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Weekly IRS Roundup October 30 – November 3, 2023

by | Nov 6, 2023 | ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 30, 2023 – November 3, 2023.

October 30, 2023: The IRS released Internal Revenue Bulletin 2023-44, which includes the following:

  • Proposed regulations that would update the rules governing the IRS’s sale of taxpayer property that was seized by levy.
  • Proposed regulations addressing so-called “Killer B” transactions. These transactions, at a high level, are structured to repatriate foreign subsidiary earnings through triangular reorganizations. The proposed regulations would formalize and modify guidance set forth in Notices 2014-32 and 2016-73.
  • Final regulations that provide rules for prohibitions on certain contributions to Type I and Type III supporting organizations, as well as rules for qualifying as functionally integrated and non-functionally integrated Type III supporting organizations.
  • Notice 2023-71, which extends all tax filing and payment deadlines from October 7, 2023, to October 7, 2024, for taxpayers affected by the recent terrorist attacks in Israel.

October 30, 2023: The IRS extended its policy for accepting digital signatures for certain tax forms until October 31, 2025. The IRS updated the Internal Revenue Manual to be consistent with this extension.

October 31, 2023: The IRS reminded taxpayers to remain vigilant against potential online threats and highlighted certain practices to help protect against cybersecurity attacks.

November 1, 2023: The IRS announced that clean vehicle sellers can now register for time-of-sale reporting and dealer advance payments for the clean vehicle credit using the new Energy Credits Online tool.

November 1, 2023: The IRS announced that the amount individuals can contribute to their 401(k) plans in 2024 has increased to $23,000, up from $22,500 in 2023. Notice 2023-75, which was released the same day, provides adjusted 2024 limitations on benefits and contributions under qualified retirement plans as under § 415(d).

November 2, 2023: The IRS rescheduled the hearing on proposed regulations regarding digital asset transactions from November 7, 2023, to November 13, 2023.

November 2, 2023: The IRS published Tax Tip 2023-119, which notes that individuals may now review 18 new Nationwide Tax Forums Online seminars.

November 3, 2023: The IRS reminded taxpayers to review their tax withholding obligations ahead of the upcoming tax filing season to avoid having a large refund or balance due.

November 3, 2023: The IRS issued proposed regulations that would add new requirements relating to the disclosure of information that group health plans and health insurance issuers must include subject to the No Surprises Act. The proposed regulations consider requiring plans and issuers to register via the Federal IDR portal. Comments must be received by January 2, 2024.

November 3, 2023: The IRS released its weekly list [...]

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Weekly IRS Roundup October 23 – October 27, 2023

by | Oct 30, 2023 | ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 23, 2023 – October 27, 2023.

October 23, 2023: The IRS is recruiting volunteers for the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. VITA and TCE participants prepare millions of tax returns each year for low- to moderate-income taxpayers at no cost. No experience is necessary to volunteer. Volunteers will have the option to participate both in-person and via virtual sites. To learn more about becoming a VITA or TCE volunteer, visit IRS Tax Volunteers.

October 23, 2023: The IRS warned taxpayers to be wary of criminals falsely posing as legitimate charities to solicit donations. Donors can use the Tax-Exempt Organization Search tool on IRS.gov to find or verify legitimate charities.

October 23, 2023: The IRS released Internal Revenue Bulletin 2023-43, which includes the following:

  • Final regulations and proposed regulations that reduce the user fee to apply for or renew a preparer tax identification number (PTIN) from $21 to $11 (plus an amount payable directly to a third-party contractor).
  • Revenue Procedure 2023-28 provides guidelines for the development, printing and approval of 2023 substitute tax forms.
  • Proposed regulations that would provide guidance on §§ 30D(g) and 25E(f), including guidance involving:
    • Elections to transfer new and previously owned clean vehicle credits
    • Dealer qualifications for becoming an eligible entity that can receive advance payments of new and previously owned clean vehicle credits
    • Credit recapture.
  • Revenue Procedure 2023-33 sets forth the procedures for transferring new and previously owned clean vehicle credits from a taxpayer to an eligible entity under §§ 30D(g) and 25E(f), including procedures for dealer registration with the IRS, procedures for the suspension and revocation of said registration and the establishment of an advance payments program to registered dealers. This revenue procedure also provides guidance on the submission of seller reports and reports by qualified manufacturers.

