IRS e-News for Small Business (Issue Number: 2021-040)
Inside This Issue
1. IRS begins delivering third round of Economic Impact Payments to Americans
The IRS announced that the third round of Economic Impact Payments will begin reaching Americans this week.
No action is needed by most taxpayers; the payments will be automatic and, in many cases, similar to how people received the first and second round of Economic Impact Payments in 2020. In general, most people will get $1,400 for themselves and $1,400 for each of their qualifying dependents claimed on their tax return.
The third round of Economic Impact Payments news release covers:
Expanded qualifying dependents
How to check payment status
Under the new law, the third round of Economic Impact Payments cannot be offset to pay various past-due federal debts or back taxes.
2. Tax Day for individual taxpayers extended to May 17
The Treasury Department and IRS announced that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.
This postponement applies to individual taxpayers, including individuals who pay self-employment tax.
See the news release for more information, including:
No need to file forms or call for this automatic relief
Postponing federal tax payments
This does not apply to estimated tax payments
State tax returns
Winter storm disaster relief
3. American Rescue Plan Act of 2021 – Don’t file related amended returns yet
The IRS urges taxpayers not to file amended returns related to the new legislative provisions or take other unnecessary steps at this time.
The IRS is reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021.
Additional information will be made available as soon as possible about:
Unemployment (IRS emphasizes not filing amended returns, until it issues additional guidance)
New round of Economic Impact Payments
Child Tax Credit, including advance payments
Other tax provisions
4. National Virtual Settlement Days expanded to reach more taxpayers
The IRS Office of Chief Counsel has embarked on its most far-reaching Settlement Days program ever, declaring the month of March 2021 as “National Settlement Month." Events will be virtual and serve taxpayers in all 50 states and the District of Columbia.
Settlement Days events are coordinated efforts to resolve cases in the United States Tax Court by providing taxpayers who are not represented by counsel with the opportunity to receive free tax advice.
Through these events, taxpayers can also:
Discuss their Tax Court cases and related tax issues with members of the Office of Chief Counsel, the IRS Independent Office of Appeals and, IRS Collection representatives
If a settlement is reached, discuss potential payment alternatives with IRS Collection personnel
Work with Taxpayer Advocate Service employees on tax issues attributable to non-docketed years, other unresolved tax matters, or to provide further assistance after the Tax Court matter is concluded
5. Guidance on Employee Retention Credit
The IRS issued guidance for employers claiming the employee retention credit under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), as modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act), for calendar quarters in 2020. This guidance applies to qualified wages paid after March 12, 2020, and before January 1, 2021, and includes clarifications and describes retroactive changes applicable to 2020, primarily relating to expanded eligibility for the credit.
See the news release to learn more.
The IRS plans to release additional guidance soon addressing changes for 2021.
6. Tax time topics information available
Dive into these special tax time topics designed to help people understand how tax changes affect them and how to file a complete and accurate tax return.
Make protecting tax and financial information a habit, scams, and schemes take on many variations
Select a tax return preparer with care, vast majority provide honest, quality service, but some cause great harm every year
Use the Where’s My Refund? tool or IRS2Go app to check tax refund status
Review recent changes to retirement plans
Get credit for IRA contributions made by April 15 on 2020 tax returns
Find more information about these and other tax time topics.
7. IRS expands help to taxpayers in multiple languages with new forms, communication
The IRS continues its efforts to expand ways to communicate to taxpayers who prefer to get information in other languages. the first time ever, the agency has posted to IRS.gov a Spanish language version of Form 1040 and the related instructions.
Learn about IRS products and services available in more languages, including:
Over the phone interpreter services
Earned Income Tax Assistant
Social media platforms
Taxpayers can indicate their language of preference for IRS-issued written communications or change their language of preference. While communications may not be immediately sent in the selected language, the IRS will use this information to allocate resources and develop communication alternatives based on the reported language preferences.
8. Report large cash transactions; e-file encouraged
The IRS recently reminded businesses of their responsibility to file Form 8300, Report of Cash Payments Over $10,000, and encourages e-filing to help them file accurate, complete forms. A fact sheet helps businesses understand how to report large cash transactions.
9. What employers need to know about repayment of deferred payroll taxes
The CARES Act allowed employers to defer payment of the employer's share of Social Security tax. Employers must pay back these deferred taxes by their applicable dates.
Find out more about applicable dates and how to repay the deferred taxes. Penalties and interest will apply to any unpaid balance after the due date.
10. IRS takes steps to help marijuana businesses stay compliant
The Commissioner of the IRS, Small Business/Self-Employed division, Eric Hylton, gives candid insights on a variety of cannabis industry issues from the federal perspective at an informational webinar; hosted by the Payments Banking and Compliance Conference. One of those issues being that states are already legalizing marijuana regardless of federal policy, creating complications that need to be addressed.
For more information, visit the marijuana industry page on IRS.gov.
11. A Closer Look: Get to know the IRS
The IRS executive columns in “A Closer Look” cover a variety of timely issues of interest to taxpayers, small businesses, and the tax community. They also provide a detailed look at key issues affecting everything from IRS operations and employees to issues involving business and tax professionals. Visit A Closer Look for prior posts and new updates.
Tax Resources for Small Business: