IR-2021-17, January 19, 2021
WASHINGTON — The Internal Revenue Service today released Notice 2021-11 PDF addressing how employers who elected to defer certain employees’ taxes can withhold and pay the deferred taxes throughout 2021 instead of just the first four months of the year.
In response to a presidential memorandum signed August 8, 2020, Notice 2020-65 was issued on August 28, 2020, giving employers the option to defer certain employees’ Social Security taxes from September 1, 2020, to December 31, 2020. This applied to employees paid less than $4,000 every two weeks, or an equivalent amount for other pay periods, with each pay period considered separately. The taxes, which are technically called Old Age, Survivors and Disability Insurance, or OASDI, are calculated at 6.2% of employees’ wages.
Any taxes deferred under Notice 2020-65 are withheld and paid ratably from employee wages between January 1, 2021, until April 30, 2021. However, the Consolidated Appropriations Act, 2021, signed into law December 27, extended the period that the deferred taxes are withheld and paid ratably. The period is now for the entire year − from January 1, 2021, through December31, 2021. Notice 2021-11 makes changes to Notice 2020-65 to reflect this extended period. Payments made by January 3, 2022, will be considered timely because December 31, 2021, is a legal holiday. Penalties, interest and additions to tax will now start to apply on January 1, 2022, for any unpaid balances
Employees could see their deferred taxes being collected immediately. Employees should check with their organization’s payroll point of contact on what their collection schedule will be.
Additional tax relief related to the COVID-19 pandemic can be found on IRS.gov. https://www.irs.gov/newsroom/employers-can-withhold-make-payments-of-deferred-social-security-taxes-from-2020
IR-2021-16, January 15, 2021
WASHINGTON ― The Internal Revenue Service announced that the nation’s tax season will start on Friday, February 12, 2021, when the tax agency will begin accepting and processing 2020 tax year returns.
The February 12 start date for individual tax return filers allows the IRS time to do additional programming and testing of IRS systems following the December 27 tax law changes that provided a second round of Economic Impact Payments and other benefits.
This programming work is critical to ensuring IRS systems run smoothly. If filing season were opened without the correct programming in place, then there could be a delay in issuing refunds to taxpayers. These changes ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 tax return.
To speed refunds during the pandemic, the IRS urges taxpayers to file electronically with direct deposit as soon as they have the information they need. People can begin filing their tax returns immediately with tax software companies, including IRS Free File partners. These groups are starting to accept tax returns now, and the returns will be transmitted to the IRS starting February 12.
“Planning for the nation’s filing season process is a massive undertaking, and IRS teams have been working non-stop to prepare for this as well as delivering Economic Impact Payments in record time,” said IRS Commissioner Chuck Rettig. “Given the pandemic, this is one of the nation’s most important filing seasons ever. This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible.”
Last year’s average tax refund was more than $2,500. More than 150 million tax returns are expected to be filed this year, with the vast majority before the Thursday, April 15 deadline.
Under the PATH Act, the IRS cannot issue a refund involving the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law provides this additional time to help the IRS stop fraudulent refunds and claims from being issued, including to identity thieves.
The IRS anticipates a first week of March refund for many EITC and ACTC taxpayers if they file electronically with direct deposit and there are no issues with their tax returns. This would be the same experience for taxpayers if the filing season opened in late January. Taxpayers will need to check Where’s My Refund for their personalized refund date.
Overall, the IRS anticipates nine out of 10 taxpayers will receive their refund within 21 days of when they file electronically with direct deposit if there are no issues with their tax return. The IRS urges taxpayers and tax professionals to file electronically. To avoid delays in processing, people should avoid filing paper returns wherever possible.
The filing season open follows IRS work to update its programming and test its systems to factor in the second Economic Impact Payments and other tax law changes. These changes are complex and take time to help ensure proper processing of tax returns and refunds as well as coordination with tax software industry, resulting in the February 12 start date.
The IRS must ensure systems are prepared to properly process and check tax returns to verify the proper amount of EIP’s are credited on taxpayer accounts – and provide remaining funds to eligible taxpayers.
