IRS

The IRS has announced the postponement of certain tax-related deadlines for victims of severe winter storms, flooding, and mudslides in California. The tax relief postpones various tax filing deadlines that began on January 8, 2023. Affected individuals and households who reside or have a business in Colusa, El Dorado, Glenn, Humboldt, Los Angeles, Marin, Mariposa, Mendocino, Merced, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Bernardino, San Diego, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Ventura, Yolo, and Yuba counties, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

In addition to extending certain tax filing and tax payment deadlines, the relief includes completion of many time-sensitive, tax-related acts described in IRS Revenue Procedure 2018-58 and Treasury Regulation 301.7508A-1(c)(1). Affected taxpayers with a covered deadline on or after January 8, 2023, and before May 15, 2023, will have until May 15, 2023, to complete the acts. This includes filing Form 5500 series returns that are required to be filed on or after January 8, 2023, and before May 15, 2023.

"Affected taxpayer" automatically includes any individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Those who reside or have a business located outside the covered disaster area, but have been affected by the disaster, may contact the IRS to request relief.

The IRS has released a proposed rule titled Use of an Electronic Medium to Make Participant Elections and Spousal Consents. The proposed regulation provides an alternative to in-person witnessing of spousal consents required to be witnessed by a notary public or a plan representative and clarifies that certain special rules for the use of an electronic medium for participant elections also apply to spousal consents.

The regulation is proposed to apply beginning on the date that is six months after publication of the Treasury decision adopting these rules as a final regulation in the Federal Register. However, taxpayers may immediately rely on the proposed rule. This guidance comes as previous temporary relief from the physical presence requirements expires at the end of the year.

Under the proposal, a plan may accept a spousal consent witnessed remotely by a notary public provided that

• The signature of the person signing the spousal consent is witnessed by the notary public using live audio-video technology,
• Requirements related to access, authentication, review and confirmation are met,
• The remote witnessing is consistent with state law requirements that apply to the notary public

The proposed rule also sets forth remote witnessing rules for spousal consents witnessed by a plan representative. A plan may accept spousal consent witnessed remotely by a plan representative, provided that

• The signature of the person signing is witnessed using live audio-video technology
• Requirements related to access, authentication, review and confirmation are met, and
• The remote witnessing satisfies the following five requirements
  • The person signing the spousal consent must present a valid photo ID
  • The live audio-video conference must allow for direct interaction between the person signing and the plan representative
  • The person signing must transmit by electronic means a legible copy of the signed document directly to the plan representative on the same date that the spousal consent is signed
  • The plan representative must acknowledge that the signature has been witnessed and transmit the consent and acknowledgement back to the person signing the consent
  • A recording of the audio-video conference during which the spousal consent was signed remotely must be made and retained by the plan representative

The rule makes several other clarifications — including defining spousal consent and specifying that rules regarding use of an electronic medium for participant elections also applies to spousal consents — and modifies Example 3 in the regulation to demonstrate applicability of requirements with respect to spousal consent.

The proposal is set to be published on December 30, 2022. Comments must be made within 90 days of publication in the Federal Register.

The IRS has announced the postponement of certain tax-related deadlines for victims of severe winter storm in New York. The tax relief postpones various tax filing deadlines that began on December 23, 2022. Affected individuals and households who reside or have a business in Erie and Genessee counties, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

In addition to extending certain tax filing and tax payment deadlines, the relief includes completion of many time-sensitive, tax-related acts described in IRS Revenue Procedure 2018-58 and Treasury Regulation 301.7508A-1(c)(1). Affected taxpayers with a covered deadline on or after December 23, 2022, and before April 18, 2023, will have until April 18, 2023, to complete the acts. This includes filing Form 5500 series returns that are required to be filed on or after December 23, 2022, and before April 18, 2023.

"Affected taxpayer” automatically includes any individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Those who reside or have a business located outside the covered disaster area, but have been affected by the disaster, may contact the IRS to request relief.

A final rule from the IRS titled “Electronically Filed Returns” has left The Office of Management and Budget.

The IRS released a proposed rule in July 2021 regarding electronic filing requirements for certain information returns, pursuant to the Taxpayer First Act of 2019. The proposed regulations reduce the threshold above which filers must electronically file from 250 to 100 returns for the 2022 calendar year. For filings required after calendar year 2022, the threshold would be further reduced to 10 returns.

A February 2022 publication of the 2022 tax year General Instructions for Certain Information Returns (Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, and W-2G) released by the IRS indicates its intent to issue regulations that reduce the 250-return requirement for 2022 tax returns, and that if final regulations are issued and effective for 2022 tax returns required to be filed in 2023, IRS will provide further communication regarding the change. Until final regulations are issued, however, the number remains at 250, as reflected in these instructions.