October 24, 2023: The IRS reminded tax return preparers to renew their PTINs ahead of the upcoming tax filing season. Information to begin the online renewal process can be accessed here. Failure to have and to use a valid PTIN may result in penalties.

October 25, 2023: The IRS published Tax Tip 2023-118, which notes that tax professionals can use Tax Pro Accounts to send powers of attorney and tax information authorization requests directly to a client’s individual IRS Online Account.

October 25, 2023: The deadline to comment on proposed regulations involving information reporting, backup withholding and the determination of amount realized and basis for digital assets sales was extended from October 30, 2023, to November 13, 2023.

October 26, 2023: The IRS encouraged employers to electronically [...]

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Court Rules Taxpayer Can Offset Foreign Tax Credits With NIIT Liability Under Tax Treaty

by and | Oct 26, 2023 | , , ,

In 2013, the net investment income tax (NIIT) found in Internal Revenue Code (IRC) Section 1411 went into effect. Since then, United States taxpayers residing outside of the US have lived with uncertainty as to whether the taxes they pay in their local country can be used as a tax credit to offset the NIIT. A recent court decision held that certain tax treaties may allow for US foreign tax credits (FTCs) to be applicable, allowing eligible taxpayers to seek refunds for potentially up to 10 years of paid NIIT.

On October 23, 2023, in Christensen v. United States, the US Court of Federal Claims ruled that two US citizens residing in France were permitted, under a tax treaty between the US and France, to use FTCs arising from French income tax liability to offset NIIT liability. Christensen is the first case to hold that, although FTCs cannot be used to offset NIIT liability under US domestic law, this restriction can be overridden by a US-France tax treaty provision, which is replicated in many US tax treaties, that provides broader FTC coverage for US citizens residing abroad.

The taxpayers in Christensen were married US citizens residing in France. The taxpayers earned income that was subject to both French income tax and (by virtue of their US citizenship) US federal income tax, including the NIIT. On their US federal income tax return, the taxpayers netted the FTCs arising from their French income tax liability against their NIIT liability, relying on Articles 24(2)(a) and 24(2)(b) of the US-France tax treaty for support.

Article 24(2)(a) of the treaty is a general provision that provides that the US shall grant its citizens a credit against US federal income tax for French income taxes paid “[i]n accordance with the provisions and subject to the limitations of the law of the United States.” In Christensen, the Court of Federal Claims noted that the NIIT was a tax imposed by IRC Chapter 2A and that the FTC provisions in IRC Section 901 et seq. restricted FTCs from offsetting US federal income tax liability arising under IRC Chapter 1. Therefore, the Court held that Article 24(2)(a) did not permit the taxpayers to use FTCs to offset NIIT liability because granting FTCs under Article 24(2)(a) was “subject to the limitations of the law of the United States,” including the limitation that FTCs could not offset liability incurred pursuant to Chapter 2A. This holding was consistent with holdings in two other recent cases that also addressed the interaction of FTCs and NIIT: Toulouse v. Commissioner, 157 T.C. 49 (2021), and Kim v. United States, 2023 WL 3213547 (C.D. Cal. Mar. 28, 2023).

However, Article 24(2)(b) of the treaty contains a special provision applicable to US citizens residing in France. This provision generally provides that, when applying the “three bites” rule for determining the order in which US and French FTCs are applied with respect to such persons, the US shall grant such persons a credit against US [...]

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Weekly IRS Roundup October 16 – October 20, 2023

by | Oct 23, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 16, 2023 – October 20, 2023.

October 16, 2023: The IRS published Revenue Ruling 2023-20, which provides the November 2023 applicable federal rates.

October 16, 2023: The IRS announced that the deadline for 2022 income tax returns and payments for most California taxpayers has been postponed again until November 16, 2023. Because of natural disasters last winter, spring due dates were previously postponed to October 16, 2023. The list of localities eligible for the extension are available here.

October 16, 2023: Tax professionals can now access 18 self-study seminars that satisfy continuing education requirements for the federal tax law and ethics categories. The seminars can be accessed at Nationwide Tax Forums Online for a fee of $29 per seminar.

October 16, 2023: The IRS announced that it recently awarded $51 million in Tax Counseling for the Elderly and Volunteer Income Tax Assistance grants to organizations that provide free federal tax return preparation services.

