News for federal, state and local governments

IRS TE/GE hiring event July 19, 2024, in St. Louis, MO; agency seeking revenue agents

The Tax Exempt & Government Entities division of the IRS is holding a hiring event July 19, 2024, from 10:00 a.m. to 3:00 p.m. in St. Louis. During this event, job seekers will be able to meet IRS TE/GE recruiters and hiring managers who will review resumes and conduct on-site interviews. 

Applicants should schedule a preferred in-person interview time on Eventbrite.

Career opportunities at this event are for revenue agents. Revenue agents are responsible for planning and conducting examinations of individuals and businesses to determine federal tax liability. These examinations are generally conducted at the taxpayer’s residence or place of business. Revenue agents work with taxpayers, their representatives, certified public accountants and tax attorneys.

This event will be held at America’s Center Convention Complex, 701 Convention Plaza, St. Louis, MO. Remember to bring your resume, two forms of identification, college transcripts and any documentation that supports your experience. You must be a U.S. citizen. 

IRS TE/GE hiring event July 17, 2024, in Nashville, TN; agency seeking revenue agents

The Tax-Exempt & Government Entities Division of the IRS is holding a hiring event July 17, 2024, from 10:00 a.m. to 3:00 p.m. in Nashville. During this event, job seekers will be able to meet IRS recruiters and hiring managers who will review resumes and conduct on-site interviews. 

Applicants should schedule a preferred in-person interview time on Eventbrite.

Career opportunities at this event are for revenue agents. Revenue agents are responsible for planning and conducting examinations of individuals and businesses to determine federal tax liability. These examinations are generally conducted at the taxpayer’s residence or place of business. Revenue agents also conduct examinations of exempt and governmental organizations and related business entities, make determinations on exempt status of organizations, review financial and operating data and provide technical assistance.

Revenue agents work with taxpayers, their representatives, certified public accountants and tax attorneys.

This event will be held at the Nashville Marriott at Vanderbilt University, 2555 West End Ave., Nashville, TN. Remember to bring your resume, two forms of identification, college transcripts and any documentation that supports your experience. You must be a U.S. citizen.

IRS offers office hours for help with the pre-filing registration process for elective payment and transfer of clean energy and CHIPS credits

The IRS is offering office hours (through Microsoft Teams) to help entities with the pre-filing registration process on the new IRA/CHIPS Pre-filing Registration Tool. Pre-filing registration is a required step for applicable entities and eligible taxpayers to take advantage of elective payment or transfer of credits available in the Inflation Reduction Act and CHIPS Act. Representatives from the IRS will be available to answer your pre-filing registration questions. 

Registration for office hours is open. Registration is required and can be completed by clicking on the links below.

Date	Time	Register
July 2, 2024	12:30-2 p.m. EDT	Register
July 17, 2024	1-2:30 p.m. EDT	Register
July 31, 2024	1-2:30 p.m. EDT	Register
August 14, 2024	1-2:30 p.m. EDT	Register
September 4, 2024	1-2:30 p.m. EDT	Register
September 18, 2024	1-2:30 p.m. EDT	Register
October 2, 2024	1-2:30 p.m. EDT	Register

Businesses and organizations can add more users for IRS Energy Credits Online

The IRS Energy Credits Online tool lets multiple people register as users on behalf of their entity. For continuity of access to the clean energy online tools, the IRS encourages each entity to have more than one Clean Energy Officer.

Additional users are vital for continuity of access. If an entity has only one user and that person leaves, no one currently associated with the entity will have the authority to act on its behalf.

This tool was built to help taxpayers register their entity, submit time-of-sale reports, register a clean energy project for an elective payment, transfer a clean energy credit and claim a CHIPS credit. The tool helps key groups with clean energy credits and makes it easier to communicate and stay compliant with the rules of the credits.

Clean Energy Officer

The first person to register with IRS Energy Credits Online is automatically the entity’s Clean Energy Officer. A Clean Energy Officer can:

• Authorize additional users.
• Promote other users to Clean Energy Officer. Multiple users can have this role for the same entity.
• Assign, manage and revoke permissions, including those of other Clean Energy Officers.

Clean Energy Officers have access to all IRS Energy Credits Online functionality. They’re the only users who can manage authorized users and permissions.

Additional users

Once the first user creates an account for the entity, they can share the registration link with additional users who need access to IRS Energy Credits Online. The IRS recommends having at least two Clean Energy Officers as a best practice to manage access to IRS Energy Credits Online.

User roles

The Clean Energy Officer should pay close attention to these roles assigned to other users in their organization.

• Dealers or Sellers. Employees who need to submit time-of-sale reports or request advance payments.
• Manufacturers. Employees who submit periodic reports.
• Clean energy delegate. Employees of the entity who aren’t officers or other people authorized to have legal responsibility for the entity. A Clean Energy Delegate can access the pre-filing registration tool to request registration numbers the entity needs to make an elective payment election.
• Clean energy third party user. Users outside the entity’s organization. This role lets the user request registration numbers the entity needs to make an elective payment election or transfer election on the tax return.

More information is available in Publication 5902, Clean Energy Authorization Permission Management PDF.

Domestic Content Bonus Credit Amounts under IRA: Expansion of applicable projects for safe harbor, and related provisions

Notice 2024-41 PDF modifies the existing domestic content safe harbor in Notice 2023-38, provides a new elective safe harbor for determining the domestic content bonus credit amounts under Sections 45, 45Y, 48, and 48E of the Internal Revenue Code, and requests comments regarding the new elective safe harbor to inform the development of any future updates.

More information is available at IRS.gov/cleanenergy.

Guidance regarding the 2024 allocation round of qualifying advanced energy project credit program under section 48C(e)

Notice 2024-36 PDF announces the 2024 allocation round of the section 48C qualifying advanced energy project credit to allocate approximately $6 billion of section 48C credits, with approximately $2.4 billion in section 48C credits to be allocated to projects located in section 48C(e) energy communities census tracts. Additionally, Notice 2024-36 updates and modifies Appendices A, B PDF and C PDF, as published in Notice 2023-18 and Notice 2023-44.

Appendix A provides definitions and examples of qualifying advanced energy projects. Appendix B provides the application process that the Department of Energy will use to evaluate concept papers and section 48C applications to decide whether to recommend a project for a section 48C allocation. Appendix C contains a list of census tracts that are section 48C(e) energy community census tracts.

Notice 2024-36 will be in IRB: 2024-21, dated May 20, 2024.

Additional information about clean energy credits can be found at IRS.gov/cleanenergy.

Elective payment and determining tax year

Information relating to determining your tax year is available at Question 23 in the Elective pay and transferability frequently asked questions. Generally, to determine your tax year, check the instructions for the annual tax return you are filing.

Applicable entities that do not have a federal income tax filing or Form 990 filing obligation and have not previously established a taxable year by filing an annual information or income tax return (e.g., Form 990-T to report and pay tax on unrelated business taxable income) may choose to adopt a calendar year for purposes of elective pay, regardless of their fiscal year, provided they maintain adequate books and records. This applies to state and local governments, Indian tribal governments, and their agencies and instrumentalities, including school districts, that don’t file an income tax return and have not established a taxable year by filing an annual tax return.

For more information, see the Elective pay and transferability frequently asked questions.

Additional information about clean energy credits can be found at IRS.gov/cleanenergy.

Elective payment elections for clean energy tax credits, Form 990-T: where and how to file

Entities must file a tax return to make an elective payment election under IRC section 6417 for clean energy tax credits. Entities for which no such return is required (such as State, local and Indian tribal governments) make an elective payment election on a timely filed Form 990-T, Exempt Organization Business Income Tax Return, with properly completed source credit forms, a properly completed Form 3800, General Business Credit (or its successor), and any required return attachments and information required in instructions to the relevant forms. Entities filing only to make an elective payment election with no unrelated business taxable income, including certain entities not subject to federal income tax and not otherwise required to file any annual tax or information return, will complete portions of the form specified in the instructions. For additional information on how to complete Form 990-T and due dates for filing, see Instructions for Form 990-T PDF.

An entity that is an organization or trust defined in section 511 and needs to file Form 990-T is required to file electronically. For additional information, visit IRS.gov/E-file.

An entity that is not an organization or trust defined in section 511 (such as a State, local and Indian tribal government), and is filing Form 990-T to make an elective payment election, is encouraged but not required to file electronically. For more information on electronic filing, visit the Modernized e-File page on IRS.gov. To file by mail, complete Form 990-T and other forms as required, and mail to:

Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027

Additional information about clean energy credits can be found at IRS.gov/cleanenergy

When businesses and other payers file information returns with data that doesn't match IRS records, IRS sends a CP2100 or CP2100A notice to them. The notices tell payers that their information returns have a missing or incorrect Taxpayer Identification Number (TIN), name or both.

Each notice has a list of payees with the issues. Payers need to compare the listing with their records and correct or update their records, if necessary.

