News & Updates

The Inflation Reduction Act imposed a new excise tax on stock repurchases equal to one percent of the aggregate fair market value of stock repurchased by certain corporations during the taxable year, subject to adjustments. The stock repurchase excise tax applies to repurchases after Dec. 31, 2022.

The proposed regulations would impact publicly traded domestic corporations that repurchase their stock or whose stock is acquired by certain affiliates. The regulations also would impact certain publicly traded foreign corporations that repurchase their stock or whose stock is acquired by certain affiliates.

The regulations would implement the statutory netting rule that reduces the aggregate fair market value of stock repurchased by a taxpayer during a taxable year by the aggregate fair market value of stock issued by the taxpayer during the taxable year. Additionally, the regulations would implement the statutory “de minimis” exception which provides that a taxpayer is not subject to the stock repurchase excise tax with respect to a taxable year if the aggregate fair market value of the stock repurchased by the taxpayer during the taxable year does not exceed $1,000,000.

These regulations follow Notice 2023-2, published on Jan. 17, 2023, which provided initial guidance on the application of the stock repurchase excise tax. The Notice set forth certain interim operating rules for determining the amount of stock repurchase excise tax owed.

The regulations would provide that the stock repurchase excise tax must be reported on the Form 720, Quarterly Federal Excise Tax Return, with the Form 7208 attached. The Form 7208, Excise Tax on Repurchase of Corporate StockPDF, would be used to figure the amount of stock repurchase excise tax owed. A draft version of the Form 7208 is currently accessible, and the final version of the form will be released prior to the first due date on which the stock repurchase excise tax must be reported and paid.

As anticipated in Announcement 2023-18, the proposed regulations would establish that, for taxpayers with a taxable year ending after Dec. 31, 2022, but before the publication of final regulations, any liability for the stock repurchase excise tax for the taxable year must be reported on the Form 720 that is due for the first full quarter after the date the final regulations are published, and that the deadline for payment of the tax is the same as the filing deadline.

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Since income taxes are a pay-as-you go process, the law requires individuals who do not have taxes withheld to pay taxes as income is received or earned throughout the year. Most people meet their tax obligations by having their taxes deducted from their paychecks, pension payments, Social Security benefits or certain other government payments including unemployment compensation.

Generally, taxpayers who are self-employed or in the gig economy are required to make estimated tax payments. Likewise, retirees, investors and others frequently need to make these payments because a significant portion of their income is not subject to withholding.

When estimating quarterly tax payments, taxpayers should include all forms of earned income, including part-time work, side jobs or the sale of goods or services commonly reported on Form 1099-K.

Income such as interest, dividends, capital gains, alimony and rental income is normally not subject to withholding. By making quarterly estimated tax payments, taxpayers can avoid penalties and uphold their tax responsibilities.

Certain groups of taxpayers, including farmers and fishers, recent retirees, individuals with disabilities, those receiving irregular income and victims of disasters are eligible for exceptions to penalties and special regulations.

Following recent disasters, eligible taxpayers in Tennessee, Connecticut, West Virginia, Michigan, California and Washington have an extended deadline for 2024 estimated tax payments until June 17, 2024. Similarly, eligible taxpayers in Alaska, Maine and Rhode Island have until July 15, 2024, and eligible taxpayers in Hawaii have until Aug. 7, 2024. For more information, visit Tax relief in disaster situations.

In addition, taxpayers who live or have a business in Israel, Gaza or the West Bank, and certain other taxpayers affected by the terrorist attacks in the State of Israel, have until Oct. 7, 2024, to make estimated tax payments.

Paying estimated taxes

Taxpayers can rely on Form 1040-ES, Estimated Tax for Individuals, for comprehensive instructions on computing their estimated taxes.

Opting for the IRS Online Account streamlines the payment process, allowing taxpayers to view their payment history, monitor pending payments and access pertinent tax information. Taxpayers have several options to make an estimated tax payment, including IRS Direct Pay, debit card, credit card, digital wallet or the Treasury Department's Electronic Federal Tax Payment System (EFTPS).

