IR-2024-315: Treasury and IRS propose regulations to update rules for tax professionals who can practice before the IRS 

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Issue Number:    IR-2024-315

Inside This Issue


Treasury and IRS propose regulations to update rules for tax professionals who can practice before the IRS 

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued proposed regulations to update the rules for certain tax professionals who can practice before the IRS; these rules are contained in Treasury Department Circular 230. 

The IRS Office of Professional Responsibility generally has responsibility for matters related to practitioner conduct, and exclusive responsibility for discipline, including disciplinary proceedings and sanctions. The proposed regulations, if finalized, would amend Circular 230 in various ways to account for changes in the law and the evolving nature of tax practice. 

Among other changes, the proposed regulations would remove or update the parts of Circular 230 related to registered tax return preparers and tax return preparation, as well as contingent fees to reflect changes in the law since the prior amendments to Circular 230 in 2011 and 2014. The proposed regulations would also revise or eliminate other provisions that are out of date. 

Additionally, the proposed regulations would incorporate new provisions that better align Circular 230 with the current practice environment, such as requiring that practitioners maintain technological competency as part of their practice before the IRS. The proposed regulations would also clarify some provisions, such as confirming that OPR retains jurisdiction over practitioners who have been suspended or disbarred from practice. 

Finally, the proposed regulations would provide rules related to appraisers, including the standards for disqualification.

 

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IR-2024-314: IRS announces special payments going this month to 1 million taxpayers who did not claim 2021 Recovery Rebate Credit; encourages non-filers about approaching deadline to claim credits 

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Issue Number:    IR-2024-314

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IRS announces special payments going this month to 1 million taxpayers who did not claim 2021 Recovery Rebate Credit; encourages non-filers about approaching deadline to claim credits 

WASHINGTON – As part of continuing efforts to help taxpayers, the Internal Revenue Service today announced plans to issue automatic payments later this month to eligible people who did not claim the Recovery Rebate Credit on their 2021 tax returns.  

The IRS announced the special step after reviewing internal data showing many eligible taxpayers who filed a return but did not claim the credit. The Recovery Rebate Credit is a refundable credit for individuals who did not receive one or more Economic Impact Payments (EIP), also known as stimulus payments. 

No action is needed for eligible taxpayers to receive these payments, which will go out automatically in December and should arrive in most cases by late January 2025. The payments will be automatically direct deposited or sent by paper check; eligible taxpayers will also receive a separate letter notifying them of the payment. 

“The IRS continues to work hard to make improvements and help taxpayers,” said IRS Commissioner Danny Werfel. “These payments are an example of our commitment to go the extra mile for taxpayers. Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible. To minimize headaches and get this money to eligible taxpayers, we’re making these payments automatic, meaning these people will not be required to go through the extensive process of filing an amended return to receive it.”  

The payments vary depending on several factors, but the maximum payment is $1,400 per individual. The estimated amount of payments going out will be about $2.4 billion. 

The IRS also reminded taxpayers who haven’t filed 2021 tax returns they might be eligible as well, but they face an April 15, 2025, deadline to file their returns to claim the credit and any other refund they might be owed.  

Most eligible taxpayers already claimed the credit 

Most taxpayers eligible for EIPs have already received their EIP or Recovery Rebate Credit. 

These December payments for the 2021 Recovery Rebate Credit are only going to taxpayers where IRS data demonstrates a taxpayer qualifies for the credit. Qualified taxpayers are those who filed a 2021 tax return, but where the data field for the Recovery Rebate Credit was left blank or was filled out as $0 when the taxpayer was actually eligible for the credit.  

How automatic payments work 

Taxpayers who qualify but did not claim any portion of the credit on their 2021 tax return should receive these payments by late January 2025. The payment will be sent to the bank account listed on the taxpayer’s 2023 tax return or to the address of record.  

An IRS letter will be sent to the taxpayer receiving these 2021 Recovery Rebate Credit payments. If the taxpayer closed their bank account since filing their 2023 tax return, taxpayers do not need to take any action. The bank will return the payment to the IRS and the refund will be reissued to the address of record. 

For questions regarding eligibility and how the payment was calculated, see 2021 Recovery Rebate Credit Questions and Answers 

Taxpayers who didn’t file a 2021 tax return may be eligible to claim the credit if they file a return  

The IRS reminds taxpayers who have not yet filed their 2021 tax returns that they may be eligible for a refund if they file and claim the Recovery Rebate Credit by the April 15, 2025, deadline. 

