Esto reduce los intereses y las multas sobre el monto pendiente y puede ayudar a evitar una posible multa por presentación tardía.

Hay opciones para los contribuyentes que le deben al IRS, pero no pueden pagar. Para obtener más información, consulte la página de multas en IRS.gov.

Los contribuyentes pueden calificar para una exención de multa si han presentado y pagado oportunamente durante los últimos tres años y cumplen con otros requisitos importantes, incluido el pago o los arreglos para pagar cualquier impuesto adeudado. Para obtener más información, consulte la página de Alivio de la imposición de multa debido a la reducción por primera vez en IRS.gov.

Contribuyentes que no adeudan impuestos o se les debe un reembolso

Los contribuyentes que optan por no presentar una declaración porque no ganan lo suficiente para cumplir con el requisito de presentación pueden perder la posibilidad de recibir un reembolso debido a posibles créditos tributarios reembolsables. Algunos ejemplos son el Crédito tributario por ingreso del trabajo y el Crédito tributario por hijos. A veces los contribuyentes no presentan una declaración de impuestos ni reclaman un reembolso por estos créditos y otros para los cuales pueden ser elegibles.

No hay penalización por presentar después de la fecha límite del 15 de abril si se debe realizar un reembolso. Sin embargo, los contribuyentes a los que se les debe un reembolso deberían considerar presentar lo antes posible.

Miembros de la comunidad militar todavía pueden usar MilTax

Los miembros elegibles de la comunidad militar también pueden presentar sus impuestos a través de MilTax (en inglés), un recurso tributario gratuito que se ofrece a través del Departamento de la Defensa. Los contribuyentes elegibles (en inglés) pueden usar MilTax para presentar electrónicamente una declaración de impuestos federales y hasta tres declaraciones estatales de forma gratuita.

Algunos contribuyentes tienen tiempo adicional

Algunos contribuyentes califican automáticamente para recibir tiempo adicional para presentar y pagar los impuestos adeudados sin multas ni intereses, incluidos:

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