News & Updates
IRS Experiencing Severe Delays in the Processing of Tax Returns and Refunds
IRS.gov Updated: 28-Dec-2021
Due to the lingering effects of COVID-19, the IRS continues to experience inventory backlogs resulting in significantly long wait times.
The IRS is opening mail within normal timeframes and all paper and electronic individual refund returns received prior to April 2021 have been processed if the return had no errors or did not require further review. As of December 18, 2021, we had 6.3 million unprocessed individual returns. Unprocessed individual returns include tax year 2020 returns with errors and those returns requiring special handling such as those that require correction to the Recovery Rebate Credit amount or validation of 2019 income used to figure the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC). This work does not require us to correspond with taxpayers but does require special handling by an IRS employee so, in these instances, it is taking the IRS more than 21 days to issue any related refund and in some cases this work could take 90 to 120 days. The IRS is having to correct significantly more errors on tax returns than in previous years. The IRS has reduced the number of returns requiring special handling from an historical high of 9.8 million on May 1, 2021 to the current level of 42,000 individual returns as of December 18. If a correction is made to any RRC, EITC or ACTC claimed on the return, the IRS will send taxpayers an explanation. Taxpayers are encouraged to continue to check Where’s My Refund? for their personalized refund status and can review Tax Season Refund Frequently Asked Questions.
As of December 18, 2021, we had 2.3 million unprocessed Forms 1040-X (Amended Returns). We are processing these returns in the order received and working hard to get through the inventory. The current timeframe can be more than 20 weeks instead of up to 16. Please don't file a second tax return or contact the IRS about the status of your amended return. Taxpayers should continue to check Where's My Amended Return? for the most up to date processing status available. For further information please click the link below:
The Recovery Rebate Credit
IRS.gov Updated: 30-Jul-2021
The first two rounds of Economic Impact Payments were advance payments of the 2020 Recovery Rebate Credit. Most eligible people already received the payments and won't include this information on their 2020 tax return.
Who May Be Eligible to Claim the 2020 Recovery Rebate Credit?
If you didn't get a first and second Economic Impact Payment or got less than the full amounts, you may be eligible to claim the 2020 Recovery Rebate Credit and must file a 2020 tax return even if you don't usually file a tax return.
Claiming the Credit
To claim the 2020 Recovery Rebate Credit, you must file a 2020 tax return, even if you aren't required to file. You must also know the amount of any first and second Economic Impact Payment you received. For further information click here.
Third Economic Impact Payment
Washington, March 31, 2021
The third round of Economic Impact Payments was authorized by the American Rescue Plan Act of 2021 as an advance payment of the tax year 2021 Recovery Rebate Credit.
The IRS started issuing the third Economic Impact Payments to eligible individuals on March 12, 2021, with more payments sent by direct deposit and through the mail as a check or debit card in the weeks that follow. The IRS will continue to issue payments throughout the year as tax returns are processed.
Most eligible people won’t need to take additional action to get a third payment. Due to new income limitations, some individuals won't be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit.
Generally, someone is eligible for the full amount of the third Economic Impact Payment if they:
are a U.S. citizen or U.S. resident alien (and their spouse if filing a joint return), and
are not a dependent of another taxpayer and
their adjusted gross income (AGI) is not more than:
$112,500 if filing as head of household or
$75,000 for eligible individuals using any other filing status
$150,000 if married and filing a joint return or if filing as a qualifying widow or widower
Payments will be phased out – or reduced -- above those AGI amounts. This means people will not receive a payment if their AGI exceeds the above amounts. To read more on the 3rd EIP, click here.
2nd Economic Impact Payments on their way, visit IRS.gov instead of calling
IR-2021-1, January 4, 2021
WASHINGTON – The Internal Revenue Service today urged people to visit IRS.gov for the most current information on the second round of Economic Impact Payments rather than calling the agency or their financial institutions or tax software providers. IRS phone assistors do not have additional information beyond what’s available on IRS.gov.
