US Taxes News: September 2023

Friday, September 29, 2023

IR-2023-184: IRS: Taxpayers impacted by seawater intrusion in parts of Louisiana qualify for tax relief; various deadlines postponed to Feb. 15

IRS Newswire

September 29, 2023

Issue Number: IR-2023-184

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IRS: Taxpayers impacted by seawater intrusion in parts of Louisiana qualify for tax relief; various deadlines postponed to Feb. 15

WASHINGTON — The Internal Revenue Service today announced tax relief for individuals and businesses affected by seawater intrusion in parts of Louisiana. These taxpayers now have until Feb. 15, 2024, to file various federal individual and business tax returns and make tax payments.

Following the disaster declaration issued by the Federal Emergency Management Agency (FEMA), individuals and households affected by the seawater intrusion that reside or have a business in Jefferson, Orleans, Plaquemines and St. Bernard parishes qualify for tax relief. The current list of eligible localities is always available and updated on the disaster relief page on IRS.gov.

Filing and Payment Relief
The tax relief postpones various tax filing and payment deadlines that occurred from Sept. 20, 2023, through Feb. 15, 2024 (postponement period). As a result, affected individuals and businesses will have until Feb. 15, 2024, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 15, 2024, deadline will now apply to:

Individuals who had a valid extension to file their 2022 return due to run out on Oct. 16, 2023. The IRS noted, however, that because tax payments related to these 2022 returns were due on April 18, 2023, those payments are not eligible for this relief. So, this is more time to file, not to pay.
Quarterly estimated income tax payments normally due on Jan. 16, 2024.
Quarterly payroll and excise tax returns normally due on Oct. 31, 2023, and Jan. 31, 2024.
Calendar-year corporations whose 2022 extensions run out on Oct. 16, 2023.
Calendar-year, tax-exempt organizations whose extensions run out on Nov. 15, 2023.

In addition, penalties for the failure to make payroll and excise tax deposits due on or after Sept. 20, 2023, and before Oct. 5, 2023, will be abated as long as the deposits are made by Oct. 5, 2023.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Additional Tax Relief
Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed next year), or the return for the prior year (2022). Taxpayers have extra time – up to six months after the due date of the taxpayer's federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. Be sure to write the FEMA declaration number – 3600-EM − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The IRS may provide additional disaster relief in the future.

The tax relief is part of a coordinated federal response to the damage caused by this disaster and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

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IR-2023-183: Oct. 16 tax filing extension deadline nears for millions of taxpayers

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September 29, 2023

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Issue Number: IR-2023-183

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Oct. 16 tax filing extension deadline nears for millions of taxpayers

WASHINGTON — The Internal Revenue Service today reminded taxpayers about the upcoming tax filing extension deadline. To avoid a possible late filing penalty, those who requested an extension to file their 2022 tax return should file their Form 1040 on or before Monday, Oct. 16.

Disaster-area taxpayers in most of California and in parts of Alabama and Georgia also have until Oct. 16, 2023, to file various federal individual and business tax returns and make tax payments.

Those with an IRS address of record in other areas covered by Federal Emergency Management Agency disaster declarations and those returning from a combat zone may have additional time to file. They include:

Taxpayers affected by flooding in Illinois and Alaska. They have until Oct. 31, 2023, to file.
Those affected by flooding in Vermont. They have until Nov. 15, 2023, to file.
Taxpayers affected by recent natural disasters including those impacted by the recent Maui fires and hurricane Idalia in parts of Florida, South Carolina and Georgia. Those in the counties of Maui, Hawaii, and many counties in Florida, South Carolina and Georgia have until Feb. 24, 2024, to file various individual and business tax returns. This list continues to be updated regularly. Taxpayers potentially affected by recent storms should visit the disaster relief page on IRS.gov for the latest information.
Members of the military and others serving in a combat zone. They typically have 180 days after they leave the combat zone to file returns and pay any taxes due.

IRS Free File and other online resources
IRS Free File is available through Oct. 16 and lets qualified taxpayers prepare and file federal income tax returns online using guided tax preparation software. It's available to any person or family with an adjusted gross income (AGI) of $73,000 or less in 2022. Taxpayers can use IRS Free File to claim the Child Tax Credit, the Earned Income Tax Credit, and other important credits. IRS Free File Fillable Forms is available for taxpayers whose 2022 AGI was greater than $73,000 and are comfortable preparing their own tax return.

Taxpayers can get answers to many tax law questions by using the IRS's Interactive Tax Assistant tool. Additionally, taxpayers can view tax information in several languages by clicking on the "English" tab located on the IRS.gov home page.

The IRS Online Account feature provides information to help taxpayers file an accurate return including AGI amounts from last year's return, estimated tax payment amounts and refunds applied as a credit.