Although tax seasons frequently begin in late January, there have been five instances since 2007 when filing seasons did not start for some taxpayers until February due to tax law changes made just before the start of tax time. https://www.irs.gov/newsroom/2021-tax-filing-season-begins-feb-12-irs-outlines-steps-to-speed-refunds-during-pandemic
IR-2021-08, January 11, 2021
WASHINGTON — The Internal Revenue Service is seeking qualified applicants for nomination to the Electronic Tax Administration Advisory Committee (ETAAC).
The ETAAC provides an organized public forum for discussion of electronic tax administration issues − such as prevention of identity theft and refund fraud − in support of the overriding goal that paperless filing should be the preferred and most convenient method of filing tax and information returns. ETAAC members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and tax industry to fight electronic fraud.
The IRS is looking for qualified individuals who will serve three-year terms beginning in September 2021. Applicants should have experience in such areas as state tax administration, cybersecurity and information security, tax software development, tax preparation, payroll and tax financial product processing, systems management and improvement and implementation of customer service initiatives.
The IRS also encourages representatives from consumer groups with an interest in tax issues to apply. Applications will be accepted through March 1, 2021.
Nominations of qualified individuals may be made by letter and received from organizations or the individuals themselves. Applicants should complete the ETAAC application PDFand include a short statement of interest and a resume. Applicants should describe and document their qualifications, past and current affiliations, and involvement with cybersecurity and electronic tax administration.
In addition, applicants must successfully complete a tax compliance check, practitioner background check and FBI criminal background check.
ETAAC is a Federal Advisory Committee established by the Internal Revenue Service Restructuring and Reform Act of 1998.
Questions about the ETAAC and the application process can be e-mailed to publicliaison@irs.gov. https://www.irs.gov/newsroom/irs-seeks-applications-for-the-electronic-tax-administration-advisory-committee-through-march-1
IR-2020-280, December 29, 2020
WASHINGTON – Today, the Internal Revenue Service and the Treasury Department will begin delivering a second round of Economic Impact Payments as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 to millions of Americans who received the first round of payments earlier this year.
The initial direct deposit payments may begin arriving as early as tonight for some and will continue into next week. Paper checks will begin to be mailed tomorrow, Wednesday, December 30.
The IRS emphasizes that there is no action required by eligible individuals to receive this second payment. Some Americans may see the direct deposit payments as pending or as provisional payments in their accounts before the official payment date of January 4, 2021. The IRS reminds taxpayers that the payments are automatic, and they should not contact their financial institutions or the IRS with payment timing questions.
As with the first round of payments under the CARES Act, most recipients will receive these payments by direct deposit. For Social Security and other beneficiaries who received the first round of payments via Direct Express, they will receive this second payment the same way.
Anyone who received the first round of payments earlier this year but doesn’t receive a payment via direct deposit will generally receive a check or, in some instances, a debit card. For those in this category, the payments will conclude in January. If additional legislation is enacted to provide for an additional amount, the Economic Impact Payments that have been issued will be topped up as quickly as possible.
Eligible individuals who did not receive an Economic Impact Payment this year – either the first or the second payment – will be able to claim it when they file their 2020 taxes in 2021. The IRS urges taxpayers who didn’t receive a payment this year to review the eligibility criteria when they file their 2020 taxes; many people, including recent college graduates, may be eligible to claim it. People will see the Economic Impact Payments (EIP) referred to as the Recovery Rebate Credit (RRC) on Form 1040 or Form 1040-SR since the EIPs are an advance payment of the RRC.
“Throughout this challenging year, the IRS has worked around the clock to provide Economic Impact Payments and critical taxpayer services to the American people,” said IRS Commissioner Chuck Rettig. “We are working swiftly to distribute this second round of payments as quickly as possible. This work continues throughout the holidays and into the new year as we prepare for the upcoming filing season. We urge everyone to visit IRS.gov in the coming days for the latest information on these payments and for important information and assistance with filing their 2021 taxes.”
Authorized by the newly enacted COVID-relief legislation, the second round of payments, or “EIP 2,” is generally $600 for singles and $1,200 for married couples filing a joint return. In addition, those with qualifying children will also receive $600 for each qualifying child. Dependents who are 17 and older are not eligible for the child payment.
