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Weekly IRS Roundup November 29 – December 3, 2021

by | Dec 6, 2021 | , ,

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of November 29, 2021 – December 3, 2021. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

November 29, 2021: The IRS published a news release warning taxpayers and tax professionals to beware of a dangerous combination of events that can increase their exposure to tax scams and identity theft. The IRS stated that the holiday shopping season, the upcoming tax season and the pandemic all create additional opportunities for criminals to steal sensitive personal or finance information.

November 30, 2021: The IRS issued Revenue Procedure 2021-53, which provides temporary guidance regarding the treatment of certain stock distributions by publicly offered real estate investment trusts and publicly offered regulated investment companies in recognition of the need for liquidity as a result of COVID-19. The guidance reduces the minimum required aggregate amount of cash that distributee shareholders may receive to no less than 10% of the total distribution in order for Section 301 (by reason of Section 305(b)) to apply to such distribution.

November 30, 2021: The IRS published a news release warning taxpayers to be wary of fake charities used by scammers to trick unsuspecting donors into providing money and sensitive financial and personal information.

November 30, 2021: The IRS posted an issue snapshot concerning issue indicators and audit tips for public and tax-exempt employer contributions to eligible deferred compensation plans (as defined in Section 457(b)).

December 1, 2021: The US Competent Authority posted the arrangement between Competent Authorities of the United States and Turkey, setting forth parameters on the exchange of county-by-country reporting agreements to combat transfer pricing, base erosion and profit shifting-related risks.

December 1, 2021: The IRS published a news release reminding taxpayers they can get extra protection starting in January by joining its Identity Protection Personal Identification Number (IP PIN) program. Anyone who can verify their identity can protect themselves against tax-related identity theft by opting into the program.

December 2, 2021: The IRS published a news release warning tax professionals that they face additional security risks from cybercriminals seeking to use the pandemic and phishing scams to steal sensitive client information.

December 2, 2021: The IRS recommended nonacquiescence in Mayo Clinic v. United States, 997 F.3d 789 (8th Cir. May 13, 2021), rev’g 412 F. Supp. 3d 1038 (D. Minn. 2019), where the appeals court invalidated Treasury Regulations Section 1.170A-9(c)(1)’s requirement that the primary function of an educational organization described in Section 170(b)(1)(A)(ii) be the presentation of formal instruction. For more background, see our recent post.

December 2, 2021: The IRS published a news release reminding tax professionals and taxpayers that they can use digital signatures on a variety of common IRS forms and access a [...]

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Weekly IRS Roundup November 22 – November 26, 2021

by | Nov 29, 2021 | ,

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

November 22, 2021: The IRS released a memorandum concerning a temporary deviation from the handwritten signature requirement for certain tax forms. To alleviate COVID-19 concerns while promoting timely filing, the IRS will allow taxpayers and representatives to use electronic or digital signatures when signing listed forms that currently require a handwritten signature. No specific technology is required to create the signature. The IRS has listed the eligible forms, which must be postmarked on August 28, 2020, or later.

November 22, 2021: The IRS released a memorandum extending through October 31, 2023, temporary deviations that allow IRS employees to: (1) accept images of signatures and digital signatures on documents related to the determination or collection of tax liability and (2) send or receive documents to or from taxpayers using emails with encrypted attachments when no other approved electronic alternative is available.

November 22, 2021: The IRS released a memorandum providing guidance concerning employee retention credits and the deferral of paying social security taxes in 2020.

November 23, 2021: The IRS published a news release announcing the launch of a new Spanish-language version of the Child Tax Credit Update Portal (CTC-UP). Families who are already receiving monthly payments use the CTC-UP to update their accounts. Now, all the features that have only been available in English are also available in Spanish.

November 26, 2021: The IRS published a notice and request for comments on Form 944, Employer’s Annual Employment Tax Return, and Form 944-X, Adjusted Employer’s Annual Federal Tax Return or Claim for Refund, which are used in part to ensure the smallest non-agricultural and non-household employers are paying the correct amount of social security tax, Medicare tax and withheld federal income tax. Comments are due on or before January 25, 2022.