Payments subject to backup withholding

CP2100 and CP2100A notices also tell payers that they may be required to backup withhold tax payments. Payments may be subject to backup withholding if:

• The payee doesn’t:
  • give their TIN to the payer in the required manner
  • certify that they aren't subject to backup withholding for underreporting interest and dividends
• The IRS tells the payer
  • the payee gave an incorrect TIN and didn’t certify their TIN as required
  • they must begin backup withholding because the payee didn't report all their interest and dividends on their tax return

Payers are responsible for any amount they fail to backup withhold and the penalties that may apply.

More information:

Publication 1281, Backup Withholding on Missing and Incorrect Name/TINs PDF

IRS offers office hours for help with the pre-filing registration process for elective payment and transfer of clean energy and CHIPS credits

The IRS is offering office hours (through Microsoft Teams) to help entities with the pre-filing registration process on the new IRA/CHIPS Pre-filing Registration Tool. Pre-filing registration is a required step for applicable entities and eligible taxpayers to take advantage of elective payment or transfer of credits available in the Inflation Reduction Act and CHIPS Act. Representatives from the IRS will be available to answer your pre-filing registration questions.

Registration for office hours is open. Registration is required and can be completed by clicking on the links below.

Date	Time	Register
May 1, 2024	1-2:30 p.m. EDT	Register
May 8, 2024	1-2:30 p.m. EDT	Register
May 15, 2024	1-2:30 p.m. EDT	Register

IRS offers office hours for help with the pre-filing registration process for elective payment and transfer of clean energy and CHIPS credits

The IRS is offering office hours (through Microsoft Teams) to help entities with the pre-filing registration process on the new IRA/CHIPS Pre-filing Registration Tool. Pre-filing registration is a required step for applicable entities and eligible taxpayers to take advantage of elective payment or transfer of credits available in the Inflation Reduction Act and CHIPS Act. Representatives from the IRS will be available to answer your pre-filing registration questions.

Registration for office hours is open. Registration is required and can be completed by clicking on the links below.

Date	Time	Register
April 3, 2024	1-2:30 p.m. EDT	Register
April 10, 2024	1-2:30 p.m. EDT	Register
April 17, 2024	1-2:30 p.m. EDT	Register
April 24, 2024	1-2:30 p.m. EDT	Register

Treasury and IRS finalize rules on elective payments of certain clean energy credits

The Department of the Treasury and Internal Revenue Service issued final regulations for applicable entities that earn certain clean energy credits and choose to make an elective payment election.

The IRS also updated the elective payment frequently asked questions based on the final regulations.

The full news release about the finalized rules on elective payments is available on IRS.gov.

When do I receive my payment if I use elective pay?

In general, payments occur after the tax return is processed (assuming requirements are met). Under the statute, the taxpayer is not entitled to the elective payment until the due date of the return, even if the taxpayer files the return before that date.

In general, entities that file by the due date of their return and appropriately elect elective pay can anticipate payment issuance within 45 days of the due date of their annual return. In some cases, this may take less or more time. Additional information can be found in the Elective pay and transferability frequently asked questions.

How to register multiple users for IRS Energy Credits Online

IRS Energy Credits Online, the online tool for users to register for elective pay elections and transfer elections, allows for multiple users to be registered on behalf of an organization. The first user to register on behalf of an entity will be assigned as a "clean energy officer" for the entity. This user will have access to all IRS Energy Credits Online functionality for the entity.

The clean energy officer must authorize access to new users who wish to register on behalf of the organization. The clean energy officer will also assign user roles and permissions. Entities may have more than one clean energy officer. For more information see Publication 5902, Clean Energy Authorization Permission Management PDF.

Additional information about clean energy credits can be found at IRS.gov/cleanenergy.

IRS offers additional office hours for help with the pre-filing registration process for elective payment and transfer of clean energy and CHIPS credits

The IRS is excited to offer additional office hours (through Microsoft Teams) to help entities with the pre-filing registration process on the new IRA/CHIPS Pre-filing Registration Tool. Pre-filing registration is a required step for applicable entities and eligible taxpayers to take advantage of elective payment or transfer of credits available in the Inflation Reduction Act and CHIPS Act. Representatives from the IRS will be available to answer your pre-filing registration questions.

Registration for office hours is now open. Registration is required and can be completed by clicking on the links below.

Date	Time	Register
February 28, 2024	1-2:30 p.m. EST	Register
March 6, 2024	1-2:30 p.m. EST	Register
March 13, 2024	1-2:30 p.m. EST	Register
March 20, 2024	1-2:30 p.m. EST	Register
March 27, 2024	1-2:30 p.m. EST	Register
April 3, 2024	1-2:30 p.m. EST	Register
April 10, 2024	1-2:30 p.m. EST	Register
April 17, 2024	1-2:30 p.m. EST	Register
April 24, 2024	1-2:30 p.m. EST	Register

News release IR -2024-30: IRS to offer an Employee Retention Credit webinar on Feb. 8; provide updates on Voluntary Disclosure Program, moratorium

The IRS continues to increase compliance activity to protect against fraud related to the Employee Retention Credit (ERC) and also renewed calls for employers to review their qualifications for ERC. Programs are available to help affected employers avoid penalties and interest on incorrect claims. IRS Criminal Investigation (CI) special agents will host educational sessions in February.

Businesses that meet certain requirements may be able to participate in the IRS Voluntary Disclosure Program. The deadline is March 22, 2024. IRS is having a Free VDP webinar - Thursday, Feb. 8 at 2 p.m. EST. It’s primarily aimed at tax professionals, however; the webinar may also be useful to others interested in this topic. Those who want to attend need to register for it.

For those with unprocessed claims, the IRS continues to accept and process requests to withdraw an employer's full ERC claim under the withdrawal process.

CI special agents are hosting a series of educational sessions geared specifically to tax professionals about ERC at its field offices across the country. These events will take place in at least 23 U.S. states and the District of Columbia and are specifically designed for tax professionals who have claimed ERCs for their clients on previous years’ tax returns. Invitations to attend will arrive by mail through the U.S. Postal Service.

Related news releases:

IRS continues work on Employee Retention Credit; new IRS CI education sessions come as agency urges businesses to review VDP, withdrawal program for questionable claims

IRS to offer an Employee Retention Credit webinar on Feb. 8; provide updates on Voluntary Disclosure Program, moratorium

The IRS is offering office hours (through Microsoft Teams) to help entities with the pre-filing registration process on the new IRA/CHIPS Pre-filing Registration Tool. Pre-filing registration is a required step for applicable entities and eligible taxpayers to take advantage of elective payment or transfer of credits available in the Inflation Reduction Act and CHIPS Act.

Representatives from the IRS will be available to answer your pre-filing registration questions.

Registration for office hours is open. Registration is required and can be completed by clicking on the links below.

E-file unavailable for Form 990-T and Form 1120-POL until March 17, 2024. An extension can be filed for both forms or paper file with Form 1120-POL

The Internal Revenue Service announced in News Release 2024-15, taxpayers won’t be able to electronically file Form 990-T, Exempt Organization Business Income Tax Return, or Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations, until March 17, 2024. IRS system upgrades mean e-filing of Forms 990-T and Forms 1120-POL (including returns on extension) with due dates from Jan. 15, 2024, to March 15, 2024, is currently unavailable.

Taxpayers with due dates on April 15, 2024, and later will be able to e-file Forms 990-T and Forms 1120-POL on time.

Returns due from Jan. 15, 2024, to March 15, 2024:

• Form 990-T, Exempt Organization Business Income Tax Return

  Organizations subject to unrelated business income tax (UBIT) are required by law to file Form 990-T electronically. An organization with a Form 990-T due from Jan.15, to March 15, 2024, should request an automatic six-month extension of time to file by submitting Form 8868, Application for Extension of Time To File an Exempt Organization Return, by the due date of the return. The IRS estimates only about 2,000 of the 200,000 Form 990-T filers have a due date in this time period and are affected by this.

  Any balance due must be submitted with Form 8868 to avoid interest and penalties. Beginning March 17, 2024, organizations will be able to timely e-file Form 990-T by the extended due date.

  If an affected organization doesn’t timely submit an extension, or if the extended due date falls within the period from Jan. 15, 2024, to March 15, 2024, and the organization consequently doesn’t timely e-file its Form 990-T, it should include with its late e-filed Form 990-T a request that any penalties for late filing not be imposed due to reasonable cause. The reasonable cause request should reference that e filing was not available as of the due date of the return.

• Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations Organizations filing a Form 1120-POL that is due from Jan. 15, 2024, to March 15, 2024, (including returns on extension) may file on paper. An organization that wishes to e-file a return with an original due date during that period may request an automatic six-month extension of time to file Form 1120-POL by submitting Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, and paying the full balance due with that form to avoid interest and penalties. Only a handful of these organizations typically file electronically in the affected time period.

Filing only to make an elective payment election for Clean Energy Credits

The electronic filing delay won’t affect the ability of government entities and Indian tribal governments -- that aren’t subject to UBIT -- to timely file Form 990-T to make an elective payment election (EPE) PDF for Clean Energy Tax Credits. EPE is available for tax years beginning in 2023, therefore the returns won’t be due until after March 17.