To pay electronically and for more information on other payment options, visit IRS.gov/payments. If paying by check, be sure to make the check payable to the "United States Treasury."

Publication 505, Tax Withholding and Estimated Tax, offers detailed information for individuals navigating dividend or capital gain income, alternative minimum tax or self-employment tax, or who have other special situations.

Tax Withholding Estimator

The IRS recommends taxpayers use the Tax Withholding Estimator tool to accurately determine the appropriate amount of tax withheld from paychecks.

Regularly monitoring withheld taxes helps mitigate the risk of underpayment, reducing the likelihood of unexpected tax bills or penalties during tax season. It also allows individuals to adjust withholding upfront, leading to larger paychecks during the year and potentially smaller refunds at tax time.

Filing Options

The IRS encourages people to file their tax returns electronically and choose direct deposit for faster refunds. Filing electronically reduces tax return errors because tax software does the calculations, flags common errors and prompts taxpayers for missing information.

The IRS offers free online and in-person tax preparation options for qualifying taxpayers through the IRS Free File program and the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs.

In addition, the Direct File pilot program, a new option that allows eligible taxpayers to file their federal tax returns online directly with the IRS for free, is currently available in 12 participating states.

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In natural disasters and other tragic events, it’s common for compassionate individuals to donate money to help the victims. Unfortunately, scammers often use fake charities as a cover to not only obtain money but also gather sensitive personal and financial information that can be exploited for tax-related identity fraud.

“We see repeated instances of scammers using major disasters as a way to prey on well-meaning taxpayers,” said IRS Commissioner Danny Werfel. “In these tragic situations, many people want to help, but con artists too frequently come in posing as charitable groups to take advantage of the situation, stealing money and personal information. People should remember it’s important to never feel pressured to give donations immediately. They should do some research and only donate to clearly established charities that help victims.”

Fake charities mark day six of the Dirty Dozen. Started in 2002, the IRS' annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes, including fake charities.

As a member of the Security Summit, the IRS has worked with state tax agencies and the nation’s tax industry for nine years to cooperatively implement a variety of internal security measures to protect taxpayers. The collaborative effort by the Summit partners also has focused on educating taxpayers about scams and fraudulent schemes throughout the year, which can lead to tax-related identity theft. Through initiatives like the Dirty Dozen and the Security Summit program, the IRS strives to protect taxpayers, businesses and the tax system from cyber criminals and deceptive activities that seek to extract information and money, including fake charities.

Real tragedies; fake charities

During times of disasters, fake charities become a concern. These deceitful organizations are created by scammers who take advantage of people’s generosity. They solicit money and personal information to victimize individuals through identity theft.

When taxpayers decide to contribute funds or goods to an organization, they may qualify for a deduction on their tax return, but only if they itemize their deductions. It is important to remember that charitable donations are valid when directed toward IRS-recognized tax-exempt organizations. Individuals intending to donate can utilize the Tax-Exempt Organization Search (TEOS) tool on IRS.gov to ensure legitimacy.

Beware of scammers who might use email communications or manipulate caller IDs to deceive people into donating funds to charities. These fraudsters often target groups such as seniors and those with limited English proficiency.

Here are some helpful tips to avoid getting scammed:

• Don’t give in to pressure. Scammers often create situations to get people to make payments. Genuine charities are always grateful for donations. Donors should take their time and research before making a charitable contribution.
• Exercise caution when making donation payments. Avoid any charity that requests gift card numbers or wire transfers. It’s better to pay by credit card or check after ensuring the charity’s authenticity.
• Verify the legitimacy of the charity. Scammers often use similar-sounding names for charities to confuse people. Before donating, potential donors need to ask the fundraiser for the charity's name, website and mailing address so they can independently verify its authenticity. Use the special IRS TEOS tool to verify if an organization is a legitimate tax-exempt charity.
• Avoid sharing too much information. Scammers are always on the lookout for both money and personal data. Never disclose Social Security numbers, credit card numbers or personal identification numbers. Only provide bank or credit card details after confirming the charity's legitimacy.