Eligible taxpayers who did not file must file a tax return to claim a Recovery Rebate Credit, even if their income from a job, business or other source was minimal or non-existent. 

Additional information about automatic payments; filing 2021 tax returns 

To calculate the amount of Recovery Rebate Credit, taxpayers may access their IRS Online Account to determine the amount they received in Economic Impact Payment(s). See FAQ G2 2021 Recovery Rebate Credit — Topic G: Finding the Third Economic Impact Payment Amount to Calculate the 2021 Recovery Rebate Credit and 2021 Recovery Rebate Credit — Topic A: General Information. 

Any Recovery Rebate Credit received does not count as income when determining eligibility for federal benefits such as Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).  

As the 2025 tax filing season approaches, the IRS is committed to helping taxpayers understand and claim the credits and deductions for which they are eligible including Coronavirus tax relief. Many taxpayers are unaware of tax credits and deductions for which they are eligible or face other barriers keeping them from claiming them. The IRS will be reminding taxpayers about these credits, including the Earned Income Tax Credit, during the 2025 filing season. 

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IR-2024-313: IRS requests feedback on draft Instructions for Form 6765, Credit for Increasing Research Activities 

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Issue Number:    IR-2024-313

Inside This Issue


IRS requests feedback on draft Instructions for Form 6765, Credit for Increasing Research Activities 

WASHINGTON — The Internal Revenue Service today announced the release of draft Instructions for Form 6765, Credit for Increasing Research Activities, also known as the research credit. 

The IRS is seeking feedback regarding the draft instructions but specifically about Section G reporting for controlled groups, ASC 730 Directive, Section G business component detail and statistical sampling. 

Feedback regarding the tax year 2024 draft or final instructions can be submitted to lbi.rt.team@irs.gov through June 30, 2025, using the subject line: “Instructions for Form 6765.” All feedback will be considered to ensure the tax year 2025 (processing year 2026) instructions provide clear and updated guidance on completing the form. The IRS remains committed to engaging with stakeholders in preparation for tax year 2025 (processing year 2026). 

These instructions will be used in conjunction with revised draft Form 6765 released on Dec. 12, 2024, which includes a new Section E seeking other business information, a new Section F summarizing the qualified research expenses and a new Section G for reporting business component details. The IRS encourages taxpayers and their representatives to review and consider using the new format when preparing their tax year 2024 return. 

The IRS anticipates publishing the final tax year 2024 Form 6765 and Instructions by the end of January 2025. 

Section G will be optional for all filers for tax year 2024 (processing year 2025). For tax year 2025 (processing year 2026) and beyond, Section G will be mandatory for all filers with optional reporting for: 

  • Qualified Small Business (QSB) taxpayers, defined under section 41(h)(1) & (2) of the Internal Revenue Code who check the box to claim a reduced payroll tax credit; or
  • Taxpayers with total qualified research expenses (QREs) equal to or less than $1.5 million, determined at the control group level and equal to or less than $50 million of gross receipts, as determined under section 448(c)(3) (without regard to subparagraph (A) thereof), claiming a research credit on an original filed return. 

The Form 6765 improvement effort was informed by stakeholder feedback. The IRS released an early preview of Form 6765 changes on Sept. 15, 2023, and invited comments from interested parties on the proposed changes. In response, the IRS received numerous helpful comments from various external stakeholders and revised the form as discussed in the prior news release on June 21, 2024.  

Annually, the IRS receives thousands of returns claiming the research credit that involve hundreds of millions of dollars. There are a substantial number of cases examining research credit issues, which consume significant resources of both taxpayers and the IRS. Improvements to Form 6765 are intended to make tax reporting more consistent, improve the information received for tax administration and build an ongoing effort to manage resources in a more effective and efficient way. 

For more information visit IRS.gov to learn more about Form 6765.

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IR-2024-312: IRS increases the standard mileage rate for business use in 2025; key rate increases 3 cents to 70 cents per mile 

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Issue Number:    IR-2024-312

Inside This Issue


IRS increases the standard mileage rate for business use in 2025; key rate increases 3 cents to 70 cents per mile 

WASHINGTON — The Internal Revenue Service today announced that the optional standard mileage rate for automobiles driven for business will increase by 3 cents in 2025, while the mileage rates for vehicles used for other purposes will remain unchanged from 2024. 

Optional standard milage rates are used to calculate the deductible costs of operating vehicles for business, charitable and medical purposes, as well as for active-duty members of the Armed Forces who are moving. 