In addition, under the law, an entity can’t receive the elective payment amount before the original due date of the return. Filing before the original due date for the return will not shorten the time for payment. While government entities and Indian tribal governments that aren’t subject to UBIT aren’t subject to the electronic filing mandate, the IRS encourages all taxpayers to e-file. See the Elective Pay and Transferability FAQs on irs.gov for more information on EPE for Clean Energy Credits.

IRS offers office hours for help with the pre-filing registration process for elective payment and transfer of clean energy and CHIPS credits

The IRS is excited to offer office hours (through Microsoft Teams) to help entities with the pre-filing registration process on the new IRA/CHIPS Pre-filing Registration Tool. Pre-filing registration is a required step for applicable entities and eligible taxpayers to take advantage of elective payment or transfer of credits available in the Inflation Reduction Act and CHIPS Act. Representatives from the IRS will be available to answer your pre-filing registration questions.

Registration for office hours is now open. Registration is required and can be completed by clicking on the links below.

Reminder: Payers may receive notices CP2100 and 2100A if they filed an information return with errors

When banks, credit unions, businesses and other payers file information returns with data that doesn't match IRS records, the IRS sends them a CP2100 or CP2100A notice. The notices tell payers that the information returns they submitted have a missing or incorrect Taxpayer Identification Number, name or both.

Each notice has a list of payees with the issues the IRS found. Payers need to compare the accounts on the notice with their account records and correct or update their records, if necessary. Payees may also need to correct their backup withholding on payments made to payees.

Tax Tip 2023-75 provides a list of the most common information returns with errors, as well as additional links to further guidance on backup withholding.

Refer to Information Returns for more information.

IRS extends popular flexibilities set to expire; electronic signatures and encrypted email enhance the taxpayer experience

The Internal Revenue Service extended certain temporary flexibilities. The acceptance of digital signatures is extended indefinitely until more robust technical solutions are deployed, and encrypted email when working directly with IRS personnel has been extended until Oct. 31, 2025.

The flexibilities, which were put in place during the COVID-19 pandemic, promoted secure and effective communications and were well received by tax professionals and taxpayers who reported that allowing for the use of electronic or digital signatures saved time and resources.

Internal Revenue Manual (IRM) 10.10.1 IRS Electronic Signature (e-Signature) Program was updated to include acceptance of alternatives to handwritten signatures for certain tax forms and the ability to accept images of signatures and digital signatures in compliance interactions.

For a list of allowable signature options, refer to IRM Exhibit 10.10.1-2 on IRS.gov.

In addition, Interim Guidance Memorandum PGLD-10-1023-0002 PDF provides temporary guidance on using email with encryption when working person-to-person with IRS personnel to address compliance or resolve issues in ongoing or follow-up authenticated interactions.

Get Your Transmitter Control Code (TCC) to Electronically File Information Returns

On November 22, 2023, the IRS issued a QuickAlert regarding use of a Transmitter Control Code (TCC) to electronically file information returns. Review the information in the November 2023 QuickAlerts messages PDF, under the subject Get Your Transmitter Control Code (TCC) to Electronically File Information Returns to ensure you are prepared to electronically file information returns for 2024.

IRS IRA/CHIPS Pre-filing Registration tool now open

Qualifying tax-exempt organizations and entities such as state, local and tribal governments can now register using the new IRS IRA/CHIPS Pre-filing Registration Tool. Registration allows entities to take advantage of the options for elective payment or transfer of certain tax credits.

Tax-exempt and governmental entities can benefit from clean energy tax credits using new options enabled by the Inflation Reduction Act of 2022 (IRA). The IRA allows qualifying tax-exempt organizations and governments to benefit from certain clean energy tax credits through elective pay. For tax years beginning after December 31, 2022, an applicable entity that qualifies for a clean energy tax credit can make an elective payment election. This election will treat certain credits as a payment against federal income tax liabilities rather than as a nonrefundable credit. The amount of the credit will first offset any tax liability of the entity and any excess will be refundable.

Qualifying entities that make an elective payment or credit transfer election must earn the credit, which means they must make a tax credit investment or undertake tax credit production activities to earn a qualifying credit.

Qualifying entities must complete the pre-file registration process and receive a registration number. The registration number must be included on the taxpayer’s annual return as part of making a valid elective pay election. To facilitate this, the IRS created the IRA/CHIPS Pre-filing Registration Tool.

Complete and submit the pre-filing registration request no earlier than the beginning of the tax year in which the taxpayer will earn the credit it wishes to monetize with an elective payment election or transfer election.

Refer to Publication 5884, Inflation Reduction Act (IRA) and CHIPS Act of 2022 (CHIPS) Pre-Filing Registration Tool User Guide PDF to assist in the pre-filing registration process. This guide has information on the clean energy credits and detailed instructions on the pre-filing registration process. A how-to video, Pre-filing Registration Tool overview, is available on IRS Videos (Videos are no longer available). Functionality allowing additional authorized users and expansion of the entity type drop down menu will be available soon.

The full news release about the IRA/CHIPS Pre-Filing Registration tool is available on IRS.gov.

Additional information about clean energy credits can be found at IRS.gov/cleanenergy.

IRS creates withdrawal process for Employee Retention Credit (ERC) claims

The IRS recently announced a withdrawal process for ERC claims to help those who filed an Employee Retention Credit (ERC) claim and are concerned about its accuracy.

This new withdrawal option allows certain employers that filed an ERC claim but have not received a refund to withdraw their claim and avoid future repayment, interest and penalties.

Employers that submitted an ERC claim that's still being processed can withdraw their claim and avoid the possibility of getting a refund for which they're ineligible.

For more information on who qualifies and how to withdraw an ERC claim refer to: IRS.gov/withdrawmyerc.

Resources for help

Fact Sheet 2023-24 contains more details about the ERC withdrawal process.

Updated Frequently asked questions about ERC with new questions and answers.

For information about choosing a trusted tax professional.

Recorded webinar

Employee Retention Credit: Latest information on the moratorium and options for withdrawing or correcting previously filed claims, will be available on the IRS Video Portal later this month. (Video is no longer available.)

Check IRS.gov/erc for updates and other information relating to ERC.

Clean energy credits: what you need to know about elective pay

Tax-exempt and governmental entities can benefit from clean energy tax credits using new options enabled by the Inflation Reduction Act of 2022 (IRA). The IRA allows governmental entities to benefit from certain clean energy tax credits through elective pay. For tax years beginning after December 31, 2022, an applicable entity that qualifies for a clean energy tax credit can make an elective payment election. This election will treat certain credits as a payment against their federal income tax liabilities rather than as a nonrefundable credit. The amount of the credit will first offset any tax liability of the entity and any excess will be refundable.

How do I make an elective pay election?

The elective payment election is made on your annual tax return in the manner prescribed by the IRS, along with any form required to claim the relevant tax credit (source credit forms), a completed Form 3800, General Business Credit (or its successor), and any additional information, including supporting calculations, required in instructions to the relevant forms. Making an elective payment election requires completing multiple steps, including completing the required pre-filing registration process.

The term annual tax return includes:

1. for any person normally required to file an annual tax return with the IRS, such annual return (including Form 990-T for organizations with unrelated business income tax or a proxy tax under section 6033(e));
2. for any person that is not normally required to file an annual tax return with the IRS (such as taxpayers located in the territories), the return they would be required to file if they were not located in the territories, or, if no such return is required (such as for State, local, or Indian tribal governmental entities), the Form 990-T Exempt Organization Business Income Tax Return; and
3. for short tax year filers, the short year tax return.

Electronic return filing is strongly encouraged.

Each entity making an elective payment election must have a unique EIN. More information about applying for an EIN is available at IRS.gov/ein.

How do I determine the taxable year?

Check the instructions for the annual tax return you are filing. For example, for tax-exempt entities filing Form 990-T, the return must be filed using the organization's established annual accounting period. If the organization has no established accounting period, file the return on the calendar-year basis.

How do I timely file my return?

An elective payment election may only be made on an original, timely filed return (including extensions). This means the deadline is the due date (including extensions of time) for the tax return for the taxable year for which the election is made. For most tax exempt and government entities including Indian tribal governments this is generally 4.5 months (for example, May 15 for a calendar year taxpayer) (or up to 10.5 months with extensions) after the end of the entity's tax year.

An original return includes a superseding return filed on or before the due date (including extensions). No election is permitted to be made on an amended return or by filing an administrative adjustment request under section 6227 of the Code. There is no relief available under §§ 301.9100-1 through 301.9100-3 of the Procedure and Administration Regulations (26 CFR part 301) for an elective payment election that is not timely filed.

Subject to future guidance, an automatic paperless six-month extension from the original due date is deemed to be allowed for entities for which no Federal income tax return is required under sections 6011 or 6033(a) of the Code.

Additional information about Clean Energy Credits can be found at IRS.gov/cleanenergy.

Reminder: Educational assistance programs can help pay workers’ student loans

Educational assistance programs offered by employers can now be used to pay principal and interest on an employee’s qualified education loans. Traditionally, these programs have been used to pay for books, equipment, supplies, fees, tuition, and other education expenses for the employee. Payments made directly to the lender, as well as those made to the employee, qualify.