Schedule and pay electronically
Taxpayers can file anytime and schedule their federal tax payments up to the Oct. 16 due date. They can pay online, by phone or with their mobile device and the IRS2Go app. Some other key points to keep in mind when filing and paying federal taxes electronically include:

Convenience. Electronic payment options are easy and flexible. Taxpayers can pay when they file electronically using online tax software. Those who use a tax preparer should ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.
IRS Direct Pay. This feature allows taxpayers to pay online directly from a checking or savings account for free and schedule payments up to 365 days in advance. An IRS Online Account is needed, however, to use IRS Direct Pay.
Pay by card. Payments can be made with a credit card, debit card or a digital wallet option. These are available through a payment processor. The payment processor, not the IRS, charges a fee for this service.
IRS2Go. The IRS2Go mobile app provides access to mobile-friendly payment options, including Direct Pay and debit or credit card payments.
Electronic Federal Tax Payment System (EFTPS). Convenient, safe and easy, EFTPS allows for payments online or by phone using the EFTPS Voice Response System. EFTPS payments must be scheduled by 8 p.m. ET at least one calendar day before the tax due date.

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IR-2023-182: IRS delivers new capabilities to Tax Pro Account; latest expansion part of effort to improve technology, tools to help tax professionals serve clients

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September 29, 2023

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Issue Number: IR-2023-182

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IRS delivers new capabilities to Tax Pro Account; latest expansion part of effort to improve technology, tools to help tax professionals serve clients

WASHINGTON – As part of a larger effort to improve technology, the Internal Revenue Service announced today an expansion of the Tax Pro Account capabilities that allows tax professionals access to new services to help their clients.

New additions to Tax Pro Account, available through IRS.gov, will help practitioners manage their active client authorizations on file with the Centralized Authorization File (CAF) database. Other enhancements will allow tax professionals to view their client's tax information, including balance due amounts. Tax Pro Account users can now also withdraw from their active authorizations online in real time.

These changes reflect ongoing transformation efforts made possible under the Inflation Reduction Act. Tax professionals are a critical part of the nation's tax system, and the new IRS Strategic Operating Plan highlights the need to improve technology and services for taxpayers as well as tax professionals.

"Tax professionals provide a vital service to taxpayers and the nation, and the IRS is committed to making improvements to help them serve their clients," said IRS Commissioner Danny Werfel. "As part of our transformation efforts, we will be working to add new technology and expand our relationship with the tax professional community. The ongoing improvements to the Tax Pro Account are just part of a larger effort."

The new enhancements continue IRS efforts to improve the third-party authorization process. The IRS also continues to work on additional expansions to improve services to taxpayers and their tax professionals.

Tax Pro Account continues expanding with new features

Tax Pro Account provides tax professionals with a digital self-service portal they can rely on to manage their authorization relationship with taxpayers and view the taxpayers' information.

With the recent enhancements, tax professionals can now use Tax Pro Account to send Power of Attorney (POA) and Tax Information Authorization (TIA) requests directly to a taxpayer's individual IRS Online Account. Upon the taxpayer's approval and validation of the information, the authorization records immediately to the CAF database, which avoids faxing, mailing, uploading and long review and processing time by the CAF Unit.

Tax professionals must have a CAF number to use a Tax Pro Account; a CAF number cannot be requested through the Tax Pro Account. Currently, the digital authorization process is available only for individual taxpayers, not businesses or other entities.

More than 260,000 people have used Tax Pro Account since it launched in July 2021. The webpage has been viewed over 2.7 million times.

The future of Tax Pro Account

The IRS is committed to improving and expanding Tax Pro Account capabilities and engaging with the tax professional community as these efforts progress. This partnership will enhance the authorization request process and provide tax professionals with the tools they need to access relevant taxpayer information and the ability to address relevant tax-related issues for their clients quickly.

More information:

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FS-23-21: Increased energy investment credit for solar and wind facilities benefitting low-income communities

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September 29, 2023

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Issue Number: FS-23-21

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Increased energy investment credit for solar and wind facilities benefitting low-income communities

The Inflation Reduction Act provides for an increase to the energy investment credit (under Internal Revenue Code Section 48) for qualifying solar and wind facilities benefitting certain low-income communities.

For a taxpayer to be eligible for this increase, the taxpayer must apply for and receive an allocation of environmental justice solar and wind capacity limitation (capacity limitation) with respect to their facility. If the facility continues to meet eligibility requirements and is placed in service within four years of the allocation award, the taxpayer that received that allocation may then claim the increased energy investment credit for the taxable year in which the facility is placed in service.