Beginning Jan. 1, 2025, the standard mileage rates for the use of a car, van, pickup or panel truck will be: 

  • 70 cents per mile driven for business use, up 3 cents from 2024.
  • 21 cents per mile driven for medical purposes, the same as in 2024.
  • 21 cents per mile driven for moving purposes for qualified active-duty members of the Armed Forces, unchanged from last year.
  • 14 cents per mile driven in service of charitable organizations, equal to the rate in 2024. 

The rates apply to fully-electric and hybrid automobiles, as well as gasoline and diesel-powered vehicles. 

While the mileage rate for charitable use is set by statute, the mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes, meanwhile, is based on only the variable costs from the annual study. 

Under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. And only taxpayers who are members of the military on active duty may claim a deduction for moving expenses incurred while relocating under orders to a permanent change of station. 

Use of the standard mileage rates is optional. Taxpayers may instead choose to calculate the actual costs of using their vehicle. 

Taxpayers using the standard mileage rate for a vehicle they own and use for business must choose to use the rate in the first year the automobile is available for business use. Then, in later years, they can choose to use the standard mileage rate or actual expenses. 

For a leased vehicle, taxpayers using the standard mileage rate must employ that method for the entire lease period, including renewals. 

Notice 2025-5 contains the optional 2025 standard mileage rates, as well as the maximum automobile cost used to calculate mileage reimbursement allowances under a fixed-and variable rate (FAVR) plan. The notice also provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in 2025 for which employers may calculate mileage allowances using a cents-per-mile valuation rule or the fleet-average-valuation rule.

 

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RESENDING: Prepare to file in 2025: Get Ready for tax season with key updates, essential tips

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Issue Number:    IR-2024-311

Inside This Issue


Prepare to file in 2025: Get Ready for tax season with key updates, essential tips 

WASHINGTON — With the 2025 filing season quickly approaching, the Internal Revenue Service  encouraged taxpayers to take key steps now to prepare for filing their 2024 federal income tax returns next year. 

The IRS continues to improve taxpayer services to help people prepare for tax season with more digital tools and options available. The IRS encourages taxpayers to sign up now for an IRS Online Account to make tax season easier and help safeguard their tax information. 

There are a number of things taxpayers can do to get ready as the end of 2024 nears and the start of the 2025 tax season approaches. 

The IRS’s Get Ready page on IRS.gov offers practical tips and resources to help taxpayers prepare. It highlights key updates and important steps for taxpayers to consider to make tax filing easier in 2025. 

This reminder is part of a series designed to help taxpayers “Get Ready” for the upcoming filing season. Taking action now can reduce stress and ensure a smoother filing process next year. 

Do more with an IRS Online Account 

Individuals can create or access their IRS Online Account at Online account for individuals. With an IRS Online Account, they can:

  • View key details from their most recent tax return, such as adjusted gross income.
  • Request an Identity Protection PIN.
  • Get account transcripts to include wage and income records.
  • Sign tax forms like powers of attorney or tax information authorizations.
  • View and edit language preferences and alternative media.
  • Receive and view over 200 IRS electronic notices.
  • View, make and cancel payments.
  • Set up or change payment plans and check their balance.

 

Get an Identity Protection Personal Identification Number (IP PIN) 

An IP PIN is a six-digit number that prevents someone else from filing a federal tax return using an individual’s Social Security number or Individual Taxpayer Identification Number. It’s a vital tool for ensuring the safety of taxpayers’ personal and financial information. 

New for 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 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. 

The best way to sign up for an IP PIN is through the IRS Online Account. If an individual is unable to create an Online Account, alternative methods are available, such as in-person authentication at a Taxpayer Assistance Center. More information is available on how to sign up at Get an identity protection PIN (IP PIN) 

Deadline for 2024 last quarterly estimated payment is Jan. 15, 2025 

Taxpayers with non-wage income—such as unemployment benefits, self-employment income, annuity payments or earnings from digital assets—may need to make estimated or additional tax payments. The Tax Withholding Estimator on IRS.gov can help wage earners determine if they need to make an additional payment to avoid an unexpected tax bill when filing their return. 

1099-K reporting changes 

Taxpayers who received more than $5,000 in payments for goods and services through an online marketplace or payment app in 2024 should expect to receive a Form 1099-K in January 2025. A copy of this form will be sent to the IRS as well.

Although the IRS is taking a phased in approach to implementation of the Form 1099-K reporting threshold, there have been no changes to the taxability of income. All income, including proceeds from part-time work, side jobs or the sale of goods and services is taxable. Taxpayers must report all income on their tax return unless it’s excluded by law, whether they receive a Form 1099-K or not. The law doesn’t allow taxpayers to avoid taxes on income earned just because they didn’t get a form reporting the payments received. 

