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IRS Guidance

IRS Issues Practice Unit on Section 965 Transition Tax

by Kevin Spencer and McDermott Will & Emery | Mar 24, 2021 | IRS Audits, IRS Guidance, Tax Reform

One of the most pressing audit issues for large taxpayers today centers on the Internal Revenue Code (Code) Section 965 transition tax. The Internal Revenue Service (IRS) has designated Code Section 965 as a campaign issue and is actively auditing taxpayers’ transition tax calculations and positions, along with other tax reform items. The stakes are high, particularly given the potential to pay this tax over a period of eight years.

On March 23, 2021, the IRS released a Practice Unit that provides an overview of the Code Section 965 transition tax with references to relevant resources. Unfortunately, unlike some other Practice Units, guidance is not provided as to the type of information revenue agents should be requesting from taxpayers.

Practice Point: Practice Units are presentation-type materials compiled by the IRS as a means for collaborating and sharing knowledge among IRS employees. They provide helpful guidance to revenue agents in the form of an overview of the law in a specific area, examination tips and guidance and references to relevant resources. Although the Code Section 965 transition tax Practice Unit does not provide insights into the types of questions and information that revenue agents may seek on audit, it is still useful for taxpayers to review to understand the IRS’s perspective in this area.

Weekly IRS Roundup March 8 – March 12, 2021

by McDermott Will & Emery | Mar 17, 2021 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 8, 2021 – March 12, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

March 11, 2021: The IRS released Internal Revenue Bulletin 2021-11, dated March 15, 2021, containing the following highlights: Notice 2021-20 (Employment Tax); Notice 2021-18 (Income Tax) and Notice 2021-19 (Income Tax).

March 12, 2021: The IRS updated its campaign list to add a new campaign for compliance with section 179D and to retire the campaign for the proper treatment of economic development incentives.

March 12, 2021: The IRS issued a Practice Unit on selling a partnership interest, covering areas such as: (1) ownership changes on sale of interest to a new or existing partner; (2) proper reporting of gain; (3) section 751 assets; (4) section 1250 assets and (5) section 754 elections.

March 12, 2021: The IRS requested comments on Form 1099-C (Cancellation of Debt) regarding cancellation of debt and removal of the 36-month non-payment testing period rule.

March 12, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Samuel DiPietro in our Chicago office for this week’s roundup.

Weekly IRS Roundup March 1 – March 5, 2021

by McDermott Will & Emery | Mar 9, 2021 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 1, 2021 – March 5, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

March 1, 2021: The IRS issued Notice 21-20 providing guidance regarding the employee retention credit provided under section 2301 of the Coronavirus Aid, Relief, and Economic Security Act. Specifically, Notice 21-20 addresses the employee retention credit as it applies to qualified wages paid after March 12, 2020, and before January 1, 2021.

March 2, 2021: The IRS issued Revenue Ruling 21-6, which provides certain applicable interest rates for the overpayments and underpayments of taxes. Specifically, Revenue Ruling 21-6 provides the daily compound interest for annual rates of 0.5% and the annual interest rates to be compounded daily pursuant to section 6622 that apply for prior periods.

March 2, 2021: The IRS issued Notice 21-15 providing guidance regarding the application of section 214 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, which provides temporary special rules for health flexible spending arrangements and dependent care assistance programs under section 125 of the Internal Revenue Code.

March 4, 2021: The IRS released Internal Revenue Bulletin 2021-10, dated March 8, 2021, containing the following highlights: Notice 2021-16 (Employee Plans); Notice 2021-15 (Income Tax); and Rev. Rul. 2021-5 (Income Tax).

March 5, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Samuel DiPietro in our Chicago office for this week’s roundup.

Weekly IRS Roundup February 22 – February 26, 2021

by McDermott Will & Emery | Mar 2, 2021 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 22, 2021 – February 26, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

February 25, 2021: The IRS issued an alert warning taxpayers to refrain from submitting meritless amended returns to claim the Domestic Production Activities Deduction (DPAD) for prior tax years—the DPAD was repealed as part of the Tax Cuts and Jobs Act for taxable years after December 31, 2017. This alert was in response to a large number of filings claiming the DPAD deduction based on studies conducted after the fact, which the IRS claims contained unreasonable assumptions of facts and law. The IRS further noted that examining these claims will continue to be a priority and that penalties may be asserted under section 6676. We have previously written about section 199 refund claims and penalties under section 6676.

