WASHINGTON —The Internal Revenue Service today announced that 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Matthew and members of their families. This is similar to relief provided this summer to Louisiana flood victims.
Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.
Retirement plans can provide this relief to employees and certain members of their families who live or work in disaster area localities affected by Hurricane Matthew and designated for individual assistance by the Federal Emergency Management Agency (FEMA). Currently, parts of North Carolina, South Carolina, Georgia and Florida qualify for individual assistance. For a complete list of eligible counties, visit https://www.fema.gov/disasters. To qualify for this relief, hardship withdrawals must be made by March 15, 2017.
The IRS is also relaxing procedural and administrative rules that normally apply to retirement plan loans and hardship distributions. As a result, eligible retirement plan participants will be able to access their money more quickly with a minimum of red tape. In addition, the six-month ban on 401(k) and 403(b) contributions that normally affects employees who take hardship distributions will not apply.
This broad-based relief means that a retirement plan can allow a victim of Hurricane Matthew to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan. It also means that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area.
Plans will be allowed to make loans or hardship distributions before the plan is formally amended to provide for such features. In addition, the plan can ignore the reasons that normally apply to hardship distributions, thus allowing them, for example, to be used for food and shelter. If a plan requires certain documentation before a distribution is made, the plan can relax this requirement as described in the announcement.
Ordinarily, retirement plan loan proceeds are tax-free if they are repaid over a period of five years or less.  Under current law, hardship distributions are generally taxable. Also, a 10 percent early-withdrawal tax usually applies.
Further details are in Announcement 2016-39, posted today on IRS.gov. More information about other relief related to Hurricane Matthew can be found on the IRS disaster relief page.
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IRS Grants Tax Relief Extension to Drought-Stricken Farmers, Ranchers; 37 States and Puerto Rico Affected
If you are a farmer or rancher forced to sell your livestock because of the drought that affects much of the nation, special IRS tax relief may help you. The IRS has extended the time to replace livestock that their owners were forced to sell due to drought. If you’re eligible, this may help you defer tax on any gains you got from the forced sales. The relief applies to all or part of 37 states and Puerto Rico affected by the drought.
Here are several points you should know about this relief:

• Defer Tax on Drought Sales.  If the drought caused you to sell more livestock than usual, you may be able to defer tax on the extra gains from those sales.
• Replacement Period.  You generally must replace the livestock within a four-year period to postpone the tax. The IRS can extend that period if the drought continues.
• IRS Grants More Time.  The IRS has added one more year to the replacement period for eligible farmers and ranchers. The one-year extension of time generally applies to certain sales due to drought.
• Livestock Sales that Apply.  If you are eligible, your gains on sales of livestock that you held for draft, dairy or breeding purposes apply.
• Livestock Sales that Do Not Apply.  Sales of other livestock, such as those you raised for slaughter or held for sporting purposes and poultry, are not eligible.
• Areas Eligible for Relief.  The IRS relief applies to any farm in areas suffering exceptional, extreme or severe drought conditions during any weekly period between Sept. 1, 2015, and Aug. 31, 2016. The National Drought Mitigation Center has listed all or parts of 37 states and Puerto Rico that qualify for relief. Any county that borders a county on the NDMC’s list also qualifies. 
• 2012 Drought Sales. This extension immediately impacts drought sales that occurred during 2012.
• Prior Drought Sales.  However, the IRS has granted previous extensions that affect some of these localities. This means that some drought sales before 2012 are also affected. The IRS will grant additional extensions if severe drought conditions persist.

Get more on this relief in Notice 2016-60 on IRS.gov. This includes a list of states and counties where the IRS relief applies. For more on these tax rules see Publication 225, Farmer’s Tax Guide on IRS.gov.
Keep a copy of your tax return. If you filed an extension and face the Oct. 17, 2016, filing deadline, you may need your Adjusted Gross Income amount from your 2014 tax return to file. Get a transcript of your prior year’s return at www.irs.gov/transcript.

The deadline for filing individual income tax returns is October 17th.  The IRS has issued the following release:​

WASHINGTON — The Internal Revenue Service today urged taxpayers whose tax-filing extension runs out on Oct. 17 to double check their returns for often-overlooked tax benefits and then file their returns electronically using IRS e-file or the Free File system.
 
Fewer than a third of the 13 million taxpayers who requested an automatic six-month extension this year have yet to file. Although Oct. 17  is the last day for most people, some still have more time, including members of the military and others serving in combat zone localities who typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due.
  