It is important for taxpayers to understand why they received a Form 1099-K and how to use it along with their other records to figure and report the correct amount of income on their tax return. It is also important for taxpayers to know what to do if they received a Form 1099-K but shouldn’t have. In either situation, good recordkeeping is key. Having good records will help make tax filing easier. 

Prepare to include digital assets on taxes in 2025 

Just like previous filing years, taxpayers must report all digital asset-related income when they file their 2024 federal income tax return. A digital asset is property that is stored electronically and can be bought, sold, owned, transferred or traded. Examples include convertible virtual currencies and cryptocurrencies, stablecoins and non-fungible tokens (NFTs).   

If a taxpayer had digital asset transactions last year, they should be sure to keep records that prove their purchase, receipt, sale, exchange or any other disposition of the digital assets and that includes the fair market value, as measured in U.S. dollars of all digital assets received as income or as a payment in the ordinary course of a trade or business.  

When filing 2024 federal income tax returns, taxpayers will be asked to answer “Yes” or “No” to the following question: 

“At any time during the tax year, did you:

(a) receive (as a reward, award or payment for property or services); or   (b) sell, exchange or otherwise dispose of a digital asset (or a financial interest in a digital asset)?” 

Taxpayers should be prepared to answer the question by reviewing the digital assets landing page and FAQ available on IRS.gov. In addition to checking the “Yes” box, taxpayers must report all income related to their digital asset transactions. Information on how to report digital asset transactions, including calculating capital gain or loss, determining basis and reporting the income on the correct form can also be found on the digital assets landing page. 

Understand refund timing and how to avoid delays 

Several factors can influence the timing of a refund after the IRS receives a tax return. While the IRS issues most refunds in less than 21 days, taxpayers are advised not to depend on receiving a 2024 federal tax refund by a specific date for major purchases or bill payments. Some returns may require additional review and take longer to process if there are possible errors, missing information, or indications of identity theft or fraud. 

Additionally, under the PATH Act, the IRS cannot issue refunds for tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) before mid-February. The IRS must hold the entire refund—not just the portion associated with these credits—until the review is complete. 

Gather and organize 2024 tax documents 

To make tax time easier, taxpayers should establish an effective record-keeping system, either electronic or paper, to organize all important documents in one place. This includes year-end income forms such as Forms W-2 from employers, Forms 1099 from banks or other payers, Forms 1099-K from third-party payment networks, Forms 1099-NEC for nonemployee compensation, Forms 1099-MISC for miscellaneous income, Forms 1099-INT for interest income and records of all digital asset transactions. 

Having all necessary documentation ensures taxpayers can file an accurate return and reduces the likelihood of processing delays or refund issues. 

Use direct deposit for a faster refund 

Filing electronically and selecting direct deposit remains the fastest and safest way for taxpayers to receive their 2024 tax refunds. Direct deposit ensures quicker access to refunds compared to receiving a paper check. 

For those without a bank account, resources are available to help. Individuals can learn how to open an account at an FDIC-insured bank or use the national Credit Union Locator tool. Veterans can explore the Veterans Benefits Banking Program for financial services at participating banks. 

Tax refunds can also be deposited onto prepaid debit cards or through mobile payment apps, provided they have routing and account numbers. Taxpayers should confirm with the mobile app provider or financial institution which numbers to use when completing their tax return. 

Free filing options 

Seventy percent of all taxpayers can use free brand name tax software to prepare and file their federal income tax return electronically using IRS Free File. All taxpayers, regardless of income level, can also use IRS Free File Fillable Forms. 

Taxpayers living in participating states with relatively simple tax returns can use Direct File and file their tax return online directly with the IRS. The Direct File program is another option for taxpayers to file their taxes. Taxpayers can see if they are eligible for Direct File. 

Older adults, members of the military and many other taxpayers—depending on their income—may also qualify for free tax return preparation and electronic filing by IRS-trained volunteers through the Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs.

 

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IR-2024-311: Prepare to file in 2025: Get Ready for tax season with key updates, essential tips

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Issue Number:    IR-2024-311

Inside This Issue


Prepare to file in 2025: Get Ready for tax season with key updates, essential tips 

WASHINGTON — With the 2025 filing season quickly approaching, the Internal Revenue Service  encouraged taxpayers to take key steps now to prepare for filing their 2024 federal income tax returns next year. 