February 25, 2021: The IRS released Internal Revenue Bulletin 2021-9, dated March 1, 2021, containing the following highlights: Announcement 2021-4 (Administrative).

February 26, 2021: The IRS issued Notice 21-18 providing the adjusted limitations on housing expenses for 2021 for purposes of section 911, which allows a qualified individual to elect to exclude from gross income certain foreign earned income and to exclude or deduct certain housing expenses.

February 26, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Samuel DiPietro in our Chicago office for this week’s roundup.

Weekly IRS Roundup February 15 – February 19, 2021

by McDermott Will & Emery | Feb 24, 2021 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 15, 2021 – February 19, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

February 16, 2021: The IRS issued Revenue Ruling 21-05, which provides the applicable short-, mid- and long-term applicable federal rates for the month of March. These rates are used for purposes of section 1274(d), which relates to the determination of issue price in the case of certain debt instruments issued for property.

February 16, 2021: The IRS issued Notice 21-16 providing guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used in section 417(e)(3) and the 24-month average segment rates under section 430(h)(2). In addition, the notice provides guidance as to the interest rate on 30-year US Department of the Treasury securities under section 417(e)(3)(A)(ii)(II) and the 30-year Treasury weighted average rate under section 431(c)(6)(E)(ii)(I).

February 18, 2021: The IRS issued Notice 21-15 clarifying the application of section 214 which provides temporary special rules for health flexible spending arrangements and dependent care assistance programs under section 125 cafeteria plans. (For more information, see our On the Subject here.)

February 18, 2021: The IRS released Internal Revenue Bulletin 2021-8, dated February 22, 2021, containing the following highlights: Announcement 2021-2 (Administrative); Announcement 2021-3 (Administrative); and Rev. Proc. 2021-15 (Administrative).

February 19, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Samuel DiPietro in our Chicago office for this week’s roundup.

Weekly IRS Roundup February 8 – February 12, 2021

by McDermott Will & Emery | Feb 17, 2021 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 8, 2021 – February 12, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

On February 9, the Internal Revenue Service announced that Nancy Sieger would permanently fill the role of chief information officer. Nancy has served as the acting chief information officer since June 2019.

February 11, 2021: The IRS released Internal Revenue Bulletin 2021-7, dated February 16, 2021, containing the following highlights: TD 9938 (Excise Tax; Exempt Organizations); Notice 2021-10 (Income Tax).

February 12, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Samuel DiPietro in our Chicago office for this week’s roundup.

Weekly IRS Roundup February 1 – February 5, 2021

by McDermott Will & Emery | Feb 8, 2021 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of February 1, 2021 – February 5, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

February 4, 2021: The IRS published Rev. Proc. 2021-15 providing a safe harbor for eligible educators to treat unreimbursed expenses paid or incurred after March 12, 2020, for COVID-19 protective items to stop the spread of COVID-19 in the classroom.

February 5, 2021: The IRS announced that Heather C. Maloy would replace Lia Colbert as the director of the Taxpayer First Act Office.

February 5, 2021: The IRS issued a news release reminding taxpayers to avoid “ghost” tax return preparers who refuse to sign tax returns they prepare.

February 5, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

February 6, 2021: The IRS released Internal Revenue Bulletin 2021-6, dated February 8, 2021, containing the following highlights: Notice 2021-6 (Administrative); Notice 2021-11(Administrative; Employment Tax); Notice 2021-12 (Income Tax); Rev. Proc. 2021-11 (Income Tax); Rev. Rul. 2021-4 (Income Tax); TD 9946 (Income Tax); TD 9947 (Income Tax); TD 9948 (Income Tax); Notice 2021-8 (Income Tax; Administrative); Notice 2021-13 (Income Tax; Administrative).

Special thanks to Samuel DiPietro in our Chicago office for this week’s roundup.

Weekly IRS Roundup January 25 – January 29, 2021

by McDermott Will & Emery | Feb 2, 2021 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 25, 2021 – January 29, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

On January 20, President Biden’s chief of staff, Ronald Klain, issued a memorandum freezing the publication of rules in the Federal Register pending additional review by presidential designees or appointees. As a result, there may be delays in the official publication of pending IRS actions.