October 16, 2023: The IRS released Internal Revenue Bulletin 2023-42, which includes the following:

  • Notice 2023-65 provides guidance on the energy efficient home credit under Internal Revenue Code (Code) § 45L. It addresses who is eligible for the credit, how to determine the applicable amount of the credit, energy saving requirements, certification requirements and substantiation requirements.
  • Notice 2023-67 gives farmers and ranchers who were impacted by drought an extra year to replace livestock from forced sales and defer gains under Code § 1033(e).
  • Notice 2023-69 provides that any cash donations employers make to charitable organizations that provide relief to victims of the wildfires in Hawaii in exchange for sick, vacation, or personal leave that their employees forgo will not be treated as compensation. The notice also provides that these employees will not be treated as receiving the value of the leave as income and cannot claim a deduction for the leave that they donated to their employer. Employers may deduct these cash payments as a business expense or a charitable contribution deduction if the employer otherwise meets the respective requirements of the applicable sections of the Code.
  • Revenue Procedure 2023-35 provides that the IRS will not treat a redemption of a share in any money market fund as part of a wash sale under Code 1091.
  • Proposed regulations that provide guidance on how manufacturers, producers and importers of designated drugs will report excise tax liability under § 5000D. The proposed regulations also would except such excise tax from semimonthly deposit requirements.

October 18, 2023: The IRS released Notice 2023-70, which provides the adjusted applicable dollar amount to be multiplied by the average number of covered lives for purposes of calculating the fee imposed by §§ 4375 and [...]

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Weekly IRS Roundup October 9 – October 13, 2023

by | Oct 19, 2023 | ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 9, 2023 – October 13, 2023.

October 10, 2023: The IRS released Internal Revenue Bulletin 2023-41, which includes the following:

  • Revenue Ruling 2023-19 sets forth updated terminal charge and Standard Industry Fare Level formula mileage rates for valuing noncommercial flights on employer-provided aircrafts for purposes of taxing fringe benefits under Treasury Regulation § 1.61-21(g).
  • Notice 2023-68 provides the special per diem rates for purposes of substantiating ordinary and necessary business expenses relating to (1) meal and incidental expenses within the transportation industry, (2) incidental expenses only and (3) allowances under the high-low substantiation method.
  • Revenue Procedure 2023-32 publishes the amount of unused housing credit carryovers allocated to qualified states under Code Section 42(h)(3)(D) for calendar year 2023.
  • Announcement 2023-29 revokes tax-exempt status from certain organizations.

October 10, 2023: The IRS reminded taxpayers filing on extension to gather all records and copies of missing documents before they prepare their returns on their own or visit a tax preparer.

October 12, 2023: The IRS released new tax gap projections for tax years 2020 and 2021. The projections estimate an increase in the gross tax gap to $688 billion in tax year 2021, which reflects a rise of more than $192 billion from prior estimates for tax years 2014 through 2016 and a rise of $138 billion from the revised projections for tax years 2017 through 2019.

October 13, 2023: The IRS released Notice 2023-71, extending all tax filing and payment deadlines from October 7, 2023, until October 7, 2024, for taxpayers affected by the recent terrorist attacks in Israel. The relief applies to:

  • Any individual whose principal residence or business entity is located in Israel, the West Bank or Gaza
  • Any sole proprietor whose principal place of business is located in Israel, the West Bank or Gaza
  • Any individual, business, sole proprietor, estate or trust whose books, records or tax preparer is located in Israel, the West Bank or Gaza
  • Any individual who was killed, injured or taken hostage during the terrorist attacks
  • Any individual affiliated with a recognized government or philanthropic organization and is assisting in Israel, the West Bank or Gaza (such as a relief worker)

October 13, 2023: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).



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Weekly IRS Roundup October 2 – October 6, 2023

by | Oct 16, 2023 | ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 2, 2023 – October 6, 2023.

October 2, 2023: The IRS released Internal Revenue Bulletin 2023-40, which includes the following:

  • Revenue Ruling 2023-18 provides the October 2023 applicable federal rates.
  • Notice 2023-64 provides interim guidance on the new corporate alternative minimum tax (CAMT) and indicates that proposed regulations are forthcoming. The notice describes rules for:
    • Determining a taxpayer’s applicable financial statement and adjusted financial statement income (AFSI), including rules applicable to tax consolidated groups and certain foreign corporations
    • AFSI adjustments for the depreciation of Section 168 property, the amortization of qualified wireless spectrum, the treatment of certain taxes and to prevent certain duplications and omissions
    • Determining the applicable corporation status, the CAMT foreign tax credit and financial statement net operating losses.
  • Notice 2023-66 updates the corporate bond monthly yield curve, the corresponding spot segment rates for September 2023 used under § 417(e)(3)(D), the 24-month average segment rates for September 2023 and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).
  • Revenue Procedure 2023-30 provides specifications for the private printing of red ink substitutes for the 2023 revisions of certain information returns.
  • Revenue Procedure 2023-31 refers filers to applicable publications, forms, instructions or other guidance, including postings on IRS.gov, for procedures related to seeking a hardship waiver or administrative exemption from requirements to file Forms 8955-SSA and 5500-EZ electronically.