The IRS continues to improve taxpayer services to help people prepare for tax season with more digital tools and options available. The IRS encourages taxpayers to sign up now for an IRS Online Account to make tax season easier and help safeguard their tax information. 

There are a number of things taxpayers can do to get ready as the end of 2024 nears and the start of the 2025 tax season approaches. 

The IRS’s Get Ready page on IRS.gov offers practical tips and resources to help taxpayers prepare. It highlights key updates and important steps for taxpayers to consider to make tax filing easier in 2025. 

This reminder is part of a series designed to help taxpayers “Get Ready” for the upcoming filing season. Taking action now can reduce stress and ensure a smoother filing process next year. 

Do more with an IRS Online Account 

Individuals can create or access their IRS Online Account at Online account for individuals. With an IRS Online Account, they can:

  • View key details from their most recent tax return, such as adjusted gross income.
  • Request an Identity Protection PIN.
  • Get account transcripts to include wage and income records.
  • Sign tax forms like powers of attorney or tax information authorizations.
  • View and edit language preferences and alternative media.
  • Receive and view over 200 IRS electronic notices.
  • View, make and cancel payments.
  • Set up or change payment plans and check their balance. 

Get an Identity Protection Personal Identification Number (IP PIN) 

An IP PIN is a six-digit number that prevents someone else from filing a federal tax return using an individual’s Social Security number or Individual Taxpayer Identification Number. It’s a vital tool for ensuring the safety of taxpayers’ personal and financial information. 

New for 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 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. 

The best way to sign up for an IP PIN is through the IRS Online Account. If an individual is unable to create an Online Account, alternative methods are available, such as in-person authentication at a Taxpayer Assistance Center. More information is available on how to sign up at Get an identity protection PIN (IP PIN)

 

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Tax Tip 2024-98: Tax pros: Apply to be an IRS authorized e-file provider in a few simple steps

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Issue Number: Tax Tip 2024-98

Tax pros: Apply to be an IRS authorized e-file provider in a few simple steps

With more than 90% of individual federal returns filed electronically, becoming an IRS-authorized e-file provider is important for tax preparers who want to grow their business with a service most taxpayers now expect. All it takes is a few simple steps.

How to apply
Tax professionals can complete and submit an authorized e-file provider application online on IRS.gov. They can complete the application at their own pace, save their progress and return to it later.

To complete the application, tax professionals should:

  1. Sign into an existing account or create a new account with the e-Services e-file application.
  2. Fill out identification information for their firm.
  3. Enter information about each principal and responsible official in their organization.
  4. Choose the e-file provider option.
  5. Select “Electronic Return Originator” if they are return preparers who want to offer e-file to their clients.
  6. If the principal or responsible official is certified or licensed, they must enter their current professional status information.

Get fingerprinted
Applicants who aren’t certified or licensed must schedule an appointment with an IRS-authorized vendor for fingerprinting free of charge. The scheduling link is on the e-file application summary page.

Pass a suitability check
After the IRS receives the application and required information, the agency will conduct a suitability check which may include a:

  • Credit check.
  • Tax compliance check.
  • Criminal background check.
  • Check for prior non-compliance with IRS e-file requirements.

It can take up to 45 days from the date of submission for the IRS to approve an application. Approved applicants will receive an acceptance letter from the IRS in the mail with the preparer’s Electronic Filing Identification Number.

 

More information:
Publication 3112, IRS e-file Application and Participation

 

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Tax Tip 2024-97: Highlights from National Tax Security Awareness Week

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IRS Tax Tips Dec. 17, 2024

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Issue Number: Tax Tip 2024-97


Highlights from National Tax Security Awareness Week

The IRS and its Security Summit partners recently held the ninth annual National Tax Security Awareness Week, an annual event that emphasizes the importance of protecting sensitive financial information from identity theft and tax scams, especially as the holidays and the 2025 tax season approach.

The Security Summit is a coalition of IRS, state tax agencies, tax software providers, tax professionals and others in the tax community public-private partnership between the IRS, state tax administrators, and the tax software and tax professional communities who have joined together to protect taxpayers and the tax system from identity theft-related fraud and scams.

Highlights from Tax Security Awareness Week 2024

IRS warns of holiday scams: During the holiday season, taxpayers should take simple steps to protect their personal and financial information from scammers.

Watch out for bad tax advice on social media: Taxpayers should be cautious against the growing threat of bad tax advice on social media that continues to dupe people into filing inaccurate tax returns.

