This month, the IRS has announced new initiatives to ensure large corporations pay the taxes they owe and do not erroneously claim tax breaks that were repealed in 2017, $51 million in funding to TCE and VITA applications to provide free tax counseling for the elderly, deadline extensions for those impacted by California storms and conflict in Israel, clean vehicle transfer credit guidelines, and a warning and red flags to look out for on charitable art donation schemes.
New Initiatives to Ensure Large Corporations Pay Taxes Owed
On October 20th, 2023, the IRs announced that it has new initiatives to pursue “high-income, high wealth individuals who do not pay overdue tax bills and complex partnerships.” The goal of this program is to crack down on abuse of tax breaks repealed in 2017 (provisions that offered a deduction for goods produced in the United States). This was a result of over $6 billion in refunds that were claimed across hundreds of filings after the tax break was repealed, including those who filed for the tax break for the first time. It also prioritizes high income and high wealth cases ($1 million in income and up and/or $250,000 in tax debt), particularly circumstances in which they have not paid their tax burden or have not filed at all. The IRS reports that dozens of IRS officers collected $38 million from just 175 earners. In September, 1,600 cases were also contacted, and the IRS has already collected $122 million from that.
Tax Counseling for the Elderly
On October 16th, 2023, the IRS announced that the IRS awarded $51 million to 45 TCE and 300 VITA applications. TCE, Tax Counseling for the Elderly, connects with communities to provide information, resources, and equitable assistance to ensure TCE programs can offer free tax counseling and return preparation (on the federal level) to individuals 60 years and older. The program was developed in 1978, and includes partnerships with community partners, non-profits, community centers, large employers, and faith-based organizations.
Deadline Extensions for California Storm Victims and Those Impacted by Terrorist Attacks in Israel.
The IRS has announced extensions for individuals and businesses impacted by recent storms in California and attacks in Israel who may not be able to meet their filing and payment obligations due to these major events.
California Storm
California storm victims now have until November 16, 2023 to file and pay (postponed from October 16th)
Click Here to View Qualification Details
Conflict in Israel
Those impacted by attacks in Israel now have until October 7th, 2024 (postponed from October 7th, 2023)
Click Here to View Qualification Details
Guidance and FAQs for Transfer of Clean Vehicle Credits are Updated
On October 6th, 2023, the IRS issued revenue procedure 2023-33, proposed regulations, and FAQs for transferring clean vehicle credits placed in service after December 31, 2023.
Beginning in January 1, 2024, taxpayers will be able to transfer the previously owned and new clean vehicle credits to eligible entities in some cases.
FAQs were also revised, including:
- Topic A: Eligibility Rules for the New Clean Vehicle Credit: Updated Questions 1, 2, 4 and 7; added Question 12
- Topic B: Income and Price Limitations for the New Clean Vehicle Credit: Updated Questions 1, 3, 7, 8, 9, 10, and11
- Topic C: When the New Requirements Apply to the New Clean Vehicle Credit: Updated Question 2
- Topic D: Eligibility Rules for the Previously Owned Clean Vehicles Credit: Updated Questions 1, 2, 3, 7, 9; added Questions 11, 12
- Topic E: Income and Price Limitations for Previously Owned Clean Vehicles: Updated Question 2
- Topic F: Claiming the Previously Owned Clean Vehicles Credit: Updated Questions 2, 3
- Topic G: Qualified Commercial Clean Vehicles Credit: Updated Question 4
- Topic H: Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit: Added Questions 1 through 21
- Topic I: Registering a Dealer/Seller for Seller Reporting and Clean Vehicle Tax Credit Transfers: Added Questions 1 through 17
- Topic J: Seller Report Information
Red Flags: Improper Art Donation Deduction Promotions
On October 5, 2023, the IRS warned taxpayers about an exaggerated art donation deduction scheme, typically targeting high income filers. The issue involves promoters persuading taxpayers to purchase art, wait to donate, and then claim an erroneous deduction for having donated the art. The IRS warns to watch out for aggressive, too good to be true promotions, to make sure you are compliant, and to look out for “discounted” prices on art that includes services like storage, shipping, arranging, and appraising the art.
Some red flags:
- Multiple works from the same artist that have little-to-no market value outside of what the promoter says
- Appraisals that don’t accurately describe the art (not just visually, but the age and condition of the work, how rare it is, the artist’s importance and stature, price, quantity, etc.).
The IRS reminds you that as the taxpayer you are ultimately responsible for the accuracy of your tax return, and that charities should also be careful to not participate in these schemes. The IRS has a team of professional art appraisers who can offer assistance to taxpayers when it comes to valuing work.
