Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 6, 2020 – July 10, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.
July 6, 2020: The IRS added new frequently asked questions on the treatment of grants or loans to businesses through the Coronavirus Relief Fund established by the Coronavirus Aid, Relief and Economic Security (CARES) Act. The IRS stated that a government grant is taxable because the grant generally is not excluded from the business’s gross income except in narrow circumstances. A government loan, however, generally is not included in gross income except to the extent it is forgiven. If a government forgives all or a portion of the loan, then the amount forgiven is included in gross income and taxable unless an exclusion applies. If an exclusion applies, the IRS indicated the taxpayer may lose an equivalent amount of tax attributes.
July 6, 2020: The IRS added frequently asked questions on the treatment of grants or loans to health care providers through the Provider Relief Fund established by the CARES Act. The IRS stated that payments from this fund do not qualify as a qualified disaster relief payment under section 139 of the Internal Revenue Code (IRC) and, in turn, are includible in gross income. The IRS also stated that a tax-exempt recipient generally is not subject to tax on a fund payment unless the amount is a reimbursement to an unrelated trade or business under section 511.
July 6, 2020: The IRS added content to its Large Business & International (LB&I) Active Campaign covering section 965 for individuals. In connection with the transition to a participation exemption system, certain individuals had an obligation to include in gross income (and report) their pro rata share of the untaxed earnings and profits of certain directly and indirectly owned foreign corporations. The IRS indicated it will address noncompliance through soft letters and examinations.
July 7, 2020: The IRS issued a news release reminding tax-exempt organizations that certain forms they file with the IRS are due on July 15, 2020, including Form 990. Tax-exempt organizations that need additional time to file beyond the July 15 deadline can request an automatic extension by filing Form 8868. The IRS also indicated that extending the time for filing a return does not extend the time for paying tax.
July 8, 2020: The IRS issued a news release reminding certain taxpayers to restart their tax payments by July 15. Some taxpayers took advantage of tax relief measures under the People First Initiative and did not make previously owed tax payments between March 25 and July 15. The IRS also set forth what taxpayers should do to resume their payment agreements to the IRS, including Installment Agreements, Offers in Compromise and Private Debt Collection program payments.
July 9, 2020: The IRS added frequently asked questions about taxpayers trying to apply for an offer in compromise and about taxpayers with pending or already accepted offers to make payments that were suspended. The IRS also added frequently asked questions on the People First Initiative, which provided compliance relief to taxpayers experiencing COVID-19-related hardships by limiting certain actions from April 1 to July 15. The IRS suspended face-to-face meetings related to current field, office and correspondence examinations. The IRS postponed starting most new field, office and correspondence examinations and is beginning new cases July 15, 2020.
July 9, 2020: The IRS and US Department of the Treasury published final regulations under section 250 that provide guidance regarding the deduction for foreign-derived intangible income (FDII) and global intangible lowtaxed income (GILTI). The final regulations also coordinate the deduction for FDII and GILTI with other provisions in the IRC. The regulations generally affect domestic corporations and individuals who elect to be subject to tax at corporate rates for purposes of inclusions under subpart F and GILTI. The regulations are slated to be effective 60 days after the scheduled July 15, 2020, publication date in the Federal Register.
July 10, 2020: The IRS updated frequently asked questions about collection activities via liens, levies and other activities. The People First Initiative temporarily suspended many IRS collection efforts through July 15, 2020.
July 10, 2020: The IRS issued a news release reminding taxpayers about the July 15 tax filing deadline and provided other tips for last-minute filers.
July 10, 2020: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).
Special thanks to Robbie Alipour in our Chicago office for this week’s roundup.