Payments are automatic for eligible taxpayers who filed a 2019 tax return, those who receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits as well as Supplemental Security Income (SSI) and Veterans Affairs beneficiaries who didn’t file a tax return. Payments are also automatic for anyone who successfully registered for the first payment online at IRS.gov using the agency’s Non-Filers tool by November 21, 2020 or who submitted a simplified tax return that has been processed by the IRS.
Generally, U.S. citizens and resident aliens who are not eligible to be claimed as a dependent on someone else’s income tax return are eligible for this second payment. Eligible individuals will automatically receive an Economic Impact Payment of up to $600 for individuals or $1,200 for married couples and up to $600 for each qualifying child. Generally, if you have adjusted gross income for 2019 up to $75,000 for individuals and up to $150,000 for married couples filing joint returns and surviving spouses, you will receive the full amount of the second payment. For filers with income above those amounts, the payment amount is reduced.
People can check the status of both their first and second payments by using the Get My Payment tool, available in English and Spanish only on IRS.gov. The tool is being updated with new information, and the IRS anticipates the tool will be available again in a few days for taxpayers.
The IRS will use the data already in our systems to send the new payments. Taxpayers with direct deposit information on file will receive the payment that way. For those without current direct deposit information on file, they will receive the payment as a check or debit card in the mail. For those eligible but who don’t receive the payment for any reason, it can be claimed by filing a 2020 tax return in 2021. Remember, the Economic Impact Payments are an advance payment of what will be called the Recovery Rebate Credit on the 2020 Form 1040 or Form 1040-SR.
For those who don’t receive a direct deposit by early January, they should watch their mail for either a paper check or a debit card. To speed delivery of the payments to reach as many people as soon as possible, the Bureau of the Fiscal Service, part of the Treasury Department, will be sending a limited number of payments out by debit card. Please note that the form of payment for the second mailed EIP may be different than for the first mailed EIP. Some people who received a paper check last time might receive a debit card this time, and some people who received a debit card last time may receive a paper check.
IRS and Treasury urge eligible people who don’t receive a direct deposit to watch their mail carefully during this period for a check or an Economic Impact Payment card, which is sponsored by the Treasury Department’s Bureau of the Fiscal Service and is issued by Treasury’s financial agent, MetaBank®, N.A. The Economic Impact Payment Card will be sent in a white envelope that prominently displays the U.S. Department of the Treasury seal. It has the Visa name on the front of the Card and the issuing bank, MetaBank®, N.A. on the back of the card. Information included with the card will explain that this is your Economic Impact Payment. More information about these cards is available at EIPcard.com.
Under the earlier CARES Act, joint returns of couples where only one member of the couple had a Social Security number were generally ineligible for a payment – unless they were a member of the military. But this month’s new law changes and expands that provision, and more people are now eligible. In this situation, these families will now be eligible to receive payments for the taxpayers and qualifying children of the family who have work-eligible SSNs. People in this group who don’t receive an Economic Impact Payment can claim this when they file their 2020 taxes under the Recovery Rebate Credit.
Most Social Security retirement and disability beneficiaries, railroad retirees and those receiving veterans’ benefits do not need take any action to receive a payment. Earlier this year, the IRS worked directly with the relevant federal agencies to obtain the information needed to send out the new payments the same way benefits for this group are normally paid. For eligible people in this group who didn’t receive a payment for any reason, they can file a 2020 tax return.
Yes, if you meet the eligibility requirement. While you won’t receive an automatic payment now, you can still claim the equivalent Recovery Rebate Credit when you file your 2020 federal income tax return.
Yes. People will receive an IRS notice, or letter, after they receive a payment telling them the amount of their payment. They should keep this for their tax records.
For more information about Economic Impact Payments and the 2020 Recovery Rebate, key information will be posted on IRS.gov/eip. Later this week, you may check the status of your payment at IRS.gov/GetMyPayment. For other COVID-19-related tax relief, visit IRS.gov/Coronavirus. https://www.irs.gov/newsroom/treasury-and-irs-begin-delivering-second-round-of-economic-impact-payments-to-millions-of-americans
IR-2020-279, December 22, 2020
WASHINGTON — The Internal Revenue Service today issued the 2021 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on January 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
The standard 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 is based on the variable costs.