November 26, 2021: The IRS published a notice and request for comments concerning TD 8857 (addressing the determination of underwriting income by non-life insurance companies), which allows a non-life insurance company to increase unpaid losses on a yearly basis by the amount of estimated salvage recoverable if the company discloses this to the state insurance regulatory authority. Comments are due on or before January 28, 2022.

November 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 Robbie Alipour in our Chicago office for this week’s roundup.



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Weekly IRS Roundup November 15 – November 19, 2021

by | Nov 24, 2021 | , ,

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

November 15, 2021: The IRS published a news release announcing the launch of a new online tool designed to help US withholding agents comply with their reporting and withholding responsibilities with respect to IRS Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. The tool performs a quality review of data before submitting to the IRS. Use of the tool does not change a withholding agent’s obligations to file Form 1042-S with the IRS and furnish a copy to the payee.

November 15, 2021: The IRS published a news release announcing that victims of wildfires that began July 14, 2021, now have until January 3, 2022, to file various individual and business tax returns and make tax payments.

November 16, 2021: The IRS published a news release announcing that, effective November 15, 2021, tax professionals are able to order up to 30 Transcript Delivery System transcripts per client through the Practitioner Priority Service line. This is an increase from the previous 10 transcripts per client limit.

November 16, 2021: The IRS published a news release regarding Notice 2021-63, which details how the temporary 100% business deduction for food or beverages from restaurants applies to taxpayers properly applying the rules of Revenue Procedure 2019-48 when using per diem rates.

November 17, 2021: The IRS published a news release announcing that victims of Hurricane Ida throughout Mississippi now have additional time—until January 3, 2022—to file various individual and business tax returns and make tax payments.

November 17, 2021: The Internal Revenue Service Advisory Council (IRSAC) published a news release announcing its annual report for 2021, which includes recommendations to the IRS regarding new and continuing issues in tax administration. The 2021 report includes recommendations on 24 issues, covering a broad range of topics. The IRSAC is a federal advisory committee that provides an organized public forum for the discussion of relevant tax administration issues between IRS officials and representatives of the public. IRSAC members offer constructive observations regarding current or proposed IRS policies, programs and procedures.

November 17, 2021: The IRS published a news release announcing it unveiled a new how-to video series enabling taxpayers to avoid potential scams by considering and applying for an Offer in Compromise themselves and to avoid paying excessive fees to companies advertising outlandish claims.

November 17, 2021: The IRS published a news release announcing the launch of an improved identity verification and sign-in process that enables more people to securely access IRS online tools and applications.

November 17, 2021: The IRS’s National Taxpayer Advocate published a blog post indicating that US Congress [...]

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IRS Announces Nonacquiescence in Mayo Tax Regulation Invalidity Holding

by and | Nov 22, 2021 | , , , ,

We previously wrote here and here about decisions made by the District Court of Minnesota and the US Court of Appeals for the Eighth Circuit in Mayo Clinic v. United States regarding challenges to the validity of certain Treasury Regulations promulgated under Internal Revenue Code (Code) Section 170. In that case, the Eighth Circuit held for the taxpayer in part and the government in part and remanded to the district court to further develop the record and address certain issues.

The Internal Revenue Service (IRS) recently announced in an Action on Decision (AOD) that it will not acquiesce in the Eighth Circuit’s holding, which invalidated Treas. Reg. § 1.170A-9(c)(1)’s requirement that the primary function of an education organization described in Code Section 170(b)(1)(A)(ii) must be the presentation of formal instruction. This means that in all cases not appealable to the Eighth Circuit, the IRS will not follow this holding and will continue to litigate the issue.

The IRS’s policy is to announce at an early date whether it will follow the holdings in certain cases, and it does so by making an announcement in an AOD. A nonacquiescence is not binding on courts or the taxpayers but merely signals the IRS’s position that it disagrees with a court decision. (Sometimes the IRS will acquiesce in a decision.) Given that an AOD is published in the Internal Revenue Bulletin, it could be argued that the IRS’s action constitutes published guidance taxpayers can rely on. The IRS’s list of AODs, with links to each action, can be found here.



