Trends to watch for in 2020 at the IRS

Payroll has moved to center stage at the IRS. Changes to watch for this year:

  • Continuing fallout from the new W-4 and withholding methods.
  • New information return e-filing threshold of 100 or more forms.
  • New Form 1099-NEC.

If that’s not enough to make your head spin, the IRS has also telegraphed its intention to do even more in its annual Priority Guidance Plan.

So much to do, so little time. Priority Guidance Plans run from July 1 through June 30. So this plan is a bit late. Nevertheless, the IRS has put 203 guidance projects on its plate for the coming six months. Most deal with implementing the Tax Cuts and Jobs Act:

  • Guidance on the definition of “qualifying relative” for individual income tax purposes. Employees may account for tax dependents in Step 3 of the 2020 W-4.
  • Regulations on deducting employees’ meal expenses. This follows up on Notice 2018-76, which sets five criteria for corporate deductions for employees’ meals.
  • Regulations concerning qualified transportation fringe benefits and the disallowance of corporate deductions for employees’ parking expenses.
  • Regulations and other guidance regarding income and pension withholding, in light of the suspension of the personal exemption amount.

Other, non-TCJA guidance projects include the following:

  • Guidance on student loan payments and 401(k) plans. This follows up on a 2018 private letter ruling allowing a 401(k) plan sponsor to contribute into its employees’ 401(k) plans if they were paying off their student loans.
  • Regulations on employer-provided convenience meals and de minimis meals under tax code Sections 119 and 132, respectively. The last time the IRS addressed convenience meals was 1985; the last time the IRS addressed de minimis meals was 1989.
  • Guidance on contributions to and benefits from paid family and medical leave programs.

A BIT MORE THAN IT CAN CHEW? Not everything on this list will get done. The IRS, for example, may need to refocus its attention on new tax legislation. But it is useful as a road map for what the IRS wants to accomplish by June 30, 2020.

Payroll Handbook D