It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. For more details see Moving Expenses for Members of the Armed Forces.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Taxpayers can use the standard mileage rate but must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.
Notice 2021-02 PDF, contains the optional 2021 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2021 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2021
IR-2020-278, December 18, 2020
WASHINGTON – The Internal Revenue Service today explained how expanded tax benefits can help both individuals and businesses give to charity before the end of this year.
The Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted last spring, includes four temporary tax changes that are designed to help people and businesses who give to charity this year. Here is a rundown of these key changes.
Individuals who elect to take the standard deduction generally cannot claim a deduction for their charitable contributions. However, the CARES Act permits these individuals to claim a limited deduction on their 2020 federal income tax returns for cash contributions made to certain qualifying charitable organizations and still claim the standard deduction. Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify.
Under this change, these individuals can claim an “above-the-line” deduction of up to $300 for cash contributions made to qualifying charities during 2020. The maximum above-the-line deduction is $150 for married individuals filing separate returns.
Though cash contributions to most charitable organizations qualify, those made either to supporting organizations or to establish or maintain a donor advised fund, do not. Cash contributions carried forward from prior years do not qualify, nor do most cash contributions to charitable remainder trusts. In general, a donor-advised fund is a fund or account in which a donor can, because of being a donor, advise the fund on how to distribute or invest amounts held in the fund. A supporting organization is a charity that carries out its exempt purposes by supporting other exempt organizations, usually other public charities. See Pub. 526 for more information on the types of organizations that qualify.
Cash contributions include those made by check, credit card or debit card as well as amounts incurred by an individual for unreimbursed out-of-pocket expenses in connection with the individual’s volunteer services to a qualifying charitable organization. Cash contributions don’t include the value of volunteer services, securities, household items or other property.
Subject to certain limits, individuals who itemize may claim a deduction for charitable contributions they make to qualifying charitable organizations. These limits generally range from 20% to 60% of an individual’s adjusted gross income (“AGI”) and vary by the type of contribution and type of charitable organization. For example, a cash contribution made by an individual to a qualifying public charity generally is limited to 60% of the individual’s AGI. Excess contributions may be carried forward for up to five tax years.
The CARES Act permits electing individuals to apply an increased limit, up to 100% of their AGI, for qualified contributions (“Increased Individual Limit”). The election is made on a contribution-by-contribution basis. Qualified contributions are limited to those made in cash during calendar year 2020 to qualifying charitable organizations.
As with the new limited deduction for nonitemizers, cash contributions to most charitable organizations qualify, but, once again, those made either to supporting organizations or to establish or maintain a donor advised fund, do not. Nor do most cash contributions to charitable remainder trusts.
Unless an individual makes the election for any given qualified contribution, the usual percentage limit applies. Keep in mind an individual’s other allowed charitable contribution deductions reduce the maximum amount allowed under this election. Individuals who would like to take advantage of the Increased Individual Limit must make their elections with their Form 1040 or Form 1040-SR.
The CARES Act permits C Corporations to apply an increased limit of 25% of taxable income (Increased Corporate Limit) for charitable contributions of cash they make to eligible charities during the 2020 calendar year. The maximum allowable deduction is usually limited to 10% of a corporation’s taxable income.
Here again, the Increased Corporate Limit does not automatically apply. C Corporations must elect application of the Increased Corporate Limit on a contribution-by-contribution basis.
Businesses donating food inventory that is eligible for the enhanced deduction (for contributions for the care of the ill, needy, and infants) are eligible for increased deduction limits. For contributions made in 2020, the limit for these contribution deductions is increased from 15% to 25%. For C Corporations, the 25% limit is based on their taxable income. For other businesses, including sole proprietorships, partnerships, and S corporations, the limit is based on their aggregate net income for the year from all trades or businesses from which the contributions were made. A special method for computing the enhanced deduction continues to apply, as do food quality standards and other requirements.
