Auto lease valuation
The IRS announced temporary relief for employers and employees using the automobile lease valuation rule. In response to the COVID-19 pandemic, the IRS relief involves determining the value of an employee’s personal use of an employer-provided vehicle. That value is used to calculate an amount to include in the employee’s gross income. Under the auto lease valuation rule, an employer determines the fair market value when a vehicle was first made available to an employee and applies a corresponding “Annual Lease Value.” Under the relief, an employer may instead use the vehicle cents-per-mile valuation rule beginning on March 13, 2020, as long as certain requirements are met. (Notice 2021-7)
A whistleblower who provides the IRS with information about another party’s unpaid taxes may be entitled to a financial award. The IRS Whistleblower Office just released its annual report. In fiscal year 2020, it paid out 169 awards totaling $86.6 million. Proceeds collected during the year totaled $472 million. Whistleblower claims assigned in FY 2020 decreased by 20% from those submitted in FY 2019 and closures decreased by 33%, the report states. Awards aren’t paid quickly. Generally, the IRS doesn’t pay awards for at least 8 years after a whistleblower files a claim because a payment can’t be made until there’s a final determination of proceeds. To read the report: https://bit.ly/2X9AYCG
Charitable deduction changes
The new law extends and improves charitable donation tax breaks. For 2020, individuals who don’t itemize deductions could take up to a $300 above-the-line deduction for cash contributions to qualified charitable organizations. The Consolidated Appropriations Act (CAA), which was signed on Dec. 27, 2020, extends this deduction through 2021. The law increases it to $600 on a tax return filed jointly by a married couple (the deduction remains at $300 for other taxpayers). Taxpayers who overstate their cash contributions when claiming this deduction are subject to a 50% penalty (previously it was 20%).
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