Guard against fraudsters with an IRS identity protection PIN: Taxpayers should add an extra layer of protection between their tax returns and identity thieves by joining the Identity Protection Personal Identification Number Program at the start of the 2025 tax season.

Updating digital security to protect businesses, taxpayers from identity theft scams: Scammers are continually changing their tactics. Companies and individual taxpayers should review and update their security measures and practices to guard against the latest scams.

Tax pros urged to guard against identity theft with updated Written Information Security Plan: Tax professionals should reevaluate security plans for protecting themselves and their clients’ sensitive information amid increasing attempts by identity thieves to steal tax data.

For more information on preventing tax information theft, visit Identity Theft Central.

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e-News for Small Business Issue 2024-25

Business Tax Account expands; ownership interest donation scam; bad social media advice; more

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e-News for Small Business December 17, 2024

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Issue Number: 2024-25

Inside This Issue


  Business Tax Account available for Corporate Designated Officials; Income Verification Express Service open to Designated Officials and sole proprietors


The IRS continues to open its Business Tax Account to a growing number of business taxpayers and expand the features available. The latest expansion lets Designated Officials view and pay their corporation’s tax balances and make federal tax deposits. In addition, Designated Officials and sole proprietors can now use Business Tax Account for tax transcript authorization requests from lenders through the IRS Income Verification Express Service.

The IRS urges every eligible business to activate and use their Business Tax Account.

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  Charitable contribution scams on the rise 


The IRS warns taxpayers to avoid promoters of fraudulent tax schemes involving donations of ownership interests in closely held businesses, sometimes marketed as “charitable LLCs.” These promotions often target higher-income filers and are considered abusive transactions by the IRS.

Businesses can find out more info on this abusive transaction, their responsibility, how to avoid the scam and what the IRS is doing about it.

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  Highlights from National Tax Security Awareness Week


The special week was part of the Security Summit initiative, a joint effort of the IRS, the states, the tax industry and tax professionals. The group works to protect taxpayers and the tax system against identity theft.

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  Other tax news


These topics may be of interest to small businesses and their partners:

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IR-2024-310: IRS recovers billions in tax, financial criminal cases focused on drug trafficking, terrorist financing; launches new business online account features 

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IRS Newswire December 12, 2024

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Issue Number:    IR-2024-310

Inside This Issue


IRS recovers billions in tax, financial criminal cases focused on drug trafficking, terrorist financing; launches new business online account features 

$4.7 billion recovered for U.S. taxpayers as part of new initiatives; continued progress made on Paperless Processing and Simple Notice Initiatives 

WASHINGTON — The Internal Revenue Service today provided the regular quarterly update to the Strategic Operating Plan, outlining key milestones in criminal investigations, improvements to taxpayer services and advancements in digital modernization that have transformed agency operations while protecting billions of taxpayer dollars. 

The IRS has now recovered $4.7 billion from new initiatives underway. This includes more than $1.3 billion from high-income, high-wealth individuals who have not paid overdue tax debt or filed tax returns, $2.9 billion related to IRS Criminal Investigation work into tax and financial crimes, including drug trafficking, cybercrime and terrorist financing, and $475 million in proceeds from criminal and civil cases attributable to whistleblower information.   

The IRS also announced today new results from the focus on high-income non-filers who have not filed taxes since 2017. The IRS has now collected an initial $292 million from more than 28,000 non-filers, an increase of $120 million since September 2024. These are cases where IRS has received third party information—such as through Forms W-2 and 1099s—indicating these people received income between $400,000 and $1 million or more than $1 million, but failed to file a tax return. The non-filer program ran sporadically since 2016 due to severe budget and staff limitations that did not allow these cases to be pursued. With additional funding, the IRS had the capacity to resume this core tax administration work earlier this year. 

“The IRS continues to show dramatic progress on a wide array of the agency’s transformation efforts, producing real-world improvements to help taxpayers and businesses while also taking important steps in the law-enforcement and compliance arena to protect billions from ongoing schemes, ensure high-income individuals file returns and pay their taxes and penalties, and battle everything from terrorist financing to drug traffickers,” said IRS Commissioner Danny Werfel. 

Pursuing drug traffickers, cybercrime, terrorist financing

IRS Criminal Investigation (IRS-CI) is charged with investigating tax and financial crimes, including drug trafficking, cybercrime and terrorist financing. In Fiscal Year 2024 (FY24), IRS-CI identified more than $9.1 billion in fraud, obtained court orders totaling $1.7 billion in restitution to U.S. taxpayers and seized criminal assets totaling approximately $1.2 billion. 