The IRS reminds both individuals and businesses that special recordkeeping rules apply to any taxpayer claiming a charitable contribution deduction. Usually, this includes obtaining a receipt or acknowledgment letter from the charity before filing a return and retaining a cancelled check or credit card receipt. For donations of property, additional recordkeeping rules may apply, including filing a form 8283 and obtaining a qualified appraisal.
For additional details on how to apply the percentage limits described above and a description of the recordkeeping rules for substantiating gifts to charity, see Publication 526, Charitable Contributions, available on IRS.gov.
For more information about other Coronavirus-related tax relief, visit IRS.gov/Coronavirus. https://www.irs.gov/newsroom/year-end-reminder-expanded-tax-benefits-help-individuals-and-businesses-give-to-charity-during-2020
IR-2020-277, December 16, 2020
WASHINGTON — The Internal Revenue Service today encouraged taxpayers to take necessary actions now to help file federal tax returns timely and accurately in 2021.
This is the fourth in a series of reminders to help taxpayers get ready for the upcoming tax filing season. A special page, updated and available on IRS.gov, outlines steps taxpayers can take to make tax filing easier in 2021.
With continued social distancing, taxpayers can stay home and stay safe with IRS online tools and resources that help them find the information they need. These IRS.gov tools are easy to use and available 24 hours a day. Millions of people use them to find information about their accounts, get answers to tax questions or file and pay taxes.
Almost everyone can file electronically for free. The IRS Free File program, available only through IRS.gov or the IRS2Go app, offers brand-name tax preparation software packages at no cost. The software does all the work of finding deductions, credits and exemptions. It’s free for those who earned $72,000 or less in 2020. Some of the Free File packages also offer free state tax return preparation.
Taxpayers comfortable filling out tax forms electronically, can use Free File Fillable Forms, regardless of income, to file their tax returns either by mail or online.
The IRS has several options for finding a tax preparer. One resource is Choosing a Tax Professional, which offers a wealth of information for selecting a tax professional. The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help taxpayers find preparers in their area who currently hold professional credentials recognized by the IRS, or who hold an Annual Filing Season Program Record of Completion.
The Interactive Tax Assistant answers general tax questions, including helping to determine if a type of income is taxable or if someone is eligible to claim certain credits and deductions. With changes to income and other life events for many in 2020, tax credits and deductions can mean more money in a taxpayer’s pocket and thinking about eligibility now can help make tax filing easier next year.
Taxpayers may qualify for credits like the Child Tax Credit and Child and Dependent Care Credit. Taxpayers whose dependent does not qualify for the CTC might be able to claim the Credit for Other Dependents. Individuals paying higher education costs for themselves, a spouse or a dependent, may be eligible to save some money with education tax credits or deductions. Additionally, low- to moderate-income taxpayers may qualify for the Earned Income Tax Credit.
Beginning in January 2021, the Interactive Tax Assistant will be updated to include answers to more tax law questions.
Taxpayers can check the status of their refund using the Where’s My Refund? tool. The status is available within 24 hours after the IRS receives their e-filed tax return or up to four weeks after they mailed a paper return. The Where’s My Refund? tool updates once every 24 hours, usually overnight, so taxpayers only need to check once a day.
The best and fastest way for taxpayers to get their tax refund is to have it direct deposited into their financial account. Taxpayers who don’t have a financial account can visit the FDIC website for information to help open an account online.
For more information about planning ahead, see Publication 5348, Get Ready to File PDF, and Publication 5349, Year-Round Tax Planning is for Everyone PDF. https://www.irs.gov/newsroom/get-ready-for-taxes-stay-home-and-stay-safe-with-irs-online-tools
IR-2020-276, December 11, 2020
WASHINGTON — Safety and social distancing, along with virtual options, will be the emphasis now and for the upcoming tax season as the Internal Revenue Service seeks volunteers to provide free tax return preparation through its Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs.
In response to the coronavirus pandemic, the IRS is rolling out new ways to make volunteering easier and safer.
In preparation for the upcoming tax filing season, to keep everyone safe, potential volunteers can tune in virtually to learn more about the programs, ask questions and find out which volunteer role is right for them.