By law, tax-free benefits under an educational assistance program are limited to $5,250 per employee per year. Normally, assistance provided above that level is taxable as wages.

Though educational assistance programs have been available for many years, the option to use them to pay student loans is available only for payments made after March 27, 2020. Under current law, this option will be available until Dec. 31, 2025.

For more information on other requirements, refer to:

Publication 15-B, Employer’s Tax Guide to Fringe Benefits

Publication 970, Tax Benefits for Education - Chapter 10, it provides details on what qualifies as a student loan.

Clean energy credits: what you need to know about claiming and receiving credits

Tax-exempt and governmental entities can benefit from clean energy tax credits using new options enabled by the Inflation Reduction Act of 2022 (IRA). The IRA allows governmental entities to benefit from certain clean energy tax credits through elective pay. For tax years beginning after December 31, 2022, an applicable entity that qualifies for a clean energy tax credit can make an elective payment election. This election will treat certain credits as a payment against their federal income tax liabilities rather than as a nonrefundable credit. The amount of the credit will first offset any tax liability of the entity and any excess will be refundable.

Available clean energy credits

For information on which clean energy tax credits are available, Publication 5817-G PDF has a list of elective pay eligible tax credits.

Pre-filing registration information

A pre-filing registration process must be completed, and a registration number received, prior to making an elective payment election on an annual tax return. Applicable entities will need their own Employer Identification Number (EIN) or Tax Identification Number (TIN) to complete the pre-filing registration process. Applicable entities cannot use or borrow the EIN of a related entity. Watch this video to learn about using the IRS EIN tool to get an EIN. (Video is no longer available.)

The online pre-filing registration process is expected to launch in late 2023. After the launch, you may complete pre-filing registration as soon as you have all the information required. More detail will be available as the launch approaches.

To complete pre-filing registration, you must provide certain information about yourself, the applicable credits you intend to earn, each eligible project or property that will contribute to the applicable credit, and certain additional information. The IRS will review the information provided and will issue a separate registration number for each applicable credit property for which the applicable entity or electing taxpayer provided sufficient verifiable information. Registration is not complete until a registration number is received. Each entity making an elective payment election must have a unique Employer Information Number (EIN).

After you complete the pre-filing registration process, the IRS will review the information provided and will issue a separate registration number for each applicable credit property for which the applicable entity or electing taxpayer provided sufficient verifiable information.

How to make an elective payment election for a clean energy tax credit:

1. Identify and pursue the qualifying project or activity: You will need to know which credit you intend to earn.
2. Determine your tax year, if not already known: Your tax year will determine the due date for your tax return.
3. Complete pre-filing registration with the IRS
4. Satisfy all eligibility requirements for the tax credit and any applicable bonus credits, if applicable, for a given tax year: For example, to claim an energy credit on a solar energy generating project, you would need to place the project in service before making an elective payment election. You will need the documentation necessary to properly substantiate any underlying tax credit, including if bonus amounts increased the credit.
5. File the required annual tax return by the due date (or extended due date) and make a valid elective payment election. This includes properly completed and attached source credit forms, Form 3800 (including registration numbers) and required return attachments.

Additional information about clean energy credits can be found at IRS.gov/cleanenergy.

Elective payments of credits under the Inflation Reduction Act: Pre-file registration and timely filing required

For tax years beginning after December 31, 2022, an applicable entity that qualifies for a clean energy tax credit can make an elective payment election. This election will treat certain credits as a payment against their federal income tax liabilities rather than as a nonrefundable credit. This payment will first offset any tax liability of the entity and any excess will be refundable.

Applicable entities generally include tax-exempt organizations, state and local governments, Indian tribal governments, Alaska Native Corporations, the Tennessee Valley Authority and rural electric cooperatives. Specific criteria for each type of applicable entity are included in the resources below.

The Internal Revenue Service issued proposed regulations describing rules and definitions concerning elective payments for the clean energy tax credits. The IRS has also issued temporary regulations regarding the pre-filing registration requirements for taxpayers planning to make an elective payment election.

The pre-filing registration process must be completed, and a registration number received, prior to making an elective payment election on an annual tax return. Entities for which no such return is required (such as state and local governments and Indian tribal governments) will file Form 990-T to make the elective payment election. An elective payment election may only be made on a timely filed return (including extensions). Applicable entities will need their own Employer Identification Number (EIN) or Tax Identification Number (TIN) to complete the pre-filing registration process. Applicable entities cannot use or borrow the EIN of a related entity. To apply for an EIN online, visit IRS.gov/ein.

The IRS is continuing to work to implement the elective payment process and will provide more information, including about the pre-filing registration process, in late 2023.

For more information on elective pay, the IRS has posted frequently asked questions that discuss eligibility, applicable credits, steps for completing pre-file registration, steps for making an election, and other rules. Additionally, the IRS has a series of publications with key information specifically for various types of applicable entities that may make an elective payment election, including information on how to make the elective pay election and what to do to receive a payment:

• Elective Pay Overview, Publication 5817 PDF
• Rural Electric Cooperatives, Publication 5817-A PDF
• U.S. Territorial Governments, Publication 5817-B PDF
• Alaska Native Corporations, Publication 5817-C PDF
• Tax-Exempt Organizations, Publication 5817-D PDF
• State and Local Government, Publication 5817-E PDF
• Indian Tribal Governments, Publication 5817-F PDF
• Clean Energy Tax Incentives: Elective Pay Eligible Tax Credits, Publication 5817-G PDF

Moratorium on processing Employee Retention Credit

The IRS ordered an immediate moratorium for processing new Employee Retention Credit (ERC) claims to add more safeguards to prevent future abuse and protect businesses from predatory tactics. The moratorium runs through at least Dec. 31, 2023.

Understanding the valuable impact of the ERC credit, the IRS is working to process valid ERC claims filed before the moratorium, but with increased scrutiny. Special withdrawal options and settlement initiatives are being prepared to help businesses that have been misled into claiming the ERC.

Check IRS.gov/erc for updates and ways to report a scam involving ERC.

IRS releases guidance on elective payments and transfers of certain credits under the Inflation Reduction Act

The Internal Revenue Service issued proposed regulations and frequently asked questions about rules for applicable entities that earn certain clean energy credits and choose to make an elective payment election. It also included rules for eligible taxpayers that elect to transfer certain credits to unrelated parties.

Applicable entities generally include tax-exempt organizations, state and local governments, Indian tribal governments, Alaska Native Corporations, the Tennessee Valley Authority and rural electric cooperatives.

For tax years beginning after Dec. 31, 2022, applicable entities can choose to make an elective payment election, which will treat certain credits as a payment against their federal income tax liabilities rather than as a nonrefundable credit. This payment will first offset any tax liability of the entity and any excess will be refundable.

Temporary regulations that relate to a mandatory IRS pre-filing registration process, which will be through an electronic portal, were also issued. the pre-filing registration process must be completed, and a registration number received, prior to making an elective payment election or an election to transfer eligible credits.

For more information on elective payments and transferability, refer to Publication 5817-E, Elective Pay for State and Local Governments PDF and visit Elective pay and transferability at IRS.gov.

Beware of Employee Retention Credit scams

The IRS continues to see third parties aggressively promoting Employee Retention Credit (ERC) schemes. In News Release IR-2023-105, the IRS renewed an alert for businesses and tax exempt groups to watch out for warning signs of aggressive Employee Retention Credit marketing.

These promoters may lie about eligibility requirements. In addition, taxpayers using these companies could be at risk of someone using the credit as a ploy to steal their identity or take a cut of the taxpayer’s improperly claimed credit.

ERC is important pandemic-era credit and valuable if claimed properly, but could result in repayment and substantial penalties and interest if not. The IRS has trained auditors examining ERC claims posing the greatest risk. The IRS Criminal Investigation division is working to identify fraud and promoters of fraudulent claims. Illegitimate claims slow down processing of the credit for everyone.

The IRS also reminds businesses, tax-exempt groups, and others about simple steps to take to protect themselves from making an improper ERC.

• Work with a trusted tax professional; don’t rely on the advice of those soliciting these credits.
• Don’t apply unless you believe you are legitimately qualified for this credit. Details about the credit are available at Employee Retention Credit.

Reporting ERC fraud:

Employers can report illegal tax-related ERC claims and activities by submitting a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers PDF, and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations. The fax telephone number and mailing address are on the form.

Payers may receive notices CP2100 and 2100A if they filed an information return with errors

When banks, credit unions, businesses and other payers file information returns with data that doesn’t match IRS records, the IRS sends them a CP2100 or CP2100A notice. The notices tell payers that the information returns they submitted have a missing or incorrect Taxpayer Identification Number (TIN), name or both. These notices are sent twice a year in September and October and again in April.

Each notice has a list of payees with the issues. Payers need to compare the accounts on the notice with their account records and correct or update their records, if necessary. Payees may also need to correct their backup withholding on payments made to payees.

