172 million recovered from 21,000 wealthy taxpayers who have not filed tax returns since 2017 in first six months of new initiative.

In the first six months of this initiative, nearly 21,000 of these wealthy taxpayers have filed, leading to $172 million in taxes being paid.

The IRS in the fall of 2023 launched a new initiative using Inflation Reduction Act funding to pursue high-income, high-wealth individuals who have failed to pay recognized tax debt, with dozens of senior employees assigned to these cases. This work is concentrated on taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. The IRS was previously unable to collect from these individuals due to a lack of resources. After successfully collecting $38 million from more than 175 high-income, high-wealth individuals last year, the IRS expanded this effort last fall to around 1,600 additional high-income, high-wealth individuals

The Internal Revenue Service today encouraged taxpayers to consider using the end of the summer to make tax withholding or payment updates to avoid a potential surprise next year at tax time.

While most taxpayers get a refund after filing their taxes, many also find they unexpectedly owe taxes. This can be due to a life or job change for which they did not make the necessary tax adjustment during the year.

Those who should be especially careful are:

• Gig economy workers.
• Those with a “side hustle.”
• Anyone earning income not subject to withholding.

These individuals should check the amount they pay, or the amount of tax they have withheld throughout the year, to bring the tax they pay closer to what is owed. The IRS has a special Tax Withholding Estimator that can help taxpayers align their tax withholding or tax payments with what they owe.

The IRS reminds taxpayers that tax planning done now can save time and frustration later. Here are some important things to keep in mind:

How refunds work

The federal tax system is pay-as-you-go. Taxpayers pay tax as they earn wages or receive income during the year. For many, taxes are withheld from their paycheck by their employer and then given over to the IRS on their behalf. Others, such as gig economy workers, make or should make quarterly estimated tax payments throughout the year to stay current. A refund normally results when too much is withheld or paid throughout the year.

Recent IRS statistics show that two-thirds of taxpayers received a refund so far in 2024. As of mid-May, nearly $270 billion in refunds went to taxpayers with the average refund just under $2,900.

Avoid an unexpected bill

On the other hand, many taxpayers end up with estimated tax penalties because they underpay throughout the year. The penalty amount varies but for some it can be several hundred dollars. Adjusting withholding on paychecks or the amount of estimated tax payments can help prevent penalties. This is especially important for self-employed people, including those in the gig economy, those with more than one job and those with major changes in their life, like a recent marriage or a new child.

With that in mind, the IRS encourages taxpayers to use the IRS Tax Withholding Estimator this summer to help better align their tax withholding or tax payments with what they owe.

Tax Withholding Estimator

This handy tool on IRS.gov helps people figure the amount of federal income tax they should pay during the year. All that’s needed for taxpayers to use it are paystubs for all their jobs or other income information, such as from side jobs, self-employment or investment income, and a copy of their 2023 tax year return.

People can use the Tax Withholding Estimator to:

• Estimate their federal income tax withholding.
• See how a refund, take-home pay or tax due are affected by withholding amounts.
• Choose an estimated withholding amount that works for them and their family.

If a withholding change is needed upon completion, taxpayers should adjust their withholding by submitting a new Form W-4 to their employer or pension provider. They can also adjust quarterly estimated tax payments as appropriate.

IRS also reminds people to use the Tax Withholding Estimator if there’s a major life change such as a:

• New job or other paid work.
• Major income change.
• Marriage.
• Childbirth or adoption.
• New home purchase.

While the Tax Withholding Estimator works for most taxpayers, people with more complex tax situations should instead use the instructions in Publication 505, Tax Withholding and Estimated Tax. This includes taxpayers who owe Alternative Minimum Tax or certain other taxes, and people with long-term capital gains or qualified dividends.

Additional information

• Tax Withholding Estimator FAQs
• Paycheck Checkup

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The Internal Revenue Service is continuing to expand the features within Business tax account (BTA), an online self-service tool for business taxpayers that now allows them to view and make balance-due payments.

Launched last fall, BTA is a key part of the agency’s service improvement initiative funded under the Inflation Reduction Act (IRA). When fully developed, BTA will allow many types of business taxpayers to check their tax history, make payments, view notices, authorize powers of attorney and conduct other business with the IRS.

With the latest expansion, an eligible business taxpayer can now use BTA to pay Federal Tax Deposits (FTDs) and see and make a payment on their full balance due – all in one place. The account is also now accessible in Spanish with more translations planned.

BTA is a key part of the agency’s ongoing work to transform and modernize service at the IRS by offering a seamless and convenient digital experience. It’s also an important part of a wide-ranging initiative to reduce paper-based processes that hamper the IRS and frustrate taxpayers.