The Department of the Treasury and the Internal Revenue Service developed the Low-Income Communities Bonus Credit Program (Program) to allocate capacity limitation. The Treasury Department and the IRS released Notice 2023-17 on Feb. 13, 2023, to establish the Program. Notice 2023-17 also provided initial guidance for potential applicants seeking allocations of capacity limitation for calendar year 2023. The Treasury Department and the IRS then issued proposed regulations to provide definitions and requirements that are applicable to the Program on May 31, 2023, which were finalized, with certain modifications, in the final regulations published on Aug. 15, 2023. With the final regulations, the Treasury Department and the IRS simultaneously issued Revenue Procedure 2023-27 to provide information on the application requirements and process for facility owners to apply for an allocation of capacity limitation.

Program overview

Taxpayers that own an eligible solar or wind facility must apply for their facility to be considered for an allocation of capacity limitation. Applications must be submitted to the portal hosted by the Department of Energy (DOE). The DOE will evaluate facility applications and provide a recommendation to the IRS regarding whether to award an applicant an amount of capacity limitation. Based on DOE's recommendation, the IRS will send applicants either an allocation award letter or a denial letter. Applicants may also receive a denial letter if there is no remaining capacity limitation available to award.

For a facility to be eligible for an allocation, and later eligible to claim the increase to the energy investment credit, the facility must be a solar facility or wind facility with a maximum net output of less than five megawatts, as measured in alternating current (AC). Additionally, the facility must qualify under one of the four statutory project categories:

Category 1: Located in a low-income community.
Category 2: Located on Indian land.
Category 3: Part of a qualified low-income residential building project.
Category 4: Part of a qualified low-income economic benefit project.

A 10-percentage-point increase to the energy investment credit is available to eligible solar and wind facilities that are placed in service in low-income communities or on Indian land. A 20-percentage-point increase is available to eligible solar and wind facilities that are part of either a qualified low-income residential building project or a qualified low-income economic benefit project.

There are separate criteria for each of the four project categories, including the requirement for facilities under Category 3 and 4 to distribute financial benefits derived from the electricity produced by the facility. The final regulations describe the criteria specific to each category and define financial benefits for Category 3 and Category 4.

The annual capacity limitation for each of the calendar years 2023 and 2024 is 1.8 gigawatts. The annual capacity limitation is divided across the facility categories for calendar year 2023 as follows:

Category 1: 700 megawatts
Category 2: 200 megawatts
Category 3: 200 megawatts
Category 4: 700 megawatts

For 2023, 50% of the capacity limitation within each category is reserved for facilities meeting certain ownership and/or geographic selection criteria, known as additional selection criteria. The additional selection criteria are described in more detail in the final regulations and Revenue Procedure 2023-27. Within Category 1, 490 megawatts of capacity limitation are reserved for eligible residential behind the meter facilities.

Facilities that receive an allocation must be placed in service within 4 years of the date of the allocation award. Facility owners will report to the DOE that the facility has been placed in service through the same portal they used to apply. When reporting, the facility owner will need to submit additional information and documentation specified in Revenue Procedure 2023-27.

The DOE will determine whether the facility, as placed in service, continues to be eligible under the applicable Program requirements and will provide a recommendation to the IRS. After reviewing DOE's recommendation, the IRS will inform the taxpayer that they may claim the increased energy investment credit or that the facility, as placed in service, is no longer eligible and is therefore disqualified from claiming the increase.

Taxpayers that are eligible to claim the increase to the energy investment credit will calculate their energy investment credit and the increase by using the Form 3468, Investment Credit. The credit increase will be calculated as the basis of eligible property in the solar or wind facility and the applicable increase of either 10 or 20 percentage points, based on the project category under which the facility was awarded an allocation. The basis of energy storage technology installed in connection with the qualified solar or wind facility is also includable in the credit increase. The final regulations define what it means for energy storage technology to be installed in connection with the qualified solar or wind facility.

Finally, the increase to the energy investment credit under Section 48(e) is separately subject to recapture. The final regulations provide the rules applicable to recapture.

Applicant portal and user guide

Applicants must submit information for each facility for which they are seeking an allocation. Applications will require information such as the applicable category, ownership, location, facility size/capacity, whether the applicant or facility meet additional selection criteria, and other information.
Applicants will complete a series of attestations provided in the online portal and upload certain documentation to demonstrate project eligibility and viability.
Each individual completing an application on behalf of their organization will need a Login.gov account in order to register on the DOE portal and complete an application.

Applications submitted within the first 30 days will be treated as submitted on the same date and at the same time, and on a rolling basis thereafter. Depending on capacity, DOE plans to accept applications for the 2023 Program year through early next year.

Webinar for potential applicants

The DOE and the Treasury Department hosted a virtual informational webinar for potential applicants on Sept. 29, 2023. This webinar provided information and details about the Program.

Additional information can be found on IRS.gov and the Department of Energy website.

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