News for Federal, State, and Local Governments

The Federal, State and Local Governments News is a periodic newsletter with information for federal tax matters for all types of government entities.

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2019

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Cost-of-Living Adjustments

The IRS released the 2020 COLA limits for retirement plans and IRAs. See which contribution, deferral and compensation limits have increased for 2020. You may also want to review the tax year 2020 annual inflation adjustments for more than 60 tax provisions, including the tax rate schedules and other tax changes.

CP 2100 Notices

The IRS will issue a CP2100 or CP2100A Notice if the payee’s name and Taxpayer Identification Number (TIN) on the information return filed does not match IRS records. This notice informs payers they may be responsible for beginning backup withholding, if they haven’t already done so. Publication 1281, Backup Withholding on Missing and Incorrect Name/TIN(s) (PDF), contains all the information payers need to comply with backup withholding requirements.

These resources will help you avoid receiving a CP2100:

Do you hire election workers?

Each election year, thousands of state and local government entities hire workers to conduct primary and general elections. Compensation paid to election workers is income and may be subject to income tax and FICA taxes as well as reporting requirements.

Election Workers: Reporting and Withholding will help you understand their unique reporting and withholding requirements and which election workers may be covered by a Section 218 Agreement.

TIN Matching Program Video

Learn how to: Decrease the number of notices you receive from the IRS. Help perfect W-9 data before filing Forms 1099-MISC. Reduce Backup Withholding problems. And more...

What You Need to Know About Backup Withholding

Learn: What is backup withholding? Who is responsible for backup withholding and how do you report it? Where can you get help?

Taxpayer Identification Matching (TIN) Tools

Learn about: The online TIN Matching Program and the Social Security Number Verification Service

Have questions on whether government entities need a tax-exempt number or a determination letter?

Our Government Information Letter webpage and video can answer:

  • How can you prove your “tax-exempt” status as a government entity?
  • Why don’t government entities require a determination letter from the IRS to secure tax-exempt status?
  • What does it mean to be a dual-status entity?  

How do I know if someone I hire is an employee or an independent contractor?

Government employers have unique employment tax classification issues. Worker classification can be difficult but our Employer and Pay Related Issues webpages and TE/GE Worker Classification: Employee or Independent Contractor? video will help you by answering common questions. You can also find links to IRS payroll forms and publications that include information specific to government entities in the Public Employer's Toolkit.

IRS Nationwide Tax Forums Offer More than Continuing Education

Educational seminars are just one benefit you get when you attend the 2019 IRS Nationwide Tax Forums. Others include the Case Resolution Program, opportunities to talk with IRS subject matter experts, workshops, and networking opportunities with your colleagues. Register now at www.irstaxforum.com.

Paycheck Checkup

Please help IRS spread the word that following major tax law changes, workers should review their withholding to make sure they have the right amount of tax taken out of their paychecks.

Tax Information for Federal, State and Local Governments

On IRS.gov/fslg, you’ll find information for government employers on getting started, information returns, the filing process, employment tax due dates and information return penalties.

Watch the videos on the IRS Video Portal for more information on how federal, state and local government employers can meet their tax compliance requirements.

Taxpayer Identification Number (TIN) Matching Tools

Read about the TIN Matching tools you can use to check the TIN furnished by the payee against the name/TIN combination in the IRS database before filing Forms 1099 and W-2. See Publication 2108-A, On-Line Taxpayer Identification Number (TIN) Matching Program (PDF).

Tax Cuts and Jobs Act

Learn more about the provisions of the Tax Cuts and Jobs Act that affect federal, state and local government employers at IRS.gov/taxreform.

TE/GE Fiscal Year 2019 Program Letter

The 2019 Program Letter (PDF) shares where we are heading in the new fiscal year, including executing compliance strategies, building better processes, and providing useful information and guidance on the Tax Cuts and Jobs Act.

TE/GE Fiscal Year 2018 Accomplishments Letter

The Accomplishments Letter (PDF) lists each TE/GE functions’ accomplishments under our compliance program.

Be prepared to validate your identity if contacting the IRS

Taxpayers and tax professionals will be asked to verify their identities if they call the IRS; having the right information can save you time.

The Dirty Dozen represents the worst of the worst tax scams

Compiled annually, the “Dirty Dozen" lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes.

TE/GE job announcements

The IRS/Department of Treasury has announced revenue agent (GS 05-11) openings in multiple locations for both Exempt Organizations and Employee Plans. These announcements are open on USAJOBS until January 29, 2020. Apply today to become part of our team.

2018

Election Workers: Reporting and Withholding

Each election year, state and local government entities hire temporary workers to conduct primary and general elections. Election workers are subject to unique reporting and withholding requirements and may be covered by a Section 218 Agreement.

IRS Videos

Watch the latest presentations made for federal, state and local governments.