October 3, 2023: A public meeting of the Electronic Tax Administration Advisory Committee will be held on November 15, 2023.

October 5, 2023: The IRS warned high-income taxpayers to avoid promotions involving inflated deductions for art donations. The IRS indicated that schemes involving abusive art donations are on its radar and that multiple investigations are underway.

October 6, 2023: The IRS released proposed regulations addressing so-called “Killer B” transactions. These transactions, at a high level, are structured to repatriate foreign subsidiary earnings through triangular reorganizations. The proposed regulations would formalize and modify guidance set forth in Notices 2014-32 and 2016-73.

October 6, 2023: The IRS issued proposed regulations, Revenue Procedure 2023-33 and frequently asked questions on the transfer of new and previously owned clean vehicle credits from a taxpayer to an eligible entity for vehicles placed in service after December 31, 2023. This guidance addresses how taxpayers can elect to transfer new and previously owned clean vehicle credits to dealers who are eligible to receive advance payments of either credit, how dealers can become eligible entities to receive advance payments of new or previously owned clean vehicle credits and how to recapture the credit.

October 6, 2023: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).



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Weekly IRS Roundup September 18 – September 22, 2023

by | Sep 25, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 18, 2023 – September 22, 2023.

September 18, 2023: The IRS released Internal Revenue Bulletin 2023-38, which includes the following:

September 18, 2023: The IRS published Tax Tip 2023-111, describing different types of third-party representatives.

September 19, 2023: The IRS published Tax Tip 2023-112, describing how taxpayers can be certain they are communicating with the IRS as opposed to scammers purporting to represent the IRS.

September 19, 2023: The IRS reminded individuals and businesses in parts of Alabama, California and Georgia that their 2022 federal income tax returns and tax payments are due October 16, 2023. The original due date for these returns was postponed because of natural disasters.

September 19, 2023: The IRS has selected eight new members for the Electronic Tax Administration Advisory Committee (ETAAC), which is a public forum for the discussion of electronic tax administration issues. ETAAC members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and the nation’s tax industry to fight identity theft and refund fraud.

September 20, 2023: The IRS published Tax Tip 2023-113, discussing the expanded tax credit for contractors who build energy-efficient homes.

September 20, 2023: The IRS announced plans to establish a special area that will focus on large or complex pass-through entities. The new work unit will be housed in the IRS Large Business and International (LB&I) division.

September 22, 2023: The IRS is requesting comments on Revenue Procedure 2004-47, which permits taxpayers who failed to make a reverse qualified terminable interest property (QTIP) election on an estate tax return to file certain documents with the Cincinnati Service Center directly to request relief in lieu of requesting a private letter ruling. Comments are invited on:

  • Whether the collection of information is necessary for the proper performance of the agency’s functions, including whether the information has practical utility
  • The accuracy of the agency’s estimate for the burden of the information collection
  • Ways to enhance the quality, utility and clarity of the information to be collected
  • Ways to minimize the burden of the information collection on other forms of information technology
  • Estimates for capital or startup costs and costs of operation, maintenance and purchase of services to provide information.

September 22, 2023: The IRS released its weekly list of written [...]

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Weekly IRS Roundup September 11 – September 15, 2023

by | Sep 19, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 11, 2023 – September 15, 2023.

September 11, 2023: The IRS released Internal Revenue Bulletin 2023-37, which includes the following:

  • Revenue Ruling 2023-16 provides the applicable federal rates for September 2023.
  • Revenue Ruling 2023-17 sets forth the underpayment and overpayment interest rates under Code Section 6621 for the calendar quarter beginning October 1, 2023.
  • Revenue Procedure 2023-29 provides the applicable percentage table used to calculate the premium tax credit under Code Section 36B.
  • Notice 2023-62 announces a two-year administrative transition period with respect to the requirement under Code Section 603 that catch-up contributions made on behalf of certain eligible participants be designated as Roth contributions. The notice also requests comments for further guidance with respect to Code Section 603.
  • Announcement 2023-25 and Announcement 2023-26 revoke tax-exempt classification for specified organizations.
  • Announcement 2023-28 corrects citations in Revenue Procedure 2023-27.