Who can use BTA now?

Business taxpayers who can activate and use their IRS business tax account include:

  • A sole proprietor who has an Employer Identification Number (EIN) issued by the IRS.
  • An individual partner or individual shareholder with both:
    • A Social Security number or an individual tax ID number (ITIN).
    • A Schedule K-1 on file (for partners, from 2012-2023; for shareholders, from 2006-2023).

Currently, a limited liability company that reports business income on a Schedule C can’t access Business Tax Account. Future access will be available for these businesses, as well as other entities including tax-exempt organizations, government agencies, partnerships, C corporations and S corporations.

What can business taxpayers do now?

Within BTA, business taxpayers can now:

  • View and make a payment toward a balance due by using a bank account. This includes a payment on a return filed for the current year as well as late payments for past tax years and Federal Tax Deposits.
  • Schedule a payment for any business day for up to a year and cancel a scheduled payment.
  • View recently processed payments, including payments made through the Electronic Federal Tax Payment System (EFTPS) online, wire transfers, checks or money orders, and see if any payments were returned or refused.
  • Store multiple bank accounts in their online “wallet” to manage tax payments.
  • Request a tax compliance check.
  • View the business name and address on file.
  • Give account access to employees of the business.
  • Register for clean energy credits (if eligible).
  • View and download transcripts for various payroll, income and excise tax returns.
  • Sole proprietors can now download business entity transcripts from their BTA account. The transcript shows entity information like business name, mailing address, location address and more for the Employer Identification Number on file.
  • View and download select digital notices including:
    • CP080: Reminder – We have not received your return, credits may be on your account.
    • CP136: Annual notification of federal tax deposit (FTD) requirements (Forms: 941, 941-SS).
    • CP216F: Application for extension of time to file an employee plan return – Approved.

What new features will be added to BTA in the future?

Future capabilities made available through funding from the IRA will enable access by all business and organizational entities and help the business tax account become a robust online self-service tool.

To set up a new business tax account, or for more information visit Business tax account.

An educational assistance program is an employer’s written plan to provide employees with undergraduate or graduate-level educational assistance. These programs allow employers to pay student loan debt and other education expenses tax-free.

Eligible expenses

Educational assistance programs can help pay for:

  • Books
  • Equipment
  • Supplies
  • Tuition and other fees
  • Qualified education loans

Loan payments
These programs can be used to pay principal and interest on an employee’s qualified education loans.

The option is available only for payments made after March 27, 2020. Under current law, this option will be available until Dec. 31, 2025.

Payments made directly to the lender and those made to the employee qualify under these programs. By law, tax-free benefits under an educational assistance program are limited to $5,250 per employee per year. Normally, assistance provided above that level is taxable as wages.

For other requirements, see Publication 15-B, Employer’s Tax Guide to Fringe Benefits. Chapter 10 in Publication 970, Tax Benefits for Education, provides details on what qualifies as a student loan.


More information
Frequently asked questions about educational assistance programs

There are two education tax credits designed to help offset education costs: the American Opportunity Tax Credit and the Lifetime Learning Credit.

Eligibility requirements
For both tax credits, to be eligible:

  • The taxpayer, their spouse or their dependents must take post-high school coursework in tax year 2024.
  • The student must have a Form 1098-T, Tuition Statement, from an eligible educational institution. There are exceptions for some students.

Things taxpayers should know about the education tax credits.
The American Opportunity Tax Credit is:

  • Worth a maximum benefit of up to $2,500 per eligible student.
  • Available only for the first four years at an eligible college or vocational school.
  • For students pursuing a degree or other recognized education credential.
  • Partially refundable. People could get up to $1,000 back.

The Lifetime Learning Credit is:

  • Worth a maximum benefit of up to $2,000 per tax return, per year, no matter how many students qualify.
  • Available for all years of postsecondary education and for courses to acquire or improve job skills.
  • Available for an unlimited number of tax years.

Claiming the credits
To claim either credit, taxpayers must complete Form 8863, Education Credits, and file it with their federal tax return.

More information
Compare Education Credits
Tax Benefits for Education: Information Center

Following inaccurate tax advice from social media influencers can have bad consequences. Taxpayers can protect themselves from misinformation and scams by following the IRS verified social media accounts and e-news services.