Also, some volunteer sites will offer virtual help to taxpayers in place of face-to-face assistance. This allows volunteers to help taxpayers over the phone or online to complete their returns. Other volunteers will conduct a virtual quality review with the taxpayer before e-filing their tax return to the IRS.
While virtual volunteering will be an option this tax season, some VITA/TCE sites will still offer in-person free tax help. However, safety and social distancing will be emphasized.
Support for new volunteers is always available through more experienced volunteers familiar with the program and tax preparation.
For over 50 years, volunteers have prepared tax returns in communities across the country. Each year, thousands of volunteers prepare millions of tax returns through the VITA and TCE programs.
The VITA program offers free tax help to people who make $57,000 or less, persons with disabilities and limited English-speaking taxpayers.
The TCE program offers free tax help to those who are 60 years of age and older. TCE volunteers specialize in questions about pensions and retirement-related issues unique to seniors.
There are many available volunteer roles:
The programs offer free training to help volunteers learn the skills they need. Some roles require tax law training and certification, but other roles do not. There is a spot for everyone who wants to help.
Another recent addition to the VITA/TCE program gives credit for experience. A new Qualified Experienced Volunteer test is shorter than the traditional test, allowing returning VITA and TCE volunteers to devote more of their time to helping taxpayers.
To learn more about volunteering and to sign up, go to IRS.gov/volunteers. Shortly after signing up, interested participants will receive an invite to attend a virtual orientation. https://www.irs.gov/newsroom/irs-volunteers-needed-for-free-tax-prep-help
IR-2020-272, December 8, 2020
WASHINGTON — The Internal Revenue Service today encouraged taxpayers to take necessary actions in the final weeks of the year to help file federal tax returns timely and accurately in 2021.
This is the third in a series of reminders to help taxpayers get ready for the upcoming tax filing season. A special page, updated and available on IRS.gov, outlines steps taxpayers can take now to make tax filing easier in 2021.
This year, there are some key items to consider involving credits, deductions and refunds:
Recovery Rebate Credit/Economic Impact Payment. Taxpayers who received an Economic Impact Payment, should keep Notice 1444, Your Economic Impact Payment, with their 2020 tax records. They may be eligible to claim the Recovery Rebate Credit on their tax year 2020 federal income tax return if:
If a taxpayer didn’t receive the full amount of the Economic Impact Payment for which they were eligible, they may be able to claim the Recovery Rebate Credit when they file in 2021. Individuals do not need to complete information about the Recovery Rebate Credit on tax year 2020 Form 1040 or 1040-SR when filing in 2021, unless eligible to claim an additional credit amount.
Interest on refunds taxable. Taxpayers who received a federal tax refund in 2020 may have been paid interest. Refund interest payments are taxable and must be reported on federal income tax returns. In January 2021, the IRS will send Form 1099-INT to anyone who received interest totaling $10 or more.
Charitable deduction changes. New this year, taxpayers who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For more information, read Publication 526, Charitable Contributions.
Refunds. The IRS always cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some returns may require additional review and processing may take longer. For example, the IRS, along with its partners in the tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud. Just like last year, refunds for tax returns claiming the Earned Income Tax Credit or Additional Child Tax Credit, cannot be issued before mid-February. This applies to the entire refund, even the portion not associated with these credits.
The IRS reminds taxpayers that the fastest and safest way to receive a refund is to combine direct deposit with electronic filing including the IRS Free File program. Taxpayers can track their refund using the Where’s My Refund? tool.
For more information to plan ahead, see Publication 5348, Get Ready to File PDF, and Publication 5349, Year-Round Tax Planning is for Everyone PDF. https://www.irs.gov/newsroom/get-ready-for-taxes-whats-new-and-what-to-consider-when-filing-in-2021
IR-2020-271, December 4, 2020
WASHINGTON — The IRS, state tax agencies and the tax industry marked the final day of National Tax Security Awareness Week with a warning to all tax professionals that they face additional challenges from cybercriminals seeking to exploit COVID-19 fears.
The partners, working together as the Security Summit, today closed a week-long effort to heighten awareness about identity theft and data security measures among taxpayers, businesses and tax practitioners. This was the fifth annual National Tax Security Awareness Week.