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Weekly IRS Roundup November 1 – November 5, 2021

by | Nov 8, 2021 | , ,

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

November 1, 2021: The IRS released a memorandum, providing guidance on the refund recoupment process for employees of Specialty Collection Offer in Compromise. Beginning with offers accepted on or after November 1, 2021, the offer in the compromise refund recoupment process will no longer be applicable for offsetting tax periods included on Form 656.

November 1, 2021: The IRS released a memorandum, extending certain temporary guidance related to taxpayer contact, initial contact and asset evaluations with respect to Internal Revenue Manual SBSE-05-0321-0019, Extension of Temporary Guidance for Field Collection and Specialty Collection Offers in Compromise Procedures During the COVID-19 Pandemic and Resumption of NFTL Procedures. The memorandum also extends the waiver that requires a field call prior to acceptance of certain Offers in Compromise in accordance with IRM 5.8.4.8(10) until January 31, 2022. The temporary guidance regarding Notice of Federal Tax Lien (NFTL) determinations and filings was not extended.

November 2, 2021: The IRS released the IRS Chief Counsel code and subject matter directory for November 2021.

November 3, 2021: The IRS published a news release, reminding taxpayers that a special tax provision will allow more Americans to easily deduct up to $600 in donations to qualifying charities on their 2021 federal income tax return. A temporary law change now permits them to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to qualifying charitable organizations.

November 3, 2021: The IRS published FAQs concerning carried interest reporting details for partnerships. The purpose of the FAQs is to provide guidance relating to both pass-through entity filing and reporting requirements and owner taxpayer filing requirements in accordance with US Department of the Treasury (Treasury) regulations revised in T.D. 9945 (concerning guidance under Section 1061, which recharacterizes certain net long-term capital gains of a partner that holds one or more applicable partnership interests as short-term capital gains).

November 3, 2021: The IRS published a news release, announcing that victims of Hurricane Ida in parts of Connecticut now have until January 3, 2022, to file various individual and business tax returns and make tax payments.

November 3, 2021: The IRS and Treasury published a notice and request for comments concerning third-party disclosure requirements in IRS regulations. Written comments are due on or before January 3, 2022.

November 5, 2021: The IRS published a practice unit concerning expense allocation and apportionment when calculating a foreign tax credit under Section 904. The practice unit was revised to correct an error and supersedes the August 29, 2016, practice unit with the same title.

November 5, 2021: The IRS and Treasury
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Weekly IRS Roundup October 25 – October 29, 2021

by | Nov 1, 2021 | , ,

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

October 25, 2021: The IRS released a memorandum implementing the Large Partnership Compliance (LPC) Pilot Program, including the identification, selection and delivery of large partnership tax returns, exam procedures and feedback.

October 25, 2021: The IRS released a memorandum providing emergency guidance on emails with personal accounts in exigent circumstances to IRS employees responsible for protecting sensitive but unclassified data, including tax information and personally identifiable information.

October 26, 2021: The IRS and US Department of the Treasury (Treasury) published a notice and request for comments concerning the foreign tax credit used by individuals, estates or trusts. Comments are requested on Form 1116, Foreign Tax Credit (Individual, Estate or Trust), and Schedules B and C, which are used by individuals (including nonresident aliens), estates or trusts who paid foreign income taxes on US taxable income to compute the foreign tax credit. Written comments are due on or before December 27, 2021.

October 26, 2021: The IRS published a practice unit examining education expenses claimed by Nonresident Alien Individual (NRA) employees. The unit focuses on examining the education expenses claimed by NRAs engaged in a US trade or business as employees and discusses the issues and audit steps that examiners will need to consider for these taxpayers.

October 27, 2021: The IRS published a new release announcing that victims of Hurricane Ida in parts of Mississippi now have additional time—until January 3, 2022—to file various individual and business tax returns and make tax payments. The deadline remains November 1, 2021, for affected taxpayers in other parts of Mississippi.