The IRS and the Treasury Department began issuing a second round of Economic Impact Payments, often referred to as stimulus payments, last week.
Last round of ITINs will expire in 2020; IRS encourages early renewal to prevent refund delays
R-2020-181, August 17, 2020
WASHINGTON — More than 1 million Individual Taxpayer Identification Numbers are set to expire at the end of 2020 as the Internal Revenue Service completes the expiration of ITINs assigned prior to 2013. The IRS continues to urge affected taxpayers to submit their renewal applications early to avoid refund delays next year.
Under the Protecting Americans from Tax Hikes (PATH) Act, ITINs that have not been used on a federal tax return at least once in the last three consecutive years and those issued before 2013 will expire. This year ITINs with middle digits 88 will expire Dec. 31, 2020. Additionally, ITINs with middle digits 90, 91, 92, 94, 95, 96, 97, 98 or 99, that were assigned before 2013 and have not already been renewed, will also expire at the end of the year. To read more about renewing your ITIN, click here.
Americans Worldwide Receive Economic Stimulus Payment (Individual Stimulus Payment/Recovery Rebate Check): What you need to know...
IR-2020-61, March 30, 2020
WASHINGTON — The Treasury Department and the Internal Revenue Service today announced that distribution of economic impact payments will begin in the next three weeks and will be distributed automatically, with no action required for most people. However, some taxpayers who typically do not file returns will need to submit a simple tax return to receive the economic impact payment. To read more, click here.
Nonfilers - IRS launches campaign aimed at bringing into compliance high-income individuals who have not filed their tax returns.
U.S. citizens and resident aliens are subject to tax in the United States on their worldwide income, no matter what form that income takes. Taxpayers are often under the misconception that they are taxed in the United States only on income generated or earned in the United States. Using examinations, the LB&I department will concentrate in this campaign on bringing into compliance high-income taxpayers who have not filed tax returns. To read more on this, click here.
With the increased collection of data by the IRS and the Department of Justice, and the prioritization of data analytics, taxpayers should expect an increase in the number of high-income individuals who are flagged for examination. It is also important to note that the US Senate recently ratified a number of long-stalled international tax treaties, including treaties with Switzerland and Luxembourg, which allow the IRS to obtain even more information from these other countries on high income, non-compliant US taxpayers.
The IRS steps up efforts to increase compliance for Virtual Currency reporting.
Updated December 2019
The IRS has indicated that it will be paying more attention to the tax treatment of transactions involving virtual currencies, highlighting the need for taxpayers to ensure that they report any virtual currency transactions appropriately. U.S. persons are subject to tax on worldwide income from all sources including transactions involving virtual currency. IRS Notice 2014-21 states that virtual currency is property for federal tax purposes and provides information on the U.S. federal tax implications of convertible virtual currency transactions. The Virtual Currency Compliance campaign will address noncompliance related to the use of virtual currency through multiple treatment streams including outreach and examinations. The compliance activities will follow the general tax principles applicable to all transactions in property, as outlined in Notice 2014-21. Click here to read FAQs published by the IRS on this.
Relief Procedures for Expatriating or Former U.S. Citizens
Updated November 22, 2019
The IRS announced procedures for certain persons who have relinquished, or intend to relinquish, their United States (U.S.) citizenship and who wish to come into compliance with their U.S. income tax and reporting obligations and avoid being taxed as a “covered expatriate” under section 877A of the U.S. Internal Revenue Code (IRC). Please read all information for these procedures including the Frequently Asked Questions and Answers (FAQs) to determine eligibility. Relinquishing U.S. citizenship and the tax impacts of relinquishing U.S. citizenship are serious matters that involve irrevocable decisions. Consider consulting legal counsel before making any decisions about relinquishing U.S. citizenship.