The IRS has announced the postponement of certain tax-related deadlines for victims of Hurricane Nicole in Florida. The tax relief postpones various tax filing deadlines that began on November 7, 2022. Affected individuals and households who reside or have a business in Brevard, Duval, Flagler, Indian River, Lake, Martin, Nassau, Palm Beach, Putnam, St. Johns, St. Lucie, and Volusia counties, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.
 
In addition to extending certain tax filing and tax payment deadlines, the relief includes completion of many time-sensitive, tax-related acts described in IRS Revenue Procedure 2018-58 and Treasury Regulation 301.7508A-1(c)(1). Affected taxpayers with a covered deadline on or after November 7, 2022, and before March 15, 2023, will have until March 15, 2023, to complete the acts. This includes filing Form 5500 series returns that are required to be filed on or after November 7, 2022, and before March 15, 2023.
 
“Affected taxpayer” automatically includes any individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Those who reside or have a business located outside the covered disaster area, but have been affected by the disaster, may contact the IRS to request relief.

The IRS has issued Notice 2023-5, which contains updated guidance on factors used in certain defined benefit (DB) pension plan minimum funding and present value calculations. Updates include the corporate bond monthly yield curve, the corresponding spot segment rates for December used under Internal Revenue Code Section (IRC Sec.) 417(e)(3), and the 24-month average segment rates under IRC Sec. 430(h)(2). IRC Sec. 417 contains definitions and special rules for minimum survivor annuity requirements in DB plans. IRC Sec. 430 addresses minimum funding standards for single-employer DB plans.

The IRS has issued Revenue Ruling 2023-1, which contains the applicable federal rates (AFR) for January 2023. These rates are used for such purposes as calculating distributions from retirement savings arrangements that meet the requirements for substantially equal periodic payments (a 10 percent early distribution penalty tax exception), also referred to as "72(t) payments."

The IRS has issued final regulations granting a permanent, automatic extension of time to comply with the Affordable Care Act (ACA) reporting requirements. Employers, health insurance issuers, and governmental plans have additional time—not to exceed 30 days after January 31— in which to provide Forms 1095-B or 1095-C to individuals. If the extended due date falls on a weekend or legal holiday, statements are due on the next business day. The extended deadline is effective for calendar years beginning after December 31, 2021. 

In addition, the regulations provide guidance on the following.

Medicaid Coverage Limited to COVID Services.  Medicaid coverage that is limited to COVID testing and diagnostic services is not minimum essential coverage under a government-sponsored program. Individuals covered under this type of plan may still qualify for premium tax credits. This provision is effective September 28, 2020.

Additional Extensions Not Available. Reporting entities are not permitted to request an additional extension to provide Forms 1095-B or 1095-C beyond the automatic 30-day extension. A reporting entity may seek to qualify for penalty relief by showing a failure to file was due to reasonable cause and not willful neglect.

Elimination of Transitional Good Faith Relief. For calendar years 2015 through 2020, the IRS did not impose penalties on reporting entities if they could show that they made good faith efforts to comply with the ACA reporting requirements. The final regulations reiterate that transitional good faith relief is not applicable to the 2021 calendar year and will not be available in the future. 

Filings Submitted to the IRS.  Reporting entities are also required to submit an information return and transmittal form to the IRS on or before February 28 for paper submissions (March 31 if filed electronically) of the year following the calendar year. This deadline has not been extended.

These final regulations provide welcome news to reporting entities who are in the beginning stages of preparing to comply with the 2022 reporting requirements.

Click here to download the PDF.

The Department of Labor’s Employee Benefits Security Administration (EBSA), the IRS, and the Pension Benefit Guaranty Corporation (PBGC) jointly released the 2022 Form 5500, Annual Return/Report of Employee Benefit Plan, and the 2022 Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan, and their respective instructions and schedules.

In an accompanying news release, EBSA reminds filers that these are informational copies of the Form 5500 series and cannot be used for filing. The news release and accompanying instructions highlight the following changes for 2022:

• For multiple-employer plans, new plan characteristic codes have been added to identify pooled employer plans, association retirement plans, PEO multiple-employer plans, and other multiple-employer plans.
• Updated instructions to reflect the cost-of-living adjustment increase of the civil filing penalty from $2,259 to $2,400.
• Revised the instructions for Schedule MB relating to multiemployer defined benefit plans and certain money purchase plan actuarial information.
• Revised Schedule R to require plans to report identifying information about any participating employer who either contributed more than five percent of the plan’s total contributions or was one of the top-ten highest contributors.
• Revised Schedule SB for single employer defined benefit plan actuarial information to require an attachment of a projection of expected benefit payments and require filers to indicate the first plan year that the extended amortization rule was applied under the American Rescue Plan Act of 2021.

The news release further explains EBSA is “modernizing” the EFAST2 website and that the existing EFAST2 user ID and password log-in process is being phased out. Beginning January 1, 2023, EFAST2 will begin using the unified Login.gov single sign-on process for U.S. government websites. Existing EFAST2 users will have until September 1, 2023, to transition their log-in.