October 28, 2021: The IRS and Treasury published a notice and request for comments concerning Form 3468 (Investment Credit). The form is used to compute taxpayers’ credit against their income tax for certain expenses incurred for their trades or businesses. Written comments are due on or before December 27, 2021.

October 29, 2021: The IRS and Treasury published a notice and request for comments concerning Form SS-4 (Application for Employer Identification Number). The form is used by taxpayers who are required to have an identification number for use on any return, statement or other document to obtain such number. Written comments are due on or before December 28, 2021.

October 29, 2021: The IRS and Treasury published a notice and request for comments concerning rules relating to the manner and method of reporting and paying the nondeductible 50% excise tax imposed by Section 5881 with respect to the receipt of greenmail. Written comments are due on or before December 28, 2021.

October 29, 2021: The IRS released a memorandum [...]

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Contracting in Anticipation of Tax Reform—Can a Tax Transaction Really Be Rescinded?

by and | Oct 29, 2021 |

Tax reform is on the horizon. It’s in the press every day, but until US Congress can get together and make a final decision, it’s all conjecture. So what can taxpayers do to prepare for the inevitable? One idea is to enter into a transaction now with the expectation that certain tax provisions will be enacted, and if those tax provisions are not enacted by December 31, 2021, unwind the transaction as if nothing ever happened—the proverbial tax “do-over,” “mulligan,” or “oopsie.” There is basis for this strategy under the doctrine of rescission.

A transaction rescission occurs when all parties agree to void the transaction as if nothing occurred. (Think of the parties physically ripping up the formal, executed contracts.) This may sound a bit silly, but if the parties can enter into a transaction, why shouldn’t they be able to decide to void it?

The doctrine of rescission is well-entrenched in the law and finds its roots in contract law, but it can also be applicable (and effective) in tax law. While the doctrine of rescission is nowhere to be found in the Internal Revenue Code or the Treasury Regulations, case law ensures taxpayers that the doctrine is available in a tax context. (See: e.g., Penn v. Robertson, 115 F.2d 167 (4th Cir. 1940).)

Likewise, in Revenue Ruling 80-58, the Internal Revenue Service (IRS) endorsed the doctrine of rescission, and the facts in that ruling demonstrate the boundaries of the doctrine. In February 1978, A (a calendar year taxpayer) sold a tract of land to B and received cash for the entire purchase price. The contract of sale obligated A, at the request of B, to accept reconveyance of the land from B if at any time within nine months of the date of sale B was unable to have the land rezoned for B‘s business purposes. If there was a reconveyance under the contract, A and B would be placed in the same positions they were prior to the sale. The IRS ruled that “the original sale is to be disregarded for federal income tax purposes because the rescission extinguished any taxable income for that year with regard to that transaction.” There are numerous private letter rulings that provide additional examples of the IRS’s approval of the doctrine of rescission.

Importantly, the doctrine of rescission as applicable to tax issues is governed by the “annual accounting concept.” This concept pervades tax law and measures behavior for tax purposes based upon the tax year of the taxpayer. As the Supreme Court of the United States held, each taxable year is a separate unit for tax accounting purposes. (See: Security Flour Mills Co. v. Comm’r, 321 U.S. 281 (1944).) So the idea is, if a taxpayer enters into a transaction and the transaction is voided before the end of the year, for tax purposes it’s as if the transaction never occurred.

So, if any taxpayers are thinking about engaging in a transaction they may [...]

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Weekly IRS Roundup October 18 – October 22, 2021

by | Oct 27, 2021 | , ,

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

October 18, 2021: The IRS announced that beginning October 18, its Large Business and International (LB&I) Division will accept all taxpayer requests to meet with IRS employees using secure video conferencing.

October 20, 2021: The IRS published an announcement, reminding employers that the next quarterly payroll tax return is due November 1, 2021. The IRS urged employers to use the speed and convenience of filing the returns electronically.

