In response to concerns surrounding improper employee retention credit (ERC) claims, the IRS has introduced a second voluntary compliance settlement program. This initiative, running through Nov. 22, 2024, is designed to help businesses rectify any mistakes made in 2021 by allowing them to return 85% of the ERC funds they received. However, this program is not available to everyone. Taxpayers currently under criminal investigation, those who have already amended their returns, or those who participated in the first settlement program are ineligible.

For tax preparers, this development underscores the importance of thoroughly reviewing past ERC claims with clients, particularly those who may have second thoughts about the validity of their claims. Encouraging clients to take advantage of this program could be crucial in avoiding future legal repercussions, especially given the IRS’s heightened scrutiny and rejection of an additional 30,000 claims.

Participating in the voluntary compliance program involves submitting Form 15434, which serves as the application for the ERC voluntary disclosure program. Once approved, taxpayers can repay 85% of the funds through the Electronic Federal Tax Payment System (EFTPS) or enter into an installment agreement if they lack the necessary funds.

The IRS’s increased focus on improper ERC claims is part of a broader effort to maintain the integrity of the tax system. This includes a significant push to identify and prosecute fraudulent claims, making it essential for tax professionals to stay informed and vigilant in advising their clients.

Additionally, for those whose claims are rejected in the upcoming wave of IRS reviews, an appeals process is available. It’s vital for tax professionals to guide their clients through these options, ensuring they make informed decisions based on the latest IRS guidelines.

For more detailed information, the IRS press release provides further insights into the specifics of the program. Staying updated on these developments is key to ensuring compliance and avoiding potential issues for both tax professionals and their clients. Here’s more from NATP’s director of Tax Content and Government Relations, Tom O’Saben.

Many small business owners opt to organize as limited liability companies (LLCs) to avoid personal liability for business debts and legal obligations. While LLCs offer some legal protections, they are not recognized by the IRS, potentially leaving owners responsible for the business’s tax obligations.

Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.   

Q: What form does a partnership file?

A: Partnerships file Form 1065, U.S. Return of Partnership Income.

Q: Do all LLCs have to pay an annual fee, or are there exceptions?

A: It depends on the state in which the LLC was formed and possibly where they operate, if different.

Q: Do SMLLCs need to file a BOI report?

A: Yes, LLCs are subject to the BOI ownership reporting requirements.

Q: Does LLC liability protection vary from state to state?

A: Yes, LLC liability protection varies from state to state.

To learn more about selecting the right entity classification for an LLC, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial at natptax.com/explore. 

With the continued spread of sports betting and online gambling across the United States, an increasing number of tax pros are working with clients who have winnings and losses.

Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.   

Q: If a taxpayer stays at a resort for three days, can that be considered one session, or is it broken up into days?

A: Under Notice 2015-21, it cannot be treated as one session because a session must end each day at 11:59 p.m.

Q: Should a professional gambler use Schedule C to file their taxes? Are they subject to self-employment (SE) tax?

A: Yes, they should report their gambling income and losses on Schedule C (Form 1040), Profit or Loss From Business. They are subject to SE tax.

Q: Under the sessions method, can taxpayers mix gambling activities (e.g., poker, slots, and craps) in one session?

A: No. Taxpayers can only use the sessions method for electronically tracked slot machine play.

Q: Can professional gamblers take gambling losses in excess of winnings?

A: No. Gambling losses are limited to gambling winnings under §165(d), even if the taxpayer is a professional gambler.

To learn more about the tax consequences of gambling you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial at natptax.com/explore.