IRS social media platforms

Visit IRS.gov to get direct links to IRS verified social media accounts. IRS has accounts on:

  • X, formerly Twitter – Information for taxpayers, businesses, tax-exempt organizations, tax professionals and job seekers. The IRS shares updates in English, Spanish, Chinese, Haitian-Creole, Korean, Russian and Vietnamese. A special IRS X handle, @IRStaxsecurityshares information to help people avoid common scams that could put their money and information at risk.
  • Facebook – Tax information for a general audience in English and Spanish.
  • Instagram − Taxpayer-friendly information on a variety of topics. 
  • YouTube − Short videos on specific tax topics for individual taxpayers, tax professionals and small businesses. The IRS also produces videos in Spanish, Chinese, Haitian-Creole, Korean, Russian, Vietnamese and American Sign Language.
  • LinkedIn – Job opportunities and key agency communications.

The IRS never contacts taxpayers on social media to ask for their personal or financial information. Taxpayers should be aware that scammers may pose as the IRS to steal a taxpayer’s identity or defraud them.

Sign up for automatic email updates

The IRS e-News subscription service sends tax information by email for many different audiences, including:

  • IRS Outreach Connection − Up-to-date materials for tax professionals and partner groups inside and outside the tax community. Subscribers can easily share the material with their clients or members through email, social media and the web.
  • IRS Tax Tips – Tips in plain language on a wide range of general interest tax topics for taxpayers.
  • IRS Newswire − News releases on tax issues from breaking news to details on legal guidance.

The Internal Revenue Service today issued Notice 2024-55, which provides guidance on exceptions to the additional tax when taking early permissible retirement plan distributions for emergency personal expenses and for victims of domestic abuse. 

This was added by the SECURE 2.0 Act of 2022, and the provisions became effective on January 1, 2024. 

Emergency personal expense distributions 

The notice provides that a taxpayer is permitted to receive a distribution from an applicable eligible retirement plan to meet unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses. The notice: 

  • defines emergency personal expense distributions, including what is an unforeseeable or immediate financial need;
  • provides that qualified defined contribution plans (including section 401(k) plans), section 403(a) annuity plans, section 403(b) plans, governmental section 457(b) plans or IRAs are eligible to permit emergency personal expense distributions;
  • describes the limitations (both dollar amount and frequency) on receiving emergency personal expense distributions; and
  • provides that individuals receiving emergency personal expense distributions are permitted to repay these distributions to certain plans. 

Distributions to victims of domestic abuse 

The notice also provides that a taxpayer is permitted to receive a distribution from an applicable eligible retirement plan if made during the one-year period beginning on the date on which the individual is a victim of domestic abuse by a spouse or domestic partner. The notice: 

  • defines domestic abuse victim distributions, including the definition of domestic abuse;
  • provides that IRAs and certain retirement plans that are not subject to the spousal consent requirements under sections 401(a)(11) and 417 are eligible to permit domestic abuse victim distributions;
  • describes the dollar limitation (indexed for inflation) on receiving domestic abuse victim distributions; and
  • provides that domestic abuse individuals are permitted to repay domestic abuse victim distributions to certain plans. 

The notice also provides guidance to applicable eligible retirement plans on the plan requirements relating to emergency personal expense distributions and domestic abuse victim distributions, including that it is optional for a plan to permit these types of distributions.    

In addition, the notice provides that the Department of the Treasury and the IRS anticipate issuing regulations on the 10% additional tax (including the exceptions to the 10% additional tax) and request comments relating to the notice. Comments are specifically requested on repayments of certain distributions permitted under section 72(t)(2). 

Taxpayers should know that these distributions are includible in gross income but are not subject to the 10% additional tax. Individuals report early distributions that are not subject to the 10% additional tax on line 2 of Form  5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts. In tax year 2021, the latest year for which the IRS has statistics, about 608,000 individuals reported that early distributions from qualified plans (including IRAs) were not subject to the 10% additional tax.

Mediation – also known as Alternative Dispute Resolution – can help taxpayers resolve tax issues early and efficiently.

The process provides taxpayers a faster, more collaborative and cost-effective approach to case resolution. The traditional appeal process is still available for taxpayers who choose it.

Mediation might be right for a taxpayer if:

• The taxpayer wants to resolve the dispute at the earliest possible stage of their audit.
• The taxpayer doesn’t have many disputed issues.
• The taxpayer gave the IRS information to support their position.
• The IRS is still considering the taxpayer’s case and issues remain unresolved.

Mediation is:

• Voluntary for both parties.
• Nonbinding, meaning each party retains 100% control over whether to settle the case. No one can force either party to do something they don’t agree to do.
• Effective when both parties have a desire to resolve the disputed issue.
• Appropriate when all issues are fully resolved except the issue for which mediation is requested.
• A chance to avoid a lengthy appeal process or costly litigation.