“When the Security Summit formed five years ago to fight identity thieves it was clear that the IRS, the state and industry could not be successful without the help of taxpayers and tax professionals. Everyone has a role to play in protecting sensitive financial data,” said IRS Commissioner Chuck Rettig. “We’ve made tremendous progress in the past five years, but we still have work to do. The coronavirus and the increase in teleworking creates new ways for these sophisticated cybercriminals to scam people out of their money or their sensitive tax and financial information.”
As the IRS and Security Summit partners took important steps to strengthen defenses against cybercriminals, identity thieves increasingly turned to tax professionals, targeting their offices and systems. Data thefts from tax professionals can provide valuable information to thieves trying to file fraudulent tax returns.
The Summit partners remind all tax professionals to review their security measures. IRS Publication 4557, Safeguarding Taxpayer Data PDF, provides practitioners with a starting point for basic steps to protect clients.
The Security Summit also created the “Taxes-Security-Together” Checklist to help tax practitioners identify the basic steps they should take. As more tax preparers work from home or remote locations because of COVID-19, these measures are even more critical for securing tax data.
In 2021, all online tax preparation products for tax professionals will include an option for using multi-factor authentication. The Security Summit urges all tax professionals to use this option. Multi-factor authentication may not be available on all over the counter, hard-disk products.
Of the numerous data thefts reported to the IRS from tax professional offices this year, most could have been avoided had the practitioner used multi-factor authentication to protect tax software accounts.
Practitioners can download to their mobile phones readily available authentication apps offered through Google Play or the Apple Store. These apps will generate a security code. Codes also may be sent to practitioner’s email or text but the IRS notes those are not as secure as the authentication apps. Use a search engine for “Authentication apps” to learn more.
A VPN provides a secure, encrypted tunnel to transmit data between a remote user via the Internet and the company network. As teleworking or working from home continues during COVID-19, VPNs are critical to protecting and securing internet connections.
Failing to use VPNs can add risks to remote takeovers by cyberthieves, giving criminals access to the tax professional’s entire office network simply by accessing an employee’s remote internet.
Tax professionals should seek out cybersecurity experts whenever possible. Practitioners can also search for “Best VPNs” to find a legitimate vendor, or major technology sites often provide lists of top services. Remember, never click on a “pop-up” ad that’s marketing a security product. Those generally are scams.
Phishing emails generally have an urgent message, such as “your account password expired.” They direct you to an official-looking link or attachment. But the link may take you to a fake site made to appear like a trusted source, where it requests your username and password. Or, the attachment may contain malware, which secretly downloads software that tracks keystrokes and allows thieves to eventually steal all the tax pro’s passwords.
The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) recently issued a warning to all organizations to educate employees, especially those teleworking, about increased activity related to phishing scams.
The IRS often sees thieves posing as potential clients, trying to trick tax pros into opening an embedded link or attachment. Scams involving COVID-19 and the Economic Impact Payments also have been prevalent.
The IRS and Security Summit partners remind tax professionals that federal law requires them to have a written information security plan. Federal law gives the Federal Trade Commission enforcement authority over this provision. Practitioners can learn more about the FTC’s “Safeguards Rule” from IRS Publication 4557 PDF.
In addition to the required information security plan, tax pros also should consider an emergency response plan should they experience a breach and data theft. This time-saving step should include contact information for the IRS Stakeholder Liaisons who are the first point of contact for data theft reporting to the IRS and to the states.
IRS Publication 5293, Data Security Resource Guide for Tax Professionals PDF, provides a compilation of data theft information available on IRS.gov, including the reporting processes.
The IRS, state tax agencies, the private sector tax industry, including tax professionals, work in partnership as the Security Summit to help protect taxpayers from identity theft and refund fraud. This is the last of a week-long series of tips to raise awareness about identity theft. See IRS.gov/securitysummit for more details. https://www.irs.gov/newsroom/national-tax-security-awareness-week-day-5-security-summit-alerts-tax-professionals-to-potential-telework-scams-during-covid-19-urges-all-practitioners-to-use-multi-factor-authentication
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