  • Payroll Reporting for Election Workers – Learn about reporting and withholding requirements that apply to paid election workers.
  • Why File Form 1099-MISC – Learn about the basic filing requirements for reporting payments on Form 1099-MISC.
  • Taxpayer Identification Number (TIN) Matching Program (obsolete) – Use TIN Matching to validate whether the TIN and name combinations provided on Forms W-9 match IRS tax filing records prior to submitting related information returns.
  • 10 Minutes on Reconciling Forms 941/W-3/W-2 to Gross Payroll – Employers who reconcile payroll can avoid discrepancies by ensuring that employees’ wages and taxes reported to the IRS and the Social Security Administration match.

Find these presentations and more on the IRS Video Portal.

Issue Snapshots

Issue Snapshots are IRS employee job aids that provide analysis and resources along with audit tips or issue indicators for technical tax issues. The most recent Issue Snapshots for federal, state and local government employers are:

IRS Videos

Watch the latest recorded webinars for federal, state, and local governments. Find these presentations and more on the IRS Video Portal.

  • Correcting Employment Taxes Using Form 941-X – Learn how to use Form 941-X to correct errors on employee wages; income tax withheld from wages; taxable Social Security wages and tips; taxable Medicare wages and tips subject to Additional Medicare Tax withholding. 
  • IRS “B” Notices and Backup Withholding (obsolete) – Learn about backup withholding, who is responsible and how it’s reported, plus what to do with a B-Notice.

2017

Early Due Dates for W-2, W-3 and Form 1099-MISC

Employers face a January 31, 2018, due date for filing 2017 Forms W-2 and W-3 with the Social Security Administration. This date applies to both electronic and paper filers.

Form 1099-MISC is due to the IRS and individuals by January 31 when reporting non-employee compensation payments in box 7.

Penalties for failure to file correct information returns or furnish correct payee statements have increased and are now subject to inflationary adjustments. These increased penalties are effective for information returns required to be filed after December 31, 2015.

Form 1098-T Reporting Changes and Limited Penalty Relief for 2017 Returns

Eligible educational institutions are required to report the total amount of payments received for qualified tuition and related expenses from all sources during the calendar year on Form 1098-T, Tuition Statement.

Announcement 2016-42 (PDF) provides relief from penalties under Section 6721 and 6722 to 2017 Forms 1098-T. The IRS will not impose penalties on eligible education institutions that report the aggregate amount billed (instead of amount received) for qualified tuition and related expenses on 2017 Form 1098-T. 

Issue Snapshots

Issue Snapshots are employee job aids that provide analysis and resources along with audit tips or issue indicators for a given technical tax issue. The most recent Issue Snapshots for federal, state, and local governments are:

Taxpayer Identification Matching Tools

Learn how to perfect your payee data before filing Forms 1099 and W-2 using the IRS Taxpayer Identification Number (TIN) Matching Program and the Social Security Number Verification Service offered by the Social Security Administration.

Third Party Payer Arrangements

Many employers use a third party to perform acts such as withholding, reporting and paying federal employment taxes on wages paid for the employer. Learn about some of the issue indicators and audit tips used on audits of these employers.

Student FICA Exception

FICA tax generally applies to wages paid to an employee on account of employment. Learn when the FICA exception applies to an employee who has the status of a student.

IRS Videos

Watch the latest videos made for federal, state, and local governments. Find these presentations and more on the IRS Video Portal.

10 Minutes on Reconciling Forms 941/W-3/W-2 to Gross Payroll

Employers who reconcile payroll can avoid discrepancies by ensuring that employees’ wages and taxes reported to the IRS and Social Security Administration match.

Payroll Reporting for Election Workers

Learn about the special rules for taxing, withholding, and reporting pay for election workers.

Backup Withholding: When and Why

Learn when you need to backup withhold, how to report and pay backup withholding to the IRS, how to furnish that information to the payee, and what happens if you don’t backup or withhold when it’s required.

The IRS is providing several types of tax relief for those affected by hurricanes hitting Texas, Florida, Georgia, Puerto Rico and the U.S. Virgin Islands. We’re monitoring the situation closely to resolve potential tax related issues as they’re identified.

IRS Gives Tax Relief to Victims of Hurricane Harvey; Parts of Texas Now Eligible

Hurricane Harvey victims in parts of Texas have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments. This relief also applies to Form 5500 series returns of eligible taxpayers.

IRS Gives Tax Relief to Victims of Hurricane Irma; Additional Relief Planned

Hurricane Irma victims have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments. This relief also applies to Form 5500 series returns of eligible taxpayers.

Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Harvey

The IRS relaxed procedural and administrative rules for retirement plan loans and hardship distributions to certain participants in 401(k), 403(b) and 457(b) plans. Retirement plans can provide this relief for participants who are victims of Hurricane Harvey or for certain family members who lived or worked inside the disaster area.

Like Harvey, Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Irma

The IRS announced that 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Irma and members of their families.

Beware of Fake Charity Scams Relating to Hurricanes Harvey and Irma

Fake charity scams proliferate after disasters like Hurricane Harvey and Hurricane Irma. We encourage you to seek out recognized charitable groups for your donations.