IRS Collection Notices Resumed
The IRS has resumed issuing collection notices. Taxpayers are strongly encouraged to respond promptly to initial notices to avoid escalations, including liens and levies. Failure to address these notices can lead to more severe collection actions.
The IRS is committed to making these notices clearer and easier to understand. Taxpayers can explore options such as short- or long-term payment plans through the IRS's self-service tools. These online tools allow taxpayers to make payments, revise existing plans, and monitor account details.
Tax professionals should advise clients to take immediate action upon receiving any IRS collection notice to prevent further complications.
Employee Retention Credit (ERC) Updates
The IRS is actively working on a dedicated landing page on IRS.gov for all information related to the ERC. This page will guide taxpayers on how to respond to ERC disallowances and other related issues.
If a taxpayer's ERC claim is disallowed, they will receive a 105C letter. Taxpayers can submit supporting documents through either the mail or the IRS Document Upload Tool, which offers a quicker and more secure method of providing documentation. The Office of Chief Counsel continues to review issues concerning ERC-related tax returns and amendments.
Case Resolution Tools and Enhancements
To improve taxpayer experience, the IRS has introduced several online tools and functionalities. New features in taxpayer online accounts now allow users to:
- View balances, payments, and payment plans
- Access IRS records and notices
- View and approve Powers of Attorney (POA)
Similar features are being rolled out for business tax accounts. Additionally, the IRS has expanded its Document Upload Tool to allow for the secure submission of more document types, reducing reliance on mail or fax.
Centralized Partnership Audit Regime and Compliance Campaigns
The IRS continues to focus on large partnerships and high-income individuals as part of its enforcement efforts. Partnerships are subject to the Bipartisan Budget Act (BBA), which created the Centralized Partnership Audit Regime. This regime centralizes the process for auditing partnerships and adjusting tax liabilities.
The IRS is actively sending soft letters to partnerships to ensure compliance, particularly regarding basis shifting transactions and related-party interest allocations. These compliance initiatives are part of an ongoing effort to address potential tax avoidance strategies and ensure partnerships are accurately reporting income and distributions.
The BBA regime applies primarily to Chapter 1 taxes, excluding Social Security taxes. Partnerships with fewer than 100 eligible partners may opt out of this regime through an annual election, though most remain within its scope. Tax professionals should familiarize themselves with the updated terms related to BBA audits, including reviewed year, adjustment year and reporting year.
Additional IRS and Stakeholder Updates
Cybersecurity Concerns: With over 25 data breaches reported in the last month, the IRS is emphasizing the need for heightened vigilance in protecting taxpayer data.
Stakeholder Liaison Update: The IMRS (Issue Management Resolution System) continues to play a pivotal role in enhancing tax compliance and improving processes.
The recent IRS updates reinforce the importance of prompt action and utilizing available tools to manage tax obligations. As the IRS rolls out additional functionalities and enforcement campaigns, tax professionals and taxpayers alike must stay informed to ensure compliance and avoid unnecessary penalties.