Examples of IRS-CI Cases 

As part of the Organized Crime Drug Enforcement Task Force (OCDETF), CI has helped investigate numerous cases in partnership with other law enforcement agencies. CI’s financial expertise in following the money not only helped unravel financial and tax crimes, but other crimes including organized drug trafficking. According to public court records, these include: 

  • In October, Jason Brown was sentenced to 18 years in federal prison for trafficking fentanyl and attempting to provide material support to the Islamic State of Iraq and al-Sham, also known as ISIS. On three occasions in 2019, Brown provided $500 in cash to an individual with the understanding that the money would be wired to an ISIS soldier engaged in terrorist activity in Syria. Unbeknownst to Brown, the individual to whom he provided the money was confidentially working with law enforcement, and the purported ISIS fighter was actually an undercover law enforcement officer. Also in 2019, Brown trafficked fentanyl and other drugs from California to the Chicago suburbs and illegally possessed several loaded handguns in furtherance of his drug trafficking activities. 
  • IRS-CI provided significant assistance in an investigation that led to drug dealer George Pherai-Bogeajis being sentenced in November to 19 years and 7 months in federal prison for conspiring to distribute methamphetamine and fentanyl and possessing firearms in furtherance of drug trafficking. Pherai-Bogeajis also forfeited four vehicles and four firearms used in the offense, along with $867,265 of drug proceeds. In April, law enforcement executed a search warrant at his Florida home, seizing nearly 50 kilograms of methamphetamine, thousands of grams of MDMA, more than two kilograms of cocaine and nearly a kilogram of other narcotics, including fentanyl. 
  • Christian Grajeda-Varela was sentenced in October to nearly four years in prison for fentanyl trafficking and money laundering. He admitted to selling roughly 1.5 pounds of fentanyl in July 2023 to a drug dealer in San Francisco. Upon a search of Grajeda-Varela’s Oakland residence, federal agents found 109 grams of fentanyl, more than six pounds of mannitol (a common mixing agent used to cut or dilute fentanyl), cocaine base, cocaine and heroin as well as drug distribution tools. Grajeda-Varela also admitted that, between March and August 2022, he laundered more than $200,000 in cash tied to the drug trade at America Latina, a money service business in Oakland; the funds were wired to recipients in Mexico and Honduras in the form of roughly 125 international wires. 

Assistance from Whistleblowers 

Whistleblowers continue to provide valuable contributions in both criminal and civil cases. Whistleblower information has led to successful criminal investigations, prosecutions and the collection of tax, fines, penalties, interest and other amounts. In FY24, the IRS paid awards totaling $123.5 million to whistleblowers for aiding in the collection of $474.7 million in proceeds on cases that included unreported/underreported income, hidden offshore assets, overstated deductions, general allegations of tax fraud and abusive international transactions.  

Improving Taxpayer Service 

As part of the Digital First Initiative, the IRS is continuing to expand features in Business Tax Account, an online self-service tool for business taxpayers. C corporations can now activate a Business Tax Account, bringing the total number of business entities eligible for this online self-service tool into the millions. Highlights include: 

  • Authorized individuals of C corporations and S corporations who can legally act on behalf of their corporation are now able to view and pay tax balances and Federal Tax Deposits. 
  • The IRS also introduced a new feature that helps to speed up the lending process by providing sole proprietors and authorized individuals with access to the long-standing IRS Income Verification Express Service (IVES) to approve or reject a tax transcript authorization request from a lending company. 
  • Business taxpayers can now access available tax returns, account and most entity transcripts in Spanish. 

These changes follow upgrades announced in September that allow business taxpayers to view and submit balance-due payments. 

In addition, the IRS has expanded the types of Transcript Delivery System (TDS) transcripts available to business taxpayers, historically an underserved population. Previously, taxpayers and their representatives had to call to request information not available through a TDS transcript. Customer service representatives would provide an internal print with the requested information, manually masking the personally identifiable information before providing the prints to the caller. Masking the transcripts was time consuming. Now taxpayers and their representatives can access these new transcripts through online self-help tools that include Business Tax Account and e-Services TDS. 

Business Entity and Form 94X Series Tax Return transcripts are now available through TDS for tax professionals and reporting agents with access to TDS through e-Services. IRS employees can access these transcripts through the Employee User Portal, and authorized users of Business Tax Account can download these transcripts. Transcript expansion will continue in a phased approach through December 2026. Future releases will include the Form 990 series, Form 1041, Form 2290, Form 1042, Form 706, and transcripts in Spanish. 