Mediation is not:

• Required by either party.
• A replacement for the audit or collection process.
• A process in which the parties in the dispute offer arguments directly to the mediator hoping to “win.”
• Effective if either party believes the only way the dispute will get resolved is if the other party concedes or gives up on its position.
• A time to present new information or raise new issues.
• An opportunity to try and get a more favorable outcome or delay the examination or collection process.

Mediation works best if taxpayers prepare for success. Find out what to expect from the Independent Office of Appeals.

More information
• Appeals Mediation – Alternative Dispute Resolution (ADR)
• Publication 4167, Appeals – Introduction to Alternative Dispute Resolution
• IRS Independent Office of Appeals forms Alternative Dispute Resolution Program Management Office

he IRS has several options to help businesses who have discovered they have questionable ERC claims. 

  • Claim withdrawal: Given the large number of questionable claims identified in the recent review, the IRS continues to urge ineligible businesses with unprocessed claims to consider the ERC Withdrawal Program to avoid future compliance issues. The IRS will treat the claim as though the taxpayer never filed it. No interest or penalties will apply. 
  • Amending a return: Businesses that overclaimed the ERC can amend their returns to correct the amount of their claim.

The IRS reminds businesses about these other common issues being seen. The agency has continued to issue warnings involving these seven areas:

  • Too many quarters being claimed. Some promoters have urged employers to claim the ERC for all quarters that the credit was available. Qualifying for all quarters is uncommon, and this could be a sign of an incorrect claim. Employers should carefully review their eligibility for each quarter.
  • Government orders that don’t qualify. Some promoters have told employers they can claim the ERC if any government order was in place in their area, even if their operations weren’t affected or if they chose to suspend their business operations voluntarily. This is false. To claim the ERC under government order rules: 
    • Government orders must have been in effect and the employer’s operations must have been fully or partially suspended by the government order during the period for which they’re claiming the credit.
    • The government order must be due to the COVID-19 pandemic.
    • The order must be a government order, not guidance, a recommendation or a statement. Some promoters suggest that an employer qualifies based on communications from the Occupational Safety and Health Administration (OSHA). This is generally not true. See the ERC FAQ about OSHA communications and the 2023 legal memo on OSHA communications for details and examples. The frequently asked questions about ERC – Qualifying Government Orders section of IRS.gov has helpful examples. Employers should make sure they have documentation of the government order related to COVID-19 and how and when it suspended their operations. Employers should avoid a promoter that supplies a generic narrative about a government order.  
  • Too many employees and wrong calculations. Employers should be cautious about claiming the ERC for all wages paid to every employee on their payroll. The law changed throughout 2020 and 2021. There are dollar limits and varying credit amounts, and employers need to meet certain rules for wages to be considered qualified wages, depending on the tax period. The IRS urges employers to carefully review all calculations and to avoid overclaiming the credit, which can happen if an employer erroneously uses the same credit amount across multiple tax periods for each employee. For details about credit amounts, see the Employee Retention Credit – 2020 vs 2021 Comparison Chart.  
  • Business citing supply chain issues. Qualifying for ERC based on a supply chain disruption is very uncommon. A supply chain disruption by itself doesn’t qualify an employer for ERC. An employer needs to ensure that their supplier’s government order meets the requirements. Employers should carefully review the rules on supply chain issues and examples in the 2023 legal memo on supply chain disruptions. 
  • Business claiming ERC for too much of a tax period. It’s possible, but uncommon, for an employer to qualify for ERC for the entire calendar quarter if their business operations were fully or partially suspended due to a government order during a portion of a calendar quarter. A business in this situation can claim ERC only for wages paid during the suspension period, not the whole quarter. Businesses should check their claim for overstated qualifying wages and should keep payroll records that support their claim. 
  • Business didn’t pay wages or didn’t exist during eligibility period. Employers can only claim ERC for tax periods when they paid wages to employees. Some taxpayers claimed the ERC but records available to the IRS show they didn’t have any employees. Others have claimed ERC for tax periods before they even had an employer identification number with the IRS, meaning the business didn’t exist during the eligibility period. The IRS has started disallowing these claims, and more work continues in this area as well as other aspects of ERC. 
  • Promoter says there’s nothing to lose. Businesses should be on high alert with any ERC promoter who urged them to claim ERC because they “have nothing to lose.” Businesses that incorrectly claim the ERC risk repayment requirements, penalties, interest, audit and potential expenses of hiring someone to help resolve the incorrect claim, amend previous returns or represent them in an audit.