September 12, 2023: The IRS released Notice 2023-64, which provides interim guidance on the corporate alternative minimum tax (CAMT). The notice lists financial statements that meet the definition of an applicable financial statement, provides general rules for determining “financial statement income” and includes guidance on when corporations are subject to the CAMT. Notice 2023-64 supplements and clarifies Notice 2023-07 and Notice 2023-20.

September 12, 2023: The IRS released Revenue Procedure 2023-31, providing guidance on Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, and Form 5500-EZ, Annual Return of A One-Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan, which must be filed for plan years beginning on or after January 1, 2024. Revenue Procedure 2023-31 supersedes Revenue Procedure 2015-47.

September 12, 2023: The IRS published Tax Tip 2023-110, advising taxpayers to look out for scammers posing as charities and to ensure their donations are going to legitimate charitable organizations.

September 13, 2023: The IRS extended tax relief to individuals and businesses impacted by Hurricane Idalia in 28 counties in Georgia. As a result, affected individuals filing personal income tax returns on extensions expiring October 16, 2023, calendar-year partnerships and S corporations whose extensions expire on October 16, 2023, and calendar-year corporations whose 2022 extensions expire on November 15, 2023, now have until February 15, 2024, to file returns and pay related taxes.

September 14, 2023: The IRS announced an immediate moratorium through at least the end of the year on processing new claims for the Employee Retention Credit (ERC). The moratorium is in response to promoters who have aggressively marketed the credit to businesses without regard for their eligibility. Hundreds of criminal cases related to ERC claims are being worked, [...]

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Weekly IRS Roundup September 4 – September 8, 2023

by | Sep 14, 2023 | , ,

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 4, 2023 – September 8, 2023.

September 5, 2023: The IRS released Internal Revenue Bulletin 2023-36, which includes proposed regulations implementing the Mental Health Parity and Addiction Equity Act of 2008.

September 5, 2023: The IRS released Tax Tip 2023-108, outlining basic tax advice for entrepreneurs who want to start a new business. The Tax Tip addresses business structures, selecting a tax year, employer identification numbers and reminds taxpayers to investigate applicable state tax requirements.

September 5, 2023: In light of September being National Preparedness Month, the IRS reminded taxpayers to develop an emergency preparedness plan and outlined steps for mitigating losses during a disaster.

September 5, 2023: The IRS issued Fact Sheet 2023-20 to explain how pass-through entities that are electronically filing Schedules K-2 and K-3 should report negative amounts, which are not permitted for certain line items. The Fact Sheet cautions that the IRS has not opined on whether it is legally appropriate to use negative values.

September 6, 2023: The IRS released Tax Tip 2023-109, providing advice to taxpayers who are still considering a tax return preparer.

September 6, 2023: The IRS extended tax relief to individuals and businesses impacted by Hurricane Idalia in South Carolina. As a result, affected individuals filing personal income tax returns on extensions expiring on October 16, 2023, calendar-year partnerships and S corporations whose extensions expire on October 16, 2023, and calendar-year corporations whose 2022 extensions expire on November 15, 2023, now have until February 15, 2024, to file returns and pay related taxes.

September 6, 2023: The IRS announced that the application period for the 2024 Compliance Assurance Process (CAP) program is now open and will run from September 6 to October 31, 2023. The IRS will inform applicants if they’re accepted into the program in February 2024. The CAP program enables taxpayers and the IRS to resolve issues before filing tax returns. To apply, applicants must (1) have assets of $10 million or more, (2) be a US publicly traded corporation with a legal requirement to prepare and submit US Securities and Exchange Commission Forms 10-K, 10-Q and 8-K, and (3) not be under investigation by, or in litigation with, any government agency that would limit the IRS’s access to current tax records.

September 6, 2023: The IRS reminded taxpayers who pay estimated taxes that the deadline to submit their third quarter payments is September 15, 2023.

September 8, 2023: The IRS announced it will be dedicating greater resources to wealthy taxpayers. As part of this effort, the IRS will ensure audit rates do not increase for those earning less than $400,000 a year and will add new fairness safeguards for those claiming the Earned Income Tax Credit. The IRS [...]

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