October 21, 2021: The IRS and US Department of the Treasury (Treasury) published a notice and request for comments concerning Form 4810 (Request for Prompt Assessment Under Internal Revenue Code Section 6501(d)). The form is used to help locate a return and expedite the processing of a taxpayer’s request. Written comments are due on or before December 20, 2021.

October 21, 2021: The IRS published an announcement, reminding the more than 759,000 federal tax return preparers that they must renew their Preparer Tax Identification Numbers (PTINs) now for 2022. All current PTINs will expire December 31, 2021.

October 21, 2021: The IRS published a notice, setting forth current standards that a limited liability company (LLC) must satisfy in order to receive a determination letter recognizing it as tax exempt under Section 501(a) and described in Section 501(c)(3). The notice also requests comments on these standards, as well as specific issues relating to tax exempt status for LLCs, to assist the Treasury and the IRS in determining whether additional guidance is needed concerning the standards that an LLC must satisfy in order to be exempt from taxation by reason of being described in Section 501(c). Written comments should be submitted by February 6, 2022.

October 22, 2021: The IRS published an announcement, reminding employers that they generally will not jeopardize the tax status of their pension plans if they rehire retirees or permit distributions of retirement benefits to current employees who have reached age 59 and a half or the plan’s normal retirement age. The IRS posted FAQs to help employers impacted by COVID-19, which resulted in labor shortages.

October 22, 2021: The IRS published Revenue Procedure 2021-42, providing guidelines and general requirements for the development, printing and approval of the 2021 substitute tax forms. The IRS accepts quality substitute tax forms that are consistent with the official forms and have no adverse impact on processing.

October 22, 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 Robbie Alipour in our Chicago office for this week’s roundup.



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Weekly IRS Roundup October 11 – October 15, 2021

by | Oct 18, 2021 | ,

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

October 12, 2021: The IRS released a notice, announcing that the US Department of the Treasury (Treasury) and the IRS intend to amend the regulations under Section 987 to defer the applicability date of certain final regulations by one additional year. The deferred regulations will apply to tax years beginning after December 7, 2022. For calendar year taxpayers, the 2016 final regulations and the related 2019 final regulations will apply to the tax year beginning on January 1, 2023. The IRS and Treasury do not intend to amend the applicability date of Treasury Regulation § 1.987-12.

October 13, 2021: The IRS published an updated Form W-8BEN-E (Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)) and related instructions.

October 14, 2021: The IRS and Treasury published a notice and request for comments concerning assumption of partner liabilities. The rules relate to a partnership’s assumption of certain fixed and contingent obligations in connection with the issuance of a partnership interest, as well as to Section 358(h) for assumptions of liabilities by corporations from partners and partnerships and temporary regulations concerning the assumption of certain liabilities under Section 358(h). Written comments are due on or before December 13, 2021.

October 14, 2021: The IRS and Treasury published a notice and request for comments concerning Form 1127 (Application for Extension of Time for Payment of Tax Due to Undue Hardship). Written comments are due on or before December 13, 2021.

October 14, 2021: The IRS and Treasury published a notice and request for comments concerning Revenue Procedure 99-50, which permits combined information reporting by a successor business entity (i.e., a corporation, partnership or sole proprietorship) in certain situations following a merger or an acquisition. Written comments are due on or before December 13, 2021.

October 15, 2021: The IRS published draft instructions for Form 8949 (Sales and Other Dispositions of Capital Assets). The updated form reflects reporting for Section 1061, which concerns recharacterizing certain long-term capital gains of a partner who holds one or more applicable partnership interests as short-term capital gains.

October 15, 2021: The IRS published a news release, updating its process for certain frequently asked questions (FAQs) on newly-enacted tax legislation. The IRS is updating this process to address concerns regarding transparency and the potential impact on taxpayers when the FAQs are updated or revised. The IRS is also addressing concerns regarding the potential application of penalties to taxpayers who rely on FAQs by providing clarity as to their ability to rely on FAQs for penalty protection. The IRS stated that significant FAQs on newly-enacted [...]

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