Happy New Year! We hope you’re well-rested and refreshed after the holidays. Now, it’s time to get ready to jump into a successful year for your tax practice!
In today’s newsletter:
ERC Protective Claims
ERC Voluntary Program
Reminders
Update on the ERC: Protective Claims
Per IRS 556, if your right to a refund is contingent on future events and may not be determinable until after the time for filing a claim for refund expires, you can file a protective claim for refund. A protective claim preserves your right to claim a refund when the contingency is resolved. A protective claim does not have to state a particular dollar amount or demand an immediate refund. However, to be valid, a protective claim must:
Be in writing and be signed,
Include your name, address, SSN/EIN and contact information,
Identify and describe the contingencies affecting the claim,
Clearly alert the IRS to the essential nature of the claim, and
Identify the specific year(s) for which a refund is sought.
If you are unsuccessful in an ERC audit (or end up repaying ERC for some other reason), filing a protective claim for refund to reverse that expense disallowance is the only way to preserve your right to claim a refund after the limitations period.
Update on the ERC: Voluntary Program
On December 21, 2023, the IRS announced their long-awaited plan on how small business taxpayers could repay ERC monies received that the business was not entitled to. The IRS will accept 80% of the amounts paid to the business and will not charge penalties or interest. To repay those funds, the businesses must electronically file IRS form 15434 for each period the credits were paid. This voluntary disclosure program is available only through March 22, 2024. As part of the repayment, the business is strongly encouraged to provide the name of the firm that prepared the ERC claims that are now being repaid. An installment option will be made available for those who cannot pay in full. In addition, the 20% that is not being repaid will not be considered taxable income, and no amended income tax returns will be required to be filed to reduce the wages paid in 2020 or 2021.
Reminders
BOI Reporting: As of January 1, FinCEN is now accepting Beneficial Ownership Information reports. Any reporting company created or registered before January 1, 2024, must file a report by January 1, 2025. Companies created after January 1, 2024 must file within 90 days. The extension from 30 days to 90 days was finalized on November 29.
1099-K Threshold Reduction Delay: In late November, the IRS issued Notice 2023-74 to announce it was once again delaying the new $600 Form 1099-K reporting threshold requirement for third-party payment organizations for tax year 2023.
IRS Updates Information Return E-filing Waiver: For 2024, taxpayers who file 10 or more information returns of any type in total must file electronically. Previously, the threshold to electronically file information returns was 250 returns of a single type.
We have a podcast!
Want more tax updates and accounting insights? Tune in every other week to Federal Tax Updates! Hosts Roger Harris, EA and Annie Schwab, CPA help you keep up-to-date with the latest federal tax information while earning approved CPE and CE credits.
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