The IRS sends notices for errors most frequently found on these forms:

• Form 1099-B, Proceeds from Broker and Barter Exchange Transactions
• Form 1099-DIV, Dividends and Distributions
• Form 1099-G, Certain Government Payments
• Form 1099-INT, Interest Income
• Form 1099-K, Payment Card and Third-Party Network Transactions
• Form 1099-MISC, Miscellaneous Information
• Form 1099-NEC, Nonemployee Compensation
• Form 1099-OID, Original Issue Discount
• Form 1099-PATR, Taxable Distributions Received from Cooperatives
• Form W-2G, Certain Gambling Winnings

Payments subject to backup withholding

CP2100 and CP2100A notices also tell payers that they may be required to backup withhold tax payments. When payments are reported on the Form 1099 series and Form W-2G information returns, payments may be subject to backup withholding if:

• The payee doesn't:
  • Give their TIN to the payer in the required manner
  • Certify that they aren’t subject to backup withholding for underreporting interest and dividends
• The IRS tells the payer:
  • The payee gave an incorrect TIN and didn’t certify their TIN as required
  • They must begin backup withholding because the payee didn't report all their interest and dividends on their tax return

Payers are responsible for any amount they fail to backup withhold and the penalties that may apply.

More information can be found in Tax Tip 2023-75 on IRS.gov and in Publication 1281, Backup Withholding on Missing and Incorrect Name/TINs PDF.

Government entities can now file Form 1099 series information returns using a new online portal. The portal, known as the Information Returns Intake System, is free, secure, accurate and doesn’t require any special software. It also:

• allows filers to submit automatic extensions and make corrections,
• acknowledges receipt of the return in as early as 48 hours,
• keeps issuer information from year to year, and prior years filed through this platform, providing convenience to 1099 filers, and
• eliminates trips to the post office and can reduce office expenses.

The IRS encourages businesses, including governments and organizations that now file on paper, to switch to e-filing through the platform and share in its benefits.

Filing Information Returns Electronically (FIRE)

The IRS is continuing its transition to the new IR-TCC Application for FIRE for customers who received their TCC(s) prior to September 26, 2021. Customers must take action to keep their existing TCCs active.

Beginning September 25, 2022, FIRE TCC holders who submitted their TCC Application prior to September 26, 2021, will need to complete and submit a new application. The IR-TCC Application can be done any time between September 25, 2022, and August 1, 2023. Your TCC will remain active for use until August 1, 2023. Upon completion of your application, active TCCs assigned prior to September 26, 2021, will be added to your application. After August 1, 2023, any FIRE TCC without a completed Application will not be available for e-file.

August 1, 2022 was the last day Form 4419, Revise Existing Transmitter Control Code (TCC) for Filing Information Returns Electronically (FIRE), was accepted. If you need to update your account, you will need to create a new IR-TCC account.

Combined Federal/State Filing Program (CF/SF): Effective September 25, 2022, if you would like to voluntarily participate in the CF/SF program, you will need to complete the new on-line IR-TCC Application and follow the testing procedures outlined in Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G PDF. If you are an existing FIRE System customer and you complete your application by August 1, 2023, your TCC(s) will automatically be added to your IR-TCC Application.

If you are already approved to participate in the CF/SF program, no action is needed.

For more Information see Filing Information Returns Electronically (FIRE).

401(k) limit increases to $22,500 for 2023, IRA limit rises to $6,500

WASHINGTON — The Internal Revenue Service announced on October 21, 2022 that the amount individuals can contribute to their 401(k) plans in 2023 has increased to $22,500, up from $20,500 for 2022. The IRS today also issued technical guidance regarding all of the cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2023 in Notice 2022-55 PDF, posted today on IRS.gov.

For more Information see 401(k) limit increases to $22,500 for 2023, IRA limit rises to $6,500.

Worker Classification 101: employee or independent contractor

A business might pay an independent contractor and an employee for the same or similar work, but there are key legal differences between the two. It is critical for business owners to correctly determine whether the people providing services are employees or independent contractors.

Here's some information to help business owners avoid problems that can result from misclassifying workers.

An employee is generally considered anyone who performs services, if the business can control what will be done and how it will be done. What matters is that the business has the right to control the details of how the worker's services are performed. Independent contractors are normally people in an independent trade, business or profession in which they offer their services to the public.

Independent contractor vs. employee

Whether a worker is an independent contractor, or an employee depends on the relationship between the worker and the business. Generally, there are three categories to consider PDF.

• Behavioral control − Does the company control or have the right to control what the worker does and how the worker does the job?
• Financial control − Does the business direct or control the financial and business aspects of the worker's job. Are the business aspects of the worker's job controlled by the payer? Things like how the worker is paid, are expenses reimbursed, who provides tools/supplies, etc.
• Relationship of the parties − Are there written contracts or employee type benefits such as pension plan, insurance, vacation pay? Will the relationship continue and is the work performed a key aspect of the business?

For more Information see Worker Classification 101: employee or independent contractor.

Visit Federal, State and Local Governments website

Find tax information and resources for government entities, including tax withholding requirements, information returns and e-services, Taxpayer Identification Number (TIN) matching and employee benefits.

Visit FSLG

Find us on social media

The IRS uses social media to share federal, state and local government information. This includes tax changes, scam alerts, initiatives, tax products and services, and more.

IRS social media resources include:

• Twitter - specific topics:
  • @IRSnews - tax announcements
  • @IRSenEspanol - information in Spanish
  • @IRStaxpros - for tax professionals
  • @IRStaxsecurity - scam alerts
  • @IRSsmallbiz - small businesses and self-employed
  • @RecruitmentIRS - job opportunities
• Instagram: Access “IRSNews” at https://www.instagram.com/irsnews or the Instagram app.
• YouTube: Video tips in English, Spanish and American Sign Language.
• Facebook: News and information for taxpayers and tax return preparers. Also in Spanish.
• LinkedIn: IRS updates and job opportunities.

Subscribe to the platform that best fits your needs.

IRS increases mileage rate for remainder of 2022

The IRS announced an increase in the optional standard mileage rate for the final 6 months of 2022 in recognition of recent gasoline price increases. Taxpayers may use the optional standard mileage rates to calculate the deductible costs of operating an automobile for business and certain other purposes, effective July 1, 2022.

2023 inflation adjusted amounts for Health Savings Accounts

Revenue Procedure 2022-24 PDF provides the 2023 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under Section 223 of the Internal Revenue Code and the maximum amount that may be made newly available for excepted benefit health reimbursement arrangements (HRAs) provided under Section 54.9831-1(c)(3)(viii) of the Pension Excise Tax Regulations.

For calendar year 2023, the annual limitation on deductions for:

• Individual with self-only coverage under a high deductible health plan is $3,850
• Individual with family coverage under a high deductible health plan is $7,750

Election workers: Reporting and withholding

Each election year, thousands of state and local government entities hire workers to conduct primary and general elections. To understand the correct tax treatment of these workers, you need to be aware of specific statutes that apply to them as well as whether they are covered by a Section 218 Agreement.

Who are election workers?

Election workers are individuals hired by government entities to perform services at polling places in connection with national, state and local elections. An election worker may be referred to by other terms and titles, for example, poll worker, moderator, machine tender, checker, ballot clerk, voting official, polling place manager, absentee ballot counter or deputy head moderator. These workers may be employed by the government entity exclusively for election work or may work in other capacities as well. Compensation paid to election workers is includible as wage income for income tax purposes and may be treated as wages for Social Security and Medicare (FICA) tax purposes.

Election workers may be compensated by a set fee per day or a stipend for the election period. The election period may include attending training or meetings prior to and after the election. Election workers may also be reimbursed for their mileage or other expenses. To be excludable from wages, expense reimbursements must be made under an accountable plan.

For more Information see Election Workers: Reporting and Withholding.

Visit Federal, State and Local Governments website

Find tax information and resources for federal, state and local government entities, including tax withholding requirements, information returns, employee benefits and e-services such as tools for Taxpayer Identification Number (TIN) matching. You can also find changes in guidance, law and procedures that affect federal, state and local governments.

Visit FSLG

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If you have questions about this study, please contact us at [email protected].

IRS sends CP2100 and 2100A notices to help payers correct backup withholding errors

In April, the Internal Revenue Service sent CP2100 and CP2100A notices to financial institutions, businesses or payers who filed certain types of information returns that don't match IRS records. These notices are sent twice a year; an initial mailing in September and October and a second mailing in April of the following year. CP2100 and CP2100A notices inform payers the information return is missing a Taxpayer Identification Number (TIN), has an incorrect name or a combination of both. For more information see IR-2022-87, April 15, 2022.

For additional resources on backup withholding:

Backup Withholding Video (Video is no longer available.)

Learn how to respond to the CP2100 and 2100A notices timely.

Backup Withholding

Learn what payments are subject to backup withholding.

Taxpayer Identification Number (TIN) On-Line Matching

Use the TIN Matching program to match your 1099 payee information against IRS records prior to filing information returns.

TIN Matching Program Video (Video is no longer available.)

Watch the video to avoid penalties and expenses from filing invalid Forms 1099.

Form 945, Annual Return of Withheld Federal Income Tax

Use this form to report withheld federal income tax from nonpayroll payments. Nonpayroll payments include backup withholding.