January 29, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

January 29, 2021: The IRS released Internal Revenue Bulletin 2021-5, dated February 1, 2021, containing the following highlights: REG-115057-20 (Administrative); Notice 2021-9 (Employee Plans); Rev. Rul. 2021-3 (Employee Plans); REG-111950-20 (Income Tax); Rev. Proc. 2021-12 (Income Tax); TD 9936 (Income Tax); TD 9943 (Income Tax); TD 9945 (Income Tax).

Special thanks to Brian Moore in our Washington, DC, office for this week’s roundup.

Weekly IRS Roundup January 18 – January 22, 2021

by McDermott Will & Emery | Jan 27, 2021 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 18, 2021 – January 22, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

January 19, 2021: The IRS released Notice 21-08 providing a waiver of the addition to tax for underpayment of estimated income tax by individual taxpayers, where the underpayment is attributable to the amendment to section 461(l)(1)(B) contained in the Coronavirus Aid, Relief and Economic Security (CARES) Act.

January 19, 2021: The IRS issued Rev. Rul. 21-04 updating the applicable federal rate and various other prescribed rates for February 2021.

January 19, 2021: The IRS issued Notice 21-09 updating weighted average interest rates, yield curves and segment rates.

January 19, 2021: The IRS released Notice 21-06 waiving the requirement to file information returns or furnish payee statements related to certain COVID-19 relief programs.

January 19, 2021: The IRS posted Notice 21-11 extending relief for employers to withhold and pay certain taxes because of the ongoing COVID-19 pandemic.

January 19, 2021: The IRS posted Notice 21-10 extending and providing additional relief for Qualified Opportunity Funds and their investors because of the ongoing COVID-19 pandemic

January 19, 2021: The IRS announced Notice 21-13 providing relief for partnerships from certain penalties related to the reporting of partners’ beginning capital account balances.

January 22, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

January 22, 2021: The IRS released Internal Revenue Bulletin 2021-4, dated January 25, 2021, containing the following highlights: Rev. Proc. 2021-8 (Exempt Organizations); TD 9937 (Employee Plans); Rev. Proc. 2021-10 (Income Tax); Rev. Rul. 2021-2 (Income Tax); Ann. 2021-1 (Tax Conventions).

Special thanks to Brian Moore in our Washington, DC, office for this week’s roundup.

Weekly IRS Roundup January 11 – January 15, 2021

by McDermott Will & Emery | Jan 20, 2021 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 11, 2021 – January 15, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

January 11, 2021: The IRS released TD 9948 containing final regulations relating to the excise taxes imposed on certain amounts paid for transportation of persons and property by air.

January 11, 2021: The IRS released TD 9938 setting forth final regulations related to the excise tax on remuneration in excess of $1 million and any excess parachute payment paid by certain tax-exempt organizations to covered employees.

January 12, 2021: The IRS released TD 9946 containing final regulations related to the deduction and reporting of certain fines, penalties and other amounts.

January 13, 2021: The IRS released TD 9949 providing final regulations concerning the application of the employer shared responsibility provisions and certain nondiscrimination rules to health reimbursement arrangements and certain other health plans.

January 14, 2021: The IRS released Rev. Proc. 21-11 providing methods for calculating W-2 wages for purposes of the wage limitation for the section 199A(g) deduction.

January 14, 2021: The IRS released Rev. Proc. 21-12 extending, in light of the continuing COVID-19 pandemic, the expiration date relevant to the application of certain safe harbors protecting the tax status of certain real estate mortgage investment conduits (REMICs) and investment trusts.

January 15, 2021: The IRS released Rev. Rul. 21-03 providing tables of covered compensation related to the contribution and benefit bases under the Social Security Act.

January 15, 2021: The IRS released Notice 21-12 providing temporary relief, due to the continuing COVID-19 pandemic, from certain requirements for qualified low-income housing projects and qualified residential rental projects.

January 15, 2021: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

January 15, 2021: The IRS released Internal Revenue Bulletin 2021-3, dated January 19, 2021, containing the following highlights: Notice 2021-7 (Administrative, Employment); TD 9932 (Employee Plans, Income Tax); REG-114615-16 (Excise Tax); Notice 2021-2 (Income Tax); Notice 2021-5 (Income Tax); Rev. Proc. 2021-9 (Income Tax); TD 9939 (Income Tax); TD 9941 (Income Tax); and TD 9942 (Income Tax).

Special thanks to Brian Moore in our Washington, DC, office for this week’s roundup.