The Department of the Treasury, the Department of State, the Internal Revenue Service, and the Social Security Administration have prepared a brief “frequently asked questions” document on obtaining social security numbers, expatriation, and tax implications of expatriation. To read further, click here...
IRS reminds those with foreign assets of annual April 15 FBAR deadline
IR-2019-63, April 4, 2019
WASHINGTON — The Internal Revenue Service today reminded U.S. citizens and resident aliens, including those with dual citizenship, that if they have a foreign bank or financial account, April 15, 2019, is the deadline to file their annual Report of Foreign Bank and Financial Accounts (FBAR). They should also check to see if they have a U.S. tax liability and a federal tax return filing requirement. To read further, click here...
Understand how to report Foreign Bank and Financial Accounts
FS-2019-7, April 2019
In a global economy, many people in the United States have foreign financial accounts. The law requires U.S. persons with foreign financial accounts to report their accounts to the U.S. Treasury Department, even if the accounts don’t generate any taxable income. They need to report by April 15 of the following calendar year.
The U.S. government requires reporting of foreign financial accounts because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. To read further, click here...
Individuals who need passports for imminent travel should contact IRS promptly to resolve tax debt
IR-2019-23, February 27, 2019
WASHINGTON ― The Internal Revenue Service today reiterated its warning that taxpayers may not be able to renew a current passport or obtain a new passport if they owe federal taxes. To avoid delays in travel plans, taxpayers need to take prompt action to resolve their tax issues. To read further, click here.
The filing obligations of U.S. Citizens and Long-term Residents living and working outside the United States.
Updated December 13, 2019
If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.
Most People Abroad Need to File... A filing requirement generally applies even if the taxpayer qualifies for tax benefits, such as the foreign earned income exclusion or the foreign tax credit, that substantially reduce or eliminate their U.S. tax liability. These tax benefits are not automatic and are only available if an eligible taxpayer files a U.S. income tax return. To read further, click here.
Compliance Options for Non-Filers
Options Available For U.S. Taxpayers with Undisclosed Foreign Financial Assets
The implementation of FATCA and the ongoing efforts of the IRS and the Department of Justice to ensure compliance by those with U.S. tax obligations have raised awareness of U.S. tax and information reporting obligations with respect to non-U.S. investments. Because the circumstances of taxpayers with non-U.S. investments vary widely, the IRS offers the following options for addressing previous failures to comply with U.S. tax and information return obligations with respect to those investments:
Each of these options is explained on the linked pages. The IRS encourages taxpayers to consult with professional tax or legal advisers in determining which option is the most appropriate for them.
IRS Upgrades, Enhances FATCA Registration System
WASHINGTON — The Internal Revenue Service has upgraded the Foreign Account Tax Compliance Act (FATCA) Online Registration System, enabling sponsoring entities to register their sponsored entities to obtain a global intermediary identification number. The upgraded system also will allow users to update their information, download registration tables and change their financial institution type. The upgrade also includes an updated jurisdiction list.
The Foreign Account Tax Compliance Act Online Registration System is a secure, web-based system that financial institutions and other entities can use to register for FATCA purposes. Launched in 2013, the system allows the IRS to identify foreign financial institutions and certain other entities with FATCA obligations. These entities generally report on foreign financial accounts held by U.S. taxpayers under the terms of FATCA or pursuant to the provisions of specific intergovernmental agreements (IGAs).
“The registration system is the backbone of FATCA,” said IRS Commissioner John Koskinen. “These upgrades improve the FATCA process, enabling the registration of sponsored entities and making it easier for registrants to use. Working with financial institutions and through intergovernmental agreements, our progress against undisclosed foreign accounts continues.”
More than 170,000 financial institutions worldwide have registered with the IRS. These financial institutions are located in more than 200 jurisdictions. In most cases, those foreign financial institutions that do not comply with FATCA or participate through an IGA are subject to 30 percent withholding on certain U.S. source payments.
Stay informed on important I.R.S. international news !!!