In addition, taxpayers in several disaster area localities who already had valid extensions now have more time to file. Currently, taxpayers in parts of Florida, Louisiana and West Virginia qualify for this relief. For details, see the disaster relief page on IRS.gov. However, like other extension filers, these taxpayers were required to pay what they owe by April 18.   
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The IRS continues to monitor the impact of Hurricane Matthew and will be watching for federal disaster declarations in affected areas that could affect the Oct. 17 deadline.
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Check Out Tax Benefits
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Before filing, the IRS encourages taxpayers to take a moment to see if they qualify for these and other often-overlooked credits and deductions:

• Benefits for low-and moderate-income workers and families, especially the Earned Income Tax Credit. The EITC Assistant can help taxpayers see if they’re eligible.
• Savers credit, claimed on Form 8880, for low-and moderate-income workers who contributed to a retirement plan, such as an IRA or 401(k).
• American Opportunity Tax Credit, claimed on Form 8863, and other education tax benefits for parents and college students.

 
Health Care
The health care law includes  the individual shared responsibility provision and the premium tax credit that may affect a taxpayer’s return.
Most taxpayers simply need to check a box on their tax return to indicate they had health coverage for all of 2015.   For any month that the taxpayer or anyone in their family did not have minimum essential coverage, they need to either claim or report a coverage exemption or make a shared responsibility payment when they file their tax return.
 
Taxpayers who enrolled in health coverage through the Health Insurance Marketplace may be eligible for the premium tax credit. Taxpayers who benefited from advance payments of the premium tax credit must file a federal income tax return to reconcile their advance credit payments, even if they’re otherwise not required to file.  Failing to file will prevent a taxpayer from receiving advance credit payments in future years.
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The Interactive Tax Assistant tool can also help determine if a taxpayer qualifies for an exemption, needs to make a payment or is eligible for the premium tax credit. Taxpayers can visit IRS.gov/aca for additional information on how the Affordable Care Act affects their return.
Some taxpayers also qualify for the Health Coverage Tax Credit. See the HCTC  page on IRS.gov for details.
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Quick and Easy Payment Options
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IRS Direct Pay offers taxpayers a fast and easy way to pay what they owe. Available through the Pay Your Tax Bill icon on IRS.gov, Direct Pay is free and allows individuals to securely pay their tax bills or make quarterly estimated tax payments online directly from checking or savings accounts without any fees or pre-registration. So far this year, more than 6 million tax payments totaling over $23 billion have been received from individual taxpayers through Direct Pay.
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Taxpayers can also pay by debit or credit card. While the IRS does not charge a fee for this service, the payment processer will. Other payment options include the Electronic Federal Tax Payment System (enrollment is required) and Electronic Funds Withdrawal which is available when e-filing. Taxpayers can pay what they owe using, the IRS2Go, mobile app. All of the electronic payment options are quick, easy and secure and much faster than mailing in a check or money order. Those choosing to pay by check or money order should make the payment out to the “United States Treasury.”
   
Taxpayers with extensions should file their returns by Oct. 17, even if they can’t pay the full amount due. By doing so, taxpayers will avoid the late-filing penalty, normally five percent per month, that would otherwise apply to any unpaid balance after Oct. 17. However, interest, currently at the rate of four percent per year compounded daily, and late-payment penalties, normally one-half a percent per month, will continue to accrue.
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Help for Struggling Taxpayers
  
In many cases, those struggling to pay taxes qualify for one of several relief programs. Most people can set up a payment agreement with the IRS on line in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to 72 months or request a short-term payment plan. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS.
  
Alternatively, taxpayers can request a payment agreement by filing Form 9465. This form can be downloaded from IRS.gov and mailed along with a tax return, bill or notice.
  
Some struggling taxpayers qualify for an Offer-in-Compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, an offer will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay. To help determine eligibility, use the Offer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.
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Planning Ahead for 2017 
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Taxpayers can begin taking steps now to ensure smooth processing of their 2016 tax return next year. The IRS offers these reminders:     