Visit Federal, State and Local Governments Website

Find tax information and resources for government entities, including tax withholding requirements, information returns and e-services, Taxpayer Identification Number (TIN) matching and employee benefits.

Visit FSLG homepage

Section 218 and Retirement Systems Basics: Videos (Videos are no longer available.)

This four-video series helps government entities correct or prevent payroll errors related to their unique participation in Social Security and Medicare coverage.

Government Employees SS and Medicare Coverage

Determine if a position is covered by a Section 218 Agreement.

IRS Suspends Mailing

The IRS is suspending the issuance of several notices generally mailed to tax-exempt or governmental entities in case of a delinquent return. Due to the historic pandemic, the IRS hasn’t yet processed several million returns filed by individuals and entities. The suspension of the notices will help avoid confusion when a filing is still in process.

The IRS will continue to assess the inventory of pending returns to determine the appropriate time to resume mailing these notices. Some taxpayers and tax professionals may still receive the notices during the next few weeks. Generally, there is no need to call or respond to the notices as long as the return was filed timely.

The suspended notices are:

When to use Forms 1099-MISC and NEC Video (Video is no longer available.)

Watch the new video, When to use Forms 1099-MISC and NEC, to know when to use Form 1099-MISC, Miscellaneous Information and Form 1099-NEC, Nonemployee Compensation. The video covers the 2021 updates to both forms.

IRS issues guidance regarding the retroactive termination of the Employee Retention Credit

The Internal Revenue Service issued guidance for employers regarding the retroactive termination of the Employee Retention Credit. The Infrastructure Investment and Jobs Act, which was enacted on November 15, 2021, amended the law so the Employee Retention Credit applies only to wages paid before October 1, 2021, unless the employer is a recovery startup business.

Notice 2021-65 applies to employers that paid wages after September 30, 2021 and received an advance payment of the Employee Retention Credit for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of 2021 but are now ineligible for the credit due to the change in the law. The notice also provides guidance regarding how the rules apply to recovery startup businesses during the fourth quarter of 2021.

Businesses and government entities must report nonemployee compensation

Businesses, including government entities and charities, which pay nonemployee compensation of $600 or more must use Form 1099-NEC, Nonemployee Compensation to report these payments to the IRS.

Generally, payers must file Form 1099-NEC by January 31. For 2021 tax returns, there is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions.

Backup withholding

Backup withholding is the payer's requirement to withhold taxes from payments not otherwise subject to withholding. Nonemployee compensation may be subject to backup withholding if a payee has not provided a Taxpayer Identification Number (TIN) to the payer, or the IRS notifies the payer the TIN provided doesn’t match IRS records. The current backup withholding tax rate is 24%.

A TIN can be one of the following numbers:

• Social Security Number
• Employer identification
• Individual taxpayer identification
• Adoption taxpayer identification

For more information, watch Backup Withholding . (Video is no longer available.)

Who is an employee webinar is posted to IRS Video Portal (Video is no longer available.)

Thank you to those who attended the live webinar in December, but if you missed it, the recording of the Who is an Employee Webinar will help you determine which workers you should treat as employees.

Topics include:

• Common law employees
• Statutory employees
• Section 218 agreement for government entities
• Form SS-8

Worker classification issues: Firefighters

Tax laws generally apply to firefighters in the same manner as for other types of workers. If the work firefighters do is subject to the will and control of the payer, under the common-law rules, they’re employees for Federal tax purposes, even if you call them volunteers. The determination whether workers are common-law employees or independent contractors is made by applying the same standards used for other workers. See IRS Publication 15, Employer’s Tax Guide PDF, for more information on determining whether a worker is a common-law employee.

Similarly, it doesn’t matter if the firefighter is full-time, part-time, or if they’re paid on a “call basis” monthly, hourly, etc. If a worker is a common-law employee, any amounts paid that are not exempt under a special provision are wages subject to withholding for Federal income tax, Social Security, and Medicare that are reported on Form W-2.

It doesn’t matter what the payments are called if the worker is a common-law employee. Employers are responsible for withholding on these wages and filing Form 941. For more information, see Issues for Firefighters.

De minimis fringe benefits

In determining if a benefit is de minimis, you should always consider its frequency and its value. The essential elements of a de minimis benefit are that it is occasional or unusual in frequency and is so small that accounting for it is unreasonable or impractical. It also must not be a form of disguised compensation.

De minimis benefits are excluded under Internal Revenue Code Section 132(a)(4) and include items not specifically excluded under other sections of the Code. These items include:

• Controlled, occasional employee use of photocopier
• Occasional snacks, coffee, doughnuts, etc.
• Occasional tickets for entertainment events
• Holiday gifts
• Occasional meal money or transportation expense for working overtime
• Group-term life insurance for employee, spouse or dependent with face value not more than $2,000
• Flowers, fruit, books, etc., provided under special circumstances
• Personal use of a cell phone provided by an employer primarily for business purposes

Whether an item or service is de minimis depends on all the facts and circumstances. In addition, if a benefit is too large to be considered de minimis, the entire value of the benefit is taxable to the employee, not just the excess over a designated de minimis amount. For more Information see De Minimis Fringe Benefits.

Webinar: Who is an Employee?

The IRS is inviting you to attend our live webinar, Who is an Employee?, on December 16, 2021, at 1 p.m. ET. Register for this free webinar presented by the IRS Office of Federal, State and Local Governments.

Information in this webinar will help you determine which workers you should treat as employees.

Topics include:

• Common law employees
• Statutory employees
• Section 218 agreement for government entities
• Form SS-8

Webinar: Reconciliation of Payroll (Video is no longer available.)

The Office of Federal, State and Local Governments invites you to watch the Reconciliation of Payroll webinar (recorded October 14, 2021).

This webinar discusses when you should reconcile your payroll and which payroll amounts to use. It also explains how to reconcile gross payroll to taxable income for federal income tax and FICA.

Reconciliation of Payroll Webinar (Video is no longer available.)

You are invited to register for a free webinar on Payroll Reconciliation hosted by the Office of Federal, State and Local Governments on October 14, 2021 at 2 p.m. (ET). This webinar will cover when your payroll should be reconciled and what payroll amounts to use. It will also explain reconciling gross payroll to taxable income for federal income tax and FICA.

Visit Federal, State and Local Governments Redesigned Website

The IRS Office of Federal, State and Local Governments announces the new design and layout of the Tax information for Federal, State and Local Governments Website. The website is an important tax resource providing valuable information and resources for government entities.

Visit the homepage at irs.gov/fslg to view the redesigned site.

Reconciliation of Payroll Webinar

You are invited to register for a free webinar on Payroll Reconciliation hosted by the Office of Federal, State and Local Government on October 14, 2021 at 2 p.m. (ET). This webinar will cover when your payroll should be reconciled and what payroll amounts to use. It will also explain reconciling gross payroll to taxable income for federal income tax and FICA.

Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 for Leave After March 31, 2021

The American Rescue Plan Act of 2021 (ARP) allows small and midsize employers, and certain governmental employers to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations.

The ARP tax credits are available to eligible employers that pay sick and family leave for leave from April 1, 2021, through September 30, 2021. For more on these ARP tax credits, see the fact sheet and related FAQs.

FIRE System Update Coming September 2021

Any filer, including corporations, partnerships, employers, estates or trusts who files 250 or more Forms 1097, 1042-S, 1098, 1099, 3921, 3922, 5498, 8027, 8955-SSA or W-2G for any calendar year must file their information returns electronically using Filing Information Returns Electronically (FIRE) System. FIRE is the online tool used to transmit information returns and automatic extension requests to the IRS. Before filers can use FIRE, they must complete an online application to obtain a 5-digit alphanumeric code known as a Transmitter Control Code (TCC). Currently, Form 4419 is used to request a TCC.

A new online application, Information Returns (IR) Application for Transmitter Control Code, is scheduled to deploy on September 26, 2021 and will replace Form 4419. The new application will be available on the FIRE page. For more information on FIRE changes, see FIRE System Update: Improving the Process and Security for Information Return (IR) Application for Transmitter Control Code (TCC).

EIN holders must update any change to responsible party

The IRS is urging those entities with Employer Identification Numbers (EINs) to update their applications if there has been a change in the responsible party or contact information.

IRS regulations require EIN holders to update responsible party information within 60 days of any change by filing Form 8822-B, Change of Address or Responsible Party - Business. It is critical that the IRS have accurate information in cases of identity theft or other fraud issues related to EINs or business accounts.

For more information see IR-2021-161, July 30, 2021.

Find us on social media

The IRS uses social media to share federal, state and local government information. This includes tax changes, scam alerts, initiatives, tax products and services, and more.

IRS social media resources include:

• Twitter - specific topics:
  • @IRSnews - tax announcements
  • @IRSenEspanol - information in Spanish
  • @IRStaxpros - for tax professionals
  • @IRStaxsecurity - scam alerts
  • @IRSsmallbiz - small businesses and self-employed
  • @RecruitmentIRS - job opportunities
• Instagram: Access “IRSNews” at https://www.instagram.com/irsnews or the Instagram app.
• YouTube: Video tips in English, Spanish and American Sign Language.
• Facebook: News and information for taxpayers and tax return preparers. Also in Spanish.
• LinkedIn: IRS updates and job opportunities.