More details on the Digital First Initiative; more digital tools launched in the last 2 years than the previous 20 years 

The IRS is significantly improving taxpayer service in person, over the phone and online. The IRS is working to deliver the same modern online experience that taxpayers experience with their bank or financial institutions. The IRS has created and enhanced popular and convenient online tools that save taxpayers time and money by providing easy, secure self-service options to get information and resolve issues. For example, in Filing Season 2024, the IRS updated the “Where’s My Refund?” tool to provide more detailed refund status information in plain language, increasing use by nearly 30%. 

The IRS has launched more digital tools in the last two years than the previous 20 years, including: 

  • More than two dozen new features and enhancements to Individual Online Account and Tax Pro Account.
  • The launch of Business Tax Account.
  • The release of more than 60 digital mobile-adaptive forms.
  • The ability for taxpayers to receive their refund status via a conversational hotline.
  • A mobile-friendly web tool for “Where’s My Refund?”. 

Through the Digital First Initiative, the IRS is pursuing a vision where taxpayers can complete all their transactions with the IRS digitally if they prefer. At the core of that improved digital experience for taxpayers are enhancements to Individual Online Account, including the ability to self-correct withholding amounts, redesigned notices for better user experience, provided digital mobile-adaptive tax forms, transcript requests in Spanish and sign-up for paperless and email preferences. Expanded payment options including Offer-in-Compromise and multiple payments in one session. Other expanded services include:  

  • A lien payoff calculator that can generate an IRS letter that they can share with authorized third parties to confirm the payoff balance. 
  • The ability to see their correspondence audit status. 
  • For taxpayers whose employer has received a “lock in” letter requiring a minimum amount of federal tax to be withheld from each paycheck, they can now find information about actions needed to release or modify the lock in amount.  
  • The ability to use a self-service Offer-in-Compromise (OIC) eligibility check to determine if they meet the major eligibility requirements for submitting an OIC. 
  • Single Transaction for Multiple Payments, allowing taxpayers to add and delete multiple payments to a shopping cart for a single transaction within their online account. 
  • Transcripts available in English and Spanish. 
  • Selection for paperless contact and email preferences. 
  • Request an Identity Protection PIN. 

The IRS has also expanded Tax Pro Account, helping tax professionals manage their authorization relationship with taxpayers, view the taxpayers’ information and act on the taxpayers’ behalf. New capabilities include:   

  • The ability to view individual and business taxpayer payment activity. 
  • A new virtual assistant that allows tax professionals access to an automated chatbot to resolve tax issues, with the ability to escalate to live chat for help with collection related issues. 
  • The ability to view and act on behalf of individual taxpayers to set up and revise payment plans.  
  • The option to make up to five same day payments on behalf of authorized clients using a checking or savings account. 

When fully developed, Tax Pro Account will become a robust online tool, including the ability to initiate POA/TIA for business taxpayers that they can review and approve in their Business Tax Account, link and manage business CAF access, view refund and audit status for individual and business taxpayers and much more.  

Additional progress in developing digital tools for taxpayers includes: 

  • Redesigning notices to be more clear as part of the Simple Notice Initiative: The IRS has redesigned 247 of the most common notices, with additional notices scheduled to deploy in the coming months. All notices have recently been added to Individual Online Account for taxpayers to view. 
  • Mobile-adaptive forms through the Paperless Processing Initiative: The IRS now has more than 60 forms available for mobile use, allowing taxpayers to fill out common non-tax forms on cell phones and tablet devices. Taxpayers have submitted more than 100k forms since the September 2023 launch. The most recent forms feature “save and draft” capabilities, which allow the taxpayer to start a form, save it and return to it later. The addition of save and draft allows for future capabilities including the ability for multiple spouses to sign a form. It will also allow a taxpayer to sign a form, save the form and send to a second taxpayer to sign using their Individual Online Account. Seventeen additional forms went live on Dec. 8, 2024, bringing the total to 67 mobile-adaptive forms currently available.   
  • Through the Paperless Processing Initiative, Document Upload Tool use continues to increase: The Document Upload Tool makes it easier for taxpayers and tax professionals to correspond digitally with the IRS. Thanks to the tool, taxpayers can digitally submit correspondence and responses to notices and letters to the IRS. The tool launched in March 2021 and expanded in 2023. The Document Upload Tool has surpassed over 1.5 million submissions with 1,669,625 submissions to date. It is estimated that 94% of taxpayers no longer need to send mail to the IRS, decreasing a substantial amount of paper correspondence entering the IRS. 

 

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