• Before filing the 2015 return, be sure to make a copy and keep it and all supporting documents for a minimum of three years. Doing so will make it easier to fill out a 2016 return next year. In addition, a taxpayer will often need the adjusted gross income (AGI) amount from their 2015 return to properly e-file their 2016 return.
• Check withholding. This is especially important for any taxpayer who is getting a big refund or has a big balance due. A taxpayer with a big refund can reduce the refund amount and boost take-home pay by claiming additional withholding allowances on the Form W-4 they give to their employer. Anyone with a big balance due can have additional tax withheld or make quarterly estimated tax payments to the IRS. For help, use the Withholding Calculator on IRS.gov.
• The IRS cautions taxpayers not to count on getting a refund by a certain date, especially when making major purchases or paying other financial obligations. Though the IRS issues most refunds in less than 21 days, some returns are held for further review. In addition, starting next year, some people will get their refunds a little later. A recent tax law requires the IRS to hold the refund for any tax return claiming either the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) until Feb. 15. By law, the IRS must hold the entire refund, not just the portion related to the EITC or ACTC. Starting Feb. 15, the best way to check the status of a refund is with the Where's My Refund? tool on IRS.gov or the IRS2Go Mobile App.
• The recent change also includes a new requirement for employers. They are now required to file their copies of Forms W-2 and certain Forms 1099 with the federal government by Jan. 31. The Jan. 31 deadline has long applied to employers furnishing copies of these forms to their employees.  

WASHINGTON — The Internal Revenue Service reminds taxpayers affected by recent changes involving the Individual Taxpayer Identification Number (ITIN) program that they can now begin submitting their ITIN renewal applications to the IRS.
 
Under the Protecting Americans from Tax Hikes (PATH) Act of 2015 passed by Congress and signed into law last year, any ITIN not used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return as of Jan. 1, 2017.
 
If a taxpayer has an ITIN that is scheduled to expire and needs to file a tax return, it’s important not to delay. By submitting the application package in the next few weeks ITIN taxpayers may avoid unnecessary delays and allow for smoother and faster processing.
  
As part of this effort, the IRS has embarked on a wider education effort to share information with ITIN holders. To help taxpayers, the IRS has prepared a variety of informational materials, including flyers and fact sheets, available in several languages on IRS.gov. In addition to English and Spanish, materials are available in Chinese, Korean, Haitian Creole, Russian and Vietnamese.
  
The IRS continues to work with partner groups and others in the ITIN community to share information widely about these important changes.   
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ITINs are used by people who have tax filing or payment obligations under U.S. law but who are not eligible for a Social Security Number. ITIN holders who have questions should visit the ITIN information page on IRS.gov and take a few minutes to understand the guidelines.
 
​Who Should Renew an ITIN
Only ITIN holders who need to file a tax return in 2017 need to renew their ITINs. Taxpayers will need to have a current ITIN in order to file a federal return in 2017. Others do not need to take any action.

• Taxpayers with ITINs that haven’t been used on a federal income tax return in the last three years won’t be able to file a return unless their ITINs are renewed.
• ITINs with the middle digits 78 or 79 (xxx-78-xxxx; xxx-79-xxxx) need to be renewed even if the taxpayer has used it in the last three years. The IRS recently mailed more than 300,000 letters (also available in Spanish on IRS.gov) alerting taxpayers with ITINs with middle digits of 78 or 79 of the need to renew their ITINs.

Taxpayers with an ITIN with middle digits of 78 or 79 have the option to renew ITINs for their entire family at the same time. Those who have received a renewal letter from the IRS can choose to renew the family’s ITINs together even if family members have an ITIN with middle digits other than 78 or 79. Family members include the tax filer, spouse and any dependents claimed on the tax return.
 
How to Renew an ITIN
 
To renew an ITIN, a taxpayer must fill out a Form W-7 and submit all required documentation. The IRS began accepting ITIN renewals on Oct. 1. There are three ways to submit the W-7 application package:

• Mail the Form W-7 — along with original identification documents or copies certified by the agency that issued them — to the IRS address listed on the Form W-7 instructions. The IRS will review the identification documents and return them within 60 days.
• Taxpayers have the option to work with Certified Acceptance Agents (CAAs) authorized by the IRS to help taxpayers apply for an ITIN. CAAs will review all documentation for a taxpayer and certify that an ITIN application is correct before submitting it to the IRS for processing. A CAA can also certify passports and birth certificates for dependents. This saves taxpayers from mailing original documents to the IRS.
• In advance, taxpayers can call and make an appointment at a designated IRS Taxpayer Assistance Center in lieu of mailing original identification documents to the IRS.

A federal tax return need not be attached to the Form W-7 application if an ITIN is being renewed. However, taxpayers must still note a reason for needing an ITIN on the Form W-7. See the Form W-7 instructions for detailed information.
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IRS Acceptance Agent Program
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To increase the availability of ITIN services nationwide, particularly in communities with high ITIN usage, the IRS is actively recruiting Certified Acceptance Agents, and applications are now accepted year-round. Interested individuals, community outreach partners and volunteers at tax preparation sites are encouraged to review all program changes and requirements.
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Also, the IRS has developed material in several languages for community outreach partners interested in helping the IRS get this message to all affected taxpayers.​