Subscribe to the platform that best fits your needs.

Election Workers Webinar

The Tax Exempt and Government Entities Division would like to invite you to register to watch the free webinar on Reporting Election Workers Earnings on June 24, 2021 at 1 p.m. (ET). This webinar explains which workers should be treated as election workers and when taxes should be withheld from wages. It will also cover what should be included in earnings.

For more information, see Webinars for Tax Exempt & Government Entities.

Submit Forms 2848 and 8821 Online

Did you know you can now electronically sign third-party authorization Form 2848, Power of Attorney, and Form 8821, Tax Information Authorization?

With the new tool, Submit Forms 2848 and 8821 Online , tax professionals can now upload the forms directly to the IRS.

For details, see IRS News Release or Fact Sheet 2021-1.

Form W-2/SSN Data Theft: Information for Businesses and Payroll Service Providers

The Tax Exempt and Government Entities Division would like to alert businesses and payroll service providers to a new email scam. This email scam uses a corporate officer's name to request employee Forms W-2 from company payroll or human resources departments. The email is sent to an employee in the payroll or human resources departments requesting a list of all employees and their Forms W-2. See the full article; Form W-2/SSN Date Theft: Information for Businesses and Payroll Services Providers, for steps to take in contacting the IRS if businesses and payroll service professionals received the email and/or lost data to this scam.

Worker Classification (Independent Contractors vs. Employees)

Are your payees independent contractors or are they employees? Before you can determine how to treat payments for services, you must first know the business relationship between you and the person performing the services.

For more information, see Worker Classification Video (Video is no longer available) or Independent Contractor (Self-Employed) or Employee?

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Find Us on Social Media

The IRS uses social media to share federal, state and local government information. This includes tax changes, scam alerts, initiatives, tax products and services, and more.

IRS social media resources include:

• Twitter - specific topics:
  • @IRSnews - tax announcements
  • @IRSenEspanol - information in Spanish
  • @IRStaxpros - for tax professionals
  • @IRStaxsecurity - scam alerts
  • @IRSsmallbiz - small businesses and self-employed
  • @RecruitmentIRS - job opportunities
• Instagram: Access "IRSNews" at https://www.instagram.com/irsnews or the Instagram app.
• YouTube: Video tips in English, Spanish and American Sign Language.
• Facebook: News and information for taxpayers and tax return preparers. Also in Spanish.
• LinkedIn: IRS updates and job opportunities.

Subscribe to the platform that best fits your needs.

The Tax Exempt and Government Entities Division would like to invite you to register to watch the free webinar on Reporting Election Workers Earnings on June 24, 2021 at 1 p.m. (ET).

This webinar is designed to explain which workers should be treated as election workers and when taxes should be withheld from wages. It will also cover what should be included in earnings.

Questions emailed to: [email protected] with the subject line “Pre-submitted questions for Election Worker webinar (June 24)” will be answered as time permits. The deadline for submitting questions is June 10, 2021.

For more information, see Webinars for Tax Exempt & Government Entities.

Live Webinar on Election Workers on June 24

The Tax Exempt and Government Entities Division would like to invite you to register to watch the free webinar on Reporting Election Workers Earnings on June 24, 2021 at 1 p.m. (ET).

This webinar is designed to explain which workers should be treated as election workers and when taxes should be withheld from wages. It will also cover what should be included in earnings.

Questions emailed to: [email protected] with the subject line “Pre-submitted questions for Election Worker webinar (June 24)” will be answered as time permits. The deadline for submitting questions is June 10, 2021.

For more information, see Webinars for Tax Exempt & Government Entities.

The Tax Exempt and Government Entities Division invites you to register for the free Taxable Fringe Benefit Essentials for Employers Webinar on April 14, 2021 at 1 p.m. (ET).

This webinar is designed to explain what a fringe benefit is and how to value a fringe benefit. It will cover the most common fringe benefits and explain if those fringe benefits are taxable.

For more information, see Webinars for Tax Exempt & Government Entities.

Taxable Fringe Benefit Essentials for Employers Webinar

The Tax Exempt and Government Entities Division would like to invite you to register to watch the free Taxable Fringe Benefit Essentials for Employers Webinar on April 14, 2021 at 1 p.m. (ET).

This webinar is designed to explain what a fringe benefit is and how to value a fringe benefit. It will cover the most common fringe benefits and explain if those fringe benefits are taxable.

For more information, see Webinars for Tax Exempt & Government Entities.

Redesigned Form W-4

The 2020 Form W-4 was redesigned to reduce the form's complexity and to increase transparency and accuracy in the withholding system. While it uses the same underlying information as the old design, it replaces complicated worksheets with more straightforward questions that make accurate withholding easier for employees.

Who must furnish a new Form W-4?

• All new employees first paid after 2019 must use the redesigned form.
• Existing employees who want to adjust their withholding.
• Existing employees that claim to be exempt from federal income tax withholding.

For additional information about Form W-4, see the links below:

• Video: How to Use Form W-4 to Calculate Withholding (Video is no longer available.)
• Publication 15-T, Federal Income Tax Withholding Methods
• FAQs on the 2020 Form W-4
• Improved Tax Withholding Estimator helps workers target the refund they want; shows how to fill out new 2020 W-4

What’s New with Fringe Benefits

The business mileage rate for 2021 is 56 cents per mile down from 57.5 cents in 2020. You may use this rate to reimburse an employee for business use of a personal vehicle, and under certain conditions, you may use the rate under the cents-per-mile rule to value the personal use of a vehicle you provide to an employee.

For more information on Fringe Benefits, if they are taxable and how they should be reported, see the links below:

• Publication 15-B, Employer's Tax Guide to Fringe Benefits
• Publication 5137, Fringe Benefit Guide PDF

403(b) Contribution Limits

The limit on elective salary deferrals has not changed for 2021. The amount an employee can contribute to a 403(b) account out of salary is $19,500 for 2020 and 2021.

Age 50 catch-up: A plan may permit employees who are age 50 or over at the end of the calendar year to make additional salary deferrals of $6,500 in 2020 and 2021.

15-years of service catch-up: A 403(b) plan may permit employees who have at least 15 years of service with the same eligible 403(b) employer (a public school system, hospital, home health service agency, health and welfare service agency, church, or convention or association of churches (or associated organization)), to make additional salary deferrals equal to the lesser of:

• $3,000,
• $15,000, reduced by the amount of additional elective deferrals made in prior years because of this rule, or
• $5,000 times the number of the employee’s years of service for the organization, minus the total elective deferrals made for earlier years.

For employees eligible for both the age 50 and 15-years of service catch-ups, salary deferrals in excess of the deferral limit ($19,500 in 2020 and 2021) are first applied to the 15-year catch-up and then the age 50 catch-up.

For more information about 403(b) contributions limits, see the links below:

• Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans)
• Retirement Topics – 403(b) Contribution Limits
• Participants Who Make Excess Salary Deferrals

Find Us on Social Media

The IRS uses social media to share federal, state, and local government information. This includes tax changes, scam alerts, initiatives, tax products and services, and more.

IRS social media resources include:

• Twitter - specific topics:
  • @IRSnews - tax announcements
  • @IRSenEspanol - information in Spanish
  • @IRStaxpros - for tax professionals
  • @IRStaxsecurity - scam alerts
  • @IRSsmallbiz - small businesses and self-employed
  • @RecruitmentIRS - job opportunities
• Instagram: Access “IRSNews” or the Instagram app.
• YouTube: Video tips in English, Spanish and American Sign Language.
• Facebook: News and information for taxpayers and tax return preparers, Also in Spanish.
• LinkedIn: IRS updates and job opportunities.

Subscribe to the platform that best fits your needs.

Taxable Fringe Benefit Essentials for Employers Webinar

The Tax Exempt and Government Entities Division would like to invite you to register to watch the free Taxable Fringe Benefit Essentials for Employers Webinar on April 14, 2021 at 1 p.m. (ET).

This webinar is designed to explain what a fringe benefit is and how to value a fringe benefit. It will cover the most common fringe benefits and explain if those fringe benefits are taxable.

For more information, see Webinars for Tax Exempt & Government Entities.

Find Us on Social Media

The IRS uses social media to share federal, state, and local government information. This includes tax changes, scam alerts, initiatives, tax products and services, and more.

IRS social media resources include:

• Twitter - specific topics:
  • @IRSnews - tax announcements
  • @IRSenEspanol - information in Spanish
  • @IRStaxpros - for tax professionals
  • @IRStaxsecurity - scam alerts
  • @IRSsmallbiz - small businesses and self-employed
  • @RecruitmentIRS - job opportunities
• Instagram: Access “IRSNews” or the Instagram app.
• YouTube: Video tips in English, Spanish and American Sign Language.
• Facebook: News and information for taxpayers and tax return preparers, Also in Spanish.
• LinkedIn: IRS updates and job opportunities.

Subscribe to the platform that best fits your needs.

Who is entitled to Covid‐19 Relief Credits?

