IRS Guidance

The IRS has issued a news release announcing the postponement of certain tax-related deadlines for victims of Hurricane Ida in New York. The tax relief postpones various tax filing deadlines that began September 1, 2021. Affected individuals and households who reside or have a business in Bronx, Kings, New York, Queens, Richmond, and Westchester counties, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines qualify for relief. The IRS has indicated similar guidance will be released for Bergen, Gloucester, Hunterdon, Middlesex, Passaic, and Somerset counties in New Jersey. This relief will be automatically granted to taxpayers in Ida-affected locations in other parts of these states subsequently designated by the Federal Emergency Management Agency (FEMA).

The IRS has released Revenue Procedure 2021-37, providing procedures for the issuance of opinion letters and the timing requirements of remedial amendment periods for Cycle 2 approvals of 403(b) plans. The guidance aligns the 403(b) pre-approval process with the 401(a) process in several ways.

The IRS has issued news releases IR-2021-175 and LA-2021-04 announcing the postponement of certain tax-related deadlines for Hurricane Ida victims in Louisiana. The tax relief postpones various tax filing deadlines that began August 26, 2021. Affected individuals and households who reside or have a business anywhere in the state of Louisiana, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines qualify for relief. This relief will be automatically granted to taxpayers in Ida-impacted locations in neighboring states designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance.

The IRS has issued a news release announcing the postponement of certain tax-related deadlines for California wildfire victims. The tax relief postpones various tax filing and payment deadlines that began on July 14, 2021. Affected individuals and households that reside or have a business in Lassen, Nevada, Placer, and Plumas counties, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines qualify for relief.

The IRS has issued a news release announcing the postponement of certain tax-related deadlines for Tennessee victims of severe storms and flooding. The tax relief postpones various tax filing and payment deadlines that began on August 21, 2021. Affected individuals and households that reside or have a business in Dickson, Hickman, Houston, and Humphreys counties, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines qualify for relief.

The IRS has released Revenue Procedure (Rev. Proc.) 2021-30, which contains significant updates to the Employee Plans Compliance Resolution System (EPCRS). Employers use EPCRS to correct certain retirement plan qualification failures so that they can continue to maintain a tax-favored retirement plan. EPCRS consists of the Self-Correction Program (SCP), the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program (Audit CAP). Rev. Proc. 2021-30 supersedes the previous EPCRS guidance (in Rev. Proc. 2019-19) and affects each of these three programs.

The IRS stated in its August 6, 2021 edition of the Employee Plans newsletter that employers that adopt retirement plans during the 2021 tax year, but before their 2020 tax filing deadline (including extensions) and elect to treat the plan as effective as of the last day of the 2020 tax year, as permitted by the SECURE Act, are not required to file a Form 5500 series for the 2020 tax year.

The average number of natural disasters continues to rise. As a result, Congress and the IRS have tried to keep pace by providing relief for those affected by major disasters and emergencies. In December 2019, the Taxpayer Certainty and Disaster Tax Relief Act of 2019 amended Internal Revenue Code (IRC) Sec. 7508A by requiring a new mandatory 60-day postponement period for certain tax-related acts following a federally declared disaster. To help clarify the new rule, the IRS issued final regulations in June 2021. The regulations 1) explain how the new mandatory 60-day postponement period is determined, and 2) clarify how the term “federally declared disaster” is defined under IRC Sec.165.

The IRS has issued Notice 2021-48, providing guidance about changes to the funding rules for single-employer defined benefit pension plans that were made by the American Rescue Plan Act of 2021 (ARPA). ARPA included provisions that addressed amortization relief by allowing existing shortfall amortization bases to be reduced to zero and extending funding shortfall installments for new shortfall bases to 15 years. In addition, ARPA amended segment rate minimum and maximum percentages and created an interest rate “floor” of five percent in a period of lower interest rates. These provisions are to be applied to all plans with plan years beginning in 2022 and, by election, may be adopted sooner.

The IRS has released a pre-publication version of proposed regulations amending rules intended to increase the filing of electronic returns in accordance with the Taxpayer First Act of 2019. Additionally, the IRS has withdrawn previously proposed regulations regarding electronic filing that were published on May 31, 2018.