08/30/2022
Great updates from the IRS on a few topics. The best being the new mileage rate for the last 6 months of 2022.
Issue Number: 2022-08
1. 2021 tax extension filers – file now; New WISP data security plan; Erroneous balance due notices (CP-14)
2021 tax extension filers don’t need to wait until October 17
The IRS reminds the estimated 19 million taxpayers who requested an extension to file their 2021 tax return that they don’t have to wait until mid-October to do so. If a taxpayer has all the necessary information to file an accurate return, they can file electronically at any time before the October deadline and avoid a last-minute rush to file.
Security Summit releases new WISP data security plan to help tax pros
To help tax pros still struggling to develop a written security plan, the Security Summit partners released a new sample security plan – the Written Information Security Plan or WISP. It’s designed to help tax professionals, especially those in smaller practices, protect their data and information.
Erroneous or incorrect balance due notices (CP-14)
The IRS is aware that some payments made for 2021 tax returns have not been correctly applied to joint taxpayer accounts, and these taxpayers are receiving erroneous balance due notices (CP-14 notices) or notices showing the incorrect amount. No immediate action or phone call is needed.
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2. Modernizing Tax Processing Systems
Ten years ago, the IRS began the highly complex effort of modernizing the engine of the nation’s core tax processing system with current technology known as the Customer Account Data Engine 2 (CADE 2) program. The IRS has now converted over 90% of the core legacy code for processing individual income tax returns to Java, with the goal of finishing this portion of the work in FY 2023.
Take A Closer Look at the program and why it’s key to unlocking better taxpayer service and reducing risk to the nation’s tax system. Also, for people looking to further their technology careers, now is a great time to join the IRS.
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3. IRS increases mileage rate for remainder of 2022
The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices. For the final 6 months of 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022. The IRS provides legal guidance on the new rates in Announcement 2022-13.
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4. Electronic Tax Administration Advisory Committee issues annual report to Congress
The Electronic Tax Administration Advisory Committee (ETAAC) released its annual report to Congress, featuring recommendations focused on budget support for the Internal Revenue Service and enhancements to e-filing.
Of particular interest to the payroll community is the Recommendation 4: The IRS should promote the use of Identity Protection PIN through a national, year-long campaign, leveraging stakeholders including the tax and financial services industries, to highlight the benefits of the program, including the overall (1) reduction in identity theft, (2) reduction in costly manual reviews, and (3) quicker issuance of refunds.
The IP PIN is the number one security tool currently available to taxpayers from the IRS. This tool is the key to making it more difficult for criminals to file false tax returns in the name of the taxpayer.
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5. New IRS Strategic Plan; Goal to help taxpayers
The IRS released a new five-year Strategic Plan that outlines its goals to improve taxpayer service and tax administration.
Learn more about how the IRS plans to focus on:
Enforcement – Enforcing the tax laws fairly and efficiently to increase voluntary compliance and narrow the tax gap
People – Fostering an inclusive, diverse and well-equipped workforce and strengthen relationships with external partners
Service – Providing quality and accessible services to enhance taxpayers’ experiences
Transformation – Transforming IRS operations to become more resilient, agile and responsive to improve the taxpayer experience and narrow the tax gap
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6. Understanding how the IRS contacts taxpayers; Avoiding scams and how to know it’s really the IRS reaching out
A new IRS fact sheet explains how taxpayers can know if a person calling or visiting their home or place of business is a legitimate IRS employee or an imposter. There are special instances where an IRS revenue officer or revenue agent may visit a home or business related to an unpaid tax bill or an audit; the IRS urges people with tax issues to understand the circumstances around these visits and also help protect themselves against imposters.
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7. Worker Classification 101: Employee or Independent Contractor
It’s critical for business owners to correctly determine whether the people providing services are employees or independent contractors. IRS Tax Tip 2022-117 provides information to businesses avoid problems that can result from misclassifying their workers.
IRS’s Gig Economy Tax Center
For employees that are classified as independent contractors or gig workers, the IRS Gig Economy Tax Center has a wealth of information for them. There, they can find forms, record keeping information, expense deductions and instructions about how to file and pay their taxes.
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8. New forms, instructions and publications on IRS.gov
Forms
Form 941, Employer's Quarterly Federal Tax Return
Form 941 (PR), Employer's Quarterly Federal Tax Return (Puerto Rico Version)
Form 941 (Schedule R), Allocation Schedule for Aggregate Form 941 Filers
Form 941-SS, Employer's Quarterly Federal Tax Return - American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands
Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund
Form 941-X (PR), Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund (Puerto Rico Version)
Instructions
Inst 941, Instructions for Form 941, Employer's Quarterly Federal Tax Return
Inst 941 (PR), Instructions for Form 941 (PR), Employer's Quarterly Federal Tax Return (Puerto Rico Version)
Inst 941 (PR) (Schedule 😎, Instructions for Schedule B (Form 941) (PR), Report of Tax Liability for Semiweekly Schedule Depositors (Puerto Rico Version)
Inst 941 (Schedule 😎, Instructions for Schedule B (Form 941), Report of Tax Liability for Semiweekly Schedule Depositors
Inst 941 (Schedule R), Instructions for Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers
Inst 941-SS, Instructions for Form 941-SS, Employer's Quarterly Federal Tax Return - American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands
Inst 941-X, Instructions for Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund
Inst 941-X (PR), Instructions for Form 941-X (PR), Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund (Puerto Rico Version)
Publications
Pub 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns
Pub 5165, Guide for Electronically Filing Affordable Care Act (ACA) Information Returns for Software Developers and Transmitters
Pub 5249, Fingerprint Card Instructions for Voluntary Certification of Professional Employer Organizations
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