The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided two new employer tax credits:

• Sick and Family Leave Credit
• Employee Retention Credit.

As a reminder, federal, state and local government entities, and any agencies or instrumentalities of those entities, are not entitled to either of these credits. However, tribal governments may be eligible to claim both the Sick and Family Leave Credit and the Employee Retention Credit. For more information on eligible employers, see:

• What is an Eligible Employer? (FFCRA - Sick & Family Leave Credits) – Questions 19b, 19c and 19g.
• Determining Which Employers are Eligible to Claim the Employee Retention Credit (CARES Act) – Questions 18, 19, 21 and 21a.

If a Form 941, Employer's Quarterly Federal Tax Return, claiming either of these credits has been filed by or on behalf of a federal, state or local government entity, or any agency or instrumentality of a government entity, the claimed credits will be disallowed and result in a balance due tax liability.

The following information provides more details on the credits:

• IR‐2020‐62, IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19
• COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs
• FAQs: Employee Retention Credit under the CARES Act

Thank You for Attending the Form 1099-NEC Awareness Day Event

The IRS Tax Exempt and Government Entities Division and the Office of Indian Tribal Governments thanks the over 5,000 participants who attended the Form 1099-NEC Awareness Day Zoom meetings January 12, 14 and 21, 2021.

These meetings provided an overview of the Form 1099-Non-Employee Compensation (NEC) and reporting requirements for the 2021 filing season.

Check out these links to resources discussed during the presentations:

Online Tools and Resources:

• 2020 Instructions for Forms 1099-MISC and 1099-NEC
• General Instructions for Certain Information Returns (Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G)
• Taxpayer Identification Number (TIN) Matching
• Filing Information Returns Electronically (FIRE)

Educators can now deduct out-of-pocket expenses for COVID-19 protective items

Eligible educators can deduct unreimbursed expenses for COVID-19 protective items to stop the spread of COVID-19 in the classroom. COVID-19 protective items include, but are not limited to:

• face masks;
• disinfectant for use against COVID-19;
• hand soap;
• hand sanitizer;
• disposable gloves;
• tape, paint or chalk to guide social distancing;
• physical barriers (for example, clear plexiglass);
• air purifiers; and
• other items recommended by the Centers for Disease Control and Prevention (CDC) to be used for the prevention of the spread of COVID-19.

Rev. Proc. 2021-15 PDF provides guidance related to educators and their expenses under the COVID-related Tax Relief Act of 2020, which was enacted as part of the Consolidated Appropriations Act, 2021. The new law clarifies that unreimbursed expenses paid or incurred after March 12, 2020, by eligible educators for protective items used to stop the spread of COVID-19 in the classroom qualify for the educator expense deduction.

The educator expense deduction rules permit eligible educators to deduct up to $250 of qualifying expenses per year ($500 if married filing jointly and both spouses are eligible educators, but not more than $250 each).

Eligible educators include any individual who is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year.

This deduction is for expenses paid or incurred during the tax year. Taxpayers claim the deduction on Form 1040, Form 1040-SR or Form 1040-NR (attached Schedule 1 (Form 1040)).

Find Us On Social Media

The IRS uses social media to share federal, state and local government information. This includes tax changes, scam alerts, initiatives, tax products and services, and more.

IRS social media resources include:

• Twitter - specific topics:
  • @IRSnews - tax announcements
  • @IRSenEspanol - information in Spanish
  • @IRStaxpros - for tax professionals
  • @IRStaxsecurity - scam alerts
  • @IRSsmallbiz - small businesses and self-employed
  • @RecruitmentIRS - job opportunities.
• Instagram: Access “IRSNews” or the Instagram app.
• YouTube: Video tips in English, Spanish and American Sign Language.
• Facebook: News and information for taxpayers and tax return preparers, Also in Spanish.
• LinkedIn: IRS updates and job opportunities.

Subscribe to the platform that best fits your needs to supplement your GovDelivery subscription.

The Tax Exempt and Government Entities Division (TEGE) invites you to join us for a free Zoom awareness meeting on either January 12, 2021 or January 14, 2021.

This meeting is designed to help governmental entities understand the new Form 1099-NEC (Non-Employee Compensation) reporting requirements for the 2020 filing season. Each session is limited to the first 950 participants.

Dates and Times:

Several dates and times offered to maximize the reach of the event.

Tuesday January 12, 2021

• 9 a.m. Eastern - Meeting ID: 161 617 7980
• 2 p.m. Eastern - Meeting ID: 160 527 4160

Thursday January 14, 2021

• 11 a.m. Eastern - Meeting ID: 160 684 3808
• 4 p.m. Eastern - Meeting ID: 161 660 1009

Participants may also join via voice call using the following information:

Dial by your location and input the meeting ID when prompted:

• 669-254-5252 US (San Jose)
• 646-828-7666 US (New York)

Reporting nonemployee compensation and backup withholding

The IRS reminds employers that starting in tax year 2020, payers must complete the new Form 1099-NEC, Nonemployee Compensation, to report any payment of $600 or more to a payee.

Generally, payers must file Form 1099-NEC by January 31. For 2020 tax returns, the due date is February 1, 2021. There is no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions.

Also, nonemployee compensation may be subject to backup withholding if a payee has not provided a taxpayer identification number to the payer or the IRS notifies the payer that the TIN provided was incorrect.

Guidance on reporting qualified sick and family leave wages paid

The IRS provided guidance in Notice 2020-54 PDF to employers requiring them to report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act (FFCRA) on Form W-2.

The Notice also provides employers with optional language to use in the Form W-2 instructions for employees.

Additional information about tax relief for those affected by the COVID-19 pandemic can be found on IRS.gov.

Do you hire election workers?

Each election year, thousands of state and local government entities hire workers to conduct primary and general elections. Compensation paid to election workers is income and may be subject to taxes and reporting requirements.

Election Workers: Reporting and Withholding will help you understand their unique reporting and withholding requirements and which election workers may be covered by a Section 218 Agreement.

Deposit Requirements for Employment Taxes, Notice 931

Before the beginning of each calendar year, you must determine if you should use a monthly or semiweekly deposit schedule for employment taxes. The deposit schedule you must use is based on the total tax liability you reported during a lookback period. Your deposit schedule isn't determined by how often you pay your employees or make deposits.

Instead of making deposits during the current quarter, you can pay your total Form 941 tax liability when you timely file Form 941 if:

1. Your total Form 941 tax liability for either the current quarter or the preceding quarter is less than $2,500, and
2. You don't incur a $100,000 next-day deposit obligation during the current quarter.

Refer to Notice 931 PDF for deposit requirements and more information about the lookback period for calendar year 2021.

Check out Filing and Paying to find additional information on paying and depositing your employment taxes.

The IRS Tax Exempt and Government Entities Division invites you to view the Worker Classification webinar (recorded October 7, 2020). (Video is no longer available.)

This webinar is designed to help government and private sector entities determine whether a worker is an employee or independent contractor. It will also cover Form SS-8, Classification Settlement Agreements and what to do if an individual is an employee.

Webinars on IRSvideos (Video is no longer available.)

Check out this presentation on payroll reporting.

• ​​​​10 Minutes on Reconciling Forms 941/W-3/W-2 to Gross Payroll

Learn about reconciling your payroll to eliminate discrepancies and reduce the number of W-2C’s filed.

Reminder: Worker Classification Webinar on October 7

The Tax Exempt and Government Entities Division invites you to register for the free Worker Classification Webinar on October 7, 2020 at 1 p.m. (ET).

This webinar is designed to help government and private sector entities understand the definition of an employee and determine whether a worker is an employee or independent contractor. It will also cover Form SS-8, Classification Settlement Agreements and what to do if an individual is an employee.

Questions emailed to: [email protected] with the subject line “Pre-submitted questions for the Workers Classification webinar (October 7)” will be answered as time permits. For further details, see Webinars for Tax Exempt & Government Entities.

Reminder: Worker Classification Webinar on October 7

The Tax Exempt and Government Entities Division invites you to register for the free Worker Classification Webinar on October 7, 2020 at 1 p.m. (ET).

This webinar is designed to help government and private sector entities understand the definition of an employee and determine whether a worker is an employee or independent contractor. It will also cover Form SS-8, Classification Settlement Agreements and what to do if an individual is an employee.

Questions emailed to: [email protected] with the subject line “Pre-submitted questions for the Workers Classification webinar (October 7)” will be answered as time permits. For further details, see Webinars for Tax Exempt & Government Entities.

Application Deadline for TEGE Commissioner Extended to October 9

The IRS has extended the application deadline for the Tax Exempt and Government Entities Division Commissioner position until October 9, 2020. The IRS encourages interested applicants to visit USAjobs.gov for full details.

For a complete application, applicants need to include the following documents:

• Resume
• Separate document for Executive Core Qualifications (ECQ) narrative
• Separate document for Technical Competencies (TC) narrative
• SF-50 for current or former federal employees
  • If a current or former Senior Executive Service (SES) employee, SF-50 should indicate your SES status

Additional details are available on USAJobs.gov, including more information for current and former federal Senior Executives interested in applying.