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With taxpayers continuing to be bombarded by email and text scams, the IRS and the Security Summit partners warned individuals and businesses to remain vigilant against these attacks. Fraudsters and identity thieves attempt to trick the recipient into clicking a suspicious link, filling out personal and financial information or downloading a malware file onto their computer.

"Scammers are relentless in their attempts to obtain sensitive financial and personal information, and impersonating the IRS remains a favorite tactic,” said IRS Commissioner Danny Werfel. “People can be anxious to get the latest information about their refund or other tax issues, so scammers frequently try using the IRS as a way to trick people. The IRS urges people to be extra cautious about unsolicited messages and avoid clicking any links in an unsolicited email or text if they are uncertain.”

Started in 2002, the IRS' annual Dirty Dozen campaign lists 12 scams and schemes that put taxpayers, businesses and the tax professional community at risk of losing money, personal information, data and more. While the Dirty Dozen is not a legal document or a formal listing of agency enforcement priorities, the education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes.

As a member of the Security Summit, the IRS has worked with state tax agencies and the nation’s tax industry for nine years to cooperatively implement a variety of internal security measures to protect taxpayers. The collaborative effort by the Summit partners also has focused on educating taxpayers about scams and fraudulent schemes throughout the year, which can lead to tax-related identity theft. Through initiatives like the Dirty Dozen and the Security Summit program, the IRS strives to protect taxpayers, businesses and the tax system from cyber criminals and deceptive activities that seek to extract information and money.

Phish or smish: Don’t take the bait

The IRS continues to see a barrage of email and text scams targeting taxpayers and others. These schemes frequently peak during tax season but they continue throughout the year. Taxpayers face a wide variety of these scams and schemes. And tax professionals, payroll providers and human resource departments remain favorite targets of email and text scams since they have sensitive personal and financial information. One common example remains the “new client” scam that can target tax pros and others.

That means taxpayers and tax professionals should be alert to fake communications posing as legitimate organizations in the tax and financial community, including the IRS and state tax agencies. These messages arrive in the form of unsolicited texts or emails to lure unsuspecting victims to provide valuable personal and financial information that can lead to identity theft. There are two main types:

• Phishing: An email sent by fraudsters claiming to come from the IRS. The email lures the victims into the scam with a variety of ruses such as enticing victims with a phony tax refund or threatening them with false legal or criminal charges for tax fraud.

• Smishing: A text or smartphone SMS message where scammers often use alarming language such as, "Your account has now been put on hold," or "Unusual Activity Report," with a bogus "Solutions" link to restore the recipient's account. Unexpected tax refunds are another potential lure for scam artists.

Never click on any unsolicited communication claiming to be the IRS as it may surreptitiously load malware. It may also be a way for malicious hackers to load ransomware that keeps the legitimate user from accessing their system and files.

In some cases, phishing emails may appear to come from a legitimate sender or organization that has had their email account credentials stolen. Setting up two-factor or multi-factor authentication with their email provider can reduce the risk of individuals having their email account compromised.

Posing as a trusted organization, friend or family member remains a common way to target individuals and tax preparers for various scams. Individuals should verify the identity of the sender by using another communication method, for instance, calling a number they independently know to be accurate, not the number provided in the email or text.

The IRS initiates most contacts through regular mail and will never initiate contact with taxpayers by email, text or social media regarding a bill or tax refund.

What to do

Individuals should never respond to tax-related phishing or smishing or click on the URL link. Instead, report all unsolicited email - including the full email headers - claiming to be from the IRS or an IRS-related function to phishing@irs.gov. If someone experienced any monetary losses due to an IRS-related scam incident, they should report it to the Treasury Inspector General for Tax Administration (TIGTA), the Federal Trade Commission and the Internet Crime Complaint Center (IC3).

If a taxpayer receives an email claiming to be from the IRS that contains a request for personal information, taxes associated with a large investment, inheritance or lottery.

• Don't reply.
• Don't open any attachments. They can contain malicious code that may infect the computer or mobile phone.
• Don't click on any links. If a taxpayer inadvertently clicked on links in a suspicious email or website and entered confidential information, visit the IRS’ identity protection page.
• Send the full email headers or forward the email as-is to phishing@irs.gov. Don't forward screenshots or scanned images of emails because this removes valuable information.
• Delete the original email.

If a taxpayer receives a text claiming to be from the IRS that contains a request for personal information, taxes associated with a large investment, inheritance or lottery.

• Don't reply.
• Don't open any attachments. They can contain malicious code that may infect the computer or mobile phone.
• Don't click on any links. If a taxpayer clicked on links in a suspicious SMS and entered confidential information, they should visit Identity Theft Central.
• Report the message to 7726 (SPAM).
• Include both the Caller ID and the message body in an email and send to phishing@irs.gov. Copy the Caller ID from the message by pressing and holding on the body of the text message, then select Copy, paste into the email. If the taxpayer is unable to copy the Caller ID or message body, forward a screenshot of the message.
• Delete the original text.
• For more information see the IRS video on fake IRS-related text messages.

The Report phishing and online scams page at IRS.gov provides complete details. The Federal Communications Commission's Smartphone Security Checker is a useful tool against mobile security threats.

Report fraud

As part of the Dirty Dozen awareness effort regarding tax schemes and unscrupulous tax return preparers, the IRS urges individuals to report those who promote abusive tax practices and tax preparers who intentionally file incorrect returns.

To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242 – Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed Form 14242PDF and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.

Mail:

Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, California 92677 3405
Fax: 877-477-9135

Taxpayers and tax professionals can also submit this information to the IRS Whistleblower Office, where they may be eligible for a monetary award. For details, refer to the sections on Abusive tax schemes and abusive tax return preparers.

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The Internal Revenue Service announced today tax relief for individuals and businesses in the Wrangell Cooperative Association of Alaska Tribal Nation that were affected by severe storms, landslides and mudslides that began on Nov. 20, 2023.

These taxpayers now have until July 15, 2024, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, this includes the Wrangell Cooperative Association of Alaska Tribal Nation. Individuals and households that reside or have a business in this locality qualify for tax relief.

The same relief will be available to any other Alaska localities added later to the disaster area. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred from Nov. 20, 2023, through July 15, 2024 (postponement period). As a result, affected individuals and businesses will have until July 15, 2024, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the July 15, 2024, deadline will now apply to:

• Individual income tax returns and payments normally due on April 15, 2024.
• 2023 contributions to IRAs and health savings accounts for eligible taxpayers.
• Quarterly estimated income tax payments normally due on Jan. 16, April 15 and June 17, 2024.
• Quarterly payroll and excise tax returns normally due on Jan. 31 and April 30, 2024.
• Calendar-year partnership and S corporation returns normally due on March 15, 2024.
• Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2024.
• Calendar-year tax-exempt organization returns normally due on May 15, 2024.

In addition, penalties for failing to make payroll and excise tax deposits due on or after Nov. 20, 2023, and before Dec. 5, 2023, will be abated as long as the deposits were made by Dec. 5, 2023.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Reminder about extensions

The IRS urges anyone who needs an additional tax-filing extension, beyond July 15, 2024, for their 2023 federal income tax return to request it electronically by April 15, 2024. Though a disaster-area taxpayer qualifies to request an extension between April 15 and July 15, 2024, a request filed during this period can only be submitted on paper. Whether requested electronically or on paper, the taxpayer will then have until Oct. 15, 2024, to file, though payments are still due on July 15, 2024. Visit IRS.gov/extensions for details.

Additional tax relief

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed this year), or the return for the prior year (2022). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2024. Be sure to write the FEMA declaration number – 4763-DR − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The IRS may provide additional disaster relief in the future.

The tax relief is part of a coordinated federal response to the damage caused by these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit DisasterAssistance.gov.

Reminder about tax return preparation options

• Eligible individuals or families can get free help preparing their tax return at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites. To find the closest free tax help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
• To find an AARP Tax-Aide site, use the AARP Site Locator Tool or call 888-227-7669.
• Any individual or family whose adjusted gross income (AGI) was $79,000 or less in 2023 can use IRS Free File’s Guided Tax Software at no cost. There are products in English and Spanish.

Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040 and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.

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